Sometimes Supply Gets Out In Front Of Demand
A report from MarketWatch. “Fresh data may confirm that the recent heyday for apartment construction is over. Fewer newly-constructed apartments are being rented out, according to figures released early in December by the Commerce Department. The ‘absorption rate’ — whether an apartment has been rented within three months of completion — was 58% in the second quarter of this year, down from 66% in the same period in 2015 — for a smaller pool of apartments. The National Association of Home Builders, crunching Commerce Department data, found that about 92% of all multi-family units were built-for-rent in the third quarter, much higher than the 80% share in the two decades before the housing boom took off.”
The Real Deal on New York. “In 2016, one of the biggest issues facing New York City’s residential market was the weakening demand for ultra-pricey properties. Next year, according to residential listings website StreetEasy, the biggest issue will be how that slowdown will adversely impact the rest of the market. ‘There’s a market correction coming in Manhattan,’ said StreetEasy economist Krishna Rao. ‘We’ve seen a lot of softness in the luxury market, and we’re going to see that trickle down.’”
“Landlords in Brooklyn and Manhattan have been dealing with stagnant rents throughout 2016. Brokers say it’s becoming harder to rent out the city’s most expensive pads. A recent report from Douglas Elliman found that just over 25 percent of all Manhattan residential leases signed in November included some form of concession.”
KUOW in Washington. “A new report predicts that rent increases in the Seattle area should slow down next year. The report was produced by Apartment Insights, a company that surveys the rental market. It finds that vacancy rates are increasing and that rents are dropping in the fourth quarter of this year. Peter Orser is the interim director of the University of Washington’s Runstad Center For Real Estate Studies: ‘Supply got out in front of jobs and immigration and that’s the way these things tend to go. Permits come in chunks. Buildings come in big increments, 50 or 100 units. Sometimes supply gets out in front of demand a little bit.’”
From Curbed San Francisco in California. “Like its competitors, rental site Zumper reported stagnation and gradual ebbing of rents in San Francisco all year long. Overall, the site recorded a 4.9 percent 2016 decline in rent prices. The biggest loser (loser in this case being a good thing): NoPa, where Zumper rents declined nine percent. Noe Valley dropped eight percent on the site, and even Nob Hill was down six. Zumper’s end of year heat map, showing the rise and fall of prices by neighborhood (again, a least as far as Zumper listings themselves go), only indicates activity, not prices themselves.”
“That means even ritzy ZIP codes in the likes of Pac Heights, the Marina, Russian Hill, Presidio Heights, Cow Hollow, and Hayes Valley ended the year down.”
From Curbed Washington, DC. “While Washington, D.C. having the sixth most expensive rents in the nation might not seem like something to be proud of, there is a silver lining; rents for one-bedroom units have dropped 3.2 percent overall in the past year, according to Zumper. Neighborhoods that dropped in price this year included the Radnor/Fort Myer Heights area, who decreased by 13 percent from this time last year, Eckington, who dropped by 10 percent year-over-year, and the Brentwood/Langdon area, which is now down nine percent from last year.”
The Mountain Xpress in North Carolina. “Third-quarter data released by two real estate research firms show an improving environment for Asheville metro area renters. After a late 2014 report showed a rental vacancy rate of less than 1 percent in Asheville and Buncombe County, local officials and renters have frequently described the area’s shortage of affordable housing as a crisis. Any easing of the rental market is likely to be received as welcome news — except perhaps by landlords.”
“In 2016, rent-price inflation slowed, and rental vacancy rates increased, according to Reis, a New York-based company. The Reis data for 2016 show a 6.8 percent vacancy rate during the second and third quarters and 7 percent for all of this year’s quarters.”
From Houston Culturemap in Texas. “The Houston rental market has been bonkers for a while, but there’s new proof that it’s finally starting to calm down. Online real estate investment management firm HomeUnion has identified the cities where rent growth has soared and sunk, and Houston ranks No. 6 among cities where rents have declined the most. Houston rents have fallen 2.8 percent, hovering now around $1,600 a month. El Paso has seen even greater declines: a 7.1 percent decrease year-over-year.”
‘where rent growth has soared and sunk’
And these numbers don’t include incentives, which can double or triple these % declines. It looks like the apartment bubble has popped.
New Canaan, CT Housing Prices Crater 9% YoY
http://www.zillow.com/new-canaan-ct/home-values/
“Silver Prices Cratering”
https://www.dailyfx.com/forex/technical/home/analysis/xag-usd/2016/12/15/Silver-Prices-Cratering-Finally-PRtech.html
Let me know when silver gets to $14
I will. Give it a couple days.
I’m loading up the truck at these prices. Platinum is an even better buy.
Don’t rush, pricing will get even better…
“That means even ritzy ZIP codes in the likes of Pac Heights, the Marina, Russian Hill, Presidio Heights, Cow Hollow, and Hayes Valley ended the year down.”
Is it different in San Diego? When will the rent decrease contagion spread here?
Currently, rent prices are already cheaper in San Diego than the bay area. But, I believe that prices went high there first and then San Diego followed, so as prices fall in the bay area, San Diego will eventually fall as well.
I think of San Diego as a lagging indicator!
And the PNW generally follows 12-18 months after the Bay Area…historically speaking, of course.
San Diego, lagging?? San Diego led the way in the last downturn.
Let’s look at the political angst over trade deficits. A trade deficit is when people in one country buy more from another country than the other country’s people buy from them. There cannot be a trade deficit in a true economic sense. Let’s examine this.
I buy more from my grocer than he buys from me. That means I have a trade deficit with my grocer. My grocer buys more from his wholesaler than his wholesaler buys from him. But there is really no trade imbalance, whether my grocer is down the street, in Canada or, God forbid, in China.
Here is what happens: When I purchase $100 worth of groceries, my goods account (groceries) rises, but my capital account (money) falls by $100. For my grocer, it is the opposite. His goods account falls by $100, but his capital account rises by $100. Looking at only the goods account, we would see trade deficits, but if we included the capital accounts, we would see a trade balance. That is true whether we are talking about domestic trade or we are talking about foreign trade.
Read more at http://www.wnd.com/2016/03/why-real-trade-deficits-dont-exist/#JMwehDbhwtZzfACh.99
By Walter E. Williams
‘Trump team floats tariffs’
Tariffs haven’t work since the 1800s
Same for protectionism
It’s worked great for China.
somewhere, trump has been getting good economic advice. he’s backing off his trillion dollar infrastructure spending. we should repair infrastructure, we just shouldn’t repair things that aren’t in need of repair. i suspect the nation could get by with spending less.
if he’s getting good advice on big spending, he might also be getting good advice on tariffs, and his stance might be tough just for negotiations. we’ll have to wait and see.
‘Trump extracts pledge from Boeing on Air Force One costs’
‘Trump met with Dennis Muilenburg of Boeing and Marillyn Hewson, chief executive of Lockheed Martin Corp - two defense companies he has made an example of since his Nov. 8 election, sending defense shares tumbling with his complaints about projects he said are too expensive.’
“Trying to get the costs down, costs. Primarily the (Lockheed Martin) F-35, we’re trying to get the cost down. It’s a program that’s very, very expensive,” Trump told reporters after meeting with the CEOs.’
‘Trump, who takes office on Jan. 20, has vowed to address government procurement costs as part of his industrial policy, which also includes taking a hard line on Chinese trade practices and renegotiating multilateral trade deals.’
‘Also on Wednesday, Trump named economist Peter Navarro, an economist who has urged a hard line on China, to head up his White House team on industrial policy.’
i don’t like the navarro pick. he doesn’t understand economics.
however, trump seems to learn fast. he might end up dumping navarro later on. mostly, trump seems to be making very good decisions.
i really like that trump is trying to get costs down. he hasn’t been bought by the defense contractor’s lobbyists. he hasn’t been corrupted so all he needs is good advice. i think he’ll get it, but it won’t be from navarro.
I like the Navarro pick.
Here’s an interesting thing about “economics”. Comes from the word “economy”. Here’s the derivation of the word “economy”:
“Origin and Etymology of economy
Middle French yconomie, from Medieval Latin oeconomia, from Greek oikonomia, from oikonomos household manager, from oikos house + nemein to manage —”
First law of “economics”: Make money
Second law: Spend less than you make
These days, economics is defined as:
a : a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services
b : economic theory, principles, or practices
Both Navarro and Krugman are “economists”. Social scientists, so to speak.
In a sense, they are just arguing where you should buy your eggs and why.
Both Navarro and Krugman are “economists”.
call ‘em whatever you want.
I took economics 101 in college. One day, the professor got up to the chalkboard and started applying some economic formula to a problem that had been presented by a student. He vigorously wrote all sorts of numbers and symbols on the board, proving it out and then all of a sudden stopped dead. Went back, started again, stopped dead. Looked at the class, said “Son of a b—-, it doesn’t always work that way!”, laughed, shrugged and erased the board and went back to the textbook.
“Trying to get the costs down, costs. Primarily the (Lockheed Martin) F-35, we’re trying to get the cost down. It’s a program that’s very, very expensive,” Trump told reporters after meeting with the CEOs.
Every other program pales in comparison. Incredible.
I think the most interesting part of econ/finance is the field of behavioral finance.
I remember taking a class that studied the CAPM pricing model in great detail (risk free rate, beta, blah, blah, blah). At the end of the class, the professor basically said…”well, that’s the theory…it doesn’t work in practice”.
I think principals of behavioral finance are more predictive than more rigid models than things like CAPM.
“I think the most interesting part of econ/finance is the field of behavioral finance.”
If credit is extended to Joe and Vanna Sixpack they’ll bite every time.
Behavioral finance 101: fools and their money are soon parted.
Behavioral finance 101: fools and their money are soon parted.
Behavioral finance 201: a fool and his money are some party.
If locals have to put up 35% you avoid bridges to nowhere
exactly. it wouldn’t even have to be as high as 35%.
Wait, are you saying that people pay more attention to things like what is being built, and what it costs when it is FOR them, and they foot a portion of the bill?
Shocking…
I had precisely this conversation with my dangerously left leaning MIL just recently, using the analogy of buying a present for someone.
Your money, your gift is the most efficient
Your money, someone else’s gift is second best (at least you aren’t over-spending, even if the gift isn’t perfect)
Someone else’s money, your gift is third best (you get what you want, but will almost certainly over-spend)
Someone else’s money, someone else’s gift is the worst (you over pay, AND the person is less likely to get what they want)
A big, central government is akin to the 4th option.
Money being spent locally is not perfect, but is getting closer to the ideal.
I think she was listening, but it will take years of such conversations to purge her brain of MSNBC–if it’s possible at all.
nicely laid out.
Drastic oversimplification of the problem at hand. Where does your capital account come from?! Getting paid for services, products, etc. If your side of the equation doesn’t produce any services, products, etc. in which to obtain capital you will have a trade deficit. Currently, consumers/companies/govts are using cheap debt to fill their capital accounts. When that cheap debt runs out, watch out below.
Excellent, dewd!
‘A Chinese auto glass tycoon has caused a stir by shifting part of his empire to the United States and setting up a factory in Ohio, citing high taxes and soaring labour costs at home.’
‘Cao Dewang’s $600-million investment comes after Donald Trump threatened to declare Beijing a currency manipulator and slap 45 percent punitive tariffs on Chinese imports to protect American jobs.’
‘The 70-year-old tycoon’s decision to open a glass factory in the eastern American state of Ohio in October — a rare case of jobs being exported from China to the US — triggered an outpouring of criticism on social media.’
‘The phrase “Cao Dewang has escaped” became a hot topic, generating nearly 10 million views on the Twitter-like Weibo microblog and many comments urging China to “not let Cao Dewang run away”.
‘Cao’s Fuyao Glass Industry Group — a supplier to big names including Volkswagen and General Motors — claims to be the biggest exporter of auto glass in the world, reporting 2.6 billion yuan ($370 million) profits last year.’
Oh Krugman, bring me some coffee!
I think it’s got more to do with shipping costs and location (and yes, potential tarrifs) than taxes. Otherwise, this guy could have raced to the bottom, to India or Bangladesh or Honduras or Mexico.
‘The phrase “Cao Dewang has escaped” became a hot topic, generating nearly 10 million views on the Twitter-like Weibo microblog and many comments urging China to “not let Cao Dewang run away”.
Dirty protectionists.
Sounds like envy.
‘The phrase “Cao Dewang has escaped” became a hot topic, generating nearly 10 million views on the Twitter-like Weibo microblog and many comments urging China to “not let Cao Dewang run away”.
Dirty protectionists.
Didn’t someone here say the other day that exports to the US are just a drop in the bucket for the rest of the world and that they don’t need us to buy their cr@p?
Drastic oversimplification of the problem at hand.
it doesn’t need to be made more complicated.
“If your side of the equation doesn’t produce any services, products, etc. in which to obtain capital you will have a trade deficit.”
as long as your side of the equation has value, nothing else needs to be taken into account.
“Currently, consumers/companies/govts are using cheap debt to fill their capital accounts.”
doesn’t matter when accounting for trade balances.
“When that cheap debt runs out, watch out below.”
so what? we’re talking about the disinformation about trade deficits.
A persistent negative trade balance means Americans as a group are falling deeper and deeper into debt to other countries. And future Americans will be poorer, and have to produce without consuming, as a result.
Most of the excess consumption was private (unlike Europe). But most of the foreign held debt is public, meaning we all will have pay — or lose federal old age benefits and suffer in old age.
Thank to Generation Greed.
A persistent negative trade balance means Americans as a group are falling deeper and deeper into debt to other countries.
care to explain?
In simple language: the Chinese, due to the trade deficit, end up with lots and lots of our dollars; they give them back to us in exchange for Treasuries; collectively, we have to pay an ever-increasing amount of interest on those.
the Chinese, due to the trade deficit, end up with lots and lots of our dollars;
and we end up with lots and lots of their goods. they’re of equal value.
if you want to believe the disinformation out there, go ahead. maybe you should contact williams and school him on his economics.
and we end up with lots and lots of their goods. they’re of equal value.
Maybe at the time of purchase. And even that’s debatable, as most of it winds up in the trash.
Maybe at the time of purchase. And even that’s debatable, as most of it winds up in the trash.
can’t argue with that logic.
you’re being intentionally obtuse.
Thought experiment: in a world where every job except barista and waiter are offshored outside the US or relegated to automation/robotics, where does Jon Q American obtain dollars with which to buy Chinese products? For the sake of simplicity, assume no one will loan us money any longer because we’ve defaulted on $30 trillion in treasuries.
in a world where every job except barista and waiter are offshored outside the US or relegated to automation/robotics,
can’t happen unless taxes and regs make it impossible to employ people. if fiscal policy made taxes 100%, NO ONE WOULD WORK!
if monetary policy made interest rates infinite, no one would borrow. but people would still WORK. it wouldn’t be a good environment, but it would be survivable.
our fiscal policy is nuts. we won’t get much growth at this level of government taxation. the more we tax, the weaker our economy will get.
it should be easy to see that fiscal policy is the most important to get right.
never fear though. we’re getting monetary policy wrong too.
“can’t happen unless taxes and regs make it impossible to employ people. if fiscal policy made taxes 100%, NO ONE WOULD WORK!”
So you don’t see a scenario whereby only service-oriented jobs remain? Automation of manufacturing would reduce 99% of workforce in all areas (cars, electronics, pharmaceuticals, agriculture, etc). Once labor costs exceed development and conversion costs to automation, the transition becomes inevitable.
Now you’re left with service jobs, but how long before those are outsourced or automated? How many call centers still exist providing phone numbers via 411? How many customer service call centers still exist in the US? Hell, development of AI is making journalists, stock-pickers, law and other such career choices a complete waste of time based on ROI in 20 years. Medicine is already too complex for humans, which is why medical errors continue to climb despite untold resources spent on “quality initiatives”, so chalk that up to AI eventually. What jobs are left?
Labor cost drives this equation. Talk of $15 minimum wage, etc drives this equation. People unwilling to work for less money because of entitlement and government incentives that prevent true price and labor discovery drive this equation. Gov’t tax rates and regs drive some of this, but the labor market is much more influential.
“if monetary policy made interest rates infinite, no one would borrow. but people would still WORK. it wouldn’t be a good environment, but it would be survivable.”
There’s a difference between people still WORKING, and BEING WILLLING to work. You’d have people willing to lend at infinite rates, but no one willing to borrow. There’d be no growth as firms would eschew capital expenditures as too expensive and not financially sound. Firms with any debt would immediately falter and go bankrupt due to cost to service debt. Unemployment, downward toilet bowl spiral. Barter system reinstated. People would be willing to work, but unable to find a job.
“our fiscal policy is nuts. we won’t get much growth at this level of government taxation. the more we tax, the weaker our economy will get.”
Agree completely with this sentiment. Question is how best to implement a system of lower taxation for both corporations and individuals. I prefer a flat income tax without any deductions/credits in conjunction with a balanced budget act that prevents govt ever spending more than it takes in under penalty of death, flat corporate tax without subsidies, and a flat sales tax (consuming more == paying more), but would be open to other options.
“never fear though. we’re getting monetary policy wrong too.”
Flaws in monetary policy will lead to our undoing. The only reason we enjoy our ability to run massive trade deficits is the world’s desire for our debt. They stupidly believe we can, or actually will, make good on it. The means of production no longer exist for us to repay $20trillion in debt, no matter how many decades into the future we project. Just like homeborrowers who woke up and walked away from a $600k mortgage on a $250k house, so too the US Govt will walk away. When countries sending us their excess capital wake up to this notion, the massive trade deficit we’ve been running will catch up with us. That’s my point; you cannot run an indefinite trade deficit, just like you cannot run an indefinite trade surplus (Japan).
“So you don’t see a scenario whereby only service-oriented jobs remain?”
so you see a scenario where people would work for free?
“Automation of manufacturing would reduce 99% of workforce in all areas (cars, electronics, pharmaceuticals, agriculture, etc).”
in a free market economy, automation creates more and better jobs than it destroys.
i don’t have the time or inclination to read the rest of your drivel.
“Looking at only the goods account, we would see trade deficits, but if we included the capital accounts, we would see a trade balance. That is true whether we are talking about domestic trade or we are talking about foreign trade.”
The whole point of trade deficit is that you’re comparing the goods accounts. You’re not supposed to include the capital account. After a year of trade deficit, you can say we received $X more in goods and they received $X more in currency. That’s it.
I think there are two concerns about being in a trade deficit. The first is that the other country is out performing yours in production. The second is that the other country has a growing capital account that could be used to buy your means of production, or maybe your houses.
“The first is that the other country is out performing yours in production.”
click on the link in the original post for more detail. williams describes how we prospered in the ’30s with every year but 1936 being a huge trade deficit. it was a decade of very large economic growth. we outperformed everyone with those huge faux trade deficits.
“The second is that the other country has a growing capital account that could be used to buy your means of production, or maybe your houses.”
you only sell things you own if you want to sell. there’s no harm here. there’s no harm to running ‘trade deficits’. as a matter of fact, growth seems to be even bigger with them.
no overall harm comes with trade. not even with faux trade ‘deficits’. no matter what’s done, businesses will come and go. they have to, or we’d never advance.
So you understand now that there are trade deficits, and what they are. Williams messed up the definition.
i understand that in the true sense there’s no such thing as trade deficits. i understand that it’s economic illiterates that spread the fear of something fake that so many don’t understand. i understand that it makes many so-called ‘economists’ concentrate on wrong things.
it’s the usual level of understanding. you fit right in.
You’re making too big of a deal of this. It just defines the difference in the value of goods in trade. I don’t understand why you and Williams choose to use a different definition than everyone else.
It just defines the difference in the value of goods in trade.
it’s not the same trade! it’s multiple trades that have nothing to do with each other. it’s like adding a bunch of plusses and minuses that equal zero and only counting the plusses.
it’s the same thing as running around believing you’re running a huge trade surplus with your grocer. it’s ridiculous.
As asked above, are you being deliberately obtuse? Of course it’s a bunch of different unrelated trades. You take the value of all the various goods leaving the country and compare it to the value of goods coming into the country. Unless they’re exactly the same, then there is a trade deficit. It is all about the flow of goods. This is only for nations, not you and your grocer.
If you can’t grasp this then you are worse than a below average student who has taken econ 101.
“It is all about the flow of goods.”
you dont’ have flow of goods without flow of capital.
“This is only for nations, not you and your grocer.”
wrong again. it’s the same thing. if you think not, explain the difference.
“If you can’t grasp this then you are worse than a below average student who has taken econ 101.”
sez the guy doing the magical thinking.
Go easy on our good friend Al.
“Trade deficit is an economic measure of a negative balance of trade in which a country’s imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets.”
http://www.investopedia.com/ask/answers/03/110603.asp
“If a country exports a greater value than it imports, it is called a trade surplus, positive balance, or a “favourable balance”, and conversely, if a country imports a greater value than it exports, it is called a trade deficit, negative balance, “unfavorable balance”, or, informally, a “trade gap”.”
https://en.wikipedia.org/wiki/Balance_of_trade
“Definition: A trade deficit is when the value of a country’s imports exceeds the value of its exports. That makes its balance of trade negative. It measures one aspect of international trade.”
https://www.thebalance.com/trade-deficit-definition-causes-effects-role-in-bop-3305898
Won’t quote this one because it’s more than a definition.
https://www.cato.org/publications/congressional-testimony/americas-misunderstood-trade-deficit
I’m not posting these for you tj, but for anyone who might mistakenly believe you are right.
you’re a genius. i never would have thought of checking wiki and investopedia for common, pedestrian definitions of ‘trade deficits’. definitions whose existence williams already acknowledged in the article i posted. definitions he proved false to most people with above average IQs. definitions he’s dealt with most of his life. yeah, your copy and pasting is really impressive.
thing is, i wasn’t posting for your benefit either. i’m just hoping to reach a few lurkers who might want to investigate further on their own (if williams wasn’t convincing enough).
in the meantime, you can continue to believe in unicorns for all i care. this has become a dead horse and no one is likely to be convinced by any further argument. besides i rather like the idea of guys like you believing in delusions.
Why am I bothering?
If you actually look at the definitions, they’re saying that:
Country A exports $10bn to Country B
Country B exports $8bn to Country A
Country B has a trade deficit of $2bn.
Country A has $2bn of Country B’s cash.
You and Williams are trying to say that there is no trade deficit because the cash and trade deficit are equal. They are equal, but the trade deficit is still there because that is how it is defined as per the links.
It’s like a messed up accountant saying that there are no debits because there are offsetting credits and equity.
If you want to say trade deficits don’t matter, as you did in your first response to me, go for it. But don’t throw out a false definition of trade deficits to prove they don’t exist.
They are equal, but the trade deficit is still there because that is how it is defined as per the links.
so if someone defined a unicorn, you’d say it’s real… because someone defined it.
Are you saying that if Country B sold $2bn less goods to Country A, that Country B didn’t sell $2bn less to Country A?
Why would you say an inch is as long as your forearm if everyone else is using a ruler?
The trade deficit is a very simple metric, and is well understood as my links show. Go ahead and argue whether it’s a valid metric. Go ahead and argue whether trade deficits matter. But don’t try to say a inch is not an inch.
“Are you saying that if Country B sold $2bn less goods to Country A, that Country B didn’t sell $2bn less to Country A?”
no, i’m saying that counting goods without counting capital, in terms of a trade, means NOTHING. you’re not calculating trade if you’re not accounting for both goods AND CAPITAL.
you want to count goods alone? fine, but don’t call it TRADE.
but tell you what. you carry on with your delusions. you keep believing that trade deficits are real. i love knowing it distorts any feeble understanding that you might have.
FWIW, the Roman empire also suffered greatly from trade deficits.
tj is right - so-called trade deficits are a non-issue
Mainstream economists have as much credibility as the mainstream media
“you want to count goods alone? fine, but don’t call it TRADE.”
Now you’re almost getting it. The goal is to count goods alone. That’s what everyone is interested in. That’s why the concepts of balance of trade, trade surplus and trade deficit exist. The metric was created because business people and government regulators want to measure the flow of goods. It’s fully understood that capital balances out the equation.
Since you don’t like the term trade, do you have an alternate that would make you more comfortable? I really don’t care what that word is, but the important part is to understand that there is a lot of interest in the flow of goods, and balance of whatever-you-want-to-call-it is used to measure it.
We’re getting more, they’re getting less.
What don’t you understand about that my friend?
“The second is that the other country has a growing capital account that could be used to buy your means of production, or maybe your houses.”
ED ZACHARY!
http://variety.com/2016/film/news/wanda-lawmakers-raise-questions-about-chinese-investment-in-hollywood-1201868250/
Not that I care all that much. But it’s interesting that lawmakers have their bloomers in a bunch about it. “No fair! That’s OUR propaganda factory, not yours.”
can we have a real economy without constant bubbles in stocks and homes?
only if you remove leverage from the equation.
“In 2016, one of the biggest issues facing New York City’s residential market was the weakening demand for ultra-pricey properties. Next year, according to residential listings website StreetEasy, the biggest issue will be how that slowdown will adversely impact the rest of the market.”
The big issue is affordability, and higher affordability is not an adverse impact. The big question is whether, in a densely developed place such as NYC, you can actually build enough housing to reduce the price. Or whether softness at the top of the market will stay there.
If it doesn’t that isn’t an adverse effect. It will mean that building fancy new housing for the rich frees up enough existing housing to help the rest.
For decades, NYC has not been a supply and demand market. It has been a demand and demand market. With higher demand the price soars until people give up on the city and move away as a recession hits. Then the price plunges because of a lack of demand, until young people realize they can move to NYC again. We’ll have to see if supply can have an impact.
frees up enough existing housing to help the rest
By “exiting housing” I assume you mean older Class B. Problem is, developers borrow Yellenbucks to update those Class B units with pergraniteel, throw in a studio for hot yoga, and charge Class A rents. The renovated Class As will always find a market because they are older and therefore occupy prime real estate near job centers. So no one is really helped.
Donk if that were true we wouldn’t be seeing these declining rental rates and record inventory.
we need another entity the FEd can sell some bonds too. A daisy chain of balance sheets.lmfao
Remember those mysterious bond buyers in the Caribbean a decade ago? Always wondered what was behind that. Probably just the shadow fed financing the ((neverending)) war in the mideast.
‘The ‘absorption rate’ — whether an apartment has been rented within three months of completion — was 58% in the second quarter of this year, down from 66% in the same period in 2015 — for a smaller pool of apartments. The National Association of Home Builders, crunching Commerce Department data, found that about 92% of all multi-family units were built-for-rent in the third quarter, much higher than the 80% share in the two decades before the housing boom took off.’
The media and this industry haven’t realized how badly they’ve overbuilt. At this stage, Chicago is building about twice their annual absorption. Phoenix is building 5 or 10 times what they usually do in a year. Places like Dallas are in uncharted water: they’ve never built anything near 50,000 apartments. All I read about is cranes, cranes everywhere!
Isn’t it interesting all of a sudden the media is picking up on it, all over the country. Right after the election.
american dream. depressing. apartment
Apartment at the right price, well managed = cash flow.
dow20k today!
party is on b@thcez
Napoleon could see the gates of Moscow. Then General Winter and the reinvigorated Russian Army showed up. And thus the epic, disastrous retreat began.
Batten down the hatches. Our Ponzi markets may have peaked. When Ponzis stop drawing in new marks, they collapse under the weight of their own fraud and artifice.
http://www.shtfplan.com/headline-news/few-are-prepped-for-a-stock-market-shock-collapse-is-coming-but-wall-street-has-blinders-on_12212016
Maybe landlords will give back some of those rent gains in excess of income gains. Who knows? Maybe Trump will take credit.
As long as we don’t socialize the losses, and run the buildings through Chapter 11 without deterioration, it’s a win for all but the investors.
With every asset overpriced, investors have a choice of things to lose money on.
I saw some value in oil awhile back and then it bounced too high for my blood.
Your right, most everything is way overpriced.
Seems there is a lot of risk of losing your principal rather than growing it.
Seems to be a lot of false hope out there.
‘One only need to look to the sky to confirm that construction in the Pacific Northwest is booming. A recent report by Rider, Levett, Bucknall, a global company specializing in project management, cost estimating and legal advisory, shows 58 cranes dotting the Seattle skyline.’
‘The Seattle Times dubbed the city “the crane capital of America,” noting that it had more cranes on the job than any other city in the country.’
“I couldn’t swear that was true,” said Steve Kelly, an RLB spokesman based in Seattle. “But I know we have a lot. We do a crane count every six months in all cities where we are present, and we seem to have more than the other cities. We counted 58 back in June and we’re actually setting up another count this week.”
‘The report notes that the demand for cranes in Seattle is up nearly 50-percent in a year’s time.’
“In general, there is a lot of apartment building going on right now. There is one that looks to have 45 floors above ground level. If you multiple that by 15 that gives you the height of the thing. I only know what I saw in the Seattle Times about the demand for cranes. It looked like they had chatted with someone from Skanska who suggested any project coming in you have to very quickly get in line for a crane.”
‘Taylor Mayfield Sr., owner and founder of Mayfield’s Hoisting Services, can confirm the demand is great.’
“There are jobs I am working on right now that aren’t going to start for eight to 10 months,” said Mayfield, whose firm is headquartered in Seattle. “I got what we call a letter of intent today on a project in greater Seattle and the crane doesn’t go up until May next year. Right now I’ve got contractual agreements for 16 projects in [the] greater Seattle area.”
‘South of Seattle in the neighboring state of Oregon, Portland also is experiencing a boom in construction. “We are in the process of expanding down to the Portland Metro area,” Mayfield said. “Portland is a lot more spread out as far as the geographical area. There is a lot going on in Portland, you bet.”
‘Crane counts have increased 40 percent in Chicago, with residential construction accounting for 60 percent of the work. Construction in New York City continues to be strong. The majority of cranes are being used for mixed-use projects, predominately residential towers with street-level retail.’
‘In Phoenix, crane counts doubled over a six month period, with prominent sectors including residential, education, industrial, hospitality and mixed-use.’
Dated today. Does this sound like an industry ready for a pull back?
And the piece that they are missing is that those who are most able to pay the high rents for the new “luxury” apartments likely have a very high overlap with people financially secure enough to start a family, buy a house, etc.
Unless of course they believe in the magic that no Millenials will ever get married, start a family, or buy a house.
what would be the ideal situation for yellen to unload a bunch of bonds from the balance sheet?
France’s election going the way of the US and Brexit (anti-globalist), raising prospects for a break-up of the EU, and a flood of capital to US Currency.
‘Britain’s Prince Charles warned against intolerance towards refugees fleeing religious persecution on Thursday, saying the rising tide of populism was reminiscent of the “dark days” of the 1930s.”We are now seeing the rise of many populist groups across the world that are increasingly aggressive towards those who adhere to a minority faith.”
‘In the run-up to Christmas he pointed to the idea that Jesus’ family had sought refuge from persecution, and said the Prophet Mohammed had also “migrated” from Mecca to Medina in search of religious freedom.’
‘Prince Charles, who will become the supreme governor of the Church of England when he succeeds his mother Queen Elizabeth II, often speaks out about the plight of Christian minorities in the Middle East. But he has long said he wants to be seen as a “Defender of Faiths” rather than the monarch’s official title of “Defender of the Faith”, to reflect Britain’s multicultural society.’
There’s a sidebar to the article above:
‘Prince Harry Rides Shotgun as Prince William Drives the Royal Family to Christmas Lunch at Granny’s’
He actually drove a car and the other goober RODE IN THE FRONT SEAT! Golly they are just regular people who care about Mohammed and such. And Granny! Oh she’s sweating away in the kitchen, making mash and bubbles and squeaks.
tabloids love these folks
I rather get the feeling that old Libby is on her last legs, hence the recent higher profile of members of the Royal Family. Prince Charles is champing at the bit.
The British royal family are a parasitic ananchronism. If he keeps lecturing the British people about the blessings of multiculturalism and diversity on their Island, they might just vote to end their centuries of support for this freeloading inbred clan.
The idea of a “Royal Family” is an absolute joke in this day and age.
”We are now seeing the rise of many populist groups across the world that are increasingly aggressive towards those who adhere to a minority faith.”
Minority faith? There are 1.6 billion Muslims in the world.
When those who “adhere to a minority faith” have a centuries-long track record of violent subjugation and mass slaughter of those of other faiths and sects, and draining our social services and internal security budgets dry, then yeah, we may not be thrilled to have them in our midst in their ever-growing numbers.
As long as they leave King David’s land it’s all good.
Peter Navarro as head of Trade is a pretty interesting Trump pick. Econ professor at UC Irvine. He ran for mayor of San Diego about 20 years ago, as a leftist democrat opposed to uncontrolled RE development who unfortunately couldnt get elected dog catcher in that town even though a future card carrying member of the vast right wing conspiracy like myself voted for him - I just saw that SD had a really good quality of life that made sense to preserve. We know how that turned out and I had to escape 10 years ago. Navarro called out the corruption in SD, nailed the dot com fraud and I think also called out the housing bubble iirc. Basically the anti-Krugman.
Yes, that is where quality of life enters into economics.
“Make money. Do it responsibly”.
Remember Chinese drywall? I know some people who had to leave their home while that stuff was mitigated.
In Florida, we have Big Sugar. Tallahassee decided to give Big Sugar its head. Business! Business! What’s good for Big Sugar is good for Florida. The result was stinking goo clogging up the waterways from Okeechobee to the Atlantic Beaches. All of a sudden, those waterfront homes were unsellable. Heck, they were unlivable unless you stayed inside in the AC. People couldn’t even go to the beach. Oh, wait, homes and tourism, maybe stinking goo is not so good for Florida, hmm.
‘Merkel Feels Hillary’s Pain as Web Trolls Bombard Her With Abuse’
“Hate posts and fake news affect the campaign,” Michael Fuchs, deputy parliamentary leader of Merkel’s Christian Democratic Union party, said in an e-mail. “We saw that in the U.S. and we have to do something about it.”
“The End”
Maybe she sat on a M&M and it melted? Wool will soak that right up.
Doodie!
https://www.youtube.com/watch?v=TPxiXGr9nFM
Sounds like Mutti is worried that Germans might finally be getting fed up with their acts of love. She might want to start wearing Depends, lest she end up like the Screecher.
Hehe… Empress and Commander.
How about another pool dance for a little pick-me-up Angela?
https://www.youtube.com/watch?v=sv-0XjrBVT0
Oh dear. SFH rental prices are dropping in the “hottest” markets. Something wicked this way comes…if you’re an FB.
http://wolfstreet.com/2016/12/21/even-single-family-rentals-sink-in-once-hot-markets/
Spanish banks are being forced by an EU court ruling to refund billions to FBs. That’s going to leave a mark.
http://wolfstreet.com/2016/12/21/european-court-of-justice-floor-clauses-against-spanish-banks/
Will Trump force the Fed to change its “No Billionaire Left Behind” monetary policies, and act to curb the oligarchy’s capture of the Republicrat duopoly and our institutions of governance? We’ll soon see.
http://charleshughsmith.blogspot.com/2016/12/why-massive-expansion-of-money-hasnt.html
Stay classy, Hillary supporters.
http://www.tmz.com/2016/12/22/ivanka-trump-flight/
‘Ivanka was on a JetBlue flight leaving JFK Thursday morning with her family when a passenger started screaming, “Your father is ruining the country.” The guy went on, “Why is she on our flight. She should be flying private.” The guy had his kid in his arms as he went on the tirade.’
‘A passenger on the flight tells TMZ Ivanka ignored the guy and tried distracting her kids with crayons.’
JetBlue personnel escorted the unruly passenger off the flight. As he was removed he screamed, “You’re kicking me off for expressing my opinion?!!”
‘7:48 AM PT — The husband of the unruly passenger tweeted an hour before the plane took off, “Ivanka and Jared at JFK T5, flying commercial. My husband chasing them down to harass them.”
The amoral, feckless scum who voted for Crooked Hillary despite her 30-year trail of scandals, influenece peddling, and corruption would have no qualms about harrassing a young mother and her three children while they’re traveling for the holidays (flying coach, the article notes).
so ignorant to stereotype all.
We have heard so much about Trump making racially/sexually driven violence OK, that we are losing sight of the effect of constant hyperbole shouted from the left-leaning MSM.
“Trump is ruining America”
“Trump is dangerous”
“The next 4 years are going to be scary”
All based on the principles of FUD (Fear, Uncertainty and Doubt), which is the basis for prejudice (pre-judging).
The left leaning media, as personified by these two a**hats is becoming every bit as poisonous to tolerance in America as (they claim) Fox News.
The election is over. Trump has 4 years to prove he is worthy of office. Get behind the man, leave the country, or express your displeasure of his leadership in the same way many have done with Obama. But you should be rooting for his success–because his success means peace and prosperity for America.
But publicly accosting his children in front of his grandchildren? Tasteless a**hattery.
Hillary never had to sneak into campaign events, or have events cancelled due to the threat of violence. Trump did.
Methinks the left doth protest too much.
I erroneously said “left” - more specifically I mean “Hillary supporters” who are of a variety of stripes.
It’s going to be hard for the nutters once they realize that screaming louder and louder will no longer get you what you want, and that they can’t get away with harassing people, especially on an airliner. Have they no common sense?
Wow, gay couples are usually, well, gayer than that. Not sure about Ivanka, but I wonder about Jared. He seems to be quite the ax-grinder.
Someone may be losing their gig at Hunter College.
Members of victim classes cannot possibly be guilty of persecuting or victimizing others. Why, that would stand The Narrative on its head.
http://www.mediaite.com/online/husband-of-jet-blue-passenger-tweeted-that-he-intended-to-harass-ivanka-trump/
When will the next systematic banking crisis begin?
http://www.caseyresearch.com/articles/why-a-full-blown-banking-crisis-is-inevitable
The Wall Street-Federal Reserve Looting Syndicate and their media border collies are trying to lure the last of the retail-investor bagholders into the rigged casino before Da Boyz cash in and head for the exits.
http://www.marketwatch.com/story/as-dow-20000-nears-pundit-says-markets-going-up-so-dont-play-it-safe-in-cash-2016-12-21
Bring on the 2017 crash and lower prices!
President-elect Donald Trump’s administration is considering imposing a 5% tariff on all imports into the United States.
Man hater -
Kellyanne Conway: I can manage White House job and being a mother because ‘I don’t play golf and I don’t have a mistress’
Managing the Trump White House will require some Den Mother qualities. I like this Kellyanne chick. I might even consent to being her mistress.
Judging from long history (long before Clinton), evidently it’s not too difficult to manage the White House while having a mistress.
rapidly_depreciating_houses
Darn, we fell for it: Corey Lewandowski Says ‘Drain The Swamp’ Is No Longer A Priority For Donald Trump.
Will tariffs increase the cost of a new Lexus?
Rent free for Christmas even.
rent free = “hey, leave my guy alone!
I thought it was Newt Gingrich who said that?
Here’s what the Don had to say:
Donald J. Trump @realDonaldTrump 2h2 hours ago
Someone incorrectly stated that the phrase “DRAIN THE SWAMP” was no longer being used by me. Actually, we will always be trying to DTS.
Goldman Sachs, Exxon, Perry…all from the swamp.
Now if Rock would have taken the job.
Do the 45 and shake it, natty!
https://www.youtube.com/watch?v=rqQz1MxRKX4
I loves me some good R & B. This guy must’ve got his inspiration from Junior Walker & the Allstars’ “Shotgun”.
Draining the swamp, huh?
https://www.bloomberg.com/news/articles/2016-12-22/goldman-is-back-on-top-in-the-trump-administration