skip to Main Content
thehousingbubble@gmail.com

If I Knew This Would Happen, I Wouldn’t Have Gone There

A report from Business in Vancouver in Canada. “Metro Vancouver’s sluggish residential real estate market has caused some developers to pull the plug on projects. ‘The market is totally in the dumps right now,’ said Holborn Group of Cos. CEO Joo Kim Tiah. ‘I don’t think people are aware or have a full grasp of what is going on. The B.C. economy is headed for tough times. The real estate economy is not going good.'”

From Mingtiandi on the UK. “The £1 billion ($1.2 billion) centrepiece of a scheme to regenerate London’s Greenwich Peninsula has been quietly dropped by the Hong Kong-based company set up seven years ago by billionaire property tycoon Henry Cheng to develop the £8.4 billion scheme.”

“Critics have accused Knight Dragon of ramping up prices in the development by targeting Asian property investors, with homes in the completed Upper Riverside project listed on JLL’s Hong Kong website at rates starting at £550,000. When challenged on the issue by CNBC last month, Knight Dragon’s chief executive officer, Richard Margree, was unable to quantify how many low-cost flats costing £300,000 or less had been sold and denied that the company was dragging its feet on the development due to the stagnant property market.”

From The Nation on Kenya. “It has been this way for some time now – property prices in Nairobi are way above the roof, a factor that has significantly slowed down the market. For the last three years, there has been a housing glut build-up, and ready developments are simply sitting idle with no takers.”

“In the peri-urban outskirts of Nairobi, in Kitengela, Athi-River and in Ngong area, high-end residential estates that took millions to put up stand empty and forlorn as developers that hoped to make a handsome profit sink in debt they are unable to pay.”

From Bloomberg on Ghana. “Isaac and Bless Boahen saved for months to fund her economics doctorate, but when the time came to cash in the investment, they were left empty handed. The couple are among at least 70,000 investors who have become collateral damage from a cleanup of Ghana’s banking industry.”

“The crackdown, which reduced the number of lenders by a third and saw the closure of 23 savings and loans companies, also triggered a run on fund managers, who couldn’t sell their holdings fast enough to meet demand. ‘My wife was very disturbed,’ the 36-year-old said by phone from Kumasi in Ghana’s Ashanti Region. They’re not getting answers and are now worried they’ll never get back the 12,000 cedis they expected back from their investment. ‘If I knew this would happen, I wouldn’t have gone there.'”

The Sunday Guardian on India. “From filing an FIR and staging demonstrations to approaching the National Consumer Disputes Redressal Commission (NCDRC) and the National Company Law Tribunal (NCLT), the situation of homebuyers of 3C Company’s Lotus brand projects is back to square one. Despite several protests, thousands of buyers are wondering what years of struggle and court battles have led to.”

“Jaya Dikshit, a Lotus homebuyer said, ‘My payment was delayed for some reason and they charged interest as penalty for that. But what about the builder’s penalty for delayed projects as per the BBA? I am still paying EMIs for the flat, but I don’t know when I am going to get it. Then, there is depreciation of property. I won’t get the same market rate if I want to resell my property.'”

The Australian Financial Review. “When Christine Robinson bought a high-rise apartment in June 2017 she didn’t know she was also buying a building manager’s services – for 25 years. Robinson, a nurse, and her IT worker husband Chris also didn’t know that they, and the other owners in the North Melbourne building, would be paying that building manager, CP Property Pty Ltd, an increase of 4 per cent after the first year and 5 per cent every year after that.”

“It is a deeply problematic building and Robinson already plans to move out of what was to be her ‘forever’ home. As the hangover from Australia’s high-rise construction party kicks in, tales of weak regulation and poorly built buildings are all too common. Robinson’s building is a case in point. Scheduled for completion in January 2018, her apartment was three months late.”

“In some cases it’s a matter of not getting what was promised. The tasteful hard-backed sales booklet for Reflections promised a 24/7 concierge service, a key selling point for Robinson, a shiftworker, who sometimes works late hours. But no such service exists, nor was ever demanded of the building manager by the developer. On the desk in the lobby where the promised concierge would be is a lonely sign saying ‘building manager,’ with a mobile number.”

“Robinson and her husband don’t want to stay in the building. Given the defects already apparent, she looks at high-profile building failures such as Sydney’s Opal and Mascot Towers and wonders what problems lie undiscovered in her own building.”

“‘I’m so sad,’ she says. ‘This could have been a magnificent building, but no. We’re going to get leaks in time with that garden above us and roots we know are growing into the building,’ she said. ‘There’s part of me that absolutely loves our apartment but another part of me that absolutely loathes it. I feel like Jekyll and Hyde.'”

This Post Has 137 Comments
  1. ‘‘I’m so sad,’ she says. ‘This could have been a magnificent building, but no. We’re going to get leaks in time with that garden above us and roots we know are growing into the building’

    If you’re sad now Christine imagine how you’ll feel when you go to sell this lemon.

        1. We have the rooftop garden at work. It’ll be a few more years before roots find their way into the structure.

  2. “When Christine Robinson bought a high-rise apartment in June 2017 she didn’t know she was also buying a building manager’s services – for 25 years. Robinson, a nurse, and her IT worker husband Chris also didn’t know that they, and the other owners in the North Melbourne building, would be paying that building manager, CP Property Pty Ltd, an increase of 4 per cent after the first year and 5 per cent every year after that.”

    Rent always increase while your mortgage stays the same. Don’t pay for someone else mortgage by throwing your money down the trash.

    1. 4% per year and then 5% per year? Awfully cushy; sounds like the kind of contract that would be strong-armed by the mob. HOAs are the same way. This is why I wanted an older SFH. Yeah the house deteriorates, like any structure, but at least it doesn’t try to swindle me or demand profit when I fix something.

    1. Looks more like a 12 percent drop, which is pretty significant. This area is dropping faster than other parts of Seattle. I wonder if there are lots of homeless in this particular zone.

      1. condos in belltown, first hill, west seattle are dropping (and/or it is a dead market)

        However, the house horny (with toddlers) are buying houses in queen ann, magnolia, u-dist, etc. It is 180 degrees opposite.

        I cannot figure it out – there is no way to price what anything is really worth

        1. Have met a couple couples this year that had big stock grants who were looking for a house (and one of my good friends starts next week at google with a 500k grant).

          I figure the uneven distribution of corporate stock lottery winnings are still powering a slice of the buyers – but even those couple have become clued in to the slowing market and potential recession. The friend I mentioned has a SAHM wife and young daughter, and the very specific goal of buying a house in the next couple years, but clearly isn’t going play bubble games.

          1. one of my good friends starts next week at google with a 500k grant)

            Wow, that is an impressive pay package. I’ve seen a couple of residents in the complex I manage’s salary and my jaw dropped. There are definitely some people who rake in the big bucks even while the vast majority are just scraping by.

          2. How long does he have to work at Google to collect that package? Surely they wouldn’t allow him to jump ship after only a year or so.

          3. How long does he have to work at Google to collect that package?

            Usually vests over 4 years, 25% a year.

            Amazon’s the only abberrant company with a 5/5/40/40% vesting over 4 years.

          4. Usually vests over 4 years, 25% a year.

            25% after first year then monthly thereafter? That’s the vesting schedule I’m familiar with.

          5. 25% after first year then monthly thereafter?

            Depends on the company. Used to be pretty standard to have 1 year cliff for first 25%, then vest quarterly. Now some companies just start out vesting quarterly, even in year one. Some (Salesforce, last I talked to them) vest annually over 4 years, 25% a year.

          6. “Some (Salesforce, last I talked to them) vest annually over 4 years, 25% a year.”

            I’ve seen that schedule as well.

            A $500K grant is pretty generous. Usually you have to be a director or VP to get that much.

          7. Vests monthly over 4 years.

            He’s coming in at L5 with expectation that he’ll make L6 as his new boss there was a former manager of his specifically recruited him away from Microsoft ATG

  3. ‘My wife was very disturbed,’ the 36-year-old said by phone from Kumasi in Ghana’s Ashanti Region.

    Did she stamp her little feet?

  4. Its interesting that Trump has gone all in on claiming ownership of the markets/economy. It seems to me he’s almost daring the deep state to try and take it down so he must have something up his sleeve. He’s also chewing on the federal reserve, demanding they cut rates and restart QE. Since rates are so low already, I’m thinking he wants to 1) expose the fed as clueless, political, and essentially another branch controlled by the deep state, and 2) get to that 0 bound/neg interest rates so he can call for some sort of gold standard and get back to a more “real” foundation for the world’s economies, one that isnt under the thumb of a group of unelected and unaccountable master planners.

    1. He wants to be re-elected. A strong economy will do it.

      The strength of the economy may be fake but it won’t matter. It would only matter if the voters weren’t so stupid.

      1. He wants to be re-elected. A strong economy will do it.

        True. But I also wonder if he knows the odds of making it for more than another year without a crash isn’t good and so he’s trying to set things up to where he can pin all the blame on the Fed and hope that’s enough to get re-elected even if things are going bad.

        1. It’s very simple. If the economy does well, it’s due to Trump. If it does poorly, the Fed is to blame.

    2. What he is saying now is in direct contradiction to what he said to get elected and what he said of the Fed in the past. He did a complete 180 degree turn about the cheap money. He has no integrity and I will not vote for him again. The main reason I voted for him is because he called the stock market “a big, fat, ugly bubble.” Now he’s all for bigger, fatter, uglier bubbles.

      1. So who ya votin’ for? Let’s see. How about a gun grabbin’socialist? An environmental nutcase?

        Gosh, the President isn’t perfect!! Who is?

        1. I may not even vote this time, which would be the first time ever. But this cheap money nonsense is absolutely destroying the country. It doesn’t matter if they go to zero, it just makes it worse. The irony is that it’s going to actually destroy the stock market, the apparent sacred cow they want to prop up so badly. Newsflash: The stock market don’t mean chit to most people.

          1. I don’t blame you at all Chin for considering not voting;
            it really doesn’t matter, does it?!

            I figured it out after last voting for Obama & he did NOTHING to jail the bankers. nada. zilch

            sat the next two elections out.

            (well, I actually did vote for a write-in prez candidate last time:
            “Dale The Crossing Guard” at my kids elementary school. haha
            took a pic of the completed ballot then slid it right into one of our CA voting machines. civic duty done)

        2. “The President isn’t perfect” is very generous of you. This person in Place (Trump) has shown himself to be unreliable, inconsistent and dangerous on many issues. There is nothing that the current crop of contenders can say or propose that scares me even if I disagree with some or all of their policies. Trump is what you get when you have a person who shopped around for what to stand for to be electable. I won’t vote for a disaster which is what he is but I will be voting. There are a good many more agreements I experience with so many of you as to economic policies and finance of the past and present. I am more confident we can get to a better future scenario without Trump than with him.

          1. ‘There is nothing that the current crop of contenders can say or propose that scares me’

            Socialism has got more people killed than anything else humans have invented. Stop being so butt-hurt. It gets old.

          2. You know, we have to put up with some real BS anymore. I remember when liberals were against globalism. Huge corporations, off-shoring, taking advantage of foreign labor that had no protection, polluting like crazy, ruining unions. Remember when it (often) was said that Republicans just wanted to bring in illegals for cheap labor?

          3. Here ya go liberal STR fan:

            ‘Once all the tenants are out, landlord Thomas McPherson plans to transform his historic downtown building into what will essentially be a glorified hotel. Partnering with an AirBnB-like startup called WanderJaunt, McPherson plans to turn every Westminster apartment unit into temporary housing for vacationers and business travelers.’

            ‘Phoenix, meanwhile, faces a growing affordable housing shortage.’

            https://www.phoenixnewtimes.com/news/phoenix-landlord-evicts-tenants-short-term-rental-wanderjaunt-11345084

            Try not to choke on your hypocrisy, liberal.

          4. ” I won’t vote for a disa$ter which is what he is but I will be voting”

            “dtRump $crewed us Iowans …” Grasshopper.head Senator Gra$$ley

            T$k, t$k … $uffering farm folks might vote their wallet$ & pur$es 2020

          5. Once all the tenants are out, landlord Thomas McPherson plans to transform his historic downtown building into what will essentially be a glorified hotel. Partnering with an AirBnB-like startup called WanderJaunt, McPherson plans to turn every Westminster a

            I fail to see the liberal hypocrisy here. This looks like pure capitalism at work to me. The owner of the building can decide to use their property as they see fit. This is not prohibited by zoning or local regs. It is maximizing profits without regards to the larger impact:

            “For his part, Chen has explicitly said that his company hopes to capitalize on the fact that landlords can charge more for short-term rentals than they can with longer-term tenants.”

            Here’s the kicker, this type of behavior is explicitly allowed by libertarians and ultra capitalists thanks to their legislation which prohibits regulation of STR in Arizona:

            “Phoenix cannot pass a similar law [banning the conversion of housing to STR]. That’s because Arizona legislators passed a bill in 2016 prohibiting municipalities from passing their own short-term rental regulations. The bill passed with bipartisan support.”

            The legislation was pushed by companies like Airbnb and Expedia, as well as libertarian groups like the Goldwater Institute and nonprofits funded by billionaires Charles and David Koch, including Americans For Prosperity and the Arizona Free Enterprise Club.”

            So is it liberals enabling STR explosion or libertarians/conservatives?

            I’ve always said STRs need to be regulated and can cause problems while simultaneously filling a niche and creating a new hybrid form of housing that wasn’t served by the existing structure.

          6. The irony is even richer. From the article:

            “If not for the 2016 bill, McPherson’s decision to turn Westminster Apartments into a short-term rental hotel would likely violate Phoenix city code. Zoning ordinances prohibit property owners from operating a rental unit for stays less than 30 days in multifamily and single-family zones, according to Angie Holdsworth, spokesperson for the Phoenix Planning and Development Department. Before 2016, Phoenix officials also would have been able to require McPherson to alter his building so it complied with the city’s requirements for hotels. But the state’s pre-emption law means the city’s hands are tied.”

            So basically this STR rental project only is legal thanks to the following groups:

            Goldwater Institute
            Charles and David Koch
            Americans For Prosperity
            Arizona Free Enterprise Club

            STR are very profitable right now. Makes sense that ultra capitalists are going to ride the wave.

          7. ” ..Republicans just wanted to bring in illegals for cheap labor? ”

            Why do they dis-a$$emble ocean ships in Bangladesh?

            This kinda work/job$ used.to.bee done bye Canadian$ & U$A workers.

            Must bee those North American National Workers weren’t as $killed as the the workers in Bangladesh?

            ECONomic$ Trump$ Politic$, the wheel is $pinning, everyone place yer bet$!

          1. I am not voting for a Globalist. I see all the policies which promote globalism promoted by the Democrats on the debate stage:
            1. Open borders
            2. Unfair trade as shown by Biden’s and others unwillingness to go after China
            3. MMT the creation of demand by the US for the developing world’s benefit.
            4. AGW excuse to give the developing world 100’s of billions while crippling our industries.

            Thus, there is only one person running who had a chance to win who will stop those policies. Yes, he is criticising the Fed and is asking for too large of cuts after calling them to loose under Obama. However the Fed did give the economy the bends by tightening too much too quick. Completely non partisan economists agree with that as they agree that 0 percent interest rates were too low to keep for years. Trump was right and the Fed was either wrong or deliberately trying to weaken the Trump economy. The only reason they are cutting now is that Germany is in recession and threatening to take down Europe. Neither Trump nor I believe they were just trying to prevent inflation.

        3. There was a news story about bullet proof backpacks for school kids the other day. Schools have ‘active shooter’ training now right along with fire drills. As a gun owner I support the recently discussed red flag warnings as do the majority of americans. I also support reinstating purchase prohibitions on those who receive disability for mental health issues. Characterizing the issue as an all or nothing alternative is how we got here.

          Nobody is gonna come take your guns.

          1. Nobody is gonna come take your guns.

            The collectivists can’t take their “redistribution of the wealth” to the next level until they do exactly that.

          2. “purchase prohibitions on those who receive disability for mental health issues.”

            I wonder if that would cut down on the disability fraud.

          3. How many of the shooters were on disability for mental health? I can’t even recall one. That would do next to nothing. It’s time to be honest – the guns don’t kill a damn person, PEOPLE do. Taking away guns is about as stupid a response as there is.

          4. “Nobody is gonna come take your guns.”

            Is an AR-15 that shoots 650 rounds.a.minute a gun or a.weapon.of.mass.destruction?

            NRA = National.Reapeating.Atrocities

          5. Is an AR-15 that shoots 650 rounds.a.minute a gun or a.weapon.of.mass.destruction?

            If that’s your argument all I ask is that you are intellectually honest and admit that it has nothing to do with AR-15s and applies to any magazine fed sem-auto. Which is most of the firearms sold. So just admit that you want most firearms classified as WMD and made unavailable…maybe even confiscated. Then we can argue whether that’s a good idea or a bad idea.

          6. ” …applies to any magazine fed sem-auto. Which is most of the firearms sold. ”

            Eye would knot have any idea how to find the million$ of numbers for those collective categories of repeatin’ guns Carl.

            But just Fer the AR-15:

            “The National Shooting Sports Foundation has estimated that approximately 5 million to 10 million AR-15 style rifles exist in the U.S”

            Besides, eye growed up watching “The Rifleman”, & his gun repeated well enough to solve most situations!

            Next: Clint Eastwood & black power 44 Colt starring in Josey Wales …

            Eye repeat: NRA = National.Reapeating.Atrocites

          7. Eye would knot have any idea how to find the million$ of numbers for those collective categories of repeatin’ guns Carl.

            You do you and take it in as many directions as you want. But I’ll assume you get my point.

        4. I never got “worked up.” I was just stating a fact. I’m not the only one who voted for him who feels this way. I was trying to find a link to something I saw yesterday which showed his first tweet about the Fed, excoriating the Fed’s policies (under Yellen). That’s the man I voted for. Now he’s morphed into something which is polar opposite, publicly shaming the Fed while calling for rate cuts and massive stimulus.

          1. “Now he’s morphed into something which is polar opposite”

            dtRumpsis Trantrumois Chaotica = $hape $hifter = “which shell is the pea under?”

    3. It’s not interesting. Every president claims credit for the good times and blames bad times on someone else.

  5. ‘Jaya Dikshit, a Lotus homebuyer said, ‘My payment was delayed for some reason and they charged interest as penalty for that. But what about the builder’s penalty for delayed projects as per the BBA? I am still paying EMIs for the flat, but I don’t know when I am going to get it. Then, there is depreciation of property. I won’t get the same market rate if I want to resell my property.’

    Stamp yer little feet Dikshit!

    1. “An unprecedented response is needed when monetary policy is exhausted and fiscal policy alone is not enough. That response will likely involve ‘going direct’: Going direct means the central bank finding ways to get central bank money directly in the hands of public and private sector spenders.”

      Dubya beat ’em to this idea already back in 2007, IIRC.

      1. Yes. And my wife has a lovely viola bow whose purchase dates back to that helicopter drop. Thank you, W.

  6. ‘I don’t think people are aware or have a full grasp of what is going on. The B.C. economy is headed for tough times. The real estate economy is not going good.’

    This is a natural consequence of basing economic policy on perpetual real estate bubbles. As ye sow, shall ye reap.

  7. I just love the descriptive stock photo used in this article:

    https://finance.yahoo.com/news/puts-have-expired-morgan-stanley-warns-neither-trade-nor-fed-can-save-investors-182223729.html

    “With the Fed’s first rate cut in a decade not having the desired effect on markets and a trade deal looking less likely every week, these two puts (the Fed and Trade Deal) may have expired, leaving investors facing the potential reality there is no second half rebound coming.”

    Eight months of magical thinking in financial markets, in other words, have come to an end.

  8. Is this summer’s massive sovereign bond rally over, in light of the inevitability of a U.S.-China trade deal?

    The Financial Times
    Sovereign bonds
    Pimco looks to offload ultra-hot bonds after huge rally
    Bond giant trims positions, saying debt prices could slump on US-China trade détente
    Pimco’s Daniel Ivascyn: ‘We’re a lot more defensive’ © Reuters
    Robin Wigglesworth in Oslo, Norway yesterday

    Pimco has pared its positions in government debt on fears that a breakthrough in US-China trade talks could trigger a violent sell-off, putting an end to one of the biggest fixed income rallies in history.

    The Bloomberg Barclays Multiverse index — the broadest bond market gauge that tracks debt with a market value of more than $59tn — has returned more than 7 per cent already in 2019. If the rally continues at the same pace, this year will be the best for the gauge since 2003.

    Although Pimco remains confident that bond yields will remain relatively low — and could still plumb new depths — the sheer power of the rally over the summer means that the balance of risks has now shifted, according to Dan Ivascyn, group chief investment officer at the giant investment house.

    “We’re a lot more defensive,” Mr Ivascyn said in an interview. “Even if we get a narrow trade agreement [between the US and China] we could see a pretty powerful snapback in yields.”

    1. Then again, overconfidence in their predictive capabilities regarding a trade deal could leave Pimco wallowing in FOMO during the next leg up in the bond rally.

      Business News
      August 18, 2019 / 8:31 AM / Updated 21 hours ago
      Trump ‘not ready’ for China trade deal, dismisses recession fears
      Howard Schneider

      WASHINGTON (Reuters) – U.S. President Donald Trump and top White House officials dismissed concerns that economic growth may be faltering, saying on Sunday they saw little risk of recession despite a volatile week on global bond markets, and insisting their trade war with China was doing no damage to the United States.

    2. Hmmmm…

      Oil
      Trade war impasse casts a ‘dark cloud’ over outlook for US oil shipments, analysts warn
      Published Mon, Aug 19 2019 9:02 AM EDT
      Sam Meredith

      Key Points
      – “Casting another dark cloud over the outlook for U.S. crude shipments is the ongoing U.S.-China trade impasse,” Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note.
      – China, the world’s largest oil buyer, was one of the leading destinations of U.S. crude throughout the first half of last year — in what had been a mutually beneficial energy relationship with the U.S., the world’s biggest crude producer.
      – However, Beijing’s U.S. crude imports plummeted almost immediately after the trade war talk started, with flows completely drying up at the turn of the year as the situation deteriorated.

      1. Yet WTI has held up while Brent has fallen. The US does not need China to buy our oil. It is just another example of our tariffs being more effective than China’s tariffs. Yes, it might in the short term make it look like the trade balance with China is getting worse but they need a market for their manufactured cheap junk more than we need to sell them oil. All this talk about a recession is just to get Trump to stop before he wins big. Pimco is anticipating the win, this the reason it is calling the near bottom for rates.

          1. As Treasury Yields Continue To Fall, Will Stocks Follow?
            Harry Dent | Aug 20, 2019 02:30PM ET

            The stock market hit a predictable snag when it hit the top of the mini-megaphone pattern I have been projecting at 27,400. One of the clear reasons: The China trade deal keeps looking less likely – as Rodney and I have been forecasting from the beginning.

            Falling Treasury Yields

            But the larger reason has been that the bond market keeps seeing a slowing global economy. Hence, yields on the 10-year Treasury just keep falling with only a minor bounce in recent days that does not look likely to last. Here’s the bigger picture since the 2007 economic peak.

        1. I don’t mind DJT holding firm on tariffs. In fact, I hope he does. I think he is right to do so. He’s a bull in the china shop. A bit crude and coarse, but maybe the guy to kind of shake things up with China. What I take issue with regarding the president is his desire to lower rates and revert to easy monetary policy.

    3. I’m not convinced this sounds like the end of the rally; it seems like more of the ongoing flattening of sovereign yields towards the zero bound and beyond. With central bankers warming up their electronic printing presses for additional rounds of quantitative easing, this dynamic could last a while.

      Markets
      Wall of New Money’ Flees Negative Rates for American Credit
      By David Caleb Mutua
      August 19, 2019, 10:33 AM PDT
      Updated on August 20, 2019, 1:35 AM PDT
      – High-grade debt attractive amid worldwide yield plunge: BofA
      – Cheaper hedging costs lure foreign investors to U.S. paper

      Blue-chip U.S. companies are likely to see a surge in demand for their bonds as the rising amount of negative-yielding debt globally forces more overseas investors to seek higher returns in dollar assets, according to Bank of America Corp.

      Record low yields on global non-dollar investment-grade debt and over $16 trillion of fixed-income assets paying less than 0% should fuel an increase in demand for U.S. credit, strategists led by Hans Mikkelsen wrote in an Aug. 16 note to clients. Attractive currency-hedging costs are helping to offset recent yield compression as offshore investors weigh allocations, according to the report.

    4. Apparently détente is not a certain path to a new deal.

      Détente (French pronunciation: ​[detɑ̃t], meaning “relaxation”) is the easing of strained relations, especially in a political situation, through verbal communication. The term in diplomacy originates around 1912 when France and Germany tried, without success, to reduce tensions.

      1. “The term in diplomacy originates around 1912 when France and Germany tried, without success, to reduce tensions.”

        In that case, we’ve have 18 years to $lough through before a global financial disa$ter stikes! … Plenty$ of time to prepare, party$.on, beside$, dtRumpsis is gettin’ the Fed.Fund$ kool-aid punch bowl refilled to the brim!

    5. Not to scare the kiddies, but it seems like the bigger risk may lie in junk bonds than sovereigns.

      Opinion: The investing opportunity of a lifetime awaits us when the recession arrives
      By John Mauldin
      Published: Aug 20, 2019 4:28 a.m. ET
      You’ll be able to buy corporate bonds, whose credit ratings are sliding, at a deep discount

      Falling apart

      When the recession hits, we will see junk bonds — and the riskier end of corporate debt generally — go into surplus. There will be more available for sale than investors want to buy. The solution will be prices dropping to a point that attracts buyers. I don’t know where that point is, but it’s a lot lower than now.

      But there’s a problem. We talked about that $3 trillion worth of BBB bonds. Any that are downgraded by merely one grade will no longer qualify as “investment grade.” That means many pension funds, insurance funds and other regulated entities by law won’t be able to hold them. They have a very short time to sell them back into the market.

      Let’s say Company X issues $100 million of a bond rated BBB by Moody’s or Standard & Poor’s. There is a high likelihood that some will be in regulated pension or insurance funds, and there will be forced-selling at lower prices. This will set a new price for that bond issue. Every mutual fund and ETF that holds those bonds will have to use the lower price when they mark-to-market at the end of the day.

      I have seen this happen three times in my career. Yields go from fairly low to 20% or more at what seems like warp speed. If you are in one of those funds, you’re going to see your value drop precipitously. Unless you are a professional or have some systematic trading signal that tells you when to trade, it’s probably best to avoid anything that looks like a high-yield mutual fund or ETF.

      More money is going to be lost by more people reaching for yield in this next high-yield debacle than all the theft and fraud combined in the past 50 years.

      1. “More money is going to be lost by more people reaching for yield in this next high-yield debacle than all the theft and fraud combined in the past 50 years.”

        High-yield$ is for adult$ & Trix’$ is fer kids … so you’re basically $carring everyone Professor!

    1. This company is right in my backyard. I see their billboards on I-15. Personally I think it sounds a lot less risky sharing your extra space for storage than it does sharing your living space with strangers.

      1. Personally I think it sounds a lot less risky sharing your extra space for storage than it does sharing your living space with strangers.

        Probably true but it makes me think about what I might be storing for them. Bedbugs, weapons, chemicals, explosives, illegal drugs and drug production equipment…so many things it might be handy to have someone else store for you.

        1. ” … it makes me think about what I might be storing for them”

          Arsenic, cyanide, mercury, ricin, … Hilarious Carl!

        2. True. But I think this type of stuff is more likely to be stored in traditional storage containers which are likely to have far less scrutiny that storing it under the auspices of a neighbor who has full access to the area.

          I remember talking to a local police officer with regards to drug use by one of our tenants. I asked him if he had seen drug use in the STR scene. You know what he said to me? He said that drug use/prostitution is far more common in regular hotels/motels than in STR because it is more anonymous. He then said that far worse stuff happens by regular tenants than STR. Sure you have the headliner story here and there about a massive party/drug binge in someone’s Airbnb, but that is just click bait and draws eyeballs. It fails to accurately convey the frequency of risks that are already occurring in the traditional establishment. It’s a bit like the EV fires that make the news, nevermind the fact that there are far more gas car fires happening every hour of every day that never get on the news.

          1. It’s a bit like the EV fires that make the news, nevermind the fact that there are far more gas car fires happening every hour of every day that never get on the news.

            Do non-solar roofs catch on fire all the time too?

            In “Explosive” Lawsuit Walmart Sues Tesla Over Solar Panel Fires, Claims SolarCity Purchase Was A Bailout

            “On Tuesday, Walmart sued Tesla, after its solar panels atop seven of the retailer’s stores allegedly caught fire, alleging breach of contract, gross negligence and failure to live up to industry standards. Walmart is asking Tesla to remove solar panels from more than 240 Walmart locations where they have been installed, and to pay damages related to all the fires Walmart says that Tesla caused.”

            “Walmart’s inspectors additionally found that Tesla ‘had engaged in widespread, systemic negligence and had failed to abide by prudent industry practices in installing, operating and maintaining its solar systems.'”

            I’m sure the alleged incompetence and negligence is confined to Tesla’s energy operations. /s

          2. “It’s a bit like the EV fires that make the news, nevermind the fact that there are far more gas car fires happening every hour of every day that never get on the news.”

            Could this reflect a much higher rate of EV fires relative to the exposure?

          3. To get a better sense of the relative fire risk between EV and non-EV, one would also have to control for things like vehicle age and maintenance. My guess is that the age-and-maintenance-adjusted EV fire rate would be higher, as traditional vehicle fires tend to concentrate in poorly maintained, older cars. (Of course sometimes the design is a factor…like old Ford Pintos.)

          4. I’m sure the alleged incompetence and negligence is confined to Tesla’s energy operations.

            I saw that article on CNBC. Not a good look for Tesla to have that damage. These installs were done by Solar City, before they were acquired by Tesla. Nevertheless, Tesla should take the hit, investigate the root cause, and resolve the issue. Looks like Solar City had some shoddy installers. Tesla inherits their liabilities.

            In retrospect, Tesla’s purchase of Solar City does not seem to be a good move. Musk bailed out his cousin on that one and it has been a pretty poor purchase. Solar city has really hurt Tesla’s financials and their new solar shingle doesn’t seem to have made it into mass production.

          5. To get a better sense of the relative fire risk between EV and non-EV, one would also have to control for things like vehicle age and maintenance.

            Tesla claims that gas cars are 11x more likely to be in a fire than its vehicles. They use NHTSA data of “fires per billion miles driven”. But I agree with you professor, there is not enough data to fully understand the comparison. Within 5 years we should know a lot more. Regardless though, gas cars have had 130 years to refine their design to reduce combustibility. Based on the data I see, EVs are already much less likely to be involved in a fire (e.g. gas is, well, super combustible and liquid). But I would guess that engineers continue to make improvements that drive the rate down further.

    2. More Powellbucks looking for a final resting place. When’s the IPO? Are they already worth more than Boeing?

      This “sharing eCONomy” is what you get when you have massive asset price bubbles which have resulted in nobody being able to afford their financed purchases, so they are trying to figure out a way to get financial help so they don’t lose it to the bank.

  9. https://techcrunch.com/2019/07/18/rent-the-backyard/

    So they build on YOUR backyard, own the shack, and take a 50% cut of the rent. After 30 years, you can buy back the shack from them … assuming you stay there for that long or can sell the place to someone stupid enough to agree to those terms…. BTW, the shack they built can be brought from Amazon for 15K….brilliant business idea!!!

    1. “The startup also handles the permitting, which co-founder Spencer Burleigh said has become much easier with recent changes in California law. In fact, he pointed to stories about how these changes have led to skyrocketing applications (16 in 2016, 350 in 2018) to build “in-law” units in San Jose, which is where the startup is focused for now.”

      Great location…this is where price is cratering the most too. More shortage coming !!!

      “Of course, for a homeowner, that means giving up a big piece of your backyard (which must be at least 30 feet by 30 feet in size), but Bakerman said that many yards are “underutilized” anyway.”

      Who needs a backyard anyway….wasted space!?! Don’t forget the garage. When I was living in OC, it was common for folks to convert the garage too!!!! Don’t worry with Uber and Lyft, who needs a car???

      “To be clear, Rent the Backyard hasn’t actually built any apartments yet, but it’s already signed up construction partners, and the goal is to get 10 units permitted and ready for construction by the end of the summer.

      “It’s a pretty fast process,” Bakerman said. “It could just be a handful of weeks before we’re able to start building” — and because the units use prefabricated construction methods, the actual building could take as little as a week and a half.”

      Just bribe some corrupted officials…Easy peazy lemon squeezy

    2. In exchanged for you shouldering 100% of the hassle of being a landlord you get 50% of the reward!

      Sign me up!!

  10. Despite what DJT says, I think we are heading towards a recession. This is a pretty reliable indicator and is one of my favorite because it is the ultimate discretionary purchase:

    An Economic Warning Sign: RV Shipments Are Slipping
    WSJ
    Shayndi Raice
    19 August 2019

    “Elkhart, Ind., is flashing a warning sign about the economy. Capital of the country’s recreational-vehicle industry, the northern Indiana city and the surrounding area are watched by economists and investors for early indications of waning consumer demand for luxury items, often the first sign of economic anxiety.”

    “Shipments of recreational vehicles to dealers have fallen about 20% so far this year, after a 4.1% drop last year, according to data from the RV Industry Association. Multiyear drops in shipments have preceded the last three recessions.”

    ““You need food, you need clothes but you don’t need an RV,” he said. “When people are starting to feel less confident about their job prospects, their 401(k), the broader economy, they’re going to feel less confident about buying an RV. And that’s what you’re seeing right now.””

    1. RVs used to be discretionary, but now they are housing – shelter – for hundreds of thousands

      1. I assume people who want to live in them are looking for a screaming deal on a used one and not looking to pay full retail for a new one.

        1. Maybe, maybe not. We’ll see. The top 5 trade-ins for the model 3 are: Honda Civic, Honda Accord, Toyota Prius, Nissan Leaf, and BMW 3-series. Only the BMW falls in the high-end category in my book. There are a lot of Tesla drivers who are doing so for the savings over time because they’ve run the numbers.

          1. Here in Silicone Valley, a big reason for buying Teslas is getting the coveted HOV lane pass — currently, only electrics and plug in hybrids that are 2017 or newer models qualify.

  11. Maybe these type of RV factories could pivot towards building pre-fab/modular construction. I’m a big believer that site-built housing is one meaningful way to cut down on costs and control quality. It’s weird to me that more building construction hasn’t caught up to the principles of assemblyline manufacturing.

    1. “Site-built” means built on site, which IS more expensive. However, getting rid of site-built housing just eliminates more decent paying jobs so some corporation can hire a bunch of illegals for their new factory. Even worse, it will ultimately be sourced from a Chinese factory.

  12. Just bought some IAU Low expense ratio (.25%), just holds gold, no selling when price goes up.
    Just an insurance policy against the mad hatter money printers

  13. Very good read on the impact of Airbnb on housing prices and rents:

    How Much Does Airbnb Really Affect Rents & Housing Prices
    Joanna Clay
    Phys.org
    20 August 2019

    “Using their data and estimates, they calculate a year-over-year Airbnb contribution to rent and price growth equal to 0.59 percent and 0.82 percent, respectively. “Suppose house prices go up 6 percent; Airbnb is probably causing 0.8 of that 6 percent,” he said.”

    Overall, Airbnb probably contributes about one-fifth of the average annual increase in U.S. rents and about one-seventh of the average annual increases in U.S. housing prices, he told the Harvard Business Review.”

    This is the way I think Airbnb should work and cities and states should ban the type of Airbnb-er that I am (e.g. a professional Airbnb-er listing multiple units as a virtual hotel):

    How L.A. wants Airbnb to benefit rent and communities

    “Proserpio noted one way Airbnb could mitigate that: the owner-occupier model. The owner-occupier is an Airbnb host who rents out a portion of their primary house—such as a room—but does not rent out the whole building or unit.”

    Some things that anti-Airbnb people don’t always think about:

    “Some Airbnbs are in locations where there are no hotels, and this has the potential to favor the economy of these areas,” Proserpio said. “Restaurants that were insulated from tourists before can now benefit from Airbnb travelers. All these things need to be taken into account to make policies that work for everyone.”

    Link to the article:

    https://phys.org/news/2019-08-airbnb-affect-rents-housing-prices.html

    1. https://www.theguardian.com/commentisfree/2018/aug/31/airbnb-sharing-economy-cities-barcelona-inequality-locals

      https://www.huffpost.com/entry/airbnb-affordable-housing-gentrification-tourism-fairbnb_n_5c5949c3e4b00187b554828d

      https://www.airbnbhell.com/airbnb-nightmare-scenario-destroying-communities/

      https://www.epi.org/publication/the-economic-costs-and-benefits-of-airbnb-no-reason-for-local-policymakers-to-let-airbnb-bypass-tax-or-regulatory-obligations/

      https://community.withairbnb.com/t5/Hosting/House-trashed-wrecked-destroyed-by-guest/td-p/76067

      https://www.housingwire.com/blogs/1-rewired/post/38125-heres-proof-airbnb-is-destroying-the-new-orleans-housing-market

      https://www.scotsman.com/business/companies/media-leisure/airbnb-is-ruining-neighbourhoods-claim-angry-residents-1-4667355

      https://www.theringer.com/features/2017/11/21/16678002/airbnb-nashville

      https://www.cnbc.com/2018/05/23/unwelcome-guests-airbnb-cities-battle-over-illegal-short-term-rentals.html

      http://insideairbnb.com/face-of-airbnb-nyc/a-year-later-airbnb-as-racial-gentrification-tool.html

      https://abc7.com/news/study-claims-la-loses-millions-due-to-airbnb-rentals/1272479/

      https://www.nbcbayarea.com/news/local/Fire-Prompts-1-Million-Dispute-With-Airbnb-509917461.html

      https://mashable.com/2015/04/30/house-destroyed-airbnb-renters/

      https://www.reddit.com/r/AirBnB/comments/6swc5i/my_airbnb_host_destroyed_my_career_and_airbnb_did/

      https://www.buzzfeednews.com/article/mbvd/hawaii-airbnb-tourism-vacation-rentals

Comments are closed.

Back To Top