Rents Fall In The Face Of An Inventory Glut
A report from CNBC. “Scan the downtowns of the nation’s largest cities, and you are likely to see a staggering array of cranes. Most of them are helping to build luxury apartment buildings. In fact, multifamily construction is now at a 40-year high; the trouble is, developers are putting up the wrong kinds of buildings. The luxury market is largely overbuilt, while there is a shortage of affordable rental housing, and developers are hamstrung by the now record-high cost of construction.”
“Developers say they simply can’t afford to add anything but luxury. ‘The two-by-four doesn’t care whether it’s in a luxury building or in an affordable building. It costs the same,’ said Toby Bozzuto, CEO of The Bozzuto Group, a multifamily management and development company operating in the Northeast and Mid-Atlantic. ‘The differential of course, is the rent and there’s a huge disparity in high-end rent versus low-end rent. So the issue is for us to develop an economically viable, feasible project, it has to be, by its very nature, high end. The rents have to be high to support the cost.’”
The Longview News-Journal in Texas. “A shortage of affordable housing rentals in Longview is prompting developers to propose projects to address the need and seek federal tax credits to make them work economically. Others agree a demand exists for apartments for renters with moderate incomes — and that the market is saturated with higher-end apartments. Karen Holt, housing navigator with the East Texas Aging & Disability Resource Center, said in a recent statement that data show a majority of families in the area are paying ‘well over’ the customary 30 percent of their income toward rent or mortgages. The median household income in Longview is $49,013 a year, according to data from Longview Economic Development Corp.”
“Holt also said the supply of conventional or high-end properties is far greater than current demand. Teri Elliott, manager at Saddle Brook Apartments on H.G. Mosley Parkway, concurred. ‘We are so overbuilt right now,’ she said. ‘Because of it, the average occupancy in Longview is 85 percent.’”
The Colorado Real Estate Journal. “While outsized rent hikes and affordability concerns have dominated the headlines in Denver’s apartment market in recent years, our robust apartment data set reveals that the environment has become materially more favorable to renters in several respects over the last few years. Concessions and discounts have become far more prevalent in Denver over the last few years. Concessions were almost nonexistent in Denver a few years ago, but have normalized alongside substantial levels of new development.”
“Also pictured in the chart is Nashville, Tennessee, which saw concessions rise from almost nonexistent levels a few years ago to one of the higher rates in the country today. The uptick in concessions in Nashville promotes the case that the metro may have been overbuilt. Lofty discounts also are common in Cherry Creek, Glendale and Denver’s pricy southeast suburbs (such as Lone Tree), all of which have experienced substantial levels of development in recent years.”
“Concessions are likely to further escalate in 2018. In January, 27 percent of all rents were tied to a rent concession, up from a peak of 23 percent during the prior winter leasing season. That uptick coincides with Denver’s next supply wave, which kicked off in earnest during the second half of 2017. This supply wave will continue for another two years, as nearly 10,000 new apartments are expected to deliver in each 2018 and 2019.”
From the Arizona Republic. “Valley apartment rents have climbed about 20 percent since 2014, while wages in the Phoenix area are up by less than half that much. Longtime Arizona economist and real estate analyst Elliott Pollack recently told a group of builders what the Valley needs to continue to grow is more ‘worker apartments’ that people can afford. It’s not that there a lack of apartments in the Phoenix area, particularly new ones. Almost 17,000 were recently built, are underway or planned.”
“But most of the new ones are upscale apartments with rents above what the typical Valley worker can afford, even with more than two weeks of their earnings. Also, some affordable apartments were torn down to make way for new pricey ones. There is some hope for struggling renters. If too many new Valley apartments go up and don’t fill up, rents could fall.”
From Inman News on New York. “Average rental prices in Manhattan and Queens fell in January, and prices in Brooklyn rose modestly, as New York City landlords aggressively pushed a record number of concessions in the face of a citywide inventory glut, according to a new report. In Manhattan, where average rent for a two-bedroom apartment fell 5.3 percent—from $5,040 in December to $4,771 in January—as many as 49.3 percent of all new leases signed included hefty owner-paid concessions, up from 36.2 percent a month earlier, according to the report by Douglas Elliman.”
From the Alaska Star. “Anchorage zoning officials listened and changed course after hearing from Eagle River residents opposed to a plan that would have opened the door to a heavy-density housing development near downtown. Eagle River resident Darryl Parks, who has worked in concert with Quimby and others, said they want to make sure future development is in keeping with plans agreed to in the 2010 Eagle River Land Use Plan.”
“Eagle River already has seen a glut in the apartment-condo-townhouse style housing market, he added. Relatively recent developments are all the same type of units proposed for Carol Creek, Parks said. ‘Both are on the market and are in the process of being developed for the last 3-5 years. And they have not sold out. Here we are and yet the market isn’t there for it,’ Parks said.”
‘The differential of course, is the rent and there’s a huge disparity in high-end rent versus low-end rent. So the issue is for us to develop an economically viable, feasible project, it has to be, by its very nature, high end. The rents have to be high to support the cost.’
Well if they aren’t you can always stamp your little feet Toby. Here’s a guess: you are staring at bankruptcy. And Olick won’t bother to cover your flame out cuz it’s bad for the REIC.
As the saying goes, you can’t squeeze blood out of a turnip, the turnips being those poor saps who are voluntarily renting luxury apartments (or perhaps renting them because there are no other options available, save sleeping in the car). Sure, people will overextend themselves and the charade can go for a bit longer than one would expect, but even that can only go on for so long. Once the easy credit is over, then comes the reckoning, the bankruptcies, the evictions, and the bursting of the bubble. Much that seemed profitable will turn out not to be.
In the meantime, real harm is done, both to the investors and the wreckage of dashed hopes and dreams.
Luckily the number of wannabe luxury apartment tenants who can easily afford to pay the rent needed for these developments to all pencil out, and make their owners very rich, is unlimited.
I keep hearing phrases like “crater” and “cave in” and “flame out” and other vague terms. But what — specifically — is going to happen when these LLs can’t collect the rent that they need to cover land/construction costs? Who’s going to eat the loss? What happens to the buildings themselves?
Is the gov going to take over and make them council housing?
Is someone else with a pile of cash going to operate them at a loss until the pile of cash is gone, a la the drycleaner effect?
Are the banks going to hold the buildings on their balance sheets but off the market while the buildings deteriorate and renters are squeezed into fewer buildings? That’s how the housing bubble ended.
Or are new buyers going to go beg for subsidies from the gov, instead of letting rents fall?
“Are the banks going to hold the buildings on their balance sheets but off the market while the buildings deteriorate and renters are squeezed into fewer buildings?”
That’s how Obama’s crony capitalists wrapped up the end of Housing Bubble 1.0.
Now that Republicans, aka the champions of free market capitalism, are in charge, perhaps we can hope for a better outcome at the end of Housing Bubble 2.0.
“That’s how the housing bubble ended”
It’s not over. Until extraordinary accommodation is finally ended, we won’t be able to see all the naked swimmers stranded on the beach.
I have to post about this massive work-live community that was coming online before the Great Recession. The whole project went into foreclosure and sat empty for about 10 years. It was odd because I think about 10-20% of the units were owner occupied, but the project was lost to the bank. It became a huge eyesore to the community and it languished half completed for almost a decade. My last trip north I realized that it was finished, so I think someone bought it out of bankruptcy. The original plan was condos, so I think the rest of the remaining units must have been bought out and are being rented as luxury. The Google reviews of the place don’t inspire confidence. I remember walking around the mall and seeing a kiosk about this gorgeous master-planned community coming. It all seemed so grandiose and beautiful. Frankly, it was somewhere where I would have wanted to live (I’m not much into SFH or townhouses, I prefer the low-maintenance condo lifestyle). But the entire thing turned out to be a nightmare for so many people involved. It looks as if the nightmare is continuing.
http://midtown360.com/
I remember seeing some work/live type stuff when the last bubble was peaking, calling itself “artist lofts” or something, where they had commercial space downstairs and their living space upstairs. The most hilarious aspect was that they said “staring in the mid $500ks” or something. Struggling artists don’t have two nickels to rub together, and that price point is laughable.
Struggling artists don’t have two nickels to rub together, and that price point is laughable.
Remember the Ghost Ship Warehouse fire in Oakland in 2016? Artists were holed up there due to exorbitant rents, and the fact that they were, well, artists.
fx county is talking re purposing office buldings etc ?
not sure what that means
30 million illegals have to live somewhere. If that’s not enough we can get more any time we want. This isn’t anything a few rent vouchers can’t fix.
Illegals seem to prefer SFH to attached product. Main reason: parking. Each house needs at least 4-5 parking spaces for everybody’s beater and white van. Want to keep out illegals? Build studio apartments and/or charge for the second/third parking space per unit.
Nah, then they just park a few blocks away in front of somebody else’s house.
I have some Russian “contractors” who live down the street from me - they park their beat-up 1990s work vehicles out on the street in front of other people’s houses. They are usually gone from 9am to 7pm so it doesn’t seem to cause too much of an issue.
Good luck Toby.
Brooklyn, NY 112016 Rental Rates Crater 15% YOY
https://www.zillow.com/new-york-ny-11206/home-values/
I wake up to the sound of a couple hundred units being added behind my unit. It’s an Avalon apartment community.
Another 200+ units are being built next year about 1/2 mile away.
This is in the Boston Bay area.
‘Valley apartment rents have climbed about 20 percent since 2014, while wages in the Phoenix area are up by less than half that much. It’s not that there a lack of apartments in the Phoenix area, particularly new ones. Almost 17,000 were recently built, are underway or planned.’
‘But most of the new ones are upscale apartments with rents above what the typical Valley worker can afford, even with more than two weeks of their earnings.’
Week after week goes by and all we get are these “gee wiz” reports. No on steps up and asks, “how could this be going on in every city and no-name burg in the country?” What are the odds of this huge industry making a 40 year mistake of this magnitude, everywhere all at once?
Meanwhile, Yellen, Bernanke and company are all smiles among each other, toasting to their achievements at Jackson Hole or some other 5 star resort.
“how could this be going on in every city and no-name burg in the country?” What are the odds of this huge industry making a 40 year mistake of this magnitude, everywhere all at once?
I see the reason being the suppression of interest rates. And suppression of interest rates is kind of like price controls. Interest is the price of money. Suppress it while providing copious amounts of money (something that wouldn’t happen with physical goods - price controls lead to hoarding, black markets and shortages), and demand to “buy” it - i.e. go into debt - surges.
Additionally, injection of money into the FIRE sector encourages speculation.
Finally, this is all driven by economic policymakers’ belief that debt is the source of economic growth, who then are willing to co-opt society’s wealth and make it available for lending.
All of this ultimately comes down to the seductive idea that deft redistribution of the money supply can lead to prosperity. Unfortunately, like central planning in the past, it seems to be leading to a dystopian outcome.
Maybe give that a little more thought. Can you really have a shortage (hoarding) of money due to price controls (suppressed interest) and also a wild speculative spending spree?
“And suppression of interest rates is a form of
kindoflikeprice controls.”Fixed it. You see, interest rates are a price — namely the price of borrowing money, given the borrower’s credit rating, the loan duration, the risk of the project to which the loan will be applied not working out as planned, and other credit risk factors. Suppressing interest rates is thus a form of price fixing.
Normally price fixing is illegal, according to the Sherman Antitrust Act. But if the Fed does it, it’s legal, especially if there is a crisis, in which case the regular laws don’t apply.
Denver = CRATER.
‘More luxury housing coming to Bayonne, but at what cost?’
‘The city held a groundbreaking ceremony yesterday for an eight-story luxury apartment building on property that has been vacant since 1999. The project, headed by Dimitris Vattes of Velios Capital, will tower over Broadway at the corner of 22nd Street and will house 72 units comprising studio, one- and two-bedroom apartments. The development received a 25-year tax abatement.’
‘But some residents aired concerns about rising housing costs in Bayonne and what luxury projects like Vattes’ will do to the cost of living in town.’
‘Rent figures for this new project stand between $1,625 to $1,720 a month for studios; between $1,900 and $2,300 for one-bedrooms; and between $2,495 and $3,750 for two-bedrooms, Vattes said. The projected rents are typical of the hundreds of luxury rental units set at market-rate that the city has approved in the past four years.’
‘A large two-bedroom duplex unit with a patio will go for $4,865, Vattes said. Bayonne’s estimated median household income in 2016 was $59,628, according to city-data.com.’
“city-data.com”
On the forums of which only Realtormath is allowed.
“The development received a 25-year tax abatement.”
Meanwhile people nearby lost direct sunlight to another monolith.
The development received a 25-year tax abatement
You know, I’m all for allowing people to keep their own money (it’s not a subsidy!) but why would a local government choose to allow a luxury development to pay no taxes for 25 years in an area of the country where the average-Joe property owner is stuck with outrageously high taxes?
Who is this benefitting? Who was paid off?
There are more brown envelopes in housing than any other business.
I believe you are correct. It’s the only explanation for a lot of what we see. It’s not like this housing provides ongoing jobs, which might actually be a justification for a 25-year tax break.
Who or how many?
Agnew took Jacksons in brown envelopes when he was Nixon’s V.P.
‘History And High Rent Are Hemorrhaging Business From Newbury Street’
“The retail turnover is always high here, but recently it’s been fast and drastic,” Select Oyster Bar chef and partner Michael Serpa said. “You see a lot of empty storefronts.”
‘For decades, Newbury Street has been Boston’s version of Rodeo Drive or Fifth Avenue. Home to some of the biggest names in luxury retail and a variety of see-and-be-seen restaurants, the chic Back Bay street has commanded some of the highest rents in the city. But new development in the Seaport and Fenway, as well as renovations to the nearby Copley Place and Prudential Center malls, have drawn shoppers at all price points away from Newbury.’
“I’m seeing the same vacancies now that I saw eight months ago,” C. Talanian Realty Co. Director of Business Development Chris Talanian said. “Rents are high. We’re in a bubble. We’re in a retail bubble.”
Janet? Janet?
Bueller?
Around here, people are asking $600 per month for a driveway space to park an rv.
Well… I can ask $50k for my 10 year old Chevy pickup but where is the buyer at that price?
So it is with all depreciating assets like houses.
Kensington, MD Housing Prices Crater 20% YOY As National Housing Demand Plummets To 20 Year Low
https://www.movoto.com/kensington-md/market-trends/
Your Chevy truck is 13 years old now.
I’d get out and push a 50 year old Chevy home before hauling a DonkeyCart.
Mountlake Terrace, WA Housing Prices Crater 13% YOY As Housing Inventory Floods Market
https://www.movoto.com/mountlake-terrace-wa/market-trends/
‘High-rise, luxury apartment building could bring 300 new spaces to downtown Salt Lake’
‘A high-rise building, about 250 feet tall, could be built in downtown Salt Lake City offering 300 apartments in a part of town where it’s hard to find a place with affordable rent.Developer Dan Lofgren of Cowboy Partners said he will submit a request to the Salt Lake City Planning Department to allow the tall building which would be about 100 feet higher than what’s normally allowed.’
‘If it all goes as planned, the apartment units would start at about $1,000 rent for studios and go a lot higher for 2-3 bedroom units. Christian Harrison, who heads the Community Council in downtown Salt Lake City, said he is thrilled for the project – even though the housing won’t be affordable.’
“I want a thriving downtown community. We really need housing for every income,” he said.’
‘Harrison said for many years, during the 60’s and 70’s, the downtown population cleared out. Then, over the last 20 years, people started returning to downtown. Now, there is not enough housing in any price range.’
‘Harrison said even if the new development is not affordable, it will help ease the housing crunch and give options for people of higher incomes who are edging-out people on tighter budgets.’
‘Melissa Jensen, Housing and Neighborhood Development Director for Salt Lake City, said the city has a new plan for housing and is working with developers to create more affordable housing. Ideally, people should pay no more than 30 percent of their income on rent. That’s not the case right now.’
“What we know is about a quarter of residents in Salt Lake are paying half of their monthly income toward rent,” she said.’
‘As we’ve reported, many workers in Denver and beyond are finding it hard to make a living despite Colorado’s sustained economic boom. A new report provides insight about this apparent paradox by turning the spotlight on Coloradans struggling to make ends meet thanks in part to high housing costs, expensive child care and wages that have barely increased in real dollars during the past two decades.’
“The economic growth and performance in Colorado is very strong,” acknowledges Rich Jones, director of policy research for the Bell Policy Center, whose analysis is entitled “Guide to Economic Mobility in Colorado.” He adds that “we have low unemployment, a lot of people are moving into the state and real estate prices are going up. But to some extent, the growth has been uneven. There are areas of the state that aren’t benefiting as much as others and people who aren’t doing as well.”
‘The report is accessible below in its entirety. But here are some of its key takeaways: “Colorado’s overall economic recovery stands out, but gains have been uneven throughout the state. Distressed communities persist both in rural and metro areas and Colorado is adding more low-wage jobs than any other. When adjusted for inflation, average weekly wages have only risen $33 since 2000….”
‘Lack of affordable housing is a top concern for Coloradans. A household must make $21.97 to afford rent and utilities in Colorado, but the average renter wage is only $17.13. Nearly half of all Colorado renters are cost burdened, with an additional 24 percent severely cost burdened….’
‘”This past summer, we spent time meeting people around the state,” Jones notes. “We heard from a lot of folks, and many of them talked about the high cost of housing. That was pretty universally a concern. And on the Western Slope, particularly, people talked about the availability and cost of health care, but also the notion that earnings are not keeping pace with the cost of living — or that even though people have jobs, they aren’t paying very well. They’re having to work two or sometimes even more jobs just to make ends meet.”
‘The data that jumps out for Jones includes “the average weekly wages in the state,” he says. “We went back from 2016 to 2000, and when we adjust for inflation, they are essentially flat — and you rally see the effects on the two recessions we’ve had since then on people’s earnings and on the economy. The Great Recession,” which dated roughly from 2007 to 2012, “was so deep and affected so many people that we forget about the early 2000s recession that up until that time had been the worst one we’d ever had.”
‘Colorado “has always been a state that’s had a lower percentage of low-wage jobs compared to other states,” he continues. “But the percentage of those occupations went from about 13 percent to 22 percent. We still look better than some other states, but that’s a 69 percent increase for us — and that means there’s a bigger chunk of people working low-wage jobs in terms of the population than we’ve seen in the past.”
‘For individuals in this scenario, housing costs are what Jones characterizes as “a key factor, particularly in the Denver metro area and around the Front Range — looking at how much the cost of housing has gone up and how it’s risen faster than wages and other costs. We weren’t one of the states coming out of the Great Recession with a big housing bubble, like Nevada. But we’ve seen a big influx of people, and we didn’t build nearly as many housing units during a ten-to-fifteen year period that we needed to accommodate them. So we have an imbalance, with expenses having outstripped wages.”
‘No wonder that “when we talked to people in different parts of the state, housing tended to be at the top of their list,” Jones admits. “They’d say, ‘I feel really stuck. I can’t get ahead.’ And a lot of that is from the high cost of housing.”
‘Also telling for Jones were the figures that emerged “when we looked at the number of people in certain occupations where the mean wages were equal to or below what it would cost for a family of four to stay out of poverty. In 2016, that was roughly $24,000 a year, and we looked back over that in time.”
You know, this doesn’t sound like a boom:
‘When adjusted for inflation, average weekly wages have only risen $33 since 2000′
Local NPR was crowing this morning that if you bought a “starter home” here 5 years ago you’ve likely doubled your equity.
Using a 3% down payment ? (which is typical for starter homes). That won’t even cover the selling commission?
If you put 20% down on $300,000, that is $60,000, so double to $120,000 and you sell for $360,000. 5% commission is $18,000, so maybe you net $40,000. Still better than rent, assuming rent/buy parity.
Better hurry up and sell before interest rates normalize and equity flies.
But what do you do while you’re waiting for interest rates and housing prices to normalize? I guess you can live in a van down by the river…
Rent it for half the monthly cost. Buy later after prices crater for 70% less.
Napa, CA Housing Prices Crater 7% YOY
https://www.zillow.com/napa-ca/home-values/
https://snag.gy/m5EzRB.jpg
you can live in a van down by the river…
Or you could live on a boat on the river and later buy a house all cash with the money you saved. Just sayin.
Ingenious approach, I love it.
If you brought for $300k then it sells for $600k (doubling your equity means the house has doubled in value). So you walk away with $340k. A co-worker just sold a place here in the SF Bay area purchased in 2012 and walked away with $400k.
doubling your equity means the house has doubled in value
Not necessarily true. If you only put $10k down on the $300k house, and the house goes up to $310k, you’ve doubled your equity (from 10k to 20k)
Hello my friend.
San Francisco, CA 94110 Housing Prices Crater 7% YOY As Residents Flee Wretched Conditions In Bay Area
https://www.zillow.com/san-francisco-ca-94110/home-values/
https://snag.gy/m5EzRB.jpg
“here 5 years ago you’ve likely doubled your equity.”
When I was in High School we had a spoof song for the Beatles song “Yesterday”.
It was…
Leprosy
Leprosy
All my skin is falling off of me
I’m not half the man I used to be
Oh Leprosy came suddenly
Wait a minute, that could be turned into,,,
Equity all my cash had come from Lending Tree
Now it seems I’ll have no place to pee.
Oh, I lost all my Equity .
Suddenly, I’m not half the man I used to be.
There’s Foreclosure hanging over me.
Oh, Equity left suddenly.
For those not old enough yo remember the song
https://www.youtube.com/watch?v=haWRUpPw_tI
I may need to get out the Taylor and cut a voice recording of this lyrics masterpiece.
You know, this doesn’t sound like a boom
It’s a100% fake boom. And it’s not just low wage workers who are affected.
Before the layoff last year, I had coworkers who hadn’t had a raise in almost 10 years. Yet they stayed put (I was one of the few who did get raises). And the reason became obvious to me when I dipped my toe into the job market last year. There’s a LOT of competition for SW Engineer jobs, and other places pay even less than we do. It took some of my fallen comrades as long as 6 months to find new gigs, and many had to accept no benefit contract jobs which when you factor in that you don’t get any paid time off (holidays and vacation) or health insurance they actually pay less than the old job.
I remember when there really was a boom. You’d get called in for an interview, and if you didn’t come across as an idiot you’d get an offer ASAP, and it included a nice pay bump (say around 10%), because they knew you had other options. Now you get to run a gauntlet of interviews that span over weeks, and they make you wait days, if not weeks for either an offer or a “we’re not moving forward with you”. I associate that experience with an anemic job market (also, the “no raises” thing is an indicator of that as well)
Flatlanders considering a move here need to read this.
And to make matters worse, most of the local “quality” employers in tech have been layoff machines for quite a while: HP, IBM, Intel, Agilent, any data storage firm (NetApp, Seagate, etc.), the telecoms (Level 3, Lucent, etc.) I suppose that was another reason my coworkers stayed put, last year was our first mass layoff in about 8 years. I do recall on of the members of the lunch bunch saying that’s why she stayed on.
Same kind of situation where I last worked. Stayed because you knew what you had and the lack of better opportunity. There were people who left for new jobs and I thought how lucky they were to escape - Then you would hear how the new gig axed them. Maybe better to stay put then be in a revolving door of jobs? I go out on Linkedin to see how previous coworkers are doing and just see a life of job hopping. Not a pretty site.
Jobs moving overseas where labor is cheaper.
Everything is getting less reliable.
The great leveling because America had it too good for so long isn’t that what we were told ?
Same kind of situation where I last worked. Stayed because you knew what you had and the lack of better opportunity. There were people who left for new jobs and I thought how lucky they were to escape - Then you would hear how the new gig axed them.
I know of people who got axed in as little as six months after changing jobs, often with 80% of their department.
I know of one guy who quit because he got a FedGov job. Says he took a pay cut, but since he won’t have to worry about layoffs that it’s worth it.
Everything is getting less reliable.
In some sectors, 2-3 years without a layoff is considered longevity.
he got a FedGov job. Says he took a pay cut
But the Heritage Foundation tells me that FedGov workers make more $$ than private sector.
I have said that the real perk of FedGov is job security and health insurance.
You have to buy your own health insurance as a federal worker, just like at any other place. It’s not provided for free.
How much of it was H1-B?
H1B yep they get let go too. Often companies like to get rid of older more expensive workers though. H1B is young and cheaper.
Big company buys a small startup and 1 year later has a big layoff. Then a year later hire H1B because you don’t have enough people to meet customer demands. Customer cancels orders because they over ordered anyway and bye bye H1B . Big company buys another startup with newer technology to get customer business back,
rinse repeat.
We only had a handful of H1-Bs at the Broomfield campus. The Santa Clara campus was a whole different story, lots of H1-B’s there (the cafeteria has an Indian food station). It’s harder for them to job hop, and many were riffed last year.
“You know, this doesn’t sound like a boom:
‘When adjusted for inflation, average weekly wages have only risen $33 since 2000′”
This is what happens when you have a President Obama who campaigns on promises to help the little guy, then gets elected and turns around and absolutely eviscerates them with a “no banker left behind” policy. It was a masterful, albeit sleazy, bait and switch.
This is why I don’t believe all this nonsense the media has been spouting lately about “wage inflation.” There’s no wage inflation at all, and there won’t be any. We’re in an absolute crisis insofar as pay is concerned in this country. That’s why the alphonso bedoyas of the world are borrowing on credit cards to buy Sh!tcoin. They’re looking for any way possible to get out of the crippling financial despair they find themselves in.
Did Obama actually promise anything to anybody? I think we all heard what we wanted to hear, and there were no specifics.
I know Oh was specific after trayvon he proved content of character did not apply to all people.
I get the sense that there is indeed upward wage pressure in my neck of the woods, but this is generally for the lowest paid workers, which is actually kind of a good thing if you ask me. A lot of this is the Walmart effect. Because Walmart raised their wage to $11/hr, anywhere else has to raise it to at least that amount. There are lots of jobs around here. Not particularly well-paying ones, but there are lots of jobs.
‘The vacancy rate in Anchorage’s top-tier commercial office space market nearly doubled from 2016 to 2017, an aftershock of job losses in the oil and gas sector and industries closely tied to it, according to numbers presented at a real estate industry event.’
‘Some landlords are offering more and larger concessions to tenants, such as more months of free rent at the start of a lease or agreeing to put more money toward office improvements, said Mark Filipenko, owner at Bond Filipenko Commercial Properties in Anchorage.’
“I think just primarily white-collar jobs, oil- and gas-driven jobs, engineers — it was a contraction within the oil and gas sector primarily,” Filipenko said. “It’s a big impact in Anchorage. We saw those layoffs happen and they translated into vacancies.”
‘Prime office space in the city — known as Class A space — had a vacancy rate of 14.6 percent in 2017, up from 7.9 percent in 2016, Filipenko said in a presentation last week at the Building Owners and Managers Association of Anchorage’s annual commercial real estate forecast. He doesn’t recall the last time the vacancy rate was as high. In 2015, he said, the rate for this type of space was about 5.8 percent.’
‘Bill Popp, president of the Anchorage Economic Development Corp., said it’s mainly job losses in the professional and business services sector — which includes architects, engineers, lawyers, accountants and more — that have driven the office vacancy rate higher during Alaska’s economic downturn.’
‘Anchorage employment in that industry was down about 3 percent last year compared to 2016, according to the Alaska Department of Labor and Workforce Development. Jobs in professional and business services had been declining for several years.’
“We’re back down to right around 2009 employment levels, which is right where the bubble began,” Popp said, referring to professional and business services jobs in Anchorage.’
fairfax co is going to re purpose some office space
wtf does that even mean?
make it into apartments or live/work lofts….
Why should it not follow the same path as Houston.
‘Over the past several years, the unofficial motto of the New York City hotel market has been “If you build it, they will come.” Tens of thousands of new hotel rooms have cropped up across the city this decade, and there are tens of thousands more in the pipeline due to arrive in the coming years—but despite all that new supply, the rooms keep getting absorbed.’
‘But other hotel market players are far less convinced. Richard Born, the co-founder of BD Hotels and the hotelier behind boutique Manhattan brands such as the Mercer Hotel, the Greenwich Hotel, the Ludlow Hotel and the Jane Hotel, espoused his view that, “with some exceptions, by and large the hotel market in New York is terrible.”
‘He cited a combination of factors including the “erosion” of daily rates (which he attributed to the influx in room supply as well as Airbnb’s vast “shadow inventory”), higher property taxes and operating costs, and the increased influence of third-party booking websites like Expedia and Travelocity (which have brought more transparency and reduced hotels’ “pricing power” while also charging booking commissions that are an additional “line item” for operators).’
“Any hotel operator operating today is making a fraction of their net operating income compared to what they were making 10 years ago,” Born said.’
Gosh, it’s almost like everything that gets built, there’s too much of. Like there’s a pattern or something.
‘Supply of off-campus housing exceeds demand, study finds’
‘When it comes to off-campus housing for Binghamton University students, supply has already outpaced demand, according to a study of housing in Broome County. In the last six years, five student housing developments have cropped up in Downtown Binghamton, starting with Twin River Commons in 2012 and ending with The Printing House, which opened its doors in fall 2016. These complexes boast a total of 2,781 beds and on-site amenities like study lounges, game rooms and parking garages.’
‘The report describes the rental market for these apartments as “volatile,” citing the “aggressive promotions” offered by buildings to encourage students to sign leases. The motivation for much of this development was BU’s “20 by 2020” initiative, which aims to increase the total student population to 20,000 by 2020, and likewise increases the demand for student housing. But that level of demand has already been met, the study says.’
“Any new beds added to this inventory will exceed demand, and there continues to be the pending issue of whether this existing inventory can be sustained,” the study reads.’
‘While the rental choices for students abound, options for other segments of the population aren’t nearly as varied. In fact, over 90 percent of available market-rate rental housing units in Broome County are occupied, and their rents have seen a steady increase in recent years. The lack of suitable housing options in Broome County is one factor in the county’s 7.3 percent population decline since 1990, according to The Agency’s report. The drop in population is projected to continue, decreasing by at least 3,500 by 2040.’
Was touring eastern Canada about 4 years ago. We stayed at Prince Edward Island university dorms during the summer. The local government was in a cash shortfall and higher education budget had vastly exceeded what was planned for. Long story short, the university was looking for ways to cut costs and increase revenue. The upside is that they turned a couple of old dorm buildings into hostel type hotels. We slept in very spartan conditions, but pretty reasonably priced for a vacation for a few nights. Nothing to write home about, but it was a good way of dealing with excess capacity.
That’s communis’
‘Rent a moving truck from Las Vegas to San Jose and you’ll pay about $100. In the opposite direction, the same truck will cost you 16 times that, or nearly $2,000.’
‘What accounts for the difference? The simple laws of supply and demand, says economist Mark J. Perry. With so many people leaving the Bay Area, there are not enough rental trucks to go around.’
This is happening in every bubble city. People are running away from the high prices.
We looked at condos in San Diego last year along the waterfront. There were 225 listings in zip code 92101. Now there are 255 for sale. That is a 13% increase.
How I wish I could afford to live on or near the SD waterfront.
Seems like it would be cheaper to fly to Vegas (or the closest cheap locale) and rent the truck there, drive it back to San Jose, and move.
What are you assuming about the driver’s value of time? Maybe would make sense if you made a vacation out of the driving experience…
It depends on how far away. Vegas is a bit far. But if you’re a $20/hr schuck it could pencil out. $1500 is a lot of money for someone like that.
I completely agree, and it’s a valid plan for some people.
You would still have to return it to San Jose, and then find your way back to Vegas. So it’s a 2500 mile trip rather than a 500 mile trip.
No, you’re moving to Vegas, so you fly to Vegas, rent the truck as an “in town” rental with unlimited mileage instead of “one way,” drive to San Jose to pick your stuff up, then drop the truck off back in Vegas when you’re done moving into your house.
OK Swan that would be sweet, but maybe it’s not like bending over and picking up $1500 off the ground. The one way to LV from SJ is $1500 for a 20 ft truck. $1000 for the next size down. This according to the uhaul site. In town rental for the 20 footer is $40 a day and $.79 a mile. So your 3 day 1000 mile trip is about $1000 and then you get to pay for the gas and your plane ticket. Do these trucks get 10 mi/gallon? Let’s call it an extra $300 for the additional gas.
Still, that’s a 1500 (correction) trip and it’s not like flying and then driving an extra fun 500 miles is without its wear and tear on you.
Last time I did something like this it was Colorado Springs to NY with my daughter and her rug rat in the cab and her personal ride on the trailer. Just the thought of driving the Uhaul round trip to save a few bucks made me shudder.
Penske has local trucks with unlimited mileage, and they are much nicer than Uhaul. I know because I have rented them many times. I did a 1750 mile trip in 2 days in one, to pick up some business equipment.
I believe you, but their site says $.70/mi for Las Vegas. At $40/day a much better deal, and a bigger truck.
If they gave the mileage for free I can’t see how they would keep their fleet reasonably maintained.
I have used Penske several times over the last three years. The only time I could get unlimited mileage was in a one way contract. Round trips were always $/day plus $/mile.
San Francisco, CA 94110 Housing Prices Crater 7% YOY As Residents Flee Wretched Conditions In Bay Area
https://www.zillow.com/san-francisco-ca-94110/home-values/
https://snag.gy/m5EzRB.jpg
The crash is going to be epic.
https://www.marketwatch.com/story/ethereum-chief-warns-cryptocurrencies-could-drop-to-near-zero-at-any-time-2018-02-19
A good read; Too much good stuff to put on Ben’s blog.
I suggest Ben’s readers put down their bags of Cheetos, pull up their britches, and give this article a close read.
https://wolfstreet.com/2018/02/18/blockchain-stocks-completely-disintegrate/
841020193852110555964462294895493038196442881097566593
344612847564823378678316527120190914564856692346034861
045432664821339360726024914127372458700660631558817488
15209……………………..TRAPPED……………………469519
591953092186117381932611793105118548074462379962749567
351885752724891227938183011949129833673362440656643086
841020193852110555964462294895493038196442881097566593
344612847564823378678316527120190914564856692346034861
045432664821339360726024914127372458700660631558817488
15209…………………….. AND THEN A MIRACLE OCCURS ……………………469519
591953092186117381932611793105118548074462379962749567
351885752724891227938183011949129833673362440656643086
841020193852110555964462294895493038196442881097566593
344612847564823378678316527120190914564856692346034861
045432664821339360726024914127372458700660631558817488
15209………QE4……………………469519591953092186117381932611793105118548074462379962749567351885752724891227938183011949129833673362440656643086
841020193852110555964462294895493038196442881097566593
344612847564823378678316527120190914564856692346034861
045432664821339360726024914127372458700660631558817488
15209………Dreamers……………………469519591953092186117381932611793105118548074462379962749567351885752724891227938183011949129833673362440656643086
Do you mind explaining what this is?
My guess was a visible depiction of someone’s worthless cryptocurrency HODLings…
To put a finer point on this, cryptocurrency is no more than a unique assignment of a bunch of numbers in a tamper-proof electronic wallet to an investor. Supposedly… unless it turns out to be the Emperor’s New Currency.
So, this is your public key?
I wonder if a post of numbers like that would trigger the moderation flags?
Yes. Might even get flagged as spam by the software.
Oxide
Alas, the wonders of a section of “pi,” but, that clearly was not the intent of your comment.
When Ben asked what the posts were about, I dunno, it seemed like he was a little annoyed. i guessed that he had to moderate more than usual, so i asked.
Ol’ Bill in LA reminded us that we would NEVER forget our blockchain. If these posts are even halfway accurate of blockchains, then crypto is dead. no one can remember this.
Hey Donk
no one can remember this…
You can’t explain a mania with logic, nor can you explain it away.
4, 3, 2, 1 CRATER
CRATER
Columbia City, OR Housing Prices Crater 13% YOY As Mortgage Meltdown Continues
https://www.movoto.com/columbia-city-or/market-trends/
Wow, 15 houses in this sample? The sample property is 35% smaller on average than last year? Yet the $/SF priceis up 3%?? …..I think meltdown is a bit hyperbolic based on the conditions in your link!
HA, you have another new name: Mortgage Watch? Too funny, but more appropriate than Housing Analyst.
DebtDonkey
Neptune Beach, FL Housing Prices Crater 23% YOY
https://www.movoto.com/neptune-beach-fl/market-trends/
if the sample is under 1000 it’s meaningless
+1,000
Data my good friends….
Ormond Beach, FL Housing Prices Crater 13% YOY
https://www.movoto.com/ormond-beach-fl/market-trends/
With the fed finally raising interests rates a little, do you think that housing prices are going to come down in 2018, and if so, how much?
It’s called STAGFLATION. Higher inflation and higher unemployment.
Nothing severe happens to the DJIA till after near-term elections.
That’s the playbook.
And BTC is now being controlled by the third Friday of every month.
————————————————————————
In Manhattan, average rent for a two-bedroom apartment fell 5.3 percent—from $5,040 in December to $4,771 in January. And that does not include monthly….
the third Friday of every month…
It’s a Lunar thing Lunacy is.
Here’s a “riches to rags” RE story complete with the trophy wife who won’t (can’t) sink when they go underwater. The full movie is there too.
“The Queen of Versailles” Official Trailer
https://www.youtube.com/watch?v=LQW9Ks0GZUQ
Thanks to Yellen the Queen of Versailles’ husband survived… party on!
The Queen of Versailles - Easter Extravaganza 2015
https://www.youtube.com/watch?v=avjdtnNa7KI
Homelessness in Los Angeles getting worse:
http://www.latimes.com/local/lanow/la-me-ln-homeless-housing-gaps-20180217-story.html
legal pot will fix that
does LA have an open pooping law?
got to have that
Maybe someone will print up t-shirts that say “Legalize it” with a picture of a pile and flies orbiting it.
Some pot entrepreneur can then distribute the pot leaves from each harvest for people to, uh, clean themselves. Makes me think of another catch phrase:
Gotta go brown? Then go Green!
The hits just keep on coming thanks to the decline of civilization.
Well we already have that poop emoticon, so there’s no shock value. To be honest, when I first saw that emoticon, I thought (nay, prayed) it was chocolate soft serve ice cream. Alas…
http://dtlon6z3v1kfl.cloudfront.net/wp-content/uploads/2017/07/05084311/ParentTexts_ChocolateKiss.jpg
but rents are up in Brooklyn?
check per sq ft etc…. makes no sense
is there any city where rents are up?
Lewisville, TX Housing Prices Crater 10% YOY As Dallas Area Collides With Housing Correction
https://www.zillow.com/lewisville-tx/home-values/
Did fear of a crash convince you to slash your bond HODLings?
Investing
Investors cut bond market allocation to 20-year low amid fears of a ‘crash’
- The market correction and spike on bond yields scared professional investors, according to the February Bank of America Merrill Lynch Fund Managers Survey.
- Investors sliced bond allocations to their lowest level since 1998, with a net 69 percent underweight fixed income.
- Cash allocations rose and exposure to stocks also declined.
Jeff Cox
Published 7:46 AM ET Tue, 13 Feb 2018
Updated 8:55 AM ET Tue, 13 Feb 2018
CNBC.com
Fund managers have sliced their bond allocations to the lowest level in 20 years as fears grow that the sector poses the biggest threat to markets.
Along with reducing their fixed income exposure, 60 percent of professional investors also say inflation and troubles overall in the bond market pose the biggest threat of a “cross-asset crash,” according to the February Bank of America Merrill Lynch Fund Manager Survey.
Respondents say they’ve reduced their bond portfolios to a net 69 percent underweight, the lowest since the survey began two decades ago. The survey polled 196 panelists with $575 billion in assets under management.
The results come amid a stock market correction that brought major averages down more than 10 percent at one point, and a spike in bond yields that sent the benchmark 10-year Treasury note to a four-year high.
Fears of a breakdown in the bond market did not push investors to stocks. The portfolio level dedicated to equities fell to a net 43 percent overweight, a 12 percentage point drop that was the biggest move in two years. Cash balances rose three-tenths from January to 4.7 percent.
“While this month’s survey shows that investors are holding on to more cash and allocating less to equities, neither trait moves the needle enough to give the all clear to buy the dip,” said Michael Hartnett, chief investment strategist at BofAML.
…
Dumb question of the day: If investors’ bond allocations are truly at a twenty year low, then what’s propping up the market? For instance, shouldn’t the 10-year Treasury yield have adjusted to well over 3% by now if next to nobody wants to HODL them with a yield below 3%?
Business News
February 18, 2018 / 12:30 PM / a day ago
Jittery U.S. bond market braces for supply wave
Richard Leong
3 Min Read
NEW YORK (Reuters) - Bond investors, who have been on edge over signs of growing inflation and a possibly more aggressive Federal Reserve, will have their work cut out for them as the U.S. government seeks to sell $258 billion worth of debt this coming week.
The Treasury Department began ramping up its debt issuance earlier this month to fund the expected growth in borrowing tied to the biggest tax overhaul in 30 years and a two-year federal spending package.
Last year’s tax reform is expected to add as much as $1.5 trillion to the federal debt load, while the budget agreement would increase government spending by almost $300 billion over the next two years.
Analysts worry the combination of a rising budget deficit, faster inflation and more Fed rate increases have ratcheted up the risk of owning Treasuries.
Those concerns pushed benchmark 10-year Treasury yields up to 2.944 percent, a four-year peak last week, Reuters data showed.
Treasury bill and two-year yields have reached their highest level in more than nine years.
The five-year Treasury yield is hovering at its highest levels in nearly eight years, while seven-year yield climbed to levels not seen since April 2011.
…
The U.S. bond and equity markets are once again safely decoupled.
The Financial Times
Markets Volatility
US inflation rise sparks bond market sell-off
Treasury yields hit 4-year highs as Wall St fears sharper rate increases
Robin Wigglesworth and Nicole Bullock in New York
February 14, 2018
Investor fears of an overheating US economy are lingering in the bond market on Thursday, where 10-year Treasury yields are at renewed four-year highs as investors cut exposure to the debt.
The selling intensified during the previous session after the US government reported that consumer prices rose faster in January than most economists had anticipated, the latest sign that long-dormant inflation is on the rise.
Last week’s financial market turmoil was sparked by concerns US wages and prices were suddenly rising quickly and the new data led to a strong sell-off.
As it continues, yields are heading further above 2.9 per cent, up 2 basis points at 2.9296 per cent, around levels last seen in January 2014. The yield added 7 basis points on Wednesday after the inflation data and it started the year trading at 2.43 per cent.
US equity markets, which bore the brunt of last week’s volatility, proved more resilient. The S&P 500 dropped 0.5 per cent at the opening bell before reversing its losses and ending the day 1.3 per cent higher.
That was the equity market’s fourth consecutive positive performance, taking its bounce from last week’s lows to 6.7 per cent and helping ease some of the fears stirred up last week about how rising interest rates could impact the wider markets and economy. The Dow Jones Industrial Average rose 1 per cent on Wednesday, and the Nasdaq climbed 1.9 per cent.
…
This time is different!
Business
The return trip to 3 percent matters this time
By TOM HUDSON
Special to the Miami Herald
February 16, 2018 06:00 AM
Updated February 16, 2018 06:00 AM
Market interest rates started rising in the middle of 2013. Over the last six months of that year, the economy was strengthening, employment was dropping, and the Federal Reserve began tapering off its purchases of government bonds. The bond market sell-off came as the stock market staged a big rally.
The interest rate on the 10-year Treasury bond hit 3 percent on New Year’s Eve 2013.
But then bond buyers came back, driving bond prices higher and interest rates lower. There were geopolitical tensions in the Middle East and Ukraine, a shrinking federal government budget deficit, and inflation remained worryingly low. Even as the Federal Reserve continued its slow process of removing its stimulus from the economy since then, investor appetite for bonds had remained strong.
That was so in 2014 as it is in 2018. In the week ahead, the benchmark interest rate on the 10-year Treasury bond may break above 3 percent for the first time in four years. This time, it has been driven higher by the same economic worry that has been blamed for the stock market sell-off — inflation.
…
Markets Now
The bond market scare might not be over
by Matt Egan CNN
February 13, 2018: 7:30 AM ET
Inflation fears driving market jitters
During scary times, cash usually flees into the arms of Uncle Sam.
Yet during the stock market mayhem of the past two weeks, not even safe U.S. Treasury bonds were spared.
The Dow plunged 2,400 points, or 9%, between January 26 and February 9 as investors fretted about the threat of inflation. But in a twist, investors sold bonds, too.
The yield on the 10-year U.S. Treasury note, which moves opposite the price spiked from 2.62% to 2.85%. Then it inched higher again on Monday because investors kept selling bonds, even while they drove the Dow up 400 points.
“While stocks are getting a respite … there is no bounce to bonds at all,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote in a report on Monday.
Strange as it may sound, one reason for the double sell-off is that the economy is so strong. Investors are selling Treasuries because economic growth has taken off and because think they inflation and higher interest rates are coming. And a splurge in spending by Washington will force the U.S. to sell even more Treasuries in the years to come.
That bonds didn’t rally last week, while stocks were selling off, “does not inspire confidence” that yields will come down soon, Morgan Stanley strategist Matthew Hornbach wrote in a report on Monday.
…
Volatility Wave Washed Over Credit Markets—Now Another Test
By Cecile Gutscher and Cormac Mullen
February 15, 2018, 10:00 PM PST
Updated on February 16, 2018, 5:10 AM PST
- Spiking Treasury yields signal end of central-bank largesse
- Junk bond funds suffer more than $10 billion weekly outflow
Investors’ Concern Has Turned to Inflation, Says Stear
Corporate bond funds succumbed to rate fears that have gripped stocks to Treasuries.
Investors pulled $14.1 billion from debt funds, the fifth-largest stretch of redemptions in the week through Feb. 14, according to a Bank of America Merrill Lynch report, citing EPFR data. High-yield bonds lost $10.9 billion alone, the second highest outflow on record. As benchmark Treasury yields traded at a four-year high, it shook the foundations of a key support for risk assets — low rates.
“Investors don’t sell their cash bonds in a big way until they are forced to, which happens when the outflows start picking up more sustainably,” Morgan Stanley strategists led by Adam Richmond wrote in a recent note to clients.
Creeping corporate leverage is setting the stage for a broader market meltdown while higher real rates drive down asset values, according to Morgan Stanley strategists, who project negative returns for corporate bonds in the U.S., Europe and Asia in 2018. They warned that leveraged companies would struggle to refinance as central banks tighten credit conditions and ‘tourist’ investors who’d dabbled in riskier debt lose interest as rates normalize.
“It’s a wake-up call that central banks are withdrawing liquidity, and that the process is not going to be smooth,” Morgan Stanley strategist wrote.
…
Futures Now
Bonds are entering a rising rates cycle for the first time since the 1940s, which could be ‘worrisome’
Keris Lahiff
Published 5:01 PM ET Sun, 18 Feb 2018
Updated 5 Hours Ago
Rates are entering a new phase in their cycle: Yamada
3:24 PM ET Fri, 16 Feb 2018 | 01:43
Bid farewell to the bond market bull run, because the markets are entering a phase not seen in 72 years: A rising rates cycle.
“The 36-year falling rates cycle, in our opinion, is over,” Louise Yamada, managing director of Louise Yamada Technical Research Advisors, told CNBC’s “Futures Now” on Thursday.
Since hitting an all-time of 15.84 percent in September 1981, the yield on the U.S. 10-year has been steadily declining. Yields hit lows of 1.36 percent in July 2016. Since then, however, it appears the downtrend has broken, says Yamada.
The next test for yields will be the 3 percent level. At that point, it will have been confirmed technically that the yields have hit a floor, and that a new rising rate cycle is in place, says Yamada.
“We’re looking for 3 percent to be crossed and that will, from a long-term perspective, define the initiation of a new rising rate cycle which we haven’t seen since 1946,” said Yamada.
‘A bit more worrisome’
Interest rate cycles are long, typically stretching 22 to 37 years. This new rate cycle could last at least two decades, introducing a whole new class of investors to rising rates.
A move up to 3 percent looks likely as soon as this quarter, says Yamada, especially as expectations rise that the Federal Reserve will be aggressive about containing inflation.
At least three increases to the federal funds rate are expected in 2018, the first of which could come as soon as the Fed’s next meeting in March. The chances of a 25-basis-point rate hike in March sit at around 83 percent, according to CME Group fed funds futures.
The likelihood of higher interest rates this year has grown as rising prices return to the economy, and the benefits of tax cuts feed into the system. Consumer and producer prices both jumped in January.
For investors worried that a rising rate cycle will put a snag in the equity bull run, Yamada has good news: Markets can still rise along with an uptrend in interest rates… up to a point.
“You can see rates go up to a certain extent along with a growing economy. They can go in tandem for a while,” she said. “It’s really not until rates get somewhere over 5 percent that things become a little bit more worrisome.”
Lst week, the yield on the 10-year Treasury note hit a four-year high of 2.944 percent. Yields retreated below 2.9 percent again on Friday. The 10-year last traded above 3 percent on Jan. 9 2014.
…
What constitutes luxury for an apartment exactly?
20 years ago - God I can’t believe I’m getting that old - my first apartment out of college was a 2 bedroom, 1 bath for $1600/mo. In today’s dollars that’s around $2500. I split it with a friend from college, who as luck would have it also got a job at the same company as I did.
This apartment was OK, but it was nothing I would call luxurious. It did have A/C which was rare back then, but other than that, pretty meh place. The kitchen was so small, more than 2 people couldn’t be in it at the same time.
So if today $2500 gets you all the “luxury” items like movie theaters, infinity pools, granite counter tops and whatever else they’re throwing around, it doesn’t seem that expensive relatively speaking.
I rented half a house with my wife in college for $100/mo.
Sorry about your advancing age.
Littleton, CO Housing Prices Crater 6% YOY As Denver Area Mortgage Defaults Surge
https://www.movoto.com/littleton-co/market-trends/
We’re dancing on the precipice.
Most folks have no recollection of the 1973-1974 Secular Bear Market. It was a study in Fibonacci retreats….and it did not stop at 61.8% for Honeywell, the darling at the time. A bond market retreat normally takes down the stock market, but, I think we are going to wake up to a China crash this time around.
An equity crash will impact home insurance (and pensions) more than storms. It’s about ROI. We are creating the perfect storm now.
DJT better hope you are wrong. He is already the least popular president in the modern era, against the backdrop of a Goldilocks economy. A stock market crash could really tank his numbers.
Yeah, that website projected a landslide for screech.
God bless President Donald J. Trump. God bless the United States Of America.
I just talked with a person who found out what the tax savings are going to be. Adds up to 5 months rent a year.
There is no greater gift than paying less taxes.
Fake news agrees with the website.
Forensics have proved the DNC server breach was a leak not a hack.
File transfer speeds too fast to be a hack from overseas.
Seth Rich was murdered by Hillary Clinton and the DNC.
Democrat Party nomination was stolen from Sanders by Hillary.
No collusion between Trump campaign and Russia established.
#MuhRussia is total bullshit.
The election was a year and a half ago. An amazing number of people still do not accept that we elected a president they did not vote for.
I would seem that they do not like the voting process itself, much less the country we are so fortunate to live in.
I didn’t vote for the guy who makes his money in hospitality with lots of unskilled workers in his kitchens, laundry, landscaping etc.
http://www.breitbart.com/video/2018/02/18/rush-limbaugh-ill-support-amnesty-illegal-immigrants-cant-vote-15-25-years/
But yeah, Screech would have had full amnesty, just like she tried in 2009-2010.
“Well — all this is, is an effort by the Democrat Party to provide for themselves a current underclass. They need a permanent underclass that is dependent on the government for their survival. That’s why they weren’t illegal immigrants granted citizenship.”
Rush has a good point here, though it seems like both of the main parties are heavily dependent on a permanent underclass for their political survival. A free and independent people don’t tend to fit into the rabid brainwashed political base of either party.
‘A free and independent people don’t tend to fit into the rabid brainwashed political base of either party’
A good sign of that is when a political outsider takes many states from the opposition in complete surprise of both parties.
‘A free and independent people don’t tend to fit into the rabid brainwashed political base of either party’
https://www.youtube.com/watch?v=qC9Pch4__M8
people r broke and have no savings.
We need cast iron debtor prisons.
Catfish
It need not be a crash. It should run close to five years. It’s a slow, grinding, debilitating, decline. You will have a “remission” rally inside of it, as well. At the bottom no one buys. It reaches seller “exhaustion.”
San Diego, CA 92129 Housing Prices Crater 13% YOY As Mortgage Crime Goes Primetime
https://www.zillow.com/san-diego-ca-92129/home-values/
here’s a prediction for you..
after a couple years cutting edge people in AI will start getting tom brady like salaries. many thousands of dollars an hour. headhunters will be frantically chasing these guys with unreal offers as their value will far exceed what they will be paid.
from what i’ve read there are already shortages of qualified AI people (or deep learning experts or whatever you want to call them).
oh the inequality of it all. but don’t worry. they will be worth every cent. and whole new areas of productivity will open up. the standard of living for everyone will rise. but of course they will be hated by the ‘zero summers’ for making more than they ‘deserve’ or what’s ‘reasonable’.
the wage gap is about to widen considerably and we’ll all be better off for it. all bets are off though, if we elect a socialist president in 2020.
tj
This isn’t a trick question. I understand why the rich wanted Trump. If you’re knocking down $400k you want Trump.
Please explain why anyone earning less than 60K would NOT want Sanders. (Let’s skip Clinton.)
And how has DJT helped the poor from Kentucky? South Carolina?
Please explain why anyone earning less than 60K would NOT want Sanders.
because sanders is a self-avowed socialist who used to hold up venezuela as an economic model before it collapsed? because he’s a complete moron?
One thing I have observed over the years is that red hot specialties that pay big bucks have very short shelf lives as they get swarmed. I wouldn’t be surprised if the lion’s share of masters and PhD Computer Science students are getting degrees in AI
I wouldn’t be surprised if the lion’s share of masters and PhD Computer Science students are getting degrees in AI
yes, but i’m thinking of the guys with experience that are already leading the way. the cutting edge of the cutting edge. i think they’ll be getting insane wages. the new PHDs will probably still have to prove themselves to get the ‘insane’ money.
Sure, there will be some guys making all-star wages in AI. Maybe $300k -$500k per year. Who cares though, really. That’s a pittance compared to some CEO pay, or what some trust fund babies make yearly on interest holding bond portfolios. The real wealth in this country doesn’t come from labor, it comes from capital.
The real wealth in this country doesn’t come from labor, it comes from capital.
by ‘capital’, do you mean assets? if so, how do assets come into being?
Lots of ways, both honest and dishonest: entrepreneurial effort and risk taking, monopolies, corruption, graft, theft, extortion, crony capitalism, inheritance, etc.
As grandpa used to say, “Remember, you can marry more in a minute than you can make in a lifetime.”
I hate to be the one to tell you this, but if you weren’t born upper-middle class or upper-class, you’re chances of joining the club are slim to none. Social mobility is becoming less and less likely. Doesn’t mean it can’t happen, it just means it’s highly unlikely. But don’t fret, you can still afford binge watch Netflix like the rest of the populace.
Lots of ways, both honest and dishonest:
in other words, you don’t have a clue how assets are created. and from your response, you might not even be sure what they are.
why don’t you define what you mean by ‘capital’?
all your shuckin’ and jivin’ is just to avoid a real answer.
oam, you probably know that an accurate definition describes what the described ‘is’ (what is included), and what it is ‘not’ (what is excluded). so please give me your best definition of the word ‘capital’ as you used it.
Some people use assets and capital interchangeably. That’s fine, but I don’t use them that way because I think it’s too narrow. I use capital in the way that Piketty and other economists use it. Sal Khan has a good video here:
https://www.khanacademy.org/economics-finance-domain/macroeconomics/gdp-topic/piketty-capital/v/what-is-capital
Capital is much broader than just assets, but if you want to think of it as assets if that is easier, then fine. Capital also includes human capital (learning, knowledge, expertise, training, experience, etc.), social capital (networks, institutions, government, systems, etc.), and cultural capital (morals, ethics, habits, values). But at a very simplistic level, the difference between capital and labor can be reduced to whether you work for money, or whether your money (assets) work for you.
Income from labor = wages, salaries, bonuses, earnings from non-wage labor, etc.
Income from capital = rent, dividends, interest, profits, capital gains, royalties, and other income derived from the mere fact of owning capital in the form of land, real estate, financial instruments, industrial equipment, etc.)
rent, dividends
rent? wasn’t labor involved in making the thing being rented?
dividends? wasn’t labor involved in making the companies that pay dividends?
i could go on, but you get the idea. none of that stuff you mention can be made without labor.
i’m sorry to tell you this, but ALL wealth in EVERY country comes from the fruits labor, and it’s astounding that you’d think otherwise.
Of course labor is a necessary ingredient in the structure of production, I was never arguing that it wasn’t. That is where the capital/labor split comes in.
i’m sorry to tell you this, but ALL wealth in EVERY country comes from the fruits labor, and it’s astounding that you’d think otherwise.
I agree, but it doesn’t mean that those who are doing the laboring are getting those fruits. Think of slavery. Someone is getting wealthy off of the labor, but it isn’t the laborer. Our discussions always come back to this. I think you believe that there is a linear pathway out of labor income to become a capitalist. I’ll concede there is, but it is very unlikely unless you start with the right circumstances. Look at DJT, he’s wealthy, but he got a million dollar loan from his dad to get his start. If you can borrow a million from your parents, you’re in the club. If you are working a minimum wage job (or picking strawberries in a field), you’re not in the club.
That is where the capital/labor split comes in.
fundamentally, an asset is created from labor. any split is unnecessary and misleading.
Think of slavery.
slavery is uneconomic compared to paid labor.
Someone is getting wealthy off of the labor, but it isn’t the laborer.
it’s logical that people don’t get rich off their labor. they never do. do you know why? because they aren’t the ones taking the risk. you sound more and more like a communist.
If you can borrow a million from your parents, you’re in the club.
most people are in the club that would lose it all within five years.
If you are working a minimum wage job (or picking strawberries in a field), you’re not in the club.
but at least you have the chance to climb the labor ladder to a higher standard of living.
fundamentally, an asset is created from labor. any split is unnecessary and misleading.
I am referring to economic output, not the division of an asset or how an asset came into existence. So of course there is a split. And by the way, labor’s share of that split has been declining in the US:
https://www.clevelandfed.org/newsroom-and-events/publications/economic-trends/2015-economic-trends/et-20151110-slow-capital-accumulation-and-the-decline-in-labors-share-of-output.aspx
The factors of production are capital, labor, land, and entrepreneurship (e.g. risk taking). All economic output is derived from these factors of production. It takes capital to purchase land. Capital is also barrier to entry for many entrepreneurial endeavors. Hence, capital is paramount as a factor of production in our capitalist system.
Individuals who have no capital, or have no access to it, must sell their labor in the market.
most people are in the club that would lose it all within five years.
Not likely:
but at least you have the chance to climb the labor ladder to a higher standard of living.
Yeah, why not. One can hope, right? Kind of like winning the lottery of becoming a professional athlete. Hope springs eternal. But don’t vote for policies that would make the system less rigged and more meritocratic, ’cause nah, that’s communistic.
I am referring to economic output, not the division of an asset or how an asset came into existence.
i see. you say wealth comes from capital/assets, not labor, but you don’t want to acknowledge how that very thing that you claim wealth comes from, came into existence from labor. yet you’ve already previously admitted it.
face it, assets don’t just magically pop into existence. they have to be created. that takes labor, no matter how much you want to deny it.
The factors of production are capital, labor, land, and entrepreneurship (e.g. risk taking).
primitive production of some things can be done alone from anywhere. that’s the foundation from which everything else was built.
Capital is also barrier to entry for many entrepreneurial endeavors.
start with something cheaper.
Hence, capital is paramount as a factor of production in our capitalist system.
start saving early.
i know, i know, you want government to take someone else’s money and give ’some’ of it to someone else like solyndra. govie will take a little off the top. the only ones disappointed are the taxpayers.
Individuals who have no capital, or have no access to it, must sell their labor in the market.
yes, until they can save up enough to risk starting a business or making other investments.
But don’t vote for policies that would make the system less rigged
so now somehow working is rigged too?
oh, and i notice now you’re not crying too much about the laborer not getting rich.
assets don’t just magically pop into existence. they have to be created. that takes labor, no matter how much you want to deny it.
I have never denied that that labor can lead to the accumulation of capital. But neither can you deny that there are many people who maintain great wealth without truly doing any labor. True, some individuals in the top 5% derive a fair chunk of their wealth from high skilled labor because they have invested in their skills and have honed their human capital. But the truly wealthy in this country are the owners, not the workers.
My point was really just to get you to think about how the fruits of one’s labor doesn’t automatically lead to wealth (asset accumulation) in clean step-wise fashion. A lot depends on how much labor benefits from the arrangement. This is why I brought up the slavery example. It is possible in some economic arrangements for labor to be so poorly compensated in the labor/capital split so as to make it almost impossible to really climb the ladder. Some laborers are only marginally better than slaves in the sense that once they pay all of their living expenses, there is little or nothing to save. Sure, it does happen, once in a while, just like people win the lottery. But increasingly it is becoming rarer. In this case, hard work is not the defining characteristic that predicts economic fortunes, it’s where you started that matters most.
you’re not crying too much about the laborer not getting rich.
Then I haven’t been clear. If there is one party I favor, it is the laborer. The person who works for a living is the side I take. This is why I advocate taxing dividends and capital gains higher than the income tax rate. This is why I favor increasing property tax. This is why I favor a consumption tax. This is why I favor a progressive income tax. I would eliminate the income tax for all wage income under $50k annually and replace it with a wealth tax or some other taxation scheme that is revenue neutral but which is discourages work a lot less.
TJ, in some sense I admire your idealistic outlook. I hope you become wildly successful in whatever you put your mind to. If you weren’t born into fortunate circumstances, I would like nothing more than to beat the odds and become wealthy.
But the truly wealthy in this country are the owners, not the workers.
i don’t think you know how jealous you sound of the wealthy. it’s unbecoming no matter where it’s seen.
My point was really just to get you to think about how the fruits of one’s labor doesn’t automatically lead to wealth (asset accumulation) in clean step-wise fashion.
i’ve never said that. it’s almost always a struggle and there’s never a guarantee of making it.
It is possible in some economic arrangements for labor to be so poorly compensated in the labor/capital split so as to make it almost impossible to really climb the ladder.
fundamentally, there’s no split. but to your major point, labor is always poorly compensated in a struggling or declining economy. and what brings a struggling economy? advancing socialism.
If there is one party I favor, it is the laborer.
yes, i know. the hammer and the sickle.
This is why I advocate taxing dividends and capital gains higher than the income tax rate.
yes, your do-gooding will damage the economy.
I would eliminate the income tax for all wage income under $50k annually and replace it with a wealth tax or some other taxation scheme that is revenue neutral but which is discourages work a lot less.
yes, we’ve all been conditioned to believe that crap since grade school. the problem is that it distorts the economy. when someone asks me how i can be for lower taxes and against the MID, that’s what i tell them. the MID distorts capital allowcation. it’s minor in the grande scheme of things, but it still has a negative effect.
I would like nothing more than to beat the odds and become wealthy.
i tell you the easiest way to get wealthy (and i’m not saying it’s easy to get wealthy).
learn AUSTRIAN economics. classical economics. and learn everything about currency and money that you can. understand that they are two different things. those things will show you what to be afraid of and what not to be afraid of.
then learn how to invest in companies by reading benjamin graham, also read the book on investing written by that idiot buffett. he’s an economic illiterate, but he’s good at finding value in companies. he lays out a sound course. his investment advice is good, but his economic theories are crap.
i don’t think you know how jealous you sound of the wealthy. it’s unbecoming no matter where it’s seen.
I’m under 40 and have net worth of over $1 million. I am already wealthy. Not absurdly wealthy, but wealthy enough. I bear no ill-will towards the wealthy. A good part of my extended family is wealthy. I grew up in a wealthy neighborhood. I went to very good high school and university. I’ll never know true poverty like that of some of my patients. I feel lucky, but I don’t believe that it’s by some merits of my own that I am where I am. Sure, I worked hard. But lots of people work hard and don’t have the same results. I’ve learned that wealth is not a result of being smarter or working harder. It’s largely about luck. Hard work can increase one’s luck, but there are bigger factors at play.
I would like nothing more than to beat the odds and become wealthy.
I typed that too fast. I meant to say I would like nothing more than for you to beat the odds and become wealthy. Maybe you are, and if so, great. If those books helped you get there, then great.
Regarding the path to wealth, I like what Malcolm Forbes said:
“I made my money the old-fashioned way. I was very nice to a wealthy relative right before he died.” –Malcolm Forbes
these days most people wouldn’t say a million dollars is rich. here’s hoping you stack many more on top of that.
It’s enough for me. I won’t make much more than that because I don’t need more than that. I value time and my experiences more. Besides, that is why I switched careers to sometime less financially rewarding but more intrinsically rewarding.
It’s enough for me.
because you think it’s the moral thing to do. because even if it’s only subconsciously, you believe that economics is a zero-sum game.
Most of the “AI” out there these days is just a bunch of statistics on large data sets.
the tax cuts enabled me to buy some more wine this month.
crushing.housing.losses.