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A Glut Of Top-Shelf Housing And Empty Condos

A report from Hamptons.com on New York. “‘The housing market continues to soften across the country — particularly in some of the most expensive areas like the Hamptons and New York City. With so many homes for sale right now, and listings lingering on the market for longer than in the past, it’s a tough time to be a seller,’ Out East GM, Matt Daimler reflected. ‘If you’re patient, persistent and price your home correctly, the right buyer will come along.'”

The Wall Street Journal on Connecticut. “A hedge funder’s 27-room Georgian estate in Greenwich, Conn., has sold for $17.5 million, half of its original asking price, according to people familiar with the deal. The property first came on the market for $35 million in 2015, and had been on and off the market with several price cuts, according to Zillow.”

The Arizona Republic. “Renting a U-Haul truck to move to metro Phoenix is a lot pricier than it was last year. But if you want to move from the Valley to San Francisco, Los Angeles, Denver, Seattle, Chicago or Houston, renting a truck is a bargain.”

“‘It costs eight times as much to rent a truck to Phoenix from Los Angeles as it does to rent one going the other way,’ said Greg Vogel, CEO of Scottsdale-based Land Advisors Organization.”

“The average cost to rent a moving truck from Los Angeles to Phoenix is $735, according to the research. It only costs $90 to rent a truck from the Valley to Los Angeles. People leaving San Francisco will pay about $1,200 to rent a one-way truck to haul their stuff to the Phoenix-area. Anyone who wants to rent the same truck for the return route only pays $120.”

“The moving truck cost is $1,730 from Seattle to Phoenix, and only $700 for the reverse trip. And renting a moving truck from Denver to the Valley costs $650, while it’s $300 from here to Denver.”

“So all the moving trucks headed to metro Phoenix are likely a welcome sight to the area’s many developers. There are about 20,000 apartments under construction or planned.”

From Variety on California. “The last home of late singer, actress and ordained minister Della Reese, an unassuming, low-slung 1970s contemporary notched into a hillside at the end of a cul-de-sac in the affluent foothills of Encino, Calif., is now listed at $1.775 million after first coming to market about four months ago at $1.925 million. The ‘Touched by an Angel Star’ and her husband had long resided in Bel Air, but decamped to Encino sometime after their $1.79 million purchase of the property in late 2014.”

From Variety on Florida. “Shaquille O’Neal has re-listed his super-sized south Florida mega-mansion with a hugely reduced asking price of $21.99 million after first setting it out for sale earlier in the year amid much publicity and hullabaloo with an in-hindsight pie-in-the-sky asking price of $28 million.”

From Weather.com on Louisiana. “For decades, Derek Bowman and his neighbors didn’t see many strangers walking around their area of New Orleans’ 7th Ward. But about a decade ago, speculators flush with cash became a frequent sight, tucking business cards into front doors, with small notes, asking residents to call if they wanted to sell.”

“More recently, in the last several years, visitors with the rolling suitcases started showing up, usually arriving at short-term rentals in the neighborhood on Friday and leaving on a Sunday.”

“There’s a scattershot approach to housing in the city that has left New Orleans with a shortage of affordable housing at the bottom and middle tiers. There’s a glut of top-shelf housing and empty condos. In the Central Business District, there’s a 30 percent vacancy rate.”

From The Garden Island on Hawaii. “The public has until 5 p.m. on Monday to provide testimony to the State Land Use Commission on the up-zoning of 97 acres of agricultural lands, next to Kapaa Middle School, to an urban center zoning designation to accommodate the building of 769 new residential units called Hokua Place.”

“Here is what you should know: First of all, Kauai does not actually have a housing shortage. As stated in both the Hokua Place Draft Environmental Impact Statement and the county’s General Plan, we actually have a high vacancy rate when it comes to housing.”

“This means a house is largely unoccupied for a good portion of the year (as in second home or investment property), or it is an illegal transient vacation rental (TVR), so considered unoccupied until otherwise shown to be in violation of the law, and in any case not in the inventory pool for long-term rentals (one of our areas where we do have major housing shortage).”

“Additionally, as of today, there are 661 houses for sale on the MLS. That does not include for-sale-by-owner listings, or ‘FSBOs.’ Not only that, currently, an approximate 41 percent of residential sales on this island are either to mainlanders or foreigners.”

“Now, Hokua Place developers want to add 769 residential units to the mix with a price point starting at $650,000, with the qualifier that these prices are subject to change. $650K is beyond the reach of low- and middle-income families, even when many of these individuals have multiple jobs just to make ends meet.”

“The net effect is we are continuing to build houses primarily for mainlanders and foreigners — is this who we should be converting our agricultural lands into urban lands for?”

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This Post Has 77 Comments

  1. ‘about a decade ago, speculators flush with cash became a frequent sight, tucking business cards into front doors, with small notes, asking residents to call if they wanted to sell’

    What happened about a decade ago? Oh right, Bernanke came up with the big idea to save us from eating gruel by driving up shack prices with money created out of thin air.

    1. The amount of productivity loss from doing practical good work with capital —-> and moving to just speculation was just so wasteful.

      Even worse was teaching wrong lessons to so many people.

      1. I caught a bit of an WSJ article about GE on phone last night (before ads made it unreadable). One thing that stood out was the rise of GE Capital and the transition of GE from a manufacturer of things to a financier / bank.

          1. It should not be lost that GE’s major downfall as of late is their foray into long term care insurance, i.e. medical insurance. These obligations could be their downfall.

    2. “Bernanke came up with the big idea to save us from eating gruel by driving up shack prices with money created out of thin air.”

      A policy of intentionally making shelter unaffordable for the majority of the population seems a poor way to manage an economy, to put it politely. Criminal seems a better description.

      1. Think of how much extra all the landlords out there made in rents supercharged by QE and you will feel better about life.

        1. Never mind all the low income families who recently found themselves living under bridges after affordable rental housing became a thing of the past.

    3. “Oh right, Bernanke came up with the big idea to save us from eating gruel by driving up shack prices with money created out of thin air.”

      Hey! Don’t knock it! Rising prices creates wealth, don’t you know?

      Sheesh.

    4. Bernanke came up with the big idea to save us from eating gruel by driving up shack prices with money created out of thin air.

      Oh, he saved someone. Just not us.

  2. ‘now listed at $1.775 million…decamped to Encino sometime after their $1.79 million purchase of the property in late 2014’

    Oh dear…

  3. You know things are getting bad when the Wall Street grifters who have been almost the sole beneficiaries of ten years of QE are starting to see Eee-bola spread to their exclusive enclaves.

    1. The “Ebola” showed up on their doorsteps first. In fact, Ben has highlighted how this bust started in NY at the high end.

      1. True, but since virtually all of the Yellen Bux “stimulus” was lavished on the Fed’s oligarch accomplices, Manhattan and The Hamptons saw the most grotesque and artificial increases in their shack and skybox valuations.

        1. Sounds as though the hedge fund industry has recently been going up in flames.

          Financial News
          Hedge Funds
          Hedge funds’ hopes for 2018 dashed amid closures
          This year was supposed to be when rising volatility and yields brought back the glory days. Instead, returns fell and investors fled
          By Tom Teodorczuk
          December 24, 2018 Updated: 9:52 a.m. GMT

          A year ago, the hedge fund industry was full of optimism.

          After years of performance trailing the stock market, fund managers saw the end of central banks’ quantitative easing — and by extension, an end to what many perceived as artificial asset valuations pumped up by government intervention — as the chance to return to the glory days of colossal market-moving bets and double-digit returns. With interest rates and volatility on the rise, it would soon be time to crow about record-setting profits.

          But one record set in 2018 was a landmark few hedge fund luminaries cared to dwell on. Last October, in what industry insiders believe to be a first, three US-based hedge funds shut in the course of the same week. Tourbillon, Highfields and Criterion all ceased operations, following an inability to generate sufficient money and capital.

          Other hedge funds to have bitten the dust in 2018 include Omega Capital, run by industry veteran Leon Cooperman, and Cerrano Capital, whose backers included activist investor Dan Loeb, but which failed to last a year in operation.

          There are many theories but little consensus on why 2018 has been so miserable for many hedge funds. The one thing nearly everyone agrees on is that it has become harder to convince investors that the glory days are returning soon.
          …

  4. “The net effect is we are continuing to build houses primarily for mainlanders and foreigners — is this who we should be converting our agricultural lands into urban lands for?”

    My sister got her B.A. at the University of Hawaii. She couldn’t afford housing, so she ingeniously found an old boat and paid some a reasonable sum to make it livable and docked her boat at the pier. It was cheaper than renting. She lived on a boat for the last 2 years of school. Kind of like BlueSkye.

    1. I have a friend who was a post-doc in San Diego who used the houseboat strategy to avoid going broke paying Bernanke-Yellen QE rental rates.

    2. Let’s be honest here – most people, especially young students, don’t have the cash to buy an old boat in the first place, much less the money, time and skill to bring it into a habitable state.

      I’m cursed with a memory resembling that of an elephant, and you’ve been getting reduced rent because of daddy. Methinks daddy helped her out, too. In the “real world,” most people don’t have daddy.

      1. I would guess the majority of people in our personal circle who bought in North County San Diego in recent years had a big assist from The Bank of Mom and Dad. I don’t hold it against them…I’d help my own kids out the same way if I were loaded.

        1. I would do the same, and I do not hold it against anybody. However, assuming that others have the same options or perceiving such advantages as “normal” is utopian.

        2. Do you think (the degree/amount of) this is something that has changed with each generation? Or are all those stories from our parent’s era of starting out on their own without help just that… stories?

      2. This was a boat for $600. She did get tuition assistance from my dad, but no living expenses. Dad was dirt poor at the time (literally living in an RV). His fortunes turned around about a decade ago with a new company he started.

        1. I should add that she funded some of the rehab because she was quite pretty and used her “feminine charm” to get guys to do some free work. Also, she ran a blog and had subscribers chip-in and donate (kind of like Ben does here). Lots of guys were impressed that a pretty girl was doing this. It wasn’t a lot, but it got her through. She’s pretty much a bohemian girl. Did a volunteer stint in Nepal and has traveled the world.

  5. How can Wall Street financiers afford to buy in the Hamptons when the Dow is dropping hundreds of points each day? You’d think the negative wealth effect would disqualify many would-be prospective buyers.

    1. Outperforming global equities in 2018: fine wine


      400-point Dow decline on Christmas Eve casts further doubt on ‘Santa Claus rally’
      Dow skids about 400 points lower in early action on the eve of Christmas
      By Barbara Kollmeyer and Mark DeCambre
      Published: Dec 24, 2018 10:11 a.m. ET
      Treasury Secretary Mnuchin conducts calls with major banks over the weekend about liquidity
      AFP/Getty Images

      U.S. stock indexes trade sharply lower in a holiday-shortened session after the worst week of trading since the financial crisis of 2008.

      Wall Street trading on the New York Stock Exchange will end at 1 p.m. Eastern Time, on the eve of Christmas and will be closed on Tuesday for the holiday.

      How are benchmarks performing?
      …

      1. Which stocks are in focus?

        Shares of Bank of America (BAC, -2.01%) Citi (C, -0.74%) Goldman Sachs (GS, -0.94%) JPMorgan Chase (JPM, -0.91%) Morgan Stanley (MS, -0.45%) and Wells Fargo (WFC, -2.55%) —to ensure they had ample liquidity in case stock should resume selling off on Monday. All six banks were seeing their shares trade solidly lower.

      2. Let’s be honest for a moment here. The DOW is still at an eye-popping 22,000. What’s all this whining and crying about again?

          1. Exactly. One more trip past Dow 10k before inflation makes it a memory. I can’t even imagine the weeping and wailing and gnashing of teeth that will occur if that is unable to be prevented.

    2. They skim their 1% off of clients whether the market goes up, down or sideways. Sure, they have some exposure to stocks, but their net worths are such that they are insulated.

    1. It’s almost as though they disbanded the PPT when Yellen left. Henceforth we have seen the return of normal market volatility…

      1. It’$ beginning to $ink in Trumpsi$is Tantrumois$is Chaotic$ mind that printing Trillion$ of monie$ is a fanta$tical po$$ible $cheme!

    2. The Financial Times
      Markets volatility

      Steven Mnuchin sparks further unease in markets
      S&P 500 and Dow Jones indices trade lower as Trump continues assault on Fed
      Steven Mnuchin said in a statement that the chiefs of the US’s biggest banks had confirmed to him that they have ample liquidity
      Joe Rennison in New York, Demetri Sevastopulo in Washington, and Kate Allen in London an hour ago

      US stocks slid further on Monday in spite of US Treasury secretary Steven Mnuchin’s highly unusual effort to reassure investors about Wall Street banks’ liquidity.
      …
      Mr Mnuchin also convened a call on Monday with the President’s Working Group on Financial Markets, which includes Fed governors, along with regulators from the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Federal Deposit Insurance Corporation.

      One person familiar with the conference call said it was a “check-in call” that discussed the functions of different agencies during the federal government shutdown. Some Treasury functions are also affected by the shutdown.

      Mr Mnuchin’s statement on the weekend appeared to be an attempt by the administration to calm nerves after a volatile week for traders, and dispel media reports that President Donald Trump was contemplating firing Federal Reserve chairman Jay Powell.

      The only problem our economy has is the Fed. The only Fed is like a powerful golfer who can’t score because he has no touch — he can’t putt!
      President Trump

      …

      1. If we have a free market economic system then why does Mnumbnuts need to telephone the CEOs of these private companies?

        2. Maybe he is trying to assess the potential future need for taxpayer-funded bailouts the next time the Good Ship Wall Street hits an iceberg.

      2. Will sleep with visions of market halts and jumping bankers. Merry Christmas to all, and God bless us Everyone!

    3. At least the blame is landing somewhere in the vicinity of the Fed, where it belongs. This is a vast improvement from the magazine covers of Bernanke in a Superman cape that we were treated to last time around.

    3. Yes, we need to enforce the borders. Most illegal immigration comes in via planes and are visa overstays. Wall will not do anything substantial, though might be symbolic. At least LeBron apologized. Does DJT apologize much?

  13. It was a house of card created by the Fed.

    There was no organic or orgasmic economic growth. Fake fake fake

  14. Fake economy, fake housing price, fake stock price, fake innovation…

    The debt is real. The surveillance corporatocracy is real.

    1. If there’s one thing that could potentially unravel the Trump presidency, it’s a complete and total stock market meltdown. I’m talking a return to, say, 12,000 or so.

      Even though more than half of the American people don’t even have a 401K or exposure to stocks, a hammered stock market is portrayed by the media talking heads and all of the moneyed special interests as something akin to a pox upon the country.

      1. “If there’s one thing that could potentially unravel the Trump presidency, it’s a complete and total stock market meltdown. I’m talking a return to, say, 12,000 or so.”

        So back to reality? Sounds good to me even if a part of my portfolio tanks, which it is, but it’s a very small part.

      2. I think you’re underestimating the animosity of Main Street vs. Wall Street over rising inequality, especially over the last 10 years, when the illusion that we’re all prospering together was broken.

        Great point about how few Americans own stocks. And even of the half that do, most of the stock ownership is concentrated at the top:

        From NPR in 2017: “the top 20 percent of Americans owned 92 percent of the stocks in 2013. Put another way: Eighty percent of Americans together owned just 8 percent of all stocks.”

        1. Sounds like the Plunge Protection Team better get busy propping up the 92 percent of stocks owned by the top 20%!

    2. It just dawned on me today that perhaps the stock market “correction” we have recently witnessed is merely one of many facets of the collapse of the Fed’s Everything Bubble.

      If so, is there any way to predict how much further stocks have to fall if this is the case? It seems as though past similar episodes have played out over many months, if not years.

      1. “It seems as though past similar episodes have played out over many months, if not years”

        Krakatoa, $on of Krakatoa, $ister of Krakatoa, $tep grand$on of Krakatoa …

        Professor, eye $ense a pattern!

  18. The unwind of asset classes is “baked into the cake” because of Fed bubble-nomics and overvaluations. Of course there will be bounces along the way, but there’s no stopping the trend once psychology has turned. For those that think that the “Fed/Powell put” will save the day, recall that it didn’t end well in 2008-09 either.

    “In the short run, the market is a voting machine [emotions and perceptions], but in the long run, it is a weighing machine [valuations and reality].” – Benjamin Graham

    DJT is correct when he calls the Fed political. It’s no coincidence that markets steadily marched higher for his predecessor. But now we have rising rates instead of falling rates and QT instead of QE since the start Trump’s term. The Fed balance sheet has only just begun to unwind (down maybe 10% so far). Unfortunately for the Donald, I’m thinking Herbert Hoover. Looks like a setup for a change of party in the 2020 elections, as per the plan.

    “We are in a big, fat, ugly bubble. And we better be awfully careful. And we have a Fed that’s doing political things. This Janet Yellen of the Fed. The Fed is doing political — by keeping the interest rates at this level. And believe me: The day Obama goes off, and he leaves, and goes out to the golf course for the rest of his life to play golf, when they raise interest rates, you’re going to see some very bad things happen, because the Fed is not doing their job. The Fed is being more political than Secretary Clinton.” – Donald Trump – 9/26/16

    We need to replace ridiculous Keynesian/Socialist economics w/ Austrian school/free markets if there’s ever going to be any hope of a return to some sense of normalcy and stability. A centrally planned, command economic system has never worked. The Fed is financial socialism.

    “The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression. People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overconsumption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers’ stone to make it last.” — Ludwig von Mises (1940)

    Stocks, bonds and housing are all turning down in roughly synchronized fashion. We’ve reached peak debt (again) and the Fed is removing the punch bowl (again). Do I see a pattern here? I’m sure they’re thinking “soft landing”, but that’s not how it turned out the past two times asset bubbles popped in this century. It’s not different this time.

    Finally:

    “Gold is money, all the rest is credit” – JP Morgan testifying in Congress in 1912
    and
    “Fiat money eventually always goes back to its intrinsic value – zero” – Voltaire

    Got gold?

    1. Precious metals popped nicely today. I also went to order more platinum Maple Leaf bullion coins today and saw they were all sold out. Looks like the flight to quality has begun.

  19. This year, IMO, saw the worst shopping deals on clothing in the past decade. Last year I was able to score a few nice pieces of outerwear on sale. This year – nada. Next month may bring better prices, but the lack of available selection means this year was a bust for me.

    Worse, the “good” brands have decided to cheap out on quality in earnest. What was once a nice, heavy wool is now noticeably thinner. Same goes with winter coats and jackets – the shells are thinner as well as the insulation, the jackets not as warm, but the high prices remain. They’re touted as cutting edge but when you wear them and find yourself cold or wet you realize you’ve been duped.

    This is why I voraciously read reviews and such, and won’t be the guinea pig on new products, preferring to wait until something is seasoned. The problem there, though, is that the seasoned items are suffering as well. Some bean counter decides “hey, if we decrease materials by 10% we can juice our margins and the customers won’t really notice.” BS.

    1. “What was once a nice, heavy wool is now noticeably thinner.”

      There’s L.L. Bean, and their older stuff too on eBay. I prefer the unlined scratchy Filson Mackinaw wool, but we own both brands in our family.

      1. I bought my ultimate parka for really cold weather at Wiggy’s in Grand Junction CO in 2006 after the one I bought from him in 1986 wore out. This newer one should last even longer. Got no use for wool except for show.

  20. Wherever he is, I wish AlbuquerqueDan a Merry Christmas and a Happy New Year.

    And better luck on his future oil price forecasts!

    Energy
    Plunging oil prices show the market is worried about a recession in 2019, says analyst
    Published Mon, Dec 24 2018 • 9:59 AM EST Updated Mon, Dec 24 2018 • 12:28 PM EST
    Tom DiChristopher
    Key Points
    – The ongoing plunge in oil prices shows that the market is worried about a recession in 2019, says Helima Croft, head of global commodity strategy at RBC Capital Markets.
    – Major benchmarks for crude oil prices have lost about 40 percent of their value in just under three months.
    – Croft and other analysts now see signs of weakening global demand growth as the fuel for continued selling in the oil market.
    …

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