July 8, 2018

Lenders Were Excited To Loan As Much Cash As Possible

A weekend topic starting with Realty Biz News. “The apartment sector of the residential housing market has begun showing indications that it is becoming saturated. Construction of high-rise apartment buildings in metro areas typically takes a year or longer to complete. The result is that many projects started during the middle and towards the end of the boom are only now coming online. In the hottest growth areas like Seattle, property managers are beginning to offer discounts and incentives to fill these new and expensive buildings. Yet, foreign investment into apartment buildings has been increasing rather than decreasing. The last quarter of 2017 and first quarter of 2018 saw higher foreign investment amounts than when the boom was in full swing during late 2016 and most of 2017. We’re talking about $10s of billions flowing in every 3 months for at least the past 3 quarters.”

“According to Real Capital Analytic, this increase is at least partially due to new foreign investors entering the market. You might think that most of this money keeps coming from China but even China almost always comes in second to Canada, which is historically the largest foreign investor in US real estate. In fact, 10 of the top 15 foreign buyers of apartment properties in the U.S. were Canadian during the 12 months that ended in the first quarter of 2018. What’s of interest is that Singapore has recently passed China to become the second most active foreign investor. Two Singapore investment funds alone invested about $6 billion in U.S. apartments over the past 12 months.”

“The same two biggest foreign investment countries, Canada and Singapore, are also investing heavily in college student housing. Overall, foreign investment in student housing is estimated to account for 36% of all transactions in 2017 and 42% so far this year. Both of these numbers are up significantly from 21% in 2016.”

From Multi-Housing News. “Jason Shepherd, co-founder of Atlas Real Estate Group, a Denver-based full-service realty firm, talks here about what he’s seeing in 2018. Q: With the first half of 2018 now behind us, what are the trends you’ve seen in Denver’s multifamily market? Shepherd: In Denver, we have been flooded with new multifamily construction over the last few years. Developers have overbuilt the multifamily asset class in Denver and I’m keeping my eye on this over the next couple years. I’m patiently waiting to see what happens to these units as 10 years of apartment supply (using our average absorption rate for this asset class) enters our market.”

“Q: What’s your biggest piece of advice with today’s current market? Shepherd: Be patient; post-housing crash we saw a flood of multifamily tenants. First, because a lot of people lost their homes or credit and also a large group of people that observed the fallout and preferred the ‘less stress’ rental option. Couple that with lenders that were excited to loan as much cash as possible after of a few years of very controlled lending practices and you have a frothy multifamily construction market.”

The Charlotte Observer in North Carolina. “Charlotte’s high-flying apartment market can’t ignore the rules of supply and demand, according to a new report that warns developers might be building too many high-end units in the city. The wave of construction probably won’t stop anytime soon, according to an analysis by apartment-tracking firm Yardi Matrix, even as the supply of new units outstrips demand from renters. ‘In the near term, markets at risk of oversupply include Denver, Seattle, Charlotte, Dallas, Phoenix and Miami, where deliveries are expected to outpace demand,’ the company wrote in its report.”

“Figures from Charlotte-based Real Data show the apartment vacancy rate uptown is 21.8 percent. That’s the highest in the city by a wide margin, and more than three times the Charlotte market’s average. More than 1,100 uptown apartments are vacant. For now, however, the boom is still on, with about 27,000 apartments planned or underway. And developers are optimistic, forging ahead with plans that incorporate ever-more-luxurious amenities like private wine bars, golf simulators, massage rooms and complimentary dog grooming in dedicated pet spas.”

From Bisnow on Texas. “Is too many amenities a bad thing? The Houston apartment industry oversupplies facilities with services and features, including ones renters don’t want, according to Apartment List. ‘Houston falls into the category of what we are calling too-many-amenities metros,’ Apartment List Housing Economist Chris Salviati said. ‘If you are paying for amenities that you don’t necessarily need that could be a downside for a renter.’”

“The supply of new rental inventory in Houston is driving the overabundance of amenities — newer properties are more likely to be equipped with the modern amenities. Houston is oversupplied in nine of the 10 amenities profiled, including air conditioning, hardwood floors, dishwasher, parking, gym, balcony, pool and being cat- and dog-friendly. For example, only 7% of users desire cat-friendly housing yet 78% of housing offered it. The report also showed 40% of users wanted a pool yet 80% of the properties provided one.”

From KBTX in Texas. “A housing trend is troubling local landlords and property owners. They tell us the Bryan-College Station market has become over-saturated with rental properties. The Texas A&M Real Estate Center says the vacancy rate for apartments alone is nearly 18.9 percent, one of the highest in the state. Area landlords told KBTX the abundance of properties are hurting their bottom line. ‘I own five houses in the Southside Historic Area that, in the past, I’ve had people waiting in line to rent them. We’re struggling to rent some of those houses,’ said Robert Averyt, a College Station landlord.”

“Averyt has owned rental property for years, but he’s finding it harder to lease them as inventory in town grows. ‘I just signed a lease… for $1,250 for what I used to get $1,600 for. That seems like we’re very overbuilt,’ he said.”

The Argus Leader in South Dakota. “It’s a good time to be a renter in Sioux Falls. A rush of large-scale apartment buildings going up in the last couple of years caused average rent in Sioux Falls to drop. There were more than 4,000 empty apartments in Minnehaha and Lincoln counties in January, according to federal housing data. Sioux Falls is celebrating five straight years of record-breaking in construction. Much of the activity both last year and the year before included sizable apartment complexes trying to hook families with lots of amenities and luxury offerings.”

“Massive campuses such as Graystone Heights in southeastern Sioux Falls and University Hills across town added to the city’s pool of rental units, and are still opening new apartments.”

The Daily Record in Maryland. “Baltimore joins metro areas, such as Portland, Oregon, Seattle, and Washington on the list of metro areas with slow rent growth, according to RealPage. The firm attributes slow rent growth to a glut of luxury units on the market in many major metro areas. Concessions, such as month of free rent, are now common in many of the trendiest neighborhoods in these areas. Apartment List found that rents in Baltimore were .6 percent lower year-over-year in the second quarter. Rents in Towson dropped the most declining 4.2 percent.”

The Seattle Times in Washington. “Inventory doubled from a year ago in Ballard/Green Lake/Greenwood, Renton-Benson Hill and Sodo/Beacon Hill. The number of homes on the market surged more than 75 percent in Lake Forest Park/Kenmore, Skyway and Renton-Highlands. In downtown Seattle, a condo-only market, inventory nearly tripled.”

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Comment by Ben Jones
2018-07-08 08:12:14

‘Couple that with lenders that were excited to loan as much cash as possible after of a few years of very controlled lending practices and you have a frothy multifamily construction market’

Published in D CEO November 2015

‘Late this summer Danielle DiMartino Booth, a maverick market analyst and outspoken critic of the Federal Reserve System, was one of a dozen women attending an annual, invitation-only retreat for finance and economics influencers in a remote area of far eastern Maine.’

‘These days DiMartino Booth is continuing to rail against the Fed’s cheap-money policy, as well as the institution itself. (It’s opaque and “bloated,” she says, with “delusional” leadership.) DiMartino Booth says…the nation’s central bank has been “boxed in” by its zero-interest policy—no matter how much it might want to let rates rise to their natural levels, say, to 3 or 4 percent. “They’ve been so low for so long—the heroin, if you will, the drug, of low-interest rates—it’s become really hard to take the patient off the drug,” she says. “They’re trying to get out of a canyon this time.”

“Ph.Ds are from Mars, and she’s from Venus. They don’t speak the same language,” says Harvey Rosenblum, who hired DiMartino Booth in 2006 and retired seven years later as the Dallas Fed’s executive vice president and director of research. “But if you’re in an organization where everybody has the same point of view, you’re in a danger zone.”

‘And, the Fed’s easy-money stance has been an impediment? “Yes. I think the Fed has been complicit— not in a malicious way. I would say the Fed has been the chief enabler, the facilitator,” she says. “So, there should be a timeline limit to how long policymakers can be ‘well-intentioned’ in their decision-making framework. [We needed to say], ‘Wait a minute, we’ve got a lot of silly investing going on, and there will be a price to pay.’”

“Whether the price is Congress abdicating all of its responsibility to policymakers … who provide the groundwork, via very low rates, to paint the veneer of prosperity, which works until it stops working. And then we go into another crisis, which is what we’ve been doing for cycle after cycle after cycle.”

‘Recalls Rosenblum, the former vice president at the Dallas Fed: “When the post-crisis plan was put into place in December 2008, I was in the room. At that time, we didn’t believe zero percent interest rates would be around one year later—let alone seven or eight! We’re just in a very unusual environment. It happens once every 20 or 30 years, when you have global recession.”

Comment by Ben Jones
2018-07-08 08:14:08

‘lenders that were excited to loan as much cash as possible’

I discovered this in the fall of 2014, after I heard some apartment guys using crazy talk about skyrocketing prices never ending. That’s all it took to sniff this bubble out. Jeebus, look at all these markets with thousands of brand new, empty apartments!

‘Wait a minute, we’ve got a lot of silly investing going on, and there will be a price to pay.’

As they say in Minnesota, “You Betcha!”

Comment by Mr. Banker
2018-07-08 08:37:14

‘lenders that were excited to loan as much cash as possible’

What a surprise! Lenders eagerly loaning money (money that belongs to somebody else 😁) to people and collecting some VERY hefty fees for doing so.

Who woulda thought?

Comment by Ben Jones
2018-07-08 08:49:26

Who remembers the loan broker who said, “like everyone else on the planet, I’m making every apartment loan and refinance I can”?

That was probably around 2015.

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Comment by Neuromance
2018-07-08 10:51:11

‘And, the Fed’s easy-money stance has been an impediment? “Yes. I think the Fed has been complicit— not in a malicious way. I would say the Fed has been the chief enabler, the facilitator,” she says.

It’s a fascinating chain that’s set up:

1) Politically motivated politician gets a chunk of cash to distribute.

2) Allocates some for academic grant which is wink-wink supposed to come to a certain conclusion.

3) Harvard (for example - could also be a non-profit) gets the grant, and generates the report/study with the right conclusion. Not hard to do in the social sciences.

4) Downstream policy makers and policy implementers get the latest study and now has full cover to implement a policy that wouldn’t pass the giggle test without that academic cover. Also, going against the policy means they are actively being economically or socially destructive.


One of the best examples of this was in the death penalty debate in Maryland. The extremely liberal Maryland governor (Martin O’Malley) led the mission to outlaw the death penalty. He had a study commissioned (funded) with help of the state legislature, which was given to a well known death penalty opponent at the University of Maryland. The study was to investigate whether the death penalty was racially biased. Of course, the study found that the death penalty was racially biased. The study could then be used against any legislator who would vote against the death penalty repeal measure. If they didn’t support the repeal, they were supporting a racially biased penalty as “proven” by the study. In one of the top 3 bluest states in the Union, with a high minority population, this would damage re-election chances.


Other examples which I haven’t dissected fully yet are the real estate departments at George Washington University, University of Pennsylvania and Harvard. They have routinely issued pro-government-injecting-money-into-real-estate conclusions. Looking at the backgrounds of the academic staff (the few I’ve looked at are former real estate industry workers) and the politicians allocating grants would be fascinating.

Comment by Taxpayers
2018-07-08 11:01:02

MD just passed a paid family leave bill for most any size biz
= death spiral

Comment by aNYCdj
2018-07-08 17:44:24

I can understand if you have 50-100+ employees you can manage for a few weeks with a temp. but still you should have to come in or do work from home to get paid.

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Comment by Professor 🐻
2018-07-08 14:15:11

“They have routinely issued pro-government-injecting-money-into-real-estate conclusions.”

How could politicians get their cuts and debt donkeys get their loans without these academic enablers?

Comment by Ben Jones
2018-07-08 08:20:00

‘The last quarter of 2017 and first quarter of 2018 saw higher foreign investment amounts than when the boom was in full swing during late 2016 and most of 2017. We’re talking about $10s of billions flowing in every 3 months for at least the past 3 quarters’

And here’s the why. There’s so much money to be made the REIC can’t resist. Even though they know what’s coming. IMO, they don’t care:

April 19, 2018

From Bisnow on Florida. “‘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.”


Comment by Mortgage Watch
2018-07-08 08:30:21

North Bethesda, MD Housing Prices Crater 20% YOY As Housing Bust Ravages NoVA/DC Area


Comment by Professor 🐻
2018-07-08 09:37:49

“You might think that most of this money keeps coming from China but even China almost always comes in second to Canada, which is historically the largest foreign investor in US real estate. In fact, 10 of the top 15 foreign buyers of apartment properties in the U.S. were Canadian during the 12 months that ended in the first quarter of 2018.”

Can we expect this to end now, given that Canada’s real estate bubble has popped?

Comment by Professor 🐻
2018-07-08 09:49:39

Toronto Is (Still) The Fastest Cooling Real Estate Market In Canada
June 26, 2018

Canadian real estate sales continue to cool, with few exceptions. Canadian Real Estate Association (CREA) numbers show all but 6 major markets (500+ sales) saw the Sales to New Listings Ratio (SNLR) decline. All 6 markets were located East of Toronto, while the largest declines were located in the Greater Toronto Area.

Comment by oxide
2018-07-08 14:13:43

Someone in Fort MacMurray isn’t going to get his full pension…

Comment by Taxpayers
2018-07-08 16:40:36

Yes he will,the gov will just tax harder
Raising age etc in my county soon.

Comment by Ben Jones
2018-07-08 17:24:04

‘gov will just tax harder
Raising age etc in my county’

Don’t count your biscuits before they materialize. The people want your scalp, swamp fiend.

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Comment by Patrick
2018-07-08 17:55:29

Yes, I can envision Canadians buying more USA real estate than any other world citizens.

But, unlike others, Canadians use their USA purchases because we like the country.

And the weather in the winter.

Comment by Mafia Blocks
2018-07-08 17:56:34

Good to see you’re getting down to the crux of the biscuit.

Comment by oxide
2018-07-08 19:49:02

FWIW if I keep doing what I’m doing I do until retirement, I could probably retire without the pension. (but it would be tougher with no pension and 1/4 lopped of SS).

Comment by aNYCdj
2018-07-08 17:46:49

Raising age etc in my county soon.

should have done that 20-30 years ago end all early retirement at full benefits

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Comment by Ol'Bubba
2018-07-08 09:41:26

I often wonder how the current housing pricing will play out and what my best course of action is.

Anyone here want to prognosticate on how the U.S. single family housing markets and the closely related mortgage and bond markets will perform over the next 5 years or so?

Comment by Anonymous
2018-07-08 10:10:20

I’m kind of wondering the same thing with myself. I’m a long-time renter, but if housing falls far enough, I might be interested in buying. For example in Sun City Summerlin, here in Las Vegas. :D I should be entitled to a zero down VA-backed loan.

Comment by rms
2018-07-08 10:46:14

“…the U.S. single family housing markets…”

Arms are for hugging. Single family housing is NOT for investors.

Comment by hwy50ina49dodge
2018-07-08 12:24:35

“Anyone here want to progno$ticate on how the U.$. $ingle family housing market$ …will perform?”

Well, li$t an a$$et class that you can inflate$ in a $hort time frame with ace$$ to borrowed debt$ by qualifing for loan$ @ < 4% intere$t … By mulitple$ of $200,000 … $300,000 … $500,000?

$mall bidne$$e$?
Indu$trial building$?
$mall apartment complexe$?
Comic book$
Vinyl record$
Antique tractor$?

Hou$es $eem.to.bee the leader of all po$$ible $peculative American commoditie$

What’$ gonna change? … or rather, … What are po$$ible thing$ that can effect a $uch a change?

Comment by Neuromance
2018-07-08 13:00:36

The big tidal change is the Fed (stated) balance sheet normalization policy. To maintain a large balance sheet requires continual money injections into the market for whose bonds they are holding. They’re supposed to be rolling off all of their MBS holdings which will reduce the amount of money injected into the real estate market. For the past 10 years, the central bank has been the big source of funds for the real estate market. Their stated goal was to boost real estate prices after the slide after 2008.

Next, attention turns to the GSEs, the conduit through which money is injected into the real estate market. Ben posted a link to a panel discussion about the fate of the GSEs at the American Enterprise Institute, for this Thursday: http://www.aei.org/policy/economics/housing-finance/

The lengths policy makers will go to in order to keep real estate prices (or really any asset price) from declining has been laid bare over the past 10 years. Poster rms noted a few days ago that it seems to be a de facto third mandate for the Fed. Milton Friedman, Bernanke’s mentor and the paradigm creator for modern economic policy, thought QE and boosting the stock market were very worthy goals and good for the economy. Has the paradigm changed? We won’t know for many years.

So it’s quite possible that the GSEs or some new entity will be put in place in order to keep injecting money into the real estate market and keep buying debt. The AEI symposium this Thursday should be informative to get an idea of ideas which policy makers will be considering.

What will they do going forward? These policies have been quite successful/lucrative for politicians and big donors but they’ve resulted in income inequality, very significantly between the young and the rest of the population. Education and housing costs are very high and rising for the young, including rent which we keep hearing is setting new highs. Income inequality is a factor which IMO leads to populism, which the (globalist) policy makers abhor. These alt-right demonstrators are young men. Another group of young people are pushing for socialism. Either way, politicians stand to lose jobs, which they abhor. The midterm elections will be interesting and informative.

On the other hand, for the people making money on these current policies now, gotta make hay while the sun shines. I’ve always said they’re going to continue current policies until they cannot because these are lucrative for policymakers themselves and the big donors.

My sense is probably wait until the end of 2019 to see how the Fed’s policies are impacting the market, and what the response from policy makers will be. It didn’t take much of a plateau in the Case Shiller index in 2007 before speculative demand fled the market.

I have a suspicion they will simply recapitalize and release the GSEs to go back to the system before the 2008 Financial crisis. When they implode again, the Fed will run the same playbook. This is a distinct possibility, with some decorative changes around the edges. Once real estate prices become high enough that speculators can’t make money, then we’ll see a plateau and then declines as they start dumping inventory.

The last runup though was in the context of declining interest rates. Now with interest rates rising, what then?

Multiple moving parts, with policy makers not showing their cards. Time will tell basically.

What policy will:
1) Keep politicians in office?
2) Enrich politicians and big donors?

That’s the one they’re going to go with.

Comment by Professor 🐻
2018-07-08 14:40:05

“The big tidal change is the Fed (stated) balance sheet normalization policy.”

Talk is cheap; action, expensive.

“I have a suspicion they will simply recapitalize and release the GSEs to go back to the system before the 2008 Financial crisis.”

Insanity is doing the same thing over and over again and expecting different results.

– Albert Einstein (misattributed)

Comment by Professor 🐻
2018-07-08 14:44:18

“Milton Friedman, Bernanke’s mentor…”

When did this mentoring happen? Friedman was a Chicago professor, Bernanke an MIT PhD student.

Comment by Neuromance
2018-07-08 15:55:27

When did this mentoring happen?

Remarks by Governor Ben S. Bernanke
At the Conference to Honor Milton Friedman, University of Chicago, Chicago, Illinois
November 8, 2002

On Milton Friedman’s Ninetieth Birthday

Today I’d like to honor Milton Friedman by talking about one of his greatest contributions to economics [ed. note: A Monetary History of the United States], made in close collaboration with his distinguished coauthor, Anna J. Schwartz. This achievement is nothing less than to provide what has become the leading and most persuasive explanation of the worst economic disaster in American history, the onset of the Great Depression–or, as Friedman and Schwartz dubbed it, the Great Contraction of 1929-33. [...]

As a personal aside, I note that I first read A Monetary History of the United States early in my graduate school years at M.I.T. I was hooked, and I have been a student of monetary economics and economic history ever since.1 I think many others have had that experience, with the result that the direct and indirect influences of the Monetary History on contemporary monetary economics would be difficult to overstate.


So mentor is the wrong word. “Most influential figure” would be better.

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Comment by Neuromance
2018-07-09 16:28:33

Also, another way to put it is that Bernanke is an acolyte of Friedman.

Comment by Professor 🐻
2018-07-08 14:52:16

“Milton Friedman, …, thought QE and boosting the stock market were very worthy goals and good for the economy.”

My impression of Milton Friedman is that he was a champion of free market economics and as little government intervention as needed to support a free-exchange economy. I don’t recall ever reading anything Friedman said about QE or stock market intervention, but frankly these seem diametrically opposite what I know about his political-economic philosophy.

Could you please post a reference on what Friedman said regarding QE or stock market intervention?

Comment by Neuromance
2018-07-08 16:05:44

Could you please post a reference on what Friedman said regarding QE or stock market intervention?

Friedman wrote, “Why money matters”. It’s a brief 6 page PDF by Friedman. His academic partner, Anna Shwartz, also wrote a piece with an identical title, in 1987. Both share similar conclusions.


It is ironic that Friedman would gain a reputation of a champion of free markets, yet be the founder of a movement which recommends redistribution via monetary policy and has led to the system we have today. Irony is an understatement. I suspect those who bestowed his title had little understanding of the reality of his work, or they were being intentionally obfuscative.

The following Google query will be informative as well: https://www.google.com/search?&q=friedman+why+money+matters

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Comment by Neuromance
2018-07-08 17:32:48

Summary from page 5 of the PDF: “The results of this natural experiment are clear, at least for major ups and downs: What happens to the quantity of money has a determinative effect on what happens to national income and to stock prices. The results strongly support Anna Schwartz’s and my 1963 conjecture about the role of monetary policy in the Great Contraction. They also support the view that monetary policy deserves much credit for the mildness of the recession that followed the collapse of the U.S. boom in late 2000.”

Assuming Dr. Friedman thought higher national income and higher stock market valuations were a good thing, combined with his crediting of monetary policy for mitigating the 2000 recession, it seems he would have supported Bernanke’s approach in 2008.

Prices are a “desirability rating”, expressed in terms of money. When the desirability of speculatively bid-up or otherwise useless items drops away, perhaps it’s not the best idea for the central bank to step in and try to reinflate that bubble.

As Jeff Goldblum’s character said in Jurassic Park, “Your scientists were so preoccupied with whether or not they could that they didn’t stop to think if they should.”

Comment by hwy50ina49dodge
2018-07-08 15:33:11

R$ing intere$t rate$ are $ucking moisture$ from the hou$e stick$, when the wind$.of.change$ come (from the uneven heating & cooling of global current$) … the $park matter$ knot from whinch it ignite$

$moke?, oh, you betcha!

Comment by oxide
2018-07-09 04:56:55

I hope they don’t put the GSEs under private-sector control while guaranteeing the risk. That’s just putting a kid in a candy store with an unlimited credit card.

But first order of business should be getting rid of Mel Watt. Today, new union rules go into effect to keep Fed employees in line. OK, I get it, but I see no reason to crack down on Fed employees to save a few millions, while the likes of Mel Watt are handing out gov-cheese with no strings at all.

Comment by Professor 🐻
2018-07-09 08:13:16

There’s this amazing concept called “private insurance” which can be used to guarantee against risk without charging nonparties to the home purchase transaction.

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Comment by Mortgage Watch
2018-07-08 09:46:43

Big Pine Key, FL Housing Prices Crater 16% YOY As Vacation/Retirement Property Market Tanks


Comment by b
2018-07-08 09:53:05

RE: “Yet, foreign investment into apartment buildings has been increasing rather than decreasing. The last quarter of 2017 and first quarter of 2018 saw higher foreign investment amounts than when the boom was in full swing during late 2016 and most of 2017. We’re talking about $10s of billions flowing in every 3 months for at least the past 3 quarters.”

So the Billion $ question is: is this part of a diversified portfolio? Do they have lots of $s and they are investing a reasonable % (say 10%) in real estate — or are they way over rotating into this sector? They can handle down turns in a couple of industries if they are being conservative. For instance, in Canada the teachers and some public sector pension funds have to have some level of diversity and safe investments. Of course we now know that real estate can get into bubbles now.

Comment by ibbots
2018-07-08 10:32:31

‘Houston is oversupplied in nine of the 10 amenities profiled, including air conditioning’

No sane person would live in Houston without AC.

Comment by whirlyite
2018-07-08 18:46:04

Right?!? AC is not an amenity here - it’s a necessity!

Comment by ibbots
2018-07-08 10:38:44

Priced out of their home? North Texans see tax bill rise $1,200 in five years.

Robbin and Andy Hallford’s annual tax bill has gone up nearly $1,200 since they bought their home in Mansfield five years ago.

“We’re starting to get priced out of this house,” Robbin Hallford, a high school science teacher, said.

Their four-bedroom home with a swimming pool in the Arbors of Creekwood neighborhood was valued at $295,106 in 2017, up from $226,000 in 2013.


If they have it homesteaded there’s a 10% cap on increase in value. We capped out this year mainly due to new builds in our area. I protested nonetheless.

Comment by In Colorado
2018-07-09 14:29:05

I was explaining to a young, idealistic couple how TABOR keeps this sort of thing from happening here. They had no idea of what property taxes are like in other states (they pay about $1000 per year on their modest home).

Comment by MGSpiffy
2018-07-09 15:10:21

Every time I protested my tax assessment increase in DFW, which was every year, it was ignored without any sort of actual evaluation that I could see. They often went for the max cap.

Comment by Taxpayers
2018-07-08 11:10:49

It’s raining Pebble Beach’s

Seattle is the” won’t happen here because” city of 2017

Comment by Mortgage Watch
2018-07-08 11:15:10

Bolton, MA Housing Prices Crater 8% YOY As Boomer Death Rate Accelerates


Comment by TIC TOK
2018-07-08 11:20:20

A/C is an over supplied ammenity…..in Houston? That is the most insane thing I’ve read in a while. And parking is an ammenity? Lol. Come on, again this is Houston not NYC. Everyone drives everywhere. Parking is not an ammenity, it is a requirement for 98% of the public. Same with a dishwasher. The apartments I rented 15-20 years ago all had dishawashers. And a pool. In some cases multiple pools. In hot climates, except for the really low end stuff, every apartment complex has a pool.

Granted golf simulators and wine bars in an apartment are ridiculous. But ac, parking, a dishwasher and a pool are pretty much standard and have been for a long time.

Comment by oxide
2018-07-08 14:22:07

The *REAL* apartment amenity that separates the wheat from the chaff is in-unit laundry. There are huge numbers of old grade B/C units that don’t have the space or plumbing for laundry in-unit.

Parking as an amenity might refer to unmonitored parking, i.e. free surface lot with no sticker needed. Those complexes will be overrun by illegals stuffing 3-4 incomes in one unit and 4-5 white vans in the parking lot. They get around it by offering one space free and charging through the nose for additional spaces.

Comment by Taxpayers
2018-07-08 11:21:28

in Hallford, a high school science teacher, said.
Tax increases
80% goes to gov bennies
55% on average is the school system

Comment by cactus
2018-07-09 13:17:45

135 % that sounds about right

Comment by aNYCdj
2018-07-08 12:40:59

cute little house sale The Florida property sold for $8 million less than its 2017 asking price


Comment by aNYCdj
2018-07-08 12:47:52

Nearly 27,000-Acre California Ranch Asks $31 Million

Lone Pine Ranch is a three-parcel combination once belonging to the late stock market tycoon Dean Witter


Former Zsa Zsa Gabor Estate to Hit Market Friday for $23.45M

Comment by hwy50ina49dodge
2018-07-08 15:24:09

Hope the new buyer$ … don’t get burned.

Comment by Anonymous
2018-07-09 16:29:29

“The ranch’s 5,300-square-foot main house was built in the mid-1930s and is joined on the land by several additional houses, sheds, barns and bunkhouses, according to the listing.

“They’re all decades old,” Mr. McDavid said, and they “all have a really authentic character to them.” ”

In other words, they’re old, dilapidated shacks that need massive investments of time and money?

Comment by Mortgage Watch
2018-07-08 14:24:06

San Francisco, CA 94110 Housing Prices Crater 6% YOY As Tech Crash Accelerates


*Select price from dropdown menu on first chart

Comment by Neuromance
2018-07-08 16:07:37

“You mean people will do work for these slips of paper?” he asked while inspecting a freshly printed dollar bill.

“They will.”

“And we control the supply of these slips of paper?”

“We do.”

“Well this is very exciting, and creates all sorts of opportunities.”

“It does.”

Comment by Palm Beach, Florida
2018-07-09 06:51:26

I’m still waiting for the Florida bubble to burst & sitting with a lot of cash:

Average June rents reached record high nationwide, as Manhattan again led the way
By Alex Nitkin | July 08, 2018 02:00PM

The national average apartment rent ticked up nearly 3 percent in June compared to the year before, reaching a…


Comment by foobarbaz
2018-07-09 08:09:33

Even if the peak has been reached right now you are looking at a minimum of another 2 years before price drops are of any significance.

Comment by Palm Beach, Florida
2018-07-09 08:11:38

Why & what do you base that on?

Comment by foobarbaz
2018-07-09 14:18:30

Housing is a slow moving ship.

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Comment by Mortgage Watch
2018-07-09 07:17:03

Miami, FL 33133 Rental Rates Crater 9% YOY As South Florida Housing Market Tanks


*Select price from dropdown menu on rental chart

Comment by cactus
2018-07-09 09:35:33

cult of meritocracy. meritocracy a ruling or influential class of educated or skilled people.’

“Writing for The Financial Times on Monday, Alexandra Scaggs characterizes the current labor market — where wage gains remain meager, job openings are plentiful, employers complain about hiring, but unpaid internships are considered a necessity — one powered by a “cult of meritocracy.” This dynamic roughly says everyone is where they are in life because they earned it and those who can’t catch up are simply not qualified. Therefore, the economy is plagued by a “skills mismatch,” which in some ways more closely resembles a story we tell ourselves to look past rising inequality than an assessment of the labor market.”

I would say educated certainly not very skillful.

Comment by In Colorado
2018-07-09 10:40:03

FWIW, even people with “skills” aren’t seeing pay increases.

Comment by tresho
2018-07-09 11:16:07

even people with “skills” aren’t seeing pay increases. Turn your statement on its head. How would you describe the groups that have been seeing great pay increases? Rent seekers? Crony capitalists? Looters with inside connections?
Talking about a “skill shortage” is simply a way to change the subject and avoid the greater underlying problem.

Comment by Professor 🐻
2018-07-09 20:59:26

“Turn your statement on its head. How would you describe the groups that have been seeing great pay increases?”

Homeowners catching helicopter drops of Yellen bucks in their sweet home equity appreciation…

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Comment by butters
2018-07-09 11:50:45

Job switch. That’s how you get a raise if you are ’skilled.’

Comment by In Colorado
2018-07-09 14:22:29

From what I have seen, you might get 2-3% more. Hardly seems worth the risk. I know more than a few who jumped ship, only to get laid off in as little as a year later, often with no warning, especially at smaller outfits.

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Comment by ChuckA
2018-07-09 18:38:11

Same here.. Ran into a guy at my current employer who I worked with at my previous employer. He said it was a big mistake to have left and take a contract job - made more money but after about a year it ended - out the door with nothing. Since then job hopping and working down the ladder not up. If he stayed put - would have been employed a lot longer - maybe still there - if he was let go would of had a minimum 4 /5 months severance + cobra paid.

Know a lot of people who fell into that cycle.

Comment by drumminj
2018-07-09 19:43:59

From what I have seen, you might get 2-3% more. Hardly seems worth the risk

I’m in the process of jumping ship…that’s about the difference I’m seeing, in addition to any signing bonus and equity grants, which can actually be a huge differentiator if you’re moving from a startup (pre-IPO) with worthless stock to a public company with RSUs you can actually turn into cash.

Comment by MIke
2018-07-09 20:40:59

I strongly disagree. I’ve gotten 3 generous raises this year and 2 bonuses its the best economy I’ve ever been apart of (gen x). Frankly I think I’m 40% overpaid. I am in the tech industry in So Cal. I have just been banking it all as I started my tech career in 2001 and know how what is hot today never lasts.

I bought my first home in 2011 which turned out to be a good time.

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Comment by rms
2018-07-09 17:15:47

“This dynamic roughly says everyone is where they are in life because they earned it and those who can’t catch up are simply not qualified.”

There’s a flip-side to this dynamic… remove meritocracy and HR will be free to insert people who have special authority protections such as self declared snowflakes. They use words in civility training like “Acceptance and Inclusion,” but they are not looking for Inclusion… rather their goal is to drive-out everyone deemed straight by any means possible.

Comment by drumminj
2018-07-09 19:48:42

rather their goal is to drive-out everyone deemed straight by any means possible.

I’ve noticed an interesting trend at my job where folks are talking more about “non-traditional” candidates….people from coding schools, etc. I find it interesting as our company is already unhealthily junior (IMO), and struggling. But for some reason, some folks feel we should lower the bar more and re-structure the way we work to support that.

I suppose I’d get it if there really is a shortage of qualified people out there — figure out how to leverage the talent you have and bolster it with what you can find. But I really don’t get wanting to do so from a starting position of weakness (again, IMO).

The struggle I have is…this company is owned by people (shareholders, private equity, what have you)….I don’t believe they’re giving you money to conduct a charity operation, or experiment? So what exactly is driving this?

Comment by rms
2018-07-10 07:23:28

Executive Order 13583

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Comment by rms
2018-07-10 07:48:36

Executive Order 13672

Executive Order 13673

The orders weakened workplace meritocracy.

Comment by Mafia Blocks
2018-07-10 05:40:14


Redmond, OR Housing Prices Crater 10% YOY


Comment by tresho
2018-07-09 11:35:58

Hundreds of new high-end homes subsidized in Akron OH
(I drastically revised the headline to match the content of the article).

The first wave of modern high-end homes is about to hit Akron.

Private developers are busily buying up 35 acres of city-owned land to build 349 homes in four developments, some so dense that 15 houses will fit on an acre. The first of the homes will be on the market later this year or early next, carrying price tags of up to $280,000.

It’s all single-family housing.

And in the WTF? department:

The homes will compete with at least 312 new downtown apartment units for young professionals looking to start a family or empty nesters who prefer low-maintenance living in the city near arts, sports, music and entertainment.

The writer did find several people to quote who expressed skepticism:

Some neighbors also question the prices. How, in a city with a median household income of $35,240, can anyone afford a $200,000 home?

“There are a lot of [used] homes here that are selling for half that. So why would someone spend that much?” asked the Rev. Scott Campbell, whose Shoreline Church sits across the street from the barren Guinther Park. “Are they going to sit empty if no one buys them and eventually become Section 8?

“Oftentimes, there’s skepticism,” Sanderson said. “And sometimes projects fail — let’s be fair.”

Comment by Anonymous
2018-07-09 16:33:17

The fact that the housing bubble has reached Akron, OH signals to me that the end of said bubble is near.

Comment by ChuckA
2018-07-09 18:19:20

Quick zillow search showed 950+ houses for sale up to $200k. Some dummy thought they needed more?

Comment by Mortgage Watch
2018-07-09 12:31:53

Potomac Falls, VA Housing Prices Crater 21% YOY As Fed Lay Offs Accelerate


Comment by Mr. Banker
Comment by In Colorado
2018-07-09 16:15:23

Whatever happening to paying off the mortgage, as soon as possible?

Comment by Neuromance
2018-07-09 17:16:28

So I was talking to a smart guy and a real estate True Believer. Not a STEM major though. He thought that taking out a HELOC and paying it back was “paying yourself”. I didn’t tease out what exactly he meant. But if that is the mentality that’s being sold, then perhaps people think it makes sense somehow?

I’d love to find out how exactly repaying a HELOC, or taking out a HELOC is “paying yourself.” As opposed to paying back the lender with interest. The subject hasn’t come up since.

Comment by Avg Joe
2018-07-09 20:19:38

Wow. That’s…. wow.

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Comment by Neuromance
2018-07-09 16:32:37

Marketing triumphs. Or, as Mr. Banker has noted, “Dumb ‘em down and profit.” Before, it was “not taking out a loan and putting your house up as collateral”. Today it’s “not tapping your home equity.” Because of course, you don’t have to pay any of that sweet debt back, with interest.

More homeowners leaving home equity untapped

CNBC’s Diana Olick reports on why Americans are choosing to leave their home equity alone and not tap into it.


Comment by Apartment 401
2018-07-09 17:24:15

Wired — How the Startup Mentality Failed Kids in San Francisco

“As San Francisco’s population became more affluent, parents started to send their kids to private schools in droves. Around 30 percent of the city’s school-age children now attend private school—one of the highest rates in the nation. More shocking, in a city that is 54 percent white, just 13 percent of school-district kids are white.

It all sounded terrific: solar panels, sustainable materials, flatscreen televisions in the counseling room, gardens to “support future careers like organic urban farming.”


Comment by aNYCdj
2018-07-09 18:46:49

the real problem is the values the children are taught at home. “White privilege” is having 2 parents that love you, offer discipline (ie, make you do you homework).

Comment by aNYCdj
2018-07-09 18:55:17

came across this from 20 years ago……goes with the topic

No. 298 March 16, 1998
Policy Analysis
Lessons from the Kansas City Desegregation Experiment
by Paul Ciotti
Executive Summary

For decades critics of the public schools have been
saying, “You can’t solve educational problems by throwing
money at them.” The education establishment and its support-
ers have replied, “No one’s ever tried.


Comment by OneAgainstMany
2018-07-09 19:32:09

Make no mistake, money makes a huge difference in education. The key is in how it is used and where it goes. Therein lies the rub.

Comment by aNYCdj
2018-07-09 21:25:19

I disagree Its not money but the 3 R’s reading writing and arithmetic,

Without that as the #1 goal, then you have parents who just dont care if their kids are on a Jail track and not a college one.

I have said this for years, we don’t have a race problem in America but we sure do have a massive functional illiteracy one.

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Comment by OneAgainstMany
2018-07-10 13:34:31

Come visit my hospital some time and you’ll see all the children being born to addicted mothers. There is a segment of this country that is being raised exceptionally well, and then there is another segment that has the deck stacked against them from birth due to choices made by their parents. The only way to give these kids a fighting chance at mastering the 3 Rs, along with the other myriad skills they will need in this 21st century economy, is skilled teachers who know how to do their very best to help remediate children who have scores of deficits.

Comment by Mortgage Watch
2018-07-09 18:24:49

Beverly, WA Housing Prices Crater12% YOY As Seattle Market Sinks Like A Ship


Comment by rms
2018-07-09 23:36:02

MarketWatch story about love and rent

“I fully supported my girlfriend… now we’re breaking up.”

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