These Shiny New Buildings Have Everything But Tenants
A report from the Beacon Hill Times in Massachusetts. “Plaguing the commercial and residential districts throughout the city, empty storefronts and vacant apartments are making it seem that Boston is experiencing market failure, despite the strong economy, real estate values and low unemployment rate. In an effort to reverse the trend, Councilor Matt O’Malley of Jamaica Plain and West Roxbury wants to start looking at ways to prod landlords and building owners to rent the spaces out, with one solution being a vacancy fee. Often times luxury buildings over 50,000 square feet are purchased for investment and left empty or are only occasionally inhabited, challenging the city’s effort to create housing for a growing population.”
“‘You see the trickle down affect this has in increasing rents and increasing prices in our neighborhoods,’ said O’Malley. ‘When buildings stay vacant, small businesses can’t find places to rent for home or business and our communities remain less active and less vibrant. It is about affordability as much as it is activating our streets. As more people come to our city we should make sure we are using every tool and every empty property to keep the city affordable.’”
From Northern Public Radio on Pennsylvania. “There’s plenty to see in Pittsburgh’s East End. Another thing you can find: plenty of construction, mostly apartment buildings with signs touting amenities – pools, gyms, rooftop decks. A lot of these shiny new buildings have everything but tenants to fill them. ‘I have passed by apartments where the doors are open and like it’s empty. So I don’t think they’re full,’ said Yazmin Dalsimer.”
“After decades of population decline and stalled development, developers were eager to nab all these well-paid renters. And so began the amenities arms race. The vacancy rates for luxury apartments is around 11 percent. And there are thousands more units being built — many of them in neighborhoods where low-income residents are being pushed out. Those apartments could go empty because of another economic reality of the New Pittsburgh. It has a tech workforce without a tech real-estate market.”
“‘I think all of a sudden, the markets realize that the current housing stock wasn’t meeting what they were looking for,’ said Christopher Briem, a regional economist at the University of Pittsburgh.”
From the Grand Forks Herald in North Dakota. “Vacancy rates, after a years long rise, were at about 8 percent for Grand Forks’ private apartments during the first quarter — and at almost 13 percent across all apartments. John Colter, executive officer with the Greater Grand Forks Apartment Association, said that means landlords have to roll with some economic punches. ‘When you have a vacancy, you have to absorb it and try your best to fill it. (When) 10 percent of your business is lying vacant … it makes it tough to pay the bill on that. You can’t sustain that forever,’ Colter said.”
“The city is coming off the tail end of an apartment boom that saw a building surge, with more than 1,500 apartment units granted building permits in 2013 and 2014, according to city records. Mark Schill, an analyst with Praxis Strategy Group, said the answer to that question — does Grand Forks have ‘enough’ apartments — depends on who you ask. Where a landlord might see too many apartments, tenants might see lower rent, and others might see more disposable income spent in the community. ‘Vacancy has come up, to be sure, and we’re seeing more aggressive marketing of apartments,’ he said. ‘Does that mean with have ‘enough’? Well, that’s a different question.’”
From the Tennessean. “Opry Mills, the land and shopping center by the Cumberland River, was one of about 1,000 high-value commercial properties whose owners successfully appealed the 2017 Nashville reassessment. Those commercial properties accounted for more than 80 percent of the county’s total reduction in assessed value, according to a Tennessean analysis of assessment data. On average, commercial properties valued at more than $1 million, that won appeals, received a 20 percent reduction in assessed value, the analysis showed. These include some of the city’s biggest apartment complexes, hospitals, parking garages and shopping centers”
“The board gave a 22 percent reduction to the owners of Element Music Row, the luxury apartment complex at 1515 Demonbreun St. Element’s owners, a Charlotte, N.C.-based development company called Childress Klein, brought their own appraisal to the board, showing the property’s expected rental income. The board agreed to lower the county’s appraisal from $160.9 million to $125 million.”
From Multi-Housing News on Texas. “Sterling Real Estate Partners has acquired Spring Valley Apartments in Austin. The property, an 11-building, 230-unit apartment community, is the largest asset yet acquired by the partnership. According to RealPage, among the 50 largest U.S. apartment markets, Austin was the only one last year to see a drop in rents, which fell 0.7 percent compared with 2016. RealPage said that new supply in Austin was a factor, with developers completing more than 10,400 units last year, and adding 18 percent to the market’s apartment inventory over the last four years.”
“But the company posited that a stronger factor in pushing rents down might be that Class B and C rents have already gone up as much as the market can bear, climbing roughly 40 percent since 2010.”
From Fox 5 New York. “If you rent a home in New York City, you already know we have some of the highest rents in the country. Now, finally, some promising news: rents are starting to come down a little, according to a report by appraiser Miller Samuel Inc. and brokerage firm Douglas Elliman Real Estate. Manhattan rents dropped 3.8 percent. Brooklyn did even better—rents fell 6.3 percent. And Queens renters got the best deal—rents dropped 6.4 percent.”
“‘Right now is a great opportunity to find a good apartment at a reasonable price,’ said Janna Raskopf, a broker with Douglas Elliman. ‘Landlords are very open to conversations in a way that they hadn’t been historically. The prices are coming down a little bit but the incentives that are being given are what’s doing that and that’s what we call the ‘net effective number. You’re having a lot of owners who are deciding to give—whether it’s their existing tenant or prospective new tenants when the apartments are vacant—opportunities to get some sort of concession.’”
From The Real Deal on Florida. “Responding to the luxury market slowdown, Masoud Shojaee’s Shoma Group is scrapping plans for the multimillion-dollar townhome project Eleven on Lenox in South Beach, The Real Deal has learned. The developer will instead build lower-priced condominiums. He said it was brought on by a tough market, and by buyers demanding discounts on the luxury townhomes, whose prices he had raised from the original preconstruction level.”
“‘The market overall is not ready for $3 or $4 million — it doesn’t matter where it is,’ Shojaee said. ‘You will get a sale here or there on the water for $7 million or $8 million, but it’s very rare at this moment.’ He added that ‘everybody is looking for a bargain. If it’s $4 million, they want to pay $3 million. If it’s $3 million, they want to pay $2 million.’”
“Construction is expected to begin in January 2019 with completion expected by the end of the year. Eleven on Lenox, by contrast, was planned as 11 three-story townhomes, each with four bedrooms, a family room, two-car garage and rooftop deck with a pool and summer kitchen. Shojaee said he had tried raising prices on units from $2.9 million to $3.3 million, and from $3.5 million to $4 million. ‘The problem was they wanted to pay the original prices and we refused to do that,’ he said. He added, ‘I don’t want to give it away.’”
“The project is the latest in a series of South Florida developments to be changed, placed on hold, canceled or delayed amid the slowdown in the condo market.”
From WOSU Radio on Ohio. “Tyvek homewrap flaps over the unfinished wooden beams of the Luxe Belle, as a sign proclaims ‘Now Leasing.’” Another sign entices the first 20 renters with free Taco Bell for a year, a tie-in with the fast-food chain that will occupy the mixed-use development’s first floor. Right now, though, that first floor is just a large concrete atrium. Like four other luxury apartment complexes near The Ohio State University, this six-story development at North High and 8th Avenue is set to open next fall.”
“Local developers are building it–will students actually come? For junior Kiersten Ahrens, who’s still searching for housing for next year, the answer is a definitive ‘no.’ ‘I would love to live them. They’re in great locations,’ Ahrens says. ‘But it’s just so expensive, it’s not even worth it.’”
“Indeed, rents for the swanky complexes can top $1,500 for a one-bedroom. Managers like Tom Heilman, with Hometeam properties, still think the market is there. ‘Let’s just say they’re $1,000 beds when the market’s used to $500 a bed, but you’re getting High Street locations and views, you’re getting amenities, you’re getting granite countertops, flat screen TVs, low utilities, safety, workout areas, and all the other amenities,’ he says. ‘And it’s just a fun experience for students that may are gonna experience this for a year or two and the parents are more than happy to do that.’”
“Occupancy rates for Hometeam’s two new properties on Lane Avenue - Wilson Place and The Point - are just now reaching 50 percent for next year. Another developer, Edwards Communities Development Co., reports similar numbers for a tower under construction at 15th and High.”
“Student Kiersten Ahrens’ current place falls under the $600 cap she and her parents agreed on. ‘This place has everything I need,’ Ahrens says. ‘And yeah, it’d be nice to have a fitness center and a pool and stuff, but they literally say all the time, like, ‘You’re in college, you need the college experience, you don’t need to be living like that when you’re in college, you need to save up and do that later on.’”
‘According to RealPage, among the 50 largest U.S. apartment markets, Austin was the only one last year to see a drop in rents’
‘Manhattan rents dropped 3.8 percent. Brooklyn did even better—rents fell 6.3 percent. And Queens renters got the best deal—rents dropped 6.4 percent.’
Outfits like RealPage are REIC dogs. Rents have been falling in most major metros for a couple of years, including Austin.
‘Manhattan rents dropped 3.8 percent. Brooklyn did even better—rents fell 6.3 percent. And Queens renters got the best deal—rents dropped 6.4 percent.’
It’s great to see that at least one reporter grasps the economically beneficial effects of falling prices to dramatically lower levels! If the losses land mainly on foreign investors, then all the better.
“Darling$ eyeloveyou, but give me Park Ave.!” … Green Acre$ is the place to be …
https://nypost.com/2018/04/22/kushner-companies-offers-250m-for-park-ave-co-op/
actually Park ave from 60th to 96th st is quite desolate almost no commercial storefronts no atms either, they maybe inside your doorman building but nothing is outside not a single grocery store in that 40 block stretch
In the face of rapidly declining rents, now seems a perfect time to unload that obscenely overpriced house. It’s going to be a renter’s market for years.
I’m not so sure, BSD. Luxury rents dropping 4%, 6%, doesn’t mean much. It’s like a Tesla dropping from $80,000 to $35,000. If all you can afford is an $8K used Corolla, even a 50% drop (or more) doesn’t mean squat. You still take the bus.
Ahhh, the new paradigm. Sorry, I don’t believe in it. Once that $3,000 apartment rent goes to $2,000, the $2,000 apartment goes to $1,000, etc. It’s turtles all the way down.
I don’t think the price reductions will be linear across the board. The most expensive places will have the biggest discounts. But as would be tenants migrate to cheaper digs, there will be more demand for the cheaper stuff than before. So while the $3K apartment becomes a $2K apartment, the $2K apartment might only drop to $1500, and the $1500 one to $1300.
Still a good trend for renters. Of course a lot of complex owners will default on their loans, which means the banks/Freddy/Fannie get bailed out, and we know who pays for that.
The numbers were just for argument’s sake. The point was that it will affect all rents. And I disagree that the demand will increase for the cheaper units. That’s already been the case as rents have soared. As they fall, people are oftentimes inclined to do a lateral move to something equally priced but much nicer, or to spend a little more for something A LOT nicer.
“The most expensive places will have the biggest discounts.”
Like it says above in Austin:
“Class B and C rents have already gone up as much as the market can bear, climbing roughly 40 percent since 2010.”
When/if credit freezes up for the refis that keep these Class B and C value-adders going, we may see the biggest discounts in this sector rather than the luxury. Developers might be building luxury for rich renters who don’t exist, but the value-adders have been actively chasing away their actual paying tenants to compete for those same rich renters that don’t exist, with inferior product to boot.
That’s right. Recall the Vermont guy who had to cut rents for the first time in 20 years. I suppose he’s got 20 year old units. And he’s getting hit by the luxury oversupply.
It’s going to be interesting to see how this all plays out.
Park Slope Brooklyn, NY Housing Prices Crater 10% YOY As Rental Rates Plunge
https://www.zillow.com/park-slope-new-york-ny/home-values/
*Select price from dropdown menu on first chart
Are you saying RealPage (never heard about it before) is just another purveyor of fake news? Nice Orwellian name there too - as creative as their brethren on Wall Street and Hollyweird.
Tukwila WA Housing Prices Crater 7% YOY On Ballooning Seattle Subprime Mortgage Defaults
https://www.movoto.com/tukwila-wa/market-trends/
Lying again there, Mafia Blocks . . . there is no Subprime in Seattle.
All cash, baby.
Hello my good friend.
Bellevue, WA Housing Prices Crater 11% YOY As Seattle Housing Bust Accelerates
https://www.zillow.com/bellevue-wa-98005/home-values/
https://snag.gy/m5EzRB.jpg
“One of Bochenski’s neighbors, Brian Weiss, even cites a real estate advertisement from years ago — listed by a real estate firm — that shows the area subdivided into single-home plots, with no room for apartment complexes.”
The story doesn’t mention public zoning maps, or did I miss that?
Let’s see if we can get Donk Craterton to weigh in.
Local governments are very receptive to developer enticements.
Austin, TX Housing Prices Crater 5% YOY As Mortgage Meltdown Expands
https://www.movoto.com/austin-tx/market-trends/
Based on this thread, perhaps the evidence I noticed yesterday of so many For Lease signs along the drive home from church was symptomatic of a national CRE market downtrend.
‘Plaguing the commercial and residential districts throughout the city, empty storefronts and vacant apartments are making it seem that Boston is experiencing market failure’
That’s what you got, from sea to shining sea. Maybe some bright penny in DC could ask around about how this came to be - almost everywhere and at the same time.
“Nobody could have seen it coming.”
Like these people?
http://abc7news.com/weather/arkansas-couples-trip-through-a-tornado-caught-on-video/3344343/
I guess there’s really no point to asking what prompted the couple to drive their trailer into a tornado.
‘The problem was they wanted to pay the original prices and we refused to do that,’ he said. He added, ‘I don’t want to give it away.’
Click!
wait for it - BANG!
‘The market overall is not ready for $3 or $4 million — it doesn’t matter where it is,’ Shojaee said. ‘You will get a sale here or there on the water for $7 million or $8 million, but it’s very rare at this moment.’ He added that ‘everybody is looking for a bargain. If it’s $4 million, they want to pay $3 million. If it’s $3 million, they want to pay $2 million.’
They smell blood in the water Masoud. BTW, check out this guys photo.
“BTW, check out this guys photo.”
“The hustlers never work, and the workers never hustle.” —Cocktail
We can laugh at people like this, but they know how to game the system. That said, his photo gives me the creeps. He looks like he oozes slime.
Wow, you weren’t kidding, SD! I was skeptical, until I opened the article for a look—and instantly felt like I needed to wash.
This is very simple. Simply set the price $1 million above what you want for it.
He needs a gold chain to complete the look.
‘If it’s $4 million, they want to pay $3 million. If it’s $3 million, they want to pay $2 million.’
Those are some hefty price cuts. Yellen bucks drying up?
‘Managers like Tom Heilman, with Hometeam properties, still think the market is there. ‘Let’s just say they’re $1,000 beds when the market’s used to $500 a bed, but you’re getting High Street locations and views, you’re getting amenities, you’re getting granite countertops, flat screen TVs, low utilities, safety, workout areas, and all the other amenities,’ he says. ‘And it’s just a fun experience for students that may are gonna experience this for a year or two and the parents are more than happy to do that.’
‘Mark Schill, an analyst with Praxis Strategy Group, said the answer to that question — does Grand Forks have ‘enough’ apartments — depends on who you ask. Where a landlord might see too many apartments, tenants might see lower rent, and others might see more disposable income spent in the community. ‘Vacancy has come up, to be sure, and we’re seeing more aggressive marketing of apartments,’ he said. ‘Does that mean with have ‘enough’? Well, that’s a different question.’
The incompetence of the apartment industry would be funny if there weren’t so many pensions going up in smoke.
‘The board gave a 22 percent reduction to the owners of Element Music Row, the luxury apartment complex…brought their own appraisal to the board, showing the property’s expected rental income. The board agreed to lower the county’s appraisal from $160.9 million to $125 million’
Poof!
‘you’re getting amenities, you’re getting…safety’
Yeah, that’s a useful amenity Tom.
Those luxury granite countertops and flat-screen TVs were paid for by early boomer parents cashing out equity on their own homes. And then Millenials (and Gen X too) bemoan why those same boomers aren’t retiring.
But the demographic attitudes are shifting. Early boomers were spoiled by post-war abundance, and it’s reflected in their Millenial kids. But the late boomers didn’t do as well, and they are refusing to coddle (or can’t afford to coddle) their Gen Z kids. So now you get families like the Ahrens, who refuse to pay more than $600/bed. Good for them.
That’s actually worth something here in Seattle in areas like downtown or U-district. With the rapidly expanding homeless population that’s fueled by the city’s ‘open arms’ policies, there’s been an explosion in property crime and aggressiveness by homeless driven in part by numbers and drugs.
Aggressive panhandlers have been around Seattle forever. It’s nothing new.
True, but by most people’s seat-of-the pants measurements, it’s gotten notably worse in recent years.
‘The board gave a 22 percent reduction to the owners of Element Music Row, the luxury apartment complex…brought their own appraisal to the board, showing the property’s expected rental income. The board agreed to lower the county’s appraisal from $160.9 million to $125 million’
The appraisal board should turn right around and hand these documents to the banks holding the loans on these properties.
I’d bet the lenders know.
I guess I was wondering if there was a way for them to tell one story to their lenders and another to the appraisal board. The numbers are the numbers, but certainly there are different ways of presenting them. And then there’s always lying.
Ben, it’s easy to mock and say Poof and Click and Someone’s Not Going To Retire. But what do you think the end game of all of this is going to be, in general?
Obviously, these developers/builders are not going to get their promised luxe rents to cover their obligations, no matter whether they call it a rent drop or a concession. They ran out of rich Millenials (i.e. rich early boomer parents). All that’s left are Gen Y and immigrants, and both are choosing other options for different reasons.
So, then what happens to the luxe? Are builders just going to refinance until the debt is inflated away? Sell the apts to lower and lower companies, each taking a little hit, until rents fall to par with incomes? Is the gov going to step in and offer granite countertops and woof decks to the poors? Are the buildings just stay empty and deteriorate, while everyone else shacks up in what’s left of Grade B?
End game? Falling prices to dramatically lower and more affordable levels.
No change to the obvious outcome Donk.
‘it’s easy to mock and say Poof and Click and Someone’s Not Going To Retire’
You’re right.
It’s already happening:
‘Responding to the luxury market slowdown, Masoud Shojaee’s Shoma Group is scrapping plans for the multimillion-dollar townhome project Eleven on Lenox in South Beach, The Real Deal has learned. The developer will instead build lower-priced condominiums’
What these guys do is try and go from condo to apartment and back again. Then when it doesn’t work, they fold the LLC and let the lender deal with it. I’m surprised this didn’t get more attention the other day:
‘…the developers agreed a slowdown is possible as new supply takes time to be absorbed, construction costs rise and actionable sites get harder to find. Low salaries in Palm Beach County mean that not many workers can afford high rents. When an audience member asked whether they were concerned with an economic downturn, Vail responded half-jokingly, ‘Condo developers, we don’t forecast those kind of things, you know what I mean? We’re just go, go go,’ he said. ‘And the faster we go, the faster we get to the closing, and then, I’m not going to say we don’t care, but … ‘ The audience chuckled as he trailed off.’
http://thehousingbubbleblog.com/?p=10407
The audience here was a room full of multi-family development people.
Luxury, single family, condos…. There’s nothing like excess, empty and defaulted housing inventory to drive prices lower.
North Palm Beach, FL Housing Prices Crater 16% YOY
https://www.movoto.com/north-palm-beach-fl/market-trends/
I can recall seeing LOTS of newly-built, unoccupied, shiny new commercial office complexes all around town in the late 1980s CRE bust. I suspect many of the last-built lux apartment structures may sit unoccupied or in some cases unfinished in the next bust.
Who eats the losses is up to our bailout authorities to decide. My guess is that they get socialized to the masses in some way that makes it less than obvious who is actually paying for them (just like last time).
‘VICTORVILLE — A recent survey found millennials are forking out nearly half of of their income on rent, with the next generation expected to pay even more. The survey that was conducted by RENTCafe examined the amount of rent paid by the last three generations and found millennials, ages 22 to 30, paid a whopping 45 percent of their income toward rent by the time they turned 30.’
‘Office manager Angela Riley said she falls into the survey’s 45-percent neighborhood, with the 29-year-old from Victorville paying about $1,300 a month for rent.’
“I live in a tiny two-bedroom apartment, but I know my rent would be much higher if I moved near my job in Rancho Cucamonga,” Riley told the Daily Press. “I used to split the rent with my cousin, but she left for college last year. I’ve been asking my friends if they want to split the rent, but most of them live with their parents to save money.”
‘Riley said many of her friends want the freedom of living in their own place, but most are hindered by college debt, low-paying wages or car payments that have forced them to live with family.’
‘Local millennials, who live and rent in the High Desert, told the Daily Press they have their own set of challenges, such as lack of local high-paying jobs, rising rents, a lack of rental inventory and the cost of commuting down the hill for work.
The survey found the majority of millennials are staying away from homeownership and going the more affordable and hassle-free route of renting, but even that path can be quite pricey.’
“We started looking for a home, but that’s been impossible,” said Candice Weber, 28, who lives in Hesperia with her husband, Chris. “We’re looking at homes in the $200,000 range, but our monthly payment would be $1,500 or more (when impounds for property taxes, mortgage insurance, and hazard insurance are included) and that’s just too expensive, regardless of what job you have.”
“Apartment life is good” when you pay $800 a month and you discover you need a down payment in the 10 to 20 percent range just to move into a new house, Weber said.’
So is there a shortage of land and a bunch of high paying jobs out there around Victorville? You greedy clowns can’t even keep the freaking desert affordable.
There is land as far as the eye can see, but it is priced into the stratosphere all over the west coast. It’s a scam, because the real money is spent to actually develop and build. We’ve got lots in the city approaching a million bucks around here. Imagine that - paying a million bucks just for the opportunity of spending a whole bunch more money to build something on it. What a joke this has become.
Before coming out here on vacation (actually for a wedding, but it was stretched into a vacation) I felt that my little burg on the Colorado front range was pricey, but after seeing the utter insanity out here you have to shake your head in disbelief.
We’re staying at an AirBnB in La Jolla that’s 3 blocks from the beach. It’s was way cheaper than staying at a La Jolla hotel. Just for kicks, I looked up the house on zillow. It was built in the 1960’s. It’s nice, but it’s still a perfectly ordinary tract home. It does have an ocean view. According to zillow, it’s worth 5 million. If they can rent the two rooms out every day of the month, they would collect $6000 a month. A retired couple owns the place, which the bought back in the 70’s. I’m guessing they use the AirBnb money to complement whatever pensions or savings they have. There are a couple of tear downs in progress down the street. Some houses on the street are tract homes, some are posh mansions. I suspect that with its view that this place will eventually sell and be torn down.
Getting back to the vacation part, as part of the wedding thing we went on a microbrewery tour with the groom. A brew tour van was hired. The driver was a coder M-F and the brew tour biz was his side hustle. I don’t see how you can survive out here without one. Of course this means he works seven days a week. The price one pays to live in “paradise”.
Welcome to “side-hustle paradise”!
You know that there is a BIG problem when even Victorville is unaffordable.
Had dinner with friends the other day in San Marcos, in north San Diego county. The restaurant was in a strip mall with other restaurants. The parking lot was packed (we had to hunt for a place to park) with expensive new cars and SUVs. As I looked upon that ocean of $40K+ vehicles and packed restaurants all I could see were HELOCs, everywhere.
I had to attend a conference at Harrah’s in Las Vegas last week. Crazy crowded. The crowd spending money hand over fist could have all been potential guests on the Jerry Springer show. I thought to myself, the last time I was struck with this same impression was 2007 in a similar type of setting setting. I couldn’t take it, too depressing, and had to cut my work short and fly out early.
Las Vegas homebuilders thriving amid ‘buying frenzy’
Las Vegas Review-Journal-Apr 22, 2018
Home Builders Research President Andrew Smith and founder Dennis Smith wrote that the first quarter was the best in a decade for closings and permits, as Las Vegas’ “buying frenzy” produced more than 1,000 of each during the same month for the first time since 2007. Moreover, prices will likely keep …
We drove through Vegas on the way to San Diego. For the life of me, I don’t understand why so many are enthralled with the place. It’s definitely a hive of scum and villainy.
As a bonus it actually looks like Mos Eisley. Just go a few miles any direction from the strip.
A Hive of Scum and Villainy is going to be my next bands name.
Just waiting for the drummer in my current band to have an untimely accident. You can set your watch to this sort of thing.
Henderson, NV is one of the safest cities in the USA. My 300k new 2200 sqft single story house has only 2.5k prop taxes, no state income tax, &500 house insurance. Much better than an old 900k crapshack in SD with high prop and income taxes. What a ripoff…
Sounds like a real estate closing.
Just waiting for the drummer in my current band to have an untimely accident.
Spontaneous combustion ala Spinal Tap?
We were just talking about that movie today, new guy started here that plays bass on the side. Which means we have 3 bass players in the group. Which means we can now play “Big Bottoms” at the company picnic.
I spent more time in Vegas than I wanted to as well. Another city that I don’t understand the appeal: New Orleans. The entire place is a rat heaven.
Every large city is a rat heaven, if you walk around at night.
“Based on a total income average of $206,000 made over the last eight years, millennials — identified as people born between 1977 and 1996 — paid out nearly $93,000 in rent during that time, which is the most ever paid by any generation, according to RENTCafe.”
Hmmmm … doing some math here …
$206,000 average income over eight years is $27,750 income per year.
Cheap labor.
$93,000 of rent paid out over eight years is $11,625 a year which is $969 a month.
Cheap rent.
But, hey, it’s Victorville.
It’s not cheap rent for them. When I was making 30K I was paying $400 a month for rent, not $1000.
truth - I’m a little younger than you I think and I was paying 550/mo to live across the street from the beach in del mar on around the same wage. I remember the landlady looking at my income and asking “are you sure you can afford this?”
My how times have changed, and it shocks me how predatory this culture has become.
“…and it shocks me how predatory this culture has become.”
And this time “predatory” includes hoards of individuals / speculators.
This includes various individuals on this board. It cannot be just myself and Ben who has noticed.
Seems to me that the rent seekers as a group have reached critical mass and successfully cornered the market in housing, at least temporarily. It won’t end until they lose their money at it. There is too much money sloshing around looking for return, and that money is fine with enslaving the lower classes to get that return.
I’m pretty much in agreement with everyone (should be obvious with my recent posts), and especially Carl.
It reminds me some of the descriptions of doing business in China - the numbers of who will cut nay corner and do anything shady to make a cent an/or look the other are huge because part total population, and a culture of every man for themselves.
We can credit the recent revolution in technology, specifically information sharing and accessibility, and globalization for spreading the competition around the world.
The United States is not a capitalist society.
That’s the real problem.
The dissolution of capitalism since roughly the turn of the century has been dramatic, rapid and widespread.
? It won’t end until they lose their money at it.
And it has to be their own money, not OPM from pensions or investors.
Ditto. I made 30K in 1991 and paid $300 a month for my first place.
Victorville to Cucamonga. Sorry, Rancho Cucamonga…yikes. I couldn’t live like that.
Think of the monthly cost to operate and depreciate a vehicle.
“Indeed, rents for the swanky complexes can top $1,500 for a one-bedroom. Managers like Tom Heilman, with Hometeam properties, still think the market is there. ‘Let’s just say they’re $1,000 beds when the market’s used to $500 a bed, but you’re getting High Street locations and views, you’re getting amenities, you’re getting granite countertops, flat screen TVs, low utilities, safety, workout areas, and all the other amenities,’ he says. ‘And it’s just a fun experience for students that may are gonna experience this for a year or two and the parents are more than happy to do that.’”
Man o man - this is a looooong way from my days living in the dorms when I was a college neophyte.
“Another sign entices the first 20 renters with free Taco Bell for a year, a tie-in with the fast-food chain that will occupy the mixed-use development’s first floor”
———————————————-
Because nothing says luxury like Taco Bell, especially when the 3am crowd visits.
Or maybe we’ve reached the future and it’s now a high end restaurant like in Demolition Man. Let’s see if they know how to use the three sea shells.
N VA has had 15% cre vacancy for 15 years
How can LL sustain this model?
Read the Massachusetts article.
Check out these prices next to Facebook in Menlo Park. 2 bed 2 bath units start at $4,220. Based on what I can see the complex is probably 50% occupied. They were advertising 2 free months rent a few weeks ago and now it’s been removed from the site. Even for the Bay Area, the price point is absurd. We own a duplex a 2 minute drive from here and charge $2,700/unit for a remodeled 2 bedroom. A simple Craigslist search for “Redwood City” shows 432 postings -WOW!!
https://www.elanmenlopark.com/floor-plans.aspx
It’s going to be interesting when Fakebook has its first mass layoff.
RE: Hightech. Unless you move up significantly in the ranks at FB, Google, Apple etc, you are not getting the super high stock grants/options.
So a lot of engineers intend to work for 8-15 years and move away (Texas, N.Carolina etc) and then get a more stable job where they can afford a house and to live there. By working in the bay and saving, they jumpstart their savings significantly.
Most engineers will not be in the bay more than 15 years.
My employer has large campuses in the Bay Area and other places, like Denver. I have not seen this tech exodus out of the bay area,
So a lot of engineers intend to work for 8-15 years and move
away ??
I think you are correct to some degree but it’s not just engineers. Many people are planning this way including several of my children’s friends. When the job money machine music stops, we will see a much different market in both apartments and SFR’s
Chino Hills, CA Housing Prices Crater 9% YOY As LA Area Housing Correction Accelerates
https://www.movoto.com/chino-hills-ca/market-trends/
https://www.bankier.pl/wiadomosc/Ceny-ofertowe-wynajmu-mieszkan-kwiecien-2018-Raport-Bankier-pl-7584745.html
Poland. Rent goes down in almost every bigger city, -5% in some, first time for a few years.
It’s a good start and trend, but after rents have doubled or worse, a 5% drop isn’t much. Sure, it’s better than a kick in the head or another rent increase.
I agree, it’s not much , but definitely worth mentioning. It’s a good sign, I think, let’s see what coming months tell us.
“a 5% drop isn’t much.”
If the only thing keeping the business model solvent is a 5% rent INCREASE every year, rents simply staying flat can bankrupt a landlord or keep them from refi-ing.
And what about those small-time accidental and speculator landlords paying money out of pocket to cover the difference between rent and their mortgage payments? A 5% rent decrease means they have to spend even more of their income to subsidize their renters.
Just like home prices, all it takes is for the increases to stop to hit the over-leveraged hard. Not to mention breaking the confidence illusion.
Herndon, VA Housing Prices Crater 8% YOY As NoVa/DC Area Housing Demand Plummets
https://www.movoto.com/herndon-va/market-trends/
Police have arrested a suspect after a white van mounted the curb and struck numerous pedestrians in Toronto.
https://www.ctvnews.ca/canada/witness-van-struck-every-single-thing-on-toronto-sidewalk-1.3898118
The article is pretty mum about who the driver was. Makes me strongly suspect that he might have been shouting Aloha Snackbar as he drove into the crowd.
You can get arrested in Canaduh for saying that.
Why would I want to go there in the first place?
Are Hawaiian snacks illegal in Canada?
Why can’t I have an Aloha Snackbar?
Why can’t I have an Aloha Snackbar?
Probably for the same reason you couldn’t get away with saying “denigrate” on national TV.
How niggardly of them!
“You can get arrested in Canaduh for saying that.”
And in the U.K. Especially London.
You can get arrested in Canaduh for saying that.
got a link for that?
Google “Canadian hate speech law” and start reading.
“…might have been shouting Aloha Snackbar as he drove into the crowd.”
As I indicated in an earlier thread Canada has an immigration problem.
If it’s a white van Oxide knows
I have a friend who works for the State of California. He believes he’ll retire at 56 with 80% of his last year’s pay, for life.
Oh and he also believes he can buy a house in Texarkana for only $20,000! Maybe with a $20,000 down payment, LOL. BTW I know for a fact his finances are a mess and his credit is shot.
Hey! A promise is a promise!
I have met my share of .gov employees who are convinced that their pensions are sacrosanct and safe.
Do you know many politicians running on the I will cut pensions platform? Sure the money will run out eventually but if you look at how long Illinois has had its pensions underfunded, you realize that if these people do not live in Illinois or a handful of other states and they already are in their 50s, they probably will receive their overinflated pensions. Illinois pensions are funded in the 30 something range, last time I looked california, still underfunded,is around 70 percent with 80 percent being considered reasonable and of course 100 percent being the goal. However, it will take decades for a system to go from being 80 percent funded to being like Illinois. Of course, a depression might hit but then wouldn’t the Fed just print money? The Keynesians do not stop until they create hyperinflation. Since the millennials do not understand this, they will vote for the very policies that make sure the baby boomers get their pensions, while they inherit abject poverty.
https://transparentcalifornia.com/
look him up
Regular pay: $89,473.25
Overtime pay: $719.13
Other pay: $5,560.30
Total pay: $95,752.68
Total benefits: Not provided
Total pay & benefits: $95,752.68
==========================
He is slacking off nowadays. Used to make maybe 10 to 20 thousand per year in overtime pay on top of his salary.
as long as he smokes 2-3 packs a day I’m ok with him retiring at 56, but so many people quit smoking and living a longer healthier lifestyles, the exponential cost of this change was never accounted for by increasing employee contributions, so we go broker and broker each year.
Just returned from a weekend in Bend Oregon and had the following observations. Housing is on a tear there again it felt that I had somehow returned to 2006. Traffic was terrible, backed up and everyone in a hurry to go nowhere. I let a few people in who were trying to merge from parking lots and not a single wave to say thanks (our town most everyone says thanks with a wave). Lots of people walking along the streets just looking into store windows. It was cold at night a strangely dry during the day. The wife and I said no way would we move to this area. Have a friend there who is in the middle of building a $1million plus house and he said “its different this time” I told my wife even a little slow down in the local economy will just kill this area. Anyone else been there lately?
I follow Bend very closely and have for several years. You want a eye opener. Zillow homes for sale in Bend.
I follow Bend area very closely and have for several years. You want a eye opener. Zillow homes for sale in Bend.
“…and not a single wave to say thanks…”
Hmm… California locusts?
It’s hard to fathom why anyone would want to spend money to live the life you describe in Bend.
Life is MUCH better elsewhere.
Marco, have you been to Tahoe during the past 5-10 years? What a hellhole that place has become. Traffic choked, zero culture. Everyone there is the same as everyone else.
Everyone can’t wait to show everyone else that they have “made it.” Summer sweaters and Starbucks and all the rest of that miserable gormless vacuousness. No class, no intelligence, no substance. Just money.
It’s awful.
Tahoe
Did you see the recent article about the $2000 parking tickets in South Lake Tahoe? They apply only to the Airbnb rentals, even for just a few minutes while standing there unloading the car.
No, I hadn’t heard. It doesn’t surprise me, tho.
Dickheads run amok.
Never have so many done so well… at the expense of so many more.
At the expense of themselves, as well. Yet they haven’t a clue.
Marco - I live in Bend, and have been for several years now. As much as I love it here, I’m also bummed that people seem to be less friendly and more dick-headed…a trend that’s gotten much worse over the past few years. As much as I’d like to attribute it to Californian transplants, I’m sure it also has to do with the large amount of people that have moved from here bringing a more metropolitan mentality here. I’m also peeved that these folks seem to have the mentality that ‘it’s different this time’ and ‘homes are so cheap here compared to where I’m from!’, which has pushed home prices so far beyond the range that a household can afford with the median income for the area.
Since the recession, several local businesses have successfully grown and created hundreds of new jobs…although I don’t think those numbers relate to the number of new households that have moved to the area. The newer residences that I’ve met either moved here, hoping to land a job, or are Bay Arean telecommuters. So while a slow down in local economy may effect us, I think a slow down in the technology sector would have a greater effect on home prices here.
“…Bay Arean telecommuters…”
Are the network services in the Bend area up to the task, or does it mean leasing a telco’s t1 circuit?
From WOSU Radio on Ohio. “Tyvek homewrap flaps over the unfinished wooden beams of the Luxe Belle, as a sign proclaims ‘Now Leasing.’” Another sign entices the first 20 renters with free Taco Bell for a year, a tie-in with the fast-food chain that will occupy the mixed-use development’s first floor. Right now, though, that first floor is just a large concrete atrium. Like four other luxury apartment complexes near The Ohio State University, this six-story development at North High and 8th Avenue is set to open next fall.”
Free Taco Bell for a year. Yeah, the crash has begun.
Free Taco Bell for a year
$10 x 31 = $310 a month, assuming one could stomach eating Taco Bell everyday for lunch and dinner. It’ll probably end up costing $100 a month, if not less. Not a huge discount when you think about it.
‘Yeah, the crash has begun’
The existing projects are half empty, next year. Do you realize how much money they are losing? And more to come:
‘Right now, though, that first floor is just a large concrete atrium. Like four other luxury apartment complexes near The Ohio State University, this six-story development at North High and 8th Avenue is set to open next fall’
Yes, the crash is here.
All it takes now is the tipping point. One confidence killing economic event and the weakness in this economy will be fully revealed.
Tnx 3% , maybe ?
Free Taco Bell? Shut up . . . just shut up! You had me at ‘free’
Mukilteo, WA Housing Prices Crater 10% YOY As Heroin Epidemic Ravages Seattle Area
https://www.movoto.com/mukilteo-wa/market-trends/
Kanye West is getting woke on Twitter lately, the SJW’s are sh*tting their beds…
Just perusing the last couple of days, according to posters here the following cities suck and/or anyone living there is crazy
San Diego
Victorville
Bay Area
Las Vegas
St George
Mesquite
Bend
Did I miss any?
“Bay Area”
If you inherit a house free and clear in San Jose then the remaining obstacle to contend with there is traffic. That aside, nice weather, great schools and hospitals, plenty of ethnic dining choices, the ocean, skiing in the Sierras, multiple hang gliding and skydiving choices, etc., elevate its “quality of life” ranking, IMHO.
I would think a lot of it is a matter of opinion and circumstance.
Factors can include how much you like or don’t mind the climate, if you are working or retired, if you have a long commute or a tiny one, where your family is, etc etc …
I lived next to Mesquite (thank id software) and initially didn’t mind the Texas climate… but eventually came to loathe it.
In my early 20s spent a year living outside of Bend (Sun River), it was great as I loved the outdoors, but I wasn’t really working a proper job - didn’t need to that year. If I did, there weren’t any software jobs to be had anywhere commutable and it would have sucked.
And so on…
Yes.
Chicago
Baltimore
New York City
Columbus
Manhattan
Chicago and Miami also come to mind
LOLZ more of the “fundamental transformation” you voted for in 2008 and 2012
Violent April breaks brief peace in Baltimore, with 29 killings in past three weeks:
“Baltimore police counted 17 killings last month, but 29 within the past three weeks. For Baltimoreans and for the officials charged with keeping them safe, a familiar dread is returning.
“Of course, the frustration is there,” said Chief T.J. Smith, the police spokesman. “You see the moments of hope, and we haven’t given up hope, certainly. … Then you have these unfortunate moments, these spates of violence.”
Police blame some of the recent bloodshed on a war between two West Baltimore groups. The Western District, the department’s smallest, has seen the largest share of violence this year: 18 people killed, more than double the total in any other district. Nine people were killed there in the past 30 days.
Commanders across the department have deployed additional officers to try to quell the rivalry.”
“I don’t want to get too specific,” Smith said. “We are aware of who they are.”
http://www.baltimoresun.com/news/maryland/crime/bs-md-ci-april-homicides-20180420-story.html
Why is Obama (half-white, his mother is white) so racist against Black People? Oh yeah, #MuhNarrative
‘Landlords are very open to conversations in a way that they hadn’t been historically.
In the words of Elvis, a little less conversation. In fact, there’s no need for conversation. You want me, a creditworthy and responsible tenant, to rent from you? Then lower the rent.
Will rising rates and a strengthening dollar tank non-interest bearing assets like gold, crypto, and oil?
WTI Crude Daily
A major reason for skepticism about crude oil’s recent rally is the fact that the “smart money” or commercial futures hedgers currently have their largest short position ever – even larger than before the 2014/2015 crude oil crash. The “smart money” tend to be right at major market turning points. At the same time, the “dumb money” or large, trend-following traders are the most bullish they’ve ever been. There is a very good chance that, when the trend finally changes, there is going to be a violent liquidation sell-off.
WTI Crude Monthly
Similar to WTI crude oil, Brent crude has been climbing a couple uptrend lines as well. The recent breakout over $71 is a bullish sign, but only if it can be sustained; if Brent breaks back below this level, it would give a bearish confirmation signal.
Brent Crude Daily
It is worth watching the U.S. Dollar Index to gain insight into crude oil’s trends (the dollar and crude oil trade inversely). The dollar’s bearish action of the past year is one of the main reasons for the rally in crude oil. The dollar has been falling within a channel pattern and has recently formed a triangle pattern. If the dollar can break out of the channel and triangle pattern to the upside, it would give a bullish confirmation signal for the dollar and a bearish signal for crude oil (or vice versa). The “smart money” or commercial futures hedgers are currently bullish on the dollar; the last several times they’ve positioned in a similar manner, the dollar rallied.
…
Whose job is it to “paint the tape”?
The Financial Times
Analysis Equity exchanges
Final 30 minutes of US trading take on outsized role
An increasing concentration of volumes from 3.30pm to 4pm is causing concern
2 hours ago
…
The 10-year T-bond yield finally topped 3%…and Wall Street bulls are partying like it’s 1999. Go figure!
10-year U.S. government bond yield touches 3.0% level
By Sunny Oh
Published: Apr 24, 2018 9:49 a.m. ET
The 10-year Treasury note yield (TMUBMUSD10Y, +0.69%) rose 2.8 basis points to 3.0%, a key psychological level, on Tuesday, according to Tradeweb data. This follows after the benchmark attempted a test of 3.0% on Monday, hitting an intraday high of 2.996%. The 2-year note yield (TMUBMUSD02Y, +1.03%) advanced 2.6 basis points to 2.500%, while the 30-year bond yield (TMUBMUSD30Y, +0.69%( rose 2.4 basis points to 3.167%. Bond prices move in the opposite direction of yields. Analysts say a combination of wider budget deficits, fiercer inflationary pressures and expectations for tighter monetary policy have put bonds under pressure.
…
So much handwringing in the MSM assured readers that a 3% yield on the 10-year T-bond would lead to financial Armageddon. Instead, the nonevent was met with a stock market rally.
No bubble here in San Diego, experts assure…
San Diego home price hits new record high: $550K
Are master-planned communities a development of the past?
Otay Ranch homes in April. (K.C. Alfred / U_T)
Phillip Molnar
The San Diego County median home price soared to its highest point ever, $550,000, in March, said real estate tracker CoreLogic.
Home prices increased 6.8 percent in a year, which experts attribute to a lack of homes for sale and a strong economy. The previous home peak was $545,000 in June.
…
can anyone explain the 4 unit “condo” 100 year old Victorian or triple decker in Bahstin
wow - who’s roof is it anyway