A First-Come, First-Served Market
A report from Bloomberg. “As the luxury market expanded after the financial crisis, developers bent over backwards to up the ante, hawking screening rooms, wine cellars, bocce courts, and concierges until so many buildings had them that they seemed like one big blur of luxury add-ons. In the hope that buyers have not become completely immune to fancy treats, a new development in Sunny Isles Beach, Fla., is offering something so over the top that it’s actually in the sky. With every purchase of a condo at the 61-unit Aurora, owners get a one-year membership to JetSmarter. The company lets users charter private jets in 170 countries.”
“The Aurora isn’t the only development offering easy access to private planes. In New York City’s TriBeCa neighborhood, the developers of 111 Murray Street have teamed with Blue Star Jets. Even with such enticements, it’s a tall order to hawk high-end condos these days, and not just in Florida. Last year, we reported that luxury real estate prices in Manhattan were on a downward slide. But better amenities might not do much to correct the downturn, says Jonathan Miller, president and chief executive officer of real estate appraisal firm Miller Samuel Inc.”
“Luxury buildings have been overbuilt, he says, and developers may actually lessen amenities in the future to rein in costs.’The market’s slow, so there’s this assumption that we’re going to see a battle of amenities,’ he says. ‘I think that the focus on amenities is going to shift to items that are much more pragmatic.’”
The Real Deal on Florida. “First-quarter sales of single-family homes and condos in Palm Beach dropped from the levels of last year, Douglas Elliman Real Estate reported. Elliman calculated that the number of condo sales in Palm Beach fell 50 percent to 45 units in the first quarter, down 50 percent from last year’s first quarter, while single-family home sales declined year over year by 14.3 percent to 24 homes.”
“The average sale price of a single-family home in Palm Beach increased to $7.9 million in the first quarter, up 70 percent from the same period last year, and the average price per square foot rose 37.1 percent to $1,588, a new record. But Elliman also reported that the average sale price of a Palm Beach condo dropped to $922,822 in the first quarter, a year-over-year decline of 10.7 percent.”
The Record Journal in Connecticut. “The Town Council voted Tuesday night to remove the affordable housing requirement for Simpson Village, a 55-and-older condominium complex on Center Street. Bob LaRosa, of LaRosa Construction Co., is listed as principal for the company, according to the secretary of the state. LaRosa and his attorneys argued that despite having the affordable units on the market for 18 months, they have only been unable to sell one due to the stipulations which require they be priced starting at $250,000, and that they be sold only to seniors with annual income of less than $68,000.”
“Former mayoral candidate Donald Kennedy, who is retired, said he looked at Simpson Village when he was moving to town and passed it over because it was overpriced. He said the burden of the lack of sales should not be the council’s. ‘The condo market is a very, very soft market and I don’t think we need to bend over to help the developer,’ Kennedy said. ‘I’m sure he’s going to survive, so I think we should either ask him to lower his prices and make it more affordable for the seniors than for the council to give him another sweet deal.’”
CBS SF Bay Area in California. “They’re words you don’t expect to hear about San Francisco’s housing market: lower prices. But guess what, It’s actually happening right now. Arrian Binnings, from Pacific Union/Christie’s International says the market is balancing out from record levels. ‘The number of solds that have occurred so far in 2016 is about 15 to 20 percent less than it was this time last year,’ Binnings said.”
“And there is also some concern over the amount of properties about to hit the market – particularly the condo market. There are nearly 63,000 units in soaring glass towers in some form of construction. ‘If you’re buying into the condo market, where there’s a lot of supply, you need to be prepared to hold on to your property for the long term,’ Binnings said.”
The Houston Chronicle in Texas. “After several years of unbridled job and population growth that led to a very unHouston-like run-up in home prices, the housing market has hit its first big stumbling block since the last recession. Sales have fallen in recent months, and houses are sitting on the market for weeks or months rather than days. Neighborhoods around the Energy Corridor to the west and north to The Woodlands are already seeing houses sit on the market much longer than they would have a year ago when the combination of low inventory and high demand resulted in a first-come, first-served market where only the most aggressive buyers ended up with homes.”
“After 22 years in their suburban home, Eric Wort and his family are moving to Louisiana. Wort, a financial analyst who works for an oil and gas company, is being transferred as part of some corporate reshuffling. He’s not too worried about selling his home because he’s getting help from a relocation company, and his family has put a lot of upgrades into the five-bedroom property. It has a pool, an outdoor kitchen and a ‘beautifully landscaped backyard.’”
“If he could, Wort would rent his house in hope of being transferred back to Houston in a few years, but there appears to be a glut of rental houses for lease in his neighborhood. ‘We can’t take the chance of double house payments,’ he said. ‘It’s riskier now because there seem to be fewer people moving in.’”
“‘If my daughter asked me tomorrow, I’d say, ‘You should wait a while,’ said Bill Gilmer, director of the UH Institute, ‘because you’ll find some bargains out there this time next year that aren’t going to be here now.’”
“But Elliman also reported that the average sale price of a Palm Beach condo dropped to $922,822 in the first quarter, a year-over-year decline of 10.7 percent.”
Before you know it all of those Uber driving illegals and Syrian refugees will be living in Palm Beach. What a bargain.
Freight shipments (metric of true economic activity) keep falling even as the stock market rises inexorably on low-volume, algo-driven trading. Companies using borrowed money to buy back their shares at the top of the market to show “shareholder value” (and boost CEO/BOD compensation) will end badly, but when?
http://wolfstreet.com/2016/04/19/inventory-glut-weak-consumer-demand-sink-u-s-freight-volume/
” Companies using borrowed money to buy back their shares at the top of the market to show ’shareholder value’ …”
This makes sense in a David Lereah sort of way, which is a way of saying that it doesn’t make sense for the health of the company.
Another case made for going to cash.
“Daddy, what does the company you work for do?”
“It sells shares of itself.”
“Do other people buy these shares?”
“Sometimes. When they don’t we buy these shares ourselves. We do this in order to keep the price up. In the world of stocks price translates to value, the higher the price the higher the value.”
“Does your company sell anything else besides shares of itself?”
“It used to but the market for our product dried up so all that is left to sell is shares of its stock.”
“Do people who buy your stock care that you no longer sells a product?”
“Apparently not; Apparently the only thing people care about is the price of the stock. If the price of the stock is going up then this is reason enough to buy it. So the company buys the stock and this causes the price to go up and everyone then becomes happy.”
Oh, that’s right. It’s a huge problem compared fractional reserve banking?
I still don’t understand how share buybacks can even work. A share is debt issuance and a source of financing. So companies are buying their own stock back, with financing raised from issuing shares?
It’s been going on for a long while, but I don’t understand how the carpet hasn’t been ripped out from these companies yet…
Stock is not debt, stock is equity.
Buying stock is buying equity. If you are buying up another company’s stock then you are buying another company. If you are buying your own stock then you are buying yourself.
This could make sense if the price of yourself is low but it makes no sense if the price of yourself is high, unless you are someone who gets paid in the form of stock; In this case it makes sense, not necessarily for the company but for you.
If you assume that this is intended to get money back to shareholders in a tax efficient way, it even makes sense to do buybacks if the stock is slightly overvalued.
If you pay $1 in dividend, the net received by shareholders is less (after tax)…what, $0.80? If in CA, $0.70?
So, you can overpay by a bit, and still have the shareholders better off than by giving them cash.
That said, I much prefer management to sit on the cash, and strategically buy back stock when the price is lower.
“That said, I much prefer management to sit on the cash, and strategically buy back stock when the price is lower.”
That’s what I prefer to do with my own cash.
Sometimes stock is being bought back from cash used by issuing debt. This, in my opinion is a bad practice. Sure, it lowers the share count, but makes the company’s balance sheet more risky.
Sometimes the stock is being bought back with cash that is generated by the company’s business. This is a much better practice.
So, let’s say the sum total of all stock of a company is worth $100B on the open market (market cap). And let’s say the company just made $1B (because they generated the money by selling products at a profit).
If they use that $1B to buyback stock, the total number of shares in the market was reduced by 1%, making all other shares worth about 1% more.
The company is still worth $100B, but that value is divided among fewer shares. In theory, if there were 1 billion shares outstanding prior to the repurchase ($100 per share), and 10 million shares were repurchased at $100 per share., the remaining 990 million shares should be worth $101.01 per share.
Why do companies do this? To return money to shareholders.
They could issue a dividend of $1 per share, paying out the $1B through a cash dividend…however, the shareholders would then need to pay tax, and on a net basis, the shareholder would get $0.80 after tax (maybe more, maybe less, depending on where they live, and how the stock is held).
And the stock would still be worth $100 after the dividend payment (for those analytical types, I’m assuming the market doesn’t go up by $1 per share to reflect the $1 more of cash).
So, theoretically, with the buyback, you have a share of stock worth $101.01.
With the dividend, you have a share of stock worth $100, and $1 in cash (which you probably need to pay taxes on).
What would you rather have?
If they use that $1B to buyback stock, the total number of shares in the market was reduced by 1%, making all other shares worth about 1% more.
The company is still worth $100B
Nope—the company just spent $1B; so it’s balance sheet is now worth the previous valuation, minus the $1B they spent. In other words, the company should really be worth $99B post-buyback—but they also have 1% fewer shares, so that lower book value is spread across the fewer shares, and should be roughly the same value per share. That’s the math, but the markets rarely see math, and instead just see a stock that keeps getting bid up. Momentum!!
How can regulators and the Fed possibly think share buybacks with cheap unlimited borrowed money can possibly end well? This kind of financial chicanery is inherently unsound, yet it is the basis for our rigged, manipulated “markets.”
http://wolfstreet.com/2016/04/18/financial-engineering-share-buybacks-backfire-like-before-last-2-stock-market-crashes/
Yeah, and last August people were freaking out about yet another purposeful bubble in China, now it’s off to the races.
‘Economic figures for March reveal a growing dependence on debt. China’s aggregate financing — a broad measure of credit that includes corporate bonds — almost doubled from a year earlier to 2.34 trillion yuan, exceeding all 24 forecasts in a Bloomberg survey as policy makers turned on the taps to support economic growth.’
‘Yet even that wasn’t enough to save the seven Chinese companies that reneged on bond obligations this year. Three of those were part-owned by China’s government, seen not long ago as a provider of implicit guarantees for bondholders. Dongbei Special Steel Group Co. on April 13 missed a third payment since its chairman was found dead by hanging last month, while Chinacoal Group Shanxi Huayu Energy Co. failed to make a distribution on April 6.’
‘Baoding Tianwei Group Co., a government-owned maker of electrical transformers that first defaulted a year ago, said on April 14 it may not be able to repay principal and interest on five-year bonds due this month. State-owned China Railway Materials Co. halted its bond trading on April 11, saying it’s studying debt “repayment issues.”
‘The reaction has been swift in China’s 18.8 trillion yuan corporate bond market (a figure that excludes certificates of deposit). The extra yield investors demand to hold seven-year onshore corporate bonds with top ratings over similar-maturity government notes has jumped by 28 basis points from an almost nine-year low in January, to 91 basis points as of Monday. At least 64 Chinese firms have postponed or scrapped planned note sales this month, six times more than the same period a year earlier.’
‘The nation’s equities lost more than $5 trillion of value last summer as authorities struggled to contain an unwinding of margin trades. Leverage is a big factor for corporate bond investors, too, with outstanding repurchase agreements in the interbank market reaching a record 9.7 trillion yuan in December.’
‘A reversal in China’s bond markets would likely have a greater impact on the economy than the rout in stocks, given the country’s reliance on debt. Corporate obligations climbed to a record 165 percent of GDP at the end of last year, the latest figures from Bloomberg Intelligence show.’
Is there any limit on the heights to which governments drive their economies through debt-fueled growth?
With Fed liftoff on indefinite hold, and negative interest rates taking hold, there has never been a better time to buy stocks!
Gold mining stocks are way up the last month.
Now that the Shanghai gold exchange has opened for business (as of today), the blatant rigging by the COMEX and LME, with regulators turning a blind eye, is going to be a lot more difficult if not impossible. Plus, Chinese fed up with dealing with a rigged Ponzi market and various scam peer-to-peer lending rackets are going to turn to precious metals in a big way once they lose faith in their corrupt “markets” and house-of-cards financial system.
http://www.zerohedge.com/news/2016-04-19/china-launches-yuan-gold-fix-exert-more-control-over-price-gold
Lurkers and newbs, read and learn. You won’t get the truth anywhere else.
“Lurkers and newbs, read and learn. You won’t get the truth anywhere else.”
Wrong. The truth awaits those of you who care (and dare) to enter my bank.
The Dotted Line awaits for your arrival.
I’m on my way!
The coffee is on me.
(For your added comfort cream and sugar will be made available at a price that is negotiable.)
Coffee is for closers.
https://www.youtube.com/watch?v=r6Lf8GtMe4M
“and third prize is you’re fired!”
Reminds me of an article a few years back about some mortgage mill where the boss would beat on peoples’ desks with a baseball bat to rally the boyz.
I thought that was a Countrywide branch office, and they would beat the desk with a bat when someone wouldn’t make a loan go through?
A donkey stamped of one.
Muggy, whatever you do, try to make a 13th payment each year. If only to p-o Mr. Banker.
“try to make a 13th payment each year.”
Just make the payments. After a while we can discuss the merits of equity cash-outs.
Banks stocks on the other hand are tanking
‘Neighborhoods around the Energy Corridor to the west and north to The Woodlands are already seeing houses sit on the market much longer than they would have a year ago when the combination of low inventory and high demand resulted in a first-come, first-served market where only the most aggressive buyers ended up with homes’
Now there’s a writer! Low inventory and high demand. Where did it go? Only the most aggressive buyers ended up with homes. Everybody else is sleeping in their car.
It was probably mid 2014 when I saw a bit a flip TV show. This 24 YO girl in Houston was trying to make 100k off of a 300-something thousand house in a month. I didn’t watch long enough to see if she made it.
‘They’re words you don’t expect to hear about San Francisco’
There’s a song in there somewhere.
“There’s a song in there somewhere.”
I lost my ass in San Francisco?
Now theres some innuendo.
These Californians. Listen to this:
March 24, 2016
‘People Are Nervous That Prices May Come Back To Earth’
http://thehousingbubbleblog.com/?p=9583
‘Arthur Sharif, an agent with Sotheby’s International in Menlo Park, called this year’s market ‘topsy turvy,’ with buyers’ confidence swinging this way and that, at least partly because of recent stock market fluctuations. ‘The underlying theme, I think, is that the go-go days of 2014 and 2015 are behind us,’ he said. ‘I think we’re going to see a little bit of sober reality.’
‘He said that homes priced between $2.5 million and $5 million ‘are staying on the market for a little bit longer time. And we’re seeing fewer multiple offers and the prices are down a little from where they’d been. And that’s true in Los Gatos and Saratoga and even in the holy grail of the market, Palo Alto.’
Palo Alto!!! The Holy Grail??!!
Look Art, I don’t even know where Palo Alto is and it’s probably a dump, but any house can go down in price. We say stuff like religion with these Californians and their houses, but holy grail? This is just stupid.
‘They’re words you don’t expect to hear about San Francisco’
Oh yeah? I can remember just a few years ago when they were running around like little whiny bitches saying nobody should have ever lent them that much money.
‘After what we’ve experienced for the last two years, it’s been a little bit of an eye opener.’
So just what was it about the last two years? Did it go really high? Was it exciting? When something gets really expensive and you are just raking in the money, it takes on a religious nature?
You guys are just jealous. Zillow says my Southern California home increased in value by $2,323 over the past thirty days
- AND -
Zillow says the imputed rent that I do not have to pay increased by $75 over the same thirty days.
Southern California, Land of Miracles.
Are you sure?
Remember…… I can ask $50k for my run down 10 year old Chevy pickup but where is the buyer at that price?
So it is with all depreciating assets like houses.
“I don’t even know where Palo Alto is and it’s probably a dump,”
That’s putting it nicely.
“Comment by Haystacks Calhoun”
Nice, I was big Dusty Rhodes fan.
I’m larger than Haystacks. And look like him too.
Where is Stanford?
Where is Yale?
I don’t think you were implying that Stanford was in Palo Alto, but people often cite that.
To clear things up, Stanford is adjacent to Palo Alto, it’s not in Palo Alto. Stanford has its own zip code (and it’s own post office), and is oficially in unincorporated Santa Clara County.
Look Art, I don’t even know where Palo Alto is and it’s probably a dump
I believe that’s Palo Alto’s bastard sibling: East Palo Alto. Palo Alto is smack in the middle of Silly Valley and is home to a few big HQ’s. HP was founded in Palo Alto and the “garage” where Bill and Dave started the company, which is in Palo Alto, is considered by many as the “birthplace of Silicon Valley” and is a historical land
mark.
Anywho, I’ve been to Palo Alto. It’s not a dump, but hoo boy, is it overpriced! Single story ranches that probably sold originally for 20-30K in the 60’s now fetch 2 million. Pure insanity.
I’ve been there too. It’s a dump.
Palo Alto is in China
It’s not a dump, but hoo boy
Nothing special. I prefer So cal (closer to beach) any day over SF and bay area.
San Diego home prices have blown through the roof again, just like they were doing when we moved here over a decade ago.
SD home price: Highest in nearly 9 years
By Phillip Molnar | 3:03 p.m. April 18, 2016
The San Diego County median home price rose to $478,000 in March, CoreLogic said. Pictured: A home Coronado on Alameda Blvd. in March.
— Charlie Neuman
San Diego home prices in March hit their highest level in nearly nine years, real estate firm CoreLogic reported Monday.
The median home price rose to $478,000 last month, passing the median in August 2007 of $475,000 before the recession fully took hold.
However, the number of home sales, 3,547, only increased 2 percent since this time last year. CoreLogic attributed low sales to waning affordability and a lack of homes for sale.
“We’re not seeing as great of an increase (in sales), simply because we don’t have the inventory,” said Raylene Brundage, president of the North San Diego County Association of Realtors.
…
“The median home price rose to $478,000 last month, passing the median in August 2007 of $475,000 before the recession fully took hold.”
Shoeshine boy indicator of next crash duly noted.
From the article: “Matthew Shaver, a San Diego senior mortgage consultant with Finance of America, said low interest rates — combined with the increased debt-to-income thresholds by Fannie Mae, Freddie Mac and the Federal Housing Administration — are making it rare for buyers to be rejected for a home loan.
“Interest rates are low enough that it’s offsetting the higher home prices,” he said.
Shaver said a $400,000 home is still affordable with current interest rates for someone making $60,000 a year.”
Yeah, good luck finding that $400,000 home that’s not in gangland central and 1 hour commute to work!
And from the comments:
We talk about houses all the time again in CA , just like last time.
Hell of a way to run a economy
Various economic authorities at the top of the federal government dictate that housing must be the driver of our economy. This is central planning, American style.
Coworker’s daughter works at a company run on VC money and she lives in Sunnyvale which is just SE of Palo Alto, IIRC. $1,800/month for a glorified motel room. Seriously. Her apartment used to be a motel room.
She’s probably hoping to make a killing on her stock options. Unfortunately, for her, she’s late to the party.
“There’s a song in there somewhere.”
I lost my ass in San Francisco?
Now theres some innuendo.
Eagle County, CO Housing Market Craters; Prices Plummet 22% YoY County-wide
http://www.zillow.com/eagle-county-co/home-values/
“They’re words you don’t expect to hear about San Francisco’s housing market: lower prices. But guess what, It’s actually happening right now.”
San Francisco County, CA Housing Market Implodes; Prices Dive 5% YoY As Rental Rates Sink
http://www.zillow.com/san-francisco-county-ca/home-values/
After 22 years in their suburban home, Eric Wort and his family … would rent his house …[but] “we can’t take the chance of double house payments”
—–
22 years in the house and it’s not paid off? 22 years in the house and you can’t find a renter to cover what’s left of the paltry payment? How much did you cash out re-fi for those upgrades, Eric?
“It has a pool, an outdoor kitchen and a ‘beautifully landscaped backyard.’”
He threw more good money after bad on a depreciating asset. Now he has MT Pockets.
POOL. HA. LOL.
Talk about swimming in depreciation!
22 years in the house and you can’t find a renter to cover what’s left of the paltry payment?
Presumably the payment would be unchanged, if the never refinanced. Loan payments don’t decrease over time on their own….
You’re forgetting two things:
Wort’s salary has likely gone up in the past 22 years. So the loan payment should have effectively decreased in comparison to his take-home pay.
Rents have increased over the past 22 years. So the market rent for a five-bedroom house should be much more than the monthly payment for a loan that was taken out 22 years ago.
Also, it’s well known rule-of-thumb that if you make an extra payment each year — either as 13th monthly payment or 26 half-payments — you save enough interest to lop 7 years off the end of the mortgage. Wort could have been one year away from paying the house off and not worry about double payments.
Repeat: Loan payments don’t decrease over time on their own….
Not to mention the fact wages and salaries today are what they were in 2004. Flat.
The 30-year in 1994 was approximately 7%.
After 22 years of payments, the principal balance on the loan should be 50% of what it started at, and the home is likely worth more.
So, if the payments were too high for his income today, he could refinance into a new loan today, and at 4%, his payment would fall by approximately 2/3s.
Unless, of course, he “liberated” equity along the way.
Well, then he just might be screwed.
Washington, DC Real Estate and Homes for Sale-20,013 properties found
http://www.realtor.com/realestateandhomes-search/Washington_DC/radius-10
Theres a GSE rumor flying around that they’re running out of houses in DC.
“Realtor Arrested For Defrauding Escrow Customers In Santa Ana”
http://newsantaana.com/2016/04/05/realtor-arrested-for-defrauding-escrow-customers-in-santa-ana/
“owners get a one-year membership to JetSmarter. ”
We need the Fixer to weigh in. Is this like a time share that you can’t get rid of?
The beatings will continue until morale improves.
“You gotta roll with it” — Caitlin Vestal
‘there is also some concern over the amount of properties about to hit the market – particularly the condo market. There are nearly 63,000 units in soaring glass towers in some form of construction. ‘If you’re buying into the condo market, where there’s a lot of supply, you need to be prepared to hold on to your property for the long term’
So Arrian, just what is long term? Do you mean I can’t flip my air box in the soaring glass tower for some immediate sweet profits? And is 63,000 a lot? That’s not counting the apartments.
When I left SF for business in 2013 (after 75 days on a project), the growth of condo towers in Mission Bay/ Dog Patch [south of ATT park] was crazy. Easily 8-10 high rise buildings going up, and back then starting prices at $800k. I wonder if all those units were filled…or if they have rent schemes to entice in the slowing market. It confused me to who was affording these, because even the tech programmers I knew couldn’t buy/rent there.
Off topic (way off topic):
Verizon is currently enduring a strike (for one week-or-so) and here’s a website that show an outage map:
http://downdetector.com/status/verizon-communications/map/
So far there are 7,340 comments and some of them are quite interesting to read.
- ALSO -
There is a website “vz layoffs” that contains a lot of interesting posts.
My take: Verizon is a totally screwed up company.
FWIW.
“My take: Verizon is a totally screwed up company.”
Telecoms usually are.
Verizon is such a rip off. My first contract cell phone was with them, and with my company discount of 20% I was still paying $80/mo for a single line, 450 mins, and 2 GB data, that was 2009. I went prepaid since and buy unlocked phones outright and never looked back…
I had a recruiter from Verizon contact me last year (though she didn’t identify herself as such so I thought maybe she was some bottom feeder from an employment agency). Anyway I am retired from telecom and have some skills they wanted so I went along with the process for a month or so…which was totally chaotic and unprofessional. Had zero desire to work there by the end.
unions sck
I’m in the lee of the RTW building in VA. No union problems here.
I am compelled to weigh in. We have seen that wherever companies can cut corners with no oversight, they will do so.
Electricians would be compelled to hook up hot boxes while standing in pools of stagnant water. Welders would be compelled to weld hot pipes, or working petroleum tanks leaking high-volatility compounds. Whatever. Use your imagination. Welders would be compelled to try (against all prudence) to reach waaay waaay out to finish a seam while standing alone on a high beam without a spotter.
You get the picture. An untimely death.
Now, if you are saying that public service desk or lab jobs should not be unionized, I’m right with you. There are no hazards to those jobs - with the exception of boredom attributable to extreme featherbedding. As witnessed by some of our govvies posting here during work hours.
Question: Why do they do that? Answer: There is nothing to do. We are compelled to pay their salaries via taxation.
Property transfers must be complicated.
Latest Fairfield property transfers: $3.6M Sasco Hill sale
Updated 3:31 pm, Monday, April 18, 2016
GreenwichTime: Southwest Connecticut Area News, Fairfield …
http://www.greenwichtime.com/ - 251k -
What makes housing to expensive;
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwj6tZ7n7ZrMAhVO7WMKHf5jCX8QqQIIHTAA&url=http%3A%2F%2Fwww.bloombergview.com%2Farticles%2F2016-04-18%2Fwhat-makes-housing-too-expensive&usg=AFQjCNFPeK6ZJ4EILXv19j7jN92V-hnpBw&bvm=bv.119745492,d.cGc
“The first problem is that some coastal metropolitan areas in the U.S. are generating lots of good jobs but aren’t building enough housing to keep up with employment growth.”
Exactly where are these coastal metropolitan areas that are generating lots of good jobs but aren’t building enough housing?
Exactly what is happening is that prospective engineers are keeping an eye on the cost of living calculators. For me, although my salary will be much lower in Phoenix, it almost makes sense for me to reside and work there. The software tools and programming technique that I am learning now are huge in Phoenix. It will take two more years to do it. Knock on wood. I would live in central Scottsdale not far from some JavaScript kind of work and right off the greenbelt, if I could return.
JavaScript will rot your brain… Just say no!
Isn’t Python the the new “cool” programming language?
I took a Python course on Coursera over the solstice holidays. It only took me a couple of days to finish a multi-week course. probably reflecting my early training in Fortran during the punch card era.
I recommend checking out Coursera’s offerings if you want to get your feet wet in Python…
Python is now a very basic scripting language. While it is a huge leap from C++, its now a basic/fundamental stepping stone to other languages. It all depends on the environment (enterprise, mobile (iOS/Android), or web based)
python is okay - I never really got much into it. Got into Ruby for a bit. I am better at perl, better yet at bash. Do most of my work in C, but bash is a staple, no matter which language.
The javascript we do is basically focused for server software and web development. It’s our basic business, and combining cryptography with it. node.js is huge. One or two of our engineers is also using angularjs. web development with java and javascript is huge in this part of OC. And in Phoenix.
“Isn’t Python the the new “cool” programming language?”
It was around 2000. I thing Scala and Go are the hot young things now.
Bill, if someone was interested in becoming a programmer, what lineage of programming languages would they study? I remember back in my school days, each professor had their pet language and it confused the heck out of me, enough to turn me off to computers in college quite a bit.
I would start with C. Because from there you can get into C# or C++. And if you learn C, Java will be a piece of cake, it is very similar to C but no pointer arithmetic. and you can get into JavaScript from there. NodeJS and Go use JavaScript.
Also the good thing about knowing C is that you can be involved in many different lines of work: embedded systems, desktop systems, database, networks, cryptography. And App development for tablets and phones. JavaScript is more narrow. NodeJS suits me for now because I am working with computer networks and need to leverage the event-driven programming that you get with callbacks.
I might move back to AZ too in a few years. Slower pace of life.
3 years then the youngest is out of HS then well see.
If we end up back there lets hike 4 peaks I never got around to that.
Certainly will. I have not done 4 peaks but did Camelback. Did not hike South Mountain despite residing there right below it for ten years.
Good article. It addresses some of the supply side concerns (namely zoning and other regulation) but overlooks a basic demand factor: people want nice places to live in thriving communities with access to economic opportunity. That describes a handful of very expensive (mainly coastal) communities. Builders, for the most part, aren’t building what most people want. As the article suggests, today’s new neighborhoods become tomorrows ghettos and then eventually gentrify. (Except for 80’s hoods–I can’t imagine those ever gentrifying…)
“Builders, for the most part, aren’t building what most people want.”
That bogus notion again.
Do you sign a construction contract for something you don’t want?
Builders sign a construction contract for what THEY want, which is high-profit attached product, McMansions with a very high proportion of air/footprint, or zero-lot line cardboard cubes which make the Soviets look like Greene&Greene in comparison.
The problem is that people don’t want ( or shouldn’t want) what builders don’t want.
Donk,
We sign construction contracts with owners. Not some imaginary entity.
Once again, as an owner, do you sign a construction contract for something you don’t want?
Contractor sentenced to 3 years in prison, ordered to pay restitution
A contractor apologized to an elderly Copley Township woman he was convicted of bilking out of more than $80,000 in home repairs. Vertucci, 41, of Green, was found guilty by a jury in January of theft from a person in a protected class, a second-degree felony. Judge Mary Margaret Rowlands told Vertucci on Monday that what he did amounted to fraud and sentenced him to three years in prison. Assistant Prosecutor Nik Buckmeier told Rowlands he thought a six-year prison sentence was warranted. He said Vertucci displayed aggressive and predatory behavior against the Goodalls for the nearly two years he worked on their home. “He essentially stole their life savings,” Buckmeier said. “The condition of the home was deplorable.” Richard “Dick” Goodall, 80, died in October 2014. Jean Goodall lost their home to foreclosure and filed for bankruptcy.
Donkin Dude, you are a special case. A *very* special case.
You are building what owners/people want and need. They need modest starter homes at modest prices. And that is what you build: beautiful 1,000 sq ft homes for $50K, i.e. $50 per square foot, regardless of location. Including land, materials, labor, permitting, utilities and profit, yes? So of course, buyers are lined up around the block to sign up with you, right?
RIGHT?
Said who?
You don’t know construction contracts. Get over it.
We’re telling mom!
Builders, for the most part, aren’t building what most people want.
At least the ones who build spec houses.
“At least the ones who build spec houses.
Why do you think there is so much speculation in the shack building business?
Because most people don’t want to deal with *sshole contractors and they would rather pay a profit margin to a homebuilder so they can avoid that special level of hell?
That’s a fine fine gyration there Rental_Fraud.
Your “homebuilder” designation is a realtors homespun word for……. contractor.
http://www.probuilder.com/2015-housing-giants-rankings
These are homebuilders.
If I called DR Horton with a fully approved set of plans, and asked them to bid the project and build me a house for their cost plus a fee, they would laugh me out of the room.
They are not a contractor that you can hire to build a home for you.
Can you buy a home that they have designed on land that they own?
Absolutely, but you don’t sign a construction contract, you sign a purchase contract.
Wandering aimlessly through the weeds is your weakest point Jingle_Fraud.
Back to this;
Why do you think there is so much speculation in the shack building business?
“The Aurora isn’t the only development offering easy access to private planes. In New York City’s TriBeCa neighborhood, the developers of 111 Murray Street have teamed with Blue Star Jets. Even with such enticements, it’s a tall order to hawk high-end condos these days, and not just in Florida. Last year, we reported that luxury real estate prices in Manhattan were on a downward slide. But better amenities might not do much to correct the downturn, says Jonathan Miller, president and chief executive officer of real estate appraisal firm Miller Samuel Inc.”
Chartered private jets for everyone!
http://111murray.com/residences/
great views great location….
When you can’t offload your dump, offer coupons. Problem is coupons don’t work either.
P Bear - this…
Tadao Ando Designed NoLita Condo building
152 Elizabeth St, New York, NY 10012
I was in NYC a year ago this week and had breakfast with friends across the street in a place called the Egg Shop - asked the proprietor there what gives with the Ando project and she said to me that it is stalled but word is 4 units total starting I recall at 8 mil a unit!! Everything state of the art - valet parking you name it - now this is a block just west of the Bowery.
https://www.compass.com/listing/152-elizabeth-street-unit-4-manhattan-ny-10012/e51ca8e1ec380d744563fa408732ae6a0455febe/
video https://www.youtube.com/watch?v=lexTVLNRiL8
That’s the one NYC -
I was stunned with the limited number of units in the thing - Just wonder if this area can support such prices?
FWIW - Ando is a very serious architect - I believe a Pritzker winner and has done masterful work throughout the world. Wonder why he would take such a project as this?
“I’d say, ‘You should wait a while,’ said Bill Gilmer, director of the UH Institute, ‘because you’ll find some bargains out there this time next year that aren’t going to be here now.’”
She’s not going to have to wait a year. The tea leaves indicate a recession is around the corner. Of course, she’ll have to hope she still has her job…
Yesterday Ben posted a link to San Jose CL adds with offers of free rent. I find it interesting the bay area is oversupplied.
Here is a CL add for Rocklin, CA (in the foothills above Sacramento). In a town of 75,000 people, there are 7 houses for rent with more than 4 bedrooms and 2 bathrooms. The market is very tight. Several years ago, there were usually 70-100 homes for that sorting category.
http://sacramento.craigslist.org/search/apa?query=Rocklin&bedrooms=4&bathrooms=2
And heres 700+ 3/2 houses surrounding you.
http://sacramento.craigslist.org/search/apa?bedrooms=3&bathrooms=1
There is no shortage of housing my friend. Not with 25 million excess empty and defaulted houses out there.
2,000,000 people. 700 houses. Exactly my point. There is a big shortage.
False.
485,000 population in a state with 4.4 million excess, empty and defaulted houses.
See for yourself.
https://en.wikipedia.org/wiki/Sacramento,_California
The link you gave from Craigslist included the whole Sacramento region (some of the first homes listed are in Citrus Heights, Davis, etc.).
The Sacramento MSA is well over 2MM people.
http://sacramento.craigslist.org/search/apa?bedrooms=3&bathrooms=1
The map of the listings you posted.
Whoops. 2500+ rentals just in Sacramento.
http://sacramento.craigslist.org/search/apa
Business
Project Syndicate economists
The problem with negative interest rates
Joseph Stiglitz
In none of the economies attempting the unorthodox experiment of negative interest rates has there been a return to growth and full employment
Headquarters of the European Central Bank in Frankfurt
Photograph: Ralph Orlowski/Reuters
Monday 18 April 2016 05.15 EDT
Last modified on Monday 18 April 2016 06.15 EDT
I wrote at the beginning of January that economic conditions this year were set to be as weak as in 2015, which was the worst year since the global financial crisis erupted in 2008. And, as has happened repeatedly over the last decade, a few months into the year, others’ more optimistic forecasts are being revised downward.
The underlying problem – which has plagued the global economy since the crisis, but has worsened slightly – is lack of global aggregate demand. Now, in response, the European Central Bank (ECB) has stepped up its stimulus, joining the Bank of Japan and a couple of other central banks in showing that the “zero lower bound” – the inability of interest rates to become negative – is a boundary only in the imagination of conventional economists.
And yet, in none of the economies attempting the unorthodox experiment of negative interest rates has there been a return to growth and full employment. In some cases, the outcome has been unexpected: some lending rates have actually increased.
It should have been apparent that most central banks’ pre-crisis models – both the formal models and the mental models that guide policymakers’ thinking – were badly wrong. None predicted the crisis; and in very few of these economies has a semblance of full employment been restored. The ECB famously raised interest rates twice in 2011, just as the euro crisis was worsening and unemployment was increasing to double-digit levels, bringing deflation ever closer.
They continued to use the old discredited models, perhaps slightly modified. In these models, the interest rate is the key policy tool, to be dialed up and down to ensure good economic performance. If a positive interest rate doesn’t suffice, then a negative interest rate should do the trick.
It hasn’t. In many economies – including Europe and the United States – real (inflation-adjusted) interest rates have been negative, sometimes as much as -2%. And yet, as real interest rates have fallen, business investment has stagnated. According to the OECD, the percentage of GDP invested in a category that is mostly plant and equipment has fallen in both Europe and the US in recent years. (In the US, it fell from 8.4% in 2000 to 6.8% in 2014; in the EU, it fell from 7.5% to 5.7% over the same period.) Other data provide a similar picture.
Clearly, the idea that large corporations precisely calculate the interest rate at which they are willing to undertake investment – and that they would be willing to undertake a large number of projects if only interest rates were lowered by another 25 basis points – is absurd. More realistically, large corporations are sitting on hundreds of billions of dollars – indeed, trillions if aggregated across the advanced economies – because they already have too much capacity. Why build more simply because the interest rate has moved down a little? The small and medium-size enterprises (SMEs) that are willing to borrow couldn’t get access to credit before the ECB went negative, and they can’t now.
…
Have central bankers ever previously succeeded in screwing up the operation of the global financial system to the present degree?
The central banks and governments work to preserve the status quo. Now is the time when the “investments” big donors have made in politicians pay off.
I remember years ago reading about Japan, how they wouldn’t let the markets work, wouldn’t take their medicine. I thought, yeah, that’s true. I internalized it. But when it came our turn, we took the same politically expedient route. Japan is indeed the model. Our populations are quite different and that’s a wildcard.
The shoe fits differently when worn on your own foot rather than on others’ feet.
Vienna, VA Housing Market Craters; Prices Plummet 6% YoY As Housing Inventory Balloons
http://www.zillow.com/vienna-va/home-values/
I got a 13% adjustable interest rate mortgage in 1984 that did nothing but drop until I sold that place in 2005.
After a seven year hiatus of renting from Deadbeat Landlords I went with 3.91% fixed in 2012.
What a long strange trip it’s been.
Mortgage Rates History - Prime Interest Rate
http://www.fedprimerate.com/mortgage_rates.htm - 333k -
For the next week, at least, we will be spared the incessant, disingenuous Fed jawboning about an (unpossible) rate rise by Yellen the Felon and her flying monkeys. Spoiler alert: the Fed will ONLY raise rates when its hand is forced by the bond vigilantes, as even a .25% hike would implode the Fed’s asset bubbles and Ponzi markets.
http://www.marketwatch.com/story/as-fed-goes-silent-so-too-go-chances-of-april-rate-hike-2016-04-19
Maybe the next one will be .125%, and the world will be saved.
Another big insurer pulls out of the racket known as Obamacare.
http://www.businessinsider.com/united-healthcare-quitting-obamacare-2016-4
Westchester County, NY Housing Market Craters; Prices Plunge 6% YoY
http://www.zillow.com/westchester-county-ny/home-values/
So….Good Morning from the ‘utopian paradise’ called Chicago.
Just a story…..
I was riding the Northwest Line (UPRR) commuter train into downtown Chicago arriving Northwestern (now Olgivie) station last week and the conductor comes on the intercom (voice blaster) to announce our arrival. He said something that just caught my attention saying we are now ’slithering through condo canyon’ into the station. And ya know he is right.
These skyboxes going up all over the place in downtown Chicago (not the loop proper) just on the periphery is mind boggling. I don’t know figures but looking at the number of recently or soon to be completed condo towers I am estimating this to be well into the thousands of units.
Condo Canyon it is and like trees in a forest these things keep reaching higher and higher into the sky to gather some snippet of direct sunlight during the day. Just scary. There are currently three tall towers up and soon to be completed at the Lake Street bridge across the Chicago river.
I hear from my architect collegues that Jeanne Gang outfit has been hired to design an ultra luxury tower near the lake front.
And across the street from where I work on the near north side of Chicago (River North) there is a condo building going up across the street. Being built by Smithfield Properties - these guys bought two old buildings (one the former Lettuce Entertain You restaurant Scoozi and another a small gubmit office), demolished them in the fall. Units were completely sold out pre construction starting at 1.2 mil. This thing is going up like there is no tomorrow.
Here is a curbed link for all this stuff going up here….. http://chicago.curbed.com/chicago-construction
All this to say - what is the end game? Who is gonna be left holding the bag when this thing blows?
2011-12 was a decent entry point
2019 - 21 will be another “decent” entry point.
The bag will rip open and spill all over everybody in the vicinity.
Are some of the sheeple finally starting to become awake and aware? Ripped-off “investors” are fighting back against the market-rigging and manipulation of the TBTF banksters.
http://wolfstreet.com/2016/04/18/mobs-of-angry-investors-fight-market-rigging-maul-deutsche-bank-in-class-action-lawsuit-other-banks-next/
i knew it would get here sooner or later……
http://www.nextadvisor.com/blog/2016/03/31/pay-no-interest-until-2018_with_these_credit_cards/
http://www.nextadvisor.com/credit_cards/low_APR.php
Could it be that Otrauma is one of them?
And Mikey Might - no comments please.
http://www.zerohedge.com/news/2016-04-18/obama-we-cant-let-truth-come-out-about-saudi-involvement-911-or-else-americas-terror
Let it go….. let it go……
“This story no longer exists”
He’s too skinny to be a saudi royal. He’s just afraid of them.
I bet they have a nuke or something.
It was only a matter of time till it happened again.
Ok - what might be the duration on the ROI of this boondoggle - city is bankrupt and rummy wants to borrow a bil to fund this thing? Swirling the drain……
https://www.yahoo.com/news/chicago-mayor-wants-borrow-more-174010667.html
Ventura, CA Housing Market Tanks; Prices Crumble 16% YoY On Billowing Housing Inventory
http://www.movoto.com/ventura-ca/market-trends/
I just got this in an email:
1331 BRICKELL BAY DR, UNIT 4201, MIAMI, FL | $3,250,000
Significant Price Reduction!
Outstandingly improved 4 bedroom, 4.5 bathroom unit at Jade Brickell. 3,415 sq ft of living space plus an 868 sq ft terrace with complete Crestron home automation system, recessed ceilings with lighting, custom built-ins throughout, automated blinds, glass marble floors, state-of-the-art kitchen and bathroom design with his/her showers. Panoramic city and bay views with floor to ceiling windows. Private elevator access to unit. Resort-like services: poolside towels, attended cabana service deck with an infinity-edged pool, fitness center, and a euro style spa.
http://www.zillow.com/homedetails/1331-Brickell-Bay-Dr-APT-4201-Miami-FL-33131/64789389_zpid/
04/18/16 Price change $3,250,000-5.8% $951 –
03/31/16 Price change $3,450,000-5.5% $1,010 –
01/26/16 Listed for sale $3,650,000 $1,068 Agent
08/19/12 Listing removed $x,xxx/mo – –
02/27/12 Listed for rent $x,xxx/mo – –
12/16/11 Listing removed $2,890,000 $846
10/17/11 Listed for sale $2,890,000+226% $846
10/08/09 Sold: Foreclosure Auction $886,500-46.3% $259
Public Record
12/17/04 Sold $1,650,000 $483
And the property taxes were only $35,359 in 2014.
Miami Beach, FL Housing Market Implodes; Prices Crater 13% YoY As Housing Demand Plummets To 20 Year Low
http://www.zillow.com/miami-beach-fl/home-values/
Does anyone else think that FaceBook makes one more racist? Exposure to all this inner city violence that was kept quiet before?
Housing my friend. Stick with housing.
Arcadia, CA Housing Prices Crater 12% YoY
http://www.zillow.com/arcadia-ca/home-values/
I think Facebook makes one more tired of statism.
“statism,” by Backwordz.
Ruh-roh, raggy.
“Employees will be notified in the next 60 days. The company didn’t break out job cuts by region, so it’s unclear how many would be affected in Oregon, home to the company’s biggest manufacturing and research-and-development operations, as well as its biggest employment base. An 11 percent cut from Intel’s 19,500-person Oregon workforce, for example, would equal around 2,100 jobs.”
http://money.cnn.com/2016/04/19/technology/intel-layoffs/index.html?iid=hp-toplead-dom
http://www.sfgate.com/education/article/UC-Berkeley-to-eliminate-500-staff-jobs-7244049.php
Financially troubled UC Berkeley will eliminate 500 staff jobs over two years to help balance its budget by 2019-20, The Chronicle has learned.
Chancellor Nicholas Dirks sent a memo to employees Monday informing them of the job reductions and said they will amount to “a modest reduction of 6 percent of our staff workforce.”
Berkeley employs about 8,500 staffers, from custodians to administrators. Faculty members will not be affected. Dirks said the reductions will be done in part through attrition and did not mention layoffs.
Germans, and German taxpayers, are finally getting fed up with “former” Goldmanites who are debasing their currency into worthlessness while covering all the bad debts of their bankster cohorts.
http://wolfstreet.com/2016/04/19/we-cannot-afford-another-draghi-germany-attacks-ecb/
What they gonna do about it?
The answer is nothing.
Tomorrow’s the day.
2pm.
hope u got the home warranty
What will you do in your final hours? Have a special meal? Say somelast words?
The Last Supper?
Hope you got a 15 and can pay it in 7.
Merritt Island, FL Housing Prices Crater 7% As Housing Market Tanks
http://www.zillow.com/merritt-island-fl/home-values/
http://www.youtube.com/watch?v=lnNhNqtX1t4 - 362k -
Ben Jones.
Traffic — Shouldn’t Have Took More Than You Gave:
https://www.youtube.com/watch?v=JweZ_wzmifw
he ree hit rmy arches n
What’s missing?
“Statism” - You will hear it here first. It’s going to be a hit.
https://m.youtube.com/watch?v=Iq8_2bjJqbo
And ask yourself why the lead singer wears a yellow and black shirt.
New HBB handle…
Donkey McDonk Face.