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The Losses Are Heavy, But What I Want Now Is To Lose As Little Money As Possible

A report from Market Place on New York. “Broker Peter Schubert estimates that between 10% and 20% of commercial real estate in Brooklyn is vacant right now — officially. ‘On top of that 10 or 20%, we know that there’s kind of this shadow inventory of these other spaces, which haven’t quite hit the market yet,’ Schubert said. ‘I think we’re at some kind of a record number, probably historic number that in some cases are in the 20 to 30% range.'”

From The Real Deal on New York. “Rudra Pandey snapped up a sprawling condominium at the Woolworth Building at a hearty discount. Pandey and his wif purchased a 4,623-square-foot unit on the 29th floor of the tower last month, property records show. The unit sold for $13.5 million, or $2,920 per square foot. Developer Alchemy Properties had initially aimed to sell it for 40 percent more, or $22.6 million, according to the condo’s initial offering plan filed in 2014 with the Attorney General’s office. But as Manhattan’s luxury condo market softened, so did prices.”

From Bisnow Boston in Massachusetts. “A judge handed down a small victory in the battle between prominent Boston developers over tens of millions of dollars allegedly lost in a massive failed Back Bay condo project. Suffolk Superior Court Judge Kenneth Salinger dismissed developer Stephen Weiner’s fraud claims against Suffolk Construction CEO John Fish as Fish moves forward his $100M civil suit against Weiner over the failed $800M 1000 Boylston tower, The Boston Globe reported.”

“Weiner Ventures Managing Partner Adam Weiner, a co-defendant in the lawsuit, had earlier professed confidence in the project, saying at the time in regards to a then-failed Simon Property Group high-rise in Back Bay, ‘We’re comfortable with the market. They weren’t.'”

The Real Deal on Florida. “Spider sold an assemblage in Miami’s Edgewater neighborhood for $7.25 million, after scrapping plans to build a 12-story condominium. Spider, led by Andres Goldenberg and Alejandro Eskenazi, sold the 28,000-square-foot site to Edgewater investor Jehad Audy, according to a press release. Spider’s decision to exit Miami is driven by the city’s high condo inventory and decreasing unit prices, Goldenberg said. The firm now is focusing on Detroit and Cleveland, which have upside potential and where investors will get a higher return. ‘It’s close to the start of a new cycle in Miami, but for us the project is done,’ Goldenberg said.”

From 7 Action News on Michigan. “Downtown areas around the country have lost some of their shine due to the pandemic. Recent data from the Downtown Detroit Partnership shows the Motor City’s downtown area isn’t immune. The data was taken from 4,487 units and shows that in the last quarter of 2020 the city’s average vacancy rate was 16%, around double was it in the first quarter of 2020. The data collected does not include subsidized units.”

“While the numbers show that people aren’t filling downtown Detroit apartments like they did pre-pandemic, there’s an upside for perspective renters: attractive move-in offers and cheaper rent in many cases. Mark Ruhle revisited the idea of moving. In part he said, because he wanted to be downtown, confident in the city and state’s rebound from the pandemic. ‘They said hey we’re dropping the rent prices if you would like to move here now, the prices are a lot cheaper.'”

The Globe and Mail in Canada. “The Toronto rental market is still suffering from a bulge in inventory that allows tenants much more negotiating power, says broker Robin Pope. Many are demanding – and receiving – cuts to their rent of as much as $300 to stop them from leaving for a cheaper apartment, he says. ‘The rental market is fine as long as you have it priced right. But prices have not recovered. Landlords have to negotiate down.'”

“Ira Jelinek, a real estate agent with Harvey Kalles Real Estate Ltd., says the midtown area around Yonge Street and Eglinton is also seeing a large number of condos for rent. ‘A lot of tenants are threatening to leave if they don’t get a better price.’ One owner recently called Mr. Jelinek to say that her tenant is moving out. She asked for his advice on whether to find a new tenant or sell. Mr. Jelinek’s research showed that the landlord would have to compete with more than 100 similar units for rent.”

“The small, one-bedroom units that used to rent for $1,800 a month now fetch between $1,400 and $1,500. ‘You have 110 to compete with,’ Mr. Jelinek told her. ‘There’s downward pressure on the price.'”

From The Connexion France. “Paris landlords are selling their flats as a lack of tourists in the past year has meant rental revenues have fallen by up to 70%. The Paris mairie estimates there are around 35,000 Parisian properties posted on tourist rental website Airbnb. But during the health crisis tourist numbers have plummeted, and many landlords have been left shouldering costs they cannot pay.”

“Frédéric Teboul, boss of multiple branches of estate agency Guy Hoquet Aleph in Paris, told newspaper Le Figaro, ‘we have more and more sellers in this position.’ ‘Banks froze their loans for a few months, but landlords had to start repaying mortgages and, without tourists, they weren’t able to,’ he said.”

“Landlord Philippe bought a studio in Paris at the end of 2019 and since then has only been able to rent it for a few weeks. He eventually sold the property for €320,000, after completing renovation works – €30,000 less than he bought it for. He said: ‘The losses are heavy, but what I want now is to lose as little money as possible.'”

The Vietnam Express. “After the third outbreak of Covid-19, house rents in HCMC have plummeted by up to half from pre-pandemic levels. Luong, a real estate agent mainly operating in districts 1 and 3, said the pandemic had severely affected businesses, resulting in a slump in demand for houses to run them. Luong said over 50 percent of houses in District 1 that were leased this year have seen rents cut by 35-40 percent, some even by half, and lease periods extended.”

“Talking to VnExpress, Nguyen Hong Hai, chairman of VNO Development and Investment Corporation, a company that transforms residential buildings into offices for rent, said the latest outbreak has driven rents even lower though they had already been low after the earlier outbreaks in 2020. ‘House rents have plunged to the lowest levels ever.'”

From Edge Prop Malaysia. “A favourite with students, Wangsa Maju and Setapak in Selangor have always enjoyed good rental yields of 4% to 6%. However, as the Covid-19 pandemic has revealed, there is no rental market that is foolproof. Oriental Real Estate Sdn Bhd team leader Alps Tan Joon Kiat has noticed many vacant units in Wangsa Maju and Setapak since the first movement control order (MCO) was instituted last year. ‘Two or three out of 10 owners are willing to drop rental by 10% to 20% just to get tenants. No one predicted the pandemic. What was worse was that no one foresaw it could last so long. It has been more than a year now,’ says Tan.”

“Landlords, he says, especially those of newly-completed units, feel the pinch after the expiry of the loan moratorium in September. Like other areas in the Klang Valley, Propnex Realty group leader Matt Tian observes that rents in Wangsa Maju and Setapak have dropped 20% to 30%. ‘A number of housing units rented to students have been vacant since last year. Some shops targeting student crowds such as saloons, milk tea shops, cafes and F&B outlets have shuttered,’ Tian observes.”

The Australian Financial Review. “Desperate landlords holding apartment stock in inner Melbourne have slashed their rents by hundreds of dollars a week and are now asking up to 25 per cent less to let their properties than 10 years ago. Hardest hit are apartments in Melbourne’s CBD, Docklands, Southbank and Carlton, where rental yields have been crushed by zero immigration, far fewer international students and changing renter preferences.”

“Riskwise CEO Doron Peleg warned investors against making a countercyclical play and investing in Melbourne CBD apartments. ‘This may still be a high-risk endeavour with potential issues over the short and long term,’ Mr Peleg said. He said inner Melbourne had ‘12,521 units in the pipeline, representing a further 5.1 per cent increase to established stock.'”

“David Anderson of Nelson Alexander said his agency did record leasing business each month from November to February as people took advantage of drastically reduced rents. ‘We have got one-bedroom apartments that were renting for $450 down to $300 or even $290,’ he said. ‘There are two bedders that prior to COVID were getting $650 to $700 a week that are $450 or $500 now.'”

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This Post Has 44 Comments

  1. ‘Many are demanding – and receiving – cuts to their rent of as much as $300 to stop them from leaving for a cheaper apartment’

    That’s the spirit!

  2. ‘saying at the time in regards to a then-failed Simon Property Group high-rise in Back Bay, ‘We’re comfortable with the market. They weren’t’

    Remember this on the HBB? It was years ago, and Simon was smart. That’s how long prices have been sinking like a turd in a well in Boston.

  3. ‘Spider’s decision to exit Miami is driven by the city’s high condo inventory and decreasing unit prices’

    Wa?

    ‘The firm now is focusing on Detroit and Cleveland’

    Fake money looking for a place to die is a real phenomenon.

      1. What a attack on life by making pop people cut off their breathing by wearing masks. Lockdowns making people be unproductive and fear based. It’s a total assault on what life is all about .
        The creation of a Pandemic that wasn’t justified in forcing mass vaccinations on Countries, where the evidence shows they were planning a Pandemic way before they rolled out Covid at the exact right time for a power grab with a new vaccine that’s a experiment.
        Shows you how powerful big pharma had become and that the do no harm doesn’t apply anymore. Look at all the drugs they had to take off the market that got approved by the FDA, that after 5 years were proven to be deadly. So, something has collapsed in terms of Federal agencies protecting the public. Politicians selling out the Special Interest that’s creating CLOWN WORLD and fake narratives a that are creating all the problems and insanity people are being subjected to. Biden the fake President represents the everything fake World being pushed 24/7 by fake news.
        So bizarre, so fake, so anti life , yet they are pulling the strings in every way.Unreal.

        1. Six feet apart, Shot in the arm, Wear a mask, Six feet apart, Shot in the arm. Wear a mask, Six feet apart, Shot in the arm. Wear a mask, Six feet apart, Shot in the arm, Wear a mask, Shot in the arm, Wear a mask.

          Six feet apart! Shot in the arm! Wear a mask!

          You may be able to have a cookout with a few family members by the 4th of July if you stay six feet apart, wear a mask and get your shot in the arm.

          New Zealand Prime Minister Admits Using “Sustained Propaganda” To Spread COVID Fear

          by Kelen McBreen
          March 12th 2021, 5:37 pm

          A video out of New Zealand shows Prime Minister Janice Ardern admitting the country engaged in a two-week-long “sustained propaganda” campaign to induce fear about COVID-19.

          Have an important tip? Let us know.
          EMAIL US HERE.
          A video out of New Zealand shows Prime Minister Janice Ardern admitting the country engaged in a two-week-long “sustained propaganda” campaign to induce fear about COVID-19.

          Essentially, Ardern was upset that citizens are disregarding government regulations and blamed new COVID cases on a few individuals.

          “Even with the full understanding of human fallibility, it is not appropriate, and it is not okay for members of a team of five million to let the rest of us down,” she said.

          Placing the blame on those who choose not to obey every minor rule put in place by the government, Ardern bragged, “We drum in that messaging around the dangers of Covid pretty diligently for a full two-week period of sustained propaganda.”

          https://www.infowars.com/posts/new-zealand-prime-minister-blames-citizens-ignoring-sustained-propaganda-for-covid-spike/

          1. I don’t see anyone observing the six feet nonsense at big box stores or super markets. And the masks most people wear are useless. Maybe if you sneeze it will catch most of the sneeze.

    1. The Financial Times
      Markets Briefing Markets
      Bond sell-off resumes after Biden vows to accelerate vaccinations
      Fresh volatility in Treasury market knocks the tech-heavy Nasdaq
      A dollar bill
      Bond markets have endured volatility over the prospect that a swift US economic recovery would increase inflation
      Leke Oso Alabi and Joshua Oliver in London and Francesca Friday in New York yesterday

      Government bond markets suffered a fresh bout of selling on Friday, halting a rally in tech stocks, after President Joe Biden said the US aimed to make vaccinations available to every adult by the start of May.

      The yield on 10-year US Treasuries jumped to 1.62 per cent, breaking through the 13-month high struck during a choppy session a week ago.

      Markets were experiencing “powerful cross-currents”, said Lauren Goodwin, economist and multi-asset portfolio strategist at New York Life Investments.
      …

      1. The inflation trade is pretty crowded but I have my doubts. Japan has been printing money and running deficits for years and no inflation. Still 20M people on pandemic unemployment. Banks are still quite hesitant to lend. Yes, commodities and other input costs are rising but that seems to be squeezing margins as the price increases are generally rejected. I’m long TLT – it’s a painful trade but I believe in the thesis that inflation will be cyclical not secular

        1. Thank you for the insights. I think Ben has said many times that QEs and low interest rate are deflationary. Why? Because they cause stupid investments in supply that would not be invested otherwise. I’m talking about malinvestment. I remembered the oil industry went up in 2011 and 2012, then crashed due to all the money losing Fracking companies creating too much supplies. Remember the energy crashed in 2015 to 2016. This is well before the Pandemic!

  6. I hope in twenty years, society will collectively condemn the Fed’s persistent efforts during the present episode to discourage young people from doing something productive with their lives by tempting them to waste their youth gambling in stonks and cryptocurrencies.

    1. “…waste their youth gambling in stonks and cryptocurrencies…”

      Just read a MSM article about digital trading cards.

      Someone sold a cache of digital trading cards for many millions.

      What I am trying to wrap my head around is who are all these nut cases out there who have millions in cash to toss down a digital rat hole?

      1. What I am trying to wrap my head around is who are all these nut cases out there who have millions in cash to toss down a digital rat hole?

        It’s just more blockchain nonsense.

          1. They always pick big round numbers and call them “milestones.” This stuff is garbage with a capital G.

    1. Markets
      Bear Warning Seen With Nasdaq 100 Velocity Stalling at 2000 Peak
      By Lu Wang
      March 13, 2021, 4:00 AM PST
      – Rising yields, cheaper stocks pose threats to tech sector
      – Nasdaq unable to maintain its gains relative to S&P 500
      – Tech Stocks Set for `Bumpy Ride,’ Saxo Bank Says

      A rebound in the Nasdaq 100 that recouped as much as half of its $1.5 trillion losses from its February high hasn’t been enough to deter skeptics. In fact, analysts are warning that the index may yet face more battering.

      Their concern emanates from the bond market, where rising yields have put pressure on richly valued stocks such as the tech companies that populate the Nasdaq gauge. An increase of 50 basis point in 10-year Treasury yields could lead to a bear market for the index, or a decline of as much as 20%, according to a study from Ned Davis Research.

      And as the economy heals, investors are embracing sectors such as energy that will likely benefit. One way of seeing the impact of that rotation out of tech is to plot the Nasdaq’s relative altitude versus the S&P 500, a gap that after briefly exceeding its level from 2000 has recently narrowed. To DoubleLine Capital LP founder Jeffrey Gundlach, it’s a sign that another collapse may be in store.

      While single-day rallies — 4% on Tuesday and 2.4% on Thursday — lifted the Nasdaq 100 to its first gain in four weeks, they’re not calming nerves. After all, big up days are not uncommon during a downtrend. In 2000, when the market started a three-year crash, the index had 27 sessions where it rose at least 4%. That compared with six such days in 1999, when prices doubled.

      “The early stages of a bear market is typically punctuated by ferocious rallies, and what matters in the end is how far the rallies extend and not how quickly they move within a single session,” said Michael Shaoul, chief executive officer at Marketfield Asset Management LLC. “Evidence continues to mount that the technology sector has finally relinquished its position as key global leadership.”

      The Nasdaq 100 is poised to trail the S&P 500 for a second month in a row. In a week when the tech-heavy gauge fell into a 10% correction, other indexes tracking everything from small-caps to banks, transports to industrials, climbed to records. On Wednesday, a version of the S&P 500 that strips out market cap bias — treating Apple Inc. the same as News Corp. — hit an all-time high even as the Nasdaq 100 was roughly 8% below its February record, a divergence not seen in two decades.
      S&P 500’s average stock climbs to record while Nasdaq 100 falls into a correction

      That’s raising alarms for anyone who lived through the dot-com crash. Back then, when the Nasdaq 100 started falling in March 2000, the equal-weighted S&P 500 kept marching forward and didn’t peak until 14 months later — a sign that money was being shifted away from the tech behemoths that soared in the internet bubble. Ultimately, the Nasdaq 100 lost half of its value.

      “People should not take solace in the fact that almost everything else besides the tech group is acting well,” said Matt Maley, chief market strategist at Miller Tabak + Co. “If the tech group continues to underperform, it’s going to weigh on the rest of the stock market eventually.”

      To be sure, as expensive as they may look now, software and internet stocks don’t match the extremes seen 20 years ago. And thanks to innovations like cloud computing and automation, their earnings are expanding, as opposed to contracting or nonexistent, as they were in 2000. But the strengthening economy, buttressed by vaccines and government support, alongside rising bond yields could mean trouble for the market’s biggest sector.

      While some strategists have brushed aside the yield risk, saying tech stocks have shown a fickle relationship with Treasuries over time, Joe Kalish, chief global macro strategist at Ned Davis Research, found that since 2014, the Nasdaq 100’s forward earnings yield — the inverse of its price-earnings ratio where the higher it is, the cheaper stocks are — has moved almost in lockstep with forecast corporate bond rates.

      In his model, if 10-year Treasury yields rise to 2% this year, that in turn could drive long-term Baa-rated bond rates to 4.5%, a scenario where the Nasdaq 100 would have to drop as much as 20% to stay attractive, all else equal. If yields climbed but the Nasdaq didn’t move, this would indicate over-valuation, Kalish said, adding his model correctly flashed warnings in 1987 and 2000.

      Based on the price-earnings ratio, the Nasdaq 100 isn’t cheap relative to other stocks, even after the latest pullback. With a multiple of 28, its premium over the S&P 500 stood roughly 7% above its five-year average.

      Moreover, the growth advantage that has sustained tech’s outperformance in all but one year since 2009 is poised to disappear — at least for the next two years — as pandemic-beaten firms like airlines and automakers roar back. Profits from software and internet companies are expected to expand 22% this year and 12% in 2022. Both lag behind the broad S&P 500, where earnings are forecast to increase 24% and 15%, respectively, data compiled by Bloomberg Intelligence show.

      Of course, with the latest federal relief package approved, cash may again flood into equities, preventing losses from snowballing. Yet with Nasdaq 100 knocking on the door of its relative peak, it’d be a mistake not to consider the downside risk, according to Jim Paulsen, chief investment strategist at Leuthold Group.

      “New-era investments are at a significant crossroads,” he said. “After a prolonged period of extensive outperformance by the Nasdaq and tech stocks, it is not unreasonable to foresee a phase of underperformance, consolidation or even an outright collapse.”
      …

    2. Warren Buffett’s stock market gauge soars past historic average; should investors be concerned?
      By: Kshitij Bhargava
      March 4, 2021 1:20 PM
      The market capitalization of all BSE listed firms stands at Rs 210 lakh crore, up from Rs 200 lakh crore at the end of the previous month.

      Warren Buffet’s favourite stock market indicator has shot above its long term average as domestic stock markets near all-time highs and bulls continue to assert control on Dalal Street. The market capitalization to Gross Domestic Product (GDP) ratio of Indian equity markets is now at 104%, against the long term average of 75%, a report by brokerage firm Motilal Oswal showed. Nifty and Sensex recorded a 6.6% jump in February, helped by the Union Budget, RBI’s accommodative stance and a global bull market.

      Still reasonable?

      However, it is not only India markets that have shot above 100% on the gauge. “In the US, the market cap-to-GDP has gone closer to 2x (200%). On a relative basis, India’s market cap to GDP is still reasonable as the world market cap-to-GDP is now placed at 1.29x,” Rusmik Oza, Executive Vice President, Head of Fundamental Research at Kotak Securities, told Financial Express Online. “The numerator that is the market cap is a function of secondary market movement and the addition of new companies by way of IPO. Globally many IPOs are hitting the market which is leading to higher growth in the market cap. Also, the fall in global GDP in CY20/FY21 has led to lowering of the denominator,” he added.
      …

  8. ‘On top of that 10 or 20%, we know that there’s kind of this shadow inventory of these other spaces, which haven’t quite hit the market yet,’ Schubert said.

    Wa? I thought shadow inventory was a conspiracy theory.

  9. “The small, one-bedroom units that used to rent for $1,800 a month now fetch between $1,400 and $1,500. ‘You have 110 to compete with,’ Mr. Jelinek told her. ‘There’s downward pressure on the price.’”

    I wanna be wooed, landlords.

  10. ‘House rents have plunged to the lowest levels ever.’”

    Yet the mortgage and carrying cost remain the same. Huh. Seems like taking the real estate mogul track to effortless riches isn’t all it’s cracked up to be.

  11. “Desperate landlords holding apartment stock in inner Melbourne have slashed their rents by hundreds of dollars a week and are now asking up to 25 per cent less to let their properties than 10 years ago.

    Ya know, I think Ima just sit tight and wait for the cascading bankruptcies and foreclosures. I’m thinking that’ll be a sweet time to do some bargain shopping, once the dust settles.

  13. From Malaysia: but with ongoing tenancies want landlords to drop rents, says Chin, adding some cuts are at 50% as landlords do not want to lose their tenants.

    In Raleigh I just got a rent increase of about 5% and an additional grounds fee.

  14. Check out these returns:

    Chiliz price
    (CHZ)
    Share
    $0.72
    1 month +1,921.04%

    It’s not Bitcoin that’s where the money is, it’s all these other shitcoins.

    Meanwhile, I’m getting 2/10s of a percent on my savings per year, or some sh!t. You think it’s any wonder people are gambling in crypto? END THE FED.

  16. All of these debt junkies are buying overpriced cars, trucks, RVs, boats, etc., thinking that the prices are not going to go down. I can’t help but think there is going to be a massive glut of these things for sale which will absolutely destroy the used market.

    1. Prices sure have gone up. Jeep just reintroduced the “Grand Wagoneer”, with prices as high as $100K

      I’ve also noticed that automakers are furiously introducing new all electric models, most with nose bleed prices.

      I expect all these hyper priced vehicles will depreciate a lot and quickly, especially as all the gadgetry they possess will quickly break once out of warranty and cost an arm and a leg to repair.

      1. “new all electric models”

        The Green New Steal “administrative fee” to install your EV charger will be $2000.

        You will pay me my gibs, and pay $6 a gallon for gas.

      2. “Prices sure have gone up.”

        Used vehicle prices are very high right now thanks to Easy Credit and quiet fed purchases of non-performing securities of bundled loans, strategies designed to keep new vehicle sales alive.

    2. All of these debt junkies are buying overpriced cars, trucks, RVs, boats, etc., thinking that the prices are not going to go down. I can’t help but think there is going to be a massive glut of these things for sale which will absolutely destroy the used market.

      That would be welcome. Our life timing isn’t aligning well with the financial cycle, but if we can at least get some of the toys for cheap once we’re done building I’ll be happy to get the consolation prize 🙂

  18. Well, the mega blizzard is turning out to be a dud. Just 1″ of snow so far. We’ll see what it’s like in the morning.

    1. About 8 inches in my nabe right now. Not a trivial amount, but not even close to the 2-3 feet that was predicted.

    1. The Financial Times
      Opinion On Wall Street
      Oil sector revival has producers eyeing boom times
      Rebound shows that the coronavirus pandemic has not weaned the world off fossil fuels
      Derek Brower
      A crude oil pump jack in the Permian Basin in Loving County, Texas. Dislodging oil from the economy may be harder and take longer than many people hoped
      Derek Brower, US energy editor March 12, 2021

      If you thought coronavirus had hobbled the oil industry for good, think again. Just a year after a Saudi-Russian price war and the coronavirus pandemic triggered the worst oil crash in decades, a stunning reversal is under way.

      It calls to mind the bumper sticker said to adorn half-tons from Texas to Alberta: “Please God, give me one more oil boom, I promise not to piss it all away next time.”

      The moment when that pledge is tested suddenly seems closer than anyone expected six months ago. Crude prices, demand, sector equities, and the mood in the oil patch are all rising.
      …

      1. Nothing destroys the economy faster than an oil and gas price spike/bubble. This entire world runs on oil.

        1. +1 You are Preaching to the Choir if your audience lived through the 1970’s Yom Kippur war and the resulting OPEC oil embargo. Hence, the brief delay before Desert Shield and Desert Storm.

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