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The Signs Are Everywhere Of The Weak Market

A report from Market Place. “The housing market is in a weird place. In 2012, demand for homes started rising. The problem was — and continues to be today — that there aren’t enough houses on the market to meet demand. So prices are way up. Susan Wachter, a real estate and finance professor at the University of Pennsylvania’s Wharton School, said prices are so high that demand for homes has been falling lately.”

From Axios. “Data from the Investment Company Institute shows that even though the stock market has risen by nearly 25% this year, investors have been net sellers of stocks, pulling $100 billion out of equity funds. There are still risks, particularly the rising level of debt, which could portend a bubble.”

“‘We don’t have overbuilt houses, we haven’t overdone capital spending. There’s no boom, so hard to get to a bust,’ JPMorgan Asset Management’s chief global strategist David Kelly adds.”

From CNBC on New York. “A new mansion tax, the cap on state and local tax deductions, renewed talk of a pied-a-terre tax and an oversupply of luxury apartments have led to falling prices and sales in Manhattan for two years. Median prices for luxury sales — defined as the top 10% of the market — are down 10% for the year, according to Miller Samuel.”

The Connecticut Insider. “The slumping real-estate market in backcountry Greenwich could use some good news. But the bad news keeps coming, with the announcement that talk show celebrity Regis Philbin has put his estate on North Stanwich Road in Greenwich on the market for $4.595 million. He and his wife, Joy, bought the mansion in 2008 for $7.2 million — which 36 percent above the the current asking price.”

“The signs are everywhere of the weak market — large properties rented out instead of sold as one example. A mansion on Moreland Road — on the market for $26 million in 2013 — was turned into a rental for $22,000 a month before selling last year for $6.5 million. And transactions are down: Home sales in the backcountry hit a total of 103 in 2007, but that number had dwindled to 56 last year. And last year’s top seller, a 6,900-square-foot home at 110 Clapboard Ridge Road, sold for $17.5 million — 50 percent less than its original asking price.”

“To Greenwich real-estate broker and Ken Edwards, the challenges posed in the backcountry are a matter of Economy 101. ‘Like any market, it’s subject to the whims of supply and demand,’ he said. ‘If there’s an overabundance of supply, relative to the number of people looking for estates, it’s going to have an affect on the price.'”

“The news about slumping real estate values in upper Greenwich — ‘the brutal Greenwich market’ in the words of the Wall Street Journal last week — can also have a dampening affect among ‘wealthy people at cocktail parties,’ the real-estate agent noted.”

The Auburn Plainsman. “The blinds in Ray Huff’s office remain permanently drawn up. Outside, a cacophony of nail guns and jackhammers sputter away while an endless line of traffic budges ever so slightly through a shaded West Glenn Avenue. The rate at which these complexes, no smaller than 450 bedrooms, are developing worries local real estate managers who say that the market, which was full to begin with, is becoming dangerously oversaturated.”

“Huff has worked in the student housing vein of real estate for 23 years. He owns Auburn Realty, a local group that manages many smaller apartment buildings throughout the City. ‘There were already vacancies around town, but there are vacancies at a magnitude I’ve never seen with the construction of these large private dorms,’ Huff said.”

“With regard to the unusual vacancy rate of 4%, Huff said that a stinging portion of this quotient consists of one-unit condominiums sitting unoccupied. ‘ lot of the property up and down Magnolia are condominiums, and if you’re a condominium owner renting to students and your one unit doesn’t rent, you’re at zero percent occupancy; we’ve got twenty-something of those.'”

“When vacancies are present at such a high rate in these apartment buildings, the health of the market is harmed as property values decrease. Subsequently, rent rates drop and property managers often struggle financially. Some owners are suspicious of the occupancy rates reported by these large apartment complexes because there is an economic incentive to appear healthier. Banks generally offer better loan rates to developers that have high occupancy rates.”

“The corporations behind the occupancy rates aren’t lying, however. Huff described a way the market is made to appear healthier than it actually is, which takes advantage of two different ways of determining occupancy: physical occupancy and economic occupancy. An apartment reaches full physical occupancy when there is one person in each bedroom unit. When determining economic occupancy, if only one of the four rooms in a four-bedroom unit is filled, the unit can be considered full.”

“The managers who report occupancy rates often rely on banks or corporate bureaucracy who will cooperate only under seemingly profitable conditions, which incentivizes these complexes to report statistics that reflect favorably on the property. Forrest Cotten, the planning director for the City of Auburn, also holds reservations about estimating a market’s health based on occupancy rates.”

“‘Reported occupancy rates have always been a point of contention because you’re basically relying on the honesty of the person reporting the information,’ Cotten said.”

The Digital Journal on Florida. “At a time where class-A apartment buildings are popping up all over the US, Tzadik Management’s Adam Marcus Hendry urges potential investors to stay away. A closer look into the class-A market shows the bleaker side of all the recent development. ‘Recent market studies done in primary markets, including areas like Miami and Fort Lauderdale, are showing a tremendous amount of rental concessions, particularly in the newer buildings,’ said Hendry. ‘It’s almost required now that you give away at minimum two month’s rent in addition to the waiving of most move-in costs.'”

“So why not just lower the rent instead of giving it away? ‘These burgeoning rental concessions are done to keep their market rents and NOI high. These ‘one-time’ concessions are put below the line and seen as one-time instances when there is little evidence to suggest they are’ said Adam Marcus Hendry. ‘The profitability of these apartments is now almost completely on life support, only surviving from the dropping interest rates that reduce debt service at the refinance. With all these new buildings popping up, what is stopping the renter from hopping to the next lease up?'”

“‘Our research is showing some pretty substantial renewal concessions at many class-A sites,’ said Hendry. ‘Renewal concessions aren’t new and are typically necessary depending on the situation, but if the renter was given the same or even double the concession at move-in, your NOI becomes a farce.'”

From KSDK on Missouri. “All of the trash has been picked up from Southwest Crossing Apartments, but a much larger mess still remains. Last week, 5 On Your Side reported that TEH Realty stopped paying its bills or responding to its tenants at several of its St. Louis properties. Now an employee at Southwest Crossing, who asked to remain anonymous, says maintenance requests have been ignored for weeks because the entire maintenance staff was fired a while ago.”

“TEH Realty evidently is in serious financial trouble. Their website is down, staffing has been slashed and the ones that remain haven’t been paid in more than a month. The water service at Southwest Crossing technically should be shut off, but the City of St. Louis has left it on to help out the residents.”

“Southwest Crossing isn’t the only problem property for TEH Realty. Earlier this week, a contractor based out of Kansas City — Eleal Moreno — sued TEH Realty for not being paid for their work at a different St. Louis property, Northwind Estates. 5 On Your Side spoke to that contractor over the phone. He said they haven’t been paid for more than $100,000 worth of work. So far, TEH Realty has not filed for bankruptcy.”

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This Post Has 154 Comments

  1. Here’s your future foreclosures:

    ‘With regard to the unusual vacancy rate of 4%, Huff said that a stinging portion of this quotient consists of one-unit condominiums sitting unoccupied. ‘ lot of the property up and down Magnolia are condominiums, and if you’re a condominium owner renting to students and your one unit doesn’t rent, you’re at zero percent occupancy; we’ve got twenty-something of those’

    ‘When vacancies are present at such a high rate in these apartment buildings, the health of the market is harmed as property values decrease. Subsequently, rent rates drop and property managers often struggle financially’

    So they resort to fraud or walk away. Big surprise. I’d bet many of the lenders are turning a blind eye too.

  2. ‘And last year’s top seller, a 6,900-square-foot home at 110 Clapboard Ridge Road, sold for $17.5 million — 50 percent less than its original asking price’

    Not Clapboard Ridge! Hey, weren’t we told 50% off is unrealistic?

    ‘the brutal Greenwich market’ in the words of the Wall Street Journal last week — can also have a dampening affect among ‘wealthy people at cocktail parties’

    I was talking to a doctor about the apartment markets. She asked me what it all means and I said ‘some rich people are gonna lose money.’ Her eyes got big and scary.

      1. That REIC troll who assured us housing would never see a 50% correction must be curled in a fetal position beside the dumpster where they carted his pipe dreams of speculative riches from endless housing appreciation.

        1. Let them eat ramen.

          I’ll keep my money in boring bonds and money market accounts and keep driving my 7 year old car and “throwing money away on rent” every month while I wait for the dust to settle, super comfy knowing I have more money in my Fidelity accounts than the average Denver loanowner has equity in their rotting, depreciating shack.

          P.S. you’re probably gonna loose it all in the divorce anyway, but at least all those Instagram likes were worth it 😉

          1. With all the crappy debt (bonds) that has been handed out in the past two decades, I think that bonds are riskier than equities. Check out those Fidelity bond funds. They buy bonds from State of Illinois. No thanks! God only knows how many of those bonds are junk or CDO tranches of old MBS or whatever.

            A friend advised me to invest in dividend-paying stocks. Some of them pay 2-3%, almost as good as a bond regardless of stock price.

          2. “A friend advised me to invest in dividend-paying stocks. Some of them pay 2-3%, almost as good as a bond regardless of stock price.”

            Sounds great, until the economy craters and the dividends go down the crater. But you don’t have to worry about that, because the Fed won’t allow it.

            And besides, what good is a negative yield on a bond, anyway?

          3. because the Fed won’t allow it

            Except that the Fed guaranteed the crater when they blew the credit bubble.

          4. Except that the Fed guaranteed the crater when they blew the credit bubble.

            Eventually yes. Before we die?

          6. Before we die?

            I have no clue Carl, but in the meantime I’m happy not to have to depend on it one way or the other.

  4. ‘The corporations behind the occupancy rates aren’t lying’

    Yes they are Ray.

    ‘Huff described a way the market is made to appear healthier than it actually is, which takes advantage of two different ways of determining occupancy: physical occupancy and economic occupancy. An apartment reaches full physical occupancy when there is one person in each bedroom unit. When determining economic occupancy, if only one of the four rooms in a four-bedroom unit is filled, the unit can be considered full’

    ‘The managers who report occupancy rates often rely on banks or corporate bureaucracy who will cooperate only under seemingly profitable conditions, which incentivizes these complexes to report statistics that reflect favorably on the property’

    Openly discussing wide scale fraud – check!

    1. ‘Renewal concessions aren’t new and are typically necessary depending on the situation, but if the renter was given the same or even double the concession at move-in, your NOI becomes a farce’

      Check – check!

    2. This is new to me. I’ve been saying that LLs will give you move-in concession and then jack up the rent on that first renewal. But it was 7 years ago last time I rented. Now, with all this new inventory (past 5 years), LLs will give out concessions every year.

      No wonder IKEA is so popular. All these renters have to be in constant move-mode, enough to threaten the LL into offering perpetual concessions.

      2. I think you are on top something Oxide. I read a commentary awhile back explaining the connection between inexpensive furniture and constant moving.

    3. “The managers who report occupancy rates often rely on banks or corporate bureaucracy who will cooperate only under seemingly profitable conditions, which incentivizes these complexes to report statistics that reflect favorably on the property”

      We’re not far from the tipping point, e.g., rename the central bank as the central committee and start addressing each other as comrade.

    1. ‘The problem was — and continues to be today — that there aren’t enough houses on the market to meet demand. So prices are way up. Susan Wachter…said prices are so high that demand for homes has been falling lately’

      See, these people have never plotted supply and demand curves. There’s a relationship. What was screwy was when people were putting in multiple offers, over asking – for years – when price were zooming up.

      1. All of the Chinese parking money in this country, and Wall Street speculating as well. Maybe Susan can touch on that a bit, how that was what drove prices up, and not some “shortage” canard.

        1. Susan will get right on that. I’m sure her editors and REIC advertisers would want the truth to come out.

        2. The “shortage” has been in what the middle class/working class can reasonably afford on stagnated wages. Giant garages for offshore and investor money has not had a supply problem.

      2. “What was screwy was when people were putting in multiple offers, over asking – for years – when price were zooming up.”

        Undergraduate economics supply and demand curves can’t capture the complexity of central bank easy money flows sparking artificial demand in excess of fundamentals that feeds on itself, like a California wildfure, until all available fuel is burned.

        We call this a bubble.

        1. Yes, they can. Bubbles are a series of right shifts in the demand curve, aided and abetted by ever rising government price floors. Quantity supplied increases with every rightward shift, but it lags. When the bubble begins to burst, the shifts to the right become smaller, until acceptance becomes the primary “taste and preference” and the demand curve shifts way left as well as becoming more elastic because of all the excess supply. Ben, ima do a screencast and share it with you. There are far, faaaaaar better economists than me, so I could be wrong, but the model does serve, it’s just that the FIRE sector, like monetarists, want to claim they can predict/manipulate it ad infinitum. At some point, the law of diminishing marginal returns wins out and beats our arrogant asses to a pulp.

    2. “The housing market is in a weird place. In 2012, demand for homes started rising. The problem was — and continues to be today — that there aren’t enough houses on the market to meet demand. So prices are way up.”

      Ever upward ascendant prices create artificial shortages, as investors with Yellen bux snap up as many houses as possible to ride the mania to its peak.

      Once the bubble finally pops, there will be plenty of inventory to go around.

      1. Had dinner last night with my daughter and her gainfully employed boyfriend (commercial construction). He’s pooling money for a group of Millennial friends to buy property in flyover, on the theory that it is “cheap” (compared with coastal California — we were together in Long Beach) and so I guess that somehow guarantees they will make money, even if real estate prices go down. I mentioned that lots of other people are playing the same game nowadays, but didn’t get into it, as I didn’t want to tempt him to roll his eyes and say, “Okay Boomer.”

        The fact that he is bringing in my daughter as an investment advisor worries me. She’s bright, and thinks outside the box, but has no background in business or finance, whatever, besides whatever she learned from me over the years by osmosis. The conversation struck me as a kind of Millenial shoeshine boy moment.

        1. “He’s pooling money for a group of Millennial friends to buy property“

          Could be worse. As much as the land value can go down, it would likely never go down to 0 like that of the new world currency / ultra lucrative / can only go up, buttcoin. Ok boomer?

          1. I agree it could be worse. Like he could be blowing his extra dough on booze, smack or fentanyl, instead of thinking about building wealth. And as noted, it won’t go to zero like some of the crazy investment schemes currently in play.

            Also my daughter may soon be offering me helpful real estate investing advice…who knows?

          2. Maybe the boyfriend knows something I am missing about the extent to which the Fed is pumping money into housing.

            The Fed is buying billions of mortgage bonds — here’s why it matters
            By Joy Wiltermuth
            Published: Nov 18, 2019 1:40 p.m. ET
            Fed’s goal is to eventually shed its MBS holdings
            Getty Images
            New York Federal Reserve Bank.

            The Federal Reserve has dramatically picked up the pace of its mortgage bond purchases in recent months as it seeks to keep the housing finance market on an even keel as borrowers race to refinance.

            But while the central bank has scaled up its purchase plans through the Federal Reserve Bank of New York, which can be tracked here, that doesn’t mean it has been loading up its balance sheet.

            Here are five things to know about the near $30 billion of mortgage bonds that the Fed has set out to buy since late May.
            …

          3. And as noted, it won’t go to zero like some of the crazy investment schemes currently in play.

            You are aware of what happened to housing prices in Detroit, right?

          5. Land values in flyover are a small percentage of the overall price with normal lots which is just the opposite from coastal California where the actual structure is a small part of the overall price. Still unless there are jobs houses can be valued lower than the replacement cost to duplicate the structure even ignoring land costs

          7. Still unless there are jobs houses can be valued lower than the replacement cost to duplicate the structure even ignoring land costs

            Condo at Boca West Country Club sells for just $1
            March 29, 2019
            WPTV
            Miranda Christian

            “”There were 58 units sold for $1 or under $5,000. That’s been since 2011,” said Maschler. Maschler said the reason properties are selling so cheap is because sellers are just looking to get rid of them. Also, when buying into Boca West, the country club has a $70,000 membership fee and annual fees.”

        2. The fact that he is bringing in my daughter as an investment advisor worries me.

          I sense that you’re more worried about her dating him rather than her as an investment advisor.

          1. There’s always that concern, but she’s had worse boyfriends. At least he has a day job and financial stability.

        3. In my experience, construction majors are the kids who arent smart enough for engineering but see the market for BAs in business is oversupplied. They usually end up in party schools, have zero real construction experience, and expect to immediately be placed in management making 70k. They are so bovine they should shout low as they walk across the commencement stage.

    1. Worker bees in pods. I think that a certain faction would have no problem with more and more people living like that. I think it’s horrible.

      2. This is not so different from those elderly Chinese ( in Hong Kong?) who are so poor that they have to live in cages. Actually the cages seemed more secure. Those pods look like they are open to attack while you’re asleep.

  8. The problem was — and continues to be today — that there aren’t enough houses on the market to meet demand. So prices are way up.

    No matter how many times you repeat a lie, it doesn’t make it so, REIC shills. The problem is – and continues to be – median shack prices have so far outstripped median incomes that a major correction is inevitable and desirable to flush the speculative excesses from the system.

  9. “‘We don’t have overbuilt houses, we haven’t overdone capital spending. There’s no boom, so hard to get to a bust,’ JPMorgan Asset Management’s chief global strategist David Kelly adds.”

    Say, David, what’s the scuttlebutt around the water cooler these days? Cuz rumor has it JM Morgan is in deep financial trouble, which is why the Fed is having to inject $120 billion a day into the repo market to head off a chain-reaction financial system meltdown a la 2008.

    1. “Cuz rumor has it JM Morgan is in deep financial trouble,…”

      Evidenc, please? Enquiring minds want to know.

        1. JP Morgan likely got bailed out when Softbank doubled down, essentially throwing good money after bad. Softbank will take a beating, but I think JP Morgan will be fine.

  10. But the bad news keeps coming, with the announcement that talk show celebrity Regis Philbin has put his estate on North Stanwich Road in Greenwich on the market for $4.595 million. He and his wife, Joy, bought the mansion in 2008 for $7.2 million — which 36 percent above the the current asking price.”

    Sorry Greedhead Regis and your soon-to-be-joyless wife, but didn’t I say I was holding out for early-1980s pricing? So get to sawin’ and slashin’ like you mean it if you want to offload that shack.

    2. Regis Philbin is worth $150M. I think he can afford the loss.

      What’s really criminal is that a short annoying guy with a horrible voice somehow amassed $150M. I guess women respond to this type of thing?

      1. “I think he can afford the loss.”

        He could live well without eating into his nest-egg, but with today’s poor returns he probably has to budget, e.g., bye bye multiple mansions.

  11. Here in the Salt Lake City area local media assures me we have a shortage and apartment occupancy is above 95%.

    Meanwhile, a simple look at apartments.com shows dozens of open units for many buildings and a variety of concessions such as one month free or free ski tickets. Perhaps the way they define “occupied” is not the way normal rational human beings use that word.

    My personal favorite is Cobble Creek. Back in 2017 we almost moved there and at that time they had only 2 units that would be available in the next 3 months. Everything else had an occupant. What a change a few short years makes! Now they have 22 open units (costs between $1,000 – 1,800). More units will open up in the next couple months. Prices are not any higher than when we looked in 2017.

    https://www.apartments.com/cobble-creek-apartment-community-salt-lake-city-ut/hcdz0p3/

    On the SFH front, went to two open houses this weekend. Completely dead. The realtor at the first one seemed way too excited we were there. Considering the shortage and demand, it’s shocking the place wasn’t packed with potential buyers.

    1. Cobble Creek is very close to the large complex in our portfolio. Not close enough to be in our comps, but very close geographically.

      1. Cobble Creek is one of the acceptable apartment complexes I’ve seen in Salt Lake. Most are simply parking lots with a few buildings. Not safe for humans and not comfortable.

        Cobble Creek keeps the cars on the outside of the ring and the inside has trees. The environment did seem nice when we visited.

        I think the USA could learn a lot from how some Chinese apartment environments are designed. The areas built in the 1990s and early 2000s are really nice — cars are not right outside your door, instead there are small gardens, walkways, and benches. A real sense of community that I find sorely lacking in apartments that give preference to car storage.

        1. That arrangement looks nice. But it sux when you have to carry things so far between your car and your front door.

          1. That’s a fat american answer. Although i find myself getting peeved if i have to park a couple extra car lengths

          2. Tom… Eh? You don’t have to be fat (or elderly, or disabled) to find it a pita to move items between your home and a car that’s parked some distance away. Unless as suggested elsewhere here, you use a wagon or cart of some kind.

        2. When you’ve got a Metro stop just down the street, sure. In most places in the USA I think car location has to be a high priority.

          1. Private cars are great. The argument I’m making is the parking lot should not get higher priority than human living space.

            And most Utah apartments I’ve seen prioritize car convenience over anything else. This could be a USA thing.

            I prefer the outside of my home to be nice, not a the equivalent of a Target parking lot. The added convenience to carry stuff to my house is not a priority to me.

            Perhaps I’m the odd one out though and what I like is not normal for Americans. Very possible.

          2. Perhaps I’m the odd one out though and what I like is not normal for Americans. Very possible.

            “Flyover” America has a long tradition of putting a high value on transportation. We’re still a pretty rural population who is only a generation or two from the farm in many cases. On the farm functionality trumps beauty. Rural Americans get pretty stressed when they visit the city and there is nowhere to park. If they actually move to the city it takes a while for them to adjust to the idea that everything doesn’t have to revolve around the car…because for their whole life to that point it did.

        3. I agree 100%. My mom lived in Hong Kong for a few years (speaks Cantonese) and she always raves about her experience there.

          Our unit is under contract, so I can’t really say much more about it until the deal closes. But it is on one of the major Trax lines. We have climate controlled parking that opens right to the elevators. Some residents who live at the end of a long hallway invest in one of those blue wagons on Amazon for their Costco runs.

          1. Hong Kong is the best. They definitely do fantastic urban design. The New Territories has lots of very nice complexes with trails and trees and gardens. Cars are parked underground, where they belong. Some would argue too many Mainlanders around there, but that’s another issue!

    2. The reviews make it sound great.

      Incompetent staff, all-around

      If you plan on moving into an apartment at Cobble Creek, bring a toolkit and learn how to do maintenance yourself. In addition to having an utterly incompetent and generally clueless leasing office staff who can’t be bothered to pick up the phone or reply to an email, the maintenance staff here might as well be nonexistent. In the two months we’ve had the displeasure of living here, four maintenance request have been completely ignored or put off for so long that we’ve had to do it ourselves. Issues with the apartment include but are not limited to: non-functional dishwasher at move-in, peeling vinyl flooring, interior doors falling off their hinges, and bifold closet doors that fall down due to broken pivots and pivot brackets. Do yourself a favor and rent literally anywhere else.

      1. We have no plans on moving there anymore. The new management company sounds atrocious.

        Sorry to hear about your bad experience! Hopefully you can find something better soon.

  13. This is us! We live in Oakland and our lease is up in March. The building is 428 units and they are at 35% occupancy after a year. We were given 6 weeks free to move in. There are now 4 to 5 new buildings around us and I will jump ship to get more free rent in March. I am curious to see what our building will offer to get us to stay.

    1. I was in Oakland recently. I was really surprised to see the number of big complexes that had gone up. Especially in areas that were previously industrial, etc. Just for grins I looked at prices in my old nabe, Rockridge, geez, it is crazy there.

  14. (Bloomberg) — Elizabeth Warren called out Blackstone Group Inc. for its real estate practices as she laid out her tenants’ rights plan, accusing the company of “shamelessly” profiting from the 2008 housing crisis.

    In a Medium post where she laid out proposals to strengthen tenants’ rights, Warren assailed Blackstone for going on a “shopping spree” in the wake of the 2008 crisis and buying apartments and single-family homes that had been foreclosed. She also took aim at Colony Capital Inc. and Cerberus Capital Management.

    2. That’s funny, my understanding is that Warren bought some foreclosed homes in 2015 and did some quick flips.

      Also, Warren’s husband makes 400 k a year as a professor. Some people would say that’s a big salary.

      Makes her pledge to pay off student debt and raise salaries of teachers a little self serving.

    3. Of course Fauxahontus makes zero mention of Blackstone’s Fed enablers, or mentions her own role in ensuring that the gold collar criminals at the Fed are not subject to a real audit.

          1. https://shiva4senate.com/lessons-from-history/

            “History teaches us that beyond the Obvious Establishment who profit from the oppression of every day people, the Not-So-Obvious-Establishment is far more insidious because they act as though they are here to fight and help the oppressed, when in fact, they exist to funnel the righteous anger and passion for change back into the Establishment. This is what Elizabeth Warren is all about. She is a Fake Indian and a Fake Fighter. This video shares the dynamics of the two faces of the Establishment.”

  15. Most professors do not make much. The adjust professor game has become very precarious. The rise of higher ed expenses has more to do with buildings and ever-increasing ancillary staff and bureaucracies. Most professors are not living high on the hog and tenure is increasingly hard to come by.

    2. Adjunct professor is a glorified teacher. They get paid per class with few benefits. Universities are ditching six-figure tenured professors for six-figure diversity officers.

      IMO the biggest swindle is the in-state/out-of-state. State schools, who were founded to serve their own population are no longer widely accepting students from their own state, in favor of students from out of state who would pay the higher tuition. For example, UVA will reject Virginia residents but accept Maryland residents. UMD will reject Maryland residents but accept Virginia residents. Multiply by all 50 states. End result: the SAME number of kids get the SAME degree but they all pay higher tuition for the SAME education.

      Ask me again why I’m glad I never had children.

      1. Adjunct professor is a glorified teacher.

        My wife is an English teacher (language arts, technically). The head of her department is male and he is the only wage earner in the household and they have 4 children. So of course he has like 2 other jobs, one of which is being an adjunct professor at the local university. Pretty typical arrangement when you look at it. My wife thinks his teaching is pretty poor because he is spread so thin, although he has the capacity to be an amazing teacher.

        1. We’re at risk of totalitarian takeover.

          Higher Education
          China
          Free Speech
          The Chinese Government Cannot Be Allowed to Undermine Academic Freedom
          Universities are not taking seriously Beijing’s efforts to stifle free speech on campus.
          By Sophie RichardsonTwitter
          November 8, 2019
          USA universities China
          Chinese students speak to representatives from the Illinois Institute of Technology and other American colleges at the “Study in USA” section of the 2015 China Education Expo (CEE) in Shanghai. (Reuters File)
          Ready to fight back?
          Sign up for Take Action Now and get three actions in your inbox every week.

          You will receive occasional promotional offers for programs that support The Nation’s journalism. You can read our Privacy Policy here.

          A few years ago, I met a student from rural China who had come to a university in Washington, DC, and fallen in love with political science. But he was too afraid of being reported to the Chinese embassy to pursue the subject. While Americans take freedom at universities for granted, for some students from China the feeling is very different. “This isn’t a free space,” he concluded.

          There are now approximately 350,000 students from China at American universities. While many have great experiences, some have to deal with the surveillance and censorship that follows them to campus. Over the past several years, Human Rights Watch has documented the unique threats these students face. Our research has revealed Chinese government and Communist Party intimidation ranging from harassment of family members in China over what someone had said in a closed seminar to censorship by US academic institutions that did not want to irk potential Chinese government partners. One scholar said a senior administrator had asked him “as a personal favor” to decline media requests during a visit by Chinese President Xi Jinping, fearing that any criticism could have negative consequences for the university’s profile in China.

          Even when campus debates take an ugly turn—such as when students from the mainland tried to shout down speakers at a March 2019 event at University of California, Berkeley, addressing the human rights crisis in Xinjiang, or in September when unidentified individuals threatened Hong Kong democracy activist Nathan Law as he arrived for graduate studies at Yale—schools appear reluctant to publicly respond to these threats against free speech. In mid-October, students at the University of California, Davis, tore down other students’ materials supporting Hong Kong protesters, yet in the ensuing days searching the school’s website for “Hong Kong” yields only information about summer internships—not unequivocal support for peaceful expression.
          …

        2. Foreigners pay a lot more, so there is the incentive to keep that foreign higher ed money coming in. Education is one of the US’s largest exports (even though technically we import the students) and a significant contributor to GDP, including oversees sister-campuses and expansions by brand-name schools.

          1. It’s difficult for Chinese kids to get into Chinese colleges even if they are rich. Our mid tier and below colleges have enrollment issues and would love to take anybody willing to pay full freight. And our top colleges have standards but won’t turn their nose up at anybody who can keep up and is also willing to pay full freight. So our colleges and their upper class kids are a match made in heaven. At least for the bean counters.

      1. You mean Harvard psy-ops? Harvard perpetrates some of the most egregious grade inflation in the country. Well-documented. And they’re racist, but I guess it doesnt count if you discriminate against Americans of Asian descent.

  16. “The signs are everywhere of the weak market — large properties rented out instead of sold as one example. A mansion on Moreland Road — on the market for $26 million in 2013 — was turned into a rental for $22,000 a month before selling last year for $6.5 million.”

    But there is no bubble, people! Unless my calculator is wrong or I made some stupid mistake, the buy to rent ratio on a 26 million dollar house that gets rented out at 22K per month is NINETY EIGHT (above 16 is considered “better to rent”). Even when the price was lowered to 6.5 million, I still get a ratio of 24 that points to the house being overpriced if you can still get someone to rent it for 22K.

    For my current rental, if I use the Zillow price to calculate the same ratio (house price/annual rent), I get a ratio of 33. If I chop off 20 percent of the zillow price just for the heck of it, I get a ratio of 27, still waaayy cheaper to rent than to buy.

    But there is NO BUBBLE!!!

    LOL!

    1. “The sign$ are everywhere of the weak market — large propertie$ rented out instead of $old as one example. ”

      Are they renters, or knife catching $helter.$hack$ buyer$?

      CELEBRITY REAL E$TATE
      Nikki Haley Purcha$es $2.4M South Carolina Mansion
      Realtor.com |By Claudine Zap | Oct 16, 2019

      Located 21 miles off the coast near Charleston, the i$land oa$is features golf course$ and a five-$tar re$ort, and has welcomed many notable guests to the low-key getaway, including Bill and Hillary Clinton, George Clooney, Oprah Winfrey, and Joe Biden.

      Nikki Haley has since joined the board of the Boeing Co.

      CELEBRITY REAL E$TATE
      Mooch Takes Manha$$et: Anthony Scaramucci Buy$ Long Island Man$ion for $3.05M

      Anthony Scaramucci once told Vanity Fair, “I’m not gonna be this gold-chain-adorned guy driving around as a Long Island guido.”

      While he may not be rocking a gold chain, the former White House communications director and his wife, Deidre Ball, will still be driving around Long Island. The couple recently purchased a luxurious, new Manhasset mansion for $3.05 million.

      The residence, located about an hour from Manhattan, first came on the market for $4.15 million in 2018. It was still available a year later, when its price was eventually sliced to $3.29 million. Perhaps Scaramucci did learn something about the art of the deal, because the fast-talking consultant snagged the place in early February for an even lower price.

      1. Anthony Scaramucci once told Vanity Fair, “I’m not gonna be this gold-chain-adorned guy driving around as a Long Island guido.”

        He says that like it’s a BAD thing….

    2. A mansion on Moreland Road — on the market for $26 million in 2013 — was turned into a rental for $22,000 a month before selling last year for $6.5 million.”

      Almost 20 million Yellen bucks ascended to debauched currency Nirvana in this single transaction. Of the trillions in “stimulus” the Fed has pumped into its bubbles, how much has already evaporated and what residual “wealth” or value remains from this tsunami of money-printing?

  17. Yes I know about the average salaries of professors being a lot lower.

    But, my point is the higher education system was just one more overpriced Monopoly that relied on government backed loans ,that were handed out much like the housing industry.

    Isn’t Warren asking for a bail out of school debt because these students are screwed much the same way buyers overpaid for houses? The students didn’t get the high paying jobs. Why doesn’t Warren put a wealth tax on the I’ll gotten gains of Harvard for instance. Harvard has a extra 86 billion sitting around.

    1. Isn’t Warren asking for a bail out of school debt because these students are screwed much the same way buyers overpaid for houses?

      Warren is asking for a bailout of student loans because, unlike housing debt, student loan debt is unable to be discharged in bankruptcy. In other words, you can’t walk away from it. This creates a disincentive for borrowers to be judicious in who they lend too and so they get lazy and don’t do their homework. Of course we can also talk about you .gov enables too much borrowing. But if one studies the issue, often times those students who borrow the most are more than capable of repaying if, for instance, they are going to use the money for advanced degree in medicine or law. This is why any student loan forgiveness program has to be very well designed.

      By the way, student loan forgiveness is a bipartisan issue now, even thought its most vocal proponents come from the left. Look at Wayne Johnson from DJT’s administration and you’ll understand how he arrived at a student debt forgiveness program rooted in conservatism.

      The most crushing student debt is usually issued to students who go to private, for-profit-colleges (like Corinthian College or DJT’s university). These programs are even worse that social sciences, comms majors, or comparative lit. Any good solution for student borrowing would emphasize community colleges and technical/vocational schools which have a proven record.

      Agree that higher ed should not be able to invest tax free. Neither should churches have tax-exempt status and charitable giving shouldn’t be a write-off if you ask me. But those are battles that have to be fought with a very powerful constituency that fight tooth-and-nail against changing that.

      1. this creates a disincentive for borrowers to be judicious in who they lend

        Meant to say, “this creates a disincentive for lenders to be judicious in who they lend to”

      2. Any good solution for student borrowing would emphasize community colleges and technical/vocational schools which have a proven record.

        Any good solution for student borrowing should emphasize, you borrowed it, you pay it back. And if banks loan money to deadbeats who can’t or won’t pay it back, that’s their problem, not mine. Let them eat the losses, not have their hirelings like Fauxahontus transfer those debts to taxpayers under the guise of “forgiveness” schemes.

        1. Solving a problem generally requires identifying the actual cause and correcting that. Perhaps it is foolish to borrow/lend huge sums of money for things people cannot actually pay for. A bailout only serves to perpetuate the problem, and the institutions that make a profit from it.

        2. And if banks loan money to deadbeats who can’t or won’t pay it back, that’s their problem, not mine.

          I have no problem with that. But the law needs to be changed to allow those with crushing student debt-whether due to irresponsible borrowers, lenders, or some combination of the two (e.g. takes two to tango)- to default.

          One of the reasons US capitalism is (used to be?) so resilient is because bankruptcy and LLCs allowed debt to be discharged and so encouraged more risk taking. It is the creative destruction that Schumpeter talked about. If you don’t like Warren’s plan, that’s fine. But doing nothing is far worse as you’ll have zombie debt sitting around forever. Lenders could take a haircut on the debt, .gov and forgive some, and we can reform the future to avoid this by penalizing institutions that disproportionally saddle students with impossible debt.

      3. Again, if a profit making education company gets ill gotten gains , that the profit they made has to be bailed out by the taxpayers, than that entity should give back some of the I’ll gotten gain.

        To try to separate the parties that benefited from the school gouge, being the schools, Isn’t social justice.

        A wealth tax is some kind of penalty for a implied I’ll gotten gain. For Warren to apply it toward industries that don’t involve her or her husbands paycheck and pensions is self serving.

      4. I still think my idea will prevail………repossess your degree and cancel the debt. Any job that requires a degree you wont be able to apply for or keep. Employers can fire you for not meeting the requirements of the job, aka a valid degree, Then you can start your life over at starbuxxx debt free. I will always be against bankruptcy or any full loan forgiveness if you keep your degree…its the biggest moral hazard we could face.

        1. I think this idea might actually gain traction:

          https://www.npr.org/sections/money/2019/03/29/708152566/episode-903-a-new-way-to-pay-for-college

          “Lauren is getting tens of thousands of dollars toward her tuition not as a scholarship or a loan. There is no set amount of money she has to pay back. But for eight years after she graduates, she has to give Purdue a percentage of her income. The more she makes, the more Purdue gets. It’s more like she sold stock in herself.”

          1. I think this idea might actually gain traction:

            Only if the odds are good that most of the students will make decent money when they graduate.

          2. Only if the odds are good that most of the students will make decent money when they graduate.

            The terms of these schemes heavily favor majors that are likely to lead to better job prospects. For instance, engineering degrees have a lower income repayment % than would a humanities major or for a longer duration. The net effect would be like having different interest rates on student loans depending on what a student’s major is, which would kind of be a market approach towards steering funding towards students who have a better ROI.

    1. Yeah, high drama. I’m thinking this Andrew attention is a distraction for us from the whole Epstein story getting flushed. The picture with Andrew and the young lady is to my eye a total cut and paste job. No shadows on the wall at all,. The ball on top of the railing newel post has a dramatic shadow on the wall. Can’t have it both ways!

      1. One of the sidebars of the Epstein suicide story is that it exposes the systemic criminal negligence of guards and prison officials who are supposed to be looking after the welfare of inmates, but who instead routinely falsify records and fail to carry out required duties. As was the case with the Abu Gharib prison scandal in Iraq, a few low-level “bad apples” will take the fall, while the main culprits escape any scrutiny or consequences whatsoever.

        https://www.cnn.com/2019/11/16/us/jeffrey-epstein-federal-worker-plea-deal/index.html

    2. I haven’t heard a peep about the treasure trove of evidence collected, and this guy was an “extortionist extraordinaire.”

        1. “In August, media outlets reported about a surprise discovery of a provocative painting depicting US President Bill Clinton in a women’s garment in Epstein’s house. In the painting, the 42nd president is seen reclining in a chair in the Oval Office wearing a blue women’s dress and red high-heels, pointing his finger at the viewer.”

          The National Enquirer would be all over this if we had any semblance of transparency that the U.S. accuses other regimes of lacking.

        2. The MSM probably won’t mention this either.

          “Burisma also helped the Clinton campaign prior to the election.”

          How did they help we asked?

          “They paid them around $10 million.”

          Wouldn’t those wire transfers show up? we questioned.

          “This was Ukraine; everything was done with big bags of cash to the Clintons.”

    1. Look at all the nearby cities like Campbell and Santa Clara. Down double digits YOY and “no data” for next year forecast. This is weird as when price was going up, the next year forecast was to the moon.

          1. Doing good and thanks for asking. He’s one month old yesterday and still the love of my life 🙂

            Though I still do miss sleep and peace time. I took 6 weeks parental leave but should be back to work on Dec 2. Will be more active on the blog then.

          2. the love of my life

            I didn’t know how much and how instantly I could love something until my son was born. It’s an amazing feeling! Congratulations on your bundle of joy!!!

    1. The article you linked to says the opposite of what you stated:

      -U.S. homebuilding rebounded in October and permits for future home construction jumped to a more than 12-year high.
      -The data pointed to strength in the housing market amid lower mortgage rates.
      -Housing starts increased 3.8% to 1.314 million units last month, with single-family construction rising for a fifth straight month and activity in the volatile multi-family sector rebounding solidly, the Commerce Department said.

  21. The cratering of the Turkish housing bubble is ominous for the PIIGS banks who used their windfall of free ECB gambling money to lend huge sums, in euros, to Turkish developers to finance a speculative building spree. Now the Istanbul skyline is littered with half-finished skyboxes and silent rusting cranes as the depreciation of the Turkish lira (PM Erdogan’s son-in-law runs the central bank as a deep state enrichment scheme) has made imported building materials prohibitively expensive. Cue defaults on those loans in 3-2-1….

    https://ahvalnews.com/turkey-economy/turkey-building-permits-slide-58-percent-first-nine-months

  22. Are you concerned that the roaring stock market may face a significant correction sometime soon, especially given overvaluations driven by overconfidence built on easy money currently gushing forth from the Fed?

      1. As long as Wall Street’s porcine beauticians do their job well, I doubt these fundamental concerns will matter much.

        ‘Joe Davis, the global chief economist and head of investment strategy at fund giant Vanguard, isn’t buying it. “In the year ahead, we don’t foresee a significant reversal of the [U.S.-China] trade tensions that have occurred so far. And with continued geopolitical uncertainty and unpredictable policy-making becoming the new normal, we expect that these influences will weigh negatively on demand in 2020 and on supply in the long run,” he tells clients. Davis says U.S. growth will decelerate to about 1% next year, and China also will grow below trend.’

    2. “Are you concerned that the roaring $tock market may face a $ignificant correction sometime soon”

      No.

    1. ‘Why the Hell Are We Democrats in the First Place?’

      Good question even without the racist angle.

      1. Recently I read “it seems voters aren’t ready for a black woman president” about Harris. Uh, you mean Democrats aren’t ready? We have to jump on board with any identity candidate as soon as they run? Castro is a political nobody and he always will be.

      2. Why does anyone belong to the uniparty who is not in the .1 percent would be my question. it does not matter whether you are a Romney/ Ryan Republican or a Democrat. I can see working class people arguing whether Bernie is right or Trump is right but voting for the uniparty is just stupid. Of course since socialism has always failed I support Trump but I can at least understand why people might debate between the two.

  24. Business News
    November 8, 2019 / 12:27 AM / 11 days ago
    Is the end of negative bond yield phenomenon nigh?
    Dhara Ranasinghe

    LONDON (Reuters) – The pool of negative-yielding euro zone bonds is draining at last as extreme economic pessimism gripping markets abates, but sub-zero borrowing costs are expected to remain a persistent feature of the year ahead.

    Investors attending this week’s Reuters Global Investment Summit said that even after a recent bond selloff, the pile of negative-yielding bonds would likely stay sizeable given weak inflation, structural long-term demand for government debt and expectations for European Central Bank rates to stay below 0%.

    The stock of euro zone government bonds with a negative yield on Tradeweb ballooned to around 5.61 trillion euros ($6.2 trln), or almost 69% of the total market, in August. It has since eased to around 5 trillion euros or 62%, according to data from the electronic trading platform.

    Globally, the pile of negative-yield bonds including corporate debt has shrunk to around $12.5 trillion from a record high around $17 trillion just two months ago.

    A stabilization in data, confidence that a no-deal Brexit can be avoided, optimism on U.S./China trade talks and a sense that major central banks are unlikely to ease policy further have all taken the edge off a stunning bond market rally.
    …

  27. Why is it that taxpayer funds are the funds that are to be used to correct any so called unjust situation? It use to be that violations were addressed by the Judicial system pursuant a lawsuit.

    It seem like following the bubble crash bail out of the Banks, the taxpayers are now the funds of choice to correct the unfair acts of industry that have become monopolies.

    1. If Congress was designed to be the lawmakers, and the Judicial Branch was designed to deal with the lawbreakers, than why are these functions getting blurred?

      1. Because the founding fathers are just evil dead white men to the left. For two and a half years the left said we needed to investigate Trump just on the chance he might have done something wrong. Now it is evil and wrong to investigate the Bidens despite a vice president’s son getting $83000 a month from a foreign controlled company which had no legitimate need for his services and the Vice President getting a prosecutor fired investigating corruption. If Trump had asked for manufactured evidence against the Bidens it would be impeachable. He did not, he asked for a legitimate investigation which is draining the swamp. There is a far better argument that the Democrats are obstructing justice than an argument of any inappropriate behavior by Trump. The swamp creatures just want to keep their corruption hidden.

        1. You got agreement from me because I have never seen anything like what is going on right now in politics.

          If anything Trump’s election brought out the true colors of the Swamp in DC.

      2. The Judicial Branch appears to have morphed into lawmakers legislating from the bench while the Legislative Branch appears to have morphed into lawbreakers aided and abetted by the Executive Branch.

  28. These f–k-rs are soon to be f’d.

    Opinion: This home mortgage disaster is ready to punish housing markets
    By Keith Jurow
    Published: Nov 19, 2019 5:20 a.m. ET
    Cash-out refinancing is popular again — and still dangerous
    Bloomberg News/Landov

    In a MarketWatch column last March, I discussed the serious threat that cash-out refinances (cash-out refis) pose for major U.S. housing markets. Eight months later, the problem continues.

    To reiterate, in a cash-out refinance mortgage the borrower pulls out some of the equity in the house by taking out a new mortgage larger than the previous one. The homeowner pockets the difference and can use the money in any manner.

    During the 2004-07 housing bubble era, homeowners in major metros used their growing equity as a piggy bank to tap at will. According to Freddie Mac’s quarterly refinance report, borrowers pulled out just under $1 trillion from their homes between 2004 and 2007. This total includes only prime first-lien conventional mortgages, and excludes subprime, other non-prime, and second mortgages.

    The peak of the cash-out refi madness came in 2005 and 2006, as the desire to turn equity into real cash spread to millions of U.S. homeowners. According to Attom Data, 8.3 million mortgages were refinanced during 2005 and 7.9 million in 2006. The dollar amount refinanced was staggering — $1.8 trillion in both 2005 and 2006.
    …

    1. The story has great historical data but very little current data. So how much per year is being taken out now? There has been an increase in taking some money out but home equity is at historical highs so that is understandable and it is understandable under the current tax laws to prefer refinancing to home equity loans. There may or may not be a problem which could lead to a vast number of new foreclosures. As long as the loans are below 80 percent of the home value and not close to the trillion dollars overall it may be an apples to oranges comparison. The 95 percent loans left no margin for error.

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