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You’re Not Going To Be Able To Re-Sell

A report from Commercial Property Executive. “The expectation among many in the commercial real estate field is that commercial mortgage lenders are actively looking to make new loans, or refinance existing loans, at very low rates to match. This is just not the case. The spread between U.S. Treasury rates and the going rates in the commercial market has increased due to uncertainty in the market and fears of an extended recession. We are seeing lenders raise their rates, or opt to sit on the sidelines, until the COVID-19 pandemic has passed. Accordingly, commercial loan volume is down drastically, and those loans being made today are being closed with much tougher underwriting requirements.”

“The two largest purchasers of apartment loans, Fannie Mae and Freddie Mac, have severely cut back on their lending volume by instituting many changes to make their underwriting more conservative. They have cut back their loan-to-value ratios in many markets that are now on their watchlists. They have discounted commercial or retail income on mixed-use properties due to store closures. And, most importantly, they have instituted reserve requirements that require borrowers to put money in escrow for 9 to 12 months to cover future payments.”

“In the past, Fannie Mae and Freddie Mac have financed up to 80 percent of a purchase price without reserves. That allowed an apartment buyer to acquire an asset with as little as 20 percent down. Now that down payments have increased and borrowers need to post reserves, the cost to acquire a property has increased. This has caused a major slowdown in the number of apartment sales nationwide.”

“In New York City, for example, residential rents have dropped to their lowest levels in a decade in all boroughs. As brokers are unable to show apartments due to shelter-in-place rules, the number of listings has increased and rents have correspondingly dropped. Before COVID-19, many markets were getting overpriced. Now some of these markets are seeing a reduction in values.”

“The coronavirus pandemic has caused serious upheaval in the commercial real estate market and probably will for some time to come. It will take months, and possibly years, for some owners and properties to return to profitability. In the meantime, lenders will continue to make commercial mortgage loans, but with much more conservative underwriting guidelines and with more financial scrutiny.”

From Senior Housing News. “When Covid-19 reached U.S. shores, senior living experts predicted a wave of distress, with the most serious issues affecting companies that already were struggling, as well as smaller operators lacking in capital and other resources. These distress situations are indeed emerging as the pandemic intensifies operational pressures and gossamer-thin margins of underperforming or mom-and-pop senior living communities.”

“Meanwhile, as early as May, Moody’s warned that senior living companies are facing bond defaults, with some of them describing how Covid-19 has worsened already-precarious financial positions. Industry experts believe that this is only the beginning.”

“The CARES Act stimulus is keeping scores of other communities afloat, but when that money runs out, underperforming properties will be back where they started, if not closer to shutting down operations. When that happens, investors are waiting in the wings to acquire assets at a discount. Kong Capital was part of a group that recently acquired a seven-property portfolio, with a purchase price that dropped from $70 million to $52 million as Covid-19 eroded net operating income at the communities.”

“Without stronger support, more communities will become distressed and eventually close, starting with facilities that struggled with margins before the pandemic disrupted operations, Blueprint Healthcare Real Estate Advisors Senior Managing Director and Head of Business Development Steve Thomes told SHN.”

“Specifically, smaller communities may be more adversely impacted by the occupancy depression affecting senior living. ‘If you weren’t solvent and you weren’t doing things the right way pre-crisis, you’re going to get a float from the stimulus. And then you’re probably going to be right back where you were, if not in worse shape,’ Thomes said.”

“Potentially exacerbating the situation, the pandemic hit just as senior living providers were beginning to recover from a period of oversupply. While sub-par operators might be essentially culled from the marketplace by Covid-19, it’s possible that higher quality providers may also find it impossible to weather the pandemic if their occupancy was already struggling.”

“The true extent of distress will not be felt immediately. Thomes expects distress to snowball as CARES Act stimulus ends, particularly if future stimulus packages do not adequately address needs. ‘We’re expecting this probably won’t happen for six to eight months, maybe even more. The stimulus has certainly created a kind of an artificial floor for a lot of operators to continue operating,’ he said.”

From Mansion Global on New York. “Well-managed co-ops also tend to have higher monthly fees than condos, but larger reserve funds, meaning that they can often afford to address repairs or other issues without upping maintenance fees for residents. And the co-ops that do have relatively low maintenance fees are also often offsetting that discount for residents with rents from commercial spaces on-site, a factor that could now negatively affect those buildings as many storefronts remain shuttered indefinitely.”

“Contrast that with new construction condos, which are currently scrambling to get buyers in the door, and can face dire financial consequences if they don’t sell enough units on schedule. ‘The last time we went through a recession, there were buildings where they got the units finished but hadn’t sold enough apartments to [afford to] finish the pool, the gym, to properly do the lobby or landscaping,’ said Melissa Cohn, president of the Melissa Cohn Group at Raveis Mortgage. ‘If 50% of the building is empty and not paying common charges, you’re not paying your super or your bills. The budgets for these buildings are on a razor sharp edge because they want to keep common charges as low as possible for marketability.'”

“All of which can harm marketability for individual owners looking to eventually sell. ‘You’re not going to be able to re-sell your unit,’ Ms. Cohn added. ‘How are you going to go up against a developer giving all kinds of concessions?'”

The Guardian on California. “Amid rising coronavirus infections and a worsening economic crisis, hundreds of thousands of renters are now at risk of becoming homeless in California. With so many families facing huge rent debt, advocates are urging the state to act. The only viable solution, some activists say, is rent relief – a move that elected officials have so far resisted.”

“‘When talking about the scale of eviction and mass displacement, it’s pretty unimaginable,’ said Ananya Roy, director of the Institute on Inequality and Democracy at the University of California, Los Angeles (UCLA). The state, she said, was headed towards even more dire conditions than the shanty towns or ‘Hoovervilles’ of the 1930s. ‘This will be worse than the Great Depression.'”

“UCLA researchers have estimated that 495,000 households are at risk of eviction in Los Angeles county. In Silicon Valley, one of the wealthiest regions in the world, 43,000 households are at high risk of eviction, and even if just 10% of them end up homeless, that could triple the region’s unhoused population, one recent report estimated. ‘We were in a crisis before. Now we are in a catastrophe,’ said Trinidad Ruiz, an LA Tenants Union (LATU) organizer.”

The St Louis Post Dispatch in Missouri. “Bridgeport Crossing was one of 12 large complexes that T.E.H. Realty affiliates purchased in the St. Louis region since late 2014. The international firm’s failure to maintain the properties and the tenants’ complaints about poor conditions became the subject of numerous news stories. Most of the properties, each owned by a separate limited liability company, ended up in foreclosure, receivership or scenarios that still are being ironed out.”

“Lee Camp, an attorney at Arch City Defenders who represents a Southwest Crossing resident accused of not paying rent, said the receivership case there and other T.E.H. properties ‘focuses on the debt and not the people.’ ‘The law seems to be protecting the banks here, anyone who has a large financial interest in these properties, but the tenants’ concerns don’t seem to be addressed through these processes,’ Camp said.”

The Daily Pennsylvanian. “In mid-March, Penn announced that the remainder of the spring semester would be conducted remotely after the conclusion of an extended spring break. Students in on-campus housing had until March 15 — just four days — to move out of their dorm rooms, the emailed announcement read. While approximately 450 students received approvals to remain on campus, thousands of other residents rapidly left campus en masse.”

“For Ortuño, the most immediate change to campus was the lack of foot traffic on Locust Walk and the surrounding streets, especially during typical class hours. ‘Walking to the grocery store on a weekday in the afternoon and seeing empty streets, empty restaurants, everything closed around me, there’s something about that that seemed very post-apocalyptic,’ Ortuño said.”

“Ergete noticed a similar lack of activity whenever she went out, especially in the earlier period after classes resumed. ‘Everyone was gone,’ Ergete said. ‘The campus was dead. Dead.'”

From The Real Deal. “A lender is seeking to foreclose on the Witkoff Group’s South Beach hotel after it alleges the developer failed to make its July payment on a $45 million loan. Ladder Capital Finance filed a foreclosure lawsuit against the owner of the 181-room Washington Park Hotel and is seeking to collect the entire loan, along with interest and late fees.”

“The lawsuit was filed on July 22 in Miami-Dade County Circuit Court and is one of the largest foreclosure lawsuits in South Florida since the coronavirus pandemic began. The boutique Art Deco hotel reopened in 2016 after an extensive renovation. Ladder Capital provided the $45 million loan to the hotel in May 2016. The New York-based lender sent the company a letter of default on July 7, after it alleges Witkoff failed to make a payment on the loan, according to the complaint.”

“Since the pandemic began in March, a number of lenders have sought to work with borrowers to offer deferrals. During its second quarter earnings call this week, Ladder said its balance sheet loans had a 98 percent collection rate in July. The exceptions were for one multifamily and one hotel loan, which were either late in payment or going to default. The hotel loan could be for the Washington Park Hotel.”

“Experts say that lenders are generally reluctant to foreclose on a property now because they are not interested in taking over or finding a replacement tenant or operator. Still, some are filing foreclosure suits. The lender, BridgeInvest, is seeking to foreclose on the 70-key Variety Hotel in Miami Beach.”

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This Post Has 72 Comments

  1. ‘The spread between U.S. Treasury rates and the going rates in the commercial market has increased due to uncertainty in the market and fears of an extended recession. We are seeing lenders raise their rates, or opt to sit on the sidelines, until the COVID-19 pandemic has passed. Accordingly, commercial loan volume is down drastically, and those loans being made today are being closed with much tougher underwriting requirements’

    ‘The two largest purchasers of apartment loans, Fannie Mae and Freddie Mac, have severely cut back on their lending volume by instituting many changes to make their underwriting more conservative. They have cut back their loan-to-value ratios in many markets that are now on their watchlists. They have discounted commercial or retail income on mixed-use properties due to store closures. And, most importantly, they have instituted reserve requirements that require borrowers to put money in escrow for 9 to 12 months to cover future payments’

    This is a credit event. How many operators have 9 or 12 months cash? A handful across the US.

    1. Seems similar in some respects to the problem facing homeowners who have temporary forbearance from monthly mortgage payments until the V-shaped recovery takes hold. How many homeowners have $20,000 to $30,000 in a liquid account available to make back payments?

        2. That’s a good point! The missed payments will accumulate with interest and suck away a few years worth of would be home equity wealth gains from the homeowner to the lender. And the homeowner’s period of debt slavery may need to be extended for a few years to repay the increased debt balance.

          Good deal for Mr Banker! Not so much for Mr and Mrs Joe Sixpack Homeowner.

          1. What seems less clear is how back end workouts can help renters. Will those unable to pay back rent be offered a similar deal as homeowners are to finance debt repayment over time? How likely are any such repayment agreements to be honored?

          2. My guess is fedgov will offer some kind of low-interest loan to renters. Renter takes the money, pays the landlord in full, pays back the gov over time. And then those fed-gov loans will quietly shift into those “loans” that don’t need to be paid back, or will be forgiven altogether.

          3. Would Congress have to authorize your Foreign Real Estate Investor Protection Plan, or could the Fed quietly use Modern Monetary Theory to carry it out, sans political limelight?

            And once the word got out that rents no longer need to be paid, since the government has taken over compensating landlords, wouldn’t everyone stop paying rent, leaving the government on the hook for an amount they can’t afford to pay?

          4. I can afford my rent, but if the Feds were giving loans I’d take the money and put all of it into stawks.

          5. My guess is fedgov will offer some kind of low-interest loan to renters. Renter takes the money, pays the landlord in full, pays back the gov over time.

            This is the most realistic scenario I’ve read/heard yet.

          6. Any deferred rent beyond the lease term will immediately be included in a Bankruptcy case. Any agreement to pay during the lease term will be impossible for tenants to perform.

  2. ‘The state, she said, was headed towards even more dire conditions than the shanty towns or ‘Hoovervilles’ of the 1930s’

    You guys have misdiagnosed the problem, didn’t really care as long as you believed your shacks were making you rich. It’s the lending. If you didn’t have the higher, guberment guaranteed cap, your prices would be the same as Arizona. If Arizona didn’t have the loan cap it has it would be affordable.

    In every area, shacks prices always end up where the loan caps are. Stupid, huh?

    1. Will the government-sponsored conforming loan limits go away when Fannie Mae and Freddie Mac are finally privatized?

      Other than artificially propping up prices with government guaranteed debt, what purpose do the conforming loan limits serve?

  3. “Experts say that lenders are generally reluctant to foreclose on a property now because they are not interested in taking over or finding a replacement tenant or operator.”

    Here come all the zombie foreclosures and the bank/MSM denial of their existence.

  4. Some pics for Jeff (no, there were no dogs on the mountain today). The Mt Evans road is the highest paved road in North America, and since it it closed for the season to all motorized traffic because of ‘Rona the bighorn sheep have taken over the road, along with us road cyclists:

    https://imgur.com/a/qFCEK6K

    14,000+ foot peak Mt Bierstadt at left, Abyss Lake at center, Mt Evans is out of frame at right:

    https://imgur.com/a/WhXIgT2

    There’s a lot of cool sh*t out there in this world to see and do when you don’t have debt. And no, I don’t have a $2,000 road bicycle like every other Front Range clown with too much money, I’m rolling on a Schwinn from the 1980’s that my homeboy rebuilt for me from the frame up.

    1. I rode up Mt. Evans from Idaho Springs, a number of years (and pounds!) ago. Unfortunately, there were vehicles on the road that day. And quite a few other cyclists. Though I noticed most of them had someone drive up and give them a ride down. After all that leg work, I was not about to miss out on the descent!

      BTW, $2K is on the cheap end for a road bike these days. You can spend $15K or more on a premium road or tri bike.

      1. BTW, $2K is on the cheap end for a road bike these days. You can spend $15K or more on a premium road or tri bike.

        Yep, all thanks to that EEEEE-ZEE money. You can finance anything. If people had to come up with $7,500 cash for a full suspension mountain bike, they’d be selling less than 10% of what they do.

      2. You can spend $15K or more on a premium road or tri bike.

        It wasn’t that long ago when $15K would buy a nice new car.

        1. In the mid-80’s, you could buy a basic subcompact car or stripped-down mini truck, brand new, for around $4K. In fact I may have been one of the people who did so. 🙂

          1. All I know is in 87 you could get a no options 87 5.0 Mustang LX for 10 grand even. That was the bang for the buck ticket that year and for a few after that even though the price rose a bit.

          2. Indeed my first car was a 77 Honda Civic hatchback that cost me $700 back in 1993. Drove it 5 years sold it for what I paid.

  5. Is the V-shaped recovery all the MSM-favored economic experts were discussing back in March proceding on schedule?

      1. It seems like an L-shaped recovery is in store, with a permanently Lower level of demand for commercial office space, hotels, air travel, automotive commuting, and housing near urban centers.

        The Economy
        June 25, 2020
        The ‘V-Shaped’ Recovery Has Died of Coronavirus
        By Eric Levitz
        If you reopen it, they won’t necessarily come. Photo: JLN Photography/Shutterstock

        The dream of a “V-shaped recovery” died Thursday of complications from coronavirus.

        For months, Wall Street’s optimists have been betting that America’s bedridden economy would bolt upright as soon as the pandemic had passed: After all, the private sector had a clean bill of health before catching COVID-19. Months ago, America’s unemployment rate was near half-century lows, and analysts were expecting a “phase one” trade deal with China to further boost GDP growth. Today, the economy’s fundamentals remain sound; the fault is in our stars, not our financial system. Thus, once all epidemiological constraints are lifted, pent-up demand will be unleashed — and growth will rise as rapidly as it fell in March, painting a “V” across economists’ charts.

        This scenario was always less likely than the bulls wanted it to be. True, the global economy had enjoyed a “V-shaped” recovery after the SARS outbreak in 2003. But SARS did not force most of the global economy to take a weeks-long hiatus. Even if Congress’s fiscal response had been flawless — which is to say, even if we gave every previously viable business the funds that it needed to weather the storm — widespread firm failures would still be inevitable. This is because the scale of the coronavirus shock was bound to foment (or accelerate) structural changes in commerce and consumption. Many movie theaters that were narrowly profitable in the pre-COVID world will not be in the post-COVID one. Now that every major firm in the world has been forced to give remote work and Zoom-only conferences a test-drive, demand for commercial real estate and hotels specializing in business functions is unlikely to return to its pre-crisis level. And such permanent changes in demand mean that millions of sidelined workers will not regain their old jobs. Rather, new jobs will need to be created following the reallocation of capital across firms and sectors. That is an inherently gradual process. And in the interim, the resilience of elevated unemployment will dampen consumer spending, further delaying full recovery.
        …

        1. The dream of a “V-shaped recovery” died Thursday of complications from coronavirus.

          For months, Wall Street’s optimists have been betting that America’s bedridden economy would bolt upright as soon as the pandemic had passed…

          The “V-shaped recovery” was nothing but bullsh!t peddled by Wall St. grifters.

          1. Friday’s V-shaped “recovery” in the Fed’s Ponzi markets was blatant intervention on a grand scale by the PPT. I can’t wait to see these fraudsters lose control.

          2. I can’t wait to see these fraudsters lose control.

            While I share your hatred of them, be careful what you wish for.

  6. UPenn.

    $75,000 per year.

    Four (4) days to move out and start attending the University of Phoenix.

    “Students in on-campus housing had until March 15 — just four days — to move out of their dorm rooms, the emailed announcement read.”

  7. As brokers are unable to show apartments due to shelter-in-place rules, the number of listings has increased

    Yes, the number of listings have increased solely because apartments can’t be shown in person. LOL!

    1. because apartments can’t be shown in person

      I suspect BS on that. Around here UHSers could always “show”, they just couldn’t do the walking talking tour along with the prospects. But you could still have an inspection and buy if you wanted to.

    1. dj — r u finding gigs during the pandemic?

      We’ve only played for one wedding since the COVID-19 outbreak went viral in March. It was in person, but hopefully with enough social distancing measures to limit the risk of spreading COVID-19 among the guests (and musicians).

      I’d think that dj’s might be able to find more opportunities in this challenging economic situation than live performing musicians, but not sure…

      1. PB I mostly do HS and college reunion type gigs, so just about all cancelled for this year and they will combine classes next year, the 2 in November are still on as of today I eased out of doing weddings a few years back unless i know them personally. The reunions are less $$$ but less stress and usually a smaller setup and the GF can act as my roadie. But the 30 year (1990) one in Nov has a graduating class of 680.

        1. Good luck to you, and I hope you figure out ways to drum up more opportunities going forward.

    2. What happened to Moz’s Vegas residency? I did a quick google search and didn’t see an update. Last time I drove past on the freeway, the big banner for it was still hanging on the side of CP.

      P.S. Ah, the Hollywood Bowl. Reminds me that I saw the Thompson Twins (with A Flock of Seagulls!) there in 1984. Good times. 🙂

  10. Check out the Gross Domestic Product and Unemployment Rate graphs on FRED (Federal Reserve Economic Data).

    This time clearly is different, as in a much worse recession that ramped up far more quickly than ever before.

    And if you look closely, you’ll notice the recession started before the COVID-19 pandemic measures began.

    1. Prof B, others, how did the unemployment rate drop from 14 to 11%. i dont think it was because workers were being called back from furlough.

      Was there a stats issue?

      1. Good question, and I don’t know without looking into it.

        For instance, the unemployment rate can fall if unemployed workers leave the labor force due to giving up on looking for a job. So it’s hard to know it a lower unemployment rate reflects more hiring or more workers giving up hope.

    2. the recession started before the COVID-19 pandemic measures began

      Are you thinking March was before pandemic measures?

      1. I’m thinking the last full week in March, when pandemic measures kicked in, doesn’t explain the amount of recession that showed up for the entire first quarter. I acknowledge the data doesn’t fully elucidate whether this is the case.

  11. Dumb question of the day: If over 1000 Americans are dying each day of COVID-19, wouldn’t over 21,000 die in the next 20 days?

          1. Looking at the GDP report earlier I noticed that the medical component of GDP had taken quite a dive in Q2. The panicdemic isn’t good for business.

    2. National
      Coronavirus update: Average weekly death count rises in nearly half of U.S. states
      Medical workers treat a patient in the covid-19 intensive care unit at a Houston hospital last week. (Go Nakamura/Getty Images)
      By Derek Hawkins
      August 2, 2020 at 6:20 a.m. PDT

      The Washington Post is providing this important information about the coronavirus for free. For more, sign up for our daily Coronavirus Updates newsletter where all stories are free to read. To support this work, please subscribe to the Post.

      The weekly average for new coronavirus-related deaths rose in nearly half of U.S. states over the past week, pushing the national death toll past 150,000 and prompting health experts to warn that the trend was unlikely to reverse anytime soon.

      Numerous states have reported record daily fatalities in recent days, including California, which reported 219 on Saturday, according to tracking by The Washington Post. Florida reported a record 257 deaths on Friday, and seven-day averages for new deaths reached highs in states across the South, West and Midwest.

      Nationwide, the daily coronavirus death toll exceeded 1,000 for the sixth day in a row on Saturday, according to The Post’s data. The 1,198 new fatalities marked the most that officials have counted on a Saturday, when death reports tend to be lower than those tallied midweek, since May 9.
      …

    3. dying each day of COVID-19

      Just to be clear, it’s “with” Covid, not “of” Covid.

      There will most probably be 8,000 Americans die every day. When does the $10 billion Fed money for testing run out? NY has already started to decrease the number of tests per day.

          1. It definitely seems like COVID-19 is the straw that breaks the camel’s back for lots of folks with underlying medical problems.

  12. The COMEX has been integral to the efforts of the Fed and its bullion bank accomplices to artificially suppress the price of gold to prop up the dollar. A critical pillar of their scams has been the sale of paper (non-existent) gold. Now gold buyers are starting to get nervous and demand delivery of the gold they bought and paid for (or thought they did). This means the COMEX (called the CRIMEX by gold bugs) has to source huge quantities of physical gold to meet rapidly rising demand for delivery. Of all the Fed’s market manipulation rackets, this is the one that has the greatest potential to blow the roof off the whole rigged financial system, because once the COMEX is forced to admit the gold it allegedly sold to investors doesn’t exist, the full extent of its collusion (racketeering) with the Fed and bullion bankers will be exposed for all to see. If that happens, expect prices of physical precious metals to skyrocket. Remember: in a time of universal fraud, if you don’t hold it, you don’t own it.

    https://www.bloomberg.com/news/articles/2020-07-31/gold-traders-issue-largest-delivery-notice-on-record-at-comex?sref=5CqwjcI3

    1. for all to see

      Does seeing really matter in an age where a Bitcoin is worth more than a Gold coin?

      1. Seems like there should be a great arbitrage opportunity there to go short buttcoin and long goldcoin for whatever hedge fund genius can figure out how to set it up.

  13. As brokers are unable to show apartments due to shelter-in-place rules, the number of listings has increased and rents have correspondingly dropped.

    Fear not, Gotham landlords! The BLM/Antifa/SJW Red Guard mobs rampaging in the streets will usher in a new era of socialist brotherhood and economic revitalization that will surely be bullish for real estate as well as the larger economy. Once their enlightened Democratic Socialist utopia has been achieved, surely the exodus of taxpayers and the productive will reverse so they can join in the building of a socialist paradise. Forward!

    (Or, things could just go to hell in a hand basket.)

  14. “The coronavirus pandemic has caused serious upheaval in the commercial real estate market and probably will for some time to come. It will take months, and possibly years, for some owners and properties to return to profitability.

    Not a peep from the REIC shills in the media about the far greater threat of protracted and worsening civil unrest and a breakdown of law and order in cities run by corrupt, incompetent Democrat administrations.

  15. These distress situations are indeed emerging as the pandemic intensifies operational pressures and gossamer-thin margins of underperforming or mom-and-pop senior living communities.”

    I’m surprised the oligarchy’s Quislings in the Republicrat Duopoly haven’t come out and said we need to euthanize any seniors whose families can’t afford to keep them in lucrative corporate “senior living” communities. What use does the Oligopoly have for useless eaters?

  16. “Ergete noticed a similar lack of activity whenever she went out, especially in the earlier period after classes resumed. ‘Everyone was gone,’ Ergete said. ‘The campus was dead. Dead.’”

    So many rackets coming to an abrupt, ignomious close as the perpetual money machine starts to seize up. No surprise that the oligarch-looted middle class can no longer afford to send its offspring to insanely overpriced universities to be indoctrinated by the Cultural Marxists who have seized control of our higher education system.

  17. “A lender is seeking to foreclose on the Witkoff Group’s South Beach hotel after it alleges the developer failed to make its July payment on a $45 million loan. Ladder Capital Finance filed a foreclosure lawsuit against the owner of the 181-room Washington Park Hotel and is seeking to collect the entire loan, along with interest and late fees.”

    Even with the Fed dumping trillions of fake money directly into our rigged and broken markets, the cascading defaults are starting to pick up steam.

  18. For the newly red-pilled who marvel at the brazen lies being peddled by the globalist-controlled corporate media, and its blatant pushing of globalist agendas and narratives, it’s important to understand the corporate capture of the Republicrat duopoly and “our” institutions of governance.

    When Corporate Power Is Your Real Government, Corporate Media Is State Media

    https://caitlinjohnstone.com/2020/07/31/when-corporate-power-is-your-real-government-corporate-media-is-state-media/

    In a corporatist system of government, where no hard lines are drawn between corporate/financial power and state power, corporate media is state media. Since bribery is legal in the US political system in the form of corporate lobbying and campaign donations, America’s elected government is controlled by wealthy elites who have money to burn and who benefit from maintaining a specific status quo arrangement.

  19. So Ben please explain why this is not the case in California especially Sacramento and Folsom areas? Homes sell over asking price, multiple bidding war offers, pending in days and no inventory?

    1. A couple I know in Fort Collins got an offer on their house. The thing is, it wasn’t listed for sale. They’ve been wanting to trade up, so they accepted the offer and already made an offer on another house. No bidding war, but they will pay $200 a sq ft for the next house, and they also got $200 sq/ft for their beat up 1970’s split level.

      The bubble ain’t over yet. Why Ft. Collins has such prices eludes me. Wages are low, low, low in the “Fort”. A lot of people who live there commute all the way to Denver, which is a chore even when the roads are dry, and a real barrel of fun when it snows.

      1. Same in Sacramento and high unemployment and state workers taking 10% paycuts. Average income is like 60k.

        Once the tech bubble collapses and those high income bay area workers are unemployed and foreign money dries up and maybe if Blackstone and other Wall Street investors don’t buy, we may see housing prices drop.

        1. We don’t even have anything like Bay Aryan locusts here. Wages in Denver also stink, just not as bad as Ft. Collins.

          Fort Collins is a nice town, so I get why people would want to live there, but the wages there are flyover garbage. An engineer that would make $140K in silly valley would get about 80K in the Fort, and maybe 100K in Denver.

          1. @In Colorado, yeah it stinks as a state worker making way less and on top of that taking a mandatory 10% paycut because of the budget shortfall. I may ride it out renting until pension kicks in then buy a sailboat in the South Pacific.

          1. to do with wages

            If house prices were based on wages, the average house would be about $125,000 just about everywhere in the US.

          2. FWIW, in nearby Loveland, houses are cheaper. They’re even cheaper in Greeley. But wages are about the same in all three.

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