Their Wager Might Be Shakier Than They Thought
WZTV reports from Tennessee. “To rent or to buy — that’s a tough question as Nashville’s ‘it city’ status drives an estimated 65 people to Music City each day. The continued boom means prices for both homes and apartments are rising, with builders working to keep up with demand. After years of paying rent, Travers Xanthos is now paying a mortgage. This millennial bought a house in Nashville’s Nations neighborhood after securing a sweet deal. ‘It’s three bedroom two and a half bath masters on the first floor, I paid $380,000 for it, but I only had to put three percent down,’ Xanthos said. ‘I really think it’s throwing your money away, especially if you’re going to be in an apartment downtown, you’re going to be paying $2,000 a month for a one bedroom a two grand mortgage would get a three bedroom house in the Nations.’”
“But with more apartment buildings going up, some others say renting gives you better flexibility. While all these new apartments being built may exceed the demand for them, it doesn’t mean rental prices will be coming down.”
The Wall Street Journal. “The largest U.S. apartment landlords are betting that hordes of millennials streaming into cities will keep pushing rents sky-high. But an expected spike in new supply in some key markets suggests their wager might be shakier than they thought. In 25 of the largest U.S. cities, multifamily permits in urban areas were up 39% in 2015 compared with a year earlier, according to a study by housing-research firm Zelman & Associates.”
“New York, for example, is poised to see 2.6 times more apartments come online in the next year than the historical average, according to the analysis. Boston is likely to see 2.5 times as much supply growth as usual, while Philadelphia is bracing for twice the usual supply increase. After the recession, ‘everyone rushed into the cities, land prices got bid up, construction got more expensive, so what you’re seeing is a lot of new supply coming on at the high end,’ said Alexander Goldfarb, an analyst at Sandler O’Neill + Partners. ‘You throw on a bunch more supply and the market really feels it.’”
“The slowdown already is beginning to be reflected in company results. According to Zelman & Associates, new apartment completions in the neighborhoods where Equity Residential’s portfolio is concentrated, such as Manhattan’s Midtown West, are forecast to increase 57% in 2016 compared with 2015. AvalonBay is likely to see a 50% increase in new supply in the neighborhoods where it has the strongest presence.”
“‘You can lean on the millennial argument…you can spin a story of how demand will absorb all of this,’ said Dennis McGill, director of research at Zelman & Associates. ‘Demand is not going to change by 50% in a year.’”
From Westside Today. “The average sale price of United States luxury homes fell 1.1 percent for the first quarter of 2016 according to internet real estate brokerage site Redfin. The definition of ‘luxury market’ for Redfin’s study is the highest 5 percent of homes sold in a particular quarter. Redfin reports that the ‘luxury home price decline was felt in cities across the country, including Miami Beach (-13.7 percent); Austin (-11.8 percent); Boston (-11.8 percent); Houston ( -5.1 percent); San Francisco (-4.7 percent); Washington (-4.2 percent); and Los Angeles (-1.3 percent).’ Except for Miami Beach, Redfin found these cities only fell at the high-end, with the bottom 95 percent seeing year over year price gains.”
“The explanation for prices going down at the high end but not the bottom 95 percent is that the global economic volatility caused luxury buyers to put the brakes on in the face of the volatility in asset prices including the oil and stock markets. The result was that the volume of inventory of homes priced above $5 million jumped up 13.2 percent from the prior year. Redfin explained that its numbers may understate the increased volume of inventory which may not include homes being built by speculators that are not yet officially on the market.”
“The Chief economist for Redfin explained further that, ‘instead of cheering rock bottom mortgage rates, luxury buyers recoiled from high–end spending in the face of volatile asset prices. Luxury demand, especially for vacation and investment properties, has been more fragile this year, causing prices to slump.’”
The Business Observer on Florida. “Coldwell Banker real estate agent Lynne Koy, specializing on Longboat Key and waterfront properties, had a golden week in early June, when she had three closings that totaled $6 million in sales. But the stellar week might not foretell a continuation in the housing market rebound. ‘I’m seeing a reduction in prices,’ Koy tells Coffee Talk. ‘We aren’t seeing the appreciation we saw in prices even a year ago.’”
“Koy says that reduction, even on sought-after waterfront properties, makes the science of how to price the listing even more of a priority. That was the case with one of her three recent closes, on Mistletoe Lane on Longboat Key. Koy actively watched the listing when it hit the market, first priced at $1,795,000. She reached out to the sellers when it didn’t move. Koy persuaded the sellers to relist with her at a lower price, $1,495,000. The 3,216-square-foot waterfront property, with four bedrooms and three and a half bathrooms, sold for $1.45 million 13 days after Koy knocked $300,000 of the list price.”
“‘Buyers are sophisticated shoppers,’ she says. ‘They will not be fooled into over-paying for properties, no matter how beautiful the view may be.’”
‘With less than half its rooms filled, a new Denver apartment complex has posted a record sales price. San Antonio-based Lynd Co sold its Joule apartment building in the Golden Triangle to a Boston-based firm for $120 million. With 224 apartments in the 16-story building, the price figures to about $535,700 per door — the highest per-unit price in Denver’s history of apartment sales.’
‘An onsite leasing representative said the Joule is 44 percent leased. The building is offering a month’s free rent to lure in tenants, a perk not offered when BusinessDen reported on apartment rental concessions in January.’
‘The smallest studio is advertised at $1,565 per month on the building’s website. Joule’s one-bedroom units run from $1,810 to $4,000 per month. The priciest three-bedroom is advertised at $9,000 per month.’
‘Renters have plenty of room to stretch in most units. ARA Newmark figures show that apartments average about 1,054 square feet. Rents on one-bedroom units range between $2.55 and $3.55 a square foot.’
‘Amenities include a Speer-fronting rooftop patio with a pool deck, fire pit, cabanas and grilling stations, as well as a dog-grooming room, concierge service and virtual golf simulator.’
‘The Golden Triangle is a hot area. The Joule is blocks away from Eviva Cherokee, a 270-unit luxury apartment tower under construction at 1250 Cherokee St. Also, Legacy Partners is putting up a 332-unit building at 13th Avenue and Speer Boulevard.’
It’s interesting how much of this new apartment flipping is going on. 500k per door is a lot.
‘Colorado’s economy will continue to slow this year and next before ramping up again in 2018, according to a quarterly economic update from the Colorado Legislative Council. Weakening exports, soft commodity prices, high housing costs and a tight labor market will continue to weigh on economic growth in Colorado, but they are unlikely to derail it.’
“Our forecast calls for a modest rate of expansion through 2017,” said Natalie Mullis, chief economist at the council. “The risks of recession are rising.”
‘Colorado may seem far removed from the economic woes plaguing Europe and Asia, but it can’t escape them as weak global demand pushes down on commodity prices. Employment in Colorado’s mining sector, which includes oil and gas, fell 8.5 percent last year, despite oil production in the state rising by a third. So far this year, mining payroll counts are down an additional 17.6 percent year to date through April.’
‘That drop in foreign demand is hurting farmers. Farm incomes in Colorado were down by a third in 2015 from the peak reached in 2013. So far this year, they are down an additional 20 percent from 2015 levels, the report notes.’
‘Farmers are borrowing more heavily to get through the rough patch and so far are staying current on their short-term loans, the report said. But if prices remain low for a long time, that could change.’
‘Weaker foreign demand and a stronger U.S. dollar are hurting Colorado exports, which were down 12 percent in the first quarter compared with the first quarter of 2015. That is nearly double the decline measured nationally. Last year, Colorado exports fell 4.3 percent.’
‘Housing costs along the northern Front Range continue to increase at some of the fastest rates in the country, diverting money that consumers might otherwise have spent buying goods and services.’
‘The council outlook expects residential permits, which rose 11.1 percent in 2014, will end the year up 6 percent this year and increase 4.5 percent in 2017.’
‘The value of nonresidential construction in Colorado is up 24.7 percent year to date through May, reflecting a higher price tag on the new projects being built.’
Boy, I hope that construction never slows down.
‘The risks of recession are rising’
The sun will be out tomorrow, bet your bottom dollar…
diverting money that consumers might otherwise have spent buying goods and services
Denver = Debtver.
“500k per door is a lot.”
Especially when it is about 400 times gross rental revenue.
$500k per door is beyond ludicrous. It’s “Onion” fodder.
Local radio station is filling a slot on Sundays now with a real estate show. It will be hosted by a Keller Williams UHS who, by, coincidence, advertises on the radio these past years to offer her selling skills. This show will run the same time as the NAR’s Real Estate show on another station. Are we topping out on real estate prices maybe and this is a sign?
Do dispensaries and craft beer bars pay enough for the workers to afford $1500-2000 in rent?
has to be allot of bootlegging on the pot front
The markup on hash oil concentrates (shatter, wax, etc) is 300-400% if you can transport it to Dallas, Chicago, New York. Don’t ask me how I know this…
Here’s another flip:
‘A JV of StonebridgeCarras and Walton Street Capital just opened 8300 Wisconsin Ave a month ago, but the partnership has already sold the nine-story, mixed-use building for a record-breaking price.’
‘The 359-unit building at 8300 Wisconsin Ave sold for $207M at an estimated roughly $520k price per unit, Bisnow has learned. The building, Flats 8300, features a 50k SF Harris Teeter grocery store with a Starbucks on the ground floor. HFF brokered the deal on behalf of the JV. Chicago-based Invesco Real Estate is the buyer of the most expensive multifamily property in Maryland history. Previously, the highest recorded price per unit sale in Maryland was The Chase at Bethesda, which sold for $467k per unit.’
‘In addition to breaking the Maryland record, this sale is in the top echelon of DC-area mulitifamily sales in history. The Louis at 14th on U Street NW had held the record at more than $650k per unit until The Woodley blew that record away, selling for just under $920k per unit in 2014. The Palatine Apartments in Arlington sold for $540k per unit in 2011, still (barely) the highest for any suburban DC apartment sale.’
“Having a price above $500k per unit is setting a new bar for sales price per unit in suburban Maryland,” Will Rich, who leads multifamily research for Delta Associates, told Bisnow today. “Not many sales around the Metro area would be able to demand such a high price, even in DC proper.”
It makes a ton of sense.
When these investors started the project, it was probably 2-3 years ago, and they underwrote a certain rent, and a certain exit cap rate. They probably trended rents somewhat, but assumed when they started that they would need to build AND lease before they would sell to realize their profit.
Fast forward 2-3 years, the rent growth has probably exceeded their expectations, and cap rates have stayed low, if not gone lower.
Based on what has happened in the market, they can probably sell the property for a price that gets them all of their expected return (if not more), and they don’t need to take any further risk. The buyer will take the lease-up risk, and get a little bit of a spread…IF cap rates stay low, and rents stay high.
I’d be a seller too…but I wouldn’t consider them “flippers”, it’s not like they entered into the transaction 6 months ago.
prices continue to drop as other states legalize it….brah
I still don’t get what makes Denver worth $4000 a month in rent.
Cow. Town.
‘The vacancy rate in residential rental units across San Diego County stands at 4.5 percent, a significant increase from the 2.6 percent vacancy rate in fall 2015, according to the San Diego County Apartment Association’s Spring 2016 Vacancy and Rental Rate Survey.’
‘Higher vacancy rates in East County and South County (6 percent and 6.3 percent, respectively) accounted for much of the increase in the county’s overall average rate.’
‘SDCAA Executive Director Alan Pentico noted that the higher vacancy rates this spring were likely due to temporary factors. For example, new multifamily developments that have opened recently in East County and the South Bay may be responsible for the higher vacancy rates in those areas, according to SDCAA’s analysis. Another possibility is that landlords are holding units vacant to allow time for renovations and upgrades.’
“Existing properties will not be able to meet growing demand,” Pentico said. “Rising operating costs — such as water and sewer rates, property taxes and worker’s compensation premiums — will make it even more difficult for property owners to keep rents at artificially low levels.”
Aren’t increasing vacancy rates in the face of an employment boom indicative that rents are too high? And just wait until the next recession. Lots of come lately SD real estate investors are due to lose their arses.
‘Rising operating costs…will make it even more difficult for property owners to keep rents at artificially low levels’
Difficult indeed. Maybe to the point of losing money and defaulting. Oh well, those pensioners didn’t need to retire so early anyway.
There seems to be a questionable assumption here that landlords will always be able to pass on rising operating costs to tenants. But tenants who can’t afford rent increases have the options of either moving into cheaper digs or leaving town.
Those rising vacancies suggest this may already be happening.
“Higher vacancy rates in East County and South County (6 percent and 6.3 percent, respectively) accounted for much of the increase in the county’s overall average rate. North County and the city of San Diego remained much closer to recent averages, at 2.8 percent and 3.2 percent, respectively.”
I wonder how many units were added to the inventory in the East and South. That would be telling.
If the vacancy rate increase can be tied pretty directly to the addition of units (that aren’t full when complete), it’s premature to draw any conclusions.
If the vacancy rate rose meaningfully independent of the additional units (they added 2,000 units, but there are 4,000 more vacant units), there might be something else going on.
Definitely happening up north in Sonoma Co., rents are up 45% in the last 5 years while wages are flat so many are doing long commutes from less expensive outlying towns…many others are working two or more jobs in order to pay high rent in the more expensive parts of California.
Have been lucky so far myself, my place was pricey when I moved in 7 years ago but have only had one 5% rent hike in the meantime.
Bluto, with rents going up 45% in 5 years, have you seen the market respond with a meaningful increase in supply?
“Existing properties will not be able to meet growing demand,” Pentico said. “Rising operating costs — such as water and sewer rates, property taxes and worker’s compensation premiums — will make it even more difficult for property owners to keep rents at artificially low levels.”
Artificially low levels??? When was the last time property owners keep rates artificially low? (never?)
Only in response to rent control laws.
“if you’re going to be in an apartment downtown, you’re going to be paying $2,000 a month ” Ok. I had to check out Nashville for myself given its new hyped up status. Well, downtown isn’t much. Why anyone would pay $2000 to live downtown, no idea. Besides the trashy Broadway St, filled with drunken bachelorette parties and honky tonk bars, there isn’t much going on. I may be biased, but if I was to throw away $2000-2500 a month, it would definitely be in a real metro area like Boston, SF, or even Seattle and other places that wont be 95 w/ 85%+ humidity everyday in July-Sept.
I especially like the line of ” ‘I really think it’s throwing your money away,”, because I too thought like that, until I found this blog and was led onto research and data. Thanks HBB.
”I really think it’s throwing your money away,”
People who go about making such lame statements are living evidence that UHS propaganda some times works.
On Facebook and LinkedIn I have some UHS contacts/friends. Their status updates and postings will always be like
1) “Rates expected to increase, jump in now!”
2) “Historically the most affordable market!”
3) “Buy now, stop wasting on rent!”
It’s worse than the broken record of Yellen saying in ambiguous terms the economy is retracting.
Nobody ever seems to count the cost of renting money.
Some do, but even fewer count the opportunity cost of money that you are not renting (ie, the return you could achieve on your down payment).
Why is this relevant when down payments are in the neighborhood of $0?
I threw some money away last night… fantastic rib-eye.
Maybe I should be smarter and buy a cow, keep it in the backyard?
The depreciation rate on cow ownership is too high once you turn them into rib-eye.
Luxury home sales dropping -11.8% in Boston. Just yesterday my coworker, 55, was talking real estate that’s been in/out of her family in the Boston area and her own misses in the market timing. She was talking about a home her grandparents bought for $75k near Davis Square/Somerville in the early 70s and how its worth $700,000 now. I tried to explain sunk/lost money over that 40 yr period due to upkeep, upgrades, taxes, depreciation, but she just kept trying to cut me off about how its still a massive gain no matter which way you slice it. My argument was also that unless you cash out/sell and move toa cheaper standard of living to anywhere south or west of NJ (compared to Boston) that’s the only way it really matters. But these people who are born and raised in New England could simply not fathom living in the “South” because anywhere south of CT/NJ/NY to them is filled with farmers, gun tottin Republicans, darker complexion folk, and grits. It really is amusing.
There are quite a few New Englanders who retire to Florida and the Carolinas.
No doubt. It would make the most financial sense. Not everyone up here is blind of course. There are very intelligent people
The other day at the public library, I checked out a back-issue copy of Where to Retire magazine, just for kicks. The upcoming trend is agri-conscious retirement. Much like having a house on a golf course, you can buy a house which borders the farm. And you can participate in the small town lifestyle, with all the craft beer and organic broccoli and artisan bread you can keep down.
Vomit inducing.
show them a s&P chart w divs- blows RE away
That’s a winner! No upkeep in VFIAX. And you can take VFIAX everywhere you go. In the last week I got $1200 in quarterly dividends from VFIAX and $1500 from VTIAX. Life is good as a renter.
No upkeep in VFIAX
No management fees?
(yes, it’s a fraction of % upkeep for a house)
The only asset class I know of with no management fees is U.S. treasuries of any form. But then you have to carefully strategize on maximizing your interest by using equally spaced maturing of treasuries.
How to make 52-week T-bills pay 52 week rates but act as if they are 4-week bills: Buy equal amounts of T-bills 13 issue times a year and reinvest.
Selected stocks are down 30% to 40% from their highs and the risk of being in T-bills missing out some potential run-ups is higher compared to the stocks themselves, so I’m shifting out of T-bills.
https://www.portfoliovisualizer.com/backtest-portfolio
Backtest your portfolio or compare to some famous sample portfolios.
Funny MO beats a health care mutual fund which beats the S&P
When I explained to this other coworker that historically over 100 yrs, thanks to massive data compiling by Shiller, houses gained, what, 1%? She did not believe me and stated how they sold their one house at a tidy profit, and moved a few neighborhoods over and their house already “appreciated” by 3% in less than a yr… -_-
These people just eat this nonsense up don’t they?
You know, even if the buyers are trained mathematicians, they can easily be fooled by realtards.
S&P 500>Single Family Residences.
No doubt.
But single-family residences should never be considered a real estate investment. They are shelter. You consume it.
HOWEVER,
Publicly traded REITs are a pretty damn good investment vehicle over long periods of time.
https://www.reit.com/investing/reit-basics/reit-financial-benefits/reits-and-investment-performance
Clearly you need to check the source (this is in-fact from NAREIT), but I have seen similar metrics noted elsewhere.
I agree with you on the REITs. I might have said this just yesterday on HBB.
I think it’s an underappreciated fact. When most people ask “is real estate a good investment?”, they are asking about their home–and then they try to draw a parallel to commercial property.
That’s akin to asking whether food is a good investment, referring to lunch, and then trying to draw a parallel to long-term ownership of productive farmland.
According to the BLS Inflation Calculator, $75,000 in 1972 had the purchasing power of $431,045 in 2016. (I used 1972 but I don’t know the exact year they bought their shack.) So much of that alleged appreciation has to be written off to inflation.
http://www.bls.gov/data/inflation_calculator.htm
Exactly. I tried to present that off the cocktail napkin math to her, but like most people, they just see total sale price and think its pure cash. So you figure $700,000 - $430,000 = $270,000. Looks like that area/zipcode of Somerville/Davis Square has approx. 1% annual property tax. So $270,000 - $75,000 (at a minimum for 10 yrs worth of taxes) and they’re “appreciation” is already down to $195,000. Of course over a 40+ yr time span how many water heaters, AC units, appliances, and windows have to be replaced? Sorry didn’t feel like running a series summation for actual taxes paid over 40+ yrs.
For reference I found something similar to what she described in the Hood she described, here is the Zillow listing. 115 yr old shack, $502/sq ft, $7000/yr property taxes…
Davis Square/Somerville Ma Shack
VOICES
We Have Tools to Revive Homeownership — It’s Time to Use Them
Marietta RodriguezBy Marietta Rodriguez
June 20, 2016
Homeownership in America today is at a crossroads. The percentage of homeowners has dropped to 63.5%, down from a peak of 69.1% just before the housing crisis. We know how to safely reverse that trend. Now is the time to act. To improve minority homeownership rates, and in the process bolster the overall homeownership rate, the mortgage industry should begin by taking a careful look at the criteria used to enable homeownership, known in the industry as the three Cs: credit, collateral and capacity……Homebuyers who have low down payments are not bad risks, especially when armed with the knowledge that homebuyer education and counseling provides…..A few lending products introduced this year are moving in the right direction, offering alternative ways of looking at income, particularly of every adult living in the home, including those not on the mortgage. These products have gotten off to a slow start. They have to accelerate to be effective…..
http://www.nationalmortgagenews.com/news/voices/we-have-tools-to-revive-homeownership-its-time-to-use-them-1080445-1.html
The best way to reverse these downward home trends is to stop butchering the value of the US dollar, stop the inflow of ill-gotten foreign capital, and to allow the economy to actually function with free market forces. Of course the answer for most people is more Govt interference, and putting each and every tax payer on the hook to prop up the ‘American Dream’.
Rates as low as 3%, and 0-3% down payment mortgages STILL isn’t saving this housing market. If cheap/easy credit cant, the only answer is a real economy/production.
“Rates as low as 3%, and 0-3% down payment mortgages STILL isn’t saving this housing market. If cheap/easy credit cant, the only answer is a real economy/production.”
Affordable (i.e. lower) home prices reflecting buyer incomes instead of fake federally-guaranteed credit might help quite a bit.
Exactly. My rate on my house was 8.25% in 1990 and the house was 2 and a half times my income. It was about right.
Yeah I think my parents first house in San Antonio around 1990 was $35,000 @ 8.5%. Not really sure on the price now since I don’t know the address but obviously its much higher due to easy credit/low interest.
About the same for me in 1997, rate was 8%, price was about double my income and amounted to about 10 years rent…buying made sense with those numbers and worked out very well. FWIW used a zero down GI Bill loan and later refinanced to 6% (but did not take any money out) when rates dropped, sold in early 2007 thanks in part to the HBB…
Bluto you had the perfect timing. Kind of like buying dozens of ounces of gold in 2001 (I didn’t).
Yep. 1996-1997 (two decades ago!) was the last good buying opportunity in California before prices went bubbly.
Similar story when I bought my house in 1998: house was 3x my gross annual salary, but interest rates were a bit lower, at 5.75%.
Will be completely paid off (and thereafter renting from the county for $375/month) in a couple of years.
Fun fact: the newest, most expensive house they just built within sight of my house has an asking price of 10X what I paid for mine.
And not a buyer in sight for either depreciating shack.
Austin (-11.8 percent)
‘Anyone paying attention to Austin’s housing market has suffered the deluge of reports naming it one of the hottest in the country. Now, analytics site NeighborhoodX has issued a report highlighting a more arcane, but possibly more accurate, predictor of the housing market, in Texas and elsewhere.’
‘The site reports that, according to some market observers and contrarian investors, membership numbers in the National Association of Realtors (NAR) tend to correlate with real estate market conditions.’
‘Between January 2000 and October 2006, meanwhile, national NAR membership almost doubled from just over 756,000 to 1.37 million, reported NeighborhoodX, which added that approximately half of all real estate agents are members of the group, according to NAR. “When everyone with a pulse is becoming a real estate agent because it seems like easy money, it’s a fairly accurate sign that a correction won’t be too far off,” the site quoted Ary Freilich, managing partner of Blumberg & Freilich Equities, an investment partnership which he co-founded in 1991 to capitalize on the unusual market opportunities that were created following the real estate crash of the late 1980s.’
‘To put that phenomenon in regional terms, NeighborhoodX explained that from 2000 to 2007, membership in the Texas NAR increased from 48,312 to 87,653, an increase of 81.4% during that time. Membership dipped to about 75,000 after the collapse of Lehman Brothers and the financial crisis—and remained around that level until 2013. As of 2015, the Texas NAR had 98,851 members—more even than at the peak of the last market cycle.’
More than a few acquaintances from high school and/or college became real estate agents when they realized that associates in arts wouldn’t fetch them a job and the military wouldn’t take them, or they didn’t sign up. They live in an area of guaranteed clients because its got 6 major military installations so people are always cycling in and out and the VA backs most of the loans.
From the world isn’t what you think it is file:
‘Israeli intelligence Chief, Major General Herzi Halevy, said that the last three months have been the most difficult for ISIS since its inception. In a speech delivered at “Herzliya” conference yesterday , Halevy explicitly said “Israel” does not want the situation in Syria to end with the defeat of ISIS “, the Israeli NRG site reported.’
“Withdrawal of the super powers from the region and letting Israel alone in front of Hezbollah and Iran that possess good abilities Will make “Israel” in a hard position”. Therefore, we’ve to do all we can so as not finding ourselves in such situation”, the Israeli chief intelligence added.’
Did I just have a mild stroke or is this guy completely crackers? I couldn’t make sense of what he’s saying. He’s unintelligible. With friends like these, who needs enemies?
“Did I just have a mild stroke or is this guy completely crackers?”
You just had a mild stroke.
“I couldn’t make sense of what he’s saying. He’s unintelligible.”
What he said is actually quite clear; He doesn’t want ISIS defeated because then Israel will have to make a go at it all on its own.
Yep, put our military in danger for their interests AND keep printing $2 billion annually for their military handouts. Where’s the waste?
“What he said is actually quite clear; He doesn’t want ISIS defeated because then Israel will have to make a go at it all on its own.”
How clear was it, Combiebanker? ISIS doesn’t bother him, he likes ISIS because he thinks it functions as a buffer between ISRL and Iran and Hezbollah. Those entities, Iran and Hezbollah, are the “it” Israel would have to make a go at all on its own, not ISIS, apparently. Which I find interesting. Remind me again who created ISIS?
Who’s having the mild stroke now?
Israel Directly Supports ISIS | The Sleuth Journal
http://www.thesleuthjournal.com/israel-supports-isis/
Dec 7, 2015 - Israeli Defense Minister Moshe Ya’alon earlier admitted Israeli support for ISIS and other takfiri terrorists, deceptively calling them Syrian rebels …
Turkey and Israel Are Directly Supporting ISIS and Al Qaeda Terrorists …
http://www.washingtonsblog.com/…/turkey-israel-directly-supporting-isis-al-qa...
Sep 29, 2014 - Foreign Policy documents that Israel is also treating ISIS terrorists for … his men with “basic medical support and clothes” as well as weapons, …
Video shows Israeli commandos save Islamic militants from the Syrian …
http://www.dailymail.co.uk/…/Watch-heart-pounding-moment-Israe...
Daily Mail
Dec 8, 2015 - In giving medical support to these fighters, Israel has done a deal with the devil ….
Rivlin: ISIS already present in Israel with support growing - Arab-Israeli …
http://www.jpost.com/…Israeli…/Rivlin-ISIS-is-already-pres...
The Jerusalem Post
Jan 21, 2016 - According to the Population, Immigration and Borders Authority, there are currently close to a dozen Israeli citizens who are fighting with ISIS, …
I wonder why Drudge has never had a link on this? It’s not like it’s some big secret.
“How clear was it, Combiebanker? ISIS doesn’t bother him, he likes ISIS because he thinks it functions as a buffer between ISRL and Iran and Hezbollah. Those entities, Iran and Hezbollah, are the “it” Israel would have to make a go at all on its own, not ISIS, apparently. Which I find interesting. Remind me again who created ISIS?”
Well there it is, as clear as it can be; This is why he doesn’t want ISIS defeated.
If ISIS is there then the U.S military will have an excuse to being there. It the U.S. military is there then Israel will not to have to stand alone.
“Well there it is, as clear as it can be; This is why he doesn’t want ISIS defeated.”
Yeah, clearly insane. Unless……
“It the U.S. military is there then Israel will not to have to stand alone.”
There is no US military anymore. Just Washington mercenaries.
Israel’s motivations are whatever they are. What I want to know is, with ISIS on the front page every day, why don’t the people in the US know this?
“why don’t the people in the US know this?”
Because the media doesn’t report it. Not even Drudge. Who, by the way, has revealed that he’s been threatened.
http://www.judiciaryreport.com/drudge_report_writer_matt_drudge_threatened_by_supreme_court_justice.htm
If you want to see what an excellent return on invested capital looks consider the amount of money that the Israel Lobby (or the Jewish Lobby or whatever) pours into Congress and then compare this to what benefits Israel receives in return.
The media does report it, at least they do in Israel. AFAIK, only Al-Jazzera touched the DIA report (below) that Judicial Watch got in a FOIA. Even Judicial Watch ignored it. Hmmm.
What he said is actually quite clear; He doesn’t want ISIS defeated because then Israel will have to make a go at it all on its own.’
yea that’s what I read.
Jan 21, 2016 - According to the Population, Immigration and Borders Authority, there are currently close to a dozen Israeli citizens who are fighting with ISIS, …”
This I didn’t know WTF ?
Around 1 out of 5 Israeli citizens are Arabs.
‘2012 Defense Intelligence Agency document: West will facilitate rise of Islamic State “in order to isolate the Syrian regime”
‘A much “bigger picture” admission and confirmation is contained in one of the Defense Intelligence Agency documents circulated in 2012: that an ‘Islamic State’ is desired in Eastern Syria to effect the West’s policies in the region.’
‘Astoundingly, the newly declassified report states that for “THE WEST, GULF COUNTRIES, AND TURKEY [WHO] SUPPORT THE [SYRIAN] OPPOSITION… THERE IS THE POSSIBILITY OF ESTABLISHING A DECLARED OR UNDECLARED SALAFIST PRINCIPALITY IN EASTERN SYRIA (HASAKA AND DER ZOR), AND THIS IS EXACTLY WHAT THE SUPPORTING POWERS TO THE OPPOSITION WANT, IN ORDER TO ISOLATE THE SYRIAN REGIME…”.
‘The DIA report, formerly classified “SECRET//NOFORN” and dated August 12, 2012, was circulated widely among various government agencies, including CENTCOM, the CIA, FBI, DHS, NGA, State Dept., and many others.’
‘The document shows that as early as 2012, U.S. intelligence predicted the rise of the Islamic State in Iraq and the Levant (ISIL or ISIS), but instead of clearly delineating the group as an enemy, the report envisions the terror group as a U.S. strategic asset.’
‘While a number of analysts and journalists have documented long ago the role of western intelligence agencies in the formation and training of the armed opposition in Syria, this is the highest level internal U.S. intelligence confirmation of the theory that western governments fundamentally see ISIS as their own tool for regime change in Syria. The document matter-of-factly states just that scenario.’
‘Forensic evidence, video evidence, as well as recent admissions of high-level officials involved (see former Ambassador to Syria Robert Ford’s admissions here and here), have since proven the State Department and CIA’s material support of ISIS terrorists on the Syrian battlefield going back to at least 2012 and 2013 (for a clear example of “forensic evidence”: see UK-based Conflict Armament Research’s report which traced the origins of Croatian anti-tank rockets recovered from ISIS fighters back to a Saudi/CIA joint program via identifiable serial numbers).’
‘The newly released DIA report makes the following summary points concerning “ISI” (in 2012 “Islamic State in Iraq,”) and the soon to emerge ISIS:
-Al-Qaeda drives the opposition in Syria
-The West identifies with the opposition
-The establishment of a nascent Islamic State became a reality only with the rise of the Syrian insurgency (there is no mention of U.S. troop withdrawal from Iraq as a catalyst for Islamic State’s rise, which is the contention of innumerable politicians and pundits; see section 4.D. below)’
‘The establishment of a “Salafist Principality” in Eastern Syria is “exactly” what the external powers supporting the opposition want (identified as “the West, Gulf Countries, and Turkey”) in order to weaken the Assad government.’
‘“Safe havens” are suggested in areas conquered by Islamic insurgents along the lines of the Libyan model (which translates to so-called no-fly zones as a first act of ‘humanitarian war’; see 7.B.)’
‘Iraq is identified with “Shia expansion” (8.C). A Sunni “Islamic State” could be devastating to “unifying Iraq” and could lead to “the renewing facilitation of terrorist elements from all over the Arab world entering into Iraqi Arena.” (see last non-redacted line in full PDF view.).’
‘8.C. IF THE SITUATION UNRAVELS THERE IS THE POSSIBILITY OF ESTABLISHING A DECLARED OR UNDECLARED SALAFIST PRINCIPALITY IN EASTERN SYRIA (HASAKA AND DER ZOR), AND THIS IS EXACTLY WHAT THE SUPPORTING POWERS TO THE OPPOSITION WANT.’
Did I just have a mild stroke or is this guy completely crackers? I couldn’t make sense of what he’s saying. He’s unintelligible. With friends like these, who needs enemies?
It could be a bad translation from something that he said in Hebrew. It’s also possible that the writer doesn’t have good English.
No surprise to me.
Some of you people on this blog (not Ben) are clueless and watch too much Faux and CNN. The real news is on alternative media (not just this site I post here because it’s dozens of links from the search engine). Israel is part of ISIS. ISIS also is used to keep the gullible Americans supporting imperialism.
http://journal-neo.org/2015/11/25/israeli-colonel-caught-with-is-pants-down/
Drudge regularly links to alleged “conservative” website World Net Daily which advocates an American foreign policy centered on belief in the Rapture.
No “smaller government” or “less regulation” or “lower taxes” happening there.
This is also the case with Breitbart.
They are sold on “American exceptionalism” and the God-given right for the war hawks to be imperialists.
Breitbart is full of hypocrisies when it comes to “rallying the base.”
FoxNewsHate is all war, all the time.
“The demand to live in these high-density urban markets remains very strong from both millennials and aging baby boomers,” wrote David Neithercut, president and chief executive of Equity Residential, in an email message. “This gives us great confidence that we are right where we want to be for the long term.”
I agree, but at what price? Enough to overcome high land and construction costs? Or enough to provide a nice income at lower rents following default, foreclosure, and re-sale?
Demand isn’t as high at prices only the wealthiest 1 percent can afford.
‘‘everyone rushed into the cities, land prices got bid up, construction got more expensive, so what you’re seeing is a lot of new supply coming on at the high end,’
‘land prices got bid up’
Yeah, double and triple up. And there’s your bubble.
‘In 25 of the largest U.S. cities, multifamily permits in urban areas were up 39% in 2015 compared with a year earlier, according to a study by housing-research firm Zelman & Associates.’
‘New York, for example, is poised to see 2.6 times more apartments come online in the next year than the historical average, according to the analysis. Boston is likely to see 2.5 times as much supply growth as usual, while Philadelphia is bracing for twice the usual supply increase.’
But the media will tell you there’s a shortage, when construction is at a 30 to 40 year high depending on how you measure it.
Is there a shortage of expensive apartments? Nope.
Is there a shortage of shelter (inexpensive and expensive, rental, and owner-occupied)? Yup.
Is construction at a 30-40 year high for shelter? Nope.
Is construction at a 30-40 year high for expensive apartments? Yup.
‘Is construction at a 30-40 year high for shelter? Nope.’
I’ve only posted the numbers a dozen times or more.
We are adding 1.1MM to 1.2MM units per year.
That is nowhere close to a 30-40 year high.
https://www.census.gov/construction/nrc/pdf/startsan.pdf
I’m talking about apartments/multi-family. You know, the stuff your REIT’s are up to their neck in. You should buy more. Please.
‘The next recession is already here—and there isn’t much the Fed can do’
Bad timing for new luxury condos and apartments. Heck, new anything. I guess you could add to the indicators in the article that luxury RE buyers have pulled way back. Poor Demi Moore, where oh where will she find a $70 million buyer? Or is it 50 now?
That’s what I figured…that’s why I made two separate statements:
“Is construction at a 30-40 year high for shelter? Nope.
Is construction at a 30-40 year high for expensive apartments? Yup.”
And I don’t own any apartment REITs. I primarily own industrial REITs.
Ben (or anyone else), which of the data sources is showing multifamily units at 40 year highs? Honest question, I just don’t see it from looking at multfamily in https://www.census.gov/construction/nrc/pdf/startsan.pdf
I also looked at the curve generated by an interactive tool
https://www.census.gov/econ/currentdata/dbsearch?program=RESCONST&startYear=1959&endYear=2016&categories=APERMITS&dataType=TOTAL&geoLevel=US&adjusted=1&submit=GET+DATA&releaseScheduleId=
This is ALL units not just multifamily, but I don’t see 40 year highs. Can you help?
I’ve posted multiple reports saying this at least a dozen times in the past year. The archives are in the sidebar and the search function is too.
Or you can just look it up:
Mayhem in Multifamily? | Realtor Magazine
realtormag.realtor.org › Commercial › Feature
In Denver, approximately 8,000 new multifamily units are under construction and …. In the case of multifamily, bubbles are likely to be localized rather than …
Is Multifamily Housing the Next Lending Bubble? | Bank Think
http://www.americanbanker.com/…/is-multifamily-housing-th...
American Banker
Sep 18, 2014 - The multifamily housing sector is likely to remain healthy thanks to favorable demographics — but the apartment market is almost certainly past …
Harvard researcher says multifamily prices have ‘markings of a bubble …
http://www.bizjournals.com/…/harvard-research...
South Florida Business Journal
Dec 4, 2015 - An increase in multifamily supply is justified, a Harvard researcher says, but the market may be due for a correction in terms of valuation.
The Reality Of The Commercial Real Estate Boom - Forbes
http://www.forbes.com/…/has-the-bubble-burst-in-commercial-real-estat...
Forbes
Feb 24, 2016 - Young, high-income professionals are fueling growing demand for multifamily units. Commercial property price indexes for apartments are at …
Are We Building An Apartment Bubble? - Forbes
http://www.forbes.com/sites/…/are-we-building-an-apartment-bubble/
Forbes
Apr 5, 2012 - And the idea that major cities are witnessing a bubble of apartment … Multifamily construction is running at about 200,000 apartment …
Are We in a Multifamily Bubble? - National Real Estate Investor
nreionline.com › Commentary
Dec 19, 2014 - The question of whether we are in a multifamily bubble is one that has recently been on the minds of many real estate investors.
Denver housing bubble is in apartments, not single-family, expert says …
http://www.denverpost.com/…/denver-housing-bubble-is-in-a...
The Denver Post
Jun 6, 2016 - Zillow research director Krishna Rao argues that those looking for a bubble should instead focus on metro Denver’s multifamily rental market.
The Banks are Back: Is Multifamily the Next Bubble for Lenders? - MPF …
https://www.realpage.com/…/banks-back-multifamily-next-bubble-lender...
Aug 27, 2014 - This is part three of a four-part series on multifamily bank lending In the first of our four-part series on bank multifamily lending, we highlighted …
Justme-
Lots of the articles that you’ll see about multi-family overbuilding are either:
1. Specific to luxury apartments; or
2. Specific to particular markets (SF, NYC, Denver, Miami are the big 4 that come to mind).
Broadly speaking, the data that you pointed to is the same data that I see. We are not building enough housing generally.
However, more specifically, we are building too much luxury multi-family in certain markets, and not nearly enough affordable housing in most markets.
Supply is one question. The other is price. Prices seem outrageously high to me. Investors are paying very low yields for multi-family property. In part this is due to rates being low. However, a part of this is an assumption that rents can be raised on the occupants making a low starting yield much higher in a relatively short timeframe.
The problem with assuming rates stay low forever is that a small move in yield can lead to a crushing reduction in value. A 4% yield going to a 4.5% yield would reduce value by 12.5%, and if you put 25% down, that’s a 50% loss in equity value from a 50 basis point move on yield alone.
And the problem with assuming rents rise forever is that with stagnant incomes, there is simply a limit to what people can pay. Eventually they leave, and you suffer higher vacancy rates while trying to get higher rents.
‘Specific to luxury apartments’
There’s very little being built that isn’t luxury. Houses, condos, apartments, it’s almost all luxury. Check my post tomorrow.
And there are millions of them.
Thanks.
Appreciate the answers. Thank you all. Does not seem that census.gov or any other source I can find has a breakdown of luxury versus basic apartment units, but I get the picture.
‘Living in San Jose, Kathleen Eaton seemingly had it all: a well-paying job, a home in a gated community, even the Bay Area’s temperate weather. But enduring a daily grind that made her feel like a “gerbil on a wheel,” Eaton reached her limit.’
‘Skyrocketing costs for housing, food and gasoline, along with the area’s insufferable gridlock, prompted the four-decade Bay Area resident to seek greener pastures — 2,000 miles away in Ohio. “It was a struggle in California,” Eaton said. “It was a very difficult place to live. … It’s a vicious circle.”
‘Eaton is far from alone. During the 12 months ending June 30, the number of people leaving California for another state exceeded by 61,100 the number who moved here from elsewhere in the U.S., according to state Finance Department statistics. The so-called “net outward migration” was the largest since 2011, when 63,300 more people fled California than entered.’
“The main factors are housing costs in many parts of the state, including coastal regions of California such as the Bay Area,” said Dan Hamilton, director of economics with the Economic Forecasting Center at California Lutheran University in Thousand Oaks. “California has seen negative outward migration to other states for 22 of the last 25 years.”
My father left Commifornia in 1985 and never looked back. If you offered him $200k cash to move there, he wouldn’t take it. When I came back from a work project in SF, I was raving about how awesome the Bay Area is, and he hit me with the “You know nothing Jon Snow”.
‘California has seen negative outward migration to other states for 22 of the last 25 years.’
Everybody wants to live there.
3 friends of mine bounced from coder job to coder job trying to make ends meet in SF. Eventually cost of living hit them, and $4,000 rent was hard to float inbetween work. They live in Sacramento now…
So is Sacramento a nice place to live, or is it also a nightmare?
Sacramento was an ok place to live, until the bay area began emptying out to come here. If it’s not the criminal underclass from the East Bay transplanted here, it’s the moneyed, self-absorbed, “progressive” jerks from SF that are changing the face of this city, and not for the better.
Eh the few times I visited Sac I wasn’t too thrilled. It was ok, had some cool bars and restaurants, the river, but it was hot like the south.
So there must not be any nice places to live in America at all.
Oh there most certainly are nice places, but many of them on the Left Coast are going to be utterly destroyed when the next Cascadia Subduction Zone earthquake hits.
‘California has seen negative outward migration to other states for 22 of the last 25 years.’
Why do statistics like this get so little play in the MSM?
Because rainbows and unicorns.
Despite the wet winter/spring, CA is still in a major drought and no facing hot summer, theyre looking at electrical grid overload. Between high housing costs, high taxes, crazy regulations, why people flock there, no clue.
Why do statistics like this get so little play in the MSM?
It’s probably because it’s not that interesting. A lot of youngish immigrants are constantly moving in. Every year many Californians reach retirement age, sell their houses and move to states where housing is much cheaper.
The person posting that statistic should have indicated that it is negative DOMESTIC (state to state) net out-migration to other states. But if you include INTERNATIONAL net in-migration to California, you have an overall net population gain from migration in most years. That combined with the births exceeding deaths each year from people already in the state gives you a very nice rate of population growth.
Yes, a few wealthy retirees cash out and leave California, but if you examine the data, domestic out-migrants are overwhelmingly low income (they can’t afford it here). And yes, a whole lot of well educated folk from other countries want to come here and take advantage of our $200,000 / yr tech jobs! There are special visas just for that purpose.
Yes, a few wealthy retirees cash out and leave California, but if you examine the data, domestic out-migrants are overwhelmingly low income (they can’t afford it here)
It would be interesting if there were details available on that. I’ve read that a number of the sand states, like Florida, Arizona and Nevada, that receive a lot of migrants from other states also have a lot of people leaving every year. In other words, lots of people move in from far away, stay a year or two, then pick up and move somewhere else. California is often considered to be different from those three states due to its expensiveness, but it’s likely that the same phenomenon goes on there.
I bailed out of the PRC after I retired, now I’m across the border in NV.
The bay area is basically being propped up by venture capital and stock buybacks. Total bubble. They come up to the central valley and pay cash and outbid locals working service jobs.
Its interesting to see housing prices/rent level charts that show the massive collapse in 2001 and 2008-2012. SF was actually affordable in those dips, well relative to other cities. People act like the Bay Area is immune to failure/slow downs. You cant survive off the notion of “its totally the greatest city ever, like ever” mentality that the youngins spew there.
Cash buyers don’t even need to outbid those buying with a mortgage…if you are competing with cash buyers you will very likely be ignored no matter how strong your offer is, I experienced this first hand and it was VERY discouraging.
r.e. Sacramento briefly considered moving there in the ’90’s as I could do a job transfer and also attend Sacramento State but was put off by the sprawl, high crime, crazy traffic, bland and generic feel of the place etc. Spent a long weekend there w/ my then GF and we both decided against it
When you drive on the major boulevards there you sometimes get the weird illusion that you are going in a circle as the chain stores an restaurants repeat every few miles…
Cash buyers don’t even need to outbid those buying with a mortgage…if you are competing with cash buyers you will very likely be ignored no matter how strong your offer is,”
I beat out cash buyers in a short sale as the neighbors didn’t want a rental or flipper in the hood.
And I used the sellers agent as my buyers agent so I guess she threw other offers away so as not to split the commission.
ETRADE took the loss on the 2nd I didn’t even know they bought mortgages ?
San Jose is a miserable place, no matter how much you make.
Ummm…..they sure are not heading to ILLANNOY - state continues to lose people on net and will continue to do so. I suspect the rate will be the highest in at least my life time this year.
No budget, fiscal mess, highest prop taxes in the country, 11% sales tax in Chicago alone, violence, corruption. Rahm, Cullerton, Mad Again, and on and on.
The folks I know who can leave have already done so or are making plans. As for me I will be outta here in 5 weeks.
And public pensioners with $100,000+ salaries as office clerks.
‘The City Council signed off Tuesday on placing a measure on the November ballot aimed at encouraging affordable housing in projects that require zoning exceptions, such as those that make the developments higher density, bigger or taller than allowed.’
‘Critics have said the measure would lead to a proliferation of developments receiving exceptions to existing zoning rules and general plan guidelines.’
‘Backers of the rival Neighborhood Integrity Initiative — which is proposed for the March 2017 ballot — contend the Build Better L.A. measure would “boost gridlock and hasten demolitions in rent-stabilized communities, all while accelerating L.A.’s price-gouging luxury housing craze.”
Ermmm isn’t that how ghettos/housing projects are? High density, tall, low income?
Getting phonebombed by recruiters with some position in Peoiria. I just laugh and laugh….
But will it play in Peoria?
It might… but I won’t.
“Eaton and her sister had a $724,000 house in The Villages in South San Jose that they sold before moving to Ohio. Their mortgage payments were $2,200 a month, plus $1,000 for association fees in the gated community. They were able to pay $300,000 in cash for their new home in Ohio.”
$300K in Dayton? They must have done it to avoid taxes, because $300K buys a LOT of house in Dayton. They could have bought two houses in Dayton.
How come no one moves back north?
It is a move north in a way. The first winter in Ohio will be difficult.
My aunt and uncle were in that situation about 15 years ago. They sold their San Jose house for $700k and bought a new house in Mesa, AZ. Everything seemed so cheap in Arizona that my aunt going for a lot of the expensive options offered by the builder.
300k for a rapidly depreciating asset like a house makes anyone a hopeless DebtDonkey regardless of location.
“But with more apartment buildings going up, some others say renting gives you better flexibility. While all these new apartments being built may exceed the demand for them, it doesn’t mean rental prices will be coming down.”
So far we know that hysteresis applies to rental prices on the way up and to commodities and Chinese stock prices on the way down.
Time will tell whether rental prices always go up, or if not, whether they also are subject to hysteresis on the down side of a bubble.
The question is one of depth of market.
When you have ultra-low vacancy rates, people doubling up, and folks living at home longer than they would otherwise like, it is clear that there needs to be more shelter built.
However, if the only shelter that “pencils” are higher cost/higher rent properties, how deep is that market?
Can a market like San Diego absorb one such project of 200 units without a meaningful decline in overall rent levels?
Probably.
What about 3 such projects?
Maybe.
How about 30?
My bet would be no.
Unless there is either a) a market where there is VERY little competing development and low vacancy rates, or b) a product type/price that appeals to a HUGE percentage of the population, I think building housing is more risky than people would like to believe.
‘Luxury demand, especially for vacation and investment properties, has been more fragile this year, causing prices to slump’
IIRC, 2015 was the record high for second house purchases in the US.
‘I paid $380,000 for it, but I only had to put three percent down,’ Xanthos said.’
From his linkedin profile:
Management
Mokha Cafe
2012 – 2013 (1 year)
“‘I paid $380,000 for it, but I only had to put three percent down,’ Xanthos said.”
Or … I promised to pay $380,000 for it but I only put three percent down and even if I never ever make a payment I will still get to live there for a very long time because the eviction process is just what it says it is, which is a process, and this process can be dragged out for a very long time if this process is properly managed - although I just can’t imagine anyone wanting to do such a thing.
Maybe it’s just me, but 380k seems like a lot of money.
3% is a small price to pay to get in the casino and catch some of the equity.
When prices go down they will get a principal reduction cause they were duped by their realtor?
Who is gonna get the blame this time around?
Most of these folks will never own jack sh@t. All they do is start making the banks more money from interest payments.
Janet L. Yellen’s Speeches
Housing Bubbles and Monetary Policy
‘Presentation to the Fourth Annual Haas Gala
San Francisco, CA
By Janet L. Yellen, President and CEO of the Federal Reserve Bank of San Francisco
For delivery October 21, 2005
‘The Fed suspected there was a stock price bubble developing as early as 1996. I was still at the Board when Greenspan made his famous irrational exuberance speech. The Fed chose not to try to burst the bubble. Instead, it did its very best to pick up the pieces when the bubble finally popped. I think that effort was pretty successful. But many observers wonder if we erred and think the Fed should have tightened monetary policy sooner.’
‘The question is not one of purely historic interest. Today, it’s not stock prices but house prices that have been soaring. Those of us who live in the Bay Area know that you can’t get through a cocktail party without some discussion of an eye-popping price somebody just got for their two-bedroom, one-bath handyman special.’
‘But the Bay Area isn’t the only place in the country, or the world, for that matter, where soaring house prices have raised concerns about national economic stability. In the U.S. as a whole, the share of residential investment in GDP is now at its highest level in decades, and this sector has been a key source of strength in the current expansion. The question for policy is: will this source of strength reverse course and become instead a source of weakness?’
‘In my view, it makes sense to organize one’s thinking around three consecutive questions—three hurdles to jump before pulling the monetary policy trigger. First, if the bubble were to deflate on its own, would the effect on the economy be exceedingly large? Second, is it unlikely that the Fed could mitigate the consequences? Third, is monetary policy the best tool to use to deflate a house-price bubble?’
‘My answers to these questions in the shortest possible form are, “no,” “no,” and “no.”
The Fed suspected there was a stock price bubble developing as early as 1996. I was still at the Board when Greenspan made his famous irrational exuberance speech. The Fed chose not to try to burst the bubble. Instead, it did its very best to pick up the pieces when the bubble finally popped. I think that effort was pretty successful.
Their money printing and bailouts are just a reallocation of resources, not a generation of wealth.
“Maybe it’s just me, but 380k seems like a lot of money.”
Same with me. But he did not have to pay 380k, he only had to pay 3% of 380k; he only had to pay $11,400.
If things work out for him (things work out = prices go up) then he can pay the rest. If things do not work out (things do not work out = prices go down) then he can skip paying the rest and wait (and wait, and wait, and wait) to be evicted.
dept of AG and no down payment
the farm part has nothing to do w it
When you live your life by “How much per month” buyers remorse doesn’t kick in until the AC unit goes out or it’s time to repaint the monstrosity.
Nope, not you. It IS a large sum of money for twigs and gypsum board.
Like Trump filing bankruptcy 4x, not paying and living there for free is just “good business.” Get yours while you can.
I stopped over in Nashville for a night last week and had dinner at Hattie B’s Hot Chicken https://www.yelp.com/biz/hattie-bs-chicken-nashville.
Google says the area I was in was Midtown/Music Row Nashville.
My first impression on getting off the highway was that this was a lower end city neighborhood. Kinda worn down, lots of thrift stores (and not fancy ones that cater to hipsters.)
There were a number of restaurants on the same side of the street as Hatties and their parking lots were all full. I missed the turn into the parking lot and had to drive onto a side street to turn around.
I was really surprised at what I saw on that side street. Tons of renovated (or new?), infill-type housing, 2-story, maybe multifamily. Lots of new asphalt in the entrances to these places. The sort of area where you have to enter into one central driveway to then get to the other buildings. I don’t think a lot of them were named roads, more like extended driveways. Sort of what you would see in an apartment complex, but these were not apartment complexes.
Terrible, tight parking situations. And I wondered how much these places cost to rent/buy. And how many of the residents of this low-end neighborhood are being pushed out by the “gentrification”.
And the reviews for Hattie B’s are a bit over the top. The food was fine, but you would think some of these people had never had a decent meal before. I paid $15 for a breast/wing with two sides and a beer. Counter service. And it was a mob scene.
Apologies if this was posted yesterday.
http://www.zerohedge.com/news/2016-06-21/loretta-lynch-admits-federal-authorities-have-lost-orlando-shooters-wife
Heckuva job, ‘Retty!
Well, that just proves they won’t be indicting The Great Whore of Globalism.
I swear, if Hillary Clinton didn’t exist you’d have to invent her.
Obama is the wild card here, though. He’s just enough of a sneaky SOB to indict just before or after the nomination. Despite appearances, no love lost between Obama and Clinton. In fact, he’s got to be wondering if she’d double-cross him if she gains the presidency. (Of COURSE she would, silly) What to do? What to do?
Perhaps he’ll trumple.
nah, if he indicts, he’ll be ridin’ with Biden.
Truth is, Obama doesn’t have a prayer if Hillary becomes prez. She hasn’t forgotten how he snatched the presidency away from her. Even if she makes president now, it’s kind of like a 90 year old with Parkinson’s winning the lottery. Something tells me she’d enjoy settling that score more than just about anything.
What exactly do you think she will do?
That’s the beauty of it, I don’t know, but it will be interesting to find out. If he doesn’t have one of those one car accidents, her Justice Dept will keep him tied up for years on something or another, most likely.
There is no honor among thieves.
She’s not going to do anything of the sort. It’s absurd.
Mike, you are so blind. I bet you don’t even believe that at night, Hillary sheds her human skin and breathes dryer lint.
“The explanation for prices going down at the high end but not the bottom 95 percent is that the global economic volatility caused luxury buyers to put the brakes on in the face of the volatility in asset prices including the oil and stock markets. The result was that the volume of inventory of homes priced above $5 million jumped up 13.2 percent from the prior year. Redfin explained that its numbers may understate the increased volume of inventory which may not include homes being built by speculators that are not yet officially on the market.”
In non-mania times, the luxury market is driven by people who are wealthy enough so that global economic volatility has no effect on their home purchase decisions. Given the high end has recently been driven by international speculators seeking high-end homes to purchase on leverage in order to capture the appreciation, it is quite possible that volatility in other asset markets could be crimping luxury home purchases. Sadly, once the appreciation turns negative, there are lots more losses to come, as no speculator wants to be caught going long in the face of a bust.
Opinion: Fed’s changing outlook doesn’t explain about-face on raising rates
Published: June 22, 2016 7:05 a.m. ET
On-again, off-again guidance about raising interest rates is just making the Fed look foolish
Win McNamee/Getty Images
Janet Yellen is no fool, but the Federal Reserve’s about-face on raising interest rates is making it look foolish.
By Caroline Baum
Columnist
Over the years, the Federal Reserve has been accused of many things: of keeping monetary policy too easy for too long (2003-2004); of being slow to recognize the onset of recession (2007); even of administering the wrong economic medicine (initially easing in response to the 1973 oil embargo).
Rarely has anyone, the usual cadre of conspiracy theorists notwithstanding, accused the Fed of looking foolish.
Sadly, that is one of the main criticisms leveled at today’s Fed. Not that individual policy makers, from Chairwoman Janet Yellen on down, are foolish. To the contrary. It’s the Fed’s modus operandi of talking so much, saying so little, and failing to follow through that has caused the audience to tune out.
For central bankers, that’s the equivalent of lost credibility.
…
‘Rarely has anyone, the usual cadre of conspiracy theorists notwithstanding, accused the Fed of looking foolish’
What an odd thing to say. I seem to recall a whole bunch of people saying Alan Greenspan was a knuckle-head for allowing the housing bubble. And Yellen makes him look vigilant.
It completely validates Ron Paul’s 40 yr old narrative. The central planners do not know anything and have 0 control. Market forces, no matter how suppressed, always surface.
a Hilary/stay/green nazi fund
https://finance.yahoo.com/quote/ICLN
close your eyes and jump
ICLN That thing cratered and hasn’t been able to move since
CALPERS is thinking about getting back into MO
‘U.S. home prices rose 5.9 percent in April from a year earlier as job growth spurred competition for a limited number of listings. Prices climbed 0.2 percent on a seasonally adjusted basis from March, the Federal Housing Finance Agency said in a report Wednesday from Washington. The average estimate of 20 economists was for a 0.6 percent gain, according to data compiled by Bloomberg.’
“There are still more buyers than sellers out there, and that will tend to push prices up,” Matthew Pointon, U.S. economist for Capital Economics Ltd., said in an interview. “The job market is coming back, mortgage underwriting is gradually loosening and there’s still not much supply.”
‘Pointon called the less-than-estimated monthly increase in the FHFA index a “soft patch” that isn’t likely to last. “Fundamentals are still there for prices to be rising,” he said.’
From the comments:
‘I have bet that my house price is going to rise by 25% this year because I need the rise in house prices to create a vacuum to pull my wages hire so that I can afford my mortgage. I know some think this is the cart before the horse but really this logic is sound as the zero interest rates mean I can purchase an overpriced house on an unstable income and ride it out like a solid investment and if it doesn’t work out I just have to declare some kind of hardship or get onboard some kind of class action that goes after some deep pockets. No way I can lose on this one with the feds on board.’
‘Relating an increase in the housing bubble to job growth is pretty lame. Retail sales, corporate earnings, state and federal government tax revenue from newly created jobs — all these things are sucking wind. The state of growth in decent jobs is also reflected in a string of dismal GDP reports. And three-percent-down, subprime housing loans are a replay of 2008.’
‘”easing mortgage standards”…here we go again.’
multifamily permits in urban areas were up 39% in 2015 compared with a year earlier,
permit to build on a high rise? how many years
This one for Ray K……
This from the venerable Art Cashin on the floor of the exchange yesterday following Yellen yellin about the E con O my!
Yellen And Brexit Dominate Talk But Crude Moves Hypnotize Markets – Fed Chair Janet Yellen spent two and a half hours providing absolutely no new information to the Senate of the United States. (We hear she
intends to repeat that performance in the House of Representatives today.) Here’s a bit of what I wrote as stocks churned sideways into midmorning:
Yellen’s prepared presentation boils down to “We haven’t a clue.” She does little to shore up the credibility gap that has developed about the Fed over five months.
It’s up to senators to try to push for specifics.
Does a remain vote put July back on table? What about the Fed’s internal monitor of employment?
We’ve gone from the two-handed economist to a Kiplingesqe multi-handed goddess.
Around 11:00, stocks moved higher but it had nothing to do with Yellen as I noted in this follow-up:
Stocks float a little higher, not on Yellen but on crude paring earlier losses.
A multi handed goddess - yikes - if she is a goddess I suggest that we all go full in Peter Gabriel and kiss that frog….:)
Existing-home sales rise to nine-year high in May
By Andrea Riquier
Published: June 22, 2016 10:05 a.m. ET
“Sales of previously owned homes increased in May to the highest level in nearly a decade, another sign of durable demand in the housing market despite ongoing headwinds.”
http://www.marketwatch.com/story/existing-home-sales-rise-again-in-may-as-buyers-turn-out-despite-tight-supply-2016-06-22
Hmmm…..
I recall and HBB’er posting a while back something about Solar City and liens places on homes that could not be sold because of said liens.
Now Musk - working a Solar City deal.
http://www.wgrz.com/ext/news/nation-now/tesla-makes-offer-for-solar-city/71/D6rxLK8AxM0WoW0IMiogM
Despite HA’s random posts of various housing markets crumbling, the real crumbling going on is in stocks. Various companies have dropped 20%, sometimes 30% or more, from their 52 week or two year highs.
Imagine Caifornia coastal house prices falling 40% within two years. That would be considered a disaster. But it’s been happening with some large companies and all you hear are crickets. This is why I have started emptying my T bills and am putting the cash in brokerages and setting buy limits.
If I remember this weekend, I will come up with a,list of company stocks that have tumbled 20% or more.
I would guess commodity related cyclical stocks ?
REITS up Utilities up health care up I bet even Home depot is up ?
Here are a few off of their 2 year highs.
First Solar
Macy’s
American Airlines
Tesla
Toyota
Apple
It’s Not Just Millennials Who Aren’t Buying Homes
3:03 a.m. Wednesday, June 22, 2016 by Bob Sullivan
You may have heard some buzz recently about first-time home buyers, with millennials sitting on the sidelines instead of jumping into the housing market.
Well, it’s not just them. Basically, Americans in every age group under 65 are showing historic reluctance to own homes, according to an email from Ellyn Terry, an economic policy analysis specialist at the Federal Reserve Bank of Atlanta….
http://www.palmbeachpost.com/feed/business/personal-finance/its-not-just-millennials-who-arent-buying-homes/fCPLhn/
I love the narrative that millenials are “just sitting on the sideline”. As if the majority are sitting on a huge cash pile just itching to be dumped into the housing market. Yeah right, those 0 down and 3% down mortgage deals exist for a reason. Even if house prices dipped 10% , even young professionals, unless earning dual income, would be hard pressed to save up $50-75k for a normal 20%payment/closing costs. It is doable if you slum in it in an apartment with 2 or 3 roomies, do without luxuries like going out, drive a beater, and earn $80,000 over 4 yrs or so.
Curiously, on of the millenials at the office finally won a bidding war and is going to be closing by the end of the month. I’m not sure if he promised to feed the squirrels.
Now granted, he isn’t your typical millenial. He’s an engineer. Not sure if he’s into kickball or not. Prior to buying, he was “famous” omn the team for taking exotic foreign vacations every year. We’ll see if that continues.
I too am a millennial engineer and graduated with 0 debt. I should have lived at home a bit longer while I was traveling for work. I was on the road so much it didn’t matter if my residence was my parents. Hindsight is 20/20. I moved up to New England to mix up work, and renting is stifling my net savings. Granted I also went to Iceland, England, some misc states here and there, so I could do better saving. I refuse to jump into the housing market, let alone the New England market.
“Curiously, on of the millenials at the office finally won a bidding war and is going to be closing by the end of the month.”
If you congratulate him be prepared for a limp handshake.
Millennials May Be Losing Their Grip
June 13, 20161:07 PM ET
Natalie Jacewicz
Millennials, the thoroughbreds of texting, may lag behind previous generations when it comes to old-fashioned hand strength.
In a study of Americans ages 20-34, occupational therapists found that men younger than 30 have significantly weaker hand grips than their counterparts in 1985 did. The same was true of women ages 20-24, according to the study published online by the Journal of Hand Therapy a few months back.
The findings suggest that it’s time to update what constitutes normal hand strength. The norms are used to assess the severity of injuries and how well people are recovering.
“Work patterns have changed dramatically since 1985, when the first norms were established,” says Elizabeth Fain of Winston-Salem State University, who led the study with Cara Weatherford. “As a society, we’re no longer agricultural or manufacturing … What we’re doing more now is technology-related, especially for millennials.”
To find out if millennials are more flimsy-fingered than older Americans, Fain and Weatherford collected data from 237 volunteers. After conducting a test to exclude anyone with preexisting thumb injuries, the researchers had millennials squeeze a hand dynamometer — a joystick-like device with a dial to measure the strength of a grip in pounds.
A hearty hold indicates not only sturdy hand muscles, but also strong wrists and arms.
In 1985, men ages 20-24 had an average right-handed grip of 121 pounds and left-handed grip of 105 pounds. Today, men that age had grips of only 101 and 99 pounds, the study found. Men 25-29 posted losses of 26 and 19 pounds.
Hank Hill - Limp Handshake Reaction - YouTube
http://www.youtube.com/watch?v=NKmoze-hlXU - 277k -
Snowflakes gonna flake.
Where did you find that gem?
If you congratulate him be prepared for a limp handshake.
He actually works out, so no limp handshake.
“He actually works out, so no limp handshake.”
Not necessarily.
I personally know dudes that work out and still have limp handshakes.
Thin is, I was a Millennial ten years ago and don’t remember acting like half these folks.
Off Topic Question: Where is the best place on the web to find a rental house?
Craigslist rental ads are rife with fraudulent listings these days. Between the Rent-to-Own scams and the off-shore fraudsters collecting rental applications and fees on houses they don’t own, about 50% of all the offerings are sponsored by criminals.
Zillow works pretty good. There are scammers, but not as many… and if you actually walk through the place before you fork out any cash you should be ok.
Maybe driving around finding spots that aren’t listed online?
Zillow has rentals as well.
I actually found both my apartments over the last year and a half on Craigslist. The listings looked legit, and upon contact both landlords were nice family people and it worked out fine. But as you say, I have heard about the huge uptick in fraud/false listings.
Will a pol please ask yellen what the interest rate would be on a test sale of the now 4.5 trillion wonder sludge ?
4,5,6%
Seems simple relevant question
Travers Xanthos is now paying a mortgage. This millennial bought a house in Nashville’s Nations neighborhood after securing a sweet deal. ‘It’s three bedroom two and a half bath masters on the first floor, I paid $380,000 for it, but I only had to put three percent down,’ Xanthos said. ‘I really think it’s throwing your money away, especially if you’re going to be in an apartment downtown, you’re going to be paying $2,000 a month for a one bedroom a two grand mortgage would get a three bedroom house in the Nations.’”
SUCKUUUUUR! Great first and last name for a band tho.
With so much U.S. investment funneled down the real estate rat hole, the protracted period of low risk premiums without end, and economic policies designed to impoverish a once-wealthy Middle Class, how could anything but low growth be on the horizon?
The Financial Times
International Monetary Fund
US risks future of low growth, says IMF
Economists warn of ‘pernicious’ trends that could hit economy
4 hours ago
Shawn Donnan in Washington
The US faces economic “headwinds” and “pernicious” trends including a shrinking middle class that could slow growth in the long term, the International Monetary Fund has warned.
In a statement marking the end of their annual mission to assess the US economy, IMF economists said the country was in “good shape”, citing 2.4m jobs created in the past year and declaring that slowing growth in recent quarters had been a temporary setback. It predicted US GDP would grow 2.2 per cent this year, down from 2.4 per cent in 2015.
…
CA’s last nuclear power plant is closing 2025. 1500 jobs and millions of tax revenue.
http://www.npr.org/sections/thetwo-way/2016/06/21/482997213/californias-last-nuclear-power-plant-to-be-shut-down
And LNG shortage in SoCal coupled with estimated peak power demands due to a hot summer.
Good. It’s a dangerous and stupid way to boil water.
Cheaper to switch to renewables then the maintenance cost on the old nuclear facility…. and then there are the 2 earthquake fault lines under it.
Do your homework. Renewables don’t provide baseload power.
Without baseload power plants, we have no functioning electrical grid.
If you want to run our country fully on renewables, get ready for a third-world experience (power comes on randomly, in random durations).
Who said 100% renewables? you neo-cons scare too easy.
The process includes increased efficiency. Ya gotta look at the complete picture, not just 1 solar panel and asking yourself how will I watch tv at night.
If you really care to inform yourself - http://www.skepticalscience.com/100-percent-renewable-by-2050.html
Does this ’signal the end’? Or just a ‘new’ beginning?
“Learn How to Get Started Fliiping Houses”
West Palm Beach Florida
6/29-7/2
http://engine.4dsply.com/Bridge/Index?width=800&height=600&url=%2FRedirect.eng%3FMediaSegmentId%3D28759%26dcid%3D1_ctx_53877827-51b1-4b3c-862a-6222f1c26734%26vmId%3D0f39e087-ec4b-439b-85c9-a578133a8624%26abr%3Dfalse%26timeZoneOffset%3D-300%26dst%3DTrue%26abr%3Dfalse%26res%3D1366×768
what’s cooking at HA’s apt? http://slo.craigslist.org/app/5648486608.html
Why doesn’t anyone call Trump out on his lies or ignorance?
He does not even know who negotiated NAFTA? Or how we got ISIS.
They do. It’s just that the rabid Trumpites discount it because they believe in their man.
It’s the same as people on the left who discount all the dirt on Hillary–they believe in their woman.
The decision will be left to the middle…as usual. As someone who has voted for people with both a D and R in front of their names, I consider my views moderate…and I can’t remember a time when I disliked the candidates more.
I want to listen to the media talk about the next 1/4 point interest rate hike for the next two months. NOT
Your going to have to take your puny savings account and buy some facebook stock if you want to get a chance at any yield.
I’m afraid the FED has made it impossible for most people to ever retire. They will be working till they cant.
I’m afraid the FED has made it impossible for most people to ever retire. They will be working till they cant.
Ron Paul tried to rein in the Fed in 2008, but only the intelligent 5% supported him. The rest are going to have to pay the price for their bovine stupidity in voting for the crony capitalist status quo.
I’ve always been suspicious of the idea of giving people money because they have money. I don’t really have a problem with earning what I need through work.
Davis, CA Housing Prices Crater 18% YoY As Housing Demand Plummets To 20 Year Low
http://www.zillow.com/davis-ca-95616/home-values/
The days of cheap oil may soon be a thing of the past if the 1400-year-old Sunni-Shia conflict heats up.
http://www.businessinsider.com/the-iranian-saudi-cold-war-is-on-the-verge-of-going-hot-2016-6
Breaking news from a few hours ago:
“The man believed to have set up and maintained the private server in the basement of then-Secretary of State Hillary Clinton’s New York home invoked his Fifth Amendment rights against self-incrimination more than 125 times during a deposition as part of a civil court case on Wednesday.
Fox News reported that Bryan Pagliano’s sworn testimony with conservative organization Judicial Watch lasted roughly 90 minutes, during which the IT expert repeatedly read a carefully worded statement off of an index card while refusing to answer questions.
Pagliano’s deposition on Wednesday was originally scheduled to occur more than two weeks ago but was postponed when his lawyers notified the court that the former State Department employee would be pleading the Fifth.”
http://www.thehill.com/policy/national-security/284481-clinton-it-specialist-invokes-the-fifth-100-times
Ever use Outlook for your email? I laugh at the word “server,” people think she had some elaborate set up. sheeple!
100,000 new millennial residents a year and this is what you get:
http://www.denverpost.com/2016/06/22/beaver-creek-colorado-wildfire-growing/
The interactive graphic at the bottom of the article about the fires is pretty cool.
Denver, CO Housing Prices Crash 7% On Record Housing High Inventory
http://www.zillow.com/denver-co-80204/home-values/
b>California Net Population Loss Exceeds 1 Million Since 2004
http://www.sacbee.com/site-services/databases/article32679753.html
I wish that was true, I have to go to so cal next week… crowded rat cage.
Gulf County, FL Housing Prices Plummet 12% YoY As Price Declines Appear Statewide
http://www.zillow.com/gulf-county-fl/home-values/
Let’s have some fun with this, I wasn’t alive in 1968:
“The president of the Cleveland Ohio police union warns that cops and convention goers are “sitting ducks” at the 2016 Republican National Convention. The City of Cleveland is ill-equipped to handle the thousands of professional leftist, Black Lives Matter, and other protesters and there is just under a month to go before the convention.
Tens of thousands of truckers, bikers, Trump supporters and convention delegates are expected to pour into the city during the convention.
Steve Loomis, president of the Cleveland Police Patrolmen’s Association, told Breitbart Texas that Cleveland city officials are still refusing to heed, some arrogantly so, the recommendations of federal security officials. This is even though the City has procured insurance, as reported, to cover the “anticipated” “large scale rioting.”
The police union head charges that the mayor of Cleveland “just does not get it.” He adds that “Command staff has arrogantly dismissed concerns of officials from FEMA (Federal Emergency Management Agency).”
http://www.breitbart.com/texas/2016/06/22/cops-gop-convention-goers-sitting-ducks-says-cleveland-police-union/
So Breitbart wants the city of Cleveland to do whatever the feds in DC tell them to do. The founding fathers wouldn’t like that. What FEMA region is Ohio in?
Lyden, WA Housing Prices Crater 11% YoY As Housing Demand Plummets To 20 Year Low
http://www.zillow.com/lynden-wa/home-values/
Rental Rates Fall In San Francisco And Manhattan As Rental Inventory Skyrockets
http://www.businessinsider.com/rents-are-falling-for-nyc-and-san-francisco-2016-6
“Desperate Sellers Resort To Dramatic Price Cuts In Manhattan’s Luxury Real Estate Market”
http://www.zerohedge.com/news/2016-06-22/desperate-sellers-resort-dramatic-price-cuts-manhattans-luxury-real-estate-market
Repost for the Brexit, “Advert” by Blur, from the album Modern Life Is Rubbish, 1993:
https://www.youtube.com/watch?v=on_sumhw0MY
Federal Reserve Holding Record $1.7 Trillion Worth Of Mortgage Backed Securities
https://www.federalreserve.gov/releases/h41/current/h41.pdf
“Crude Is Crashing”
http://www.zerohedge.com/news/2016-06-22/crude-crashing-again
Could this be a sign the Brexit is going to happen, despite all the MSM hype to suggest otherwise?