November 13, 2017

Too Much Supply Or Not Enough Demand?

A report from Bisnow on Texas. “The Dallas multifamily market is looking a little rough with rent growth continuing to sag due to incessant Class-A deliveries. More product is on the way — Dallas is No. 2 in the nation for multifamily permits issued this year. This has raised some concerns about overbuilding. ‘Dallas continues to experience steady declines in rent prices due to a huge number of new apartments coming to the market,’ Abodo Senior Communications Director Sam Radbil said.”

“Despite this, Dallas issued 20,150 permits in 2017, including 1,389 in September, a study from RealPage shows. Taken together, these stats seem to indicate weakening in the market, but experts say these numbers do not tell the whole story. Axiometrics Senior Vice President Jay Denton said a decline in Dallas’ frenzied job growth numbers may have caused the recent stress on the market. ‘As of September, according to the Bureau of Labor Statistics, [job growth in Dallas] is down from 105,000 [jobs added year-over-year] to 67,000. So you can ask the question of, ‘do we have too much supply or do we not have enough demand?’”

From LA Weekly in California. “A wave of new apartments downtown has slowed the pace of rent increases and inspired landlords to offer free parking and a month’s free rent. ‘Rent has started to slow down, and that will make capital forces hesitant,’ says Greg Willet, chief economist at RealPage. Even as planned building is flat or even on the decrease, construction that was seeded two and three years ago will result in a peak year for new apartment openings in 2018, Willet says. As many as 18,000 units could come online, much of it in downtown, Hollywood and other core areas, he says.”

“That’s a mixed bag: It’s still not enough, and it’s mostly luxury housing. Downtown real estate agent Bill Cooper says the flat figures for L.A. are even more dire than they appear because, he believes, most of that planned construction involves high-end luxury units and not the kind of apartments the average Angeleno can afford. ‘They’re basically filling downtown with luxury apartments,’ he says. ‘There’s only so many people who can pay those rents.’”

“Cooper says the glut downtown could result in rents that aren’t as outrageous as L.A. has experienced in the last few years. ‘You’re going to see apartment pricing change,’ he says. ‘I think it’s going to have to make a correction in the next few years.’”

From BKLYNER on New York. “Hot on the heels of a mayoral election, we found ourselves thinking of the ‘the rent is too damn high.’ While we here at BKLYNER do our best to find the finest deals in the county of Kings, it seems nothing can shape markets like plain ol’ supply and demand (pursuant to incentives, etc.) Fortunately, it seems as though rents might be starting to tick downward thanks to the flood of new housing that has, in part, reshaped the skyline of Brooklyn and its denizens.”

“86 Court Street #3: This Brooklyn Heights one bedroom has seen its price dip from $2,499 down to just $2,099 a month during its time on the market. Now is the time to strike. 72 Clermont Avenue #1: After starting at $2,200 on October 15, the price has tumbled to $1,850 per month.”

The Real Deal on New York. “Though slightly down from last month, the vacancy rate in Manhattan rental apartments in October remained high. ‘We are seeing just general malaise or weakness in the market,’ said Jonathan Miller, the CEO of appraisal firm Miller Samuel and author of the report. ‘The market is soft. We’re seeing a lot of concessions.’”

The Washington Blade. “It’s not rocket science: The more housing there is, the more affordable housing will be. D.C. has begun to prove this simple reality of supply and demand. A report last month by real estate research firm Delta Associates indicated that D.C. rental prices dropped for the second consecutive quarter, following a rare drop in rents in the previous period. These drops were only the third decrease in rents since 2010.”

“This decline in average rents was the result of a record number of new apartments hitting the market in the past year, totaling more than 11,000 units. Optimism that prices will continue to drop is based on an already-planned addition of nearly 14,000 new units in the next three years. Rental prices were anticipated to plateau in the areas with the largest supply of new units, primarily the Riverfront area in Southeast-and-Southwest D.C., as well as NoMa and surrounding the H Street, N.E., corridor. These areas are expected to continue to lead the city in rental housing growth over the next three years, eventually exceeding the total number of units in central D.C.”

“Instead, rents dropped in the more established neighborhoods of northwest D.C., including Foggy Bottom, Dupont Circle, Logan Circle, Shaw, and the Mount Vernon Triangle area. The Shaw-Columbia Heights submarket experienced the largest decrease at 4.1 percent while average rents in Dupont-Logan-Mount Vernon declined 2.4 percent – all near-downtown areas.”

“Nearly all new rental housing in almost all cities is typically, and historically, higher-priced housing. The availability of new ‘luxury’ apartments, however, serves to reduce the pressure on existing housing, including less expensive units. This benefits the mainstream market overall and allows for a broader range of rental price points.”




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121 Comments »

Comment by Ben Jones
2017-11-13 07:18:11

‘Cooper says the glut downtown could result in rents that aren’t as outrageous as L.A. has experienced in the last few years. ‘You’re going to see apartment pricing change,’ he says. ‘I think it’s going to have to make a correction in the next few years.’

It’s already happening Bill, but thanks for the confirmation.

‘So you can ask the question of, ‘do we have too much supply or do we not have enough demand?’

I dunno Jay. You’ll have a 30 year supply when what’s under construction is finished. Can you say “both”?

Comment by Jingle Male
2017-11-14 07:34:46

“…….it seems nothing can shape markets like plain ol’ supply and demand….”

What? I thought is was the government financing that drove the bus. If only they could get Fannie Mae loans in Detroit, housing would appreciate rapidly.

Comment by Rental Watch
2017-11-14 09:43:58

The answer is both matter…when available to a buyer (and the buyer desires to borrow more), cheap finance can increase what someone will spend on a home. Cheap and available debt increases the maximum any individual can pay for a house.

However, it can also be true that despite cheap finance being available, people can choose to not fully utilize it (buy below their ceiling).

At the same time, lack of supply, which generally will drive prices higher, will, over time, encourage people to get more aggressive in their own personal borrowing decisions (as they get more and more complacent about the potential downside risks).

Candidly, the question is whether the home prices going up in any particular market are being driven by people who are pushing to the limit of borrowing, or whether prices would still be going up if those pushing to the limit were removed from the demand side of the equation.

And that goes precisely to the question of “depth of demand”. If there are 20 buyers bidding on a house, chances are very good that more than a few are not buying up to their limit–I would say that finance has little to do with prices in that particular market. If, however, there are only a couple of bidders on a given house, chances are good that prices are strongly influenced in that market by cheap finance.

And of course, there are many markets that interplay, so it gets a hell of a lot more complicated than that…

 
 
Comment by Mafia Blocks
2017-11-14 10:01:17

What’s another million or two of new houses when there are 25 million excess empty and defaulted housing units out there? Demand? Housing demand is at 20 year lows and falling.

 
 
Comment by Ben Jones
2017-11-13 07:21:14

‘Miami rents moderately dropped last month, according to reports by both Zumper and Abodo. The former says one bedroom median rent in Miami, which continues to rank ninth nationally, decreased by 2.8 percent to $1,750 while the national one bedroom median rent dipped by 1.4 percent to $1,175.’

‘It was the largest decrease by a city ranked in the Top 10 outside of Seattle, which dipped by 3.7 percent to $1,800.’

Check out the double digit declines on the table at this link.

Comment by Professor Bear
2017-11-13 10:42:52

I see a 2.2% drop in month-on-month rents for 2-bedroom apartments in San Diego.

I SEE HOPE!

 
Comment by Karen
2017-11-13 13:17:16

The news just keeps getting better and better.

 
 
Comment by Senior Housing Analyst
2017-11-13 07:42:54

<Miromar Lakes, FL Housing Prices Plunge 18% YOY On Cratering Housing Demand

https://www.movoto.com/miromar-lakes-fl/market-trends/

Comment by Jingle Male
2017-11-14 07:42:59

HA! Is that you.

I go to Miromar often and I can tell you from personal experience the market is NOT cratering. Even your own link shows $/SF data is $250/SF and has been for a while.

I can tell you properties are not even close to the 2006 & 2007 fiasco prices of $300/SF +, and I can also say that prices are not appreciating these days.

Comment by Jingle Male
2017-11-14 08:13:39

Keep walking the asking price down until it sells. This 2,386 SF Miromar Lakes condo finally sold this July at $303/SF. They were asking $400/SF in 2013. Housing is sticky. Wishing prices of yester-year don’t count……..

DATE EVENT PRICE
07/19/17 Sold $725,000-9.3%
07/06/17 Pending sale $799,000
06/20/17 Price change $799,000-2.6%
06/16/17 Price change $820,000-0.6%
05/16/17 Price change $825,000-4.0%
05/05/17 Price change $859,000-2.3%
04/06/17 Price change $879,500-2.2%
03/24/17 Listed for sale $899,000+5.9%
06/02/14 Listing removed $849,000
05/22/14 Listing removed $7,500/mo
02/21/14 Listed for rent $7,500/mo
01/27/14 Listed for sale $849,000-10.5%
12/05/13 Listing removed $949,000
07/22/13 Listed for sale $949,000

 
Comment by Mafia Blocks
2017-11-14 08:35:25

DebtDonkey

Bellaire, TX Housing Prices Crater 5% YOY

https://www.zillow.com/bellaire-tx/home-values/

 
 
 
Comment by 2banana
2017-11-13 08:21:38

And this is happening with a massive bubble in stock market…

Public and private unions are the LARGEST political donors of all time.

And they give 99% of their money to democrats.

+++++++

Pension Ponzi Bailout: Democrats Sponsor US Treasury Bailout Scheme
ZeroHedge - Nov 13, 2017

Most defined benefit pension plans are nothing but Ponzi schemes. Plans are now unraveling because of demographics. An increasing number of retirees, needing untenable returns, are supported by fewer and fewer people putting money in the system. Democrats sponsored a bailout scheme. Will it pass?

Sen. Sherrod Brown, D-Ohio, plans to introduce legislation that would allow struggling multiemployer pension funds to borrow from the U.S. Treasury to remain solvent.

The bill, co-sponsored by Rep. Tim Ryan, D-Ohio, could be introduced later this week or shortly after. It would create a new office within the Treasury Department called the Pension Rehabilitation Administration. The funds would come from the sale of Treasury-issued bonds to financial institutions. The pension funds could borrow for 30 years at low interest rates. One restriction for borrowers is they could not make risky investments.

Mr. Brown told a group of retired Teamsters in Ohio on Monday that the bill will be out shortly.

No, instead what will happen “under his watch” is that funds collected from taxpaying Americans will be spent to satisfy the ridiculous retirement promises and obligations made over the past few decades, and while the immediate recipients of the funds, i.e. those looking at near-term retirement will be made whole, everyone else, i.e., taxpayers will lose.

And now that the machinery for pension bailouts is finally in motion, we look forward to the next, and possibly final, tear in the American social fabric, that between workers who can’t wait to retire to the generous pension promises (see “Why Illinois Is In Trouble - 63,000 Public Employees With $100,000+ Salaries Cost Taxpayers $10 Billion ” and “Mapping The $100,000+ California Public Employee Pensions At CalPERS Costing Taxpayers $3.0B”), and all those other unlucky taxpayers, who will have to fund these promises.

I do not think this is the final scheme, for reasons stated, but it is the opening salvo. Expect to see even more “creative” ideas when public union pensions such as CALPers blows sky high.

Comment by In Colorado
2017-11-13 09:10:03

Most defined benefit pension plans are nothing but Ponzi schemes.

The thing is, they shouldn’t be. There is a branch of math, actuarial science, whose sole purpose is to keep insurance and pension programs solvent.

The problem, of course, is politics. Politicians make promises that the actuaries know can’t be delivered. Actuaries are told to use return rates that are not historical, while politicians keep promising more, while not contributing more to the plans (because there is no money).

It’s going to be impossible to take care of the unfunded liabilities through taxation. These wouldn’t be trivial tax increases, we’re talking tens of trillions, far more than the current national debt. The federal income tax would likely have to double, possible triple to cover the pensions. That would annihilate the economy, it’s not going to happen.

Sure, some states like California, New York and Illinois will raise local taxes, but it won’t be enough, not even close. And if they raise taxes too much, people and corporations will leave their states. It’s a battle they can’t win.

Comment by 2banana
2017-11-13 09:21:57

Public and private unions, by far, are the LARGEST campaign political contributors of ALL TIME.

They give 99% of their money to democrats.

And their votes and support don’t come CHEAP.

https://www.opensecrets.org/orgs/

Comment by In Colorado
2017-11-13 09:59:23

It doesn’t matter, their pensions won’t be made whole. At best there will be band aids that will cover the gaps for a few short years (like Dallas selling bonds) but it’s going to implode.

This problem isn’t unique to the USA. What we might see are central banks conjuring those missing trillions into existence and bailing out the pensions, via loans that will never be paid back.

So DC owes 20T already, what’s another 50T if it never has to be paid back? So interest rates drop into negative territory, it’s for the children. Imagine what negative mortgage interest rates could do! Bubble 3.0, here we come!

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Comment by 2banana
2017-11-13 10:12:10

It does matter a GREAT DEAL to local homeowners.

Their property taxes will explode. There will be no mercy.

And there will be no fake legacy news media reports of people being forced from their homes and into the streets because they can’t afford the taxes. Even on fully paid off houses without a mortgage.

All so that public union goons can be paid their six figure spiked COLA pensions with free medical

F**k You. Pay me.

https://www.youtube.com/watch?v=3XGAmPRxV48

 
Comment by Ben Jones
2017-11-13 10:14:08

Total federal obligations are closer to 200 trillions. When you start believing fantasies, it can get dangerous. Take the “never have to pay back” thing. Is that based in reality? Many years ago, I listened to some guys on TV discussing the central bank buying treasuries - monetizing the debt. One said, first, it’s illegal. Second, the markets would flip out. Fast forward a couple decades and the plunge protection team was an internet conspiracy theory. Now it’s an ongoing multi-trillion peso global policy.

Let’s go back: why was monetizing the debt shrugged off as ludicrous? Illegal even. It was unthinkable at the time. We are living with actions no one would have believed possible 20 or 30 years ago. I’ll say this: you can’t print wealth. This funny money is going to go poof somewhere at some point. Like permitting 20k apartments in Dallas when they already have too many. How can that happen? Distortions caused by oceans of phony Yellen bucks. How many grilled cheese truck type companies are “worth” billions?

 
Comment by Professor Bear
2017-11-13 10:48:18

“When you start believing fantasies, it can get dangerous.”

Yep.

Oct 18, 2017, 2:54 pm EST
7 Cryptocurrencies to Buy as Blockchain Heats Up
Defying fears of a market bubble, bitcoin and other leading cryptocurrencies will likely continue moving higher
By Josh Enomoto, InvestorPlace Contributor

At the turn of the decade, hardly anyone knew anything about cryptocurrencies. Aside from visiting obscure forums and chat rooms, the general public had few opportunities to learn about them. Even more startling, early proponents had no idea of the revolution digital tokens would spark, as evidenced by Laszlo Hanyecz’s first recorded crypto purchase: 10,000 Bitcoins for one pizza.

To commemorate that occasion, May 22 is known as “Bitcoin Pizza Day.” But rather than a mockery of an incredibly misfortunate soul, the milestone is observed to celebrate the blockchain revolution. The underlying architecture that drives virtual coins, the blockchain essentially automates the verification process in digital transactions. With this paradigm-shifting technology, people aren’t just looking for cryptocurrencies to buy; instead, they’re slowly waking up to its profound implications.

I recently laid out the case for $10,000 bitcoin and I’m still holding firm to my price target. First, highly-esteemed market analysts, such as our own Will Ashworth, view the lofty forecast as a probability, not a possibility. Second, cryptocurrencies finally caught the big banking cartel’s attention. While they’re hostile towards crypto investing, the fact that renowned bankers are thinking about the blockchain represents major progress.

 
Comment by Professor Bear
2017-11-13 10:52:06

“The underlying architecture that drives virtual coins, the blockchain essentially automates the verification process in digital transactions. With this paradigm-shifting technology, people aren’t just looking for cryptocurrencies to buy; instead, they’re slowly waking up to its profound implications.”

It’s a new era! This time is different!!

 
Comment by redmondjp
2017-11-13 11:49:47

Until the electrical grid goes down, locking all of those virtual coins inside memory chips here and there.

Got physical?

 
Comment by oxide
2017-11-13 13:14:53

I once watched a documentary on the history of the Israelites. During one uprising (or was it a raid-and-pillage?), the residents of Jerusalem set fire to the bank building where all the records of loans were kept on scrolls. Suddenly, all the folks in Jerusalem were debt free. I often think about that, what a strange concept debt really is, and how quickly it can literally go *poof*.

 
Comment by BlueSkye ⚓
2017-11-13 13:28:15

No one will rush in to solve a bitcoin crisis. The producers of fiat might even help tip it over. The whole purpose of fiat is to allow government to spend what it does not have. Bitcoin does not suit this purpose.

 
Comment by OneAgainstMany
2017-11-13 17:14:42

Not all states have the pension problems that Illinois has. Quite a few are managed pretty well:

http://www.pewtrusts.org/en/research-and-analysis/analysis/2017/07/19/measuring-the-fiscal-health-of-state-pension-plans

 
Comment by In Colorado
2017-11-13 17:29:16

Their property taxes will explode. There will be no mercy.

Taxpayer revolt?

 
Comment by In Colorado
2017-11-13 17:51:11

It does matter a GREAT DEAL to local homeowners.

They do have Prop 13 in California. Of course there are other ways to tax people. But as we all know, onerous taxes drive productive people away. In the end there is no money, as states with those huge liabilities are perpetually broke.

State pension payouts are going to get a haircut.

 
Comment by Rental Watch
2017-11-14 02:44:26

Quite a few are managed pretty well:

Would you put CA in that category?

The only reason that CA is even close to the 80% target is that the state is sucking more and more out of the population to keep up with their pension obligations.

Los Angeles used to pay 5% of their budget toward covering pension obligations…they are now 18% (if not more by now).

The result is that cities are stretched so far that they need to pay for services through impact fees that used to be paid through other means…which jacks up the cost of building a new home, pushing cost of living up, stretching the population even farther.

Illinois is what happens once you run out of other people’s money.

California is what it looks like when you haven’t run out of other people’s money yet.

 
Comment by Hi-Z
2017-11-14 08:32:59

Until the electrical grid goes down, locking all of those virtual coins inside memory chips here and there.

Where do you think almost all of the USD kept? Will your wealth or mine still be available in that instance?

 
Comment by BlueSkye ⚓
2017-11-14 08:49:41

“the USD kept…”

It would be foolish not to keep a paper record of your own accounts. JMO.

 
Comment by Hi-Z
2017-11-14 11:45:12

It would be foolish not to keep a paper record of your own accounts. JMO.

If still in business, the bank will not recognize your paper record as evidence of anything.

 
 
 
Comment by Professor Bear
2017-11-13 10:45:20

“Actuaries are told to use return rates that are not historical, while politicians keep promising more, while not contributing more to the plans (because there is no money).”

Do you have any ideas what pension liabilities would look like if properly valued at the recent historically low risk-free rate?

In a word, they would look GINORMOUS.

Comment by In Colorado
2017-11-13 17:46:50

No doubt. CalPers is far deeper in the hole than anyone will admit.

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Comment by taxpayer
2017-11-14 09:44:26

if you say TABOR one more time

 
 
 
Comment by 2banana
2017-11-13 12:57:05

It will end very badly. There is no stopping it.

And the democrats in charge will tax all working adults to the max all along the way to make good on their promises to their number one campaign contributors.

2banana’s Rule:

Long term democrat rule + public unions + free sh*t army = misery, ruin and bankruptcy

+++++

Opinion: How did CalPERS dig a $153 billion pension hole?
San Jose Mercury-News | November 13, 2017 | by Dan Pellissier

During the next five weeks, the CalPERS board, custodian of $326 billion in assets needed to fulfill retirement promises for 1.8 million California public employees and beneficiaries, will make decisions affecting government budgets for decades to come.

The problem is, despite their fiduciary duty under the state Constitution to “protect the competency of the assets” under their absolute control, CalPERS is roughly $153 billion short of fully funding the retirement promises earned to date.

How did CalPERS dig this huge hole? During the last decade, they manipulated actuarial assumptions and methods to keep employer and employee contribution rates low in the short term.

Besides over-estimating investment returns, CalPERS uses very long amortization schedules to push debts onto future generations, greatly increasing the pension system’s long-term cost. As a result, CalPERS is just 68 percent funded, barely above what would be “critical” status for private-sector pension plans.

Simple math requires government employers and employees to contribute more money to fill the roughly $153 billion gap. Yet government agencies do not want pension costs to crowd out expenditures for other worthy programs. And government employees would rather have pay increases and force taxpayers 30 years later to finish paying today’s pension bill.

 
 
 
Comment by 2banana
2017-11-13 08:35:31

I post this as Bucks, Burlington and Montgomery Counties are very wealthy suburban counties of Philly and are often referred to as the crown jewels “swing” counties politically. As in if these Counties goes “D” or “R” - it usually indicated how the state or national election will go.

Houses in Bucks, Burlington and Montgomery Counties are pretty expensive with high (buy not NJ high) property taxes. Who is going to buy them when these folks retire?

+++++

Three in 10 local households have no retirement savings, records show
Nov 12, 2017 - Bucks County Courier Times (PA)       
Thousands of families in Bucks, Burlington and Montgomery counties have no pension, 401(k) or individual retirement accounts, federal data shows

Tony stopped working after a heart attack. But he never anticipated the advances in cardiac care, which keep his heart ticking. And he never calculated for paying the property tax bills, which go up and up.

In spite of it all, Tony knows he’s among the lucky ones. He retired with a pension.

Low- and middle-income families average $39,000 in retirement savings, the Federal Reserve estimates. Upper-income households average $147,300 in retirement accounts, according to federal estimates.

In New Jersey and Pennsylvania, half of all private sector workers have no retirement savings accounts, according to the National Institute for Retirement Savings.

In Pennsylvania and New Jersey, NIRS estimates half of all private sector workers have nothing saved for retirement.

In Dublin, the average household had $149,123 in retirement accounts. GfK estimated. That’s $13,556 annually for men in retirement for 11 years. Spaced over 16 years for women, it’s $9,320 annually.

“I’ve had clients who go into retirement with that amount saved, and it’s a challenge,” said Freeh. “They have to make tough choices.”

“The best thing is for people in their 20s is probably a Roth IRA,” said Garry, founder of Yardley Wealth Management. “You don’t need to worry about a (tax) deductible IRA because, at this point in your life, you’re probably not paying much, if anything, in federal income taxes.

Pew surveyed 5,661 Americans ages 20 to 58. One in four had tapped their 401(k) following a divorce or job loss.

Comment by In Colorado
2017-11-13 09:19:27

Tony stopped working after a heart attack. But he never anticipated the advances in cardiac care, which keep his heart ticking. And he never calculated for paying the property tax bills, which go up and up.

I just can’t fathom this. My bill has barely gone up in 20 years, as in I’m still paying about the same.

I’ve met a lot of retirees who moved to my little burg from out of state. At first I wondered why would anyone move here. The high altitude has to take a toll on sea level seniors, and our winters, while not the worst, are definitely not sunbelt winters.

But now I get it, they come here for the low taxes. They also probably came for the lower housing costs, though that has changed in the past few years, especially in Denver. In my burg you can still get a smaller house for 300K.

Another possible factor is that my little burg is not “diverse”. There is a very small Hispanic minority, but that’s it. According to the census bureau, the city is 93% white.

Comment by 2banana
2017-11-13 09:37:08

Tax refugees…

Comment by BlueSkye ⚓
2017-11-13 13:30:45

I am a tax refugee hunkered down in place (NY).

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Comment by SFMF
2017-11-13 10:19:35

“I just can’t fathom this. My bill has barely gone up in 20 years, as in I’m still paying about the same.”

I can’t fathom your situation, lol.

Every home I’ve owned has had steady property tax increases. Nothing huge any one year, but on average probably 3% a year. And over 20 years 3% a year means almost double the taxes. You may well be the luckiest home owner in America.

Comment by In Colorado
2017-11-13 17:37:21

Luck has nothing to do with it. It’s TABOR, plain and simple.

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Comment by alphonso bedoya
2017-11-13 18:41:12

You wrote this yesterday:
“Not sure what your point is.”

You see….you do understand my point. :)

When you have money [You do], you live in an expensive enclave [You do], and, the Taxman knows why you are there so he raises the temperature on you every year, knowing you are going to stay, and, in twenty years, you wake up to servicemen who charge you for your address and call you Sir and look at the cars you drive and the shoes you wear….knowing the taxes you pay…. and…… charging you a little extra for your pride and joy.

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Comment by SFMF
2017-11-13 10:16:33

I’ve been thinking about this recently as well. I have a nice nest egg stashed away in a combination of IRA, 401k and SEP accounts. But in 20-30 years when I retire, will I have been a fool for being prudent and saving? I’m starting t think the answer is yes.

Democrats already floated the idea of confiscating retirement funds. It didn’t go over so well. But neither did gay marriage or socialized medicine when they first flew the trial balloon. Didn’t matter, they came back again and again until they got their way.

And since so many people have nothing saved, up, it will be an easy sell politically to the free s**t army.

If I were 22 I’d spend every penny I have and not put anything away for the future.

Comment by Mafia Blocks
2017-11-13 10:26:04

Liquidate everything you’ve got and hang onto every dollar like it’s the last one on earth.

You’ll thank me later.

 
Comment by oxide
2017-11-13 14:05:09

The socialist medicine folks haven’t really gotten their way… not yet. As for gay marriage, that doesn’t cost anyone any money, so there wasn’t a lot of widespread resistance, at least not at the voting booth.

But, retirement money is pretty sacred. Nothing will get a politician voted out of office quicker than taking away pensions and 401Ks. At best, I could see the gov means-testing social security, but that’s about it.

Comment by SFMF
2017-11-13 14:45:55

Obamacare is socialized medicine The govt dictates prices and content of every policy. It’s a govt run system, that outsourced the administrative tasks to private companies that we colloquially still call insurance companies. All Aetna does is collect fees on behalf of the govt and pays doctors/hospitals on behalf of the govt. And for its effort, gets a healthy cut of the action, like any other middle man.

It’s no different than the Department of Agriculture outsourcing its IT needs to Accenture. But Accenture doesn’t pretend to be in the agriculture business, it’s in the outsourcing business. Yet for some reason Aetna pretends it is in the health insurance businesses. It’s not. It, and United, Blue Cross, Cigna, etc are in the paper pushing business.

For all intents and purposes, private health insurance no longer exists in this country.

And the worst thing is the left did this without anyone noticing.

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Comment by OneAgainstMany
2017-11-13 17:25:33

US government spending on healthcare in the US is higher than any other nation, including all the national health system (i.e. socialized medicine) countries. The US healthcare system has not been a private system for a long time, and the ACA didn’t cause that.

“At $5,960 per capita, government spending on health care costs in the U.S. was the highest of any nation in 2013, including countries with universal health programs such as Canada, Sweden and the United Kingdom. (Estimated total U.S. health spending for 2013 was $9,267 per capita, with government’s share being $5,960.) Indeed, government health spending in the United States exceeded total health spending (government plus private) in every other country except Switzerland.

The finding that Americans pay the world’s highest health-related taxes conflicts with popular perceptions that the U.S. health care financing system is predominantly private, write Drs. David U. Himmelstein and Steffie Woolhandler, the authors of the study. Himmelstein and Woolhandler are professors at the City University of New York School of Public Health and lecturers in medicine at Harvard Medical School.”

 
Comment by OneAgainstMany
2017-11-13 17:27:53

Make sure you sign up for Trumpcare:

https://www.youtube.com/watch?v=mlZNmtZdTlg

 
Comment by SFMF
2017-11-13 17:32:55

3rd World countries spend next to nothing. Using your logic they must have excellent systems. The reason we spend a lot is because we get a lot. Need an MRI? You get one in a day using the latest technology. Could luck with that in Canada where if you’re lucky, the wait time for an MRI is ONLY 11 weeks. No big deal to wait 3 months. The pain shouldn’t be too bad. Just take some aspirin and the time will fly by.

https://www.fraserinstitute.org/studies/waiting-your-turn-wait-times-for-health-care-in-canada-2016

“Patients also experience significant waiting times for various diagnostic technologies across the provinces. This year, Canadians could expect to wait 3.7 weeks for a computed tomography (CT) scan, 11.1 weeks for a magnetic resonance imaging (MRI) scan, and 4.0 weeks for an ultrasound.”

 
Comment by SFMF
2017-11-13 17:35:54

So you take all your advice on important issues from a comedian? LOL

 
Comment by OneAgainstMany
2017-11-13 20:02:49

You don’t like Trumpcare? Trump should be proud. I hope he’ll acknowledge this success on Twitter soon. It’s too early to to say for sure, but early numbers show his numbers are looking great for enrollment this year!

By the way, I work in a large Trauma-2 hospital as an RN, and I’ve lived in Canada for several years. I vastly prefer the Canadian healthcare system, though it has it’s shortcomings. If you are interested in a thoughtful analysis between healthcare systems instead of just cherry picking the things you disdain about our neighbors to the north, I would recommend this:

https://www.nytimes.com/interactive/2017/09/18/upshot/best-health-care-system-country-bracket.html

Canada is not the system I would have the US emulate, but at least no one ever went bankrupt there (true story: my clinical professor went bankrupt and lost his house when his first wife passed away from cancer). You can loathe socialized medicine, fine. But let’s not pretend that the American healthcare system is anywhere near private. Over 60% of medical dollars spent on healthcare come from the government. Incidentally, we aren’t getting good value for our money, but that’s a different discussion for a different blog. I felt compelled to chime and clarify when someone says that we have a private health system. We are no where near private and haven’t been for a long time.

 
Comment by Rental Watch
2017-11-14 02:58:21

Until the left can get comfortable telling people that single-payer only works with the rationing of healthcare, it will never work.

And we all know the left isn’t any good at telling people that they can’t have their unlimited free cheese.

 
Comment by oxide
2017-11-14 06:04:32

private health insurance no longer exists in this country.

Where are you getting this? Most of the country is insured through private insurance through their employer. I thought Obamacare was a hybrid insurance company for people who didn’t have private insurance or Medicare.

 
Comment by SFMF
2017-11-14 08:00:23

So 11 weeks wait for an MRI is OK with you? Like I said, just take an aspirin and you’ll be fine.

Oh a NY “analysis”? Well that settles it. LOL.

And yes we are not private, that is my point. Obamacare has succeeded in making the left’s wet dream come true. Govt run health care.

 
Comment by OneAgainstMany
2017-11-14 17:13:06

So 11 weeks wait for an MRI is OK with you?

Having worked in an ER, I can tell you that there are plenty of people who are using emergent care when they should be seeing a general practitioner. Sometimes waiting is the right decision. In Canada, a truly emergent situation requiring imaging (CT, MRI, ultrasound, ECHO, x-ray, etc.) will receive it in the same speed as the US. Elective procedures and non-emergent procedures, on the other hand, not so much.

Myth #4: Canada has long wait times because it has a single-payer system.

The wait times that Canada might experience are not caused by its being a single-payer system.

Wait times aren’t like cancer. We know what causes wait times; we know how to fix them. Spend more money.

Our single-payer system, which is called Medicare (see above), manages not to have the “wait times” issue that Canada’s does. There must, therefore, be some other reason for the wait times. There is, of course.
In 1966, Canada implemented a single-payer health care system, which is also known as Medicare. Since then, as a country, Canadians have made a conscious decision to hold down costs. One of the ways they do that is by limiting supply, mostly for elective things, which can create wait times. Their outcomes are otherwise comparable to ours.

Please understand, the wait times could be overcome. Canadians could spend more. They don’t want to. We can choose to dislike wait times in principle, but they are a byproduct of Canada’s choice to be fiscally conservative.

Yes, they chose this. In a rational world, those who are concerned about health care costs and what they mean to the economy might respect that course of action. But instead, they attack the system.

https://www.aarp.org/politics-society/government-elections/info-03-2012/myths-canada-health-care.html

 
 
Comment by Taxpayers
2017-11-13 18:59:53

Things seemed slope in white van land (home depot)

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Comment by In Colorado
2017-11-13 08:49:58

‘They’re basically filling downtown with luxury apartments,’ he says. ‘There’s only so many people who can pay those rents.’

Expect to hear this more and more, especially after the high end rental markets across the country implode when all the units are finished and no one rents them.

Comment by Apartment 401
2017-11-13 09:12:34

Denver = CRATER.

Berg Electric works on Sundays in downtown Denver. I saw some guys in Berg vests downtown yesterday and asked them how much overtime they’re working, 10 hour days, up to 70 hours a week.

Comment by Ben Jones
2017-11-13 09:18:32

I flew in and out of DFW this past week. The amount of housing construction is phenomenal. I over heard this guy talking about bringing in dozens of pieces of heavy equipment and hiring 160 people in a month. Here’s the thing: when that unwinds the people who were flush will pull back. And that’s how recessions start.

Another note: flying into what they call the mid-cities I was struck by how much empty land there is within eye sight of the Dallas CBD. From the ground it may look dense, but not from the air.

Comment by Mafia Blocks
2017-11-13 10:05:05

“Here’s the thing: when that unwinds the people who were flush will pull back.”

The unwind is a huge boomerang and the domino trail is miles long in the construction biz. The effect is wide and deep. The bums, know-nothings and crooks that appear at the bottom of the food chain(housing) during the run up start bidding real work when when housing construction dries up. It has real added benefits and creates nightmares depending on which party you are. Good for owners because bid prices fall by 50%+. Not good for established professional contracting firms. A nightmare for Eng and Arc’s whose job it is to vet qualifications. And that’s just the beginning.

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Comment by Ben Jones
2017-11-13 10:17:35

When I moved to Sedona all the construction guys had fat wallets and could hardly take a day off. By 2007 they were broke and gone. I can’t remember one of them that saved a meaningful amount of what they earned.

 
Comment by oxide
2017-11-13 11:10:17

bid prices fall by 50%…

It’s a bad time to be an Eng and Arc. They need to build quality product, while the bean counters are nudging them toward the cheaper bums and know-nothings. That’s one reason I wanted an older (cold-war era) house. Closer in, better built (maybe), and no HOA.

By the way Maf, what sort of prices are these bums and crooks bidding at? $50/sq ft, perhaps?

 
Comment by Mafia Blocks
2017-11-13 11:32:53

DebtDonkey

Austin, TX Housing Prices Crater 7% YOY

https://www.movoto.com/austin-tx/market-trends/

 
 
Comment by BlackSwandive
2017-11-13 22:24:06

“The amount of housing construction is phenomenal.”

The same thing’s going on everywhere. I drove through little old Bend, Oregon the other day and they’re building like crazy, and bubble prices are back. It’s shocking what a crappy house $300k buys.

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Comment by In Colorado
2017-11-13 09:25:52

Berg Electric works on Sundays in downtown Denver.

It’s mind boggling how they can’t see the imminent train wreck that is coming. Whoever is financing all this over construction is going to be in a world of hurt soon.

I hope those electricians are salting away their overtime pay, because they’re going to have a lot of spare time soon.

Comment by Apartment 401
2017-11-13 10:43:56

Look at all this dirt at the 9th Avenue and Colorado Blvd jobsite:

http://www.picpaste.com/20171113_094945.jpg

We are close to finishing the first of three 9 story “luxury” apartment buildings here. The site will also include an office and hotel.

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Comment by jeff
2017-11-13 20:04:20

Make hay while the sun shines.

I have heard that the High Dollar project Monkeys in SE Region IV have said the economy will cook through the mid terms and then all bets are off.

 
 
Comment by Grant
2017-11-14 07:18:34

Berg is there doing electric for all the new apartments no one is going to rent? Have rents in Denver started to fall yet?

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Comment by redmondjp
2017-11-13 11:55:03

I’ve seen this time and time again: in boom times, the skilled tradesmen blow their wad on $75K brodozers, ski boats, and all the toys, thinking that the good times will never end, and not saving a penny.

You’d think they would learn (esp. those who have been through the cycle before, like veteran oilfield workers), but no . . .

More money won’t fix bad financial habits. And even family and friends of mine don’t seem to ever learn either. How do you help people who refuse to change their ways?

Comment by BearCat
2017-11-13 12:05:10

Not just trades, I’ve heard salesdudes are the same: when times are great, they think they’ll last forever….
and I think we can put most UHS and such into this category, too

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Comment by BlueSkye ⚓
2017-11-14 07:37:10

I spent my bubble money on things that would reduce my cost of living.

 
 
Comment by S-Crow
2017-11-13 12:15:53

Yup. I’m seeing it again. Especially the young contractors who were just entering the workforce over the last 7-10 yrs have no market experience. New cars and toys are once again littering driveways.

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Comment by junior_kai
2017-11-13 17:23:50

I said the same thing on this blog a few months ago. Lots of hammer swinging bro-brahs riding around in giant new trucks. Seen this movie before, does not end well.

Last downturn I happened to be buying a car that was a repo with my credit union. I was at the dealer my CU used when a bro-brah came in saying he needed to downsize, couldnt afford his ginormous truck. The dealer swindlers were all too happy to roll that loan into another truck. Dude will get out from under that around probably 2035.

 
Comment by goedeck
2017-11-13 21:29:36

4 X 4 highchairs

 
 
Comment by rms
2017-11-13 13:46:12

“You’d think they would learn…”

Haha… these are the guys who spread their seed far and wide.

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Comment by drumminj
2017-11-13 19:47:37

blow their wad on $75K brodozers

What exactly is a ‘brodozer’???

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Comment by BlackSwandive
2017-11-13 22:27:26

A jacked up truck with huge tires, etc.

 
Comment by rms
2017-11-13 23:13:10

“What exactly is a ‘brodozer’???”

2017 Toyota Tundra Limited, Supercharger 550 hp - $55,000
https://denver.craigslist.org/cto/d/2017-toyota-tundra-limited/6353307224.html

 
Comment by oxide
2017-11-14 06:08:10

I had to look it up too. Check Google images. It’s basically a monster truck used to bulldoze the competition.

 
Comment by jeff
2017-11-14 09:25:21

“What exactly is a ‘brodozer’???”

Somebody recently (I think goon) posted a “used” Toyota 4×4 pickup with an asking price that was scaring $100k.

 
 
 
 
Comment by octal77
2017-11-13 13:04:47

“…‘There’s only so many people who can pay those rents.’…”

And just because someone has the means to afford those sky high “luxury” rents, does it mean that they *will* pay those rents.

I know many folks who are working 60-70 hour weeks who care less about all that “luxury” because they don’t have the time to take advantage of it.

Kinda like paying for 1000 channels of TV but only watching 15 minutes of the local news.

 
 
Comment by Senior Housing Analyst
2017-11-13 09:15:58

Littleton, CO Housing Prices Crater 9% YOY

https://www.movoto.com/littleton-co/market-trends/

 
Comment by Professor 🐻
2017-11-13 09:33:36

“A report last month by real estate research firm Delta Associates indicated that D.C. rental prices dropped for the second consecutive quarter, following a rare drop in rents in the previous period. These drops were only the third decrease in rents since 2010.”

Is it safe to assume that the owner-occupied segment of DC housing is decoupled from the cratering rental segment?

“Nearly all new rental housing in almost all cities is typically, and historically, higher-priced housing. The availability of new ‘luxury’ apartments, however, serves to reduce the pressure on existing housing, including less expensive units. This benefits the mainstream market overall and allows for a broader range of rental price points.”

Of course not.

Comment by 2banana
2017-11-13 09:46:28

“Rare” is now the new “unexpected!”

 
 
Comment by BearCat
2017-11-13 09:52:43

Since we’re talking supply and demand, there’s one important point these recent articles (including the Silycon Valley ones) don’t discuss:

How much demand is speculative? (and thus could go away in a heart beat)
How much demand is organic? (and thus will always be there)

I suspect if SV housing prices just level off (not even fall), demand is going to fall. Maybe not, maybe enough people will “buy the dip”.

Comment by Professor Bear
2017-11-13 10:50:48

“I suspect if SV housing prices just level off (not even fall), demand is going to fall.”

And this, in turn, is why the PTB will try hard to keep real estate prices going up.

 
 
Comment by SFMF
2017-11-13 10:12:24

I know the MSM treats DTLA like the hottest coolest hippest place to be. But realistically, do people really want to live there? Is anyone leaving Santa Monica for DTLA? I’m guessing no.

Comment by Mafia Blocks
2017-11-13 10:23:59

Given how impoverished CA is, can anyone afford to go anywhere?

Comment by da bear
2017-11-13 21:26:53

So Mexico IS gonna pay for the wall?

 
 
Comment by Rental Watch
2017-11-13 10:56:36

It’s all a question of “depth of market”.

Can you find 1 guy to rent luxury a studio apartment in DTLA for $5k per month?

Sure.

How about 10?

Probably.

How about 10,000? Whadda ya think?

Not a chance in hell.

The best deals are ones where there is strong demand and limited supply. In those cases, you never need to worry about the question of depth of demand, which IMHO is the hardest question to answer when underwriting a new development.

 
Comment by rms
2017-11-13 13:53:15

I just spent a week in San Jose, CA.

The homeless with shopping carts full of wet blankets and lice are wandering pretty deep into the suburbs far from downtown.

Comment by Carl Morris
2017-11-13 15:08:44

What part of town were you in? I’m usually up on the north side close to Milpitas, but I did go downtown for a nice dinner over the weekend. I usually don’t see much homeless unless I am near the airport.

Comment by rms
2017-11-13 18:27:42

“What part of town were you in?”

Willow Glen area, southwest of downtown. The homeless are all over Lincoln avenue past Curtner Ave these days. I saw ‘em out past Capitol Expwy along Monterey Hwy along the railroad tracks too. Trash everywhere along the Guadalupe Creek where the new “Google town” is supposed to spring-up.

I like to visit Just Breakfast on Monterey Hwy and Kirk’s Burgers on Bascom Ave by Dry Creek when I’m in the area. I’m looking for a different job as budgets continue to tighten, but not in San Jose… too crowded and expensive. Fingers crossed!

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Comment by Carl Morris
2017-11-13 19:07:31

Oh OK, yeah. I generally never go south of 280 unless headed straight to Santa Cruz or Monterey.

Same here on the job thing. I’m moving forward with the Folsom plan.

 
Comment by drumminj
2017-11-13 19:50:40

I’m moving forward with the Folsom plan.

Good luck! Keep us informed here as things progress

 
Comment by OneAgainstMany
2017-11-13 20:04:42

Massive homeless problem in Salt Lake City. City leaders have finally gotten their arms around it, but its dissipated into the suburbs.

 
Comment by drumminj
2017-11-13 20:07:54

Massive homeless problem in Salt Lake City

Same with Seattle. The tents keep multiplying at I-90/I-5 flyovers.

Given the weather here this time of year, I don’t understand why folks wouldn’t seek a better climate to live outdoors, but there’s certainly a growing issue in the area.

 
Comment by scdave
2017-11-14 10:03:57

Massive homeless problem in Salt Lake City ??

Same with Seattle ??

Yes but some here want to make it a unique problem to California particularly high cost housing area’s…Makes them feel good to dump there internal strife….With a few, the “envy” just oozes out of their pores…

 
 
 
 
 
Comment by SFMF
 
Comment by Senior Housing Analyst
2017-11-13 12:47:13

San Marino, CA Housing Prices Crater 13% YOY

https://www.movoto.com/san-marino-ca/market-trends/

 
Comment by frankie
2017-11-13 13:27:39

More than a third of home owners trying to sell their house have been forced to reduce their asking price, with the number of price cuts at their highest level since 2012, according to Rightmove.

Traditionally house sellers are often forced to cut asking prices in the pre-Christmas period but this year the nation appears to be holding a collective autumn sale, said the property website.

Rightmove, which claims to list 90% of the houses being sold in the UK, said 37% of current sellers had dropped their asking price, with a typical 0.8% or £2,392 price reduction. It also warned that those who recently put their property on the market were being too optimistic by not discounting

by more.

https://www.theguardian.com/money/2017/nov/13/more-than-third-of-uk-home-sellers-cut-asking-price-rightmove-property-market-interest-rates

A tiny step in the right direction. Lets hope the point moves left, 8% would be nice but still not enough.

 
Comment by Senior Housing Analyst
2017-11-13 14:10:25

“Gas Prices High Now, But Expected To Drop Below $2 By Christmas”

http://wpde.com/news/local/aaa-spokeswoman-gas-prices-expected-to-drop-below-2-by-christmas

Comment by oxide
2017-11-14 06:13:40

Thank you HA for an informative article. Jan Feb is a good time to take road trips, as long as there isn’t snow. Museums etc are nearly empty, as are the roads.

 
Comment by In Colorado
2017-11-14 08:05:34

Weren’t they supposed to be below $2 by now?

 
 
Comment by Karen
2017-11-13 14:36:01

My favorite of today’s articles is the Washington Blade one Ben posted:

“This decline in average rents was the result of a record number of new apartments hitting the market in the past year, totaling more than 11,000 units… Rental prices were anticipated to plateau in the areas with the largest supply of new units…Instead, rents dropped in the more established neighborhoods of northwest D.C.”

“Nearly all new rental housing in almost all cities is typically, and historically, higher-priced housing. The availability of new ‘luxury’ apartments, however, serves to reduce the pressure on existing housing, including less expensive units. This benefits the mainstream market overall and allows for a broader range of rental price points.”

How many times have certain posters on this board insisted that this will not happen, that what’s being built is the wrong type of apartments (luxury) in the wrong places (CBD’s) and that excess in these units will not affect other apartment types and other areas of the same cities?

How does Madame Oxide prefer her crow to be served? We have many options here at Ben’s 24-Hour Crow Buffet.

Comment by Carl Morris
2017-11-13 15:16:40

I don’t remember what Oxide may have said. But barring the government rescuing the banks by somehow subsidizing luxury rentals to prevent their value from falling, it seems that the luxury rentals simply become the good upper middle class rentals while the lower end stuff gets abandoned to Section 8 and bulldozers.

It’s the circle of life.

I just have concerns that something Section-8-like will be used to prevent nature from taking its course.

 
Comment by Mafia Blocks
2017-11-13 15:38:51

Inventory is inventory. It’s all shelter, some with more garbage installed, some with less. In the end, it’s all square footage. “Luxury” is a distinction without a difference.

 
Comment by oxide
2017-11-14 06:20:38

In all my posts, I said that during the time I rented 1993-2012, I had never seen rents go down (for the same unit). I also added a caveat that this recent influx of inventory is new, and that falling rents are entirely possible.

I notice that the Blade article says that the new inventory “serves to reduce the pressure” on Grade B and Grade B+, but cites NO examples of rents dropping for those lower grades. The author editorializes instead of reports.

Also note that the Blade is reporting only on complexes inside the DC city limits. I haven’t been keeping track of the rents in the burbs, where the Grade B and B+ are.

But keep the crow warm. This isn’t over yet.

Comment by BearCat
2017-11-14 09:54:07

And during that time period I had my rent drop 30%

 
 
 
Comment by Senior Housing Analyst
Comment by da bear
2017-11-13 21:30:52

Times must be tough in Palm Beach County.
In the good old days a up and comer coulda swindled $3 million — easy.

da bear

When the going gets odd, the odds get better.

Comment by jeff
2017-11-14 10:08:58

“Times must be tough in Palm Beach County.”

Realtor Rosa Martinez from Boynton Beach?

It’s safe to say poor old Rosa isn’t dealing with Tiger Woods or Celine Dionne’s neighbors who are purchasing homes on Jupiter Island.

Her crimes are budgeted to someone who would trust a Realtor named Rosa Martinez in Boynton Beach who may or may not be a citizen of the United States and probably much more vulnerable and much less likely to report a scam.

 
 
 
Comment by azdude
2017-11-13 17:52:11

assets r your meal ticket. quit your job and just invest fulltime. let the folks overseas do the real work.

Comment by BlueSkye ⚓
2017-11-14 08:01:06

Still living in the mania Poet.

 
 
Comment by Larry Littlefield
2017-11-14 04:15:32

Rents are like housing prices were a decade ago. They may have edged down a little, but it’s a long way down to merely high in the big booming urban areas. And those high rents are still choking young people and limiting the growth of the economy.

Comment by Karen
2017-11-14 14:36:55

This thing is just getting started. Give it a minute.

 
 
Comment by azdude
2017-11-14 06:44:59

why does the FED keep saying there is no inflation?

Well u heard it here first.

If there was inflation bond holders would want a higher yield on treasuries. This would send bond prices cratering. Thus the whole house of cards would take a nosedive.

so when everything around you is going up in dollars thank your fed masters.

 
Comment by azdude
2017-11-14 07:11:10

is this another engineered market decline to suck some more short sellers in and then goose the market and get them to sell at a loss?

Been happening over and over for almost 10 years now.

 
Comment by Senior Housing Analyst
2017-11-14 08:32:03

Denver, CO 80202 Rental Rates Crater 14% YOY

https://www.zillow.com/denver-co-80202/home-values/

 
Comment by jeff
2017-11-14 09:27:26

1960 $32k

2017 $1.1 million

Comment by rms
2017-11-14 11:13:33

In 1960, $32k was a big house in a really nice neighborhood.

Comment by Rental Watch
2017-11-14 15:14:00

In 1946, $26k bought a house on a quarter acre in Palo Alto (which was considered expensive at the time).

That same quarter acre will fetch $3MM+ today…more if the house is already scraped.

Comment by jeff
2017-11-14 20:55:10

Historical Census of Housing Tables
Home Values

https://www.census.gov/hhes/www/housing/census/historic/values.html

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