May 10, 2018

A Market Groaning Under The Weight Of New Supply

A report from Multi-Housing News. “In 10 of the nation’s 50 largest markets, apartment supply in 2018 is expected to increase 40 percent or more from 2017 levels, according to a RealPage report. The largest supply increase predicted for 2018 is in Sacramento. Last year, 682 apartment units were completed there; this year, 1,614 will be, for an increase of 137 percent compared with 2017. Los Angeles will also see a large increase in the number of units completed this year: 6,456 in 2017 and 14,087 units this year, for an increase of 118 percent.”

“Other markets that will experience sizable supply increases this year, according to RealPage, include Denver, Providence, R.I., Cleveland, Columbus, Jacksonville, Newark, St. Louis and Phoenix. For its part, Denver, is expected to see nearly 13,000 units come online in 2018— an 80 percent increase from the roughly 6,500 units completed in 2017. Phoenix is scheduled to see new supply of about 8,600 units in 2018, 39 percent above the 2017 volume.”

From the Times-Picayune in Louisiana. “Last year, a New Orleans development team announced plans to build a new five-story, mixed-income apartment building in the Bywater with the goal of attracting former residents who have been priced out of the neighborhood. The team says it intends to move forward with the project this fall, though it will be smaller and less aggressive in its affordability goals. ‘We just don’t think it’s a good bet to go into the market with an apartment that’s $3,000,’ said Curtis Doucette, a managing partner at Iris Development, noting the recent spike in luxury apartments mainly in downtown New Orleans.”

The Press Herald in Maine. “The developer of a shopping center near the Portland-Westbrook line wants to add 750 apartments to the plan, which would make it one of the largest residential projects in the region. But housing developments with hundreds of units have faced pushback in recent years in Westbrook and Portland. Brit Vitalius, president of the Southern Maine Landlord Association, said communities like Westbrook have been absorbing new units in recent years, but rents in Portland appear to be leveling off. He cautioned that Waterstone should be watchful of the market and open the units in phases.”

“‘It’s recognized that we need more housing in the area, and we need affordable housing in the area, and the local landlords fully support that concept,’ he said. ‘But any community can be challenged if there is a glut of housing. Any type of oversupply will throw the market into imbalance and hurt everybody.’”

The Tampa Bay Times in Florida. “Tampa Bay’s apartment boom is continuing unabated with three big, mid-priced projects coming out of the ground. While lenders have begun to rein back on high-end new multi-family construction, location and comparatively affordable rents are selling points for all three projects. There is some concern among lenders that the bay area is becoming saturated with luxury apartments, especially in popular downtown areas where rents can soar to $3,000 and above.”

“Overall, reliable rent figures are hard to come by because most companies surveying the rental market check only large apartment complexes at a time when many people rent single family homes. According to Apartment List, Tampa’s average rent for a two-bedroom apartment has risen 4.4 percent since last year to $1,230, $70 more than the national average.”

From KMIR in California. “There are nearly two-thousand registered vacation rentals in the City of Palm Springs. If you own one of them, you know it can be a good source of income. But if you live next to one, it can be a living nightmare. Palm Springs resident Rich Fearns says, ‘I don’t have a sense of security, don’t have a sense of belonging, don’t have a sense of neighborhood.’”

“Fearns says when he bought his home in 2004, these was a sense of community, ‘my neighborhood has essentially been converted to a hotel district.’ Fellow resident Mike Garibaldi-Frick says, ‘we’ve had lots of nights where we can’t sleep and we’ve been woken up in the middle of the night. I don’t think people realize how disrupting it is until they have one next door.’”

“‘We have 7 houses now in our neighborhood that are short term vacation rentals in our small little neighborhood and everyone is on edge,’ says Garibaldi-Frick. Fearns adds on, ‘I don’t know my neighbors anymore. I don’t have any neighbors.’ It’s not just neighborhoods that are divided. The city, business owners, and the entire Coachella Valley could face some big financial challenges if Measure C passes.”

From Bisnow on Illinois. “It is 7:30 on a Thursday evening and residents of L, Property Markets Group’s apartment building in Logan Square, are flocking to the building’s lawn for an evening of yoga, followed by a post-workout nosh of wine and cheese. But they aren’t alone. The yoga class is open to the public and people who don’t call L home are entering the building to get in a workout, find inner peace and connect with friends and strangers. The prospect of attracting new residents surely doesn’t hurt.”

“Five years ago, it would have been unheard of to allow nonresidents to use in-house amenities. And though some still say opening those doors will hurt the value of a building when it comes time to sell, some developers are opening in-building amenities such as rooftop decks, fitness centers, and kitchens and screening rooms to nonresidents as a way to generate interest in a property.”

“The decision to open amenities to nonresidents is coming amid signs of softening in rental markets nationwide and in Chicago in particular. Zumper’s national rent report for May showed Chicago one-bedroom apartments rents declined 10.7% in the past year, while two-bedroom rents dropped 15.8% during the same time frame. RealPage reports 10,545 new units were added to the city’s inventory in 2017, and another 3,350 are expected to come online this year. Yardi Matrix estimates 360,000 new apartments will be delivered in 2018 across the country, a 20% increase over last year.”

“Developers — starting in Miami and the West Coast and now those in Chicago — are increasingly hoping open doors will change that course. Danish coffee house chain Joe & the Juice opened a Chicago shop at 8 East Huron that is accessible to residents of the 26-story River North apartment tower, as well as passers-by. ‘It’s advertising for the building,’ Luxury Living Chicago Realty founder and CEO Aaron Galvin said.”

From Senior Housing News. “Two new developments point to signs of financial distress at Mainstreet. An unopened transitional rehabilitation facility developed by Mainstreet is facing foreclosure after falling behind on monthly interest payments. Avana Capital, an Arizona-based commercial lender, last week moved to foreclose on the $17.5 million Healthcare Resort of Wichita in Kansas, according to a Wednesday report in the Wichita Eagle.”

“The 94-bed facility had initially been slated to open in 2016, but remained vacant as of Tuesday after a complex series of transactions that have brought multiple owners and potential operators. Mainstreet gained prominence in the industry by developing hotel-like facilities as part of its ‘healthcare resort’ model. More recently, it has moved to a new concept dubbed ‘Rapid Recovery Centers’ — also a higher-end rehabilitation facility, designed to improve outcomes and reduce lengths of stay. It plans to operate these facilities through its Mainstreet Health arm.”

“Invesque and Mainstreet both have Zeke Turner in common; Turner founded both of the Carmel, Ind.-based companies. He’s no longer involved with Invesque, which focuses primarily on real estate investment, but remains the CEO of Mainstreet.”

“But Mainstreet has run into problems in recent months, pulling out of the Arizona market in March and laying off 70 workers. At the time, Turner told Skilled Nursing News that the company remained committed to the Rapid Recovery Center model. ‘We have three centers open in Texas right now and are scheduled to open five more over the next 12 months,’ Turner said at the time. ‘This is already a huge undertaking and commitment, which did contribute to the Arizona decision.’”

From Bloomberg on New York. “For New York City apartment hunters, April was another good month to find a deal on rents. But no one fared better than those in northwest Queens. Rents there dropped 12 percent from a year earlier, to a median of $2,646 a month, after landlord giveaways were subtracted, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Those giveaways were offered on 65 percent of all new leases signed in the area, excluding renewals, a record share in data going back to the beginning of 2016.”

“New York City tenants are crossing borders to compare deals in a market groaning under the weight of new supply. Landlords, who’ve accepted they need to compete to keep their units filled, are working to attract new tenants and offering sweeter renewal terms to keep the ones they have, said Hal Gavzie, Douglas Elliman’s executive manager of leasing. In Manhattan, 44 percent of all new leases came with a landlord concession, such as a free month of rent or payment of broker fees. In Brooklyn, the share was 51 percent, a record for the borough.”

“The number of new leases in Manhattan and Brooklyn fell 3.5 percent and 1.6 percent, respectively, a sign that renters there found good reason to stay in their current apartments, Gavzie said. ‘Tenants negotiating a renewal, they’ve looked around to see what deals they can get,’ he said. ‘So their landlord gives them a sweet offer to stay.’”

From New York City Lens. “Walk down Broadway on the Upper West Side of Manhattan, and you will find a wasteland of sorts littered with ‘For Rent’ signs and empty storefronts that seem to go on forever. ‘It’s unbelievable,’ said Joanne Scott, 64, an Upper West Side resident. ‘It looks like a war-torn environment.’”

“Not that the buildings are destroyed, but in many cases they are empty. A recent report compiled by Councilwoman Helen Rosenthal, of Manhattan’s 6th District, found that of the 1,332 Upper West Side storefronts surveyed, 12 percent were unoccupied. A recent New York Times story estimated SoHo commercial vacancy rents are as high as 20 percent. ‘It’s disturbing,’ said Ramon Nieves, a manager at P.C. Richard & Son on 86th and Broadway. ‘It’s only banks and Duane Reade now.’”




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76 Comments »

Comment by Ben Jones
2018-05-10 09:49:20

‘Tenants negotiating a renewal, they’ve looked around to see what deals they can get,’ he said. ‘So their landlord gives them a sweet offer to stay.’

Crow time Oxide.

Comment by Mafia Blocks
2018-05-10 10:22:52

Poor Donk…. poor poor Donk.

 
Comment by BlueSkye
2018-05-10 11:15:35

She doesn’t remember. Neither does Dan.

 
Comment by Oxide
2018-05-10 12:20:20

Not really, Ben. I said I never had an in-complex rent reduction, which is true. But the last time I paid rent was six years ago, BEFORE all this inventory came online. I also said that with all this new inventory, we could very well see in-complex reductions. Which we are… after a couple years of concessions. And yes I remember it.

Comment by Mafia Blocks
2018-05-10 12:24:07

Eat up Donk….. Eat up.

 
Comment by Ben Jones
2018-05-10 12:42:38

I remember you saying these landlords would draw in tenants with concessions and then jack up the rents at the end of the lease.

Comment by oxide
2018-05-10 13:25:34

Hmmm… You’re right I think I did. I like my birds well-done with cranberry sauce, thanks. :grin:

Concessions are a good way to get over natural slumps in vacancies. After a year or two, demand kicks up, and LLs can get away with their usual rent-jack. Looks like the inventory came online quicker than the demand did. LLs are hosed.

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Comment by Mafia Blocks
2018-05-10 19:06:36

With 25 million excess, empty and defaulted housing units out there, it’s going to take more than a few years and a minor 40 % price decline like last time.

 
Comment by In Colorado
2018-05-10 20:06:29

In admitting that you were in error, you have shown to have more class than most people who post here, especially those who will never admit they’re wrong.

 
Comment by Mafia Blocks
2018-05-10 20:39:40

Now feed her a CraterTater.

 
Comment by Professor 🐻
2018-05-11 04:17:59

When the facts change, I change my mind.

– John Maynard Keynes

 
 
 
Comment by Professor 🐻
2018-05-11 04:14:40

Wait… didn’t you assure all who read here that home prices and rents would grow to the sky forever?

Here we are at or near the peak of an economic boom, and rents are already dropping in many U.S. multifamily markets, with a huge and growing wave of new supply adding to the growing glut. And again, this is during boom times.

Once the next recession hits, many former critics will feel compelled by dropping rents and home prices to grudgingly acknowledge the GSEs’ success in achieving their Affordable Housing mission.

Comment by oxide
2018-05-11 04:32:50

Are you done yet?

Scientists always add qualifiers to their predictions, not make dogmatic no-matter-what statements. In this case, rents *will* grow to the sky *if* apartments are built at historic rates. Except that they *aren’t* being built at historic rates; therefore the rents *will not* won’t grow to the sky. Surely this isn’t too difficult for you.

And we all saw this coming. We all said that this inventory would drop rents eventually. I just underestimated how fast the inventory would grow relative to demand.

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Comment by Albuquerquedan
2018-05-11 05:55:42

Oxide, as I learned qualifiers are always ignored by many on this board. Just do like Professor, just post a bunch of links and quotes on this board that clearly look like you have a prediction and point to them if the prediction comes true but if it goes the other way then just state you never made a prediction. Or you could follow the other method of evading predictions which is to change your name often so people forget that you had a prediction.

 
 
 
 
 
Comment by Mortgage Watch
2018-05-10 10:08:04

Santa Clarita, CA(Los Angeles County) Housing Prices Crater 6% YOY As Housing Correction Ravages SoCal

https://www.movoto.com/santa-clarita-ca/market-trends/

 
Comment by Sketch
2018-05-10 10:28:37

Ben,

The vacation home rental (VHR) phenomenon got me thinking. A few years ago we experienced the same issues and sentiment in Bend as the resident in Palm Springs shared in the KMIR report. I was able to be on the City’s ‘taskforce’ to address and discuss the issue with other neighbors and VHR owners and VHR mangers. The proliferation of these VHR’s definitely definitely changed the fabric of many neighborhoods, and it was eye-opening to know how many there were out there in the City. We’re also experiencing a market with non-existent affordable housing, along with many West Coast Cities. Apartments and Condos have been going up slowly…but here’s what clicked in my mind. When Wall Street enters a downswing, and folks ease back on their travel plans…these VHR’s will either need to enter the Long Term Rental market or owners will sell their ‘asset’. Which, at least in our neck of the woods, could lead to a significant softening of the real estate and rental market. My question to you, and others, how often are the Wall Street and Real Estate market cycles in parallel or related to one another?

Comment by In Colorado
2018-05-10 10:49:32

I’ve never understood the allure of Palm Springs. Why would I want to vacation there? To catch a glimpse of some celeb in his/her luxury car?

Comment by rms
2018-05-10 13:05:12

All kidding aside, I really prefer Las Vegas where you can get an Denver Omelette 24/7 and there’s plenty of eye candy. Sure thing love… I’ll take the kids to the pool. :)

 
Comment by Anonymous
2018-05-10 16:57:34

The aerial tramway ride up San Jacinto Mt. is nice. Otherwise…?

Comment by Professor 🐻
2018-05-11 04:22:52

Golf, tennis, has-been entertainers… plus great access to an entire forest of Joshua trees where FBs can meditate on their foolish housing market gambles.

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Comment by Ben Jones
2018-05-10 10:51:55

I don’t agree this is a cycle. All sorts of nutty covers are dug up for speculation. But this one is not even new. I posted many dozens of FB’s who got stuck with illegal rentals on Craigslist. Sure enough, paid off local politicians are getting pressure to put an end to it all across the country. And I recently posted an Australian report with people bailing on short term rentals.

It just doesn’t make any sense. What about hotels? What about the rights of poor bashtards like this guy in Palm Springs? What about zoning and other laws?

Comment by CHE
2018-05-10 13:29:03

Palm Springs has really clamped down on vacation rentals. I have stayed in 8 different rental homes over the past few years and every time the list of rules grows.

One of the biggest is that you can be fined and kicked out for ANY outdoor amplified sound - any whatsoever.

The amount of homes there to rent are staggering. I think they were bought up during the dip and have been pressed in to service as short-term rentals which has really driven up prices.

I have a friend who is looking to buy there and he says he’s seen homes bought for 300-400k now trying to be sold at upwards of 900k and they’re not moving. He’s noticing price reductions as well.

Should be interesting to see how this plays out.

 
Comment by liquideye
2018-05-10 14:20:17

Poor bashtards is going to be the name of my irish soccer hooligan numetal band.

And if you get the tattoo you get into every show gratis.

 
Comment by MGSpiffy
2018-05-10 15:59:26

Ben,
Maybe there are elements of a cycle in all this, but the current state of VHR / Short-term rental housing is new territory in a lot of ways.

There’s been an unprecedented shift in reducing friction / lowering the barrier to entry and connecting with customers in the endeavor.

There’s also never been this mix of landlords before; companies and people in the sector that would not have bothered before, but now find themselves in a world awash in capital, and cheap credit looking for returns that have disappeared from so many of the expected places.

And there has never been this ease to find out about it; From nosy neighbors to city councils, the data as to who is doing what is there to be gathered.

I’m seeing, so you must be as well, lots of articles dealing the the long standing implicit (and explicit*) social contracts in neighborhoods and how they are to be run. The boom in short-term rentals has pit neighbor vs landlord vs local governments in a way that is still evolving.

* explicit as in everything from HOAs to the design of public roads and utilities.

And, I’m quite convinced that this is one of several factors in the current mess that is housing/availability/affordability in this (and other) countries.

Comment by MGSpiffy
2018-05-10 16:00:50

(wish there was a way to edit typos once posted … oh well)

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Comment by PDneXt
2018-05-11 01:00:47

Because internet, wowing pols, and lobbying cash. In Portland, an Airbnb exec dated the offspring of our former mayor. There are mandated safety inspections and permits which are not enforced at all. No guarantee of a bedroom egress window or smoke detectors.

The amateur landlords assume appreciation, as do those with cash to travel. They’ll go south simultaneously.

Totally agree on why have zoning?

Comment by OneAgainstMany
2018-05-11 08:38:59

The vacation rental market is so intriguing to me down here in St. George, UT. We’re at the gateway of lots of national parks, so we gets tourists from all over the US, China, and Europe. Santa Clara, a small, but quaint, city right next door has embedded vacation rental properties right into the heart of the city. It is kind of like it’s own tourist enclave:

http://www.myparadisevillage.com/

It seems to be okay because they are uniquely used as short-term vacation properties and I don’t believe that it is set up to have residents living within these areas. The units sold are stuffed with hide-a-beds and bunk beds so that they can sleep large family gatherings and reunions. When I run by these places I see advertisements of 6 bedrooms 5 bathrooms, sleeps 20.

These properties are proliferating and spreading. My wife’s good friend lives in one of these properties called Coral Ridge. She says that the neighborhood is kind of quiet and that they are the only one on the street with young children; she was begging us to move here so that her children would have someone to play with in the neighborhood, not just vacationers and retirees.

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Comment by Professor 🐻
2018-05-11 04:26:44

Hotels have to be hurting in the face of AirBnBs which skirt or flagrantly violate local occupancy laws. An industry backlash is inevitable.

 
 
 
Comment by Apartment 401
2018-05-10 10:45:37

Realtors are liars.

 
 
Comment by bobby mac
2018-05-10 11:10:48

I live in Orlando. There have been apartment complexes going up all over the place for the last 5-7 years. And they keep going up. And I mean, all over the place. In a 3-5 square mile area where i rent a town house…..half dozen huge complexes have gone up. In a 2 or 3 mile area close to where I work, I would say that 8-10 huge complexes have gone up over the last 2-3 years. Everywhere you look there is another one. I always remark to my coworkers….where the hell are they finding people to occupy these things. I can’t imagine they are…..

Comment by Ben Jones
2018-05-10 11:44:18

It should be clear to everyone this is a mania now. Many markets have been obviously oversupplied for months or years, yet we see reports like this:

‘In 10 of the nation’s 50 largest markets, apartment supply in 2018 is expected to increase 40 percent or more from 2017 levels, according to a RealPage report. The largest supply increase predicted for 2018 is in Sacramento. Last year, 682 apartment units were completed there; this year, 1,614 will be, for an increase of 137 percent compared with 2017. Los Angeles will also see a large increase in the number of units completed this year: 6,456 in 2017 and 14,087 units this year, for an increase of 118 percent.’

‘Other markets that will experience sizable supply increases this year, according to RealPage, include Denver, Providence, R.I., Cleveland, Columbus, Jacksonville, Newark, St. Louis and Phoenix. For its part, Denver, is expected to see nearly 13,000 units come online in 2018— an 80 percent increase from the roughly 6,500 units completed in 2017. Phoenix is scheduled to see new supply of about 8,600 units in 2018, 39 percent above the 2017 volume’

Why? Because they aren’t thinking about rents:

‘Five years ago, it would have been unheard of to allow nonresidents to use in-house amenities. And though some still say opening those doors will hurt the value of a building when it comes time to sell’

Comment by Ben Jones
2018-05-10 12:59:36

April 19, 2018

“‘Palm Beach is completely on fire,’ said Todd Michael Glaser, a high-end homebuilder who made his name in Miami but has lately been concentrating on Palm Beach County. ‘I’ve never seen the amount of $8M to $70M homes as in the last three and a half, four months. It’s staggering.’ It’s not just single-family homes that are hot, but a new wave of high-end condos and mutifamily apartments, especially in downtown West Palm Beach.”

“Kolter Urban President Bob Vail, who is developing the Alexander, said that there is something of an arms race for amenities in the new supply of high-end homes. ‘You see that across the U.S. There are [apartment] buildings in Atlanta, Denver and Dallas that are nicer and more fully amenitized than condominium units, because that’s what it’s going to take to get people to choose that building,’ Vail said. ‘It’s just sort of a differential advantage. It’s really become a race in those more in-demand markets.’”

“Though the market is healthy now, the developers agreed a slowdown is possible as new supply takes time to be absorbed, construction costs rise and actionable sites get harder to find. Low salaries in Palm Beach County mean that not many workers can afford high rents. When an audience member asked whether they were concerned with an economic downturn, Vail responded half-jokingly, ‘Condo developers, we don’t forecast those kind of things, you know what I mean? We’re just go, go go,’ he said. ‘And the faster we go, the faster we get to the closing, and then, I’m not going to say we don’t care, but … ‘ The audience chuckled as he trailed off.”

http://thehousingbubbleblog.com/?p=10407

 
Comment by BlackSwandive
2018-05-10 17:42:22

The real unfortunate thing to me is that the government won’t just stay out of things and let those who are making/have made bad bets eat their losses. Instead, the taxpayer is on the hook for all of this, and not only financially. It’s a despicable way to manage an economy.

I thought lessons were learned after the horrific meltdown of 2008. Nope, not a goddamn thing was learned. It’s absolutely vomit-inducing.

 
 
Comment by snake charmer
2018-05-10 13:01:00

What are they made of? The stuff I see going up in Tampa looks to be made of especially flimsy building materials. And then a ritzy name is chosen.

Comment by MiamiMissus
2018-05-10 17:20:44

Flimsy materials are gonna hurt big if we continue to have hurricane seasons like last year’s Category 5 nightmare.

 
 
Comment by Professor 🐻
2018-05-11 04:29:03

Same in San Diego. The next crash is baked in.

 
 
Comment by In Colorado
2018-05-10 11:33:26

Oil projected to reach $100 by next year:

http://money.cnn.com/2018/05/10/investing/100-oil-iran-trump-bank-of-america/index.html

Is $100 oil on its way back? Bank of America thinks so.

The bank’s analysts wrote Thursday that collapsing oil production in Venezuela and potential export disruptions in Iran could push the price of Brent crude as high as $100 per barrel in 2019.

The analysts said their target price for Brent, the global benchmark, was $90 for the second quarter of next year. But they warned there was a risk that deteriorating conditions in Iran would push prices to $100, a level not seen since 2014.

Hmm … won’t this motivate Canadian and American producers to “frill, baby, drill?”

Comment by BlackSwandive
2018-05-10 14:25:20

Oil is pretty much the last piece for the culmination of this everything bubble. If it goes up over $100, watch this fake eCONomy crater into oblivion.

Comment by In Colorado
2018-05-10 16:18:59

If the PTB can get oil, of which there is no shortage, to climb to $100 or higher, it just goes to show that everything is rigged.

Comment by BlueSkye
2018-05-10 16:40:22

A couple of the big financial houses have already told you it will come to pass. You don’t think they would bid it up and then tell you to jump in and at the same time bet against you?

Again?

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Comment by BlackSwandive
2018-05-10 17:48:43

They have done it multiple times. Supply means nothing when it comes to Wall St. speculators and crooks.

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Comment by Albuquerquedan
2018-05-11 09:14:32

Over a one hundred million barrels of demand per day but less production is the definition of shortage, Obama to get Putin out of power had the Saudis depress oil and we helped out with a stronger dollar and with large sales from the strategic petroleum reserve. Congress in the last budget continued selling. This was done mainly for the money but also to hurt Putin. Government manipulation is coming back to bite us in the butt, bigger vehicles were bought, CNG and LNG substitution for oil was slowed and we sold our oil for below production costs. Like all government manipulation, it fails in the end. That is why we have some people even talking about $300 oil, thanks Obama. I do not share that price outlook, CNG, LNG and electric vehicles should cut the growth in demand enough to keep oil between $80 and $100 adjusted for inflation but only because Trump is willing to burn coal. Using NG to make electricity when it can be used for transportation is a major policy failure.

Data link:

http://www.iea.org/topics/oil/

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Comment by Albuquerquedan
2018-05-11 06:12:15

Key language from article below, in sum between bottle necks in pipelines the increasing costs to drill, and the fact that the oil companies balance sheets are a mess since they drilled at a loss for years, there is not going to be a surge in drilling. As I have repeatedly said shale oil and gas is very expensive to produce and $80 to $100 oil is needed to make a decent return of investment. Not what many on this board want to hear so shoot the messenger but the fall in prices was due to politics not economic fundamentals. Oil is not being manipulated up right now, it was manipulate down previously. My timing was not perfect for the recovery but it was as inevitable as the fall in Canadian housing prices and who on this board got the timing of that perfect? It took governmental intervention to make that prediction come true and the prediction came true many years after it was first made and housing prices are still far above where they were when people were first saying that the fall would occur. Predictions are never easy but they are particularly difficult when government manipulation is involved. In any event there never was any basis to think oil prices were going to $10 a barrel like the people that are criticizing me were saying.

“For months, investors have urged exploration and production companies to rein in unprofitable spending. That pressure’s likely to remain, keeping a lid on any increases to drilling budgets, analysts at Houston investment bank Tudor Pickering Holt & Co. said in a note to clients recently.
“Expect little change to messaging or 2018 plans as operators continue to view the rally in crude as a boon to cash flow rather than an opportunity to accelerate growth,” the bank advised. Instead, additional share buybacks and debt reduction are likely to be the top priorities, added RBC Capital Markets analyst Scott Hanold in another note.
The caution is made more likely by the logistical hurdles mounting in the Permian basin, the top U.S. shale play. Shortages of labor, equipment and pipeline capacity had crude from the West Texas region selling at a $12.50 a barrel discount this past week to oil received at the U.S. distribution hub in Cushing, Oklahoma.
That’s meant producers aren’t reaping the full benefit of $70 oil anyway, said Antoine Halff, former chief oil analyst for the International Energy Agency. Add in the increasing size and complexity of shale projects, which lengthen the time for oil to come to market, and “I wouldn’t necessary conclude that this will trigger a huge rebound in supply,” said Halff, now a Columbia University scholar.”

 
 
Comment by Mortgage Watch
2018-05-10 11:46:45

Houston, TX 77096 Housing Prices Crater 18% YOY As Global Oil Glut Slams Housing

https://www.zillow.com/houston-tx-77096/home-values/

*Select price from dropdown menu on first chart

Comment by Jingle Male
2018-05-11 02:18:19

The $100/barrel oil glut? You’re funny, but broken….and not even right twice in one day!

Comment by Mafia Blocks
2018-05-11 17:29:16

DegenerateGambler

Arlington, VA Housing Prices Crater 11% YOY

https://www.movoto.com/arlington-va/market-trends/

 
 
 
Comment by Ben Jones
2018-05-10 11:48:06

‘An unopened transitional rehabilitation facility developed by Mainstreet is facing foreclosure after falling behind on monthly interest payments. Avana Capital, an Arizona-based commercial lender, last week moved to foreclose on the $17.5 million Healthcare Resort of Wichita in Kansas’

‘The 94-bed facility had initially been slated to open in 2016, but remained vacant as of Tuesday after a complex series of transactions that have brought multiple owners and potential operators. Mainstreet gained prominence in the industry by developing hotel-like facilities as part of its ‘healthcare resort’ model. More recently, it has moved to a new concept dubbed ‘Rapid Recovery Centers’ — also a higher-end rehabilitation facility’

So we now see at least one luxury condo/apartment or luxury senior facility defaulting each week.

Comment by Ben Jones
2018-05-10 11:49:52

‘Walk down Broadway on the Upper West Side of Manhattan, and you will find a wasteland of sorts littered with ‘For Rent’ signs and empty storefronts that seem to go on forever. ‘It’s unbelievable,’ said Joanne Scott, 64, an Upper West Side resident. ‘It looks like a war-torn environment.’

‘Not that the buildings are destroyed, but in many cases they are empty’

 
 
Comment by Ben Jones
2018-05-10 12:07:20

‘my neighborhood has essentially been converted to a hotel district.’…‘we’ve had lots of nights where we can’t sleep and we’ve been woken up in the middle of the night. I don’t think people realize how disrupting it is until they have one next door.’

‘We have 7 houses now in our neighborhood that are short term vacation rentals in our small little neighborhood and everyone is on edge…I don’t know my neighbors anymore. I don’t have any neighbors.’

You’ve been disrupted.

Comment by CHE
2018-05-10 13:36:25

“short-term” neighbors.

 
Comment by Jingle Male
2018-05-11 02:22:16

When we began our journey to buy a waterfront condo in San Diego, we thought it would be great to offer it out as a short term rental while we travelled.

Guess what? All the HOAs prohibit this ……6 month minimum term. I understand why now.

Comment by Jingle Male
2018-05-11 02:24:15

BTW, condo listings in 92101 have gone from 225 last May to 320 now…..

Selection is growing. Prices might become attractive by 2022.

 
 
 
Comment by ipfreely
2018-05-10 13:15:47

Creative Destruction of your neighborhood.

 
Comment by Professor Bear
2018-05-10 14:25:59

People are leaving the state in droves, and housing prices are heading to the sky, and yet there is an ever-growing housing shortage?

Does not compute.

With no letup in home prices, the California exodus surges
Published: May 8, 2018 8:48 a.m. ET
The median sale price for a home in California is more than double that in the rest of the nation
By Andrea Riquier

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.

If this trend persists, the researchers argued, analysts forecast the state will be about 3 million homes short by 2025.

Comment by In Colorado
2018-05-10 16:22:20

Are Californians selling their homes and leaving, or is it mostly renters who are saying buh-bye?

Comment by Professor 🐻
2018-05-11 04:33:05

A few families in our circle have recently cashed out their home equity and left the state.

 
 
Comment by Anonymous
2018-05-10 17:05:15

So will Cali experience a net population decline? Or will the birth rate of the residents prop up the population numbers?

BTW, how many of the illegals present in the state are being counted in these tallies (or census)??

Comment by Jingle Male
2018-05-11 02:29:35

No worries about California population growth….

“….By 2025, California’s population is projected to reach 42.5 million. Annual growth rates are expected to be just 1 percent, similar to growth experienced in the first decade of this century…..”

Up from 38.5 million.

 
Comment by Professor 🐻
2018-05-11 04:34:33

Guess it depends on whether the influx of immigrants can be successfully curtailed.

Comment by Albuquerquedan
2018-05-11 05:37:51

And on how many anchor babies the illegals have. However, it is going to just aggravate the affordability issues. The type of people breeding and coming cannot afford any housing in California. Yet the politicians continue to adopt policies that make affordable housing even less affordable with the solar mandate being the latest example. Adding twenty or thirty thousand to a million dollar house is just a rounding error. But adding to it to a $250,000 house is a major escalation. Of course, a $250,000 home is an endangered species in California and only exist far from the coast. BTW, here is a story from Great Britain about over promised solar systems, but since it is for the good of the planet lying is permissible:

https://wattsupwiththat.com/2018/05/08/home-solar-loan-ripoff-uk-ombudsman-rules-potential-returns-were-misrepresented/

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Comment by BlackSwandive
2018-05-10 17:52:51

When prices are cratering it becomes a crisis where the government just has to hop in to “help home prices recover.” When renters and potential purchasers are completely shut out of the market due to skyrocketing prices it gets a bit of media attention, but nothing like the articles cheerleading the prices.

The government and the FED are complete failures insofar as housing is concerned, and they’ve just created the worst housing bubble in the history of the country. Who’s to say this thing won’t hyperinflate and double from here? Hell, with Smell Watt running things, why not?

 
 
Comment by Mortgage Watch
2018-05-10 17:13:36

Portland(Northwest), OR Housing Prices Crater 9% YOY

https://www.zillow.com/northwest-portland-or/home-values/

*Select price from dropdown menu on first chart

Comment by Ant Naples
2018-05-10 21:59:27

Portland, OR Housing Prices INCREASE 4% YOY

https://www.movoto.com/portland-or/market-trends/

Comment by Mafia Blocks
2018-05-11 17:58:34

Hello my friend.

Arcadia, CA Housing Prices Crater 9% YOY As Population Decline Accelerates Statewide

https://www.movoto.com/arcadia-ca/market-trends/

Comment by Jingle Male
2018-05-12 05:59:34

Broken Mortgage Watch…..

…..can’t even be correct twice a day! HA!

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Comment by Mafia Blocks
2018-05-12 12:10:59

DegenerateGambler

Sarasota, FL 34231 Housing Prices Crater 10% YOY

https://www.zillow.com/sarasota-fl-34231/home-values/

https://snag.gy/m5EzRB.jpg

 
 
 
 
 
Comment by MiamiMissus
2018-05-10 17:17:03

I don’t see sweet deals in apartment rentals in Miami. Really expensive here. And even an efficiency (an add-on behind someone’s house) can be 900 bucks (the guy who came to repair our railing paid that for a small efficiency).

Every week, someone comes knocking to see if we’re renting and how much, and most are looking for something around $1000 or less for a 1 bedroom. Good luck.

From Rent Jungle:
As of April 2018, average rent for an apartment in Miami, FL is $2157 which is a 0.09% decrease from last year when the average rent was $2159 , and a 1.99% increase from last month when the average rent was $2114.

One bedroom apartments in Miami rent for $1865 a month on average (a 2.41% increase from last year) and two bedroom apartment rents average $2411 (a 0.87% decrease from last year).

Comment by Ben Jones
2018-05-10 17:44:10

Miami has the highest rents to income ratio in the country. But there is a condo crash in the making. The condo-vulture guy is giving pre-foreclosure tours! You’ll get lower rents but a recession too. Greater Miami has a 12% delinquency rate on outstanding mortgages.

 
 
Comment by sod
2018-05-10 19:28:33

The bubble continues to expand in Charleston:

“Soaring home prices didn’t deter home buyers in the Charleston area in April.

Residential real estate transactions jumped 5.6 percent last month from a year earlier, according to preliminary data Thursday from the Charleston Trident Association of Realtors.

“Activity has picked up significantly, but we are still struggling with a considerable lack of inventory in our market,” said association president Kimberly Lease. “Prices continue to escalate at this pace because of the limited supply, and it’s further compounding the affordability issues we face in our region.”

 
Comment by Albuquerquedan
2018-05-11 06:26:08

Sounds like he reads this blog, he even has the oil analysis largely correct:

http://news.goldseek.com/GoldSeek/1526040780.php

Comment by Jingle Male
2018-05-12 06:05:42

$338,000 median home value (2018) will drop to a $40,000 median home value?

He is crazier than HA is!

 
 
Comment by Albuquerquedan
2018-05-11 06:34:03

Just to be clear, I agree with the goldseek article on the analysis of the problems, I think his predictions are off because he ignores the government response which will be print money like crazy.

Comment by rms
2018-05-11 11:51:48

“…the government response which will be print money like crazy.”

This is what they’ve been doing for the past ten years, IIRC.

Comment by Albuquerquedan
2018-05-11 12:07:15

And in country after country before a country collapses it has hyperinflation, we are not immune from that result. The time for the dollar being the reserve currency seems to be ending. Putin is actively promoting its demise. He thanks Obama for his Iran deal which upset the traditional relationship between Saudi Arabia and the U.S. SA support for the dollar has been connected to our support for the Monarchy and that changed during his administration. Russia was able to politically get the Saudis from working with the U.S. to lower oil prices to a more nature cooperate with it to get higher prices. For an idea on how much the oil recovery has helped Russia and its attempts to weaken the pricing in dollars check out this link:

https://oilprice.com/Energy/Crude-Oil/Russia-To-See-Oil-Revenues-Jump-Fivefold.html

 
 
 
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