The Belief That Was A Collective Hallucination
It’s Friday desk clearing time for this blogger. “This week, 10 years ago, Americans learned that the U.S. had its largest single-year drop in home prices in a quarter century. It began, in many ways, in people’s heads. That is, after all, where hopes ultimately reside. The belief that housing prices could only, permanently, inexorably, go up was a collective hallucination, but it felt very real. ‘Oh, it was so hot!’ said Heidi Kasama, president of the Nevada Association of Realtors. ‘Literally, I remember one time I was entering a listing into the computer and the phone rang — I’m not kidding — less than a minute after I hit enter, and somebody asked me, ‘Is it still available?’ That’s how frantic people were.’”
“The Bay Area’s red-hot housing market is showing no signs of cooling. Ken Robertson of San Jose found this out recently. He and his wife listed their three bedroom, two and a half bath house in San Jose’s Willow Glen neighborhood last Thursday. Asking price: One-point-five million. hundreds of people came over the weekend, and as recently as Monday night, to see and wish upon a star. Five days later, he’s accepting one-of-seven offers, according to Intero realtor Alicia Duarte.”
“In some cases, realtors say properties are selling even sooner, when the sign goes up announcing an impending sale. For buyers, the future holds higher prices pushing the dash for new digs to new heights.”
“The median sales price for a single-family home in Brevard County rose more than 19 percent in December 2017, to $227,789 from the same point a year earlier. But what were once whispers of an overheated housing market are turning into more of an open debate between the ‘yes, we are’ vs. the ‘no, we’re not even close’ camp of a housing bubble.”
“There’s no question of a similar over-exuberance when it comes to real estate, said Scott Ellis, the Brevard County Clerk of Courts. Ellis goes back to headlines between 2005-2008 that dismiss any talk of a significant bubble, or a correction, and they’re eerily similar to what he’s hearing today. ‘The problem is the underlying sound pricing economics have fallen prey to the intense belief prices will relentlessly surge,’ Ellis wrote.”
“Michael Slotkin, associate professor of economics at Florida Institute of Technology, doesn’t think Brevard is in a housing bubble. ‘We still haven’t seen anything like the manic production of housing units that occurred in 2004-06, where we saw phantom demand with no population increase to support it,’ Slotkin said.”
“‘Over the last few years residential and commercial construction has nearly tripled in the Edwardsville area,’ stated Mike Rathgeb, owner of Spencer Homes, one of the metro east’s premier builders. Spencer Homes is filling a void in the housing market at a more affordable price with their latest home development, @Cloverdale. The high quality, low maintenance homes now start at $289,000, a more than 20 percent price reduction from 2017.”
“The hot market for mega mansions in Los Angeles has cooled. Fewer blockbuster sales caused the median price to dip while inventory shrunk as owners pulled stale, overpriced listings from the market. ‘One of the things we’re seeing in high-end markets across the country, the inventory is dropping … because the overpriced inventory that’s been sitting for a couple of years are being left to expire,’ said Jonathan Miller, president of appraisal firm Miller Samuel.”
“The sale is most certainly on. J. Crew chairman Mickey Drexler has cut the price of the Manhattan loft he has been trying to sell for around two and a half years almost in half. The TriBeCa apartment has been put back on the market this week with a new price of $18.5 million, close to half the original asking price of $35 million when it was first listed for sale in April 2015. Drexler is just one of the many high-end sellers who are struggling against a backdrop of Manhattan’s weakening luxury property sector, where a flood of high-end condos coming to market has meant that buyers have a slew of options to choose from.”
“The 2018 Toronto housing market is off to a slow start, and buyers’ market conditions prevail. According to mid-month data collected from the Toronto Real Estate Board (TREB), numbers indicate sales are down annually across every housing type — with the exception of semi-detached homes. A number of factors could be influencing January real estate, which, so far, is in sharp contrast to the frantic activity witnessed in early 2017 when Toronto real estate ramped up towards the March peak. This year, buyers and sellers prove trepidatious as new mortgage rules — which have slashed affordability for the average buyer by 20 per cent — are absorbed.”
“There is little sign the cuts to stamp duty announced in the 2017 Budget are stimulating demand among first time buyers. Shore Capital analyst Robin Hardy says: ‘The market net balance has fallen again with demand (new buyer enquiries) slipping faster than supply (new vendor instructions) once again pushing us more towards a deflationary buyers’ market.’”
“Housing prices were on the decline in Sweden at the end of 2017. The fall in prices has been most dramatic in major cities like Stockholm where the prices in January 2018 were down 12% from the peak in August 2017. According to a report from Swedbank published Wednesday the market will fall still further. The combination of a large supply of new built housing in 2018 and the stricter amortization rules mean that the market has not stabilized yet.”
“Property owners in Dubai better be willing to cut their asking prices if they want to sell. If not, they are staring at future disappointments. With off-plan sales from developers overwhelming demand in the secondary market, individual owners have limited options on pricing their properties. ‘We are seeing declines in secondary market listings, especially in the price ranges where new supply has been added in 2017,’ said Lynnette Abad, Partner at Cavendish Maxwell. ‘In 2017, sellers held firm to their pricing in the secondary market … while their units sat empty. We are starting to see units priced a little closer to realistic selling levels. However, the asking prices are still far higher than the achieved.’”
“An Auckland property developer has admitted to his part in a $50 million mortgage fraud case. Kang Huang pleaded guilty to 10 criminal charges in the High Court at Auckland before Christmas, the Herald can reveal. He was one of a quartet charged by the Serious Fraud Office in a case involving more than 70 Auckland and Hamilton properties - and mortgages of about $50m. The SFO alleges the accused provided false information or documents, or withheld information from either the BNZ or ANZ to obtain loans to purchase properties between December 2011 and October 2015.”
“The SFO alleges, according to court documents, that false salary payments were made as part of the applications for some of the loans. Banks were also allegedly provided with false income and employment information. Those defending the case include Huang’s wife, Yan (Jenny) Zhang. Zhang, who is also known as Kang Xu, is facing charges for obtaining by deception. Lawyer Gang (Richard) Chen is also facing charges for obtaining by deception. The third defendant heading to trial is former bank worker Zongliang (Charly) Jiang. Jiang is facing a Secret Commissions Act charge of accepting gifts and charges for obtaining by deception.”
“‘From our point of view, they [foreign buyers] are disappearing severely. The banking policies, stamp duty surcharge and Chinese government control have created the perfect storm,’ Country Garden Australia managing director Guotao Hu said. The comments echo those of Meriton’s Harry Triguboff who told the Financial Review last week that the sharp drop in foreign buyers was not just bad but ‘very bad.’”
“Chinese developer Starryland’s managing director Hao Liu who sold out his Parramatta Promenade apartments in 2014 said it was not only counter-intuitive but unfair to introduce stamp duty surcharges and lending cuts so late in the cycle.”
“‘The foreign buyer correction has come during the downturn in the market. When it was hot in 2014, the government happily allowed foreigners to buy but only when people complained they increased taxes,’ he said. ‘Many developers entered the market excitedly only to be trapped further down the development cycle.’”
Wheat Ridge, CO Housing Prices Crater 5% YOY
https://www.movoto.com/wheat-ridge-co/market-trends/
From the first article:
“These days, things are a lot different. The percentage of seriously underwater homeowners nationally has fallen from 31.4 percent in 2012 to about 10 percent today. Foreclosures are at an 11-year low. Banks are more regulated, lenders more careful about handing out loans. Even Las Vegas has a thriving real-estate market now, Bishop (president of the Greater Las Vegas Association of Realtors) said.
“We all feel like we can breathe again,” he said.
The mania of the 2000s seems like a memory”.
With foreclosure moratorium efforts in effect in all 50 states it’s no surprise.
More than half of the 1,900 ultra-luxury apartments built in London last year failed to sell, raising fears that the capital will be left with dozens of “posh ghost towers”.
The swanky flats, complete with private gyms, swimming pools and cinema rooms, are lying empty as hundreds of thousands of would-be first-time buyers struggle to find an affordable home.
The total number of unsold luxury new-build homes, which are rarely advertised at less than £1m, has now hit a record high of 3,000 units, as the rich overseas investors they were built for turn their backs on the UK due to Brexit uncertainty and the hike in stamp duty on second homes.
https://www.theguardian.com/business/2018/jan/26/ghost-towers-half-of-new-build-luxury-london-flats-fail-to-sell
Still blaming everything on Brexit.
And climate change caused Brexit, thus everything can be blamed on climate change.
http://www.independent.co.uk/environment/brexit-climate-change-al-gore-says-global-warming-syria-war-helped-leave-vote-a7645866.html
“thus everything can be blamed on climate change.”
If they are handing out Grant money to study how sandwiches impact Climate change it is only a matter of time before “Climate scientists” are paid to do a study that proves everything can be blamed on climate change.
Climate change: Sandwiches eaten in UK ‘have same environmental impact as eight million cars’
Pre-packaged bacon, sausage and egg sandwich has biggest carbon footprint, according to researchers at University of Manchester
Chris Baynes a day ago
Researchers at the University of Manchester calculated the carbon footprint of 40 different types of sandwiches – both home-made and pre-packaged – taking account how the ingredients were produced, the packaging, as well as food waste discarded at home and elsewhere in the supply chain.
The carbon footprint of the most popular home-made sandwich, ham and cheese, varied from 399g to 843g CO2 eq depending on the recipe.
http://www.independent.co.uk/news/science/uks-consumption-of-sandwiches-has-same-environmental-impact-as-eight-million-cars-a8176936.html
We humans are simple folk and like to blame problems we encounter on one thing, rather that looking at them in the round. I suspect there is a bit of Brexit in the mix of the sudden realization the flats are empty, but as this appears to be a phenomenon in multiple markets across the world, it isn’t the primary cause. I think if I had too try to find one cause, it would be greed and cheap credit (or is that two, never mind it will have too do).
Another place that has legalized medical crack.
‘For buyers, the future holds higher prices pushing the dash for new digs to new heights’
‘New York state lawmakers could punch a $50.6 billion hole in the federal government’s budget by revamping their state income tax.
If California followed the same approach, its legislature could keep $66.8 billion out of the U.S. Treasury. And in New Jersey, state lawmakers could hold back $12.5 billion more.
Their plans face obstacles, and not every state is pursuing the same strategy. But five Democratic-leaning states that are exploring ways to change their tax laws could remove roughly $154 billion from federal coffers over the next eight years, adding to anticipated deficits,’
New York state budget director Robert Mujica says lawmakers will have draft legislation to debate within 30 days.
“What we are trying to accomplish here is to put [New Yorkers] back to where they were” before the new tax law, said Mujica. “The federal tax law aimed at the heart of New York and California, and we produce 25 percent of GDP for the nation.”
Tax fraud is a felony.
Even to NYS politicians.
Go ahead - make Trump’s day.
The wealthy should pay “their fair share” of taxes…unless of course you are referring to wealthy states.
I find it particularly ironic that the same people who think that rich individuals don’t pay enough in tax, are complaining because their state pays more to the Federal Government than the state receives in benefits.
I find it particularly ironic that the same people who think that rich individuals don’t pay enough in tax, are complaining because their state pays more to the Federal Government than the state receives in benefits.
It appears that they are not making that complaint. They just don’t want that discrepancy to increase.
It appears that they are not making that complaint. They just don’t want that discrepancy to increase.
Yet they are perfectly happy to heap more taxes upon the wealthy within their own states. In fact, they call it “fair”.
BTW, I’ve heard that comment (that they pay more than they get) as a rationale for why they should continue to get the SALT deduction.
Off topic, but did anybody catch this headline from CNN?
“Cuckolding can be positive for some couples, study says”
This solidifies the fact that CNN has completely jumped the shark. Should they add a “C” to LGBTQ?
A response …
http://fxn.ws/2ncV38y
CNN is very, very fake news.
Ya if you vote.
LGBTP
P for polygamous
Silly me, I was too specific about this particular derangement.
This, my fellow HBBers, is what a bubble looks like imploding in the initial stages…
++++++
“Blockchain” Stocks Collapse by 40% to 90%
Wolf Richter • Jan 25, 2018
UBI Blockchain International down 93% from the peak.
Longfin down 70% from the peak. LFIN went public in the US in November, languished at first, but suddenly soared 2,700% over three days to an intraday high of $142.82 by December 18. This briefly gave it a market capitalization of over $7 billion.
DPW Holdings down 62% from the peak. DPW, a penny-stock dotcom-crash survivor that makes lowly power supplies for computers, catapulted its shares 880% from $0.56 on November 21 to an intraday high of $5.95 on December 18, by announcing that it would market its power supplies to cryptocurrency miners.
Long Blockchain Corp down 61% from the peak. LBCC, at the time a failing beverage-maker called Long Island Iced Tea, got its shares to rocket by 360% from $2.06 on December 18 to $9.49 a few days later by announcing that it would change its name and ticker symbol.
On-line Blockchain down 35% from the peak.
Riot Blockchain down 61% from the peak. RIOT was a failing biotech outfit called Biotix with annual revenues between $100,000 and $200,000 over the past four years, generating $34 million in losses over the same period. Then on October 4, it announced that it would change its name and ticker symbol and start investing in cryptocurrency and blockchain startups.
Eastman Kodak down 23% from the peak.
Seven Stars Cloud Group down 40% from the peak.
Siebert Financial Corp down 54% from the peak.
For speculators that were able to get into and out of these scams in time, it worked. A 1,000% gain obtained in a few days by hook or crook is nothing to sneeze at. But it’s ending in tears for those who got into these scams too late and whose despised fiat currency just ended up providing the exit grease for early speculators.
“This, my fellow HBBers, is what a bubble looks like imploding in the initial stages…”
Nonsense, go all in and buy the dips. Use other people’s money to do so.
Visit your local banker today and he will show you how easily it can be done.
There are going to be stories soon of the “smart investors” who took out HELOCs or maxed out their credit cards to buy crypto.
And how they are victims and need a bailout.
My nomination for the Cybercoin Investor’s Theme Song …
https://youtu.be/rEX1dYyvmig
What do you guys have against Bums?
Why that’s, well it something.
https://www.youtube.com/watch?v=OmOe27SJ3Yc
Yet Bitcoin has essentially been parked at $11,000 for the past 10 days. Makes no sense.
It’s not about sense.
You’re right, it’s about “cents,” lots and lots of ‘em.
Time to HODL and BTFD.
Riiiight. Once this pig breaks below $10k, I think the sucker really starts going down.
Predicting how an hallucination will progress is rather pointless.
watching Bloomberg interview the 1% at Davos, the bullishness is infectious. Blackrock’s Larry Fink saying that “sideline cash” should be invested to make people wealthier during this . Ray Dalio saying you “will feel stupid” for holding cash. Lloyds insurance talking about 4-7% growth in Asia and optimism everywhere. The tax bill is supposed to add about 35% to corporate profit growth.
It’s a compelling story and maybe it’s correct. Hell, after 10 minutes I was ready to hit the buy button.
I guess the whole QT or quantitative tightening is not a big deal. I remember David Tippet prescient call to “buy everything” as printing was ramping up. Do the dynamics change when printing is drawing down?
I have been so wrong about this for so long that I now use a calculator to add anything more than 2+2. Still, I have a haunting feeling that QT will matter. I’m not worried about wage growth as I think automation will smack down any attempts there.
But the herd optimism, the 10% zombie corporations and the runaway nature of stocks all seem to be ingredients of a bear market that climbs a wall of optimism.
Reminds me of the saying:
“When you are playing poker and you look around and wonder who the pigeon is….it is you.”
Yep, theyre probably talking their book and having a hard time finding marks to buy their overpriced assets. Same with the various cryptos - even less liquidity there.
I know I’ve learned my lesson about fighting the Fed. If QT is for real (and I don’t believe it is, I think they will reverse course as soon as everything starts to go down) it will definitely matter.
It doesn’t matter… housing prices cratered 50% no matter what they did the last time. They are powerless.
Exactly. They couldn’t stem the last crash one bit. How soon people forget DOW 6,500. Oh, that’s right, it’s different this time…
think about that for a minute …
Dow 7K to 26K in how many years?
What the heck? Did the Fed just screw all our grandkids?
It depends. Some people who get rich on this stock market boom will be able to pay the college tuition for their grandchildren and also leave them a small fortune when they kick the bucket.
Dow 7000 is a long way down. Lots of losses to be taken yet.
Yet Howard Marks (Oaktree) notes that “In the past, levels like these were followed by downturns. Thus a decision to invest today has to rely on the belief that ‘it’s different this time.’”
At a recent conference, what people said on panels was markedly different than what they said privately. Publicly, they were quite bullish…privately, less so.
A guy on a panel from Oaktree at least admitted that they were 2:1 net sellers. However, much of the selling was for assets that they acquired immediately post-crash.
I remember feeling stupid when I didn’t participate in the dotcom boom, and equally stupid when I was in cash going into the crash. I’m sure I’ll feel stupid this time for a while too–but it won’t stop me from de-risking.
Oaktree at least admitted that they were 2:1 net sellers ??
I have been watching Several different West Coast States and also Tennessee for new commercial listing activity in 2018….There has been a significant spike in commercial Inventory over the past 26 days…Particularly the last 14 days…
Lots of apartment listings and other types…I think the most significant thing that I have seen is “portfolio” listings…One gentleman in the bay area listed over 500 million dollars worth of apartments at one time…It must have been like 20+ properties…
Lots of NNN properties also…Just saw 8 Del Taco’s listed…Also, big commercial buildings 100,000 square foot +
Not sure what it all means (if anything) but its apparent to me that people are on the move…They are no longer sitting on their hands…
My guess would be that between the QE, the tax cut and world wide liquidity we have front loaded the run up in assets…If so, how much upside can be left with QE unwind and the bond market flashing Yellow caution…
One gentleman in the bay area listed over 500 million dollars worth of apartments at one time
Who was this? I’m not in the market for half a billion of apartments (or any at today’s cap rates, for that matter), but I’m curious.
500 million? That’s not listing, that’s dumping.
Who was this? I’m not in the market for half a billion of apartments (or any at today’s cap rates, for that matter), but I’m curious ??
Its proprietary info so I don’t want to post it here..If somehow I can get it direct to you I would be glad to…
An uncle of mine used to work for one of the major apartment owners in the Bay Area…I’ll reach out to him…I’ll bet he knows (hell, it might even be the company he used to work for).
Well if that does not work I would be glad to get it to you another way.
Just watch Equity Residential. Their groups seem pretty adept at selling near the top!
here. here.
de-risking is smart right now. however, we may have another 12-18 months of run up.
And that’s why I know I’ll feel stupid for a while.
I already moved my kids’ 529s from “aggressive” to “conservative” and my IRAs from an aggressive small-cap positioning to heavy dividend payers.
My challenge on the taxable side continues to be how to justify taking at 30%+ tax hit to sell dividend paying stocks that I purchased at an excellent time, vs. simply holding through the next downturn. Since they are companies I intend to hold very long term, I may simply grit my teeth and watch their values fall.
Like Bitcoin, the stock market always goes up, in the long run. I just decided a significant part of my portfolio last week. I may be overly precautious, but it feels very similar at the moment to the run-up period to the tech stock crash, with so many cock sure investors about the certainty that their stock market investment portfolios are a one way ticket to vast riches.
Once it ybilitsr a
They all say there’s tons of cash sitting. There were a couple of reports (from banks) saying it’s at the lowest point.
#whoslying
getting closer to the end of this bull run than the start, turning from most hated market to go all in
Of course we’re getting closer to the end - that’s true in any bull market. It’s like once you’re born, you’re one day closer to death each day.
So, moving on from the obvious - there’s no telling how or when this thing ends.
Mike: I have been so wrong about this for so long that I now use a calculator to add anything more than 2+2
This could be the turning point of a multi-generational, 40-plus years, economic theory. Look at the federal funds rate: https://fred.stlouisfed.org/series/FEDFUNDS - the trend been coming down for 40 years.
Look at the central bank balance sheet: http://www.businessinsider.com/charts-that-shed-light-on-the-feds-mysterious-45-trillion-portfolio-2017-5
https://fred.stlouisfed.org/series/ECBASSETS - It’s been going up for a long time.
All asset holders look like geniuses when interest rates are coming down and money is being pumped into the market by the central bank(s).
If this titanic trend changes course, then asset prices should at least stabilize instead of this rampant, relentless charge upwards.
As far as houses go, the narrative is that low inventory is driving this runup. But realize this: during the run up of the first bubble, prices were galloping higher just as inventory was galloping higher (hover on the line to find exact dates):
US housing inventory: https://fred.stlouisfed.org/series/MSACSR
House price chart (Case Shiller via FRED): https://fred.stlouisfed.org/series/CSUSHPINSA
Now I said earlier, this could be the turning point of 40-plus years of economic theory. Why would it turn? Well, what is balance sheet expansion? Printing money, which extracts purchasing power from the society, in order to inject it into a central bank’s spending priorities. Covert taxation and redistribution. People always bring up the case of Japan, which seems to be doing fine under this regime - their prime minister is set to be the longest serving prime minister on record. So they’re okay with this covert taxation/redistribution scheme.
BUT - in the case of US and Europe, we’re seeing more non-traditional candidates - populists. That’s an indicator of dissatisfaction with how things are. The other day I posted a report from a Fed economist stating that QE hadn’t worked.
Now, is there any reason they have to stop this covert taxation/redistribution scheme? As long as (the right) politicians are being re-elected, I don’t think so - see Japan. However, if the policy presents a threat to the power and wealth of the elites, it will change. Is it doing that now? Not in Japan. Not in China. In Europe and the US, there are some threats to the power structure. The largesse isn’t reaching the broader population. I suspect in Japan, being a homogeneous society, there is more broad-based socially redistributive spending and redistributive effect than in Europe and America.
If the titanic trends change - interest rates going up and the central bank actually reducing its balance sheet, it makes sense to me that asset markets would at least stabilize, instead of galloping higher. However, these policies have made the donor class and politicians wealthier so there is of course a strong impetus to keep them going.
Well I don’t see rents dropping or real estate prices dropping in Sacramento, San Jose, San Francisco, San Diego, LA, Orange County! Rather Sacramento rents are SKYROCKETING due to housing shortage, low inventory, too much immigration, no new construction of rental units. SO when will this madness end?
Pretty simple, when you move out of that s-thole state bruh. Then you can watch the madness from afar with a sense of wonder and amusement.
I know I do
“J. Crew chairman Mickey Drexler has cut the price of the Manhattan loft he has been trying to sell for around two and a half years almost in half. The TriBeCa apartment has been put back on the market this week with a new price of $18.5 million, close to half the original asking price of $35 million when it was first listed for sale in April 2015. Drexler is just one of the many high-end sellers who are struggling against a backdrop of Manhattan’s weakening luxury property sector, where a flood of high-end condos coming to market has meant that buyers have a slew of options to choose from.”
And I offer to you for you edification…..this project that caught my eye when I was in NY 3 years ago and the site was a small parking garage across the street from the Egg Shop where I ate. Posting again as a reminder given what Mickey is experiencing.
Linky here….
https://www.152elizabethst.com/neighborhood
East Sacramento, CA Housing Prices Crater 5% YOY As Housing Correction Expands Statewide
https://www.zillow.com/east-sacramento-sacramento-ca/home-values/
when u look around the room and cant find the patsy it must be you crowman.
The Real Mystery About Low Inflation
The Fed isn’t hitting its target because it doesn’t take its target seriously.
By Ramesh Ponnuru
January 26, 2018, 5:00 AM MST
Where’s that inflation we were promised? That’s the question Senators Elizabeth Warren and Sherrod Brown asked economist Marvin Goodfriend during contentious hearings over his nomination to the Federal Reserve Board.
In 2011, Goodfriend had said that inflation would grow more severe. But inflation, as the senators noted, has been relatively low since then.
The Fed says it wants a measure of inflation called the PCE deflator to rise by 2 percent a year. Since the economic recovery began, the measure has almost always been below that target.
https://www.bloomberg.com/view/articles/2018-01-26/the-real-mystery-about-low-inflation
It was a rhetorical question. And the senators asking it all knew in 2011 that no significant inflation would occur despite the printing presses running red hot.
/sarc
Pretty sure lots of people have been puzzled by the lack of inflation after all that QE.
puzzled…
Not at all. QE was aimed at boosting the financialization process, not at increasing worker’s wages. Not that PCE is what inflation.
Why Is Pay Lagging?
Maybe Too Many Mergers in the Heartland
Consolidation is often seen as a consumer problem. But it may also reduce competition for workers, especially outside big cities, holding down wages.
By NOAM SCHEIBER and BEN CASSELMAN
JAN. 25, 2018
BERLIN, Wis. — For as long as he can remember, the only thing Matt Gies really wanted to do for a living was repair farm equipment.
But ever since he quit his job more than three years ago at a John Deere dealership — where he worked too hard for too little pay, he said — he has struggled to find a position in the same line of work.
One key reason for the difficulty is a wave of consolidation in the industry. Of the seven John Deere farm equipment dealerships within about an hour’s drive of his house, the one Mr. Gies left and refuses to work for, Riesterer & Schnell, owns four.
“It was just tough,” he said. “Everyone around here’s been bought out by Riesterer.”
Mr. Gies’s predicament is not uncommon in today’s job market. In the past few years, a growing chorus of economists has expressed concern that consolidation among companies, often considered a problem for consumers, may be limiting workers’ employment options and holding their wages down as a result.
https://www.nytimes.com/2018/01/25/business/economy/mergers-worker-pay.html
The farm bubble popped. These guys went hog wild buying land and equipment post QE/commodity bubble and now the auctions are overloaded. I’ve posted several articles about the farm equipment problem.
You can get a deal on a used manure spreader right now.
The farm bubble popped ??
Renewal of farm subsidies is coming up. Could be payback time.
Yet compact utility tractor prices are through the roof. It seems all the stuff that normal wage earners can afford never goes down in price until the economy is in such a decrepit state that there’s no point in buying it anymore.
Of the seven John Deere farm equipment dealerships within about an hour’s drive of his house, the one Mr. Gies left and refuses to work for, Riesterer & Schnell, owns four.
This sounds like the kind of people I grew up around. Refuse to be treated like crap but also refuse to live anywhere else in order to avoid it. So they sit and stew for years at a time trying to resist the urge to go postal.
Laugh of the day, from today’s WSJ. Absent a subscription, can’t see more than this snippet via Internet:
“Chinese will soon be celebrating the Year of the Dog. It could also be the Year of the Deal.
It has long been known in real-estate circles that an address or price that includes the number eight—which when spoken in Cantonese sounds like the word for ‘prosperity’—can make a property more popular with Chinese buyers. Now some real-estate agents are reporting a reaction to the auspicious year of 2018: The number 18, when spoken out loud in Cantonese, sounds like the phrase “I want to be very wealthy.”
https://www.wsj.com/articles/a-lucky-year-for-chinese-real-estate-buyers-1516893692
“‘Over the last few years residential and commercial construction has nearly tripled in the Edwardsville area,’ stated Mike Rathgeb, owner of Spencer Homes, one of the metro east’s premier builders. Spencer Homes is filling a void in the housing market at a more affordable price with their latest home development, @Cloverdale. The high quality, low maintenance homes now start at $289,000, a more than 20 percent price reduction from 2017.”
Southern Illinois University at Edwardsville alum reporting here. Of all the places I have lived as an adult, that was one of the nicest and most affordable. I was able to live off campus in a shared apartment while attending school full time and could afford to pay my living expenses, including my share of the rent, off part time employment.
This was long before housing prices went manic.
Laugh number two of the day, from the Miami Herald:
“BITCOIN IS BOOMING IN MIAMI. BUT CAN YOU BUY A HOUSE WITH IT?
They gathered in downtown Miami — an estimated 4,350 Bitcoin believers — to trade pitches for apps and start-ups. They discussed and debated trends in cryptocurrency. They speculated about the volatility of Bitcoin, which shot up in value from $900 to $19,000 over the course of 2017 and is currently hovering around the $10,000 mark.
But despite the national stir created last fall when a $544,500 Edgewater condo was listed for sale in ‘Bitcoin only,’ none of the panels or presentations at Miami’s sixth annual North American Bitcoin Conference focused on real estate. Although Bitcoin is the oldest and best-known of the nearly 1,500 kinds of cryptocurrencies currently available, real estate developers, brokers and analysts are cool on its use in an industry that is literally defined by physical assets.
In other words, if you’re hunting for a home, don’t worry that you’ll get outbid by a buyer offering cryptocurrency. At least not yet.
…
At the conference, the main exhibition hall was crammed with start-ups hoping to use blockchain technology for everything from Bitcoin ATMs to virtual reality. Dr. Gor Van Ek, a respected figure in the blockchain field, flew in from Australia to promote his latest endeavor, Bitcar, a platform that will allow users to purchase an interest in exotic, rare and classic cars — a way of investment that has been traditionally exclusive to the wealthy.”
http://www.miamiherald.com/news/business/real-estate-news/article196658364.html
He and his wife listed their three bedroom, two and a half bath house in San Jose’s Willow Glen neighborhood last Thursday. Asking price: One-point-five million.
It appears the new $750k MID and $10k SALT cap isn’t killing CA SFR sales…
A 3/2 craftsman at $1.5M is the stuff of speculators… not anyone punching a time clock.
In San Jose you punch in when you arrive and you never punch out unless you leave.
In San Jose you punch in when you arrive and you never punch out unless you leave.”
so true 10 hour work days plus travel plus weekends
I don’t have much to contribute about housing right now, but I’d just like to say that I despise the lying sack of crap lamestream media with a passion.
I despise the lying sack of crap lamestream media ??
Excecpt for Zerohedge right ??
That would be more like derangedstream.
how is your boy HAnnity?
Would you like a straw to assist in your sucking it up buttercup? Its going to cost you if your utopian leaders get their way
https://www.zerohedge.com/news/2018-01-26/california-considers-1000-fine-waiters-offering-unsolicited-plastic-straws
Here’s my fave recent ZH story:
https://www.zerohedge.com/news/2018-01-26/cnn-extols-virtues-being-actual-cuck-gets-mocked-oblivion
You can’t make this stuff up.
You wife’s boyfriend told me you’ve been posting there under the handle “NickPeeMe”.
What are the MSM doing now?
San Francisco, CA 94110 Housing Prices Crater 7% YOY On Rising Mortgage Defaults
https://www.zillow.com/san-francisco-ca-94110/home-values/
https://snag.gy/m5EzRB.jpg
Why San Francisco has the second-highest construction costs in the world
By Roland Li – Reporter, San Francisco Business Times
Jan 24, 2018, 9:01am
San Francisco has the world’s second-highest construction costs because of complex, burdensome approvals, a severe labor shortage and easy paths for opponents to delay projects, according to a new report.
The city’s average construction costs of $330 per square foot was second only to New York, according to a study last year by Turner and Townsend, a construction consultant. Apartments cost around $425,000 per unit to build, exacerbating the region’s housing crisis by requiring high rents or massive public subsidies to make construction feasible.
UC Berkeley’s Terner Center for Housing Innovation surveyed developers, contractors, architects and nonprofits building market-rate and affordable residential projects on why costs are so high. Respondents said that city agencies have a complex and unwieldy permitting process, noting “additional hoops and requirements seem to pop up at various stages in the process.” They also pointed out that building inspections that aren’t standardized and lack of coordination between departments adds time to the process.
https://www.bizjournals.com/sanfrancisco/news/2018/01/24/sf-construction-costs-2nd-highest-housing-crisis.html
Castro Valley, CA Housing Prices Crater 6% YOY As Housing Demand Plummets To 20 Year Low
https://www.movoto.com/castro-valley-ca/market-trends/
https://www.realpage.com/mpf-research/apartment-supply-volumes-peak-30-year-high-2017/
“Driving the national completion volume in 2017 were the 15 metros that have led for development volumes throughout the current cycle. Those metros – where construction is particularly active in urban core areas – contributed roughly half of the nation’s new units in the past year.”
For what it’s worth, those 15 metros represented approximately 30% of the US population as of the 2010 census.
stocks are cheap boyz!
I just derisked a significant part of my portfolio last week. I may be early and overly precautious, but it feels very similar at the moment to the run-up period to the tech stock crash, with so many cock sure about the certainty that their stock market investment portfolios are a one way ticket to vast riches.
Good idea, da bear. I’m thinking of doing that myself. My investment company offers a fixed fund which is sort of a 10-year annuity. Every so often I transfer some equity funds into it, as I invest into equities in other places.
I sold a portion of my holdings in the first stock I ever bought today. I decided it was time to take some profits and lower my risk.
I’m considering moving my bond holdings from broad bond market index funds into shorter term/shorter duration bond funds.
Even if the equity bull has some more room to run, I think there’s a significant downside risk. De-risking feels prudent to me now.
As the saying goes: “There are old pilots, and there are bold pilots, but there are no old, bold pilots.”
“I’m considering moving my bond holdings from broad bond market index funds into shorter term/shorter duration bond funds.”
I have done that with my own and my parent’s portfolios (I help them manage their finances). No need to suddenly realize that you are reliving 1987 while sitting on a pile of long-term bonds.
As the saying goes: “There are old pilots, and there are bold pilots, but there are no old, bold pilots.”
+1 The physics of aviation is rather humbling.
I have to do that also ..
https://www.realpage.com/mpf-research/multifamily-market-outlook-fuel-left-tank/
“But underlying fundamentals – rents and demand – haven’t seen nearly the same bias toward big-city downtown apartments. RealPage lease-transaction records show the average rent roll premium for an urban apartment property compared to a top-end suburban counterpart has eroded by 9 percentage points on a same-store basis over the last five years. Suburbs have consistently outperformed on rent growth since the second half of 2013, and that trend won’t disappear anytime soon.
Simply put, the flood of capital chasing urban, luxury apartments has created a surge in new supply that – in turn – creates challenges for investors to achieve pro forma growth. Anyone who bought the conventional wisdom that urban areas offered higher barriers to entry were buying into a badly outdated principle. Urban construction has outpaced that of the suburbs for the last decade – and by a longshot. That, too, won’t change anytime soon.
Abundant supply makes it easy for renters, often light on possessions, to move two blocks away to a tempting property offering special incentives – particularly if the bloom is off the rose where they currently live. These renters are relatively affluent, upwardly mobile, and in fact mobile in general.”
The last paragraph is key…with enough supply, landlords’ ability to simply slap new paint on the walls and raise rents by $100 goes away.
It’s ironic don’t ya think. If there is such a dire shortage of housing, why build where you have to tear down existing housing? Something else is at work.
From what I see this dynamic flows from 1 major factor, and 1 minor one.
The major factor is foreign capital flows and investment from large institutions (in part driven by demographics…needing yield).
Foreign/large capital flows have primarily been to large urban markets (especially gateway cities). Want some pension fund’s money to build? If you tell them there isn’t enough housing in Sacramento, they look at you funny…but if you say San Francisco, the money flows in.
For lots of these foreign investors, yields of 4% seem luxurious (negative interest rates anyone?), where for most it seems crazy–so they build in places that are “safe” at low yields–NYC, SF, etc., where smaller domestic investors can’t get the numbers to pencil in the burbs–in part because capital that is going to buy the finished product wants higher yields.
The minor factor is that it seems like construction costs have risen earlier than prior cycles. We are at 75% of “normal” housing starts, why is construction labor so hard to find?
From what I’ve heard, lots of construction workers found other jobs following the crash, meaning that construction labor got tight a lot sooner than it would have had the downturn not been so extreme…and contractors are making a mint by building urban where large capital providers are desperate for yield, why would the contractors go suburban for less money?
I have a closing date now. I can guarantee the market will begin an irrevocable and accelerated slide downwards after Feb 7th.
Good one, MG. In all seriousness, I hope it works out for you and that you got a good deal. Renting sux in the current environment.
I think we mentioned it before when I was posting a couple months. It’s on 98040. Very quiet/secluded location. Very nice condition.
And though the tiny street it’s on has gone slightly soft since summer, the listings for the rest of the island are bonkers. It’s twice the house in many ways of others listed 20-40+% more. I’m getting it for about 15% under what looks to be a fairly accurate appraisal.
Really nice not to have to move, or deal with the market buying process.
Sweet! What a great area. God’s country, really. One of my bro’s lives up in Kirkland and he says it doesn’t get much better than Mercer.
Now, remind me, aren’t you buying what you’ve been renting? If so, it’s a win-win for you and the LL and how often does that happen?
Yep. We’re buying it from our landlord, so we got to avoid the whole house hunting madness.
It happens that renters buy the place they rent, but not that often. Prices around here are such most renters aren’t in a position to buy the house they are in. If you look on redfin or zillow, the 5 cheapest houses currently for sale on the island are $940k, $968K, $1.1M, $1.195M, and $1.55M. The cheapest new construction is $2M. The 5th one is most comparable to this place, but we’re paying just over #2’s price.
Here’s a pic of my home office where I’m typing this from, and what I have to look out on every day. http://i.imgur.com/dve75es.jpg
Looks like most recent reply got eaten?
Nice view. I like mine too.
I hope you’re making a lot more than $100K. Alot more. If you’re not, that view is going to suck a few decades of your life right out the window.
That is fantastic. I got interested after your post and looked at some videos of Mercer Island, it really does look like a sort of paradise, and a great place for kids as well.
MG, this is one of the things I so enjoy about the internet age. Seeing other places, right here in the US, that I otherwise would never have gotten a chance to see, or maybe even know about. On demand, too.
I did a little video tour of some spots along the shores of the Great Lakes last night and thoroughly enjoyed it and learned a lot. Today, it’s Mercer Island. How cool is that?
Not to mention that they took out the reversible HOV lanes on I-90 which is the only way to access Mercer Island, so they can run their choo-choo passenger train.
Islanders had an exemption for the past 40 years to be able to use the HOV lanes to get on and off the island, bypassing part of the typical backup in the regular lanes. That bonus is now gone.
@BlueSky - the lowest in the last 4 years was 303k. Best was $497k DTI is about 2.1x. The good times should last a couple more years minimum. My wife’s boring corporate gig brings home $150k, and we focusing on growing the emergency fund to 18+ months.
TBH, it’s a choice we agonized over, but baring a 2% type event, it makes economic sense in the long run. Most comparable size places on the island rent for close to our mortgage payment (or even more). We’re going to be here for 10-20 years, and location, location, location relative to the places we are likely to work (downtown or eastside/redmond). It feels strongly that we got a good price given the specifics - purchase price was 12% under appraisal and the lender specifically said that’s the first time he’s seen that in the last year.
Given the strong population growth, driven by the areas tech jobs, I’m betting that if/when the King County area corrects as part of a national event, it’ll be late.
palmetto - the thing that struck me most about our particular neighborhood int the 2 years we’ve lived here already - there are kids outside playing… lots of them… all the time. It’s like a throwback to an earlier time. Compared to the city of Seattle, the Island feels tons more safe and secure. Seattle has a serious homeless problem, but with only a couple ways on/off the island, the police here are basically zero tolerance for those. elitist? yea the liberals cry about it, but our kids have lots of park without fear of stepping on feces, needles or being chased by homeless druggies.
And it is very cool what is out there - I grew up on the great lakes - you could see Canada across the river from the elementary school playground, and I have seen with my own eyes (at age 7-8) the Edmund Fitzgerald go on by.
@redmondjp - I-90 and I-5 are a mess, and going get worse for a couple years before it gets better. I have no idea if the light rail to the east side will ever live up to claims or not.
My wife and I are currently work from home 95%+ of the time, so the pic above is the office and the commute is about 35 feet and one staircase.
MG, thanks so much for all the info. Yes, I was looking at the Mercer Island Parks video, it’s incredible what they have to offer, I don’t know of many places that have all that. This is really well done on your part, to make this happen and clearly, you’ve earned it. So enjoy!
That’s also a great story about having seen the Edmund Fitzgerald. I’ve been fascinated with the legend of it ever since I heard Gordon Lightfoot’s classic song, which is one of my favorites.
I was struck by some of the visual similarities between where you are now and where you grew up. I guess the Great Lakes region, outside of the urban parts, is fortunate in some ways in that the cold weather (and the biting flies) prevents it from being developed out of all recognition.
Wow! Nice stats …
https://www.unitedstateszipcodes.org/98040/
Bezos’ net worth soars, while 10% of Amazon’s Ohio employees are on food stamps, according to liberal-leaning think tank
Jaden Urbi
11:51 AM ET Thu, 25 Jan 2018
eff Bezos recently made headlines for becoming the world’s richest man. And after the launch of Amazon Go this week, Bezos tacked on another $2.8 billion to his net worth. But there’s another story that’s not getting as much attention.
Ten percent of Amazon’s Ohio workforce is on food stamps, according to a snapshot study done by a nonprofit liberal-leaning policy research group called Policy Matters Ohio. And it was released just days before Bezos’ net worth broke the world record at $105 billion.
The report looked at data from the Ohio Department of Job and Family Services. It found that roughly 700 employees, more than 1 in 10, at Amazon’s Ohio warehouses received SNAP benefits in August.
https://www.cnbc.com/2018/01/25/10-percent-of-amazons-ohio-employees-are-on-food-stamps-liberal-think-tank-says.html
I’ve often mused that there ought to be a way to add a surtax to a company for the number of employees they have that are receiving public assistance.
Minimum wage…
Minimum wage in my little burg (and the whole Centennial state) just went up to $10.20/hr. So far I have observed little to no effect on hiring. In fact, many fast food places have signage saying that starting pay is $11/hr or even higher.
I do believe that a $15/hr minimum wage would have an effect on employment. Minimum wage here is scheduled to eventually reach $12/hr in 2020. We’ll see what happens.
Bahahahanahahahahahahahahahahahaha …
https://www.cnbc.com/2018/01/26/japanese-cryptocurrency-exchange-loses-more-than-500-million-to-hackers.html?__source=sharebar%7Cemail&par=sharebar
Someone turned the 1s to 0s, OMG!
Be a neat little trick if the whole bitcoin thing was a japanese central bank op to suck up the excess chinese liquidity created over the last decade or so.
Only Satoshi Nakamoto knows the truth.
do the opposite of our resident cRoWmaN and u will make a fortune.This is a goldilocks economy people!
Portland(Goose Hollow), OR Housing Prices Crater 12% YOY
https://www.zillow.com/goose-hollow-portland-or/home-values/
https://snag.gy/m5EzRB.jpg
https://www.youtube.com/watch?v=zVuSG7IFc4c
Okay, housing experts… Who thinks the next (economic/housing) crash will be worse than 2008?
The investment banks won’t be exposed next time.
“This week, 10 years ago, Americans learned that the U.S. had its largest single-year drop in home prices in a quarter century. It began, in many ways, in people’s heads. That is, after all, where hopes ultimately reside. The belief that housing prices could only, permanently, inexorably, go up was a collective hallucination, but it felt very real.”
That sounds just like today’s stock market…and bond market…and housing market…and crypto currency market!
Enjoy the Everything Bubble while it lasts, because the Fed is seriously going to finally start thinking about preparing to take away the punchbowl at some point in the indefinite future…really!
what exactly can they do?
Seems interest rates are about all they have.
Raise rates and implode your own portfolio?
Suppose they decided it was best to keep extending and pretending forever instead of ever actively taking away the punchbowl. Isn’t it possible that the forces of destiny would eventually overtake them? Especially if China decided that it was time to tighten?
Marvin Gaye — Save The Children (live 1971 in Washington D.C.):
https://www.youtube.com/watch?v=96XFwLudPYw
Redmond, WA 98052 Housing Prices Crater 7% YOY On Plunging Housing Demand
https://www.zillow.com/redmond-wa-98052/home-values/
Try again, Housing Analyst . . . there’s nothing even for sale here right now.
Hello my good friend.
Oceanfront Miami Beach, FL Housing Prices Crater 9% YOY
https://www.zillow.com/oceanfront-miami-beach-fl/home-values/
https://snag.gy/m5EzRB.jpg
NPR’s Planet Money Indicator did a short interview with the CEO of RedFin. They played a segment called “overrated” and “underrated” where they ask the CEO a series of questions on a variety of topics. Here were some of the more HBB relevant pieces:
Overrated or underrated, having Amazon’s new headquarters in your city?
Adequately rated. I know that every city is twisting itself into pretzels and giving ridiculous tax breaks to Amazon, but I do think that there are all these places where people don’t have good jobs and Amazon can take some of the wealth of Seattle or Silicon Valley and bring it to the center of the country and that can be really good.
But I think people are over-indexed on Amazon. There is going to be Apple, and there is going to be Dropbox, and then there is going to be Intel. We have to find more affordable places to employ engineers and it turns out that they want to live there and so do the companies. So I think you are going to see a zillion HQ2s.
Overrated or underrated, the mortgage interest tax deduction?
Overrated. It’s a tax break for rich people. We don’t need any more of those.
Overrated or underrated, owning a home?
Overrated. A lot of people just have this American Dream that they feel like, “I’m not a real man or a real woman unless I own a home,” and they buy it for all the wrong reasons.
Regarding the spread of HQ2 to lower cost of living locals, this is something that I believe Oxide has been suggesting is the future for some time. It sounds like Redfin’s CEO agrees. I don’t know much about this CEO, but he sounds like he has his head screwed on pretty good. He struck me as a pretty decent fellow (bonus points for being a D&D dungeon master), especially since he slammed CEOs in general.
Here is a link to the interview:
https://www.npr.org/sections/money/2018/01/26/581131310/amazon-ipos-and-the-queen-of-the-demonweb-pits
“Overrated or underrated…”
Reminds me of the baseline test a la Blade Runner 2049.
I don’t know much about Redfin either, but IIUC, this guy wants to break the realtor monopoly and lower than 6% extortion fees from the NAR.
Ready for StarCoin?
https://www.express.co.uk/finance/city/910629/bitcoin-cryptocurrency-news-latest-Ripple-Ethereum-price-value-surge-starbucks-payment
sponsored by
CITY & BUSINESS
Bitcoin SNUBBED after value plunge as Starbucks announces plans to accept cryptocurrencies
STARBUCKS is set to become one of the first major high street shops to accept cryptocurrency after it announced plans to incorporate blockchain as part of its payment strategy, but in a snub it has ruled out using Bitcoin.
By Dan Falvey
00:48, Sat, Jan 27, 2018 | UPDATED: 00:59, Sat, Jan 27, 2018
Interesting.
Mercer Island foreclosure.
Loan issued in 2005. Foreclosed in 2017.
https://www.zillow.com/homedetails/4830-E-Mercer-Way-MERCER-ISLAND-WA-98040/48767833_zpid
Beautiful island.
Now multiply that by 25 million.
Bitcoin prices tumble; Japan cracks down on Coincheck after hack
By Barbara Kollmeyer
Published: Jan 29, 2018 4:06 a.m. ET
Bitcoin is on fire lately, but no caution needed?
Bitcoin prices slipped on Monday, as the market weighed up news of a fresh crackdown on a cryptocurrency exchange in Japan after the biggest theft of digital assets since 2014.
Spot bitcoin prices (BTCUSD, -4.47%) fell 4% to $11,215.74, and ether coins on the Ethereum blockchain fell 4.8% to $1,188.60, according to prices on research and data site CoinDesk.
https://www.marketwatch.com/story/bitcoin-prices-tumble-japan-cracks-down-on-coincheck-after-hack-2018-01-29