Luxury Buyers Wealth Is At Stake
The Lincoln Journal Star reports from Nebraska. “According to the Realtors Association of Lincoln, the median sales price in the first quarter was $166,900. That’s up more than 10 percent from the same time last year and the highest local median price ever recorded. Local real estate officials lay the blame — or credit, depending on whether you are a buyer or seller — squarely on the lack of homes for sale. Ryan Pierce, co-owner and managing broker of SimpliCity Real Estate, said that buyers pretty much have to be ready to put an offer on a house the day it comes on the market, and even then, they still might miss out. In the $100,000 to $300,000 price range, ‘It just seems like they’re flying off the shelves,’ he said. ‘We’re seeing a lot of multiple offers.’”
The Tampa Bay Business Journal in Florida. “The vast majority of apartments constructed in Tampa Bay in 2015 were luxury units, according to a new study. RentCafe, a national apartment search website, released data that shows 82 percent of new apartments completed in the Bay region in 2015 were high-end rentals. Nationally, an average of 75 percent of completed apartments were luxury units, according to RentCafe. ‘The ratio of high-end to total apartments completed increased by a staggering 63 percent from 2012,’ according to RentCafe. ‘In absolute numbers, this translates into 896 luxury multifamily projects of 50+ units (out of a total of 1,188 total projects) completed in 2015, compared to 382 luxury multifamily projects of 50+ units completed three years prior.’”
“The dynamic will likely continue in 2016, according to RentCare. Of developments completed nationally in the first quarter, 79 percent luxury developments. There are varying philosophies on luxury apartment development in the Tampa Bay region. Some developers, like Atlanta-based Pollack Shores Real Estate Group, believe that the segment is overbuilt.”
The Charlotte Observer in North Carolina. “Recently opened upscale apartment buildings in the city are offering breaks on rent as they compete for tenants, a result of the surge in new apartments hitting the market. This week, I looked at 24 apartment buildings that have started leasing in the past two years, and found 13 of them are advertising concessions to lure new renters – up to two free months of rent, in some cases.”
“Although the city’s overall vacancy rate remains low, some markets have a substantially higher share of empty units. Uptown and the Southeast-1 submarket (which includes South End) have the highest vacancy rates, at 11.9 and 11.3 percent, according to Real Data. They also have the highest average rents, at $1,694 and $1,332 a month, respectively. ‘The overall market still seems to be very healthy, and things are leasing up,’ said Charles Dalton, head of Charlotte-based apartment market-tracking firm Real Data. ‘Even though we are building quite a lot.’”
The Odessa American in Texas. “Odessa apartments on average rent for nearly 30 percent less than they did a year ago, a trend market watchers expect to continue as the high living costs of the oil boom keep fading during the bust. ‘You’ve seen even 18 months ago, we did have the highest rents in the State of Texas,’ said Rhonda Lesley, association executive of the Permian Basin Apartment Association. ‘Now San Antonio and Dallas are higher than we are. That sounds right. Because when we were the highest it didn’t seem feasible, but it was actually true.’”
“Another reason for the continuing drop, said Andrew Woo, an Apartment List data scientist, is that homes are still being built and apartments being added in Midland. Lesley said apartments are still getting built in Midland, which saw more units come online during the boom, but the last Odessa apartment complex was finished more than a year ago. ‘Now Leasing’ banners abound throughout Odessa. Meanwhile, home values are falling albeit at a slower pace. Woo said less expensive houses also puts downward pressure on apartment rents for now.”
“The manager of Pebblebend Apartments, 4315 Esmond Drive, said the property is about 97 percent full, up from 82 percent at this time last year. ‘I’ve been busting my tail with marketing and stuff like that and doing things for the residents to try to keep them here,’ the manager, Tiffany Wood, said. One bedroom apartments that Pebblebend had rented out for $1,000 recently rented for as low as $560, Wood said.”
Boston Agent Magazine in Massachusetts. “Luxury housing markets across the U.S. have seen declines in 2016, but according to a new analysis from Redfin, few markets have slowed more than Boston. Through Q1 2016, the average sale price for luxury homes in Boston was $3.19 million, an 11.8 percent decline from Q1 2015. That was the fourth-largest such decline in the country. Redfin Chief Economist Nela Richardson explained: ‘Luxury buyers are out of step with the rest of the market because their wealth is at stake. Instead of cheering rock-bottom mortgage rates, luxury buyers recoiled from high-end spending in the face of volatile asset prices.’”
Iron ore in a free fall as Chinese asset bubbles start crashing back to earth. Iron ore in warehouses has also been used extensively as collateral for Chinese loans, with the same tonnages often being “rehypothocated” to secure multiple loans. So if the underlying value of the collateral drops, when do the margin calls start going out?
http://www.bloomberg.com/news/articles/2016-05-09/iron-ore-futures-drop-in-asia-as-holdings-at-china-s-ports-swell?bpop=106030612
“So if the underlying value of the collateral drops, when do the margin calls start going out?”
Don’t be surprised if state-sanctioned deceptive accounting or temporary suspension of the rules is used to avoid the scenario you envision.
It’s China - state sanctioned deceptive accounting or “temporary” suspension of the rules is a given. That said, every Ponzi has its moment of truth, and when the scale of the fraud reaches a certain vastness, further intervention may not be enough to forestall the inevitable.
Specuvestors must have believed that the great Chinese building boom was back. Watch copper, gold, oil & etc. return to signaling deflation.
Greeks who voted for successive corrupt socialist/crony capitalist administrations are finding out what happens when you run out of other people’s money and need endless bailouts to avert a total collapse. Democrat-run states, territories, and municipalities, take note.
http://www.aljazeera.com/news/2016/05/thousands-protest-greek-reform-vote-160508162859367.html
Now they’re finding out what’s left of your sovereignty when pure neoliberal ideology takes control, which is to say, nothing. We ought to end the fiction that there is a country called “Greece” anymore. It’s only a territory governed by foreign banking interests acting through supranational entities. And a way station for refugees from countries the U.S. has chosen to destabilize.
With all these luxury units going on line, e housing bubble pop will flood the rental market and drive the low end rents down.
My rent in 1985 was $375. Low end. In 1996 my luxury apartment rent was $600. My low end apartment currently is $1425 and really should be $1,000.
Things could get interesting if Mom and Pop landlords (like ours) get cold feet and try to cash out of their investments when rents start to fall. The problem of super-low inventory of used homes could quickly reverse.
get cold feet and try to cash out of their investments when rents start to fall ??
Depends…If they are leveraged only maybe…If they are not, they are likely in a position to ride it down just like they rode it up…
If they are older, tax issues start to come into the equation…If one spouse dies, the remaining spouse gets a stepped up basis and pay no tax up to I believe $5.5 mil for his/her 1/2 interest…
Besides, cash out and do what with the money ?? Between the State and FED your looking at something around 33% tax on the gain and I believe normal tax on all recapture of depreciation…
What do you do with whatever cash is left…Put it in the bank @ zero interest rates ??
What you don’t want is to get caught holding a falling knife when the Echo Bubble pops.
What you don’t want is to get caught holding a falling knife ??
The knife only cuts if you have to sell it PBear…
So pay a grossly inflated price for a depreciating asset and hold onto it until when? It’s worth 50% of what you’ve got in it? 20%?
Hilary will be hiring cadres of gov workers to buy me out
the rest of u are screwed
Depends. Luxury houses, from the last link:
Alexandria $1,408,000 -6.9%
Washington, D.C. $2,042,000 -4.2% $537,000
More:
Sandy Springs $1,546,000 -14.9%
Austin $1,504,000 -11.8%
San Diego $2,477,000 -5.9%
Houston $1,377,000 -5.1%
Spring, TX $1,077,000 -4.1%
San Francisco $4,407,000 -4.7%
Pompano Beach, FL $1,123,000 -4.2%
Cash in the bank @ zero % interest rate is much better than cash in a house declining @ 10% a year.
” cash out and do what with the money ?”
They might just like to have the money to spend rather than simply lose it in a falling house. Houses are horrible investments.
Possible Brexit looms as a threat to UK housing bubble.
http://www.telegraph.co.uk/property/house-prices/wind-taken-out-of-uk-housing-market-as-prices-dip/
“Record credit growth” doesn’t equate to a strengthening economy.
http://www.reuters.com/article/us-china-economy-trade-idUSKCN0XZ02J
How long can the PBOC keep levitating Chinese Ponzi markets and asset bubbles?
http://www.businessinsider.com/chinas-top-stock-market-is-diving-2016-5
Even the clueless Chinese Communist Party is starting to get alarmed about the country’s dangerously unsustainable debt levels.
http://www.bloomberg.com/news/articles/2016-05-09/china-s-latest-debt-warning-comes-via-communist-party-mouthpiece
“Investors” are being duped by bogus S&P earnings growth.
http://wolfstreet.com/2016/05/09/wall-street-inflates-sp-500-revenue-growth/
This is an excellent article.
+1 Indeed.
I have my 401k in the index funds, “fire and forget.” I’d rather not play their game at all, but fortunately we can participate from the sidelines.
How about putting alert on sector ETFs, of say, 30% price drops from their peaks, then from there once the alerts pop up you look at the individual stocks and choose the one with insider buying, best book to price ratio and best cash to debt ratio.
I got a buy limit on First Solar at $38 (currently between $50 and $51) and Toyota at a good price cut.
“If the UAE builds a mountain will it actually bring more rain?”
Say, what?
“The United Arab Emirates wants to build a mountain so the nation can control the weather—but some experts are skeptical about the effectiveness of this project, which may sound more like a James Bond villain’s diabolical plan than a solution to drought.
“The actual construction of a mountain isn’t beyond the engineering prowess of the UAE. The small country on the Arabian Peninsula has pulled off grandiose environmental projects before, like the artificial Palm Islands off the coast of Dubai and an indoor ski hill in the Mall of the Emirates. But the scientific purpose of the mountain is questionable.
“The UAE’s National Center for Meteorology and Seismology (NCMS) is currently collaborating with the U.S.-based University Corporation for Atmospheric Research (UCAR) for the first planning phase of the ambitious project, according to Arabian Business. The UAE government gave the two groups $400,000 in funding to determine whether they can bring more rain to the region by constructing a mountain that will foster better cloud-seeding.
“Last week the NCMS revealed that the UAE spent $588,000 on cloud-seeding in 2015. Throughout the year, 186 flights dispersed potassium chloride, sodium chloride and magnesium into clouds—a process that can trigger precipitation. Now, the UAE is hoping they can enhance the chemical process by forcing air up around the artificial mountain, creating clouds that can be seeded more easily and efficiently.
“’What we are looking at is basically evaluating the effects on weather through the type of mountain, how high it should be and how the slopes should be,’ NCAR lead researcher Roelof Bruintjes told Arabian Business. ‘We will have a report of the first phase this summer as an initial step.’
“But some scientists don’t expect NCAR’s research will lead to a rain-inducing alp. ‘I really doubt that it would work,’ Raymond Pierrehumbert, a professor of physics at the University of Oxford told Vocativ. ‘You’d need to build a long ridge, not just a cone, otherwise the air would just go around. Even if you could do that, mountains cause local enhanced rain on the upslope side, but not much persistent cloud downwind, and if you need cloud seeding to get even the upslope rain, it’s really unlikely to work as there is very little evidence that cloud seeding produces much rainfall.’
“Pierrehumbert, who specializes in geophysics and climate change, believes the regional environment would make the project especially difficult. ‘UAE is a desert because of the wind patterns arising from global atmospheric circulations, and any mountain they build is not going to alter those,’ he said.
“Pierrehumbert concedes that NCAR is a respectable organization that will be able to use the ’small amount of money to research the problem.’ He thinks some good scientific study will come of the effort—perhaps helping to determine why a hot, humid area bordered by the ocean receives so little rainfall.
“But he believes the minimal sum should go into another project: ‘They’d be way better off putting the money into solar-powered desalination plants.’
“If the project doesn’t work out, at least wealthy Emirates have a 125,000-square-foot indoor snow park to look forward to in 2018.”
Link to follow.
Link …
http://www.vocativ.com/315209/uae-artificial-mountain-rain/
Incredible, almost unimaginable hubris. Provoked by unearned windfall riches of course. When you read things like this you almost want the oil to run out.
https://youtu.be/Grs4acx-3SU?t=347
There is no housing bubble in Lincoln, Nebraska. The reason their median sales price is up by ten percent in one year, to the highest ever level, is that everyone wants to live there.
Lincoln is actually a pretty nice town. If I was a California equity locust, the place would be downright attractive compared to the People’s Republic.
I am not knocking Lincoln as a nice town, but I am pretty sure that the news of homes priced up to $300K “flying off the shelves” is a harbinger of trouble ahead in their housing market.
I see these types of reports every day. Little towns and cities all over the US, “shortage, urgency”! I include one every once in a while to remind us of that. So are tech firms invading Lincoln? Are their sewer hook ups soaring? Are they too running out of land?
They used the word unthinkable in the URL:
http://journalstar.com/business/local/lincoln-home-prices-hitting-once-unthinkable-levels/article_2308a1ae-26fc-52e0-8035-d1357a63f3a9.html
“Inconceivable!” (Montage from “Princess Bride”)
https://www.youtube.com/watch?v=qhXjcZdk5QQ
I ask the simple question.
If there is no shortage of land, and it is very inexpensive to put in the infrastructure for a subdivision, and homes priced at $100k-$300k are selling very well (like they are in most of the country), then:
WHY AREN’T PEOPLE BUILDING THESE INEXPENSIVE HOMES?
And before you say that the public builders are beholden to their shareholders, and are looking for the highest margins, remember that well over half of all homes in the US are built by private builders, who very frequently want a safe return, not necessarily the biggest return (since they sign personally on construction loans).
If it actually is cheap to build, what is the explanation for why builders are not adding affordable supply?
I have only one:
1. Private builders are starved for credit.
I believe however that the setup is faulty, and the following points need to be considered:
1. The downturn was so long and deep that lots of the tradesmen left the industry…it’s not as cheap as it should be to build (sticks and bricks).
2. Cities, having gotten themselves into fiscal troubles (overpromising on pensions, etc.) are looking more and more to “impact fees” to fund their ongoing operations–which is heaping additional costs onto new homes.
You’re overplaying it again. Relax.
US Housing Demand Plummets To 20 Year Low
http://2.bp.blogspot.com/-yX5B5Hn95bQ/VYC3Wr6ihBI/AAAAAAAAj7I/alOslZa-cK8/s1600/MBAJune172015.PNG
Why were builders able to profit yet build at 65% of current asking prices in 2009?? Doesn’t seem like they *want* to now.
Any firm will seek to maximize profit. Building inexpensive homes is a lot of work for little return. Once a firm gets a foothold in the market, it will naturally want to work where the margins are greatest–and that’s the high end. But, of course, all the firms behave like this and it creates gluts. And so it goes…
WHY AREN’T PEOPLE BUILDING THESE INEXPENSIVE HOMES
The land costs too much. The land costs too much because there’s a bubble.
When there is no demand at that price like current market conditions, nobody is going to make more at a higher price.
Why were builders able to profit yet build at 65% of current asking prices in 2009?? Doesn’t seem like they *want* to now.
Builders sold finished lots for a loss post-crash to get tax money back from the government, and then repurchased other finished lots at less than replacement cost. THAT’s how they made them pencil—they paid less than replacement cost.
And now you have this from an article in the WSJ over the weekend:
“Home Builders Say They Are Squeezed by Rising Compliance Costs”
“The cost of regulation imposed during the land development and construction process on average represented $84,671 of the cost of the average new single-family home in March. That is up from $65,224 in 2011, the last time the home-building industry group conducted a similar survey on regulatory costs.”
Your “homebuilders” are marketers. They don’t build a thing. What they do is lobby and pass envelopes and of course, whine because they paid massively inflated prices for worthless dirt they can’t build on and knew it before they bought it.
General Contractors build all sorts of things… including houses. And we all know “homebuilders” are nothing more than a BS marketing group.
‘2011, the last time the home-building industry group conducted a similar survey’
And they didn’t say boo all these years they were bidding lot prices up. Quite the coordinated release too; get Ivy Zelman to produce a damning report saying the same thing. There’s a reason the Toll Brothers have Picasso’s on their walls.
They were bidding lot prices up because buying existing lots was/is cheaper than building more of them.
We bought land post-crash for a small fraction of replacement cost (1/3, 1/4, etc.)–that was distressed pricing. That was market price. That was in part because builders were dumping lots to get $ back from Uncle Sam for taxes paid in prior years.
From that point, even with static development costs, lots needed to double, triple, or quadruple in value in order to justify developing more lots. And in the meantime, replacement cost has risen due in part to impact fees going up.
It has become accepted that impact fees are a great way to pay for government, here is a nice report from Brookings justifying the use of impact fees going back to pre-crash days:
http://www.brookings.edu/research/reports/2003/06/metropolitanpolicy-nelson
Are lot prices in a bubble? Maybe in places like Silicon Valley, where funny-money valuations of startups are pouring money into the area, driving home prices and thus residual land values higher and higher. Are lot prices in a bubble where home prices are generally lower (inland CA)? Nope. They just now are closer to reflecting replacement cost.
If you recall, I noted our acquisition of finished lots years ago, citing replacement cost as one of the factors that would drive the lot prices higher–and one of the rationales for the investment (that either lot prices would need to go much higher, or there would be very few new lots being developed). And that is exactly what is happening.
“that is exactly what is happening”
Right. There is a housing bubble in NYC. California isn’t crowded at all in comparison. Not any part of it.
Western NY has been in a depression as long as I’ve been alive. Yet we have a housing bubble.
Remember….. Land is highly speculative resulting in massive price swings entirely unfounded on fundamentals. If you’re paying more than $500-$1000/acre, you’re paying too much. That’s why land is referred to as worthless dirt. Besides, there is a globe full of land and roughly 95% of it goes undeveloped.
California isn’t crowded at all in comparison. Not any part of it.
Well, first of all, NYC is definitely crowded, but they solve that by building up and up and up.
If you don’t allow more homes to be built, but population keeps growing, there is an increasing demand for static supply. Econ 101 says prices will go up.
Is this a bubble? Or Econ 101?
Regardless of land availability, CA regulations have restricted supply for the past 25+ years, which has resulted in far too few homes being built for the growing population.
Are prices based on Econ 101? Or a bubble?
‘The land costs too much. The land costs too much because there’s a bubble.’
Well, there not gonna just give it away!
I was there for a football game once. It felt like a 1950s kind of place. Friendly people.
the place would be downright attractive ??
Nah….If I were to move to flyover it would be around Nashville Tenn….
When I think of “flyover” I think Oklahoma, Kansas, Toto… not Nashville.
Nashville? Last week HBB had a nice discussion about how Nashville was already being invaded by Millenials, same as Austin and Denver.
I was just thinking about that the other day. When/if I retire in 20 years, would I choose one of these cities, where the Ms are still likely to be? My sanity can endure only a limited quantity of local coffee and craft beer.
Invaded by an army of MT Pockets?
Sounds like another phony narrative.
The bubble is alive and well in the Nashville area. I’m still piling up cash and waiting for a pop…
Take a look at the sale price chart. Fraud does some serious distorting doesn’t it….
http://www.zillow.com/nashville-tn/home-values/
Why no catchy headline for this data, poet?
Suggested headline:
Nashville house prices skyrocket, up 9% YoY!
Anecdotal, but still… another co-worker sold his home recently. Had a contract at full-price less than an hour after the sign went in the yard (neighbor saw it and called a friend who wanted to live in the neighborhood). This is what I’m hearing over and over for every neighborhood (SFH) where you’d want to live.
http://www.tennessean.com/story/money/homes/2016/05/09/nashville-prices-break-record-second-straight-month/84135618/
‘The Laseter’s experience reflects how multiple offers have become the norm in Nashville’s booming residential market, forcing realtors to become creative to give their clients the upper hand.’
‘Data released Monday revealed that the median price of a single-family home reached $250,000 in April, marking the second consecutive month of a record level since the Greater Nashville Association of Realtors began tracking the figures.’
‘The April figures GNAR released also showed a 11.7 percent year-over-year increase in home sales to 3,284 closings, pushing year-to-date sales up 1,000 units compared to the same period last year. At the end of April, there were 3,756 sales pending, up 17 percent from a year earlier.’
Now here’s where you supply and demanders can explain why sales are going up at the same time as prices. Because the laws of supply and demand clearly say as prices rise demand should fall. It’s that way with groceries, or cars or umbrellas.
What’s that? You only know the REIC version of supply and demand? It’s never mentioned in the papers, is it? I would add that increased demand in the face of years of higher prices suggests speculative intent.
China stocks drop on growth worries
By Chao Deng
Published: May 9, 2016 5:39 a.m. ET
Communist Party mouthpiece warns of ‘L-shaped recovery’
China Daily via Reuters
China’s walking an economic tightrope as growth is slowing.
Stock markets in China fell on Monday, after the Communist Party’s mouthpiece reported that the nation’s economy is headed for an “L-shaped” recovery, stoking worries among investors that growth in the world’s second-largest economy will moderate further.
The Shanghai Composite Index tumbled 2.8% to finish at 2832.11, near its intraday low, while the Shenzhen Composite Index was off 3.6% at 1804.34.
…
Methinks China’s Ponzi markets and asset bubbles will be the first to implode.
It’s sounds like China’s central planners see what’s coming and realize the baying mobs of defrauded “investors” will be coming for them with pitchforks and torches if the crash occurs without any official prior warnings.
http://www.businessinsider.com/chinese-official-warns-on-the-build-up-of-debt-in-the-country-2016-5
‘Luxury buyers are out of step with the rest of the market because their wealth is at stake. Instead of cheering rock-bottom mortgage rates, luxury buyers recoiled from high-end spending in the face of volatile asset prices.’
It would be interesting to know what share of luxury investment market purchases over the 2009-2014 period were Chinese and Canadian investors who are now out of the game due to either the China slowdown or the commodities collapse, respectively.
Sadiq Khan, the first-ever Muslim mayor of a major western metropolis, won his London mayoral race (against an oligarch scion) by pledging action on affordable housing. This guy will likely have no love for Russian oligarchs and Chinese money launderers who have been propping up the high end of the London housing market - how long before he proposes a populist tax targeting absentee homeowners and speculators?
Low housing costs are sharia law!
“Luxury buyers” might finally be pulling back, even though the Fed has the backs of its .1% accomplices.
http://wolfstreet.com/2016/05/08/manhattan-luxury-condo-bubble-bites-dust-sales-and-prices-fall/
“Instead of cheering rock-bottom mortgage rates, luxury buyers ”
Wouldn’t luxury buyers want HIGH mortgage rates? I thought luxury buyers bought cash. High mortgage rates would decrease prices, so they can buy the same house for less cash (or more house for the same cash).
Do Realtors NOT get this? :rolleyes:
Hey Donk.
” I thought luxury buyers bought cash…”
That wouldn’t explain why they go bankrupt when house prices go down.
World corporate debt far exceeds pre-Lehman levels (but our Keynesian central bankers assure us there are no bubbles….)
http://www.ibtimes.co.uk/world-corporate-debt-far-exceeds-pre-lehman-financial-bubble-warns-iif-1558766
Forbes
No Freeze Ever: Iran Govt Reiterates Plans To Keep Pumping Oil
May 9, 2016 @ 07:30 AM
Kenneth Rapoza
Contributor
I cover business and investing in emerging markets.
How oil prices can go higher with three major producers saying they’re pumping full throttle remains a mystery. Iran’s Oil Minister reiterated on Sunday that the country will not accept any production freeze. Ever.
“I even had discussions with Saudi oil minister at that (Doha) meeting because they wanted us to lower oil production in our country to the levels of early 2016. I said to him, ‘You have got to be kidding!,’” Zangeneh was quoted saying by the IRINN television channel.
…
Last time we checked, the world was running out of oil storage. So where is all this pumped oil going? Is it being used? [See below -- it certainly isn't being used by mothballed Union Pacific rail engines.]
Our latest Democrat-on-Arrival entitlement voters are costing US taxpayers a pretty penny, but the DNC’s glorious FSA must swell in size for our Permanent Democrat Supermajority to became a reality. Forward!
http://www.washingtonexaminer.com/illegal-immigrant-households-get-5692-in-welfare-1261-more-than-american-families/article/2590744
How long before crude follows commodities and freight down?
http://www.zerohedge.com/news/2016-05-09/bofa-says-its-time-sell-wti-crude-price-target-low-35-heres-why
answer:
http://www.washingtonsblog.com/2016/05/rail-traffic-depression-292-union-pacific-engines-are-sitting-in-the-arizona-desert-doing-nothing.html
Monetary Policy
Outspoken Fed Official Frets About Following Japan’s Path
James Bullard has been worried for years that the United States and other major economies may be stuck with low interest rates for some time to come.
Chris Goodney / Bloomberg
By BINYAMIN APPELBAUM
May 4, 2016
James Bullard, president of the Federal Reserve Bank of St. Louis, doesn’t know when the American economy will fall into another recession. But he says it’s increasingly likely that it will happen before the Fed has a chance to return its benchmark interest rate to a historically normal level.
Indeed, Mr. Bullard has fretted for years that the United States and other major economies may be stuck with low interest rates for some time to come. In an interview last week, Mr. Bullard said he wants to raise rates. He really does. It just seems as if the necessary conditions keep slipping away.
After pushing to raise rates at the beginning of the year, he voted against a rate increase in April and he said he’s still thinking about June. “If you talk to people in Tokyo, they say, ‘Well, we’ve been through this and tried all these things and you guys are just following us,’ ” he said in the interview.
…
“James Bullard has been worried for years that the United States and other major economies may be stuck with low interest rates for some time to come.”
Woe to those who make their living by handling other people’s money.
A reminder: These money-manager guys need to earn two returns on the money they handle: One return goes to the owner of the money that is being handled, another return goes to them, the managers of the money that is being handled.
In the fun days of high returns of invested capital both of these returns were easy to make. Now that the less-than-fund days of low returns of invested capital have arrived just one of these returns is tough to make, will be tough to make. This means that the only way to extend the rates of return in such an environment is to extend the risks, risks taken on by a money manager who happens to be suing somebody else’s money.
“suing somebody else’s money” = “using somebody else’s money”
IMO the easy way to generate a return is to chase prices. And because there are a lot of return-hungry money managers out there in the investment world one should expect prices to be chased.
Not all prices, just some; the prices of what is considered to be “hot” at the time for whatever reason.
If I read this Blog right they are taking risks in RE investing in apartments and driving up rents.
What next ? Fast food ?
I would love to see the day when Yellen and all her flying monkeys and their Wall Street accomplices are arrayed in orange jumpsuits in front of an honest judge. Never going to happen, though.
Is an “L-shaped” recovery baked in?
There is no “L” in recovery………no recovery can be “L” shaped….it is just a decline to a lower level.
The “L” shape defines recovery.
Remember….. A ‘housing recovery’ is falling prices to dramatically lower and more affordable levels by definition.
Maybe L-shaped social unrest in Saudi Arabia is the next black swan to hit global markets.
http://oilprice.com/Energy/Energy-General/50000-Laid-Off-In-Saudi-Arabia-As-Oil-Crisis-Bites-Deeper.html
Excellent point. I have read some predictions that the House of Saud is on its last legs. How can any country with a royal family numbering 30,000 indolent individuals survive? No layoffs there!
Got gold?
https://www.sprottmoney.com/blog/alasdair-macleod-if-youve-got-gold-youve-got-money-if-you-havent-got-gold-youve-got-a-problem-the-daily-coin.html
From Tales of Times Square by Josh Alan Friedman (1986):
“The most inherently corrupt and immoral power group since Tammany Hall — real estate speculators — circle like buzzards above the dying Forty Deuce. These are not visionary architects, but cold snakes who exist only to amass fortunes through land. They don’t need art, or fun, or spontaneity. With each demolished theater, they destroy more of New York’s history. Cheaply constructed, inflation-era skyscrapers of glass, cement, and plasterboard replace finely tuned, homey theatrical inns, one tower obstructing the view of the next. The reigning architecture of New York has become corporate.”
http://www.picpaste.com/20160509_071702.jpg
More negative effects of NIRP on the real, productive economy, while the Fed’s oligarch cronies make bank as yield-seeking retail muppets are forced to play in Wall Street’s rigged, broken, manipulated markets.
http://www.bloomberg.com/news/articles/2016-05-08/negative-rates-hit-global-shipping-market-as-zombies-slow-m-a
‘Recently opened upscale apartment buildings in the city are offering breaks on rent as they compete for tenants, a result of the surge in new apartments hitting the market…some markets have a substantially higher share of empty units. Uptown and the Southeast-1 submarket (which includes South End) have the highest vacancy rates, at 11.9 and 11.3 percent, according to Real Data. They also have the highest average rents’
Linked from Drudge, Mark Zuckerberg is a globalist:
http://gizmodo.com/former-facebook-workers-we-routinely-suppressed-conser-1775461006
Globalists gonna globe.
Cuckerberg. The ultimate parasite. Got where he is by theft, basically. I am not now, nor have I ever been, a Faceplant member, thank Jeebus.
Facebook colludes with European governments in suppressing criticism of immigration.
Davos/Aspen wants open borders. And what Davos/Aspen wants, Davos/Aspen gets.
Globalists gonna globe.
As I recall I was on the receiving end of a beat down about Obama’s plan via J. Castro to recast suburban Murika - well here is a reprise from today.
My question is - anyone in Dallas heard of experienced what is reported in this article? Chicago style violence comin to a nabe near you?
http://nypost.com/2016/05/08/obamas-last-act-is-to-force-suburbs-to-be-less-white-and-less-wealthy/
anyone in Dallas ??
Ibbots lives there
Ibbots - can you confirm what the article says - is it gettin rough in those north Dallas nabes?
That’s an interesting story.
As for violence up north in the burbs, good question. I recall reading something about moving the section 8′ers to the burbs because the older, inner city, urban areas were all re-gentrifying and displacing the section 8′ers.
I know Dallas proper has had a big jump in homicides so far this year. Most of them are in low income high crime areas as you’d expect, there’s just more of them.
Thanks.
Same here in Chicago - crime and violence WAY up again this spring. Seems to be concentrated in the inner city. WAY too much black on black crime - and it continues to go unreported locally by any measure here.
According to NPR, it is the Chicago Police that are to blame for all of this . . .
Get your affairs in order because this rare technical signal is flashing red
By Shawn Langlois
Published: May 9, 2016 8:53 a.m. ET
Critical intelligence before the U.S. market opens
20thCentFox/Courtesy Everett Collection
The global economy is on the ‘Titanic’
The U.S. dollar, which has been under pressure since late last year, is coming off its best week of the 2016. While it wasn’t exactly a huge move, it was enough to deliver a hit to currency traders, who had started the week loaded up on short positions to a degree not seen in almost two years.
In other words, it was finally a great week to be a dollar contrarian.
Marc Chandler of Brown Brothers Harriman says “the key issue facing the foreign exchange market is whether the modicum of strength the U.S. dollar demonstrated last week is the beginning of a sustainable move.”
The potential impact of the healing greenback on a fragile stock market is something traders will keep their eye on as we exit a mostly downbeat earnings season.
Dollar aside, there’s an ominous technical signal lurking in the shadows, according to the Northman Trader blog, which recently called for the market to break from its range with a big move one way or another. Is now the time?
“Something happened Friday that’s happened only twice in over 20 years on the $SPX: The weekly 100MA has crossed over the weekly 50MA,” the blogger said. “The last two times this happened carnage followed.”
…
Carrollton, TX Housing Affordability Improves As Prices Sink 4% YoY
http://www.zillow.com/carrollton-tx/home-values/
No “smaller government” or “less regulation” or “lower taxes” happening here:
“In an attempt to ramp up the tempo of the war, the U.S. military is escalating its engagement, dispatching an additional 450 Special Operations forces and other troops to Syria and Iraq, deploying hundreds of Marines close to the front lines in Iraq and bringing Apache attack helicopters and B-52s into service for the air campaign.
The extra resources are an acknowledgment, U.S. officials say, that the war can’t be won without a greater level of American involvement.
https://www.washingtonpost.com/world/middle_east/the-war-against-the-islamic-state-hits-hurdles-just-as-the-us-military-gears-up/2016/05/08/013897f8-10ac-11e6-a9b5-bf703a5a7191_story.html
No “smaller government” or “less regulation” or “lower taxes” happening here:
“A senior Iranian general on Monday announced that the country’s armed forces successfully tested a precision-guided, medium-range ballistic missile two weeks ago, the state-run Tasnim agency reported.
“We test-fired a missile with a range of 2,000 kilometers and a margin of error of eight meters,” Brigadier General Ali Abdollahi was quoted as saying at a Tehran science conference.
http://www.timesofisrael.com/iran-claims-to-successfully-test-missile-that-can-reach-israel/
Starve the beast
Amen.
Commie Noam Chomsky questions the globalist narrative:
“We cannot gain a realistic understanding of who rules the world while ignoring the “masters of mankind,” as Adam Smith called them: in his day, the merchants and manufacturers of England; in ours, multinational conglomerates, huge financial institutions, retail empires, and the like. Still following Smith, it is also wise to attend to the “vile maxim” to which the “masters of mankind” are dedicated: “All for ourselves and nothing for other people” — a doctrine known otherwise as bitter and incessant class war, often one-sided, much to the detriment of the people of the home country and the world.
In the contemporary global order, the institutions of the masters hold enormous power, not only in the international arena but also within their home states, on which they rely to protect their power and to provide economic support by a wide variety of means. When we consider the role of the masters of mankind, we turn to such state policy priorities of the moment as the Trans-Pacific Partnership, one of the investor-rights agreements mislabeled “free-trade agreements” in propaganda and commentary. They are negotiated in secret, apart from the hundreds of corporate lawyers and lobbyists writing the crucial details. The intention is to have them adopted in good Stalinist style with “fast track” procedures designed to block discussion and allow only the choice of yes or no (hence yes). The designers regularly do quite well, not surprisingly. People are incidental, with the consequences one might anticipate.
http://www.huffingtonpost.com/noam-chomsky/american-power-under-challenge-who-rules-the-world_b_9866204.html
Good article by Noam Chomsky, read it yesterday, was definitely worth it.
I liked his book Manufacturing Consent.
No “pent-up demand” for $500,000 starter homes happening here:
“Half of U.S. high school graduates this year had better forget about mom and dad paying for all, or even some, of their college education, now a six-figure proposition at even middling schools. A new survey from Discover Financial Services found that 48 percent of parents think their child should pay a portion—or all—of the cost. Four years ago, the same survey found 39 percent of parents held that opinion. That parental piggy bank is shrinking.
http://www.bloomberg.com/news/articles/2016-05-09/parents-tell-kids-to-borrow-more-for-college
Region VIII news:
“Tami Door, president and CEO of the Downtown Denver Partnership, which manages the 16th Street Mall, said wafting odors from consumption of marijuana, which is illegal, is a major complaint of tourists and conventioneers who visit the mall.
She said Denver police issue hundreds of citations every month for infractions, but the problem continues. She said the DPD is providing money for increased security for private security teams and off-duty police officers to augment regular police patrols.
She added that downtown Denver is a showcase for the best the city has to offer — and the worst.
“When people come downtown, you don’t just know that there are issues around marijuana use and addiction, you’re actually directly experiencing it. That directly influences our brand,” Door said. “This is leaving a reflection on what people say about Denver when they leave here.”
Along with the glowing reports about Denver, such as Denver Union Station development and the new A Line train to DIA and other attributes of the city, they’re saying “that we have social issues and it is very evident on our streets,” she said.
http://www.bizjournals.com/denver/news/2016/05/05/drugs-and-alcohol-in-denvera-challenge-for.html
Sounds like downtown Seattle. WA and CO are 420 friends!
I have never caught a whiff of marijuana in Seattle… was very common in San Francisco though.
I do catch a whiff occasionally, but no more often than I did before it was legalized…
Downtown Denver has become the place of marijuana stench, hobos and litter.
I see hobos strung out on weed or alcohol all of the time. Now that it is warming up and people are migrating back to Denver, it is seasonally worse.
More and more I see hobos with their own dogs and even pet cats in tow. They squat at one place and leave their garbage and pet feces there, then move on and do the same at another location.
Hobos as well as non-hobos leave their trash everywhere (lower downtown (Lodo) is the worse. Even if a garbage can is 4 feet away, they will throw their trash on the ground. I never have seen so many slobs who think they are royalty and that there is always someone to pick up after them.
The current popular viewpoint regarding marijuana here is that it is a health remedy (for just about any ailment, you name it) and that since it is now legal, you can smoke or use it wherever you please. Today, I heard someone say, “I have cleaned myself up, I have a job and I don’t do drugs. Oh, I do smoke weed.”
All of this is true.
Living in South Denver I can avoid most of this, and pay half of downtown rents.
South park?
They need signs “bus your own curb”. That might help.
“Signs, signs, everywhere there’s signs . . . “
Hmmmm…… “they’re saying “that we have social issues and it is very evident on our streets,” she said.”
I recall Lodo when I was a mere crumpet back in the day as a place where the destitute, drug and alcohol addicted tended to congregate - then came the redevelopment (Coors Field) that booted ‘em all out to other locales and help centers (Denver Mission) and lo and behold good ol’ CO passes a pot law and look what happens - those very same “social issues” have migrated right back to where they started. Who couldaknowd? Gee…..the more things change the more they remain the same.
AND “When people come downtown, you don’t just know that there are issues around marijuana use and addiction, you’re actually directly experiencing it. That directly influences our brand,” Door said.”
My question for Ms. Door would be - what “brand” would that be exactly? Whocouldknowd that Denver is now a ‘brand’. Sheesh. I am so sick and tired of the corporate meme of branding - down to the point where all these milleneal hipsters are buying the idea that they themselves with their twit account are a ‘brand’. Just sick and tired of all this crap.
I can’t imagine staying here for more than another 10 years.
Pleasant Valley(Portland), OR Housing Affordability Surges As Prices Crater 6% YoY
http://www.zillow.com/pleasant-valley-portland-or/home-values/
‘The manager of Pebblebend Apartments, 4315 Esmond Drive, said the property is about 97 percent full, up from 82 percent at this time last year. ‘I’ve been busting my tail with marketing and stuff like that and doing things for the residents to try to keep them here,’ the manager, Tiffany Wood, said. One bedroom apartments that Pebblebend had rented out for $1,000 recently rented for as low as $560, Wood said.’
The article goes on to say this complex uses a program service to set asking rents, using inputs about local vacancies and such. So when the computer said slash, they slashed. I expect we’ll be hearing more about this in the future.
We used this when I worked as a property accountant for Archstone 6 years ago:
http://www.mrisoftware.com/products/residential-management/
Choppin’ and a slashin’. Edward Scissorhands has arrived.
>>‘I’ve been busting my tail with marketing and stuff like that and doing things for the residents to try to keep them here,’ the manager, Tiffany Wood, said.
The problem, Tiffany, is that your marketing sucks. Your apt complex needs to be renamed to something more classy than “Pebblebend”. Some suggestions from you humble servant:
“Pebble-skip at Riverbend”
“Hole-in-one at Sandtrap”
“Hole 9 at Skid Row”
Here’s Nela again:
‘Luxury buyers are out of step with the rest of the market because their wealth is at stake. Instead of cheering rock-bottom mortgage rates, luxury buyers recoiled from high-end spending’
I’ve been reading REIC pieces about encouraging minorities to get up to their neck in debt to “build wealth” lately. “Take advantage of the bounty Mel Watt has offered!”
Middletown, CT Housing Affordability Balloons As Prices Plunge 14% YoY
http://www.zillow.com/middletown-ct/home-values/
http://www.flickr.com/photos/clintjcl/69383431 -
I just got this in an email:
“The journalists behind the Panama Papers scandal are set to release a massive, searchable archive Monday at 2 p.m. ET, with information on more than 200,000 offshore entities involved in the unprecedented leak.”
https://panamapapers.icij.org/20160426-database-coming-soon.html
From the above link:
The database will be published at https://offshoreleaks.icij.org on May 9 at 2 p.m. EDT (1800 UTC).
Do you really think anybody involved with this will get any jail time?
Bradley/Chelsea Manning is rotting in prison.
Julian Assange is stuck in the London Ecuadorean embassy.
Edward Snowden is stuck in Moscow.
And more importantly, does anybody outside of the 0.1% even care?
“Do you really think anybody involved with this will get any jail time?”
Taxes are only for the little people.
Next!
Those people soon will be joined by whoever leaked the Panama data.
Fun stuff!!! You’re deeds will eventually come to light if you play in the dark long enough : )
Your.
I’m sure the Fed will disavow any knowledge of these “entities”.
The future demands it.
“The future demands from us something more than a nostalgia for some rose-tinted version of the past that did not really exist in any case,” Kerry said. “You’re about to graduate into a complex and borderless world.”
Globalists gonna globe.
And Matt Drudge is a neocon, whether you like it or not.
The future demands it.
Mr. “I will fly around the world doing good for the environment,” will tell ya.
http://www.youtube.com/watch?v=4_Pbx9mvWPY - 266k -
This is what happens when you sign up to be a DebtDonkey for a rapidly depreciating asset at a grossly inflated price.
Massachusetts Foreclosure Starts Balloon 6% In March
http://www.lowellsun.com/news/ci_29865231/mass-foreclosure-starts-rise-6-4-percent-march
Snowflakes gonna flake…
http://www.orlandosentinel.com/classified/realestate/os-millenials-live-with-parents-20160509-story.html
$483 a square foot:
https://www.redfin.com/CO/Denver/1624-S-Lincoln-St-80210/home/34144785
‘Redfin is unable to take you out on tour to see this home because the sellers have accepted an offer and the property is now pending or under contract.’
Built in 1927. Has a swamp cooler. In the dining room, short people toward the back of the room, slightly taller the other way.
I’m out on a walking tour, heading down South Pearl St toward DU.
More to come…
FWIW Redfin won’t even “service” houses below $400K where I live…like this 2 bdr. $390K gem that right at the junction of US 101 and CA12 with an offramp at the property line.
https://www.redfin.com/CA/Santa-Rosa/516-S-A-St-95404/home/2201861
Looks like a nice place and a friendly neighborhood… the peeps keep their front yards looking nice… has curb appeal. That said, I couldn’t imagine my name inked on a $500k residential mortgage; couldn’t sleep.
Built in 1893, only $307 a square foot:
https://www.redfin.com/CO/Denver/1217-S-Pennsylvania-St-80210/home/34143504
Gotta pretty good walk score though.
^LOL
5 artisenal crack dealers within walking distance.
LOL!
Today’s walking tour ends here with Deschutes pints 2 for $6:
http://m.yelp.com/biz/gennaros-cafe-italiano-denver
My project ended and I don’t go back to work until June.
Not a problem, because renting.
Exactly. Why buy it when you can rent it for half the monthly cost?
“…with Deschutes pints 2 for $6:”
Oregon dark beer!
Truly a Hipsters paradise. Yer guests get a splinter or pinch every time they sit on that vintage wood toilet seat!!
“Dynamic area, close to light rail, Old Pearl Street restaurants and new Sprouts grocery store.”
I’m good thanks.
‘Railroad killer’ offers apology at execution
Maturino Resendiz asks for forgiveness: ‘I deserve what I am getting’
By Allan Turner Published 5:30 am, Wednesday, June 28, 2006
HUNTSVILLE - Angel Maturino Resendiz, the serial killer who claimed he was half-man, half-angel and could not be killed, was executed here Tuesday for the December 1998 murder of West University Place physician Claudia Benton.
Man found guilty in restaurant murder; victim killed in front of family
By Alicia Fabbre
Daily Southtown
Feb 18, 2016
A 33-year-old Joliet man Thursday was found guilty of the 2013 shooting death of another Joliet man during the breakfast rush at a local restaurant.
Maturino Resendiz, 46, who killed as many as 14 people as he criss-crossed the nation by rail and in the process came to be known as the “railroad killer,” was the 13th person to be executed in Texas this year.
Man faces attempted murder charges in connection to grocery store shooting
Sunday, February 7th 2016, 1:51 pm EDT
By: WECT Staff
PENDER COUNTY, NC (WECT) -
Deputies arrested a man Tuesday suspected of shooting at least two people at a grocery store in Pender County in January.
SUV Sales surge in April.
Related, because for many it’s a house on wheels.
http://www.forbes.com/sites/laurengensler/2016/05/03/u-s-auto-sales-april-suvs-trucks/#2d8f10e70206
If you want your 7 year car payment you can keep your 7 year car payment.
It should be legal to live in ones car/truck/van.
This guy has it down:
http://www.korduroy.tv/2016/cyrus-suttons-van-life-part-1/
…and look at it this way, it’s a lot shorter than a 15 or 30 year mortgage trap.
Or the Google employee that lives in a moving truck right on the Google office parking lot! Talk about “walk to work”!
http://www.businessinsider.com/google-employee-lives-in-truck-in-parking-lot-2015-10
In 07 I actually saw a hummer parked at costco that was obviously being used as a dwelling.
Terrible choice for a vehicle to live in!!
I got one in May, small SUV, 32 mpg.
Todd Rundgren - When The Sh*t Hits The Fan (Sunset Blvd):
https://www.youtube.com/watch?v=V8qv6DvI3eQ
Directly related to the Friedman book cited above.
Lou Reed — Sally Can’t Dance:
https://m.youtube.com/watch?v=20_4NnRtlJU
New York must have been pretty cool before it went soulless and corporate.
Earth was pretty cool before it went soulless and corporate.
https://www.youtube.com/watch?v=AzUrHvSOmEI
Ventura, CA Housing Prices Crater 16% On Ballooning Housing Inventory
http://www.movoto.com/ventura-ca/market-trends/
We must keep The Narrative in the hands of its annointed custodians, the Oligopoly. The Truth is too dangerous to be entrusted to the proles.
http://www.washingtonexaminer.com/is-online-free-speech-under-attack/article/2590519
Cue L-shaped non-recovery bursting bubble in China.
http://wolfstreet.com/2016/05/09/chinese-government-warns-l-shaped-dive-no-recovery-economic-growth/
“Growth crisis” (read: oligarch looting and asset-stripping of the 99%) threatens the social fabric in Europe, warns the retarded cousin of Captain Obvious.
http://www.telegraph.co.uk/business/2016/05/09/growth-crisis-threatens-european-social-fabric-warns-monetary-ch/
The paper gold markets - controlled by London and New York - are a racket.
https://www.bullionstar.com/blogs/bullionstar/infographic-london-gold-market/
Behold NIRP, the most diabolical central banks swindle yet against the 99%.
http://wolfstreet.com/2016/05/10/wealth-confiscation-for-the-digital-age-the-new-cash-tax/
A preview of coming attractions under our Permanent Democrat Supermajority. Forward, Comrades! Unfurl the glorious banner of the mighty Free Sh*t Army!
http://www.bloomberg.com/view/articles/2016-05-09/catastrophe-is-the-new-normal-for-venezuelans