Investors Are Talking About Unloading Their Properties
A weekend topic starting with Bisnow. “Investor confidence in the stability of the multifamily sector this year remains strong, despite robust new supply levels and concerns regarding rising inflation and aggressive interest rate hikes. As the cycle continues to mature, investors are shifting their investment strategies to focus less on appreciation to generate crazy returns, and more on stability and betting on assets that will generate steady cash flow. Marcus & Millichap anticipates 335,000 units will come online this year — down from 2017’s 380,000 completions. New deliveries will be largely concentrated in Dallas, New York City, Washington, D.C., and Atlanta.”
“‘Last year we saw a very significant wave of construction … the most completions on record and likely the most we’ve seen since the ’80s,’ said Marcus & Millichap First VP of Research Services John Chang. ‘[We] do anticipate it tapering a bit in 2018, coming down to 335,000 units, which is still a lot. We’re still looking at a very deep pipeline of construction that should continue to come to market.’”
The San Francisco Chronicle in California. “Is the long run up of San Francisco rental prices finally coming to an end? In certain neighborhoods at least, the signs seem to be pointing to a resounding yes, according to Zumper. The apartment listing site says that the median asking prices for one-bedrooms in Cole Valley are down 14 percent to $2,950, while the Inner Richmond is down 11 percent to $2,550 and Mission Dolores is down 9 percent to $3,350 since the same time last year.”
“‘Last year, in the Inner Richmond and Cole Valley, rents were spiking due to a lot of demand present, since these areas are safe/low on crime and tend to be less expensive than living in the surrounding neighborhoods like Hayes Valley or NOPA,’ explained Zumper’s Crystal Chen. ‘While the demand will always be there for these neighborhoods, the price has come down from last year since less people are looking to move right now and it seems a ceiling has been hit.’”
The Herald Net in Washington. “In December the average rental price fell 2.9 percent across Snohomish and King counties, according to a widely heralded landlord survey by Apartment Insights/Real Data. Was the decrease — the largest this decade — an anomaly, or the start of a downward trend? A little of both, analysts say. Dylan Simon, an executive vice president and head of the Multifamily Team at Collier’s International in Seattle, ridiculed news stories that suggested rents are ‘dropping significantly’ in the Puget Sound area.”
“Sean Martin isn’t so certain. He is the interim director of the Rental Housing Association of Washington, a consortium of more than 5,000 independent rental owners and managers. ‘This is a little bit more than the natural slow-down at this time of year,’ Martin said. ‘A lot of our members are saying rents are pretty stagnant.’”
“A rash of recent apartment construction across the region is stabilizing the market, he said. More than 2,000 rental units are being built in Snohomish County, with some 5,000 more in the planning stages.”
The Miami Herald in Florida. “The federal government says its hunt for dirty money in luxury real estate in South Florida and other high-priced housing markets is working — and the temporary initiative is being extended yet again. Since 2016, the U.S. Treasury Department has mandated that secretive shell companies buying luxury homes with cash in certain areas disclose their true owners to the government. The anti-money-laundering initiative began in Manhattan and Miami-Dade County — to the protests of South Florida politicians — and has gradually been expanded to other areas in Florida, New York, California, Texas and Hawaii.”
“Drug dealers, corrupt officials, money launderers and other criminals often buy expensive real estate to legitimize dirty cash. They use shell companies — which don’t have to disclose their owners — in order to keep their identities hidden, frustrating law enforcement agents and sometimes stopping investigations dead in their tracks. Anti-corruption advocates have called for the disclosure rules to be made permanent. The flood of foreign money — most of it clean — pouring into markets like South Florida is partially blamed for rising home prices.”
“The temporary orders, issued by a Treasury agency called the U.S. Financial Crimes Enforcement Network (FinCEN), are known as geographic targeting orders, or GTOs. Last year, FinCEN reported that 30 percent of home deals reported under the GTOs were linked to people who had been the subject of ’suspicious activity reports’ filed by banks.”
From The Oregonian. “Residents of downtown Portland’s Ladd Tower last year started noticing a growing number of strangers in their building’s lobby and elevators, often with luggage in tow. They arrived at a time when residents were already on edge over a series of break-ins, and crime prevention officials had warned them to watch out for unfamiliar people. It wasn’t clear where they were coming from — until residents found the building listed on the website Stay Alfred, which rents out vacant apartments to travelers.”
“‘I signed up to live in a home, not a hotel,’ said Lisa Cox, a resident of the building. ‘Holland Residential has turned this into a hotel without me even knowing.’”
“Ladd Tower, owned by Holland, isn’t alone. The owners of a handful of high-end apartment buildings are now offering rooms to rent by the night through Stay Alfred and a Portland-based competitor, Vacasa. It’s part of a small but growing industry that allows building owners to make money off of empty units.”
The New York Times. “As South Lake Tahoe struggles with a proliferation of vacation-home rentals in its residential neighborhoods, the El Dorado County town has enacted tough new rules, slapping $1,000 fines on both vacation-rental guests and owners for infractions related to noise, parking, trash, too many visitors, too many cars or hot-tubbing after 10 p.m. Homeowners say the influx of weekend visitors, some of whom they describe as drunken revelers, destroys their tranquillity and neighborhood character. They point to new McMansions with eight or more bedrooms being built specifically to house tourists. They’d like to ban vacation rentals altogether in residential areas.”
“Already some real estate investors are talking about unloading their properties. ‘Sooner or later we will sell our house,’ said one vacation-rental owner who has already received two $1,000 citations for guests who briefly had an extra car. If she gets another one, she can no longer rent to tourists. If scores follow her example, the inventory flood could exert downward pressure on home prices.”
The Missoula Current on Montana. “Sterling CRE adviser Matt Mellott offered his company’s top investment opportunities – and risks – for investors looking at commercial real estate property in Missoula. Mellott said investors building spec homes in Missoula priced over $350,000 are fine for now, though that could change if the market corrects itself. ‘If there’s a market correction, you can still sell a $250,000 house, but you’ll have a very difficult time selling a $350,000 or $450,000 house.’”
“Stabilized multi-family properties you don’t plan to keep through an entire cycle: ‘If you buy a property that has a net operating income, right now, of $100,000, and you buy at a 5.5 percent cap rate, which is typical for this area, you’re going to pay $1.82 million,’ Mellott said.”
“But if that same investor assumes his or her rent will grow 3 percent each year, pushing his or her net operating income to $109,000 three years from now, a life-changing event that requires the investor to sell could spell disaster in an environment with rising interest rates. ‘A 6.5 cap rate on a $109,000 net operating income means you’ll sell for $1.86 million, which means a net loss of $140,000 three years from now. Rising interest rates are not your friend when you talk about buying low cap-rate products.’”
From the Washington Post. “A new case in the District offers good news to condo associations struggling with owners delinquent on their fees: It reinforces their right to foreclose on a unit without having to wait for the bank to do so first. Other winners in the case are buyers looking to whisk up a foreclosed condo at a huge bargain. Losers are banks that are left without the right to foreclose first and unable to get back the money they lent.”
“Back in May 2014, Andrea Liu bought a unit at the Sonata, a luxury condo building in Northwest Washington, at a foreclosure auction, paying $17,000 for an apartment that was valued around $700,000. The reason Liu got such a deal on the condo was because the previous owner stopped making mortgage payments and paying condo fees on the unit. Under D.C. condo law, condo associations have what is known as a six-month ’super-priority’ lien. If a unit owner stops paying fees to the association, the association can foreclose and get its money before anyone else, including the bank.”
“Most banks, when faced with a foreclosure by a condo association in the District, will often pay the condo association what it is owed to prevent the foreclosure. In this case, U.S. Bank, which held the mortgage on the unit that Liu bought, tried to pay off the approximately $5,200 the owner owed in condo fees to the association. But it was one day too late. The foreclosure had already taken place.”
“It reinforces their right to foreclose on a unit without having to wait for the bank to do so first. Other winners in the case are buyers looking to whisk up a foreclosed condo at a huge bargain. Losers are banks that are left without the right to foreclose first and unable to get back the money they lent.”
With Republicans in control, perhaps market discipline can return to housing. Deadbeats and lenders who handed out subprime loans like candy, beware.
This stinks to high heaven. A “super priority lien” which wipes out the first Deed of Trust? Give me a break.
Then again, it stinks to high heaven when the first Deed of Trust sits on a squatter’s condo but not paying condo fees. And the bank dropped the ball when they didn’t show up at the auction to buy back their own condo. A foreclosure auction without a minimum reserve, for example $600K? There’s a lot else that stinks about this particular example.
Other winners in the case are buyers looking to whisk up a foreclosed condo at a huge bargain.
The real winners are the remaining condo owners who are responsible for the vacant unit’s facilities and maintenance fees. Think elevators, landscaping, swimming pools, etc., which must be done.
Superior, CO Housing Prices Crater 14% YOY As Boulder Area Housing Correction Expands
https://www.zillow.com/superior-co/home-values/
‘Despite senior housing industry headwinds, don’t expect real estate investment trusts (REITs) to be taking aggressive steps to cut rents or lower escalators for operators as they have been for skilled nursing tenants. That’s according to Rick Matros, CEO of the Irvine, California-based Sabra Health Care REIT (Nasdaq: SBRA).’
“If you go back 20 years to 1997 when you had a bunch of companies going bankrupt, the companies that went under during that period were the companies that had too much leverage,” Matros told Senior Housing News. “You see it time and time again.”
‘Sabra is also in the midst of what it’s dubbed a “Genesis Exodus,” or a plan to fully divest all of its skilled nursing facilities operated by Genesis Healthcare, Inc. (NYSE: GEN). Genesis has high leverage—7.3x on a pro forma basis.’
‘On the whole, senior housing investors are in for a slightly bumpy ride, Matros suggested. He’s in a position to comment, as Sabra has a mixed portfolio of skilled nursing and private-pay senior living assets, with about 384 of its 507 total properties being skilled nursing and 101 being senior living.’
“My point of view, on the senior housing side, is that everybody’s a little bit too bent out of shape,” he said. The sector, for instance, is experiencing a downturn, challenged by several factors including tight labor markets and falling occupancy linked to oversupply issues.’
‘Senior housing occupancy was 88.8% for the fourth quarter of 2017, which was unchanged from the third quarter, according to the National Investment Center for Seniors Housing & Care (NIC). So, the industry is definitely experiencing a “downturn,” but it could be worse. In general, senior housing landlords aren’t at a point where they’re considering or making rent cuts, Matros said.’
‘When Genesis Healthcare Inc., one of the nation’s largest nursing-home operators, returned to the stock market three years ago through a merger, the goal for the Kennett Square company was to sell more shares to the public to pay down its massive debt load.’
‘Instead, the stock tanked, never making it out of the single digits and hitting a low of 60 cents in December, as Medicare and Medicaid rates haven’t kept pace with rising costs. Plus, better-paying Medicare patients increasingly are kept out of nursing homes, leaving Genesis and others with a heavier concentration of money-losing Medicaid patients, who bring in less than half of Medicare.’
‘The shares, which trade on the New York Stock Exchange, have since recovered slightly, to close Tuesday at $1.64, thanks to the willingness of Genesis’ biggest landlords, Welltower Inc. and Sabra Healthcare REIT Inc., to cut aggregate rents by 11 percent, or $54 million. The landlords also kicked in an $8 million reduction cash interest on loans.’
“They see the problems going around the industry,” George V. Hager Jr., Genesis’ chief executive, said in an interview Monday.’
‘On Friday, Genesis reported a 2017 loss of $214.4 million, as measured by earnings before interest, taxes, and amortization, on revenue of $5.4 billion, compared with a profit of $647 million on revenue of $5.7 billion in 2016.’
‘Genesis is not alone. A tidal wave of financial pressure sweeping through the entire nursing-home industry has engulfed players big and small.’
For all you home investors.
I am staying away from REITs. Some pay a nice dividend but this sector is going to get crushed with rising interest rates and falling housing prices. Plus they are leveraged (debt) to the max.
Even baby boomer retirement living REITs
IMHO.
I owned some REITs a few years ago and rode up the post-meltdown gains for a while, but I wouldn’t touch them at this late stage of Housing Bubble 2.0.
I may wade back in after the next real estate bust settles in.
When I asked where a person could get an 8% return on cash in this coming year, with everything so toppy, wouldn’t you know that Rental Watch was pimping REITs?
I like how you ignore the fact that I also said that such returns only existed because they were retail REITs, and that there was meaningful risk there.
And that if you wanted a safe 8% yield, it didn’t exist.
And I wanted to add that I distinctly remember you talking about investing in REITs at that time, and then also talking about when you got out. I respect that, because it was a far cry from those people like Joe Crapto who showed up here at the absolute pinnacle of Buttcoin Bubble to tell us he made tens of millions, when he had never shared years before that he was supposedly buying the whole time. He’s a lion, you’re not.
I lightened up on my REIT exposure earlier this year, but I still have some exposure in my retirement accounts. Excluding the REITs that are part of the major indices, I reckon my holdings have about a 2% allocation to the Vanguard REIT index.
Mister Market has a way of humbling those who go all-in (or all-out for that matter) on any particular asset class.
If you own an S&P 500 index fund or a Russell 1000 or Russell 3000 based index fund, then you have some REIT exposure in your portfolio.
If senior housing can’t make a buck what their group can ?
Plus they are leveraged (debt) to the max.
Which REITs are leveraged to the max? From what I’ve seen, analysts are still punishing REITs for carrying too much debt, and some that had “near death” experiences during the crash, are still in the process of delevering…reducing absolute amounts of debt, AND extending the maturity of their debt.
One of my favorite REITs, Prologis (warehousing–riding e-commerce wave) has book value of $29.5 Billion, and TOTAL liabilities of $10.8 Billion.
The market is valuing their equity at $32.3 Billion.
I’m not saying that PLD is a “buy” right now…I think the stock price is on the high end of a fair range.
However, I don’t think it’s overleveraged, nor do I think there is broad overdevelopment of warehouses, nor do I think there is an imminent collapse in demand for warehouse space.
‘A New Braunfels nonprofit company that provides retirement housing and health care to more than 300 residents and patients has sought bankruptcy protection. Eden Home Inc., which does business as EdenHill Communities, filed Chapter 11 last Friday after defaulting on about $52.6 million in bonds used to finance construction of 103 apartments, a health center and other improvements.’
‘An agreement with bondholders to delay a foreclosure expired, prompting them to direct the bond trustee to “exercise remedies,” Eden Home CEO Laurence Dahl said in a court filing accompanying the bankruptcy petition. The bondholders have a lien against Eden Home’s real estate and personal property.’
‘Dahl blamed construction defects and delays for Eden Home’s financial troubles. It is mired in litigation with the contractor.’
‘The nonprofit posted almost $13 million in losses for the four years ending in 2015, its tax returns show. Its 2016 and 2017 tax returns have not been filed with GuideStar, a website that gathers financial information on nonprofit organizations.’
‘Eden Home occupies about 15 acres on Lake Boulevard in New Braunfels. Its original facilities were built in 1956 and it has expanded at various points over the years.’
Those assisted living places are unbelievably expensive. The percentage of seniors who can afford them must be small. And a very broke .gov cannot pick up the tab.
My folks spend over half their annual income on their independent living apartment in a senior center. I can’t complain at all about the services they are provided, but it’s not cheap, and the assisted living arrangement offered there is quite a bit more expensive. I would guess many who last for over a decade in those living arrangements find their assets fully depleted. A cynical view is that the senior care industry represents a benevolent fleecing operation.
A cynical view is that the senior care industry represents a benevolent fleecing operation ??
But the real question P-Bear is whats the alternative for your parents ?? I do think there is a way to lets say “stretch your dollars” when, when in need, you find yourself in this situation…Seek a cheaper location…If its far away from the kids but its cheaper with equal care (or better) then thats the price of getting the assistance you may needed can afford…I had a friend who moved his mother about 100 miles away but cut the cost of the same care in half…
Now, alternatively, someone like McBeth would just say lets just euthanize them as a better and cheaper alternative…
Before becoming an RN, I worked in an assisted living center. The lives of these individuals were great and the care that they received was superb. This was a particularly well-run facility, but it was super expensive. The pay for the aides was very poor and the food was mediocre at best (but I’m a food snob). The operations for these things are often not that great and some of the needs of the residents, especially in memory care (read: Alzheimer’s) units are very large. Housing right now is very expensive, and senior housing in a skilled nursing facility, assisted living, or specialty care hospital is very pricey indeed.
McBeth would just say…
So much hate, so little time.
“McBeth would just say…
So much hate, so little time.”
Pretty much.
I had an interesting experience at the endodontist on Thursday. I was two get two root canals …I had three done instead. The dentist drilled the wrong tooth!
No matter. I asked the guy if he felt bad about it. He said he did and it was obvious he did. I told him not to worry and “hey, let’s get started with the next procedure.” He got it done. My teeth and gums feel pretty good today (Saturday).
He knocked down the price (I did not request him to do so). Three root canals for the price of one. I’ll take it. Fine by me. I joked that should I need his services again, he can do the same thing again! Maybe a two-for-one. He laughed.
I asked him to do two things for me:
(1) That he react similarly the next time he is on the short of the stick - say, if someone runs into his car. Cut the guilty party some slack and give them time and space to make things even.
(2) Remember something that I wrote on a Post It note (that I gave to him). I wrote the oft-used expression “Have A Great Day”. Underneath it, I wrote, “Because You Can’t Live It Again”.
Someone told me that about 2 years ago and I have never forgot it. A very simple yet very profound statement once one takes time to reflect on it.
The endodontist was a bit stunned. As I was two years ago.
I told him and the hygienist that should I return, I will only let the two of them touch my teeth.
Then, I paid my bill and left.
He killed one of your healthy teeth—and you seriously don’t care?
No, I don’t. Why would I?
Anyone who is concerned with something so trivial should have their head examined, not their mouth.
How was the tooth “killed”? He didn’t lose it. The nerve was removed, but the tooth should be just fine. There’s a good chance he’ll take that tooth to his grave.
I had a root canal done almost 30 years ago. The tooth has not given me a problem since that day.
Mac, if you’re out there this fine morning, check out DJT’s twitter. Just like my friend the government spending gadfly said, the wall is in the defense allocation.
A lot of other stuff in that defense allocation, too, if some of the internet chatter is correct. Some money going to be spread around to compensate some folks who got hurt by Hillary’s international crime ring. All this is gonna cost major buckaroos. But, we might just get some of it back.
Thanks, palmy. I’ll check into it.
With all the cross-currents that typify today’s culture, I am going to take a Missouri on this for now (”Show Me”).
No offense meant to you, your friend or Trump.
Maybe Oxide will happen upon something more official within the next few weeks and share it here.
I very much hope you are correct.
I had a root canal done in 1982 with a gold crown. Tooth has been as good as gold since then. I have had 2 other teeth I lost when they developed vertical cracks - cracks that extended below the gum line. Both my siblings have lost teeth for the same exact reason at about the same age, must be in our DNA. Dentist told me those defects are not salvageable in any way & so the teeth were extracted. Then he wanted me to have implants at $5000 each. No thanks. Gaps are barely visible anyway unless I open very wide. If these teeth had gotten root canals with gold crowns earlier, the vertical splits would not have happened. A tooth may be healthy when you’re 30 and may self-destruct by the time you’re 35.
Four years ago: $3500+ /month
So a couple would need to clear $7000 a month. Just how many retirees have that kind of income?
‘Senior housing is aging well in the Denver area, but there is a bit of oversupply in the sector, keeping it from going through another growth spurt. Pamela Pyms, who cut her teeth in the senior housing sector as a broker at Fuller Real Estate, Cassidy Turley and at her own firm, Pyms Capital Resources LLC, before merging her company last year, said the Denver-area senior housing market is softened just a bit.”
“It has become so attractive to senior housing because of its strong demographics and seniors wanting to be close to their grandchildren that it led to a bit of a construction boom following the Great Recession. “Denver is still a strong market, but occupancy rates (at independent living and active senior housing communities) have dropped a little bit,” Pyms said.’
“The market used to be at a 92 percent occupancy rate and now it is around 88 percent, although I think it is going to come back,” as not as much new supply is being added to the market, she said.’
‘She said cap rates have risen a bit on senior housing acquisitions, in part because of rising interest rates and partly because there is more senior housing supply on the market than a few years ago. “I have seen a little bit of a discrepancy between sellers’ expectations and what the market is willing to pay, but I would say it is still a very strong market,” she said.’
Yeah, Pamela. Just make sure you’ve got plenty of pickleball courts and pinochle rooms, maybe even a bowling alley, and they’ll come. Be sure have three outdoor swimming pools, too. Because three is better than one. Oh, and a ballroom. Gotta have that ballroom.
‘Many California universities are working quickly to provide more affordable and convenient on-campus housing options for existing and future students to temper the rising cost of living in the state. The University of California system is actively working to meet its goal of building 14,000 beds by 2020.’
“Students … are being priced out of the local markets,” Galindo said during a recent Bisnow event. “A lot of our campuses are going high.” Campuses like UCLA and UC San Diego are building 14-story residences and increasing density, she said.’
‘Off-campus projects not only need to go through an often-contentious entitlement process, but they also have to provide the right mix of amenities to attract students and lease up their properties. Many developers have had to tone down their amenities and instead of building luxury amenities like lazy rivers, more educational facilities are being added instead.’
‘Developers like The Dinerstein Cos. are still adding high-end fitness centers and the bells and whistles, but educational aspects like study rooms and WeWork concepts are becoming key amenities, according to The Dinerstein Cos. West Coast partner Josh Vasbinder. “We’re competing with other private developers and I wished it wasn’t an amenities race,” Vasbinder said.’
Stop paying so much for the land Josh. What’s that? Oh, you already paid too much? Sucks to be you then, amenity racer.
“Off-campus projects —snip— have to provide the right mix of amenities to attract students and lease up their properties.”
Most students are interested in low rents and distance to campus, not these “amenities” that developers are pimping.
This is part of “the story” they made up to justify the bubble land pricing. I’ve tracked it a while and documented the formation. Lots went along with it: the new rich renter. The millennial who demanded bocci ball and craft beer downstairs, who just happened to be comfortable paying 60-70% of their income in rent. Adults willing to live with strangers like dorms. Then there is the wealthy seniors who don’t want to own a house and prefer to live the “urban vibe”. Remember the Atlanta apartment that cost $5,000 a month and served free drinks day and night?
Campuses like UCLA and UC San Diego are building 14-story residences and increasing density, she said
I’ve never visited UCLA, but UCSD has tons of open space. It’s also had high rise dorms as far back as I can remember.
When I was a student I was surprised by how many of my classmates, who came from solid middle class homes, were getting Cal Grants, especially considering how much more affordable UC was back then.
UCSD still has some open space - especially since the eucalyptus trees seem to be dying off - but nothing like it used to 25 years ago. Back then my friends and I who went to school there built a skatepark in the forest and the cops didnt know for months - until they decided to investigate what all the cars driving in and out were doing. This wasnt small either - big ramp was 9′ tall, 24′ wide, probably 40′ long and the mini ramp was 5′ tall, 12′ wide and probably 20′ long - basically the size of a double tennis court. We had a generator, bands would play - it was all time.
We got away with so much back then, its crazy. And the school even handed us money when they needed us to relocate. Imagine handing 2K to a bunch of starving students! I think the first thing we did, well second after eating was go down to TJ to skate the park there and buy firecrackers. I might need to write the screenplay for that era, kind of “lords of dogtown 2.0″
I’ve come across this issue, from the first link above:
‘Investment in Class-A assets in gateway markets is expected to taper off a bit as investors hunt for value-add opportunities in secondary and tertiary markets with stable upside potential. By purchasing these properties and giving them a face-lift, builders can pay less upfront, add a few amenities, boost rents and reap the profits — which tend to far outweigh the initial capital injection.’
“The difference between building Class-B and Class-A is not that different,” Eisner said. “The price of building the box is not that different, it’s really the finishes.”
So if the box isn’t that much more, why the lazy rivers? Because they paid so much for the land they have to have stupid high rents to tote the note. Now it’s blowing up on them.
“the price of building the box is not that different”
Nor is the location of the box.Anyone can easily pay too much for worthless dirt in TX as they can in CA. It simply comes down to how dumb you are.
Speaking of dumb, I saw this video last night and my jaw dropped - million dollar shack near my old stomping grounds. Never mind that its old, junky (but with some porcine lipstick), the size of an ashtray and theres an auto repair place next door!
https://www.youtube.com/watch?v=PFkjnLWwn2U
Cali you so dumb, SO dumb!
This is from our long time friend:
133 Second St., Encinitas
JimtheRealtor
Published on Mar 11, 2018
This closed for $1,240,000 in February.
Thanks for momento Mr. Ben … & Howdy Jimmy!
Breakslow @ “The Potato Shack” … reading the Coast News & San Diego Reader for free, & patrons without cell.phone.neckitis … Cue Frankie singin’, “eye did it my way” …
Salt.air, that’s a great.gift.of.life!
I regularly get calls from job recruiters for jobs in California, especially in the Bay Area. I always cut them off, telling them that I could never afford to live there.
I also looked at that property on Zillow. It’s 5 blocks from the beach. Used to be that kind of money would get you a shack right on the beach.
Heck, even Cholo Vista and El Cajon are unaffordable now.
Cogswell Cogs in CA? Makes sense.
“This closed for $1,240,000 in February.”
There are no words…
At 0:34 into the video, the guy walks into the house only to hear a blasting train horn. Not a train that’s way in the distance that you hear in the night, but a train that’s a block away.
I agree with the realtor that the house is “habitable,” but that’s about it. I guess much of the value is in the guest house(?) in back.
Yeah, that train horn was a nice touch - and you probably only hear it a dozen times a day. Would hack me off to live some place really nice like Del Mar and you hear the train plus the loud din of traffic on the 5 as its always a mess.
Jim said the guest house would bring in 1200/mo - thats not too attractive. The whole thing is a mess IMO. You could go east of the 5 and get a really nice place, yeah you have to drive to the beach but you’ll be driving to do stuff anyway so its not like you can zero out car ownership from the equation. Maybe if you worked in the neighborhood (like at the repair place next door, lol!) and avoided the miserable SD commute that might be worth some premium.
At 0:34 into the video, the guy walks into the house only to hear a blasting train horn.
AKA the “San Diegan” which runs right through the much coveted area “West of I-5″ many times a day. In some areas, like Solana Beach, its runs just 1 block from the beach.
I’ve mentioned before that any property near railroad tracks suffers not only from horrific air pollution from the smoke belching locomotives, but soil contamination and other lovely side effects.
‘Investment in Class-A assets in gateway markets is expected to taper off a bit as investors hunt for value-add opportunities in secondary and tertiary markets with stable upside potential. By purchasing these properties and giving them a face-lift, builders can pay less upfront, add a few amenities, boost rents and reap the profits — which tend to far outweigh the initial capital injection.’
Yeah fawkin’ right! What’s the date on this article? Because that ship has sailed. The secondary and tertiary markets are already goosed to the hilt. It doesn’t pencil out. I even posted an article from rural Timbuktoo where the locals couldn’t afford rents anymore and the guy was camping with his kid until they found a place to live. This thing is OVER.
‘pay less upfront, add a few amenities, boost rents and reap the profits — which tend to far outweigh the initial capital injection’
By this they mean flip it (or refinance) cuz they are valued by revenue, not comps. What they’ve been doing is doubling their money put down in a short period of time. Problem is when the revenue goes down, value goes down. Short term financing, and it’s time to pony up. Unless, you get one of those non-recourse loans they like so much.
It’s been a pretty lopsided bet these people have been making for a long time and with the governments help to boot. But the cap rate fairy dust is now working it’s magic in reverse.
‘If you buy a property that has a net operating income, right now, of $100,000, and you buy at a 5.5 percent cap rate, which is typical for this area, you’re going to pay $1.82 million’
‘But if that same investor assumes his or her rent will grow 3 percent each year, pushing his or her net operating income to $109,000 three years from now, a life-changing event that requires the investor to sell could spell disaster in an environment with rising interest rates. ‘A 6.5 cap rate on a $109,000 net operating income means you’ll sell for $1.86 million, which means a net loss of $140,000 three years from now. Rising interest rates are not your friend when you talk about buying low cap-rate products.’
Low caps+rising rates combined with falling rents and high vacancies=fooked.
“Unless, you get one of those non-recourse loans they like so much.”
They don’t even care if they default and lose the property, they’ll just incorporate as another entity and buy the thing back cheaper, or something similar. They’ve got no skin in the game and they’ve been doing cash-out refis, as you’ve posted here for so long. What a scam.
‘But if that same investor assumes his or her rent will grow 3 percent each year, pushing his or her net operating income to $109,000 three years from now, a life-changing event that requires the investor to sell could spell disaster in an environment with rising interest rates. ‘A 6.5 cap rate on a $109,000 net operating income means you’ll sell for $1.86 million, which means a net loss of $140,000 three years from now. Rising interest rates are not your friend when you talk about buying low cap-rate products.’
Here’s another doozie: all these guys are building rent increases into their numbers. If they don’t get it they’re fooked. Watch out for that tree!
‘the median asking prices for one-bedrooms in Cole Valley are down 14 percent to $2,950, while the Inner Richmond is down 11 percent to $2,550 and Mission Dolores is down 9 percent to $3,350 since the same time last year’
And these aren’t effective rents, which include vacancies and concessions. Effective rents can be double or triple the decline.
My only question is how was it possible for rents to get so high as it is? It’s absolute insanity around here. Pay does not even begin to approach what’s going on.
“My only question is how was it possible for rents to get so high as it is?”
The rest of the local property owners will be taxed to subsidize rent vouchers via public housing agencies.
How long until there’s a nationwide tax revolt?
Property taxes jumped by as much as 31% here last year. 31% in a year!
My only question is how was it possible for rents to get so high as it is?
Because renters have few options–otherwise, when the landlord tried to push the rents to these levels, the market answer would be crickets.
“Effective rents can be double or triple the decline”
Falling rental rates and falling housing prices. It doesn’t get better than that.
investors are shifting their investment strategies to focus less on appreciation to generate crazy returns, and more on stability and betting on assets that will generate steady cash flow.
Last week I spoke about my area going from all but the priciest Apartment complex being at 100% capacity to, less than 1 year later, having about 150 new units unoccupied. My place, which was at 100% capacity when I signed my lease in April, (I moved in July) and was increasing rent $10/month is now giving $1000 off the first month rent of a new lease.
100% capacity April 2017 - $1000 off a new lease March of 2018
Exurb of Raleigh about 55-60 miles S-SW.
‘focus less on appreciation to generate crazy returns’
This was a big clue there was a commercial bubble years ago. It was all about the greater fool.
An acquaintance in Fuquay-Varina, another Raleigh exurb, tells me that that prices have gone through the roof, even though there’s empty land as far as the eye can see. It’s 20 miles from Raleigh.
Fuquay-Varina:
For sale: 294
New Construction (196)
So 2/3 of the houses are new builds. Seriously? This should be Oil City country.
From what I’ve heard F-Q’s been growing like a weed. It used to be an exurb where you could get a cheap house in the Raleigh area.
Not anymore.
Raytheon is in F-Q.
’nuff said.
The availability of land has nothing to do with whether or not there can be a bubble. Just look at Nevada - there is more land than you could ever need to build, yet prices went stupid high.
You are right. It’s the availability of drinking water that is much more important.
appreciation —–>preservation
“Since 2016, the U.S. Treasury Department has mandated that secretive shell companies buying luxury homes with cash in certain areas disclose their true owners to the government. The anti-money-laundering initiative began in Manhattan and Miami-Dade County — to the protests of South Florida politicians — and has gradually been expanded to other areas in Florida, New York, California, Texas and Hawaii.”
Hahahahaha! Dirty money laundering ain’t all that any more.
‘Since 2016, the U.S. Treasury Department has mandated that secretive shell companies buying luxury homes with cash in certain areas disclose their true owners to the government’
If you’ll recall, the government didn’t really want to do this. They were embarrassed by a NYT investigative report on shell buyers in New York City. They found scads of crooks, drug/arms dealers, who were obviously layering LLC’s to hide their involvement. Which is a crime in and of itself when it comes to money laundering.
So they announced some timid actions: just Miami and NY and only for 6 months. The Miami UHS immediately starting openly holding seminars on how to get around the new regs, which drew some angry comments from law enforcement. The new focus was turning up lots of shady deals. By then it was too obvious to ignore and the net was widened.
‘The Panama Papers are 11.5 million leaked documents that detail financial and attorney–client information for more than 214,488 offshore entities.[1][2] The documents, some dating back to the 1970s, were created by, and taken from, Panamanian law firm and corporate service provider Mossack Fonseca,[3] and were leaked in 2015 by an anonymous source.[4]‘
‘The documents contain personal financial information about wealthy individuals and public officials that had previously been kept private.[5] While offshore business entities are legal (see Offshore Magic Circle), reporters found that some of the Mossack Fonseca shell corporations were used for illegal purposes, including fraud, tax evasion, and evading international sanctions.[6]‘
“John Doe”, the whistleblower who leaked the documents to German journalist Bastian Obermayer[7][8] from the newspaper Süddeutsche Zeitung (SZ), remains anonymous, even to the journalists who worked on the investigation. “My life is in danger”, he told them.[9] In a May 6 statement, John Doe cited income inequality as the reason for his action, and said he leaked the documents “simply because I understood enough about their contents to realise the scale of the injustices they described”.
‘He added that he had never worked for any government or intelligence agency and expressed willingness to help prosecutors if granted immunity from prosecution. After SZ verified that the statement did in fact come from the source for the Panama Papers, the International Consortium of Investigative Journalists (ICIJ) posted the full document on its website.[10][11]‘
https://en.wikipedia.org/wiki/Panama_Papers
Who is it in the U.S. government who benefits from illegal money laundering, and how do they get away with their crimes?
Is your question who is it in the U.S. government or the U.S. in general ?
Govt
What are the fundamentals behind of the bear market in the dollar over the last year?
I would have thought that rising interest rates in the U.S. relative to other nations would have been a plus for the value of the dollar.
Trade wars if they are effective in reducing the trade deficit (not saying that they necessarily are) would result in greater need for dollars overseas to pay for imports from the U.S.
Reversing quantitative easing should remove deposits at the Federal Reserve thus increasing the need for cash by banks. A lot of these deposits are from foreign banks. This should cause more demand for the dollar. Indeed we are seeing widening LIBOR-OIS spreads proportional to the reduction in the Fed balance sheet. So dollars appear to be in demand.
Inflation is relatively tame in the U.S. right now. Velocity of money is low. That should be relatively good for the dollar. Real short term rates are negative which should be bad for the dollar but that has been the case for many years and it’s all relative to negative rates in other countries.
So what has been different this last year that wasn’t true the previous five or six years?
I looked at some long term charts and there does seem to be a regular cycle in the dollar over many years but the cause of the cycle in unknown to me.
Is it all psychological? Trumpaphobia? Your thoughts?
“I would have thought that rising interest rates in the U.S. relative to other nations would have been a plus for the value of the dollar.”
They haven’t risen much yet off historic lows over the entire history of finance, going back centuries, reached in the past decade.
Yellen is a labor economist. Her head fake approach to rate increases probably helped reduce unemployment, but she largely left the challenge of rate normalization to her successor.
Proximity to peak leveraged speculative asset price bubble…
Pacifica, CA Housing Prices Crater 10% YOY On Rising Bay Area Mortgage Defaults
https://www.movoto.com/pacifica-ca/market-trends/
Realtors are liars.
Found on a postcard in a old shoebox
Make America Great Again!
15.5% mortgage rates
& … or
https://en.m.wikipedia.org/wiki/Homestead_Acts
$incerely,
TheAmishareSuffering
Sept,2005
“…and betting on assets that will generate steady cash flow.”
If interest rates continue to normalize, this could prove to be a losing bet. Rising rates generate negative capital gains on investments with steady cash flow.
We are currently in the aftermath of one such period. Be sure to cover your assets!
What could possibly go wrong?
What you need to know about Utah becoming the first state to make ‘free-range parenting’ legal
https://www.yahoo.com/lifestyle/know-utah-becoming-first-state-133358437.html
Now you have to pass a law to allow kids to walk to school? Geeze, my entire town would have been under arrest. Is it still legal to be a latchkey kid? Kids started latching around age 11.
And the twelve year old could watch the younger siblings until Mom got home from work.
The waiting in parked cars scares me a lot since every year we have dozens of toddlers nationwide who die from heat exhaustion due to being forgotten in scorching hot cars. Obviously some common sense should come into play here. An 11-year-old who wants to play Candy Crush while mom pops in to the supermarket to pick up some milk is different than a 4-year-old. This law is more of a statement than anything else. It’s kind of a legislative jab at those stories, which are more exaggerated hysteria than reality, of parents being investigated by CPS for letting their kids walk home from a park a block or two away.
I think you’re right it’s a statement, because the law “doesn’t specify an age limit for the above activities.” If this were really a safety issue, there would be some more specs; for example a minimum age, or a maximum time without supervision, perhaps distance from the home, etc.
Fairfax co has a “safe routes to school coordinator”
Wrightsville Beach, NC Housing Prices Crater 5% YOY As Vacation Property Demand Falls Through Floor
https://www.movoto.com/wrightsville-beach-nc/market-trends/
anyone notice how quiet the ppt has gotten? Is it time for them to ride this sucker on the way down and sell some bonds to scared sh@tless stock market evacuees?
They are punishing the investors as a way teach Trump a lesson. When Trump gets the full lambasting in the media for destroying everyone’s retirement, then the ppt will swing into action.
two $1,000 citations for guests who briefly had an extra car…
No more Tupperware parties, no more baby showers, no more dinner guests. High class solitary confinement?
The bright side of it is that I bet there isn’t a single illegal immigrant clan in the whole town. Nobody does multiple parking better than they do.
Hey Donk
Name the new school:
Some ideas aimed to honor people, some drew inspiration from geographical features in the area and some tried humor, The Daily Herald reported Thursday.
One resident suggested the new Eagle Mountain high school should be called The Derek Zoolander School for Kids Who Can’t Read Good and Want to Do Other Stuff Good Too.
Another wanted it to be named Hogwarts High School.
http://www.good4utah.com/news/local-news/hogwarts-zoolander-among-entries-for-new-utah-school-names/1073850377
Everything around Jackson Hole has a “Moose” prefix.
The Derek Zoolander School for Kids Who Can’t Read Good and Want to Do Other Stuff Good Too.
The Derek Zoolander School for Kids Who Can’t Read Very, Very, Good and Want to Do Other Stuffs Very Good Two.
The Derek Zoolander School for Kids Who Can’t Read Very, Very, Good Stuff and Want to Do Other Stuffs Very Good Two, also.
Washington DC Housing Prices Crater 12% YOY As Federal Budget Impacts Market
https://www.zillow.com/washington-dc-20010/home-values/
*Select price from dropdown menu on first chart
Which federal budget would that be? The one that boosted military spending? Like there’s no military around DC…
Housing Donk.
Naples, FL Housing Prices Crater 5% YOY
https://www.movoto.com/naples-fl/market-trends/
Dc area still has low inventory n fast turnover. Donald spending bigly
Trump’s 2018 budget did drop by about $50B. Not much, but still a step in the right direction.
Just how much of that affects Fed Gov workers in DC directly is unclear. I suspect if there was a headcount reduction, it was with contractors. I know of a few Fed Gov employees in the Denver area. None of them seem too worried about losing their jobs, not like workers in the private sector.
These days in the private sector you’re ALWAYS looking over your shoulder. There are even layoff tracking websites like layoff . com which track rumors and actual layoffs. And no matter how much money the firm is making, you are always at risk.
“Denver rents in the past year have increased less than the national average, according to a new report from Zillow.
According to Zillow’s latest figures, rents across the country have increased 2.8 percent over the past year, while rents in Denver have increased only 2.5 percent over the same period.”
https://www.bizjournals.com/denver/news/2018/03/22/denver-rents-increasing-less-than-national-average.html
“New home loans in Denver and Boulder dropped by 37 percent year-over-year in Q4 2017, according to a report from ATTOM Data Solutions.
Of the 120 metropolitan areas analyzed in the report, only eight saw year-over-year increases in total loan originations during that period.
Denver and Boulder dipped lower than the national trend as new home loans fell 19 percent year-over-year nationally.”
https://www.bizjournals.com/denver/news/2018/03/23/new-home-loans-in-denver-boulder-dipped.html
Remember, every dollar that gets sucked into the black hole of the Health Insurance Industrial Complex is a dollar that will never be spent in the “real”economy…
Health-Insurance Premiums Loom as Election Issue:
“Health-insurance premiums have been rising sharply for people who buy insurance on their own, rather than getting it through work or other programs, and dwindling participation by insurers has left such consumers with fewer choices.
Some lawmakers from both parties had pushed to include in the spending bill measures aimed at stabilizing the individual health-insurance market, especially restoring payments to insurers that offset the cost of subsidies they are required under the ACA to provide to some low-income consumers. President Donald Trump ended the payments last year, saying they were illegal because the money hadn’t been appropriated by Congress. The proposals also sought to give states money to help with expensive insurance claims.
Omitting the measures from the spending bill dims the prospects for such legislation this year. While some lawmakers are likely to push for separate legislation, the odds of passage are high amid rifts in Congress over whether to help support the health law as well as on the abortion restrictions.
That deals a blow to insurers who must soon determine what rates to charge next year. Without the payments, insurers may raise premiums or curtail participation in the ACA exchanges. The Congressional Budget Office estimates that gross premiums for a popular middle-priced plan offered through the insurance exchanges are, on average, about 10% higher this year than they would have been if the subsidies to insurers were funded, a figure set to grow to 20% by 2021. The CBO also expects premiums to rise as a result of the repeal of the requirement that most people have coverage or pay a penalty, something that might encourage healthier people to forgo insurance.”
https://www.wsj.com/articles/health-insurance-premiums-loom-as-election-issue-1521975600
“International Brotherhood of Teamsters President James Hoffa said the government has no right to take away pensions from hardworking Americans.
“People can’t work 40 years, promised a pension and then you pull the rug on them – that’s wrong. People deserve pensions,” Hoffa said during an exclusive interview with FOX Business’ Maria Bartiromo on “Mornings with Maria” on Wednesday.
“You’ll have a revolution in this country,” Hoffa warned. “I know thousands of people that depend on Social Security, Medicare, Medicaid – that is what this country’s about.”
https://www.foxbusiness.com/politics/pension-crisis-could-start-a-revolution-teamsters-hoffa-warns
That is what this country is about? LMFAO
That is what this country is about? LMFAO
The only pensions the government can “take away” are the ones it pays to its retirees. Teamsters are not government employees. Their union arranged for pensions that may not be payable. Hoffa wants the rest of us to chip in for those empty promises. The BS is so strong in this article.
“The BS is so strong in this article.”
That FOX Business piece was yellow journalism.
CNBC offers up a puff piece that doesn’t mention the fact that 50% of all marriages end in divorce and that 70% of all divorces are initiated by women…
I was part of the 1%—here’s how everything changed when my husband left:
“At our first meeting, my divorce lawyer looked across his large desk, fixed his gaze on my swollen, weeping eyes, and said, “The hardest thing for women like you to understand is that your life as you know it is over.”
It was a harsh assessment of my future financial prospects, and one that didn’t immediately sink in. I had come to interview this lawyer a week after my husband of nearly 14 years left me for his pregnant mistress and just days after the first lawyer I visited looked across her desk, characterized me as a gold-digger and said that I should not expect a financial windfall from the situation.
Never mind that I was the aggrieved party and I now had two children to support, that my husband had been the sole breadwinner, that I had put my journalism career (LOLZ) on the back-burner as we followed his banking career around the world. The first bit of legal wisdom these lawyers chose to impart was that I should not expect to profit from the end of my marriage.”
https://www.cnbc.com/2018/03/22/i-was-part-of-the-1-percent-but-everything-changed-when-my-husband-left.html
“Over the previous six years, I had developed spending patterns that had become second nature.”
She demands to be supported in the manner she had become accustomed.
“Over the previous six years, I had developed spending patterns that had become second nature.”
Shivers.
And the judge will likely rule in her favor. She’ll be fine. Her beta provider on the other hand …
I asked a friend if he’d re-marry, and he said, “I can afford to live on half, but not a quarter.”
“50% of all marriages end in divorce”
And 100% are a result of overspending. Mostly mortgages.
50% of all marriages end in divorce
Many people marry and divorce several times over their lives. This skews the statistics quite a bit. It’s not 50% of first marriages that end in divorce.
The men I know whose wives have divorced them have mostly been pretty problematic people (alcohol, financial dishonesty, and abuse, mostly). And they usually become repeat offenders, reeling new (mostly younger) women in with their charm and bullsh!t.
where is the PPT? Is it time to wheel out a FED member on CNBC?
“Baltimore City ranks somewhat high on the “sh*thole” list for its widespread death and destruction. After fifty years of failed democratically controlled leadership, the eastern and western districts of the inner-city have deteriorated into a complete and utter war-zone. This is not a new phenomenon but has been worsening for decades.
In 2017, the city’s population hit a 100-year low, as residents abandoned their neighborhoods to escape the opioid-infused violent crime that continues to ripple through the city streets. In fact, the violent crime is so severe in the region, that the homicide rate is now the highest in the entire country.
According to The Baltimore Sun, the U.S. Census Bureau recorded one of the most significant population declines for Baltimore City than any jurisdiction in the nation this past year. The city had the second-largest decline of any county for 2016 through 2017, second only to Cook County (Chicago), according to the latest figures from the U.S. Census Bureau.”
https://www.zerohedge.com/news/2018-03-24/exodus-baltimore-residents-flee-collapsing-city-census-figures-warn
I saw the Failed Mayor from that Failed City on Tucker Carlson’s show recently spewing Gun Grabber talking points and refusing to answer questions about her failed policies and failing city.
“One thing to realize about our fractional reserve banking system is that, like a child’s game of musical chairs, as long as the music is playing, there are no losers.” –Andrew Gause
“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.” - Citigroup’s Chuck Prince in 2007
Dallas, TX 75287 Housing Prices Crater 7% YOY On Plummeting Housing Demand
https://www.zillow.com/dallas-tx-75287/home-values/
*Select price from dropdown menu on first chart
Underage Drinking
Alcohol is the most commonly used and abused drug among youth in the United States.1
Excessive drinking is responsible for more than 4,300 deaths among underage youth each year, and cost the U.S. $24 billion in economic costs in 2010.
https://www.cdc.gov/alcohol/fact-sheets/underage-drinking.htm
Alcohol is the most commonly used and abused drug
I have a solution! Prohibit the sale and consumption of alcohol!