They’re Kind Of Taking A Hit
A report from the Seattle Times in Washington. “Seattle’s record construction boom may have peaked: Development activity across the central part of the city is declining at the fastest rate in at least 12 years. At the end of this past year, there were 57 active projects underway in the area that stretches from South Lake Union to Sodo, according to a report released Monday by the Downtown Seattle Association. That’s down from a record high of 74 projects six months prior. The 23 percent decline amounts to the biggest six-month drop since the downtown association began its twice-a-year construction counts in 2005. It comes after a recent survey found Seattle’s crane count had dipped for the first time in years.”
“Rents downtown have begun dropping for the first time since last decade amid the construction boom, as some of the new luxury apartments opening in the city’s hottest neighborhoods have sat empty. Altogether, the area has added more than 20,000 new housing units in the past decade. There are up to 30,000 apartments still left in the pipeline, though developers recently have reported a pullback in new apartment plans now that rents are no longer keeping up with rising construction costs.”
The Des Moines Register in Iowa. “Des Moines-area renters should see a relief in rising rents this year as landlords look to fill an unprecedented wave of new apartments. Vacancies are at their highest level since 2010 and, as a result, rental rate increases have slowed, according to an annual survey released by CBRE/Hubbell Commercial. That slowdown will likely continue as more apartments open, said Linda Gibbs, senior vice president of investment properties at CBRE/Hubbell Commercial. ‘We won’t see the same kind of rent growth we’ve seen in the past few years,’ she said.”
“The metro’s apartment building boom is expected to continue this year. An estimated 3,230 apartments opened here last year, compared to 1,966 in 2016, according to the CBRE report. Another 3,061 apartments are planned this year. The number of vacant apartment units has reached a level not seen since 2010, when the United States was in the middle of a recession. Vacancies metro-wide are at 8.2 percent. The largest number of vacancies is downtown, 18.5 percent, and in the western suburbs, 7.7 percent.”
“With so many units coming online in a single year, developers and property managers have offered incentives, including free parking, gift cards worth up to $1,500, free TVs and iPads, and even three months free rent to entice would-be renters to sign leases. Those incentives will attract tenants to move away from older apartments, said Timothy Sharpe, senior vice president of investment properties at CBRE/Hubbell Commercial. Those Class B and C units — built before 1980 — often have fewer amenities and outdated finishings. The renter exodus will result in reduced rents and higher vacancies in older units over the next few years.”
“‘They’re kind of taking a hit,’ Sharpe said.”
The Houston Chronicle in Texas. “Some Houstonians displaced by Hurricane Harvey have started moving out of short-term rentals and back into their newly renovated homes or ones they’ve purchased since the flood. Occupancy across the Houston area is at 89.5 percent, up from just over 88 percent a year ago, according to a March report from ApartmentData. The urban core, however, which had a glut of units for lease pre-Harvey, still has a fair amount of vacancy. Aris Market Square is advertising three months free rent with a 13-month lease. Catalyst, near Minute Maid Park, is offering up to two months free. Alexan Downtown and Block 334 is giving two months free prorated throughout the term of a lease.”
“Landlords should find some solace in the fact that only about 7,500 new units will open this year, compared with 21,000 for each of the last two, said apartment analyst Bruce McClenny. And next year, no more than 6,000 should open.”
From the New York Real Estate Journal. “The New York Real Estate Journal recently sat down with Shimon Shkury, founder and president of Ariel Property Advisors, a New York City investment real estate services and advisory company. Q: How did the multifamily market perform in 2017?”
“A: While pricing was a notable bright spot, particularly in Queens, the Bronx and Northern Manhattan, volume in the New York City multifamily market slumped to levels not seen since the beginning of the decade, due largely to a dramatic pullback in institutional-level transactions. Dollar volume reached a six-year low amid the fewest number of transactions since 2010.”
“When compared to 2016, dollar and transaction volume declined 48% and 28%, respectively, while property volume slid 29%. Institutional investors were largely absent in 2017. New York City recorded only five sales at or above $100 million, down sharply from 26 sales the previous year. The largest sale of the year clocked in at $135 million, a level that was surpassed seven times in 2016 and four in 2015, when the largest sale in those years were $620 million and $5.5 billion, respectively. On a local level, the rental market faced well-publicized struggles last year, with median rents in Manhattan and Queens falling.”
“Q: How did the submarkets perform last year? A: On a sub-market level, Manhattan struggled in 2017, with volume metrics decreasing substantially from the previous year’s levels. The borough’s dollar volume, at $2.32 billion, was the lowest since 2010, and its 57% drop from 2016 was the sharpest decline of any sub-market. Brooklyn’s multifamily market softened, with volume metrics notching double-digit declines. Dollar volume slumped 48% to $1.48 billion, transaction volume slid 35% to 119, and building volume sunk 21% to 227. ”
“Queens activity was extremely lackluster in 2017, with transaction volume skidding 40% to 43%, the steepest year-over-year decline of any sub-market. At the same time, dollar volume dropped 47% to $849 million.”
The Union Tribune in California. “Usually, U-Haul truck rentals are advertised at an affordable sticker price, comfortably in the three-digit range. But a trend out of northern California is pushing that sticker price as high as $2,000, and moving Californians to disbelief. The cost to rent a 26-foot U-Haul truck — big enough to move a three- to four-bedroom home — out of San Francisco headed to Las Vegas reached as high as $2,085 for four days. To rent the same truck going in the opposite direction is only a fraction of that cost — $132.”
“We were curious about what it cost to rent a U-Haul truck for one-way trips to and from San Diego, so we checked and found that it was more expensive to rent a U-Haul truck traveling from San Diego to another city than the other way around. That said, prices were not as high as the ones involving San Francisco. Last month, California’s Legislative Analyst’s Office reported that the state is has experienced a net loss of about 1 million residents from 2007 to 2016.”
“An analysis from the real estate website Redfin published last month offers more evidence of this trend — San Francisco was the top city with the highest loss of residents, a net loss of 15,489 in the last four months of 2017, compared to New York City’s net loss of 12,532 residents.”
Albany, OR Housing Prices Crater 22% YOY
https://www.movoto.com/albany-or/market-trends/
‘The second-largest U.S. nursing home operator, HCR ManorCare Inc, filed for Chapter 11 protection late Sunday with $7.1 billion of debt as part of a pre-arranged deal to transfer ownership to its landlord Quality Care Properties Inc. Toledo, Ohio-based ManorCare, which operates skilled nursing, assisted living and memory care locations across the United States, had been battling with its landlord over unpaid rents since last year.’
‘In a bankruptcy filing in Delaware, privately-owned ManorCare said revenues have failed to cover monthly rent obligations since 2012, a year after the master lease was signed. The lease covers 289 facilities.’
‘It blamed shrinking margins at its post-acute and skilled nursing facilities on reduced government reimbursement rates, low occupancy, a shift toward new managed Medicare plans and alternative services such as home health care and retirement communities.’
‘ManorCare said it owed $446 million in rent that was accruing at a minimum of $39.5 million every month. The company was able to use profits from other growing businesses such as home health, hospice and outpatient rehab to help meet the rent until April 2017, when it defaulted on a prior credit facility.’
‘ManorCare posted $3.7 billion in revenue in 2017, with 82 percent of it coming from its long-term care business, while its pre-tax loss from continuing operations totaled $268 million. Assets were worth $4.3 billion, it said.’
‘The company has set aside $305 million to cover legal defense and settlement costs, including litigation for hundreds of claims against its long-term care business, for which it said it does not believe it is liable.’
‘The company is also facing four lawsuits by shareholders of its previous landlord HCP Inc, which in 2016 spun off the ManorCare real estate portfolio it had acquired from Carlyle in 2011. Carlyle bought ManorCare in a 2007 leveraged buyout.’
‘In a bankruptcy filing in Delaware, privately-owned ManorCare said revenues have failed to cover monthly rent obligations since 2012, a year after the master lease was signed.
Sounds like they didn’t have a viable business to begin with. How could all the factors that they blame for their troubles have caused this within one year of signing the lease? Did government reimbursements, etc. drop off a cliff without warning in 2012?
Sounds like they didn’t have a viable business to begin with.
I actually think the business portion is probably sound. More than likely this bankruptcy was due to debt that was heaped up from a leveraged buyout. We saw this with the Toys R Us bankruptcy and several other high profile retail bankruptcies. They have profits, but so much debt has been loaded up on these companies balance sheets (and equity extracted by hedge funds), that when there is even the slightest correction in operating margins, then poof, they are in the red.
‘San Francisco was the top city with the highest loss of residents, a net loss of 15,489 in the last four months of 2017′
This supports my contention that this area entered recession last year. We’ve seen reports of “hemorrhaging jobs for months”. People wouldn’t be leaving if the economy was doing well.
https://sfbay.craigslist.org/search/sfc/apa?query=free+rent&availabilityMode=0&sale_date=all+dates
$5361 / 2br - 1156ft2 - Now Touring And Leasing New TownHomes! 2 Month Free Rent! (SOMA / south beach)
‘Find the perfect brand new apartment that truly expresses your personality. Start by selecting the studio, one or two bedroom apartment that fits your lifestyle. Then personalize your new space by choosing which of our four unique finish packages inspires you. Each home features polished quartz counters, custom kitchen tile backsplashes, stainless steel appliances, wood-inspired plank or concrete flooring, expansive windows, and much more.’
‘Features:
Keyless Entry Front Door, Four Custom Finish Packages, Views of Downtown San Francisco*, Polished Quartz Countertops, In-home Front Loading Washer and Dryer, Comcast Internet Blast Package and HD Digital Cable, USB Charging Outlets, Wood Look Plank Flooring or Polished Concrete Flooring in Living Areas, Private Direct Access Garage*, Kitchen Tile Backsplash’
‘Community Amenities:
Rooftop Beer Garden with Kegerator, Green Wall, and Outdoor Television, Underground Parking Garage with Elevators, Fitness Center with Variety of Strength and Cardio Equipment Plus TRX Wall, Resident Lounge Featuring Hospitality Station, Coworking Spaces, and Complimentary WiFi, Rooftop BBQ Terrace with Outdoor Heating and City Views, Rooftop Game Lounge with Ping Pong, Scrabble, and Life Sized Connect Four, Rooftop Firepit Lounge with Built-in Seating, Private Conference and Meeting Rooms’
https://sfbay.craigslist.org/sfc/apa/d/now-touring-and-leasing-new/6516312566.html
‘Start by selecting the studio, one or two bedroom apartment that fits your lifestyle’ = we got a lot of these airboxes sitting empty.
“$5361 / 2br - 1156ft2″
No wonder it’s vacant.
It would be $4400 in downtown Seattle - so almost as bad
“…USB Charging Outlets…Kitchen Tile Backsplash…”
Who cares about rents when you have a USB charging station
or an actual backsplash in the kitchen?
So whats next, promoting that “all electrical outlets feature 110VAC electricity” or that when you stand in front of your kitchen sink you will receive “highly sought after San Francisco Water”?
Where do you sign up?
Wood Look Plank Flooring or Polished Concrete Flooring in Living Areas
I’m totally in love with this aspect of the design aesthetic. Nothing says home like some polished concrete flooring in your living room.
“…Nothing says home like some polished concrete flooring in your living room…”
Gotta look at the positives.. If you are hosting a party and some hipster spills red wine, it simply flows over the polished concrete, under the walls into your neighbors bedroom.
No problem at all!
BYO Pergo.
we have polished cement at a customer office location. Leather shoes all squeak …. it is very distracting
USB charging outlets
So they’re charging luxe rents to do what anyone can do with a $3 adapter? What a ripoff. At least the dog-washing parlor needs some real plumbing.
Life size connect four, WTF? Do they expect people with a 9 year olds’ brain to be able to cough up 5Gs a month? WTF (W stands for who in this one!) wants a life size connect four?!? And what builder thinks this is a good idea?
There are those “co-working spaces” again. We read about those on HBB last month.
I think it’s pretty funny that you get to choose your finish package. If they build, say, 100 units, do they trick out 25 in each finish and hope that tenants choose them equally? I remember when I rented, you got the unit they gave you and you liked it.
“…If they build, say, 100 units, do they trick out 25 in each finish and hope that tenants choose…”
Me thinks its all done with Green Screen and Virtual Reality.
After all, this *is* Silicon Valley!
“The cost to rent a 26-foot U-Haul truck — big enough to move a three- to four-bedroom home — out of San Francisco headed to Las Vegas reached as high as $2,085 for four days. To rent the same truck going in the opposite direction is only a fraction of that cost — $132.”
That’s a huge spread, suggesting primarily one-way traffic out of SF.
And who knew that California lost a net one million in population since 2007? Seems like the entire state has been experiencing an economic depression for the past decade, masked by bubbles in housing and tech stocks.
‘California lost a net one million in population since 2007′
Yet some insist they need to build hundreds of thousands of shacks a year.
‘California lost a net one million in population since 2007′
I’d like to know how this number is derived considering the unknown numbers of illegals that continously come and go and the unknown numbers of people that live twenty or more in one house.
‘unknown numbers of people that live twenty or more in one house’
Yeah, that’s quite a plantation you guys are running out there. I can remember when progressives chided Republicans for pushing illegal immigration so they could have cheap labor.
What we need is for other states (the flyover states) to all pitch in and help bail California out.
Since Jerry Brown has essentially declared war, what Cali needs is a good dose of martial law until it gets its act straightened out. Military tribunals for the politicians that defy the law and appropriate penalties for their sedition. Yes, it’s shock therapy, but it desperately needs it. And cut off federal funds until things are sorted out.
https://www.zerohedge.com/news/2018-03-07/were-going-war-california-governor-blasts-full-liars-administration-over-immigrant
I am not for militarization, but in this case they’ve been drawing first blood for a while now and begging for it.
‘unknown numbers of people that live twenty or more in one house’
Same thing in every other state that has immigrants. It’s not unique to CA, so assuming they use the same metrics to count the population as other states do, the statistics are valid.
“Same thing in every other state that has immigrants. It’s not unique to CA, so assuming they use the same metrics to count the population as other states do, the statistics are valid.”
Lol. I see that you are one of the products of “No Child Left Behind”.
“Same thing in every other state that has immigrants. It’s not unique to CA, so assuming they use the same metrics to count the population as other states do, the statistics are valid.”
Lol. I see that you are one of the products of “No Child Left Behind”.
I think we’ve hit a nerve with Mr. Banker on these CA posts. Normally he’s just playing his role. Now, it’s getting personal and nasty. Are some of your loans starting to go bad?
There has always been a shadow population. Government statistics are always, to some extent, nonsense. There is so much they can’t count. But, as long as the measuring entities don’t change the way they measure things, and the various entities measuring against each other use the same metrics, you can at least use the official figures to understand the trends.
By the way, illegal immigration has been way down over the last ten years.
Next I guess you’ll be posting that they forgot to count all the street people and those living in their cars.
“Next I guess you’ll be posting that they forgot to count all the street people and those living in their cars.”
Another unknown quantity. The interesting thing about the term “unknown” is it is used to describe something that is not known. Funny how that should be.
“Government statistics are always, to some extent, nonsense. There is so much they can’t count.”
Which is my point. What they can count is what is legit, what they cannot count is something that is not legit, which is hidden, which is underground, which is undocumented.
This counting of what cannot be counted produces a number that is a work of fiction.
IIUC, the # of congresscritters depends on the total population, not just the population of citizens. So I’m pretty sure that they have a way to count to illegal immigrants and take full credit where they can.
I agree Ben, I picked up on the “cheap labor” hypocrisy when Dems started the meme of “who’s going to mow your lawn, who’s going to clean your house, who’s going to take care of your children, etc.” When I was growing up, we children mowed our own lawns and took turns cleaning parts of the house. We even took care of ourselves as latchkey kids around age 11. Now it looks like these limousine liberals are too good for that. They need serfs to mow the lawn so Janie is free to go to violin camp.
I ran across this …
http://minnesota.cbslocal.com/2016/03/10/good-question-how-are-undocumented-immigrants-counted/
A snippet …
“It’s actually a really difficult number to come about,” said Linus Chan, a clinical professor of immigration law at the University of Minnesota. “At one point it was nine million, others say it’s 12 million and it really depends on how you sample and look at the population.”
Can’t they just match up the illegals with their voter registrations?
WTF is a “clinical professor of immigration law” ?!
“WTF is a “clinical professor of immigration law” ?!”
He’s the guy that can closely and accurately pinpoint the number of illegal immigrants who are in this country to the extraordinary narrow range of between nine million and twelve million people.
Being that cell-phones can now (il)legally identify your PRESENCE, taking an accurate population census is rather easy. If you leave the State and don’t return they assume you have migrated.
This problem has now come to the forefront with regards to OUR foreign military bases. When we roll out an operation, a foreign power with advanced technology can identify troop “movements.”
Don’t forget that soldiers wearing fitness tracking devices have been broadcasting their troop movements for a while in sensitive locations to global heat maps:
https://www.washingtonpost.com/world/a-map-showing-the-users-of-fitness-devices-lets-the-world-see-where-us-soldiers-are-and-what-they-are-doing/2018/01/28/86915662-0441-11e8-aa61-f3391373867e_story.html?utm_term=.0fb41b8cd4b8
Now I know all the best running routes on Kandahar airbase!
“They need serfs to mow the lawn so Janie is free to go to violin camp.”
Our yard is small with little grass, and our landlord kindly retains immigrant-run yard care service to tend it, which does free up our kids’ weekend time for music and other more interesting activities than pushing around a lawn mower. It’s really an awesome situation, and I am grateful to the landlords and the Mexican lawn care workers for freeing up the time.
The best time to do yardwork is on a weeknight, from about 6:00 to 7:30. Most people get tired after 90 minutes anyway, so why waste a Saturday on it?
“Yet some insist they need to build hundreds of thousands of shacks a year.”
Not to mention the fact there are 25 million excess empty and defaulted housing units in the US and 4.4 million of them are in CA alone.
Did I mention the foreclosure moratorium in effect in CA since 2008?
July 2007 population in CA…approximately 36.55MM
July 2017 population in CA…approximately 39.6MM
January 2007 Housing Units…approximately 13.36MM (2.73 people per housing unit)
January 2017 Housing Units…approximately 14.07MM (2.81 people per housing unit)
July 2017 US population…approximately 325.7MM
July 2017 US Housing Units…approximately 136.5MM (2.39 people per housing unit)
Remember that CA is a large state.
July 2017 US ex-CA population…approximately 286.1MM
July 2017 US ex-CA Housing Unis…approximately 122.4MM (2.33 people per housing unit).
So, outside of CA, there is one housing unit for every 2.33 people.
In CA, it’s one for every 2.81 people.
And no, the population in CA isn’t shrinking.
Yes, people are leaving SF, and some are leaving the state. But others are finding places to live that are more affordable.
A woman in our office had been renting a place on the peninsula south of SF. The annual multi-hundred dollar rent increases were simply too much to continue to contend with…so she moved eastward where she could afford to buy a house. We are working with her so she comes into the office less (working from home at least one day a week) or shifted hours (to avoid the worst of traffic).
Did she leave the peninsula? Yes. Did she leave the state? No. Did she lose her job? No.
Incorrect.
“Roughly 5 Million People Left California In The Last Decade. See Where They Went”
http://www.sacbee.com/site-services/databases/article32679753.html
“About 5 million Californians left between 2004 and 2013. Roughly 3.9 million people came here from other states during that period, for a net population loss of more than 1 million people.
“Despite the loss of residents to other states, California continued to grow during the last decade because of natural increase - more births than deaths - and foreign migration.”
True, but it doesn’t discount the fact that there is a net migration out of California. And small wonder, given the horrendous cost of living there.
howmoneywalks.com shows those w $ are leaving
+1 txpyr. Never mind the actual number of people. It’s the money that’s leaving, and the negative money that’s moving in.
It’s the money that’s leaving, and the negative money that’s moving in.
Hmmm. It would be great to know if they arrived in California years ago or if they made their money in California. If people are coming in with less money, putting up with it for a while, making their fortune/nest egg, and then leaving…it’s kind of a merrie-go-round that makes sense.
http://www.everythingsouthcity.com/california-legislative-analysts-office-reports-state-losing-residents-via-domestic-migration/
Yes, CA lost 1MM residents to migration from 2007-2016 (out-migration outnumbers in-migration). Out-migration has exceeded in-migration for at least the past 25 years…in fact, 100k per year is a relatively tame number…in the 90’s the rate of net out-migration was far higher.
No, despite out-migration exceeding in-migration over the past 25 years, the population of the state did not decrease over the past 25 years.
Resulting in “a net population loss of more than 1 million people.”
‘the population of the state did not decrease’
I’m not that interested in ancient history. How about them U Haul numbers?
Resulting in “a net population loss of more than 1 million people.”
They are only tracking domestic migration.
Population is still growing when you add in birth/death and international migration measures.
Incorrect. They are tracking all demographics.
I’m not that interested in ancient history. How about them U Haul numbers?
Domestic out-migration from CA has exceeded domestic in-migration to CA for the past 25 years…consistently. Every…single…year. This isn’t news.
With respect to U-Haul costs…have you EVER seen the data show otherwise? I haven’t. With consistent domestic out-migration from the state, one should expect the U-Haul metric to be this way.
I don’t pay that much attention to it. But the media is sure full of “I’m outa here” California stories lately. IMO, this isn’t so much frustration with traffic, etc., but rather fewer jobs, and a sense of cashing out on the shacks. Like the lady who was moving to Nashville with all that sweet equity.
You shouldn’t take things so personal. You had your boom. Can anyone deny that? You know what happens after a boom, right?
With consistent domestic out-migration from the state, one should expect the U-Haul metric to be this way.
BTW, I was born and grew up in CA. The policies completely screw anyone who doesn’t own a home, and rewards those who do (including throwing up economic incentives to NOT move from the state), and allows those who own homes to stop development–further exacerbating the problem.
Many of the kids I grew up with still live in my hometown…many others have left the state for more affordable locales.
The primary issue is cost of housing.
There. You explained to yourself why CA continues to lose population.
Thank the gang at the HBB.
I’m not that interested in ancient history. How about them U Haul numbers?
A sure sign that net outward migration is growing.
Every time I go back, I’m horrified at what I see. It makes Denver, which is in large part an armpit, look positively good.
“Incorrect. They are tracking all demographics.”
Since so much of these demographics are underground I would like to know how they are being tracked.
I’m not taking anything personal.
The “I’m outta here” stories happen all the time…and I don’t need to read about them in the paper. I hear about them every single election cycle from people who live here.
I hear about traffic pushing people out every single economic cycle…I watched it ebb and flow with my father’s 40-year commute into SF from Sonoma County starting in the 70’s.
My parents note the day they decided to leave the Peninsula as a time they couldn’t find a parking space during the holidays in the late 60’s…citing too much traffic, too many people.
All I’m saying is that the trends that you note are not new, the volume just gets turned up during booms, and turned down during busts…there is no paradigm shift.
‘the trends that you note are not new’
How much did a shack there cost in the 60’s or 70’s?
I’m going to beat the drum again.
The main reason cited for people leaving CA is high cost of living…mainly housing.
I contend that the main reason for this high housing cost is terrible policies that have constrained supply–starting with the passage of CEQA in the 70’s.
The oft-cited reason on this blog is easy money provided by the GSEs–that if only the GSEs would stop lending, prices would collapse in CA.
So, let me ask the obvious question.
If the reason for high housing prices in CA is primarily the GSEs, and the GSEs lend to residents of all states, then why is the housing cost issue so acute in CA, but not in the places where Californians are fleeing?
And the answer is not “because the loan limits are higher in CA”. The loan limits for GSEs were increased in high cost areas BECAUSE of higher home prices. In other words, the limits were not increased first.
“The main reason cited for people leaving CA is high cost of living…mainly housing.”
That is another error on your part. The latest data from household surveys indicate quality of life issues are by far the reason for the net population loss and outbound migration from CA. Failing economy, crime, unemployment and environmental issues ranked at the top.
And this:
‘The state also received poor marks simply because outsiders tend to think of Californians themselves as insufferable.’
‘the trends that you note are not new’
How much did a shack there cost in the 60’s or 70’s?
A LOT less than today in much of the state (the home I grew up in cost ~$40k in 1975–Sonoma County on 1+ acres of land), but the most attractive locations were generally expensive even then.
My great aunt noted the horrendous cost of their house in Palo Alto when they moved there in the 1940’s…it was $26k.
The main issue with home prices started post-CEQA, which was passed in 1970–which slowed new approvals for housing. The effect wasn’t immediate:
1. CEQA was the thin end of the wedge…the first approvals under CEQA required relatively little documentation…over the years it has become a monster…now things like “greenhouse gas emissions” need to be considered and studied when preparing for approvals.
2. CEQA allows approvals to be delayed with a simple and cheap lawsuit…the greater the population, the more people oppose development.
3. There was lots of land approved for housing at the time CEQA was passed–usually cities want to see 10+ years of available land for housing in advance…this land could be built on…however, once the already approved housing was built, housing development was dramatically constrained–and it’s still getting worse.
From 1963-1969, there were 1.323MM (189k per year).
From 1970-1979, there were 2.155MM (215k per year).
From 1980-1989, there were 2.034MM (203k per year).
From 1990-1999, there were 1.106MM (110k per year).
From 2000-2009, there were 1.461MM (146k per year).
From 2010-2017, there were 635k (79k per year).
2017 saw 113k permits.
From 1963 to 2017, CA represented approximately 11.5% of all housing starts in the entire country.
Over that same timeframe, CA’s population growth represented 16% of the entire country’s population growth.
As I’ve said before, usually incompetence makes one poorer.
Wait…
“… outsiders tend to think of Californians themselves as insufferable.”
This is why they are outsiders. These outsiders would quickly change their tune if they were invited in but this will not happen because, frankly, they simply cannot measure up.
And now the long term trend is reversing, prices falling, inventory growing.
What is your point?
http://www.foxnews.com/us/2018/03/01/california-has-worst-quality-life-in-us-study-says.html
“One way to measure quality life is whether residents can even afford to have a roof over their heads, and by that standard, California is failing. ”
“California finished No. 43 in fiscal stability, No. 46 in opportunity, and No. 38 in infrastructure. It posted relatively high marks in health care (11th), economy (4th), and crime and corrections (28th).”
MW,
I would love to know what are the “environmental issues” that are encouraging people to leave. CA has about the strictest environmental regulations in the country. The environment should be the best in the country, right?
Maybe you’re using “environmental” in a different sense?
California finished No. 1 in cheap U-Hauls!
CA supports the western real estate market with equity that that other close states have come to bank on.
And the answer is not “because the loan limits are higher in CA”. The loan limits for GSEs were increased in high cost areas BECAUSE of higher home prices. In other words, the limits were not increased first.
Of course they didn’t increase first. No one ever said they did. But they now provide the floor, propping prices up. Absent these high limits, the high prices would not have been sustained.
CA. The policies completely screw anyone who doesn’t own a home, and rewards those who do…
House prices 9 x Income. Whatever the reward is, it is hidden under a burden of debt that cannot be repaid in a lifetime.
‘the limits were not increased first’
They were raised significantly because the jumbo market evaporated. Now the GSE’s do jumbo. They just raised the limits, again. And each time prices float right up to it. Just how did Fredricksberg TX get $350k shacks? They were less than $100k before the loan limits were jacked up.
‘House prices 9 x Income’
That was the fascinating thing about that study of where the highest ratios in the US were. Every dang one of them was supposedly “rich” areas, with the highest being Mercer Island WA at 13 x incomes.
Yet the net worth of individuals is far higher where the housing price/income is lower.
Nothing says poverty like a big fat multi-decade debt obligation on a rapidly depreciating asset like a house.
That was the fascinating thing about that study of where the highest ratios in the US were. Every dang one of them was supposedly “rich” areas, with the highest being Mercer Island WA at 13 x incomes.
The ratio that matters is not the price to income.
It’s the debt to income.
One way to get to 13x price to income is to borrow to the hilt.
Another way is by having residents who have money already and who work and borrow less than a typical American.
My guess is that the “rich” areas you are seeing in the study are also areas that have had companies with hyper-growth over the prior few decades.
Had a call today with a guy who’s friends with a person who was employee sub-100 at Amazon…he retired well before the age of 40, and probably lives in an above average house. He certainly helps jack up the price-to-income ratio…but not the debt to income ratio.
Price to income and debt to income is a distinction without a difference considering the fact 90%+ of all mortgages are zero down or near zero down.
One way to get to 13x price to income is…by having residents who have money already and who work and borrow less than a typical American…
So that is why California is the poorest state in the Nation, they’re all rich!
I don’t think so.
“The ratio that matters is not the price to income.
It’s the debt to income.
One way to get to 13x price to income is to borrow to the hilt.
Another way is by having residents who have money already and who work and borrow less than a typical American.
My guess is that the “rich” areas you are seeing in the study are also areas that have had companies with hyper-growth over the prior few decades.
Had a call today with a guy who’s friends with a person who was employee sub-100 at Amazon…he retired well before the age of 40, and probably lives in an above average house. He certainly helps jack up the price-to-income ratio…but not the debt to income ratio.”
Wow, this is some kind of fantasy, supported by unverifiable anecdotal “evidence.”
I’ve talked to people who were friends of someone who claimed to have made a fortune. I guess I’ve know a few people who had more than they needed. Next to that, hundreds and hundreds of people who simply mortgaged their future to live beyond their means.
Rental Watch, I’d be curious to get your opinion on what CA’s governor and the CA legislature are doing to basically override the local NIMBYs and force more housing construction, or automatic approval if certain requirements are met. Do you think this is generally the tough medicine (i.e. CEQA is the problem, so this is a solution)?
I like the idea of more development…I don’t like what they are proposing…it’s a very blunt tool and takes a lot of the right for Cities to set their zoning the way they prefer. And, it effectively tries to solve the housing problem by only building one-type of housing (high density near transit)…not all people want to live that way.
The problem with CEQA is that with $1,000 (or less), you can file a CEQA lawsuit and delay by 6 months (or longer) a development that took millions (trying to comply with CEQA) to get to that point. And the delay can often times screw up purchase agreement timelines (ruining the deal), or require studies under CEQA to be redone (costing even more money), etc.
I prefer a much simpler solution to the CEQA mess.
Loser pays.
In other words, if you file a lawsuit under CEQA, and you lose, you need to pay the developer’s legal fees.
AND,
If your suit is found to be frivolous by the judge, you should also be liable for consequential damages.
This would solve a LOT of the issues with CEQA. People would think twice before filing lawsuits under CEQA grounds. Right now, there is no risk for people filing the suits, and HUGE costs to developers given the hoops that CEQA requires they jump through.
Step 2 is to reform CEQA entirely, but I think we have a better shot at sending a human to Mars.
“Nothing says poverty like a big fat multi-decade debt obligation on a rapidly depreciating asset like a house.”
Depreciation has been effectively masked by historic rates of price gains in the recent mania. When these gains reach the limit of what household incomes can support, which they recently have for the second time since 2000, it’s hard to imagine how owners will offset their depreciation costs.
The other problem for home price appreciation is that mortgage rates are reverting to normalcy after a full decade of artificially suppressed levels. They are currently at 4.46% and rising. This reduces the price a buyer can pay unless their income increases or lending standards are relaxed. Normally a decrease in demand leads to lower prices, but perhaps housing is different.
Thanks for the response Rental Watch. Some of your suggestions seem reasonable to me.
ISTR seeing migration data by year overlaid with housing prices.
Prices up…out-migration up.
Prices down…out-migration down.
“It comes after a recent survey found Seattle’s crane count had dipped for the first time in years.”
Is the crane at risk of soon joining the endangered species list?
San Diego, CA 92037 Housing Prices Crater 6% YOY As Housing Correction Expands In Southern California
https://www.zillow.com/san-diego-ca-92037/home-values/
*Select price from dropdown menu on first chart
‘Des Moines-area renters should see a relief in rising rents this year as landlords look to fill an unprecedented wave of new apartments. Vacancies are at their highest level since 2010 and, as a result…The metro’s apartment building boom is expected to continue this year. An estimated 3,230 apartments opened here last year, compared to 1,966 in 2016, according to the CBRE report. Another 3,061 apartments are planned this year. The number of vacant apartment units has reached a level not seen since 2010, when the United States was in the middle of a recession. Vacancies metro-wide are at 8.2 percent. The largest number of vacancies is downtown, 18.5 percent’
Ouch, there goes someones pension.
Another day, another metro most of us will never visit turns in a luxury apartment glut. I wonder when Mel Watt will realize this is a thing?
Does he even care?
Is Mel Watt still there? Jeebus.
Mel Watt is in an unusual position. He is serving a five-year term as Director of FHFA (term ends in January). It’s like being a congresscritter. He cannot be fired mid-term, only renewed or replaced.
Quite a few smaller agencies have similar setups, where the head honchos can’t be fired. However, those other agencies are all “boards” or “commissions” with 3-5 honchos. They check and balance each other through voting on policy. And the honchos serve staggered terms, so no President can replace an entire board at once.
But there is only one head of FHFA, not a board. Mel Watt is basically an un-fireable dictator of housing policy.
Great example of the permanent administrative state.
Seattle, WA 98109 Rental Rates Crater 16% YOY As Residents Flee Seattle Area
https://www.zillow.com/seattle-wa-98109/home-values/
*Select price from dropdown menu on rental chart
Realtors are liars.
“Last month, California’s Legislative Analyst’s Office reported that the state is has experienced a net loss of about 1 million residents from 2007 to 2016.”
A net loss means the total population is lower. Period. For example, instead of 39 million residents, there are now 38 million residents.
Yet the population numbers Rental Watch posted seem to show otherwise.
Perhaps the original quote was incorrectly written?
http://www.everythingsouthcity.com/california-legislative-analysts-office-reports-state-losing-residents-via-domestic-migration/
“On net, the state lost 1 million residents to domestic migration—about 2.5 percent of its total population. These population losses are low in historical terms. The graph below shows data from the Internal Revenue Service on the movement of income tax filers in and out of California since 1990. (Data on tax filers does not cover the entire population because some people do not earn enough income to necessitate filing taxes.) As the graph shows, net out-migration from 1990 to 2006 was, on average, more than double what is was in the most recent ten years.”
This doesn’t factor in international migration or birth-death…because I know the population isn’t lower in 2016 than it was in 1990 in California…which would need to be true if they read this report as meaning the population is 1MM lower in 2016 than it was in 2007.
Must be everyone from Hollywood snuck off to Canada or Mars after the election.
“A net loss means the total population is lower. Period.”
Corrected. And it is lower by 1 million in CA.
Apollo Beach, FL Housing Prices Crater 33% YOY As Bottom Drops Out Of Beach Property Market
https://www.movoto.com/apollo-beach-fl/market-trends/
Looks like, as I suspected, the Lucky Dragon resort in Vegas was nothing but an HB-5 visa scam. The place never really had much chance of succeeding. It is already bankrupt, and only partially operating.
Do the people who got those visas, get to keep them, even if the business goes bankrupt or shuts down?!
“…About 179 people invested $500,000 each, or $89.5 million total, in the project through the federal EB-5 visa program.
Foreigners can obtain U.S. residency through the EB-5 program if they put at least a half-million dollars into a business venture and the funding creates at least 10 full-time jobs.”
https://www.reviewjournal.com/business/casinos-gaming/lucky-dragon-now-in-chapter-11-bankruptcy/
Anymore of this Global Warming and they will be snowplowing the parking lots for the 4th of July in Connecticut.
Storm could leave 18 inches of snow in parts of Connecticut
Staff reports Updated 2:27 pm, Wednesday, March 7, 2018
Storm could leave 15 inches of snow across Connecticut - CTPost
https://www.ctpost.com/local/article/Storm-could-leave-15-inches-of-snow-across-12734442.php - - Cached - Similar pages
Not to worry, the soon-to-be boiling oceans will alleviate any possible chance of this again happening in the near future.
Best to take your children outside now to allow them to play in the snow because in the future children will simply not know what snow is.
Apparently they’re having snow thunderstorms. I don’t ever recall thunder and lightning accompanying snow storms when I wuz a pup. Must be globull warming.
(ta da)
“Thundersnow. Strong winter snowstorms and blizzards commonly produce lightning strikes, a phenomenon referred to as ‘thundersnow’. Lightning and thunder can occur with any type of winter precipitation - including snow, sleet (’thundersleet’) and freezing rain.”
An explanation …
https://www.aol.com/article/weather/2018/03/07/rare-thundersnow-is-hitting-new-york-heres-what-that-is-and-why-it-happens/23379686/
Thanks, combo. Never experienced it, even when I lived up north.
I’ve lived through thundersnow before. It’s about what you’d imagine it would be like, based on the name; like a normal thunder storm, but with snow instead of rain. Very strange.
“Storm could leave 18 inches of snow in parts of Connecticut”
Comfortable 75F today in San Jose, CA.
Comfortable enough for thousands of people to live outside in the weather, which is what thousands of people are doing.
That’s what happens when there are no jobs. People milling around committing crimes.
“94,785,000 Not in Labor Force; At 62.9%, Labor Force Participation Stuck Near 38-Year Low”
https://www.cnsnews.com/news/article/susan-jones/no-records-set-august-number-employed-americans-drops-participation-rate
Exactly!! Economy in full production unlike Conn.
My post was for rms.
“My post was for rms.”
That’s what the magic boxes say.
Housing my good friend.
Alameda, CA Housing Prices Crater 12% YOY
https://www.movoto.com/alameda-ca/market-trends/
peak for your area?
5/17 for my hood s of central soviet
Melania’s cut 40%+
trumpf is slaking
According to Zestimates, the peak for my area was still Fall of 2007. My house price would have to rise 25% from what it is now to get back to peak.
“Melania’s cut 40%+”
I’m available for adoption.
Charlton, MA Housing Prices Crater 9% As National Housing Demand Plummets To Record LowYOY
https://www.movoto.com/charlton-ma/market-trends/
$2,000 for a U-Haul to move out of San Francisco? Believe it.
By Luis Gomez
Contact Reporter
1 day ago
The cost to rent a 26-foot U-Haul truck — big enough to move a three- to four-bedroom home — out of San Francisco headed to Las Vegas reached as high as $2,085 for four days. To rent the same truck going in the opposite direction is only a fraction of that cost — $132.
Last month, California’s Legislative Analyst’s Office reported that the state is has experienced a net loss of about 1 million residents from 2007 to 2016. Most of these residents have relocated to states such as Texas, Arizona, Nevada and Oregon.
An analysis from the real estate website Redfin published last month offers more evidence of this trend — San Francisco was the top city with the highest loss of residents, a net loss of 15,489 in the last four months of 2017, compared to New York City’s net loss of 12,532 residents.
http://www.sandiegouniontribune.com/opinion/the-conversation/sd-how-much-cost-to-move-out-of-san-francisco-california-20180306-htmlstory.html
…already posted above
It was posted above, but I guess no one is contemplating whether it’s worth $2000 to pack and drive your crap by yourself. You’re better off just leaving taking your important stuff in the car and leaving everything else. Save about $1500, take the sweet equity, and buy new when you get to your destination.
My guess is that my next dwelling (20+ years from now) will be an assisted-living condo or similar, and even now, I’m always editing my stuff to prepare for such a moving day.
Hey Donk
whether it’s worth $2000…
It would sure depend. A couple pieces of decent furniture would cost more than $1500 to replace. When I was younger and took care of five other people, there were beds and dressers for all plus living room crap and a dining table and chairs. No brainer, but I would try to do it for a lot less. Lucky to fit all four kids in the car!
“I’m always editing my stuff to prepare for such a moving day.”
Yes, people (especially older people) tend to get to the end of their lives with waaaaay too much stuff.
“…already posted above”
The next time I go to confession I will lead with that if it makes you feel better.
Forgive me Father for I have sinned. It has been a lot of days, weeks months well years since my last confession. I accuse myself of the following sins.
I posted a “$2,000 for a U-Haul to move out of San Francisco?” article on the HBB after it had already been posted.
the first rule of hole:
when your in one , stop digging!
“the first rule of hole:”
You know a lot about holes don’t you.
Forgive me Father for I have sinned.
My son, you will be absolved after you sell all that you have, give it to the poor, and live in a tent city on the west coast for the rest of your life, and say 3 Hail Marys and an Our Father.
Newcastle, WA Housing Prices Crater 22% YOY As Seattle Area Housing Inventory Skyrockets
https://www.movoto.com/newcastle-wa/market-trends/
“Meanwhile, the C-suites shuttled upwards of $15 trillion of cash flow and debt capacity during the last decade alone into stock buybacks, vanity M&A deals and excess dividends and recaps. As we said in today’s Fox interview, America’s business leaders will not stop strip-mining their companies in order to juice Wall Street and goose their own stock options until they are taken to the woodshed by a stern task-master at the Fed.
By that we mean a central bank that is willing to get out of the financial asset price propping and pegging business, and to thereby permit the kind of stock market collapse that would finally expose the folly of corporate America’s endless financial engineering. Indeed, at this point nothing else will stop them except being run out of their jobs for massive dissipation of corporate resources and piling their balance sheets high with unproductive debt.
At the current annualized run rates, stock buybacks at $800 billion plus upwards of $2 trillion of domestic M&A deals and hundreds of billions more of LBOs, leveraged recaps and special dividends will pump $3.5 trillion of cash back into the canyons of Wall Street this year.”
http://davidstockmanscontracorner.com/hallelujah-the-goldman-sachs-regency-at-the-white-house-is-finally-over/
“To repeat, the US does $4 trillion of combined export and import business with the rest of the world each year. About $2 trillion of that is spread among approximately 150 countries where trade is evenly balanced as between about $1 trillion of imports and exports each.
For the most part, the counties involved such as Canada, the UK, the Scandinavian nations, Brazil etc. have not attempted to trash their own currencies any faster than the Fed has inflated its own dollar liabilities. That means they defended themselves from the Fed’s rampant expansion of US dollar liabilities, but did not take advantage of it to justify outright exchange rate suppression and mercantilist export promotion.
By contrast, the other $2 trillion of trade is accounted for by just 10 countries, of which China, Vietnam and Mexico account for over half. Yet among the Dirty Float Ten, US exports in 2017 amounted to only $625 billion, while imports from these countries were more than double that figure at $1.352 trillion.
To the contrary, the real US trade problem is a monetary problem that can only be cured by regime change in the Eccles Building.”
http://davidstockmanscontracorner.com/hallelujah-the-goldman-sachs-regency-at-the-white-house-is-finally-over/
I’m seeing big frame glasses, some bell bottoms
and stagflation(mild) coming back
spending like mad,printing like mad,mad tariffs
very 70’s
Do you really believe wages with triple or quadruple to meet grossly inflated prices?
Of course not.
Prices will continued falling to dramatically lower and more affordable levels meeting wages.
Brandon, FL Housing Prices Crater 28% YOY
https://www.movoto.com/brandon-fl/market-trends/
very 70’s
I think we’re almost there. Maybe some new Scooby Doo episodes and a Partridge family remake and we’re there!
Do fears of a “deep correction” have you paring your stock HODLings?
‘It could be a deep correction’ — J.P. Morgan co-president warns of 40% stock pullback
By Sara Sjolin
Published: Mar 8, 2018 7:02 a.m. ET
Game over for the bulls on Wall Street?
Stock traders buckle up — the market is set for as much as a 40% plunge in the next two to three years, essentially wiping out the last two year’s market rally in the U.S.
That’s the warning from J.P. Morgan (JPM, -0.63%) Co-President Daniel Pinto, who in an interview with Bloomberg Television on Thursday said “we know there will be a correction at some point.” A correction is usually defined by a more than 10% drop from a recent market peak.
…