The Rapid Boom Has Begun To Create A Housing Glut
A report from Real Estate Weekly on New York. “A glut of rentals has New York’s landlords offering deep discounts this holiday season. And although landlords’ use of incentives skyrocketed, they could not hold down the Manhattan vacancy rate where inventory rose to the highest level in over eights years. ‘While historically concessions increase as we enter winter, we haven’t seen them this prevalent since the depths of the Great Recession,’ said Gary Malin, president of Citi Habitats. ‘While there is still demand, the market remains price-sensitive. Even with these incentives, Manhattan’s vacancy rate is the highest it’s been in over eight years.’”
From Bisnow on Pennsylvania. “The panelists looking ahead at Bisnow’s 2018 Philadelphia Forecast event covered a diverse range of topics…though some are resistant to using the term ‘oversupply’ to describe the ongoing influx of apartments in Philadelphia. A common refrain among the capital markets crowd is that a deep pool of investors sits ready to deploy capital, but there are not enough deals to be done. That has contributed to the debt market seeing a host of new entrants.”
“According to RAIT Financial Trust Senior Managing Director Gregory Marks, that should be cause for concern. ‘There are way too many capital sources in the market,’ Marks said. ‘As the most cynical lender up here, I liken this to the end of 2006 where a lot of groups saw the returns being realized by debt funds and the CMBS market. There were a lot of new entries, and many of those aren’t around today.’”
“Some of that concern is due to the increase in debt funds over the last few years from players that wish to capitalize on the hot market. Life companies with similarly deep pockets are also putting pressure on banks and other established debt sources. ‘We’re competing against players that we have no business competing against, like life companies blowing us out of the water with rates we can’t match,’ Marks said.”
From the Daily Reflector in North Carolina. “The Greenville housing market is over-saturated with student housing and lacking a healthy supply of market-rate housing, according to a consultant hired by the city, who said the situation is projected to continue getting worse. According to the presentation, Greenville has just over 11,000 units (bedrooms) targeted for student in the housing market. The aggregate vacancy rate at these student-targeted communities is 11.6 percent. Communities located further than three miles from East Carolina University or Pitt Community College campuses — about one-third of the units — had a vacancy rate of 18.7 percent.”
“Jessica Rossi, a planner with Kimberly-Horne, said the rates of vacancy are expected to increase as new apartment properties open their doors. According to her report, there are an additional 1,930 bedrooms under construction in Greenville, and another 656 have been proposed. ‘The question that will be interesting to see after the lease-up for the start of the 2018 school year, when three of the four under construction communities will come online, is how many people gravitate to those communities leaving some of the more distant communities at even higher vacancy rates,’ she said.”
From Multi-Housing News on Texas. “Austin’s multifamily market shifted down a gear in 2017, due to 2016’s strong wave of supply. As a result, rents contracted. Continued construction pushed the occupancy rate to 94.6 percent as of September, down 70 basis points in 12 months. This figure is likely to keep falling in the short term, while the metro absorbs the new stock.”
“Transaction activity continued to decelerate in the second half of 2017, with $961 million in apartments trading in the first 10 months of the year, half of last 2016’s volume. Nearly 3,700 units were delivered this year through October, a third of last year’s new stock, but almost 17,000 units were still under construction as of October.”
Northern Nevada Business Weekly. “Reno ranked 8th in the nation for apartment concession-related deals, according to Zumper. In cities across the country, the rapid new apartment construction boom of the past five years has begun to create a housing glut. Landlords, faced with higher vacancy rates, are now looking to attract new tenants any way they can – many times through flexible lease terms, offers of free rent, and other concessions.”
“Listings and buildings offering deals such as free rent, reduced security deposits, gift cards, Netflix/cable subscriptions, and even Uber credit were considered. That was weighed next to the total percentage of ‘concession listings’ relative to the total amount of inventory in each city. Reno had a percentage of 3.08 of concession-related deals. By comparison, Winston-Salem, N.C. topped the list at 6.81 percent.”
From Inforum on North Dakota. “There is an epidemic in Fargo, especially in south Fargo, called ‘apartments.’ A lot of people I talk to agree we have too many. There are very few city blocks in the the south Fargo area that don’t have an apartment on them, and I bet that there is a plethora of vacancies. The last I checked, the vacancy rate was at 11 percent, but if you drive around town it appears that it is considerably higher. Well, it would make perfect sense that when a census of the developers is taken asking about vacancy rate that they are lying just to be able to build more empty buildings.”
“In addition, they are also granting these ridiculous tax breaks to developers to redevelop areas.”
From Bisnow on Illinois. “Last year was one for the record books in Chicago multifamily real estate. Apartment sales downtown and in the suburbs set records for volume. This year, downtown multifamily struggled with new inventory resulting in flat rent growth, declining lease retention rates and developers of newer assets struggling to find buyers. KIG managing partner Todd Stofflet said the plateauing of downtown multifamily is related to the flood of new deliveries this year. KIG estimates over 2,800 downtown apartments brought to market in 2017 have not been able to go under contract.”
“KIG Senior Director Jason Stevens said institutional money is chasing opportunities near highly rated schools, lifestyle centers and grocers. Foxford Communities Managing Director John McFarland said Foxford Station was originally intended to be a 52-unit apartment project during the entitlement process, but the company decided to build larger condos after seeing the flood of new apartments being built.”
This is a press release:
‘The Bascom Group, LLC (”Bascom”) has acquired Boulder View Apartments (”Boulder View”), a 68-unit infill class “A” apartment community located in the vibrant city of Boulder, Colorado. The $18.97 Million acquisition ($278,985/unit) closed on December 19, 2017.’
‘Scott McClave, Senior Principal of Bascom, comments, “Boulder View was a rare opportunity to acquire a core-plus asset from a private seller in an extremely tight market. The quality of the asset, proximity to employment, and market fundamentals were extremely attractive to us. Our purchase price represented a significant discount to replacement cost and recent sales comparables in the Boulder market.”
‘About Bascom: The Bascom Group, LLC is a private equity firm specializing in value-added multifamily, commercial, and non-performing loans and real estate related investments and operating companies. Bascom sources value-added and distressed properties including many through foreclosure, bankruptcy, or short sales and repositions them by adding extensive capital improvements, improving revenue, and reducing expenses by realizing operational efficiencies through implementation of institutional-quality property management.’
‘Our purchase price represented a significant discount to replacement cost and recent sales comparables in the Boulder market’
Not that long ago we were reading about new apartments going for twice their construction costs. From the link:
‘Built in 2014, Boulder View is located just minutes from downtown Boulder and surrounding recreational areas’
$279k per door seems a bit rich, no?
It is, but in the past few years I’ve posted reports of $400-500-600k for even 20 year old apartments in Colorado.
Did somebody say CRATER?
And who is gonna pay the overpriced rents for the “luxury” apartments I’m building now?
Do you have your next career move planned? Because at some point the music will stop and the construction jobs will vanish.
He’s an electrician, not some laborer. There will always be work for journeymen.
My understanding is that there’s a rich uncle in the mix somewhere, and that soon el Goono won’t need to work, at least not full-time. Maybe he’ll move, since the Front Range is SO OVER.
Math time!
$278,985/unit. Let’s say each unit rents on average for $2,000/month.
That is $24,000 per year per unit (gross).
Subtract taxes, upkeep, insurance, administration costs, etc.
That is maybe $12,000 net. Maybe.
So only 23 years to BREAK EVEN…AT ZERO INTEREST RATES.
Maybe they can sell them for condos at $250K and make up the rest through HOA fees.
The expenses for new construction should be much lower than the 50% implied expense rate in your 12k net. At a 35% expense ratio this pencils out at around a 5.25% to 5.5% cap rate.
Not to mention 2k/mo is way too low for luxury apartments in Boulder anyway. 2k is what a lux apartment costs in a 2nd rate city in Memphis or Cincinnati. Even in Baltimore they run more than 2k.
Also — big operators know how to work the tax situations to their advantage. They’re not like some to random person with a straight forward tax situation.
Liberace!
‘Landlords still offering freebies to lure renters to Brooklyn’s emerging neighborhoods. Practice is especially common in Gowanus, according to data from Miller Samuel.’
‘Even in Brooklyn’s up-and-coming neighborhoods, concessions are king.’
‘At the request of The Real Deal, appraisal firm Miller Samuel crunched the numbers in seven rising sections of the borough — Crown Heights, Bushwick, Bedford-Stuyvesant, Prospect-Lefferts Gardens, Gowanus, Flatbush and Greenpoint — and found that developers and landlords in six of the neighborhoods still leaned heavily on concessions to rope in prospective renters.’
‘Gowanus had by far the highest percentage of new rentals with concessions during the third quarter of the year at 65.22 percent, up from 57.41 percent in the third quarter of last year, according to the data. Despite its year-over-year decline, Prospect-Lefferts Gardens was still in second at 26.19 percent, followed by Crown Heights at 25.37 percent and Bed-Stuy at 17.69 percent.’
‘Scott Avram, senior vice president of development at Lightstone, said the percentage of concessions was higher in Gowanus than in other parts of Brooklyn because the rental market is still so new and dominated by 365 and 363 Bond.’
“There’s no other neighborhood in the city that I can think of that has the same traditional product and all of a sudden got an influx of new development all at once in the same location,” he said. “Gowanus is small. It’s a small neighborhood, so when you add 700 units at once, it makes a big difference.”
‘David Maundrell, executive vice president of new development for Brooklyn and Queens at Citi Habitats, said he has seen some landlords offer three months of free rent to tenants as well, although these generally only occur when the leases are for two years or longer.’
“The strategy there is not to just get people in the door of these apartments but have them stick around a little bit longer,” he said.’
‘Although hearing the phrase “two months of free rent” would initially sound appealing to almost any tenant, Maundrell said at this point many of them have figured out the problem Miller outlined and would strongly prefer a lower base rent.’
“People are barley scraping by,” he said, “so what the general public has caught onto is saying, ‘OK, so I come in, you’re going to give me two to three months free, but what happens next year?’”
‘OK, so I come in, you’re going to give me two to three months free, but what happens next year?’”
____
Simple. You got to the landlord and say I’d like another free 2 months this year or I move to the place down the street that will offer me that. This isn’t rocket science.
Works the same way with cable/satelitte. They all over YUUGE discounts the first year. Then when they year is up, the price is hiked up 50%. So as a consumer you call up Comcast or AT&T or whatever, and say, I’d like the cheap price for another year or I’m leaving for the other guy. And 90% of the time, you’ll get the discount for the next year.
Except that with internet there’s oftentimes only one provider available in the local market, so no…
Usually both the cable TV company and the phone company offer Internet service. In some locales there is also wireless microwave based service (see Rise Broadbrand).
There are a surprising amount of the 25 largest cities in the US that have only 1 residential broadband provider for to the structure of bidding and the age of the conduit they’re working with. Baltimore is one example: Comcast is the only option (Verizon FiOS is available in the county, not the city).
If there are cities of 500k+ with only 1 provider, there must be many thousands of small towns as well.
“OK, so I come in, you’re going to give me two to three months free, but what happens next year?’”
It’s good to be a banker …
“OK, so I come in, you’re going to give me two to three years of a low, adjustable, interest rate, but what happens the following years?’”
Washington, DC 20037 Rental Rates Plummet 14% YOY As Housing Prices Crater
https://www.zillow.com/washington-dc-20037/home-values/
“Emerging neighborhoods” is that like an emerging market? i.e. third-world trash heaps and sneakers hanging on every electrical line?
Have apartments ever not had concessions though? Back when I was living in apartments in the early 2000s, every complex had some incentives. Usually a free month. Some had 2 months, if an 18 month lease was signed. That was pretty much expected.
So the fact 15 years later complexes are giving away 1-2 months free doesn’t really mean much. It’s like buying a car. Nobody pays MSRP. A discount is expected. Same with renting an apartment. The MSRP is the advertized rental price, the actual price paid is significantly less.
‘Have apartments ever not had concessions’
We’ve only been over that 20 or 30 times.
I must have missed it then.
Yes, you missed it.
I’m a renter. There are always concessions. I’ve never known a time when there weren’t.
If you’re going to rent, always sign leases in November. That’s when you get both concessions and rental decreases.
‘I’m a renter. There are always concessions.’
I’m a landlord and I can rent an apartment the same day it’s vacant. I’m lucky that no new apartments have been built in the sub-market where I manage. In the past few months I had two units come available. Both times I had people calling me when the movers were still working. No ads, from drive bys.
That’s the exception today, though. It’s these big metros that saw the multi-decade explosion of construction. 72 year high in San Francisco, 60 year high in Boston.
But I’m not going to dig around yet again for the articles about 4 deep waiting lists for apartments and renters waiving hundreds of dollars around at apartment open houses. I posted it over and over again in 2014-2015. Yes, even bidding wars for apartments, we saw that too.
So we’re just back to normal then. Which is my point.
No, it’s not normal:
‘Continued construction pushed the occupancy rate to 94.6 percent as of September, down 70 basis points in 12 months…Transaction activity continued to decelerate in the second half of 2017, with $961 million in apartments trading in the first 10 months of the year, half of last 2016’s volume. Nearly 3,700 units were delivered this year through October, a third of last year’s new stock, but almost 17,000 units were still under construction as of October’
These past transactions are at levels that spell almost certain default given what’s in the pipeline. 300k for a rental airbox? And I posted numerous reports of way more than that in past years. Anyone remember the $1 million per door rentals in NYC? Not a house, an apartment. See, they were betting on appreciation, which is classic insanity when you are talking about apartments. That’s what lead me into following this in 2014.
Your entire premise is that 1-2 month concessions means we’re in some kind of oversupply frenzy. You may be correct that in 2014 there were no concessions. I have no clue, I wasn’t looking for apartments then. But I’ll take your word for it. In the early 2000s there were also 1-2 month concessions.
So all that’s happened in 2017 is we’ve gone back to the normalcy of pre-2014. Or put another way, in 2014 the supply was low, builders built and now supply is back to normal.
As for $1M apartments in NYC, since when is that expensive?
So we’re just back to normal…
Consider the possibility that you have no idea what is coming.
“Consider the possibility that you have no idea what is coming.”
Yeah, and who is this SFMF character who recently showed up on the blog as one of the most prolific posters, appearing as a housing shill and challenging Ben?
The concessions I have taken advantage of have always been seasonal.
I am in flyover, in snow country. People up north do not enjoy moving when it’s 30 degrees, for obvious reasons. Hence, concessions and rate reductions from Halloween until March. Especially between Halloween and New Years.
Yeah, and who is this SFMF character who recently showed up on the blog as one of the most prolific posters, appearing as a housing shill and challenging Ben?
I seem to recall another poster poster who would sing the praises of always leasing expensive cars vs. buying and driving them into the ground.
Is the real estate double bubble back?
‘Average U.S. commercial real estate prices are now far over their 2007 bubble peak, about 22 percent higher than they were in the excesses of a decade ago, just before their last big crash. In inflation-adjusted terms, they are also well over their bubble peak, by about 6 percent.’
‘In the wake of the bubble, the Federal Reserve set out to create renewed asset-price inflation. It certainly succeeded with commercial real estate – a sector often at the center of financial booms and busts.’
‘Commercial real estate prices dropped like a rock after 2007, far more than did house prices, falling on average 40 percent to their trough in 2010. Since then, the asset price inflation has been dramatic: up more than 100 percent from the bottom. In inflation-adjusted terms, they are up 83 percent.’
Look normal?
“Look normal?”
Enormous bubble.
Let’s see, there’s going to be about 3 fed rate hikes this year as the economy returns to normal. so, interest rates will rise a bit to take the foam off the top. If there is nothing but foam below that (everybody was betting on appreciation) then there should be a correction back to historical rates of return - i.e. properties will sell for what they can get as a reasonable return on income.
Commercial real estate is a huge counter-weight to all the pensions, annuities, etc., so the fed to the rescue… especially at the onset of the boomer retirement wave.
Denver, CO 80202 Rental Rates Crater 13% YOY
https://www.zillow.com/denver-co-80202/home-values/
And don’t forget to select price from dropdown menu on rental chart
Denver has a serious homeless problem.
I was downtown today and some junkie was hassling a yuppie parked in front of me for some cash as I was getting in my car, and this crackhead starts tapping on my window as I start my car. I told him GTFO through the glass as I drove off. First time this has happened to me in Denver, actually touching my car.
I used to have a hat I bought in Los Angleles that says “DON’T ASK ME 4 SHIT” but sadly I lost it somewhere
“…and this crackhead starts tapping on my window as I start my car…”
That would piss me right off. Don’t touch my sheet.
1,000,000,000 volt zapper is 20$ on ebay
Twice recently in Las Vegas, I have been in retail establishments (one was a Starbucks, one was a sub shop) and someone came in and brazenly started pan- handling right there in the seating/dining area.
In Baltimore we have a prolific squeegee kid issue. Just tell the panhandlers (and squeegee’ers - they’re aggressive like your panhandlers) that you’ve got no cash. Those are the magic words - “got no cash”. These folks are out there for a single reason - to get cash. So they look for people they think a) have cash and b) will give it to them. If you break that chain anywhere, they’ll move on. They’re not out there for their health - that’s not the point of the enterprise.
Their selection algorithm is interesting. They select white folks, Asians or wealthy black folks who don’t look like they live in the city. Once I was behind a luxury sedan with blacked out windows (drug dealer) - they didn’t even give it a glance as soon as they saw me. I cracked my windows, told them I “got no cash” and they moved on.
brazenly started pan- handling right there in the seating/dining area.
Or they will make a ruckus. They know the manager will give him some food just to get the guy out of there. Oh well, at least the guy is only getting food and not money for more drugs.
Mountain View, CA Rental Rates Plunge 8% YOY On Skyrocketing Housing Inventory
https://www.zillow.com/mountain-view-ca/home-values/
*Select price from dropdown menu on rental chart
Zillow says 9% increase next yr
It’s a lock
I remember these articles in 2006
“Many analysts have called for a plateau in the upcoming years…”
BAHAHAHAHAHAHAHAHAHAHA!!!!
+++++
“I’m Truly Starting To Fear The Worst For The US Car Industry…”
ZeroHedge - Dec 22, 2017
Automotive credit has become easier in the last few years, and manufacturers are still seeking whatever growth they can come up with in our market at any cost.
People are buying cars they can’t afford or shouldn’t even have been able to buy. Used car depreciation is at an all time high for many cars and yet everyday more and more people are trading them in.
On the other end, every time I look up from my desk there is a customer who is absolutely drowned in their vehicle. Six thousand dollars in negative equity is the norm, but I’ve witnessed numbers as high as twenty thousand in the last year. Customers are always astounded by how their car has lost so much of its value so quickly. What they fail to realise is their car was worthless from the beginning. Rebates and incentives are at an all time high at many manufacturers, J.D. Power quoted an average around four thousand dollars earlier this year, and I’m sure that number has risen since then. The problem with high rebate numbers is it absolutely kills the resale value of a car.
It was supposed to be a smooth way of marketing large incentives without spooking everyone, but really it was a free-for-all that led to trade in values dipping leading into the opening years of the recession.
When you have consumers packing on massive amounts of negative equity, and taking on payments and debt they should be never be allowed to, it leads us to a dark end. Many analysts have called for a plateau in the upcoming years, but you’d be hard pressed to see the market maintain under this pressure. You’re going to see more new cars being repossessed, and more consumers being turned away from new cars because they can’t afford the payments.
That’s why I lease. Get the 0% interest rate, plus no surprises, no hassles after 3 years. And a lot of times there are more rebates for leasing than financing.
Now I get why leasing gets a bad rep. The majority of people don’t understand how it works and they get clobbered. They put down payments on a lease, for example which is idiotic. But for someone like me who understands how a lease is structured, it’s never been a better time to lease.
Pay a ridiculously low monthly payment, always drive a new car, always under warranty. Never have to buy new tires or brakes or any repairs. Then in 3 years, hand the keys back and start over again.
I ran the lease treadmill many years ago. Yeah, it was nice always having a newer car, but always having payments wasn’t so nice, even when they we a little lower.
FWIW, I can buy a lot of tires, batteries and brake jobs with what I save on not having a monthly payment. And yeah, at some point the car will wear out and become a repair money pit, but these days that doesn’t seem to happen until 150K-200K miles.
Having a low mileage car that is paid for: priceless.
Also, in many states registration fees really tumble after about 5 years.
In my state registration is the same for a brand new car or a 20 year old car. Only difference is weight, heavier = a little more expensive.
Maintenance is expensive for cars. Even a 3-5 year old car needs “stuff” and all cars, even the most reliable ones, have things go wrong. A good set of tires is $1000 that last 40K-50K or every 3 years. Front and rear brakes is $700. Any part of the A/C needs repair, you’re lucky if you’re out the door under $1000. Ever owned a German car? YIKES. You do not want to own one out of warranty. Ever. Never, ever. Ask me how I know
Is driving an older car cheaper than new? Of course. Is the extra cost worth not having the headaches? Definitely.
It all comes back to interest. If you can get a 0% loan/lease, why wold would you tie up $20K (or whatever you pay) in a car? Makes no sense. And your low mileage car is depreciating and costing you money. That’s all a lease is, paying the depreciation. Either pay it off as monthly cost or pay it off in a big chunk all at once. Youur $20K car will be $10K in a few years. Plus on leasess, sales tax is only paid on the value of the lease, not the value of the car.
But each to their own.
A good set of tires is $1000 that last 40K-50K or every 3 years. Front and rear brakes is $700.
I bought a set of Michelin Defenders. 90K warranty, for $800, installed. Brake jobs are usually well under $200 per axle, unless you need to replace the rotors.
Ever owned a German car? YIKES.
Agreed, they break a lot and are expensive to fix. But as consumer reports says: why have an unreliable car to begin with? For status? Because it handles better? Where can you drive it like that? On the freeway?
Having a never ending payment seems like a steep price to pay to not have to buy new tires or get a brake job every 4-5 years. But I get it, some people like to get a new set of wheels every 2-3 years. I used to do it.
I get fancy glossy flyers and emails from local dealerships, touting their deals. But my 5 year old car has been bulletproof so far and now that I work from home I’m only driving 3-4K miles per year. If I’m lucky (meaning I can continue working from home) I might be able to drive it well into retirement.
A quick looksie at the local BMW website shows that I could lease a 530i xDrive for about $600 a month ($3999 due at signing). Nice car, but I’ll pass.
sales tax is only paid on the value of the lease…
Which is perpetual, so not a nice feature.
Depreciation on a car is very front end loaded, so also not a good deal.
I’m near to replacing my 20 YO SUV. Drive train is great after >300,000 miles. Body not so great. This vehicle has only needed significant work done about once a year. Significant is $500. Not a pain. Good YUGE all season tires $750. 3 yrs yes. A decade without a car payment, priceless.
If one weren’t leasing, they could afford twice the car.
“Agreed, they break a lot and are expensive to fix. But as consumer reports says: why have an unreliable car to begin with? For status? Because it handles better? Where can you drive it like that? On the freeway?”
Seriously, consumer reports? LOL.
There are two types of drivers. Those who buy an appliance on wheels to got A to B. And those who buy a car to drive. We’re in opposite groups I suppose.
It’s not so much that they’re unreliable, it’s that they are over engineered. So when something small breaks, it costs an arm and a leg because you have to take 1/2 the car apart to get to the problem.
It’s also why you never want to buy a used German car unless it’s from the first owner. People will buy these cars used and have no idea the cost of maintenance/repairs and forgo the expensive maintenance.
Your 20 year old SUV also has 20 year technology. None of the safety features of newer cars. I want that stuff. And yes I know everyone here will scoff at it. But it’s pretty cool when the car brakes for you when cut off. Also lane assist, variable cruise control, etc.
“A quick looksie at the local BMW website shows that I could lease a 530i xDrive for about $600 a month ($3999 due at signing). Nice car, but I’ll pass.”
More like $450 a month with $0 down after some negotiating.
There are two types of drivers. Those who buy an appliance on wheels to got A to B. And those who buy a car to drive. We’re in opposite groups I suppose.
Where can you can your car like that? Unless you’re in Germany on the autobahn you’ll drive your sports sedan just like everyone else: in bumper to bumper traffic commuting to work. I’ve had the sporty cars, and I quickly learned that it was pointless.
It’s not so much that they’re unreliable, it’s that they are over engineered.
We made the mistake 10 years ago of buying a MINI. The thing didn’t even have 30K miles on it and everything began to break. A total piece of BMW junk. It held its value rather well so we traded it in for an Asian car, which has been bulletproof.
You don’t need the Autobahn to enjoy rail like handling or acceleration or a stiff suspension. Driving 2 miles to the grocery store can be fun in the right car. Like I said, two types of drivers…..
two types of drivers….
I let your type pass me at the earliest opportunity!
I expect if you rear ended me though, having so much fun, your car would be totaled and my only problem would be how to get your junk off my rear hitch.
Sounds like somebody has esteem issues and trying to fill the void by driving a cool car…
Most guys I see driving Beamers, Audis and other European imports:
1) Are old
2) Have slushboxes
3) Drive just like everyone else.
Plus, given the state of American roads I learned that those stiff suspensions get old after a while. Yeah, they’re fun at first, but while the novelty eventually wears off, the jarring ride stays.
The MINI was fun at first, it was a stick and had a “stiff suspension” and drove as if on rails. Once the novelty wore off it was just a chore to drive. It also didn’t do well at all on those grooved surfaces that are common on freeways, it would lurch suddenly with no warning. When it started to fall apart at 30K miles the decision to get rid of it was easy.
And then there’s the issue of your friendly neighborhood cop and his radar gun. They loooove to write citations.
I’m only driving 3-4K miles per year.
At some point, things start breaking down because of the age of the car, not just the mileage.
I had a super reliable Honda civic for my first car. I then sold it and leased a Hyundai Sonata hybrid. Both gave me no problems. When the lease was up, I turned it in. I have been carless for the past year and 1 month and ride my eBike everywhere. My wife has a pretty beat-up Honda Civic that has 120k miles on it that we share. All I have to say is that I save so much not leasing OR buying. I side step wheels, brakes, registration, taxes, depreciation, no monthly payment, etc. Of course, this is only possible because I set out to rent a place where I could walk to work (1 mile away from hospital) and we live in the only part of town centralized enough where I can get to everything within walking/riding distance.
You’re not really carless. You use you wife’s car or use her as delivery service. Wake me when you have to carry groceries in a crate on your bike in the snow and wind, every week, for years and years.
You are right, we do share a car (but that is only because I can’t convince my wife to get rid of her car!). But it’s her car and I rarely use it, maybe a handful of times a year.
As for snow, we don’t live in an area where it snows, which is why this works well. It was cold yesterday on my bike though and so you learn to do layers and a good skiing face mask makes wind bite less. I have a large pannier installed on the back of my eBike for groceries. This allows me to do several gallons of milk and maybe four or five bags of groceries. If I need more than that, I hook up my Thule Burley solo trainer and put all the groceries in that. I regularly do the shopping and transport all groceries, just as much as I would load in the back of a Civic coupe. It works quite nice. I would show a picture if I knew how.
*trailer
Around here people rent cars for long road trips because they can’t put any more miles on their leased cars without a big penalty when the lease is up.
My daughter has ZipCar right on campus near the dorms. EZ. Her car is with us in the garage waiting for her to finish college.
http://www.zipcar.com/
We don’t have Zipcar in our neck of the woods, but the university students here have Enterprise carshare at $5/hour and $25 annual fee ($1 application fee). It’s a pretty easy way to have temporary access to a car. Once you’re registered, you just scan the card and go. Then drop it off when you’re done. Simple!
One Against Many: Wiggy’s out of Grand Junction CO sells the best parkas I have ever found. They supply the Alaska Highway Patrol. I got one there in 2006 while on a summer road trip. Good to -20 F wind chill or so. The cold weather clothing for sale in most retail outlets is complete junk.
Thanks for the tip Tresho! I’ll check that out.
but I’ve witnessed numbers as high as twenty thousand in the last year
For Pete’s sake, you can buy a new car for 20 grand. Not a fancy car, but you can buy one.
Yes, a young coworker of mine just got a brand-new 2017 Civic for a tad over $20K. It’s yuuuuuge (as big as the Accords were some years back) inside and it’s got plenty of features. I think he made a wise purchase and he will drive it for the next 10-15 years (he learned that from his family).
Housing my friends….
Columbia, CT Housing Prices Crater 13% YOY On Plunging National Rental Rates
https://www.movoto.com/columbia-ct/market-trends/
“While there is still demand, the market remains price-sensitive. Even with these incentives, Manhattan’s vacancy rate is the highest it’s been in over eight years.”
There is enormous suppressed demand in New York City. Just when soaring prices started driving people away, the trend reversed and in September the city’s labor force increased by 113,000.
That’s 113,000 more workers in a city with virtually no vacancy, one where a construction “boom” is still small relative to the overall population because the city is built out, and construction means buying existing buildings, getting rid of the occupants, and tearing them down.
College graduates are living four or five to an apartment, and immigrants more than one to a room. Our children have returned to the nest after college. Other “empty nesters” are renting rooms to other people’s children.
Landlords with stars in their eyes, and/or landlords who paid so much for the buildings that they can’t rent them at a price people can afford without going under. That’s the problem, in residential, and in retail.
“Have apartments ever not had concessions though?”
There was no such thing as concessions in the NY residential market until a decade ago. And the tenant always paid the broker feel, not the landlord. Not until I lived elsewhere for a while did I learn what a concession was.
I’ve heard there were concessions back in the Great Depression. The poor would sneak away every time the free rent was up, changing their names along the way.
NYC has always been different with broker fees and nonsense like that. Out in the real world, concessions have been part of renting forever.
You’re also spot on with the demand. I mentioned this here a while back that I was considered a potential job in NYC. I looked around for apartments and there was nothing under $5K/mo that was livable. And imagine the Wall St bonuses for 2017. Kaboom. That $5K will be more like $6K in 2018.
I have never received a concession or a discount, and I have never lived in NYC.
Same here. I guess the real world is somewhere I’ve never lived.
I’ve seen concession signs at complexes in my little burg for years: first month free, no deposit, free utilities and cable, free internet.
That said, the rents are outrageous. $1000+ for one bedroom units. Fort Collins is even pricier.
“I have never received a concession or a discount, and I have never lived in NYC.
Did you ever ask?
I got a concession I think once — and that was in the form of cheap rent for the first year. And then the rent skyrocketed. But then, I was always renting Grade B apartments, where there is much more demand.
Lots of concessions these days on apartments in the Las Vegas area.
That’s good, I hadn’t heard (I’m in Las Vegas, too.)
Went to the store about two hours ago (7 PM) and the Salvation Army bellringer had already packed it in. No business?
Still only silence re: rent/lease from my LL. Don’t know what $ to send for next month.
Coyotes have been stalking our neighborhood.
coyotes1
coyotes2
I have to keep the damned cats in all the time and the boys are duking it out; cabin fever, maybe.
We’ve got coyotes in our nabe, too. Also bobcats, or so I’ve heard.
If you haven’t heard anything, just send the same amount of rent you’ve been sending up to now.
I’m just surprised. It’s hardly rural here; I thought they’d stick to the outskirts.
We get a slip in the mail about the rent, though it usually only arrives a day or two before the month ends. I don’t think the PM has his heart in the job, in “sigh” mode every time I’ve seen him.
We’re getting pushed out of here. Squatter house up the block sold at auction this week for $247K, prob wrecked inside. Two more recently sold for around $450K. When we moved in two and a half years ago, most places here were around $275K est.
I dunno. I’ve rented in every metro city in the East and never were there any comps or concessions.
North Bend, OR Housing Prices Crater 7% YOY
https://www.zillow.com/north-bend-or/home-values/
*Select price from dropdown menu on first chart
‘A common refrain among the capital markets crowd is that a deep pool of investors sits ready to deploy capital, but there are not enough deals to be done. ..‘There are way too many capital sources in the market,’ Marks said. ‘As the most cynical lender up here, I liken this to the end of 2006 where a lot of groups saw the returns being realized by debt funds and the CMBS market. There were a lot of new entries, and many of those aren’t around today.’
‘Some of that concern is due to the increase in debt funds over the last few years from players that wish to capitalize on the hot market. Life companies with similarly deep pockets are also putting pressure on banks and other established debt sources. ‘We’re competing against players that we have no business competing against, like life companies blowing us out of the water with rates we can’t match,’ Marks said.’
And again we see what’s really driven this bubble: not demand, but too much money chasing yield. So why can’t these life insurance companies just invest in office towers or bonds like they used to? Oh, right, you can’t earn anything on your money anymore. Notice the media never draws that connection. BTW, the PA article says office is fooked too.
BAHAHAHAHAHAAHAHA!!!!
++++++
But newly built apartments in Philly are targeting rents at an average of $3.50/SF, according to JLL Research Director Lauren Gilchrist, or $3,500/month for a 1K SF apartment. For most Philly renters, that is an astronomical figure.
Philly is scary . Period
and many of those aren’t around today….
Their money went poof.
Williamsburg Brooklyn Rental Rates Plunge 9% YOY
https://www.zillow.com/williamsburg-new-york-ny/home-values/
*Select price from dropdown list on rental chart
Long article with lots of great tidbits and stats.
+++++++
Dave Collum’s 2017 Year In Review: “The Bubble In Everything Grew”
ZeroHedge - 12/23/2017
Housing and Real Estate
“We bailed out the financial system so that financiers with access to cheap credit can buy up all of America’s real estate so that they can then rent it back to you later.”
~Mike Krieger, Liberty Blitzkrieg blog
There are, once again, housing bubbles littered across the globe at various stages of expansion and contraction owing to central banks providing in excess of $3 trillion dollars of QE this year. Credit is fungible, so the flood of capital can come from anywhere and migrate to anywhere it finds an inflating asset. Hong Kong’s spiking prices are rising by dozens of basis points per day. Attempts by authorities to cool the market only fanned the flames, resulting in “a sea of madness.” Australian authorities tried to cap the dreaded interest-only loans at 30% of the total pool, prompting one hedge fund to return money to investors and declare that “Mortgage fraud is endemic; it’s systemic; it’s just terrible what’s going on. When you’ve got 30-year-olds, who have never seen a property downturn before, borrowing up to 80% to buy three and four apartments, it’s a bubble.”
Prices in London are now collapsing. Why would anything collapse with so much global credit? Simple: top-heavy structures tend to collapse from even small shocks.
More than 40 percent of 25-34 year olds, a group historically en route to home ownership, have nothing set aside for a down payment. Those who scream about the need for affordable housing don’t notice that we have plenty of low-quality houses. We lack low-cost houses. And the Fed says inflation is good.
A couple earning $138,000 will soon qualify for subsidized housing in San Francisco.
In New York City, rising rates seem to be nudging commercial and residential real estate down and foreclosures up to levels not seen since the 2009 crisis (79 percent year-over-year in Q3).
“A couple earning $138,000 will soon qualify for subsidized housing in San Francisco.”
Why not? A couple earning $100K is also considered “poor” when it comes to Obamacare. Keep voting Democrat y’all.
The end game for America when the government and bankers have stolen everything…
++++++
Humanity is increasingly moving into cities, but the Earth isn’t getting any bigger.
That means our apartments are getting smaller, and our living arrangements denser.
Some people get roommates to avoid living in such small spaces. Others, due to poverty or personal obligations, have no choice but to accept their crowded circumstances.
We don’t know how they do it, but somehow they make it work.
https://www.msn.com/en-us/money/realestate/28-crazy-pictures-of-micro-apartments-around-the-world/ss-AAtoNBh?li=BBnb7Kz&ocid=mailsignout#image=1
During a job search this summer I was dismayed to see how many software jobs were now downtown. In crowded “bench seating” environments where everyone wore headphones to drown out all the ambient noise (I guess it helps if you’re a millennial). So I guess when you go home to your shared, expensive downtown apartment it just seems normal to have no privacy.
When I asked the recruiters if they had parking, I was always told employees had to pay for their own (200-300 a month) and that most either walked, rode their bikes or took the bus.
Anyway, I’m glad I was able to stay put, especially since I now work from home 95% of the time.
I’ve enjoyed working from home for 16 years. It meant I could work from the boat if I felt like it. Flexible dress code and no commute. Three more days of that work thing left for me.
But very smart liberals keep telling me EVERYONE wants to live downtown cuz you have 17 different Ethiopian restaurants within walking distance. Living/working in the burbs is sooooooo 2014.
I happen to love Ethiopian food. I’ve only eaten at one once in downtown Salt Lake City, but it was really good food. The injera bread takes some getting used to. If you have the money, the gastronomy in a downtown area is a huge plus. We live in a much smaller city now and it’s mostly just chains (Applebees, Chilis, Texas Roadhouse, etc.). If we want good food we usually have to go to Vegas.
And these are “connected” tech jobs which could easily be worked from home. I remember the saying: if you can do your job from your home, Apu can do your job from his home in Mumbai. Whatever happened to that?
The trend of at-home workers is now reversing. Bloomberg did a big feature on this when IBM started pulling its remote workers. They had been the evangelizers of the at-home working movement.
“The end game for America when the government and bankers have stolen everything…”
You are half right and you are half wrong. Bankers do not steal; bankers merely present dotted lines to totally dumbed-down ignorant fools.
You Sir impoverish the poor with usury and transfer the wealth of the country to the already rich and connected. You call it quantitative easing and lending but it is in fact a calculated constriction on the means of the mass of the people.
Biggest heist ever.
I was thinking about this concept of “banks” the other day and it started to seem ridiculous to me, kind of like when you contemplate a word and the word starts to lose meaning. In the more populous area, you’ve got one on every street corner, just about. Nice brick or stone buildings, usually, with a counter behind which the clerks, known as tellers, stand at attention to take deposits and dispense cash or other monetary instruments, you’ve got discreet offices where managers speak to clients or potential clients in hushed tones, you’ve got computers and other electronic equipment and often a vault of some sort. It’s all very official, very serious, you’d think something productive was taking place.
And what’s going on in these places, really? They’re shuffling thin air and numbers around. Sometimes they give out or take in pieces of fancy printed paper, occasionally some round discs of debased metal.
The emperor has no clothes.
And people laugh at digital currency?
I suspect the reason there are hushed tones is that people are bargaining with future years, or even decades of their blood, sweat and tears. That stuff is real.
Meanwhile there are million of ghost city apartments rotting away in the sticks! Surely the Chinese government can afford to bus these unemployed people out there.
Forget China. There are millions of ghost houses/apartments right here in da usa.
Well, well, well, what have we here?
http://www.zerohedge.com/news/2017-12-23/fbi-deputy-director-mccabe-retiring-after-trump-insurance-policy-debacle
Eff him. Hangs in for another 90 days and presto! We have to pay his friggin’ pension, while he goes and gets a job with some contractor. Someone please fire this asshat yesterday.
How many vindictive dems like him or Learner are in Fed Gov? I would say 70 to 80%. Rethugnicans are pretty useless bunch to allow this to happen. You reap what you sow….
Heh, what goes around, comes around, sort of. Was there ever a more vindictive regime than the Bush II administration? 9/11 was pretty vindictive, I’d say. And it’s hard to beat Karl Rove for political vindictiveness, both outside and inside the party. And then there’s smirking Bill Kristol.
Anyway, it looks as if the whole Democrat/Republican paradigm is falling apart. It’s just vindictive political animals, period. Sort of a uni-party thing, entrenched in the deep state.
You make a good point. Those you hired to go against moosleems are turning against you. Poetic justice.
Realtors are liars.
… and every closing a crime scene.
The Replacements — Can’t Hardly Wait (live at Maxwell’s 2/4/1986):
https://www.youtube.com/watch?v=NDo-IZVxZek
11% vs income of 3? = no sweat
http://www.builderonline.com/money/mortgage-finance/typical-mortgage-payment-up-11-yoy_c
From the article: “A typical payment is calculated using Freddie Mac’s average 30-year fixed rate mortgage and a 20 percent down payment.”
WTF pay 20% down anymore? In fact I can count on one hand the number of people who even put 10% down.
tenants has resulted in a 25-35% increase in concession packages at ground-up projects and a 45-60% increase at redevelopments, which have recently offered 16-18 months free and $140-$150 in tenant improvements allowances to prospective tenants.
Seems steep
10 year lease?
<Carmel, CA Housing Prices Crater 5% YOY As Fiscal Conditions Worsen
https://www.movoto.com/carmel-ca/market-trends/