National Multihousing Council Apartment Conditions Fall Further

The average of the NMHC’s Apartment Conditions fell to 24 from 35 with all series but Equity Financing (holding at 33) falling from last quarter. Both Market Tightness and Sales Volume came in at 25 (down from 28 and 35 respectively) while the more volatile Debt Financing fell to 14 from 38 last fall.

The Equity Financing which may be the most Continue reading National Multihousing Council Apartment Conditions Fall Further

Woo-hoo We’re All Gonna… Have More Expensive Apartment Loan Rates

The apartment investment loan we track has jumped up five times in a month, the most change it’s had since the Taper Tantrum in 2013. From the low of 4.125% the week before the election it is now up to 4.75% as of yesterday. With the Fed due to Continue reading Woo-hoo We’re All Gonna… Have More Expensive Apartment Loan Rates

So That Happened, Then This Happened- Apartment Loan Rates Jump with T10

And we’re off to the races apparently. The day after the surprising election results the US Treasury 10 year jumped 19 basis points blowing through the 2% level to close that day at 2.07%. You would have to Continue reading So That Happened, Then This Happened- Apartment Loan Rates Jump with T10

Apartment Investment Sales Fall Below 50 in Latest NMHC Quarterly Survey

The latest National Multifamily Housing Council Apartment Conditions Quarterly shows the average fell 15 points to 35, dragged down by Sales Volume dropping to 42 from 50 and the more volatile Debt Financing which descended to 38 from 62. Market Tightness (occupancy & rent growth) and Equity Financing Continue reading Apartment Investment Sales Fall Below 50 in Latest NMHC Quarterly Survey

10yr Apartment Building Loan Rate Back On It’s Meds at 4.375%

10 year apartment building investment loan rates
Click on image for full size.

After showing signs of life in June and July the 10yr apartment building investment loan rate we track seems to be fully anesthetized once again and is resting comfortably at 4.375%. Meanwhile the ULI rate seemed to be steadily working its way lower, following the ten year Treasury down which got as low as 2.01%. That all ended with the Chinese stock market melt down and currency devaluation a couple weeks ago and drove the ULI rate up 27bp to 3.82%.

Chinese stock market has only fallen back to where it was in February
Click on image for full size.

Interestingly despite all the panic about the Continue reading 10yr Apartment Building Loan Rate Back On It’s Meds at 4.375%

The Nick Hanauer Problem: Why the recovery is going so slowly.

Changes in Mean and Median Net Worth.
Changes in Mean and Median Net Worth.

Invictus over at the Big Picture Blog had a chart rich article last month called “Bill Gates walks out of a bar – Of Means & Medians” that explored some of the causes for the slow economic recovery in the US.

What really caught my attention was how skewed the distribution of wealth is with the mean (aka the ‘average’) being 6.5X the median* (50% above, 50% below). How do we keep the peasants from revolting in these conditions? Or more realistically because 90% of us are not in the top 10% why do we not revolt?

With the Mean Net Worth 6.5x larger than the Median, the distribution in very skewed.
With the Mean Net Worth 6.5x higher than the Median, the distribution in very skewed.

This means that the economy is suffering from the Nick Hanauer problem; the wealthy aren’t Continue reading The Nick Hanauer Problem: Why the recovery is going so slowly.

Treasury rates are up but…

10 year Treasury rates vs. apartment builiding investment loan rates thru July 2015
Click on image for full size

For this month’s post on apartment building investment loan rates and the key 10yr Treasury (T10) we’re looking at the longer trend back to the beginning of 2013. The news has been full of talk about rising interest rates but looking at the chart above we can see that while the T10 is up off its recent low of 1.68% in the end of January it’s still more than 50 basis points below the highs it hit in September and December 2013 (2.98% and 3.04% respectively).

In turn the 10 year apartment loan we track has been treading water around the 4.3% mark for the last nine months and essentially it’s back to where it was in early 2013 before the Continue reading Treasury rates are up but…

What’s your personal GDP- Gross Domestic Pleasure?

Most of the economic statistics that we rely on to understand how the economy is doing (and contribute to the apartment building investment cycle) were created in the 1930s and ’40s, smack dab in the middle of the Industrial Age. They haven’t changed much

What's your personal GDP- Gross Domestic Pleasure?
Click the image to see the thought provoking NYT Magazine article that inspired this post: “The Economy’s Missing Metrics”. Illustration by Andrew Rae

since then, you can find out a lot about woodworking-machine-setters but all web developers are thrown into a single category. Such as they are they were an attempt to measure something that seems quite radical especially coming from economists: Is the government making life better or worse for its citizens? Not how many pairs of shoes were manufactured, how long they sat in warehouses and the average price they sold for.

The intellectual leader for this radical thought was Simon Kuznets who as an immigrant had a special respect for the promises of democracy. He believed politicians should be Continue reading What’s your personal GDP- Gross Domestic Pleasure?

Are Interest Rates Caught in a Catch 22?

Are interest rates caught in a Catch-22? What if the Fed is waiting to raise rates until the economy is growing stronger but the economy won’t grow stronger until rates go up?

10 year Treasury Rates June 2014 - May 2015

For three years everyone has ‘known’ that interest rates were going up but other than during the Taper Tantrum of June 2013 which affected loan rates more than Treasuries, the T10 only moved up to the 2.75% area which was just picking itself off the floor of 1.66 where it got down to in May that year.

The Fed would like to raise rates, if for no other reason than to prove they aren’t turning Japanese by leaving rates low for two and a half ‘Lost Decades’. They’d also like to have room to lower them again if the economy dips back into recession (Note Q1 GDP was just revised down to -.7% that’s Continue reading Are Interest Rates Caught in a Catch 22?