Overbuilt Due To The Need To Feed Their Businesses
A report from The Stranger in Washington. “Danny Westneat’s present column, ‘Another ‘Manhattan moment’: Seattle’s new $19,265-a-month apartment’ concerns an apartment that’s at the top of a new Seattle building and, of course, only the super-rich can afford. It costs $19,000 not ‘per year—the advertised rent is $19,000 per month.’ But what is luxury exactly? It’s a thing that connects with or taps into the infinity of money. For, Noam Yuran, a philosopher of desire and money, this is when a thing ‘can be endlessly desired’; meaning, desired as if the ‘thing were money,’ which, unlike a thing, is limitless.”
“But a thing of luxury breaks with ‘the restricted desire for [a] thing’ (this is what orthodox economics calls the marginal utility of a thing, and is the foundation for the supply and demand conceptions of the market utopia), and for one reason or other, is sucked into ‘the limitless desire for money’ and thereby is inflated like nothing else. Another object of this kind is, of course, hanging in Seattle Art Museum right at this moment: Jean-Michel Basquiat’s Untitled (1982). One is not by any means nuts to conclude that it’s now even worth much more than its price a year ago. Money cannot stop flying to it, even as it sits doing pretty much nothing in downtown Seattle. It doesn’t work. It doesn’t grow. It’s unproductive. It has achieved the highest level of luxury possible.”
From Seattle PI in Washington. “Remember our post a few weeks ago about buying a Seattle condo? It was titled, Seattle Condo Buyers, Now Is Your Time. Well, I wanted to cover this same exact topic once again. There are now 145 units on the market in Downtown Seattle. Of the 145 units, 30 of them are new and 115 of those units have been waiting for buyers. Of the 115 units that have been on the market, 33% of those condos just reduced their price.”
“As inventory climbs, new projects are announced and we head into what feels like a cyclical shift in the market. Just 8 months ago, I posted about the severe shortage in condos listed under $500,000. At that time, Seattle had just 5 condos priced under $500k. Now, as of today, the number of units under $500k has moved up 260% (5 units to 18 units). As price reductions increase, the percentage of list to sale price ratio will decrease.”
“As an example, in April of this year sellers were getting 4.4% of their asking price. So if a place was listed at $1,000,000, the buyers were on average, bidding that property up, to a sales price to $1,044,000. However, just 3 months later in June the number has declined to 98.8%.”
From McKnights Senior Living. “The occupancy rate for assisted living continued its downward trend in the second quarter of 2018, falling lower than last quarter’s record-low average of 85.7% to a low of 85.2%, according to the National Investment Center for Seniors Housing & Care. ‘The occupancy rate for assisted living was the lowest since NIC began to report the data in late 2005,’ NIC Chief Economist Beth Burnham Mace said. ‘Inventory growth also set a record, with more than 4,400 units coming online. Demand accelerated from the first quarter’s flu-related weak levels but was not strong enough to offset growth in inventory.’”
“‘The seniors housing occupancy rate has trended downward over the past 10 quarters, which is only two quarters short of its 12-quarter downturn during the Great Recession,’ NIC Chief of Research and Analytics Chuck Harry said. ‘Although annual absorption [change in occupied units] has averaged a solid 2.4% during this 10-quarter downturn to date, the total number of seniors housing units absorbed amounts to only 63 percent of the significant and sustained inventory growth during this same period.’”
The Idaho Business Review. “Developers of senior housing describe a saturated market in much of the Treasure Valley. Jeremy Garner, president of Veranda Senior Living, said several new providers – many without experience – have entered the local market to serve the seniors expected to need assisted-living care in the next three to five years. Garner said the assisted living inventory has expanded beyond the need sometime in the last few months, especially between downtown Boise and west of Nampa.”
“‘I’m seeing a lot of these places that are popping up, even out in Nampa,’ said Garner, whose company runs a 73-unit facility in Meridian. ‘Some of the recent feasibility studies that we have done have shown an overabundance of beds in some of these western Treasure Valley areas.’”
“Mike Sharp, executive VP of Edgewood Health Care, concurs the assisted living market has become saturated in most of Treasure Valley, though he knows of about six projects in the works that will provide new assisted living and memory care. ‘As far as Meridian and Eagle, there’s a lot of (assisted living) vacancy right now,’ Sharp said. Sharp said business is booming for builders specializing in independent living housing for seniors. ‘Every time I drive somewhere I see a new 55-and-older development,’ Sharp said.”
From Multi-Housing News. “The student housing market continues to grow across the U.S. at an unprecedented rate. Between 2016 and 2017, developers added nearly 20,000 units to the nationwide inventory, with 15,521 units currently under construction, according to Yardi Matrix. Julie Bonnin, COO of Asset Campus Housing, possesses more than 30 years of asset management experience and, in her current role, she is overseeing all operations of the firm’s expanding student housing portfolio—currently comprising upwards of 121,500 beds.”
“What are some of the biggest challenges in today’s student housing market? Bonnin: Overbuilt markets—due to development companies’ need to build communities to feed their businesses. We have seen this repeatedly in markets where enrollment has been steady and/or increasing and where land is cheaper to purchase. For example, Texas A&M University. Additionally, some of these overbuilt markets are suffering from the delivery of new projects, outpacing even significant enrollment growth. From an operating standpoint, utility expenses and payroll costs are beginning to place strain on net income.”
From National Real Estate Invstor. “Student housing properties are taking a little longer to pre-lease this year. ‘There certainly are several over-built student housing markets around the country,’ says Frederick Pierce, president and CEO of Pierce Education Properties, a San Diego-based owner, developer and manager of student housing communities. All the new student housing beds developers have planned are finally beginning to weigh on the market. The percentage of student housing beds that were pre-leased for the school year beginning in the fall of 2018 was just 74.4 percent in May, according to Axiometrics.”
“Developers will finish a total of 47,000 new beds at off-campus student housing projects for the fall of 2018. Construction is also starting on 30,900 beds for the fall of 2019, with 10,000 additional beds identified but not started, according to Axiometrics.”
“Multifamily investors continue to be eager to purchase value-add apartment assets. The challenge is to find the right property. ‘Many of the easy deals already have been done,’ says Greg Willett, chief economist for RealPage Inc. Private equity fund managers have become particularly interested. More than 40 percent of all real estate investment dollars raised in 2017 by private equity funds were raised for value-add investments, according to JLL. That’s a tremendous amount of capital targeting what had once been a niche investment strategy.”
‘In fact, apartment rents could even slip lower from today’s levels. ‘If the upgrade is significant enough that the property will need a complete turnover of the resident base, there’s some possibility that the leasing efforts could be pushed into a recessionary environment,’ says Willett.”
From My Central Jersey. “In the last few years, apartments have been springing up in Central Jersey towns with a frequency not seen in decades. Alert developers who have been anticipating this trend for a few years are reaping the benefits of their vision, and thousands more are planned around Central Jersey. At least two Central Jersey professionals looking a few years into the future worry that too many apartments may be in the works, especially in the greater Somerville area.”
“Tim Deluccia of Berkshire Hathaway HomeServices New Jersey Properties, has been working with developers who are constructing apartment buildings in Somerville. He said that in Somerville alone, there are now about 400 luxury apartment units among the various new buildings under construction. Also, there are 140 units scheduled for Raritan Borough, and Bound Brook has hundreds of apartment units in the pipeline.”
“In Somerville, Tom Genova has been renovating apartments and mixed-use buildings for years. ‘I’ve been saying for a while that we need to slow up the apartments, pump the breaks a little bit,’ Genova said. ‘We need diversity in housing stocks; they can’t all be apartments. Everything is a cycle. Look at New York City. They are actually having trouble renting luxury apartments in New York City.’”
“However, Don Tozzi, a councilman in Raritan Borough who has lived at the Lena in the borough for six months, disagrees. ‘These apartments move the town forward, because other towns are doing the same thing,’ Tozzi said. ‘I don’t think there will be a glut because people are moving in from other areas.’”
From Curbed New York. “The story of New York City’s rental market remained the same at the beginning of the summer: Prices continue to inch downward—though not to a level of what one might call ‘affordable’—and concessions remain prevalent across the boroughs. Jonathan Miller, the author of the Douglas Elliman reports, calls it ‘the slow grind’—as long as there’s a hefty supply of luxury inventory, price drops will likely continue, and incentives will remain high.”
“According to Miller, ‘we’ve cracked the three year mark’ when it comes to new leases in Manhattan with some form of rental incentive; for the 37th consecutive month, there was a year-over-year rise in the number of transactions with concessions, from 24 percent last year to 32.6 percent this year. That number was actually higher in Brooklyn and Queens; 40.4 and 45.7 percent of new leases came with a concession, respectively.”
“But there is ‘one interesting wrinkle’ in last month’s numbers, according to Miller: New leases are down across the three boroughs. In Manhattan, the number of new leases declined 17.5 percent to 5,447. In Queens, that number declined 13.7 percent to 302. Brooklyn saw a drop of 17.7 percent to 1,413. But it doesn’t point to a drop in inventory; instead, Miller believes ‘landlords have become better at wooing tenants into renewal,’ meaning more negotiations and continued concessions past year one of the lease.”
‘Miller believes ‘landlords have become better at wooing tenants into renewal,’ meaning more negotiations and continued concessions past year one of the lease.’
More crow oxide.
‘Overbuilt markets—due to development companies’ need to build communities to feed their businesses. We have seen this repeatedly in markets where enrollment has been steady and/or increasing and where land is cheaper to purchase. For example, Texas A&M University. Additionally, some of these overbuilt markets are suffering from the delivery of new projects, outpacing even significant enrollment growth. From an operating standpoint, utility expenses and payroll costs are beginning to place strain on net income’
This is how I spotted the apartment bubble. These guys weren’t building based on supply and demand. Rather it was the greed to cash in on the enormous flood of money being pushed at these markets. Foreigners are pumping billions of yellen bucks into the student market right now.
‘‘Inventory growth also set a record, with more than 4,400 units coming online…The seniors housing occupancy rate has trended downward over the past 10 quarters, which is only two quarters short of its 12-quarter downturn during the Great Recession…the total number of seniors housing units absorbed amounts to only 63 percent of the significant and sustained inventory growth during this same period.’
This is another dead giveaway in a bubble. Every one of these markets is seeing huge supply coming into too much already. It’s happened in retail too.
“The seniors housing occupancy rate has trended downward over the past 10 quarters, which is only two quarters short of its 12-quarter downturn during the Great Recession…”
And this is while the protracted expansion with plunging unemployment to historic lows is underway. Makes you wonder for how many more quarters this trend might continue as new inventory continues to pile on past the market saturation point, especially if the expansion ends within the next few quarters.
“Foreigners are pumping billions of yellen bucks into the student market right now.”
That’s where the dumb money resides. Go here for a peek at some examples of the burning stupidity …
“8 Charts That Illustrate the Mounting Student Loan Crisis”
http://www.loanlab.co/8-charts-that-illustrate-the-mounting-student-loan-crisis/
The only reason LLs need to offer concessions is the stupid amount of stupid inventory they built; we all know this. When I was renting, they didn’t need to offer such options.
Aren’t you an LL yourself? Are you having to offer concessions to your tenants?
No. After briefly attempting to raise rents I put them back to the original number and I don’t have much vacancy. Also these markets haven’t seen new apartments built. Some new shacks, yes, but not apartments.
‘the stupid amount of stupid inventory they built’
And thousands more on the way. These condo landlords in NYC are getting hammered.
Donk,
The inventory is empty because of the price.
“The inventory is empty because of the price.”
+1 The Rent is Too Damn High!
https://www.youtube.com/watch?v=79KzZ0YqLvo
“the stupid amount of stupid inventory…”
Their absolute and eternal power to raise rates to the moon seems to have tarnished rather quickly. That’s a pretty big assumption to get so wrong.
Poor Donk…. Poor poor Donk.
Washington DC Rental Rates 10% YOY As DC/NoVA Housing Market Craters
https://www.zillow.com/dupont-circle-washington-dc/home-values/
More clueless stuff from the Idaho report:
‘Greg Urrutia still sees ample room for growth in his category of mixed-income apartments providing independent living for tenants who are 55 and older. Urrutia, owner of New Beginnings Housing, has four housing communities in the Treasure Valley. His fifth development, which will include 30 units in downtown Caldwell, is scheduled to open July 1, and he recently broke ground on 50 units in Nampa.’
‘Urrutia takes advantage of federal tax credits for construction of affordable housing, allowing him to tie his rental rates to income. His rents range from 10 to 30 percent below market value.’
“The demand is very strong (for independent-living senior housing). There’s a lot of unmet demand right now, for both market-rate and affordable units,” Urrutia said.’
‘In eastern Idaho, Ken Pape, director of operations with Chubbuck-based Portneuf Development, sees unmet demand for the full gamut of senior housing options. Pape is helping to develop north Pocatello’s planned Northgate Project, which will include a mixture of housing types, commercial space, a high-tech industrial park and a medical campus.’
‘In early July, he’ll break ground on a gated community, providing 52 single-family homes for residents 55 and older who are capable of living independently. According to his market research, Bannock County has more than 8,000 people in the target age group who want to move into senior housing. His gated community’s Craftsman-style homes will sell for at least $289,000 and include a minimum of 1,300 square feet of space.’
‘Pape explained the development will be ideal for a population of seniors who enjoy traveling and want to make certain their homes are secure and monitored while they’re away. The gated community will limit break-ins, crews will tend to lawns and maintenance and the homes will all use smart technology.’
“From appliances to garage doors and cameras, everything you can imagine is run off your smart phone,” Pape said. “If you go the grocery store and you realize you don’t know how much milk you’ve got, you can literally look into your fridge with a camera. Or if you’re coming back with a pizza, you can turn your oven on before you get
home.”
‘Early next year, Pape will also break ground on about 40 cottages and an assisted living center with about 50 units. The cottages will be adjacent to the assisted living facility to provide meals and assistance to seniors to help them continue living independently longer. Pape planned his senior housing to be in close proximity to multifamily units, which will cater to the wants of millennials.’
Places like Idaho are fooked. When the major markets suffer a cut, Idaho suffers an amputation.
I dunno… Boise is an LGBTQ safe place these days.
We are in the middle of a historic natural experiment where an unprecedented amount of electronic printing press money was injected into the international economy by the global central banking cartel over an extended period to prevent a deep recession from clearing out the wreckage of the pre-2007 period of malinvestment. One result has been a massive overshoot in the amount of real estate investment in certain sectors (lux airboxes, senior housing, and student housing, to name three examples) which is just now reaching proportions the MSM cannot fail to notice without flunking the red face test.
How this situation reequilibrates from here is a known unknown. However, it is easy enough to see the process will be unpleasant for many and will continue for years if not decades to come.
“From appliances to garage doors and cameras, everything you can imagine is run off your smart phone,” Pape said. “If you go the grocery store and you realize you don’t know how much milk you’ve got, you can literally look into your fridge with a camera. Or if you’re coming back with a pizza, you can turn your oven on before you get
home.”
All this does is make life more complicated and expensive. All of this tech garbage breaks, then you have to pay through the nose to repair/replace.
My family refrigerator lasted from the 60s until the early 2000s, almost 40 years without a singe service call until it finally just went warm. It probably could have been repaired but at that point it was showing its age from wear and tear and it was time for a new one. These new made in China pieces of shit refrigerators oftentimes break in the first year.
These new made in China pieces of shit refrigerators oftentimes break in the first year.”
yes buy Korean
you can turn your oven on before you get home…
Stupidity.
“All of this tech garbage breaks, then you have to pay through the nose to repair/replace.”
Another great reason to rent and let your landlord help out with maintenance and repair costs. Ours have been very generous in this area.
Impressed that you are able to pay SoCal rent and college tuition simultaneously.
“Pape planned his senior housing to be in close proximity to multifamily units, which will cater to the wants of millennials.”
Because we know how wise millennials are when it comes to considering want vs needs. But who needs to bother with those trivial considerations when you got Bernie who is gonna give us a bunch of free shit because we’ve been oppressed from having nice things by the white patriarchy!
‘These apartments move the town forward, because other towns are doing the same thing,’ Tozzi said’
Thinking like this is why you make the big bucks Don.
‘Just 8 months ago, I posted about the severe shortage in condos listed under $500,000′
‘As price reductions increase…’
Oh dear…
Austin, TX Housing Prices Crater 6% YOY As Bond Market Craters
https://www.movoto.com/austin-tx/market-trends/
China is warning about Canada …
Hexun, China’s largest finance portal, recently published an article pointing to Canada’s debt fueled economy. They noted that Canadians have the largest debt-to-income ratio of any G7 country, with the average spending 165% of their salary. To contrast, at the height of the US housing crisis in 2008, Americans carried what was then considered an outlandish 147% debt-to-income ratio – 17 points lower than where we currently sit. Canada’s total household debt reached $1.892 trillion dollars, with $1.234 trillion dollars of that as mortgage debt – roughly 65% more than we make per year. To put that 1.82 trillion dollars into perspective, we could have run the US government for 8 months with that amount of money.
https://betterdwelling.com/city/vancouver/chinese-media-now-warning-canadas-housing-crash-will-worse-us/#comment-586
You know it is bad when China is warning you about YOUR own debt bubble…
And in Canada - nearly all loans are recourse and adjustable!
“And in Canada - nearly all loans are recourse and adjustable!”
Heaven on earth!
😁
Mr. Banker - One of your favorite shows on youtube:
(Teaches the peasants what a recourse loan or debt really is…)
Can’t Pay and We”ll Come Take it Away
https://www.youtube.com/watch?v=TJ14weqs_hA
what’s worse is that no-one in Canada cares about this? or the federal/provincial debt.
Many of the elites take pleasure in looking down at the US (especially in the Trump age). So as long as they feel superior a significant amount of Canadians will be happy
How much of this debt warning purportedly coming from China is designed to make Chinese citizens think twice from pulling money out of their own country? I seem to recall that China is still trying to put the brakes on money leaving it’s country. I imagine this is one way to do it. It doesn’t mean they are wrong about Canada’s housing bubble though.
“They noted that Canadians have the largest debt-to-income ratio of any G7 country, with the average spending 165% of their salary. To contrast, at the height of the US housing crisis in 2008, Americans carried what was then considered an outlandish 147% debt-to-income ratio…”
Go big or go home.
guess they prefer to go big since there is a growing number that will have no home to go to once those adjustable rates rise and/or interest only loans reset to start paying principal. But if you were lucky to avoid those shams, hopefully your economy stays intact and your incomes stays intact or you might have to give up the steaks/seafood with Molson for a steady diet of rice, beans, and poutine!
and screw your grandkids.
You know that old age pensions will never be reduced in canada
Good points about the Global Housing Bust hitting Canada but China has an even larger pile of failing mortgages and debt to deal with.
China and its citizens are dead broke and in debt.
“Why China’s Looming Debt Problems Won’t Stop At Its Borders”
https://www.forbes.com/sites/douglasbulloch/2018/05/31/while-china-is-facing-its-own-debt-crisis-it-is-also-exacerbating-others/#10ba54183fc3
Realtors are liars.
https://www.youtube.com/watch?v=4dkU-c4g1VM
Lol!
Rising Interest Rates + DJT New Tax Laws + QE Unwind = The Tipping Point (TTP)
+++++
Housing Starts Crash In June, Permits Tumble YoY
ZeroHedge - Wed, 07/18/2018
Following May’s plunge in building-permits (starts jumped), June was expected to deliver a rebound, but it didn’t. Permits dropped 2.2% MoM (vs +2.2% exp) but Housing Starts collapsed 12.3% MoM (after May’s 4.8% rise MoM).
This is the 3rd month of declining permits in a row and biggest drop in starts since Nov 2016…
The collapse in starts was broad based:
single family starts down from 944K to 858K
multi family starts down from 381K to 304K
But the drop in permits was dominated by multi-family units…
Single-family permits from 843K to 850K , +0.8%
Multi-family permits from 424K to 387K , -8.7%, lowest since May 2017
Details “journalists” don’t report:
Listed at $6.2 on May 27, 2018.
Reduced to $5.9 on July 13, 2018.
Purchased for $5.25 on July 31, 2012.
He will be lucky to “break even” after taxes/fees and upgrades are calculated - over 10 years of the “hot hot” real estate market
+++++
Glenn Beck is selling his Texas mansion for $5.9 million
Houston Chronicle | 7-17-2018 | Fernando Ramirez
The former Fox News star recently listed his 9,100-square-foot, 6-bedroom Westlake mansion for $5.9 million, according to Realtor.com.
First off he bought it for 3.9M in 2011. So he will easily turn a profit selling in the $5s. And it is a hell of a house with acreage.
But even if all he does is break even, he will have lived for free in a $4-5m house for 6 years. A house like that would cost at minimum $6k a month to rent, which means he will have made a $430k net profit vs renting. Not bad for doing nothing other than living in a mansion.
And can you even find houses like that to rent? I guess they are out there but it has to be rare to find a spread like that for rent for 6 years in a row.
Incorrect. He paid $5.5mill in 2012.
https://www.zillow.com/homedetails/2224-King-Fisher-Dr-Westlake-TX-76262/70555946_zpid/
Then the articles go on to say how he dump millions more into it since then.
Now theres some painful losses.
A real estate pump just got caught lying.
Pimp (damn autocorrect!)
Are you that math challenged that you don’t understand:
He was probably paying a mortgage of at least that amount
If he purchased outright - the loss of investing that money (opportunity costs)
You said he will break even. Breaking even while living rent free for 6 or 7 years is a 7900 sq ft mansion is a nice gig.
Unless now you are moving the goal posts and claiming he will not break even after all?
Or unless you have a top secret way yo live rent free in a house luke that for 7 years you’d like to share?
Fine you want opportunity cost, how about tax deduction. Property tax on that monster is $134k a year which was fully deductible every year. Beck is in the 39% bracket. So in 7 years he saved $365k in taxes by owning vs renting. And if he had a mortgage, add another $100k give or take from the MID over 7 years.
So in the ballpark of $500k saved in income tax alone from his ownership. What a dummy he was to buy!!!
He’s an insufferable ass-hat. How does that figure in?
You are starting to sound like a troll.
If he breaks even on price, then he didn’t live in the house “for free.” He simply didn’t pay any more in PITI than he would have in rent. At the end of the day, he’s still out $6K/month.
Tax deductions are pretty much offset by house maintenance — at least for average houses. (I know several people who spend their tax refund on house projects.) I don’t know about these big houses. If he’s paying a cleaning crew and chefs and lawnmowers, those $500K go fast.
Now that’s special.
Try writing off $3/sqft depreciation this year and let us know how it goes for you Donk.
“You are starting to sound like a troll.”
He’s sounding a lot like that SFMF guy you banned. A lot of those types seem to show up under different monikers, but with the same spew.
“he will have made a $430k net profit vs renting…”
Unfortunately, you are not the only one who thinks like this.
http://www.businessinsider.com/glenn-beck-texas-house-2011-6
I trust zillow data as much as your predictions. My house showed as for sale for about 6 months after I bought it, and also shows my taxes at about 40% less than what I actually pay.
The public record is $5.5million, July 2012.
Next.
he’s a “peaker”
anyone buying between 1/17 and NOW ,today
Try 2004.
On the west coast, anything past late 90s is nosebleed.
“On the west coast, anything past late 90s is nosebleed.”
True. And the bubble has been aloft for so long at this point, it’s hard to envision it ever ending.
They are using the “A” word now…
+++++
Department store apocalypse is taking its toll on NYC
Steve Cuozzo - July 14, 2018 - NY Post
But Lord & Taylor, like every big department store, offered a welcoming civility that softened the city’s rough edges. New York will be slightly less human without it, however obsolete its business model. Never again will the public enjoy the store’s grand main floor with its noble vaulted ceiling, arched mirrors and stately columns.
The shutdown is one of up to 10 Lord & Taylor closures of a total 50 stores planned by chain owner Hudson’s Bay Company. It comes amid a nationwide department store apocalypse. Hudson’s Bay, which owns 488 stores including Saks Fifth Avenue, is battling high debt, declining sales and falling stock prices.
Another industry giant, Macy’s Inc., which also owns Bloomingdale’s, has closed 14 percent of its stores since 2014, while its same-store sales in 2017 fell 4.3 percent compared with 2016. J.C. Penney closed 138 locations, or 14 percent of its stores, last year.
Too bad, because department stores are among the most agreeable places to mingle, meet friends, linger on a rainy day — and eat. Many have fine restaurants like Macy’s marvelous Italian trattoria Stella. They offer public toilets that don’t require nuclear code-like protocols to use.
But almost every property in Manhattan today is worth less than its redevelopment value — a fact that puts all department stores at risk.
Barneys’ Madison Avenue flagship might not survive an arbitrator’s upcoming possible decision to bless the landlord’s demand for a fourfold rent increase that the store says it can’t afford.
But losing it is a pity nonetheless. WeWork paid $850 million for the building, an offer that Hudson’s Bay, grappling with a $646 million operating loss in the last fiscal year, couldn’t refuse.
WeWork hopes to attract companies to its “people-centered design and connected-space technology.” The people at 424 Fifth Ave. will no longer include shoppers, browsers or salespeople hawking fragrances.
“WeWork hopes to attract companies to its “people-centered design and connected-space technology.” The people at 424 Fifth Ave. will no longer include shoppers, browsers or salespeople hawking fragrances.”
Add carnivores to that list….
WeWork = the SoyBoy office.
HA can rework it for $50 a foot
all inclusive
Housing
Atlantic Beach, FL Housing Prices Crater 9% YOY
https://www.movoto.com/atlantic-beach-fl/market-trends/
HA is getting it good today, lol
Department stores were wiped out in NYC in the October 1987-1992 recession, which was far worse here than anything since. Many of them in January 1991, when NYC lost 200,000 jobs in one month.
There were a few survivors. They are hurting now too.
“Many of them in January 1991, when NYC lost 200,000 jobs in one month.”
I can remember San Jose area losing thousands of jobs every week when the cold war in Europe ended, and these were family supporting jobs with insurance, etc., a painful time.
But almost every property in Manhattan today is worth less than its redevelopment value — a fact that puts all department stores at risk.
Redevelopment into what? And if that “what” is some sort of housing, is it still desirable when all the retail is gone? We just keep getting stupider…and it feels like we’re really close to killing the goose that has laid the golden eggs for all these years since the last great depression. Or maybe we did kill it in 2008 and have been eating it since then and now it’s about gone.
Bellevue, WA Rental Rates Crater 14% YOY As Seattle Area Housing Market Goes Up In Flames
https://www.zillow.com/bellevue-wa-98004/home-values/
*Select price from dropdown menu on rental chart
More trouble in paradise. Tax abatement coming to an end and its Freakout Time…
https://licpost.com/citylights-residents-hold-rally-at-city-hall-seek-tax-relief
Public union pensions will be paid.
Thank God for DJT and the new tax laws.
******
“My maintenance is going from $2,600 [per month] this year to $3,900 [per month] in 2022,” said Shelley Cohen, the treasurer of the building, last week.
What the actual hell ?! How can those fees be that high!
The initial offering was VERY low price but high maintenance since it also paid the mortgage on the building.
here is the history The average price of an apartment in Citylights was $35,259 or just $43.27 per square foot.”
https://ny.curbed.com/2005/3/10/10615754/update-apartment-drama-rages-on-in-the-lic
I wonder how many residents there actually knew anything about all that stuff going on in the background?
The assessed value has gone from $51.7 million in 2016 to $101.6 million in 2018.
Therein lies the problem, is it vastly over assessed? then anyone who bought lately or heloc’d is foooooked and old timers who thought they could get a cool 1/2 mill$$ and move to floriddah, now maybe will get half of that if they are lucky
LIC back in 07 08 were totally downplaying these 421a tax abatement…..hiding this stuff in the fine print
https://licpost.com/report-city-lights-offers-good-value-despite-high-maintenance-costs
Units, based on data obtained by the LICPost, were initially priced at levels such as $15,800 for a studio and $64,500 for a 3 bedroom.
“The coop didn’t have to start paying property taxes until this month.”
Wait, they have to pay property taxes? Just like everyone else does? No one could have seen this coming.
And how many savvy investors out there had no idea that co-ops can take out mortages on buildings? How many no-due-diligence bidding warriors knew that condos can take out loans against the cash-flow from monthly HOA dues? Better hope board members have been conscientious stewards of the building’s financial health.
‘More than 40 percent of all real estate investment dollars raised in 2017 by private equity funds were raised for value-add investments, according to JLL. That’s a tremendous amount of capital targeting what had once been a niche investment strategy’
‘In fact, apartment rents could even slip lower from today’s levels. ‘If the upgrade is significant enough that the property will need a complete turnover of the resident base, there’s some possibility that the leasing efforts could be pushed into a recessionary environment’
And what a bad time for that Greg!
‘We have seen this repeatedly in markets where enrollment has been steady and/or increasing and where land is cheaper to purchase. For example, Texas A&M University’
May 30, 2018
From Realtor.com. “College Station is best known as the home of Texas A&M University and more than 68,000 students. But these Aggie football fans got a little carried away on their latest housing boom, putting up too many new residences. As a result there are more homes for sale than buyers to scoop them up. Hence, the discounts. ‘To be blunt, the housing market is crashing right now,’ says Jeff Leatherwood, a broker at Aggieland Properties. ‘Properties built for the purposes of student housing are just overbuilt. We are a huge college town, and most of our market is rental properties.’”
“This overabundance of housing, particularly homes aimed at students, could get worse before it gets better, local professionals fear. ‘There is an air of doom and gloom,’ Leatherwood says. ‘When the school year starts again in September, homes [that didn't get student renters] will flood the market.’”
http://thehousingbubbleblog.com/?p=10448
‘these Aggie football fans got a little carried away on their latest housing boom’
Not baseball, not basketball, football. It’s all they think about down there.
This particular work by Basquiat, formerly owned by Metallica drummer Lars Ulrich, looks like someone confronting the Fed and our idiotic, counterproductive national approach to residential housing:
https://www.wikiart.org/en/jean-michel-basquiat/profit-i
This got me thinking - do all of these super wealthy people who buy expensive art hang it on the walls of their mansions. And if they do, how much must their insurance premiums be? That would make the carrying costs absolutely prohibitive.
And what happens when the dog drools and shakes his head and the big gob of drool lands on the painting???
If it’s a Basquiat painting, I think most people would assume the drool is part of the painting. Modern Art is trash.
Miami, FL Housing Prices Crater 12% YOY As Double Digit Price Declines Spread
https://www.zillow.com/miami-fl-33125/home-values/
*Select price from dropdown menu on first chart
I thought senior assisted-living was a sure bet ?! You know, with all the Boomers getting old and getting Alzheimer’s.
Being that most boomers are broke, how are they going to pay for it?
LOL, yeah I guess the developers definitely never considered that scenario.
Since so many boomers are flat-broke-busted, it must be a small subsection who got insanely wealthy off all of this Fed liquidity, huh?
Several that I know of in North Palm Beach County that are doing well.
Does anyone know of instances where assisted living centers or student apartments were converted to regular apartments? I’d be curious to find out if developers seek to alter the nature of their investment when faced with a glut.
“Housing Crisis May Be Inevitable, Thanks To Government Meddling”
https://www.investors.com/politics/editorials/housing-crisis-inevitable/
“In the next housing crisis, banks will hold hundreds of billions in bad loans and the economy will again crater. Then what? Rather than waiting for disaster, why not do what we should’ve done years ago? Either privatize Fannie and Freddie or shut them down, while the economy’s strong and we still have time.”
Appears to provide cover for told you so moments that will inevitably occur post-donkey stampede.
“Crisis”….. lol.
The Fed, worried about ultralow 3.8% unemployment and rising incomes
In what universe?
you can run sub 2% w/o inflation if you dereg labor rules etc
see SINGapore for results
By “in what universe”, I was pointing out that real unemployment in the US is actually much higher. The U6 rate is almost 8%, and according to shadowstats it’s about 20%.
And rising incomes? Factoring in real inflation, incomes are falling, not rising.
As for Singapore, since they have no social safety net, their guest workers self deport when they can’t find work. So their official unemployment rate is bogus too.
“…And rising incomes? Factoring in real inflation, incomes are falling, not rising…”
I work for a Fortune 100 company as a engineer.
Our salary increase last year barely covered increase in medical premium. (And we are considered to have a “cadillac” plan), let along inflation.
I have long thought that all these gov’t Fed people ought to be required to get a real job and see what its really like to try and earn a living.
“Our salary increase last year barely covered increase in medical premium.”
This was my situation for the last ten years, and we rarely use any medical services. And it doesn’t matter that we try to eat right, exercise daily, etc., because there are no rankings for medical insurance. The plaque says that this is a republic, but the reality is socialism shoved up your a**.
Our salary increase last year barely covered increase in medical premium.
I got 3%. Jumping ship right now for another 3% on top of that while I can/the market’s hot.
“…if you dereg labor rules…”
Google “Hong Kong human cages” to see the end game…
Surfside Beach, TX Housing Prices Crater 21% YOY
https://www.movoto.com/surfside-beach-tx/market-trends/
Totally OT but hey
Slang Terms and Code Words: A Reference for Law
Enforcement Personnel
https://www.dea.gov/ops/DIR-022-18.pdf
We need one for people who over pay for housing and the industry that supports it.
fed and jp morgan say years of expansion- that’s right years.
one less house built = 1/2 a pu truck= 20 trips to el Walmarto etc.
inflating stock and home prices is what has driven our economy for years. let the minions overseas make our stuff and deal with the pollution.
And you get to fund it all with a lifetime of debt servitude on your pressboardbox (where did he go, btw?), with blood pressure double that of an African living in a dirt floor hovel, as you toil away in misery to pay back Mr. Banker.
as you toil away in misery to pay back Mr. Banker
Pay him back? I thought we weren’t supposed to do that. You know, 500K stuffed in a mattress and all that.
“Realtor Pleads Guilty To Stealing Millions From Clients”
https://www.justice.gov/usao-ndga/pr/realtor-pleads-guilty-stealing-millions-clients
I wonder if this is a harbinger of things to come this year….
https://www.mercurynews.com/2018/07/17/ebay-chops-hundreds-bay-area-jobs-tech-economy-layoff/
Over the one-year period that ended in March, eBay lost $1.64 billion on revenues of $9.84 billion, according to information posted on the Yahoo Finance site.
Firing 300 people isn’t going to put a dent in that loss. Firing 3000 wouldn’t be enough.
The problem is eBay jacked their fees so bad that their bread and butter - the sellers - disappeared.
You have to sign up for their offers, i get some real good ones like $20 max fees so if you have say a $1000 item instead of $100 it $20.
Even made 5 dummy auctions max fees $5 for the first 5 sales, so i am recording the last of my vinyl, and will put it up for $500 the lot then post pics and use FB groups to get hits…it does work
But i agree 10% fees plus 3% for paypal, is easily double what it used to be, and add in how they jacked up postage rate when it went to $4 a gallon and never lowered then
fed ex ground is usually the cheapest now but also the most easily damaged due to the sub contractor delivery people, so you buy insurance
Ben posted a note about this AEI forum on the GSEs. What struck me is how powerful and ubiquitous the impacts of the GSEs and the central bank are, yet how oblivious the vast majority of people are to their existence and activities. Insiders certainly appreciate them however.
Link to a recording of the event: http://www.aei.org/events/should-fannie-mae-and-freddie-mac-be-shrinking-or-expanding-their-activities/
Six panelists + Alex Pollack (including Ed DeMarco, former head of the FHFA). It’s about two hours long but for regular blog readers, it will be an interesting two hours.
Ed Pinto (first panelist) discussed the similarities to what Fannie was doing back in the late 90s to what it’s doing today. The history of Fannie was interesting. The questions at the end were informative.
Multiple panelists discussed how DTIs are again increasing, as they’ve done in the past, and it was noted that while the GSEs were envisioned as counter-cyclical supports of the real estate market, they are actually pro-cyclical (i.e. they make highs higher and busts larger), and how this cycle is mimicking the last. Also, Pinto notes DTI does matter in delinquency rates. They also discuss Fannie’s role in multifamily. Plus they note the GSEs are actually growing not winding down.
Very interesting piece. The GSEs are the other big piece in the American real estate market (the first big piece being the central bank). A goliath machine.
Five of the six panelists supported some kind of reform, from replacement to minor optimizations. One has to wonder who’s getting rich from the GSEs. If I could ask that panel one question, I’d have to ask, “What is blocking reform?”
“One has to wonder who’s getting rich from the GSEs.”
Wonder no more. Let’s pick a GSE at random and see what we’ve got.
Let’s pick … hmmm … let’s pick Fannie Mae …
From Wikipedia …
“Fannie Mae created a liquid secondary mortgage market and thereby made it possible for banks and other loan originators to issue more housing loans, primarily by buying Federal Housing Administration (FHA) insured mortgages.”
See? Nuthin’ to it.
Let’s pick another GSE, Let’s pick FHA …
Again, from Wikipedia …
“The Federal Housing Administration (FHA) is a United States government agency created in part by the National Housing Act of 1934. The FHA sets standards for construction and underwriting and insures loans made by banks and other private lenders for home building.”
My favorite part: “… insures loans made by banks and other private lenders …”
Easy money.
😁
Mr. Banker, you’ve, as usual, zeroed in on the source of profit
There was a representative from the Mortgage Bankers Association who did want reform, but it was minor, as he did note that GSE existence was essential to some of his association members’ very existence.
In that first AEI piece, with the architects of QE, they noted the Fed has two types of people - “cleaners” versus “leaners”. Cleaners, like Greenspan, believe the job of the Fed is to clean up after financial sector excesses blow up. Leaners believe the job of the Fed is to mitigate financial excesses.
The interesting thing is, in their excesses, they fraudulently issue claims on an outsize portion of national purchasing power, which fail, (purportedly) threatening the financial system, then leave it up to the Fed to invisibly extract that purchasing power from the society and funnel it to the financial sector to pay those claims.
It is a most devious and profitable system. The people enable it by their love of gambling, their lust for real estate and fractional reserve banking. Bravo Mr. Banker
The next California, happening here…
Report says income levels make it ‘impossible’ for many in Colorado to live middle class lifestyle:
“Colorado’s middle class has shrunk since 2000 as its lower- and upper classes grew—due in part to wages that haven’t kept pace and rising costs of living and education in the state, according to a new study released last week from the Bell Policy Center, the Colorado Trust and the University of Colorado Denver’s School of Public Affairs.”
https://www.thedenverchannel.com/money/report-says-income-levels-make-it-impossible-for-many-in-colorado-to-live-middle-class-lifestyle
“Colorado’s middle-income families are having children later, continuing to boost family incomes with two adult wage earners, depending more heavily on female wage earners, and borrowing to support consumer purchases.”
…aka burning the candle on both ends.
Hopefully people will stop moving here. There’s only so much fresh water to go around.
Louis Armstrong - West End Blues 1928
https://www.youtube.com/watch?v=W232OsTAMo8
Splitting up California: State Supreme Court takes initiative off ballot
Bob Egelko July 18, 2018 Updated: July 18, 2018 8:52 p.m.
The state Supreme Court decided Wednesday that California will remain intact geographically, at least for now, while it decides whether the voters can consider a proposal to divide the Golden State into three new states.
The three-state initiative, Proposition 9, had gathered enough signatures to qualify for the November ballot. Nine days after opponents filed suit, the court issued a unanimous order removing the measure from the ballot and ordering further legal arguments on whether it should be placed on another ballot in 2020 or struck down altogether.
https://www.sfchronicle.com/politics/article/Splitting-up-Calif-State-Supreme-Court-takes-13085880.php
One would think that the liberal court would relish have 6 liberal senators instead of just 2.
“Legal groups representing low-income Californians also argued that the three new states, while relatively equal in population, would be financially unequal — the new Northern California would have far more revenue available from income, sales and property taxes, and less need for spending on public assistance, than the other two new states.”
One would think that the liberal court would relish have 6 liberal senators instead of just 2.
Depends on how you divide it.
A swing state is not about wife swapping.
Are you worried about a looming selloff in Treasurys?
Home
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The Tell
The bond market is ‘coiling’ for a violent yield surge, says BMO strategist
By Sunny Oh
Published: July 19, 2018 7:26 a.m. ET
The 10-year Treasury yield has traded in a tight range of eight basis points in the last 14 sessions
Everett Collection
Trading in Treasurys has been unusually muted in recent weeks, with yields traversing a narrow range. But to at least one strategist, this subdued action is evidence that a sharp selloff in the bond market—with yields inversely jumping higher—could be imminent.
Ian Lyngen, an interest-rate analyst for BMO Capital Markets, says the 10-year Treasury yield (TMUBMUSD10Y, +0.70%) has traded in a range of eight basis points, or less than 0.1 percentage points, between 2.80% and 2.90% in the last 14 trading sessions since June 28.
…
Oh bugger!
Tesla stock falls 2% after Needham downgrades to underperform
By Emily Bary
Published: July 19, 2018 8:08 a.m. ET
“Another object of this kind is, of course, hanging in Seattle Art Museum right at this moment: Jean-Michel Basquiat’s Untitled (1982). One is not by any means nuts to conclude that it’s now even worth much more than its price a year ago. Money cannot stop flying to it, even as it sits doing pretty much nothing in downtown Seattle. It doesn’t work. It doesn’t grow. It’s unproductive. It has achieved the highest level of luxury possible.”
More Yellen bux seeking a toetag home…
“Overbuilt markets—due to development companies’ need to build communities to feed their
businesses.alligators.”Fixed it.
“In recent years, central bank credit expansion has often repeated this trick of causing bubbles in absurd and risky investments, such as the ‘NINJA loans’ before the 2007/8 crisis, or the unprofitable tech startups during the dot-com bubble of 1997-2001. However, there is perhaps no lesson from history which more vividly illustrates the dangers of credit expansion-fuelled business cycles than the story of Gregor MacGregor and his imaginary country of Poyais.”
https://www.zerohedge.com/news/2018-07-18/how-central-bank-caused-one-historys-biggest-cons