February 28, 2018

Some Markets Are Clearly Oversupplied

A report from Governing.com. “When it comes to housing, New York, Portland, Ore., Seattle and Washington, D.C., all have something in common. Prices are actually starting to come down. Many of the nation’s hottest real estate markets, construction booms have brought a recent reduction in average monthly rents. Last year, apartment construction reached a 30-year high, with much of the growth concentrated in major cities such as Dallas, Houston and New York. ‘We have seen an uptick in vacancy rates and that’s having an effect on rents,’ says Michael Neal, an economist with the National Association of Home Builders.”

“Seattle’s vacancy rate is now 5.4 percent, which is the highest it’s been since 2010. Rents are going down fastest in the neighborhoods in and around downtown, which have been the most in-demand and, consequently, have seen the most recent construction. But even a drop in rental costs of about 6 percent in those neighborhoods doesn’t feel like much of a break when prices have shot up by more than 50 percent over the past five years. In the major cities, the vast majority of apartments being built are designed to serve luxury or at least high-end markets.”

From Bloomberg on New York. “Sales of Manhattan investment properties are running ahead of last year’s pace, helping to validate the view of many commercial brokers that the snoozy market of 2017 wouldn’t be repeated. Commercial-building prices in New York are off 3.4 percent from their peak early last year, according to Green Street Advisors LLC. Rents are declining or, at best, flat, for offices and apartments. Buyers and sellers alike are getting more comfortable with what the market saying about building values, said Peter Hauspurg, Eastern Consolidated’s CEO.”

From the Pittsburg Post-Gazette in Pennsylvania. “The boom in apartment building in Pittsburgh could spell trouble for landlords of older stock as they try to hold on to renters who find the shiny new units and the amenities that come with them hard to resist. In a report CBRE found Pittsburgh is in the midst of a supply surge, with about 4,600 units being built within the last three years — more than in the previous 15 years combined.”

“As one example, CBRE cited the 2004-built Flats at Southside Works. Occupancy hit 99 percent in 2010 and the average rent peaked at $1.80 a square foot in 2014. Faced with competition from the newer Hot Metal Flats and Southside Works City Apartments, the complex is now 71 percent occupied with rents of $1.73 a square foot, according to the report.”

From Urban Land. “Investors continue to pour money into U.S. student housing projects. Despite shrinking yields and rising development costs, transaction activity in 2017 was ‘very strong,’ after a record volume in 2016, says Jaclyn Fitts, director of student housing for CBRE. About $8 billion was invested in student housing in 2017, compared with $9.8 billion in 2016, but that represents volumes three times higher than 2014, Fitts says. More than 40 percent of the deals in the last year were driven by international groups, she says.”

“Developers were expected to deliver 46,000 new student housing beds for the fall 2017 semester, with another 42,000 scheduled to come on line in fall of this year, according to Axiometrics, which tracks the industry. Many universities have gone through a building boom in recent years. For example, Florida State University added 3,000 beds and Texas A&M University 2,500 beds in the last year alone, Axiometrics reports.”

“As a result, rents in many markets are flattening as new supply comes on line and students—and their parents—push back on rising costs. ‘Some markets are clearly oversupplied,’ said Travis Prince, executive managing director of the National Student Housing Group for Colliers International.”

From the Marquette Wire in Wisconsin. “Milwaukee rent is up about 2 percent from last year, according to a Department of Housing and Urban Development study. However, it’s difficult to determine if this trend will hold true for the Marquette area. Andy Hunt, the director of the Center for Real Estate in the College of Business Administration, said Milwaukee is currently experiencing an ‘apartment boom’ where demand is outpacing supply, leading to more complexes being built.”

“This ‘apartment boom’ may not be good for Marquette campus landlords, who are trying to keep up with newly-built complexes that offer more updated features and amenities to potential tenants. The freshness of new buildings may lead landlords around the area to lower their rates so they can stay on a level playing field with the competition, Larry Conjar, a local landlord, said. Conjar, who has been the landlord for decades, said too many apartments are being built around campus. That leads to a high number of vacancies, especially during the summer, when few students are on campus.”

“‘Right now (Marquette campus) is overbuilt,’ Conjar said. ‘A lot of people, including myself, are suffering from vacancies for next June. They’re actually lowering the rates to fill up the units.’”

From the Los Altos Town Crier in California. “When asked in a Bankrate study last July ‘What is the best way to invest money you wouldn’t need for 10 years or more?’ 28 percent of millennials picked real estate and 23 percent chose cash. Only 17 favored stocks. This is the wrong way to build wealth. I’m not saying that real estate per se is a bad investment. But when it comes to investing your savings for growth, if you think real estate gives you the best returns with the lowest risk, you would be mistaken.”

“A study by the London Business School, cited by Taylor Tepper at Bankrate, revealed that housing returned only 1.3 percent annually (on average) above inflation from 1900 to 2011. Stocks, on the other hand, performed more than four times better. Even in the Bay Area, despite the tremendous run-up in home prices over the past seven years, real estate growth has still failed to outpace the growth in stocks.”

“What about the risk – or volatility – of owning real estate? Illiquidity, one of the factors that adds to the volatility of an asset class such as real estate, masks it at the same time. Unlike stocks, the media cannot report the daily change in the price of your rental property, because without a buyer, there is no way to determine it. So while you hear about the stock market soaring or plunging on a regular basis, the lack of reporting on real estate prices makes it appear to be a quiet and low-risk asset class. It isn’t.”

“Take San Francisco housing prices, for example. From 2000 through 2005, they grew by a whopping 12.7 percent per year (on average). A $500,000 house purchased at the start of the decade would have grown in value to $907,000 in just five years. But from 2005 through 2009, that $907,000 house would have dropped in value to $642,000, a -6.7 percent average annual decline. The data firm of Crandall, Pierce & Co. further identified three other periods (1969-1971, 1978-1981 and 1989-1992) when housing prices nationally plunged by more than 15 percent. That isn’t low volatility.”

“For every well-publicized, highly successful real estate investor, there are scores of investors holding poorly producing rental properties. Not to mention those who bought and sold for a loss. But you never hear about those in the media.”

From KCTV 5 in Missouri. “KCTV5 News investigators are exposing the truth about one of Kansas City’s biggest landlords. A company named ‘Raineth’ has been snapping up low-income property for years and that company is behind nearly $600,000 in property taxes. Raineth doesn’t just owe money to Jackson County. The company owes Cincinnati $600,000 in property taxes and St. Louis $1.1 million. Overall, the company owes over $2 million.”

“If any of the tenants and neighbors want to have a face to face conversation with Raineth’s owner, they’d have to hop on a plane to sunny, southern California. Ed Renwick lives in a $3 million home on the outskirts of a gated community. Renwick has paid his property taxes on his home. KCTV5’s sister station in St. Louis, KMOV, sent an investigative reporter to Renwick’s house to get the bottom of the millions he owes in back taxes in their area.”

“Renwick says he had the best of intentions. He wanted to turn a profit while giving low-income communities access to affordable housing. He admitted the company owes a lot of money and he’s not happy about it. Renwick blamed being ‘behind on profitability.’ ‘We bought a lot of houses and running the houses was more complicated than we thought,’ says Renwick. ‘We had a choice: stop investing in our tenants or fall behind in taxes and we chose to fall behind in taxes.’”

“But Kansas City neighbors point out that it’s hard to see the investment, especially since Raineth is still collecting federal housing dollars which is funded by tax dollars. Records show Raineth has collected more than $2.6 million in public housing funds in Kansas City. However, many of Raineth’s homes are empty, boarded up and not rental ready. When asked about the vacant homes, Renwick says he bought the homes in that condition and hasn’t had money to fix them yet.”

“Assistant City Manager John Wood, the man in charge of housing for Kansas City, says he’s shadowboxing big out of state, and sometimes out of country companies, buying up cheap properties and letting the homes fall into further disrepair. ‘I find them to be negligent,’” says Wood. ‘They aren’t good neighbors. I would prefer they weren’t here. They buy homes low, put a little money into it to make improvements, charge a certain amount to meet a rate of return. I think it’s criminal in my mind.’”

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Comment by Professor 🐻
2018-02-28 08:27:15

“When it comes to housing, New York, Portland, Ore., Seattle and Washington, D.C., all have something in common. Prices are actually starting to come down.”

HA nailed it!

Comment by lfc
2018-02-28 08:31:37

If you talk to normal person he/she understands no asset class goes up into perpetuity, except of course for housing. That same normal person thinks that housing is somehow magical, and completely disconnected from the rest of the market.

Oil, stocks, gold, beef, they can all go up and down in value, but housing? No way!

Comment by Puggs
2018-02-28 09:53:52

I’ve noticed food prices are up. Gas is lower than previous years and my housing cost is cheap since I bought in around the 90’s. Life is expensive now for those who choose to pay inflated prices for new cars and houses.

Comment by 2banana
2018-02-28 10:02:13

Oil, stocks, gold, beef, they can all go up and down in value, but Bitcoin? No way!

Comment by lfc
2018-02-28 10:43:11

Hahaha. Touche.

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Comment by redmondjp
2018-02-28 11:02:46

HA did not nail anything. Even a broken clock is still correct twice a day!

Comment by In Colorado
2018-02-28 11:22:54

Yup. We were all in agreement that this would eventually happen. And after 10 long years it looks like the day of reckoning is at hand.

Comment by Avg Joe
2018-02-28 16:12:05

Not to mention that the article specifically says that a 6 percent decline isn’t that comforting after a 50% increase.

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Comment by Mafia Blocks
2018-02-28 16:34:04

You’re correct. Housing prices have a long way to fall indeed.

Greenwich Village Manhattan Housing Prices Crater 19% YOY


Comment by Ben Jones
2018-02-28 16:40:12

‘the article specifically says that…’

This is a Jedi-media trick. They do it in SF, “rents are way down but it’s still the most expensive airboxes in the country!”

Uh, what happened to that shortage you guys go on about? Who’s going to live in the 60,000 units on the way? And what about in NYC where rents fell first and now airbox owners are losing half their yellen bucks?

Comment by Rental Watch
2018-02-28 18:31:33

Uh, what happened to that shortage you guys go on about? Who’s going to live in the 60,000 units on the way? And what about in NYC where rents fell first and now airbox owners are losing half their yellen bucks?


It’ll take a while to right the market…unless we have a good old fashioned job-destroying recession.

Comment by Ben Jones
2018-02-28 18:40:35

‘The verdict: San Francisco (or more accurately, the SF-Oakland-Hayward census area) created only one new home per 6.8 new jobs between 2010 and 2015.’

Well Rumpelstiltskin, I am sorry to tell you it’s 2018. Wakey wakey, smell the coffee and see the glut! This is classic Jedi-media BS out of California. Oh look, compared to 09!

Comment by oxide
2018-03-01 06:05:42

Ben, are you really expecting those luxury apartments to lower their rents to Grade B middle-class prices? I’m not optimistic.

To use a car analogy, builders are making thousands of Beemers and no Corollas — and then destroying all the old used Corollas. People are forced to either go into perpetual hock for the Beemer, or take the bus. Builders will never drop the price of Beemers, because that would dilute the brand and hurt their balance sheets. And those companies will borrow and borrow just to hold out and keep the price high.

What a builder is *more* likely to do is to ask governments to give out “assistance” to low-incomers to rent at near-luxury original prices. High-end renters lose because their building gets trashed, governments lose because they are paying through the nose, middle class loses because they are stuck in Grade B (until that gets value-added), and the buildings themselves lose because they deteriorate. The only winner is the developer ultimately got his luxury price.

Cynical? Yes. But I think that’s how this will go.

Comment by Mafia Blocks
2018-03-01 07:35:21

Donk, They’re already slashing prices.

Comment by b
2018-03-01 08:54:59

In downtown Seattle, they are offering 1 or 2 months free on a 12 month lease. That is a cut - but keeping the official rent rate higher

Comment by Rental Watch
2018-03-01 10:32:01

Well Rumpelstiltskin, I am sorry to tell you it’s 2018. Wakey wakey, smell the coffee and see the glut! This is classic Jedi-media BS out of California. Oh look, compared to 09!

You must have missed this line: “That’s a ratio of 15,853 new homes in five years, versus 164,693 new jobs.”–that’s between 2010 and 2015. Did someone snap their fingers and build 100k+ homes between 2015 and today? Did job growth drop to 0 in the last 3 years?

A woman in our office last weekend moved to a distance where she would now need a 1+ hour commute because she was tired of multi-hundred dollar rent increases (year after year after year).

You can’t solve housing shortages quickly.

Comment by Mafia Blocks
2018-03-01 11:07:33

With 25 million excess empty and defaulted housing units in the US, 4.4 million of which are in CA, there is hardly a shortage.

Comment by Mafia Blocks
2018-02-28 11:26:57

Housing my good friend.

Venice, FL Housing Prices Crater 6% YOY


Comment by oxide
2018-02-28 11:19:38

Not sure about DC proper, but my area has been stagnant for about a year, possibly a 1% rise. It’s hard to tell in my nabe because the houses span a wide range in condition or improvements.

Comment by In Colorado
2018-02-28 12:45:32

A big difference from the previous bubble, at least in my neck of the woods is that this time builders did not build simple, entry level stuff. No vinyl floors, formica countertops or basic particle board cabinets and the houses were under 2000 sq ft. Now it’s maple floors, granite countertops and fancy cabinets and the houses are much bigger. And while last time the average new house was under 200K, this time they are 400K. From what I’m seeing, the cheaper used houses still sell quickly, but the 400K ones take longer, especially now.

Comment by Mortgage Watch
2018-02-28 12:53:29

The best part of that is wise buyers will get even more bang for the buck.

Lone Tree, CO Housing Prices Crater 6% YOY


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Comment by MGSpiffy
2018-02-28 19:12:59

Sorry for being so late to the discussion - had to issue an emergency patch for my game.

If I am reading things right, the “Prices are actually starting to come down” new applies to the supply of apartments and corresponding rents. At least here in the Seattle area (and as linked above, the SF area and probably others), that doesn’t (and may still be a long way away from) map over to single family homes.

Locally, the situation seems to be the _supply_ of 1 and 2 bedroom higher-end apartments has been been flooded, enough to gain ground on the supply of renters who want them and soften the market as all the new buildings that just came online with tens of thousands of units compete for tenants.

But that does almost nothing for people raising kids or not being in a phase of their lives compatible with living dense, in the urban core, and somewhat car-free. I’ve tried to find stats, and can’t get anything definitive, but it appears that only 0.6 to 1.9 percent of new apartments are 3-bedroom (or more?) units.

The demand for larger / family suitable units (but at a price affordable) has to be waaaaaaay more than that, judging by what I see going on all around me with rental houses. Families with kids are going to war to find ‘affordable’ houses to rent, especially in a good school district.

And I should make an aside and make a note that the in City of Seattle proper, many school districts are rated as “awful” or worse. In the built-up areas, where the tall buildings are and so many 40+ story apartment buildings have gone up, expensive private schools are about the only option. Not to mention the army of homeless that live on the streets and have taken over most parks and public spaces.

Seattle is full of super-liberal young people who go on and on about their social justice values. But I’m noticing that once they pop out a kid or two, the reality that most of us ‘conservative old farts’ know starts to kick in and cause them some serious existential crisis and “do what I say, not what I do” as they suddenly realize they don’t want their precious offspring to play with the junkie’s discarded needles, or be accosted by an addict.

As mentioned earlier, I moved to nearby Mercer Island. More than once recently, I spoken with other newly arrived residents that have kids, and after a bit it’s been admitted that the fact there’s near zero tolerance for the homeless (go across the bridge into seattle and you pass though the I-5 homeless encampments) or other crime (Seattle PD ignores most ’small’ property crime) was something they were specifically looking for along with the schools. They’ll go on about the need to be ‘compassionate’, etc. but not in their back(front)yard.

Anyway, back to the topic. Will a surge in the supply of 1 and 2 bedroom apartments be enough to slow, then stop the hot market for detached houses? I don’t think it’s there yet. There’s a buffering process through the market segments. Drops in apartment rents in the core could get many other apartment dwellers who moved far away from the city core to move closer to save 1-2+ hours a day commuting. Maybe it won’t. I don’t know. I just don’t think we’re there yet in locations that are geographically limited, but had a huge run up in jobs.

Comment by Mortgage Watch
2018-02-28 19:59:53

It applies to living space. Quarters. Square footage. The type of square footage is simply a distinction without a difference not to mention record high levels of inventory coincident with housing demand at record lows.

Vancouver(Evergreen), WA Housing Prices Crater 6% YOY


*Select price from dropdown menu on first chart

Comment by Jingle Male
2018-03-01 06:18:58

“…..HA nailed it!….”. Not.

The article was about rents, not SFR prices. Case Schiller national index up 6% YoY for SFR.

Comment by Mortgage Watch
2018-03-01 08:13:23

CS isn’t real time data nor does it capture foreclosures and defaults. It’s merely an index that doesn’t show on the ground local price declines.

Check our daily posts showing current price declines, in particular in large coastal cities.

Albany, OR Housing Prices Crater 32% YOY


Comment by Professor 🐻
2018-02-28 08:30:46

Are you still HODLing stocks, now that the two-year Treasury yield has surpassed the S&P 500 dividend yield for the first time since 2008?

Comment by Mortgage Watch
2018-02-28 08:38:24

Denver(Highland), CO Housing Prices Crater 14% YOY As Cash-Out Refinancing Proliferates


Comment by Apartment 401
Comment by taxpayer
2018-02-28 09:38:41

visit for the pot stay for the easy pooping

I think the poop stories are a peak indicater

Comment by 2banana
2018-02-28 10:00:58

But, but….mountains.

And heroin.

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Comment by ironknee
2018-02-28 13:08:52

Mountains of what? ;)

Comment by Mr. Banker
2018-02-28 15:19:51
Comment by In Colorado
2018-02-28 11:24:58

FWIW, I’ve yet to see a major metro downtown area that isn’t a dump, and I’ve seen worse than downtown Denver. Downtown St. Louis comes to mind.

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Comment by oxide
2018-02-28 12:53:25

DC’s downtown is in okay shape. Yes there are homeless, but I haven’t seen any of them dump yet. There are bad areas but they are being gentrified.

Comment by Anonymous
2018-02-28 17:41:49

If Amazon brings HQ2 to Denver, all will be well. ;-)

Comment by In Colorado
2018-02-28 22:51:16

I seriously doubt they will pick Denver.

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Comment by Mr. Banker
2018-02-28 08:53:36

“For every well-publicized, highly successful real estate investor, there are scores of investors holding poorly producing rental properties. Not to mention those who bought and sold for a loss. But you never hear about those in the media.”

Bahahahahahahahaha …dumb ‘em down, and profit. Keep ‘em dumbed down and profit even more.


Comment by Mr. Banker
2018-02-28 09:07:35

“But you never hear about those in the media.”

Mark Twain: “If you don’t read the newspaper, you are uninformed. If you do read the newspaper, you are misinformed.”

A puke who knows he is uniformed is well ahead of a puke who thinks he is informed but isn’t. And this is the task of the bought-and-paid-for MSM, to keep the uninformed misininformed as much as possible while allowing him to believe he is informed as much as possible.

Not too difficult of a task because, deep down, people are really quite stupid.

Comment by snake charmer
2018-02-28 09:24:55

I commented to a co-worker the other day that I do not watch television news, and am much better informed as a consequence.

Comment by Sean
2018-02-28 09:41:07

Exactly. Just like when a friend talks about playing blackjack. He’ll tell you all day long how much he won, but will never tell you how much he lost.

Comment by BlackSwandive
2018-02-28 14:47:26


Comment by MGSpiffy
2018-02-28 19:41:55

https://xkcd.com/1827/ (Survivorship Bias)

Comment by Oxide
2018-02-28 09:13:03

“Jackson County” is code for LDS. This guy was speculating to sell to them, if he isn’t one himself.

Comment by taxpayer
2018-02-28 09:36:41

reits down 15%
builder etf’s down 9% ytd

could be a message there

Comment by Sean
2018-02-28 09:43:36

The message is: “It’s a good time to buy!”

Comment by cactus
2018-02-28 11:38:58

Getting clearer all the time.

Comment by 2banana
2018-02-28 09:59:14

Public union pensions will be paid.

The buck stops with us? Big city democrats are delusional. It “stops” with massive taxes for the taxpayers and not one cut to insane public union contracts.

Higher interest rates, no MID or real estate tax deduction and massive increases in property taxes. That should help the property bubble in Philly go boom.


Mayor Kenney to seek property tax hike to help offset schools’ nearly $1 billion deficit
Philly.com - FEBRUARY 28, 20

“The buck will stop with us,” he promised.

On Thursday, he’ll put his money where his mouth is.

At his annual budget address, Kenney will propose directing somewhere between an extra $700 million and $900 million to the city’s schools over the next five years, according to sources in City Hall who were not authorized to speak publicly about the financial plan.

To cover that, he is going to ask Council to increase the property tax rate and the real estate transfer tax, sources said. He is also expected to suggest freezing the city’s wage tax, which was scheduled for gradual reduction.

Sources said the mayor’s recommended property tax hike will be less than 10 percent.

Under former Mayor Nutter, lawmakers voted to boost property taxes four times in order to pump money into the underfunded school district. The city also brought in additional cash during a real estate reassessment.

In 2016, Kenney signed Philadelphia’s soda tax into law partly to expand pre-K throughout the city.

Comment by alphonso bedoya
2018-02-28 10:42:11

Pensions soon will be given a deal they can not refuse.
How much of CALPERS is in R.E. ?
The people they need to raise taxes on are either leaving or being deported.

Comment by cactus
2018-02-28 11:46:22

I think All taxes go to CALPERS eventually, gas tax for roads, water bonds for storage of water, taxes for schools, I have a bad feeling it all goes to CALPERS. Always broke and crying about it and if that doesn’t work then scaring the voters into another tax increase.

Comment by jeff
2018-02-28 15:48:22

“scaring the voters into another tax increase.”

Nobody move!

This is a tax increase.


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Comment by Anonymous
2018-02-28 17:49:16

“Pension costs ‘unsustainable,’ California cities say”


Comment by Rental Watch
2018-02-28 18:33:17

No problem, just raise impact fees on new development. Problem solved.

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Comment by OneAgainstMany
2018-02-28 19:04:29

From the article: “CalPERS now expects to average 7 percent earnings on its investments each year, down from its previous projection of 7.5 percent.”

I just read a meta-study cited by the Economist that global equities have returned 5.2% since 1900. With CAPE ratios at a near all-time high, I would expect real returns to be 4-5% long term since we are starting from a high point. When you consider the large US debt, I think we would be lucky to get that. Bottom line: if you think pensions are underfunded now, you ain’t seen nuthin’ yet! Wait until a correction occurs in earnest!

Comment by cactus
2018-02-28 19:06:42

California’s state payroll – excluding its universities – grew by more than $1 billion last year, twice the rate of growth as the previous year, according to new figures from the State Controller’s Office.

The 6 percent growth rate was not unexpected. More than half of the state’s workforce voted on labor agreements early last year that included substantial pay raises. Money for the raises was included in the 2017-18 state budget.

Comment by OneAgainstMany
2018-02-28 19:18:21

We are setting up for a serious inter-generational fight. The old boomers who are expecting medicare/social security benefits, pensions and the younger members in the labor force who will shoulder the tax burden to support the underfunded portions. This could get messy.

Comment by oxide
2018-03-01 06:13:15

We’re already in an intergenerational fight. The GenXers are getting resentful that Boomers are refusing to retire. Reasons for refusal:

1. Boomer is subsidizing strapped Millenial kids (and grandkids)
2. Boomer has younger second wife on his bennies and needs to work until she reaches 65/Medicare.
3. Boomer overshot in the 1990s-2000s, lost a lot in Great Recession, and can’t afford to retire.

Even at my office, I have been watching Boomers steadily march through their 60s (min retirement age is 56, full retirement at 62). Eventually they will be forced out by some health problem.

Comment by tresho
2018-03-01 16:58:52

steadily march through their 60s until they meet death on the trail.

Comment by rms
2018-03-01 23:32:48

“CalPERS now expects to average 7 percent earnings on its investments each year, down from its previous projection of 7.5 percent.”

That still sounds too rosy, IMHO.

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Comment by Taxpayers
2018-02-28 10:47:26

The schools
The schools
85% of recent tax hikes have gone to compensation

Comment by alphonso bedoya
2018-02-28 10:53:42

Wait till CalPERS read the Federal fine print and see what their pensions are capped at in the event of a bailout.

Comment by azdude
2018-02-28 12:28:31

“when you buy a house u are investing in the community as well as your family.”

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Comment by MGSpiffy
2018-02-28 19:49:42

The lights are starting to come on in King County.

After the ST3 taxes (Sound Transit - pay $60B for some bridges, etc with a property, sales and car tab hikes) jolted people by quadrupling (or more) car tab renewals, we had a change in school funding that resulted in average Property Taxes going up 18-21% from last year.

And somehow because of all the extra money for schools, we’re seeing ad campaigns by the local school district (mailed flyer, doom and gloom speeches to school kids, etc) claiming that their funding has gone down and we need a special extra tax to keep the precious children from ruin. (Are you guys elsewhere in WA state seeing this?)

The good news is that I’m hearing a good number of people responding with “WTF??” (as opposed to the overwhelming liberal ‘more taxes = more good’ mantra that’s been the norm around here).

Comment by BlackSwandive
2018-02-28 22:15:32

Property taxes increased by as much as 31% in some places. Ask yourself this: How in a time of record property taxes, are local governments suddenly so poor? The answer is they’re not, they’re a LION. They are hiring record numbers of people and boosting all their salaries, spending, spending, spending. Behind closed doors they say things like “if we don’t spend it, we’ll lose it,” and “we better get more now before the next recession hits.” The people of WA state are getting clowned worse than CA right now.

Comment by b
2018-03-01 09:11:43

i am downtown Seattle (condo in belltown). Property taxes went up almost 20%. Almost 14 of that was from the McCleary decision.

Basically the state supreme court ruled that school districts were not being funded evenly or enough. So … more taxes stated by the court.

The thing is that most folks have a mortgage and it is ‘included’ so they dont notice as much. As i dont have a mortgage, i pay in cash every 6 months.

Ran in a guy in a local bar - who had a hard time finding a job after his History BA degree. He was in the gig economy for 7-8 months, and just caught on with King County (where Seattle is based). Because he has a certain level of education (even though not relevant in my opinion for a County job or mission), he is getting very good compensation and if he sticks will have cost of living raises, promotion raises, and a pension in 28 years. Honestly, if he keeps his nose clean, he is set for life

Comment by da bear
2018-03-01 15:32:13

Methinks they are about to go FULL KANSAS.

da bear

Comment by Ben Jones
2018-02-28 10:24:07



Empty Storefronts in San Francisco Show Impact of Years of Rising Rents


Comment by alphonso bedoya
2018-02-28 10:48:29

Where’s Tony Bennett ?

Comment by OneAgainstMany
2018-02-28 15:07:00

The San Fran video states that commercial storefronts can have their stores vacant for 270 days before being fined. The city council woman interviewed states “that’s too much. If they don’t want to rent out their buildings, they should get out of the commercial real estate business.”

I think she is right. There is a cost borne by surrounding residents in these neighborhoods when landlords raise the rent so high that businesses are no longer able to afford the rent. Something is wrong when the calculus is, “I’ll raise the rents so high and if no one can afford it, I’ll just sit on these empty storefront properties and bank on the appreciation and not rent these units out.”

If there were a way to enforce a similar regulation on vacant housing stock being unused in thriving urban areas I would be in favor of that.

Comment by Mr. Banker
2018-02-28 16:23:09

So a landlord does not have a choice of eating lost revenue while choosing to hold out for higher rents? And it is the infinite wisdom of a city council member that is decisive of what amount of rent is “too much” to charge a tenant?

Do I understand this correctly?

Comment by Mr. Banker
2018-02-28 16:38:42

If this city council woman has the wisdom to determine what rent is “too much” does she also possess the wisdom to determine what rent is “just right” as well?

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Comment by Rental Watch
2018-02-28 18:25:16

No to mention the fact that to get any approval for a new building in SF takes YEARS and so a property owner doesn’t have the option to forego revenue during that process so they can make sure to be able to redevelop the property when approvals are received…to IMPROVE the neighborhood.

If the City wants to be a property owner (with all the risks and rewards) then they should simply go around and buy all the property they can and be a landlord/property owner.

The funny thing is, they might think differently about the crazy zoning regs if they did…

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Comment by OneAgainstMany
2018-02-28 19:15:54

So a landlord does not have a choice of eating lost revenue while choosing to hold out for higher rents? And it is the infinite wisdom of a city council member that is decisive of what amount of rent is “too much” to charge a tenant?

Do I understand this correctly?

Yes, that is what I think. Commercial property in an urban city center is a positional good. The benefits of the rent accrue to the owners and the consumers benefit from access to goods and services provided by the establishment. It’s one thing if there are extensive renovations going on, but just sitting for months on end strikes me as wrongheaded, and I think the city has the right to intervene.

I don’t view ownership as unlimited in scope. My little burg, which is as laissez-faire as they come (heck, our pawn shop sold the guns in the Vegas massacre) has code enforcement regs that prohibit inoperable vehicles, weeds, junk, trash, debris, etc. Just owning the property doesn’t give you the ability to just do whatever. Rights AND responsibilities. Keeping out businesses for an extended period of time by “holding out for higher rents” impairs the livability of the city. If this were somewhere in the sticks where there was abundant land, then I would feel differently.

Comment by MGSpiffy
2018-02-28 19:58:42

I think you do understand it correctly.

I wonder if the city will fine a landlord if that cant find any tenants willing to pay enough to cover the mortgage plus operating costs.

I really don’t like the idea. Things perhaps could be done to encourage renting to tenants (tax breaks, etc?)… but if it can implicitly dictate that you are forced to lose money (or else we’ll fine you heavily so you lose even more money)… well, no one in their sane mind would buy commercial property there.

Comment by OneAgainstMany
2018-02-28 20:42:28

I believe the holders of this prime commercial real estate are doing fantastically well. Unless they are new owners, their basis was likely low and they are enjoying windfall profits, so much so that they calculate they can just let the property sit idle. If a property can’t make a profit it is likely because it exchanged hands at too lofty a basis. This should be self-correcting at some point.

2017 was chocked full of famous establishments closing their doors in NYC because landlords were upping the rent by nosebleed amounts. It has become very difficult for a restaurateur to make a profit with the rent rates skyrocketing. Indeed, often times the landlord is making more in profit (by far) than the establishment itself. There are plenty of articles bemoaning the fate of long established, high quality eateries shuttering.

When this happens, I think it’s time for a liberalizing of the food truck ordinances and virtual restaurants on Yelp/GrubHub/insert your local delivery service here. I remember hearing about how Starbucks CEO was thinking about self-driving vehicles in urban areas. Why even pay top dollar for rent when you can have a rolling coffee shop and barista roam the city?

Comment by BlueSkye
2018-02-28 17:50:18

If you are going to be a useful central planner, you need to fix the price of everything.

Comment by ironknee
2018-02-28 15:20:06

That state has become such a sh!thole, soooo glad I left over a decade ago - every ex-pat I know is so happy they got out when they did.

Only people left are third worlders, retards and deranged freaks. And yes, I have family still there!

Comment by scdave
2018-02-28 16:44:18

soooo glad I left over a decade ago ??

Well, considering the racial tones of some of your post your family is likely glad you left.

Comment by Drater
2018-02-28 18:50:14

“Well, considering the racial tones of some of your post your family is likely glad you left.”

^^ironknee forgot to mention snowflakes^^

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Comment by Anonymous
2018-02-28 17:53:20

When I clicked on your first link, I was initially treated to an ad exhorting me to defend freedom by joining the NRA…

Comment by BlackSwandive
2018-02-28 22:05:31

I like how the guy on the week to week agreement is paying 25% of the asking price. Can you say “that’s the going rate?”

Comment by tresho
2018-03-01 17:00:18

They are “leaving something else” in San Francisco. Don’t step in it.

Comment by Mortgage Watch
2018-02-28 10:52:14

Washington DC 20018 Housing Prices Crater 5% YOY As Foreclosures Increase


*Select price from dropdown menu on first chart

Comment by da bear
2018-03-01 15:35:53

Draining the swamp is a total drag, man.

da bear

Comment by Mr. Banker
2018-02-28 11:57:01

A concrete tent …


Comment by Mr. Banker
2018-02-28 12:10:50

Another version …


Comment by MGSpiffy
2018-02-28 20:05:48

Definitely useful for something like natural disaster relief.

Reminds me of Monolithic Dome homes - http://www.monolithic.org/

Comment by jeff
2018-02-28 20:14:51

Now that’s underwhelming.

Comment by azdude
2018-02-28 12:14:43

housing always comes back in ca even if there is a little blip.

Comment by Mr. Banker
2018-02-28 12:46:00

Interesting housing-related video …


Comment by Mike
2018-02-28 17:35:37

that’s pretty cool architecture and manufacturing. But how can it be used to get people to borrow $500K for a shack?
Wait a second…this is a communist thing isn’t it?

Comment by MGSpiffy
2018-02-28 20:13:03

Very Interesting.

In places in the world where regulations aren’t a problem, I can totally see the low cost of materials and construction as a big win.

Comment by Mortgage Watch
2018-02-28 12:59:19

San Francisco, CA 94109 Housing Prices Crater 13% YOY As Residents Flee West Coast Crime And Failing Economy


*Select Price from dropdown menu on first chart

Comment by BlackSwandive
2018-02-28 13:24:27

“Seattle’s vacancy rate is now 5.4 percent, which is the highest it’s been since 2010. Rents are going down fastest in the neighborhoods in and around downtown, which have been the most in-demand and, consequently, have seen the most recent construction. But even a drop in rental costs of about 6 percent in those neighborhoods doesn’t feel like much of a break when prices have shot up by more than 50 percent over the past five years.”

Exactly, and so people will continue to leave until prices reflect what median incomes can afford, which isn’t even remotely the case right now. Median HOUSEHOLD income in Seattle is just shy of $80,000. Median house prices are nearly $750,000. Rents are better, but still way above what incomes afford. Do the math.

Comment by Anonymous
2018-02-28 18:05:13

I was in Seattle a few weeks ago. The number of big construction cranes downtown was remarkable.

Of course, the number of homeless encampments on hillsides above roads and highways was also remarkable…

Comment by b
2018-03-01 09:14:44

Mostly rental buildings.

They fill it up and get a 1 year history of income flow —- and sell it to REITS

Comment by taxpayer
2018-02-28 13:52:53


4 hikes my AZSSsssssssssssssss

Comment by azdude
2018-02-28 16:10:27

its all bs and hype.

Comment by Big V
2018-02-28 17:03:47

Stock brokers are liars.

Comment by Mafia Blocks
2018-02-28 17:49:46

Brokers of all types are neck deep in fraud and crime.

Comment by OneAgainstMany
2018-02-28 19:30:56

California’s housing crunch has turned liberals against one another
NBC News
Feb 28, 2018

James Rainey

“BERKELEY, Calif. — A median-priced one-bedroom apartment in San Francisco rents for nearly $3,300 a month. In the Silicon Valley community of San Mateo, the median home will set you back almost $1.4 million. Even in semi-rural Petaluma in Sonoma County, at least an hour drive from the city, rent for a one-bedroom can reach $2,000 and more.”

“To afford a place to live in the Bay Area, stressed workers and students are moving farther and farther out, commuting for hours a day from what used to be farm country. Others pile two and three to a room. In Los Angeles, San Diego and along much of the coast, the picture is much the same. For many Californians, the housing crisis has become “a feeling of tightness in their chests and in their jaws,” said Brian Hanlon, a prominent housing activist, “because they have this sense that there is no future for them here.”

“But now the need for more affordable housing is provoking an intense ideological struggle, and in this left-leaning state, one that pits liberals against liberals. On one side are old-style liberals who lean against development and do not want to see construction cranes building high-rise apartments in their neighborhoods. On the other side are progressives who support such building efforts and focus on the effect of long commutes on the environment, particularly from cheaper exurban areas with little mass transit.”

“The Yimby newcomers, many of them millennials, have run smack into old-guard liberals, often baby-boomers or older, who cut their political teeth during an era when one could be staunchly progressive and adamantly “slow growth.” The collision has not been a happy one.”

“I think they are a combination of dumb and venal and maybe equal parts of both,” said Becky O’Malley, a 78-year-old Berkeley lawyer and journalist, when asked about the Yimby activists. She didn’t hesitate to add that some of the Yimbies appear to be “fronts” for big developers.

“On the other side, Hanlon, 35, the executive director of California Yimby, accuses opponents like O’Malley of having a drawbridge mentality, of wanting to exclude newcomers after having obtained entrée to the state’s rarefied housing market.”

“They are the masters of hypocritical progressivism,” Hanlon says. “They have created what amounts to natural retirement communities. And now people like me can’t get a toehold. He said older white homeowners are the one group in the state that doesn’t support new housing. When he goes to hearings about new development, he said, the opponents are typically “septuagenarians who just don’t want the kids living there.”


Comment by Ben Jones
2018-02-28 19:37:32

‘masters of hypocritical progressivism’

Just live in shipping containers. Problem solved. Jeebus, when will the reality sink in?




Comment by MGSpiffy
2018-02-28 20:18:15

Isn’t it such a testament to the way our economy is being managed by its controlling interests that we can have both a Shortage and Glut at the same time. I guess as long the elite profits it doesn’t matter how it impacts the rest.

Comment by jeff
2018-02-28 20:21:18


What do you have against Manny anyway?


Comment by OneAgainstMany
2018-02-28 20:54:37

Nothing, I think he looks great in the horse suit with sparklers:


Comment by jeff
2018-03-01 08:18:21

OneAgainstManny :(

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Comment by oxide
2018-03-01 06:27:09

Nobody is mentioning the obvious solution: Move the JOBS out of the Bay Area. I’ve said this before: there is unused infrastructure all over this country. Why can’t these tech giants move to smaller cities in other states? There are miles of empty roads, empty parking lots, small houses on large lots waiting to be torn-down/replaced, small university towns that need more employment than the university. Plenty of medium-sized airports which are one upgrade from being world-class. If Millenials want to live in a “vibrant” city, then create one!

Comment by Rental Watch
2018-03-01 10:38:35

Because if an engineer moves to Des Moines for a job in a young tech company, and that company fails, the engineer is screwed.

If the engineer is in an area that has lots of tech companies, and their employer goes belly up, there are a lot of job options.

In other words, there needs to be a critical mass of tech companies to be able to attract capable employees.

Comment by Professor 🐻
2018-02-28 21:02:22

Another day, another 300+ point drop in the Dow. How many more such drops can withstand before it goes to zero?

Comment by BlackSwandive
2018-02-28 21:11:16


Comment by Professor 🐻
2018-02-28 21:11:52

100% / 1.5% = 66.6666667 more 380 point drops should do it…

Comment by Professor 🐻
2018-03-01 00:40:29

Considering all of the rate hike consternation, does it seem peculiar that the 10-year Treasury yield can’t clear 3%?

Comment by taxpayer
2018-03-01 06:34:45

aren’t vacancy rates like crime rates? no report = no change

Comment by da bear
2018-03-01 15:38:37

The only difference between HOUSING and HOSING is ‘U’!

da bear

Comment by Norma
2018-03-11 13:46:41

“New York City’s offer of a free year’s rent to homeless people who move out of town is such a sweet deal that at least one man left his job to take advantage of it, an official revealed Friday.”

Solve for the equilibrium once the availability of this program becomes widely known.

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