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Sale housing & credit on the brink, how about apartments…
August 25, 2008
An Economy on the Brink | www.usnews.com
Mr. Zuckerman, the Editor-In-Chief, writes persuasively here of declining, nay plummeting, home prices and new home construction and of the possible passing of the U.S. auto industry and of healthcare funding problems. He makes the point that 10 million home mortgages exceed the value of the underlying security and goes on to point out that wages are not rising to cover the average $ 2,000 loss to the family budget from recent food and fuel prices. He doesn’t tell you that the next few months will have meat prices rising again on a step upward curve and that the family budget will bulge again from this new stress. The balance he points out is an inflation risk from low interest rates versus a progressively weaker economy.
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August 8, 2008
The Other Shoe... | www.us-banker.com
The news here is that the chickens are coming to roost in one of the largest misapplications of capital yet. Commercial real estate is overdone in most every sector and market and the banks of this country are among the culprits. Ratios of three and more times capital lead to predictions that scores of banks are set to fail. I can’t see any flaws in this thinking.
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America Supplies Its Drug Dealers
July 15, 2008
Arming the Drug Wars | www.portfolio.com
As it turns out, gun dealers in Phoenix are supplying some/a bunch of the weapons which are being used in the drug wars below the Mexican border. The Mexican Cartels send $ 15 Billion drugs to the U.S. and transports $ 10 Billion cash back to Mexico over the border. As the article also tells us, the U.S. consumes more than half of the world’s drugs. “Much of the Heroin, most of the Marijuana and methamphetamine, and 90 % of the Cocaine comes from or through Mexico” is written. The ATF tells us that “they will fight to the death to protect their source and supply of drugs and their trafficking routes” when discussing the Mexicans and their trade partners, the Colombians.
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Tying The Pieces Together In This Declining Economy
July 15, 2008
Blackstone's Peterson Backs Film on U.S. Debt Through Nonprofit | www.bloomberg.com
The Peter G. Peterson foundation will confront the dangers of America’s $ 9.5 Trillion national debt. The article quotes Peterson as saying “Over time, taxes would have to double to pay for the debt and that's unthinkable''.
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July 9, 2008
Envisioning a world of $200-a-barrel oil | www.latimes.com
Changes to housing, autos, urban planning, public transportation, carpooling, consumer goods and retailing, manufacturing, restaurants, agriculture, mining and utility providers are coming. There will be suppliers close to the ultimate user, zero or virtual mobility for workers and local vacations or recreation, we are told.
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Housing Market Costs Coming To Roost Now
July 8, 2008
Fix Congress’s Housing Fix | www.usnews.com
The public is now going to be asked to support the housing mania of the 1st years of this century with tax look-backs to previous profits, with extended activity by the quasi-public lenders, Freddie Mac and Fannie Mae, and with government backing for loans written down to 85% of the new appraisal. Industry insiders will love this direction as they seek to absolve their balance sheets of low quality assets. If enacted to a more maximum rather than minimum degree, it’s possible that companies whose quality and liquidity issues should have sunk them will now have shifted all responsibility to the U.S. tax payer.
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How Long Is This Going To Take?
July 8, 2008
Bank Job | www.portfolio.com
This article notes the recent statement building financing of financial institutions and concludes its opening remarks with “I don’t know, you don’t know, and they don’t know”. The article states the assumptions of current bank recapitalizations and in particular recaps the Bear Stearns acquisition. It’s notable to me that Warren Buffet recently said that he didn’t have the appetite to pick that one up on those acquisition terms, or something to that effect.
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Commercial Real Estate Recourse Financing
June 23, 2008
Guarantee Gamble: Developers Dread Return of Recourse | online.wsj.com
There were names like Fox & Carskadon, McNeil and Consolidated Capital among the biggest income property acquisition syndicators in the 70’s and 80’s, but no more. And no more are thousands of other syndicators of that era big and small, who generally fell by the wayside as they could not execute. And the reason they could not execute was they could not exit their existing portfolios to substantiate further activity. And the reason they could not exit was that the tax write-offs that were the foundations of their business were not available to future buyers after tax code changes. So activity slowed, and the recourse provisions of their debt put them down.
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June 23, 2008
The American Dream Goes On | www.usnews.com
The referenced article begins with the now usual doomsday message which many including this writer have now exhausted ad nauseam. Three relatively short paragraphs later, the Editor-in-Chief wraps up the forgone conclusions neatly and attempts to move on to some new meat. You can read the rest of the article to absorb his wisdom. This guy is a great real estate investor and journalist and I think he mostly always presents good food for thought. I admire.
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Hopw long wil our finacial institutions take to recover?
June 16, 2008
After $4.6 Billion in Losses Head Says FHA May Have To Shut Down | www.therealestatebloggers.com
Three years after the change in the residential market, we have now come to the failure of the financial institutions which have supported the real estate backed consumer goods market of the recent past. You might just as well have written the article about FNMA or FHLMC, as the same solvency analysis is probably supported. The biggest banks and the last remaining major mortgage company and the last remaining huge thrift and the last 5 huge independent Wall Street firms are similarly impacted, maybe to differing degrees but nevertheless in difficulty.
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June 9, 2008
Housing woes won’t end soon … | www.usatoday.com
When you read that the subject poll showed that 59% of those polled believed that now is a good time to buy, you realize that the American Dream is still a great big pad with a 6.000 pound SUV or two in the garage no matter what. JUst like land developers and builders, if you will loan money, the American public will buy and/or build. They’ll be angry with the lender if they tip over, but that will be true even if they don’t get the loan. So once again, we are shown that the American public wants the house no matter and the lender/investor is the only discipline in the market. A further obvious truth is that there is no discipline among a lending corp paid on a per deal or per year basis rather than from the long term growth of the Institution.
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Apartment investments are performing poorly in Phoenix now
June 2, 2008
Best time in years to be a renter | www.eastvalleytribune.com
When you combine rents set and projected at unrealistic levels and an economy where only 22% of jobs statewide pay $17 per hour plus benefits with a surplus of single family homes, you get high vacancy rates in apartment communities. When the government is seeking higher tax revenue from income property with increased assessments and the property insurers are raising rates and the utilities are charging way higher rates, you get losses from operations. Then you figure that in some cases apartment community acquisition costs went from $ 50,000 per unit or less to as much as $ 90,000 per unit in just a few years for Class B units, and you get investment catastrophe.
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Los Angeles – King of The West
May 13, 2008
Political Foreclosure | www.latimes.com
It’s hard to believe that the formerly largest industrial city in the nation has fallen on hard times for jobs. But apparently so be it as the last remaining king, the Garment industry, is about to topple. Just yesterday the entertainment industry was king here too, but we know its influence has also been dispersed to other locations. The article points to the average 75 degree days and tourism as the last economic king or back to the beginning of the economic wheel here.
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Here’s The Face of Opportunity
May 13, 2008
Dan Walters: California Faces Huge Upheaval | www.sacbee.com
Staggering numbers are presented here. Seniors increasing from almost 5 million to 11 million in 30 years, critical shortages of skilled/professional labor with 1/3 of California’s high school students not graduating, and unparalleled diversity in a huge population.
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Real Commercial/Income Property Values in the U.S.
May 1, 2008
Shrinking Values, Growing Anxiety | nreionline.com
The points of this article that I find important are the comments regarding property owners running out of money/cash in the commercial property sectors as they have in the homebuilding arena, and the comments regarding the overall strength and performance of the companies that form the tenant base for the U.S. inventory.
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May 1, 2008
It’s (Really) The Economy, Stupid | www.portfolio.com
It appears that we have been doing nothing economically during the current administration except gorging in a huge consumption and speculative binge and conducting war in the Middle East. The subject article proposes that we will pay for this during the next administration and beyond as we rebuild the financial system of the United States.
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Underwiting real estate investment now is a political risk assessment
April 15, 2008
The Case For Housing Help | www.usnews.com
In my mind, the debate as to housing affordability and commercial real estate viability is over. The game is lost as $ 21 trillion in housing value will become $ 15 trillion in the next few years and commercial real estate values will drop 25 to 50 % on the average in the next few years.
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A Solution For Wall Street – What Happens to Commercial Real Estate and Housing?
April 14, 2008
What's wrong with Wall St. - and how to fix it | money.cnn.com
If the subject analysis is realized, the return of Wall Street to advisory services will return real estate debt to the portfolio lenders. Goodbye to the CMBS market as well as the sub-prime market. In fact, Wall Street itself will be a unit of major banking institutions. The major bankers will raise their capital requirements and the returns expected will escalate.
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April 8, 2008
Las Vegas’ fortunes dim as economy slows down | www.signonsandiego.com
The economy of the western United States has been thought to have underpinnings that are too solid to be affected by recessions. Among these economic undertakings are the gaming and tourism facilities of Las Vegas. This assumption looks to be shaky as set forth in the subject article.
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Local News About Phoenix, Arizona
March 31, 2008
Soaring Food Prices Hit Table | www.azcentral.com
The article shows what’s on the local mind as families in this average man’s town try to get from paycheck to paycheck. Not surprisingly, the British grocer, Tesco, has called a 90 day moratorium to its aggressive market entry and store opening program in Arizona, California and Nevada. Since the initial stores only opened within the current year, the meaning is clear.
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