Supply Is Becoming Conspicuous In Its Abundance
A paper written by Danielle DiMartino Booth
titled, ‘Commercial Real Estate: From Towers of Gold to Pillars of Salt.’ “Today’s investors in commercial real estate (CRE) can be forgiven if they’ve got the urge of late to go soft on the sector. Fine, so the current CRE cycle is long in the tooth. The same could be said for the length of the rally in just about every other asset class and for that matter the current economic expansion. What differentiates CRE from other asset classes is that it’s been hyper-driven by monetary policy gone wild. Flows into both U.S. commercial and high end residential real estate reflect the currency tug of war that started over three years ago.”
“Though few real estate consultancies are foolish enough to bite the hand that feeds them, there is a nascent acknowledgement that supply is becoming conspicuous in its abundance. Take a drive through anywhere in suburbia and you’ll conclude quickly enough that retail is the next major source of loans behaving badly. Retail is a subject in and of itself. Rather than take a deep dive, take it on faith that there’s no way all of the excess supply can be absorbed and repurposed.”
“Less visible to the naked eye is the trouble brewing in office space. Be that as it may, the numbers don’t lie. Commercial mortgage-backed securities (CMBS) comprise a mere tenth of CRE debt. Still, they provide an ideal prism into the health of the overall market given they are publicly traded; performance metrics are readily available. With that said, the most recent batch of data reveal that office delinquencies have been ticking up since midyear. Moreover, at $5.1 billion, the balance of delinquent office CMBS is second in size only to retail, which is saddled with a $5.9 billion pool of debt gone bad.”
“Private equity is sitting on a $230 billion mountain of dry powder, as in funds earmarked to buy up real estate. That’s up from $210 billion at the end of 2015 and a mere $156 billion four years ago due in large part to pensions chasing returns. Meanwhile, it looks like CMBS issuance will rise to $65 billion next year pushing up the sector’s market share to 15 percent. And don’t count out insurance companies. Some analysts predict their market share could double or more from 2016’s 13-percent base.”
“Not every tower, you see, maintains its golden allure forever. Real estate developers are the first to say they must be optimists to succeed in their chosen line of work. That said, many developers have gone down in flames, denying that the party has ended. Like Lot’s wife, they refuse to relinquish the past. They too look back, destroying what riches they had built, turning them into pillars of salt.”
From Bloomberg. “Manhattan apartment landlords are offering potential tenants more perks to avoid cutting rents further in a softening market. Incentives, such as a month’s free rent or payment of broker fees, were given on 25 percent of new leases last month, up from 14 percent a year earlier, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. It was the biggest share for any month since the firms began tracking the data six years ago, topping the record of 24 percent set in October. Landlords also gave discounts averaging 3.8 percent off their asking rents, compared with 3.2 percent in November 2015.”
“‘The effort to keep the appearance of rents being at a higher level than they actually are is taking more and more work,’ Jonathan Miller, president of Miller Samuel, said in an interview. ‘The public face of the rental market is different than what’s under the hood.’”
“At the end of November, there were 7,283 rental apartments on the market in Manhattan, a 25 percent jump from a year earlier, according to the firms. The annual growth in listings has topped 20 percent every month this year since March.”
From Bisnow. “If the country’s premier real estate market slumps, it makes everyone nervous. And there’s no getting around it, NYC is hugely in the red for office absorption in 2016. The data in CBRE and Colliers Internationals’ recent Manhattan office market snapshots is accurate, of course (the firms are some of the best in the biz), but some of the figures are pretty eye-popping. CBRE’s reporting that a negative 693k SF absorption in November brought year-to-date net absorption to negative 4.3M SF.”
“But what about the substantial drops in leasing activity? Year-to-date leasing activity, CBRE’s report reads, dropped 15% in Midtown, 25% in Midtown South and 23% in Downtown. CBRE analyst team lead Michael Slattery says the decline may seem steep, but only when compared to 2015, which had an unprecedented amount of activity.”
“What about reports of increased concessions from office landlords? ‘I take exception with people acting like concessions [are] rising all of a sudden,’ says Colliers International executive director Craig Caggiano. ‘They’ve been steadily increasing since 2008, when average rental abatements were four months. Today, on average, tenants can expect 8.7 months.’”
“He also points to New York’s unemployment rate, which was 5.6% in October, 30 bps below the 5.9% recorded in August 2008, just before the Lehman Brothers’ collapse.”
From Crain’s New York. “A year and a half after the owner of a Sutton Place development site allegedly turned down a sale offer that would have made him $45 million, Joseph Beninati now stands to lose the $4.3 million his firm invested in the project at a bankruptcy auction next Tuesday, federal court filings show.”
“Bauhouse Group began buying up a series of buildings along East 58th Street in the tony Manhattan enclave in early 2015, with plans to build a luxury condo tower. To do so, Beninati took out a series of high-interest loans from hard-money lender N. Richard Kalikow. But nearly a year later, a limited-liability company controlled by Bauhouse Group went into default and then filed for bankruptcy protection. And last month, an auction was scheduled to sell the site in an effort to pay back Kalikow’s firm, Gamma Real Estate, and a list of creditors that includes brokerages and law firms that worked on the project but were never compensated.”
“But selling the site for enough money to repay everyone—including Beninati and his firm, who are last in line—will be difficult. A real estate broker who will run the auction recently told The Wall Street Journal that he hoped the site will trade for north of $700 per square foot, which comes out to roughly $187 million. That is almost equal to what Gamma is owed in debt and interest for the main acquisition and building loan it floated for the project, meaning if a third party purchases the site next Tuesday, most of the proceeds would go to Gamma. Alternatively, Gamma could take control of the site by using some or all of the money it is owed to bid on the site itself.”
“Even if the assemblage goes for more than $700 per square foot, claims from creditors amount to millions more. And Gamma also lent the project $32 million in mezzanine financing, giving Beninati and Bauhouse only an outside chance to recoup their nearly $4.3 million investment—a striking fate because, according to testimony from Kalikow’s son, Beninati turned down an offer that would have made his firm tens of millions of dollars in the summer of 2015.”
I highly recommend reading the paper by Ms. Booth.
‘The average rental price of a one-bedroom unit dropped last month by five dollars, from $1,042 to $1,037, according to new data from ABODO.’
‘Among the major metro markets, Miami saw the greatest rent decrease, with the price of a one-bedroom falling dropping by 11percent to $1,569. Other markets showing rent declines were Minneapolis and Seattle (both registering a nine percent drop), Dallas (down seven percent) and Oakland (down six percent).’
There’s a graphic at the link with most up and down.
‘The U.S. Census Income and Poverty 2015 report was a positive one for the economy, with a 5.2 percent growth in median household incomes last year. But that doesn’t mean Americans have more spending money. Middle class households may be better positioned to cover their expenses, but they may not be increasing their spending on retail and recreation anyway, industry sources say.’
‘But even as incomes rise, sources say retailers should be wary of just how much discretionary income is actually swirling in the national pot. At the moment, whatever discretionary income the middle class does hold gets whittled away by inflated healthcare and rent prices. As a result, middle class households could still have less money to spend on retail and recreational activities.’
‘The fall of the middle class has been widely documented over the past few years. Although the Census Bureau doesn’t have a definition for middle class, Pew Research defines it as adults with household incomes at two thirds to double of the national median. By that definition, the middle class comprised 50 percent of U.S. adults in 2015. That figure is down from 61 percent in 1971, Pew notes.’
‘In 2015, 16.7 percent of the 125,000 households the U.S. Census Bureau surveyed fell into the $50,000-$74,999 income bracket.’
‘These are the types of households that are being squeezed by rising rents today, as the majority of new multifamily supply coming on the market consists of class-A apartment buildings. Data from the U.S. Census Bureau’s 2015 American Community Survey show that of 6.9 million U.S. renters who make $50,000 to $74,999 a year, 2.79 million pay 20 to 29 percent of their income on housing costs, while nearly 1.5 million pay 30 percent or more of their income on housing costs.’
“There has been no new class-B and class-C construction this year,” notes Byrne Denham. As of the third quarter of 2016, there were 10.59 million existing multifamily units available across the country. Of that figure, 4.7 million were class-A units, while class-B and class-C properties comprised the remaining 5.69 million units, Reis data shows.’
“What gets built today generally is class-A,” says Justin Tochtermann, research consultant with the CoStar Group. As of the third quarter of 2016, there were 410,326 class-A multifamily units under construction and 33,280 class-B and class-C units, according to CoStar data.’
“There is not significant new inventory or supply growth in workforce housing. I have seen supply actually decline in select markets where developers are purchasing this workforce housing and repositioning [it for] higher rents,” Chandan says.’
Dry cleaner effect?
“There has been no new class-B and class-C construction this year,”
Why should this year be unlike any other year? Class-C and Class-B are usually older properties that were the best in their markets when they were newly constructed, and drifted downward as age, deterioration, and changing dynamics took effect.
For as long as I can remember, newly constructed apartments have been aimed at the top of the market to command the premium rents and all other properties were priced at a market-induced discount to the top rent in the market. This is nothing new.
We’ve been over that and that’s debatable. The problem is this:
‘developers are purchasing this workforce housing and repositioning [it for] higher rents’
This is going on like crazy all over the country.
And it gets back to the dirt being wayyyyyy too expensive. Bubble land prices create massive market distortions. That 10 foot wide apartment building in Seattle is no better indicator. That thing should have NEVER been built.
developers are purchasing this workforce housing and repositioning [it for] higher rents’ ??
Spot on Ben….
‘I take exception with people acting like concessions [are] rising all of a sudden,’ says Colliers International executive director Craig Caggiano. ‘They’ve been steadily increasing since 2008, when average rental abatements were four months. Today, on average, tenants can expect 8.7 months.’
So the market is twice as weak as 2008.
‘At the end of November, there were 7,283 rental apartments on the market in Manhattan, a 25 percent jump from a year earlier, according to the firms. The annual growth in listings has topped 20 percent every month this year since March.’
Oh dear.
I won’t be at all surprised if our next housing crash is far more rapid and devastating than the 2007-08 episode. Where’s the support for the next round of bailouts, to make the all-cash Chinese and Canadian investors whole, going to originate? Team Trump?! I think not.
‘The public face of the rental market is different than what’s under the hood.’
The public face of pretty much everything in American is different than what’s under the hood these days. But don’t tell that to the posters who ’see’ prosperity.
It’s fiction Jerry! Pure fiction being peddled! We could make a fortune!
I haven’t been to NYC since 9/11, but it just seems to me, from what I read and see on line, it’s getting more and more repulsive by the day. And it’s not the only “international city” that’s getting hit by the ugly stick. I understand Paris is now pretty much a dung heap. Londonistan? Ugh. LA? We just went over that in the other thread. Rio? Blech. Beijing? Gag.
Anyone got a city they’d recommend? It could be anywhere in the world. The US cities seem to be taking a dump.
Maybe Montevideo. Or some of the Swiss cities.
I go to NYC every few months. The down trend in quality of life is very apparent.
Try Warsaw, Prague or Budapest.
Yep, heard good things about some of Eastern Europe. Western Europe, Scandinavia, RIP.
“Try Warsaw, Prague or Budapest.”
Lots of young curvy ladies, but they all smoke like a train.
That they do. It’s the one thing I didn’t like about Hungary.
Budapest seemed be going through long term restoration while I was there. It seemed in central Pest that every few blocks there was an 18th or 19th century building being restored.
Anyone who has a city to recommend should have the wisdom to keep it to themselves.
Your comment caused me a deep belly laugh; so true.
I hope you didn’t wet yourself.
I haven’t been to NYC since 9/11, but it just seems to me, from what I read and see on line, it’s getting more and more repulsive by the day.
The crime rate is much lower than it was in the 70s and 80s.
I understand Paris is now pretty much a dung heap.
It’s also having some serious air pollution issues, mostly because of the prevalence of diesel cars. Buses and the Metro are now free in Paris to help discourage people from driving. There are also plans in many European cities to ban diesel cars altogether.
Amazing how there has not been ONE STORY in the fake legacy media of getting money out of politics in this election….
—
Hillary Clinton’s losing campaign cost a record $1.2B
NY Post | Decemer 9, 2016 | Bob Fredericks
Hillary Clinton and her supporters spent a record $1.2 billion for her losing presidential campaign — twice as much as the winner, Donald Trump, according to the latest records.
The president-elect, who confounded critics during the campaign by saying there was no need to raise or spend $1 billion or more, ended up making do with $600 million.
and a big part of that was transportation costs imagine he was at 6 rallies in 6 states in one day….now that is super impressive
God bless DJT
And Hahahahahahahahahahahahahahaha
—-
Trump: I Tried To Buy Hillary’s Unused Victory Fireworks For Pennies On The Dollar
grabien.com | Dec 10, 2016
Donald Trump, speaking Friday night in Grand Rapids, Mich.:
When I heard they spent $7 million on the fireworks … we sent them a nice verbal statement. We will offer you five cents on the dollar for the fireworks … They never responded. I thought I could buy the fireworks cheap. Just like I do not want to buy an airplane for $4 billion.
Hilarious Donald Trump Compilation Collection
https://www.youtube.com/watch?v=ufetNHDHI1A
Hilarious Donald Trump MOMENTS Compilation
https://www.youtube.com/watch?v=AMLAdTVJsQc
Most Badass/Funny Donald Trump Moments - Can’t Stump The Trump Compilation #1
https://www.youtube.com/watch?v=MKG7CZfC0JQ
Russ used to talk about FAOM for Trump, but it would seem that two of the biggest tubbalards in the US, Michael Moore and Rosie O’Donnell, are firmly in the Hillary camp.
Michael Moore at least predicted Trump would win, and nailed the reasons why.
Someone is living rent free in Professor Butt Hurt’s skull.
Caught on video: Trump’s election was an ‘act of terrorism,’ says Orange Coast College instructor in class
Dec. 8, 2016 Updated Dec. 9, 2016 11:44 a.m.
COSTA MESA – In a video clip recorded by a student, a psychology instructor at Orange Coast College told her class that the election of Donald Trump was “an act of terrorism” – prompting an official complaint from the school’s Republican Club.
Olga Perez Stable Cox told students in her popular human sexuality class shortly after the election: “We have been assaulted.”
“One of the most frightening things for me, and most people in my life, is that the people who are leading the assault are among us,” said the instructor who is in her 30th year at the college. “It is not some stranger from some other country coming in and attacking our sense of what it means to be an American and the things that we stand for. And that makes it more painful. …
“We are way beyond Republicans and Democrats, and we’re really back to being (in) a civil war – and I don’t mean it in a fighting way, but our nation is divided as clearly as it was in Civil War times,” she told the students. “And my hope is that we will get some good leadership to help us to overcome that.”
http://www.ocregister.com/articles/college-737827-students-instructor.html
When you cram your prevented progressive agenda down the throat of America through EOs, court decisions and ignoring already passed laws on the books,
Instead of passing your own laws through the constitutional process…
YOU are the one dividing the nation.
“I have a phone and a pen.”
Now so does Donald Trump.
The freight train is coming…
You guys can’t get over your Trumphoria. The headache following the hangover after the drinking binge when it ends is gonna hurt like hell.
PS I don’t get the civil war cheerleading. Is your life really so terrible that you would prefer to see the country consumed by another civil war?
“Is your life really so terrible that you would prefer to see the country consumed by another civil war?”
Professor
You can’t seriously be worried about the Butt Hurt Social Justice Warrior Snowflakes actually starting a civil war can you?
https://www.youtube.com/watch?v=o8IvxDBVNMk
Unless “Civil War” means heading down to Starbucks and ordering a pumpkin spic latte while reading HuffPo and the Daily Kos.
“Unless “Civil War” means heading down to Starbucks and ordering a pumpkin spic latte while reading HuffPo and the Daily Kos.”
“The combat finale—a last stand or “Alamo” like the one in Saving Private Ryan”
https://www.youtube.com/watch?v=vKOb-kmOgpI
Gee, you must be forgetting about all of those violent criminals who are such an important part of the DNC base voters.
Gee, you must be forgetting about all of those violent criminals who are such an important part of the DNC base voters.
Criminals are cowards. They’re not going to start any sort of war.
This remark isn’t only about the OC professor, as I read posters here make similar civil war cheerleading comments.
Professor Bear
I don’t exactly know how to word this without making it sound smart@ss but I am going to try.
When I said ” Professor Butt Hurt’s skull” I was referring to Olga Perez Stable Cox the psychology instructor at Orange Coast College not you.
All joking and sparring aside I have too much respect for you to say that.
+1.
I enrage serfs.
Don’t be a DebtDonkey.
I didn’t take it personally. I am just a bit unnerved by how many commentators these days translate their personal political discontent into evidence that a new civil war is at hand.
Here on the HBB? Do you have any evidence for that? Any comments by specific posters that you can repost? I, personally, haven’t seen any.
Eh, never mind, I just read the comments by butters below. I forgot that he had mentioned civil war in the past. Guess I wasn’t taking it seriously.
There were people who wrote a lot about “go time” not so long ago. They discussed stockpiling guns and junk silver and so forth in preparation.
translate their personal political discontent into evidence that a new civil war is at hand ??
Or the spite for their fellow man…If you witnessed Trump and the people at the rallies you witnessed it first hand;
a desire to hurt, annoy, or offend someone.
“he’d think I was saying it out of spite”
synonyms: malice, malevolence, ill will, vindictiveness, vengefulness, revenge, malignity, evil intentions, animus, enmity; informalbitchiness, cattiness; literarymaleficence
“he said it out of spite”
You’re allowing the power of falling prices enrage you.
So you guys are saying Trump has saved us from a civil war.
If you cheer for low housing price or lower stwak price, is that bad too?
No one’s cheering for civil war, but many of us recognize that it’s a foregone conclusion and hope to profit from it.
Civil war? I got five bucks that says it won’t happen.
Another 5 that it won’t.
There is nothing more patriotic and pro-US than a bustling economy founded on thrift, affordability and sound personal and public(taxpayer) financial practice. Debt is weakness.
We are already 2banana republic. Civil is around the corner.
There will be plenty of whining and feet stamping by the butt hurt pantie waists, maybe a few on campus protests with skinny hipsters carrying “I’m a feminist” signs; but that’s as far as it will go.
A 2banana Republic would be awesome!
Hold….hold….
—-
Record High Lease Returns Set To Wreak Havoc On Used Car Prices
ZeroHedge.com - Dec 9, 2016
About a month ago we warned that declining used car prices could spell disaster for subprime auto securitizations (see “Slumping Used Car Prices Spell Disaster For Subprime Auto Securitizations”). While it’s always difficult to predict the exact timing of when bubbles will burst, a combination of record-high lease returns in 2017 and 2018, combined with rising interest rates could imply that the auto bubble is on the precipice.
As Bloomberg recently pointed out, strong used car pricing is a critical component required to prop up the overall auto market. While American’s love their brand new cars, if used car prices become too soft then substitution can hurt new car sales. Add to that the impact of falling residual values on the finance arms of the auto OEMs and you have all the ingredients required for an auto market meltdown.
Typically a lease lasts about three years, after which the customer returns to the showroom for another vehicle — which is when things could get difficult for the industry.
In 2017, about one million more off-lease vehicles will be available in the U.S. compared with 2015. That additional volume will put downward pressure on used car prices.
Of course, how we got here is fairly obvious. The majority of Americans buy cars based on one factor: monthly payment.
The miracle of modern finance has made this possible. Can you say “upside-down” and “rolled over into new 8 year loan?”
If the off-lease cars are returned, won’t those people need to buy a replacement vehicle?
I has the same thought. And this flood of end of lease returns, it’s hardly unexpected, that’s what people usually do at the end of a lease, they return it and lease a brand new one. That is the whole allure of a lease: lower (but never ending) payments and you’re always in a late model car that otherwise you couldn’t afford. I strongly suspect that most Audis, BMWs , Benzes and Lexus cars are leased.
Speaking of cars, I heard an ad on the radio. it was something about group buying Nissan Leafs. The ad claimed that you could get a 35K MSRP car for 11K, after discounts and tax credits. I looked at their website and the actual discount was about 10K, the rest were federal and state tax credits.
I don’t want a Leaf, as the 100 mile range pretty much makes it useless for me. But that sure is a lot of government subsidy for a foreign built car.
I’m starting to look for a new car as my 2004 ride recently turned over 130k miles. It’s well maintained and still runs great..
One site that caught my eye is Carvana as it looks like they acquire the cream of the crop of lease returns for resale.
Any prognostications from the HBB gallery as to when the resale market for used cars will bottom?
My strategy is to pick up a 2 or 3 year old car with less than 20k miles on it and then drive it for 10 years.
You’re only half way to the end of its service life. Are you just tired of it?
I don’t even like new vehicles anymore. It’s too stressful to try to protect them while other drivers throw their doors into them, etc. I’m now interested in seeing how many miles I can log on my older ones until they’re literally ready for the scrap yard.
Most new cars are way too gadgety for my taste. Just more expensive stuff to act up and break. Then there is the trend of replacing standard user interfaces with non intuitive ones. I am reminded of a story I read about how a guy with a late model Audi had to show the valet parking guy on how to operate the automatic transmission, as the poor guy couldn’t figure out how to put it in drive.
Then there is this new trend of replacing V6’s with tiny 4’s with turbochargers. Turbos break and they are expensive to replace (nevermind the turbo lag). I will never buy a car again with a turbo. The only one I ever owned had the turbo break just weeks before the warranty expired. I leaned at the dealership that had that happened a few weeks later I would have been out over $3000.
“You’re only half way to the end of its service life. Are you just tired of it?”
I hope you’re right about it being halfway through its service life.
I still like the car, but I do wonder about maintenance items coming up with a fair amount of regularity as it further ages.
To answer your question, I’m partially tired of it as I’ve driven it for over 10 years and partially opportunistic as I see that we may be coming up on a really discounted market for late model cars coming off of 2 and 3 year leases.
Remember…… falling prices is a benefit to everyone.
I still like the car, but I do wonder about maintenance items coming up with a fair amount of regularity as it further ages.
I think Hondas and Toyotas are not as bullet proof as they once were. A guy at work traded in his 100K Corolla because things were starting to break.
The most satisfying Trump video eva…
https://youtu.be/YhjmOATje_U
Granby, CO Housing Prices Crater 11% YoY
http://www.zillow.com/granby-ct/home-values/
The bad news just keeps coming. It doesn’t appear that 2017 will be good for RE.
“Fine, so the current CRE cycle is long in the tooth. The same could be said for the length of the rally in just about every other asset class and for that matter the current economic expansion. What differentiates CRE from other asset classes is that it’s been hyper-driven by monetary policy gone wild. Flows into both U.S. commercial and high end residential real estate reflect the currency tug of war that started over three years ago.”
What about all those companies that borrowed dirt cheap to buy back their own stock to prop up the share price. Isn’t that another side effect of monetary policy on steroids?
WATCH The Biggest Media Meltdowns to Trump’s Win
https://www.youtube.com/watch?v=o8IvxDBVNMk
It’s a whitelash. Hehe.
Speaking of CRE, I had a gig last weekend out in Carlsbad. My son and I drove through an area called Bressi Ranch, a place whose name may ring bells in some posters’ minds from the last crash. Anyway, our GPS led us through a little CRE office complex area, and I will swear to it that there was a For Lease sign up in front of every driveway.
I have a question for the CRE experts who read here: How can you make money on property where you have to pay PITI, if you have no tenants paying rent to help cover your ownership costs?
Its called going broke fast.
I think there is a lot of subletting that goes on in commercial real estate.
I’ve seen place sit for years with no tenants.
Get ready for the Republican-sponsored pension cuts. I’m talking about your Social Security that you have paid near-15% payroll taxes into for your entire working lives.
Those of you who are enough may recall Ronald Reagan’s work with Alan Greenspan in the early-1980s to “permanently save” Social Security (i.e. cut benefits & raise payroll taxes). It’s deja vu all over again.
BUSINESS Michael Hiltzik
The GOP unveils a ‘permanent save’ for Social Security — with massive benefit cuts
During the campaign, Donald Trump pledged to protect Social Security from cutbacks. Will he keep his promise?
(Mary Altaffer / Associated Press)
Michael Hiltzik
Reporter
Amid all the hand-wringing over Republican plans to eviscerate Medicare and Medicaid and repeal the Affordable Care Act, it shouldn’t be overlooked that the GOP has the knives out for Social Security too.
The latest reminder comes from Rep. Sam Johnson, R-Tex., chairman of the Ways and Means Social Security subcommittee. Johnson on Thursday uncorked what he termed a “plan to permanently save Social Security.”
Followers of GOP habits won’t be surprised to learn that it achieves this goal entirely through benefit cuts, without a dime of new revenues such as higher payroll taxes on the wealthy. in fact, Johnson’s plan reduces the resources coming into the program by eliminating a key tax –another way that he absolves richer Americans of paying their fair share, while increasing the burdens of retirement for almost everyone else.
…
Given that it isn’t taking enough money in, other than cutting the payouts the only other options are:
A) Raise the payroll tax (not likely)
B) Hope that obesity epidemic continues to spiral out of control, thus reducing the number of years that beneficiaries collect payouts.
I’m betting on B.
http://www.npr.org/sections/health-shots/2016/12/08/504667607/life-expectancy-in-u-s-drops-for-first-time-in-decades-report-finds
I think that we are now just seeing the tip of the iceberg
Good bet.
Health
Life Expectancy in U.S. Declines Slightly, and Researchers Are Puzzled
Emergency room staff attempted to resuscitate a 52-year-old man in a New Jersey hospital in 2015.
Mark Makela for The New York Times
By KATIE ROGERS
December 8, 2016
American life expectancy is in decline for the first time since 1993, when H.I.V.-related deaths were at their peak. But this time, researchers can’t identify a single problem driving the drop, and are instead pointing to a number of factors, from heart disease to suicides, that have caused a greater number of deaths.
…
Emergency room staff attempted to resuscitate a 52-year-old man
Death at 52 is good, but 62 would be better. Get a lot of people to pay in for decades and then drop dead just before they become eligible for benefits.
I suppose that many of those people will collect SSDI before giving up the ghost, but it does seem that they will collect for far fewer years than a healthy person who retires in his 60’s.
I’ve wondered more than once if the reason nothing is being done about obesity is for this very reason.
“I’ve wondered more than once if the reason nothing is being done about obesity is for this very reason.”
It’s a personal choice. If people are going to treat their bodies that way, they should be allowed to. Me? I prefer to stay in shape.
How about:
Cracking down on massive fraud in the disability program.
Not letting in “refugees” that immediately go on social security.
please eviscerate
the 1950’s were good 1920 best
no fed programs
welfare cam from the state
people survived
My grandparents told me a little about their childhoods back in the 1920s. It was grim.
There are grim childhoods in every era. There’s the lucky sperm club, and there’s also the really unlucky sperm club.
I want my friends here to get rich flipping houses.
You might seek a date with Elizabeth Warren.
what can trump cut w/o congressional approval?
ZIRP, which bilks savers and the responsible out of hundreds of billions a year in interest income, is the Wall Street-Federal Reserve Looting Syndicates primary means to force “investers” into Wall Street’s rigged casino where they can be fleeced at will. Yellen the Felon would doubtless kept punting on an interest rate hike into perpetuity, pulling her “Lucy and the Football” routine each FOMC meeting while her flying monkeys jawbone incessantly about the next supposedly pending rate hike. But now the bond market may be forcing Yellen’s hand, and her chances of taking the thievery to the next level by imposing NIRP seem remote now.
http://wolfstreet.com/2016/12/10/government-bond-mortgage-carnage-enters-sixth-week/
Heckova job, central planners.
http://www.zerohedge.com/news/2016-12-09/65-atms-nonoperational-goldman-warns-india-returning-barter-system
I’m surprised that people there haven’t resorted to an alternative currency, like Uncle Buck or some middle eastern currency.
The MSM is trying to use the US Government to enforce its monopoly on news and information, aka The Narrative crafted by its oligarch owners and controllers.
https://libertyblitzkrieg.com/2016/12/09/the-mainstream-media-is-asking-for-a-government-bailout-via-censorship/
Lately Yellen the Felon as a hunted look, as if she knows tens of millions of Americans, not to mention Trump himself, are on to the Fed’s swindles against the 99%. How much longer will the Fed be able to maintain its “No Billionaire Left Behind” monetary policies?
http://www.marketwatch.com/story/fed-to-hike-interest-rates-next-week-while-ignoring-the-elephant-in-the-room-2016-12-09?mod=MW_story_top_stories
Crooked Hillary’s loss had nothing to do with her being an exemplar of the corrupt, crony capitalist status quo, her serial influence peddling, or her 30-year crime spree. It was all due to machinations by those evil Russkys…we Trump supporters were but putty in their hands.
https://www.washingtonpost.com/world/national-security/obama-orders-review-of-russian-hacking-during-presidential-campaign/2016/12/09/31d6b300-be2a-11e6-94ac-3d324840106c_story.html?utm_term=.7b8eb40f17f7
There is no problem with housing, politics, or life in general that stamping one’s little feet won’t solve.
‘The wave of easy credit and longer auto loans has left a record percentage of consumers trading in vehicles that are worth less than what the borrowers owe on their loans. In auto-finance parlance, these folks are underwater, or upside down. They already are affecting the market as automakers increase incentives and subprime lenders monitor their delinquency rates more closely.’
‘So far this year, a record 32 percent, or nearly one-third, of all vehicles offered for trade-ins at U.S. dealerships are in this category, according to research by Edmunds.com. When people with underwater vehicles go to buy a new vehicle, they must add the difference between their loan balance and the vehicle’s value to the price of the one they want to buy.’
‘For perspective, the lowest the underwater percentage has been was 13.9 percent in 2009, the depths of the recession when credit was tight. The previous high was 29.2 percent in 2006, about when the housing market was near its frothiest point.’
“There’s been a lot of water building behind this dam for some time because of higher transaction prices, lower down payments and long-term loans,” said Greg McBride, chief analyst with Bankrate.com, a consumer finance information service.
“It’s problematic for the consumer because there’s no foolproof way to eliminate his financial exposure,” McBride said. “If the car gets stolen, is totaled or you get new car envy while you’re upside down, then it’s a big problem.”
‘This is happening as the average selling price of a new vehicle is near a historic high of about $34,000. Some of that increase is driven by consumers’ preference for larger, fully equipped pickups, SUVs and crossovers.’
‘Already, especially in segments such as subcompact, compact and midsize cars, used car values are falling as a wave of 3-year-old models are returned by lessees. This increased supply is pushing down the price dealers are willing to pay for them at auctions.’
‘Credit agencies, such as Moody’s, Standard & Poor’s and Fitch, so far, have expressed mild concern about the trend. Their focus is on the $38 billion market for securities backed by auto loans. These are bundles of auto loans, similar to the tranches of mortgages that collapsed in the 2008 crash of the housing bubble.’
‘Fitch reported that 60-days-plus delinquencies on subprime auto loans rose to 5.05 percent in September, the second highest level since 2001, and 13.2 percent higher than a year earlier.’
“When you look at recessionary levels where unemployment was near 10 percent in 2009 and late 2008, we touched 5.04 percent,” said Hylton Heard, senior director at Fitch Ratings. “Today you’re pretty much at that peak.”
‘Incentive spending in early November rose to $3,886 per vehicle, up 15 percent from $3,374 from November 2015 and the second-highest level ever behind the record $3,939 set in September.’
“People’s monthly payments are being kept very low by low interest rates that most manufacturers are willing to subsidize,” said Ivan Drury, senior analyst at Edmunds.com. “But if we see those rates go up a bit, some of these people won’t be able to afford their cars.”
extend and pretend.
To keep prices ridiculously high they extend the loan length and lower the rate.
Grossly overpriced!
People are so d@m broke all they can do is make payments on cars and homes.
Don’t worry, banks who lend to deadbeats. Middle class taxpayers and the Fed have your backs.
‘For perspective, the lowest the underwater percentage has been was 13.9 percent in 2009, the depths of the recession when credit was tight. The previous high was 29.2 percent in 2006, about when the housing market was near its frothiest point.’
Sounds like it’s about time to lance the pustule again.
There will be another “guaranteed” junk bond issuance with a patriotic name and maybe a Super Bowl commercial with Dwayne Johnson in a new lifted four-door pickup truck pulling a huge trailer stacked with used vehicles to the scrap yard. Narrative.
Likely Narrative:= “Get America Rolling Again”
Why are people trading in so soon? Are their cars lemons? Or they just gotta have that new car with a built in hot spot or maybe they just want that new built in prostate massager?
‘This is happening as the average selling price of a new vehicle is near a historic high of about $34,000.
And you don’t even get that much car for the money. Most likely a smaller, 4 cylinder SUV that’s loaded with gadgets. Even so called “economy cars” are priced in the low 20’s.
Small wonder so many are leasing.
Oh dear. This could put a dent in my plans to list my 2009 Honda Pilot for $60,000.
http://www.zerohedge.com/news/2016-12-09/record-high-lease-returns-set-wreak-havoc-used-car-prices
“That said, many developers have gone down in flames, denying that the party has ended. Like Lot’s wife, they refuse to relinquish the past. They too look back, destroying what riches they had built, turning them into pillars of salt.”
Great Biblical reference there.
Translation: Dump your real estate investments today, and don’t look back.
Why do they insist that you pay higher prices? Free markets generally lead to lower prices.
Stock prices are back to the dot.com era valuations.
Why should I overpay?
What Florida bank leaders think about real estate lending
Tampa Bay Business Journal-Dec 8, 2016
… Associates survey say that condominiums and apartments have been overbuilt in some markets, and they single out multi-family lending as a top concern.
“Almost 60 percent of Florida bank managers and investors who took part in a Raymond James & Associates survey say that condominiums and apartments have been overbuilt in some markets, and they single out multifamily lending as a top concern. Twenty percent of the bankers said they were most concerned about construction loans from a credit perspective. Banks are wary of having too large a concentration of loans in a single segment — especially commercial real estate — for fear those loans will become difficult to collect in the event of an economic downturn.” (Jacksonville Business Journal)
http://nreionline.com/nrei-wire/10-must-reads-cre-industry-today-december-9-2016
Developer walks away from plans for new residential tower on …
Tampa Bay Business Journal-14 hours ago
… tower at 319 Bayshore Blvd., adjacent to 2Bayshore, a luxury apartment complex. … That building sold for a record-setting$303,814 per apartment shortly after …
Houston self-storage rents drop in November
Chron.com-19 hours ago
Average rents for self-storage units dropped by 0.7 percent across the U.S. in … Rents in Houston were down 2.8 percent in November compared with the …
‘A lack of housing supply and rising rents have fueled San Diego’s multifamily housing market, making it a great time to own or sell apartments. But an influx of new units downtown and rents reaching near capacity, could dampen the downtown submarket.’
‘Perhaps those who are benefitting the most in this market are recent buyers of Class B and C properties with 25 to 50 units who are renovating their properties and then charging higher rents.’
‘The rise in rents has driven transactions for Class C properties, according to Marcus & Millichap’s third quarter multifamily research market report. But cap rates have reached historic lows, making it challenging for buyers to find properties to renovate.’
‘Downtown, however, is in a class by itself. There are 3,000 units in the pipeline in downtown alone, far more than anywhere else in the county. And with rental rates pushing against renter affordability, most experts expect the market to slow in 2017.’
‘Changing demographics are driving the design of these new projects, which are highly amenitized to appeal to millennials, who may be willing to forego bigger units for properties that have spas, large gathering areas, kitchens, theaters and more.’
The last paragraph reads like it’s plagiarized directly from Aesop’s Fables.
DEPRESSING APARMENTS
Thank you, globalists!
http://www.breitbart.com/big-government/2016/12/07/somali-refugees-arriving-highest-rate-ever-first-two-months-fy-2017/
https://seattle.craigslist.org/search/apa
1 to 100 of 2500
https://seattle.craigslist.org/search/apa?query=1+month+free&availabilityMode=0
1 to 100 of 2001
https://seattle.craigslist.org/search/apa?query=2+months+free&availabilityMode=0
1 to 100 of 1502
mY hOUSE iS MY rEtIREMENT !
Stamp your feet Poet….. stamp your feet my friend.
The Keynesian fraudsters are stamping their little feet.
http://www.zerohedge.com/news/2016-12-10/krugmans-latest-twitter-meltdown-lays-out-democrats-next-steps
THE MORE CASH PEOPLE HAVE THE WEALTHIER THEY ARE.
With Yellen the Felon and the Keynesian fraudsters at the Fed hellbent on printing away all government and corporate debts and liabilities, I’d prefer physical precious metals and life’s essentials over FedBux any day.
u r addicted to fedbux!
‘Grand China Fund made its first foray into U.S. student housing with an investment in the development of a 166-unit, 464-bed student housing high rise, Aspen West Campus, at 1909 Rio Grande St. in Austin, near the University of Texas-Austin main campus. The fund partnered with Aspen Heights Partners on the 17-story development, which is also Aspen’s first project in Austin.’
‘Grand China Fund is a Beijing-based real estate private equity fund with about $1.5 billion in assets under management.’
‘Aspen West Campus, which is already under construction, will be located in the West Campus neighborhood of Austin, offering walkability and access to the immediately adjacent University of Texas. The units will range from efficiencies to five-bedroom floor plans, and the building will also feature a sixth-floor amenity terrace with a fitness center, game lounge, study lounge, and a pool area with grills.’
‘Inside A Tumultuous Week For The Dallas Police And Fire Pension System’
‘Mayor Mike Rawlings…“There was not transparency on the numbers. When I became mayor in 2011, about three months after that I realized that there was smoke coming out of that pension fund. I tried to get information and when I couldn’t get the information, when it took me years to get auditors in there to mark the investments correctly, I realized there was a problem.”
‘…On Moody’s report on the pension shortfalls: “If we’re second [in the country] to Chicago in this situation, we’re the worst governance in the nation [on the Police & Fire Pension Fund]. I don’t believe there’s a worse governance in the nation and I’ve been told this by pension experts. There’s no checks and balances, the police and fire get to vote in their own benefits, and the older officers get to vote in big benefits and leave the younger officers slim pickings.”
Lots of public labor union goons who aided and abetted generations of municipal patronage and graft rackets are going to find out that their patrons ripped them off, too. The stamping of little feet will be epic.
No jet skis, motorhomes or boats for their retirements.
No retirements for their retirements, once the full magnitude of pension fund shortcomings becomes evident.
Sorry, public labor union goons. You aren’t immune to the systemic corruption and crony capitalism you voted for and enabled. Now the cops will become even more complicit with the criminals, just like in Mexico.
Zackley - The Public Union Goons will come after our assets. See India right now. They are literally breaking down the front doors of citizens’ homes and confiscating everything in sight to fund the un-fundable. The Fascist Left/Communists - are panicking they will do whatever it takes to maintain power. When that time comes it will be a “RioAmericanInBrasil dystopian wet dream.”
seee IL for results
gov workers get paid-you get to work longer
I don’t believe there’s a worse governance in the nation and I’ve been told this by pension experts. There’s no checks and balances, the police and fire get to vote in their own benefits, and the older officers get to vote in big benefits and leave the younger officers slim pickings.”
Reminescent of the generational shafting the Boomers inflicted on younger generations.
But…but…Hollywood celebrities and the DNC tell us we don’t need guns.
https://www.gunsamerica.com/blog/gun-wielding-yoga-instructor-kills-two-four-home-invaders/?utm_source=email&utm_medium=20161209_FridayDigest_99&utm_campaign=/blog/gun-wielding-yoga-instructor-kills-two-four-home-invaders/
WIth Keynesian fraudsters running the Fed, is the dollar on borrowed time?
https://www.theburningplatform.com/2016/12/10/3-vital-things-to-know-before-next-weeks-anticipated-fed-rate-hike/
I don’t see big time supply in commercial real estate. There has been something of a boom in apartments, but it’s been driven by demand for housing in locations where decent stuff was in short supply.
What the money boom did is create a price bubble, re-inflating the cost of housing in many places and turbocharging it in others.
Shopping center development is nothing compared with what it was — mostly infill, urban, in understored areas. Internet retailing has a bigger impact on supply.
As for office, the development bubble was in the 1980s, and not since. What you had was a demand collapse due to companies cramming the serfs into less space. That may have run is course.
Where I live (San Diego), there is an unbelievable amount of empty and vacant commercial real estate everywhere. There are just so many signs that things are not well.