There’s Too Many Buyers Who Can’t Afford A House
A report from CBC News. “When it comes to low interest rates, winter is coming. That was Federal Reserve chair Janet Yellen’s clear message Wednesday. Despite strong objections from some of her advisers, Yellen announced no change this week. So strongly that Yellen and her advisers on the committee that makes interest rate decisions were unanimous that a rate rise was needed. ‘We are worried that bubbles could form in the economy,’ she said.”
“Borrowers should keep their eyes open. Yellen’s message is that, for the first time in a long time, rates are on the way up. Then again, she gave us a much more serious warning a year ago, and since then, nothing much has really happened.”
From Bloomberg on Florida. “Alex Sifakis never raised this much money this fast. The house flipper from Jacksonville, Florida, crowdfunded nine deals totaling more than $9 million through RealtyShares over the last two and a half years. A July deal for $1 million took him just 12 hours. ‘It’s the greatest thing in the world,’ Sifakis said. ‘The amount of money you can raise isn’t limited by anything but their investor base. And the investor base is growing and growing.’”
“House flippers and property developers are increasingly crowdfunding — tapping the virtual wallets of anonymous internet backers on platforms such as RealtyShares, LendingHome, PeerStreet and Patch of Land. For riskier ventures, such as building new homes and buying, renovating and selling existing ones, they’re finding quick financing can be easier to get online than from banks. That’s contributed to an increase in home flipping. In the second quarter, 39,775 investors bought and sold at least one house, the most since 2007, according to ATTOM Data Solutions.”
“‘If you’re originating and selling, you’re just trying to get as much volume as you can,’ said Brett Crosby, a Google Inc. alum who co-created PeerStreet and is now chief operating officer. ‘In order to get more borrowers in the door, you start to drop underwriting guidelines.’”
The Williamette Weekly in Oregon. “The 21-story, dark glass tower looming above the east end of the Burnside Bridge is supposed to help solve Portland’s housing shortage. The apartment building known as Yard opened in late July. The tower was intended to ease Portland’s housing crunch by adding 284 apartments to a city where low vacancy rates are driving up rent. That’s why the Portland Housing Bureau offered tax credits to the real estate developers that bought the property from the Portland Development Commission in 2014.”
“But the entire 11th floor is available as a short-term rental. The decision to create short-term rentals out of a whole floor of a city-subsidized apartment complex raises questions about the city’s use of scarce housing dollars and its failure to enforce the rules for companies like Airbnb. ‘This entire floor dedicated to Airbnbs speaks to the fallacy of the argument of ‘build, build, build and the market will provide something that’s affordable,’ says housing advocate Justin Buri.”
The Mercury News in California. “In the Bay Area housing market, it appears to be a game of cat and mouse. Sales of single-family homes in August crept up ever so slightly from the year before as many buyers took a wait-and-see attitude, challenging sellers to negotiate — something unheard of in the overheated market of 2015. ‘Outside hotly contested areas, we’re seeing price adjustments of a kind we haven’t seen in some time,’ said Timothy Ambrose, treasurer of the Bay East Association of Realtors. ‘Buyers start thinking, ‘Well, should I wait?’”
“‘The Bay Area eked out a very small year-over-year gain for home sales,’ said Andrew LePage, a research analyst for CoreLogic. ‘Now why is that the case when the job market’s doing well and interest rates are still incredibly low? Once again, it’s because of affordability and constraints’ in the housing supply. ‘And it’s not just that there’s not enough houses for buyers — there’s too many buyers who can’t afford a house.’”
The Real Deal on New York. “In yet another sign of the dipping ultra-high-end market, the seller of the city’s most expensive listing has cut $24 million from the asking price. The 12,000-square-foot duplex co-op at 834 Fifth Avenue was listed in April for $120 million. But now that it has sat on the market for five months, the seller decided to offer a discount to $96 million ($8,000 per square foot), the New York Observer reported.”
“One of the most sought-after addresses in the city, 834 Fifth Avenue doesn’t allow financing for co-op purchases.”
‘This entire floor dedicated to Airbnbs speaks to the fallacy of the argument of ‘build, build, build and the market will provide something that’s affordable’
‘And it’s not just that there’s not enough houses for buyers — there’s too many buyers who can’t afford a house.’
Waiter, please send some crow to Rental Watch’s table, on me.
“This entire floor dedicated to Airbnbs speaks to the fallacy of the argument of ‘build, build, build and the market will provide something that’s affordable,’” says housing advocate Justin Buri, a former head of Community Alliance of Tenants.”
Spoken by someone who would love to have more government intervention to provide more affordable housing, rather than allow more development to provide supply. He’s talking his book, not reality.
‘And it’s not just that there’s not enough houses for buyers — there’s too many buyers who can’t afford a house.’
Yes, there are two problems, not enough homes, and the homes are too expensive (more buyers could afford a house if they were cheaper)…they go hand in hand.
You think that these quotes in some way prove that lack of supply isn’t a major contributor to high home prices? As I’ve said before, if you look at where there are cracks in home prices/rent, it’s where there has been lots of recent development.
I’d say a 74% vacancy rate is plenty of housing. The bubble is in the land. We’ve tried your “build your way out of the bubble”. Now mean ol’ Mister Supply and Demand will finish the job. But it won’t be pretty.
A far better solution would have been for the government to have cut back on credit a long time ago. Better yet, get out of the housing finance biz altogether. Now there are no buyers without even easier lending. But we do have speculators, like the builders of these apartments.
This argument is besides the point. What the government and central bank wanted to do was drive house prices up. They said so flat out; create a wealth effect. That’s why they kept juicing the demand part and held back the inventory (foam the runway, yada yada).
“A bridge that relies on wealth effects, you better hope that you got enough growth to justify the asset price increase which created the wealth effect in the first place.” - Raghuram Rajan
http://www.marketwatch.com/story/in-interview-indias-rajan-says-monetary-policy-has-run-its-course-2016-04-15?siteid=yhoof2&yptr=yahoo
See my new post below…the Yard has been open for 2 months, or less. 26% leased puts the leasing on pace for being full in less than a year.
A 1-year lease-up for a 284 unit project is not a sign of trouble.
So why are they going airbnb instead of full time leases?
They are currently offering six weeks free rent. Nearby new buildings are offering two months free rent.
Oh dear…
Extra money while they lease-up.
If you knew that you would have at least 18 units available for approximately a year (not unexpected for the lease-up phase of the project), and you could get revenue for that year by leasing the units nightly, starting immediately, why wouldn’t you?
It’s actually pretty smart, and efficient use of the building.
BTW, I just saw that the bottom floors that are fully leased are the affordable units (for which there was a lot of demand), so the lease-up of the more expensive floors will take longer.
https://yardhighrise.prospectportal.com/portland/yard/floorplans/
This shows the available units by floor.
Ignoring the 18 units on floor 11 leased to Vacasa.
Ignoring the 54 units that are affordable.
There are 212 other market rate units.
Flipping floor by floor, I count 44 units that are “unavailable”, which I read as leased, or under application.
So, the 212 units are about 20% accounted for in 2 months.
10-month lease-up of the market rate units.
Based on the above numbers, unofficially, this looks like approximately 59% vacancy currently, down from 74% when the article was researched.
They are currently offering six weeks free rent. Nearby new buildings are offering two months free rent.
So, they are offering 2 weeks LESS free rent than other apartments in lease-up?
A quick comment on free rent during lease-up:
I remember hearing a decade (or more) ago about how young people would “new apartment hop” in the SF Bay Area, in order to get effectively a month or two free rent each and every year.
In other words, free rent for leasing up new apartments is NOT uncommon, or necessarily a sign of a stressed market.
If, however, you start to see the 2 months free become 3 months, and escalating “free rent” wars between competing new apartment projects…then I think saying “Oh Dear” is perfectly appropriate.
‘looks like approximately 59% vacancy currently, down from 74%’
If I was giving away free rent I could reduce vacancies too. The question is, did they misjudge the market?
I recently had two vacancies, one in a house another in an apartment. I filled them in two weeks, no freebies. If I had to offer 6 weeks free, I would think, maybe, my price was too high?
So far. This building is newer. And uglier, I might add. The city is paying them to add windows.
The developer isn’t doing the nightly rentals. They leased the units to Vacasa.
‘escalating “free rent” wars between competing new apartment projects’
Isn’t that what the local poster said was happening?
I’m guessing that, as been commented elsewhere, they can’t reduce rents yet because of financing restrictions. But it will come, particularly when the “investor” owners start bailing.
If I was giving away free rent I could reduce vacancies too. The question is, did they misjudge the market?
What I’m saying is that giving away free rent is common in leasing new projects, and based on leasing progress to date, it’s too early to say that they misjudged the market.
Isn’t that what the local poster said was happening?
What they said was that they are offering less free rent than the competition. I don’t think they said that they continuing to offer more and more free rent in order to attract tenants.
‘free rent is common in leasing new projects’
That’s interesting because I posted a Bloomberg article on San Francisco where they quoted one guy saying they didn’t used to have to give free rent and now they do. I’ll try to find it. Meanwhile, from earlier this month:
The San Francisco Chronicle reports from California. “We’ve heard it over and over as people lament the high price of housing in the city: that the theory of supply and demand doesn’t apply when it comes to the San Francisco real estate market. Tell them that in South of Market. SoMa, and particularly Mission Bay, have experienced dramatic development, adding thousands of units of new rental housing. And the result? ‘It’s basically a tenants’ market right now,’ says Climb Real Estate agent Elizabeth Kim, who says she has an unprecedented 20 vacant units she’s trying to rent. ‘Usually at this time of year we’re really busy. But now people are not snapping things up. We’re not getting the multiple offers.’”
“As my colleague, Kathleen Pender, wrote in June, there is an unmistakable softening of the rental market in SoMa, South Beach, Potrero Hill and Mission Bay, and large rental developers are bending over backward to attract renters. They have to, says Mark Choey, one of the founders of Climb Real Estate. ‘Demand is probably the same, but supply has shot up dramatically,’ he said. ‘There are hundreds, if not thousands, of empty units.’”
“A potential renter at One Henry Adams said she and her husband decided to move to Mission Bay and gave their Richmond District landlord one-month’s notice. ‘And when our landlady couldn’t get anyone to rent at our rate, she dropped our rent significantly,’ she said.”
“Another trend to watch is that of independent landlords getting out of the business of using their properties as rental income. Choey tells of such a property owner who had been getting $6,000 a month for a luxury two-bedroom SoMa unit — until his tenant moved out. ‘He tried to rent it at $4,000 a month, but couldn’t get it,’ Choey said. ‘So he’s decided to sell while prices are high. It could be that if they can’t get the rent they want, more landlords are going to sell.’”
The Elko Daily Free Press in Nevada. “After weathering apartment crunches in boom times over the years, Elko now has enough apartments to more than meet demand. New construction in the past five years has added hundreds of apartments, and the Ruby Vista Apartments development still has more to be finished in the near future. The abundance of rentals has spurred competition that is stabilizing or bringing down rents, as well as spurring incentives to fill vacancies, but apartment complex managers and real estate experts have differing opinions on whether apartment developers have overbuilt in Elko.”
“‘It’s a renters’ market right now. You see for-rent signs all over town,’ said Sandy Wakefield of Sandy’s Castles, which manages 265 rental properties in Elko, Spring Creek and Carlin. ‘We have more rentals than needed right now.’”
“Cathy Rich, manager of the Parkway Apartments said Elko is ‘overloaded on apartments right now,’ with not that many construction workers coming to town. ‘I can adjust rates to stay full,’ Rich said, explaining that newer apartment complexes can’t lower rent because there are more costs and mortgages to pay. Parkway has 100 units.”
“Kelly Zornes, manager of the newer Copperwood Apartments on North Fifth Street, agreed that Copperwood ‘can’t really lower rents because we have all our bills and mortgage to pay. We’re not even two years old.’ Copperwood’s occupancy stays pretty steady, but the complex has never been fully occupied because ‘the boom left before we finished the building. I feel we are overbuilt, to be honest,’ Zornes said.”
KHOU in Texas. “What’s bad for landlords may be a boon for Houston renters. We have new numbers on how an apartment glut is impacting availability. ‘There’s a greater availability than there is a demand,’ said Realtor Andrew Weiland with ULR Properties. Weiland is in the business of locating living spaces. ‘They had to project it would take a couple of years to complete these projects,’ said Weiland. ‘And within that time frame, things just kind of went downhill,’ he added.”
“A map made using data from apartment search website RentCafe shows the more than 16,000 new units that were expected to open in the city of Houston alone in 2016. But as apartments rose, the Greater Houston Partnership and others report job growth slowed. That was due, in large part, to the oil industry slump. So, it left with a lot of new apartments sitting empty.”
“‘So, a lot of apartment communities are offering specials,’ said Weiland. ‘8 weeks free, I’ve seen up to 12 months free,’ he added.”
http://thehousingbubbleblog.com/?p=9783
The building is strikingly ugly.
$30,000/yr rent where the median gross family income is $60,000.
“So, the 212 units are about 20% accounted for in 2 months.
10-month lease-up of the market rate units.”
Straight line extrapolation invariably leads to some very bad business decisions.
A report from USA Today. “Apartment building owners are struggling to rent many of the luxury units that have flooded downtowns across the country in recent years even as a relative shortage of multifamily homes in the suburbs has driven up rents. The downtown building frenzy has been well-publicized as developers cater to Millennials, among other age groups, who have streamed into revitalized cities to be closer to amenities, nightlife and a car-free lifestyle. According to real estate research firm CoStar, however, builders may be putting up too many apartments — most of which are at the high end of the market — in the urban hubs and not enough in outlying areas.”
“Over the past four years, the vacancy rate in downtowns and adjacent districts has climbed from 3.4% to about 5.5%, CoStar figures show. Although new apartment complexes typically take some time to lease up, many units have been sitting empty longer than normal. Nationally, new apartments had an average 52% vacancy rate when they opened in the first quarter of 2013, and the rate for those dwellings fell to about 11% within 18 months.”
“By contrast, new units opening in the first quarter of 2015 had a 72% vacancy rate that declined to 18% over a similar period. The higher vacancies were driven by luxury buildings in central business districts, says CoStar Chief Economist Hans Nordby.”
“The city-suburb split is playing out in metro areas across the country but it’s particularly acute in large cities such as Los Angeles, Washington and Chicago. In Los Angeles, about 5,500 apartments have opened downtown the past 3 ½ years, with typical rents of about $6,500 a month, and the district’s overall vacancy rate has climbed from 4.5% to 9.9%, according to CoStar data. Niko Deleon, owner of Niko LA Leasing in Los Angeles, says most high-end downtown buildings have been forced to offer amenities such as free rent for up to six weeks.”
“‘These new flashy, splashy downtown buildings — they have a vacancy problem,’ Nordby says. ‘They are too expensive to rent’ and there are too many of them. At the same time, he says.’
http://thehousingbubbleblog.com/?p=9741
Yahoo Finance on California. “San Francisco is notorious for sky-high rental prices, and while that situation won’t likely change in the near future, there are signs the San Francisco rental market is finally (finally!) softening. ‘Listings that once rented in just two to three weeks can now take two to three months to rent,’ explains Paul Hwang, principal broker at Skybox Realty.”
“Tech layoffs more than doubled during the first four months this year compared to the same period in 2015, according to the San Jose Mercury News. Raising funds isn’t as easy as it once was, when seemingly any entrepreneur with a half-baked idea — another Snapchat clone, the 20th food delivery startup — could raise a few million before slowly puttering their way into irrelevance.”
“Then there’s the huge surplus of the available units up for rent. Research firm Axiometrics estimates 12,300 new units will glut San Francisco, Oakland and San Jose this year, up from about 7,000 units in 2015 and 6,700 units in 2014. For more attractive deals, look no further than Craigslist, where ‘1 month free’ is a popular tagline in listings spanning from San Francisco proper and Oakland to San Jose and Cupertino.”
“‘Welcome Home!! 1 Month Free!! No App Fees!! $500 Deposit!!’ reads one listing for an 845-square-foot one-bedroom in San Jose. ‘Love where you live! 1 month free – $500 [Visa] gift card!’ another listing declares for a 679-square-foot one-bedroom in Redwood City. Still others are dangling a $1,000 ‘look and lease’ special: Lease an apartment the same day you view it, and the landlord slashes $1,000 off the deposit or one month’s rent.’”
http://thehousingbubbleblog.com/?p=9731
The North Bay Business Journal reports from California. “After a few years of hot sales activity, the market for multifamily properties in the North Bay appears to be slowing, not so much from lack of interest among investors but for lack of buying opportunities and pricing uncertainties, according to local experts. In Marin County, there are a number of properties with more than five units awaiting buyers, an unusual amount for the market, according to Katherine Higgins, an apartments specialists with Paragon Real Estate Group in Greenbrae. ‘I’m not sure if it’s the price point or that the prices do not make sense,’ she said. ‘Last year, almost everything that came on market was snapped up in weeks.’”
“Buyers of institutional-level properties, typically with more than 200 units, seem to be getting less aggressive in chasing prices and more cautious about overpaying, said Scott Gerber, another longtime apartment broker, now with Bradley Commercial. ‘It’s no secret rents in San Francisco — one of the major drivers for the North Bay as activity radiates this way — were down in the fourth quarter and moderating at best because of the huge supply built there in last five years,’ Gerber said.”
“There has been such a hunger for properties and competition between buyers that a number of deals have gone into contract before inspection reports were completed and at sale prices that the properties’ rents didn’t seem to justify, Higgins said. ‘It’s been an absolute feeding frenzy for the past two years,’ Higgins said. ‘It’s a bubble in the making. Then the buyers get in and realize they have put in more money to get the property to where they want it to be.’”
http://thehousingbubbleblog.com/?p=9687
That’s interesting because I posted a Bloomberg article on San Francisco where they quoted one guy saying they didn’t used to have to give free rent and now they do. I’ll try to find it. Meanwhile, from earlier this month:
Yes, SF went from 0 months of free rent, to needing to give free rent. Super-tight, to not so much.
SF with 0 months of free rent was not a normal market.
BTW, I don’t know what we are debating here, I think we both see this similarly, with one small but important difference.
You think that developers built luxury because land prices forced them to. I think developers built luxury because they believed they could lease them up, and that allowed them to bid more than anyone else for land (thus driving up land prices).
If these projects prove that they can’t lease luxury at the rents they expected, in my universe, land values will fall, and luxury development will slow considerably.
In other words, until land prices fall they won’t build anything but “luxury”. That’s the same as saying they are building luxury because land prices are too high. Nobody cares about the chicken/egg part do they?
‘And when our landlady couldn’t get anyone to rent at our rate, she dropped our rent significantly,’ she said.”
i wonder if they feel a little stupid throwing away all that money on an overpriced lease? I’ll bet they become a lot more demanding at the lower rent
I remember hearing a decade (or more) ago about how young people would “new apartment hop” in the SF Bay Area, in order to get effectively a month or two free rent each and every year.
In the past year, HBB posted an article about the same thing happening in Northern Virginia. And it’s the only way people could afford the rent.
And yeah, this Yard thing is ugly, and way too expensive. $3000/month for a 2-bedroom?
In other words, until land prices fall they won’t build anything but “luxury”. That’s the same as saying they are building luxury because land prices are too high. Nobody cares about the chicken/egg part do they?
Your statement assumes builders will still build luxury, even though there isn’t enough demand to fill the buildings. They won’t. If landowners aren’t willing to sell for lower prices, land won’t sell, and no one will build anything (including “luxury”).
Said another way, if there is not enough demand for end-users of luxury apartments, lenders won’t lend, equity investors won’t invest, and developers won’t build apartments that require high rents to “pencil”.
As such, when land that is zoned for multi-family is available for sale, there won’t be developers of luxury units bidding on it anymore, and the market clearing price will be lower than it has been.
Will sellers still sell? Maybe. Some may hold out hope that they can get higher prices again, but land costs money to hold. Over time, more and more will sell at the lower prices.
This discussion stems from the commentary that the bubble is in land prices. It is not. Land prices are a direct function of the value of what can reasonably be built on it, not the other way around.
You think that both land values and luxury apartments are intertwined, and you are right. But underpinning this relationship is the perceived ability to rent the finished product at high rents and sell for a low yield. Without that perception, no one would fund a luxury apartment development, and the land wouldn’t sell at the high prices.
Once you break that belief in luxury apartment demand, multifamily land prices will fall.
‘Your statement assumes builders will still build luxury, even though there isn’t enough demand to fill the buildings. They won’t’
I’d say they are. Look at Manhattan. What’s driven this thing was the large amounts of money looking for a place to go. Margins got thinner and no one cared because true demand was a secondary concern. If there are speculators willing to step in, the projects moved forward until the funding gets yanked. See the Miami condo halt yesterday, 13 floors up.
Is 12? Fed Housing agencies enough?
Hilary announced affordable housing so more coming .
‘While renters are clamoring to find an affordable apartment in Portland, many of the expensive high-rise units have been sitting vacant. Now, some of those building owners are getting creative, listing them as vacation rentals online.’
‘As The Willamette Week reported Tuesday, Yard on Northeast 2nd Avenue is trying to make up some money while they wait to lease all of their 284 apartments.’
‘In exchange for city tax credits and fees waived–Yard provides 57 units of affordable housing in a time when Portland needs it the most. Those are all taken. But according to their website, 74 percent of the remaining apartments are still vacant.’
‘Enter vacation rental sites Vacasa and Airbnb. Eighteen units, the entire 11th floor, in Yard are furnished and listed for daily or weekly stays at around a couple hundred dollars a night. Park Avenue West, which just opened this spring on Southwest 9th Avenue, is also doing it with a few of their vacant units. But there’s a problem.’
“Yes I believe we have a violation,” said Mike Liefeld with the city’s Bureau of Development Services. He says both buildings, and probably others, don’t have the right permit to be acting as a hotel. “It is allowed by right to do motel/hotel uses. They just need to get the building all situated correctly to have the occupancy to have it 100 percent legal for that operation,” Liefeld said.’
‘74 percent of the remaining apartments are still vacant’
And that’s just one building. But there’s a shortage! Well, maybe not. Just that what’s being built isn’t what the market needs. Now how could this be? What could cause the price of land to go so high that only luxury apartments are built that then sit vacant? It’s almost like there is something distorting these markets and getting all sorts of things out of whack.
Has there been a “non-luxury” apartment built in the last 20 years?
Out of whack? More like real estate business can’t survive without blowing bubbles, along with a bit of “when your only tool is a hammer, everything looks like a nail”
It would be like if car dealers only sold $100,000 cars, and wondered why there are so few buyers.
“It would be like if car dealers only sold $100,000 cars…”
We’ll be there in a few years at the current rate.
“The apartment building known as Yard opened in late July.”
Late July opening, we were probably halfway through September as the article was written (printed on the 20th), To be conservative, let’s call it 2 months (although it might have been only 1.5 months at the time the 74% was calculated).
74% vacant means 26% leased.
Saying that it has been moving people in for 2 months puts the lease-up timeframe at 8 months.
Let’s be even more conservative and say that some of the tenants were waiting for it to open, and moved in immediately (pre-leased), so maybe the overall lease up pace isn’t 8 months, but let’s increase it by 50% to 12 months…hell, double it to 16 months.
That’s hardly a sign a trouble.
Sorry in advance for the long post Ben…I read this in a comments section of a news article..The article was discussing future rate increases..I would be interested in your thoughts because much of this is true…We find ourselves with ZIRP and a huge debt balance sheet…Personally, I think major tax reform maybe the only way out meaning that everyone will pay more…
“Borrowers should keep their eyes open. Yellen’s message is that, for the first time in a long time, rates are on the way up ??
Rising interest rates levy two massive, budget-busting, costs on the federal government. First, rising rates push interest payments on the National Debt through the roof. Currently, Washington pays about $430 billion in interest on the National Debt each year. That’s at an interest rate of just 2.3% — a record low. Over the past 50 years, the average interest rate on the debt has been 6.4%. If interest rates return to historical norms, interest payments will suddenly explode to $1.2 trillion — a nearly 3 times increase.
And if interest rates overshoot to the upside, as often happens when major imbalances like this one are corrected, you could be looking at annual interest expenses of up to $2.2 trillion. But rising rates could likely do even more damage than that, due to their impact on the overall economy.
Rising interest rates cause the economy to slow which reduces federal tax receipts and increases the cost of unemployment benefits, welfare, food stamps and other programs. And we have plenty of new programs and additional beneficiaries!
Rising interest rates also put the brakes on young professionals investing in their future due to rising cost(s) of student loan(s), automobiles, employment necessities financed, etc. It also cripples young families trying to get their first house, finance cars, appliances, furniture, clothes; and all of the items needed to grow and support a family. Rising interest rates “crush” the future.
With more money going to cover the cost of interest, when they can no longer sell bonds/notes to pay interest due, the government simply runs out of money. Social Security and Medicare payments cease. Welfare and food stamps vanish. Basically civil society collapses.
But Ma and Pa Kettle would get an extra $200 annual on their $10,000 CD. Rising interest rates invest in the past, savers who no longer participate in the consumer economy; and, pushes the money taken from those who finance necessities to the top 5-10% wealthiest people.
Is that the economy that you think best serves the USA? Me neither. Interest rate policy is right on, right now. It is tax policy that is behind the yield curve. If the Obama ever missed an opportunity, this was it. And all of the congressional leaders that have served during his administration, both parties, have been nothing short of stupid!
“Social Security and Medicare payments cease. Welfare and food stamps vanish.”
That’s a bad thing? And no the sky won’t fall when rate ultimately go back to the 10% range. Quite the opposite.
Yes, that would be a bad thing. It’s good that you asked.
Just send the old people to the Soylent Factory.
Why?
Don’t worry about the details. Just know that Social Security and Medicare are important programs. Medicare is probably the most important institution in American life.
Explain why it would be a bad thing. Proceed.
“Social Security and Medicare payments cease. Welfare and food stamps vanish.”
Never happen; arson is cheap.
Yep. Mayhem insurance. If “LA John” were “Caspar Wyoming Compound John” he wouldn’t have to worry.
Yeah, arson and mayhem would be in the cards. You don’t know what those senior citizens are capable of until you take away their free s–t.
It’s not the senior citizens, it’s their deadbeat adult children who spend those checks. And I’m not talking about “Obama’s sons.” Those duck dynasty trailer trolls have lots of firepower.
Trump has a plan.
“everyone has a plan till they get punched in the mouth” M. tyson
Nice… add that one to my quiver.
They should be getting about $700 on that $10k CD.
Cutting interest rates to zero, while cutting the wretched refuse’ s pay checks even more (by various means) and a defacto inflation rate well above zero, is not the formula for a growing economy.
‘Rising interest rates levy two massive, budget-busting, costs on the federal government’
The artificially low rates encouraged the borrowing in the first place, and not just by governments; corporations too for stock buy backs. Which produce nothing for the economy BTW.
The short of this is, allowing rates to find equilibrium will destroy everything. Maybe. Maybe shoulda thought of that before you went down this road.
They have dug themselves such a hole now that all they can do is talk about raising rates. Bad actors for sure. Its like crying wolf for years.
I think there is only one thing that will force rates up:
currency crater!
As long as we “suck less” Uncle Buck won’t crater.
so as long as everyone else is going down the sh@tter we will be ok?
Yes, because when that happens, the money flows here.
The author of that comment must be a Wall Street shill. A$$wipes like him are very good at employing tear-jerker arguments like “low interest rates are good for the children *sob*.” Meanwhile he conveniently omits that low interest rates are what enabled the economy to run on blowing smoke instead of on honest goods and services. Which of course in turn gives the author and his ilk higher bonuses to throw more yacht parties.
He gives himself away at the end when he says that Obama missed an opportunity to reform tax policy. That is straight-up 1%er code for more trickle-down tax cuts.
The bubble economy baiscally keeps inflating stock and home bubbles over and over.
A lot of people workn real jobs seem to resent all these people sitting at home watching their stocks and home values go up cause the FED.
And the current policy is great?
Asset inflation of stocks and housing, so a 1100 sq ft Bay Area crap shack is $650,000 (and a great deal!)
Apartment rents going up after “renovation” so more affordable housing is removed.
Yellen bucks looking for some place to die - a lot of borrowed money going to useless ends — and will probably never be repaid.
Pension plans and life insurance plans destroyed.
Heck of job Bama, Mel, and Janet! It so great, let’s go negative! Eliminate cash so the peons can fight our plans!
Work until u have one foot in the grave!
“I read this in a comments section of a news article..”
What news article and where did you read it?
dave
dont forget ohhhbama let credit card companies have 18 months to switch over tens of millions of fixed rate card to variable interest ones…before the interest rate bump abuses were stopped we will renew your card at 18% instead of 8% for no apparent reason………….what a gift!!!
“Metro Denver’s inventory is still only about 40 percent to 50 percent of the historical average, and remains super-tight. But McLaughlin notes a lack of affordability appears to be weighing on the Denver starter-home market.
The median price in that segment has shot up 20 percent in the past year, and “starter” buyers seeking a median home in that tier face mortgage costs at 46 percent of income — well above the 36 percent lenders are typically comfortable providing.”
http://www.denverpost.com/2016/09/21/denver-for-sale-homes-loosening/
46% of income? Yeah, good luck with that.
Dallas-Fort Worth home prices are rising at more than twice the nationwide rate.
D-FW housing prices jumped 12 percent in August from a year earlier, according to a new report by Zillow.
Prices were up 10.7 percent from a year ago in Denver and rose 11.3 percent in Seattle.
http://www.dallasnews.com/business/residential-real-estate/20160922-d-fw-home-prices-rising-at-twice-the-national-rate-august-saw-big-jump.ece
“46% of income? Yeah, good luck with that.”
Haha… have to put both the wife and mistress to work.
OT, but….
“Brad Pitt reportedly being investigated for child abuse”
A “Divorce Lawyer 101″ course, for lawyers representing women seeking sole custody of the kids.
One thing you learn is that women are NEVER selfish. They always do “what’s best for the kids”. Which, councidentally, almost always aligns with what THEY want.
In my case, between having a good lawyer, and the kids being old enough to throw the “BS” flag, it never became an issue for me.
Good ole Brad is as alpha male as they come, and he still couldn’t hold on to a post wall Jolie. What chance does a beta bux have at keeping the wifey happy and not wind up being dragged into family court and losing everything?
“Good ole Brad is as alpha male as they come”
Nah, have to vehemently disagree here. More like a beta impersonating an alpha male. After all, he’s an actor.
Alpha males are really just a cross breed with lot’s of Golden Retriever needing constant affirmation to keep the ego afloat. They are the most superficial people I know. NOT. WORTH. THE. TIME.
You can’t post that here.
On another subject, now that the weather is cooling off in Region VIII that means less exposed skin on the tattooed moms at King Soopers. The season of short shorts and large thigh tats is nearing its end. Fortunately, neck and hand tattoos are still proudly on display.
In that case I also advise waiting for cooler weather before going to any Renaissance Faires. I was astonished at the sheer amount of tat-coverage there. Entire limbs! Don’t these people even TRY to think ahead, like, 5 years?
5 years
What about 20 years? Or 50 years?
At one of my local bars there are alot of old timers with military or biker tats that look more like lesions than art.
20-50? What kind of moon shot is *that*? I used five because I figure that’s about the most we can expect.
“that means less exposed skin on the tattooed moms at King Soopers.”
I’m sure what I am about to say is ist or phobic in some way or another.
Walking out of Publix about a month ago, 2 drop dead gorgeous 20 something year old blondes (probably sisters) are walking in at the same time. One problem, one of them is not drop dead gorgeous because she is covered in tattoos. I mean covered, 2 sleeves on her arms, large portions of her thighs, calves and neck covered.
Now some men may find that attractive but I am not one of them. One looked like a Playboy model and the other like a 3D cartoon.
Display that publicly, and you deserve the judgment of others who consider it disfigurement or mutilation, including but not limited to prospective husbands and especially hiring managers.
Not unlike an insect with bright colors that provides a warning to potential predators to stay away because of toxicity. Same thing applies to these strumpets. Irony is in humans the tattoos attract the predators, rather than repel them.
Would a beta-bux even go for someone like Jolie?
I meant an “ordinary wife”, not Jolie. She wouldn’t give the time of day to a beta bux.
I do find it interesting that they were together for like 10 years or something, but their marriage only lasted about 2 years. I do suspect that Jolie, incomplete as she is now, will hop back on the carousel for one last hurrah.
Two unhealthy people do not make a healthy couple.
Of that there is no doubt, though it only takes one to mess things up. And some would argue that the current legal environment gives wives a big incentive to hit the eject button.
“I do suspect that Jolie, incomplete as she is now, will hop back on the carousel for one last hurrah.”
Angelina is well past her prime, even scary looking, IMHO.
Those hands:
http://picpaste.com/Shipwrecked-Seafood-Bar-Grill-457918.jpg
He was the beta…Jollie wore the pants in that relationship.
With fame, looks and money, of course he has lots lots of opportunities and Jollie’s hagged out anyway.
he can get another hottie like tomorrow
Yep, and half his age too!
“When it comes to low interest rates, winter is coming. That was Federal Reserve chair Janet Yellen’s clear message Wednesday. Despite strong objections from some of her advisers, Yellen announced no change this week. So strongly that Yellen and her advisers on the committee that makes interest rate decisions were unanimous that a rate rise was needed. ‘We are worried that bubbles could form in the economy,’ she said.”
“Borrowers should keep their eyes open. Yellen’s message is that, for the first time in a long time, rates are on the way up. Then again, she gave us a much more serious warning a year ago, and since then, nothing much has really happened.”
__________________________________/
What a transparently idiotic charade.
Palmetto, did you read this today? The funniest piece I’ve read in the Times for quite awhile. Somebody put up a fake “Coming Soon: World of Beer” sign at the site of a recently-demolished building in Seminole Heights.
http://www.tampabay.com/news/humaninterest/seminole-heights-hipsters-wake-up-to-sign-of-the-times-revolt/2294340
“The very idea that a craft beer franchise would rise on ground occupied just a few short months ago by a decrepit historic theater was met with scorn. The sign was perceived to be a beacon for dudes who iron their jeans.
‘People were all riled up,’ said Bradley Jones, 34, bar manager at the Independent. ‘Everybody was talking about it.’
The mile markers of gentrification are not always evident. Sometimes, there’s just a soul food restaurant on the corner one day, and the next, it’s a Jug & Bottle Dept. selling organic lip balm and imported mustard.
But this seemed too precious to be legitimate. It was so close to the indie record store and the Volkswagen repair shop.”
The leader of one of my networking groups is a syndication guy, who does student housing. He got into it early in the trend.He has other sectors in his holdings as well. All his properties cash flow.
One consistent theme to all my networking groups is that 95% of the syndications are out of Ca. Crowdfunding is another big trend in my groups. Lots of hard money folks and neophytes, along with pretty wealthy older guys.
One kid tried being a financial advisor (lost all his client’s $), and is now doing crowdfunding and syndication match-making. (oy vey)
Automated self-storage facilities (kiosk and tech technologies) are a sector to watch going forward.
One kid tried being a financial advisor (lost all his client’s $), and is now doing crowdfunding and syndication match-making. (oy vey)
It never ceases to amaze me how willingly people will give their money away.
“From the sublime to the ridiculous, the SNB now owns $1.5bn of shares in Facebook and is one of the biggest shareholders in Apple. Meanwhile, both the Bank of England and the European Central Bank have announced massive corporate bond buying programmes, including, in the BoE’s case the sterling bonds of the aforementioned Apple. Quite how that’s meant to benefit the UK economy is anyone’s guess.”
http://davidstockmanscontracorner.com/get-ready-for-the-mother-of-all-stock-market-corrections-once-central-banks-cease-their-money-printing/
‘If you’re originating and selling, you’re just trying to get as much volume as you can,’ said Brett Crosby, a Google Inc. alum who co-created PeerStreet and is now chief operating officer. ‘In order to get more borrowers in the door, you start to drop underwriting guidelines.’
Brett, meet skillet. Skillet, meet Brett.
According to the article in Bloomberg:
PeerStreet got an early investment from Michael Burry, the hedge fund manager who was played by Christian Bale in the movie version of Michael Lewis’s 2011 book “The Big Short.”
Sounds to me like they might be making a sequel to that movie.
‘Outside hotly contested areas, we’re seeing price adjustments of a kind we haven’t seen in some time,’ said Timothy Ambrose, treasurer of the Bay East Association of Realtors. ‘Buyers start thinking, ‘Well, should I wait?’
Someone here said the loans will probably be OK Tim.
If these loans were actually given with money people actually had to bust their @ss for, someone would care.
‘We are worried that bubbles could form in the economy,’ she said.’
‘In yet another sign of the dipping ultra-high-end market, the seller of the city’s most expensive listing has cut $24 million from the asking price’
Smart as a whup (as we used to say), that Janet.
http://www.texasmonthly.com/articles/more-colorful-texas-sayings/
Smart
Bright as a new penny.
Smart as a hooty owl.
No flies on my mama.
Smart as a whip.
That list is funny:
Dumb
If a duck had his brain, it would fly north for the winter.
She doesn’t have enough sense to spit downwind.
If he was bacon, he wouldn’t even sizzle.
If brains were leather, he couldn’t saddle a flea.
He carries his brains in his back pocket.
Dumb as dirt.
Dumb as a box of rocks.
Dumb as a barrel of hair.
Dumb as a post.
Dumb as a wagon wheel.
Dumb as a prairie dog.
Dumb as a watermelon.
Dumb enough for twins.
He doesn’t know “come here” from “sic ’em.”
He doesn’t know enough to pound sand down a rat hole.
He can’t ride and chew at the same time.
So stupid if you put his brains in a bumblebee, it’d fly backwards.
If all her brains were ink, she couldn’t dot an i.
If all her brains were dynamite, she couldn’t blow her nose.
He don’t know which end’s up.
He don’t know a widget from a whangdoodle.
He don’t know nothing from nothing.
He don’t know diddly squat.
He couldn’t pour piss out of a boot with a hole in the toe and the directions on the heel.
If he had a brain, it’d die of loneliness.
So thick-headed you can hit him in the face with a tire iron and he won’t yell till morning.
He could screw up an anvil.
I liked these.
Dishonest
There are a lot of nooses in his family tree.
Honest
If that ain’t a fact, God’s a possum.
Brave
Brave as the first man who ate an oyster.
She’d charge hell with a bucket of ice water.
General Advice
Skin your own buffalo.
Lucky
They tried to hang him but the rope broke.
I think I just found Al Franken’s son:
http://www.zerohedge.com/news/2016-09-22/white-house-hacked-dc-leaks-releases-new-emails-white-house-staffer
Unbelievable, these guys. A buncha hopelessly cucked little man-children playing “Let’s Rule the World”! No wonder we’re in deep schitt. Because this is what they grow up to be if they hang around long enough:
https://en.wikipedia.org/wiki/Ash_Carter
This is the guy who is so desperate he’s drafting women.
If u have to finance it, it’s probably overpriced.
2007 Honda Pilot with 150,000. Asking: $11,5000
Yeah, I’d say most everything, including used cars are overpriced today!
+1 Paid $5,500 for a 2001 Toyota Tacoma with 191,000-miles.
It runs great though, doesn’t burn a drop of oil, zero blow-by. Drove it 1,600-miles to fetch a bicycle, oil was still yellow-fresh. Anything *merican would be in a wrecking yard.
It’s even worse for used Odysseys - asking prices of $15-18K for a van with over 150K miles on it.
We really lucked out a few years ago, snagging a 2001 Odyssey with 107K miles (with its THIRD transmission having just been installed under warranty for the original owner) for $6700. That car has 213K miles on it now and it’s one of the best cars I have ever owned (the wife’s DD).
and if you have to borrow for 15 or 30 years to pay for it, you can’t afford it.
Interest rates
If the Fed didn’t buy them down by 4.4 trillion. What’s your guess on the 10 year?
2%
2.2 %
Not much
I always liked being the banker when I played monopoly.
NOW HAVING SAID ALL THIS, WHY CAN’T I CONTROL HOW LOUD I TALK YOU MIGHT ASK?
Hillary Clinton Screeches ‘Why Aren’t I 50 Points Ahead … - YouTube
https://www.youtube.com/watch?v=BlNzUHF9h1k - 167k - Cached - Similar pages
7 hours ago .
The Los Angeles Times (real journalists) that nobody AFAIK has ever accused of conservative bias, is now polling The Donald as moving ahead:
http://www.latimes.com/politics/
Nate Silver’s got it at 286 to 251 as of now:
http://projects.fivethirtyeight.com/2016-election-forecast/?ex_cid=rrpromo
Right now
That’s the operative word, isn’t it? Nate silver changes his forecast 1000’s of times during the course of an election….why the F anyone listen to this idiot? Can’t they make prediction early and stick with it if they are really that good? Even my dog is sensing a Trump victory right now.
She’s freaking bugged out in that video, what a mess!
She gets rocked in this between two ferns bit too:
https://www.youtube.com/watch?v=xrkPe-9rM1Q
I made it as far as “I’m not down with TPP” and I had to bail.
Imagine paying millions to live in a sinking building.
http://www.cnbc.com/2016/09/22/the-millennium-tower-is-sinking-politicians-want-to-understand-why.html
Imagine paying trillions to live in a sinking country.
No need to imagine.
But Jesus is gonna pay us a visit; ‘da Pope said so. Worth everyone’s last cent.
Hillaryous is unelectable.
You sadly underestimate how stupid and amoral ‘Muricans have become.
Here is a story that happens in cities small and large all over the country everyday that you never hear about. I found it by accident.
Two suspects arrested in shooting death of 13-year-old Modesto girl
By Erin Tracy
September 22, 2016 11:09 AM
Two men were arrested this week on suspicion of murder in connection with the shooting death of a 13-year-old Modesto girl in May.
Brisa Covarrubias was shot May 30 in front of her home in the 1600 block of Pelton Avenue. Her 15-year-old brother tried to shield her from the shooter and was also hit. The two teens were taken to a hospital, where Brisa was pronounced dead.
On Tuesday, Modesto police served search warrants at four locations in Modesto and Empire. Emilio Silva, 19, and Juan Carlos Cruz, 24, were arrested then and have been charged with murder, attempted murder and participating in a criminal street gang.
Modesto police and the Stanislaus County Sheriff’s Office served five more search warrants Thursday morning at homes in west Modesto and one home in Waterford. Police were looking for evidence and additional suspects connected to the case, although police spokeswoman Heather Graves said Silva and Cruz are the primary suspects.
SWAT teams from both agencies served the warrants, using a loudspeaker to call out the occupants. Several people were detained during the searches but it was unknown early Thursday afternoon if any additional arrests were made.
Silva and Cruz made their first court appearance Thursday afternoon during which their arraignment was continued until Monday. They are being held at the downtown jail without bail.
Because they face a special circumstance for committing a crime for the benefit of a street gang, the two could face the death penalty or life without parole. Prosecutors have not decided yet if they’ll seek the death penalty.
Brisa’s family said the teens were shot by a man who pulled up in a Chevrolet pickup and asked them, “Do you bang?” – asking whether they were in a gang. The teens said “no,” but the man starting shooting, according to a family member.
Read more here: http://www.modbee.com/news/local/crime/article103447992.html#storylink=cpy
If you can’t afford it, then don’t buy it. That’s just how it is. How many people have houses that are too big for them, too expensive to maintain. They just sink deeper into debt.