That ‘When Is It Going To End?’ Pattern
A report from KSNV in Nevada. “Take a drive to California, and you can’t help but notice the empty, desert land along I-15. It is a land that soon could be filled with hundreds of new homes. Developers are buying up the vacant lots to build new condominiums, apartments and townhomes on the south side of Las Vegas. Tom McCormick, president of Touchstone Living, said the home builder plans to break ground this fall on new townhomes near I-15 and St. Rose Parkway. McCormick says the community will target entry-level home buyers in a tight housing market. ‘We expect to start at $225,000 for a three-bedroom home. We expect everything to be under $300,000,’ said McCormick. ‘Because it is more affordable.’”
From the Green Bay Press Gazette. “The northeastern Wisconsin housing market reached its nadir 10 years ago when the market crashed amid a global recession. Since then, existing sales not only rebounded, but set records in the last two years. ‘There’s no normal right now. Everyone’s heads are spinning, grasping at what’s out there and wondering when it’s going to cool down,’ said Paul Soletski, owner of Bay Lakes Builders & Development in Allouez. ‘You can’t blame them because for so long we all barely kept our heads above water.’”
“Strong sales and demand after such a low point a decade ago has many in the business wondering what the new normal will look like, said Mike Kunesh, president of the Realtors Association of Northeast Wisconsin. ‘We’re in that ‘When is it going to end?’ pattern,’ Kunesh said.”
From WMC Action News in Tennessee. “The housing market is booming, and homes are going fast. Ask any realtor and they’ll tell you, it’s an amazing time for the housing market in the Mid-South, especially if you’re looking to sell! Sheldon Rosengarten with Marx-Bensdorf Realtors has been in the business for 40 years and said he’s never seen anything like the current Mid-South market. ‘The inventory is low, buyers are involved with multiple offers, there’s bidding wars on properties throughout the different areas in the city and the county and it’s just a crazy market right now,’ Rosengarten said.”
“With the market being so competitive, Rosengarten said realtors are working around the clock to give families their dream home ‘If I list something on a Friday, I may have 3, 5, or 7 offers on Sunday afternoon,’ Rosengarten said.”
From Curbed Los Angeles in California. “The price of renting in Los Angeles continues to plateau, even as the cost of buying a home rockets upward to unprecedented levels. Richard Green, director of the Lusk Center for Real Estate at USC, tells Curbed that steady rent growth may be slowing in response to new housing construction in the Los Angeles area. ‘In LA, we’ve sort of been building enough to meet new demand, and that helps,’ says Green.”
“Though a recent state analysis found that Los Angeles is failing to meet goals for affordable housing construction, the city has already exceeded a benchmark for new market rate housing that it had until 2021 to hit. Still, Green says he’s been somewhat surprised by how quickly rental prices have tapered off. The market has ‘definitely softened a little more than I was expecting,’ he notes.”
From Mansion Global on New York. “Manhattan luxury homeowners are slashing asking prices to strike a deal with buyers, according to the Olshan Report. Apartments and townhouses that went into contract in the week ending Sunday got an average 16% price cut, according to the report—one of the steepest average discounts in the past year, at least. Even typically price-stubborn developers headed to the negotiating table.”
“‘Some developers are negotiating lower prices to get deals done and clear the inventory,’ Donna Olshan, president of Olshan Real Estate, wrote in the report.”
“For example, among the contracts signed last week was a 24th-floor condo at a Christian de Portzamparc-designed building in NoMad that found a buyer asking $4.975 million—a 17% markdown from the $6 million the developer originally wanted in 2016. Since the beginning of the year, the average luxury home found a buyer after 446 days on the market and once the seller cut the listing price by 9%, according to Olshan.”
From Seattle PI on Texas. “A rise in home foreclosures around Houston may be upon us. Housing analysts predict a surge in foreclosures this year as forbearance programs cease and homeowners face mortgage payments they can’t cover, the Houston Chronicle reported. Over the past two weeks alone, more than three dozen foreclosed properties have been listed for sale on the Houston Association of Realtors website.”
The Des Moines Register in Iowa. “Every single home matters in a community of 120 people. Each house serves as a crucial piece of the local tax base, keeping the town from fading away. That’s why people like Marne Mayor Randy Baxter have surgically removed the town’s dilapidated homes over the years. That’s why the city will give away residential lots for free to anyone willing to build a new home.”
“He plans to start building spec homes with his own capital, confident that there’s enough demand to sell them once they’re built. Even completing one new home every two years would be huge for the tiny town, he said. ‘We’ve gotten rid of all the houses here that are not livable,’ he said. ‘I think now’s a good time to start thinking about building new houses. We think if we build it, someone will eventually live in it.’”
“The program is pretty simple: The lots go free to anyone willing to build a home that’s at least 1,200 square feet. No trailer homes are allowed, but modular homes are acceptable. In the last decade, only one family has taken up the city’s offer: a ranch home on a corner lot was built several years ago.”
Alameda, CA Housing Prices Crater 9% YOY As Bay Area Layoffs Expand
https://www.zillow.com/alameda-ca/home-values/
*Select price from dropdown menu on first chart
Other than Pandora cutting staffs, are there any other layoffs? haven’t heard anything.
Legacy companies like Hewlett-Packard Enterprise have been laying off. The people I know from that region who get laid off seem to have no problem finding a new job in just a few weeks. Recruiters are constantly contacting me to see if I’m interested in relocating to the Bay Area. As far as I can tell, there are plenty of jobs there.
Depends on what field…not necessarily in all areas such as chip design
so we just recently moved to the east coast, and we have been leasing out our Oakland condo since last summer.
Last year in July, we had at least 10 applicants for the unit, this year in April we got 1 (and not even a very good one).
I know the job market is still very strong….. but something is changing, just not quite sure what it is…….
Thanks for the insight JT.
“… but something is changing, just not quite sure what it is…”
Here’s a hint: This sucker is soon gonna blow!
The Bay Area’s Affordable Housing Crisis Is Only Getting Worse
Rebecca Worby
6 hours ago
A new report from the California Housing Partnership, an affordable housing non-profit, shows just how wide the gulf between Bay Area housing costs and wages has grown.
According to the report, workers in several Bay Area counties would need to earn four times the minimum wage to pay the median rent for an apartment. In Oakland, workers would have to make nearly $50 an hour to afford the median Alameda County rent of $2,553. To afford San Mateo County’s median rent of $3,395, workers would have to make more than $65 an hour, which is close to six times the state minimum wage.
“This is a housing emergency,” Matt Schwartz, the non-profit’s president and chief executive officer, told the Mercury News.
The vast gap between wages and rental rates has a disproportionate effect on the lowest-income renters, who spend more than half of their income—and in some cases up to 70 percent—on housing.
The report also found that homelessness is on the rise all across the Bay Area, including increases of 36 percent in Alameda County and 47 percent in Sacramento County.
The California Housing Partnership recommends that the state put $1 billion of its budget surplus toward affordable rental housing, devote another $1 billion toward housing the homeless, and set aside at least $1 billion annually for “redevelopment funding for affordable housing and related infrastructure.”
…
With no letup in home prices, the California exodus surges
By Andrea Riquier
Published: May 4, 2018 8:11 a.m. ET
The median sale price for a home in California is more than double that in the rest of the nation
Say goodbye to Hollywood, Billy Joel sang in 1976.
Now, in the midst of a deepening housing crisis, thousands of people are following that advice.
Over a million more people moved out of California from 2006 to 2016 than moved in, according to a new report, due mainly to the high cost of housing that hits lower-income people the hardest.
“A strong economy can also be dysfunctional,” noted the report, a project of Next 10 and Beacon Economics. Housing costs are much higher in California than in other states, yet wages for workers in the lower income brackets aren’t. And the state attracts more highly-educated high-earners who can afford pricey homes.
There are many reasons for the housing crunch, but the lack of new construction may be the most significant. According to the report, from 2008 to 2017, an average of 24.7 new housing permits were filed for every 100 new residents in California. That’s well below the national average of 43.1 permits per 100 people.
…
“…and Beacon Economics.”
Chris Thornberg never mentions that excessive taxpayer-backed credit availability helped to drive home prices higher.
Qualcomm
Facebook is adding 10,000 jobs in 2018. I would guess the number of new housing units built within 20 miles is under 5,000. The demand side just keeps building.
Housing my friends.
Danbury, CT Housing Prices Crater 22% YOY As Coastal Housing Corrections Accelerate
https://www.movoto.com/danbury-ct/market-trends/
A letter to the editor in the Palm Beach Post:
‘Letters: Home sellers hanging on to recoup precrash investment’
‘Regarding low affordable housing inventory and first-time homebuyers’ difficulties, a major reason many homeowners postpone downsizing and listing their homes: they bought the house during the real estate boom. Many older couples are keeping it until they can break even on the purchase price. The house is their major asset.’
‘Many younger homeowners who bought during the boom are also waiting to break even on the 2005-07 purchase price, even if it means foregoing vacation plans to re-landscape after a hurricane and paying higher property taxes. Several have told me that they’re not concerned about increasing interest rates, they intend to sell for cash and purchase a new home the same way. Out-of-state and foreign buyers often pay cash and don’t need loans.’
KATHLEEN BURT, PORT ST LUCIE
“Several have told me that they’re not concerned about increasing interest rates, they intend to sell for cash and purchase a new home the same way. Out-of-state and foreign buyers often pay cash and don’t need loans.”
Just keep hoping for the magic foreign buyer fairy to buy your poorly-maintained, non-updated house.
“Letters: Home sellers hanging on to recoup precrash investment”
This is why a 20% down payment was successful.
Realtors are liars.
‘Richard Green, director of the Lusk Center for Real Estate at USC, tells Curbed that steady rent growth may be slowing in response to new housing construction in the Los Angeles area.’
‘In LA, we’ve sort of been building enough to meet new demand’
Now wait a minute Dick (can I call you Dick?). This is crazy talk. We have been lectured over and over that it is absolutely unpossible for Californians to build enough of anything. Much less in a city with as many people as LA. I mean, if they can do that there, what about all those places where there is plenty of empty land? Gosh, I can see what you are saying but still, it means we’ve got some crow eatin’ lions around here.
I wonder if, when this all finally shakes out, there will be cheap houses to buy again? It’s been over 20 years straight without cheap houses.
There is only one answer my good friend. Falling prices.
Littleton, CO Housing Prices Crater 6% YOY
https://www.movoto.com/littleton-co/market-trends/
For several decades houses have been a surefire way to get rich by doing nothing but having a loan at the friendly bank. The bigger the loan the better! You don’t need any skills. You don’t need any smarts. Just jump in and win!
When nobody believes this will houses sell for less?
When nobody believes this will houses sell for less?
If nobody believes it nobody will even want a house until they are almost free.
Don’t forget the Bernanke-Yellen Fed’s decision to reflate the bubble at the very point where affordable housing was almost in reach. The trillion dollar question: Will the new guy continue the Fed support for maintaining high home prices which his predecessors helped establish?
“……over 20 years straight without cheap houses….”
That is not true everywhere. I bought some pretty cheap houses in 2009 & 2010. The sales price was 10 times the annual gross rent. Nobody wanted (or could buy) the houses then. Some we’re brand new and had never been occupied.
OK. But I think the rents you are comparing against were inflated compared to if the market had been allowed to clear.
Palm City, FL Housing Prices Crater 7% YOY As Coastal Property Market Demand Plummets
https://www.zillow.com/palm-city-fl/home-values/
*Select price from dropdown menu on first chart
‘As Vacant Offices Pile Up In Downtown D.C., Business Groups Want The City To Intervene’
‘If it was a car, 900 G St. NW would be a Porsche: floor-to-ceiling glass stretches across its nine luxurious stories, with a marble-accented lobby, panoramic views and a gym with towel service. Called the “future of office buildings in D.C.,” the structure sold for a record price in January: $144 million.’
‘The blockbuster sale might suggest that D.C.’s office market is thriving — but it was actually an anomaly. Beyond the glassy walls of 900 G St., more than 5 million square feet of office space sits empty in a large swath of downtown D.C. Fearing a damaging drop in property values, two groups are calling on lawmakers to do something about it.’
‘It’s not easy to persuade developers to build apartments downtown, the report says, because they make far more money erecting luxurious new office buildings like 900 G St. (High-end offices are bait for law firms and other deep-pocketed tenants for whom appearances matter.) But putting up new offices downtown is only worsening the vacancy problem, which is one reason why the business improvement districts say it’s time for the city to step in.’
‘Office-to-residential conversions have been popping up across the Washington region for some time now: a 50-year-old office building in Alexandria is slated to become 520 apartments with retail, and in Silver Spring, what was once a struggling office building is now a collection of modern condominiums called Octave 1320.’
‘The D.C. council recently approved a task force to study the issue, and the idea has already proved successful in Bethesda, where what was once a decaying office building is now a permanent home for 32 homeless men and women.’
I’m confused. I thought we had an inventory problem? It’s all about supply and demand they said!
“As vacant offices pile up”
What I see everywhere is commercial space that sits empty, unleased, because they’re “not going to give it away.” Nobody will take their medicine and just lower the price to where a new business moves in. Apparently, many are able to absorb the lost revenue for years, even decades, as evidenced by large anchor stores which were vacated and never replaced (K-Mart, Sears, etc.).
Nobody will take their medicine and just lower the price to where a new business moves in.
Nobody takes it voluntarily. Nature needs to be allowed to take its course. With GAAP in place. And perpwalks for the deserving.
‘There was more bad news for retail in New York City in the first three months of the year, with rents sliding in almost all Manhattan retail corridors during the first quarter, according to CBRE’s quarterly report. On average, rents declined 19.5% year over year to hit $653 per SF, the report found. Rents decreased in all but three of the 16 retail corridors that the brokerage tracks.’
“In New York City, we’re seeing continued adjustments to pricing expectations, as average asking rents continue to trend down,” CBRE Director of Research and Analysis Nicole LaRusso said, adding that many tenants are offering concessions and agreeing to short-term leases.’
‘Some have been warning of what has become known as a “retail apocalypse” for some time. Rents in Manhattan last year fell to their lowest rate in 17 years, according to a Real Estate Board of New York report.’
https://www.bisnow.com/new-york/news/retail/nyc-retail-rents-fell-20-in-the-first-quarter-of-the-year-87793
‘more than 5 million square feet of office space sits empty in a large swath of downtown D.C. Fearing a damaging drop in property values, two groups are calling on lawmakers to do something about it’
I can guarantee that the owners of 5 million square feet are feeling it. They are bleeding cash. That’s why they are crying for “government” gravy.
Here’s what I don’t get: why isn’t the media asking, “how could you screw up so bad?” There are loads of advisor/consultant companies whose only job is to tell these bozos what to build and where. IMO, everybody is blinded by market distortions. Take land costs: CRE in NYC doubles in 2 years. Message to the market: “this stuff must be in high demand and the only thing that will pencil out is luxury!”
Uh, no. It’s just a bubble and when you snazz everything up, jack up the rents, it simply dooms the entire street.
‘For months, Wade Park, a planned 175-acre mixed-use development along Frisco’s $5 Billion Mile, has avoided foreclosure. Two lenders for the development first filed foreclosure notices in February and have refiled the notices each month following the scheduled auction date.’
‘The situation with rents in the most expensive US rental markets can be summarized like this: Free-fall in Chicago, where the median asking rent for two-bedroom apartments has plunged 32% from its peak, a similar collapse in rents in Honolulu, double-digit declines from the peak in New York City and Washington DC, mixed movements in the Bay Area, a blistering boom in Southern California, and everything in between.’
‘A peculiar phenomenon cropped up last November: The median asking rent for 1-BR apartments suddenly surged by the double-digits, even as the median asking rent for 2-BR apartments was barely edging up. This phenomenon endured for four months but has now collapsed.’
‘In San Francisco, the most expensive major rental market in the US, the median asking rent for 1-BR apartments rose 2.1% year-over-year to $3,440 in April, but remains down 6.3% from the peak in October 2015. For 2-BR apartments, it rose 1.1% year-over-year to $4,550 but remains down 9.0% from the peak in October 2015.’
‘There is no shortage of apartments in San Francisco. Far from it. For example, Zillow lists 1,851 apartments for rent at the moment, up from 1,581 a month ago, and up 61% from the 1,149 listed in August 2016. This is a result of the construction boom. The City is not large, with a total of 387,000 housing units. But almost all the supply is high-end - and I mean “expensive,” not necessarily “luxurious.”
‘In other words, there are plenty of units for rent, but most people cannot afford them. Our local term for this phenomenon - “Housing Crisis” - describes a crisis of rent inflation. There is no crisis of availability.’
‘In the second most expensive major rental market, New York City, the median asking rent for 1-BR apartments edged down 0.7% year-over-year to $2,890 and is down 14.2% from the peak in March 2016. 2-BR apartment rents fell 3.5% to $3,330 and are down 16.3% from the peak in March 2016.’
‘These are serious declines, but they do not include incentives or “concessions,” such as “1 month free” or “2 months free,” which reduce the effective rent for the first year by 8% or 17%. Concessions have reached record levels in New York City.’
‘ Seattle rents are seesawing between a vibrant economy and the onslaught of new supply from its dizzying housing construction boom that focused on the high end. So the median 1-BR asking rent edged out by $10 the record set in August 2017. But 2-BR rents remained nearly 5% below their peak of April 2016.’
‘Chicago rents are in free-fall, with 1-BR asking rents down 27% from the peak in October 2015 and 2-BR asking rents down 32% from the peak in September 2015. Chicago has had plenty of new construction, but the population has been declining as tax burdens are growing and as the city is gingerly and ever so slowly tottering toward what may ultimately become the largest municipal bankruptcy filing.’
‘Rents in Honolulu, after having plunged for three years straight, are struggling to find a bottom, with asking rents for 1-BR and 2-BR apartments down over 20% from their respective peaks in early 2015.’
‘Of the three Bay Area cities in the chart above, rents are down from the respective peaks in two: San Francisco and Oakland. The drop in Oakland (13% and 15% from their peaks) is significant.’
I can vouch for here Honolulu here.
My buddy (the one that’s about to lose his job in Mortgage Processing) was complaining last year about his landlord jacking up his rent.
He said he had to stay though because everywhere else was so expensive. I sent him an article showing Honolulu rents dropping and he didn’t believe it.
Just a couple months ago he got his rent jacked up again. This time he did look - and had NO TROUBLE finding a place.
I also got a text from a friend of mine asking if West Hollywood, CA rents were in a free-fall because he found a 2 bedroom place near mine for little more than what I pay for my 2 bedroom that I moved in to in 2011 - and I’m in a rent control building.
Here’s what I don’t get: why isn’t the media asking, “how could you screw up so bad?”
The media should also point out which lawmakers are considering a fix… with taxpayer money of course.
Little wonder that newspaper outlets are dying… they’re dying because their subscribers know that they are looking the other direction when the corruption is rampant.
White Plains, NY Rental Rates Crater 8% YOY As Housing Correction Ravages NYC Area
https://www.zillow.com/white-plains-ny/home-values/
https://snag.gy/m5EzRB.jpg
A fish rots from the head down.
as evidenced by large anchor stores which were vacated and never replaced (K-Mart, Sears, etc.)
It’s possible that no one wants to lease those properties at any price.
There was an old school Walmart (no grocery section) when we first moved to our little burg. A few years later they built and opened a Super Walmart and closed the old one. The old one sat vacant for years, until it was subdivided and a Hobby Lobby and thrift store moved in. Have read stories of dead WalMarts and KMarts that never found a new tenant.
Kmart in my hood got replaced by a sports authority - the Borders of outdoors. You try something on, then buy it online. I knew they were dead men walking when I went to look at shoes on a sunday evening - fully staffed with maybe a few customers. Needless to say that didnt last long!
We also have a dead man walking KMart in our town. Usually there are maybe 30-40 cars in the parking lot vs. the Walmart which has hundreds, maybe over a thousand on a busy day.
The KMart is dilapidated, but on the rare occasions when I go in it does appear to be fully stocked (have read stories about half empty Sears and KMarts). Perhaps it still has enough customers to keep going. I remember when there would be maybe a couple hundred cars in the parking lot on a weekend afternoon.
There’s an empty Circuit City store on west Sahara Avenue in Las Vegas. It still has all the signage up and everything. As you know, Circuit City shut down years ago. But it’s still sitting there.
It’s ALWAYS the price when it comes to vacancies. Every time I have this conversation with people, whether it’s vacant for sale or rent, I ask them - “do you think somebody would buy it for a dollar?” They laugh and roll their eyes, and I follow up with “the market price is somewhere between $1 and your current ask, and there are many takers at that price.”
There was no better example of this than Ben Jones’ link to a San Francisco article where a guy is on a month to month lease at 1/3 of the “market rate” for the commercial space, selling t-shirts out of the place. He IS the market rate, and at least those owners have acknowledged that and are getting something. Other owners are just saying “I’m not giving it away.” I’m not opposed to local governments cracking down on those owners, because vacancies and blight are not good for cities and towns, and the people of this country.
“I’m not opposed to local governments cracking down on those owners,”
A return to mark-to-market accounting standards would also go a long way towards this end without the need for new regulation.
Offices for homeless !
Kewl
Converting office buildings to residences seems to be another form of value-add. I looked up that Octave 1320. Two units sold recently:
Studio 744 sq ft: $305K
2-bed 850 sq ft: $360K
That’s not far off from 2007 bubble pricing for that area. The building has a big advantage in that it is very close to a Metro station, and within walking distance of a major “vibrant” retail/restaurant area.
I’m really surprised they don’t do that with some of the empty office buildings in San Jose.
Tear down and rebuild - it’s happened to several offices parks around here, including during bubble 1.0
Washington, DC 20010 Housing Prices Crater 14% YOY
https://www.zillow.com/washington-dc-20010/home-values/
*Select price from dropdown menu on first chart
From CNN.com today regarding an mortgage underwriter: “Hager said he has put the housing crash behind him. He is energized about working at a start up that focuses on helping home buyers, particularly first-timers, through the mortgage process.
“There’s a special adrenaline rush that you get when you are helping someone achieve their dream and making sure it’s the right fit for them,” he said.”
Why is it always the first-timers?
They’re dumb with empty pockets and easy scam by scammers. They’ll never do it again after losing their ass the first time.
“They’ll never do it again after losing their ass the first time.”
Au contraire, my friend, au contraire. You must not be paying attention. Google “boomerang buyers” to understand that all the suckers who got fleeced at the top last time are getting fleeced at the top again right now. In fact, Ben has posted links right on this blog.
The dumbest ones might not have had enough of a beating the first time around and come back, but the ranks do shrink. It’s like falling down a flight of stairs.
Englewood, CO Housing Prices Crater 10% YOY As Housing Correction Rolls Through Denver
https://www.movoto.com/englewood-co/market-trends/
Casey Serin just shared publicly that he’s gone all in on Litecoin (even though he can’t pay his bills). Hashtag “MillionaireByChristmas”.
he is poster boy for gambling.
Wow, just checked out his Twitter. He’s driving for Uber. Not surprised.
Sometimes “all in” is $20.
This crapto sheet is unreal.
Marne, Iowa is in the middle of nowhere, but it is less than 10 miles from a Wal-Mart. If you’re a healthy introverted retiree couple, it might work.
The catch here is that the house must be 1200 sq ft. No tiny houses allowed, and especially no THOWs.
Interesting. I was just in Costa Rica and they do it the opposite way.
While we were driving through a small rural village on the way to rafting, the guide explained that if a person buys the land, the government will build a small house for them on it. They looked to be about 500 sq ft or so.
There better be good healthcare. And 10 miles one way to a store is a pretty lengthy drive for an old timer.
And 10 miles one way to a store is a pretty lengthy drive for an old timer. How far to health care for that old timer?
Arlington, VA Housing Prices Crater 8% YOY As NoVa/DC Housing Glut Advances
https://www.movoto.com/arlington-va/market-trends/
Local NPR just reported Denver apartment construction expected to peak this year.
“This sucker could go down” — George W. Bush
Is that because the developers are worried about excess capacity or are lenders applying the brakes?
Maybe it’s the lenders who are worried about excess capacity.
I asked my iPad the question “Why do restaurants fail?” and she came back with this reply …
“10 Reasons Restaurants Fail”
I homed in on the first reason because it reminds me of a pizza place that know of that opened and closed and then opened and closed … etc … while continuously sucking money out of numerous bank accounts. There was something wrong with the joint but not wrong enough to demolish the place, just wrong enough to destroy people’s finances (think Ben Jones’s dry cleaner effect).
Whatever … go here …
https://www.thebalancesmb.com/ten-reasons-restaurants-fail-2888628
There was a stand alone Chinese restaurant in the parking lot or the dead WalMart I mentioned above. It went through a few owner until it closed about 15 years ago, at which point no one would touch it. Last year it was demolished and replaced with a KFC. I have no idea of how the KFC is doing as I have yet to set foot in it.
There was also an A&W in town that folded about 10 years ago. A couple of would be burger mesiters tried to go the mom and pop approach, but both folded after a few years. Both claimed kitchen fires and their insurance refused to pay. It’s across the street from a McDonalds and it’s been empty for about 5 years and no one will touch it.
I watched 4 restaurants fail in the same location, all different fare, over the course of 5 years, two of them lasting 6 months max. The location stinks because it’s hard to turn into off a 50 mph highway, and there’s nothing else nearby that people would patronize.
Fast forward after a year vacant and a liquor store popped up. The parking lot is packed every day. Go figure.
You can cook your own food at home, but making booze is more involved.
It’s really not that hard, just takes some planning ahead.
When I drive through middle-town America (5K+ pop), it seems that there is always a string of car dealerships and at least two dollar stores. Those never seem to fail.
A lot of Chevy dealerships failed in those towns in the last downturn.
Heh. Just yesterday I saw a sign that the local restaurant which opens and closes yearly will be opening soon once again. In the past 5 or 6 years it has been an Italian joint, Messican, high end burger and most recently a bar and grill. All closed within a year. Which is weird cuz the location is good and surrounded by other businesses that are thriving. It’s like the building itself is cursed or something.
The lease is too high. The end.
+1 Another cheese flavored biscuit!
Franchise fees coupled with a corporate stranglehold. Why go to have a drink at an Applebee’s when I can have a great craft IPA at a local owned place.
Large Bud Light at Applebee’s = $6
Aslin Double Orange Starfish in Herndon = $5 (and it’s a great beer)
All of those are valid reasons why restaurants fail, but they all seem to revolve around factors that are ostensibly within the control of the restaurateur. The problem may simply be that of a bubble in restaurants in general:
Thanks to Wall St., There May Be Too Many Restaurants
“After a prolonged stretch of explosive growth, fueled by interest from Wall Street, experts say there are now too many fast-food, casual and other chain restaurants.”
““There becomes a point where there’s too many choices,” Mr. Mooney said recently. “The more restaurants that opened up, the more it took away from business for us.””
“Since the early 2000s, banks, private equity firms and other financial institutions have poured billions into the restaurant industry as they sought out more tangible enterprises than the dot-com start-ups that were going belly-up. There are now more than 620,000 eating and drinking places in the United States, according to the Bureau of Labor Statistics, and the number of restaurants is growing at about twice the rate of the population.”
https://www.nytimes.com/2017/10/31/business/too-many-restaurants-wall-street.html?mtrref=www.google.com&gwh=3DB7B5132EF8DEC70F254001B66D62C0&gwt=pay
There may be (and probably is) too many restaurants but this does not mean the restaurants will be demolished, only that they will probably close. A closed restaurant that still stands as a restaurant is a turn-key business that may sooner-or-later fire up the imagination of some puke who has it in his head that he (unlike others) can make the restaurant profitable.
Now a prospective entrepreneur is a “puke?” It sounds like you’re the real puke, Mr. Banker.
A prospective investor who lacks good business sense is a puke.
“investor” should be “entrepreneur”
“Mr. Banker” should be “puke”
It also doesn’t help that even crummy casual dining places like Applebee’s are pricey, and that a meal, soft drink and tip can easily be $20 per person. I can make a filet mignon dinner at home for far less than that.
Come to think of it, there hasn’t been a new casual dining place opening in my little burg in about 10 years. A Carino’s that closed a few years ago still has no tenant. Lots of fast food places like Chipotle and Smashburger have opened.
A footlong Subway meal is $13 around here.
i went into panera bread and got hosed today. 10 bucks for a tiny @ss sandwich.
Testify, brother!
IMO you get more for your money at Applebee’s than Panera Bread.
By the way, the Paleo/Primal crowd are opening restaurants too. I don’t think they will survive. The meat and high-quality veggies are the most expensive part of any meal. They don’t serve any cheap bread, so how are they supposed to make up expenses and a profit? Kombucha?
I miss our old Carino’s, but admit we didn’t go all that often because of the high carbs.
Wonder how much if the business dropoff is due to health concerns.
Lots of fast food places like Chipotle and Smashburger have opened.
Those type of places would be considered “fast casual”, which purports to be a step-up from fast food but not a full-serve place. Panera, Chipotle, Cafe Rio, Five Guys, Noodles & Co, Shake Shack, etc. This segment has been hot for some time now, putting pressure on the Applebees and Chilis.
Speaking of fast food and labor costs:
A Fast-Food Problem: Where Have All the Teenagers Gone?
The New York Times
May 3, 2018
By Rachel Abrams and Robert Gebeloff
“A quarter-century ago, there were 56 teenagers in the labor force for every “limited service” restaurant — that is, the kind where you order at the counter.”
“Today, there are fewer than half as many, which is a reflection both of teenagers’ decreasing work force participation and of the explosive growth in restaurants.”
“But in an industry where cheap labor is an essential component in providing inexpensive food, a shortage of workers is changing the equation upon which fast-food places have long relied. This can be seen in rising wages, in a growth of incentives, and in the sometimes odd situations that business owners find themselves in.”
“This is why Jeffrey Kaplow, for example, spends a lot of time working behind the counter in his Subway restaurant in Lower Manhattan. It’s not what he pictured himself doing, but he simply doesn’t have enough employees.”
https://www.nytimes.com/2018/05/03/upshot/fast-food-jobs-teenagers-shortage.html
I grew up in a tourist town that was only busy in the summer, so teenagers made good summer help. But that has mostly ended for a few reasons.
I think first is that pre-teens aren’t doing much physical activity any more. It’s all video games and homework. Throw a 14-16yo with no physical endurance into a busy restaurant job and it takes most of the summer before they can keep up. So net loss there.
Second, the few that are willing to physically endure that process want to get paid a decent wage for it. In most places illegals already have the endurance and will take a lower wage. And for the short seasonal stuff without many illegals available there are now special visas to bring in young people from eastern Europe just a for a few months a year to do this kind of work. So that’s what’s happened in my hometown.
There’s no shortage of teens. Just a shortage of tough ones willing to work for nothing.
Out where we are the competition for these kind of entry-level jobs is fierce and a 16/17 y-o can’t compete. Between the local small university kids, the otherwise-unemployable and ESL-types (no farms around here for them to pick strawberries) there’s no room for a kid that has a curfew and requires a permit from the HS to work. Once said kid turns 18 it gets better.
2 out of 3 of my kids got jobs at 16/17. One got their Red Cross Lifeguard cert so worked for the Y and local park district (specialization to the rescue…) and the other got in via connections: friend’s father owned a small grill.
I don’t think the number of ambitious or money-driven kids has gone down. I think the job market has been compressing and driving workers down into what was entry-level jobs.
“This is why Jeffrey Kaplow, for example, spends a lot of time working behind the counter in his Subway restaurant in Lower Manhattan. It’s not what he pictured himself doing, but he simply doesn’t have enough employees.”
He needs to review the employee’s pension plan and their stock options strike price. Employers who are “with it” also have a free Wi-Fi so your data plan doesn’t get hit.
Oops… /sarc>
“Out where we are the competition for these kind of entry-level jobs is fierce and a 16/17 y-o can’t compete.”
There are fast food job openings everywhere here. $10 is starting, minimum, and multiple locations (like Taco Bell, Iceburg, Arby’s, Del Taco, etc.) have signage up on their marquee saying “Now hiring, pay up to $13/hr”. Labor is really tight here. The thing is, I wouldn’t want my son working fast food, at least not for many hours. It would make more sense to funnel that time into something that will pay off more in the long-run, like an apprenticeship or coding classes. Or maybe learning Mandarin.
It would make more sense to funnel that time into something that will pay off more in the long-run, like an apprenticeship or coding classes. Or maybe learning Mandarin.
I think people underestimate the long term value of doing some crappy physical work at a young age. But I think most educated parents are thinking the same thing as you.
the long term value of doing some crappy physical work at a young age It worked for me. I never wanted to do crappy physical labor again!
Housing ladies…. Housing.
Dewey Beach, DE Housing Prices Crater 11% YOY
https://www.movoto.com/dewey-beach-de/market-trends/
Monterey, CA Housing Prices Crater 24% YOY As Demand For Coastal Housing Evaporates
https://www.movoto.com/monterey-ca/market-trends/
Broken Watch, you’re not right even twice a day!
DegenerateGambler
Millbrae, CA Housing Prices Crater 5% YOY As Bay Area Layoffs Accelerate And Confidence Plummets
https://www.movoto.com/millbrae-ca/market-trends/
Also from Curbed.
https://www.curbed.com/2018/5/2/17306936/housing-bubble-financial-crisis-again-us
“In the run up to the crisis, easy credit created an artificial demand for housing that pushed prices up, creating a bubble that ultimately burst. Today, millennials looking to become first-time home buyers are flooding a housing market that’s starved for supply. Low supply and high demand means high prices. One could argue that today’s housing bubble isn’t a bubble at all, but a reflection of an incredible supply and demand imbalance.”
“There are so many institutions and industries that depend on home prices going up that there are intense institutional and policy forces causing just that. If they haven’t already, those forces may push prices beyond the real value of the asset. Wall Street being Wall Street, it’s found new ways to squeeze every last dollar out of the housing market by leveraging big data and national online investor platforms such as those for home flipper loans and so-called iBuyers.”
“The financialization of housing by institutional capital has negative consequences, like inflating home values at a time when affordable housing is scarce to nonexistent. And as housing is such a bedrock of the U.S. economy, the well-being of housing and the economy are tethered such that if one goes down, the other goes down with it.”
“There are so many institutions and industries that depend on home prices going up”
They’ll find another way to earn a living just like realtors and appraisers will.
stock and home wealth is 50% of the economy at least.
I read that this morning. Another long-winded “it’s different this time” thing. One of the comments:
‘ LAoneWay
fundamentally, I don’t see a huge downturn on the horizon either – maybe a slowing down due to the lack of affordability. But if anything happens to the economy as a whole that could kill consumer confidence and that’s really what it all comes down to. How confident are people about the future? so far so good. we shall see how long this continues. nothing lasts forever. I hope to cash out at some point and take my profits and leave the state of CA.’
You and a few million others. Another:
‘You were right when you said that people were set up to fail – that the mortgages were designed in a way that people would not be able to maintain them. But then you say that they didn’t deserve the credit extended to them. This “blaming the victim” is a common excuse for the Recession. However, the blame only lies at the feet of the banks. They were the predators, with manipulative financial products. Had they not taken advantage of millions of homebuyers, and had instead stuck with products that were not predatory, most people would have been able to hold on to their homes.’
Again, over 90% of the defaults were prime loans. People walked away when they thought it was good money after bad. The end.
Ben - these kinds of comments you glean from these articles show exactly why it won’t be different this time. The majority of the population has no idea what caused the last crisis. They think they do and that we are avoiding the error trap this time. We aren’t. This crash will hurt worse than last time. 2020 - housing bust here we come
Welcome to 2020.
Pullman, WA Housing Prices Crater 11% YOY
https://www.movoto.com/pullman-wa/market-trends/
Pasadena, CA Housing Prices Crater 8% YOY As California Continues To Lose Population
https://www.movoto.com/pasadena-ca/market-trends/
“I need to up this guys assets to fund. Is there any hard money lenders that can lend $50k for 2 months?”
“Why not just skip the hassle and photoshop a couple fake bank statements?”
“Where could I photoshop? Is it legal?”
LMFAO
Sorry - link didn’t take
https://web.archive.org/web/20070309074739/http://www.brokeruniverse.com/grapevine/thread/?thread=356751
As giant rodents thrive in Italy, mayor comes up with novel solution - eat them
https://www.telegraph.co.uk/news/2018/05/03/giant-rodents-thrive-italy-mayor-comes-novel-solution-eat/
Dracut, MA Housing Prices Crater 13% YOY As Housing Correction Arrives In Boston
https://www.movoto.com/dracut-ma/market-trends/
Wondering why Freddie was introducing the 3% NINJA loan?
Homebuyers Catching a Break in Some of the Hottest U.S. Markets
By Prashant Gopal
May 3, 2018
Bloomberg
Finally, some good news for homebuyers in Austin, Dallas, Honolulu and a handful of other red-hot markets across the U.S.: Asking prices are cooling off.
In March, median list prices fell 5.4 percent from a year earlier in San Antonio followed by Austin, with a 3.4 percent drop, and Honolulu, with a 1.4 percent decline, according to a new report from Trulia that focuses on 10 of the country’s 100 biggest housing markets. Asking prices were little changed or only slightly higher in the other seven cities.
https://www.bloomberg.com/news/articles/2018-05-03/homebuyers-catching-a-break-in-some-of-the-hottest-u-s-markets
As Ben as said:
“If these markets are so red hot and if housing is such a rock solid investment - why do you need all these gimmicks to keep it going?”
As 2banana has said:
“Mel Watt is one of obama’s greatest legacy.”
3% NINJA loan = knifecatcher’s special
3% gets u in the game and isnt much to lose if u have to walk away.
The peacocks don’t even have the 3%, so there are programs to loan ‘em that too.
Rule #1 of getting away with a lie:
DON’T CHANGE YOUR STORY.
Jerry, just remember. It’s not a lie… if you believe it…
https://www.youtube.com/watch?v=vn_PSJsl0LQ
now the hush money came from a retainer.
Didn’t we already give those knockers 15-minutes?
Would this be a good time to buy the dip in Argentina sovereign debt?
The Financial Times
Global Economy
Argentina defends peso as emerging markets stumble
Central bank raises interest rates to 33.25% just six days after last tightening
updated 48 minutes ago
100 years is a LONG time to wait to get your pesos back.
Markets
Argentina’s 100-Year Bonds Plunge
By Carolina Millan
and Pablo Rosendo Gonzalez
February 9, 2018, 10:24 AM PST
Updated on February 9, 2018, 1:56 PM PST
- Amid rising U.S. rate prospects, traders dump long maturities
- ‘International and local risk remains’ for nation’s economy
Things went from bad to worse for Argentine bondholders this week as the effects of a global market rout throttled demand for a risky trade that had become a Wall Street favorite.
The pain has been particularly acute for investors of the country’s 100-year bonds. Their price dropped to 91 cents on the dollar from 103 cents at the end of last year as traders unnerved by the prospect of rising U.S. interest rates dumped securities with long maturities. Overall, the country’s dollar-denominated bonds lost 2.1 percent over the first four days of the week, leaving them down more than 6 percent on the year, the worst performance in emerging markets, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.
Argentina is getting hit from several sides. The selloff in U.S. equities is seeping into other markets globally as investors pull back from riskier assets. At the same time, the peso has fallen to a record low against the dollar amid growing concern that the central bank is under pressure from President Mauricio Macri’s administration to pull back on its fight against inflation.
…
I smell an emerging markets crisis brewing. Things could get interesting by the time the crash-prone month of October rolls around.
The Financial Times
US Dollar
Emerging market currencies burnt by dollar rebound
US jobs and earnings data set to test resurgent dollar bulls
2 hours ago
…
we created a measley 164k jobs in april. the phony recovery continues.
stock and home prices have recovered cause of mass manipulation.
Pundits are doing their best to blame the bad jobs number on the weather, etc.
Part of it is the way we count jobs. Under Obama two jobs became three to avoid Obamacare. The lousy jobs still found takers in the poor economy. Now three jobs are becoming two as full time jobs with benefits are being offered to attract people. We are still adding jobs faster than the economists are saying the labor pool is adding workers. There is no way 164000 jobs was called lousy by the press under Obama even when there was a lot more people on the sidelines
Just looked up a NPR article from January 7, 2017, reporting on the final jobs report of the Obama administration. It was 156,000 jobs and was described as solid but not splashy. Article stated that under his administration we averaged 109,000 a month. How quickly we forget what is too painful to remember, the non-recovery under Obama. Only looked good compared to his fellow globalist W. Now we have the globalist press telling us that Trump is risking a depression standing up to China and others that have been cheating us out of real jobs. I call BS, just the small steps Trump has been able to make despite a globalist Congress has helped us immensely.
With all due respect, Trump has left a history of destroyed businesses behind him, stiffs his contractors, and certainly is not some sort of “real American.” The notion that he is NOT some sort of globalist sell-out like Congress and most of our leadership is not supported by his long and publicly accessible business history.
I used to frequent this blog (under another name, because I quite frankly recall what my original user name was), and I am extremely disappointed in the hard-right turn it has taken. All this laughable praise of Trump - a REAL ESTATE tycoon who made his fortune playing the EXACT type of games that produced the first housing bubble (lying, stiffing people, white collar crime, etc.) is appalling for a group of people who supposedly want affordable housing and honest business.
So you don’t like Trump. See ya!
Indeed, I agree with you.
Trump is a long way from Mother Teresa, but he is shaking things up in the DC swamp. We may have to push things over the edge, Cloward–Piven style, such that a full rebuild happens.
Here’s an education on the Clintons. Their friends commit suicide by shooting themselves in the back of the head, and that’s without using strings and pulleys.
SeeItBefore, get a 20-oz beer and watch this 90-minute presentation.
Bill Clinton Murders
https://www.youtube.com/watch?v=ed1H-j4Wv0g