June 29, 2016

Markets Flooded With Investors Chasing Yield

A report from Real Estate Weekly. “When The RADCO Companies CEO Norman Radow was in the workout business, his company foreclosed on $8 billion worth of real estate over two years. After the workout business, Radow transitioned into buying multifamily, ‘because Fannie Mae and Freddie Mac were there, and it had liquidity.’ But he quickly learned he couldn’t compete for shiny new apartments against the Behringer Harvards of the world, which could close in 30 days. That’s when he discovered the Class-B value-add space. ‘Eighteen months later, something profound was going on,’ he recalled of the year 2013. ‘There was the most dramatic demographic change since the end of World War II … and we were seeing it in reverse. The market was moving faster than we could catch it.’”

“Since then, rents have grown each year — in Atlanta, as much as 10 percent or more. ‘This isn’t an inning,’ he said of the market. ‘This is a whole new season.’”

The Arizona Daily Star. “Activity in Tucson’s commercial real-estate market was a mixed bag in the first half of the year, with some sectors performing better than expected and others struggling. The multifamily market has been the star of the show so far this year, attracting big investors and record sales. ‘The apartment market in Tucson and the entire West Coast is on fire,’ said Kami Taylor, sales manager for CBRE’s Tucson office. ‘It’s a safe investment; you’re not looking at big dips in income stream. Markets of our size have been flooded with investors in apartments.’”

“Michael Gross, investment specialist with Tucson Realty & Trust, said there have been 41 sales of communities with 25 or more units so far this year. ‘Apartments have been the king and leading the investment market,’ he said. ‘Unheard of, but in a low-return market, investors are chasing yield.’”

The Dallas Morning News in Texas. “North Texas apartment construction has exploded in the last few months, reaching almost unheard of levels. More than 50,000 apartments are currently being built in the Dallas-Fort Worth area - a jump of almost 7,000 units in just the last three months, according to a new report by MPF Research. More apartments are under construction in D-FW than anyplace else in the country. Apartment building volumes in North Texas at midyear are about seven times what they were five years ago, according to MPF Research.”

“Almost 10 percent of all the apartments being built in the entire U.S. are in the D-FW area.”

“Most of the leasing has been in the second quarter, after a slump in apartment renting during the early months of this year. ‘After demand lulled briefly right at the start of the year, leasing now has surged again,’ said Greg Willett, MPF Research vice president. ‘If the economy stumbles for any reason and there are 50,000 units on the way, that means a big correction.’”

The San Francisco Business Times in California. “New data on residential rents in San Francisco shows two trends: a flood of new supply had led to flattening prices and renters have started to look outside the city for more affordable options. Real estate data website Zumper’s latest San Francisco rent map tells a revealing story of how the market and renters are responding to the city’s stratospheric rental rates. Devin O’Brien, head of strategic marketing at Zumper, told the Business Times that new, higher-end units coming into the market as a reason why prices have started to stabilize. ‘Over time, this trickles down into lower-priced units as these buildings are ultimately just new supply,’ O’Brien said.”

“South Beach once again led pricing – even with a 2.5 percent drop from the last measured time period – with median one-bedroom apartments going for $3,860. Neighborhoods where median rental prices dipped include Hayes Valley, which was down 3.4 percent to $3,410 and the Tenderloin which dropped about 2 percent to a median price of $2,250.”

The Gothamist in New York. “For those of you who hoped news of the impending L train shutdown would drive out all the rich people so Williamsburg can dedouchefy, according to a new report, rents have, in fact, dropped slightly off the Bedford L stop. Real estate blog Brick Underground released their annual list of median rents within a five-block radius of stops ranging from Bedford Avenue to Broadway Junction, and it appears, blissfully, that median rents off the Bedford Stop have gone down 11.4 percent from 2015.”

“The site hypothesizes that the massive influx of high-end developments coupled with fears over the future LPocalypse likely contributed to the decrease, though perhaps ‘The Bedford Stop’ scared off some prospective renters, too. The median rent in Yupster Times Square is now $3,100/month—in 2015, it was $3450/month, up from $3,350/month in 2014.”

“The Lorimer stop also saw a decrease, with median rents going down 5.7 percent (to $3,300/month) from 2015. The number of rental units are also up a wild 93.7 percent from 2015, which likely lessened the burden on renters. As for stops further down the line: the Grand, Montrose, Halsey and Broadway Junction stops all saw decreases in median rent.”




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220 Comments »

Comment by Ben Jones
2016-06-29 02:20:50

‘Rents are rising in Dallas, but unfortunately, incomes aren’t keeping up. In fact, Dallasites are way more cost-burdened than we were even 15 years ago. Apartment List analyzed U.S. Census data from 1960-2014 and found that inflation-adjusted rents have risen by 64 percent nationally, but real household incomes only increased by 19 percent.’

‘During the particularly grim first decade of the 21st century, household incomes actually fell by 9 percent, while rents rose by 18 percent.’

From the Dallas article:

‘Almost 10 percent of all the apartments being built in the entire U.S. are in the D-FW area. Most of the leasing has been in the second quarter, after a slump in apartment renting during the early months of this year. ‘If the economy stumbles for any reason and there are 50,000 units on the way, that means a big correction’

Yeah, boy howdy it does.

Comment by Professor Bear
2016-06-29 06:04:49

“During the particularly grim first decade of the 21st century, household incomes actually fell by 9 percent, while rents rose by 18 percent.”

Sounds like those artificially engineered rent increases will not prove sustainable.

Comment by snake charmer
2016-06-29 07:06:43

What a tremendous public policy failure this is. In so many ways, government at all levels seems inept and hapless, if not openly mendacious. There’s big trouble on the way.

Comment by taxpayers
2016-06-29 08:34:52

List of successful gov programs……

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Comment by Raymond K Hessel
2016-06-29 17:01:04

n so many ways, government at all levels seems inept and hapless, if not openly mendacious.

When 95% of the electorate are functional retards, this is what you get.

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Comment by Rental Watch
2016-06-29 08:43:55

So, who is exactly “engineering” rent increases? And how are they doing it?

Comment by Ben Jones
2016-06-29 08:47:37

‘who is exactly “engineering” rent increases? And how are they doing it?’

Jumpin’ Jehoshaphat man, are you even paying attention? I have spelled it out a dozen ways from Sunday.

‘‘he expects to be able to mark to market “and leave the cap rate in the dust.” ‘After rectifying the problems, re-cladding the building, and taking down the mansards, RADCO made the building look brand new and hip for Millennials. “We’re 25 percent net growth in year one, and will refi in July with 120 percent repayment in equity,” he noted’

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Comment by Rental Watch
2016-06-29 08:51:27

So, they are “engineering” the higher rents because they are taking crappy old buildings, fixing them up, and charging higher rent?

How is that some government conspiracy?

The only reason those plans work is because there isn’t enough supply of nicer apartments for the people who want to rent them.

There is nothing “artificial” about rent levels…no one is holding supply off the market, no one is subsidizing payers of “luxury” rents. The only way the landlords can charge higher rents is because there are enough people who are willing pay the higher rents, and not enough supply to keep rents down.

There is nothing artificial about this process…it’s the natural economic process of supply and demand.

 
Comment by oxide
2016-06-29 10:02:38

I wouldn’t call it a “conspiracy,” but it’s clearly a failure of public policy. Many of the loans which are used to buy and fix up the old apartments are government-backed loans at artificially low interest rates. And the remainder of the fix-up loans are backed by pensions and retirement funds who need the yield because — you guessed it — interest rates are artificially low and pensions can’t make it on the DOW or the bonds.

And this is NOT the natural process of supply and demand. Natural supply and demand would be if developers offered a range of apartment options and people rented what they could afford.

Instead, developers are ensuring that ALL of the apartments are grade-A luxury, because that’s all that’s profitable. And people are not “willing” to pay those rents. They have no choice but to pay. [Imagine what a city would look like if the ONLY cars available were $60K Beemers and there was no good bus system.]

Developers got away with this in the last decade because (1) people shacked up with roomies (2) people are giving up other luxuries to make the rent (3) people are putting groceries on the credit card so they can make the rent. Renters were NOT wealthy. They were really just raiding pockets of “hidden” cash, so to speak: three in an apartment instead of two, Dollar store instead of JC Penney, 84-month car loan instead of 36, beating up the car with Uber as a second job. Well, all that capacity is maxed now. There is simply no more blood in the stone. Now what?

 
Comment by Ben Jones
2016-06-29 10:27:31

Add to all that the tax code and low income housing tax credits. The tax code greatly encourages investment pools in apartments for the wealthy.

 
Comment by Rental Watch
2016-06-29 11:44:57

“Many of the loans which are used to buy and fix up the old apartments are government-backed loans at artificially low interest rates.”

The “fix and flip” transactions that I’ve seen don’t have GSE loans attached to them. GSE transactions take too long.

Here’s the thing…low interest rates should lead to an easier time adding supply.

Let me repeat that, the logical result of lower interest rates should be greater supply.

I think there is a public policy failure, but it’s not of low interest rates or GSEs providing capital into the market.

The public policy failure IMHO is of development restrictions that limit land availability and impact fees that do not discriminate between low cost and high cost housing (same impact fee per unit for a luxury project than for an “affordable” project).

 
Comment by Karen
2016-06-29 11:57:36

Let me repeat that, the logical result of lower interest rates should be greater supply.

Greater supply of what, exactly?

Are the ‘more than 50,000 units’ being built in the Dallas area not greater supply? http://www.dallasnews.com/business/headlines/20160628-d-fw-apartment-building-booms-with-more-than-50000-units-on-the-way.ece

What we have is a greater supply of ‘luxury’ housing. Due to a combination of factors that Ben has posted about over and over and over.

I don’t know about any ‘development restrictions that limit land availability and impact fees’ here.

 
Comment by rms
2016-06-29 11:58:41

“There is nothing artificial about this process…it’s the natural economic process of supply and demand.”

Then the government can exit the cre/re guarantee business. Whew!

 
Comment by Rental Watch
2016-06-29 12:12:48

“I don’t know about any ‘development restrictions that limit land availability and impact fees’ here.”

You’re right, which is why they are adding 50k units, and median rents are only $1,000 per month.

That’s the point. In markets without development restrictions, supply responds to low vacancy rates, which keeps a lid on rents (prices).

 
Comment by Captain Lou Albano
2016-06-29 12:43:46

Empty apartment buildings in every city in the country says your wrong.

 
Comment by Karen
2016-06-29 12:49:58

You’re right, which is why they are adding 50k units, and median rents are only $1,000 per month.

But none of what’s being built is affordably-priced. And in looking at existing rentals, if you exclude ghetto-areas and really horrible complexes that exist even in non-ghetto areas (I posted a month or so back about one in Richardson that had a rating of “0″ on apartmentratings.com and which appears to be truly horrifying to live in)…

In other words, the median rent of a decent 2-bedroom apartment in a decent, low crime area is far higher than $1,000 per month.

 
Comment by Rental Watch
2016-06-29 13:00:39

“But none of what’s being built is affordably-priced. And in looking at existing rentals, if you exclude ghetto-areas and really horrible complexes that exist even in non-ghetto areas (I posted a month or so back about one in Richardson that had a rating of “0″ on apartmentratings.com and which appears to be truly horrifying to live in)…

In other words, the median rent of a decent 2-bedroom apartment in a decent, low crime area is far higher than $1,000 per month.”

I have no reason to dispute any of this.

But if the reason for high rents is loose credit and low interest rates, ask yourself what would happen if credit was tighter and more expensive. Fewer apartments would be built, and yes, fewer fix/flip projects would be undertaken. But in that universe, all-else equal (population, employment, etc.), vacancy rates would be even lower.

Do you honestly think that in that universe of tighter credit and lower vacancy rates landlords wouldn’t be pushing rents higher?

The overall rental stock will just be older and crappier.

 
Comment by Karen
2016-06-29 15:52:16

In Rental Watch’s world, loose credit/Yellen bucks looking for a place to die/artificially-low interest rates = lots of supply and lower rents.

Somehow, for a hundred years, or however long people have been living in apartment buildings (two hundred years?) that wasn’t true.

But now we supposedly ‘need’ loose credit and artificially-low interest rates.

Mhmmm.

But of course, loose credit/Yellen bucks looking for a place to die/artificially-low interest rates affects the demand side as well, right? I mean 100 years ago renters couldn’t put groceries, clothing, the electric bill, (or the rent itself!) on their credit cards. 50 years ago they couldn’t do that. Loose credit = loose consumer credit too.

And yes, 100 years ago, most people rented housing. They didn’t own it. And somehow none of what Rental Watch says was true then.

We really are operating off a whole new paradigm I guess. It’s the Mad Hatter’s world.

I found some other folks who think the same way:

The End of Accounting

“When Netflix’s quarterly earnings announcement in April fell short of the consensus estimate of analysts, its share price surprisingly rose almost 18% on the announcement. An investor blackout? No. Investors justifiably ignored the backward-looking accounting information…

Netflix is not an aberration. The problem with reported earnings, and financial statements in general, is that they no longer reflect the realities of businesses. Instead, they follow an arcane set of accounting rules and regulations. An alternate reality which fails to illuminate essential factors that make an enterprise rise or fall…

All this results in backward-looking accounting statements that say little about an enterprise’s future growth and ability to compete. Take Amazon, for example: Its earnings fell short of analysts’ consensus earnings estimates in eight of the 16 quarters of 2012-2015, alarming some investors, yet obscuring its phenomenal growth and competitive prowess…”

You see, HBB folks, we just need to ’stop looking backward’ and adjust our notions of economics and accounting to fit the new paradigm.

If the traditional methods of financial evaluation, developed over millennia of human history, say that a company, individual, or nation are not doing well, that just means the measuring tools are faulty. Put a thumb on that scale and see if it doesn’t show what you want it to.

 
Comment by Captain Lou Albano
2016-06-29 15:57:09

But isn’t that what dishonest individuals do? Arrange the inputs in a way to suit the desired outcome?

I think it is.

 
Comment by Karen
2016-06-29 16:09:20

But isn’t that what dishonest individuals do? Arrange the inputs in a way to suit the desired outcome?

I think it is.

You’re right. But it’s fraud on such a widespread and massive scale that it astounds me. And there are so many apologists for it.

It’s not just some individuals, or certain companies. It’s far more widespread and coordinated than that.

But the essence of it really is just that simple.

 
Comment by Neuromance
2016-06-29 18:02:27

Rental Watch: Let me repeat that, the logical result of lower interest rates should be greater supply.

But if the reason for high rents is loose credit and low interest rates, ask yourself what would happen if credit was tighter and more expensive.

Remember though that low interest rates drive up prices of items bought with debt. Which could certainly drive up land prices, leading to luxury apartments.

 
Comment by Neuromance
2016-06-29 18:21:29

IF the rental vacancy rate is low even with the new luxury apartments - i.e. the luxury apartments are filled to the brim - then, yeah, it’s a lack of supply that’s a significant factor

However, if the rental vacancy rate is not taking into account the newer apartments, then supply may not be such a big factor.

There can certainly be multiple factors at play: rent = f(a,b,c…n)

Also realize that if all the new supply is luxury, then there’s no pressure on existing apartments to lower rents. Rising rents mean the renter can be further squeezed.

The existence of very non-traditional candidates (Sanders, Trump) seems to indicate that those being squeezed are perhaps not so happy about it.

 
 
Comment by MacBeth
2016-06-29 10:41:49

“So, who is exactly “engineering” rent increases? And how are they doing it?”

I am astonished by this response.

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Comment by Professor Bear
2016-06-29 11:42:36

Consider the source and lose your astonishment.

 
Comment by Rental Watch
2016-06-29 11:50:33

My point is that there is nothing “artificial” about high rents. It’s a byproduct of supply and demand.

Everyone talks about low interest rates as being the driving factor, but that is completely wrongheaded. Low interest rates and “easy” credit should lead to greater and greater supply of apartments, which, even if they are luxury apartments, should drive down the rents everywhere else.

Easy credit can absolutely drive up the price of owner-occupied housing, but it would only serve to add supply of rental housing, which should REDUCE rents, not increase them.

So, easy credit isn’t the culprit.

 
Comment by Professor Bear
2016-06-29 11:54:25

“So, easy credit isn’t the culprit.”

By encouraging reckless investment in, among other things, housing, low interest rates helped drive up housing costs.

And since rental housing is a close substitute for owner-occupied housing, low rates helped drive up rents as well.

So easy credit is one of the culprits, after all.

 
Comment by Professor Bear
2016-06-29 11:55:29

P.S. I should have said “low interest rates and lax underwriting standards,” as both are components of the easy credit environment driving up housing prices and rents.

 
Comment by Karen
2016-06-29 12:02:29

Joseph T. Salerno, chairman of the graduate program in economics at Pace University on the current, unnatural rate of interest:

The Fed and Bernanke Are Wrong About the Natural Interest Rate

“It is thus the continual creation of bank reserves out of thin air via Fed open market operations that facilitates the continual expansion of bank credit and drives the loan rate below the natural rate determined in the free and unfettered intertemporal market.

…if the goal of monetary policy is really to adapt the rate in financial markets to the natural rate of interest, then all the Fed needs to do is to cease all open market operations, slam the discount window shut, and freeze reserve requirements at current levels.”

 
Comment by Rental Watch
2016-06-29 12:19:41

By encouraging reckless investment in, among other things, housing, low interest rates helped drive up housing costs.

And since rental housing is a close substitute for owner-occupied housing, low rates helped drive up rents as well.

So easy credit is one of the culprits, after all.

So in your universe, easy money which serves to add supply drives market rents higher?

The fix/flip is a byproduct of low supply. If markets didn’t have low vacancy, developers would have no ability to slap paint on the walls and charge $100 additional rent.

You say that it’s the fault of the $ being available to paint the walls, I’m saying its because the tenant doesn’t have the ability to give the flipper the finger and move to another vacant apartment.

With more supply, the fix/flip strategy dies. Regardless of whether the money is available.

You need to buy an Econ 101 textbook.

 
Comment by Captain Lou Albano
2016-06-29 12:41:55

Nonsense. Fix/Flip is the direct end result of excessive housing supply and cratering demand.

 
Comment by Jingle Male
2016-06-30 05:19:00

Captain? HA, is that you? Because it sounds like your twisted thinking! HA, Ha, ha, ha, aaaaa!

 
Comment by Captain Lou Albano
2016-06-30 05:36:21

Data my friend. Stick with the data

Sarasota, FL Affordability Surges As Housing Prices Nosedive 16%YoY

http://www.movoto.com/sarasota-fl/market-trends/

 
 
 
Comment by Bluto
2016-06-29 10:38:38

Part of what has fueled big rent increases locally (Sonoma Co., Calif.) is that 4+ years ago after Bubble 1.0 popped when buying was affordable for many it was VERY difficult to do so unless you had 100% cash….I experienced this personally, had 50% cash, excellent job and credit, and a preapproved mortgage but my offers were repeatedly ignored because I was competing with cash buyers. So I continue to rent and no way would I buy now since house prices have nearly doubled in the last 5 years. Many are now hopelessly shut out from buying and rents are up 45% over the same period….county median household income is about $65K, median house price is about $550K.

Comment by MacBeth
2016-06-29 10:46:55

Meanwhile, Californians selling out to the highest Chinese bidder are themselves selling out their own culture, fleeing the state, and repeating this scenario in their new environs, pricing the residents out of their own markets in Texas, Oregon, Idaho, etc.

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Comment by dandroidz
2016-06-29 11:10:11

Californians cashing out the Cali dream? No wayyyy.
Lol so many of my friends are all trying to move to CA or are currently working 2-3 jobs to sustain the “life”.

 
Comment by Professor Bear
2016-06-29 11:47:06

California’s skyrocketing housing costs, taxes prompt exodus of residents
By George Avalos
06/20/2016 04:23:28 PM PDT | Updated: 6 days ago
Faced with the exorbitant rising costs of Bay Area living, Priya Govindarajan and Ajay Patel pack up their apartment in San Francisco, Calif., Thursday afternoon, June 9, 2016, preparing for their move to North Carolina.
(Karl Mondon/Bay Area News Group)
One-third of Bay Area residents hope to leave soon, poll finds

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.

A growing number of Bay Area residents — besieged by home prices, worsening traffic, high taxes and a generally more expensive cost of living — believe life would be better just about anywhere else but here.

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.

 
Comment by Captain Lou Albano
2016-06-29 13:45:27

“California has seen negative outward migration to other states for 22 of the last 25 years.”

Which explains the massive, excess, empty inventory of housing in CA.

 
Comment by CalifoH20
2016-06-29 16:39:41

Californians cashing out the Cali dream? No wayyyy.
Lol so many of my friends are all trying to move to CA or are currently working 2-3 jobs to sustain the “life”.

seems like the same story over and over, AZ, OR, TX…. etc. Mostly white middle class retirees trying to stretch their pension.

Living in Lake Tahoe, Marin, Santa Barbara or Napa is different then San Jose, Torrance or Irvine.

 
 
 
 
Comment by Combotechie
2016-06-29 06:05:35

“… that means a big correction.”

A “big correction”. Reminds me of this correction …

https://www.youtube.com/watch?v=CIMtJo88NCM

 
Comment by Ben Jones
2016-06-29 06:18:02

From the first link:

‘Investors share value-add success stories at annual IMN event’

‘His firm just closed on a multifamily deal in which tax credits are expiring, and with it, subsidized rents. RADCO is paying under-market rents, and he expects to be able to mark to market “and leave the cap rate in the dust.”

‘RADCO also had a project in Colorado “that was a manager’s special with all of my favorite flavors: lead paint, asbestos, aluminum wiring, and single-pane windows,” Radow said.’

‘After rectifying the problems, re-cladding the building, and taking down the mansards, RADCO made the building look brand new and hip for Millennials. “We’re 25 percent net growth in year one, and will refi in July with 120 percent repayment in equity,” he noted.’

This is where the affordable housing is going. It’s on a large enough scale that it has driven up rents across the country. The government is backing many of the loans, which are financed by pension funds and insurance companies also “chasing yield”. It’s simple really, but these guys think they have stumbled onto some new perpetual money machine.

Comment by Rental Watch
2016-06-29 08:48:07

In order for these business plans to work, they need to find enough tenants willing to pay high enough rents for the refurbished building.

To some extent, supply is being created to meet a demand…however, how deep is that pool?

Comment by Ben Jones
2016-06-29 08:56:16

‘they need to find enough tenants willing to pay high enough rents’

So you missed the part about how many renters are paying half their income, or more, in rents? Do you really think this was what they wanted? Or shall I find a couple thousand articles with people being evicted and not able to find anything close to what they can afford? They don’t have a choice. It’s so bad people in your neck of the woods are living in RV’s or increasingly, sleeping on the ground. Meanwhile there are tens of thousands of units coming in San Francisco (and LA). What percentage of all those condos and apartments will a working man or woman be able to afford?

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Comment by Rental Watch
2016-06-29 09:25:52

So, you are saying that there isn’t enough supply of housing?

Great we agree.

Let’s do a little mental exercise. If you snapped your fingers, and added 10% to the housing stock, regardless of the quality of that 10%, all-else equal (jobs, population, income levels, etc.), what would happen to the rents at the other 91% (yes, PB, 100/110=91%) of total housing stock?

Rents would go down in the existing housing stock, REGARDLESS of the last 9%. How could you possibly think otherwise?

In many ways, with respect to making housing more affordable, it doesn’t matter what kind of supply is being built, just that it is being built.

Quality of housing doesn’t dictate price. Supply and demand does. That is why all the developers of luxury apartments in SF are doing so much hand wringing…they have added a huge supply, and guess what? Rent increases are softening (maybe even falling rents?).

What caused this softening? It wasn’t that they built a product that was slightly inferior to the existing stock.

It was because huge supply was added.

With the 50k new units being added in DFW, I’ll bet the fix/flip business plans start to look a lot worse in the coming years.

Do you think that the “renovate” and flip crowd is going to have a chance in hell if they are competing with new construction?

 
Comment by oxide
2016-06-29 10:18:40

” what would happen to the rents at the other 91%? Rents would go down in the existing housing stock, REGARDLESS of the last 9%. How could you possibly think otherwise?”

Because supply and demand — at least in its simplest form — has gone to heck, can’t you see that? Supply and demand does NOT work if the product is a “need” such as housing, and if ALL of the suppliers hold out for a higher rent. The developers can pay the low interest payments on their loans longer than renters can live within a place to live. And the renters have been the ones who have to cave in and pay 50% of income for rent.

And yes, the renovate and flip crowd WILL have a chance in hell. Why? Location location location. Renovated older stuff has an easier commute than the shiny new. Or, the older stuff in the city centers will be a bit cheaper than the shiny new stuff in the city centers. I see this all the time.

 
Comment by Professor Bear
2016-06-29 11:48:54

“So, you are saying that there isn’t enough supply of housing?”

To the contrary, there is too much (luxury apartment and condo housing, that is!).

 
Comment by Rental Watch
2016-06-29 12:08:50

“Supply and demand does NOT work if the product is a “need” such as housing, and if ALL of the suppliers hold out for a higher rent.”

Ahhh, the conspiracy theory. Supply and demand no longer works because the local investor who owns a single family home for rent is in collusion with every other owner of a rental in town.

If your supposition holds true, then you should see high rents even in markets with high vacancy rates.

But you don’t.

What you do see is apartment owners offering concessions in competition with other owners to fill their buildings. No collusion…competition.

 
Comment by Rental Watch
2016-06-29 12:37:23

Per the US Census, the rental vacancy rate in the US averaged 7.1% during 2015.

This is the lowest vacancy rate for rental property in 30 years (1985 was lower at 6.5%).

For you all to NOT think that the low vacancy (not enough supply for the demand) has anything to do with high rents is mind boggling.

Instead we have conspiracy theories of collusion among ALL apartment owners, and a bizarre theory that loose credit somehow drives rents higher.

People have stated on this board over and over again that the beauty of renting is that if your landlord raises your rent, you can give him the finger and move. Wonderful freedom!

Unless of course, you have nowhere else to go, in which case, you end up paying the higher rent.

ANYTHING that adds more vacant units to a market helps to alleviate this condition. Yes, even if they are luxury units.

 
Comment by Captain Lou Albano
2016-06-29 12:53:36

Yet the SFR vacancy rate is at record highs.

 
Comment by Neuromance
2016-06-29 18:05:29

Rental Watch: So, you are saying that there isn’t enough supply of housing?

Great we agree.

I understand that 30 million people are added a decade. That’s a good point. But it seems to me there was overbuilding during the housing bubble, then underbuilding during the several years after 2008. It doesn’t seem like there should be some dramatic undersupply of housing.

My skepticism is also due to the fact that this was (part of) the narrative during the Bubble Part I. Of course, it could have been false then and true now, but see paragraph 1 above

 
 
 
 
Comment by sleepless_near_seattle
2016-06-29 09:36:02

“incomes aren’t keeping up”

This is important. With mortgages (and the government’s intrusion into it) you can get “creative” with programs and financing to make it “affordable.” Rent, on the other hand, is specifically tied to income and income only, unless the bank of MaD comes in to assist…

Comment by dandroidz
2016-06-29 12:03:38

People are earning the same as they did in 2000. Yet the DOW and NASDAQ have gone beserk since then…weird…

 
 
 
Comment by Ben Jones
2016-06-29 02:29:05

‘It may seem as if Boulder’s red-hot rental market is a relatively recent reality, but rents in the area have been rising for a long time…But the income-to-rent disparity has left more residents than ever paying more than the recommended 30 percent of their income for housing costs.’

‘At last blush, nearly 60 percent of the city’s renters were cost burdened, well above the 52 percent national average. Countywide, “about 40,000 people pay more than half of their income every month on rent,” according to Jim Williams, communications director for Boulder County Housing Authority.’

“We’re seeing more people who were traditionally in the middle class now struggling with relatively high rental costs,” he said. “They’re having to make other choices about things they can no longer afford. Sometimes that’s health care, food, transportation, and so all of it ends up impacting supports that are needed in a range of ways.”

‘For the moment, local renters are getting a bit of a break, with rents rising more slowly than in the past few years of double-digit increases.’

“I think over the last 18 months, landlords have gotten more savvy about the market and all the money they were leaving on the table by not raising rents,” said Forrest Noble, president of Boulder-based 8z Rentals. “The landlords have gotten the rents up to market levels. They can’t raise them anymore.”

‘Apartments are sitting longer on the market: 30 days, rather than the usual 10 to 15, and more tenants are working out deals to pay just a little bit more and stay put. Rents aren’t going down anytime soon, Noble predicted, but “there’s less urgency than there has been in a long time.”

Comment by Ben Jones
2016-06-29 06:36:34

‘The landlords have gotten the rents up to market levels. They can’t raise them anymore…Apartments are sitting longer on the market…Rents aren’t going down anytime soon, Noble predicted, but “there’s less urgency than there has been in a long time.”

Here’s where these supply/demand masters have got it all wrong. Price (in this case rents) sends a signal to market participants. Higher prices tells developers, bring more supply and what kind of supply. But this artificial value add destruction of affordable apartments and the doubling or tripling of land prices (speculative bubble) in the past few years has sent an incorrect signal. They think, “we need way more supply and it has to be luxury”.

This is why in places like San Francisco and Manhattan these people find themselves with too much of the wrong type of housing.

It’s very interesting to see, again, the creation of new paradigms to explain the unexplainable. They go on about millenials and affluent renters. They talk about safe deposit boxes in the sky and cashed-up foreign buyers that can’t get enough. Also a repeat is the urban living thing. Sure there’s no grocery store, but look at all the bars!

Comment by Rental Watch
2016-06-29 09:08:29

No, with limited land supply in the infill markets in question (SF, NYC, Seattle), with competitive bidding processes for land transactions, the developers who can afford to pay the most for land are those building luxury apartments.

It’s not a speculative bubble in land prices, it’s luxury apartment builders outbidding everyone else due effectively to high market rents.

Those developers who “win the land bid” and want to build luxury apartments are able to finance the land purchases and subsequent development because they can convince the lenders and investors that they can rent out the units at high enough levels to make the developments profitable.

Market rents drive land values. If the market rents weren’t high enough, those who bid up land values wouldn’t be able to finance the land purchase, and the transaction would fail to close.

Said another way, without high market rents, lenders wouldn’t lend to these projects, and investors wouldn’t provide the equity, and the projects wouldn’t be built.

Comment by Ben Jones
2016-06-29 09:23:13

‘It’s not a speculative bubble in land prices, it’s luxury apartment builders outbidding everyone else’

‘If the market rents weren’t high enough’

The industry is systematically turning affordable apartments into expensive apartments all over the US.

‘Radow transitioned into buying multifamily, ‘because Fannie Mae and Freddie Mac were there, and it had liquidity.’ But he quickly learned he couldn’t compete for shiny new apartments …That’s when he discovered the Class-B value-add space. ‘Eighteen months later, something profound was going on,’ he recalled of the year 2013.’

‘Since then, rents have grown each year — in Atlanta, as much as 10 percent or more. ‘This isn’t an inning,’ he said of the market. ‘This is a whole new season.’

He’s not speculating it will continue?

‘The apartment market in Tucson and the entire West Coast is on fire,’ said Kami Taylor, sales manager for CBRE’s Tucson office. ‘Markets of our size have been flooded with investors in apartments.’

‘Michael Gross, investment specialist with Tucson Realty & Trust, said there have been 41 sales of communities with 25 or more units so far this year. ‘Apartments have been the king and leading the investment market,’ he said. ‘Unheard of, but in a low-return market, investors are chasing yield.’

‘those who bid up land values wouldn’t be able to finance the land purchase’

‘because Fannie Mae and Freddie Mac were there, and it had liquidity’

Ah, the broke-back GSEs, this is where Mel Watt steps in. Have you been following? He’s thrown a trillion Yellen bucks of guarantees at the multifamily market in just the last few years. And the pensions/insurance companies are there to finance it, because of the backing and they are also “chasing yield.”

Why can’t the market deliver what consumers want? There’s a distortion of rents. It’s sent the wrong signals to the suppliers, and they have responded with too much of the wrong product. How does it end? Well the word glut is used a lot in Manhattan these days. Miami Beach too. I even saw it used about downtown LA the other day.

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Comment by Rental Watch
2016-06-29 09:31:01

“Why can’t the market deliver what consumers want?”

My view?

Land and development constraints.

If you have 10 developers bidding on the one piece of apartment land available, the developer who is building the most expensive product will win the land bidding process.

However, if you have 10 developers bidding on 10-15 different available land parcels–that could all be developed into apartments, the best land parcel will trade for the highest price and might become luxury, but some builders will be able to build more inexpensive housing.

I saw such a project recently in a market in Phoenix. New construction, targeting a mid-range in price. Development yield was OK, it will probably get built.

I’m willing to bet that a meaningful (if not large) percentage of the units being built in DFW are NOT luxury.

 
Comment by Ben Jones
2016-06-29 09:34:43

I’d bet almost all of it is.

Like I said yesterday, I’m not trying to make horses drink here.

 
Comment by Rental Watch
2016-06-29 09:45:09

You think almost all the 50k units in DFW are luxury?

http://www.apartmentwiz.com/apartments_listing/apartments_listing.aspx?location=Fort%20Worth&id=297&apartment_area=Newly%20Constructed%20Fort%20Worth%20Apartments

Here is a listing of new apartments in Fort Worth.

Look, I don’t know the income levels FW, (I’m assuming they aren’t very high), so these rents might be considered “luxury”, but based on the cost of building (even at less than $100psf), with the cost of ownership in the $3,000 (+/-) per unit per year range, $700-$800 for anything new doesn’t seem crazy.

 
Comment by Ben Jones
2016-06-29 10:00:08

Fort Worth is called Cow Town.

‘North Texas is booming. Through April, the Dallas-Fort Worth metropolitan area had more housing starts this year than any other place in the country, according to U.S. Census data. Most of the new units under construction (76 percent) are being built outside of the city of Dallas, and most of them (58 percent) are single-family, which is another way of saying that an ever-increasing share of the region’s population is residing in sprawling subdivisions planted on virgin land in Celina or Little Elm.’

‘Not that the city of Dallas is totally missing out. The city’s 24-percent share of new units (the vast majority of which are apartments or condos) is larger than its 19-percent share of the region’s population.’

‘Of course, how much of the construction boom you see depends entirely on what part of Dallas you happen to live in. An analysis of city building permits filed between August of 2011 and February of 2016 shows that the city’s growth, as always, is oriented solidly north.’

http://www.dallasobserver.com/news/dallas-biggest-boom-neighborhoods-8388788

‘as always’

North of Dallas is where prices are skyrocketing and have been for years. There’s some graphs at the link. If everything goes as planned, I’m headed to Texas this weekend. I’ll shoot some video and put it up on the web.

 
Comment by Karen
2016-06-29 10:40:18

You think almost all the 50k units in DFW are luxury?

http://www.apartmentwiz.com/apartments_listing/apartments_listing.aspx?location=Fort%20Worth&id=297&apartment_area=Newly%20Constructed%20Fort%20Worth%20Apartments

Here is a listing of new apartments in Fort Worth.

Look, I don’t know the income levels FW, (I’m assuming they aren’t very high), so these rents might be considered “luxury”, but based on the cost of building (even at less than $100psf), with the cost of ownership in the $3,000 (+/-) per unit per year range, $700-$800 for anything new doesn’t seem crazy.

I don’t know what kind of BS site Rental Watch linked to, but all those apartment complexes are in Keller, which is waaaay outside of Fort Worth. With zero traffic it would take you 30 minutes to get downtown. It’s not near Dallas, either. It’s sort of the middle of nowhere.

Also, those apartment complexes are not new. I clicked on the first one on the list, and the blurb says, “These new apartments in Keller, just nort of Fort Worth, are projected to open in the Fall of 2007.” http://www.apartmentwiz.com/fort_worth_apartments/fort_worth_apartments_specials/keller_apartments/1035_keller_apartments.php

And no, $800-$900 for a 1-bedroom is not affordable.

 
Comment by Rental Watch
2016-06-29 12:22:33

And where are the 50k units being built in “Dallas Forth Worth”. I guarantee it’s in the entire metro.

 
Comment by Karen
2016-06-29 12:56:16
 
Comment by Rental Watch
2016-06-29 13:55:17

My point…again, is that adding any supply helps keeps rents in check for the whole of the market. The $1,000 was from the first part of the quote.

“For the first time D-FW average apartment rents have topped $1,000 a month. Average rents in the newest units are $1,448.”

 
Comment by Rental Watch
2016-06-29 13:57:23

And these are also an important quotes to consider as part of the whole picture:

“Less than 5 percent of D-FW apartments are empty.”

Low Vacancy

“Overall apartment rents are up by more than 6 percent in the last year”

High rent growth

 
Comment by Karen
2016-06-29 16:02:06

My point…again, is that adding any supply helps keeps rents in check for the whole of the market. The $1,000 was from the first part of the quote.

But above you claimed all the new apartments being constructed weren’t luxury apartments.

Yes, they are. With an average rent of $1,448. This is not workforce housing.

I live in DFW and I see NOTHING remotely affordable being built.

 
Comment by whirlyite
2016-06-29 18:43:37

Same thing in Houston.

 
 
 
 
Comment by Senior Housing Analyst
2016-06-29 14:34:45

Whole Picture

Coppell(Dallas), TX Housing Prices Plunge 11% YoY As Speculators Flood Market With Inventory

http://www.zillow.com/coppell-tx/home-values/

 
 
Comment by Ben Jones
2016-06-29 02:30:33

‘Hot real-estate market? Bidding wars? Not necessarily, if the property in question is a former Seattle City Light substation. MAJOR PRICE REDUCTION is splashed across the cover of the just-revised brochure for the city-owned former substation that’s up for sale on Pigeon Point (2100 SW Andover). We found the flyer after spotting the price cut in a routine check of local commercial-real-estate listings. The 8,000-square-foot site was originally put up for sale almost four months ago for a “minimum bid of $400,000.” It’s zoned for lowrise housing.’

‘And while we were checking on that one, we scrolled further down the latest West Seattle commercial-real-estate listings and found the same thing has happened to the ex-substation that’s for sale in south Highland Park (8820 9th SW) – revised flyer dated yesterday, also with the big red banner MAJOR PRICE REDUCTION.’

‘This one also has been cut to $200,000 asking price – a more-drastic slash, since its asking price in March was $500,000 – and it’s even bigger: 13,000+ square feet, zoned for lowrise housing.’

Comment by dandroidz
2016-06-29 11:30:17

A quick glance in and around the Boston area yields similar results. Most listings are some point or another have had price reductions. Are they still moving? Yes. Are they still moving at high prices (close to 2007 highs?) yes. But they are moving a little slower and with price cuts.

 
 
Comment by Palm Beach County
Comment by Professor Bear
2016-06-29 04:48:00

There will be no bubble until your 0.1% club masters who control the MSM say there is one.

June 25, 2016 12:01 a.m. ET
The Housing Market: No Bubble, No Bust
Advancing home sales have fueled a revival in retail, and brightened the prospect for economic growth, despite turmoil in Britain.
By Gene Epstein

The housing market is finally advancing at a walk after inching forward at a crawl. But given the way housing overheated in 2006 and 2007, be thankful the walk hasn’t turned into a sprint.

In any case, the outlook for economic growth, already brighter from rebounding retail sales (“Strong Retail Sales Signal a Better Economic Outlook,” Economic Beat, June 18), has brightened more, despite Brexit-inspired turmoil. Sturdy home sales in April didn’t weaken in May. As reported last week, the total of new- and existing-home sales in May ticked up to an annual rate of nearly 6.1 million units, a high not seen since May 2007, and were up 4.9% from the same month a year ago.

The back-to-back boost in home sales only deepens the mystery of related purchases at the retail level—furniture included—having retreated in May. When consumers invest in new homes, they also buy new items that homes typically require. No doubt these acquisitions will show up in the June data for retail sales.

Another way that rising home sales boost consumer spending is via the wealth effect. When house prices rise, homeowners feel wealthier and spend more. But in light of the house prices of 10 years ago that signaled a housing bubble, a word of reassurance is in order.

The median price of an existing single-family home hit $241,000 in May, a 42% jump from May 2011, a much bigger leap than the 6.5% increase in the consumer price index over the same five-year period. The turnaround in house prices from the lows of five years ago has restored housing wealth, in turn lending a boost to consumer spending.

But in real terms, house prices are still well below the peak of 10 years ago. That $241,000 median price is just 5.5% above the price of May 2006, versus a CPI increase over this 10-year period of 18.9%. So house prices are still far below the threshold of bubble trouble.

Comment by snake charmer
2016-06-29 07:15:57

Here’s some more breaking commentary in the denial department, in today’s Tampa Bay Times, from Mr. Housing Souffle himself:

“Florida’s economy will continue to outpace the rest of the country for the next four years, pushing the state toward a $1 trillion economy by 2018, according to the latest economic forecast from the University of Central Florida.

In his second-quarter forecast, UCF economist Sean Snaith said the Sunshine State is enjoying rising job growth and home construction.

Already, Florida has enjoyed a healthy housing recovery. Median home prices have jumped from a low of $122,200 during the housing crisis to $213,000. A shrinking inventory of homes on the market is encouraging builders.

But Snaith discounted fears that another housing crisis may be brewing. ‘While this looks like another housing bubble, it’s really just an old-fashioned shortage in the single-family market,’ he said, predicting any housing shortage will correct itself as housing starts pick up in the next few years.”

http://www.tampabay.com/news/business/report-florida-on-pace-to-swell-into-a-1-trillion-economy/2283397

Comment by Ben Jones
2016-06-29 07:19:44

‘While this looks like another housing bubble, it’s really just an old-fashioned shortage in the single-family market’

Well he got the last one so right…

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Comment by Bill DaWahl
2016-06-29 10:09:43

Oh, Jeebus, THAT guy! I remember posting something about him during his souffle period, and objecting to the fact that the state of Florida was paying for him to dish this sort of stuff out, via the University of Central Florida. Some poster responded angrily to me that I was on meds or some such thing. To this day I believe it might have been Snaith himself, because who else would care?

 
 
 
 
Comment by Professor Bear
2016-06-29 04:57:59

It’s shocking to realize that you can pay the price of a Stradivarius for a depreciating crap shack. Just buy the Strad, and forego the huge future losses to both depreciation and bubble collapse that await those who inherit the luxury housing Winner’s Curse.

Comment by azdude
2016-06-29 05:24:15

Your masters are good at get you to overpay for stuff. Thats how they get rich.

Get on the right side of the trade!

Comment by cactus
2016-06-29 09:03:04

Your masters are good at get you to overpay for stuff.”

And under paying for your labor

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Comment by Professor Bear
2016-06-29 02:41:44

Opinion: Brexit is just the beginning of a popular revolt against elites
By Darrell Delamaide
Published: June 26, 2016 2:36 p.m. ET
The forces of globalization and convergence have unleashed a counter-revolution
DANIEL LEAL-OLIVAS/AFP/Getty Images
British voters have said “enough” to the forces of economic globalization, easy immigration and political convergence.

Now that Britain has done the unthinkable and voted to leave the European Union, the critics are ruthless in their condemnation of Prime Minister David Cameron for his “irresponsible act” in calling the referendum in the first place.

As if it were his fault.

As if he was responsible for the bloated Brussels bureaucracy and undemocratic governance structure in the EU.

As if he were to blame for the domination of an unequal union by a German chancellor responsive and accountable only to her own domestic political concerns.

Yes, Cameron will step down, as political accountability in a parliamentary system demands. He miscalculated and lost big time, staking his political future on a Remain vote.

It was Martin Wolf, the prestigious columnist for the Financial Times, who last month labeled the referendum on a British exit from the EU — widely known as Brexit – as “the most irresponsible act by a British government in my lifetime.”

The nerve of the leader of one of the world’s oldest democracies to actually let the voting public decide the future of the nation.

Cameron surely would have been much smarter to follow the lead of the political elites in other countries and to ignore the rising hostility to a union that seems to be stifling progress rather than increasing prosperity for all.

Instead, he committed the unforgivable sin of allowing democracy to function, a debate to be held, and voters to choose.

In doing so, Cameron has opened a Pandora’s box of insurgency against the political elite in Europe.

Comment by Anonymous
2016-06-29 07:14:48

We can only hope its true…

 
Comment by In Colorado
2016-06-29 08:16:23

The nerve of the leader of one of the world’s oldest democracies to actually let the voting public decide the future of the nation.

Of course, had remain won the day we would be hearing stuff like “The people have spoken”, “Why democracy is right”, “A smart and savvy electorate sees past the xenophobic lies of the leave crowd”, etc.

But since they didn’t vote per the dictates of The Davos crowd, it was clearly a mistake to hold the referendum as the people are just a bunch of clueless knuckledraggers who have to be saved from themselves.

 
 
Comment by Professor Bear
2016-06-29 02:55:37

“The Lorimer stop also saw a decrease, with median rents going down 5.7 percent (to $3,300/month) from 2015. The number of rental units are also up a wild 93.7 percent from 2015, which likely lessened the burden on renters. As for stops further down the line: the Grand, Montrose, Halsey and Broadway Junction stops all saw decreases in median rent.”

It’s heartening to know that even following an unprecedented period of central bank originated crazy investment spurred by quantitative easing and zero interest rates, the forces of supply and demand ultimately dictate where the market will go.

Comment by dandroidz
2016-06-29 04:47:13

Keynesians be damned.

Comment by Professor Bear
2016-06-29 05:01:50

I can’t imagine that Keynes would have agreed with the unprecedented protracted period of low risk premiums which the global central banking cartel has financially engineered. The unwind will be a bitch.

 
 
Comment by aNYCdj
2016-06-29 05:23:15

here is my take living in queens and i know about this impending disaster.

NYC is the most seriously congested 9-5 M-F place i have ever lived. people have no concept of a reverse commute.

the manhattan bound 7 or L trains are jam packed going into manhattan but at 8 am going the other direction its easy to find a seat and air conditioning that works great.

the trains are over capacity and would take 20-30 years before a new tunnel would every be built. yes our inept government wont authorize money to get the job done.

the new 2nd ave subway which was supposed to open 10 years ago..might happen this year but only a partial solution.

i have always advocated reverse tax credits the more employees you can time shift into 2nd 3rd weekends and holiday the bigger your tax credit….. like asking a wedding dj for a discount in june, never happens unless its beginner, but in january sure no problem!

even Gov Christy vetoed a new tunnel from being built under the hudson, because NJ would be liable for all cost over runs….all of them

we will be spending tens of billions on Muslim refugees but nyc subways…good luck….we need a change!

Comment by taxpayers
2016-06-29 08:39:52

$400,000 pound per yr bureaucrats should worry
Death to the bureaucrats

Comment by rms
2016-06-29 12:02:30

Line up… lets see those palms!

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Comment by dandroidz
2016-06-29 03:30:08

“renters have started to look outside the city for more affordable options” - In regards to SF, I think that’s always been the case since the mid 90s, or actually in any city ever since the growth of ‘burbs…

All of these new apartments, man what a great time to be a serf.

These investors are all tapped out on Amazon and Netflix stock? I mean it’s only $708 a share with a P/E of 291

Comment by Combotechie
2016-06-29 03:59:27

AMZN

ROA = 2.00%
ROE = 8.90%
ROI = 4.70%

Gross Margin = 33.80%
Operating Margin - 2.70%
Profit Margin = 1.00%

http://finviz.com/quote.ashx?t=AMZN

Comment by azdude
2016-06-29 05:26:40

bubble stock but its been that way for years thanks to central banks propping up the market to compensate for screwing you on you savings account.

people who blindly bought it have made a fortune.

Wreckless behavior?

 
 
Comment by Combotechie
2016-06-29 04:06:11

NFLX

ROA = 1.20%
ROE = 5.80%
ROI = 6.20%

Gross Margin = 31.40%
Operating Margin = 3.60%
Profit Margin = 1.80%

http://finviz.com/quote.ashx?t=NFLX&ty=c&ta=1&p=d

Comment by dandroidz
2016-06-29 04:46:07

So two companies with sub 2% profit margins are somehow yielding 4.7% and 6.2% ROIs?

Comment by Combotechie
2016-06-29 05:09:26

Both companies carry lots of debt. If the cost of their debt is cheap enough then perhaps lots of financial magic can be performed.

This is, in part, what makes RE investments work.

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Comment by azdude
2016-06-29 05:28:26

They will collapse but timing is the key.

markets can stay irrational a lot longer than u can remain solvent.

This is the most hated bull market in history cause a lot of people missed it.

 
Comment by Combotechie
2016-06-29 05:35:00

“They will collapse but timing is the key.”

Q. What is it that needs to be timed?

“markets can stay irrational a lot longer than u can remain solvent”

A. Irrationality, irrationality is what needs to be timed.

Good luck with doing that.

 
Comment by The Central Scrutinizer
2016-06-29 07:36:52

The crash will be obvious, and that’s when you buy. I don’t se what’s so difficult about timing.

 
Comment by Combotechie
2016-06-29 07:46:19

Pricing. Some people think of it as timing but it’s really pricing.

 
Comment by rms
2016-06-29 12:14:02

“The crash will be obvious, and that’s when you buy.”

Mortgage lenders used to be very tight-fisted following a crash. Buyers H-A-D to have 20% down and provide a solid employment history w/ tax returns. Millions of folks can’t even scrounge-up $400 these days, IIRC.

 
Comment by Captain Lou Albano
2016-06-29 12:50:14

$400 is just enough to get you into a mortgage for 30 long years.

 
Comment by oxide
2016-06-29 18:34:49

Mortgage lenders were somewhat tight-fisted in 2012. I had to provide the employment history and tax returns, but only 10% down. That’s probably because the bank has to compete with FHA 3.5% down.

 
Comment by Captain Lou Albano
2016-06-29 19:02:41

Very few lenders adhered to any standards the last 16 years. The lower the rate, the greater the standard.

 
 
 
 
 
Comment by Palm Beach County
2016-06-29 04:05:48

Downtown West Palm Beach office rents at record highs; space available
BUSINESS By Jeff Ostrowski - Palm Beach Post Staff Writer 0

Updated: 5:36 p.m. Monday, June 27, 2016 | Posted: 1:44 p.m. Monday, June 27, 2016

WEST PALM BEACH — Office rents in downtown West Palm Beach have rocketed to record levels, and empty space is scarce in the city’s trophy towers.
In something of a contradiction, no developer has been bold enough to break ground on a new tower that would take advantage of downtown West Palm Beach’s office boom.

The average rent at 10 buildings is $40.11, up 7.8 percent from early 2015, according to a new market report by JLL. Downtown’s prestige addresses collect especially steep rents, averaging $53.74 a square foot, up nearly 10 percent from early 2015. (Those figures are “gross rents.” Landlords quote lower-priced net rents when marketing space.)

Here’s a stat that helps explain why billionaire property mogul Jeff Greene and other developers have yet to break ground on new towers: There’s some 272,000 square feet of empty space spread among 10 downtown addresses, JLL says.

There’s no empty space at several towers, including CityPlace Tower, Esperante Corporate Center, Phillips Point East and Flagler Center II. But Northbridge Centre and One Clearlake Centre have several empty floors, JLL reports.

+Downtown West Palm Beach office rents at record highs; space available photo
The city skyline glows as the sun sets, August 21, 2015, in West Palm Beach, Florida. (Greg Lovett / The Palm … Read More
Overall, the vacancy rate in downtown’s 1.9 million-square-foot market is just under 14 percent.

“It’s an interesting dynamic,” said Anthony Librizzi, an office broker at commercial real estate firm CBRE. “There’s plenty of space. Unfortunately, it’s sort of that second tier that’s hard to sell to those tenants who want the cachet of being in one of the premier buildings.”

Kelly Smallridge, head of the Business Development Board of Palm Beach …….

Comment by dandroidz
2016-06-29 04:49:17

Those offices can have fun with those A/C & utility bills from March until September. WPB was one of the most in your face wealth divides I’ve seen, super wealthy beach area, with massive ghetto/poor area in between, then condos to I-95

Comment by snake charmer
2016-06-29 07:23:23

Yeah, drive through Riviera Beach. I did that, and was asking myself “billionaires live near here?”

 
 
 
Comment by Mugsy
2016-06-29 04:23:56

“The Lorimer stop also saw a decrease, with median rents going down 5.7 percent (to $3,300/month) from 2015. The number of rental units are also up a wild 93.7 percent from 2015, which likely lessened the burden on renters. As for stops further down the line: the Grand, Montrose, Halsey and Broadway Junction stops all saw decreases in median rent.”

When I was a kid in Queens my stepdad would take us down to Williamsburg by the Schaefer brewery to shoot at the rats with our BB guns or just throw rocks at them. How those creatures lived down there is beyond me. Lots of trucks, all night diners and shady, shady people on every street corner. Now you have to be rich to live there. So who knew?

Comment by dandroidz
2016-06-29 11:34:12

Same goes for an old industrial (Navy) area like Alameda or Hunters Point SF. Mega ghettos, now being filled with expensive condos. Some of my older coworkers who had been to the area in the 80s said that was NOT the place to be by yourself out and about.

 
 
Comment by Professor Bear
2016-06-29 05:05:29

Dumb question of the day: If interest rates paid on bonds are negative, wouldn’t it be more prudent than buying bonds to simply keep your money stashed under the mattress?

Comment by Raymond K Hessel
2016-06-29 05:33:26

Or buy precious metals, which are the ultimate safe haven when you have Keynesian lunatics bent on taking us down the road to Weimar 2.0.

Comment by Raymond K Hessel
2016-06-29 06:00:05

Silver is surging to new highs as more central bank debasement of the currency looms.

http://www.zerohedge.com/news/2016-06-29/silver-surges-post-brexit-highs

 
 
Comment by cactus
2016-06-29 09:09:30

wouldn’t it be more prudent than buying bonds to simply keep your money stashed under the mattress?”

Buy REITS and raise rents ? Isn’t that what Ben’s been talking about for the last 6 months ? Maybe longer time has a way of slipping by me these days.

Comment by cactus
2016-06-29 09:16:38

“with one North Beach resident saying he recently received a notice from his landlord that his rent was increasing from $1,800 to $8,000 per month.”

Dang that should fund some sweet CA pension plans and a ski boat on lake havasu

 
 
 
Comment by Raymond K Hessel
 
Comment by Raymond K Hessel
2016-06-29 05:20:24

A preview of coming attractions once the DNC’s permanent Democrat supermajority is in place and the Comrades of Proven Worth can install their collectivist kleptocracy.

https://www.washingtonpost.com/world/the_americas/venezuelans-are-storming-supermarkets-and-attacking-trucks-as-food-supplies-dwindle/2016/06/28/70020a14-37c8-11e6-af02-1df55f0c77ff_story.html

Comment by Apartment 401
2016-06-29 06:03:36

If there was a nationwide crash of the EBT system, Merika is about 72 hours away from this. Cloward-Piven is real.

Comment by Raymond K Hessel
2016-06-29 06:47:18

That would be a major reality check for millions of lobotomized, MSM-brainwashed ‘Muricans.

 
Comment by aNYCdj
2016-06-29 08:19:17

true…so it seems the best option is to spend it and stock up the pantry and freezer in the first day or two of it being available.

 
 
 
Comment by Raymond K Hessel
2016-06-29 05:25:12

Revenge of the Rubes - are the sheeple belatedly waking up and pushing back against the Oligopoly?

http://davidstockmanscontracorner.com/revenge-of-the-rubes-why-they-days-of-the-financial-elites-rule-are-numbered/

 
Comment by Raymond K Hessel
2016-06-29 05:27:43

More “stimulus bets” driving markets higher. Remember when stock valuations were based on fundamentals instead of limitless printing-press QE from the Keynesian fraudsters at the central banks? Neither do I.

http://www.bloomberg.com/news/articles/2016-06-28/asia-stocks-fall-as-brexit-fueled-turmoil-offsets-stimulus-hopes

 
Comment by Palm Beach County
2016-06-29 05:28:51

When is this ‘bubble’ going to burst??? Anyone else getting sick of waiting while missing our on 1% interest rates that will be for 30 years? What to do? Ideas?

Downtown Fort Lauderdale attracting developers, boomers and millennials
Walkability, a planned streetcar and All Aboard Florida bringing development to city’s urban core
June 28, 2016 09:45AM
By James Teeple

http://therealdeal.com/miami/2016/06/28/downtown-fort-lauderdale-attracting-developers-boomers-and-millennials/

Comment by Combotechie
2016-06-29 05:40:45

“What to do? Ideas?”

Go to cash? Wait?

“When is this ‘bubble’ going to burst???”

Thank you for not asking whether or not this bubble is going to burst.

 
Comment by Ben Jones
2016-06-29 05:46:17

‘When is this ‘bubble’ going to burst’

In 1998 I moved to Austin TX to work at a dotcom, saw my rent was half of my landlords mortgage and cemented the idea that there was a housing bubble there. Late 1999, I decided there was a internet related bubble. I just watched it for afar. I know people that lost everything they had on some of those Austin dotcoms, their families lost too. And the real estate in Austin took a hit, I’m not sure how bad because I got out of there.

I started this blog in 2004. I stepped away for a few years to work in the foreclosure biz. There was more work than an army could handle. Around 2011, I saw signs the bubble hadn’t died and started following it more closely. The bubbles have popped, more than once.

I don’t know why the government and central banks think this is going to work. It almost stopped near the end of 2014, IMO. Major markets stumbled, investors got scared, then off it went again. This stuff is unpredictable. One end game is when we start to hear glut. It’s hard to zoom past that.

Comment by Professor Bear
2016-06-29 08:19:39

It’s hard to understand what is different in the U.S. versus, say, China, where despite the Chicom government’s best efforts, they were unable to keep a stock market bubble inflated.

At what point will U.S. government bubble support measures meet a similar tearful ending?

Comment by Professor Bear
2016-06-29 08:43:58

How can the U.S. housing market perpetually inflate further and further into bubble territory when so many stock markets around the globe are feeling the bear’s claw? The laws of finance don’t seem to work any more!

Investing Guide
These stock markets are in correction (or worse)

by Heather Long
June 28, 2016: 12:12 PM ET
The story of Brexit is a story of never
Can you hear the bears growling?

The famous bronze bull sculpture continues to stand somewhat tall on Wall Street for now, but the bears are taking over in many global financial centers.

Stocks around the world are in the dumps, despite the little “breather rebound” Tuesday. The shock Brexit vote triggered a sell-off that got so bad that markets in Europe, Japan and China have fallen back into “bear market” status. That means they’ve fallen 20% or more from their recent 2015 highs (most markets peaked in the spring of summer last year).

Here’s a look at which markets have slid into bear status (20% drop) or correction status (10%) drop. Notice that even the United States hasn’t gone unscathed. The tech-heavy Nasdaq composite index also fell back into correction after Brexit. Also, some Asian stock markets were already in bear territory, but Brexit pushed them even deeper in the hole.

Bear markets (a 20% drop)
Germany’s DAX
France’s CAC 40
Spain’s IBEX 35
Italy’s FTSE MIB
Switzerland’s SMI
Japan’s Nikkei 225
China’s A shares
Hong Kong’s Hang Seng
(Note that after Tuesday’s rally, the Swiss market gained just enough to lift out of bear market status).

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Comment by cactus
2016-06-29 09:21:52

Around 2011, I saw signs the bubble hadn’t died and started following it more closely. The bubbles have popped, more than once. ”

Maybe this is the new information age economy that will replace manufacturing ? Flat out speculation ?

 
Comment by Lurker
2016-06-29 10:36:12

“It almost stopped near the end of 2014, IMO.”

I swear it really felt like it was about to come crashing down once a year, every year of the rebubble. Every year seemed like it had at least one long stretch of no buyers, price reductions, etc. But then the frenzy started back up, out of nowhere.

Looking back, I’ve been wondering if that was just wishful thinking/only seeing what I wanted to see. Then I saw this Case-Shiller Broad Home Price Index MoM chart. Check out the volatility in MoM changes post-2008 compared with the 1997-2005 period. Wild, wild swings every year of the “recovery.” It’s like we’ve gone from a multi-year bubble to a once-a-year bubble and bust, in the context of a wider bubble.

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/06/23/20160628_CS2.jpg

 
 
Comment by Ethan in Northern VA
2016-06-29 11:37:45

It needs to burst soon. Rent is so high, MID tax writeoff so appealing…

I dread moving again :-(

At this point I think the trick is just to get higher paying job? I think with job hopping I can get from the low 100’s to $150K+.

Comment by dandroidz
2016-06-29 11:53:03

My next move, Im considering craigslisting everything (bed set/mattress/futon) etc and moving with my clothes, computers, and my books.

I’m in a 3rd floor private apartment/residence with one heckuva stairwell.

Comment by Karen
2016-06-29 12:06:14

I toy with the idea of buying an RV. Then I’d be like a turtle with it’s shelter on it’s back. Moving would be so much simpler.

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Comment by dandroidz
2016-06-29 12:20:09

I’ve thought about it too, but then you gotta find a campground or something to park it, or deal with security on overnight stays.

 
 
 
Comment by Captain Lou Albano
2016-06-29 12:47:14

Why buy it when you can rent it for half the monthly cost? By later after prices crater for 65% less.

 
Comment by Eddie89
2016-06-30 11:30:26

Just remember that for the MID tax writeoff to really pay off, it has to be higher than your standard deduction, for 2015 tax year it’s $6,300 for single and $12,600 for married filing jointly.

The problem with having interest rates so low, that for some folks the MID doesn’t even kick in and it’s better to go with the standard deduction. In which cases owning vs renting, the MID is not that much of a deal.

Comment by Captain Lou Albano
2016-06-30 12:37:00

Even with the MID, rental rates are half the monthly cost of buying at current grossly inflated asking prices of resale housing.

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Comment by Raymond K Hessel
2016-06-29 05:32:10

Our rigged and broken “markets” are levitating based on an expectation of moar financial crack cocaine from the Keynesian fraudsters at the Fed and central banks. QE4, here we come….

http://www.zerohedge.com/news/2016-06-29/global-stock-surge-continues-investors-look-central-banks-support

 
Comment by Raymond K Hessel
2016-06-29 05:35:20

Watch and learn, Democrats. Watch and learn. This is the inevitable endstate when collectivists run out of Other People’s Money (OPM) and the productive get overwhelmed by the takers.

http://www.shtfplan.com/headline-news/they-are-putting-armed-guards-on-food-trucks-in-venezuela_06272016

Comment by In Colorado
2016-06-29 08:23:00

We’re feeding about 1/5 of the country with about 3% of the Federal Budget.

Comment by cactus
2016-06-29 09:24:02

Why are all the kids who get free lunches at public schools so FAT ?

What are they feeding them anyway ??

Comment by oxide
2016-06-29 10:36:34

What are they feeding the kids?

“Heart healthy” whole grains, AND vegetable and seed oils such as corn oil, soybean oil, canola oil, sunflower oil, safflower oil, etc.

The dangers of grain carbs are becoming well-known, but the pioneers of paleo are starting to believe that the vegetable oils are even worse.

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Comment by Neuromance
2016-06-29 18:15:10

The Case for Eating Butter Just Got Stronger

“To be clear, the new study doesn’t say butter is a health food, rather that “it doesn’t seem to be hugely harmful or beneficial,” says study author Dr. Dariush Mozaffarian, dean of the Friedman School of Nutrition Science and Policy at Tufts in Boston. This is in line with the new thinking from a growing number of nutrition scientists who say that cutting back on fat, even the saturated kind, is doing more harm than good. ”

http://time.com/4386248/fat-butter-nutrition-health/

 
Comment by Captain Lou Albano
2016-06-29 19:08:35

There is only one purpose for bread. It’s to get the butter to your mouth.

 
Comment by Karen
2016-06-29 21:23:28

There is only one purpose for bread. It’s to get the butter to your mouth.

Agreed. And all this talk of how our official nutrition dictators have discovered butter isn’t so bad is just their way of backpedaling. In a few years, they’ll be touting what a health food it is. Which is the truth.

 
 
Comment by dandroidz
2016-06-29 11:16:57

*shudder* public school lunches. Shoot I graduated HS in 2007, and the lunches just looked disgusting. Monday was pizza day, and since our first lunch period was so early, they had to have gotten the pizzas from Pizza Hut on Sunday or something. Then Tuesday was Chikfila sandwich day. Everyday there was a hoagie line, with digusting repressed ham meat with grissle in the slices. I lived in various areas growing up, and it was more of the same in public school. There was always burgers, pizza, and sandwiches, and kids always picked chocolate milk, and even bought an extra for $0.25. They get fat because the food ios pure $h!t

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Comment by oxide
2016-06-29 12:16:00

I’m skeptical, dandroidz. I was in school in the 70’s and 80’s, and we also had disgusting school lunches. Friday was burnt pizza day, everyone got the chocolate milk or kool-aid. But there simply weren’t the levels of obesity that we have today.

I’m guessing that the obesity is due to the after-school food and those veggie oils.

 
Comment by Eddie89
2016-06-30 11:38:05

I saw a documentary the other day that showed what France does for school lunches and it was amazing food! Fresh, cooked food! In actual kitchens! In the schools! Wow! Go figure!

The powers that be and their corporate lobbyists are purposefully making bank by feeding out kids crap in order to maximize their profits. And then U.S. kids get sicker faster from the crap food, which then enriches the healthcare corporate lobbyists, etc., etc.

http://www.mindbodygreen.com/0-14845/what-french-kids-eat-for-school-lunch-it-puts-americans-to-shame.html

 
 
 
 
Comment by Puggs
2016-06-29 11:03:03

Common sense is no longer common.

I belong to the common sense party. We are a paltry lot.

Comment by dandroidz
2016-06-29 11:19:50

But at least they have Common Core curriculum, 2+2 = 8

 
 
 
Comment by Raymond K Hessel
2016-06-29 05:38:12

Rise of the K2 synthetic marijuana zombies - it’s not like we didn’t have enough walking dead already, what with the Obama Zombies, McCain Mutants, and Romney Retards.

http://www.nbcnewyork.com/news/local/NYC-K2-Synthetic-Marijuana-Drug-Use-Brooklyn-Intersection-Epidemic-384801001.html

Comment by Apartment 401
2016-06-29 06:01:23

Synthetic drugs are garbage.

But as long as Big Government keeps a plant illegal, this is what the free market will provide in the absence of its legality.

Comment by Raymond K Hessel
2016-06-29 06:49:46

Maybe TPTB have a vested interest in keeping the sheeple in a stupified, brain-dead, zombified state. That right there is the perfect lifetime Democrat dependency voter. Forward!

 
 
 
Comment by aNYCdj
2016-06-29 05:54:30

fascinating story….its true we really dont need a lot of humans today in most warehouses..

so maybe the next step is to hire back American workers in america to handle customer service???

http://www.bloomberg.com/news/articles/2016-06-29/how-amazon-triggered-a-robot-arms-race

Comment by scdave
2016-06-29 07:32:34

That was a interesting article…Tech, robotics and demographics all colliding at the same time…

 
Comment by In Colorado
2016-06-29 08:28:51

About half the human labor in warehouses slogs away on simple, arduous tasks that involve moving stuff around—doing work that’s the equivalent of restocking shelves in a grocery store. It’s strenuous work, with employees often walking more than a dozen miles a day as part of their job.

On the plus side, they won’t be fat.

But as automation continues to progress, there will be only one outcome: more people on foodstamps.

 
Comment by cactus
2016-06-29 09:27:14

The only problem was that there were no other options. Kiva was pretty much it. ‘

yea I doubt that

 
 
Comment by Senior Housing Analyst
 
Comment by Ben Jones
2016-06-29 06:41:50

‘Atlanta has the largest apartments in the country, study finds’

‘A new report by apartment search website RentCafe and its sister company Yardi Matrix puts Atlanta at the top of the heap for U.S. cities with the largest rental apartments. RentCafe analyzed apartment sizes in the 100 largest U.S. cities, including only buildings containing at least 50 rental units.’

‘Throughout the country, the average size of new apartments shrank 8 percent, from 1,015 square feet in 2006 to 934 square feet in 2016. But don’t think rent is going down just because apartment sizes are.’

‘According to RentCafe, “(a)partment rents are breaking record after record, with the national average hitting an impressive $1,204 in May. While rental rates will moderate as new supply kicks in, this is not the kind of thing that happens overnight.”

Comment by Ben Jones
2016-06-29 06:47:11

‘the average size of new apartments shrank 8 percent…(a)partment rents are breaking record after record’

Smaller apartments should cost less, no? Again, the prices have sent an incorrect message. The consumers desperately need more affordable housing. What are developers doing? Tearing that up, slapping in a splash pad and jacking up rents; exactly the opposite of what’s needed.

And the new supply; luxury, when the consumers need something more affordable and maybe not with a bar downstairs.

So where are all the economists who can’t see the supply/demand thing isn’t working? And that price is the problem here.

But there’s no fun in that, right Mel Watt? After all, you don’t get the short-term economic kick out of affordable housing as you get with this:

‘he expects to be able to mark to market “and leave the cap rate in the dust.” ‘After rectifying the problems, re-cladding the building, and taking down the mansards, RADCO made the building look brand new and hip for Millennials. “We’re 25 percent net growth in year one, and will refi in July with 120 percent repayment in equity,” he noted’

Comment by Ben Jones
2016-06-29 07:10:46

And what will they do with this?

‘will refi in July with 120 percent repayment in equity’

Take a nice vacation and use the rest to buy even more affordable housing and make it unaffordable. They’ve been doing this over and over for years.

 
 
 
Comment by Raymond K Hessel
 
Comment by Ben Jones
2016-06-29 07:17:06

Looks like the “Brexit is Hitler” thing didn’t stick.

Comment by Apartment 401
2016-06-29 07:26:32

Gloabalists gonna globe:

http://www.politico.com/story/2016/06/full-transcript-trump-job-plan-speech-224891

And no, I don’t these ideas are realistic. But who else is discussing globalisation?

Comment by Ben Jones
2016-06-29 08:41:56

I listened to some of the speed and I think it’s a good start. Forget about new globalism treaties. Renegotiate WTO/NAFTA or we’re out. Stop manipulating your currency to take market share or we’ll enforce existing laws to stop you. What are the Wrong-Way Globalists saying?

‘The North American leaders’ meeting came as Donald Trump, the presumptive Republican nominee for U.S. president, blamed globalization for the loss of millions of manufacturing jobs and threatens to extricate the U.S. from the North American Free Trade Agreement, in effect since 1994. Trump on Tuesday also pledged that as president, he would withdraw from an agreement among 12 Pacific Rim nations that has yet to take effect. And it was only last week that Britain voted to leave the European Union.’

‘Canada’s international trade minister, Chrystia Freeland, noted that the meeting of the three pro-trade leaders was taking place at a pivotal moment.’

“This is a time when a lot of leaders in the world are talking about building walls,” Freeland said in an interview with The Associated Press. “What you are going to hear from the leaders of Canada, the United States and Mexico is that we are a continent and we believe in building bridges. We really believe in the open society. Those are core Canadian values, open to immigration, open to visitors and open to trade.”

Building bridges, it sounds so progressive! Are those bridges for the hundreds of thousands trying to escape socialist hell-holes south of the border? Wasn’t NAFTA supposed to help all these people find a higher standard of living and start buying stuff from us? I posted a report yesterday that Canada isn’t taking in all these illegals, why should the US?

Globalism had its chance and it failed. How many decades of proof do we need? What do we get from China but unemployment, crap that breaks and them running up house prices all over the world? Even now the Chicoms are cracking down even more on free speech and criticism of its “leaders”. Why don’t these progressives note that 100 members of the Politburo have become billionaires while the ordinary people live in cage-like cement boxes that cost a fortune? How much inequality are we going to take before we try something different?

Comment by snake charmer
2016-06-29 11:40:20

I have a question for Ms. Freeland. How many Canadians are going to fight for that set of “core Canadian values”?

I don’t dislike Mexico. But the U.S. is not the same as Mexico. Neither is Canada. And that’s OK. Trying to say that we are “a continent” is declaring a solidarity that doesn’t exist and never will.

Canada has a hard enough time convincing Quebecers that they are Canadians first and Quebec residents second.

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Comment by In Colorado
2016-06-29 11:48:53

Why don’t these progressives note that 100 members of the Politburo have become billionaires while the ordinary people live in cage-like cement boxes that cost a fortune? How much inequality are we going to take before we try something different?

Kind of ironic that the Politburo of the Chinese Communist Party are nothing more than a bunch of robber barons.

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Comment by In Colorado
2016-06-29 08:32:23

The thing about Hitler is that he was able to seize power in large part because the German people were fed up with the status quo and the non stop shafting they were getting. You’d think that the Davos crowd would have a clue, but maybe they still believe that they will win in the end.

Comment by Ben Jones
2016-06-29 09:30:08

I just saw this:

‘The speech Trump delivered in Pennsylvania on Tuesday, attacking globalization and trade, will provide more cause for panic among Republican elites.’

When I was a kid we studies civics and stuff, and I distinctly remember there was no talk of elites in the US. Maybe where they have kings or queens, but not in the US. Call me crazy, but this might be a fundamental problem here for these so-called elites. Nothing some tar and feathers couldn’t sort out.

BTW, some of you who go on about who’s responsible for NAFTA please note; the discussion has moved to getting rid of it.

Comment by Apartment 401
2016-06-29 09:47:05

+1

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Comment by dandroidz
2016-06-29 11:27:44

The only ammo people have against Trump seems to be his bankruptcies, despite them being strategic, hey more power to him. Also that you can dig up pictures of him with the Clintons, Bushes, and other partied people, but he flat out said early on he is a business man, and buttered whatever bread he needed to.

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Comment by Lurker
2016-06-29 11:38:43

One problem is that we need a different word than “elites,” which is not accurate. Elite connotes wealth and power - but how many of these consensus-minded urban elites are actually not wealthy or powerful, but are desperately and just barely getting by?

Think of the Atlantic journalist who couldn’t come up with $400 in an emergency, yet he is a bonafide member of media elite. Or I think of some British friends who were passionately in favor of “Remain” - they are part of a well-educated and well-paid elite class who are barely getting by in expensive, overworked London.

I think there’s a real fear at work: because so many upper-middle class people are barely hanging on financially, it’s all the more important to hang on socially to the political ideology of polite society because that’s the only thing separates them from the struggling masses from whom they’re really not so different.

In another era, this elite was sneeringly called the “bourgeoise,” with the appropriate connotations of petty insecurity and desperate conformism. And, importantly, it was not a club people wanted to be join. Yet the word “elite” flatters its exponents and creates the illusion of clout to everyone else. “Bourgeoise” were to be laughed at for their inane struggles; “elite” are to be feared.

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Comment by dandroidz
2016-06-29 11:44:45

Indeed. It’s just as the political weasles in “Atlas Shrugged”. Dagney’s brother wormed his way into connections and wealth and became a string puller. He relished in it, and loved suffocating the producers or having them concede to him and his powerful friends. Our “elites” are the same, well connected, insiders, who profit and strangle the workers/producers.

 
Comment by Justme
2016-06-29 12:47:47

@Lurker

>> because so many upper-middle class people are barely hanging on financially,

Heh. Nobody caught this gem of a statement?

 
 
Comment by In Colorado
2016-06-29 11:44:02

BTW, some of you who go on about who’s responsible for NAFTA please note; the discussion has moved to getting rid of it.

What have you got against Mexican made “American” cars? ;-)

FWIW, if we’re going to import stuff, I’d rather buy it from Canada and Mexico than China.

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Comment by dandroidz
2016-06-29 11:46:37

Norfolk VA loved it when Ford closed the F150 plant and moved it to Mexico. Viva la Mehicoooo

 
 
Comment by In Colorado
2016-06-29 11:57:11

When I was a kid we studies civics and stuff, and I distinctly remember there was no talk of elites in the US. Maybe where they have kings or queens, but not in the US.

While the civics books didn’t talk about them, we definitely had our elites: Rockefeller, Ford, Carnegie, etc. Same in the political arena: Roosevelt, Kennedy, etc., though to be fair we had some presidents who did not come from elite backgrounds: Truman, Eisenhower, and dare I say it: Bill Clinton.

But given the current situation, I will quote V from “V for Vendetta”: “there is something very wrong with this country”

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Comment by CalifoH20
2016-06-29 15:29:22

I never liked NAFTA.

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Comment by snake charmer
2016-06-29 07:33:48

This was news here yesterday:

“Tampa Bay Buccaneers quarterback Jameis Winston will be starting his second season as a homeowner.

Winston paid $1.195 million last week for a Mediterranean-style mansion on an acre fronting Lake Keystone in Odessa, Multiple Listing Service records show.

The 5,400-square-foot home features 10-foot mahogany ceilings, a winding staircase, a music room and a formal dining room. The first-floor master bedroom “beckons you as a private oasis with its elegant master bath complete with walk-thru shower with triple heads, a Jacuzzi tub and his and her sinks,” the listing says.

The previous owners, Douglas and Youngmi Min, bought the eight–year-old home in 2011 for $935,000. They put it on the market in March 2015 for $1.395 million, dropping the price twice before landing a sale.”

http://www.tampabay.com/news/business/realestate/buccaneer-jameis-winston-buys-mediterranean-style-mansion-in-odessa/2283276

Comment by dandroidz
2016-06-29 11:22:47

Sigh, these athletes get stuck with the property payments years after their playing yrs and then they end up in a ESPN special about being broke. Why they aren’t ok with a $400,000-600,000 house, is beyond me.

Comment by In Colorado
2016-06-29 11:34:39

The dude got a $16M signing bonus. I think he can afford a $1.2M house. Compared to other athletes he actually showed some restraint and didn’t buy a $10M house.

Whether or not he overpaid is another matter.

Comment by dandroidz
2016-06-29 11:42:05

Oh I have no doubt he got paid great on his rookie deal. And if he continues to perform well, he will score a larger deal in a couple of yrs, but I’m still just saying, these guys go from $40-60 million to broke. Even if they can afford the house, their advisors steal from them, business ventures they get roped into fail. cars for family, etc. The real killer is if they get pegged for child support during their peak deals.

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Comment by In Colorado
2016-06-29 12:40:46

Agreed, few have a clue on how to manage their money and many end up squandering it. But in this guy’s case I don’t think a 600K vs 1200K house will make much difference in the final outcome.

 
Comment by CalifoH20
2016-06-29 16:02:50

Lesson: AN EARLY VASECTOMY SAVES MONEY!

 
 
 
 
Comment by Eddie89
2016-07-01 11:26:28

WOW! $1.195 million for a Mediterranean-style mansion in FL?!

The only thing you can buy for $1.195 million in coastal California is a 40 year old stucco shack and neighbors so close you can hear them fart!

Nope, not a bubble at all! Normal prices!

 
 
Comment by Palm Beach County
2016-06-29 08:26:56

STOCKMAN’S CORNER
Europe’s Banking Bloodbath—–Shares Of Top 8 Banks Down 35%-70% In Past Year
by David Stockman • June 28, 2016

http://davidstockmanscontracorner.com/europes-banking-bloodbath-shares-of-top-8-banks-down-35-70-in-past-year/

Here’s a comment from the site on a U.S. index:

DavidYoung3 1 day ago
And the next chart will be the losses of America’s 8 largest money-center banks! The Philadelphia Bank Index, BKK, is down a smart 21% over the last 52 weeks! Only going to get worse as these Banksters are constantly buying each other’s JUNK. CAN YOU YELL, TIMMMMMBBBEERRRRRRRRRRRR?!

 
Comment by The Selfish Hoarder
2016-06-29 08:34:24

I did not realize it at the time I bought AUY at $1.89 in January. Its current book value per share is $5.15 and is now priced at $5.83.

Toyota is priced a little below book value.

 
Comment by Palm Beach County
2016-06-29 08:38:58

STOCKMAN’S CORNER
Chart Of The Day: Last Time We Were Here Recession Started
by David Stockman • June 28, 2016

The US Treasury yield curve has collapsed to its flattest since Nov 2007… just before the US economy officially slumped into recession…

http://davidstockmanscontracorner.com/chart-of-the-day-last-time-we-were-here-recession-started/

 
Comment by Palm Beach County
2016-06-29 08:42:50

After ‘Brexit,’ Can We Exit a Few Things Too?
by Ron Paul • June 28, 2016

http://davidstockmanscontracorner.com/after-brexit-can-we-exit-a-few-things-too/

 
Comment by Anonymous
2016-06-29 09:34:12

Airbnb Sues Hometown San Francisco

http://www.bloomberg.com/news/articles/2016-06-27/airbnb-is-suing-hometeown-san-francisco-to-block-rental-rules

“Airbnb Inc., the second-most highly valued San Francisco-based startup, sued its hometown over claims the city’s rental restrictions violate protections for internet companies and its free-speech rights.

The company is hoping to avoid thousands of dollars in daily fines it could face when a new San Francisco law takes full effect next month. The law, passed with a 10-0 vote by the city’s Board of Supervisors, would require Airbnb to make sure that hosts on its platform have registered with the city.”

Comment by dandroidz
2016-06-29 11:24:08

Lol @ SF passing restrictions on its bread and butter companies.
I’m surprised they haven’t backed their outrageous yellowcabbies yet to spite Uber and Lyft.

 
 
Comment by taxpayers
2016-06-29 10:09:18

https://www.yahoo.com/?fr=yset_ie_syc_oracle&type=orcl_hpset

Illanoy

1. any idea how much re taxes will go up?
2 will they get a bailout now that PR is getting bailed?

Comment by rj soon not to be in chicago
2016-06-29 12:29:13

Take a look at a few of the posts here…..

https://www.illinoispolicy.org/

This place is going down hard….anything printed as to how great Ch*tcago is - don’t believe it - the sheeple do - thinking folk - not so much anymore.

ILLANNOY on the verge of no budget for second year - Guv, Mad AGAIN and Cullerton are kicking sand at each other as the folks suffer - and they sit with their swizzle sticks in the cold martini laughing the entire time. Down with elites - us vs. them - damn them all.

 
Comment by rj soon not to be in chicago
 
Comment by Anonymous
2016-06-29 13:36:46

Puerto Rico Says It Will Default Even With Congressional Aid

“Two days before a potential historical default, Puerto Rico Governor Alejandro Garcia Padilla made it clear that the commonwealth won’t pay bondholders even as Congress votes on a bill allowing the island to restructure its $70 billion in debt.

“On July 1, 2016, Puerto Rico will default on more than $1 billion in general obligation bonds, the island’s senior credits protected by a constitutional lien on revenues,” Garcia Padilla wrote in a editorial posted on a CNBC website.”

https://finance.yahoo.com/news/puerto-rico-says-default-even-154247833.html

 
 
Comment by taxpayers
2016-06-29 10:12:19

where’s muggy? home depot

Comment by phony scandals
2016-06-29 13:45:17

I don’t know but he’s not out looking for another rental or folding Furniture Pads in the back of a U-Haul.

 
 
Comment by taxpayers
2016-06-29 10:13:38

http://www.movoto.com/chicago-il/market-trends/

the re data must be lagging already
how could prices be going up in Chighetto when they know taxes are going to skyrocket

 
Comment by aNYCdj
2016-06-29 10:46:54

just wondering why muslims want to bomb airports kill gays when people die from water shortages…..

https://www.yahoo.com/news/murders-violence-rise-parched-central-india-battles-water-071307420.html?ref=gs

 
Comment by CalifoH20
2016-06-29 10:58:46

You can thank the GOP for putting up Trump. People have no choice.

NATE SILVER: Hillary Clinton has a near 80% chance of winning the election
Jun. 29, 2016

 
Comment by snake charmer
2016-06-29 11:29:33

Silver is not exactly on a winning streak. Neither are pollsters in general.

I’m a little dismayed that predictions like this are being made so far in advance. As a young person in 1988, I worked for the Dukakis campaign. He enjoyed a large lead in the polls in June. That’s not who ended up winning the election. And it wasn’t even close, he lost 40 states, including California.

People do have a choice, although not necessarily one they like.

Comment by In Colorado
2016-06-29 11:37:44

The “predictions” are being made early because the Masters of the Universe want Clinton to win.

Comment by snake charmer
2016-06-29 12:26:44

Quite true. Clinton is the analogue of “Remain” in the UK referendum.

(Comments wont nest below this level)
Comment by In Colorado
2016-06-29 12:45:32

The Davos crowd must really love the way the EU is run. Sure, you let the member countries elect their parliaments and Prime Minsters, etc. But at the end of the day they all have to obey the unelected bureaucracy in Brussels (and guess who pulls their strings?). Here they still have to maneuver to get their preferred candidates on the ballots and then elected.

 
 
 
 
Comment by phony scandals
2016-06-29 13:01:37

“You can thank the GOP for putting up Trump. People have no choice.”

This message has been brought to you by the Southern Poverty Law Center.

Now back to regularly scheduled North American Union NWO propaganda or I mean programming.

Obama hopes trade, not Trump, is a focus of Canada summit

Kevin Liptak-Profile-Image

By Kevin Liptak, CNN White House Producer

Updated 12:59 PM ET, Wed June 29, 2016

Ottawa (CNN)President Barack Obama bid “adieu” and “adios” to his counterparts in Canada and Mexico Wednesday, convening a final North American leaders’ summit even as the U.S. presidential contest throws crucial cross-border issues into turmoil.

Meanwhile, Obama and fellow world leaders continue to size up the ramifications of last week’s vote in the United Kingdom to exit to European Union, a topic that’s certain to come up in the conversations in Canada.

To those ends, the leaders announced ambitious new agreements meant to curb climate change, a priority for Obama. That includes setting a target of producing half of the continent’s power from renewable energy sources by 2025. Currently, the three countries together generate 37% of their power from clean energy sources like nuclear, wind, solar and hydro power.

The leaders also discussed plans to replace the much-maligned North American Free Trade Agreement with Obama’s preferred TPP trade deal — a measure that’s faced fierce political opposition and is currently awaiting congressional approval. Obama is likely to attempt to reassure his counterparts the deal will eventually pass, though how and when remain unclear.

 
 
Comment by dandroidz
2016-06-29 11:37:32

Just overheard my coworker on the phone with her bank or someone discussing why the appraiser said her home was worth yadda yadda when her neighbors sold for yadda yadda. She went on to mention how this is her 3rd or 4th Refi. Lol I wonder if she pays closing costs each time or if its rolled in? That’s not a cheap process. That’s like last yr my lender wanted me to ReFi from 4% to 3.5%, “great offer, cheap rates!”, uhm yeah no…glad I don’t own anymore.

Comment by CHE
2016-06-29 12:21:54

I’m starting to get unsolicited mortgage/re-fi offers in my email saying I could receive significant monthly savings regarding my home in LA.

I don’t own a home - I rent. I haven’t owned a home since 2005.

Sounds like they’re starting to get desperate for business.

 
Comment by CalifoH20
2016-06-29 15:05:45

People who re-fi a lot have never seen an amortization table or they live pay check to pay check and dont care.

 
Comment by rms
2016-06-29 21:25:51

“She went on to mention how this is her 3rd or 4th Refi.”

Men pay for the drinks, the student loan and the mortgage.

 
 
Comment by Professor Bear
2016-06-29 11:52:48

People who held on to their cash instead of buying risk assets at a bad time didn’t suffer the fate described below.

Investors are suffering from the ‘terrible twos’
Published: June 29, 2016 12:38 p.m. ET
By Rob Isbitts

It has been a long time since my kids were two years old. While my wife and I look back at those days with a smile, we also recall that children around that age can sometimes be difficult … that is when they are not being impossible. For many investors, the two years since mid June 2014 have also been somewhere between difficult and impossible. There are good reasons for that. A malaise has gradually crept in, turning several prominent investment strategies into mush. That’s not to say that folks are being wiped out, but that they are more likely treading water. Let’s quickly review what’s happened and then prescribe a short list of observations to see if we can tilt the next couple of years more in our favor.

The chart above shows that a wide variety of “set it and forget it” strategies have been mediocre producers for the past two years. The four S&P Target Risk Indexes, which are combinations of global stocks and bonds designed to track “balanced” portfolio investing, have all produced cumulative losses of between 0.91% and 2.85%. So whether you were 80% in stocks and 20% in bonds (”Aggressive”), 30% in stocks and 70% in bonds (”Conservative”) or anywhere in between, your portfolio produced a slightly negative return.

 
Comment by rms
2016-06-29 12:29:46

“…CEO Norman Radow was in the workout business…”

Gotta wonder if he wore skull-n-bones suspenders during his workouts?

 
Comment by CalifoH20
2016-06-29 13:43:54

Who is voting for Trump?

Who is voting Hillary?

Who is staying home?

Comment by Anonymous
2016-06-29 14:22:08

D. Possibly going to vote on local/state issues & candidates but skipping the Prez candidates.

 
Comment by Captain Lou Albano
2016-06-29 14:46:27

lol@lola

 
Comment by PDneXt
2016-06-29 15:04:50

Johnson.

 
 
Comment by Senior Housing Analyst
2016-06-29 13:49:22

Daytona Beach, FL Housing Prices Crater 9% YoY As Housing Inventory Balloons

http://www.zillow.com/daytona-beach-fl/home-values/

 
Comment by Anonymous
2016-06-29 14:23:23

Fed flags Morgan Stanley, Deutsche, Santander in stress tests; 30 other banks OK

http://www.cnbc.com/2016/06/29/fed-flags-morgan-stanley-deutsche-bank-santander-in-stress-testing.html

The Federal Reserve objects to capital distribution plans proposed at the U.S. units of Deutsche Bank and Santander, meaning that the banks cannot issue dividends or make share buybacks until they establish a new plan, the central bank said Wednesday.

Further, central bank regulators are requiring Morgan Stanley to submit a new capital plan by the end of the fourth quarter of 2016, but said they did not object to the bank’s capital plan.

The Federal Reserve’s Wednesday announcement of the results of its Comprehensive Capital Analysis and Review marks the second and final portion of the annual, two-part stress tests aimed at gauging Wall Street’s ability to adequately respond to an economic crisis.

There were only three objections out of 33 institutions tested.

 
Comment by phony scandals
2016-06-29 14:41:03

The EU Is About Control, Not Free Trade

Technocracy is 1984-style totalitarianism

Sascha Kloake | Mises.org - June 29, 2016 0 Comments

On Tuesday, during a somewhat raucous session of the European parliament, Nigel Farage gave his post-Brexit “victory speech.”

Besides his trademark taunting of his pro-EU colleagues, Mr Farage made an important point, suggesting:

Why don’t we be grown up, pragmatic, sensible, realistic and let’s cut between us a sensible tariff-free deal and thereafter recognise that the United Kingdom will be your friend, that we will trade with you, cooperate with you, we will be your best friends in the world.

This statement, like most of Mr Farage’s speech, was greeted with jeers. While the reaction could simply be regarded as being due to Mr Farage’s earlier taunting and to the emotional nature of the post-Brexit debate, it seems to hint at a deeper issue, which has been brought up on the Mises Wire several times: That the European Union is not primarily about free trade for mutual benefit, but about political integration and economic harmonisation, in which free trade is just the reward for going along with the political ambitions of Brussels.

This alternative explanation seems to be confirmed by comments made by the president of the European Commission, Jean-Claude Juncker, in May, including that “deserters will not be welcomed back with open arms,” and yesterday, by German chancellor Angela Merkel, who said in front of the German Bundestag:

We’ll ensure that negotiations don’t take place according to the principle of cherry-picking … It must and will make a noticeable difference whether a country wants to be a member of the family of the European Union or not. Whoever wants to leave this family can’t expect to do away with all of its responsibilities while keeping the privileges.

Is leaving the European Union with its plans for ever-greater harmonisation leading to a political, fiscal, and social union really “desertion”? Is the desire to be an independent, sovereign country, yet still participate in free trade with some of the world’s largest economies, cherry-picking? As Murray Rothbard has pointed out, “genuine free trade doesn’t require a treaty”, and if it does not even require a treaty, it is quite clear that it certainly does not require a political union that harmonises away the competition responsible for many of the benefits of free trade.

This, however, seems lost on many politicians and bureaucrats in the EU, as well as many of its intellectual supporters at universities and newspapers across Europe, even when they did make the effort to mention the common market as a major benefit of remaining a member of the union.

 
Comment by Senior Housing Analyst
2016-06-29 14:44:04

Newark(Alameda County), CA Housing Prices Plummet 8% YoY As New Inventory Floods Market

http://www.zillow.com/newark-ca/home-values/

 
Comment by Senior Housing Analyst
2016-06-29 15:52:32

“Pending Home Sales Crash Most In 6 Years - ‘Supply’ Blamed”

http://www.zerohedge.com/news/2016-06-29/pening-home-sales-crash-most-6-years-supply-blamed#comment-7756100

Foolish realtors

 
Comment by CalifoH20
2016-06-29 15:58:48

improving !
February 22, 2016
A new Rasmussen Reports national telephone survey finds that just 11% of Likely U.S. Voters think Congress is doing a good or excellent job. That’s up slightly from nine percent (9%) in the previous two surveys which was the lowest positive rating since the start of the new Republican-led Congress in January of last year. Sixty percent (60%) say Congress is doing a poor job, showing little change from the previous survey and generally in line with findings over the past year. (To see survey question wording, click here.)

Comment by Raymond K Hessel
2016-06-29 17:03:51

Yet 95% of these dolts will keep voting for more of the same, just like they did in 2008 and 2012. And a majority will probably vote for pure evil, aka Hillary Clinton. You can’t fix stupid.

 
Comment by sleepless_near_seattle
2016-06-29 22:15:49

What they really mean, is “everyone but MY representatives are bad.”

Otherwise, with that bad of a rating, why do we have so many career politicians? Most voters are lazy and simply passing the buck.

 
 
Comment by Senior Housing Analyst
 
Comment by Sacks of Dong
2016-06-29 16:12:10

Rental Watch 6/2016: “…it’s the natural economic process of supply and demand.”
No. Its:
https://en.wikipedia.org/wiki/Tulip_Fever
“The two invest in the risky tulip market in hopes to build a future together.”

 
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