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A Phenomenon Most Didn’t See Coming When Demand Was Red-Hot

A weekend topic starting with WCPO in Ohio. “One of downtown’s largest office properties is seeking $45 million in tax breaks to help it convert part of its space into 205 apartments. Owners of the Atrium One and Atrium Two buildings say they’re hoping to avoid ‘a catastrophic loss of office tenancy in the coming years.’ Acabay Inc., a Vermont-based real estate company that bought the Atrium properties in 2018 and 2019, shared details of its proposed $80 million renovation in an application for financial assistance with the city of Cincinnati. Two companies that track mortgage-backed securities say Greater Cincinnati’s delinquency rate for office loans is approaching 20%.”

“‘My impression is that over the short term it’s definitely going to be a little painful,’ said Michael Rosenbaum, general manager for Diversified Management. ‘People who don’t have the reserves … will be defaulting.'”

The Real Deal. “The Sphere in Las Vegas has taken off. But the nearby 68-acre business park owned by Blackstone has done a belly flop and now sinks toward default. Once dubbed ‘Nevada’s business district,’ the 1.4 million-square-foot Hughes Center is nearly half empty and has gone into special servicing, the Las Vegas Review-Journal reported. Last spring, New York-based Blackstone stopped making payments on a $325 million loan tied to the office park and went into special servicing. ‘We began writing this property down three years ago and completely wrote it off earlier this year,’ Blackstone said in a statement often repeated after questions about any of its troubled office properties.”

Bisnow on Texas. “It was a year of reckoning for the local apartment industry. After notching a series of wins in the wake of the pandemic, occupancy in Dallas-Fort Worth declined each month in 2023, causing rent growth to falter in the back half of the year. A wave of new units coming online snatched the ball from owners and placed it firmly in the tenants’ court, marking a reversal in the power dynamic that has defined the market for the last three years. ‘There’s just been wild swings in supply and demand,’ MRI ApartmentData Industry Principal Bruce McClenny said. ‘That’s what’s behind the drop-off in [rental] rates — there are so many new units coming on, and the timing isn’t right.'”

“More than 8,100 new units opened in DFW in the third quarter alone, and another 44,000 are on the way in 2024 and 2025. Meanwhile, more than 81,000 existing units sit empty, and landlords are having to work twice as hard to fill them amid fiercer competition from new development. ‘When you’re talking about so many thousands of units … that is a huge amount of supply,’ RR Living CEO Melanie French said. ‘You see building happening everywhere.'”

“Class-A properties have been the hardest hit, and that is because they are competing with the new deliveries, McClenny said. As of November, the highest-end cohort of apartments was 87.4% occupied, compared to 92.7% in Class-B and 91.9% in Class-C, according to MRI ApartmentData. ‘The move-ins are all happening in the Class-A space, but the problem goes back to supply,’ he said. ‘When you add 3,000 to 4,000 units every month, there’s no way you are covering that in terms of move-ins.’ Hundreds of new projects launched over the last three years, but those units are delivering into a market on its way to becoming oversupplied — a phenomenon most didn’t see coming when demand was red-hot, McClenny said.”

Bisnow on Massachusetts. “Coming out of a white-hot streak during the early years of the pandemic, Boston’s life sciences market looks like a bucket of ice water has been dropped on it. After billions of dollars in venture capital funding fueled a flood of new biotech leasing and development in the sector, a slowdown was inevitable, but several industry experts told Bisnow they didn’t expect one of this magnitude for the nation’s most significant lab cluster. ‘We’ve never seen a slowdown of this magnitude in life science,’ JLL Executive Managing Director Bob Richards said. ‘The challenge is the ability of existing companies to raise additional capital and produce companies to raise initial capital. That has been what has caused the slowdown, primarily.'”

“Across the market, total vacancy reached 21.2% this quarter, according to new data JLL shared with Bisnow, a massive jump from 9.9% at the beginning of the year. ‘We’ve literally gone from a hot summer day to a cold winter evening,’ Richards said. This sudden shock came from the pain that hit the biotech sector. As of October, at least 17 Boston-area biotech companies had shut down this year, almost triple that of 2022, the Boston Business Journal reported. ‘There’s sort of the elephant in the room of the potential oversupply that’s coming with new development trying to finish their construction as we come into ’24 and ’25,’ CBRE Director of Research Suzanne Duca said.””

The Mercury News in California. “A big office complex in Concord has been bought in a deal that suggests property values have nosedived for Bay Area offices in the wake of the coronavirus-spawned business lockdowns. Concord Corporate Centre has been bought for $20 million by an affiliate of Sierra Pacific Properties, a real estate firm controlled by the Seeno family, according to documents filed on Dec. 14 with the Contra Costa County Recorder’s Office. That price is 68.5% below the $63.5 million that the sellers in the deal, Harbert Management, paid in 2017 for the two-building office complex. The deal is an example of the collapse in values for Bay Area office buildings in the wake of the coronavirus lockdowns and the uneven return to the office even after the draconian government-ordered building closures were terminated.”

Bloomberg on California. “Aon Center, the third-tallest tower in Los Angeles, has sold for $147.8 million — about 45% less than its last purchase price in 2014 — as office values continue to suffer from high vacancies and financing costs. The sale is the largest office deal this year in downtown Los Angeles, which has been among the hardest-hit US office markets since the pandemic as remote work becomes more popular and escalating interest rates drive down values, wiping out owners’ equity. Almost 30% of downtown LA office space was available for lease or sublease in the third quarter, brokerage Savills reported. Many tenants and investors are turned off by the neighborhood’s tough commutes and high homeless population. Rents downtown were 40% lower than in more-desirable areas, such as Century City, where the availability rate was 16%, according to Savills.”

“An affiliate of Brookfield Corp., downtown’s one-time largest landlord, defaulted on three office towers in the area this year. An added blow for sellers was a voter-approved 5.5% transfer tax on real estate transactions greater than $10 million that took effect April 1. Office prices nationwide have fallen 35% from a peak in the first quarter of 2022, when the Federal Reserve began raising interest rates to combat inflation, according to real estate analytics firm Green Street.”

Hawaii Real Estate Dreams. “Through October this year, 298 houses have been sold in Kona, 288 condos and 77 pieces of land for a grand total of 663. Since sales typically slow over the Thanksgiving and Christmas holidays don’t look for any big changes between now and the end of the year in volume. There are 98 overall properties in escrow as of the end of October, mirroring September’s number of 100, so sales should be similar in November, probably around 60 or so. September vacation rental occupancy dropped again in the state to 52.7%, a 6.3% drop from last September and a 15.4% drop since September of 2019. Pricing is surely playing a part in this since the average room night increased $100 in the state during that same time. I’m getting calls weekly from owners now considering switching from vacation rental to long-term, more consistent income but you don’t get to use the property as often. Some will sell… stay tuned!”

Fox 2 Detroit in Michigan. “Meet custom home builder Dave Nash. Some of Dave’s customers say he has an interesting customer service philosophy. ‘(He said) ‘I’ll sue you, you don’t know who I am,’ Kim said. ‘(He said) ‘You can’t do anything to me. My dad’s a lawyer,’ Kelly said. Dave Nash’s company, Envy Homes, built this house for Chris and Megan. The cost was $440,000. At least, that was what it was supposed to cost. ‘I have been asking almost weekly, ‘Where we at with the budget?’ said Chris.”We don’t know.’ ‘Where we at with the budget?’ ‘We don’t know.'”

“Chris is a police officer and $440,000 was the top of his budget. But surprise – when the house was finished, Chris and Megan say Dave Nash jacked the price up another 20,000 onto the cost. ‘I didn’t want to give him any more money, but I also wanted a house,’ Megan said. Chris took the money to the Envy Homes office and handed it to Nash, anyway. ‘I handed him a check for almost $20,000,’ he said. And he got this handwritten receipt from Dave for ‘overages.’ But at least they were in the house, which they say has some problems. Problems they told Nash about – and included in their complaint to the state.”

“Then a couple of months later and after paying $20,000 in overages …’Today, I received an email saying they put a lien on our house,’ Megan said. The couple thinks Dave did it just out of spite. This is the flooring in Kelly and Dan’s house. You can see it’s bubbling and has big gaps. ‘It’s just a mess,’ Dan said.”

North Shore News. “A B.C. judge has denied a receivership application from the purported majority shareholders of residential development firm Coromandel Properties Ltd. who claim management is threatening the company’s assets. According to the Dec. 12 ruling, shareholders Zhao Ming Mo, Zi Hao Mo, the ZHM Family Trust 2020, and the Birch Family Trust claimed current management is threatening the company’s assets by failing to attend to day-to-day operations, pay outstanding professional fees, and respond to the landlord of the company’s head office. Management has also failed to respond to correspondence from the Canada Revenue Agency and file tax returns, the shareholders submitted.”

“It ‘appears to be uncontroverted’ that Coromandel manager Zhen Yu Zhong, also known as Jerry Zhong, ‘is not carrying out these functions adequately or at all,’ wrote Justice Kevin Loo in his decision. However, while Loo agreed the evidence shows Coromandel ‘has failed to adequately or properly perform the day-to-day operations of the debtor companies,’ the judge found too many problems with granting the application, which was opposed by secured lenders and ‘other stakeholders’ of the company’s operations. The Mos are the children of Junchao Mo and told the court they own 70 per cent of Coromandel. They said Junchao Mo and Zhong entered a partnership when they launched Coromandel, which now has $700 million of debt and 16 ongoing development projects.”

ABC News in Australia. “The NT Property Council says Darwin CBD is already in an ‘unenviable position’ with the nation’s highest vacancy rate — but they expect figures to worsen in the new year. According to their research, 58,000 square metres of commercial office space lies vacant across the Darwin CBD with smaller retail and hospitality venues recording a vacancy rate of around 20 per cent. NT Business and Tourism Minister Joel Bowden attributed Darwin’s high vacancy rate to supply and demand. He said despite continued construction projects and the approval of nearly 300 new apartments, not enough people were moving to the Northern Territory. ‘We’ve got nearly 50,000sqm of new commercial space in the pipeline so construction has continued there just hasn’t been enough people opening up new businesses over the time,’ he said.”

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This Post Has 68 Comments

  1. ‘the nearby 68-acre business park owned by Blackstone has done a belly flop and now sinks toward default. Once dubbed ‘Nevada’s business district,’ the 1.4 million-square-foot Hughes Center is nearly half empty and has gone into special servicing, the Las Vegas Review-Journal reported. Last spring, New York-based Blackstone stopped making payments on a $325 million loan tied to the office park and went into special servicing. ‘We began writing this property down three years ago and completely wrote it off earlier this year’

    How the mighty have fallen. Wait a minute, blackflop has money! They are just giving it away.

      1. They wrote it all off, so every penny is gone plus what it costs to walk. Brookfield has also been tossing keys early and often. I still see a quote every week or so that office loans are non-existent right now.

  2. ‘There’s sort of the elephant in the room of the potential oversupply that’s coming with new development trying to finish their construction as we come into ’24 and ’25′

    I love a good elephant in the room Suzanne. Yes, even life sciences is taking a sh$t. Funny how all the red hotness turns into oversupply when the easy money goes away.

  3. ‘More than 8,100 new units opened in DFW in the third quarter alone, and another 44,000 are on the way in 2024 and 2025. Meanwhile, more than 81,000 existing units sit empty, and landlords are having to work twice as hard to fill them’

    Is that a lot?

    ‘When you’re talking about so many thousands of units … that is a huge amount of supply…You see building happening everywhere’

    The frantic overbuilding was seen as a sign of redhotness not that long ago Melanie.

    1. Will Joetato try to house the invaders in those new apartments? Just print up another trillion and presto!

  5. . ‘We’ve literally gone from a hot summer day to a cold winter evening,’ Richards said.

    Dick, you need to learn what “literally” means. Then you need to quit making lame analogies and just say the crater is getting serious.

  6. That price is 68.5% below the $63.5 million that the sellers in the deal, Harbert Management, paid in 2017 for the two-building office complex.

    The destruction of fake wealth created by fake money is going to be downright Biblical as the Doom Loop hits terminal velocity in commie-controlled cities.

  7. Our friend in Hawaii sent me the link above and this one with comments:

    https://beatofhawaii.com/holiday-slump-hawaii-struggles-unsuccessfully-to-revive-tourism/

    There’s no aloha spirit there anymore. I had a place there for 12 years. It was wonderful for the first few years. I’ll never go back there’s so many other places in the world that are so much better!

    Summer 2022 i was on thebig island. Went on a tour at a private reserve. Came back to find the windows smashed and our backpacks and a duffle stolen. Police blamed us for leaving stuff in car. They said they would look into it but never heard from them. Biggest financial loss was tours we missed since we had to take care of this. During our visit had to wait 1.5 hours after our reserved time at restaurant at volcano Lodge because some locals were having party no apoligies list goes on. Felt very unwelcome during our whole visit. Btw, we did donate to Maui relief fund. This was my 15th trip to hawaii and possibly last.

    If the Hotel owners weren’t so greedy we would have more visitors, I have a vacation rental on the big island and have seen this year been th poorest for short term rentals, I charge less than 35% for a rental than the hotels and they say we are greedy, give your head a shake, hotels and now paid parking in Kona, trying to gouge tourists for every last dime they Can squeeze, maybe the governor will read this and wake up to the real problem, hotel gouging, aloha from the somewhat depressed big island!

    1. A military guy in my ‘hood who recently returned from a 3-year assignment to Hawaii said GIs were constantly getting jumped by local thugs who hate the mainlanders. He had to pull his kids out of the Hawaii public school system because of the constant threats & harassment.

          1. It is my understanding that polynesian Hawaiians are now a small minority in their home. There are almost as many Hispanics there now.

        2. They were likewise when my mom attended University of Hawaii in the late 60s. She was called a haole.

    2. From what I have read there is a global backlash against tourism, especially in the more popular destinations. Even though tourism provides jobs and helps pays the bills, the locals are often fed up with the tourists.

      1. These hospitality workers need to quit bitching about the disappearance of $20 cash tips and get their QR code tattoo.

        1. These hospitality workers need to quit bitching about the disappearance of $20 cash tips

          It is a contradiction, but as of late the world seems to thrive on them.

  8. ’Today, I received an email saying they put a lien on our house,’ Megan said. The couple thinks Dave did it just out of spite.‘

    I doubt Dave did this out of spite. This happens when Dave fails to pay his material suppliers and/or sub-contractors. Dave is likely a real doozy of a general contractor. Have fun with that Chris and Megan.

    1. I’m surprised he only came uo $20k over budget.

      ‘I have been asking almost weekly, ‘Where we at with the budget?’ said Chris.”We don’t know.’ ‘Where we at with the budget?’ ‘We don’t know.’”

    1. Argentina has long been one of the world’s biggest basket cases. It will take time to right that ship.

      One thing I will give Mexico’s leftist populist AMLO credit for is that he has kept deficit spending under control, and with it inflation. If only he could put a lid on violent crime, which he is failing miserably.

      1. In the late 70’s and 80’s Mexico was also a high inflation basket case. It took over a decade to fix that.

      2. If Mexico dealt with its crime better, the triumvirate of Canada, the US, and Mexico would be unstoppable.

    2. President Javier Milei Addresses Argentina With Profound Changes To The Economy

      In a recorded message, the President of Argentina, Javier Milei, sent a message to the country on the first national management network with announcements of profound changes in the economy and the advancement of a Decree of Necessity and Urgency ( DNU).

      “We designed a shock stabilization plan that includes a fiscal adjustment program, an exchange rate policy that adjusted the exchange rate to market value and a monetary policy that includes the sanitation of the Central Bank,” said Milei.

      After ten minutes of diagnosis , Milei began reading 30 bullet points : “As our economic model attacks the deficit, which is the cause of our problems, we can begin today to unblock all these regulations that aim to provide solutions but that only create problems.”

      the president listed what the decree of necessity and urgency will have:

      1. Repeal of the Rental Law : so that the real estate market works smoothly again and so that renting is not an odyssey.

      2. Repeal of the Supply Law , so that the State never again attacks the property rights of individuals.

      3. Repeal of the Gondola Law so that the State stops interfering in the decisions of Argentine merchants.

      4. Repeal of the National Purchase Law that only benefits certain power players.

      5. Repeal of the Price Observatory of the Ministry of Economy to avoid the persecution of companies.

      6. Repeal of the Industrial Promotion Law.

      7. Repeal of the Trade Promotion Law.

      8. Repeal of the regulations that prevent the privatization of public companies.

      9. Repeal of the State Companies regime.

      10. Transformation of all State companies into public limited companies for subsequent privatization.

      11. Modernization of the labor regime to facilitate the process of generating genuine employment.

      12. Reform of the Customs Code to facilitate international trade.

      13. Repeal of the Land Law to promote investments.

      14. Modification of the Fire Management Law.

      15. Repeal of the obligations that sugar mills have regarding sugar production.

      16.Liberation of the legal regime applicable to the wine sector.

      17.Repeal of the national mining trade system and the Mining Information Bank.

      18. Authorization for the transfer of the total or partial share package of Aerolíneas Argentinas.

      19. Implementation of the open skies policy.

      20. Modification of the Civil and Commercial Code to reinforce the principle of contractual freedom between the parties.

      21. Modification of the Civil and Commercial Code to guarantee that obligations contracted in foreign currency must be paid in the agreed currency.

      22.Modification to the regulatory framework of prepaid medicine and social works .

      23.Elimination of price restrictions on the prepaid industry .

      24.Incorporation of prepaid medicine companies into the social work regime.

      25.Establishment of electronic prescription to streamline service and minimize costs.

      26. Modifications to the regime of pharmaceutical companies to promote competition and reduce costs.

      27. Modification of the Companies Law so that football clubs can become public limited companies if they so wish.

      28.Deregulation of satellite internet services .

      29. Deregulation of the tourism sector by eliminating the monopoly of tourism agencies.

      30.Incorporation of digital tools for automotive registration procedures

      Javier Milei assured: “This is only the first step, in the coming days we will call extraordinary sessions of the National Congress and we will send a package of laws asking Congress for collaboration to advance in this process of change that society chose in a context of crisis that requires immediate action.

      https://www.bitchute.com/video/Sdy6VOitB2La/

      16:39.

      1. The new Argentina president appears Javier Milei appears to be on track to privatize the entire country, that is, selling off large swaths of public lands and assets through some no doubt corrupt process that will permanently impoverish Argentina. Next: Ukraine, unless Russia saves them.

  11. The comments are a hoot.

    Former AG Bill Barr: I’m ‘Worried’ About ‘Chaotic’ Trump’s ‘Abuse of Government Power’ in 2nd Term

    nfowars.com
    December 24th 2023, 10:45 am

    “One of the reasons I’m against Trump as the [Republican National Committee] nominee is I don’t think he’s going to move the country forward,” Barr told Fox News host Neil Cavuto on Friday.

    “I’m worried his style of governance, his continuing to pander to anger and frustration versus a constructive approach to solving our problem is going to be chaotic and not going to accomplish very much. He’ll be a lame duck president.”

    Barr then said that anybody working for Trump in his second term must be ready to “oppose the abuse of government power,” but didn’t elaborate on what such abuses will look like.

    “I think for people going into that administration. I think they have to be ready to oppose the abuse of government power,” he said.

    https://www.infowars.com/posts/former-ag-bill-barr-im-worried-about-chaotic-trumps-abuse-of-government-power-in-2nd-term/

    1. Suspected burglary leads to police pursuit; four arrested after tracked down by K-9
      by: Anna Ashcraft, Christelle Koumoué
      Posted: Dec 23, 2023 / 08:40 PM PST
      Updated: Dec 24, 2023 / 03:58 PM PST

      SAN DIEGO — A 911 call about a suspected burglary led to a police pursuit then a foot pursuit in a residential area of Rancho Santa Fe Saturday night.

      According to the San Diego County Sheriff’s Department, a neighbor alerted police to an ongoing burglary at a home in the 6000 block of Poco Lago Saturday evening. The caller described the suspects as three males trying to enter a home.

      Deputies from 4S Ranch, Poway, Encinitas and ASTREA arrived on scene just before 8 p.m.

      The sheriff’s helicopter ASTREA saw the suspects flee the scene through a nearby canyon to a waiting vehicle, which left the area at a high rate of speed, SDSO said in an update Sunday.

      After a brief police pursuit, the suspects crashed into a gate of a gated community in the 13000 block of Carmel Valley Road, then fled on foot.

      Four suspects were taken into custody after an extensive search and multiple stolen items were recovered from the vehicle, according to SDSO.

      Two of the suspects were bitten by a police K-9 during the pursuit.
      …
      https://fox5sandiego.com/news/local-news/suspected-burglary-leads-to-police-pursuit-three-arrested-after-tracked-down-by-k-9/

      1. “Two of the suspects were bitten by a police K-9 during the pursuit.”

        It sux to be caught red handed, especially when dogs are involved in the pursuit.

  13. With the Fed’s rate hikes on hold and the prospect of near-term interest rate cuts, is stock market investment a no-lose gamble in 2024?

    1. Yahoo
      Fortune
      Wall Street’s expecting a soft landing in 2024—but that doesn’t mean stocks will soar
      Will Daniel
      Sat, December 23, 2023 at 4:00 AM PST·10 min read

      At the start of 2023, most economists and Wall Street leaders were convinced that a U.S. recession was imminent. With the Federal Reserve rapidly hiking interest rates to fight inflation, raising borrowing costs for already struggling businesses and consumers nationwide, economic and market forecasts were bleak. Investment banks’ average year-end price target for the S&P 500 fell to just 4,000 as bearish predictions flooded in late last year, implying the blue chip index would rise a mere 4% this year (compared to its roughly 10% average yearly gain since 1957).

      But instead of struggling, stocks have soared—and the economy has remained resilient. Rising interest rates have managed to slow inflation without cracking the labor market, leading to steady consumer spending and GDP growth.

      Now, instead of attempting to forecast the next recession, many economists are more concerned with timing the Fed’s interest rate cuts. “It’s more likely than not that the economy will be able to move successfully into a soft landing,” Sinead Colton Grant, BNY Mellon Wealth Management’s new chief investment officer, told Fortune. But the newfound economic optimism and rate cut forecasts haven’t translated into a sky-high price target for stocks. After a more than TK% jump in the S&P 500 in 2023, Wall Street’s equity market outlook is, once again, a bit tame.
      …
      https://finance.yahoo.com/news/wall-street-expecting-soft-landing-120000691.html

    2. A record $6 trillion in cash on the sidelines will help the stock market in 2024, Fundstrat says
      Matthew Fox
      Dec 24, 2023, 5:11 AM PST
      Read in app
      Cash dollars and stock market indicators (inflation, economy, crisis, finance)
      Getty Images

      – The stock market is poised to benefit from a record $5.9 trillion pile of cash in 2024, according to Fundstrat.

      – The large amount of cash should mean future stock market declines will be short-lived.

      – “Minor pullbacks in the weeks/months to come likely should be buyable,”Fundstrat said.

      The growing pile of cash in money market funds should serve as a strong backstop for the stock market in 2024, according to a recent note from Fundstrat’s technical strategist Mark Newton.

      The allure of 5% interest rates has led to a surge in money market fund assets this year, with total cash on the sidelines recently reaching a record $5.88 trillion. That’s up 24% from last year, when money market funds held $4.73 trillion in cash.

      “While several prominent sentiment polls have turned more optimistic in the last few weeks, this gauge should be a source of comfort to market bulls, meaning that minor pullbacks in the weeks/months to come likely should be buyable given the global liquidity backdrop coupled with ample cash on the sidelines,” Newton said.

      He later added, “Funds might begin to deploy cash in the new calendar year once rebalancing takes place, which might help to fuel the market rally even more.”
      …
      https://markets.businessinsider.com/news/stocks/stock-market-outlook-2024-6-trillion-cash-buy-the-dip-2023-12

      1. “Minor pullbacks in the weeks/months to come likely should be buyable,”

        Translation: There has never been a better time for dips to buy.

    3. Market Snapshot
      The Magnificent 7 dominated 2023. Will the rest of the stock market soar in 2024?
      Last Updated: Dec. 24, 2023 at 3:13 p.m. ET
      First Published: Dec. 24, 2023 at 12:01 p.m. ET
      By William Watts
      End of ‘extreme speculation’ will let beaten-down parts of the market shine, says veteran investor
      Investors will need to keep their balance if market leadership shifts. MarketWatch photo illustration/iStockphoto
      …

      1. “The Magnificent 7 dominated 2023. Will the rest of the stock market soar in 2024?”

        The bulls can only envision a world where the rest of the market catches up to the Magnificent 7’s magnificence.

        They cannot envision an unhappy ending to the 2009-2023 bull run fueled by a protracted period of extraordinary accomodation, which, by the way, has ended.

        ‘Be fearful when others are greedy.’

        — Warren Buffett

        1. Wall Street’s fear gauge is crashing toward a 4-year low. That could be a sign of overconfidence, UBS says.
          George Glover
          Dec 13, 2023, 2:30 AM PST
          Stock market volatility
          Getty Images

          – The VIX index, which tracks stock-market volatility, is trading close to a four-year low.

          – That could be a sign investors are complacent about the economy, according to UBS.

          – The sliding fear gauge is “pointing to a degree of overconfidence,” the Swiss bank said in a recent research note.

          Wall Street’s so-called “fear gauge” is plunging a four-year low – and that’s a sign stock-market investors have become overconfident, according to UBS.

          The Swiss bank said in a research note last week that the tumbling VIX Index, which measures stock-market volatility by tracking S&P 500 options contracts, suggests traders have become complacent about the economy.

          “At present, markets are priced for this optimal outcome,” strategists wrote, referring to the scenario where the US avoids a recession but the Federal Reserve still starts cutting interest rates in 2024.

          “The VIX index of implied US equity market volatility, a popular measure of fear in markets, is close to historical lows – pointing to a degree of over-confidence, in our view,” they added.
          …
          https://markets.businessinsider.com/news/stocks/stock-market-outlook-fear-gauge-vix-index-recession-soft-landing-2023-12

    4. A Bull Market Is Coming: 2 Stock-Split Stocks to Buy as Part of Your 2024 New Year’s Resolution
      By Anthony Di Pizio – Dec 24, 2023 at 6:45AM

      Key Points

      – The S&P 500 is knocking on the door of bull market territory.

      – Historical data suggests 2024 is almost certain to be another positive year.

      – Two stocks that have created incredible amounts of value since they came public remain great buys today.
      …
      https://www.fool.com/investing/2023/12/24/bull-market-2-stock-split-stocks-buy-2024-new-year/

    5. Stock Market Today
      Dow Jones Futures: Market Rally Won’t Stop; Two Magnificent Seven Stocks Forge New Buy Points
      ED CARSON 04:51 PM ET 12/24/2023

      Dow Jones futures will open Monday evening, along with S&P 500 futures and Nasdaq futures, toward the end of the long holiday weekend.

      The stock market rally suffered an abrupt sell-off Wednesday, but it was more of a jump scare than a horror show. The major indexes rebounded, closing near weekly highs, with slim to solid gains. The Russell 2000 hit a 20-month high on Friday.
      …
      https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-market-wont-back-down-new-buy-points-for-two-magnificent-seven-stocks/

    6. Morningstar
      Bonds
      What the Yield Curve Says About a Recession

      And what to do about it.
      Daniel Sotiroff
      Nov 16, 2023
      An illustration of a downward trending line.

      Much has been made about an impending recession. The reasons, however, are seldom discussed, are even less understood, and do little to inform what actions investors should take (if any).

      Economists often use historical information to form opinions about the direction of the economy. Those opinions aren’t built around perfect information. Markets and the economy are uncertain, so nothing is guaranteed. With history as a guide, several key signs indicate that a recession is more likely than not in the near future.

      An Economic Crystal Ball

      One harbinger was the return of inflation, which started ticking higher in early 2021. Prices tend to rise as demand outstrips supply. After some hesitation, the Federal Reserve started increasing its short-term policy rate. Theoretically, that makes money more expensive to borrow, a tactic that’s intended to cool down the economy and tamp down inflation. Those signs tend to align with the peak of an economic cycle, meaning economic growth should slow.

      The rise in short-term interest rates created an unusual, though not unprecedented, situation in the bond market. The yield curve—which measures the yield to maturity of bonds across various maturities—sloped down at the end of July, as shown in Exhibit 1, meaning bonds with shorter maturities had a higher yield than those with longer maturities. The curve normally slopes up and to the right as investors usually demand a higher yield to bear incremental risks that occur over longer time horizons.
      …
      https://www.morningstar.com/bonds/what-yield-curve-says-about-recession

    7. Remember that recession that was supposed to happen in 2023?

      Since the experts were wrong, and it hasn’t happened yet, it can never happen…or so the experts tell me.

      1. Bloomberg
        Opinion
        Nir Kaissar & Jessica Karl, Columnists
        The Year There Was No Recession

        A lot of people were convinced the US economy would take a tumble in 2023, but it never did.
        December 22, 2023 at 10:38 AM PST
        By Nir Kaissar and Jessica Karl
        …

      2. Yahoo
        Insider Monkey
        Jim Cramer Says Recession Is Not Coming and Recommends These 11 Stocks
        Fahad Saleem
        Thu, December 21, 2023 at 6:10 AM PST·9 min read
        In this article:

        In this article, we will take a detailed look at the Jim Cramer Says Recession Is Not Coming and Recommends These 11 Stocks. For a quick overview of such stocks, read our article Jim Cramer Says Recession Is Not Coming and Recommends These 5 Stocks.

        On December 14, an enthusiastic Jim Cramer announced on his program on CNBC that the much-dreaded recession in not coming and pricing stability has been achieved by the Federal Reserve.

        “Powell does not want to declare victory… I will declare victory for him, Cramer said.”

        Cramer said with the latest Fed decision, it is clear that “interest rates have peaked” and that we “now have the wind at our backs for some, not all, stocks.”

        Jim Cramer said that now the market bears are “trapped.” Cramer said these bears could never embrace the possibility that Jerome Powell could “engineer” a “terrific” soft landing.
        …
        https://finance.yahoo.com/news/jim-cramer-says-recession-not-141048298.html

      3. About That Recession We Were All Bracing For…
        The Recession That Many Predicted for 2023 Seems Likely To Be Avoided Next Year Too
        By Diccon Hyatt
        Published December 22, 2023
        Diners at a crowded restaurant in Washington D.C.
        Scott Suchman / The Washington Post / Getty Images

        Key Takeaways

        – Many economists predicted a recession in 2023 that didn’t come to fruition.

        – Consumer spending and the labor market have remained healthy despite inflation and the rate hikes implemented to quell it.

        – Recession is less likely in the coming year as data now point to a successful soft landing.

        In future histories, 2023 may be known as the year of the recession that never came.
        …
        https://www.investopedia.com/about-that-recession-we-were-all-bracing-for-8419748

      4. IIRC, the tech stock collapse in the early 2000s set up similary to the present episode. Everyone knew tech stocks were greatly overvalued. And yet when the end of the party didn’t arrive on schedule, the bulls trumpeted that as a sign that the good times would never end, and drove valuations to ever more ridiculous heights.

        When the tech stock bubble finally popped, ‘nobody could have seen it coming.’ The recurring waves of stock market sales lasted for months on end, accompanied by much wailing and gnashing of teeth.

        1. Market Valuation: Is the Market Still Overvalued?
          by Jennifer Nash, 12/4/23

          Here is a summary of the four market valuation indicators we update monthly.

          – The Crestmont Research P/E ratio (more)

          – The cyclical P/E ratio using the trailing 10-year earnings as the divisor (more)

          – The Q ratio, which is the total price of the market divided by its replacement cost (more)

          – The relationship of the S&P composite price to a regression trendline (more)

          To facilitate comparisons, we’ve adjusted the two P/E ratios and Q ratio to their arithmetic means and the inflation-adjusted S&P composite to its exponential regression. Thus the percentages on the vertical axis show the over/undervaluation as a percent above mean value, which we’re using as a surrogate for fair value. Based on the latest S&P 500 monthly data, the market is overvalued somewhere in the range of 71% to 129%, depending on the indicator, up from last month’s 64% to 119%.
          …
          https://www.advisorperspectives.com/dshort/updates/2023/12/04/market-valuation-is-the-market-still-overvalued

          1. “Based on the latest S&P 500 monthly data, the market is overvalued somewhere in the range of 71% to 129%, depending on the indicator, up from last month’s 64% to 119%.”

            Take homes:

            1) This is a lot more boring to read than “buy stocks now or get priced out forever.”

            2) The market remains historically overvalued by standard metrics.

            3) Recession or no, there is a lot of downside risk at these valuations. Caveat emptor!

  14. ‘That’s what’s behind the drop-off in [rental] rates — there are so many new units coming on, and the timing isn’t right’

    Bruce:

    via GIPHY

    1. ‘The move-ins are all happening in the Class-A space, but the problem goes back to supply,’ he said. ‘When you add 3,000 to 4,000 units every month, there’s no way you are covering that in terms of move-ins’

      So 81,000 empty airboxes and they are piling up by the day.

  15. ‘An affiliate of Brookfield Corp., downtown’s one-time largest landlord, defaulted on three office towers in the area this year. An added blow for sellers was a voter-approved 5.5% transfer tax on real estate transactions greater than $10 million that took effect April 1’

    Californians are good at shooting themselves in the fook.

    ‘Office prices nationwide have fallen 35% from a peak in the first quarter of 2022, when the Federal Reserve began raising interest rates to combat inflation’

    The peak was not first quarter 2022.

  18. Florida Condo Association’s insurance spiked nearly 1,000% — Here’s why
    comment: So the entire condo complex used to pay $56,000 a year. If you divide that by 50 units, that is $1120 per unit. Now it went up to $526,579 or $10,531 per unit. Its not like every single condo association fee is going up that much in Florida. This specific condo complex failed many various inspections and many homes in the complex have construction defects.
    https://www.youtube.com/watch?v=M-9VncCXWko

    1. Well, it’s not a high rise, so they’re likely safe from being crushed beneath concrete and steel. Odds are they’ll be going “bare-back” until things change, and they won’t be able to sell either.

  19. YOUR MONEY
    Most homes for sale in 2023 were not affordable for a typical U.S. household
    DECEMBER 24, 2023 2:34 PM ET
    Jennifer Ludden at NPR headquarters in Washington, D.C., September 27, 2018.
    (photo by Allison Shelley)
    Jennifer Ludden
    A pending sale sign in Little Rock, Ark., in 2011. A new Redfin analysis finds the share of affordable homes for sale in 2023 was the lowest in at least a decade.
    Danny Johnston/AP file photo

    If you found the U.S. housing market impossible this year you were not alone. In fact, you were in the vast majority, according to a new analysis by the real estate group Redfin.

    Just 15.5% of homes for sale were affordable for a typical U.S. household, the lowest share since Redfin started tracking this a decade ago. A home is deemed affordable if the estimated mortgage payment is no more than 30% of the average local monthly income.

    Affordability plunged 40% from before the pandemic, and 21% from just last year. Redfin says spiking mortgage rates were a key reason why.
    …
    https://www.opb.org/article/2023/12/24/most-homes-for-sale-in-2023-were-not-affordable-for-a-typical-u-s-household/

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