thehousingbubble@gmail.com
Blog

In Today’s Market, The Only Path Is One That Leads To A Downward Price

It’s Friday desk clearing time for this blogger. “According to the Realtor Association of Sarasota and Manatee, fewer Bradenton area homes changed hands in April than a year ago. Homes were also taking longer to sell and sellers weren’t always getting their asking price. Rob Sartore, an associate with ReMax Platinum Realty, says he is consistently seeing price reductions by sellers for single-family homes and condos. ‘No price point is immune. It’s happening across the board on high-end properties to lower mid-range properties. This is because those homes were overpriced and a direct result of the fallout from the pandemic buying spree aberration that existed until June 2022,’ Sartore said.”

“Hawaii’s housing shortage eased somewhat with the addition of 6,071 housing units from 2020 to 2022, with help from the state’s declining population, according to new U.S. Census Bureau estimates. According to the Honolulu Board of Realtors, the median sale price for single-family homes on Oahu in April was $999,995 and for condos $500,000, down 10 % and 2%, respectively, from the same month a year ago.”

“Home prices in San Diego County rose in April for the second straight month, but still remained below the levels of a year ago, the California Association of Realtors said Thursday. The median sale price of a single-family home in the county was $930,000 last month, up from $915,000 in March. The April figure, though, fell from $975,000 in April 2022, according to the association. Statewide, April’s sales pace was down 4.7% on a monthly basis from 281,050 in March, and down 36.1% from a year ago.”

“People are leaving San Jose by the thousands. According to data from the U.S. Census Bureau’s City and Town population totals report, in July 2020, the city had an estimated population of 1,009,830 residents. This number was down to 981,466 residents in 2021. Now in 2022, San Jose has a population of 971,233. San Jose State Economics Professor Matt Holian says the city has seen a drop in home prices due to lack of demand. This is obviously good news for buyers, but bad news for sellers. ‘As house prices have fallen the property tax base goes down and cities are able to collect less tax revenue,’ Prof Holian said. ‘So, that’s going to affect city budgets – everything from police, schools, basic street cleaning.’ Oakland and San Francisco have joined San Jose in declining population in the past years, which Holian says only makes the problems on the streets more visible with less vibrancy around.”

“On the first Tuesday of every month, like-minded people gather outside the Bexar County Courthouse bidding for their next financial opportunity. ‘For us, we find properties on the market that we can fix and resell and make a profit,’ said Eddie Lozano, one of dozens of investors and realtors who attended April’s housing auction. In Texas, foreclosures rose by 187.3%, going from a little more than 4,000 in the first six months of 2021 to about 11,500 foreclosures in the first half of 2022, according to Attom. ‘If people would just call their realtor, whoever sold them the house, tell them, ‘Hey, I’m falling behind on my bills,’ a lot of the times the banks will work with you to do a forbearance until you get back on your feet,’ Lozano said.”

“The record 2022 boom in Denver apartment construction is about to supply the city with a swath of new housing units renters sorely need, but it could mean slower rent growth for property owners, especially downtown. Construction activity continues to soar. There are more than 31,000 units under construction in the Denver metro area, which is a record high, according to the data. Once completed, Denver’s inventory could expand by almost 11%. ‘Downtown [Denver] will bear the brunt of the supply wave,’ Unique Properties’ Q1 2023 market insights report says.”

“M&R Development and Bucksbaum Retail Properties increased their ownership stake in the apartment and retail complex known as Addison & Clark across the street from Wrigley Field, through a refinancing deal, while their Swiss partner on the project, UBS Group, lost most of its equity in the property, CoStar reported. M&R and Bucksbaum, along with an affiliate of The Dinerstein Cos., paid $100 million for the property at 1025 West Addison Street in late April. That’s far less than the $180 million it cost to build the complex. Commercial properties selling for far less than what an investor paid has become common in today’s market.”

“Last month, representatives of at least three major real estate development firms contacted Vancouver’s mayor and council imploring them to create a new tax exemption and apply it retroactively. Weeks later, council’s ABC majority did just that, prompting rebuke from other local politicians and the public. Grosvenor’s senior vice-president of development Marc Josephson also wrote to the mayor and council last month about his company’s condo tower with unsold units, and their $1.65-million tax bill. Asked if Grosvenor has tried reducing the price of the homes to sell them, Josephson said: ‘We are actively trying to sell these homes and are responding to market conditions.'”

“London’s cooling luxury housing market is turning into a tale of two sellers — those willing to knock down the asking price to secure a deal and those too stubborn to budge. Over half of prime homes in the city were sold at a discount in April, with the average price reduction rising to 9.1% for the first time in more than three and a half years, according to researcher LonRes. However, sales dropped by over a third from the same month last year, as some determined vendors sit on the sidelines waiting for the bargain hunt to end.”

“‘Sellers are referencing prices of yesteryear, while buyers are looking to a future in which they expect prices to fall,’ said Anthony Payne, managing director at LonRes. ‘For those vendors who fail to recognize the true value of their home in today’s market, the only path is one that leads to a downward price drift. Small price reductions that edge towards the true value of a property frequently result in a bigger reduction later down the line.'”

“‘It still seems likely that this downturn is on its last legs, albeit not quite finished yet,’ said CoreLogic NZ chief property economist Kelvin Davidson. House sales for the year ended April were down about 31 percent on the year earlier, while values fell 10 percent. Wellington was the weakest of the main centres, with values down 21 percent from the peak, while Christchurch was down 6.2 percent.”

“A whopping 27,000 homes due to be built have been shelved by developers with warnings that they may never be constructed despite Australia facing a housing crisis with a severe shortage of rentals and properties for sale. The value of the 10,400 dwellings that have been abandoned for now in Victoria is worth a whopping $4.3 billion. ‘Property developers are shelving projects because of soaring costs and lacklustre property prices. Some are even going bust,’ KPMG urban economist Terry Rawnsley said.”

“The latest to go under was Tasmanian building company Multi-Res Builders, leaving multimillion-dollar projects in the lurch, while developer Property Solutions Holdings, responsible for some of Brisbane’s most famous urban renewal projects also failed recently. PBS Building, a multimillion-dollar firm which did a mix of commercial and residential projects across Queensland, NSW and the ACT, also sent shockwaves through the industry when it collapsed. Other firms to go bust include NSW apartment developer EQ Constructions and a Perth building company called Hamlen Homes with both owing millions to creditors. New home sales are almost 50 per cent lower than a year ago, the HIA report found, while lending for the purchase or construction of a new home has fallen to its lowest level since 2008.”

Related Posts
This Post Has 99 Comments

  1. ‘If people would just call their realtor, whoever sold them the house, tell them, ‘Hey, I’m falling behind on my bills’

    Eddie is appearing at comedy club Laughing Stock, and he’ll be there all week!

    1. Wait until they see the property tax and insurance changes over the last 18 months. The idea that higher is better for prices is a myth.

      1. “…property tax and insurance changes…”

        I have yet to see a single article in the MSM about the insidious effect of ever increasing holding costs, (property tax, insurance, maintenance, utilities, HOA dues, etc).

        Kinda’ like have a boat anchor around your neck sinking you just a few millimeters at a time, while the sharks casually start circling.

      2. The local county assessor and his employees are livin’ large. They’re the ones buying $100k trucks and 2nd homes.

    2. If people would just call their realtor, whoever sold them the house

      I recall this happened during Housing Bubble 1.0. The realtor would get a couple of strawberry pickers “into” a house with a 2-year neg-am. Then when the payment skyrocketed and the house value plummeted, they would call up the realtor and say “Hola mi hermano, what can you do for me?” Of course the answer was “nuthin.”

      2. “Of course the answer was “nuthin.”

        Your recollection of history is faulty. The relitters said “Have you heard of this wonderful concept called a short sale? I can represent you.”

    3. This is just a cautionary note to anyone considering the responsibility of being the executor of someone’s will. As distasteful as it might be, make sure everything is correct with paperwork and that all names on trusts, for real estate or otherwise, and beneficiary accounts are correct without possible error according to the persons wishes and that no errors have been made with misfiled papers by any institution or authority. If you don’t take extraordinary precaution in these matters, the misery you might be subjected to could be crushing.

      1. And to people who are making wills, if there’s a relative you don’t like, never “leave them out” of the will. Insert a clause explicitly leaving them $1, or $10. Sometimes that relative is in line for an inheritance by law, and if the name isn’t in there, probate will think that you just forgot the name and they’ll get the money anyway.

          3. But is oxide wrong here?

            Estate planning can be a complex and arcane area of law, and one that can vary in many details from state to state. The goal of estate planning in California is to avoid probate.

          4. Generally speaking: If someone dies intestate (i.e., without a will) assets go to the spouse then down the family tree. If the person dies without heirs, assets go up and out the family tree.

          1. No, I “lost” a small amount because a distant relative didn’t do this. But more importantly, that relative wound up leaving some cash to some siblings (actually siblings’ kids) even though he didn’t like them.

      2. Yes, we are going through this right now and it is horrible. My brother is the executor but I’ve been helping out with some nasty legal stuff that we had no idea was even necessary until my mother died.

  2. ‘No price point is immune. It’s happening across the board on high-end properties to lower mid-range properties. This is because those homes were overpriced and a direct result of the fallout from the pandemic buying spree aberration that existed until June 2022’

    Rob, we’ve all agreed to not mention 2021 and 2022.

    1. We should belatedly recognize the selfless heroism of scores of realtors who bravely advised their clients that buying into the unsustainable scamdemic-era housing bubble spike would be their financial Waterloo.

      Oh, wait….

  4. ‘For us, we find properties on the market that we can fix and resell and make a profit,’ said Eddie Lozano, one of dozens of investors and realtors who attended April’s housing auction.

    Die, speculator scum.

  5. A reader sent these in:

    For those who have a simple reason for why home builders have round-tripped to all time highs, I say save it for last year. Because home sales are lower now than they were a year ago. In recession we will learn that pandemics don’t increase housing demand.

    https://twitter.com/SuburbanDrone/status/1658988182929567745

    UK policy-makers are recommending Crypto be regulated as gambling:
    “Crypto currencies serve no useful social purpose”. It’s worse than gambling. Everyone who went to Vegas in January made money, everyone who came the rest of the year lost money.

    https://twitter.com/SuburbanDrone/status/1658827568735297537

    This latest AI bubble is pathetic. AI has been around since the 1950s, but today’s dunces think it’s brand new.

    https://twitter.com/SuburbanDrone/status/1658821111746813953

    Number of multi-family housing units under construction continued to climb in April, rising to highest since October 1973

    https://twitter.com/LizAnnSonders/status/1659147829938642944

    Also, tell me again what’s gonna stop the Fed from slapping a last 25 bp hike with Nasdaq inching back towards it’s ATH? That’s what $ rally and belly sell-off are saying anyway.

    https://twitter.com/INArteCarloDoss/status/1659223937077714945

    Bank of Canada says mortgage payments could spike as much as 40 per cent

    https://twitter.com/therealhebrahim/status/1659217538654388224

    Over a decade of zero interest rates. Negative yielding bonds. And what tangible economic investments did our government make with it? Trillions used to prop up asset prices and drive economic inequality. A record debt bill being passed to the next generation. Thanks, Boomers.

    https://twitter.com/mr_skilling/status/1659373873945624580

    There were about as many AirBnBs ADDED to Phoenix last year alone as there are homes for sale today in phoenix (2019 levels). Imagine what happens when a recession hits, people stop spending on travel & all these 50k+? houses decide to get out at once.

    https://twitter.com/GRomePow/status/1659283291697221632

    Another horror story – Here’s a 2005 construction Rite Aid that recently went dark. Rite Aid still has a couple years left on the lease and paying rent. What price would get you interested in this mess?

    https://twitter.com/TripleNetInvest/status/1659341828993462274

    Saw one the other day. That makes sense why they’re all vacant!

    https://twitter.com/xskidave/status/1659346777542389761

    Bank of Canada needs more rate hikes to crush inflation: Scotiabank | Financial Post

    https://twitter.com/REWoman/status/1659218983243988992

    “Nightmare unfolds for 🇨🇦 homeowners as Bank of Canada foresees a 40% surge in mortgage payments, plunging the economy into uncertainty.” 👇🏽

    https://twitter.com/ShaziGoalie/status/1659337586471477250

    Don’t worry, nobody is going to buy or invest in anything but treasuries pretty soon. 200 billion a month in new notes incoming. Yield and duration: whatever it takes to get that money out of stocks and real estate. Let the race begin

    https://twitter.com/BMFiore2/status/1659331127918698498

    Literally everyone in Dallas says they can’t afford their own houses at current prices. I’m talking about six-figure dual income, college educated househoulds. Doctors, bankers, consultants, accountants, engineers etc.

    https://twitter.com/akm515/status/1659295359909130259

    1 Year Warranty on my new home expired today. Some stats:
    💧5 (!!) leaks
    🌊 1 basement flood
    💨 1 dryer vent venting into the attic
    🔥 2 furnace repairs
    💡 3 light malfunctions
    🔌 4 dead outlets
    🤕 1 endless headache
    # Make new builds good again #

    https://twitter.com/CREdeallawyer/status/1659196264284839938

    One month chart of the 10 year bond yield. The bond market doesn’t see a pivot anytime soon as they are starting to push rates aggressively higher. These people that think the Fed pivots in July and starts dropping rates have mental issues. Higher for longer all day long.

    https://twitter.com/StealthQE4/status/1659290779141959682

    I know…… You probably assumed this was another chart of Nasdaq melting up…….

    but it is actually from the year 2000.

    What if I tell you that for the next 2 years, the white line collapsed by 80%?

    By no means I’m suggesting that history will repeat itself exactly, but the behavior of today’s market is remarkably similar to the Tech Bust period.

    Honestly, I cannot recall a time when investors were more complacent, especially considering that we are already one year into one of the steepest rate hikes in history.

    ▪️ Corporate fundamentals deteriorating
    ▪️ More than 90% of the entire Treasury curve already inverted
    ▪️ Soft data is mostly at recessionary levels
    ▪️ Macro data starting to contract
    ▪️ Banks severely reducing their lending standards
    ▪️ M2 money supply now falling the most in 60 years

    Never mind that as soon as these debt ceiling discussions are over, the government will be dumping at least another $1T worth of Treasuries into the market.

    This comes after a banking crisis triggered by a major decline in the value of these debt instruments.

    Now, ask yourself:

    are we appropriately pricing risk in this environment?

    VIX is at 16, credit spreads sub 200bps, and stocks have one of their most extreme valuations in history.

    To be clear, the recent market rally has been almost entirely driven by megacaps.

    Beware of times when the generals lead but the soldiers don’t follow.

    https://twitter.com/TaviCosta/status/1659342747613143040

    1. “Honestly, I cannot recall a time when investors were more complacent, especially considering that we are already one year into one of the steepest rate hikes in history.”

      I doubt most of today’s stock market investors know that monetary policy operates with long and variable lags. And many of them have never experienced a tightening cycle like this one.

      1. “Policy makers” react a very long time after the damage of their previous policy has gotten out of control. Case in point; ZIRP for an entire decade became a disaster years ago.

    2. That’s a lot of repairs for a new house! Admittedly I’ve had similar repairs, but that’s over the 11 years I’ve been here, and the house itself was decades old when I bought it.

      1. I would assume that broaching debt ceiling is an automatic government shutdown,(?) and yet we haven’t heard anything about this at my agency. So I have no idea what will happen. I worst, I imagine I would miss one paycheck, which would eventually be reimbursed.

        1. Yes, because Gawd forbid, we can’t keep going deeper in debt to support a huge government. How does one do that, we don’t know.

          You’ll be fine.

    1. “…releasing nearly 300,000 square feet…”

      Given Uber’s business model, you begin to wonder (despite the WFH trend) what on earth they were going to do with all that space?

      Reminds me of the bloated days [early 80’s] of Wordperfect before Microsoft Office killed them off. At Wordperfect assistants had assistants until one day the company woke up and found out they weren’t making any money.

      1. And before MS Office, Wordperfect ruled. It never successfully transitioned from DOS to Windows.

  8. The Dinerstein Cos., paid $100 million for the property at 1025 West Addison Street in late April. That’s far less than the $180 million it cost to build the complex. Commercial properties selling for far less than what an investor paid has become common in today’s market.”

    Gosh, I hope that doesn’t impair the underlying collateral. I’d hate to see the banksters holding that mortgage debt get schlonged bigly.

  9. Re: ‘As house prices have fallen the property tax base goes down and cities are able to collect less tax revenue,’ Prof Holian said. ‘So, that’s going to affect city budgets – everything from police, schools, basic street cleaning.’

    Obviously these services were not functioning before the bubble. Such brilliant observations can only be expected from Professsors . . .

    1. San Jose State Economics Professor Matt[hew] Holian says:
      ‘So, that’s going to affect city budgets – everything from police, schools, basic street cleaning.’

      “….Such brilliant observations can only be expected from Professors”

      That’s why we proud Californians pay these folks the big bucks for such insights.

      For a real eyeful of what Professor Holian’s pay really is, check out

      https://transparentcalifornia.com/salaries/search/?q=matthew+holian

    1. Sure youse can. Death, most divorces and job loss don’t care about interest rates.

          2. 2+ minutes of physical violence. Other than don’t mess with the Italian mafia, which I already know, I highly doubt some dude’s coming of age story in 1960s Bronx has anything of relevance to my life.

      2. you can rent storage space for all your knicky knacks, but no one will get rid of stuff so the apartment/house has a lot more open space to actually live in.

      3. One of my young adult kidz just had a cohabitant breakup. After checking out studio rents, the decision is to peacefully cohabitate until another roommate arrangement can be found.

        2. A college classmate found a really affordable and cool duplex on a ranch setting in the San Luis Obispo area. Then his girlfriend left him for the guy in the other unit of the duplex. Unfortunately, the layout had the bedrooms sharing the dividing wall.

          1. I remember you posting this before. He had to listen to his ex-gf getting banged by the other guy. That’s a steep learning curve in the dating world.

      4. How many FBs forced to sell by circumstances will be able to bring money to the table to get out from under their alligators?

        1. The return of jingle mail, I suppose. Sure, credit scores will be wrecked, but if you don’t have 100 grand, or whatever needs to be brought to closing, what else can you do? Unless the short sale returns.

    1. Ponzi markets & asset bubbles

      Any financial bubble that merely levels off will pop and collapse on its own. Grow or die. Doesn’t matter if the price of eggs is going up or down.

    2. “”We face uncertainty about the lagged effects of our tightening so far, and about the extent of credit tightening from recent banking stresses,” Powell said”

      Funny how this asz clown wasn’t worried about the uncertainties of his grotesque money printing show. Somebody put this guy in a pine box already.

  12. College Student Flies To Classes To Avoid High Rent In Bay Area
    Ben Schlappig
    2 days ago

    This is pretty remarkable. A college student spent an entire academic year living in Los Angeles while attending school in the Bay Area. And no, he wasn’t taking online classes, but rather attended all his classes in person, and didn’t even miss a single class.

    As flagged by @zainman, a Reddit user shared his experience living in Los Angeles while commuting to the University of California at Berkeley for all his classes. His logic was that he previously lived in Los Angeles, and was attending a one year program. He knew that after the program was done, he’d move back to Los Angeles, because his previous employer would hire him once again.

    He had a place to live in Los Angeles rent-free, and he tried to avoid the high rent costs in the Bay Area. So he made the decision to commute by plane for all his classes. He was able to schedule his classes so that most weeks he only had to commute 3x, though for a couple of weeks he had to commute 5x.
    …
    https://onemileatatime.com/news/college-student-flies-classes/

    1. he only had to commute 3x

      I did the same thing in the ’70s, except by train. Worked 4 days, classes the other three. Lived free with family. Could sleep or study during the hour train ride.

    2. From the article:
      —————
      “Good Lord,” Ramsey said. “What did you study and when?”

      Larhonda said she had three degrees: the first was in multidisciplinary studies, criminal justice, and religion, the second was a masters in accounting, and the third was a masters of divinity in theology and hermeneutics. She had also taken on loans for her son’s college fees.
      ——————-

      At least Dave knows to ask the right questions.

      1. Wait a minute.

        A Masters degree in accounting and she couldn’t figure out that $250K was a complete waste of money?

        1. I just saw an episode of House Hunters last night where the female half of the couple had just received her MBA in Finance from a state university in Pennsylvania. They were moving to Carolina Beach, NC and she planned to start her career as a, wait for it, Realtor! Didn’t know you needed an MBA to pass a Realtor exam. Good luck with that career.

  16. I don’t know if others have noticed, but I just can’t get the same information I was able to get before. The articles are gone, the information is gone and its replaced with BS.
    Some have alledged that they are using AI to do a information purge .
    One of the reasons I spent hours everyday looking up stuff, beginning with the Covid Saga, was I had a strange feeling it would be unavailable later.
    It really looks to me like information is being eliminated and replaced with narratives that are BS. . I try to go back and even get newspaper articles that I got before and they are gone. ..Historical information strangely gone . Im not saying everything , but information has been cleaned up.

    1. One of the biggest unintended consequences of GPT is going to be the massive proliferation of junk pages and info. It used to be a slow grind to make 100 unique landing pages/blog posts with link backs etc. Now they can do that in an hour. The OCD types are going to exponentially increase the amount of crap that is made to game the search engines. Pair this with the huge amount of censorship that is occurring and the ease that AI can identify and ‘correct’ stories and you wind up with a really big pile of crap.

        1. For example I found this one article from about three years ago that I remembered because of unique title and pictures.
          But when I read the contents it was altered and edited to reach the opposite conclusion than before.
          I wonder if they are going to do it to books?
          The Ministry of Truth is going after the young in school and Bill Gates says AI is going to replace teachers.
          Remember Klaus Schwab saying , “Who ever controls technology controls the
          World .”

          1. They have already done it to ebooks. The people who hold real paper and ink books are going to be like the monks of the dark ages. Protect your library.

          2. Gibbon, Will Durant, and The Great Books of the Western World collection make up 40% of my personal library, but if things develop that way, I’ll be able to snatch a few millions for them in a decade or so…:)

    2. Those articles still exist, they’re available on the Archive website (which I use to bypass subscriber paywalls when sharing articles from the New York Times and Washington Post on this blog).

      Fun fact: every tweet that has ever been posted on Twitter is archived in the Library of Congress.

  17. >The Big Fat Bastard
    >March 9, 2023 at 4:15 pm
    >I’m planning a surfing trip to San Diego.

    He’s been kinda quiet. Did he become a democrat and settle down in the golden state?

    2. I can’t imagine a bucket of fried chicken, two tubs of gravy, a pan of biscuits and a 2 liter bottle of soda for lunch, repeatedly, is very healthy.

      1. If he truly ate like that, then he would have weighed 350 lbs

        Is he still posting at the other blogs he frequents, or has he gone silent?

  18. Great Reset Architect Yuval Harari Arrives Through The Backdoor at Bilderberg as Uninvited Guest

    By Adan Salazar | INFOWARS.COM Friday, May 19, 2023

    World Economic Forum advisor Yuval Noah Harari arrived in Lisbon, Portugal, Friday, presumably to attend the 69th annual Bilderberg Group meeting, despite not formally being listed as an expected attendee.

    “Yuval Harari was not invited, but he also came to Lisbon,” commented independent journalist Frederico Duarte Carvalho, who’s been staking out the airport for notable arrivals.

    An official list of roughly 130 participants released by the group on its website does not show Harari’s name.

    https://www.newswars.com/great-reset-architect-yuval-harari-arrives-at-bilderberg-as-uninvited-guest/

    1. An official list of roughly 130 participants released by the group on its website does not show Harari’s name.

      Maybe he’s attending as someone’s date? 😉

  21. FBI Concerned Jan. 6 Footage Would Expose Undercover Agents, Informants: Whistleblower

    By Zachary Stieber
    May 19, 2023

    Hill said Boston officials questioned why they couldn’t get access to the tranche of some 11,000 hours of footage from inside the Capitol.

    “Because there may be—may be—UCs, undercover officers, or … confidential human sources, on those videos whose identity we need to protect,” Washington-based officials responded.

    https://www.ntd.com/fbi-concerned-jan-6-footage-would-expose-undercover-agents-informants-whistleblower_920545.html

  22. Would you follow Gollum’s real estate investment knifecatcher encouragement advice?

    “The worst vice is ad-vice.”

    1. GlobeSt
      Many Family Offices Increasing Allocations to CRE
      By Erik Sherman
      May 18, 2023 at 08:17 AM

      About 60% of those polled planned to maintain or increase their exposure.

      A new report from Goldman Sachs says that the family offices they surveyed were largely maintaining or increasing their exposure to real estate.

      This is part of a greater pattern of “risk-on” allocation planned increase over the next 12 months. On average, 9% of funds were being put into real estate and infrastructure.

      The report was based on surveys of 166 institutional family offices with net worth of at least $500 million.

      “With the flexibility to invest across the risk spectrum, family offices have maintained a largely consistent approach to more aggressive allocations as they seek superior returns,” Meena Flynn, co-head of global private wealth management and co-lead of One Goldman Sachs Family Office Initiative, said in the report. “Planned risk-on allocations tell us they see strong opportunities to capture added alpha. This patient, strategic, long-term orientation is often an advantage in managing and preserving generational wealth.”

      “Within real estate, 30% of family offices reported that they plan on increasing exposure to the residential sub-sector over the next 12 months, with another 30% looking to maintain their exposure,” according to the report. Goldman saw a focus on multifamily because it has natural demand throughout business cycles and because it’s considered a good hedge against inflation. That is true particularly now when an undersupply of housing stock in the U.S. combined with higher interest rates makes it less likely people can purchase their own homes.

      According to WealthManagement.com, many family offices have capital on hand to put to work, with real estate being one asset class that can have tax advantages while producing cash flow. They are, however, being cautious at the same time given the churning in the banking sector.

      One way those two inclinations come together is bargain shopping. High-net-worth families and a few well-heeled developers have been bargain-hunting for Manhattan office-buildings and making an increasing share of purchases, according to Savills. Many are making snap decisions to purchase properties at significant discount. But that may be something of an anomaly.

      Going back to the Goldman Sachs report, only 7% of family offices plan to invest more in office space and 4% in retail; 12% and 10% respectively plan to reduce their exposure. At the same time, there is “continued interest in warehouses and logistics centers that support the shift to e-commerce and onshoring” with 13% of family offices saying they plan to increase their exposure to industrial and 28% saying they wish to maintain it. “Other secular themes include towers and data-storage centers that enable digitization, assets related to renewables and sustainable food production, and lab facilities dedicated to biotech innovation.”
      …
      https://www.globest.com/2023/05/18/many-family-offices-increasing-allocations-to-cre/?slreturn=20230420065724

      1. “Planned risk-on allocations tell us they see strong opportunities to capture added alpha.”

        What if you try to capture added alpha, only to discover you inadvertently caught yourself a falling knife?

        Remenber those Norwegians who took the bait back in the 2008 financial debacle?

    2. I got a text from my dad last night. His financial planner was advising an annuity (um, no), a 1031 exchange for the condo that cash flows $400/mo (that’s it?!) and investing in a REIT (as RE is tanking).

  23. The Financial Times
    Emerging market investing
    Investors snap up local currency bonds as dollar debt loses allure
    Falling inflation and high interest rates in emerging markets attract investor flows
    Crates of vegetable are stacked behind two women and a man
    A customer buys vegetables at a warehouse in São Paulo. The Brazilian real, along with the Mexican peso, has strengthened more than 10% against the dollar
    Mary McDougall and Jonathan Wheatley in London yesterday

    Investors are ploughing money into emerging market local currency bonds, as high interest rates and falling inflation make them increasingly attractive compared with dollar assets.

    In the first four months of the year, investors withdrew a net $2.65bn from funds holding so-called hard currency — predominantly dollar-denominated — emerging market bonds, but added $5.23bn to local currency bond funds, according to fund flow data provider EPFR Global.

    The flows mark a reversal of years of investors opting for dollar-denominated debt as a strong greenback broadly drove better and lower-risk returns. This year, the tables have turned with local bonds performing better, as currencies including the Mexican peso and Brazilian real have strengthened more than 10 per cent against the dollar.

    “Local markets are far outperforming external debt,” said Paul Greer, emerging markets debt portfolio manager at Fidelity International. “Frankly I think that trend will probably continue for the rest of the year.”

    This year JPMorgan’s emerging market benchmark for local currency government bonds has delivered a 6.8 per cent total return, outstripping a 1.9 per cent rise for its hard currency counterpart.

    Analysts say much of that outperformance has been down to the fact that this year the dollar has weakened against many major developing country currencies that also offer higher rates of return. Such an uplift in return is known as “carry” in foreign exchange markets.

    “The carry trade is front and centre of people’s minds,” said Manik Narain, head emerging market strategist at UBS. “There is a strong consensus to be short the dollar, on the basis of the Fed having reached the end of its tightening cycle.”
    …

  24. Portland’s population shrinks again, census estimates show
    Updated: May. 18, 2023, 7:31 a.m.
    Published: May. 18, 2023, 5:00 a.m.
    Aerial views of downtown portland
    Providence Park can be seen in the foreground of an aerial view of downtown Portland on Mon., March 27, 2023.
    By Kristine de Leon | The Oregonian/OregonLive
    Portland has shed more than 18,200 residents between the pandemic’s onset and last summer, new estimates from the U.S. Census Bureau shows.

    That makes Oregon’s largest city one of its fastest shrinking. Between July 2020 and July 2022, it lost 2.8% of its population. Among cities with at least 10,000 residents, only Troutdale lost a larger share of its residents, according to the new estimates.

    But the population decline has slowed slightly. In the year leading up to July 2022, the city lost only 8,300 residents as the pandemic eased and the economy gained steam, compared to 9,900 the year prior.

    Portland now has just over 635,000 residents, according to the census data.

    Huda Alkitkat, program manager at Portland State University’s Population Research Center, said fewer people are moving to the city to replace those moving out, and deaths outpace births.

    The new census data also show, however, that the number of occupied homes in the city continues to increase. That suggests the number of people per household in Portland is declining, with more people living on their own or with a roommate or partner rather than a large family.

    “The average household size is indeed down quite significantly for rented and owner-occupied units,” Alkitkat said, citing recent census data. In 2021, the average household size in Portland was 2.5 people for owner-occupied homes and 1.9 in rented homes.

    Some Portland suburbs, including Gresham, Lake Oswego, West Linn and Troutdale, have also seen their populations drop since the start of the pandemic.

    For Gresham, Lake Oswego and West Linn, the population declines accelerated last year.
    …
    https://www.oregonlive.com/news/2023/05/portlands-population-shrinks-again-census-estimates-show.html

  25. Podcasts | Money Talks
    Hot property: the remarkable resilience of America’s housing market
    Our podcast on markets, the economy and business. This week, why house prices are so stubbornly high
    May 18th 2023

    HOUSING IN AMERICA has never been this unaffordable. The pandemic set off skyrocketing prices; then the Fed began to rapidly increase interest rates, pushing up borrowing costs. Many predicted this might result in a crash. But after dropping 10% from all-time highs, home prices in America are picking up again. What is going on?

    On this week’s podcast, hosts Alice Fulwood, Tom Lee-Devlin and Mike Bird ask if anything can take the heat out of the American housing market. Skylar Olsen, chief economist at property app Zillow, tells them that interest rate rises have added $800 a month to the typical American household’s mortgage bill. And Domonic Purviance from the Federal Reserve Bank of Atlanta explains how central bankers are thinking about the impact on the affordability of those loans. Runtime: 40 min
    …
    https://www.economist.com/podcasts/2023/05/18/hot-property-the-remarkable-resilience-of-americas-housing-market

    1. Does anyone else suspect the financialization of residential housing has severely harmed affordability of shelter to ordinary American families who just need a place to live?

      1. Home
        Markets
        The biggest home buyers in America are now selling more property than they’re buying
        Phil Rosen
        May 19, 2023, 3:05 AM PDT

        Happy Friday my people. Phil Rosen here, writing to you from a cafe in downtown Manhattan.

        While I haven’t personally checked every building, odds are that a lot of the skyscrapers around me are emptier than they’ve been in years.

        Commercial properties are under pressure thanks to the persistence of work-from-home trends — meaning less demand for office space — and higher borrowing costs.

        Moody’s just reported that real-estate prices in the sector just saw their first quarterly decline in 12 years, and analysts expect them to drop further.

        Commercial property headwinds aside, today we’re looking at the residential housing market, which is undergoing its own shifts, but not exactly in the same direction.
        …
        https://www.businessinsider.com/housing-market-home-buyers-america-finance-sellers-mortgage-property-2023-5

    2. What is going on?

      The greatest wealth transfer in history, that’s what. Prepare to be A LOT poorer.

Comments are closed.