It’s Inevitable That The Bubble Is Going To Burst
A report from LA Weekly in California. “City Hall is well on its way to requiring developers to help pay for affordable apartments, the governor recently signed legislation that could lead to $4 billion in new housing funds, and a slew of new units downtown has goosed the vacancy rate and slowed rent increases. ‘One thing about global cities is they’re all expensive,’ says Richard K. Green, chair of USC’s Lusk Center for Real Estate. ‘New York, London, Sydney — you’ll never build enough to meet the demand of a successful city.’”
From the Los Angeles Times in California. “So far this year, rent growth has actually slowed in both Los Angeles and Orange counties. Richard Green, director of the USC Lusk Center for Real Estate, said that slowdown probably reflects a flood of new apartment buildings that have opened. But he doesn’t expect the trend to continue. ‘We think incomes are going to keep rising and we are not going to build enough,’ he said.”
From Downtown LA News in California. “The Downtown Los Angeles construction boom has produced a glut of new apartments, and despite a steady influx of residents, the community has seen its vacancy rate soar to levels not seen in decades. ‘Cuts in Class B units suggest competition at the top end of the market is trickling into middle-market product,’ RealPage analyst Bill Kitchens wrote last month. ‘Annual rent cuts are likely to persist through most of 2018 as operators continue to focus on filling units over pricing.’”
The San Francisco Chronicle in California. “We all know the San Francisco rental market is tough. In recent years, it has presented challengers for renters, but now it seems to be getting tougher for landlords. If the number of ‘move in specials’ is anything to go by, filling vacant units this fall isn’t as easy as it usually is. The National Real Estate Investor reported in July that ‘It’s probably impossible to overbuild San Francisco at large…..But it is quite possible to overbuild the high-end of the market, and weak rents and rising concessions suggest that developers may have succeeded.’”
The Wall Street Journal on Colorado. “A booming tech industry and strong job market have fueled an apartment-building frenzy in the midsize, mile-high city of Denver. Now, some local real-estate experts say the balance is shifting, with the supply of new housing matching or even exceeding demand. ‘They have totally overbuilt the luxury apartment buildings,’ says Christina Freyer Walker, the president of Colorado & Co. Real Estate.”
The Real Deal on New York. “Rental incentives — which landlords have been using all year to fend off increasing vacancy rates and dipping rents — are no longer working as they once were. In Brooklyn, the net effective median rent fell by 6 percent to hit $2,757 in September. That decline is largest drop since March 2015, according to the from Douglas Elliman report. As is the case in Manhattan, concessions are no longer keeping sliding rents at bay. ‘The market is drifting lower, and the next tool for landlords is going to be cutting prices,’ said Jonathan Miller, the CEO of appraisal firm Miller Samuel and author of the report. ‘We’ve reached the point where we are going to see more aggressive declines in face rents, just to get it in sync with the large amount of supply,’ Miller said.”
From Bisnow on DC. “With developers in D.C. planning and delivering multifamily projects faster than ever, its apartment rents continued to drop during the third quarter, although not in the neighborhoods experts predicted. After D.C. experienced a rare drop in rents during the second quarter — the first quarterly decline in two years and just the third since 2010 — that trend continued in Q3. The Columbia Heights/Shaw submarket, an established multifamily area, experienced a 4.1% decline in Class-A rents. Its vacancy rate now sits at 6%, the highest of any submarket in the District. The second-largest rent drop occurred in Central D.C., a submarket that includes Dupont Circle, Logan Circle and Mount Vernon Triangle, with prices falling by 2.4%. These submarkets still had the city’s highest average Class-A rents.”
The Baton Rouge Business Report in Louisiana. “Nearly four years after Shreveport-based Vintage Realty acquired a 20-acre tract adjacent to Perkins Rowe with plans to develop a multifamily complex, the Park Rowe Apartments, as the project will be called, is beginning to take shape. Developer David Alexander says he plans to start preleasing units by the end of the year. The Baton Rouge market for multifamily complexes has changed considerably since Vintage Realty acquired the tract in November 2013 for $6.5 million. Some 50 new apartment complexes have been completed since then, adding thousands of units to the market.”
“Nearly 3,000 additional new units in the ‘upscale/luxury’ category alone are currently under construction or have recently been completed. Acknowledging the competitive pressures, Alexander says he doesn’t believe the multifamily sector is overbuilt—at least not along the bustling Bluebonnet Boulevard commercial corridor. ‘I know there is concern about the student housing market being overbuilt,’ he says. ‘But we feel confident that being in Perkins Rowe with the amenities, restaurants and medical facilities; that’s a good source for our residents and we’re delivering a good product.’”
“Wesley Moore, an appraiser with Cook Moore & Associates, is more cautious in his assessment. ‘To me, it’s inevitable that the bubble is going to burst,’ he says. ‘That said, I can’t tell you I have seen any evidence of it yet.’”
The Dallas Morning News in Texas. “A third quarter scorecard for Dallas-Fort Worth’s real estate market shows some winners and losers. At the end of the third quarter, about 48,000 apartments were under construction in the D-FW area — down from almost 53,000 units at the recent peak of the market. In the third quarter net apartment leasing in the area added up to only about 400 apartments.”
“Through the first nine months of the year, net apartment leasing in D-FW is running almost 30 percent behind where it was in the same period of 2016. With more than 20,000 new apartments opening their doors in 2017, that’s not what D-FW landlords want to hear.”
From The Motley Fool. “Not long ago, I was talking on the phone with a well-known bank investor based in Dallas. Somewhere in the conversation, he told me he asks every banker he meets what he or she thinks about the state of the lending market. Are things getting frothy? Are banks lowering credit standards and making loans they shouldn’t? I had this discussion recently with a commercial real estate banker at the Minneapolis airport. Given how much time I’ve spent digging into Bank of the Ozarks over the past couple months, and the fact that it’s a major commercial real estate lender, I figured he may have run into it in the marketplace.”
“‘Have you ever heard of Bank of the Ozarks?’ I asked. ‘Yeah,’ he told me. ‘We can’t compete with them. ‘Why?’ I asked. ‘Because they make loans that we can’t,’ he answered.”
“‘Sometimes it seems like Bank of the Ozarks is the only show left in town, lending hundreds of millions to developers across the city amid a condo financing drought,’ wrote Katherine Clarke in April for The Real Deal, which covers real estate news in New York City. ‘Its aggressive approach has led some industry insiders to question whether the Arkansas-based lender is becoming overexposed to a downturn in the New York City condo market.’”
“‘Despite living 350 miles west of Nashville in Little Rock, Ark., [Chairman and CEO George] Gleason and his … Bank of the Ozarks have funneled more money into Nashville’s construction boom than any lender around in recent years,’ wrote Meg Garner for the Nashville Business Journal in April. Even ‘those in the development community warn that the city has too many apartments on the market.’”
“And in Miami the bank is developing a reputation as ‘one of the most aggressive in issuing construction loans to Miami condo developers.’ Now, again, it’s possible that nothing is amiss at Bank of the Ozarks, and that it hasn’t dropped its underwriting standards at all. Yet it seems unusual that so many sources from so many different places would all say the same thing: that Bank of the Ozarks is writing loans that are too risky for other banks. The implication is that it could run into problems if the commercial real estate market continues on its current course.”
‘To me, it’s inevitable that the bubble is going to burst,’ he says. ‘That said, I can’t tell you I have seen any evidence of it yet.’
You should read this blog Wesley.
‘One thing about global cities is they’re all expensive,’ says Richard K. Green, chair of USC’s Lusk Center for Real Estate. ‘New York, London, Sydney — you’ll never build enough to meet the demand of a successful city.’
The bubble has burst in New York, London and Sydney already.
‘At the end of the third quarter, about 48,000 apartments were under construction in the D-FW area — down from almost 53,000 units at the recent peak of the market. In the third quarter net apartment leasing in the area added up to only about 400 apartments.’
Translation = you’re fooked.
‘We think incomes are going to keep rising and we are not going to build enough,’ he said.”
From Downtown LA News in California. “The Downtown Los Angeles construction boom has produced a glut of new apartments, and despite a steady influx of residents, the community has seen its vacancy rate soar to levels not seen in decades.”
Some shortage there!
They’ve already built too much with many thousands under construction. All these cites are in the exact same boat.
It’s irrational isn’t it? But that’s what makes it a mania. Some of these LA towers are half empty, even with big concessions. How can this USC “expert” and all the developers and lenders be so wrong? The market has been distorted. QE, interest rates. It simply went on far too long and these guys can’t put down the crack pipe.
‘How can this USC “expert” and all the developers and lenders be so wrong?’
Having watched this mania along with other HBB audience members since 2004, I believe the explanation lies in the mass delusion effect of a mania. Since the Lusk expert and his audience members are all drinking from the same punch bowl, it is easy for them to collectively agree on a ‘trees grow to the sky’ story while ignoring the burgeoning luxury property glut in major cities around the globe. It’s a retelling of the tale of the Emperor’s New Clothes, which ends with the little boy pointing out that the Emperor is naked.
‘Atlanta’s latest food hall concept is aiming to set up shop very soon in the city’s cosmopolitan heart. At the base of upscale Trace Midtown apartments—where some rents have been flirting with $7,000 per month—a gourmet food and booze emporium by celebrity chef Harry Pagancoss hopes to debut later this fall where Peachtree meets 5th street.’
‘The concept—the first of its kind—is called “Caravaca Market,” officials announced in a press release today. Initially, it was projected to open a year ago.’
‘More specifically, Pagancoss and company said speciality dishes will include what sounds like a sophisticated, eclectic smorgasbord: “Icelandic Lamb, Peruvian Ceviche, gluten-free Mexican Tlayudas, Mozzarella Wraps, Brazilian and Italian sandwiches, house-made Gelato with exotic flavors … [plus] … Brazilian Roll Cake, Puerto Rican Mallorcas, and delicate Alfajores.”
‘News of the market comes as Colony Square prepares to break ground on its own Midtown food hall, roughly 10 blocks up the street.’
‘Meanwhile, roughly 10 blocks in the other direction on Peachtree, the MARTA-connected Peachtree Center food court is being reborn as “The Hub,” which is hoping to net “foodie-focused eateries, unique entertainment experiences, and boutique services like fitness and grocery” geared toward a blossoming downtown.’
This country is obsessed with consumption and its consuming itself thanks to the (((marketers))) and the (((master planners))). 40% obesity rate now among adults. Thats obese, not overweight. 10 fold increase in childhood obesity in the last 40 years. Everyone trying to make/save a buck and they’ll spend their last dime on a “stupid” phone that costs a grand rather than put good food into their body and exercise regularly. Food quality declining as well as the junk they sell in stores barely resembles anything edible. Free meals for students, even on weekends? Nothing but fking soylent green designed to make them good little (or rather, big) slaves.
‘Acknowledging the competitive pressures, Alexander says he doesn’t believe the multifamily sector is overbuilt—at least not along the bustling Bluebonnet Boulevard commercial corridor. ‘I know there is concern about the student housing market being overbuilt,’ he says. ‘But we feel confident that being in Perkins Rowe with the amenities, restaurants and medical facilities; that’s a good source for our residents and we’re delivering a good product.’
Again with the amenities. These extra costs are going to sink you not save you. And I bet they’ll look a long time to find a $7,000/month renter.
‘The concept—the first of its kind—is called “Caravaca Market,” officials announced in a press release today. Initially, it was projected to open a year ago.’
—————————————–
First of its kind? It sounds just like Faneuil Hall in Boston! A long building with lots of different foods and TONS of people. Not exactly ‘first of it’s kind’ and definitely not a place I would like to live.
‘A gym, a call center, a storage facility or years of vacancy could be what’s next for many empty spaces once home to big chain stores that have closed or are on their way out. As retailers struggle to compete for market share with Amazon and other online retailers, some are closing stores or going under all together. That leaves a glut of square footage that property owners and real estate agents are trying to find new uses for.’
‘At least three such stores are slated to close in the coming months: Kmart near 50th and L Streets. Those closings, combined with four Omaha-area Gordmans stores that closed earlier this year when the company declared bankruptcy, have accelerated the vacant “big box” square footage in the area, local real estate professionals say.’
“If it’s a good location, you’ll see other retailers, other uses going in there,” said James Maenner, senior vice president of CBRE/Mega. But of some of the locations recently closed, he said: “Those stores might sit for a long time.”
‘The problem is that few retailers are opening the mammoth stores anymore. That means the space must be split up, or find a new use.’
Brick and mortar retail has been dying for a decade. It’s good to see the space repurposed. Much like how old urban factories were re purposed into office and residential use.
Meanwhile, San Diego is ironically trying to convince “online retailer” Amazon to drastically increase its local brick and mortar footprint. There must be some kind of tax angle involved.
San Diego vies for Amazon’s 2nd headquarters
Posted 5:59 AM, October 10, 2017, by CNN Wire, Updated at 12:06PM, October 10, 2017
SAN DIEGO — The San Diego County Board of Supervisors Tuesday voted to send a letter to Amazon founder and CEO Jeff Bezos indicating a strong interest and willingness to explore possible incentives for the company if it builds its second headquarters in the region.
The vote was unanimous with Supervisor Greg Cox saying the new headquarters could be built in unincorporated areas of the county. No mention was made as to what the incentives could be.
…
Free Hep A shots perhaps?
Plus no pesky football team to obsess over so the workers can concentrate fully on their drone like jobs.
Yes. Free shots would be useful.
“No mention was made as to what the incentives could be.”
“In suggesting gifts: Money is appropriate, and one size fits all.” —William Randolph Hearst
Metro Dumver is getting a second IKEA scheduled to open in Broomfield in 2019.
Kewl… now you can channel the Asian motif. Hipster!
Cool, I wonder which piece of vacant land they will build it on? They were trying pitch the old STK land to Amazon, I wonder if IKEA has already claimed it?
Anyway, Boulder people finally can avoid driving all the way down to Highlands Ranch for the necessities.
I’ve seen several large stores here in Florida converted to evangelical Protestant churches.
And here in Silicon Valley, a number of office buildings are being used as churches (often evangelical Chinese) OR, of course, being torn down and converted into housing
‘PALO ALTO – Tesla fired hundreds of workers this week, including engineers, managers and factory workers, even as the company struggles to expand its manufacturing and product line. In multiple interviews, former and current employees told this news organization little or no warning preceded the dismissals. The workers interviewed include trained engineers working on vehicle design and production, a supervisor and factory employees.’
‘The spokesman said most of the dismissals were administrative and sales positions, and outside of manufacturing. Tesla employs about 10,000 workers at its Fremont factory. Workers spoke on the condition of anonymity because they feared reprisals from the company. Employees said the firings have lowered morale through many departments. Several said Model X, Model S and former SolarCity operations seemed to be targeted.’
‘Juan Maldonado, a production worker, felt the tap on his shoulder on Thursday. He worked at Tesla for nearly four years, and said he heard about 60 other workers in his section of the factory were dismissed. Maldonado, 48, said he ran late for work twice in recent months, but thought he had straightened things out with his supervisor. Now, he said, “I’m going to try to find a job.”
I remember reading that Tesla employeed eastern Euros at its plant. Back to Budapest and Minsk I guess.
‘Luxury electric vehicle maker Tesla Inc fired about 400 employees this week, including associates, team leaders and supervisors, a former employee told Reuters on Friday. “It’s about 400 people ranging from associates to team leaders to supervisors. We don’t know how high up it went,” said the former employee, who worked on the assembly line and did not want to be identified.’
‘Though Tesla cited performance as the reason for the firings, the source told Reuters he was fired in spite of never having been given a bad review.’
From the comments:
“This fraudulent enterprise will collapse when the Obama subsidies are cut off.”
“It’s ok Elon is basking in his billions like a BOSS on his yacht of a few hundred million. He’ll have his spaceX rocket too, all thanks to the support of the tax payers. That’s how the rich roll right over the poor.”
“I have noticed that the quality at TESLA has gone down since the 2015 Model. I love my 2015 TESLA but I would not buy one today!”
“Elon Musk is a conman, a grafter, a fraud! He uses OPM (Other People’s Money) to enrich himself with his phony companies. If Electric cars were viable, why didn’t any of the major car companies make any before Musk? They didn’t start making them until they saw that states like California would pay government subsidies and all kinds of tax breaks if they were built and/or assembled in their state. Can’t wait until Musk is forced to do the perp walk!!!”
“It couldn’t have anything to do with the fact that Tesla builds only 8 cars per employee per year. Companies like Ford and Toyota build about 70 per employee per year.”
“Where is the outcry and boycott over Tesla using nonunion labor? This was subsidized by our last White House administration? Friend to unions??”
Im still long TSLA. The Ponzi has a lot of room to run before the collapse. Musk is a jerk and con man. But he also knowa how ti run a long con well.
A friend of mine likes his Tesla, but hesitates when asked if he would buy another.
Quality and ease of getting the little issues addressed are the main issues (without a dealer network, it’s not as easy to get the nagging issues addressed).
I saw my first Tesla this weekend. Has anyone here driven one?
I just rode in one last week for the first time. A coworker got a deal on one of the last P75s…selling Tesla stock to buy it. The seats were comfortable but my impression was more “comfortable for short trips” than long ones. Which is fine…since you probably won’t be taking any long trips in it.
But the pluses were the power and having navigation/Google maps on the big screen. It was really nice for that. It can park itself and be summoned from parking, and drive itself somewhat. Pretty cool stuff.
If anything it made me more likely to consider one someday.
My BIL, the one who enjoys a disproportionately high salary for Utah’s cost of living, bought himself a $100K Tesla this year. I was grateful, as it made it considerably easier for me to convince his sister that a $2200 guitar purchase was not all that outrageous.
Make and model (guitar), please.
Yeah, I’d like to know that too. That’s below the cost of many professional-quality instruments, but far above the starter level.
I remember reading that Tesla employeed eastern Euros at its plant. Back to Budapest and Minsk I guess.
‘Maldonado’ doesn’t sound Eastern European to me.
California Dreaming
Tesla
Tesla Model 3 Production Is 84% Lower Than What Elon Musk Promised
This Is Why the Model 3 Is So Important to Tesla
Elon Musk has very high hopes for the Model 3. Here’s why it’s so important to Tesla.
Oops.
By Kirsten Korosec October 2, 2017
Tesla reported Monday that it produced 260 of its new Model 3 electric cars in the third quarter, of which it has delivered 220, dramatically missing CEO Elon Musk’s prediction that it would produce more than 1,600 cars by September.
In July, Musk tweeted a production update for the Model 3 vehicles, saying the car had passed all regulatory requirements ahead of schedule. After announcing that the first 30 customers would receive the Model 3s on July 28, Musk wrote “production grows exponentially, so Aug should be 100 cars and Sept above 1,500.”
Altogether, Musk predicted that third quarter production numbers for the Model 3 would be around 1,630 vehicles, which means he’s off by 84%.
…
Had an interesting conversation with a friend over dinner last night. First he asked me what I thought about cryptocurrency as an investment. I gave him at least ten reasons to avoid it like the plague. A staunch bull, he dismissed my arguments out of hand based on his belief that Bitcoin remains undervalued.
I said that if I were a gambler, I’d try to figure out how to short sell cryptocurrency before I would go long. He responded that if he were going to bet short, it would be against Tesla share prices.
Elon has been disrupted. We’re gonna find out if all these money losing snake oil companies are going to go poof. I was reading the other day about some Amazon employees in the UK making less than minimum wage. Same with uber. Despite paying coolie wages, they can’t make money?
I thing Tesla is going to crash and burn. GM is already selling a comparable car to the Tesla 3, and soon other car makers will offer their own models.
SpaceX might be viable, as he appears to be undercutting Arianespace, but he might bankrupt it trying to get to Mars. They have yet to launch the Falcon Heavy, never mind the so called BFR, which would dwarf the Saturn V. Sure, if .gov gave SpaceX a blank check they might be able to pull it off close to the promised date, but that is not the case.
Who will have the best financing wins!
It doesn’t matter who is making the cars if they don’t address the refueling. Until they have <10-minute recharging (charge or swap) in at least 75% of the fuel stations in the country, I will continue to use my ICE car.
I thing Tesla is going to crash and burn.
Totally possible.
GM is already selling a comparable car to the Tesla 3, and soon other car makers will offer their own models.
So far I’m not seeing the threat. GM, Nissan, whoever, may offer a better deal on appliances. But nobody seems to be going head to head with Telsa on making an electric car that people actually want more than other cars. Performance and styling. I think it’s like the early iPhone. Nothing came close until others finally caught up on performance and styling.
Tesla Model 3 Production Is 84% Lower Than What Elon Musk Promised
And he’s going to land people on Mars in just 7 years. And build a permanent settlement there.
That was the booze and Ambien talking.
‘Its aggressive approach has led some industry insiders to question whether the Arkansas-based lender is becoming overexposed to a downturn in the New York City condo market.’
‘Despite living 350 miles west of Nashville in Little Rock, Ark., [Chairman and CEO George] Gleason and his … Bank of the Ozarks have funneled more money into Nashville’s construction boom than any lender around in recent years,’ wrote Meg Garner for the Nashville Business Journal in April. Even ‘those in the development community warn that the city has too many apartments on the market.’
‘And in Miami the bank is developing a reputation as ‘one of the most aggressive in issuing construction loans to Miami condo developers.’
The media is starting to figure out what we’ve discussed here for 3 years. What’s driving this mania is money chasing yield. Not supply and demand.
October 9, 2017
From Crain’s New York. “A group of developers has secured a $215 million loan to finance construction of a 27-story condo tower at 537 Greenwich St. A partnership between Strategic Capital, Forum Absolute and Cape Advisors received the debt from Bank of the Ozarks to help fund the 170-unit tower. Construction loans for high-end residential condo development have been more difficult to secure as concerns have lingered about an oversupply of units. Residential market data for the third quarter depict a buyer’s market in which sellers in Manhattan have had to discount asking prices by an average of 6%. One in three sellers cut their asking price to sell their apartment or townhouse.”
“Bank of the Ozarks has been one of the busiest construction lenders in the city in recent years, pouring hundreds of millions of dollars into development deals as other major lenders have pulled back. In July, however, Dan Thomas, head of the bank’s real estate lending group, suddenly resigned, plunging the company’s stock by almost 12% and stoking questions about whether there are problems in the bank’s portfolio of loans and if it might pull back on lending in the city.”
http://thehousingbubbleblog.com/?p=10225
Bank of the Ozarks… Arkansas… sleazy financing…
Hillbilly and Slick Willie just HAVE to be involved somehow!
I moved to North Florida recently and for the first time saw a Bank of the Ozarks branch on the main drag near where I’m living. I think I’ll go see them about a loan.
What prompted you to move to North Florida? Was it hurricane related?
Nope, it was “Owner Says Sell!”, and there went the rental that I had for six years. Unfortunately, finding a comparable in the area for the price was impossible. North Florida move was to keep expenses down. I rather like it here. It has it quirks for sure, but it is very interesting. Got some rolling hills, lots of pines and oaks, in some ways more Southern than Floridian. Weather is a bit cooler, too, at least right now.
The thing about it is, though, after the wildfires in CA, I got to looking around at all the trees around here and also the fact that a lot of the housing in this area is frame and siding and I said to myself “Whoopsie!”.
I plumb forgot that parts of North Florida get wildfires, too, on occasion, especially if there’s a long dry season.
I suspect climate works in your favor, though, as my recollection of Florida is that it tends to have frequent rainfall, year-round. By contrast, rain is a perennially rare event in most of California between April through October, which explains why normally hot, dry, windy October is a historically perilous time here for wildfire risk. At some point each November, it normally cools off and the rainy season begins, at which time fire risk is eclipsed by flood and mudslide risk, especially in hilly areas which recently burned, such as Napa and Sonoma Counties this year.
All that said, my earliest vivid memory of a wildfire was the one burning a few hundred yards away from our home in Gadsden, Alabama when I was maybe four years old, visible through our living room picture window. I imagine that the wooded area surronding where we lived more closely resembles northern than central Florida. My parents didn’t feel the need to evacuate, though knowing what I do now about fire risk, I am not sure this was prudent.
“I imagine that the wooded area surronding where we lived more closely resembles northern than central Florida.”
Most likely. There’s a reason Georgia Pacific and the St. Joe company did and I think still do a lot of logging in Northern Florida. Heck, people around here can even sell the oak trees on their property if they’re not rotted inside. I was browsing some of the local RE listings on Craigslist and there’s a number of riverfront listings with logs piled up against the shore.
There is fire risk in Florida, they had a bad one a few years ago over by Jacksonville where some neighborhoods got burned out and we could actually smell the smoke down in Tampa, not to mention we got the haze as well. Yes, we get rain, but if there’s none for a long period of time, it gets a little dicey in some areas come early spring. We are just entering the dry season now.
If you are at liberty to say, where in North Florida? Tallahassee? Ocala? Hopefully not one of the prison counties. Your reason for moving is the reason why we ended up buying our house a few years ago.
Although it’s been years since I did it, I enjoy driving north up U.S. 27. You see an almost forgotten rural Florida, places like Perry and Cross City. It’s a day’s drive from Miami but culturally it might as well be on another planet.
Bank of the Ozarks had been aggressively lending for a long time. It’s likely they will become another Fremont in the next downturn.
https://en.m.wikipedia.org/wiki/Fremont_General_Corporation
Bank of Ozarks is funny. There is a Netlix show called Ozark, about a guy money laundering for the Mexican cartels, set in The Ozarks.
I realize this is not the Fed’s concern, as propping up housing prices lies outside of the scope of its mandate, but what will become of sales and prices when they finally get around to rate normalization, if sales are already falling off a cliff at rock-bottom interest rate levels?
Home Sales Decline In San Diego, Experts Say Homes Have ‘Reached Unaffordable Levels’
Monday, October 9, 2017
By City News Service
Real estate signs advertise the sale of three houses in a row in Encinitas
Photo by Associated Press
The number of homes in the region that changed owners in September declined dramatically from the previous month and from the same period last year as prices continued to climb in most categories, the San Diego Association of Realtors announced Monday.
…
‘prices continued to climb in most categories’
Why is it again that everyone wants to live in California?
California fires: New evacuations ordered for Santa Rosa
By Nicole Chavez and Jason Hanna, CNN
Updated 1:44 PM ET, Sat October 14, 2017
Bodycam video shows dramatic wildfire rescue
Story highlights
Thousands ordered to evacuate from parts of northeastern Santa Rosa
Thirty-six people killed in outbreak of fires that are among the deadliest in California history
(CNN) Several thousand more people were ordered Saturday to evacuate from the Northern California city of Santa Rosa as a new wildfire threatened the area, six days after deadly blazes started to devastate the region. Police said evacuations were ordered Saturday morning for areas in northeastern Santa Rosa, a city of about 175,000 people roughly 50 miles northwest of San Francisco.
A large part of the city was evacuated earlier when wildfires began tearing through Northern California on Sunday night, killing at least 36 people, including 19 in Sonoma County, where Santa Rosa is located.
…
I tried to respond to this earlier, but there was some problem connecting. Anyway, I just wanted to say that this situation really, really sux. From what I understand, many of the dead are elderly folks who were either confused by the event or couldn’t move fast enough.
And why, in the state that has all kinds of rules and regulations, is it necessary to building in the wildfire corridors? Same thing in Florida, where homes are built in the paths of potential storm surges.
I know it is sort of the “in” thing to make fun of CA and urge it to secede, but it still sux what’s going on there.
Not sure if I would rather deal with hurricanes or California wildfires. Both are horrible in their own right.
I hear montana is becoming a hot spot for disgruntled cali folk.
That somehow makes sense.
News
Wildfires put state budgets under pressure in Montana, nationally
By Sophie Quinton , Stateline.org (TNS) |
Updated 3:50 p.m. MT Oct. 7, 2017
WASHINGTON — The wildfires that tore through more than a million acres of Montana this year damaged homes, cloaked communities in smoke, and burned a hole in the state budget.
…
I’ll take the hurricanes over the fires.
“And why, in the state that has all kinds of rules and regulations, is it necessary to building in the wildfire corridors?”
Very strong Diablo winds originate inland and flow toward the coast, think Santa Ana winds. Trees weakened by years of drought topple over on to power lines that spark fires. Last year’s wet winter added to the growth of cheatgrass and under brush. Hot embers were flying up to a mile ahead of the flames starting residential shake and tar roof commercial buildings ablaze. A perfect storm.
“Hot embers were flying up to a mile ahead of the flames starting residential shake and tar roof commercial buildings ablaze.”
“Shake and tar roofs”.
A nation of dummys.
Few residential homes have flat tar roof whereas CRE it is commonplace. Hot embers find their way into homes through openings like the pet door too.
New California residential construction cannot use wood shakes.
Wild land fire behavior is changing commensurate with changes in environmental conditions and long-brewing problems with forest health. Laws can be beneficial for static conditions, but how do you legislate for such dynamic conditions? It could be done but not without a whole host of new problems. I think the better option is to proactively invest in tackling issues that cause catastrophic fires rather than trying to reactively change or introduce laws. Thin forests overgrown from previous clear cutting and decades of fire suppression, continue developing economically sustainable clean energy, and incentivize the insurance industry to push for firewise treatments among policy holders.
Why is it again that everyone wants to live in California?
Must be:
The stratospherically high cost of living
The unbelievable traffic jams
The 3rd world gangs
The crime
?
Don’t forget the Hepatitis A outbreak and crumbling infrastructure
California declares state of emergency over deadly hepatitis A outbreak
Health officials said Oct. 5 that the outbreak could continue for many months, even years. (Oct. 6, 2017)
Soumya Karlamangla
California Gov. Brown declared a state of emergency Friday because of a hepatitis A outbreak that has killed at least 18 people in the state.
The declaration allows state health officials to buy additional doses of the hepatitis A vaccine to try to halt the outbreak, which is already the nation’s second largest in more than two decades.
“We have the capacity to use as much vaccine as we can get our hands on,” said Dr. Gil Chavez, state epidemiologist with the California Department of Public Health.
The outbreak began in San Diego’s homeless community late last year, but has since spread outside the region. Los Angeles and Santa Cruz counties are also now experiencing outbreaks.
…
“Hepatitis A is particularly hard to control because people can spread the disease before they have symptoms and even know that they have the virus. The virus itself is also highly contagious and can survive in the environment for a long time once it’s introduced.”
Low wage workers are frequently employed in the fast food industry.
It’s the Typhoid Mary model.
pooping in the streets
San Francisco, CA Rental Rates Crater 7% YOY
https://www.zillow.com/mission-san-francisco-ca/home-values/
The server went down for a few hours. Please let me know if you experience any difficulty.
I posted an article earlier today about the Hepatitis-A outbreak in the post-apocalyptic wasteland formerly known as California. I’ll plan to repost tomorrow in case it was lost in the server crash.
Seems to be OK now, but couldn’t connect late this afternoon.
I love equity. U just sit there and the cash roles in.
Works great until you are underwater and facing foreclosure because you lost your job in the recession that whacked 30% off the market value of your house.
and a meteor could wipe us out tomorrow. THE FED has your back now. Banks are so levered up they cant let them go down.
Oh, I see.. this time is different, as the central bankers’ cartel has abolished the business cycle and put a permanent moratorium on future recessions.
Kind of brings to mind a few other “never gonna happen” posts here over recent years:
- Chinese stock prices are never gonna fall.
- Vancouver house prices are never gonna correct.
- The Chinese economic growth rate is never gonna drop below 8%.
I predict the 21 percent drop is an underestimate, as it neglects to factor in the rush to the exits when investors panic.
Greater Vancouver home prices to drop 21 per cent by 2019: analysis
Technical charts point to prolonged house price slide, technical analyst contends
Frank O’Brien / Western Investor
October 3, 2017 10:00 AM
The average price of a detached house in Greater Vancouver will decline 21 per cent from its recent peak to $1.5 million by 2019 and will stay at that level until a recovery begins in late 2021, according to a forecast based on historical trading patterns.
“Sell now and begin buying again in four to five years,” is the advice from Dane Eitel, a North Shore realtor who has applied the discipline of technical charting used in the equity market to forecast Greater Vancouver’s housing market.
His call is for the average detached-house price to fall from the recent peak of $1.8 million to $1.48 million to $1.5 million in the latter half of 2019. Prices will remain in that range for two years before bottoming in 2021.
…
modern shoeshine boy…
Cuts in Class B units suggest competition at the top end of the market is trickling into middle-market product,
The trickle down effect at work . lOL
Unless you’re in Denver, where the city proposes to subsidize rents in luxury apartments, which will keep rents artificially high in direct opposition of their attempt to make housing more affordable. Is there such a thing as trickle-up?
Denver can propose all it wants, it doesn’t have the money (not in the amounts needed) and can’t raise taxes because of TABOR.
George Lopez booed off stage after Trump jokes flop at gala
https://www.youtube.com/watch?v=XdaOO7_8slE
The sound of Hillary bouncing off the glass ceiling on election night.
https://www.youtube.com/watch?v=FVYECPw_ih8
“That’s the loudest “Doink” I’ve ever heard”
Some of my favorite YouTube videos are a search on “2016 election meltdown.”
There’s gonna be a million suicides in this country when Trump wins again in 2020.
If you get a chance check out George Lopez talking about old white men and white privilege in the video above.
Who’d've thunk that policies deliberately aimed to stimulate massive overinvestment in all risk assets would ultimately stimulate massive overinvestment which proves deflationary when fundamentals overtake the policy distortion?
Yellen Calls Inflation the ‘Biggest Surprise’ in the Economy
By Jeanna Smialek
October 15, 2017, 6:03 AM PDT
October 15, 2017, 6:20 AM PDT
Fed Chair speaks on monetary policy at Group of 30 event
Yellen sees prices picking up, but structural change possible
Janet Yellen Photographer: Andrew Harrer
Federal Reserve Chair Janet Yellen said that the U.S. central bank expects to continue to raise interest rates gradually as solid growth, a strong labor market and a healthy global economy lift prices even as she recognized that inflation has been surprisingly low.
“My best guess is that these soft readings will not persist, and with the ongoing strengthening of labor markets, I expect inflation to move higher next year,” Yellen said Sunday in the text of a speech prepared for delivery at the Group of Thirty’s Annual International Banking Seminar in Washington.
Yellen’s term expires in February and she is said to be among the candidates President Donald Trump is considering to be his pick to lead the central bank. She has presided over a sustained recovery from the global financial crisis, though inflation has remained below the Fed’s 2 percent goal, a development that’s puzzled policy makers at a time when the unemployment rate has fallen past its pre-crisis low.
..
buying overpriced, leveraged homes is an american pastime such as baseball and aaple pie.
Give the me credit out of thin air. when they default print more to bail them out and keep prices up.
Its just dollars being shuffled around.
Washington, DC Housing Prices Crater 15% YOY
https://www.zillow.com/adams-morgan-washington-dc/home-values/
What is it with all these “prices crater” links? I clicked on this one and it doesn’t show anything about “15% YOY.”
All I see is a 4.0% 1-year change.
Maybe i’m missing something..
Thanks.
fires have just slammed santa rosa area. It is really unbelievable. You would think stucco houses with tile roofs wouldn’t burn so fast but with enough heat built up they are no match. The winds got wicked when the fires started.
https://www.youtube.com/watch?time_continue=61&v=zxFHMNtQ3zg
crushing.housing.losses.
saw this today from last month
$20 Trillion: U.S. Debt Crisis | Peter Schiff and Stefan Molyneux
https://www.youtube.com/watch?v=biPlaHkKdUo
$20 Trillion: U.S. Debt
Which is why interests won’t be going up significantly any time soon. Ditto for Japan, most of the EU and many other countries.
Dec. 1, 2016
Debt Myths, Debunked
‘Sometime in early December, the federal government’s official debt will likely cross the $20 trillion mark – an amount no country has ever owed. As we approach this milestone, there are a few myths regarding the debt that should be debunked.’
‘Myth: The government owes $20 trillion.’
‘Fact: The federal government actually owes around $120 trillion. The $20 trillion debt is the portion of the government’s financial obligation that is legally binding. The other portion, the government’s unfunded liabilities, is money the government has promised to people but will not be able and isn’t legally required to pay. The lion’s share is in Social Security, Medicare and veterans benefits. Estimating unfunded liabilities is difficult, requiring estimating future interest, inflation, population growth and mortality rates. Consequently, figures range from the astronomical (around $80 trillion) to the truly unbelievable (over $200 trillion). But even the lowest estimates exceed the annual economic output of the entire planet.’
‘Myth: The government owes $120 trillion.’
‘Fact: The “government” is composed of federal, state and local governments, government agencies and government-sponsored enterprises. Ultimately, taxpayers are responsible for all these bodies’ debts. The federal government’s financial obligations total about $120 trillion. U.S. state and local governments officially owe $3 trillion and have another $5 trillion in unfunded liabilities themselves. Federal agencies and government sponsored enterprises owe another $8 trillion, which is not included in the federal government’s numbers. This brings total U.S. government obligations to over $135 trillion, conservatively estimated.’
https://www.usnews.com/opinion/economic-intelligence/articles/2016-12-01/myths-and-facts-about-the-us-federal-debt
What is hard to grasp regarding unrepayable debt burdens is at what point they can no longer be further accumulated, refinanced, and hidden under the rug of mass oblivion. I assume this day of reckoning can be postponed for a long time, but not forever.
The government is like a Californian owing 10 years income, or like a Chinese owing 50 years income.
Kind of brings to mind a few other “never gonna happen” posts here over recent years:
- Chinese stock prices are never gonna fall.
- Vancouver house prices are never gonna correct.
- The Chinese economic growth rate is never gonna drop below 8%.
U.S. housing consumers seem perpetually mystified by the Fed-engineered slow-motion short squeeze.
I personally didn’t imagine that they would let the imbalances build up this far so soon after the early 2000s debacle, but I suppose that so long as nobody links housing market problems to policy distortions, what is the big deal?
Renters think the housing market is finally loosening up, fueling a sudden optimism among homebuyers
Diana Olick | @DianaOlick
Published 10:56 AM ET Tue, 10 Oct 2017 Updated 3:02 PM ET Tue, 10 Oct 2017 CNBC.com
Renters think the housing market is finally loosening up
All year, the overwhelming sentiment in the housing market has been frustration. Too few homes for sale drove prices sky high and led to fierce competition among buyers, especially at the entry level. So it was a little bit more than surprising to see a sudden burst of optimism among potential homebuyers in a monthly sentiment survey from Fannie Mae.
Housing confidence rose in September to match the all-time high set in June. The main driver: a big jump in the share of current renters surveyed saying now is a good time to buy. In addition, the share of those respondents saying they believed home prices would go up in the next year dropped significantly. This, even though respondents continue to say that the main barrier to entry-level homeownership today is high prices.
“Perceptions of easing inventory helped boost the net share saying that now is a good time to buy, which is consistent with less bullish home price appreciation sentiment during the month,” wrote Doug Duncan, Fannie Mae’s chief economist, in the release.
That perception is puzzling, to say the least, as the numbers don’t support it. Inventory at the end of August was down 6.5 percent from the year-earlier period, according to the National Association of Realtors. Home price gains also began accelerating again after plateauing at the start of the summer. Pending home sales, which measure contracts signed, fell in August and have been down five of the last six months, due to low supply.
“Demand continues to overwhelm supply in most of the country, and as a result, many would-be buyers from earlier in the year are still in the market for a home, while others have perhaps decided to temporarily postpone their search,” wrote Lawrence Yun, chief economist for the Realtors.
…
Miramar, FL Housing Prices Crater 9% YOY
https://www.zillow.com/miramar-fl-33025/home-values/
Opinion
Two Obama holdovers are sowing the seeds for another subprime collapse
By Paul Sperry
October 14, 2017 | 11:43am
Obama-administration holdovers Mel Watt (left) and Richard Cordray are taking risks with loan policy. Bloomberg via Getty Images
A pair of top Obama-appointed bank regulators still serving in the Trump administration could spark another mortgage meltdown by lowering credit standards and encouraging risky lending practices.
Democrat Mel Watt, who is serving a special five-year term as head of the Federal Housing Finance Agency, is pushing the mortgage-lending giants he regulates — Fannie Mae and Freddie Mac — to offer home loans to deadbeat borrowers with shaky credit, setting up conditions for another housing-market crash, industry officials warn.
Meanwhile, the other Obama holdover — liberal Democrat Richard Cordray, who continues to head the Consumer Financial Protection Bureau through 2018 — has launched an unprecedented crackdown on credit reporting bureaus for allegedly widespread errors and bias, leading the industry to strip some negative information from credit reports used by home lenders, which analysts fear could blind them to default risks.
“We are dumbing down the requirements all over again,” warned former chief Fannie credit officer Ed Pinto. “It’s getting very dangerous.”
…
I got here too late to check this out, but first hot day in the spring, this is where I’m going:
http://entertainment.chubbiesshorts.com/2016/08/bobs-river-place-bradford-florida.html
Now that’s America! Kid Rock country.
Skip the rope swing, unless you are a wiry featherweight (12 year old). I’ve discovered that the centrifugal force on such a thing means you have to hold multiples of your own weight to hang on once you get to the bottom of the arc. That one looks like it isn’t even over the water until way out on the swing.
what’s your best and cheapest hedge for nasdac correction?
tia
also Oxides gave a very poetic answer to the feds quitting (not) post Trumpf
5 mortgages that require no down payment or a small down payment
https://www.youtube.com/watch?v=0VY0qkHXl-Q
Crooked Hillary
Would Dallas/Plano/McKinney be a good place to relocate from California?
I’m a 27 yo, single male.
Thanks for the input.
The ladies sure are pretty in that stretch from Oklahoma City to Dallas… gotta be something in the water.
That’s actually one of the reasons I’m considering moving there haha
it seems that every time I am reading the post on this site, it’s always “too much supply for high end apartments/condos, and the demand has slowed down”….. that doesn’t help the price for starter homes. unfortunately, that’s the bracket I am in, unless there is some layoff in the labor force, the starter home will remain on high demand and low supply–> high price.
I feel your pain. Eventually price cuts should trickle down though as the high end continues to soften and the builders start to undercut the existing homes in order to keep building. It’s what they do…and I suspect they have plenty of margin they can cut if necessary to stay in business.
Now that youth has left me, I’ve begun to wonder more and more, and bump up against the feelings of regret, and consider if it’s better to be devoid of integrity and, ‘have it all’ than to walk, the path less traveled upon.
Is there a difference between a lying, no-good Realtor [or, a stereo-typical shady used car salesman], and someone who recognizes The Fed induced business cycle for what it is and how it creates the mania of the housing bubble - yet they purposefully decide to be a part of it all for gain - by, ‘buying low and selling high’ to unsuspecting people who do not realize they are overpaying at a peak?
Imho, there does indeed seem to be a difference between all of the above, and the sellers who didn’t know beforehand, yet who came to recognize they should sell what they have while they’re at the top of a market peak and get out, and rent, until things cool down. [I'm not that. I'm just a looser renter who thinks too much. I need to get those talking T-shirts printed up, 'This: is what a looser looks like' with fine print on the bottom: 'courtesy of, your government.'. But, of course I won't do that, it's my own damn fault. I saw it coming and should have prepared better. Er' I mean, I wish I knew what the dudes on the film, 'The Big Short' knew about shorting stuff, back when I knew about this, Way before they did.]
While I’m trying hard Not to say there’s something wrong with turning a Buck, or, ‘getting out’, what word or phrase describes someone who purposefully jumps back in to take advantage of the cluelessness of others, And, At The Expense of Others? Is that just, ‘good business practices’ and fairly taking advantage of an arbitrage, or is it something else?
I struggle with the answer as I’m re-evaluating if the mortgage brokers back in 2004, or so [or, since] who offered, or who saw the writing on the wall, yet still helped to steer their customers into loans which the mortgage brokers KNEW their customers eventually couldn’t afford, used good business practices, or if they were worthless pond-scum, without which, the housing bubble might not have financially ruined as many families as it did, and for so long, without them. And, who else acted the same way? Who enabled it all, up and down the chain? Chains?
One-by-one, the stack was willingly built, by many. Or, was it all just due to Humpty and all the King’s men?
‘All of them!’ shouts the elderly farmer who survived the dustbin of history called, ‘The Farm Crisis’ of the 1980’s while having personally avoided signing up for and collecting the many gross farm subsidies so many farmers lined up for, both then, and now. [Who could blame those who did, certainly not those who purposely bought at a dip and sold at a peak.] His pitchfork sitting unused beside him, his heirs looking down while remaining silent after having sold off the once productive and beautiful farm in order to create room for row upon row of ticky-tacky houses which all look the same in order to help fund the lavish lifestyle to which they’ve become accustomed to, as if it were a right, and in order to pay for the ever increasing fees from the old-folks home their aging parents were wasting away in - in disgusting isolation - similar to an unused piece of equipment sitting unused out in the field far away from the barn while it collected rust and interest from the bank and sucked the life out of the family structure quite counter to what has been the case for many families throughout eons, as if it were the result of an attack on a culture no different from an inhumane blast of atomic nothingness, or Sherman’s merciless march across The South as he destroyed family after family in the name of, ‘Union’. …Sherman would have made a great banker.
Yes, maybe, all of them, should be forgiven. But, just whom, shall be forgiven? You’ve got to have names, in order to forgive. Or, pity.
I really miss and long for the days of youth [who doesn't?] of riding my motorcycle over the Whoops with my friends in the nearby farms, riding horses, chasing cattle and chickens, running through grassy fields and catching fish in the ponds which have All been turned into someone’s sterile-like and manicured back yards overlooked by Big-Brother-like security systems. I’m a fan of progress, but that all seems more like, sick regress.
And, no, I wasn’t rich. The motorcycle was only a step above a bicycle, often sitting in need of cheap welding repairs while my friends and I spent time unintentionally destroying some of the structures of the half-built houses which sat un-built for The Longest Time during the trough in the late 1970s’ of the very first part of what I think was the real beginning of this current housing bubble, next to dilapidated, to say the least, farms since turned into subdivisioned housing tracts.
I and my neighborhood friends ate plenty of future-health-problem poor- person staples such as; Hamburger Helper, Wonder Bread PBJ’s, and hot dogs as a daily S.A.D. for the longest time. Thank goodness for gardens and the gardeners that filled the gaps. I just wish they would have avoided using all the gov. approved pesticides. Such is the life, at, or near, the bottom. Industrial induced death, but I digress.
I only mention all that because I feel bad for the youth of today who are trapped in the cages their parents have bought into which afford none of the good things. I suppose it doesn’t matter, the youth are trapped in their own way, by technology, and a movie-star-like self-importance which seems greater than almost any I knew of while growing up. Atari games and the Video Arcades of the 1980’s were so un-like today’s Game Boy, I again, struggle with how describe the immense difference. Especially, the social isolation. Oh boy, the second best part of going to a video arcade in The Mall in the 80’s was bumping up against and meeting the girls. How does that work in today’s online isolation games? Re-gress.
Also, the TV microwave dinners and drive-thru food today’s youth survive on seems like mega ten steps below the Hamburger Helper and the stuff from the garden I grew up on, that it ain’t even funny.
Devoid of nutrients.
‘Trapped inside’, in that sterile-like environment,… is that what it was like to grow up in the big cities? I imagine you guys in the Big cities found outlets in alley-ways and parks, but wow, I can’t even think of the words to describe what I think you, and today’s, ‘helicopter-mom-world’ youth missed out on. [Again, I remind you. I wasn't in a rich family. They lived up the street. Er, road.]
I suppose you guys made up for it by not being as limited in your interaction with the adult world compared to the isolation-like experience a teenager has with being outside the city limits. I imagine that life in The City for young people today has changed considerably, too.
Pardon, just thinking out loud in response to reading what you guys have written over the years while trying to understand how I fit into the universe. You guys all, each and every one, friend and foe alike, assist in doing that to me!
…I wonder what Mr. Banker’s life was like as a youth. Do you think he was that, ‘cool funny guy’ you once knew at your teenage, ‘Thrills’ but was somehow changed by his experience at the conditioning, Divergent/Insurgent straining camp, known as, The University?
Such a thought, is all, so, I dunno, freedom-seeking, Logan’s Run-like, with a mix of that nerdy yet dangerous Dr. Who’s ‘Daliks’ wrapped in an enigma. It’s no wonder most people can’t face the music.
A mouse in the pocket is a comforting thing in comparison to all that. I can see why Mike fights you all like tooth and nails. The reality of it all is too horrifying to face, for most.
Face to the wind, my friends. Face to the wind, and sit tight.
It’s Inevitable That The Bubble Is Going To Burst