The Beginning Stages Of Being Oversaturated
A report from the News Tribune in Washington. “Tacoma apartment rents have increased for the 11th straight month, according to Axiometrics, a research firm that tracks apartment rentals. Seattle-Bellevue-Everett’s average rent prices in September dropped to $1,777 from August’s $1,799, possibly fueled by an increase in the number of apartments available, said Axiometrics’ senior vice president of analytics Jay Denton. ‘Seattle is still among the top-performing metros in the nation, but deliveries of new units accelerated in the third quarter and the pace is expected to quicken through the second quarter of 2017,’ Denton said in a news release.”
The Boston Globe in Massachusetts. “Rents in Boston are climbing at their slowest rate in more than two years as a surge of new apartments hits the market. A new report out Wednesday from data firm Axiometrics found that the average rent in Greater Boston fell slightly from August to September. It’s the latest sign that the wave of building in the region is having an impact on rents.”
“‘The Boston apartment market may be seeing the effects of the new supply delivered in the past six months,’ said Stephanie McCleskey, vice president of research for Axiometrics. ‘Job growth picked up in the third quarter, but the low rates earlier this year combined with the new construction provide a foundation for lower rent growth.’”
“There are signs that may continue. More than 3,000 new apartments have come on the market in the last six months, Axiometrics said, with another 1,344 slated by year’s end, and about 6,000 expected to open in 2017.”
The DA Online in West Virginia. “The term ’student housing’ at WVU has been redefined. The phrase now refers to more than standard, quiet dorm units and extends to University Apartments, like Vandalia, College Park, University Place and University Park—the latter two being the brightly lit residence/shopping complexes that sprouted up in Sunnyside and Evansdale over the past two years. These apartments combined hold 2,205 beds students can rent (not including the dorm units in University Park), but 35 percent of these remain unfilled as of Fall 2016, according to FOIA documents obtained by The DA.”
“‘A lot of people just can’t afford them,’ said David Kelly, owner and operator of Kelly Rentals in Morgantown. The biggest problem, Kelly said, is that with all the University operated apartments, corporate housing complexes (Campus Evolution, The Ridge, Copper Beech, etc) and private housing in Morgantown, there are more beds available throughout town than there are students to fill them.”
The Duluth News Tribune in Minnesota. “According to a study done by the City of Duluth in March 2012 called the Higher Education Small Area Plan, the estimated student population in Duluth is about 20,000 between UMD, CSS and Lake Superior College, with 16,000 of those students seeking off-campus housing. The problem for many students is the available housing close to campus may not be overly affordable for them, said Mike Peller, owner of Gables & Ivy Real Estate in Duluth.”
“Peller said he rents about 40 properties near UMD and CSS. The price of real estate increases the closer the property is to campus, he said, making monthly rent more expensive. Mark Lambert, owner of Campus Park Townhomes and Villas, Boulder Ridge Luxury Apartments, Summit Ridge Luxury Apartments and BlueStone Lofts and Flats, said he thinks the housing market is in the beginning stages of being oversaturated.”
“While there may have been student-housing issues in the past, Lambert said, there is a delicate balance between providing enough housing and too much. ‘This year is the first year we’ve had some vacancy issues,’ Lambert said, adding that Campus Park is 20 percent vacant.”
The Silicon Valley Business Journal in California. “Believe it or not, rents can go down in Silicon Valley. In Santa Clara County, the average asking rent in Q3 for all unit types was $2,619, a 1.3 percent decrease from the prior quarter and 0.2 percent drop from Q3 2015, according to data from Novato-based Real Answers. The slight decline in rents over the last 12 months stands in sharp contrast the nearly 11 percent year-over-year increases seen in the third quarters of 2015 and 2014.”
“A quick note on the data used: Real Answers uses average asking rents from complexes with 50 or more units, meaning smaller complexes are not represented.”
DNA Info on NewYork. “Temporary walls are this season’s hottest luxury rental amenity. Developers know that many renters need roommates to afford New York City living, and — with a glut of rentals hitting Manhattan’s market and pushing prices down — they understand that squeezing roommates in is one of the best ways to keep prices up and vacancy rates down. That means more landlords are letting renters know, whether explicitly or tacitly, that they can indeed carve out extra bedrooms with temporary walls.”
“At the Grayson, a 17-story rental on East 28th Street, a unit is listed on Streeteasy for $5,500 a month as a three-bedroom though its floor plan shows it as a two-bedroom. The description states, ‘This apt easily converts to a 3 bedroom. Full walls allowed.’ A $4,100 a month one-bedroom in the same building, states, ‘This apt easily converts to a 2 bedroom.’”
“‘We’re seeing walls and dividers in a lot of new development. There are a lot of buildings showing them in their marketing materials,’ said Karla Saladino, of Mirador, the exclusive rental agent for more than 100 buildings across the city. ‘A lot of the stuff in Murray Hill has to be convertible or people can’t afford to be there,’ she added. ‘There are only so many people who want to live in one-bedrooms in the neighborhood.’”
“Donny Zanger, founder of All Week Walls, said his business installing temporary walls dipped after the 2010 Times article about illegal walls, but recently things have been on the upswing again. Developers need the walls since they ‘put a lot of money into their buildings’ and have to command high enough rents and low enough vacancies to see returns on their investment, Zanger said.”
“Since landlords typically require a renter earn 40 times the monthly rent, that means renters for half of the one-bedrooms on the market would need to earn more than $135,800 a year. ‘You can have someone working at Morgan Stanley, and if their rent increases 10 percent and wages increase 2 percent,’ Zanger said, ‘the only way you can balance it out is by the walls.’”
‘A new high-end apartment community has opened in Patton Township. Highwoods at Toftrees held the official ribbon cutting on its luxury apartments last week.The Berger Rental Communities property includes two buildings with 48 units each. The first building opened to residents in July and the second in August.’
‘Regional property manager Katherine Smith said Berger has had a presence in the Centre Region since the late 1980s and owns seven of the sub-communities — the majority of homes– in Toftrees. She said Berger identified a demand in the local market for high-end housing for graduate students and professionals, and for Penn State alumni looking for a secondary residence.’
‘Among the features and amenities of the one-, two- and three-bedroom apartments are granite countertops, wood floors, high efficiency lighting, energy-efficient heating and cooling, and balconies or patios accessed from the master bedroom. Residents also have access to the community clubhouse with a fitness center, pool, lounge, business center, outdoor grill, and fire pit area.’
‘In addition to graduate students and professionals, the apartments have proven popular among Penn State alumni who want a residence of their own when they visit Happy Valley.’
“We have a lot of alumni that this is not their primary housing. They use it for secondary housing,” Smith said. “There are a lot of people who have season [football] tickets and instead of paying for weekend rentals find it’s more economic to have year-round housing. And because they love to return to the area during non-football season anyway its a nice thing for them to have. We did a fair amount of leasing at Highwoods for that but we also have a significant amount of rentals at the Toftrees community for alumni.”
‘Highwoods at Toftrees was financed by Fulton Bank.’
Kathy with a K, I can’t see renting an expensive apartment for football games. For the price I could get a pretty nice hotel room that I didn’t have to heat all the time I’m not there.
All for eight weekends of home football games a year.
Let me do the math on that.
Makes about as much sense as solar panels.
But…but…entitlement!
It looks more like speculation than entitlement to me; these fools think the place with pay for itself and more, so really they think they’re getting a FREE place to stay that will also pay them handsome dividends over time. Time will tell…
Hey, my solar panels make great sense. $8k to save $1,250/year.
Who is paying for them?
People poorer than Jingle pay for it. It’s a reverse-Robin-Hood subsidy; I have several rather well-off friends who reap the WA State’s subsidies in Seattle.
“Oversaturated”. What phrases these REIC people come up with. Not just saturated, but OVERsaturated. But a little reverse hype does not hurt. Double plus good, if you ask me.
Yeah, it’s not a word I’d use but I started doing searches for it when I saw it several times.
BTW, I just added the Boston link because their site was down. This blog would be down too. The servers are under DoS attack. But because I register with godaddy and not the host the HBB is still up.
An awful lot of hot rental markets not so hot all around the same time.
We use the term “supersaturated” in chemistry. It means that if things get jostled just a bit, a whole lot of stuff is going to fall out.
An awful lot of hot rental markets not so hot all around the same time ??
Which tells you its not a outlier…Something more fundamental going on…
‘The price of real estate increases the closer the property is to campus, he said, making monthly rent more expensive’
Here’s the bubble - paid too much because it was never going to end, etc.
‘Mark Lambert, owner of Campus Park Townhomes and Villas, Boulder Ridge Luxury Apartments, Summit Ridge Luxury Apartments and BlueStone Lofts and Flats, said he thinks the housing market is in the beginning stages of being oversaturated. ‘This year is the first year we’ve had some vacancy issues,’ Lambert said’
You like that luxury name on your shacks Mark. Ah, these rich students, how could they live with out bocci ball courts and zen gardens. What was it the DC guy said the other day, “these things don’t bring in revenue!”
Geniuses. You deserve to go bankrupt.
Imagine this scenario if the US government didn’t guarantee student loans and allowed student loans to be discharged in bankruptcy…
Bigger government can solve this.
The government is backing a lot of these student housing loans too. They are in everything, senior, luxury apartments.
I don’t have a subscription, but just saw this:
Chicago’s Magnificent Mile feels chill wind of falling home sales
Financial Times-Oct 20, 2016
Running 13 blocks along Michigan Avenue from the Chicago river to Oak Street in the Near North Side, the area is home to high-end condominiums and …
Here’s a bit more, including some numbers to document that a crash is underway.
Though the article frames this as a Chicago-only situation, many similar articles recently posted here about high-end real estate in other major cities around the world suggest otherwise. And remember, the fish rots from the head.
International Property
Chicago’s Magnificent Mile feels chill wind of falling home sales
The strong market along the upscale stretch has been hit by sellers rushing to cash in
Downtown Chicago
© Carol Ricker/Getty Images
October 20, 2016
by: Troy McMullen
Chicago’s Magnificent Mile is an upscale stretch of the Windy City lined with some of the most expensive real estate in town. Running 13 blocks along Michigan Avenue from the Chicago river to Oak Street in the Near North Side, the area is home to high-end condominiums and landmark buildings such as the Neo-Gothic Tribune Tower, the Wrigley Building, and the John Hancock Center.
Yet lately the upper end of the city’s property market has struggled, and home sales along Chicago’s most famous stretch have been anything but magnificent. Sales of condos have dipped this year, the drop being particularly acute at the higher end of Chicago’s real estate market. During the first three months of 2016, sales of properties priced at more than $1m fell 9 per cent compared with the same period in 2015, according to research from realtor Re/Max.
The trend is also apparent in data from real estate website Zillow, which show that prices in the top 10 per cent of the market fell 16.6 per cent during the 12 months to March 31.
…
‘hit by sellers rushing to cash in’
No pride of ownership? Won’t they have to shovel snow if they leave their condos? It’s cheaper than renting!
I guess the all-cash Chinese investors somehow overlooked Chicago.
‘CENTRAL ILLINOIS — The third quarter numbers for home sales in Peoria County are not great news. The county is down 10% from the third quarter of 2015, and 2% down for the year overall. The average price for a home also went down almost $6,000 to $145,066.’
“So, in regards to the median price coming down slightly, it has a huge impact from our luxury home market,” said Jana Heffron, President of the Peoria Area Association of Realtors. “The luxury home market here locally is anything priced about $500,000-plus, and in that price range, that is part of our market that has really slowed, especially this last quarter.”
Oh no, not the Peoria luxury market. Say it ain’t so!
In 1971 I spent a few days in Bellefonte PA, which is the town by State College. My old Chevy had a transmission failure on Rt 80. The garage sent me over to the old hotel in town for a cheap room. $3/night. Just a narrow bed and the shared bath was down the hall.
I imagine this place, and the gas station where they let me play pinball for free until dawn the first night, is long gone and replaced by some Luxury apartments.
Season ticket holders. Very funny.
Everybody’s talking about the good old days…
Wu-Tang Clan — Can It Be All So Simple (1993):
https://www.youtube.com/watch?v=XOlvVO8mna0
The future is dark and bleak, and it’s only gonna get worse…
Tame Impala — Keep On Lying:
https://www.youtube.com/watch?v=0YGNdAQsI4o
All you breeders with kidz deserve everything you’ve created for them, which is nothing, just an empty shell of a hollowed out country, no future, just endless debt. All you old f*ckers stole my future from me, and I chose not to breed, and I owe your spawn nothing. Starve and die, starve and f*ing die.
I learned the most efficient way to push a tangle of wire back up into a box, and I can use that same technique to push more useless corpses down into a grave to fit more corpses in there, just let me know how many bodies the Hitlery needs to bury, LOLZ.
Bonus beats — Neil Young — Cowgirl In The Sand:
https://www.youtube.com/watch?v=3fAXl97-RFg
I’ve got kids, Goon. For their sake, I fight on, even though 95% of my fellow ‘Muricans have become zombies and vegetables.
“All you old f*ckers stole my future from me…”
Well it didn’t seem like it to me. I did my time in the salt mines to bring you up and your future did not end up in my pocket. I was perhaps a witless fool in this matter, but not a willful thief.
‘The future is dark and bleak’
Not if you pick up a few of these apartment units at fire sale prices.
Let me know if they ever do hit fire-sale prices…
I will. I’m about to start a long delayed Texas tour looking at just that complete with videos. Should be interesting.
“A rigged system, a rigged system” — The Donald, 10/21/2016
Ben Jones he can’t deliver any of this, realistically. But who else even talks about this? Globalist pigs who do not recognize American economic sovereignty, I want to see your throats slit and your heads hung on the fenceposts of the “deplorabales” you detest and have left behind.
Cleveland, Akron, Canton, Youngstown, Sandusky, Lorain, Toledo, Mansfield, when you see a PIG from New York City or Washington, cut that pig’s throat, and stomp on its head until that filthy pig dies.
They have NOTHING to offer you, so let’s put these globalist pigs in their graves, where we can p*ss on them, and their children, before we toss a match on them and sing as they burn.
Goodbye pigs. Goodbye piggy piggy pig pig…
“…and their children…”
Wipe their seed from the earth?
At first glance I thought Goon stole these lines from a Louis Armstrong song.
“All you old f*ckers stole my future from me, and I chose not to breed, and I owe your spawn nothing. Starve and die, starve and f*ing die.”
But when I checked I found out I was mistaken.
I see skies of blue and clouds of white
The bright blessed day, the dark sacred night
And I think to myself what a wonderful world
The colors of the rainbow so pretty in the sky
Are also on the faces of people going by
I see friends shaking hands saying how do you do
They’re really saying I love you
I hear babies crying, I watch them grow
They’ll learn much more than I’ll never know
And I think to myself what a wonderful world
Yes I think to myself what a wonderful world
Read more: Louis Armstrong - What A Wonderful World Lyrics | MetroLyrics
Nice, phony!
Louis Armstrong - West End Blues 1928
https://www.youtube.com/watch?v=W232OsTAMo8
“All you old f*ckers stole my future from me,…”
Looking for free sh!t in all the wrong places…
Neil Young — Old Man
“The future is dark and bleak, and it’s only gonna get worse…”
You could have been a 1960’s U.C. Berkeley student, Sproul Plaza activist although roughly the same thing happened regarding the Middle East more recently. History repeating itself.
My grandma used to say stuff like that, interlaced with fond remembrances of the halcyon days of her youth. Later, after we took Grandma home, my mom wryly noted how Grandma selectively forgot about her brother who got run over by a cab after drinking too much, or the two World Wars and the Great Depression that played out in the first half of Grandma’s life…
“My grandma used to say stuff like that,”
What was the U.S. Debt when she used to say it?
http://www.usdebtclock.org/
Other than that, Mrs. Lincoln, how did you enjoy the play?
“What was the U.S. debt…”
Not to worry, as the debt is denominated in ever-inflating U.S. dollars.
Fundamental transformation comes to the UK.
http://www.telegraph.co.uk/news/2016/10/21/police-uncover-london-underground-bomb-plot-teenager-arrested-an/
http://www.dailymail.co.uk/news/article-3860790/The-thing-ask-razor-s-dead-giveaway-Couple-fostered-child-refugees-warn-UK-exploited-grown-men-masquerading-youngsters.html
Correct The Record gets paid to post here.
They get paid.
Paid paid paid paid paid. To sit at a desk, in their mom’s basement, clicking a mouse, and typing on a keyboard, while the rest of America works.
Paid paid paid paid paid paid paid. Sunlight has not touched their skin in months. But f* it, they’re getting paid. And getting paid to post right here on the HBB.
Know when you’re reading a sponsored content post. Because it reads exactly like the same one you just read on Facebook, Twitter, Reddit, et cetera. And no different from the sponsored narrative as provided by the New York Times and Washington Post.
Real journalists are the house slaves up on the porch sipping mint juleps with the plantation boss watching the black slaves get whipped for not working fast enough and babbling about “social justice” f*ing hypocrites, LOLZ.
hey apt 401
your neighbors 400 & 402 would like you to turn the effin volume down.
301 is ordering a pizza delivery laced w/sominex so you will stop PACING THE DAMN FLOOR ALL NIGHT !!
that will be all
All civility has now been flushed down the drain…Its always been out there, with Rush and others but it was basically the choir that was listening…A choir I might add that is losing its congregation in each passing year…
Now, the rancor and poison has been brought to the national stage via Trump…Civility will ultimately prevail but the attrition will take a long time..
You do realize Clinton just got caught paying people to start fights at Trump rallies?
She seems pretty adept at starting fights in debates, too.
to start fights at Trump rallies ??
Showing up starts a fight at a Trump rally…Just a gigantic Hate fest…No policy and no substance…Just Anger…Stage a rally, Take away Trump and insert Kasich…No body would show up…
scdave
Sounds like you have been hanging out with Sheila Jackson Lee and reading up on those Wikipedia Leaks.
Dem Rep. Sheila Jackson Lee Denounces ‘Wikipedia’ for Publishing Leaked Emails!
“I’m going to first of all denounce the utilization of this intrusion by Wikipedia through the Russian intrusion.”
Chris Menahan
InformationLiberation
Oct. 21, 2016
As Breitbart reports:
Friday on MSNBC when asked about the thousands of emails released by WikiLeaks from a hack of Democratic presidential nominee Hillary Clinton’s campaign chairman John Podesta, Rep. Shelia Jackson Lee (D-TX) mistakenly denounced the free online encyclopedia, Wikipedia, instead of WikiLeaks.
informationliberation.com · 15 hours ago
“No body would show up…”
And trying to start fights would be a waste of Soros money.
As Breitbart reports ??
A Putin Ally…Rubio at least got it right…Next could be you or your family…
The revelation of information is not whats critical here…Abetting these acts as an American is truly disgusting…Not denouncing and in fact encouraging these acts as a American presidential candidate is borders treasonous…Add to this denouncing of our election process as rigged is disqualifying…If ever a wave election were needed, it is right now…
Dem Operative Who Oversaw Trump Rally Agitators Visited White House 342 Times
Donald Trump rallies
political violence
Project Veritas
Peter Hasson, Daily Caller
Robert Creamer, who acted as a middle man between the Clinton campaign, the Democratic National Committee and “protesters” who tried — and succeeded — to provoke violence at Trump rallies met with President Obama 47 times, according to White House records. Creamer’s last visit was in June 2016.
http://dailycaller.com/2016/10/18/exposed-dem-operative-who-oversaw-trump-rally-agitators-visited-white-house-342-times/
https://www.youtube.com/watch?v=xT2OTKIWfB0
So it’s Obama, not Clinton, who is behind the agitation, at least according to your sources?
No the Democrats on the video explained it all very clearly. Clinton’s campaign paid the DNC, the DNC paid these guys to start fights among other things. That the man running it all met at the white house so often is just another puzzle. It’s all pretty crazy if you ask me. I don’t remember a presidential campaign ever doing such a thing. It’s gotta be against the law. And then there’s the followup video where they describe in-depth taking illegal aliens across state lines to vote.
I don’t remember a presidential campaign where one of the candidates suggested he would only accept the legitimacy of the outcome if he wins. It has definitely been an unusual election season!
Watch those Project Veritas videos and you would know why.
Gold…$2000 to $4000 the next five years
https://www.thestreet.com/video/13862964/is-gold-s-real-value-2-000-an-ounce.html?puc=yahoov&cm_ven=YAHOOV&yptr=yahoo&ref=yfp
Looks like you’re going to need more oatmeal.
China House Price Bubble Soars Most Ever, Government Freaks out, Preannounces Plunge
by Wolf Richter • October 21, 2016 •
http://wolfstreet.com/2016/10/21/china-house-price-bubble-soars-most-ever-in-september-government-preannounces-october-plunge/
“Preannounces Plunge”
That’s a new one… they’re catching on!
is there more risk to the uspside or to the downside?
It depends on whether you buy high or buy low.
Downside risk would seem to be mitigated by the Fed’s fire brigade. However, Mr Market is clever enough to factor in the value of free insurance. So you end up with frothy prices that factor in the implicit value of the free insurance, but still face downside risk.
Relative to houses and stocks, precious metals are undervalued. If you need cash, realize gains on your long term winners. And overkill it so that you can shift excess realized gains into undervalued assets. I’ve used this strategy with metals in 2010 and sold a bunch to pay expenses and shift into cash to pay for my big conversion to Roth IRA. I’ve used it on my former company stock. Two years ago. I used it on mining stocks this year.
Pick any international stock mutual fund and see its profile. Morningstar rates them 3 stars or less. Long term (10 year) annual returns underperform the U.S. large caps, small caps, midcaps. Emerging internationals are all dismal looking.
But the market is cyclical. You don’t buy more of something that’s been going up so long. You buy more of what’s been beaten. Gold has been bested since 2012. Same deal.
I would back up the ol Japanese hatchback and load up physical precious metals. The prices look bottomed a year ago and are tepid for now, all year there have been good buys. I think mining stocks will rally in six months.
As for oil, I am waiting for Hess to get low again, I chickened out a year ago and sold some Hess I bought at a bargain. NORW looks good enough in the market cycles so I loaded up on over 400 shares.
Agree with you on the PMs, Bill, not so much on the Hess. I sold early on the Hess I picked up at the firesale, but will not buy it back (or FCX, which I picked up at the same time and also unloaded) unless there’s a major market-wide dump.
Physical platinum seems like a screaming good buy. 10X more rare than gold, harder to refine, with much higher and growing industrial usage, and the main sources of supply being Russia and South Africa - both iffy from a long-term reliability standpoint.
Good luck!
Gettysburg
Amen, brothah!
I don’t get it. Supposedly 60% of ‘Muricans fear goverment corruption above all else, yet at least half of these yahoos will shamble into a voting booth in November and mark vote for “Ds” - despite Wikileaks laying bare the systemic, institutional corruption exemplified by the DNC and its candidates - while others will vote for Establishment GOP RINO scum who are just as on the make and on the take as their Democrat counterparts. Then the stoopids will whinge about corruption in high places.
The stupid, it burns.
http://www.zerohedge.com/news/2016-10-21/over-60-americans-fear-corruption-government-officials-above-anything-else
No one is fooled by Hillary’s disingenuous assurances about her support for the Second Amendment. All forms of socialism and kleptocracy are based on coercively taking from the productive to “redistribute the wealth” to the social parasites and n’er-do-wells who form the DNC’s all-important dependency voting blocs. Armed citizens prepared to defend what’s theirs’ or resist government tyranny will be a serious bulward to Hillary and her collectivist comrades as they attempt to implement their radical agendas.
http://www.washingtonexaminer.com/guns-sales-double-in-run-up-to-election-in-uncharted-territory/article/2605126
I love the thought of how the DNC and their pet media must be cringing at each new Wikileaks drop. The latest dump provides more evidence, as if more were needed, of the close, collobarative ties between the DNC and its MSM adjuncts and syncophants. Yeah, I’m sure all these “real journalists” would do their Fourth Estate duty and expose any wrongdoing in the DNC or its deeply corrupt and venal candidates.
http://www.zerohedge.com/news/2016-10-22/wikileaks-releases-part-15-podesta-files-bringing-total-26095-emails
Chinese home prices surge most on record despite lackluster government attempts to cool runaway speculation.
http://www.zerohedge.com/news/2016-10-22/chinese-home-prices-surge-most-record-ignore-cooling-measures
The Comrades of Proven Worth, once they have seized the levers of power and turned a formerly prosperous sovereign nation into their collectivist kleptocracy and looting plantation, will laugh at the attempts of the proles to use the “democratic process” to bring about regime change. Forward!
http://www.usnews.com/news/world/articles/2016-10-22/venezuela-braces-for-turbulence-after-recall-is-stalled
Brave Wallonia stands up to the globalists and banksters.
http://wolfstreet.com/2016/10/22/wallonia-belgium-trips-up-global-corporatocracy-ceta-eu-canada/
http://www.9news.com/entertainment/television/programs/next-with-kyle-clark/a-550000-home-raffle-ends-with-an-unfortunate-fortune/339329223
Are you stuck in assets that have a one-way ticket down from here?
Here’s what to do when rising rates hit the stocks acting like bonds
By Anora Mahmudova
Published: Oct 21, 2016 1:44 p.m. ET
10-year Treasury yields started their climb in July — not great news for bond-proxy stocks
Getty Images
Marilyn Monroe look-alikes audition to be the body double of the Hollywood legend’s wax likeness at Madame Tussauds. In the hunt for yield, low-volatility stocks have been stand-ins for bonds.
If the bottom is in for yields, stocks that stand in as proxies for bonds are in for a rough ride, according to one analyst.
The turning point for the most-beloved stocks of 2016 — such as low-volatility, high-dividend yield bearers or really anything with “bond-like” characteristics — was on July 8. That’s the day the 10-year U.S. Treasury yield bottomed at 1.36% and has been on the rise since.
Over the third quarter, the S&P 500 utilities sector fell 6.7% compared with a 3.3% gain for the broader S&P 500 index, according to FactSet. Meanwhile, the yield on 10-year Treasurys rose about 40 basis points to 1.75%. The inverse correlation of rate-sensitive stocks with 10-year yields is striking.
…
Maybe this is too completely obvious to mention, but bonds and houses also act like bonds and are destined to tank when rates revert to historic norms.
“…the yield on 10-year Treasurys rose about 40 basis points to 1.75%.”
A little back-of-the-envelope math suggests that folks who owned 10-year Treasurys during this 40 basis point rate increase have only lost about 2% so far. However, if yields merely increase to the recent and relatively modest 3.5% level, 10% cumulative losses off the 1.75% yield floor would result.
And remember, the asset valuation properties of houses backed by 30-year mortgages are very similar to those of long-term bonds.
One carries a bond in their pocket and, according to Thoreau, one carries a house upon their back.
Those of you who are sure that Trump is our next president and Hillarious is unelectable are staring at a great opportunity to make bank in the betting markets on the inevitable Trump victory. Apparently the gambling community has it all wrong!
USA Presidential Election: 2016 Odds
OddsShark Staff | Thu. Oct 20 2016, 11:40 am
…
Following the final debate, Clinton’s odds have increased from -500 before the debate while Trump’s number has dropped slightly from +350.
Next President of the United States of America
Odds as of October 20 at Bovada
Hillary Clinton -550
Donald Trump +375
Other +3000
…