Why it’s good news that more Americans are renting rather than buying homes. Via Slate. Good for #Multifamily
Filed under: Multifamily Investments, The Economy and Current Affairs
Exec Sum:
The American economy is making a significant shift from buying to renting, and that may ultimately be good news. According to a USA Today analysis of Census data released this weekend, since 2006, the number of households that rent has grown by about 700,000 a year, while the number of households that own has fallen by about 200,000 a year.
[R]enting is better than owning for many Americans. Indeed, dozens of recent studies have shown that, excepting the go-go bubble years, houses tend not to make very good investments at all: A prospective homebuyer would have made more money taking her down payment, parking it in inflation-adjusted Treasury bonds, and renting.
But it is conclusive: Not everyone should own a home. The recession has helped erode the stigma against renting, with about 70 percent of Americans now admitting that it has advantages over buying a house. If people are making unsentimental decisions about whether homeownership is really worth it for them, that is at least one small benefit of the housing bubble bursting.
See the whole article with links to reports and surveys here: The Rent Isn’t Too Damn High
NY AG Schneiderman and OWS finally convince Obama to go after banksters. Via TBP Blog
Elected attorney general in November 2010, Schneiderman discovered upon taking office that the Obama administration was avidly promoting a proposed settlement among five mega-lenders… In return.. the feds and the state AGs would grant the banks immunity for not just any further robo-signing misdeeds but for all illegal conduct that had led to the 2008 collapse… the banks would be free and clear of any state or federal prosecution for these offenses. Indeed, with no agency of government able to bring legal action, there would be no serious investigation of whether and how the banks broke the law.
“We have to get accountability,” Schneiderman told me this week. “We have to get substantial relief for homeowners and investors. And we have to get the story told clearly and factually, so the history doesn’t get rewritten. If you listen to the presidential debates, you hear the same supply-side and deregulatory nonsense that got us into this crisis. If we don’t uncover the facts and put them out there, it will happen again.”
See the whole article here: The man who shaped Obama’s drive to hold banks accountable
Zero Bound Interest Rates, The Zirp Dimension, Stagflation and #Multifamily
Filed under: Multifamily Investments, The Economy and Current Affairs, Value Investor's Guide to Apartment Buildings
Zero interest rates and apartment building investment.
First my condolences to Bill Gross on the loss of his brother-in-law. Reading his piece in PIMCO’s latest Investment Outlook it is clear that the world’s biggest bond manager is running out of places to generate returns for their investors and by extension this applies to all income investors, especially retired people trying to live on interest income. For those would like to retire soon you may have to delay that decision for “an extended period’ as Edward Harrison over at Credit Writedowns put it in Permanent Zero and Personal Interest Income.
Gross’ points out that the Fed’s zero interest rate policy (ZIRP) which they have just announced to maintain through 2014 and their defacto though opaque continuation of quantitative easing (QE2.5 as he tweeted it) threaten to take us into another dimension where their policies have the opposite effect of their intentions.
“Much like the laws of physics change from the world of Newtonian large objects to the world of quantum Einsteinian dynamics, so too might low interest rates at the zero-bound reorient previously held models that justified the stimulative effects of lower and lower yields on asset prices and the real economy.” – Bill Gross
His bullet points:
- Recent central bank behavior, including that of the U.S. Fed, provides assurances that short and intermediate yields will not change, and therefore bond prices are not likely threatened on the downside.
- Most short to intermediate Treasury yields are dangerously close to the zero-bound which imply limited potential room, if any, for price appreciation.
- We can’t put $100 trillion of credit in a system-wide mattress, but we can move in that direction by delevering and refusing to extend maturities and duration.
For more views on this and Europe too see also Entering the Debt Dimension from Phil’s Picks on the Phil’s Stock World Blog.
What does this mean for Multifamily?
The Zirp Dimension leads to Stagflation where economic growth remains anemic yet prices on essential Read more
MF Global Customer Funds ‘Vaporized’? Can you trust YOUR brokerage company? Not if you have a margin account!
Jesse’s Café Américain Blog had a post Monday (sorry, just catching up) on MF Global and how the government is not done anything but protect the perps so far. This has left the tax paying citizen/customers dangling in the wind and now facing potential tax bills on money they may never see- how great is that? This is on top of the supposed regulator doing nothing to protect customer accounts while the TBTE banks hide the MF Global cash they hold from everyone. Here’s what got me from the post:
“Remember that the customers were not speculators who lost money on their bets, as the bailed out banks had been, but in many cases were depositors who had cash and valid title to precious metals and treasuries held on account in a firm that was one of the Fed’s primary dealers and a major player at the CME. And the money was taken twice. First by MF Global, and then by the financial institutions that seized the money and then manipulated the courts and the press to hide it and to keep it.
The theft of customer funds was bad enough, but the manner in which the exchange, the regulators, the court, the Congress and the Obama Administration have dealt with the aftermath of this is truly despicable. Throughout the financial crisis the character of the public’s dealings with the financial sector has been dominated by of opacity, obfuscation, misuse of influence, abuse of power, and fear.”
If you can stand to read the whole post at: MF Global: A Despicable State of Affairs
Can your broker’s company, its regulator or the exchanges they trade on be trusted? That is a big question. If you doubt that read up on re-hypothecation and then study very carefully the fine print in your brokerage agreement. For more see:
MF Global and the lie about safe accounts and MF Global and the great Wall St re-hypothecation scandal and this MF Global and Rehypothecation Now you understand why your brokerage was so hot for you to sign up for a margin account, even though you never trade on margin!
BTW JCA is a great place to get a non-corporate view of finance, the markets, government and politics.
Whodunit? Great books on the causes and solutions to the Financial Collapse
A year ago for Christmas I received a Kindle eReader (thank you Tammy!) and it has greatly accelerated my consumption of books. One of the subjects that I dove (continued to dive) into was the causes of the financial collapse. The conditions that contributed to our undoing, how we get out of our ongoing mess and the steps that should be taken to prevent a repeat are vitally important to our future as well as to our children and their children.
I have written about this myself since 2008 (see here and here for instance) and have read a number of books on the subject (see my Whodunit list down to the right on this page under Learning From History) that I thought covered fairly well the breadth of the subject and helped me refine my understanding. However I was humbled last night by a blog post on The Baseline Scenario that linked to Reading About the Financial Crisis: A 21-Book Review by Andrew Lo, a truly epic undertaking that is well worth reading on its own.
The causes are Read more
Find the freight trains in your life and get on them instead of in front of them.- Barry Sternlicht Video via @Michael_MBA
Filed under: Commercial Real Estate, Multifamily Design & Development, Multifamily Investments, The Economy and Current Affairs
Great advice from Barry Sternlicht plus much, much more on real estate, investment, capital, leadership, opportunity, Europe, China while speaking at the Schack real estate conference. He is one very smart guy while being personable and humble, a rare but valuable combination. Reminds me a bit of my virtual mentor Tom Barrack, and not just because of the haircut! Barry even mentions wanting to learn how to surf, something Tom could definitely help with.
Here’s the link to the video: Barry Sternlicht at Schack RE Conference For more great video from the conference Read more
Portland unemployment drops to lowest in 3 yrs. Good for #Multifamily Via @hfo_apt_brokers
Filed under: Multifamily Investments, The Economy and Current Affairs
The Oregonian reports data from the state employment department about the Portland-area’s unemployment level falling to 8.6 percent, its lowest in three years.
Meanwhile, most people are still unaware of a report issued last month by the Oregon Employment Department forecasting an 18 percent increase in employment statewide in the coming decade. See the post here: http://bit.ly/yxMb1y
Thanks to Greg Frick at HFO in PDX
Multifamily rental construction definitely the brightest sector in housing market.
Filed under: Commercial Real Estate, Multifamily Design & Development, Multifamily Investments, The Economy and Current Affairs
See the Housing Wire piece here:
Seattle Multifamily market cycle peaking or just taking a breather?
Filed under: Commercial Real Estate, Multifamily Investments, The Economy and Current Affairs
In his Q4 report on the Seattle multifamily market ARA’s Jim Claeys says:
Vacancies and Concessions UP
Absorption and Rents DOWN
New Construction Pipeline UP 140% from year ago
Also Home and Condo Sales UP 41, 70% respectively
Sounds kind of like the cycle is moving to the next phase doesn’t it? See the whole article here: This may be a good time for developers to reassess their projections
Mauldin: Mayan Calander predicts end of Europe… not world. Whew, good thing we’ll be ok- or not
Gallows humor for sure. The article is the best explanation of Europe’s predicament in layman’s terms I’ve read. See the article here: The End of Europe?
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