skip to Main Content
thehousingbubble@gmail.com

Swapping Fear Of Missing Out For Shame Of Being Suckered

A report from Easy Reader News on California. “Economist Christopher Thornberg quoted Chapman University economist Joel Kotkin’s finding that California recently became the world’s fifth largest economy. ‘But he says all the growth is coming from Silicon Valley. The rest of the state is a hell hole. It’s okay to think that. But why did he have to say that?'”

“‘Joel has reached an interesting point in his career where he no longer needs facts to back up his opinion. We all get there. My father is there. I’m getting there.’ ‘But look at the data,’ he said in a pleading voice. Then he showed a slide of Kotkin’s own economic data showing the Bay area ‘punching above its weight’ but not surpassing Southern California.”

“‘The Bay Area has never been a dominant source of growth, ever, from an income or job perspective. It never will be. It’s too small. It has seven million people. Los Angeles County alone has 10.5 million,’ he said.”

“‘The mortgage rate hike caused the housing market to take a breather in 2018. Sales slipped from 5.5 million to 5.2 million. This is the market behaving rationally. Yet that tiny blip has led to mass panic,’ Thornberg said. ‘People say the housing shortage is an affordability crisis. That’s a stupid argument. The problem is not enough homes.'”

The Orange County Register. “Homebuying in Aliso Viejo, Dana Point, Laguna Niguel and San Clemente fell 16 percent from August through November vs. the same period in 2017 amid a steep countywide slowdown. Once primetime selling season ended in Orange County this summer, house hunters balked.”

“That created the slowest-selling August-to-November period in seven years. Culprits were high prices and expensive mortgages. At the same time, homeowners and builders boosted the supply of residences for sale.”

From Mingtiandi. “Four of the biggest Chinese investors in Los Angeles real estate have been named in an FBI investigation of possible bribery, kickbacks, extortion, and money laundering related to property deals in southern California’s largest city, according to a document seen by Mingtiandi and first uncovered by the Los Angeles Times.”

“Shanghai’s Greenland Group, Shenzhen Hazens, China Oceanwide Holdings and Shenzhen New World Group, were all named in a search warrant filed by the FBI and approved in US federal court last November, seeking access to email accounts belonging to Ray Chan, the former head of the Los Angeles Department of Building and Safety under Mayor Eric Garcetti, according to the document.”

“The document specifically requests ‘All records relating to development projects in and around Los Angeles that related to foreign investors to include, but not limited to, Hazens, Greenland, Oceanwide and other foreign investors not yet identified.’ Together with Shenzhen New World, Hazens, Greenland Group and China Oceanwide have invested in Los Angeles area real estate projects valued at over $2.35 billion since 2010.”

The Wall Street Journal. “Messaging startup Hustle projected the picture of Silicon Valley largess. So it came as a shock to many employees earlier this month when co-founder and CEO Roddy Lindsay sent them an early-morning email announcing mass layoffs. Before the week was done, even the espresso machine was ripped out of the kitchen at Hustle’s San Francisco headquarters.”

“Hustle is hardly the first startup to spend lavishly in an era of technology riches. What is new these days: The bill is coming due. Startup investors and company founders warn that the unchecked growth of the past several years—which by some metrics exceeded heights from the dot-com boom—could be hitting a limit.”

“‘The unbridled optimism that inhabits our world,’ said startup investor Sunny Dhillon, ‘is getting a shot of realism.'”

“The attitude among technology investors is shifting, said venture capitalist Josh Wolfe of Lux Capital, swapping ’fear of missing out’ for ’shame of being suckered.'”

This Post Has 38 Comments
  1. From the last link:

    “Last year, they were flying you in business class. This year, they can barely afford coach.” —Christian Ferris, investor in venture-backed tech companies

  2. ‘But he says all the growth is coming from Silicon Valley. The rest of the state is a hell hole. It’s okay to think that. But why did he have to say that?’

    Click!

    1. Don’t let Kauai become California

      “The fact is, in the last 20 years California has become a place where most “locals no longer recognize it.” It’s become a melting pot of drug addicts, homelessness, and a refuge for anyone that would like to come live there from around the world.”

      “Wages continue to drop, housing continues to rise, and traffic has become the worst congestion of any state compared to other states as the free flow of cheap labor arrives daily.”

      http://www.thegardenisland.com/2019/01/22/opinion/dont-let-kauai-become-california/

      How Do You Picture San Francisco?

      The NBC Bay Area Investigative Unit is expanding its investigation into San Francisco’s dirty streets by inviting viewers to share their thoughts and photos

      https://www.nbcbayarea.com/investigations/BAY-How-Do-You-Picture-San-Francisco-494420271.html

      San Francisco Is a ‘Train Wreck’ of Inequality Because of Silicon Valley, Salesforce CEO Says

      “In some ways, San Francisco is the canary in the coal mine,” Benioff said in an interview with CNBC’s Sara Eisen at the World Economic Forum in Davos, Switzerland. “We have to look at San Francisco and say here’s the best technology example in the world and yet the worst homelessness.”

      “San Francisco is kind of a train wreck, we have a real inequality problem,” he said. “It’s because of the tech sector.”

      https://www.nbcwashington.com/news/national-international/San-Francisco-Is-a-Train-Wreck-of-Inequality-Because-of-Silicon-Valley-Salesforce-CEO-Says-504705352.html

      1. I’m genuinely embarassed and ashamed that one of the “great cities” of my country looks like that.

        Just think, when it rains, some that crap–human waste, garbage, needles, etc.–gets washed into the storm drains and out into the ocean. But we gotta outlaw plastic shopping bags and now straws.

        1. I was in SF last February and I was shocked at the numbers and aggressiveness of homeless people, even in tourist areas like Union Square and the Fisherman’s Wharf area. The smell almost knocked me over on some streets and there were tents set up all over the place. I saw hardly any police around and the few that I did see were riding by in cruisers so I felt unsafe the entire time I was there. I was relieved to leave and I actually felt sorry for people who were stuck living there. With the current tech bubble starting to collapse, I imagine that things will only get worse.

          1. Vacancy glut in SF could spur tax on empty storefronts
            San Francisco Chronicle-8 hours ago
            Landlords with three or more units that are vacant for six months would also pay … Development and Mayor’s Office of Housing and Community Development to …

        2. When you think about things logically, human feces on streets and sidewalks is a no-brainer where you have large populations of homeless people. Where else are these people going to take care of business when nature calls at night?

        3. “But we gotta outlaw plastic shopping bags and now straws.”

          Seems like California priorities are a bit out of kilter!

      2. The socioeconomic state of the entire country has never been so bifurcated. This is what happens when you hollow out your good paying jobs with cheap, illegal labor and offshoring.

        RIP, USA.

        1. nor most of it north of SF

          Everyone here knows that Marin is special; LAY told us that before the last bubble. And Carmel is the Bay Aryan Malibu, so of course no problems there. But there may be storms brewing in surrounding towns like Watsonville, Salinas, Seaside, etc. Carmel better start thinking about putting up a wall.

      3. And AZ or So Cal or wherever is any better? Davos wealthy attendees just don’t get it on a everyday, we have to pay the bills, level, as do most here on this blog. I’ve been a faithful reader since 2005 but seriously there are some disconnected, “I know better than you do”, preachy, “I got this shit all together” know it alls here ad nauseum. The reality is that we have kids, in-laws, family, looking to negotiate the everyday bullshit that is today’s housing market. It’s no longer about buying a place in a town you like and want to raise your kids. No. Now everyone thinks its a “great” investment. Snap out of it! It’s just a goddamn house and it’s probably older and needs repairs and TLC but your love the big backyard. In the end we need to STOP speculating in an asset class that people LIVE in. Sheesh I’m so over this BS housing market. Owned (paid the bank) for more than few places in my life and dig just renting a room from my youngest kid and making his life easier by helping out with yard work and groceries plus I’m only four blocks from work as a wine buyer. Best damn job I’ve ever had and its part-time.

        1. I hear you bro. I’m sitting on sizeable gains in my house but it feels like a pyrrhic victory – and who knows when they will suddenly vanish. Good on you for continuing to give to your kids while you are still able. Nothing like family teamwork being perpetuated across generations; hopefully your kid is appreciative and will pass the trait forward.

          1. “I’m sitting on sizeable gains in my house”

            Yet unlikely to recover from the losses, ever.

    2. BOTH big city areas in so cal and the bay area are awful. But that where the jobs are. The traffic and the homeless situation is so bad.

  3. https://finance.yahoo.com/news/student-loan-debt-blame-sluggish-200023334.html

    Homeownership for adults ages 24 to 32 fell 9% from 2005 to 2014
    2% of the 9% decline is due to student debt
    400,000 borrowers didn’t purchase a home as a result of student loan debt
    Student loan balances have more than doubled to about $1.5 trillion in the last decade
    The average debt per student between the ages of 24 to 32 set rose from $5,000 to $10,000 from 2005 to 2014

    “While investing in postsecondary education continues to yield, on average, positive and substantial returns, burdensome student loan debt levels may be lessening these benefits,” the researchers noted.

  4. This report is a major concern, all the growth from one sector, one location, like the old saying, a team wins championships not one player?

  5. “Four of the biggest Chinese investors in Los Angeles real estate have been named in an FBI investigation of possible bribery, kickbacks, extortion, and money laundering related to property deals in southern California’s largest city, according to a document seen by Mingtiandi and first uncovered by the Los Angeles Times.”

    Is Chinese money laundering legal? If not, why is it allowed to continue in plain sight?

  6. Gosh Roddy I hope you sent those pink slips on the Hustle msg platform, to give that more human feel.

    “Hustle works because people read and respond to texts—and to communication that feels more human.”

  7. Don’t let the SOBS squelch your FOMO. Buy real estate, stocks, high-yield bonds and cryptocurrencies on every dip. Money market mutual funds are for loosers.

    Investors’ Rush To Cash Signals More Big Declines Ahead
    By Mark Kolakowski
    Updated Jan 22, 2019

    Investors are increasing their cash balances at the fastest pace since the financial crisis year of 2008, and that may be an ominous signal for the stock market. In the fourth quarter of 2018, the balances in money market funds jumped by $190 billion, while an additional $2 billion was added during the first 17 days of January 2019, per Lipper Research, a division of Thomson Reuters. Based on history since 1952, the S&P 500 Index (SPX) has tended to fall in years when cash allocations rise, Goldman Sachs finds. “Cash is a great short-term way to mitigate volatility,” observes Matthew McLennan, a portfolio manager with First Eagle Asset Management, in remarks to The Wall Street Journal, which also cited the data above.

  8. “People say the housing shortage is an affordability crisis. That’s a stupid argument. ”

    Chris Thornberg called me stupid. I am ashamed, so ashamed …

Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top