The Higher-End Rental Market Will Be Tested
A report from Crain’s Cleveland Business in Ohio. “In downtown Cleveland and University Circle, a bevy of new apartment buildings and rehabs of former offices to dwellings have come online, and more are on the way. Consider the last six weeks of insanity: Developers have rolled out more than 1,500 suites in a region where 200 units was the norm until the apartment boom began and pushed the figure to 750 suites a year since 2014, according to Marcus & Millichap statistics. Moreover, in projects that are further along, at least that many suites will hit the market by 2018. Just one, Flats at East Bank, has been built from the ground up in the last 10 years.”
“The profusion of downtown housing projects the past decade has also helped hike rents to $1.61 a square foot late last year from $1.10 in late 2010 — an increase of 47% while rents in Cleveland and Cuyahoga County remained flat. Some projects such as the Schofield, The 9 and the Flats at East Bank have surpassed $2 a square foot, the level developers believe they need to make a go of construction in addition to the continued conversion of old office space to swanky apartments. The questions politicos, civic leaders, lenders, real estate developers and others ask are, ‘When will the market soften?’ and ‘Which project will get stuck with more suites than it can sell?’”
The Alabama Media Group. “Birmingham had the highest increase in apartment rents higher than $1,500 per month of any of the eight southern cities in a new study. All eight cities in the Federal Reserve Bank of Atlanta study - Birmingham, Atlanta, Jacksonville, Memphis, Miami, Nashville, Orlando and Tampa - saw declines in the supply of rental units priced between $500 and $750 monthly from 2010 until 2014. All except Tampa saw decreases in units under $500 monthly.”
“Each city also saw an increase of units that cost more than $1,500 monthly - but Birmingham had the biggest increase. It’s likely that that increase has gone up even more since then, with the recent opening of luxury apartment complexes within city limits. It’s also likely to keep increasing - several more luxury projects are in the works. Birmingham is seeing a massive influx of luxury rental units, often celebrated for bringing investment to the city and continuing urban renewal. But incomes aren’t necessarily keeping up with rising rents - 58.5 percent of all renter households in Birmingham spent more than 30 percent of their income on rent in 2014, up from 55.9 percent in 2010, according to the study.”
The Tennessean. “Howe Garden Apartments in East Nashville has been in the news — I mean for something besides last fall’s double homicide. This January, Middle Farms Capital bought the property as part of a $54.5 million deal spanning nine apartment complexes in five cities. Investors like Middle Farms are buying up what few affordable rental properties remain in Nashville, slapping on some new countertops, and doubling the rent. Under Howe Garden’s new owners, renovated units start at $1,099 per month for a one bedroom. About a month ago tenants were paying as little as $524 per month.”
“Nashville is in a crisis. As of December, average rent in this city has risen to $1,246 per month. Income rose 20 percent between 2000 and 2015, but the cost of a home rose 103 percent in that same time. There’s no reasonable relationship between local wages and local rent anymore, and it’s getting worse.”
Vegas Inc in Nevada. “Amid a national apartment boom, Southern Nevada’s multifamily market has bounced back from the recession faster than other segments of the real estate industry. Property pros, however, expect rent growth to slow and vacancies to tick higher, amid questions over the depth of Las Vegas’ renter pool and whether investors are building too many higher-end projects.”
“About 3,000 new apartments hit the local market last year, and 4,500 are expected this year. That’s up from a low of about 370 in 2013, according to Las Vegas broker Spencer Ballif, a senior vice president with CBRE Group. According to Reis, in the first quarter alone, U.S. developers brought to market more than 42,000 units, the highest first-quarter tally since at least 1999. Ballif noted that Las Vegas’ workforce has grown faster than other metro areas’ but said the depth of the higher-end rental market ‘will be tested,’ adding: ‘We’re probably overcooking it a little bit.’”
“Broker Patrick Sauter, managing partner of NAI Vegas, said nearly all developers were ‘building basically the same product,’ going after the same customer base and targeting the valley’s same two submarkets. He figures there ‘might be a little bit of a glut’ of new projects and that rent-growth could slow. Investors, meanwhile, are paying top dollar for these and other rental properties.”
The Colorado Real Estate Journal. “The Denver multifamily property values continuing their current inexorable climb. Simply put, apartment permits are well above the norm – recently averaging 9,500 per year versus the long-term demand of 5,500 units per year. The overbuilding in apartments is being (temporarily) absorbed by millennials who are forced to defer their entry-level home purchase. However, we expect this artificial demand to reverse within the next two to five years as the millennials gain increasing access to mortgage financing.”
“In the meantime, for the next two to three years, apartment developers will enjoy an Indian Summer that they will later come to regret. The fact is, Denver apartment deliveries are continuing well above trend – some analysts are projecting nearly 10,000 new units per year for the next two years. Unfortunately, the great return recently enjoyed by apartment developers and buyers has created a sense of complacency. Capital is abundant and it is likely to drive more serious overbuilding. If developers stop building, the negative downturn is likely to be modest. Unfortunately – given the nature of developers – this is possible, but not likely.”
“It is our estimate that there will probably be a recession in 2019 – give or take one or two years. While this recession likely will be a garden-variety recession, it will have devastating consequences on apartments because it is likely to appear precisely at the time of peak overbuilding of apartments. Vacancies will spike, rents will plummet and values will decline. We are calling this unfortunate confluence a ‘negative trifecta’ for apartments.”
“We are, in fact, guided by defined metrics, allowing us to predict with considerable accuracy the coming cycle downturn. The combination of higher vacancy and lower rents stresses apartment cash flows breaching construction loan covenants. It is the appearance of distressed sales that causes a severe downturn in apartment values. We are not sure that such a downturn will occur in Denver, but we are watching the metrics carefully.”
“We are continuing to build selectively. We still like the transit-oriented and the senior-oriented apartment market niches. Otherwise, in Colorado, we have taken the precaution to sell our three other apartment projects.”
It really is amazing to hear about the bubble in Birmingham housing and with rent prices, also Cleveland? Is there no end to this non sense? I mean how many po-dunk towns across the US can support $1400-$1800 rents? I suppose that’s the million $ question and reason behind having this blog, so we can see reports of this madness in Lincoln Nebraska, Birmingham Al, or in the old rust belt region.
All up the North Shore of Boston, I-95 corridor all the way to Maine (2 hr north), the apartment rents are insane. There are plenty of rehabbed mills that became “luxury” apartments with exposed brick, rotting beams, and exposed rusty/repainted pipes, easily in the $1500-$2000/mo range for 500 sq ft - 800 sq ft apartments. It’s ok, internet is included. Could you imagine sharing internet with 200 other tenants? Ha. When I first moved here in Jan 2015, I was looking at a mill apartment in Portsmouth NH. It was going for $1550 and it was a 500 sq ft “loft”. I was working at the Naval Shipyard there as an engineer, but even then I knew that exceeded my income and many others. That shipyard employs 5,000 from all around Maine/NH/Mass. so I guess its the super commuters from Boston driving up costs (1.5 to 2 hr south).
Yet still half the cost of buying at current grossly inflated prices of resale housing.
DebtDonkey Narratives are unacceptable.
Could you imagine sharing internet with 200 other tenants?
The performance would depend on the kind of connection that they have. There are businesses in which thousands of employees in the same building share internet access.
FIOS would have your own connection tho the central station…they put a 96 conductor fibre cable down our street.
I’m seeing more offices using cloud infrastructure through a ds3 circuit, and I’m out in fly-over country.
‘It’s no secret that Portland’s rental market is in shambles. With the vacancy rate hovering somewhere between never-gonna-happen and might-as-well-move-to-Westbrook, working class Portlanders are finding it increasingly impossible to find an affordable place to call home in Maine’s largest city.’
‘What once was a market where $1000 could cover move in costs of a security deposit and first month’s rent just a few years ago has become a place where landlords have collectively jacked rent up to absurd levels, charging first and last months rent plus deposit, running credit checks, and even looking at bank account balances to determine just who is worthy of renting their closet-sized spaces for double or triple the amount that they were going for before things went awry.’
‘A local woman named Sharon O’Neil wrote a post yesterday that sums up the feelings of lifelong or longtime Portlanders- in regards to the ongoing gentrification of our town- perfectly: “Portland, Maine: $3200- Beautiful, tastefully furnished, luxury 1 BR apartment within walking distance to shops, cafes, bus lines (pshhhh, you have 3 cars), more cafes, gorgeous parks (don’t worry drug probz aren’t an issue here but those who have them are free to navigate on their own), theaters, music venues, 1,000,000 restaurants, and a Whole Foods.”
“Take your morning poop into an oddly shaped toilet with multiple (green!) flushing options as you smugly sip your fair trade latte and enjoy spectacular, sweeping views of panhandlers out your bay window.
No, no, silly…look just beyond that, to the sparkling waters of Casco Bay. It’s a real working waterfront, but no need to contribute to keeping it sustainable. Just take in the view, your coffee was fair trade so you’ve done your part today!”
“Go where the locals go to experience the real culture of the town, then return to your ice castle by nightfall and simply swipe your iPad666 to put your smart home on lock down so you can count seagulls in peace.”
“Before you leave, you MUST try that new place on the corner that used to be a bar I liked. They are running a special that is to die for- Deep fried gold encrusted Maine duck egg/g.f. seafood stuffing/diamond dust/local blood sweat and tears aioli.”
And in most of Maine there is NOTHING left after the timber, logging, tannery, and paper mills left. Maine has tourism, the Naval Shipyard in the south, and General Dynamics shipyard in Bath.
The fact that Portland is growing is just like all the other cities. It has the ‘cool’ image and young people flock there to work at a boutique beer bar or a place that makes fancy sausage. I have no idea what is driving the Portland economy. You go there and the homeless problem is similar to SF, every corner, every sidewalk, as soon as your get of I-295 you are greeted by peddlers.
Portland is ok for a day trip for a decent dinner on the water and some great breweries, but paying $2000+/mo rent to live there? HAAAAA
maine has welfare Somalis too !
Major heroin problems too.
That problem is not limited to Maine - it’s also really bad in Seattle, where the city council actively enables drug use in multiple ways.
Another local municipality recently conducted training for the PUBLIC so WE can know how to safely pick up and dispose of the junkies’ used needles and syringes that are left in our neighborhoods.
This country is so wack-a-doodle upside down right now that it isn’t even funny.
Seems like a good time to take a 2 year walk-about.
“Seems like a good time to take a 2 year walk-about.”
Thoreau?
Crocodile Dundee.
Portland is crazy expensive. I’ve been looking at places outside a radius of 15 miles or more of the Portland zone and they are still dumpy and overpriced. It was that way when I moved here in 2003. Too bad I balked at buying something in 2011 or so when real estate was down but I did not heed the call. One thing I valued about Maine was you could live a quiet life and stay under the radar and actually enjoy the amenities. It seems though much of the time spent living here ain’t that simple.
Darn near 8% income tax over $60k. They bleed you out.
Never confuse Yellen Bucks Looking For A Place To Die with gentrification.
From the Denver article:
“However, we expect this artificial demand to reverse within the next two to five years as the millennials gain increasing access to mortgage financing”
Not 20% down payments.
Not higher wages.
Just more debt.
“Not 20% down payments.
Not higher wages.
Just more debt.”
And all of this has resulted in two things for you:
1. Lower rent
2. Greater selection
“Just more debt.”
Yes, yes, yes, yes, yes … yes-yes-yes-yes-yes-yes-yes-yes-yes … YES!
I like it. I love it. I want some more of it.
Dumb ‘em down, and profit.
Dumb ‘em down and profit, indeed. IDIOCRACY, we have arrived.
I am really ‘banking’ on my brethren’s massive student loan debt to hold them back in the next couple of yrs as housing takes a correction. Graduating debt free and working a professional job right out of the gate will hopefully give me a leg up. Although I am just as much as a feudal serf as anyone else at this point. Bow to your banker masters, bow!!
A worthy goal is to have every financial transaction on the planet - EVERY FINANCIAL TRANSACTION - include a banker placed in the middle - a banker in placed the middle of each and every transaction and collecting just a wee bit from each end.
Like in Office Space, taking fractions of pennies at a time…
Where’s my stapler? I want my red stapler…
The sheeple will vote for their own shafting, like they always do. You can’t fix stupid.
I am really ‘banking’ on my brethren’s massive student loan debt to hold them back in the next couple of yrs as housing takes a correction.
You haven’t been paying attention. The Comrades of Proven Worth at the DNC, who are nothing more than adjuncts for the banksters, will see to it that those unpayable student loans are “forgiven” - i.e. transferred to taxpayers. And Obama will have the gall to call it “the right thing to do.” And 95% of you idiots will meekly bend over and take it, just like you did in 2008 when you bailed out Wall Street, then turned around and voted for Wall Street errand boys.
I wrote in Ron Paul, so I’m not part of the 95%…
I too expect my idiot friends to be forgiven of their $75,000-100,000 debt, that I will help pay off for them, and also for their free houses, cars, whatever else is in the pipeline. FSA!!
“I too expect my idiot friends to be forgiven of their $75,000-100,000 debt …”
I call this a “reset”. After the reset is completed these same people will line up at my door wanting to do it again.
And since there are some hefty fees involved in doing it again (and again and again) that will be paid to me what’s not to like?
You haven’t been paying attention. The Comrades of Proven Worth at the DNC, who are nothing more than adjuncts for the banksters, will see to it that those unpayable student loans are “forgiven” - i.e. transferred to taxpayers
Won’t that require that the GOP controlled Congress play along?
Won’t that require that the GOP controlled Congress play along?
Don’t bother him with facts.
Irrelevant.
The government gets its money for free but charges students 6.75% interest. It makes money off of student debt. It’s already started forgiving certain debts (fraudulent schools/disabilities) and still the student loan program is a net money maker.
What this article fails to mention about the subreddit being censored is that its subject is open borders immigration in Europe and its related problems:
http://www.foxnews.com/tech/2016/05/16/reddit-administrators-accused-censorship.html
Another Southern Poverty Law Center production.
Globalists gonna globe.
‘Nearly 1,000 luxury apartments units are delivering now in downtown Austin at rents setting a high bar. Three years ago, The Whitley at 301 Brazos St. broke the $3-per-square-foot ceiling and now the 439-unit Northshore appears poised to breech the $4-per-square foot benchmark.’
‘A one-bedroom, 777-square-foot apartment on the 27th floor costs $2,983 per month, according to its website — possibly an unprecedented $3.84 per square foot in Austin leasing history. Even one of the smallest one-bedroom units — 504 square feet on the eighth floor — costs $1,838 per month, about $3.64 per square foot.’
‘More apartments are under construction or in the pipeline, according to a map created by CBRE Group Inc. using information from Apartment Data Services. The map also indicates the density of millennial-aged residents — currently a very active renter group across the city — with a high volume of 18-34-year-olds living between U.S. 183 to the north, Texas Highway 71 to the south, Mopac Expressway to the west and Springdale Road to the east.’
‘Apartment development in East Austin tops all submarkets with nine projects recently completed or under construction and another five proposed for a total of 4,756 units, according to the CBRE data.’
‘The Central Business District and The Domain in North Austin also are seeing more heavy construction activity. The Standard at the Domain is one of the largest new apartment complexes to deliver in Austin in 2016 with 563 units.’
All these articles about high rent apartments.
When the Chinese turn to other asset classes the rug will be pulled out. And it will become a renter’s market.
The Chinese developers have jumped into multi-family, but mostly condos and in just a few markets like LA and NYC. The money behind these apartments is largely US based. Private equity groups loaded up with pension bucks, etc. There’s the Yellen/central bank QE fiat running around. It’s oversupply that is tipping it over. This is the “build your way out of a bubble” route and every week, more media is asking, “do we have an apartment bubble?” like the Las Vegas headline. It’s popping right now, has been for almost a year.
http://www.census.gov/construction/nrc/historical_data/index.html
See the historical start data. The AVERAGE new home starts from 1959 to 2007 was approximately 1.5MM homes per year. This is approximately what we need for population growth and replacement of existing structures.
We have averaged 800k over the last 8 years, and now are seeing low vacancy rates and high rent growth (signs of there not being enough housing).
Building 2MM housing units per year (above equilibrium levels) at a time when vacancy rates were on the high end of normal was overbuilding (2005).
Building 1.2MM housing units or less (below equilibrium levels) at a time when vacancy rates are on the low end of normal is not overbuilding (current conditions).
Are we building too many of certain products in certain markets?
Absolutely.
High-end condos in NYC, luxury apartments in Denver, luxury apartments in many markets, etc.
Are we building enough housing generally?
Nope.
With record vacancy rates, record high levels of housing units and falling population growth in the US, record low household formation there is no need to build more houses.
http://wallstreetexaminer.com/uploads/iamge576.png
Big picture my friend. Big picture.
You do realize that your posted graph only shows data to 2011, right?
http://www.sfchronicle.com/business/networth/article/Bay-Area-building-boom-may-not-end-housing-7223711.php
1.5 month old article for the SF Bay Area.
Good point. There are a couple million more houses built since then.
Rents are completely out of whack in Austin. Many friends of mine are paying $2.5k+ in rent, and please don’t forget most apartment charge anywhere from $100 to $150 to park vehicle you own. In the meantime, I am sticking with my 1960s Spanish-style condo rental in the middle of downtown for $1325 a month.
How many ‘young’ professionals with 6-figure salaries are there?
“I am sticking with my 1960s Spanish-style condo rental in the middle of downtown for $1325 a month.”
Here’s 2500 more rentals under $1300 a month in Austin.
http://austin.craigslist.org/search/apa?max_price=1300
1 to 100 of 1057
http://austin.craigslist.org/search/apa?query=1+month+free&max_price=1300
Yeah looks like lots of nice 2 bedroom apartments for around $1200. Not sure where the $2500 figure came from.
Yeah I don’t get it. Irvine, CA also has lots of $2,500 apartments to rent and I suppose lots of people rent them. Many of those apartments are not much quieter than mine (lots of busy streets).
Yet mine is $1425 - partly because I have no W/D inside and it’s a one bedroom unit. I had to provide my own fridge. My place (knock on wood) is nice enough for me. Close to a great bike trail and within 8 miles of my office.
My complex rarely has vacancies. I think my place is a diamond.
I can stuff $30,000 away into Roth 401k and Roth IRA every year and have enough money left over to stay debt free. Fine by me.
No “smaller government” or “less regulation” or “lower taxes” happening here:
“All over the country, employers say they see a disturbing downside of tighter labor markets as they try to rebuild from the worst recession since the Depression: They are struggling to find workers who can pass a pre-employment drug test.
Drug use in the work force “is not a new problem. Back in the ’80s, it was pretty bad, and we brought it down,” said Calvina L. Fay, executive director of the Drug Free America Foundation. But, she added, “we’ve seen it edging back up some,” and increasingly, both employers and industry associations “have expressed exasperation.”
Data on the scope of the problem is sketchy because figures on job applicants who test positive for drugs miss the many people who simply skip tests they cannot pass.
In Colorado, “to find a roofer or a painter that can pass a drug test is unheard-of,” said Jesse Russow, owner of Avalanche Roofing & Exteriors, in Colorado Springs. That was true even before Colorado, like a few other states, made recreational use of marijuana legal.
In a sector where employers like himself tend to rely on Latino workers, Mr. Russow tried to diversify three years ago by recruiting white workers, vetting about 80 people. But, he said, “As soon as I say ‘criminal background check,’ ‘drug test,’ they’re out the door.”
http://www.nytimes.com/2016/05/18/business/hiring-hurdle-finding-workers-who-can-pass-a-drug-test.html?_r=0
maybe that $15 minimum wage should come with a clean criminal and drug test or employers can still pay you $7.50
I guess who gives a crap what you do in your spare time? As long as they’re not high on the job, who cares? I’ve not read any scientific study that says recreational drug use in your spare time correlates with poor job performance.
or test positive for drugs and you cant sue your employer or use his insurance to cover your medical bills…..sounds fair
Annandale, VA Housing Affordability Improves As Prices Plunge 9% YoY
http://www.zillow.com/annandale-va/home-values/
The front page of Google notes that today is the International Day Against Homophobia and Transphobia.
“For more than 25 years, Richard Johnson has called a one-bedroom apartment in Hayes Valley home — even as the neighborhood changed and rents increased, pushing out old friends. He never imagined he would be among them.
Johnson, 59, who was diagnosed with HIV in 1987, is disabled and receives a monthly rental assistance voucher from the Housing Opportunities for Persons with HIV/AIDS, known as HOPWA. But while other federal housing programs protect tenants from rent increases, this one does not. On Johnson’s birthday in December, he got a letter in the mail: His rent was going to go up by 175 percent.
“Next year, they could raise my rent to full market price, and I would lose my apartment of 25 years because I couldn’t afford it and have no way to fight an eviction,” said Johnson, who was able to get the rent increase reduced to 35 percent. “My story is not unique. Those with HIV and AIDS, we are being selectively pushed out by the exorbitant increases and have no protections against it.”
Supervisor Scott Wiener on Tuesday will introduce legislation at the Board of Supervisors that would close the rent control loophole, allowing those relying on the program to be protected from increases. The measure could begin providing protection as soon as July.
“When you’re talking about renters who are long-term HIV survivors, these are people who are disproportionally low-income or on a fixed income,” Wiener said. “These are not people that can afford to rent at market rate. If their rent spikes, unless they get really lucky, they have to leave the city or become homeless. The last thing we need is people with HIV being pushed out of their homes due to an irrational loophole.”
http://www.sfgate.com/bayarea/article/S-F-supervisor-looks-to-shield-HIV-survivors-7510000.php
Anti-LGBT views still prevail, global survey finds:
“Two-thirds of adults would be upset if their child told them that they were in love with someone of the same sex according to a survey of 96,000 people in 53 UN member states.
The survey (pdf), which was conducted by the International Lesbian, Gay, Bisexual, Trans and Intersex Association (ILGA) found that regional differences in opinion exist, but that overall the findings show “deeply entrenched heteronormative concepts of sexual orientation and gender identity”. Only 28% of respondents globally said they would find it acceptable if a male child always dressed and expressed themselves as a girl.
A separate report also released by the ILGA on Tuesday looks at laws worldwide and finds that same-sex sexual acts can be punished with death penalty in 13 states, or parts of states (representing 6% of all UN states) while the threat of imprisonment exists in 75 countries and five entities.”
http://www.theguardian.com/world/2016/may/17/global-lgbt-rights-new-survey-ilga
some people want grandchildren
Hilary will fix that
Boomers are Hillary’s main supporters. Selfish and feckless to the bitter end, aren’t they? If they have grandchildren, they deserve their hatred and bitterness for massively screwing over them and their generation.
link please
“Next year, they could raise my rent to full market price,”
The inhumanity of it all.
The FSA on the march.
hey 2 i dunno, he has lived almost 30 years with hiv…what are his chances of living another year or two?
would you kick Some one out who is legally blind and lives on the first floor? maybe force them to rent an apartment on the 2nd 3rd floor with no elevator?
id err on the side of being a little compassionate. unless there were say 100,000 in his situation that we are paying for.
No “pent-up demand” for $500,000 starter homes happening here:
“According to the latest estimates, 70% of the class of 2016 will graduate with student loan debt, and the average 2016 college graduate with loans will owe $37,172.”
http://www.businessinsider.com/what-the-class-of-2016-should-know-about-student-loans-2016-5
I am student loan debt free, working as an engineer, and still can’t afford these inflated home markets. Guess I am going about life wrong.
Pick yourself up off the floor, cheer up and be happy like Happy Humphrey and remember….. Nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels. Nothing.
Miami, FL Housing Prices Crater 6% YoY
http://www.zillow.com/miami-fl/home-values/
The key is getting massively into debt, and then having others pay for it when you are over your head. I have watched friends, coworkers, and neighbors all do it. They all have (or had, for awhile) nicer houses, cars, and other expensive toys than me.
But seriously, keep your powder dry, and diversify your assets - some cash, some bitcoin, some physical gold and silver, and guns & ammo (even if you aren’t a ‘gun’ person) too. Heck, even things like a high-quality Stihl chainsaw and other useful items, kept in good condition, will always have utility and monetary value.
“Guess I am going about life wrong.”
I had the exact same feeling 11-12 years ago. In my naivete, I wondered what was wrong with me. Fresh-faced college grads were buying 1-bed condos for $275-$300K and painting accent walls with their handsome SOs (so said the adverts). Obviously they had the financial acumen to have $60K in cash saved up. Meanwhile here I was, 10 years older and just paying off some deferred student debt.
How could I be such a loser? That’s how I found this blog. And found that they weren’t putting ANYTHING down. And not even paying full PITI. I hope they all lost their shirts.
“How could I be such a loser?”
Here ya go Donk.
http://www.rentfaxpro.com/wp-content/uploads/2016/04/depreciation.jpg
Debt-fueled growth never ends well.
http://www.businessinsider.com/infographic-estimate-chinas-debt-load-2016-5
It sure seemed like people were going to turn it around and change there behaviors in 2009. It appears it didn’t stick, as you can see from the plethora of articles suggesting just the opposite.
Gold ETFs are a scam. Remember, in a time of universal fraud, possession is 9/10s of the law.
http://wolfstreet.com/2016/05/16/why-the-gold-and-silver-futures-market-is-like-a-rigged-casino/
Cedar Park(Austin), TX Housing Affordability Surges As Prices Fall 7% YoY
http://www.movoto.com/cedar-park-tx/market-trends/
Silly Germans, sueing to stop the ECB’s deranged money-printing. Are they delusional enough to think that supranational bodies installed to amass all wealth and power into the greedy hands of the Oligopoly are accountable to the serfs?
https://www.yahoo.com/news/germans-sue-european-central-bank-115204814.html?nhp=1
“Monetizing public service” - what an apt description of our crony capitalist Republicrat duopoly, with arch-fiend Hillary Clinton soon to be Influence Peddler in Chief.
http://www.breitbart.com/2016-presidential-race/2016/05/16/peter-schweizer-clinton-cash-shows-clintons-monetized-public-service-email-scandal-symptom-larger-problem/
That’s a Breitbart link. Southern Poverty Law Center blog monitors forbid you posting Breitbart links here. Please adhere to the globalist narrative.
An interesting article.
————
America Today Resembles 1910 More Than Postwar Era
Townhall.com | May 17, 2016 | Michael Barone
Conservatives look back fondly on postwar America’s high marriage rates and stable families, few divorces and out-of-wedlock births, low crime rates and widely shared cultural values celebrated in classic movies and television sitcoms that almost everyone watched. Liberals look back fondly on postwar America’s high income equality and labor union membership, its low rates of unemployment and rising education levels, its high marginal tax rates and its high rates of social mobility.
So let me offer a different benchmark: the America of 1910 or some other year before the outbreak of World War I in 1914.
I started thinking about that on a recent weekend sightseeing tour of lower Manhattan. It’s become a kind of outdoor museum, with few cars on the street and with dozens of tourists eyeing the massive buildings — the columned stock exchange, JPMorgan’s austere headquarters, the massive Equitable Building and the 60-story Woolworth Building looming over lower Broadway — with their marble gleaming as it must have when they were newly built 100 or so years ago.
The America of 1910 was a lot more like today’s America than you might think. The economy was growing, but fitfully. Disruptive technology was threatening old industries, creating new jobs but eliminating many others.
Income inequality was much greater than today, and living conditions more disparate. Electricity was common in cities but unavailable on the farms where half of Americans lived. John D. Rockefeller and Henry Ford were billionaires at a time when average annual incomes were below $1,000.
It was an America even more culturally divided than we are today. Within a mile or so of Wall Street lived hundreds of thousands of Jewish and Italian immigrants in the world’s most crowded neighborhoods. Immigration as a percentage of pre-existing population between the opening of Ellis Island in 1892 and the outbreak of World War I in 1914 was three times the level of 1982-2007.
The South was in many ways a separate and underdeveloped country, still estranged half a century after the Civil War, with income levels one-quarter those of New York. Even as 30 million Europeans crossed the ocean to America, only 1 million Southern whites and 1 million blacks moved North despite the promise of much higher wages.
Marriage rates were lower than in postwar America, and many young people dropped by the wayside. Alcohol consumption was much higher than today; prostitution, female and male, was common. People didn’t like to talk about these things, but you get hints about them in the novels of Frank Norris and Theodore Dreiser.
The Americans of 1910 faced terrorism and globalization, too. Anarchists murdered President William McKinley in 1901 and set off a bomb that killed dozens next to J.P. Morgan’s 23 Wall Street in 1920. This America was interlaced with the global economy and, with its growing economic and demographic might, risked being drawn into any world war.
So, America in 1910, with nearly 100 million people, was in important ways less like the postwar America of 150 million than like today’s America of 300 million. Studying how Americans handled — or mishandled — similar challenges may prove more fruitful than yearning to restore the unique and non-replicable America of Charles Murray’s, Robert Putnam’s and my youth.
2 B -
I had posted a while back after finishing a book called “The Bully Pulpit” by Doris kerns ???? about TR and his buddy Bill Taft. As I finished that book I thought - this is exactly where we are today - alot of pissed off people - no solutions - divided parties etc.
In 1912 + or - Roosevelt attempted to regain the Repub nomination at the convention in (you guessed it) Chicago only to find that he could not get a majority vote for nomination. So…..what does he do - starts a third party “Bull Moose”. As a result - the liberal Progressives led by Woody Wilson - waltzed into power right through the gap that TR created with his new party.
Yep - the more things change the more they remain the same. Why do we have to re-learn the same lessons over and over and over?
I am more and more convinced that the utopian paradise known as Chicago is the epicenter of the destruction of our liberty in this once great country. Great no longer.
‘whether investors are building too many higher-end projects. Broker Patrick Sauter, managing partner of NAI Vegas, said nearly all developers were ‘building basically the same product…’
From yesterday:
‘In some areas, the average has jumped hundreds of dollars. The luxury market appears to be driving steep increases. And more high-end apartments are on the way. The Arizona Multi-Housing Association counts more than 11,500 apartments under construction or planned east of the I-17, only about 500 would be considered affordable.’
http://thehousingbubbleblog.com/?p=9636
How come no one asks why? How could this be going on in almost every city and town in the country, at the exact same time? I’ve documented it extensively. Land prices have doubled or tripled. There’s your bubble. FHFA is backing the loans where need be, to the tune of a trillion bucks in the past few years. Portland Maine apartment rents went up 40% in three years and yields went down 22%. Affordable units are being wiped out and the only thing being built is “luxury”.
‘Investors like Middle Farms are buying up what few affordable rental properties remain in Nashville, slapping on some new countertops, and doubling the rent. Under Howe Garden’s new owners, renovated units start at $1,099 per month for a one bedroom. About a month ago tenants were paying as little as $524 per month’
This isn’t some accident. The government is making housing unaffordable. Every time housing markets slowdown, here comes lower lending standards. Sure, it’s going to blow up. A recession, credit crisis, something has to give. It’s not good for the economy. This money we are spending on shelter could be used on food or education or transportation or (gasp!) savings. But no, it’s being sucked into the black hole of foaming the runway for the banks.
“Oh, we can’t build affordable housing Ben!”
Notice they have no problem building empty towers all over the world for foreign investors. That they can throw up tens of thousands of spiffy apartments no one needs every quarter for several quarters now.
‘All eight cities in the Federal Reserve Bank of Atlanta study - Birmingham, Atlanta, Jacksonville, Memphis, Miami, Nashville, Orlando and Tampa - saw declines in the supply of rental units priced between $500 and $750 monthly from 2010 until 2014. All except Tampa saw decreases in units under $500 monthly.’
‘Each city also saw an increase of units that cost more than $1,500 monthly - but Birmingham had the biggest increase. It’s likely that that increase has gone up even more since then, with the recent opening of luxury apartment complexes within city limits. It’s also likely to keep increasing - several more luxury projects are in the works. Birmingham is seeing a massive influx of luxury rental units, often celebrated for bringing investment to the city and continuing urban renewal. But incomes aren’t necessarily keeping up with rising rents’
Ben-
This reminds me of that NPR piece years ago on Planet Money where the word of the day was “excess money in the world markets looking for a place to land”. And land it did - in smoke and flames. We again have money chasing ever smaller and smaller returns (in essence yield). I have a sense when housing yield crashes that same money will be looking for another place to land.
” We again have money chasing ever smaller and smaller returns (in essence yield).”
Prices, I think this money is chasing prices.
Yield sounds like a good word but (to me at least) the “yield” of and investment is what the investment itself will return, the money that the investment as an entity will generate and pass on to the shareholder or whomever, money generated by its operations.
But chasing prices is another thing altogether; Chasing prices is in essence looking for (and hoping for) the greater fool, the greater fool that will buy tomorrow (or ten minutes from now) what you bought today and will buy it for a higher price.
Chasing prices doesn’t end up having anything built as one normally thinks an investment will cause to happen, chasing prices only moves prices up and down and generates a lot of fees and commissions for strangers.
If you are a handler of other people’s money and these other people need you to generate a hefty return because they themselves promised somebody else a hefty return (think annuities and pensions) then you are screwed if you are going to accept and settle for an investment “yield” (say, of interest or dividends) because this yield is just not going to hack it; It will not hack it for the people you are handing money for nor will it hack it for yourself. (Remember, as a handler of other people’s money you need to generate two returns, two yields: One yield for the people whose money you are handling and one yield for yourself.)
This is not doable in this low-return environment without taking some enormous risks, some enormous price-chasing risks.
Bulletin U.S. consumer-price index up 0.4% in April
Wall Street banks see a painful summer for stocks ahead
By Sue Chang
Published: May 16, 2016 7:34 p.m. ET
Risk factors include higher interest rates and the U.S. election
AFP/Getty Images
It’s looking like a rough summer for stock bulls.
If you gathered a group of stock analysts in a room, odds are each analyst would have a different view on the market.
So when analysts from three big investment banks are on the same page, it might pay to listen.
Bank of America Merrill Lynch, Goldman Sachs and J.P. Morgan are all urging investors to rotate out of equities because they see a painful summer ahead.
…
With so little interest in stocks, plus a corporate earnings recession already of several months duration, what props up the market?
Opinion: Investors throw in the towel on stocks
By Howard Gold
Published: May 17, 2016 5:11 a.m. ET
Middle-class Americans have fled the market because they simply don’t have the money
Only 52% of Americans had money in the stock market in April, matching the lowest ownership rate in 19 years of Gallup polling.
Last week came the news that investors were pulling money from global stock funds at the fastest pace since 2011 — $44 billion in five weeks and nearly $90 billion so far this year.
The Usual Experts gave lots of reasons for this — uncertainty about Federal Reserve policy, weakness in Japan and Europe, and slower-than-expected GDP growth in the U.S. and China, as well as the market turmoil that ran from last summer until early this year. All of this supposedly sent individual investors running for the hills.
But fund flow data largely reflect the decisions of institutional investors and traders. Exchange-traded funds, which are tracked in the data, have emerged as important hedging and trading vehicles for institutions and hedge funds. U.S. households owned only 5% of them in 2015, according to the Investment Company Institute (ICI).
No, individuals have been staying the course, for the most part. But their course is to keep as far away from the stock market as possible. This retreat from equities has been going on for eight years.
Gallup regularly polls Americans about their ownership of stocks and equity mutual funds. Last month it found that only 52% of Americans said they had money in the market, matching the lowest ownership rate in 19 years of polling.
In April 2008, just before the financial crisis began, 65% of Americans said they had money in stocks. That was the peak. The number slid steadily until 2013, and has stayed around that depressed level ever since.
Interest in stocks also remains low. As the table below shows, only 22% of Americans told Gallup in April they viewed stocks as the best long-term investment. That’s up from the nadir of 15% after the financial crisis, but it’s way down from the high of 31% in April 2007, just months before the market hit its previous all-time high. (By the way, interest in real estate is the highest it’s been since just before the housing bust. Uh-oh.)
…
Rents are going to keep rising as hope ‘n change continues to hollow out the middle class.
http://www.zerohedge.com/news/2016-05-17/rents-set-keep-rising-after-depressed-multfamily-starts-permits
‘The issue, as with the starts data, is the multi-family, aka rental units, barely rebounded and remained at severely depressed levels last seen in 2013: at 348K rental units permitted in April, this is a far cry from the recent highs of 598K in June.’
Look at the chart. The 598k units was the highest on the graph. From above:
‘According to Reis, in the first quarter alone, U.S. developers brought to market more than 42,000 units, the highest first-quarter tally since at least 1999′
The construction is one thing, the absorption is another. They have been finishing more apartments than have been filled for 5 quarters. The biggest expense for a landlord is vacancy. With these razor thin profit margins, 5 or 10% vacancy means it’s losing money. Losing money means defaults.
‘Cheap borrowing costs may be artificially pumping up property values, but strong real estate fundamentals and the global interest rate environment are mitigating the risks, said Barry Sternlicht, head of the $53 billion investment firm Starwood Capital Group.’
‘Sternlicht was responding to a warning from Boston Fed President Eric Rosengren that low interest rates may be encouraging commercial real estate speculation. “He’s right, we’ve created an asset bubble,” Sternlicht said. “But do you really think rates can rise aggressively in the United States, when global interest rates are so low? The dollar will go through the ceiling.”
‘Against that backdrop, Sternlicht also said, “The core fundamentals of the property sector haven’t been this good in the United States in 20 years.” Starwood Capital specializes in real estate investing. “Housing formation is good. The housing market is OK. Apartment rents are going up,” Sternlicht said, revealing he’s purchased about $8 billion of apartments in the past six months.’
He cited as strong markets: Nashville, Tennessee; Denver; Seattle; and Southern California. But even expensive New York City and San Francisco are cooling off a bit, Sternlicht said. “San Francisco is turning because of the tech bubble … deflating.”
‘he’s purchased about $8 billion of apartments in the past six months’
This guy is the biggest bag-holder on the planet. The FHFA backed these loans. The old hands sold to him for top dollar and they’ll buy it back in foreclosure. They talk about it openly:
‘Otherwise, in Colorado, we have taken the precaution to sell our three other apartment projects’
My son and two roommates just rented a new apartment in Greeley. They are paying $1450 a month for a two bedroom apartment in Greeley, and the complex, which is brand new, is almost fully rented out.
I don’t know if the place qualifies as “luxury”. It is nice, but it’s also brand new. One thing it does have: granite counter tops in in the kitchen. The complex has garages, but a single spot is an extra $200 a month.
Here’s 177 more Greeley houses and apartments under $1000/month…. with parking.
https://fortcollins.craigslist.org/search/apa?search_distance=5&postal=80631&max_price=1000
He’s probably an off the books agent of the Fed Reserve. The tribe runs scams like this all the time to cover their tracks. Remember all those hedge funds based in the Caribbean back during the last bubble that were buying US treasuries when no one else would? The tribe owns the printing presses and the banks and control the country. Half these hedge fund clowns are doing the govt bidding - if they weren’t they would have been crushed long ago.
^It’s been going on for a long while and nobody is discussing it except us.
Post a link.
Irrelevant
Most projects will factor in 5% vacancy at a minimum. We are underwriting a project today where the assumed vacancy factor is 6%, in a local market with sub-4% vacancy.
We don’t start running into issues with the ability to make the debt payment until the vacancy rate is well in excess of 25%.
This is mainly due to the fact that to build an apartment project, lenders are requiring more than 20% of the project to be contributed as equity (we are putting down 30%).
Here’s the math.
Build a $10MM apartment complex to a 6% yield assuming 5% vacancy, assuming a 35% expense ratio. And 6% is on the low end…I haven’t seen anything over 8% in a LONG time (for new construction), but over 7% exists in many markets.
That means the income each year is $600k, comprised of $925k of revenue, $325k of expenses at 95% leased.
The loan is $7MM. With interest rates at 4.5%, even factoring in amortization at 25 years, you need $472k of income to service the debt (some loans have 30-year amortization, some are interest only, both of which makes debt service easier).
So, you can have your income reduced by $128k per year before you run into problems. 95% occupancy was $925k of revenue, or approximately $9,750k per point of occupancy. $128k is another 13 points of occupancy.
This assumes all expenses are fixed (and they are not).
An 18% vacancy factor to break even on the debt. Build to a higher yield and the 18% rises (this is why our number is higher).
I’m not saying people didn’t overleverage. I’m certain many did. However, it’s not universal, and going from 0% to 10% vacancy will not create massive defaults.
In the US as a whole, all-else equal (no new renter households), you need to add more than 400,000 rental units to add 1 point of vacancy.
The main issues that I see in apartments are:
1. Too many luxury units being built, especially in “hot” markets (Austin, SF, NYC, Denver); and
2. In those “hot” markets, the exit yields have been lowered to a point where only a slight uptick in market cap rates wipe out a LOT of equity. If you assume a 4% exit cap, and the market moves to 5%, all-else equal, that’s a 25% reduction in value. That’s a big number.
I don’t see overall there being too many units being built.
The rising vacancy and default rates and falling rents say otherwise.
“The rising vacancy and default rates and falling rents say otherwise.”
Post a link.
Data my friend. Like this.
http://www.census.gov/housing/hvs/files/currenthvspress.pdf
http://www.bkfs.com/Data/DataReports/BKFS_MM_Mar2016_Report.pdf
http://on.wsj.com/1XxyPeg
Read up my friend. Read up.
Novato, CA Housing Prices Crater 11% YoY As Declines Grow Statewide
http://www.zillow.com/novato-ca/home-values/
Where are the vacancy rates, default rates, or falling rents?
All around you. In every state in the country.
rental what about people like us non luxury people? the only real luxury i need is a modern updated computer whats that… a month or two rent?
Real inflation, even as measured by our Soviet-style BLS stats, keeps rising, yet Yellen the Felon keeps bilking savers and retirees with ZIRP, soon to be NIRP.
http://www.zerohedge.com/news/2016-05-17/consumer-prices-jump-most-over-3-years-amid-rising-gasoline-rent-inflation
Unfortunately that’s not inflation.
Daryl Hall Slams SJW Academia: ‘Now, There’s a Hotbed of Idiocy’
5.13.2016
News
Trey Sanchez
Here is the exchange.
SALON: One of the current debates is over “cultural appropriation” – the idea that white people should not appropriate the culture of ethnic and racial minorities. I know that you don’t like the term “blue eyed soul.” Have you followed this conversation?
HALL: Are you trying to say that I don’t own the style of music that I grew up with and sing? I grew up with this music. It is not about being black or white. That is the most naïve attitude I’ve ever heard in my life. That is so far in the past, I hope, for everyone’s sake. It isn’t even an issue to discuss. The music that you listened to when you grew up is your music. It has nothing to do with “cultural appropriation.”
SALON: I agree with you entirely, because…
HALL: I’m glad that you do, because anyone who says that should shut the f*** up.
SALON: Well, this entire critique is coming back…
HALL: I’m sorry to hear it. Who is making these critiques? Who do they write for? What are their credentials to give an opinion like that? Who are they?
SALON: Much of it is academic.
HALL: Well, then they should go back to school. Academia? Now, there’s a hotbed of idiocy.
SALON: Anyone who knows about music, about culture in general, understands that everything is much more natural. Everything is a mixture.
HALL: We live in America. That’s our entire culture. Our culture is a blend. It isn’t split up into groups. Anyone who says otherwise is a fool – worse than a fool – a dangerous fool.
Rock on, Daryl.
Some of these old-school rockers still have a streak of rock ‘n roll rebellion.
Have you seen Triggly Puff yet? Just google it…
The SJW poster girl and role model for the precious snowflakes coming out of our NEA-DNC indoctrination mills.
In a less enlightened era, her only future would have been a carnival side show.
She has a bright future as a Democrat Party senior official.
Bingo wings at such a young age. Sad, really.
https://encyclopediadramatica.se/Trigglypuff
(Oh-oh, here she comes)
Watch out boy
She’ll chew you up
(Oh-oh, here she comes)
She’s a Social Justice Warrior
Heh, I’m stocking up on popcorn for the Obama post-presidency reality show. It’ll make LBJ’s crack-up look quaint.
That would be cool if he let his hair get long like LBJ did.
“HALL: We live in America. That’s our entire culture. Our culture is a blend. It isn’t split up into groups. Anyone who says otherwise is a fool – worse than a fool – a dangerous fool.”
Obama: ‘Be Confident in Your Heritage. Be Confident in Your Blackness.’
Published on May 7, 2016
http://www.youtube.com/watch?v=XKrlBwyUFt8 - 316k -
“Our culture is a blend. It isn’t split up into groups.”
Oh, dear. I’m a big fan of Hall’s, but clearly he hasn’t kept up with the times and is out of step with the culture.
Ya know, I would have more success thinking of our culture as a blend if the Social Justice Warriors would stop reminding me that our culture isn’t really a blend, like this…
7 most progressive moments from ’Star Wars: The Force Awakens’
#1: First fighter is a woman.
#2: Rey stance on hand-holding while running.
#3: First time Finn turns on lightsaber.
#4: Minority X-Wing pilots live!
#5: Lady stormtrooper
#6: Asian Resistance leader
#7: Rey takes up the lightsaber
Read more at http://www.hitfix.com/harpy/most-progressive-moments-from-star-wars-the-force-awakens#yRwXI8HJo0grPeOq.99
Hey donk.
One of the current debates is over “cultural appropriation” – the idea that white people should not appropriate the culture of ethnic and racial minorities. I know that you don’t like the term “blue eyed soul.” Have you followed this conversation?
This is a big fuss over nothing. Probably fewer than 1 in 10 Americans have ever heard of “cultural appropriation”.
“Probably fewer than 1 in 10 Americans have ever heard of “cultural appropriation”.
Spoken like a ‘non-diverse’ racist who doesn’t have “White Privilege II” on his playlist.
White men in tech are now being referred to as ‘non-diverse’
Julie Bort
May 13, 2016
When it comes to companies that have staffed their boards with people of many backgrounds, Salesforce has done a commendable job.
Its board of directors includes former US Secretary of State Colin Powell, Gilead Sciences CFO Robin Washington, YouTube CEO Susan Wojcicki, and a former vice president of the European Commission, Neelie Kroes.
That means that of the 12 people on its board, four of them — one-third — are not white males.
And, by the way, the company’s initiatives on equal pay for women make it a role model on that front, too.
Still, we couldn’t help but chuckle at the company’s latest SEC filing, in which it describes the backgrounds of its board.
Take a look at the chart, at the part where it describes the diversity of its board: 33% of them are “diverse” and 67% of them are “non-diverse.”
(AllHipHop News) Macklemore used his latest single “White Privilege II” to address some serious social issues such as racism, police brutality, and white supremacy. However, many news outlets ran stories claiming the Seattle rhymer “dissed” other white performers Miley Cyrus and Iggy Azalea.
[ALSO READ: Macklemore Addresses Black Lives Matter, Cultural Appropriation & White Supremacy On “White Privilege II” (AUDIO)]
While Macklemore’s particular bars mentioning Iggy were in the context of him questioning his own role in cultural appropriation, Iggy posted a tweet that read, “He shouldn’t have spent the last three yrs having friendly [conversations] and taking pictures together at events, etc, if those were his feelings.”
MACKLEMORE & RYAN LEWIS FEAT. JAMILA WOODS - WHITE PRIVILEGE II
http://www.youtube.com/watch?v=Y_rl4ZGdy34 - 327k -
maybe they could work and speak the king’s English
appropriate that,yo
Get ready for “higher than expected” inflation as the Fed’s debasement of the currency erodes your purchasing power.
http://www.businessinsider.com/cpi-consumer-price-index-april-2016-2016-5
Will the specter of high inflation force the Fed to follow through with announced interest rate liftoff plans?
Not a chance. Yellen the Felon will not raise interest rates until her hand is forced by the bond vigilantes. As long as 95% of the electorate remain docile and stupid, the Fed has a free hand to enrich its oligarch patrons at the expense of everyone else.
Inflation rises in April at fastest rate in 3 years
By Jeffry Bartash
Published: May 17, 2016 10:37 a.m. ET
CPI climbs 0.4% on higher gas prices, rising rent
Consumers paid more for gas in April. Rent, food and medical care were mostly costly, too.
The prices Americans pay for goods and services saw the fastest increase in April in more than three years, led by the higher cost of gas and rent.
The consumer price index shot up a seasonally adjusted 0.4% last month, the biggest gain since February 2013.
More than half of the rise in consumer inflation stemmed from a recent bump in the cost of gasoline. Rent was another major contributor, accounting for about one-fourth of the increase.
…
Rental costs continue to surge past incomes
By Andrea Riquier
Published: May 17, 2016 10:51 a.m. ET
Rent continues to grow at a stronger pace than incomes, capping household formation and distorting the housing market.
Rent price growth matched the highest since the financial crisis, another indication of the imbalance in the nation’s housing market.
In April, rent was 3.7% higher than a year ago, the same 12-month rate of increase for the fifth month in a row, the Labor Department reported as part of the consumer price index report. That’s the highest since before the financial crisis, and it’s much bigger than pay increases.
…
Dow logs nearly 2-month closing low as rate-hike fear sparks sell-off
By Mark DeCambre
Published: May 17, 2016 4:04 p.m. ET
The Dow Jones Industrial Average on Tuesday sank to its lowest level in almost two months after comments from Federal Reserve officials fueled fears that the U.S. central bank would resume raising benchmark rates as early as June. The Dow tumbled 180 points, or 1%, to 17,529, marking its lowest close since March 28. Nearly all of the Dow’s 30 components finished in negative territory, led by a 2.5% slide in Home Depot Inc. Shares of Caterpillar Inc. and DuPont closed in positive territory. The S&P 500 index ended down 19 points, or 0.9%, to 2,047, while the tech-heavy Nasdaq Composite Index finished off 59 points, or 1.3%, at 4,715.
…
Are the Keynesian fraudsters at the Fed readying helicopter money to goose their Ponzi markets and asset bubbles?
http://wolfstreet.com/2016/05/16/next-step-for-the-us-looks-like-helicopter-money/
‘Homeownership, a key indicator of neighborhood stability, has dwindled near the University of Arizona — in some cases dramatically — over the past 15 years. In a dozen neighborhoods on the university’s borders, the rate of owner-occupied homes tops out at 42 percent and in some cases the rate is 10 percent or less.’
‘Those rentals used to be occupied by UA students, but increasingly that group is choosing plush new student-housing communities, leaving residents to worry about vacant, unkempt properties left behind.’
‘Councilman Steve Kozachik, whose ward includes the majority of the 12 UA-area neighborhoods, said the city’s role can be to contact owners of vacant homes and explain the effort and remind them that tenants may be tough to find as more student housing becomes available.’
‘In the Rincon Heights Neighborhood, southwest of Campbell Avenue and Sixth Street, the vacancy rate has nearly doubled to 9.3 percent. “There does seem to be a lot more rent signs and they’re staying out longer,” said Colby Henley, a neighborhood association board member and representative to the Campus Community Relations Committee.’
‘He believes student housing complexes have lured away students who would otherwise be living in his neighborhood. “It’s a two-sided thing,” Henley said. “The towers addressed the pressure on the neighborhoods, but the flip side is it opened up some of these places and there’s more vacancies.”
‘choosing plush new student-housing communities’
Yes, luxury student housing; another bubble. Senior housing is overbuilt too.
30,000 apartments on the way in Houston, mostly luxury:
‘The U.S. energy sector (XLE) is facing $370 billion of debt, a number that has more than doubled in the past decade. But even as oil rebounds off 13-year lows, many energy companies are struggling to stay afloat. To simply make the interest payments on the debt, energy companies shelled out $16.7 billion last year—about half of their total operating profit, according to data compiled by FactSet and Yahoo Finance.’
‘The figures from the past quarter are increasingly grim: 86% of energy sector operating profits were used to cover the interest payments on debt.’
That is always a sign of imminent bankruptcy.
When a person/business/country can not even pay the interest on the debt - let alone pay back any principal.
‘The figures from the past quarter are increasingly grim: 86% of energy sector operating profits were used to cover the interest payments on debt.’
On my way to the Boston-Logan airport last Friday, I noticed this brand new, massive apartment complex, probably 6-8 buildings. Right off the hwy, “the Chase at Overlook Ridge” in a crummy part of town. Googled it, of course the starting rent is $1600 for a 425 sq ft place. I’m sure a parking space is extra. Airplane noise is free though.
Living the Boston dream those folks are….
What I’ve come to understand, having lived in Boston 1996, is that this place is the next San Francisco. Big tech, big pharma, big medicine, big paychecks. Which means big-ass housing prices. It’s only going to get worse. Things may flatline when the economy shits the bed, but don’t count on that lasting too long. The stratification will continue. The city doesn’t give a shit, those assholes are too busy lining their own pockets. The NIMBYs in the suburbs don’t give a shit, those assholes got theirs and they don’t give a shit if you got yours. It’s only getting worse with time. Those who don’t own their housing will be serfs at the mercy of the aristocracy. Or they’ll just be driven out of the city. That’s just the way it is, brah.
Oh trust me I know. I’ve only been in the area for over a yr and don’t plan on staying long. Housing is out of the question, gun ownership -nope, my car insurance doubled, and the whole I-95 corridor North is about to be jam packed from Fri-Sun as everyone migrates to the “beaches” and $25 lobster rolls.
I had a friend enthusiastically move up here to get a “raise” to $65k, only to live in East Boston for $1800/mo, and just outside his apartment someone was murdered and the FBI busted 30+ MS-13 gang members. Woohoo gentrification!!
$65K in Boston is not even middle class. It’s working poor.
$100k in Boston is working poor.
Boston??? I like the weather in the mtns better. Better quality of life as a bartender in Mammoth Lakes, CA. traffic???
Traffic in metro Boston is horrendous. That’s why people pay $800K for modest houses within the Route 128 beltway.
Better quality of life as a bartender in Mammoth Lakes, CA.
That doesn’t sound too great. Wouldn’t you prefer to be a hedge fund manager on Maui?
‘Oh trust me I know. I’ve only been in the area for over a yr and don’t plan on staying long. ‘
And make sure to not own much materially. Take the BILA advice and be prepared to move on a dime to another location for a job.
Check this:
https://www.reddit.com/r/boston/comments/4jqkvq/somerville_tenants_decry_rent_hikes_as_notorious/
How about $1,725 for a 1 bd/1ba 876 sqft apartment right next (literally) to a 16 lane freeway (I-15) in San Diego!
http://www.gardencommunitiesca.com/Apartment-Rentals/CA/San-Diego/Casa-Mira-View.aspx
“PORTLAND—This city that prides itself on being different has been experiencing a problem all too common of late. It used to be unique, people say, a utopia where people could get tattoos and ride their bikes everywhere and just be weird. Portland was so affordable, as the slogan went, that young people went there to retire.
Then the city got “discovered,” people started flocking here, the tech companies came, and Portland became more expensive. Oregon has been the top destination for people to move to for three years in a row, according to United Van Lines.
Now, housing prices are skyrocketing in this city of 600,000, as more people move in and new high-rises and apartment complexes go up. Apartment rents are rising at an annualized rate of 14 percent, one of the largest increases in the country. More than half of the city’s tenants spend more than 30 percent of their income on rent. News stories abound of whole buildings raising their rent by 20 percent or by $500, or more. Evictions have skyrocketed as landlords make room for new residents with bigger salaries.
It’s all the newcomers, some say. They’re driving prices up and they’re pushing long-time residents out. They’re why Portland was determined by Governing magazine to be the place in the country with the most gentrification over the last decade.”
http://www.theatlantic.com/business/archive/2016/05/the-real-roots-of-portlands-housing-crisis/482988/
From the article:
“There are limits to white urban liberalism,” Justin Buri, the executive director of the Community Alliance of Tenants, tells me. “When it comes to housing and schools, all of that goes out the window.”
LOLZ
I keep telling my friend to hurry up and cash out of Portland. They have a little SFH, bought for $140,000 a decade or so ago. It needs work, but this crazy influx/housing hysteria, people are buying properties on his street for $300-400k. Cash out and run for the hills.
It’s a shame, because having worked in both Portland and SF on temporary basis, Portland was refreshing and low key compared to the Bay Area. People weren’t pompous or self righteous about living in “the greatest city on Earth”. But the tech transplants are flooding into Portland and in comes the prevailing attitudes. My friend says the amount of CA license plates in the new apartment parking complexes is crazy.
Post a link.
Sausage, my favorite kind of link.
Data my friend. Like this.
Ventura, CA Housing Prices Crater 16% YoY
http://www.movoto.com/ventura-ca/market-trends/
Mmmm, cherries!
Are you sure?
Household Formation Plummets To Record Low
http://ftalphaville.ft.com/files/2014/12/HHFGS.png
“People weren’t pompous or self righteous about living in “the greatest city on Earth”.”
Uh, it’s been at least 15, and probably more like 20, years since that was the case. People here act like it’s the ONLY city on Earth.
“But the tech transplants are flooding into Portland and in comes the prevailing attitudes.”
There you go.
“More than half of the city’s tenants spend more than 30 percent of their income on rent.”
I’m in the other 50%-ish. Another rent-increase-free year coming up!
Portland…is over.
“Developers increased the number of new apartment starts every year since the recovery began. But now, the number of new apartments may have finally caught up with the number of new renters who need these units. The percentage of vacant apartments has begun to creep upwards, though it’s still well under 5.0 percent on average in the U.S., according to most apartment researchers. Lenders are also much less willing to provide capital for new development. In 2016, developers will start construction on 320,000 new apartment units, followed by 275,000 units annually during the next few years. In contrast, in 2015, they started work on 350,000 units, according to Ron Witten, founder of apartment research firm Witten Advisors, based in Dallas. ‘We believe 2015 was the peak for this cycle,’ says Witten.”
“In 2016, developers will start construction on 320,000 new apartment units, followed by 275,000 units annually during the next few years. In contrast, in 2015, they started work on 350,000 units, according to Witten. Developers are starting to build fewer apartments partly because banks are refusing to pay for it. As a flood of new apartment developments opens and the percentage of vacant apartments has started to rise, banks are refusing to lend to weak deals and are lending less on the stronger deals. ‘Some banks are declining to quote some deals altogether,’ says Mitchell Kiffe, senior managing director for debt and structured finance in the capital markets group of real estate services firm CBRE.”
“As Dallas is considered one of the 10 hottest rental markets in the nation, it’s not much of a surprise to learn that we like our apartments fancy. How fancy? Of all the apartment projects completed in 2015, 93 percent of them were high-end. In San Antonio, 100 percent of all new apartments that went up last year were high-end. That’s right, 100 percent. In Austin, the number is 92 percent, just 1 percent behind Dallas. Eighty-nine percent of Houston’s new apartments were high-end, and Fort Worth slides in with 86 percent.”
“A handful of cities experienced ’spectacular’ growth in the luxury apartment area, including Midland-Odessa and its 800 percent increase. In 2012, there was just one high-end rental complex. As of 2015, there were nine. RentCafe points out the Texas domination, noting that ‘urban Houston, Dallas, San Antonio, Austin, Midland, Fort Worth, and Spring saw a combined total of 103 new luxury rental properties in 2015 and only six non-luxury rental properties.’”
“While nationwide and statewide trends reflect steadily increasing real estate prices, renters in the greater Salt Lake area are under particularly intense pressure as employment opportunities and the population are flourishing. Rental rates are skyrocketing due to high demand for apartment living and limited unit availability. Developers have reacted by building high-quality, high-price units, according to new research by James Wood, a senior fellow at the Kem C. Gardner Policy Institute at the University of Utah.”
“In Salt Lake City specifically, Wood said there have been 2,500 class A — or high-end — apartments built in the past five years. ‘We are in the biggest apartment boom in Salt Lake County and Salt Lake City in 30 years,’ Wood said.”
http://thehousingbubbleblog.com/?p=9632
“Luxury” in Midland/Odessa? What is it, a triple wide trailer? Do their Waffle Houses have linen on the table?
Please. Out of all the cities I’ve ever been to Midland is easily one of the biggest s**tholes.
Do they at least have a Whataburger?
Elon Musk apologizes for Tesla workers paid just $5 an hour by subcontractor
A report alleging the electric car company exploited workers from eastern Europe to build a high-tech paint shop has prompted Musk to launch an investigation
Tesla relied on cheap foreign labor to build a hi-tech paint shop in California, paying workers as little as $5 an hour, according to a damning report that prompted CEO Elon Musk to launch an investigation.
The electric car company used roughly 140 workers from eastern Europe, primarily Slovenia and Croatia, to build a paint shop in Fremont in northern California as part of its production of the Model 3 sedan.
Workers hired by subcontractor Eisenmann, a German-based manufacturer, received hourly wages as low as $5, which is a fraction of the prevailing wages for local sheet metal workers – $52 an hour plus $42 an hour in benefits and pensions, according to a report by the Bay Area News Group.
In response to the article, Musk tweeted, “Only heard about this today. Sounds like the wrong thing happened on many levels. Will investigate and make it right.”
https://www.theguardian.com/technology/2016/may/16/elon-musk-tesla-wages-apology?CMP=share_btn_fb#_=_
$50+/hr is cheap foreign labor in the Bay Area markets
Are the insider oligarchs exiting the Wall Street-Federal Reserve pump & dump and parking their ill-gotten gains in gold to profit massively from the coming crash?
http://www.marketwatch.com/story/what-to-back-while-waiting-for-the-markets-big-shift-2016-05-17
A newer form of real estate investing? Rooftops?
http://www.solarpowerportal.co.uk/guest_blog/the_rise_of_the_secondary_rooftop_market_5792
Oil prices rise to $48, up from $26 just 3 months ago.
http://money.cnn.com/2016/05/17/investing/oil-crude-prices-rally/index.htm
Amazing given the production and supply surplus huh
http://www.bloomberg.com/news/articles/2016-05-16/goldman-surprised-by-oil-market-s-flip-to-deficit-on-supply-cuts
Apparently the surplus is gone (likely temporarily).
Fair Oaks(Sacramento), CA Housing Affordability Balloons As Prices Plunge 13% YoY
http://www.zillow.com/fair-oaks-ca-95628/home-values/
“Used Car Prices Fall”
http://www.kjrh.com/money/consumer/dont-waste-your-money/used-car-prices-fall-for-the-first-time-in-years
“Supply of Used Cars Finally Rising”
Kewl
Will Mr banker go 84 mc months on a used car?
Wonder what happens when those 84 month loans start to default
They already started defaulting 18 months ago.
Post a link.
Anything for you my good friend. Anything for you.
Jupiter, FL Housing Prices Crater 9% YoY As Speculators Dump Properties Nationally
http://www.zillow.com/jupiter-fl/home-values/
Irrelevant.
Falling prices are never irrelevant.
Remember my friend…… Nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels. Nothing.
Doesn’t Zillow say the prices have ‘gone up’…not ‘cratered as you said:
“The median home value in Jupiter is $315,700. Jupiter home values have gone up 9.4% over the past year and Zillow predicts they will rise 0.1% within the next year.
Read more
About freaking time. $10,988 for a 2009 120,000mi CorollaXRS?!?!!? REALLY? I’m blaming it on state issued legal weed.
Used car prices have been crazy stupid high the last two years and this spring they’ve only gotten worse. I can wait though. Very patient.
Yep. I tried to buy one. Gave up and leased a new computer on wheels. My texts show up on the 7″ screen, voice commands, Pandora….14 airbags, 32mpg, stops on a dime
http://finance.yahoo.com/news/forget-slowdown-china-huge-us-131615334.html
I have no idea if this is true ?
“no idea”
How long have been here?
I think that is called capital flight, which is a classical symptom of a sinking ship (China).
Sinking ship, yea could be and how many millions off that sinking ship will end up here in the US ? Could be inflationary for RE and deflationary for wages.
Anyway I see it every day here on the coast. Irvine off jamboree surreal 6 years ago as I passed through it a few years ago on a Sunday.
NZ housing……
http://www.theguardian.com/world/2016/may/17/new-zealand-housing-crisis-forces-hundreds-to-live-in-garages-tents-and-cars
http://www.theguardian.com/world/2015/jul/13/new-zealand-labour-defends-claim-that-foreign-chinese-are-buying-up-houses
New Zealand’s Labour leader, Andrew Little, is defending the decision to release controversial data that he says suggests non-resident Chinese buyers are buying more and more properties in Auckland.
An Auckland economist, Shamubeel Eaqub, told Fairfax that using such “half-baked” data to draw conclusions verged on racism.
Soon enough China will be overrunning Australia and New Zealand by force as part of it’s own Greater East Asia Co-Prosperity Sphere. And the sheeple of those countries, who let themselves be disarmed by their oligarchs, will be wiped out or reduced to colonial serfdom.
https://www.youtube.com/watch?v=9KaX0F8GojI
Montclair(Denver), CO Housing Affordability Surges At Prices Crater 5% YoY
http://www.zillow.com/denver-co-80230/home-values/
Here it is - the ultimate in self congratulations!!!
Where else but the bowels of ILL ANNOY government agencies. Sheeesh!!!
CHICAGO, May 17, 2016 - The Chicago Department of Aviation (CDA) is pleased to announce that it has been recognized for safety by the Illinois Department of Transportation (IDOT) and for public service activities by the Association of Subcontractors & Affiliates of Chicago (ASAC).
The IDOT Division of Aeronautics selected O’Hare International Airport as the 2016 Illinois Primary Airport of the Year, based on an internal review that the division conducts on airports around the state. The criteria used for the review include coordination and cooperation with the Federal Aviation Administration; the facility’s safety record; general maintenance of the facility and service provided to the local community. The award was presented on May 5, 2016 at Southern Illinois University in Carbondale.
That same day, ASAC selected the CDA as the recipient of its 2016 Outstanding Public Service Award, for the CDA’s leadership overseeing significant construction projects taking place at O’Hare and Midway International Airports.
“We thank both IDOT and ASAC for honoring the Chicago Department of Aviation with these awards,” said CDA Commissioner Ginger S. Evans. “Safety on the airfield and in the terminals is our top priority. We are also committed to ensuring our airports continue to be largest economic engines for our region.”
IDOT is responsible for the planning, construction, operation, and maintenance of Illinois’ extensive transportation network, which encompasses roads, bridges, airports, public transit, rail freight, and rail passenger systems.
ASAC represents over 400 construction subcontractors and serves its members by providing networking opportunities, education, and advocacy within the construction industry. Over the years, ASAC has worked closely with the CDA on a variety of matters affecting subcontractors, including development of payment practices that served as a model for other government agencies.
Senate passes bill allowing 9/11 victims to sue Saudi Arabia.
House of Bush is not happy.
Time to seize the Saudi property in the usa.
Can we just follow the building permits to see boom and bust?
Well, the Skyscraper Index says that we are about to be in a world of hurt (Google it as there are plenty of good articles).
Check the ‘Skyscraper Index’, which says impending bust.
[sorry about the double post]
OK, the Democrat clown car was funny and all, but now they are getting violent:
‘The head of the Democratic Party on Tuesday denounced the violence and incivility that marred this past weekend’s party gathering in Nevada and called on leaders to reject such actions. “Our democracy is undermined any time threats, intimidation, physical violence or damage to property are present,” Rep. Debbie Wasserman Schultz, D-Fla., chairman of the Democratic Party, said in a statement.’
‘Chair throwing, shouted profanities and even later death threats to party leaders marked Saturday’s party meeting. The raucous affair ended Saturday night when security at the Paris Las Vegas casino said they could no longer ensure an orderly event. “It was beyond the pale,” said Democratic state Sen. Pat Spearman, a Clinton supporter who said she saw an elderly woman hit with a bottle amid the ruckus.’
http://bigstory.ap.org/article/bd8b6ba80de446a09ba25fc56d9599a1/pall-nevada-fracas-hangs-over-democratic-contest
I wonder how many of these protesters even vote? 20%? Most people do not align themselves with either party anymore. Both suk
When the corrupt crony capitalist apparatchiks running the DNC rig the process, they shouldn’t be surprised when some of the proles they’re screwing over get unruly.
“In downtown Cleveland and University Circle, a bevy of new apartment buildings and rehabs of former offices to dwellings have come online, and more are on the way.”
Sounds like Cleveland rents are rolling through Cleveland on fire. Probably going to end like this:
Randy Newman - Burn On
https://www.youtube.com/watch?v=VtW8RkI3-c4
Want to Buy a Self-Driving Car? Big-Rig Trucks May Come First
SAN FRANCISCO — Imagine you are driving on a highway late at night when a big-rig truck closes in behind you. You relax because it is keeping a safe distance and seems to be obeying the speed limit. Now imagine that truck is driving itself.
Despite Silicon Valley’s enthusiasm for self-driving cars, it could be years before there are many of them on the road. But autonomous 18-wheelers? One start-up is betting that is a different matter.
Otto, led by 15 former Google engineers, including major figures from the search company’s self-driving car and maps projects, is aiming at the long-haul freeway driving that is the bread and butter of the commercial trucking industry.
The engineers think that automating trucks rather than passenger vehicles could be more palatable financially and to regulators. Nationally, trucks drive 5.6 percent of all vehicle miles and are responsible for 9.5 percent of highway fatalities, according to Department of Transportation data.
Adding self-driving technology — at least as it stands now — into regular passenger cars could make them absurdly expensive for anyone without the cash of a Silicon Valley mogul. Until recently, the laser sensor used on the Google car project cost $75,000.
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Those costs are coming down, but it will be some time before they have a realistic price for consumers. But a new, big tractor-trailer truck can easily cost more than $150,000, so the added cost of robotic features could make more sense.
In addition, it could make trucking more efficient, allowing, for example, a human driver to rest in the sleeper cabin while the truck takes the wheel.
http://www.nytimes.com/2016/05/17/technology/want-to-buy-a-self-driving-car-trucks-may-come-first.html?smtyp=cur&_r=0
I mentioned I could see this. But I imagined setting up separate highways dedicated to them between major hubs. Have them draft one another magnetically, peel off when they got near their destination to be driven by a person to the final drop off. You could save billions in accidents, insurance, fuel, road wear, labor and the trucks could operate all day and night until they crapped out.
What you are describing has already been invented: it’s called the railway system.
It’s completely stupid to be using trucks for anything longer than a couple hundred miles.
There’s probably more to it then you realize. Trucks and railroads have been competing for a long time and the railroads haven’t driven long distance trucking out of business.
The railway system can’t peel off cars near a destination. It could work a lot of different ways. From a rail center; Dallas to somewhere near. There are a lot of trucks on the road, and they tear it up. I drive on interstates a lot. There is almost always a rail line right next them, and the highway is swarming with trucks. Anyway, I’m just thinking out loud. I don’t know anything about it really.
The unionized railways, that owned (were given by the gov’t in most cases) their own right-of-ways and tracks, were undercut by non-unionized trucking companies using public highways that the trucking companies didn’t own or maintain.
An unintended consequence of building the interstate highway system. The fact that there is still a lot of truck traffic indicates that we need to tilt the balance financially-speaking towards using the rail system again, which of course will drive free-market types crazy.
We pay for it one way or the other, and personally, I’d much rather pay a nickel more for that apple delivered to my grocery store than to drive on rutted, rough highways ruined by heavy trucks.
Now imagine a hacker takes control of that driverless truck and wreaks mayhem on our highways.
Look out self driving trucks.
Skip to 1:00 to see why.
http://www.youtube.com/watch?v=g3WtvzmKCQQ - 296k -
Kapolei, Hawaii Housing Affordability Improves As Prices Crater 9% YoY
http://www.zillow.com/kapolei-hi/home-values/
Non-vegetables, repeat after me: Yellen the Felon will NEVER raise rates of her own volition, despite the incessant jawboning of her flying monkeys and the Oligopoly stenographers who are trying to pretend the Fed has some credibility as a central bank. Yellen knows full well that if she raises rates, the Ponzi tanks. So unless her Goldman Sachs handlers have gone massively short and ordered her to hike rates to crash the market and slaughter the muppets, it ain’t going to happen.
http://www.marketwatch.com/story/us-stock-futures-seesaw-as-oil-rally-fades-2016-05-17
Yellen is a few months from getting kicked to the curb.
How’s that hope ‘n change workin’ out ya, ‘Murica?
http://libertyblitzkrieg.com/2016/05/17/middle-class-destitution-a-devastating-tale-from-americas-heartland/
Venezuelans voted for socialism. Now they’re getting it good and hard. ‘Muricans, meet your future under our Permanent Democrat Supermajority.
http://www.theatlantic.com/photo/2016/05/the-empty-cupboards-of-venezuelas-families/482949/
May the lib-tards of Minnesota enjoy their fundamental transformation as they hack out their TB-ridden lungs.
http://www.breitbart.com/big-government/2016/05/17/22-resettled-refugees-minnesota-tested-positive-tuberculosis/
Saudi Arabia has threatened to dump its US Treasury holdings if this bill passes (allowing the victims of the 9-11 attacks to sue Saudi Arabia if it is found to be complicit in the attacks, in which 15 of 19 attackers were Saudis). If the Saudis dump their US debt, Yellen the Felon will likely have no choice but to jack up interest rates to make US debt more attractive to foreign “investors” (who are too dumb to realize that Yellen will print/inflate away that debt rather than repay it). This could get interesting….
http://www.aljazeera.com/news/2016/05/senate-adopts-bill-opposed-saudi-arabia-160517192222851.html
Go ahead, Saudi Arabia. Dump your US Treasuries and stocks. I double-dog dare you.
http://www.breitbart.com/big-government/2016/05/17/senate-passes-bipartisan-bill-allowing-911-victims-to-sue-saudi-arabia-despite-veto-threats/
attorneys are happy - congress is made up of attorneys. shocking!
The US has raised its import duties on Chinese steelmakers by more than five-fold after accusing them of selling their products below market prices.
The taxes specifically apply to Chinese-made cold-rolled flat steel, which is used in car manufacturing, shipping containers and construction.
The US Commerce Department ruling comes amid heightened trade tensions between the two sides over several products, including chicken parts.
Steel is an especially sensitive issue.
US and European steel producers claim China is distorting the global market and undercutting them by dumping its excess supply abroad.
http://www.bbc.co.uk/news/business-36319141
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