The Housing Bubble

Olancha

That’s the plant for Southern CA. they have plants above SF as well.

(395 past Ridgecrest going north to Bishop, pret near the same)

I’ve watched numerous commercial buildings including mixed use condo projects go into foreclosure here in South Florida. I think here it’s hitting just as hard as housing and in the near future it may be worse than housing.

My theory is based on the sheer number of vacant storefronts and space available in Class A offices. Rents haven’t tanked everywhere yet but I’m starting to get cold calls about leasing in local plazas that are 60 to 70% vacant. They’re still talking $36 per square foot including CAM. To compare, I found class A office space from a landlord tired of watching his building sit empty for a little under $14 including CAM AND water/sewer/electric. As these landlords start to take hits, those that had projects put up in the last 8 years won’t be able to make ends meet and foreclosure will be inevitable.

Rents haven’t tanked everywhere yet but I’m starting to get cold calls about leasing in local plazas that are 60 to 70% vacant.

Although I haven’t gotten such calls lately, I have gotten them in the past few years. And it’s as if the callers are just going through a list of business names without doing any sort of pre-screening to see if the businesses would actually be the types that would be leasing storefront space.

For me they’ve just started. Essentially they want me to pay triple my rent for frontage and just a little bit more space. Then of course I’d have to pay for a build-out. Honestly, $3,000 per month for a 1,000 square foot space is a lot of overhead to overcome.

then the death spiral is possible if most owners are highly leveraged ??

Not so…In fact, just the opposite…
Un-leveraged owners are the first to step up and reduce rents because they can afford to & want to retain their tenants…

For tenant retention, it depends on the math. If the drop in rents is more than made up by not needing to pay another leasing commission/more TIs, then you are right (pretty much 100% of the time). However, desperately dropping rents to compete against what is often a limited amount of cheap space (that often would be leased quickly) is often times a game a strong owner won’t play.

If vacancies are not all that high, most strong land would rather wait for the cheap space to get taken than lock in a low rate for years and years and years.

This is especially the case if the property is in question is retail and the landlord still has strong anchors.

In my experience, the unleveraged/stable landlords, if rents for a limited number of competitors are significantly below the long-term trend will generally:

1) Drop their rents to move in a tenant, but only do so on a very short-term basis (1 or 2 year leases); or
2) Hold out for the rents they want.

If someone has a reset basis (ie. they bought really cheap from a bank), and are offering a 7-year lease at far below the market trendline, a strong landlord often won’t compete on that basis–they can afford to wait to get such a longer lease when the starting rent is higher.

Being in Silicon Valley, Arriaga is the perfect example of this. He is not afraid to leave a building empty if he can’t get the rent that he wants.

If you’re filling out the forms, you clearly haven’t found the right connections…Florida local politics are a treat.

true, we don’t win much.

I’m not saying they’re lazy and I don’t agree with the strict austerity programs. They should be hiring more gov’t workers i.e. the ones that collect revenue and punish tax cheats. How can they increase revenue, when they’re firing workers? Especially workers that collect a payroll taxed check.

I absolutely and positively CAN say they are. This comparison of hours “logged in” does not compare to actual “work performed”. If you compare sitting in a salon, talking with your friends while waiting for some customers to show up, vs. manufacturing a BMW on an assembly line, or installing huge solar power installations, you are making FALSE comparisons.

This is the biggest problem I have seen here in the US of A. All the leftists think worker A is completely interchangeble with worker B, whether they are black, brown, female, male,foreign, domestic, English or African, Gay or Straight, tall or short, slim or overweight, they are ALL THE SAME.
Therefore, whoever shows up at the door MUST be hired if they have so and so qualifications. (as defined by the State).

What the EURO experiment has shown is that Germans or Finns, or Swedes can do 2x the work in 1/2 the time and still take a 2 hour lunch.

What the American experiment has shown is you can destroy educational systems, healthcare systems, and the basic economy by using a “one size fits all” approach to every social issue.
Europe will dissolve, hopefully soon. And no, the Germans don’t need trading partners if they aren’t going to get paid back for their work. Just like we had Millions of “consumers” of housing, those deadbeats aren’t going to pay the bills they agreed to pay. If they were made to do so, the housing market would never have collapsed. But, then, this is another moral issue that needs another discussion. We all understood it was “unsustainable” based on simple math.

You left out the old crippled joos.

“If you compare sitting in a salon, talking with your friends while waiting for some customers to show up, vs. manufacturing a BMW on an assembly line, or installing huge solar power installations, you are making FALSE comparisons.”

What if you’re comparing someone working on a farm, with someone working for a mega-bank?

Tourism is one of Greece’s major job sectors, if not THE biggest. Restaurants, inns, hotels, shops all have pretty long hours, especially for the owners. I wonder if that’s a factor in the higher number of hours worked. Of course that doesn’t explain Italy, but then, what does?

There’s way too much logic there. But then, if the tries that in the US, some of the more productive workers would have had to “sacrifice” their own promotional potential just to keep their lazy bum co-workers employed. And we can’t be havin’ any o’ that.

When I was in private sector, co-workers backstabbed even in good times.

When I was in private sector, co-workers backstabbed even in good times.

Ain’t that the truth! And when times are bad, watch out, cuz the daggers start flying.

Barbara Ehrenreich pointed this out as a major divide between Lucky Duckies and Cubicle Farm dwellers. There is no camaraderie in the office, your coworkers are not your friends, they are your rivals. And if there is even a remote possibility of a layoff, they will bad mouth you (and everyone else) to the boss while kissing his or her butt. If you refuse to play this game you had better be a truly outstanding performer, or you will get the ax.

“It’s all crime. I heard FL is bad but wow…. what a zoo.”

Why, just because we have a few stories like…

Videotaped sledgehammer attack critically injures Miami store owner | Video

Authorities are looking for a man who used a sledgehammer to attack the owner of a Little Havana convenience store. After knocking him unconscious, he took off with two cartons of Marlboro Reds.

or

Judge cuts men’s life terms
in ‘94 rape to 27 and 29 years
They were sentenced to life as teenagers.

or

$5 dispute lands two Lake Park men in jail for alleged robbery at gunpoint

Hell check out the Palm Beach County Booking Blotter for the day.

http://www.palmbeachpost.com/blotter - 39k

Three strong branches and three lengths of rope. Problem solved.

Damn!

I didn`t scroll down on this one when I posted it.

Will Robinson Danger! Danger!

3-plex ?

No…Multifamily would be described as a undivided interest in the complex…So, if you had a duplex that had a undivided ownership interest (fee simple) then it would be considered multifamily…Alternatively, if you had a duplex that had a recorded condominium map on it, then you would have divided ownership of the air-space, building and the land…In fact, in that example, you could have three owners…The owner of each individual condo plus the association ownership of the commons…

You took the words out of my mouth, thanks. “I think” followed by a bunch of science-y words and no data just doesn’t cut it anymore.

If children are being held to a reasonable standard within each school and being tested on a regular basis within their school, there is no need for a standardized test. What ends up happening is teachers teach just to the test and all practical application goes out the window.

As was pointed out, just teaching to the test often fails the students’ needs.

Having successfully taught TOEFL, SAT, GRE and GMAT, I know that practical application is indeed a key. Not only to motivate the students to achieve a high score, but to provide insight into the ways the individual skills, vocabulary, logic and light bulbs may allow mental freedom in an otherwise cubically-defined environment.

Teach to the test, but tell them why and amplify.

Just my 2 cents -

The term, Colorado, was “ENFORCING equality”.

If you’re looking for the best education kids can get, in most cases it won’t be found in public school these days. But you’ll find out why Heather has two mommies. I believe in preparing kids so they can contribute to society. The larger question is, what is “society”, as we know it now in the US. Not something that I would want kids to contribute to.

But you’ll find out why Heather has two mommies.

And so what if she does? It’s not as if days and weeks of the school year are going to be spent on this topic.

Some people are gay. Some people are lesbian. And some of them are parents. From what I’ve seen, they’re doing a fine job of raising the kids. Maybe it’s time to stop being so afraid of how different they are from you and start getting to know them as your fellow human beings.

Question:

Why are all home-schoolers ultra-right wing religious nut jobs?

Not making a judgement, mind you.

Why are all home-schoolers ultra-right wing religious nut jobs?

Because they want to keep their precious snowflakes away from all of us heathens, that’s why!

cracker,

From what I’ve seen, they’re doing a fine job of raising the kids. Maybe it’s time to stop being so afraid of how different they are from you and start getting to know them as your fellow human beings.

“start getting to know them as your fellow human beings.”

What if he doesn’t want to? Huh? Shouldn’t people be allowed to choose who they do and don’t want to associate with? Freedom of association is a basic freedom, fast being destroyed. Nobody has to like everyone, you know.

“I’ve seen the future, I can’t afford it
Tell me the truth sir, someone just bought it
Say mr. whispers! Here come the click of dice
Roulette and blackjacks - gonna build us a paradise
Larger than life and twice as ugly
If we have to live there, you’ll have to drug me”

From the song “How to be A Millionaire” by ABC (HT Mark White/Martin Fry)

“And so what if she does? It’s not as if days and weeks of the school year are going to be spent on this topic.”

I don’t give a crap what people do with their pudenda, as long as they keep it away from me and mine. Sex has no place in the school system, period. It’s a parental and family matter. School’s a place for reading, writing and ‘rithmetic. At least, that’s how I understood it.

And am I the only one that thinks we need to get rid of the peducators in the system? Florida, particularly, seems to have a real problem there.

Say, Muggy, maybe you can do something about this. Do you speak out against it, or are you one of the silent ones?

My understanding is that Florida has a real problem in public education - worse than most states. My cousin and her husband raised their child largely in Florida. Clever girl, but she wanted to go to high school with her friends so her parents didn’t make her go to the gifted program she qualified for. She is living with her grandmother after having a baby at 19. Told us all that she was the last person in her group of friends to have a baby. Needless to say, college and a decent job is not on the horizon. She’s cute and blond. I suppose she can make a few bucks waiting tables.

FWIW I’ve seen girls from strict parrochial schools end up like the girl mentioned above, and I’ve seen kids who went to public schools turn out just fine.

The term, Colorado, was “ENFORCING equality”.

So what’s the problem then?

Not for a seciond did I interpret this to be a call for a “Harrison Bergeron” scenario.For Pete’s sake, no one wants that.

I mean, it was a clever story. But who is actually promoting that? No one.

I’m sorry, but the public education goal is to verrrry slowly bring that about.

That same offspring I mentioned earlier is really unhappy (as are the co-workers) about a new directive the teachers have gotten which is to essentially drop everything and focus on the one or two students who didn’t pass the standardized test, while letting all the others try to learn on their own. And when one of our kids was in elementary school over 25 years ago, that kid was required to essentially be a tutor for a student who was behind in the class. While performing this task, what did our kid miss? Math. We had to teach that at home.

I could tell our teacher offspring was really unhappy about this directive; you could hear the emotion in the voice.

Cracker Bob,

For what it’s worth, I home schooled my child, and I’m atheist, not ultra right-wing, and moderately sane.

Polly, you’re going way off the tracks here. We’re talking about kids who have no hope for leading a productive life who are disrupting those who do. They used to have this thing called special education to help those students.

They still have it. One of my cousins is in special education classes in his public school in Vermont. He is 15. He can read. He can write. He can do some math. But he can’t function in a regular classroom. Poor guy just didn’t win the genetic lottery with his biological parents, though he sure won with his adoptive parents (my uncle and his husband).

And he isn’t disruptive in a normal class. He spent plenty of time with other kids in lower grades for things like class plays and participated very successfully. But he can’t do regular high school work, so he gets the academic stuff he can handle in special classes and some one-on-one. And they take the special ed kids out to learn day to day living skills in field trips, like how to shop at a grocery store, because while he goes to the store with his fathers, he doesn’t pay attention to the process the way a kid without his problems would.

If Florida (or some other state) isn’t providing that sort of program to special ed kids, then that is Florida’s problem, not a problem with all schools. You know what you need to implement a good program like the one my cousin is in? You aren’t going to like the answer. You need money.

Yeah, just throw money at it and it will go away.

In 1998 the United States was the #4 country in spending per pupil and by 2003 we were #1. How does our education system compare to that in 1998? Better, worse or the same? I don’t think you’ll like the answer.

You know what you need to implement a good program like the one my cousin is in? You aren’t going to like the answer. You need money.

My cousin’s wife is employed by such a program. She’s like a side-by-side instructor for high school kids in special ed.

It’s not an easy job, trust me on that. All I can say is, whatever she’s getting paid is very much deserved.

Yeah, just throw money at it and it will go away.

So what do you propose?

Well, BA, I know several people personally ACROSS the country and their experience is a nightmare.

And that “per pupil” should read “per administrator.”

Complete overhaul Colorado. I don’t pretend to know the answer to that question but when a middle school has 14 copiers all on lease priorities are out of whack and more money is not the answer.

I’ve known more than a few people who were regarded as throwaway kids during their school years. Some went on to very well in life.

Others? Well, let’s just say that they took that throwaway label to heart and turned it back on society.

Great response! Shows a lot of thought went into it before fingers touched keyboard.

You’re welcome! I tried to keep it succinct just for you

See also Sean Hannity chased by Ron Paul supporters

http://www.youtube.com/watch?v=v7b4lqC8BA8

Hannity is the ultimate Republican tool. If it’s not in the GOP talking points, Hannity knows nothing about it. He and the Fox News war machine are going to help perpetuate another war in the middle east.

And these are the guys who are all about the ’sanctity of contracts’. Except when they aren’t.

Contracts are agreements between two willing parties.

They are government tax and spend programs. Like every other one.

And these “contracts” will bankrupt our country.

Remind us again who needed a $16 trillion dollar loan because of their “contracts”?

I agree. These were not contracts. The government just took my money. period. They said it was for an old age pension, since I couldn’t take care of it myself. I would have rather had the money.
And what a stupid argument that is, if the government hadn’t taken our money the “consumer economy” would have been stalled, because we would have needed to save it ourselves.
A net zero proposition.
But, in retrospect, the idea of a “consumer economy” is all a fantasy anyway. You can’t have “consumption” without first having production.
The so-called consumer economy is all about FINANCE, with lots of FRAUD, claiming on today’s production, with promises of paying with tomorrow’s labor. Now that tomorrow is here, all the debtors, who agreed to pay today for what they “consumed” yesterday are walking into bankruptcy courts and walking away from their obligations.

Social Security and Medicare and all the other govt. programs are all FRAUDS. The demographics simply don’t work and the “pay ins” greatly understate the “payouts”. There are a LOT Of reasons for this, but ultimately, I can promise to give you a Million dollars in 30 years if you just give me $500 a month. It’s sounds like a “contract”, but if you really believe it will be fulfilled, then you are a fool.
There’s simply no investment scheme that will generate that kind of a return.

And, most importantly, the hated of Ron Paul is that he would break up the Ponzi scheme finance mechanism called the Federal Reserve Banking System. They depend on it to create “levered finance” to skim profits off a 2% growth economy and claim 20% returns. It cannot be done with “leverage”. You can’t have leverage without “fractional reserve lending” because their would be no money for the leverage. Krugman is a mouthpiece for his buddies at Goldman-Sachs. Nothing more. His arguments are ridiculous. If he wasn’t part of the NYTimes insider group, no one would listen to him, because he wouldn’t have anything in print for all of us to re-gurgitate.

They absolutely weren’t contracts. Sane people don’t willingly hand over their money to the government in the hopes they’ll be taken care of at a later date.

That said, Ron Paul’s stand is clear. Shore up Social Security and other Nanny State programs to protect those already addicted…errr…promised and wean off everyone else. It’s the only solution that will work with the culture of corruption in DC.

The you will stop driving on the roads, using electricity, calling the police, testing your own food for e coli, fly from your own airport, among hundreds of others things?

Yeah, didn’t think so. Funny how your kind is all about paying for things except when YOU have to pay for it.

Electricity = Private utility where I come from and I’m sure my electric cost is lower than yours. Private airports could absolutely do better than the air traffic disaster that’s coming down the line from the FAA (read up on it you’ll like it). Police is the local government. Big pharma and agri run the FDA and corruption runs rampant.

So yes, I stand by my statement. If you think that your government works well for you I feel very sorry for you.

“And these are the guys who are all about the ’sanctity of contracts’. Except when they aren’t.”

Thanks for proving my point, guys.

“since I couldn’t take care of it myself. I would have rather had the money.”

And I have said, repeatedly, that this won’t work. If people suddenly had more SS opt-out cash in their pockets, the prices of good and services would immediately go up. They would raise the prices to where you needed to dip into your SS opt-out money to buy things. If you refused to pay the prices, fine, they would find somebody else who WOULD pay the prices. after all, everyone else would have that SS opt-out money too.

The rub, of course, is could you “refuse” to pay the prices for things like food, rent, house prices,* electricity, or medical care? Probably not. Thus — no matter how strong-willed and frugal you are, your SS opt-out money will be GONE long before you can put it away.

But let’s, for a moment, assume that you really are strong-willed and that darnit, come hell or high water you’re gonna put that SS opt-out money away for retirement. Since gas, food, rent, housing, and other prices are so high, what else do you cut back on so you can save the money? Well, consumer goods. You live in a nearly empty house and never go to Applesbees and you never go on vacation, because you need to worry about retiring. So, as I said, there goes the consumer economy. (this proves another of your arguments wrong.)

—————
*Exhibit A: the gov essentially DID give us some opt-out money, in the form of the $8000 tax credit on housing. Remember what happened with that? Housing instantly increased by $24K, once you figure in the mortgage. And no, maybe you didn’t buy a house, but house prices stayed high because other people DID buy housing. Now, what if you were stuck and you had to buy housing right away? You would have been forced to pay that extra $24K. Even if you wanted to save it, you were SOL.

Now that’s an extreme example, because most of us can hold off on buying a house on short notice. But, are you going to hold off on buying gas, or food, or electricity?

The same argument could be made about lowering taxes and I don’t think that it holds water. People WILL provide for themselves if they know they have no one else to rely on at least for the most part.

And if they do, they will find out there are a lot more people who need jobs than there are jobs, since nobody will be buying anything outside of the barest necessity. (we see this already) And so will millions provide for themselves? Cubicle farms populated by backstabbers? Roving gangs? Tapping into oil pipelines?

Andy, I just posted an example of the gov lowering taxes by handing out an $8K tax credit. And look, the price of housing went up!

Whenever the President “lowers my taxes” by handing out some tax refund check, companies were just waiting to pounce that money. When Bush sent everybody $300, Home Depot set up a system where you could use the tax check to buy goods directly, without cashing the check first. God forbid the check ever get within a block of your bank, where you may have evil thoughts about putting it into a savings account. If they know you have money, they will separate you from it.

And as I said above, people will provide for themselves by buying nothing except the cheapest and barest essentials, which will throw a lot more people out of work. And those are the law abiding ones. There are quite a few other less legal ways.

And demographics that mean one middle aged couple that has to help support up to 4 parents and 8 grandparents.

Yeah, I know. Monetarism is a temporary band-aid, one that just makes sure the rich stay rich through the recession/depression.

You would know- you’re him!

http://www.gocomics.com/tomthedancingbug/2011/10/28

They are already insured against claw back provisions.

http://www.nytimes.com/2011/12/20/business/pushing-back-on-clawbacks.html?src=rechp

It’s as wrong as believing that you can regulate financial services to the point where they’ll play fair. Over regulation costs the very people that the regulations are trying to protect in the end. There’s a happy middle ground to be found, but it’s not in our political culture in Washington.

“How many bank failures before people pull their money out of all banks good and bad. How many Enrons…”

Precisely the problems that occurred during the Long Depression, before we had any government bailouts or backstops. (Advance warning- the Long Depression so perfectly refutes the libertarian/Austrian School economic theories that they’ve simply taken to denying it ever occurred, even though it somehow got discussed in history books and popular literature, both from shortly after the time it occurred until the present, all over the world.)

the only people who suffered were the dozen bad/dishonest/corrupt guys at the top who ran the scheme. Everyone else got to keep their jobs.

Who ever claimed no one suffers, or that no one innocent suffers?

Really, you think such a thing is achievable?!?

What you say in no way invalidates my explanation. Sure, people get hurt - I never claimed otherwise. Companies (and individuals) *will* do damage. The system itself will ultimately purge these negative actors, rather than have them be entrenched as they currently are by regulatory capture and the fed/gov’t backstopping certain companies that would otherwise fail.

So it’s okay for a company to wreak havoc on its workers and the economy, as long as it fails spectacularly in the end? And then supposedly the spectacular fail is enough to deter other companies? Sure, you’ll make your point and feel all good about yourself, but at what cost?

Overall, prevention seems to be a better deterrent.

Darn those facts.

So are you for printing money or against it? Interest rates are low because of a central bank artificially holding them low. Commodity prices have been a series of mini bubbles and busts since the 1980’s. And if there’s minimal inflation I’d like you to tell me how much a gallon of gas cost in 2004, 2008, and today (see my mini-bubble comment). Next let’s compare prices at the grocery store.

Sure, there hasn’t been hyper inflation, but all we’ve done is kick the can down the road.

1. I’m OK with Keynsian stimulus if it is directed at creating jobs and improving my living standard, better roads parks schools water systems safer streets, making the country less dependent on the middle east etc etc.
2. I’m against the monetization of bank and corporate debt that relieves gamblers of their gambling losses, and props up wall street.

Unfortunately we have done much more monetization and much less creating jobs, note the GOP would block any jobs program.

Look CPI is low, Don’t believe the gov look at the billion price index from MIT, both say inflation is modest at 3%. The last 6 months have shown a drop in commodities.

Your experience with milk and gas doesn’t equate to the hyperinflation that the Austrians like Alan Meltzler and other anti Krugman economists like Nial Fergusson were predicting. You let anger get in ideology get in the way of analyzing what is happening.

Note my experience with clothes shopping shows deflation. I bought 16 pairs of slacks in 2008 for 19 on sale, I went shopping for the first time since to buy the kids some clothes and the same pants were 18 on sale. There’s more to come on the deflation front as China pops and Europe cuts wages and benefits.

Hate to break it to you Slim, but if they’re on 0.2 acres, they ARE in the suburbs, even if they are right next to downtown. In many small cities, the suburbs start within a block of downtown. I call them urburbs.

In a true, un-sprawly city, like Washington DC, you have to drive 15 miles from downtown to find a 0.2 acre. Unless you have a million bucks.

Boulder often makes the hipsters’ top ten lists in various publications.

The hipters and trustafarians need family money or their own herbal pharmaceuticals biz to make it in Boulder. Down in Denver 4-5-6 hipsters can share a house in Capitol Hill on Lucky Ducky wages and not starve to death.

I estimate my current rental would be 40-60% more up in the People’s Republic of Boulder.

And I’m still living large at $250/mo in Boulder. I can’t believe more people don’t do it :-).

I’ve been watching some FC’s here, and even after the first notice it seems like it takes forever and the sale date extended out further and further. Then the listing drops off and reappears.

What is interesting in speaking with some guys who are buying on the courthouse steps is that MOST of the properties that show up any given day are repeats (it’s not “most new with a few repeats”).

Per LPS, the number of new 30 to 60 day delinquencies are fairly close to normal. The pig is in the python…how long to digest?

Here’s my steady drumbeat…non-judicial state will be faster to digest than judicial states.

Big business doesn’t have a place in law enforcement either. That’s what state and local government is for.

Well that’s what’s a little unnerving about DHS allegedly orchestrating the crushing of these occupy movements. Sounds like a nation police force to me.