September 13, 2016

The Market Slows To Absorb The Flood

A report from the Real Estate Journal. “Developers are expected to add more apartment units across the United States this year than they have in the last decade, according to RENTCafe. According to the company, more than 320,000 new apartments are expected to be completed in 2016. That is a jump of 50 percent from 2015. Texas leads the way, with more than 69,000 units projected to be completed in 2016 in the metropolitan areas of Dallas-Fort Worth, Austin, Houston and San Antonio. Chicago ranks 14th on RENTCafe’s list of hot apartment markets, with developers expected to deliver 8,377 new apartment units to the metropolitan area by the time this year ends.”

“The only other Midwest market to make this list was Nashville, which is expected to add 6,536 new apartment units this year.”

WSMV on Tennessee. “Just as Metro’s new affordable housing laws go into effect, one of Nashville’s newest and most expensive apartment complexes is putting on the finishing touches. With some lofts starting at $2,725 dollars a month, many wonder who can afford it. The Cadence in Midtown will begin opening up in phases in mid-September. Urban development experts say to live there comfortably, residents would have to make upwards of $90,000 per year.”

“Bradley Crossfield moved to Nashville from Dallas three months ago. He wanted to live in Midtown because of the close proximity to bars and restaurants. But Crossfield said he was a bit shocked when he saw rent prices. ‘I was like, ‘say what?’ It did surprise me because Dallas is a big large metroplex and I didn’t really expect the cost of living to be as high in Nashville as it actually is,’ he said.”

“While it might seem these pricy apartments are filling up fast, that’s not always the case. The Element on Music Row, close to The Cadence, opened late last year. It has more than 400 apartments with prices starting at $1,600 per month. A few of them are $10,000 a month. The occupancy is only at 26 percent.”

The Philadelphia Inquirer in Pennsylvania. “Here’s a sign that Philadelphia’s apartment-building buzz may be quieting: A major out-of-town developer has bailed on a big Center City project, citing ballooning construction costs and tapering rent growth. Mack-Cali Realty Corp. said in its most recent earnings call that it had backed out of a deal to build a 300-unit apartment tower with local developer Parkway Corp.”

“The Jersey City, N.J.-based company is withdrawing from a Center City residential-development boom that’s been gaining steam since the end of the last recession, with rising rents encouraging record investment in new projects. But some think Mack-Cali’s decision could be a preview of things to come, as the market slows to absorb the flood of new apartments and allow labor demand to cool.”

“‘You’ve seen at least one project that’s put the brakes on development, and that could lead to others doing the same,’ said William Rich, a director at the Washington-based real estate tracker Delta Associates. ‘This could be the leading edge.’”

“Philadelphia is not alone among cities with resurgent downtowns that are now facing the threat of oversupply, said Hans Nordby, a managing director at real estate research firm CoStar Group. Dense urban enclaves such as downtown Los Angeles and the central parts of Houston and Nashville are seeing their markets cool, he said. As a result, asking-rent increases nationwide are forecast to decline through at least 2020, according to CoStar.”

“‘Your urban, fashionable, everybody-wants-to-live-there neighborhood was so good for so long . . . that now it’s become a little overheated,’ Nordby said. ‘In many cases, developers have gotten religion and they’re starting to shut down supply.’”

The Real Deal on New York. “Its aging office buildings are struggling with rising vacancies and competition from new developments at Hudson Yards. And even the seemingly invincible luxury market is having a hard time. Park Avenue, it seems, is at risk of losing its role as the coronary artery of wealth and power in Manhattan. In all, nearly 50 percent of Park Avenue apartments currently listed at $5 million and up have seen price chops since hitting the market, according to The Real Deal’s analysis of 37 such listings on StreetEasy.”

“Amid an overall market correction, prices and sales at some of the most exclusive co-ops in the city along Park Avenue have softened. Late Wall Street trader Karen Cook’s apartment at 775 Park is currently asking $7.495 million — less than the $7.975 sale price in 2008. Meanwhile, Andrea Jung, the former chief executive of Avon Products, listed her co-op at 1021 Park last fall for $16.2 million. After several price chops, the pad is now asking $13.5 million, according to StreetEasy.”

“‘I feel that this is one of the most price-sensitive markets in which we’ve ever worked,’ said Brown Harris Stevens’ Kathy Sloane. ‘People are looking, but they’re slower to make offers and we don’t know what is holding the buyers back.’”

“There are certainly fewer deals. During the first 35 weeks of the year, there were 33 contracts signed on Park Avenue co-ops above $4 million — a nearly 27 percent drop from the 45 signed during the same time in 2015, according to data from Olshan Realty. According to firm founder Donna Olshan, the decline mirrors the rest of the co-op market in Manhattan. ‘Many of them need a lot of work, and the younger audience has no interest in going through the co-op board process,’ she said, citing competition from amenity-laden condos in trendy neighborhoods.”

“Warburg Realty’s Frederick Peters agreed. ‘If you bought your property a year ago, chances are it is worth less today,’ he said. Sellers who listed apartments at too-high prices last year, he said, are finding that they now need to reduce prices significantly to make a deal.”




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130 Comments »

Comment by Ben Jones
2016-09-13 07:50:47

From the last link:

‘So far this year, the priciest closed sale was Liz Swig’s duplex at 740 Park that she once shared with ex-husband Kent Swig, which sold for $18.5 million after two years on the market. Swig, daughter of developer Harry Macklowe, originally listed the co-op for $32.5 million in 2014.’

‘Toll Brothers chopped prices at its nine-unit condo at 1110 Park last year, including its $44 million penthouse — which was reduced to $29.5 million this year.’

Comment by Blue Skye
2016-09-13 08:39:03

“we don’t know what is holding the buyers back.’”

“….If you bought your property a year ago, chances are it is worth less today,’ he said.”

 
Comment by rms
2016-09-13 09:19:22

Wow, $32.5 million —> $18.5 million; talk about skinned alive.

 
Comment by The Crushin' Russian
2016-09-13 13:03:51

Get what you can get for your house today because it’s going to be worthless tomorrow for decades to come.

Comment by creditguru
2016-09-15 11:13:28

how do you figure? is your assessment for luxury only or across the board?

 
 
 
Comment by Palm Beach County
2016-09-13 07:51:17

Many Miami residents are looking at other cities to buy a home: report
Affordability was a big factor in directing search traffic outside of Miami
September 12, 2016 10:40AM

http://therealdeal.com/miami/2016/09/12/many-miami-residents-are-looking-at-other-cities-to-buy-a-home-report/

Comment by palmetto
2016-09-13 09:34:30

I don’t blame them. It’s not just the prices, but the rising flood waters after even a minor storm, in some areas. No way Miami can sustain its population.

 
 
Comment by Palm Beach County
2016-09-13 07:58:27

Another Big Central Bank Warns on Housing Bubble, Frets about Risks to Banks, Blows Whistle on Stimulus
by Wolf Richter • September 12, 2016

http://wolfstreet.com/2016/09/12/pboc-stimulus-china-housing-bubble-risk-to-banks/

 
Comment by Ben Jones
2016-09-13 08:06:27

‘Bubble Bursting in Less Than a Week for Payment-in-Kind Bonds’

‘Bonds that allow issuers to defer interest payments are nosediving less than a week after they were sold amid a sell-off of fixed-income assets.’

‘Ardagh Group SA’s 845 million euros ($948 million) payment-in-kind toggle notes due September 2023 are indicated at 95.5 cents on the euro, down 4.5 cents from when the Luxembourg-headquartered packaging company sold them on Wednesday, according to data compiled by Bloomberg. German auto components maker Schaeffler AG’s 750 million euros of notes due September 2026 are quoted 97.2 cents down from a sale price of 100 cents on Thursday, the data show.’

‘Both companies increased the size of their payment-in-kind note sales last week amid surging demand for higher-yielding assets, which pushed borrowing costs for junk-rated companies to a record low. Markets subsequently turned, starting with a tumble in longer-dated government bonds and spreading to other fixed-income assets, amid growing concern about the effectiveness of loose monetary policies from the U.S. to Europe.’

“Investors who bought risky bonds such as PIKs in the bull market phase, have woken up to a bear market this week,” said Bill Blain, a strategist at brokerage Mint Partners in London. “The global experimentation with monetary policy is being shown as ineffective.”

‘in the bull market phase’

It was last week.

 
Comment by Ben Jones
2016-09-13 08:15:37

‘It has more than 400 apartments with prices starting at $1,600 per month. A few of them are $10,000 a month. The occupancy is only at 26 percent’

But the slowdown has “started”. I’d say it has hit a wall in the luxury sector.

‘more than 320,000 new apartments are expected to be completed in 2016. That is a jump of 50 percent from 2015.’

Comment by oxide
2016-09-13 09:08:43

I went to the website of The Element Music Row apartments in Nashville. The website blasted me with an offer of Two Months Free and New Reduced Rents.

The monthly rents do *not* start at $1600/month. The rents start at $1910. The $1600 includes the two months free. When it comes time for the first renewal, the rent will rise to $1910. If the building were full, the rent would rise to $1910 + 5%.

The $1910 is for a 564 sq ft studio. For $8500/month you can rent a 3/3 2100 sq ft penthouse.

For $3000/month PITI, you can buy this, just 3 extra blocks from those same bars and restaurants.

http://www.zillow.com/homedetails/900-Villa-Pl-Nashville-TN-37212/41117470_zpid/

They’d be saving so much money on buying they wouldn’t know what to spend it on.

Comment by Ben Jones
2016-09-13 09:20:58

Surprise, surprise, another former foreclosure:

09/08/16 Listed for sale $600,000+51.9%
05/20/09 Sold $395,000+394,900%
01/30/08 Sold $100-99.9%
09/15/07 Listing removed $180,000
09/06/07 Sold $180,000
09/05/07 Listed for sale $180,000+37.3%
08/14/07 Sold: Foreclosure Auction $131,100-16.7%
01/24/07 Sold: Foreclosed to lender $157,390

Look at the zestimate chart for this house. Up almost $200k in a month. Plus another zillow fact:

Built in 2009

Comment by dandroidz
2016-09-13 09:50:00

My friend got such an awesome deal on a foreclosure in MS sitting on 15 acres. The realhore UHS tried to tell him not to lowball the offer to the Govt, he did anyway, and the Govt initially balked, but ultimately accepted. Beautiful log cabin home with 2 ponds for under $150k. I’m pretty happy for him benefitting from a divorced couple’s underwater financial woes.

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Comment by The Crushin' Russian
2016-09-13 13:26:31

I doubt it’s worth that much. What’s the dirt worth…. $15k? How old is the shack?

 
 
 
Comment by dandroidz
2016-09-13 09:47:57

$3000/mo PITI? Jesus, who’d want that monthly nut in the south?

Comment by oxide
2016-09-13 12:06:15

That’s not the point. The point is that the monthly nut is HALF the monthly nut for an apartment which is the same size and three blocks away. So if you think people are nuts for buying this $600K house on a tear-down lot, then they are even more nuts for renting the penthouse.

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Comment by In Colorado
2016-09-13 14:26:57

FWIW, you can walk away from the overpriced rental if need be. If you buy and end up underwater, the only way out is jingle mail.

 
Comment by FED Up
2016-09-13 23:10:19

You didn’t include the $200k haircut coming down the pipe. And don’t forget the 6% to pay the realwhore to unload it.

 
Comment by Jingle Male
2016-09-15 04:33:25

Great reason to rent and pay 200% more!

 
 
 
Comment by Blue Skye
2016-09-13 10:46:52

“They’d be saving so much money on buying…”

This is why debt donkeys are pictured with special thick glasses.

 
Comment by The Crushin' Russian
2016-09-13 13:32:28

Donk,

You can rent the same three bedrooms for $1200/month anywhere in Nashville.

http://nashville.craigslist.org/search/apa?max_price=1200&bedrooms=3

Why buy it when you can rent it for 60% less? Buy later after prices crater for 70% less.

 
 
Comment by Sean
2016-09-13 11:18:43

I thought the South was supposed to be affordable. That’s what all my redneck friends keep telling me.

Comment by In Colorado
2016-09-13 11:56:16

YMMV. My brother paid about $65/sq foot for his place near Raleigh. He’s out in the exurbs. If he had bought closer to town he could have paid a whole lot more.

Comment by oxide
2016-09-13 12:07:23

Oh but the SBUX and craft beer tastes so much better in the vibrant city!

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Comment by Raymond K Hessel
2016-09-13 12:36:54

Soon to be overrun with feral Democrat entitlement voters.

 
Comment by Ethan in Northern VA
2016-09-13 13:38:15

But there are tech jerbs there.

 
Comment by taxpayers
2016-09-13 13:53:04

Took er jerb !

 
 
 
 
Comment by Eddie89
2016-09-13 13:10:00

Check out the crazy here in San Diego. They just started renting 1 bed, 1 bath 678 SqFt apartments starting at $2,499 per month! Insane!
http://www.avinoliving.com/floorplans.aspx

Comment by The Crushin' Russian
2016-09-13 13:39:25

Here’s 600+ apartments in SD under $1000.

 
 
 
Comment by Professor Bear
2016-09-13 08:50:23

Is Mr. Market throwing another taper tantrum over the Fed’s nonstop liftoff chatter?

Comment by Professor Bear
2016-09-13 13:37:46

It isn’t the Fed that’s spooking stock and bond investors
Published: Sept 13, 2016 1:26 p.m. ET
Steepening global yield curve is actual source of worry:
Barrow
AFP/Getty Images
Can Bank of Japan Gov. Haruhiko Kuroda get the long end of the yield curve under control?
By William Watts
Deputy markets editor

The specter of the Federal Reserve moving sooner rather than later to raise official interest rates got the blame for last week’s stock- and bond-market selloff, but the real culprit might lurk elsewhere.

While the short end of the yield curve is the area that is most sensitive to shifting expectations about monetary policy, years of asset purchases have left central banks with burgeoning balance sheets that also give them substantial sway across the yield curve, said Steven Barrow, currency and fixed-income strategist at Standard Bank, in a note on Tuesday.

So while bond investors are naturally very sensitive to comments about policy rates, they “can be just as sensitive to comments about [quantitative easing] or, indeed, any ‘desired’ move in yields from policy makers,” he said.

U.S. Treasurys sold off last week, pushing the yield on the benchmark 10-year note (TMUBMUSD10Y, +3.71%) above long-term resistance at 1.6% to hit its highest level since the U.K.’s late June vote to leave the European Union. Rate rise fears were also blamed for a sharp stock-market selloff. Yields and bond prices move inversely.

Stocks (SPX, -1.48%) were under renewed pressure Tuesday as oil futures retreated, while yields extended their advance.

 
Comment by Professor Bear
2016-09-13 15:25:07

Got cratering crude?

ft dot com
Equity Valuation
Tumbling oil prices drive stocks lower
Dollar firm versus yen and sterling
Global Market Overview
Read latest:
Record level of fund managers say bonds and equities overvalued
by: Dave Shellock

Tuesday 21:00 BST. US and European equity markets suffered further sharp declines as a more optimistic view of the outlook for Federal Reserve policy evaporated and energy stocks were hit by steep falls for oil prices.

Wall Street had rallied strongly in the previous session after Fed governor Lael Brainard delivered a dovish speech that made it clear she was unlikely to vote for a rise in interest rates at the central bank’s policy meeting next week.

Her comments came hard on the heels of remarks on Friday from Eric Rosengren, president of the Boston Fed, who warned that the US economy ran the risk of overheating if rates were kept too low for too long.

Fed fund futures moved on Monday to price in a 22 per cent probability of a September rate rise, compared with 30 per cent at the end of last week.

“It is clear from Ms Brainard’s speech that she believes the current labour market/inflation trade-off dynamic suggests ample scope for remaining patient in regard to raising the federal funds rate,” said Derek Halpenny, strategist at Bank of Tokyo-Mitsubishi UFJ.

He noted that the dollar’s reaction on Monday had been relatively muted, particularly in comparison to the moves for equities.

“The modest FX moves perhaps reflect the fact that while Ms Brainard’s comments now point to a greater chance of no action next week, the more important takeaway from Fed rhetoric in recent weeks is that the Open Market Committee is becoming increasingly divided and the chorus for reducing financial market instability risks through monetary action is getting louder.”

Jane Foley, senior currency strategist at Rabobank, said: “While Ms Brainard’s remarks have appeased market sentiment, they do little to address underlying anxiety over whether policymakers are losing their faith in the benefits of ultra-accommodative monetary policies.”

 
 
Comment by dandroidz
2016-09-13 08:51:15

I love when they use phrases like “resurgent downtown”. Don’t they mean replacement of former industrial/producer areas with expensive lofts/condos and upscale bars/restaurants? Every city in America is having old fishing pier, commerce ports, factories replaced with $2200-$4000/mo properties and somehow people are gobbling them up? Is there enough paper shuffling jobs to go around and support this?

I remember the BAE shipyard in SF, between the 2 projects I had there, each time new development encroached closer and closer to this former site where battleships were churned out like clock work. Multimillion $$$ condos all around and people walking around photographing the “chic” industrial area with $5000 cameras….

Comment by Ben Jones
2016-09-13 09:13:35

‘Developers are expected to add more apartment units across the United States this year than they have in the last decade’

I think they mean the highest annual total in a decade. Still, a 50% increase just as the market is fully supplied or oversupplied is telling. As I’ve pointed to in the recent past, these guys are saying what is driving this is the prices they’re getting for the apartments, not demand. And what’s driving the prices is the flood of money chasing yield. So we are one or more layers of supply and demand even being a consideration. And that’s why they are going over the falls headlong. Compounding the problem is the concentration in luxury, which is also a misreading of demand caused by the price of the land not by what tenants actually want.

Comment by In Colorado
2016-09-13 09:37:49

Pension funds chasing yield. A lot of teachers, cops, firefighters and other muni employees are in for the surprise of their lives. The tax increases needed to make these funds whole will cause riots and taxpayer revolts, especially in states that are already heavily taxed.

Comment by Puggs
2016-09-13 10:10:34

Hope they invested some of their own cheddar into a Roth!

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Comment by In Colorado
2016-09-13 10:30:01

That’s what I told my schoolteacher sister. She told me that when she turns 62 she’ll get 70% of her salary. I told her to start saving, because it’s very unlikely she’ll get that much.

She was shocked, she had no idea that the pensions are underfunded. I explained to her about chasing yield. I guess I ruined her day.

 
Comment by Puggs
2016-09-13 10:40:23

If they offer and early buy out I’d jump all over that in a heartbeat. Even invested conservatively she’d come out ahead.

 
Comment by Raymond K Hessel
2016-09-13 12:39:42

The NEA’s Comrades of Proven Worth who voted in lockstep for successive corrupt Democrat administrations are going to retire looking forward to a gold-plated lifetime pension in return for aiding and abetting DNC corruption, only to discover they have been swindled along with everybody else. Their enraged screeches and wails of despair are going to be music to my ears.

 
 
Comment by In Colorado
2016-09-13 10:27:33

Doing some quick calculations: If the pensions are underfunded by 5T as many have estimated, and assuming that there are 100M non lucky ducky workers, a bailout would be $50,000 per taxpayer.

It ain’t gonna happen.

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Comment by Justme
2016-09-13 13:55:02

>>It ain’t gonna happen.

Maybe if it can be marketed as a tax cut for the wealthy? :-) :-)

 
 
Comment by taxpayers
2016-09-13 10:52:40

I’m already revolting fcta.org

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Comment by Ethan in Northern VA
2016-09-13 13:44:22

That website… is that a file listing from a dial-up BBS system from the 80s?

 
Comment by taxpayers
2016-09-13 13:54:11

The guys is an aging coder
Non redeemable

 
 
 
Comment by dandroidz
2016-09-13 09:40:49

Yeah. Whats crazy is the “luxury” moniker is occurring way out in the ‘burbs. No one is building regular old apartments. They all have balconies, gyms, pools, concierge service, WiFi, etc., og and charge $100-300/mo extra for a parking space or two. Whatever happened to 4 walls and a roof for under $1200/mo?

 
Comment by Rental Watch
2016-09-13 09:49:21

“As I’ve pointed to in the recent past, these guys are saying what is driving this is the prices they’re getting for the apartments, not demand.”

True. Today’s low yields (cap rates) allow developments to “pencil” much more easily. These low yields have driven the price of the finished product much higher, and consequently have allowed builders to pay more for land and still have a viable project. That said, they need to get to a yield (ie. lease the building) in order to sell it–so they have an incentive to only build where they are confident they can lease.

I also agree with you that there is too much of a focus on luxury, and that the depth of the luxury market is questionable.

However, I’m not worried about there being too many apartments generally, despite the 50% increase year on year. That 50% increase is in the context of a market where we are still building too few homes for population growth, and rental vacancy rates are low.

Will some markets get overbuilt, and/or have too much of the wrong product built? Absolutely. But over time, the new units will be absorbed (at some market clearing rent).

I’m not overly concerned about apartment developers defaulting on their mortgages. I think they will still be able to cover debt service. HOWEVER, I do think that people are underestimating the potential for rates to rise, and for cap rates to rise with them.

A move from a 4% cap to a 5% cap wipes out 25% of value…there goes the equity in the deal. From a 5% to a 6% you lose 20% of value. We’ve been cautious on apartments for several years given the low yields (and the steep dropoff in values with only small increasesin cap rates).

But lots of other people seem to love them.

Comment by oxide
2016-09-13 12:16:40

“the new units will be absorbed (at some market clearing rent).”

And who’s going to make the pension funds and the banks whole when they have to repay those luxury construction loans at Section 8 prices?

And the materials used to build those apartments were intended for the tender touch of the special snowflakes. They aren’t going to survive Section 8 tenants.

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Comment by Ben Jones
2016-09-13 13:20:21

They don’t have room to lower rents. These are single digit properties. And most of the existing stuff is being flipped or refinanced into the same position. After foreclosure, rents will be substantially lowered. But that just gets the whole slide underway which takes out the next layer. This is already happening in North Dakota.

 
Comment by Rental Watch
2016-09-13 13:26:04

You think they are going to lease to Section 8 tenants? That’s funny. They will get less in rent, but they will be renting to the upper tier of tenants, not section 8.

One thing to remember is that often times pension funds and GSE loans don’t get involved in an apartment project until it has been built and leased.

And the pain will be known once the income is much less than underwriting.

Who will suffer? Primarily private equity funds who invested in the development, individual investors, etc. Have you ever heard of a private equity fund getting bailed out? Nope. They simply take their losses, and fold up shop. There is simply loss of capital.

To the extent the underlying investors are pension funds, they will become more underfunded, and that will trickle into higher required payments into the system from employees, and ultimately taxpayers if that isn’t enough. To the extent the investors in the PE funds are endowments (like Stanford, Harvard, Yale, etc.), those entities will be slightly less rich.

Who bails out the banks who provided the construction loans? Well if there are losses to dole out after the equity investors are wiped out, to a significant extent the banks will absorb the losses, and if the bank fails due to the losses, the FDIC and taxpayer are the ultimate backstops.

Remember, post-crash, multifamily delinquency rates for GSE loans peaked at 0.8% in 2010. And that was in the context of HUGE job losses (where tenants couldn’t pay any rent) and vacancy rates were high following years of overbuilding shelter.

And the lending to multifamily was crazy during the bubble years too. The biggest wipeouts post crash were from commercial properties that were built, and then stayed empty.

The apartments will not be empty. Because they will be the newest in their markets, they will get filled with tenants, it’s just a question of rent level they will achieve. It won’t be the same kind of wipeout.

 
Comment by The Crushin' Russian
2016-09-13 13:47:47

And there are millions of them. With millions more in the pipeline.

 
Comment by Rental Watch
2016-09-13 14:08:04

This is already happening in North Dakota.

ND was a combination of massive ramp up in supply, combined with a complete collapse of employment. On a percentage basis, the addition of units in ND was far greater than anywhere else…and then the one driving jobs (oil) collapsed.

 
 
Comment by Blue Skye
2016-09-13 13:10:53

“A move from a 4% cap to a 5% cap wipes out 25% of value…”

I suppose you are an expert at this stuff. To us regular folks, it would seen that in increase in income generated would not make the asset value go down. Just sayin.

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Comment by Rental Watch
2016-09-13 14:04:50

If your property generates income of a $100, and the market says that it is worth a 4% yield (cap rate), then it would sell for $2,500. This $2,500 value is what determines what a developer can pay for the land (after deducting a profit margin, and construction costs, etc.).

Buying for $2,500 at a 4% cap means you get $100 of income ($100 of income divided by an investment of $2,500).

That 4% cap is influenced NOT by rent levels, but by expectation of rent growth, interest rates, and alternative ways to invest for yield.

If cap rates rise to 5% because all yield expectations go up, or expectation for future rent growth go down, that very same property generating $100 of income is only worth $2,000…got my math reversed…only a 20% decline (25% increase going from 5% to 4%).

And if your whole business plan revolved around having costs of $2,000 to sell for $2,500 (equity of about $400-$500, selling for about $400-$500 of profit), you are screwed.

Same point. Higher yield=lower value.

 
Comment by The Crushin' Russian
2016-09-13 14:04:58

But here’s what we know and understand intuitively…..

Nothing raises the standard of living, creates jobs and accelerates the economy like falling prices to dramatically lower and more affordable levels. Nothing.

 
Comment by The Crushin' Russian
2016-09-13 14:10:32

And if your depreciating shack sits there empty or full, it depreciates $2.50 per square foot year after year after year.

Same point. Housing=losses.

 
Comment by Blue Skye
2016-09-13 14:44:24

“Buying for $2,500 at a 4% cap means you get $100 of income ($100 of income divided by an investment of $2,500).”

By that logic, if your “cap” goes to 5% on a building you already own, your investment is still $2,500 so your income must have risen to $125.

 
Comment by Rental Watch
2016-09-13 14:54:25

“By that logic, if your “cap” goes to 5% on a building you already own, your investment is still $2,500 so your income must have risen to $125.”

No.

I’m talking about market value of an real estate asset…how the market values your property (and how a bank would value your property if it was re-appraised for, say, a refinance).

If you buy an apartment project at a 4% cap, it means you get a 4% yield on your investment. If rents go up, your yield on investment goes up, and if rents go down, your yield on investment goes down. However, your investment is constant.

If the market changes the next day, and such an asset is now only valued at a 5% cap, then if you were to re-sell the asset the next day, someone is going to value your building at a lower amount, because with the same level of income, they are going to want to get a 5% return, not 4%. They won’t be willing to pay you as much.

Think of the concept in terms of a 30-year bond yield.

If you buy a 30-year bond at a 2.46% yield (today’s bond yield), and then market rates rise to 3%, you are underwater and can’t sell the bond for what you paid.

 
Comment by The Crushin' Russian
2016-09-13 15:18:14

If you have to borrow for 15 or 30 years, it’s not affordable nor can you afford it.

 
Comment by Rental Watch
2016-09-13 15:26:57

Blue, consider this as the development cycle (and forgive the long message):

1. Based on their understanding of a market’s supply/demand, developer decides what they want to build (to whom they will rent, what the rent levels will be, etc.). Sometimes they’ll perform market studies to help figure out where the demand lies.
2. With that broad plan, they have a budgeted income upon stabilization Rents-Expenses=Net Operating Income (NOI). The value of their building is then determined by NOI/Market Cap Rate=Value. Based on the value of the building upon completion, they look for land to purchase.

Often #2 comes first…they find available land, and then see if they can design a project to justify buying the land.

3. If they can find land with a price such that Value MINUS Construction Cost MINUS Land Cost>0, well, then, they just might have a viable project.
4. They put the land into contract, they create a business plan, and try to raise the money for the development. They usually need to convince a bank to lend ~75%-80% of cost, and an equity investor for the lion’s share of the rest. They might get away with putting in 2% of the total project cost…their “skin in the game”.
5. Let’s say they find the money….now they can proceed.

What can happen next?

Well, costs can go up…that is bad.
Rents can go up, that is good.
Operating expenses can go up, that is bad.
Market Cap Rates change, which could be good or bad depending on whether they go up or down (up=bad, down=good).

And from buying the land to selling the project can take 30-48 months….so, a lot can happen in the meantime.

If the basis on which you started was market cap rates of 4%, and the only thing that happened was that market cap rates rose to 5%, well, then, your value is 20% less. Rents fall, you get a double whammy. If construction costs went up (because lots of people were building at the same time), triple whammy.

Many people when they underwrite build in some cushion, so their value equation might be “value=NOI/(Today’s Cap Rate + 1%)”. So, if cap rates do rise from 4% to 5%, all else equal, they actually still meet their business plan profit. And then you can absorb some higher costs and some lower rents, and still make a profit…maybe not the same profit, but some profit.

And if you underwrite conservatively, and cap rates don’t move, you do great. The problem is that over time, if there is more and more demand for land that works for apartments, and if you assume cap rates go up by 1% in your underwriting, and the next guy only assumes they go up by 0.75%, he can pay more for the land and make his deal “pencil”. If someone assumes 0.5% movement only, they can pay even more for the dirt.

If someone assumes NO MOVEMENT at all in cap rates, AND they “trends rents” higher, he can justify the highest price of all…and if he can convince a lender and equity investor in his business plan, he can build the project.

The longer the cycle goes on, the more aggressive business plans become, and the less room there is for error.

Not all projects will perform the same way in the same market…performance is largely based on the level of conservatism in the underwriting. You might have one project that assumed higher exit cap rate, and no rent growth, and a project next door that assumed a lower exit cap rate and 5% rent growth, and the outcomes for the projects could be very different in the same market environment.

 
Comment by Blue Skye
2016-09-13 15:28:35

” If rents go up, your yield on investment goes up, and if rents go down, your yield on investment goes down. However, your investment is constant.”

Now we are in agreement.

 
Comment by Rental Watch
2016-09-13 16:29:39

” If rents go up, your yield on investment goes up, and if rents go down, your yield on investment goes down. However, your investment is constant.”

Now we are in agreement.

——————

The yield on your investment is not the same as the market cap rate.

If the yield on your investment is greater than the market cap rate, you have unrealized capital gain.

If the yield on your investment is less than the market cap rate, you have unrealized capital loss.

 
Comment by Rental Watch
2016-09-13 16:31:40

And to follow up on my last point:

Market cap rates generally change independently from how your yield on investment changes.

 
Comment by The Crushin' Russian
2016-09-13 16:42:44

And cap rates are negative at current grossly inflated asking prices of resale housing.

 
Comment by Rental Watch
2016-09-13 16:51:29

“And cap rates are negative at current grossly inflated asking prices of resale housing.”

These kinds of statement show amazing ignorance.

Price has nothing to do with whether the yield (cap rate) of an investment is positive or negative.

If the project generates income, the yield/cap rate will be positive (a higher and higher price will drive the yield lower and lower, but never negative).

If the project cannot generate income (rent is less than expenses), then the yield/cap rate will be negative (regardless of how cheap the asset is, yield will be negative).

 
Comment by The Crushin' Russian
2016-09-13 16:54:38

Incorrect. All expenses are deducted from gross income.

Again…. You don’t know what you’re talking about.

 
Comment by Rental Watch
2016-09-13 17:19:48
 
Comment by Blue Skye
2016-09-13 17:22:23

“Price has nothing to do with whether the yield (cap rate) of an investment is positive or negative.”

You were schooling me earlier that the price you can get when selling has everything to do with the yield, or what others expect the yield to be or something like that.

Think of it like Bonds?

 
Comment by The Crushin' Russian
2016-09-13 17:26:50

See that? You really can learn RW.

 
Comment by Rental Watch
2016-09-13 17:43:57

Price has everything to do with how positive (or how negative) a yield is, but not whether a yield is positive or negative.

As long as an asset generates income, it is impossible to have a negative yield on that investment. You sell me a building that generates $1 of income per year, but I pay you $10,000,000 for it? Terrible investment, yield/cap rate still >0.

You sell me a building that loses $1 every year for $0.01? Seemingly cheap, but still a money loser, with a negative yield.

Don’t mistake a profitable investment with one that has a positive yield.

Bear with me.

Let’s say the market yield for a 30-year treasury is 5%, but you don’t know that because you live on an island, and you have buckets of cash and you are earning no return on them.

Someone comes to the island and offers to sell you the bond at a price that would give you a 2% yield.

Having no alternative, you decide it is a good investment, so you buy the bond.

Your yield is positive, but the investment is a bad one. You cannot sell the bond and get your money back…you have a paper loss the instant you purchased the bond–even though it has a positive yield.

 
Comment by Blue Skye
2016-09-13 18:09:56

I live on a boat.

 
Comment by Rental Watch
2016-09-13 18:15:51

Now you’re just giving up.

Here is what you need to know:

Yield on your investment (how much money you actually make on your investment–money you have already invested) is not the same as market cap rate (what market participants expect to earn on their investment–money they have yet to invest).

 
Comment by The Crushin' Russian
2016-09-13 18:22:15

Either way, cap rates are negative at current grossly inflated asking prices of resale housing.

 
Comment by Blue Skye
2016-09-13 18:47:28

Yes, well, you weren’t clear in the original post.

 
 
 
 
 
Comment by palmetto
2016-09-13 09:38:02

Droppin’ like flies:

http://www.people.com/article/hillary-clinton-staff-sick-pneumonia

Let’s take a look at all the different, and contradictory, explanations we’ve had for Hillary Clinton’s health problems over the last week, going back to her nearly unwatchable coughing attack on September 5:

1) She’s fine.
2) Okay, maybe she coughed a little, but it’s just allergies.
3) Calm down, she just tripped at that 9/11 memorial event.
4) Okay, maybe she didn’t exactly trip, but she overheated because it was so hot outside.
5) Okay, maybe it was only 79 degrees and she was in the shade, but she was totally dehydrated and stuff.
6) On second thought, she has a really bad case of pneumonia.
7) Actually, she’s “feeling great” now and not contagious so we’re going to make a spectacle of her hugging a kid in the street.
8) Yeah, about that not contagious thing: the whole campaign pretty much caught the plague from Hillary.
9) Hillary Clinton feels so great right now that her campaign just canceled two days of events.
10) She’s fine.

http://www.zerohedge.com/news/2016-09-12/hillary-clintons-campaign-needs-hire-better-liars

Comment by dandroidz
2016-09-13 09:43:34

And yet in 2012 they all tried to make Ron Paul’s age a huge factor, that he couldn’t handle the rigorous trail and office. Yet he bikes some 15+ miles weekly…

The hypocrisy is beautiful.

 
Comment by Rental Watch
2016-09-13 10:06:26

And blood clots in the brain, and Coumadin? No problem. That can’t possibly be causing any of these issues.

Comment by palmetto
2016-09-13 12:04:30

Blood clots on the brain? She and her freak of a husband are walking, festering, bloody stools.

Comment by Tarara Boomdea
2016-09-14 23:43:20

Why are Hillary’s use of drugs and booze never brought up?
Google it. Alcohol will dehydrate you plenty.

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Comment by oxide
2016-09-13 11:01:16

Actually, Trump supporters should be disappointed that Hilary has pneumonia.

Comment by phony scandals
2016-09-13 11:33:08

Who says Hilary has pneumonia?

Comment by The Crushin' Russian
2016-09-13 13:45:01

How many mini-strokes has she had just in the last 6 months?

The woman is a trainwreck.

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Comment by phony scandals
2016-09-13 11:50:53

MSNBCNN

The video clearly shows Hillary diving for an unopened jar of pickles that rolled out when the van door opened.

https://www.youtube.com/watch?v=FVDyciOQCak - 470k -

Hillary Clinton Proves She’s in Good Health - YouTube
https://www.youtube.com/watch?v=Kt22Y9-dfNk - 492k - Cached - Similar pages
Aug 22, 2016 … Secretary Hillary Clinton demonstrates her good health. … This whole “if Hillary can open a jar of pickles that means she’s healthy”

Comment by Rental Watch
2016-09-13 12:09:21

That sure would make healthcare cheaper.

First diagnostic test: Open this jar of pickles. If you open it, you are free to go.

Comment by phony scandals
2016-09-13 12:59:39

Let’s Call The Conspiracy Theories About Hillary’s Health What They Are

We get it, she’s a lady.

08/26/2016 12:48 pm ET |

Gender bias “absolutely” plays a role in the conspiracy theories around Clinton’s health, even if it’s not the primary motivating factor, Fenster said.

http://www.huffingtonpost.com/entry/lets-call-the-conspiracy-theories-about-hillarys-health-what-they-are_us_57bf6cb1e4b085c1ff28af62 - 373k -

The new birthers: Debunking the Hillary Clinton health conspiracy

By Gregory Krieg, CNN

Updated 7:47 AM ET, Wed August 24, 2016

(CNN)From Donald Trump and his top surrogates to the right-wing media and its engine rooms of outrage in the blogosphere, Hillary Clinton’s opponents are ramping up efforts to sow doubt over the candidate’s health.

http://www.cnn.com/2016/08/22/politics/hillary-clinton-health-conspiracy-theory-explained/ - 249k -

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Comment by Puggs
2016-09-13 09:59:58

After Public Outcry Over $125 Million Tolstedt Bonus, Wells Fargo Will End Sales Goals For Retail Bankers

http://www.zerohedge.com/news/2016-09-13/after-public-outcry-over-125-million-tolstedt-bonus-wells-fargo-will-end-sales-goals

And Trump supporters are DEPLORABLE?!?!??!

 
Comment by Puggs
2016-09-13 10:37:35

“Bradley Crossfield moved to Nashville from Dallas three months ago. He wanted to live in Midtown because of the close proximity to bars and restaurants. But Crossfield said he was a bit shocked when he saw rent prices. ‘I was like, ‘say what?’ It did surprise me because Dallas is a big large metroplex and I didn’t really expect the cost of living to be as high in Nashville as it actually is,’ he said.”

Hey Brad, it’s all yer hipster friends who want low walk scores and gluten-free hand crafted brews that are drivin’ up the price!

 
Comment by phony scandals
2016-09-13 10:44:42

Deplorable

EXCLUSIVE: John Kerry’s State Department Funneled MILLIONS To His Daughter’s Nonprofit

Ethan Barton
10:03 PM 09/12/2016

More than $9 million of Department of State money has been funneled through the Peace Corps to a nonprofit foundation started and run by Secretary of State John Kerry’s daughter, documents obtained by The Daily Caller News Foundation show.

The Department of State funded a Peace Corps program created by Dr. Vanessa Kerry and officials from both agencies, records show. The Peace Corps then awarded the money without competition to a nonprofit Kerry created for the program.

Initially, the Peace Corps awarded Kerry’s group — now called Seed Global Health — with a three-year contract worth $2 million of State Department money on Sept. 10, 2012, documents show. Her father was then the chairman of the Senate Committee on Foreign Relations, which oversees both the Department of State and the Peace Corps.

Seed secured a four-year extension in September 2015, again without competition. This time, the Peace Corps gave the nonprofit $6.4 million provided by the Department of State while John Kerry was secretary of state.

Read more: http://dailycaller.com/2016/09/12/exclusive-john-kerrys-state-department-funneled-millions-to-his-daughters-nonprofit/#ixzz4K9uSPobX

Comment by palmetto
2016-09-13 12:03:15

When I see what these fvckers have done to this country and how they’ve debased it, I swear to God, I really want to see actual heads on pikes, or bodies in cages like the good old days. Pitchforks and oil are too good for ‘em.

Comment by Raymond K Hessel
2016-09-13 13:36:11

Don’t forget, 95% of your fellow ‘Muricans sanctioned these swindles with their votes for the Republicrat status quo.

 
 
 
Comment by Raymond K Hessel
2016-09-13 12:42:16

The Fed might find that propping up Crooked Hillary’s flagging campaign might be even harder than levitating its asset bubbles and Ponzi markets.

http://wolfstreet.com/2016/09/13/fed-brainard-gooses-stocks-after-donating-4-times-to-hillary-clinton-campaign/

 
Comment by Raymond K Hessel
2016-09-13 13:24:48

The overlords are trying to placate the serfs with meaningless platitudes. Of course, the functional retards who believed that a candidate backed by George Soros and Goldman Sachs would bring “Hope and change we can believe it” are stupid enough to buy it.

http://www.bloomberg.com/news/articles/2016-09-13/lagarde-says-globalization-s-benefits-need-to-be-shared-by-all

 
Comment by Raymond K Hessel
2016-09-13 13:27:17

I love the smell of imploding VC firms in the morning. It smells like…victory.

http://www.businessinsider.com/rothenberg-ventures-implosion-lp-letter-2016-9

 
Comment by Raymond K Hessel
2016-09-13 13:29:47

As part of her sweetheart deal with NBC news, Chealsea Clinton handles such substantive fare as dance classes for Parkinson’s sufferers.

http://www.nbcnews.com/video/nightly-news/53315589

 
Comment by Raymond K Hessel
2016-09-13 13:35:02

But…but…The Narrative said Brexit was due solely to racism and xenophobia….

https://www.rt.com/uk/359203-inequality-richest-oxfam-brexit/

 
Comment by Raymond K Hessel
2016-09-13 13:40:31

“Investors” dumping US Treasuries (debt). Imagine the carnage when Yellen the Felon is forced to hike as interest rates surge and the dollar-dumping begins in earnest.

http://www.marketwatch.com/investing/Bond/TMUBMUSD10Y?countrycode=BX

Comment by Professor Bear
2016-09-13 19:40:28

Other things equal, higher rates increase the value of the dollar, while gold, oil and other commodities head south, as they produce no income streams.

 
 
Comment by Raymond K Hessel
2016-09-13 13:43:30

While 95% of the brain-dead electorate voted to perpetuate the crony-capitalist status quo in 2008 and 2012, it warms might hard to see thousands of awake and aware Americans savaging the Fed on its recently-launched Facebook page - what the hell were they thinking?!! - for its “No Billionaire Left Behind” monetary policies and debasement of the currency. Maybe there’s hope after all.

https://m.facebook.com/story.php?story_fbid=1072300072847984&id=1043592612385397&refid=17&_ft_=top_level_post_id.1072300072847984%3Atl_objid.1072300072847984%3Athid.1043592612385397%3A306061129499414%3A3%3A0%3A1472713199%3A-2656696189458760041

 
Comment by Senior Housing Analyst
2016-09-13 13:46:25

Newcastle, WA Housing Prices Crater 7% As Vancouver Housing Bust Expands

http://www.zillow.com/newcastle-wa/home-values/

Comment by redmondjp
2016-09-13 16:16:34

Oh you are as predictable as a broken clock, Housing Analyst! You love to keep posting about Newcastle.

Well I’ve got news for you - we had friends just move there and I have visited there several times recently (also drive right by it twice a day). It’s one of the Eastside’s hidden residential gems. Close-in to Seattle via I-90, and much more affordable than Bellevue, Kirkland, and Redmond to the north.

Comment by The Crushin' Russian
2016-09-13 16:29:19

Nonsense.

Comment by redmondjp
2016-09-13 23:51:37

You can’t even gin up one zillovoto link for me, HA? You’re off your game.

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Comment by The Crushin' Russian
2016-09-14 01:26:00

Irrelevant..

 
 
 
 
 
Comment by Raymond K Hessel
2016-09-13 13:46:55

One by one, all western cities must experience the glories of fundamental transformation and globalism. Forward!

http://www.telegraph.co.uk/news/2016/09/13/paris-is-a-post-apocalyptic-hellhole-of-public-urination-and-lit/

 
Comment by Raymond K Hessel
 
Comment by Raymond K Hessel
2016-09-13 13:53:34

I would love to see the Oligopoly media’s talking heads held personally accountable for their lies, disinformation, and propagation of DNC talking points.

http://www.breitbart.com/big-hollywood/2016/09/13/katie-couric-faces-12-million-defamation-lawsuit-deceptive-edits-gun-control-film/

 
Comment by Raymond K Hessel
2016-09-13 14:04:54

US pledges a record $38 billion in military aid to Israel over the next ten years.

https://www.theguardian.com/world/2016/sep/13/us-israel-aid-38-billion-record-military-assistance

 
Comment by The Crushin' Russian
2016-09-13 14:17:19

So it begins…..

“The US Consumer Taps Out: BofA Internal Credit Card Data Shows Retail Spending Tumbles”

http://www.zerohedge.com/news/2016-09-13/us-consumer-taps-out-bofa-internal-credit-card-data-shows-retail-spending-tumbles

 
Comment by The Crushin' Russian
2016-09-13 14:18:23

Someone around says all the time sez this woman is unelectable.

Now someone at zerohedge sez the same thing…. all time.

Coincidence?

“Hillary Became Unelectable Long Ago”

http://www.zerohedge.com/news/2016-09-13/hillary-became-unelectable-long-ago

 
Comment by phony scandals
2016-09-13 14:28:25

This dude sounds like the first DHS Re-Education Camp graduate.

“I’m a very poor person. I’m a homeless person. I like to keep my mouth shut. I don’t like to go to jail again. I like to stay with people and be quiet and keep a low profile.”

“The shelter gives me everything — food, housing, the whole thing.”

Benghazi YouTube Filmmaker Lives Quiet Life In L.A. Homeless Shelter

Kerry Picket
Reporter
12:40 AM 11/03/2015

Nakoula Basseley Nakoula, the filmmaker whose YouTube movie was initially blamed for the Benghazi attack, told The Daily Caller he has little to say about the Benghazi Select Committee hearings where Hillary Clinton testified almost two weeks ago.

“The movie had nothing to do with the people getting killed — right? I’m out,” he declared, implying he had nothing else to say about the matter since he was released from prison.

Read more: http://dailycaller.com/2015/11/03/benghazi-youtube-filmmaker-lives-quiet-life-in-l-a-homeless-shelter/#ixzz4KAn22wtj

Comment by Raymond K Hessel
2016-09-13 15:24:15

He doesn’t want to get Arkancided.

 
 
Comment by MightyMike
2016-09-13 15:02:12

Hey, incomes surged last year. It’s OK to be happy!

Well that’s more like it — even if it is just one year. US median household income, adjusted for inflation, was $56,500 in 2015, 5.2% above its 2014 level. It was the largest jump in incomes since 1967 when the Census Bureau started releasing such data.

What’s more, the gain was the first statistically significant increase since 2007 — although incomes still remain 1.6% below that pre-recession level. Job growth and rising real earnings growth (a combo of higher hourly earnings and hours worked) is finally paying off.

And the gains were broadly based, at least as measured by percentage gain rather than absolute gain. There was a big drop in the official poverty rate, too. As the Obama economic team noted on the White House blog, “gains were even larger in the lower half of the income distribution, ranging from an increase of 5.5 percent for households at the 40th percentile to an increase of nearly 8 percent for households at the 10th percentile.”

https://www.aei.org/publication/hey-incomes-surged-last-year/

Comment by Blue Skye
2016-09-13 16:20:17

Well, there you go.

The Census report says that personal income did not increase significantly and the number of people with full time jobs did not increase significantly, yet there is a significant jump in “real” household income.

Curious.

Comment by MightyMike
2016-09-13 17:21:56

The Census Bureau’s annual report, based on a survey of 95,000 households, is the latest evidence that 2015 was a good year for the economy. Employers added more than three million jobs as the unemployment rate fell to 5 percent. Hourly pay increased by 2 percent, adjusting for inflation. Americans drove more miles in their cars. Even housing showed some signs of a revival.

http://www.nytimes.com/2016/09/14/business/economy/us-census-household-income-poverty-wealth-2015.html?_r=0

 
Comment by phony scandals
2016-09-13 19:42:21

“Curious.”

Those who earn 12k a year got a $900 a year raise by working more hours and that’s it.

 
 
 
Comment by MightyMike
2016-09-13 15:21:02

The American people agree with Clinton: Trump is a bigot. This new poll confirms it.
By Greg Sargent September 12

THE MORNING PLUM:

On Fox this morning, Donald Trump addressed the two biggest stories of the weekend: He mostly laid low on the news that Hillary Clinton has been diagnosed with pneumonia, saying he hopes she “gets well,” while also tearing into Clinton’s suggestion that half of his voters are bigoted or chauvinistic “deplorables.” These two things are related: The Post reports that Trump advisers want him to go easy on Clinton’s health, because they want the focus this week to be on her “deplorables” remark.

And so, on Fox, Trump had this to say about Clinton’s “deplorables” comment: “I think it’s the single biggest mistake of the political season.”

But the new Post/ABC News poll released over the weekend raises questions about whether Clinton’s remarks were really a political mistake. If Clinton’s goal was to force a public discussion of Trump’s bigotry and chauvinism, well, the Post poll finds that a large majority of Americans agree with her that Trump is biased against women and minorities, including among the voter groups that Trump needs to improve among in order to win.

The Post poll, which found Clinton leading Trump by five points among likely voters nationwide, also found that 60 percent of Americans believe Trump “is biased against women and minorities,” with 48 percent believing that strongly. According to the crosstabs, college educated whites believe this by 57-41, and college educated white women — a crucial demographic that the campaigns are fighting over — believe it by 61-39.

What’s more, majorities of college educated white men and non-college white women also believe this. Indeed, as James Downie puts it: “At this point, the only group of voters that doesn’t think Trump is biased is white men without a college degree.”

https://www.washingtonpost.com/blogs/plum-line/wp/2016/09/12/the-american-people-agree-with-clinton-trump-is-a-bigot-this-new-poll-confirms-it/?utm_term=.ac3d9094424a

Comment by Blue Skye
2016-09-13 16:27:11

Clinton admits that she despises at least 25% of Americans. I take this as a psychotic outburst. Disturbing to say the least.

Comment by MightyMike
2016-09-13 17:04:52

It would be closer to 20%, though she later took that back. It’s quite reasonable to estimate that one out of five Americans hold the views that she ascribed to them, making them worthy of contempt.

Comment by The Crushin' Russian
2016-09-13 17:23:50

irrelevant.

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Comment by Blue Skye
2016-09-13 17:47:49

Some things can’t be simply taken back, like contempt for the citizenry.

“The racist, sexist, homophobic, xenophobic, Islamophobic — you name it.”

I don’t agree totally with everything that modern society seems to be urgently celebrating. I have some reservations about some ideas and what I think their consequences might be. I try to avoid condemnation of people for having or trying on ideas that are not quite like mine, unless they mean actual harm to others.

You are supporting contempt for people, a large swath, who do not share your same ideals. That implies a license to harm. This is dangerous to all of us.

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Comment by MightyMike
2016-09-13 18:10:10

You are supporting contempt for people, a large swath, who do not share your same ideals. That implies a license to harm. This is dangerous to all of us.

No, that’s not true. It’s possible to have contempt for people without any “license to harm”.

It’s odd that you quote her sentence about racist, sexist, etc. as if those are perfectly benign attitudes that only an unreasonable person would criticize. Also, when you write, “I try to avoid condemnation of people for having or trying on ideas that are not quite like mine, unless they mean actual harm to others.”, I’m not sure what sure getting at. Perhaps you think that no one should condemn things that you don’t condemn. Quite a few racist or Islamophobic people would like to see harm to those that they hate.

 
Comment by phony scandals
2016-09-13 18:30:30

O Canada - YouTube
https://www.youtube.com/watch?v=zwDvF0NtgdU - 171k -

 
Comment by Blue Skye
2016-09-13 18:42:53

To be sure, if a leader of a country expresses contempt for a group of people within its bounds, it is a license to harm them. Refer to history.

“perfectly benign attitudes”

If I am to believe the Bible and call myself a Christian, I might have some reservations about Islam and homosexuality. I might think that wives and husbands have different roles in family/society. That would make me many times over one of your “phobes”. I mean no harm yet you mean harm to me. I don’t especially hate people who think differently, but you seem to. You did say deserving of contempt. This means harm.

 
Comment by MightyMike
2016-09-13 18:49:27

No, I don’t mean harm to you. I don’t mean harm to people that I have contempt for. That’s just false.

Besides that, it’s probably the case that every American leader must express contempt for some Americans.

 
Comment by Blue Skye
2016-09-13 19:20:15

You would like to extinct me. Contempt has no other meaning.

 
Comment by MightyMike
2016-09-13 19:57:48

No, that’s not what it means.

noun
1.
the feeling with which a person regards anything considered mean, vile, or worthless; disdain; scorn.

2.
the state of being despised; dishonor; disgrace.
3.
Law.
willful disobedience to or open disrespect for the rules or orders of a court (contempt of court) or legislative body.
an act showing such disrespect.

http://www.dictionary.com/browse/contempt

You make no sense and I can’t see what your goal is. Perhaps your trying to defend bigotry by criticizing efforts to combat it.

 
Comment by Blue Skye
2016-09-13 20:50:29

Well, if you consider me vile, you will want to do harm. It really is that simple.

 
Comment by MightyMike
2016-09-13 21:00:26

No, it’s not that simple. And I never wrote that I consider you to be vile in the first place. You’re pretty close to saying that no one can disagree with you about anything.

 
 
 
 
Comment by phony scandals
2016-09-13 19:39:23

ABC News poll presented by the Washington Post?

Get the exact questions asked in this POS poll put out by the propagandist arm of the Democrat Party and we will discuss it.

 
 
Comment by The Crushin' Russian
2016-09-13 15:24:34

Labor Force Participation Rate Plummets To 38 Year Low; Joblessness At Record High

http://data.bls.gov/timeseries/LNS11300000

 
Comment by The Crushin' Russian
2016-09-13 16:56:06

Wheel out the BanVan Jonesy! I’ll fetch the RageCages!

 
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