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The Cost Of Capital Was Very Low, The Green Light Was On, Then We Hit The Wall Of Oversupply

A report from Senior Housing News. “Pam Kessler joined LTC Properties and has not looked back, becoming CFO in 2007. The last few years have once again brought industry dislocation in the form of oversupply and new payment models, she said during a recent interview for Senior Housing News. Q: Have there been other moments of challenge or change since that dark time in 2000?”

“A: It’s been pretty steady up until recently. We’ve had a lot of change recently…So, we have a new product, standalone memory care, and we were one of the first out of the gates on that…Certainly, the first developments we had out of the gate were leasing up, were beating pro forma, which spurs you to do more, right? And then —- we were not the only geniuses. Everybody was on to it. We’re all rushing to meet this projected demand, and certainly the cost of capital was very low. So, the green light was on for development. Then, we hit the wall of oversupply.”

“Q: With the tough operating environment, we’ve heard from providers that lease escalators are a problem. A: It’s the capital structure that kind of brought them down. The over-leveraging of the leases … the operator over-monetized. They pulled out all the money from their real estate and all the money from their operations — for the most part, their operations were getting a real estate multiple, so they got a healthy payment — and then they’re left with this company that’s completely leveraged with these high leases. That’s not sustainable, especially in this environment that maybe revenue isn’t growing as rapidly as projected.”

“Q: What do you make of all the capital coming into senior housing from private equity and other sources? A: A lot of this capital, I’m calling it undisciplined, because I think they’re allocating capital into the space without really understanding the space. So, capital providers that haven’t been through multiple [skilled nursing] reimbursement cycles, development cycles from the senior housing side, I think they’re mispricing their risk. They don’t have this high appreciation for the risk that’s involved in both asset classes, and therefore they’re willing to pay more than the property is worth. We certainly see that.”

“I don’t understand paying for a stabilized value on an asset that’s not stabilized. I’m not even saying close to stabilized — 50% stabilized, you’re halfway there, in this environment, you’ve probably got another 18 or 24 months. There are [lease-ups] that have been stalled for four years, they’re sitting at 50% occupancy. What’s leading you to think [this property] is going to get to 90% occupied and why in the world are you paying like it’s 90% occupied?”

From Bloomberg on New York. “Sales of New York City apartment buildings tumbled to near-decade lows last year, after new rent rules scared investors away from properties with regulated units. By every measure, it was a terrible 2019 for those in the business of owning and selling multifamily properties. The dollar value of purchases across all boroughs fell 40% from the prior year to $6.91 billion, the lowest total since 2011, according to a report by brokerage Ariel Property Advisors. There were 290 multifamily deals — a 36% decline, and the first year with fewer than 300 transaction”

“Apartments fell out of favor for investors last year as they digested New York’s new rent law, which governs about 1 million apartments in the city. The overhaul took direct aim at landlords’ income by making it almost impossible to raise rents, remove units from state regulation or even recoup the costs of capital improvements. In doing so, it upended a basic tenet of apartment investing: that spending on renovations could bring higher returns.”

“‘The fact that there’s no correlation between the amount you put into a building and the amount of rent you can charge has completely shifted investment interest in rent-stabilized buildings,’ Shimon Shkury, president of Ariel, said in an interview.”

From Boston.com in Massachusetts. “High-end market units close to Boston, with many more expected to come online this year, currently command monthly rents ranging from $5,000 to just over $10,000, said Carlina Nabatoff, co-owner of Abundant Real Estate Group in Cambridge. Nabatoff found 664 apartments for rent in Cambridge and Somerville on the Multiple Listing Service database, more than what she typically sees this time of
year — and some have been on the market for a few months.”

“‘Cambridge and Somerville have a ton of these new apartment and condo buildings,’ she said. ‘More inventory means that prices for older stock have evened out; they’re sitting longer and prices are dropping.'”

“Depending on the area, Nabatoff said, some listings drop the asking rent by up to $200 to compete with newly built apartments — a move many landlords haven’t had to employ for years.”

From Houston Agent Magazine in Texas. “Apartmentguide recently released their Annual Rent Report, which highlighted market trends and fluctuations experienced by renters in major cities across the United States. The report revealed a slight rent decrease in prices across Texas, and Houston was no exception. Overall, Houston’s rental premiums fell 15.5 percent for studio apartments, 7.5 percent for one-bedroom apartments, and 9.9 percent for two-bedroom units.”

“Apartmentguide.com predicted that these rental prices could have occurred because the supply for property in the Houston rental market is finally meeting the recent surge in demand.”

The Auburn Plainsman in Alabama. “Auburn City Council members are expected to vote on a student housing moratorium in the coming weeks. This moratorium comes after over a year of work from the student housing task force, which Mayor Ron Anders created shortly after he was sworn in as mayor in 2018. As the mayor explained his plan for the moratorium at the Dec. 3 meeting, he expressed concerns over the number of available student beds in Auburn.”

“‘We’ve got a large number of beds, and we believe that number could be anywhere from 37,000, around that number, of beds that have been dedicated and built for students,’ Anders said at the Dec. 3 City Council meeting. ‘There are some in this room that would argue that the number is greater than that, but we know that it is at least that.'”

“One concern related to the number of beds available for students already was Auburn University’s formal announcement of an enrollment cap at 25,000 undergraduate students. ‘There is an overabundance of student beds in our market,’ said City Manager Jim Buston. ‘Or if not an overabundance now, there soon will be an overabundance of beds in the market.'”

“Anders and Buston agreed that if the 90-day moratorium is approved, city staff would look to get a better understanding of what the absorption rate of student beds is with the enrollment cap in place. ‘With 31,000 students and 37,000 beds, I believe that that means that we need to make some determinations and some decisions about is this something that we need to address or not,’ Anders said at the Dec. 3 City Council meeting.”

This Post Has 158 Comments
  1. ‘we were one of the first out of the gates on that…Certainly, the first developments we had out of the gate were leasing up, were beating pro forma, which spurs you to do more, right? And then —- we were not the only geniuses. Everybody was on to it. We’re all rushing to meet this projected demand, and certainly the cost of capital was very low. So, the green light was on for development. Then, we hit the wall of oversupply’

    QE is deflationary.

    1. we were not the only geniuses

      There it is again…everybody thinking the same thing and all of them thinking they are geniuses.

      1. Let’s see …

        1. They were at first doing well so that inspired them to do more. It also allowed them to think they were geniuses.

        2. Others saw what they were doing and, because they also wanted to be seen as geniuses, they too joined the fray. “Everyone was on to it:” was how it was put.

        3. Add to this sudden explosion of financial genius an era where the cost of capital was low and – presto! – you have a situation where the industry becomes over built and everyone begins to lose their financial asses.

        What a bunch of dummies.

    2. “So, the green light was on for development.”

      Lender’s gotta lend, builder’s gotta build and Olick’s gotta…

    3. Projected demand: they forgot that the people who need senior housing would also have to have the income to pay for it.

      Why did they forget? The wages of most Americans have fallen for decades, but they still went on spending. Thanks to debts and inadequate savings for their old age. A long term crisis of demand due to the beating down of most Americans was deferred and disguised.

      Just wait until those born in 1958 or later hit old age — if they live that long. Prepare to short the cruise ship industry.

    4. Hey Ben — this is the first time I have actually understood what you mean by “QE is deflationary.” Good example there. Thanks.

  2. in NYC they want you to have 40-42X your month rent for $5k apt. means you have to prove at least $200K steady income

    1. Was that different before the latest regulations? I’m assuming it’s up / more strict. (sorry, just not familiar)

      1. This is why NYC need this….the more you spent on an apartment the more rent you could charge sounds reasonable until landlords started putting Viking stoves imported tile floors luxury appliance in a 6th floor walkup to get the rent high enough to be deregulated. ………add to that a 20% vacancy increase for each new lease. So get a few short term tenants like students or divorcees and a $600 very affordable apartment can easily be $2000 in 5 years and be deregulated… there was no incentive to just paint and put in Sears appliances and raise the rent $50 ……and massive incentives to raise it $500 a month

        The fact that there’s no correlation between the amount you put into a building and the amount of rent you can charge

    2. It’s more difficult to rent than to buy. To rent, not only do they want that, they want 1st, last and deposit which is oftentimes the same as the rent. For a small house in many parts, it’s $6k liquid minimum. Hardly anybody has that.

  3. Read the Houston article again: Rents are falling because everyone is buying houses! You see rents always go up while your mortgages stay the same suckers!

    1. dont forget that with the magic of loan ownership, you also can simply stop making those payments and bunker up for years. Renters you have 30 days to GTFO. Loooooooserrrrssss! Winning! FREE!!!

  4. That is quite a hit to the pocketbook.

    “The dollar value of purchases across all boroughs fell 40% from the prior year to $6.91 billion, the lowest total since 2011, according to a report by brokerage Ariel Property Advisors. There were 290 multifamily deals — a 36% decline, and the first year with fewer than 300 transaction”

  5. “By every measure, it was a terrible 2019 for those in the business of owning and selling multifamily properties.”

    Well, yeah, here in Portland 4-plexes that were overpriced 6 years ago are now 2.5x the price. Good luck with yer cash flow.

    And the price declines mentioned are a triumph not “terrible” nor a tragedy.

    1. Right. For anyone under the age of 50, or even 60, vastly lower asset prices are the solution to the problem, not the problem.

      1. But that’s not friendly to the oligarchs’ net worths, so the narrative needs to be that “falling prices = bad.”

        1. No just the oligarchs. It’s also not friendly to voters who have already bought homes. Solution is to keep prices high but print money and distribute it to the poor to help pay those high prices.

          1. Sorry, I meant that it’s not MY solution; it’s the solution that the oligarchs and governments want. We’re seeing it already.

  6. “currently command monthly rents ranging from $5,000 to just over $10,000, said Carlina Nabatoff”

    and then,

    “Depending on the area, Nabatoff said, some listings drop the asking rent by up to $200 to compete with newly built apartments”

    UP TO $200?

    Seriously. Seriously?

  7. Burying your head in the sand is an interesting way to handle a stock market panic.

    Published: January 28, 2020
    Chinese stock market
    Chinese authorities have announced that stock markets in Shanghai and Shenzhen will remain closed until next Monday as fears over coronavirus continue to swirl. But it may not be enough to stop a selloff once markets reopen next week.| Image: shutterstock.com
    — Chinese authorities have decided to suspend trading on the Shanghai and Shenzhen stock exchanges.
    — This move comes as the Wuhan coronavirus outbreak grows in size and severity.
    — The government is kicking the can down the road. Investors can expect a massive correction when trading resumes next Monday.

    1. I don’t recall that the SARS virus spread so quickly. The new coronavirus has seemingly gone from unknown to uncontained overnight.

      1. It’s getting very close to home.

        Coronavirus
        Possible Coronavirus Case Being Investigated at San Diego Hospital: HHSA
        By Omari Fleming and NBC News
        • Published 4 hours ago
        • Updated 4 hours ago
        County Investigating Possible Case of Coronavirus
        NBCUniversal, Inc.

        NBC 7’s Omari Fleming details the county’s precautionary investigation.

        A possible case of Coronavirus is being investigated at a San Diego hospital, a County Health and Human Services Agency official confirmed Monday.

        The patient who may have contracted the respiratory disease recently traveled through Wuhan, China, the epicenter of the outbreak, on their way to San Diego, according to HHSA Public Health Officer Dr. Wilma Wooten.

        Cases in China have now surpassed 2,700, and at least 80 deaths have been reported as of Monday evening. Stateside, five have been hospitalized with confirmed cases of coronavirus: one in Washington, one in Illinois, one in Arizona, and two in Los Angeles and Orange counties, NBC News reported.

        1. ‘The mayor of Wuhan City, ground zero for the new coronavirus outbreak, sat down for a rare television interview in which he indirectly called out his higher-ups for mismanaging the crisis. During a news program that aired on state broadcaster CCTV on Jan. 27 evening, Zhou Xianwang said that the central government made the decision to withhold information about the outbreak. ‘

          ‘He admitted that the city government did not publish information in time, and failed to properly contain the virus. “Disclosures about the outbreak were not timely… As the leader of a local government, I could only publish information after I receive permission from the authorities [central government],” Zhou said during the interview.’

          ‘Wuhan health authorities only confirmed the outbreak on Dec. 31, 2019, though the first patient was infected on Dec. 12. After a leading expert working for the central government, Zhong Nanshan, gave a speech about the illness’s severity, Wuhan authorities began reporting more official cases of infections.’

          ‘Zhou also revealed that more than five million people have left Wuhan in January, leaving many Chinese worried that these people have the potential to spread the virus widely.’

          ‘Wang Yanhu, an editor at the Chinese state-run media outlet Beijing News, published an article on Jan. 27, in which he criticized the Wuhan government for allowing so many residents to exit the city and put the rest of the population in danger. “The local government kept on delivering positive information until academician Zhong Nanshan gave a speech on Jan. 20,” Wang wrote.’

          ‘Wang said that the majority of the five million people left Wuhan between Jan. 1 to Jan. 20.’

          ‘China commentators believe that Zhou’s TV interview and Ma’s words indirectly meant that they wanted to push the responsibility of containing the virus to Xi.’

          “It’s a clear message from Zhou and Ma that they won’t want to take the responsibility, because they’re afraid they’ll have to pay with their lives for making the wrong decisions,” said Tang Jingyuan, a U.S.-based China affairs commentator in a Jan. 27 interview with The Epoch Times.’

          ‘Tang also believed that the Beijing News article criticizing Wuhan authorities “is a sign that the central government may punish some officials in Wuhan,” he said.’

          https://www.theepochtimes.com/wuhan-mayor-admits-wrongdoing-but-pushes-blame-on-beijing-for-mishandling-viral-outbreak-crisis_3218297.html

      2. It’s much more contagious than SARS and people are spreading it for days or weeks before they know they even have it. Luckily not nearly as lethal.

        1. It’s too early to estimate the death rate, as one needs to know how many who got the illness survived. Given the explosive growth in the number of new cases, the number of these for which the eventual outcome is yet to be determined, and the possibility that the Chinese government might be understating the number of deaths to stem the panic, the death rate is a known unknown at this point.

          1. Hopefully it takes longer to survive a coronavirus infection than to not survive it, as a 50%+ mortality rate would obviously be very bad.

          2. Is (Total Deaths) / (Total Deaths + Total Recovered) a reasonable first approximation to the death rate?

          3. Is (Total Deaths) / (Total Deaths + Total Recovered) a reasonable first approximation to the death rate?

            Once it’s in the past and the numbers are good, I think so. But for now there’s so much lag between exposure and confirmed cases and then so much more lag between confirmed cases and confirmed deaths I don’t think we can conclude anything yet.

            The scary thing is that if you can match up the “humps” in the curves it would appear that the confirmed deaths lags the confirmed cases by about 5 days or so (big stretch, I know). But if that were true it would mean that you should do that math using confirmed case numbers from about 5 days earlier when computing the death rate from the confirmed deaths. In that case the death rate could be over 10%. Hopefully that’s not the case. See pic from link…wish I could embed it.

            https://upload.wikimedia.org/wikipedia/commons/8/86/Log-linear_plot_of_coronovirus_cases_with_linear_regressions.png

          4. I suppose that death is easier to detect than recovery? So the eventual recovery count may lag the death toll. Let’s hope so, anyway…

    1. There is desperation among the Globalists. Their worse nightmare is a Sanders vs. Trump matchup and it is on track to happen. Poor Romney wanted to be the nominee after Trump was removed. The globalists probably wanted a Biden vs Romney election. The type of choice we voters were subjected to for decades. Go Trump, Go Bernie give the remaining politically active Koch brother a heart attack. You set it up by supporting Democrats in 2018.

      1. A-dan, when you say “removed,” do you mean by the never-Trumpers in 2016, or removed by impeachment now?

        The globalists are definitely desperate. After Boris Johnson’s landslide win cemented Brexit, they went quiet REAL fast. No more pestering Theresa May. No more sneering at the British middle class. No more forcing a do-over. Brexit is happening within weeks.

        ATM globalists are probably crawling into their holes hoping to escape coronavirus.

        1. Oxide, Romney wanted the Republican convention to reject Trump, Mueller to get him to resign or now to be impeached. A reelected Trump would be an end to his presidential ambitions and the careers of the other never Trumpets.

          1. Being that the Senate needs a super majority to convict him, I would say that the probability of Trump being removed from office is virtually 0%.

          2. Senate needs a super majority to convict him, I would say that the probability of Trump being removed from office is virtually 0% ??

            Removing him is not the objective… Exposeing him along with his suck-up, weak senators is the goal…

          3. Exposeing

            Ironically, the pretentious smear job seems to be having exactly the opposite result.

            I heard on the radio today that the Soap Operas have had twice the ratings of the sham trial, because they seem more real.

          4. “Expose” Trump? That’s not a goal, that’s a participation trophy. Don’t think I haven’t noticed the tentative attempts to connect Mike Pence to Trump’s activities, Russia and Ukraine hoping against hope they could impeach Pence too. The REAL goal was to remove both Trump and Pence and install Nancy Pelosi as President.

            What do the Dems hope to accomplish from exposure? Trump exposes himself on a daily basis, and he’s proud of it. And his supporters will STILL vote for him, because they would rather have a boor that gets the results, than a polite smooth-talker who promises freebies while giving away the store to the rest of the world.

            There’s a better shot at the Dems taking the Senate.

        2. do you mean by the never-Trumpers in 2016, or removed by impeachment now?

          Are these different people? BTW, the impeachment started in 2016.

          1. A-dan had it right. These are different groups of people. The never-Trumpers wanted Trump out by the convention. The Dems have wanted Trump out since he announced on that escalator, and Trump himself has said that.

  8. Is the coronavirus outbreak much worse than disclosed, or nothing to worry about? The reports are all over the place.

    It must be a good time for dips to buy stocks.

    1. 5 reasons coronavirus fears are overblown — and 14 stocks to buy now
      Michael Brush
      14-18 minutes

      Investor fears about the coronavirus are overblown.

      So Monday’s biggest one-day percentage declines since early October in the Dow Jones Industrial Average (DJIA, +0.45%) and the S&P 500 index (SPX, +0.72%) on coronavirus fears have created nice buying opportunities in 14 stocks with lots of exposure to China.

      Before we get to those, here are five reasons why investors are panicking too much about coronavirus.

      1. That article describes how coronavirus affecting the *markets* are overblown, not about coronavirus itself.

        HHS just came out and decided not to declare a health emergency. Let’s hope it’s because they have updated medical information and not because they don’t want to create a panic. Still no definitive word on whether coronavirus spreads during the symptomless incubation.

        1. It’s all about not creating a panic. Meanwhile, it’s being reported that there’s a run on masks in the US. People aren’t that stupid.

          1. My wife was trying to round up more to send to China yesterday and the supply houses sold out earlier in the day.

          2. I caught part of an interview with a 3M honcho earlier this morning on Bloomberg radio. He described how they are ramping up production of masks to meet demand.

          3. “He described how they are ramping up production of masks to meet demand.”

            Where are they made, China?

          4. Flew in to SFO yesterday and out today. Witnessed more facemasks than I’m comfortable seeing. 😷😷😷😷

            Due back for a conference next week but ain’t gonna lie, considering not going.

          5. considering not going

            Not a bad choice IMO. And, I’ve had reason to read The Hot Zone. My mother helped care for a young orangutan in Borneo bleeding out with Ebola-like symptoms in the mid-1990s. This was after her exposure to HIV during the late-1980s working for an infectious disease laboratory testing predominantly homosexual patients, some of whom wanted to infect the heterosexual population to elevate the concern.

          6. This was after her exposure to HIV during the late-1980s working for an infectious disease laboratory testing predominantly homosexual patients, some of whom wanted to infect the heterosexual population to elevate the concern.

            How thoughtful; LGBTQ core values?

        2. “That article describes how coronavirus affecting the *markets* are overblown, not about coronavirus itself.”

          It’s a distinction without a difference. 50 million Chinese citizens on lockdown is going to leave a mark on their economy, and the effects are not likely to be contained to China. But perhaps a massive injection of financial liquidity opioids will suffice to quell the negative economic impacts.

    2. Health and Science
      Ex-FDA chief worries China could be underestimating coronavirus cases by ‘tens of thousands’

      Published Tue, Jan 28 2020 7:52 AM EST
      Updated 2 hours ago
      Jessica Bursztynsky
      Key Points
      — Former FDA Commissioner Scott Gottlieb said he’s worried that coronavirus cases in China are actually much higher than the official numbers.
      — “I think we are dramatically underestimating” cases in China by “tens of thousands,” Gottlieb said.
      — Chinese officials on Tuesday sharply increased their confirmed coronavirus cases to more than 4,500. The death toll in China rose to 106.

      1. I honestly think the Chinese have stopped counting at this point.

        I just read on Sky News that the Thai Health minister is on record saying “we cannot stop the spread.”

        Because it can be transmitted by healthy hosts, I believe the cat is out of the bag. Airport screenings are for show. I think at this point most important question is what is the mortality rate. Hopefully it is low. I’m hoping there are a lot of mildly affected people that never sought treatment and hence we are overestimating the lethality.

        1. The Financial Times
          Coronavirus
          ‘People are getting ill all around us’: the foreigners trapped in Wuhan
          — US citizens set to be evacuated but other expatriates wait for details of exit plans
          — People wearing face masks walk down a deserted street in Wuhan in central China’s Hubei Province, Tuesday, Jan. 28, 2020. China’s death toll from a new viral disease that is causing a global concern rose by 25 to at least 106 on Tuesday as the United States and other governments prepared to fly their citizens out of the locked-down city at center of the outbreak. (AP Photo/Arek Rataj)
          The deserted streets of Wuhan on Tuesday
          Tom Hancock in Wuhan
          4 hours ago

          US citizens were preparing to escape from Wuhan on Tuesday night on the first evacuation flight to leave the centre of China’s coronavirus outbreak. But thousands of foreigners from other countries remain trapped in the stricken city.

          They include football coaches, airline pilots, teachers and students who had found a home in the central Chinese city as its economy boomed.

          Divyank Parekh, a 20-year-old student, said he was one of about 50 Indian students who remained in the dormitories at Wuhan University School of Medicine.

      2. Oh bugger!

        WHO admits error in assessment of deadly coronavirus risk
        The World Health Organization said the global risk from the deadly coronavirus was high, after incorrectly rating the global risk as “moderate” last week.
        By Joseph Guzman
        Story at a glance
        — The correction of the global risk assessment does not mean an international health emergency has been declared.
        — The WHO made the correction in a report released Monday.
        — Officials have declined to declare a public health emergency at this time as the outbreak sweeps through China.

        The World Health Organization (WHO) said Monday the global risk from the deadly coronavirus was “high,” admitting it made a mistake in previous reports that rated the risk of the virus as “moderate.”

        The United Nations health body said in a situation report published Sunday that the risk was “very high in China, high at the regional level and high at the global level,” and explained in a footnote there had been an error in reports published Thursday, Friday and Saturday which incorrectly said the global risk was “moderate.”

        WHO last week decided not to declare the virus an international public health emergency. WHO chief Tedros Adhanom Ghebreyesus said Thursday, “This is an emergency in China, but it has not yet become a global health emergency.”

    3. The virus is not going away but outside of China will not impact the global economy in a major way this year, in my opinion. The stock market in this country was due for a correction. The virus was a good excuse. Unfortunately, I do not see corona virus ever eradicated. Isn’t globalism grand?

      1. Hard to say. If it can spread as quickly as some fear and a body count start rising, I could see panic spreading in the West too. Currently watching closely and will be ready to zip over to the warehouse club store to buy non perishable food, the trick is to know when to pull the trigger. Pull it too soon and you might end up with a lot of rice, beans and canned food you don’t need, pull it too late and the shelves could be bare.

          1. Just to follow up, went to Costco tonight to stock up on about a month worth of staples. Shelves were fully stocked and there was zero sense of urgency among the shoppers. Couldn’t decide if that was encouraging or scary.

            I ordered a few cases of MREs last week. Arrived today. I like those for emergencies and for the car if I need to make a run for Wyoming and think I can carry/acquire enough fuel to make it.

        1. Pull the trigger now, Colorado. There are a million reasons to need 6 weeks of non-perishable food. Don’t forget a case of water.

          I assume that even during an outbreak, essential staff will keep the utilities going. So you may not even need to get non-perishable food or water. Stock the freezer.

        2. rice, beans and canned food you don’t need

          Rice and Beans have an incredible shelf life. The key is to stock food you will actually eat anyway.

        3. And don’t forget the peanut butter! I think peanut butter is just about the cheapest calories you can find. And it has lots of good fat and protein, etc.

          1. I’m stocked up on virtual Cheetos… Like I do every week. The best part about it? I have my own Cheetos Fetcher.

        4. Pull it too soon and you might end up with a lot of rice, beans and canned food you don’t need, pull it too late and the shelves could be bare.

          That’s the balancing act I’ve been working on – having a stockpile of stuff that lasts long enough that if everything stays totally normal, we will manage to consume our way through it as part of our normal diet / consumption habits before anything expires or goes bad. Little stickers indicating purchase date for all the stuff on the garage shelves help.

          What it means in terms of food is that we have a longer supply or more boring and storeable things. Meat and fresh veggies are purchased a day or two within being cooked, while rice, flour, soups, beans, etc can last us a long while.

          We try to cook a lot and don’t have that many pre-packaged meals. We’ve alternated on and off when it comes to making our own bread.

        5. 4 engineers just arrived back at work here in the USA from China
          with more arriving daily. How fun. took the day off work to fix my washer and I don’t feel that great but expect its a cold.. but who knows.

    4. The Financial Times
      Opinion Coronavirus
      Containing the spread of the coronavirus is a forlorn hope
      A revised timeline suggests it has been circulating longer than first thought
      Anjana Ahuja
      – In this Jan. 26, 2020, photo released by Xinhua News Agency, a member of a military medical team takes over the work from a medical worker at Wuhan Jinyintan Hospital in Wuhan, central China’s Hubei province. China on Monday expanded sweeping efforts to contain a viral disease by postponing the end of this week’s Lunar New Year holiday to keep the public at home and avoid spreading infection. (Li Yun/Xinhua via AP)
      – A military medical team member and a medical worker at Wuhan Jinyintan Hospital at the weekend © Li Yun/Xinhua/AP
      Anjana Ahuja yesterday

      The world should be more anxious than it was a week ago. According to research published on Friday, a new Sars-like coronavirus has been present in China since December 1, a full month before the alarm was raised. Almost 3,000 people have been diagnosed with the respiratory illness. As of Monday afternoon, 35 cases were outside China. Eighty-one people have died.

      Despite draconian quarantining, the virus, provisionally known as 2019-nCoV, is spreading. Several countries, including the UK, are considering evacuating nationals from the hot zone. It is now time for the World Health Organisation to call a Public Health Emergency of International Concern (PHEIC).

      The revised timeline on when the virus began circulating comes courtesy of two papers in The Lancet medical journal, which reveal other worrying details. One sets out the clinical data on the first 41 laboratory-confirmed patients.

      Patient zero, who fell ill on December 1, had no link to the seafood market in Wuhan that is widely assumed to be the source of the outbreak. A further 13 of those 41 cases showed no link either. It is possible that the virus began circulating earlier than December.

      Other analyses separately suggest that containment is now a forlorn hope. The “reproduction number” is thought to lie between two and four — meaning that, on average, each infected person passes the virus to between two and four others. That is high: seasonal flu has a reproduction rate of about 1.4.

      The incubation period could be about a week, with infected individuals possibly being contagious while showing mild or no symptoms. Neil Ferguson, an Imperial College epidemiologist, estimated that 4,000 were infected by January 18. Jonathan Read, of Lancaster University, and colleagues provisionally calculate that the tally could exceed 190,000 by February 4.

      1. The “reproduction number” is thought to lie between two and four

        To draw such a conclusion, factual reporting is necessary. We already know that isn’t the case.

        1. That’s the thing, we have NO idea of what the real situation is in China. I did read that the CDC offered to help and the Chicoms said “No”. Perhaps it was said out of pride, or perhaps because they don’t want the truth to get out. Who knows?

          1. Or the Chinese think they can’t trust the Amerikkans to tell the truth. It’s all propaganda to Americans. They can’t even tell the truth about how many of their troops were injured.

      2. Real Journalists need to stop calling it a “seafood market.”

        It’s cages, pens, tanks full of live animals, surrounded by the carcasses, cooked and uncooked, of dead animals.

        See also “The Jungle” by Upton Sinclair.

        1. It’s absolutely despicable. These filthy people have no regard for animals or any sort of human decency.

          1. Also, Chinatown in SF is where the demand for illegal bear gall bladders comes from. The poachers sell them to store owners in back room deals.

        2. Now they’re saying that this virus first appeared on December 1, which is earlier than and not near the incident of the bat-eating snake (or whatever the story was). So they must have traced it incorrectly. Maybe it was a different wet market with some other animal action. Those markets all look so bloody and bad that I’m surprised that this hasn’t happened earlier.

          1. Keep in mind that it’s easy to cast blame on people who eat strange food. But the fact remains that the bio research lab is right across the river.

          2. Posting again for those who may have missed it.

            https://www.nature.com/news/inside-the-chinese-lab-poised-to-study-world-s-most-dangerous-pathogens-1.21487

            “But worries surround the Chinese lab, too. The SARS virus has escaped from high-level containment facilities in Beijing multiple times, notes Richard Ebright, a molecular biologist at Rutgers University in Piscataway, New Jersey. Tim Trevan, founder of CHROME Biosafety and Biosecurity Consulting in Damascus, Maryland, says that an open culture is important to keeping BSL-4 labs safe, and he questions how easy this will be in China, where society emphasizes hierarchy. ‘Diversity of viewpoint, flat structures where everyone feels free to speak up and openness of information are important,’ he says.”

    5. What happens when a real economic concern meets a wall of financial liquidity? We are soon to learn.

      China Pledges Liquidity, Asks for Rational Investor Reaction
      Christopher Anstey and Claire Che
      Bloomberg January 28, 2020, 3:59 AM PST
      China Pledges Liquidity, Asks for Rational Investor Reaction

      (Bloomberg) — China pledged to provide abundant liquidity for money markets and urged investors to evaluate the impact of the coronavirus objectively, as the nation prepared for a potentially tumultuous resumption of trading next Monday.

      Along with a potential sell-off in Chinese stocks, which haven’t traded onshore since Jan. 23, there’s a “large amount of funds” coming due Feb. 3, the People’s Bank of China said in a statement. It will conduct operations “to provide abundant liquidity in a timely manner to maintain reasonable and sufficient liquidity in the banking system,” it said.

        1. If liquidity is being pumped into the system, Why are both golf and silver very weak? Seems more likely that the big boys think that the coranavirus is largely contained and are buying stocks and selling the precious metals they bought when they were worried. Thanks big guys I sold more call options further out on the mining stocks yesterday, I appreciate your contribution to my retirement funds. Please run gold and silver up a few months from now so I can rewrite, after June would be my preference. You are pond scum but I cannot beat your manipulation but I can make a few dollars anticipating your moves.

          1. “Why are both golf and silver very weak? Seems more likely that the big boys think that the coranavirus is largely contained and are buying stocks and selling the precious metals they bought when they were worried.”

            Sorry, I don’t see anybody, much less the “big boys,” buying precious metals then selling them in such a tiny time frame.

          2. The repo and liquidity and printing are making dollars look good for the moment, keeping the metals weak compared to dollars. However, central banks for different countries have been buying the metals for months now on the theory that the dollar will eventually fail and hyperinflate. Then the metals will kick in, but not yet. There’s even a rumor that China is developing a gold-backed cryptocurrency.

            The recent move in gold happened when the US and Iran tossed a few drones and missiles at each other. Coronavirus is not yet having an effect, yet.

          3. China is developing a gold-backed cryptocurrency

            If it were redeemable outside of China, it would be the CCP’s worst defense against capital flight.

    6. Worse. Looks like China has been undertesting (for many reasons) and so have not been counting/including deaths of those that were symptomatic but were not tested.

  9. ‘I don’t understand paying for a stabilized value on an asset that’s not stabilized. I’m not even saying close to stabilized — 50% stabilized, you’re halfway there, in this environment, you’ve probably got another 18 or 24 months. There are [lease-ups] that have been stalled for four years, they’re sitting at 50% occupancy. What’s leading you to think [this property] is going to get to 90% occupied and why in the world are you paying like it’s 90% occupied?’

    I’d bet there are accounting time-bombs like this all over the senior, student and lux apt biz.

  10. ‘With 31,000 students and 37,000 beds, I believe that that means that we need to make some determinations and some decisions about is this something that we need to address or not’

    But it’s recession proof!

  11. ‘A source attributed the leasing boomlet in the blocks between East 57th and 60th streets to enormous cuts in asking rents — “down 35 percent in that area in just two years,” an insider said.’

    ‘Even so, the average ground-floor asking rent for the Vornado leases was still $1,000 a square foot, sources said — hardly chopped liver.’

    ‘The new stores come not a moment too soon for the battered sidewalk-level scene along 57th Street between Park and Sixth avenues and on blocks immediately north and south, which were rocked by one retail wipeout after another in the past 18 months.’

    ‘Despite the welcome imminent arrival of luxury perfume shop Amaffi at 40 E. 57th St. and David Yurman’s move to 5 E. 57th, the brick-and-mortar retail recession has taken a grim toll.’

    ‘The long 57th Street block between Fifth and Sixth avenues now has as much vacant store space as occupied space since Z Chemists went dark a few weeks ago. Demolition and construction make things look worse.’

    ‘At the same time, Fifth Avenue south of 57th has large, empty spaces that were home to Henri Bendel, The Gap, Ralph Lauren Polo, Tommy Hilfiger, Massimo Dutti, Stuart Weitzman, Lululemon and Topshop.’

    ‘Most have been empty for more than a year. No leases are known to be pending at any of them.’

    https://nypost.com/2020/01/27/fendi-berluti-sign-madison-avenue-leases-easing-vornado-slump/

    1. The Spanish flue killed 65 million in around 1919 , so I don’t know how anyone can say what is going to happen with this virus.

      The other thing going on is that Bernie Sanders seems to be the frontrunner. This is shocking to me because Bernie is such a Commie thats it’s alarming.

        1. Actually that was the first race he did win: Mayor of Burlington. For years he would 1 or 2 percent of the votes and be a spoiler. The Republicans in the state loved him for getting Republicans elected.

      1. are they polling 16-18 yr olds exclusively?

        spanish flu 10-20% death rate
        before ac and even knowing aspirin and hydration techniques.

        over 85 degrees, throw up twice and you’re dead.

        1. An old friend/neighbor of mine lived through that. He said they stacked the bodies on hay wagons in our little rural town.

      2. When you strip mine the entire economy with the 1% siphoning off the wealth of the bottom 99%, this is what you get.

      3. I am more alarmed that the globalists were able for around thirty years to manipulate people to vote for one side or another of the same coin. They grew rich while they laughed at the people who were excited to vote for their hand picked candidates. Functionally it was no different from Iran where the candidates are picked by the leaders of the theocracy. I am proud to have been supporting third party voters most of the time and with my decision to vote for Trump and end mere protest votes in 2016. The Bush family, the Clinton family and the Obama family have no trouble hanging together. However they all snub Trump, he could receive no greater endorsement.

        1. This may shock or even offend people on this board but if Romney was running against Bernie, I would reluctantly have to vote for Bernie as the lesser of two evils.

          1. If the GOP were to nominate uncharismatic Romney a second time, it would prove that it is indeed “the stupid party”.

          2. I think Romney could get elected in good “stay the course” times. But not when people are looking for change.

      4. When I think of the extraordinary wealth transfer that has taken place in the US, the movie “There Will Be Blood” comes to mind, particularly the scene where he screams “I drink your milkshake!” The wealthy are drinking everybody else’s milkshakes.

          1. It’s gonna be a fun show.

            If Sanders wins Iowa, I’ll give his campaign another $20. If he wins New Hampshire, another $20.

            After all, REALTOR, I have so much money left after “throwing money away on rent” every month that I don’t know where to throw it.

      5. The Cornovirus panic is just that, panic of panic’s sake. 80K people died of the regular Flu in 2018, no one said anything, no news reports, no nothing. 6 people get the virus and time to PANIC. Just like SARS, Swine Flu, Mad Cow, etc. etc.

        Bernie appeals to a lot of people because they find Socialism very attractive. Lots of factors, but his biggest base seems to be college educated young whites. A reflection of the absolute nonsense that passes for education in college today. Bernie’s gonna erase student debt and make everything free, if you are dumb 23 y/o with no understanding of economics or History this sounds awesome. I don’t think the Clinton/Obama machine will allow him to get the nomination, but you never know.

        1. It’s way past six cases now.

          Coronavirus: First case confirmed in Gulf region, more than 6,000 worldwide
          UN News/Jing Zhang
          People wear face masks in the waiting area at China’s Shenzhen Bao’an International Airport.
          29 January 2020
          Health

          On Wednesday, the World Health Organization (WHO) confirmed that the coronavirus outbreak has now spread to the United Arab Emirates (UAE). The vast majority of cases continue to be declared in China, with more than 6,000 confirmed, 68 of them outside of the country.

          1. According to the CDC 80,000 people in the US died from the Flu. 80K I don’t recall reading about pandemics, epidemics, mass death etc.

            Same nonsense was said about SARS and Swine Flu.
            It’s almost as if you folks are rooting for it………..

          2. Wow, 6k cases world-wide? Out of billions of people. More people probably died falling down stairs in the same amount of time.

            How many people world-wide currently have the regular Flu? Lots more than 6k……

          3. Wow, 6k cases world-wide?

            If you believe the numbers and narrative coming out of China, I’ve got a bridge to sell you. Is it the apocalypse/armageddon? No! But, it’s not a nothing-burger either. An ounce of prevention is worth a pound of cure.

          4. armageddon?

            When I was a lad, these CCP socialist guys killed (starved) an estimated 30 million of their own fellows on purpose. This is the same group that gives the world stats on mortality and infection rates of a virus. Really, we have no idea yet.

  12. I guess Hong Kong lacks a PPT?

    Markets
    Hong Kong stocks tumble on coronavirus fears
    Shares in the Asian financial hub fall after market returns from lunar new year break
    3 hours ago

      1. Coronavirus Live Updates: U.S. Evacuates Citizens, and Deaths Mount

        Chinese officials confirmed nearly 6,000 cases of the mysterious illness as foreign governments airlifted their citizens out of Wuhan, the outbreak’s epicenter.

        By The New York Times

        Right Now

        Virus shows signs of spreading overseas with people who never visited China falling ill in Germany, Japan, Taiwan and Vietnam.
        Here’s what you need to know:

        — Americans evacuated from China undergo screening in Alaska before quarantine.
        — The outbreak is spreading. Nearly 6,000 cases have been confirmed.
        — British Airways cancels all flights to and from China amid fears of the outbreak.
        — Rise in number of cases outside China is “very concerning,” expert says.
        — Villagers clash with the police over a proposed quarantine site.

    1. Coronavirus shock could deliver double-digit hit to stock market, investor warns
      By Shawn Langlois
      Published: Jan 29, 2020 10:01 a.m. ET
      Getty Images
      Chinese women and a child all wear protective masks as they walk under decorations in a park after celebrations for the Chinese New Year and Spring Festival were cancelled.

      ‘I don’t think we fully understand the scope of what’s going on with the coronavirus, I wouldn’t be surprised to see additional headlines come out that might shake the markets a bit.’

      And by “shake the markets a bit”, Jeffrey Mills of Bryn Mawr Trust means a potential double-digit percentage drop in stocks.

      “A 5% to 10% drawdown would bring us right around the upward sloping 200-day moving average [for the S&P 500] around 3,000,” he told CNBC in an interview this week. “In that case, we would be buyers.”

      1. Coronavirus shock could deliver double-digit hit to stock market

        We all wondered what the last snowflake would be to start the avalanche. Turns out somebody brought some mortar rounds to play with.

  13. Its FOMO time!!

    “ It is busier than I expected this year,” said Redfin Boston listing agent Delince Louis. “My first listing of the new year has already received four offers. Low interest rates and low inventory are fuelling activity, and we are seeing activity now that we normally wouldn’t see until March. 2019 was slow, people were worried about a recession, but this year is back to being competitive. A lot of millennials who put their searches on pause last year are coming back now, and they are coming back early because they want to beat the rush.”

    Seattle Redfin agent Shoshana Godwin says 2020 already feels busier than even the craziest times in 2017. “I’m regularly seeing homes with well over a dozen offers that sell for hundreds of thousands above list price, even in the middle of our recent snowy week. In a typical year, I’d say to wait it out and expect more homes for sale in the next few months…but now I’m warning clients prices may only continue to rise and the inventory may not appear.”

    If the data continues coming in as strong as it has through the first few weeks of January, 2020 may turn out to be the most robust housing market in a decade. That’s great news for those looking to sell a home, but for homebuyers it will mean increasing competition and rising prices.”

    https://www.prnewswire.com/news-releases/2020-housing-market-forecast-more-buyers-fewer-homes-for-sale-300995090.html

    1. Got skid marks?

      Pending Home Sales Skid 4.9% in December
      January 29, 2020
      Media Contact:
      Quintin Simmons 202-383-1178

      WASHINGTON (January 29, 2020) – Pending home sales fell in December, taking a step back after increasing slightly in November, according to the National Association of Realtors®. Each of the four major regions reported a drop in month-over-month contract activity, with the South experiencing the steepest fall.

  14. So far the economic impact of Coranavirus in the US is to lower mortgage rates and to increase buying. Unfortunately, millennials may now be buying. I guess I should not be surprised that a generation who will pay over $500 a share for Tesla will overpay for housing. Herd animals.

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