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Developers Biting Their Nails And Offering Fantastic Concessions Just To Seal The Deal

A report from Bloomberg. “Residential starts fell 9.4% to a 1.26 million annualized rate on weakness in the multifamily category after an upwardly revised 1.39 million pace in the prior month, according to government figures released Thursday that missed estimates in Bloomberg’s survey. Permits, a proxy for future construction, dropped 2.7% to a 1.39 million rate that exceeded estimates. Groundbreakings for single-family properties proceeded at the fastest pace since January. That gain was offset by a 28.2% drop in new construction of apartment buildings and condominiums.”

From Multi-Housing News on Florida. “Employment and population growth continue to fuel Miami’s multifamily market across all segments. With more than $3 billion in originations in South Florida and 146 loans granted in 2018, Berkadia is one of the region’s largest commercial mortgage lenders. Construction is expected to mark a new cycle high with more than 16,000 units delivered by year’s end, according to Yardi Matrix. How will the new supply impact the Miami market?”

“Charles Foschini senior managing director: Miami is so dense that any area can be successful. The key is finding land at a value where you can hit your return on cost and make a profit.”

From Multi-Family Biz on Washington. “A wise man once said that nature abhors a void, but it seems that everyone else does, too—especially those of us in the multifamily housing industry. Up until recently, developers have turned to master lease agreements with short-term rental (STR) providers to help fill empty apartments during the lease-up phase. However, many industry innovators are now attempting a different solution, with AvalonBay Communities, Inc. being one of those very companies.”

“Recently, AvalonBay Communities partnered with WhyHotel to create a pop-up hotel solution to address this all-too-common issue. According to leasing experts, it generally takes between 12 and 24 months to completely fill an apartment building the size of AvalonBay’s Seattle property, the 24-story, 275-unit Avalon Belltown Towers, with residents who meet the lease criteria and can pay the rental deposit. Even in a seller’s market, the lease-up period can have developers biting their nails and offering fantastic concessions just to seal the deal.”

The Washington Post. “When he and his wife were shown the apartment, William Hart examined the window. There was no doubt. The software developer’s new home would be where his cubicle once was. After spending 10 years working for the IRS in the Oxon Hill, Md., office building, Hart returned in June to live there with his wife.”

“In a city overrun with Type A workaholics who spend so much time in their offices they might as well live there, turning cubicles into homes seems logical. But there are sound economic reasons too. Across the region, as law firms downsize and the federal government retrenches, the Washington area is awash in vacant offices.”

“There’s plenty of buildings waiting to be transformed. A recent search of Costar’s database uncovered dozens of office buildings in the region with 0 percent occupancy.”

The Wall Street Journal. “An apartment-hotel company that manages short-term rentals is leasing and managing an entire 26-story Dallas apartment building, the latest sign this budding segment of the lodging market is starting to gain traction. These operators mark the latest threat to the big hotel companies, which are already struggling with supply gluts, rising labor costs and slowing economic growth.”

“Now they are taking entire buildings and aiming for more corporate travelers. Residential and commercial property owners are more willing to team up with these startups and develop or revamp entire buildings for these brands.”

From Houston Public Media in Texas. “Houston saw the largest month-over-month decrease in rents of any major Texas urban area. The average U.S. rent dropped for the first time in more than two years. Rents were down across Texas, but Houston saw the biggest drop. That’s a bit of a break for renters, but it also indicates fewer people are seeking apartments.”

“Doug Ressler, manager of business intelligence for Yardi Systems, said demand is falling across the board, from luxury apartments to more modest units. ‘We really see it in terms of…both lifestyle and rents by necessity. Lifestyle’s the luxury stuff. Renters by necessity is the workforce, you know, the things like that,’ he said. ‘So, we’re seeing a downturn on both of that, and we’ve started to see that downturn beginning in July and August.'”

“Meanwhile, the supply of finished apartments in Houston is rising.”

From The Orion in California. “Recent trends in Chico have made luxury housing a hot commodity for students. While these high-end apartments sound amazing, they have their drawbacks. Mainly, having expensive price tags that most students are unable to afford.”

“‘I would say the average rent in Chico is anywhere from $400 to $800 a month depending on the amenities and proximity to campus and things like that,’ said Dan Herbert, director f Off-Campus Student Services. ‘It’s interesting, I talk to people in my work throughout the country and the new trend in student housing are these higher-end, fully-furnished apartments. But that doesn’t mean that there aren’t thousands, literally, thousands of beds out there that are still the old fashioned, ‘four guys go to an apartment and they share the rent, and each gets a bedroom and their rent’s $400 a month.’”

“Additional amenities like onsite pools, parking structures, free printing, study rooms and gyms all come as standard with these luxury apartments. Gates and security are also put in place to assure those who lease with them are safe when in their homes.”

“‘Last year, I had my car’s tires slashed and it was parked in the complex,’ said current tenant of Post on Nord, Nicholas Morales. ‘Where it is supposed to be guaranteed safe and secure, which it wasn’t, they don’t have cameras in the parking lot so I couldn’t really do anything about it. They just said they’d keep an eye out and they sent an email out. They also raised the rent. For what I’m getting out of it I don’t feel like I’m getting enough in return; I feel like you’re paying more for the look.'”

The Hattiesburg American in Mississippi. “Two companies are putting in luxury renovations at a block of apartments next to Pete Taylor Park— a perfect location for University of Southern Mississippi students. But will the students be able to afford them? ‘We’re hoping for young families and students (to rent here),’ said Bailey Kleban, manager with Kleban Properties. ‘Right now it’s a brick building that looks like any other complex in the area. We want it to breath luxury — ooze a sense of comfort and be a home that people deserve to have.'”

From KATV in Arkansas. “Tenants at the Spanish Valley Apartments protested alongside Arkansas Renters United on Sept. 22, in hopes to spread the message about AMG’s treatment of residents. Don Marshall sold Rosewood and Parkway Crossing apartment complexes to AMG Realty Group one year ago. At the time, he was unaware of how AMG operated.”

“‘People like Adam Glickman are coming in taking a part what we did,’ said Marshall. ‘I regret anything that he buys in this state because I’ve spent a lot of time — me and my wife — my ex-wife, buying apartment complexes in southwest Little Rock. We fixed them up. We made them nice places for people to live, low-income people.'”

“Marshall has expressed he’d potentially consider purchasing back the two properties if they went into foreclosure. AMG Realty Group has not responded to requests for comment.”

This Post Has 80 Comments
    1. Ya think????

      “There’s plenty of buildings waiting to be transformed. A recent search of Costar’s database uncovered dozens of office buildings in the region with 0 percent occupancy.”

      1. Dumb questions of the day:

        How does a landlord cover ownership costs on a property with 0 occupancy. Are bailouts somehow involved?

      2. Trump Tax Documents Show Major Inconsistencies

        “For instance, Trump told the lender that he took in twice as much rent from one building as he reported to tax authorities during the same year, 2017. He also gave conflicting occupancy figures for one of his signature skyscrapers, located at 40 Wall Street.”

        “Lenders like to see a rising occupancy level as a sign of what they call “leasing momentum.” Sure enough, the company told a lender that 40 Wall Street had been 58.9% leased on Dec. 31, 2012, and then rose to 95% a few years later. The company told tax officials the building was 81% rented as of Jan. 5, 2013.”

  1. 401 –
    Seeing this article that Ben posted today re Developers biting their nails – I just have to note and I don’t know bout your nabe in CO – but down by me in Castle Rock there is nothing but dust, earth movers and Cali style housing going up all over the place – it is just SCARY!!!
    Drive if you will down Crowfoot from Parker to CR and you will see miles of dirt bein’ plowed and ready for crap shack foundations. SCARY!!!

    1. Was just there, Hawk development was huge, wife just said NO. Zero lot lines, and 300 homes in one development, the back yard had zero privacy, zero. We looked at Boulder, 900k for an out dated ranch a mile outside of down town Pearl St, crazy CA pricing. Just gonna wait, late 2020-2021 the correction will be in full swing, looking for a 20-30% drop and a huge selection as owners who were over there heads in mortgage debt get scared and run for the exit.

      1. One can only hope. I lived in Boulder 2007-2014, no appreciable dip in cost then. Also, the housing stock is pretty old and crappy in general there.

    2. I’ve been in South Denver almost ten years and am planning for my exit within the next two years.

      The quality of life in the metro Front Range only gets worse, it doesn’t get better.

    1. It does sound hellish. Also, it doesn’t sound cheap to retrofit an office building into apartments. Plumbing, electric… permits. Basically a full gut but for 200+ units right? Serious money going down that route. Big pop, as Ben says.

  2. ‘It’s interesting, I talk to people in my work throughout the country and the new trend in student housing are these higher-end, fully-furnished apartments. But that doesn’t mean that there aren’t thousands, literally, thousands of beds out there that are still the old fashioned, ‘four guys go to an apartment and they share the rent, and each gets a bedroom and their rent’s $400 a month’

    Entire buildings being repurposed as apartments, hotels or STR, in major metros. Boy that shortage sure went away quick. And Miami just hit a “cycle” high with 16,000 new units lined up? Jeebus, this is going to be one huge pop.

    1. I got this in an email:

      Over $1M Reduced | Prime Hancock Park Investment Property | Priced To Sell Bring All Offers

      617 North Sycamore Avenue
      Los Angeles, CA
      An incredibly rare offering; 10 units in Prime Hancock Park, comprised of 5 free-standing Duplexes on a HUGE 16,744 square foot lot, zoned LAR1.5 (offering multi-family development opportunity). Amazing scale and great frontage (90 linear feet)…
      Offered at $5,499,000

      1. Bloomberg
        California Is in Big Trouble Again
        The collapse of the housing bubble hit California hard, pushing unemployment above 12%. Some commentators suggested that California’s governance model, …
        2 hours ago

        Says it’s on the brink of being a “failed state”.

        1. I just read the BBG article on CA.
          “Meanwhile, despite one-party control of the state legislature, California has been unable to meaningfully address its housing crisis.”

          – My comments:
          – “One party control” – Yep! There’s your problem! No mention of Democratic Socialism though, ‘cause it’s Bloomberg (BBG). It’s amazing to me that because of the left’s near religious blind faith in Socialism, it’s still a complete mystery to them as to root cause of CA’s problems. “It CAN’T possibly be Socialism!
          – The only solutions proposed by BBG were a) Eliminate Prop. 13 and b) raise property taxes.
          – CA has been raising income and sales taxes, with the inevitable result of massive out migration, soon to be net negative migration.
          – History has shown Socialism always ends in a failed State. It’s not different in CA. What idiots!

          1. – To be fair, BBG did suggest reducing benefits for pensioners, but short of municipalities filing BK, that’s really hard to do. Look at IL (similar lefty disaster), for example.
            – I’m sure that all of the ‘free’ benefits showered on millions of illegal aliens don’t cost a dime, nor does sanctuary status for all of those welcoming cities either. Does anyone in CA know simple math anymore? Socialism is the new math.

          2. it’s still a complete mystery to them

            It’s not a mystery to them; they don’t care. They’re motivated by power and greed.

          3. The only solutions proposed by BBG were a) Eliminate Prop. 13 and b) raise property taxes.

            I actually think those two items alone would be extremely powerful in correcting a huge chunk of CA’s woes.

          4. Good reference here. Read the whole thing.

            If Socialism Is So Good, Why Are People Moving Away?
            February 7, 2019 | Dennis Miller | Free Market, Retirement

            The New York Times trumpets, “Mayor de Blasio Says Wealth Is ‘in the Wrong Hands,’ Pledges to Redistribute It.”

            “Here’s the truth, brothers and sisters, there’s plenty of money in the world. Plenty of money in this city,” the mayor said…. It’s just in the wrong hands!”

            Taxes Matter

            How Money Walks uses IRS data in their tax migration analysis. The red states have lost billions in wealth due to outbound migration. People are heading to states with lower taxes.

            I received a letter from a reader asking me to stop promoting Prescott, AZ. His reason? They are inundated with CA refugees; driving real estate prices sky high. We see the same thing here in Phoenix.

            Arthur B. Laffer and Stephen Moore’s Wall Street Journal article, “So Long, California. Sayonara, New York” concludes:

            “We estimate, based on the historical relationship between tax rates and migration patterns, that both California and New York will lose on net about 800,000 residents over the next three years-roughly twice the number that left from 2014-16.”

            Both states welcome immigrants looking for free stuff with open arms. That does not bode well for the remaining taxpayers.

            In the 1960s two events changed America. The birth control pill was perfected while Lyndon Johnson’s “Great Society” included laws that ended up incentivizing out of wedlock birth.

            The Washington Free Beacon references this 2017 study:

            ” …. Trends in marriage by economic classes have sharply diverged, a marked change from just 40 to 50 years ago.

            While poor and working-class Americans are less likely to be married or otherwise involved, they also have more children on average than their middle- and upper-class peers. Poor women have approximately 2.4 children on average; working-class women, 1.8; and middle- and upper-class women, 1.7. Poor women not only have more children but also start childbearing earlier.”

            The producing members of society are declining while the poor are reproducing at a rate almost 33% higher.

            The government made things worse.

            “Attempting to account for this divergence, (they) cite a series of interlocking economic, policy, civic, and cultural changes since the 1960s in America combined to create a perfect family storm for poor and working-class Americans.

            The marriage gap in America is also a function of policy decisions …. and a substantially expanded welfare state, including programs which actively penalize marriage. One survey found that 31 percent of Americans personally know someone who chose not to marry so as not to lose a means-tested benefit.”

            A liberal immigration policy adds to the challenge.

            Politicians focus on those who can vote them into power. If those getting the free stuff are the majority, that’s where they go. Ruling forever is the goal of every political party.

            Politicos, regardless of their party affiliation, have turned buying votes with tax dollars into an art form. While Mayor de Blasio may preach about the 1% getting richer, why are the big banks and federal reserve exempt?

            Wealthy pioneers like Henry Ford, Sam Walton or Bill Gates amassed fortunes by changing America. They created things the public wanted, including thousands of jobs. I’ve never seen a book titled, “Good things bankers did for America!”

            We can’t get enough votes in Congress to audit the Fed, much less break up their cartel. Why? The smart 1% make the right political donations and buy protection.

            In the Lincoln-Douglas debates, Honest Abe nailed it:

            “They are the two principles that have stood face to face from the beginning of time; and will ever continue to struggle. The one is the common right of humanity, and the other the divine right of kings. It is the same principle in whatever shape it develops itself. It is the same spirit that says, “You toil and work and earn bread, and I’ll eat it.”

            The ruling class consumes the bread produced by others. After taking their massive cut, they feed their armies to protect them and sprinkle the remainder to the masses to maintain their power.

          5. Just what we need: more taxes.

            Yes, sometimes you do need more taxes. Sometimes less. The default setting isn’t always less, it is smart taxation. CA’s taxation scheme has greatly distorted the housing market with prop 13 and artificially low property taxes, which only exacerbates wealth inequality by blowing asset bubbles. You could lower other forms of taxes and make it revenue neutral if you’d like. But eliminating prop 13 and raising property taxes while providing some other offset would be like mana from heaven for the housing burdened in CA.

      2. Available Inventory for apartments in southern California has grown 3X maybe more in the past year Ben…I am seeing many owners of multiple buildings put their whole portfolio on the market…Ditto for restaurant retail and portfolio office complexes…I just saw today, 6 Red Robin restaurant’s in three states come up for sale as a portfolio offering…

  3. I need to rent a place in Las Vegas soon. It’s just me, and I don’t have much stuff, so it will probably be one bedroom apartment.

    I moved out of my previous apartment at the end of January. And haven’t had my own place since. But I’m not liking this arrangement so I want to get my own little place again. Obviously I’m not going to buy right now.

    Just seems like maybe it’s bad timing though? I don’t really see rents or occupancy going down just yet. 🙁

  4. “Across the region, as law firms downsize and the federal government retrenches, the Washington [DC] area is awash in vacant offices.”

    Really?! The swamp is actually being drained a little bit? 🙂

    1. No, the swamp isn’t draining. DC developers got a bunch of Yellenbux too. In the past 10 years they built a ton of new office and apartment complexes — you know, work-here-play-here-live-here mixed-use — in the effort to revitalize areas around outlying metro stations. So the swamp is still expanding, just not fast enough to fill the new space.

  5. “An apartment-hotel company that manages short-term rentals is leasing and managing an entire 26-story Dallas apartment building, the latest sign this budding segment of the lodging market is starting to gain traction. These operators mark the latest threat to the big hotel companies, which are already struggling with supply gluts, rising labor costs and slowing economic growth.”

    These WhyHotel outfits are exactly the model I follow, but on a fraction of the scale (I’ve got about 25 units). The past 3 months I’ve broken down about 5 STR and converted them into full-time leases as we’ve filled up phase 1 of 350 units.

    To me it is a no-brainer to get some revenue on unoccupied units during a lease-up phase. The key is how to keep costs low in furnishing and make it very spartan and also to isolate these STRs from the full-time residents.

    My only question will be, how long before hotels start getting into the long-term rental game if there becomes a big glut due to all these STRs?

  6. We want it to breath luxury — ooze a sense of comfort and be a home that people deserve to have.

    I’ve gotten to where every single use of the word “deserve”, positive or negative, in any context raises a red flag for me.

      1. Every time I hear it I think Clint Eastwood in Unforgiven. “Deserve’s got nothing to do with it”.

    1. We did some work today on the trailers on Taylor south of Valmont in Boulder. Is that your former nabe? I never knew they were there.

      1. I haven’t heard of Taylor Street in Boulder, and can’t find it on a map? My ex is still there on the north side of Valmont off Airport Blvd.

  7. THIS IS not housing Related but I am going to post it anyway because I just cannot restrain myself.

    Here …

    There’s been a standoff between New York City and utility company National Grid going on since May of this year. As you may recall, plans for a new natural gas pipeline from New Jersey were killed off by the state government under pressure from environmental activists. As a result, National Grid wound up imposing a moratorium on new gas hookups because the current supply was insufficient to serve additional customers. This has resulted in more than a thousand potential customers being unable to be hooked up.

    Now the Governor has come up with a unique plan to end the stalemate. Using an obscure state law regulating utility companies through the power of the Public Service Commission, Andrew Cuomo (who helped kill the pipeline project) is simply ordering the utility to hook up the gas lines anyway. (New York Post)

    The Cuomo administration is ordering National Grid to provide natural gas hookups to over 1,100 previously denied Brooklyn-based customers.

    The Public Service Commission, the state body that licenses and oversees public utility companies, announced Friday that National Grid must provide service to customers or else face “millions of dollars in penalties.”

    Previously, 1,157 customers had been denied service due to National Grid’s moratorium on all new gas hookups, announced in May.

    Cuomo is accusing National Grid of “acting in bad faith” and crowing about their public responsibility to provide reliable service. But he’s simultaneously reiterating his opposition to the Williams Pipeline.

    Does this guy understand what he’s asking for here? We’re also left wondering if he understands why the utility stopped authorizing new gas lines in the first place. Does he think that National Grid was simply tired of making money? Obviously they want to sign up new customers so they can begin billing them.

    But there isn’t enough natural gas in the existing pipeline to keep adding more service points. If they continue to hook up new customers, you’re going to see the backpressure in the lines start dropping during peak demand hours. If you look at the configuration of a typical gas furnace installation you’ll note that if the incoming gas pressure drops too low, the furnace will simply shut down for safety reasons until the pressure is restored. The same is true for many other appliances that use natural gas or propane.

    Since peak demand typically hits during a severe cold snap in the winter, what Cuomo is ordering could result in a lot of people suddenly going without heat, most likely near the furthest extreme of the gas lines. And at that point, complaining to National Grid and issuing more orders isn’t going to make the heat come back on.

    Of course, none of this may wind up mattering (at least until winter) because National Grid turned around and agreed to do the hookups anyway. It was that or face crippling fines handed down by the state. They will apparently open up more lines and just wait for the weakening gas supply to shut off the heat on its own.

    There’s a solution to this problem right in front of the governor if he has the common sense to see it. Your problem isn’t the management at the utility. It’s the lack of natural gas supplies running into Brooklyn. Approving the new pipeline would fix this because there is a virtually limitless supply of gas waiting for you in Pennsylvania. (And there would be in your own state as well if you hadn’t signed a moratorium on fracking.) Approve the pipeline, get the gas flowing again and all of these headaches go away. Fail to do so and you’re going to wind up with an army of freezing, very angry constituents in February. It’s your call.

    Cuomo orders utility to pump imaginary natural gas

    1. Related to the above article is this (from Feb 14, 2019) …

      HOLYOKE — Holyoke Gas and Electric (HG&E) has imposed a moratorium on new natural gas connections for residential and business customers, citing no increases in pipeline capacity by Berkshire Gas and Columbia Gas of Massachusetts.

      In a statement, HG&E said the “load has grown significantly and is now operating at capacity during peak periods,” which triggered the moratorium on new gas connections. A Tennessee Gas pipeline,

      known as the Northampton Lateral, became “severely constrained” as a result of high demand in the last 20 years.

      Berkshire and Columbia began implementing service moratoriums in 2014, which were also related to the Northampton Lateral capacity problem.

      HG&E suggested existing customers could improve their existing service by replacing aging gas furnaces, stoves or water heaters, but only if the “load profile does not increase and the service was active as of Dec. 31, 2018.”

      The utility said it could accommodate specific commercial and industrial requests, which also are dependent on load profile and “the ability for those new customers to utilize dual fuel during peak periods on HG&E’s interruptible rate.”

      HG&E further stated that while the nation’s natural gas supply is plentiful, the current pipeline infrastructure is lacking.

      “Recent proposals that would increase natural gas capacity in the region have been met with opposition, and the current pipeline constraints are causing significant adverse environmental and economic impacts on the region’s ratepayers,” read the statement.

      Neighbor to Neighbor, a Holyoke-based group, opposes increased capacity, citing environmental and safety concerns. Several members of the group recently addressed the Holyoke City Council’s Development and Government Relations Committee chaired by Ward 4 Councilor David K. Bartley.

      James Lavelle, HG&E’s manager, countered by stating that New England utilities burned 2 million barrels of oil during a 15-day “cold spell” in January 2018, which exceeded the total consumed in 2017.

      Holyoke Gas and Electric imposes moratorium on new natural gas service –

        1. It’s going to be hilarious when the liberal northeast starts losing heat in the middle of January. Nothing better than to see environmental extremists hoisted by their own petard.

          1. Exactly, it is the mirror image of the build it and they will come but do not build it and they will not need it does not work. Both California and New York will soon learn you cannot run a modern economy on unicorn farts and fairy dust. Wind turbines and solar panels do not last 30 years and coal and NG plants last far longer than thirty years. However the studies which claim that wind and solar are competitive assume all the sources last thirty years.

    2. Cuomo orders utility to pump imaginary natural gas

      He obviously understands this. Come January we will find out what his agenda really is.

  8. The Deep State has a new Narrative: If you oppose giving the miltary-industrial complex a blank check, or endless neocon regime-change fiascos, you are “attacking America from within.” Gosh, we’d better start building a gulag to protect ourselves from these Emanuel Goldstein agents, and start up mandatory Two Minutes of Hate sessions while we’re at it.

    1. RentCafé: Average U.S. rent declines for first time in 2 years
      The national average rent falls to $1,471 in September
      October 15, 2019 By Alcynna

      America’s rental prices declined in September, as RentCafé indicates the nation’s average rent fell by $1 – the first decrease since 2017.

      Although September’s month-over-month decrease may seem insignificant, RentCafé says that it points to a slight wind-down in rent prices in the context of a more volatile financial climate.

      According to the company’s Apartment Market Report, the national average rent in August totaled $1,471.

      1. Also from the article:

        “While this is a 0.1% decrease from the previous month, it also represents a 3.2% increase from the same time period in 2018.”

        As they say, one swallow doesn’t make a summer. Let’s see yoy falling rents, or even sideways rents and then I think something will be happening.

    1. Catholic illegal/resident immigrants having as many anchor babies as they can and living intergenerationally. It doesn’t change the number of houses needed, but it’s hell on the traffic.

      1. Anecdotally, I’m seeing more intergenerational living of all types and unique living arrangements. In our immediate family my sister-in-law and her husband with two children have been living with their parents for almost 5 years now, rent free. It’s the only way they could survive as neither are college educated and she is a stay-at-home mom with no real skills and he probably pulls in $30k/year.

        1. Probably TMI.
          That’s the way we grew up in (not rich) Manhattan. The neighborhood was constantly changing, going bad. We were reluctant to leave where we were since we lived in rent controlled/stabilized apartments being long time tenants. When it got too bad, we moved a few blocks away to an area that was still good, referred by friends/family. Every time an apartment became available our landlord would give whatever relative still back in a bad part of the neighborhood a newly available apartment to get them out of there.
          Before this, it was a nice time. As a kid, we always had someone you could go, a relative who was always home and nearby. Since we lived right below my maternal grandparents, we’d just grab a broom and knock on the ceiling and talk through the dumbwaiter. If you needed milk or whatever, they’d put it in there and you’d pull on the rope and voilà, there it was.
          I used to go to my paternal grandparents for lunch in the middle of the school day. My mother said they were always grateful that we were still so close since my father passed away when we were very young.
          Such a shame how things are now. It was hardly idyllic but life has changed so much.

          1. Thanks for sharing. It seems like there are distinct benefits from being able to be close to extended family. Modern society seems to have made that pretty difficult for all but a handful. Immigrants, however, still seem to do good at making the intergenerational family thing work. I think this has to do with the older generation really pitching in to give the younger one a leg up. This is especially evident in many Asian cultures.

        2. intergenerational living
          Yeah, I think it has good advantages. Kids grow up cared for by an extended family.
          I burst out laughing when I saw an apartment in a building we lived in back in those days listed for $300K plus (co-op). They had renovated it so completely I couldn’t tell which room was which but it’s still a five story walk-up. Because of that, weekly grocery shopping was a group effort and gave us our exercise for the day.

  9. Is it safe to say the economic storm has blown over without any significant impact, given the yield curve deinversion and the Brexit and China deals?

    1. It seems like the pundits are so singularly fixated on the ten-year Treasury yield that they are oblivious to the ongoing inversion out to five years. Nothing that a few more rate reductions can’t cure, I suppose.

      The Financial Times
      Federal Reserve
      Strategists worry US yield curve could invert again
      Recent bullish signals from bond market indicator are linked to short-term factors
      FILE PHOTO: The Federal Reserve building is pictured in Washington, DC, U.S., August 22, 2018. REUTERS/Chris Wattie/File
      Analysts say much depends on whether the Federal Reserve delivers enough interest cuts to soothe investors © Reuters
      Colby Smith in New York 3 hours ago

      Strategists say the recent steepening of the US yield curve might be shortlived, warning it could invert again if the Federal Reserve fails to deliver enough interest rate cuts to soothe investors and stave off a slowdown.

      Investors worry about an inversion of the yield curve — in which shorter-term rates are higher than longer-term ones — because of its power as an economic indicator. The curve has inverted before every recession of the last half century.

      Fears of a downturn eased this month after a widely watched portion of the yield curved turned positive following months of inversion. Thursday’s yield on the three-month Treasury bill was 8 basis points lower than that for the benchmark 10-year bond — after being as much as 51bp higher. The two-year Treasury yield was 16bp lower than that on the 10-year after inverting earlier.

      1. There seems to be a glaring logical flaw in the bovine herd’s thinking, which is that financial plumbing efforts to contort the curve into a non-inverted shape will somehow miraculously erase the fundamental reasons the curve inverted to begin with.

        Good luck with that theory!

        1. You make a really good point here professor–the inversion doesn’t CAUSE recession, it is caused by a lot of people forecasting a recession (and putting their money where their mouth is to boot).

          1. it is caused by a lot of people forecasting a recession

            I would say it is caused by investors not having confidence that there are many growth opportunities and so pulling out their investments and placing them in “safe” assets. They are “hunkering down” so to speak.

        2. You are assuming the fundamental reason is a coming recession. I have always assumed the fundamental reason was that the Fed was too tight since it wanted to hurt Trump. It only stopped when it saw it was causing a worldwide recession.

      2. “Nothing that a few more rate reduction$ can’t cure, I suppose. ”

        “Lower the damn Fed$ Rate$ to (0) Zero!, Now!”: dtRumpsis, Navarro, Kudlow, Ro$$, Ha$$ett & Co. llc.

        The Next Rece$$ion’s Cure Might Be Wor$e Than the Di$ease
        Too much ea$y money and not enough fiscal $timulus is a dangerous combo.

        Bloomberg |By Mark Gongloff |October 17, 2019

        “… monetary policy alone can’t fix what ails the global economy, writes Ferdinando Giugliano. In fact, the more easy money is pumped into the system, the more investors and businesses take ever-bigger risks, raising the chances it all goes kablooey when growth slows. The cure could soon be worse than the illness.”

        1. I am actually starting to come around to DJTs thoughts on rates. If rates are lowered, it makes a huge difference in borrowing costs for builders and the housing market can continue to ride. As long as people are worried about a recession, maybe they start building more reasonable dwellings at these rates in the next 6 years instead of ultra luxury.

    2. The Financial Times
      Chinese economy
      China’s GDP growth sinks to new low of 6%

      Weaker than expected figure is worst in three decades, adding to global economic woes
      Workers help to dock a China Ocean Shipping Company (COSCO) container ship at a port in Qingdao, Shandong province, China October 19, 2018. REUTERS/Stringer ATTENTION EDITORS – THIS IMAGE WAS PROVIDED BY A THIRD PARTY. CHINA OUT.
      In September, Chinese exports fell 3.2% year on year © Reuters
      Don Weinland, Sun Yu and Xinning Liu in Beijing 31 minutes ago

      China’s economy grew at 6 per cent in the third quarter of 2019 compared with a year earlier, its slowest pace in about 30 years, delivering another blow to global growth and underlining many of the challenges facing President Xi Jinping.

      The country’s trade war with the US, slowing income growth and cooling manufacturing investment took a toll on the world’s second-largest economy between July and September, according to the figures released by the National Bureau of Statistics on Friday.

      The gross domestic product data came in below analysts’ expectations of 6.1 per cent and revealed that China’s growth was running at a level comparable with the late 1980s. However, the overall size of the economy is now far larger and, by many accounts, cannot continue expanding at double-digit rates.

        1. Why should thee Chine$e offer more truthful data $ets than American real e$tate profe$$ional$?

    3. Adding Fre$h Oct 2019 word$ of eCONomic promi$e: “$oft.landing$” + “hicup$” + “$ag” = Fa$ter!, fa$ter!, fa$ter! … More!, More!, More!

      Risk of ‘$harp, $udden’ Financial Tightening Has Ri$en, IMF Says
      By Jeff Kearns |Bloomberg |October 16, 2019

      Weak companie$ will come under pre$$ure in a downturn

      International Monetary Fund cut global outlook to 10-year low

      “While easier financial conditions have supported economic growth and helped contain downside risks to the outlook in the near term, they have also encouraged more financial risk-taking and a further buildup of financial vulnerabilities, putting medium-term growth at risk,”

      The policy easing that has helped support global growth has also fueled a further increase of financial risks, and threats to global growth and financial stability remain “firmly skewed to the downside,” the fund said. It added that policy makers “urgently need to take action to tackle financial vulnerabilities that could exacerbate the next economic downturn.”

      The fund said lower yields are spurring investors such as insurance companies and pension funds “to invest in riskier and less liquid securities” and that pricing in financial markets signals interest rates will remain lower for longer than anticipated at the start of this year. About $15 trillion of debt worldwide has negative yields, it said.

      “There are quite a few weak non-financial firms in these economies that are still able to roll over debt and continue to accumulate debt because of very low interest rates”

      “The concern is that in an economic downturn these firms may come under pressure and may experience difficulty servicing the debt, and they have to deleverage, and when they do they cut back on investment and employment and that exacerbates the recession,”

      Vulnerability among non-bank institutions is elevated in 80% of nations with large financial sectors, a share similar to the depths of the global financial crisis, the fund said. In an economic slowdown scenario half as severe, corporate debt owed by firms unable to cover their interest payments with earnings could rise to $19 trillion, or nearly 40% of company debt in major economies.

      “The search for yield in a prolonged low-interest-rate environment has led to stretched valuations in risky asset markets around the globe, raising the possibility of sharp, sudden adjustments in financial conditions,” the fund said. “Such sharp tightening could have significant macroeconomic implications, especially in countries with elevated financial vulnerabilities.”

      “While monetary easing has supported growth, it is essential that effective macroprudential regulation be deployed today to prevent mispricing of risk and excessive buildup of financial vulnerabilities,”

  10. Oh dear. Hong Kong skybox owners are dumping their skyboxes at up to 25% under market value to take the money and run as social unrest drags on. Gosh, I’d hate to think these deep discounts represent the new market value, cuz in that scenario, “investors” who bought before the unrest just saw a quarter lopped off their skybox valuations.

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