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Conditions Have The Realtors Suggesting The Once Unthinkable

A report from Builder Online on New York. “The number of homes for sale reached new highs in Brooklyn and Queens and jumped to near-highs in Manhattan, according to the Q3 2019 StreetEasy Market Reports. In Manhattan, the index fell 4.4% to $1,093,562 — its lowest level since 2015. ‘Most sellers are still refusing to bow to the buckling market, causing would-be buyers to turn to the rental market, where they are finding a lot to like,’ said StreetEasy Senior Economist Grant Long. ‘Until sellers recognize that prices are not what they once were, those with the means to buy will continue to play the waiting game from the comfort of their rental.'”

From Curbed Boston on Massachusetts. “Conditions have the realtors association suggesting the once unthinkable: That the Boston-area housing market—so long the domain of ceaseless escalating prices, vicious bidding wars, and often paltry inventory—might be turning in favor of buyers.”

“‘The sellers’ market is likely over, or at least the balance has shifted,’ Jim Major, president of the Greater Boston Association of Realtors and an agent with Century 21 North East in Woburn, said in a statement. ‘With sale prices having begun to stabilize, more homes and condos available for sale, and properties sitting on the market longer, home values have most likely peaked in many areas.'”

The News Press in Florida. “Eminent domain and the housing market crash of the Great Recession have placed a 74-year-old widowed woman into an unenviable position with the City of Cape Coral. Thereza Dean was asked in July by Cape Coral to sell her vacant lot for $96,000. Since then, negotiations have been ongoing. This month, the city has increased its offer to $100,000 after Dean spent $200 on an appraisal that valued the land at $105,000.”

“For Dean, even the increased offer still posed an economic challenge. She purchased the parcel for $183,000 in October 2004 in northwest Cape Coral, just south of the Charlotte County line, a little before the real estate market bubble burst in 2006. One year prior to her purchasing it, it sold for $85,000, property records show. Counting the property taxes she has paid over the past 15 years, Dean looks to lose more than $100,000 of her investment by selling it.”

“Dean acknowledged she made a bad investment. She said she was upset to be forced finally to reckon with it. The city also gave her the option of doing a land swap for it, but she just didn’t want to be stuck with any more land. ‘I just don’t want to deal with it anymore,’ said Dean, who was contemplating this week whether to hire a lawyer. ‘The whole situation was making me feel sick.'”

The Post and Courier in South Carolina. “For the first time in two years, rents across the nation and in Charleston and North Charleston dropped in September, if ever so slightly, according to RentCafe. Last year, rental rates were projected to fall slightly this year because of the glut of new apartments coming on the market throughout the region. More are on the way, especially on Charleston’s upper peninsula.”

The Springfield News Leader in Missouri. “A California-based company’s request for nearly $5 million in local property tax incentives isn’t sitting well with local developers. Tim Roth, the president of the Springfield Apartment Housing Association, cited a recent survey of the Heers building, Park East, 800 South Bear Village, the Beacon properties, Aspen Heights and the new Vue project, which found just 84 percent of the 2,700 spaces for students were filled.”

“Craig Wagoner, who owns several loft apartments in historic buildings downtown, said the city is already getting ‘overbuilt’ with large-scale student housing projects, and this one could be particularly dangerous for the market and the city.  Wagoner said for an out-of-state developer getting all that financial help, building a sustainable project won’t matter. ‘He’s not worried about occupancy. He doesn’t have to worry about that, but it’s going to saturate the market and take a long time for it to pick up,’ he said. ‘When you look at all the credits and the incentives … some guy in California doesn’t care.'”

From Colorado Politics. “Renters in the Denver metro area saw some relief in average rent during the third quarter of 2019. After accounting for inflation, the metro area’s annual rent has fallen either at or somewhere below 2 percent since 2016, said Mark Williams, the executive vice president of the Apartment Association of Metro Denver.”

The Sentinel Record in Arkansas. “A North Little Rock developer said he plans to build luxury apartments on the tract he recently acquired between Higdon Ferry and Twin Points roads. Keith Richardson said he intends to dedicate 35 of the roughly 100 acres he bought from Bank OZK to a Class A multifamily apartment complex in the vein of upmarket units his company built and manages in the Little Rock metropolitan area.”

“A deed recorded earlier this month showed the company paid Bank OZK $2 million for the land. According to property records, ownership devolved to the bank in 2016 after developer Robert Malt defaulted on a $2 million revolving line of credit secured by the property, one of numerous Malt-owned properties that backed millions of dollars in nonperforming loans.”

“Simmons Bank completed foreclosure proceedings the following year on Malt-owned properties in the nearby Forest Lakes Garden Homes neighborhood after it was awarded a more than $1.8 million judgment for loans Malt had defaulted on. ‘It will be resort-style and high on amenities,’ Richardson said. ‘There will be 15,000 to 20,000 square feet of amenities: golf simulators, virtual workout rooms, a pool and a spa.'”

From Bakersfield.com in California. “If the owner of Sundale Country Club was looking for financially stable business partners, he chose the wrong guys. But if the goal was to buy time, his choices were effective. All three of the men Sundale owner Young Ohr gave a minority stake to in June 2018 have since filed for bankruptcy protection. The result has been repeated postponement of the golf course’s sale at public auction.”

“The 18-hole golf course is the central feature of Kern City, the surrounding retirement community where residents have eyed the foreclosure process warily. Whoever ends up owning the property will have the option, starting in 2022, of turning all or part of the course into new housing, which many residents there oppose.”

“Bakersfield bankruptcy attorney D. Max Gardner, who is not connected to the Sundale case, observed that bringing in new part-owners who then proceed to file for bankruptcy protection can be regarded as a strategy to buy time. ‘It can be a desperate tactic that’s utilized to invoke the automatic stay (of a foreclosure auction) so that the creditor can’t proceed with the trustee sale,’ he said.”

“Gardner added that such legal maneuvers don’t happen often, and that people facing bankruptcy often do feel a sense of desperation because of the nature of their financial predicament. Song’s Chapter 7 bankruptcy filing, dated Oct. 15, says he owes fewer than 50 creditors a total of between $50,001 and $100,000. It says his assets are worth no more than $50,000.”

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This Post Has 136 Comments

  1. ‘In Manhattan, the index fell 4.4% to $1,093,562 — its lowest level since 2015’

    Worser and worser…

  2. From Curbed Boston on Massachusetts. “Conditions have the realtors association suggesting the once unthinkable: That the Boston-area housing market—so long the domain of ceaseless escalating prices, vicious bidding wars, and often paltry inventory—might be turning in favor of buyers.”

    If these realtors think a softening RE market is unthinkable, wait until they get a load of the Great Reset when it shows up in all its fury.

    1. All the smug Boston area RE shills are about to get a rude awakening when they learn no, this isn’t the “next Bay Area”.

  5. ‘PRIMORSKY KRAI, Russia—Three years ago, Russia set out a bold plan to revive its vast Far East, handing out free land to reverse depopulation in an area rich in timber, minerals and oil that has drawn interest from Chinese investors and businesses.’

    ‘But the ambitious program to arrest the decadeslong outflow of residents to the bright lights of big cities, including Moscow and St. Petersburg, hasn’t lived up to expectations. Pioneers of this five-year pilot program now in its third year have been stymied by poor transportation, meager power links and unexpected costs, leaving some locals worried they will be unable to keep up with the Chinese economic juggernaut.’

    ‘Property lawyer Oleg Kuchma found that the free hectare, or 2½ acres, he was allocated is blanketed with trees and brush. He planned to build a water-bottling plant or sports center, but local engineers told him it would cost the equivalent of $61,000 to set up infrastructure to get electricity to the site. He would also have to drill a well for fresh water.’

    “The hectare itself is free, but everything else is a headache,” said Mr. Kuchma, whose land overlooks the Sea of Japan. “It’s madness.”

    https://www.wsj.com/articles/on-russias-vast-frontier-lots-of-free-land-and-few-takers-11571909402

    1. Eye would love to $ee this opportunitie$ pre$ented to those great American citizen’$ who might tackle such “free.land$” with grit & innovation$ & 4×4 $ubaru’s!

      Hand out survey stake$ & florescent tape @ the next “Burning.Man” Fe$tival! … (does Amazon & Pizza Hut provide free deliverie$?)

      $ign.me.up! … (do you think any financial NON.Bank would provide me a quick high.intere$t mini.$helter.$hack con$truction loan?)

      1. There are several states that are offering this type of incentive in the north east because their of the aging of the population. It is either some form of student loan forgiveness or housing/tax credit. Vermont has a $10k remote worker program.

  6. (Reuters) – Sales of new U.S. single-family homes fell in September as low inventories continue to weigh on sales even as prices saw the biggest monthly fall in five years.’

    ‘The median new house price fell 8.8% to $299,400 in September from a year ago. Prices were down 7.9% from the prior month, the biggest decline since September 2014. ‘

    https://www.reuters.com/article/us-usa-economy-housing/u-s-new-home-sales-dip-in-september-prices-fall-idUSKBN1X31VH

    Good thing everybody is putting 20% down…

      1. “ So now low inventories cause lower prices? Who writes this stuff?”

        As i was reading this and watching NBR news, RE expert Diane Olick happened to show her witchy face and explained this as follows: 50% of housing sold this year was low end “affordable” housing vs 43% last year but the builders dont have enough inventory to keep up with “demand?” Then went on to say buyers are more picky… She expects home sales to pickup in coming months…

        Had to turn the tv off after near vomiting from watching her…

      2. They have their reasoning backwards. Low demand causes low prices. And low prices keeps sellers who can’t find a buyer willing to pay their wishing price out of the market. The volume of listings and sales drop, along with prices, exactly as economic theory predicts should happen.

    2. Wow, that is a meaningful drop. Will be interesting to see what happens between now and spring.

  7. “The 18-hole golf cour$e is the central feature of Kern City, ”

    Baker$fried!

    Pick up yer free moving’ inn “Welcome Ba$ket” @ the Chamber of Commerce in Weedpatch or OilDale!

    Contents: x1 quart of motor oil, x1# of non.organic baby carrots & x1 12oz bottle of pesticide

  9. It will come down to a question of when these things will eventually happen.

    1) Baby Boomers realize en masse just how much worse off they have left the generations coming after, and if they don’t want the sales price to reflect that, they’d better get out while the getting is good. (Before massive tax increases and cuts in public services, for example).

    2) Millennials realize en masse just how screwed they are, and decide not to buy no matter how high the rent rises until the sales price is so low it offsets all the other disadvantages and provides the possibility of a decent return and future life.

    True of houses, true of stocks.

    1. “Millennial$ realize en ma$$e … ”

      What do ya reckon their average age will bee when the “realization led lightbulb” become$ illuminated?

      1. “led lightbulb”

        For the boomer cohort, my guess is when they are about 120 years old and for the millennials, about 80 years of age.

        1. As an old millennial, even I might consider buying at today’s prices, but only when interest rates get sufficiently negative.

  11. OK kiddie$ here’$ what we have cooking in Wall $treet’$ Veg.O.Matic $lice&Dice machine today:

    ETF Meatloaf mini.Muffin$!

    1. Get what ever $ize ETF bowl you like
    2. Choo$e yer favorite color
    3. Dump the inGREEDient$ from Veg.O.Matic & vigorou$ly $tir
    4. Put into oven & bake until it completely ri$es
    5. Carefully remove & let it $ettle.
    6. Enjoy with friends & family ($erve$ Million$!!!)

    As seen on “live.TV” @ Cramerica! (ju$t kidding!)

    Per$onal Finance:

    Charles $chwab’s move to $ell fraction$ of $hares could be a ‘game-changer’ for investor$

    Published: Oct 24, 2019 | MarketWatch | By Brett Arends

    https://www.marketwatch.com/story/charles-schwabs-move-to-sell-fractions-of-shares-could-be-a-game-changer-for-investors-2019-10-23?mod=home-page

  12. I think you can start a whole new blog about the Golf Course Bubble. Left and right they are shutting down, getting sold to investors for repurposing while the golf course communities are seeming less and less exciting for younger people. “You mean I get to spend a million for a poorly built McMansion with $600 a month HOA fees backing the 14th while some gummer shanks a Pro V1 through my brand new window? Gee, where do I sign up”?

    As much as I love golfing the money and time coupled with the poor experience is never worth it.

    1. This is a (-$$$enior) only community (gated) in Thee.oh.$ee!
      (eye believe the City has purcha$ed it recently)

      Fun comments!

      City to explore feasibility of acquiring Cas$ta Del $ol Golf Cour$e for community benefit.

      The City of Mission Viejo is looking at the feasibility of purchasing the oCasta Del Sol Golf Course after the City Council on Tuesday voted unanimously to direct staff to evaluate the City’s interests in preserving the golf course for public purposes by acquiring the facility.

      Key issues under examination will be the condition of the course; costs to repair, renovate and enhance the facility and grounds; methods to fund the purchase; revenue and costs of the current course; and opportunities to raise revenues to help pay for the purchase. The City will also look at the interest and costs of obtaining the purchase rights from the current buyer, long-range connectivity with the trail and neighboring City recreation facilities; and the community’s vision for the property’s use. There is much to be learned and evaluated, so the City Council and residents can be the best stewards of the City’s money.

      Designed in 1970, the 3,760-yard course has long been a significant community-oriented property with an emphasis on benefiting kthe residents and guests of the Casta Del Sol development and with general use by residents of Palmia and the entire Mission Viejo community. The property owner placed the golf course on the market. As part of its due diligence, the City will explore the idea of preserving a golf course use, enhancing the current uses as well as potential future uses on site for wider community benefit.I

      https://cityofmissionviejo.org/news/city-to-explore-feasibility-of-acquiring-casta-del-sol-golf-course-for-community-benefit

        1. They want to play in their “back yard” only to be chased off by swozzled, cigar-chomping hacks in funny pants.

          Seems like even golf is dying in my retirement/tourist city. Pickle ball is all the rage these days!

  13. “Conditions Have The Realtors Suggesting The Once Unthinkable”

    Since when do realtors;

    -think
    -tell the truth
    -work

    ?

    1. “The whole situation was making me feel sick”

      That’s what REALTOR does.

      Heroin is over. Now enjoy being dopesick, you debt junkie.

    1. Fed “cash for trash” repo operations continue to expand.

      Repurchase Agreement Collateral (repo): “Securities eligible as collateral include Treasury, agency debt, and agency mortgage-backed securities.”

      The third item here is likely the source of pain. 🙂

  15. “Eminent domain and the housing market crash of the Great Recession have placed a 74-year-old widowed woman into an unenviable position with the City of Cape Coral.”

    She made a speculative investment and it didn’t pan out. It happens. Not sure why we should care she’s a widow or old.

    1. Has the land market in FL been that bad that she couldn’t have sold it earlier, say 2016-18 sometime? Did she simply hold out for a higher price for too long and miss-time the peak?

    2. She likely has no means or available time to recover financially from her losses, unlike a Millennial whose Bitcoin horde is gradually shriveleling away might later enjoy.

      Editor’s Pick|6,910 views|Oct 24, 2019,12:06 pm
      Is Bitcoin Poised For Further Losses After Its Recent Drop?
      Charles BovairdSenior Contributor
      Crypto & Blockchain
      I am a financial writer and consultant who focuses on investments.
      Bitcoin Virtual Currency : Illustration
      Bitcoin prices may be headed for more losses

      Is the world’s most prominent digital currency heading toward additional downside after dropping more than 5% yesterday?

      Several market observers leveraged technical analysis, emphasizing that the cryptocurrency has been giving off bearish signals.

      Bitcoin is on a “collision course for a death cross,” said analyst Mati Greenspan, referring to a chart setup where an asset’s short-term moving average falls below its long-term moving average, portending price declines.
      …

  16. It was announced Refis are twice the amount that they were last year. Especially among those who’d already recently refinanced. Hmmm perhaps families trying to transfer a lot of consumer auto and credit card debt? Recipe for a slow bleed toward bankruptcy and homelessness.

    1. “a slow bleed toward bankruptcy and homelessness”

      Alot of loanowners are already there or close to it.

      Living one foot in their financial grave… 🙁

  18. ‘Until sellers recognize that prices are not what they once were, those with the means to buy will continue to play the waiting game from the comfort of their rental.’

    Long time without commenting as I had to move from one rental to another due to landlord needing our previous house. It was unexpected and we had to move fast, so we did not have a lot of leverage to negotiate. Even so, if I go by the Zestimate of my current house I would have to put 500K down and pay 50% more for a mortgage than I am paying for rent. Even if we had ended up in one of the other houses we saw that had a much higher asking rent, we would still have been within “rent cheaper than buying” territory. Some landlords get it, some others don’t.
    Just this week I found my footing again after the crazy move. I checked the listings in my previous hood and saw a couple of very nice houses that were not in the market when we were looking whose rents have been lowered by over one thousand dollars. Only three months ago some landlords turned their noses at an offer just 400 dollars under the asking with 6 months rent in advance. Winter is coming….

        1. I don’t know how you people do it. I was just in west LA a few weeks back and could not wait to leave. Culver City was much dumpier than I ever remember. Homeless people everywhere, gang bangers driving around, Guatemalans pushing shopping carts with kids in tow, nowhere to go – just hideous.

          1. All of this part of LA is getting dumpier if you don’t count places like Bel Air. There are homeless people everywhere along the avenues that cross residential areas, even in the most pricey zip codes. I just went to the gas station. There was a poor homeless woman hanging out at the pump looking like she had a mental problem, and another pan handler across the street in the 7 eleven parking lot. It’s the new normal, but house prices make it seem like you are living among millionaires. Something’s got to give, that is why we rent.

          2. Yeah, but you can ski AND surf on the same day! Do you not grok how fantabulously awesome that is?

            Worth every penny – flyover can suck it! We chosen share sidewalks with the rich and famous of hollyweird – and you cant put a price on that.

    3. Cassiopeia, I know what that’s like and you have my sympathy FWIW, though I am in a much, much, much lower price range. Not to underestimate your pain, but it’s been striking me for quite a while now that the comment section here used to be a little more regular. People humorously scorned those who, for example, wanted granite countertops, which were deemed as pretentious. Things have certainly changed in the last 14 years.

      Winter is coming
      Totally agree, if I’ve correctly interpreted your reference, but the GOT finale is still painful to remember, almost as bad as Dexter.
      Yeah, I watch TV. I would never pay for it (VPN/Kodi/other APKs) and I see the BS that’s embedded and don’t take it seriously, even at half attention as I’m online reading other things.

      1. It’s not just that things have changed, they have gotten even crazier and the crazy has become “normal” so there is really very few people you can talk to. I am not rich. I only live in a rented house whose price would indicate that whoever bought is either rich or loaned way too much money.

        GOT, I confess to watching. The last season, was…. let’s just say it was the cause of long debates in my family. I fell on the side of those who said why, oh why did they have to shorten and hurry everything so much!

        1. they have gotten even crazier and the crazy has become “normal” so there is really very few people you can talk to.
          So true. Prob would be good for me to take a break from the sites I read routinely; they’re depressing as hell. This article kind of set me off (OT, about corruption and a “comedian”):
          medium.com/@laurenspitzberg/did-the-son-of-the-worlds-premier-fixer-fix-his-hollywood-career-c4373c6e1a83
          The worst people have been winning…forever. I hope winter comes for them soon, but I’m afraid it’s just too big.
          Next on my list, get some sunshine.
          All the best.

          1. The worst people have been winning…forever

            I had to swallow that bitter pill when the bailouts happened and we had to keep on renting. The lesson is you hunker down and keep on working. That comedian guy is going to get himself booed out of the stage one of these days, maybe not soon but one day. Even if that does not happen, success does not taste well if everyone knows you are a fake, especially not for performers who get their high not only from money but from making people laugh, cry, etc. Look at the Neumann guy from WeWork. He is many times a millionaire and everyone knows he is full of BS. Some people do not want that kind of success, and they take what they can get doing things right in their field. We just have to thank God that those people exist.

          2. I had to swallow that bitter pill when the bailouts happened

            Yup. And everything that went with it. 10 years ago I knew there was corruption but I thought the dollar was sacred because it represented the future of the country. Once I realized that nothing was sacred and ANYTHING can be thrown overboard to save TPTB including the future of the country then I knew I would have to question all my assumptions about what would happen next. Which means now I believe the Fed is never out of ammunition until unopposed unfriendly tanks are parked on the steps. Until then as long as people are willing to trade time and wealth for their promises, they have power to make us as a country do things their way.

          3. I first heard about the depth of corruption as a little kid from my very political grandmother, then more from reading in the 60’s on. It’s not hard to believe at all if you extrapolate from your personal experiences in life, business. It’s just that the info is everywhere now, in excruciating detail. BTW, that article moves on from Nick Kroll about halfway through and starts detailing the really scary part about law enforcement agencies, high to low and worldwide being corrupt right down to controlling John Jay in NYC.
            Once I realized that nothing was sacred and ANYTHING can be thrown overboard to save TPTB including the future of the country then I knew I would have to question all my assumptions about what would happen next.
            So true, Carl. Ron Paul always said they’ll print until they can print no more.

          4. power to make us as a country do things their way.

            Their power comes from morally bankrupt debt donkeys and charlatans. They are far from omnipotent.

          5. “We thought it was a rough patch, but it turned out to be our life.” —Bruce Eric Kaplan, New Yorker cartoonist

          6. “We thought it was a rough patch, but it turned out to be our life.” —Bruce Eric Kaplan, New Yorker cartoonist

            That is a a classic, one of my favorites!

  19. Long time reader, first time poster (I think). Am checking in from Laguna area of Orange County – and will report some anecdotes from time to time on what I see. I’m a huge housing bear, but I do not see much (any?) concern or significant price drops around here at all. Same goes for my relatives up in the Bay Area.

    1. “ Long time reader, first time poster (I think)”

      Welcome (back?) red

      “ but I do not see much (any?) concern or significant price drops around here at all. Same goes for my relatives up in the Bay Area.”

      Nothing significant yet but lots of price drops and much longer DOM in the area i track (bay area). When you have the printing presses running 24/7 to support RE and stawk it keeps the ships from sinking. The good news (or bad for realtors and RE related shills) is that it will isnt going up and waiting it out isnt looking like a bad option. As realturds always say, i dont have a crystal ball but i would Put my money on a crash vs another bull run

      1. “Put my money on a crash vs another bull run”

        Yes, in that order (six years down first)…

    2. Definitely significant in SV, and the hard times haven’t even hit yet (although they’re coming, as WeBroke shows). I’ve seen A LOT of price reduced signs around here.

      Yes, houses are still selling, but much more slowly, and often with significant price reductions (>$30K).

    3. Of course, there’s too much of the “real estate always goes up, so if there’s any dip, buy it!” mentality.

      CA’s government has been trying to kill the golden goose for >30 years. Some day they’ll succeed.

      1. The California government has declared open season on golden gooses. Eventually the species will go extinct, at which point the transformation of a formerly rich state into a third world country will be complete.

  21. ‘Most sellers are still refusing to bow to the buckling market, causing would-be buyers to turn to the rental market, where they are finding a lot to like,’ said StreetEasy Senior Economist Grant Long. ‘

    You stick to your guns, sellers. CNBC RE expert Diana Olick assures us that green shoots of whenever are going to be sprouting in a matter of weeks or months, so hold firm for that special buyer who will give you every penny of your wish price.

  22. Song’s Chapter 7 bankruptcy filing, dated Oct. 15, says he owes fewer than 50 creditors a total of between $50,001 and $100,000. It says his assets are worth no more than $50,000.”

    Song sung blue, everybody knows one….

    2. “says he owes fewer than 50 creditors a total of between $50,001 and $100,000. It says his assets are worth no more than $50,000.”

      Sounds like it’s second job and cut your lifestyle to the bone time.

      1. Well, the chapter 7 should wipe out all the debt, and unless the assets are in a pension plan/401K those will be bye bye too.

  23. “Dean acknowledged she made a bad investment. She said she was upset to be forced finally to reckon with it.

    I know I’m supposed to read these sob stories and feel sorry for widows, single moms, and veterans who made greed-based financial decisions that came back to bite them. But somehow, I just can’t muster the requisite sympathy.

    1. “She purchased the parcel for $183,000 in October 2004”

      Chosen at random:
      Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX)

      Sold at $61 a share in October 2004, closed today at $208.

      $183K/$61 = 3,000 shares
      3,000 x $208 = $624,000

      Minus taxes and fees it’s less, and I’m not saying put every nickel in the market, but having a balanced portfolio for long term growth seems much more reasonable than buying some dirt patch in Florida. Don’t let the sob story fool you, she wanted to brag about being a land owner and being active in real estate.

      1. anted to brag about being a land owner and being active in real estate.

        The Rate of Return On Everything 1870-2015

        “Over the long run of nearly 150 years, we find that advanced economy risky assets have performed strongly. The average total real rate of return is approximately 7% per year for equities and 8% for housing. The average total real rate of return for safe assets has been much lower, 2.5% for bonds and 1% for bills. These average rates of return are strikingly consistent over different subsamples, and they hold true whether or not one calculates these averages using GDP-weighted portfolios. Housing returns exceed or match equity returns, but with considerably lower volatility—a challenge to the conventional wisdom of investing in equities for the long-run.”

        Full disclosure: I have extremely limited stock exposure at the moment, no real estate exposure, and a heavy cash position.

          2. No, I separate my personal investments from the family office. Yes, we have significant investments in real estate.

          4. The term “empty suit” comes to mind…

            Um, yeah, no. I had more in savings when I exited university than most boomers have at retirement. All self-made. Academic scholarship, 3 jobs, living at home (to save money, not in lux housing). Left IT/Operations career at 33 and retrained as an RN. Only got pulled away from nursing this past year to fix problems. As long as we don’t do anything stupid like invest in a Precious Metals Ponzi Scheme, we’ll be okay regardless of how the estate does.

        2. Interesting how by contrast, Shiller found an inflation adjusted return on housing near zero in the pre-bubble period. I wonder whose a lion?

          1. Interesting how by contrast, Shiller found an inflation adjusted return on housing near zero in the pre-bubble period. I wonder whose a lion?

            The difference in this study is that it looks as real estate as an asset class with rents, not one’s own primary dwelling. It kind of goes back to the idea that you don’t get wealthy by owning your own house, but you might by owning someone else’s.

        3. Yes, but which ones?
          RE is local. If you invested in SF RE, it’s been great. If you invested in Detroit RE, not so great.

          Some for risky stocks. How many companies go bankrupt? Maybe ETF stocks are the way to go, but if everyone uses those, I suspect it’ll add unpredictable, systemic risks we haven’t anticipated.

    1. Price drops, buyers pulling out of contracts… almost as if poway RE confidence and prices have stalled or, unexpectedly, heading negative. Proceed with caution!

      1. Sign with realtor’s info has been taken down but post with “I’m gorgeous inside” teaser is still up. It may soon join the house across the street that failed to get its wishing price.

      2. Proceed with caution!

        Falling prices with the 1031 exchange means lower property taxes. I’m good with that! The question is will prices in Poway fall more quickly or at the same rate as Encinitas.

  26. Teslas Difficult Path to Profit in 6 Charts

    Housing and vehicles are inextricable connected. The entire “drive ’till you qualify” thing. Land is (too) expensive in urban city centers and even some suburbs with good jobs. Some workers can work remotely, but most can’t. So we have the rise of the supercommuters.

    I see no imminent fall in housing or rents. Some small moves here and there, and maybe some large ones in overpriced luxury. Rates are going lower and the Fed is determined to prop up prices for ever.

    Reducing the cost of commuting by making it less carbon-intensive, cheaper, and less taxing (either self-driving) is one way I think the market can work around the impass of unaffordable housing.

    1. The Financial Times
      Amazon.com
      Amazon profit drop triggers sharp after-hours sell-off
      As much as $80bn in market cap wiped out after group reports rising next-day delivery cost
      Amazon’s shares dropped by 9 per cent in after-hours trading following its report that third-quarter operating income fell to $3.2bn from $3.7bn last year © AP
      Patrick McGee in San Francisco 7 hours ago

      Amazon’s third-quarter profits fell from a year ago as it ramped up spending on its next-day delivery service, the first time the ecommerce group has suffered an annual earnings drop in more than a year.

      The drop in third-quarter operating income, to $3.2bn from $3.7bn last year, triggered a sharp sell-off in after-hours trading, with shares falling as much as 9 per cent, wiping about $80bn from its stock market value.
      …

      1. Amazon profit is falling? That’s unpossible! AWS is supposed to be taking over the computing world!

        On a related note, I saw an article saying that Microsoft Azure’s growth is tapering. Looks like that Cloud party might be over.

      2. Amazon is a mixed bag in my opinion. People love to hate them, and they have some troubling aspects (fraud, dangerous products, paying near 0 taxes), but what they fundamentally got right is that a physical store is not required for many consumer goods. Their logistics is spot-on and they know what their doing. Their low profit margins is paradoxically their moat because they were willing to sacrifice profits for so long while scaling up to a monopoly.

  28. Despite an implicit commitment from the Fed to keep the stock market party going forever, we haven’t run out of stock market worriers just yet.

    1. A nasty Japan-style market drop looms if this chart is any indication
      By Shawn Langlois
      Published: Oct 24, 2019 2:41 p.m. ET
      Is the U.S. market starting to look like Japan’s, circa 1990?

      Jesse Felder, the former hedge-funder behind the popular Felder Report blog, says the stock market could be facing a Japan-style slowdown.

      In a recent post, Felder painted “a Nikkei-post-1990-type of scenario,” which led to Japanese stocks trading on the Nikkei lingering more than a third below a peak the index had reached 30 years prior.

      Macroeconomic pundits often reference the protracted period of low-growth and low-inflation environment that began in the early 1990s in Japan — typically described as Japanification — as a cautionary tale for the rest of the world.

      Japan is approaching its fourth consecutive decade of consistently low nominal growth, inflation, and interest rates.

      “Is it so hard to believe that, after the U.S. equity market hit 140% of GDP this year [like the Japanese market did in the early 1990s] that the S&P 500 could suffer a similar fate?” Felder wrote. “Of course it is, we’re in the midst of another mania and there is only room for belief in the impossible.”

      But seriously, a mania in markets, he explained, is “marked by excessive enthusiasm that leads to belief in the impossible that allows for a bubble to form.” And, he says, that’s exactly what we’re seeing now — just like we saw in 2000.

      “Twenty years ago, the mania that drove prices to bubble territory was the false believe that it didn’t matter what prices investors paid for fast-growing internet stocks,” Felder wrote. “So long as they bought in before it was too late they would certainly make a fortune over time.”

      Today’s mania, however, is driven in part by the notion, he said, that it doesn’t matter what price investors pay for equities via passive funds.

      “So long as they hold on they will be entitled to the historical rate of return and, if prices ever decline, they will always come back,” Felder said. “Of course, and probably more importantly, there’s also a mania on the part of corporate managements focused on stock buybacks based on the false belief that what’s good for shareholders in the short run is the most important thing.”
      …

      1. IMO, if you slice and dice many stocks and the S&P and Dow performance curves with a line of best fit, about 35% needs to be peeled off, unwinding 6-7 years of gains. Basically, S&P at 2K, Dow at 17K.

          1. If it goes Japanese, it could kiss 10K and get stucco there for a couple of decades. The dip to worry about is the one with no ensuing bounce. (Having bought into a Japanese sock market index fund circa 1990, I can attest that this does happen.)

    1. The Financial Times
      We Company
      WeWork’s sparsely populated China offices drain company’s cash
      Turnround plan will evaluate subsidiary’s low occupancy rates in key cities
      A guest attends the opening ceremony of WeWork Hong Kong flagship location in Hong Kong, China February 23, 2017.
      REUTERS/Bobby Yip
      The brisk pace of new building openings in China has weighed on WeWork’s overall occupancy levels
      © Reuters
      Eric Platt in New York, George Hammond in Hong Kong and Arash Massoudi in London yesterday

      China has emerged as one of WeWork’s worst performing markets as a local operation once seen as critical to the office provider’s global growth suffers from ultra-low occupancy rates and is “bleeding cash”, said people with direct knowledge of the business.

      The Chinese subsidiary, which last year was valued at $5bn in a dedicated funding round led by SoftBank and its Saudi Arabia-backed Vision Fund, has proven a drain on the company’s cash position. Occupancy figures recently reviewed by the Financial Times underlined the poor performance in several key cities in the country.

      WeWork locations in Shanghai, where it has installed 43,600 desks, had a vacancy rate of 35.7 per cent in October. In Shenzhen, where the company has 8,000 desks, 65.3 per cent were vacant, while 22.1 per cent of the group’s 8,900 desks in Hong Kong sat unfilled. The company was also expanding in central China, with multiple offices in Xi’an. There, it suffered a vacancy rate of 78.5 per cent.
      …

          1. If you hit X in your browser fast enough, you should be able to stop it before the pay input box loads. If not, refresh and try again…

          2. Was the energy perhaps renewable? (Just a hunch…)

            How is that non-renewable power with transmission lines lighting everything ablaze in CA working out?

        3. And we could probably lump Theranos in with them as well.

          Everyone wants to start on third base and convince themselves they hit a triple.

      2. The company was also expanding in central China, with multiple offices in Xi’an. There, it suffered a vacancy rate of 78.5 per cent.

        Ridiculous. What made them think they could operate successfully there? Or it just didn’t matter, they just needed to show “growth”?

    1. There’s never been a better time to buy.

      The Financial Times
      Prime property
      Brexit bargains: London’s luxury homes take big price cuts
      Wealthy buyers are benefiting from political uncertainty — especially if they are paying in dollars
      Five-bedroom house in Belgravia has cut its original asking price by £1m to £8.95m
      Aleksandra Wisniewska October 23 2019

      Brexit uncertainty hangs over London’s luxury property market like a fog. Since the referendum in June 2016, house prices in prime central London have dropped 14 per cent, according Savills. Meanwhile, sales are down 19 per cent, according to LonRes.

      However, despite the endless political wrangling, some buyers believe they see the opportunity for a Brexit bargain — especially if they are buying in dollars.

      One US-based buyer, who asked to remain anonymous, has just bought a flat in Mayfair for £6m after negotiating a discount of more than 10 per cent. He says the weak pound, attractive borrowing rates and overblown stories about professionals leaving London in their droves all contributed to his decision to buy now.
      …

    1. Back in the mid-eighties I had a girlfriend who liked going to a Vietnamese beauty salon for pedicures costing me nearly $300 a month, IIRC.

      1. “Pedicure”? $300 in 80s money should have bought a LOT of Vietnamese pedicures. Unless she was actually buying other things there too.

  32. The Fed just increased its repo operations to $120 billion a day, yet futures are showing a peculiar shade of green that looks just like red. What would these Ponzi markets be doing if the Fed and PPT weren’t pumping like crazy to keep them levitated?

    2. I keep telling myself I’ll sell off some froth once the Dow hits 27K, then I don’t. Just seems to bounce between 25K and 27K and seems like there’s an equal shot of crash or Dow 30K+.

      1. an equal shot of crash or Dow 30K+

        You see 50% odds of up $3K and 50% odds of down $10K. I’m not questioning your odds, just your hesitation.

        1. Really for me just a question of what will win out, an exhausted stock market and historical levels of debt or the power of low cost money and the repo market (Fed actions).

          1. Don’t fight the Fed! Unless they run out of ammunition, at which point you should run like hell away from risk assets.

          1. My husband’s got a buddy who was a helicopter mechanic in the Marines. He now has a number of planes, not all air worthy. Given his bad taste in damaged fixer upper women, it’s the cheaper hobby.

  34. I ran across this and thought I would share…

    Federal Grand Jury Returns Indictment in $300 Million Nationwide Investment Fraud and Ponzi Scheme | USAO-SC | Department of Justice
    https://www.justice.gov/usao-sc/pr/federal-grand-jury-returns-indictment-300-million-nationwide-investment-fraud-and-ponzi

    (snip)

    According to the Indictment, FIP operated a Ponzi scheme in which it actively recruited pension holders who were desperate for money, including many veterans of the United States Armed Forces. The pensioners made monthly payments to FIP in exchange for a lump sum payment or loan. The adjusted annual percentage rate on these transactions often exceeded 100%.

    FIP then solicited investors to purchase “structured cash flows,” which were the pensioners’ monthly pension payments. FIP promised the investors a rate of return between 6.5% and 8%. It took active steps to conceal from the investors the usurious nature of its transactions with the pension holders. FIP diverted new investor funds flowing into the business to fund payments to earlier investors in order to keep the scheme operational. When FIP ceased doing business in early 2018, investors were owed approximately $300 million. The scheme alleged in the Indictment victimized over 2,600 individuals.

    “The scheme alleged in this Indictment took advantage of pensioners facing difficult financial situations – including veterans of the U.S. Armed Forces – and preyed upon innocent investors to the tune of roughly $300 million,” said U.S. Attorney Lydon. “Along with our federal, state, and local partners, the U.S. Attorney’s Office for the District of South Carolina will continue to aggressively prosecute those who seek to line their own pockets by robbing individuals of their hard-earned money.”

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