Landmark Links November 13th – Bait and Switch

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Must Read: Its becoming increasingly apparent that Amazon’s HQ2 search was a ruse with a predetermined outcome.  Here’s how it all went down:

  1. Announce a nationwide (and parts of Canada) search for a 2nd headquarters
  2. Cities drop pants and offer billions in taxpayer subsidies and tax exemptions
  3. Collect tons of data to form the biggest corporate site location database ever created covering everything from transit systems to talent pools to available real estate – all provided for free, of course.
  4. Leverage offers from other cities to extract hundreds of millions in subsidies from NY and DC areas, which coincidentally (I’m sure) are home to Amazon’s largest east coast offices currently.
  5. Pick NY and DC both as HQ2 & 2A sites.
  6. Congratulations America!  We’ve been played.

Economy

Win/Win: After years of stagnant pay, retail workers are finding themselves in the sweet spot of the cycle as a tight economy leads to both raises and colleagues leaving for greener pastures, putting even more upward pressure on pay.

Meh: The US economy is doing great on paper but sluggish wage gains and declining economic mobility make it not feel that way to a large portion of the population.  See Also: Low earners are always the last to recover in an economic cycle.

Commercial

Implosion: Real estate crowd funding platform Realty Shares is going out of business despite raising $63 million of venture capital. (h/t Tad Springer)

Give Away the Farm: Wisconsin’s Foxconn factory boondoggle which won’t break even until 2043 at the earliest is just the latest example of the disaster that is corporate welfare.

Residential

Short Way Down: US housing has become a less-accurate leading indicator of a recession, primarily because the market never properly recovered following the Great Recession.  In other words, it’s hard to get badly hurt when you fall off of a curb.

High Vacancy: 50 million homes in China or one fifth of total inventory are vacant.

Profiles

Headache: Legal pot is a nightmare for airports and travelers to deal with.

Dangerous Game: For all of the hype about the amount of money raised by SoftBank in it’s Vision Fund, the company is incredibly highly leveraged and reliant on debt to boost returns.

Shakedown: How the mafia took over the food chain in Italy from farms to livestock, markets and restaurants.

What A Drag: Mining cryptocurrencies is more energy intensive than actual mining according to new research.  See Also: The CEO obsession with bitcoin and blockchain that took hold around a year ago appears to be over.

Chart of the Day

81% of homes in San Francisco are worth $1MM or more in 2018, up from 67.3% just last year.

Million Dollar Hoods_Hero

WTF

Bummer: The Brazillian Miss BumBum competition ended in on-stage violence as accusations over butt implants sparked a brawl.

Throw Down: Two moms brawled at a school bus stop, using broken coffee mugs as weapons because Florida.

Highest Bidder: A sex robot brothel in West Hollywood is creepily auctioning off “robot virginity” mostly because no one ever went broke underestimating the intelligence of the American public.

No Justice, No Peace! A judge tossed a $5MM lawsuit that was brought by two McDonalds customers over unwanted cheese on a Quarter Pounder because Florida.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at Landmarkcapitaladvisors.com

Landmark Links November 13th – Bait and Switch

Landmark Links November 9th – Getting High On Supply

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Lead Story: A combination of rising interest rates, burnout from buyers and flat-lining rents have helped tamp down home buyer demand over the last six months in Seattle where home prices have fallen, thanks to a doubling in inventory over the past year.  See Also: Las Vegas home inventory was up over 50% year over year in October. Related:Mortgage applications have dropped to their lowest level in four years as interest rates hit an 8-year high.

My position for a while has been that supply drives home prices more than interest rates do and my assumption has been that builders will slow starts once sales slow, putting a lid on supply.  The ball is clearly now in the home builders’ court.  Housing sentiment is falling, and if sales don’t turn around soon, builders are very likely going to start cutting back on starts.  This will likely result in layoffs as well as some relief on the labor shortage front.  Eventually, lower starts along with the lock in effect of higher rates will put a lid on growing supply, making the likelihood of a substantial price correction less probable.  I suspect that we are going to find out if this assumption is correct or not very soon.

Economy

On Track: Last week’s employment report is likely to keep the Federal Reserve on track for December and beyond.

Shopping Season: US Christmas sales are predicted to surpass $1 trillion for the first time ever in 2018.

You Want Fries With That? A labor shortage amid the tightest job market in almost five decades combined with the propensity for longer-living Americans to keep working—even part-time—to supplement often-meager retirement savings have led to senior citizens replacing teens as fast food workers.

Commercial

This Will End in Tears: A cryptocurrency millionaire bought 67,000 largely undeveloped acres in Storey County, NV and wants to build a new city with blockchain technology incorporated into all of its infrastructure and systems.

Same Old Story: Complain about high prices and low yields if you’d like but the fundamentals behind the industrial and warehouse sector in the US are still white hot.

Residential

Shrinkage: Builders are constructing smaller homes in an effort to appeal to first time buyers and those on a budget as affordability concerns continue to impact demand at the move-up level.

Correction: Lumber prices are still dropping like a rock and have  now fallen over 20% year over year.

Profiles

Push-back: America is starting to fall out of love with Silicon Valley as scandal, obscene riches and data breaches have public opinion towards big tech companies falling like it did for Wall Street banks did a decade ago.

Pay to Play: The increasingly high cost of youth sports in America is creating a two tiered system where participation among the well-off is increasing at the same time that it is falling off among kids from poorer families.

Barrier to Entry: It would take roughly $6 trillion in infrastructure investment for electric cars to be a fully viable replacement for combustion engines.

I Have No Issue with This: How Lululemon and workout culture turned the US into a nation of yoga pants.

Chart of the Day

The McRib Effect: Correlation does not equal causality.

WTF

Giddy Up: A drunk man jumped on a horse and rode it at Churchill Downs during the Breeder’s Cup before being arrested by police.

Misdiagnosed: A doctor removed a woman’s kidney after mistaking it for a tumor during back surgery because Florida.

What a Way to Go: A retired light heavyweight pro boxer died from choking on a croissant during an eating contest in Argentina.  At least he died doing what he loved.

Can You Spot the Irony: A man jumped into a crocodile exhibit wearing only boxers and Crocs and was attacked by the crocodiles because Florida.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at Landmarkcapitaladvisors.com

Landmark Links November 9th – Getting High On Supply

Landmark Links November 6th – Flawless Logic

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Lead Story: It’s been a while since we checked in on the mortgage originators to see what they are up to since rising rates have chocked off their refinancing pipeline. At the same time that slowing home sales are starting to hit purchase mortgage originations which are showing signs of topping out.  For quite a while now, I’ve been saying that lenders and originators would have a choice between:

  1. Right sizing their businesses for a down cycle (layoffs and down sizing) and dealing with lower volume.
  2. Lowering underwriting standards in order to bring more marginal  borrowers in and prop up volume.

Thus far, the response has been somewhat bifurcated.  The large integrated financial institutions (banks) are laying people off while the one trick pony mortgage originators appear to be getting somewhat more aggressive since every problem looks like a nail when your only tool is a hammer.  It turns out that there is another option that I had (naively) not anticipated – outright trickery.   To wit, I was pursuing Twitter this weekend when the following ad popped up, pitching potential marks…I mean clients to refinance into a new 30 year loan and re-set their amortization as some sort of money saving secret that banks don’t want you to know about:

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Fortunately, I checked the replies – always a risky proposition when dealing with the cretins who inhabit Twitter – and nearly everyone on there was trashing the post as the sort of garbage and risky “advice” that it was.  First off, a little simple math: restarting the amortization on your loan will often lower the monthly payment on your mortgage, even at higher rates.  However, it will also cost you tens if not hundreds of thousands of dollars in interest during the life of the loan.  For example, take a look below for an at what happens to both the monthly payment and total interest over the life of the loan if a mortgage originated in late 2011 were to be refinanced at today’s rates.

Purchase Mortgage Refinance
Loan Amount at Origination 500,000 429,000
Rate 4.00% 4.85%
Amortization 30 Years 30 Years
Monthly Payment 2,400 2,260
Monthly Principal Payment 11/2018 953 530
Total Interest Over Life of Loan 360,000 386,000

Yes, the monthly payment goes down.  However, it comes at the expense of paying a lot more in interest since the refinance starts the amortization clock all over again at a higher rate.

I would have thought that this sort of advertisement would run afoul of regulations after the foreclosure crisis but apparently it does not.  I suppose that its somewhat encouraging that the Twitter mentions were so negative but that is just tiny sample size.  Some people will see this sort of thing and jump on it to lower their monthly payment, even though it will cause them financial harm in the long run.  Unfortunately, we can probably look forward to more of this sort of thing in the near future as originators continue to grasp for a bigger piece of a shrinking pie for the remainder of this economic cycle.

Economy

Rocking and Rolling: The October non-farm payroll report was another strong one, with solid wage growth and strong job creation, all of which led to lower bond prices and higher interest rates But See: Millennial men are one of the few dark clouds in the economy right now and their employment metrics still don’t look all that great.

Weight on Their Shoulders: New data showing that only half of college graduates who went to college in 1995-1996 had paid off their student loans in 20 years continues to indicate that the federal student loan system is a failed social experiment.

Commercial

Metamorphosis: Brookfield Property Partners plans to spend between $800 million and $1 billion each year over the next few years to reposition or add office and/or residential space to 100 of the 125 GGP malls that they own.

Residential

Drive Until You Qualify: High housing costs mean that less-wealthy people are increasingly fleeing the Bay Area and Los Angeles for more affordable inland markets and being replaced by higher earners.

Priced Out: The high cost of housing in the Bay Area means that people making $400,000 a year are basically middle class.

Nuanced View: Nobel Laureate Robert Shiller says that the housing market reminds him of 2006 yet doesn’t think that the next downturn will be anything near as bad as the one that led to the Great Recession.

Profiles

Haven’t Hit Bottom Yet: CryptoKitties, a blockchain enabled digital collectible game raised $15MM from some very prominent VCs despite a low daily user count because apparently some otherwise very intelligent people find it prudent to continue throwing cash into this fire.

Left Out: Amazon recently gave a much-publicized pay increase to all of its workers….except for its contract delivery staff that functions like Uber for packages.

Too Big to Fail: Despite years of scandal, fake news and data breach hacks, Mark Zuckerberg’s hold on Facebook is as strong as ever.

Chart of the Day

Lower income people who leave the Bay Area and LA are often replaced by high earners.

WTF

Strong Exit: A Tennessee man said “let’s rock” before being executed by electric chair because you always want to finish strong. (h/t Greg Wertman)

Bender: A drunk, shirtless man was arrested for barging into homes and seeking someone to fight him after knocking himself out by running into a fence because Florida.

Solid Logic: A man who was rescued after climbing into a well and getting trapped said that he went in ‘just to say that he did’ because Florida.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at Landmarkcapitaladvisors.com

Landmark Links November 6th – Flawless Logic

Landmark Links November 2nd – Too Many Cooks?

students-packed-into-crowded-kitchen

Must Read: Rare antiques have gotten incredibly cheap, mostly because people spend almost all of their time in their kitchens and have little use for upscale living and dining room furniture.  Another sign of how home design continues to evolve.

Economy

Low Leverage: The level of US household debt to GDP is still at an historically low level and really has not ticked up much since the end of the Great Recession.  This should provide some cushion against an economic downturn.  See Also: Consumer confidence has hit an 18-year high.

Pay Up: Airlines and fast food makers are among the industries passing along higher costs to consumers, raising fears of inflation.

Staying Power: Foreign investment in US treasuries may be down in percentage terms but is actually flat in nominal terms, indicating that demand has not actually decreased.

Commercial

Going High Tech: Walmart’s warehouse chain, Sam’s Club is attempting to compete with the likes of Amazon by rolling out a test store where shoppers make all of their purchases on their smart phones and use the devices to navigate the aisles.

This Was Inevitable: CBRE is taking on WeWork and its co-working peers with a new flexible office business line.

Residential

Outward Migration: The price difference between suburban and urban apartment properties is narrowing as some investors begin to look beyond downtown areas for future population growth.

Cashing Out: TPG and Amherst are marketing a $400MM rental home portfolio in a sign that institutions are starting to wind down some of their homes for rent portfolios.

Profiles

Smoke and Mirrors: The whole concept of so-called “super foods” is little more than a marketing ploy.

No Experience Necessary: Private equity firms are paying through the nose and offering salaries that can exceed $300k for recent college graduates in a highly competitive arms race for talent.

Underwhelming: Amazon’s disappointing quarterly results showed slowing growth and led some to question whether the e-commerce giant is as invincible as it has appeared.

The Holy Grail: A growing number of ultra-rich clean-energy advocates pouring money into startups that are rushing to produce the first commercially viable fusion reactor.

Chart of the Day

This is fascinating.

A diagram from the 2012 U.C.L.A. anthropological study, “Life at Home in the 21st Century.” The red dots indicate the positions of family members every 10 minutes in a California home.

CreditCotsen Institute of Archaeology Press, U.C.L.A.

WTF

Ghosted: A British woman who claimed she has slept with at least 20 ghosts says she’s now engaged to a poltergeist, which gives a whole new meaning to the term “ghosted.

Quid Pro Quo: A mayor solicited sex from a constituent in exchange for speed bumps being installed on her street because Florida.

Asking for Trouble: An Indiana man called the police to complain that his crack dealer was threatening him for non payment.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at Landmarkcapitaladvisors.com

Landmark Links November 2nd – Too Many Cooks?

Landmark Links October 30th – Too Much of a Good Thing?

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Lead Story: When tax reform was passed last year, among the biggest potentiality wins for real estate investors and developers was the creation of Qualified Opportunity Zones which instituted tax benefits in exchange for investment in certain neighborhoods. The program is fairly straight forward: those who invest in regions that neighborhoods that the designation would receive massive tax breaks, either deferring or avoiding capital gains taxes altogether depending on the term of the investment made in exchange for investing in and improving property.  The broad idea is to create incentives for investors to put their capital to work in neighborhoods that have been overlooked.  By and large, this is a solid concept in terms of incentivizing investment but there were a whole lot of questions about the specifics of the program that were not provided when it was initially rolled out.  In the past couple of weeks, the Treasury Department and IRS have issued long-awaited guidance on what the program will look like and it certainly appears to be generous towards developers.  For example, here is Bisnow’s summary of what qualifies as an Opportunity Fund or the vehicle used to invest in a Qualified Opportunity Zone:

One persistent question is what qualifies as an opportunity fund — the investment vehicle for an opportunity zone investment. Who can start one? What are the requirements?

All you need is to self-certify and fill out Form 8996 and attach it to your federal income tax return.

The proposed regulations generally permit any taxpayer that is a corporation or partnership for tax purposes to self-certify as a Qualified Opportunity Fund, provided that the entity self-certifying is statutorily eligible to do so,” the regulations state.

Kosmont Cos.’ founder Larry Kosmont likes that a qualified opportunity fund could be created as a limited liability company.

“This is a real estate developer’s dream,” Kosmont said. “They love LLCs in terms of the flexibility, structuring deals and easier administration of it.”

Starczewski said there is nothing in the regulations that requires an investor to be attached to a big fund run by a bank or a private equity firm.

“A fund could just be a two-person partnership,” Starczewski said. “It could be a real estate developer and a city or an investor who gets together and pool capital gains they have and decide they are going to these zones and purchase a property and renovate the building.”

This appears to be a positive since it means that an individual can us the capital gains from the sale of a company (for example) in order to invest in an opportunity zone directly rather than having to go through a larger fund.  In other words, there is no particular advantage for the big guys – at least on the placement of capital (sourcing the actual investment property is another matter entirely).  There is already pretty clear evidence that designated zones are attracting capital but the latest clarification raises a couple of concerns about a program that I otherwise like a lot:

  1. There is a high likelihood that the incentives will create inefficiencies in the market that cause an over-allocation of capital to a specific region due to a somewhat arbitrary tax designation alone.  This inefficiency can lead to increased risk of downside if the business plan isn’t executed properly.
  2. Upon closer review, some of the zones that received the designation seem dubious at best and should raise some serious eyebrows as to how the selection for was ultimately made.

The first point is troubling in that property in the zones will likely attract substantially more capital than property outside of the zone.  Since the boundaries are somewhat arbitrary, this could be as localized as adjacent properties having vastly different valuations since one gets favorable tax treatment and the other does not.  Want an example in the real world?  The Wall Street Journal already has one:

San Diego developer Moe Ebrahimi paid $720,000 late last year for a site where he planned to build apartments. He expected to own it for years, believing the Logan Heights neighborhood would gentrify.

That all changed earlier this year, when Mr. Ebrahimi put the land up for sale with an asking price of $1 million.

The developer shifted tactics after learning that anyone buying his property would be eligible for lucrative tax benefits. That’s because his land resides in one of the nearly 9,000 so-called “opportunity zones” across the U.S. intended to stoke economic development in low-income areas.

“My friends and I were high-fiving,” he said. “This was a jackpot.”

 

First off, good on the developer mentioned above for making a profit in a short amount of time.  That being said, it is an illustration of the type of distortions that can happen when an arbitrary policy is localized down to the block.  My concern is that the amount of capital that will want the beneficial tax treatment will dwarf the actionable opportunities available.  This will eventually lead to overvaluation of questionable opportunities (some of these zones are in the middle of nowhere) and ultimately big losses for investors who don’t really understand what they are getting in to.  In other words, the epitome of the phrase “too much money chasing too few deals.”

The second point above is that some of the zones seem curious at best.  For example, take a look at the Opportunity Zone map of California.  A couple of things initially jumped out at me.  Close to home, a large swath in the West Costa Mesa is included.  There are currently hundreds of homes within that zone that are being built and sold with starting prices around $800k.  In addition, it has a booming restaurant and bar scene.  There was enough activity in this zone (among others) that the city voted to pass an ordinance requiring projects that would increase trip counts by a certain amount to go to a city-wide referendum.  Maybe this are wasn’t receiving much investment in the early 2000s but that is far from the case now.  That part of the Westside is a lot of things but underinvested is not one of them.

Another curious feature of the map is that Five Point and Lennar somehow managed to get just about all of their big Bay Area projects included which I’m sure is nothing but a coincidence (end sarcasm here).  Why on earth do already active projects like Hunters Point, Candlestick, Treasure Island, etc need this designation to attract even more capital to what is already being invested?  The answer is that they don’t but some lobbyist clearly did his or her job well and Lennar / Five Point will now be able to bring in even more capital at a likely cheaper cost.

In closing, using tax policy to direct capital to underinvested neighborhoods seems like a good idea but I’m concerned about the long term implications once the money really starts flowing.  The big boys (Lennar and Five Point, for example) are going to do great and attract even more capital – as if they need it.  At the smaller scale, this designation will create some incredible opportunities – at least initially.  However, I have to question if the market is really prepared for the type of distortion that the coming tidal wave of capital will cause over time.

Economy

Causation: Faster government spending, particularly on military, accounted for nearly half of acceleration in economic growth since mid-2017.

Staying Power: America’s need for skilled immigrants isn’t going anywhere but our system for admitting educated workers needs major improvements.

Staying the Course: While investors are rattled by markets of late the Federal Reserve is giving no indication that they are losing their cool.

Commercial

Fertile Ground: Conditions are getting increasingly favorable for more multi-story warehouses in densely populated cities.

Shifting Focus: Global CRE investors are increasingly pivoting from North America to Asia when it comes to investment.

Residential

And Now For Some Good News: Proposition 10, which would repeal Costa Hawkins and make rent control much easier to pass in California cities is getting walloped in polls with 60% of likely voters are opposed and just 25% support it.

Tipping Point? New home sales are tanking even faster in the high property tax northeast than elsewhere and the culprit may be reduced SALT deductionsSee Also: Buyers are hibernating in the housing market as spiking mortgage rates take a toll.

Inching Up: Apartment cap rates in San Francisco are creeping higher as increased borrowing costs may finally begin to sting.

Profiles

Behind the Scenes: Uber Eats is using its customer data to create virtual restaurants with no storefronts that make food strictly for delivery and fill specific segments of demand.

Hiding in Plain Sight: A stadium at Boston University, the former home of the Braves (and for two World Series, the Red Sox), connects the sports-crazy city’s bountiful present to a glorious past.

Inside the Machine: Amazon has so much information about us that it’s become expert at shilling us things we didn’t even know we needed. No wonder its advertising business is booming.

Chart of the Day

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WTF

Measured Response: A Fresno man lit his parents house on fire with a blowtorch while trying to kill spiders.

Grow Up: 25% of college students claim to have the early onset of PTSD because of the 2016 election.  Reminder: There are people still alive who stormed the beaches of Normandy (not to mention fought in Vietnam, Korea, Iraq and Afghanistan).  These kids are just wimps.

Stop Looking at Your Phone: A woman fell into a shark tank during feeding time at a Chinese shopping mall because apparently posting that meme on Instagram just couldn’t wait.

Kinky: A woman tried to bite off a certain body part on a man during a threesome because meth.  Also because heroin.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at Landmarkcapitaladvisors.com

Landmark Links October 30th – Too Much of a Good Thing?

Landmark Links October 26th – Nailed It

Must Read: Over the past summer, there was a debate raging in the investment community as to whether or not massive pension fund buying to take advantage of a lucrative tax break was suppressing yields on the 10-Year Treasury.  When tax reform passed last year, pension funds were permitted to deduct their contributions based on last year’s corporate tax rate up until mid September, when all contributions would be deducted at this year’s lower rate.  The logic went something like this:

“There is a tax advantage for most plans to make a contribution prior to Sept. 15 of this year…saving 14 cents on the dollar,” said Matt McDaniel, a partner with consulting firm Mercer, who leads the U.S. financial strategy group. “Unsurprisingly, a lot of corporations are looking at that and saying: ‘Gee our pension plan is underfunded. Why wouldn’t we accelerate that cash and fund it on a cheaper basis.’ This in turn generates dollars into the pension system that has to go to work.”

I point this out now to illustrate how good a call Michael Schumacher, director of strategy at Wells Fargo made back in August.

“They’re not going going to jump out, but they are going to climb out,” said Michael Schumacher, director rates strategy at Wells Fargo. Private pensions hold about $3 trillion in assets. Schumacher said the pre-tax deadline buying was so strong, it likely had a short-term impact of holding long-term rates lower. Those yields could now move higher later in September, as fund buying slows.

…….

“It’s a powerful argument,” said Schumacher. “If you think about the changes since May, we had definite increases in Treasury supply, and it’s been more skewed toward the long end, and yet yields are down…Overseas buyers have been absent, and still yields are down.”

…….

Schumacher estimates the 10-year Treasury yield could move up as much as 20 basis points when the funds step back from buying next month.

In August, the 10-year yield was in the mid 2.80% range and hit the high 2.90% range by mid September.  It topped out at 3.25% in October and has now settled down a bit to 3.10%.   The compression between equity returns and debt yields has been a very real, if somewhat under-the-radar story in commercial real estate this year.  I have to wonder how many other artificial distortions are impacting the market that may be mitigating this compression or making it worse.  Either way, that was one hell of a call.

Economy

Downward Spiral: The next generation of college graduates will include more borrowers who will likely never be able to repay their debts.  Reminder: there is an incredibly straight forward fix for this and it is to require colleges to finance tuition in exchange for a percentage of future salary rather than having loans issued by the Federal Government as they are today.  This problem will not subside until colleges have some level of accountability.

Draining: Annual defaults on loans taken against investors’ 401(k)s threaten to reduce the wealth in US retirement accounts by about $210 billion when the lost savings are compounded over employees’ careers, according to an analysis by Deloitte Consulting LLP.  Remember kids, when it comes to debt, it takes $2 in income to repay $1 borrowed once taxes are taken into account.

Ballooning: Corporate debt growth has exploded upwards, especially among lower rated companies.  At some point this will have an ending and it will not be a happy one:

The overall effect of more leverage is that the next time there is a macro shock both equity and debt will be more sensitive to a downturn. Investors may not feel any impact today, but when it comes the effect on markets will demonstrable.

Commercial

Survivor: A few short years ago, Best Buy was nearly left for dead.  However, in contrast to doomed Toys R Us, the electronics giant focused on paying down debt and focusing on customer experience.  Now Best Buy is firing on all cylinders and offers a road map on how a legacy big box retailer can survive in the age of disruption.

Out of Balance: There is a ton of new office space getting built in the Bay Area but not very much housing for all of the workers it attracts.

The Only Constant is Change: This info-graphic showing the evolution of NYC’s skyline over the past 100 years is really cool.

Residential

Exodus: High cost of living is California’s loss and Boise and Reno‘s gain.

Deep Discount: Property tax exemptions saved Californians $30 billion in 2018 (but were a primary driver of spiraling development impact fees).

Warning Sign?  New home sales were down sharply in September but have not yet reached the level of decline that typically precedes a recessionSee Also: Yes, September housing reports were terrible but the yield curve is probably a more reliable recessionary indicator and it has not yet inverted.

Profiles

At What Cost?  CBD – the lesser known compound in marijuana than THC that won’t get you high – is showing up everywhere.  However, no one really knows how to properly dose it and the compound can get incredibly expensive.

A (Townie) Sucker Born Every Minute: Per capital lottery spending has doubled since 1995, led by Massachusetts where an astonishing $767 is spent on the lottery per person, per year.

Chart of the Day

Shot

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And chaser

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WTF

Gotta Hear Both Sides: A Denver Broncos backup QB was arrested when he wandered into a random house wearing a cowboy costume and mumbling incoherently after attending the team’s (allegedly) drug-themed Halloween party.  He was also allegedly beaten with a vacuum hose by the homeowner who found him sitting in their living room.

Last Wish: Adults are asking their families to scatter their ashes at Disney World which is probably the saddest (and grossest) thing that I read this week.

Udderly Weird: A woman who was busted for shoplifting from a Walmart while wearing a cow costume told police that they could “suck a pink cow udder” because Arkansas.

Public Servant: A local politician has resigned after being charged with murder because Florida.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

Visit us at Landmarkcapitaladvisors.com

Landmark Links October 26th – Nailed It

Landmark Links October 23rd – Barbarians at the Gate

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Must Read: Google, Amazon and Tesla are making a push into the notoriously slow-to adapt housing industry in various ways with the benefit of having much larger balance sheets than the incumbents and cultures that encourage innovation and disruption.

Economy

Moon Shot: Wages for the top 1% of earners are now at their highest level ever at $719k a year and are growing at a rate nearly four times those in the bottom 90% of earners.

USA #1! The United States regained its top spot as the world’s most competitive economy in the World Economic Forum rankings for the first time in a decade, thanks to strong economic growth.

Plateau? The real cost of college is flattening even as tuition costs keep rising as schools offer more aid to attract a shrinking pool of students.

Commercial

Playing Catch Up: Real estate companies are increasingly becoming venture investors in prop-tech startups as they search for an edge.

Taking Root: The legal marijuana industry is emerging among the vineyards of  California’s wine country.

Popular: Sean Parker – of Facebook and Napster fame – crafted a little-known part of the tax code called Opportunity Zones. Now every one-percenter in Silicon Valley wants inSee Also: The IRS has finally released Opportunity Zone guidelines.

Residential

Build-Up: Check out this statistic from Calculated Risk showing how inventory trends have changed dramatically in California this year.  Reminder: if prices do begin to actually fall (rather than increase at a slower rate), the catalyst will be an increase in supply – which is has barely budged nationwide but up substantially in CA.

Statewide active listings rose for the sixth consecutive month following 33 straight months of declines, increasing 20.4 percent from the previous year. September’s listings increase was the biggest in nearly four years.

Head in the Sand: Experts across the board say that California needs to build a lot more housing but the public disagrees.

Profiles

Covering All of the Bases: Uber is targeting the trucking industry via a new trailer rental business with their IPO looming.

This is Really Cool: How the Sears catalog subverted the racial hierarchy of Jim Crow.

Vultures: Crypto M&A is on a tear as deal-makers see opportunity in plunging coin values.

Groundswell: Two thirds of all Americans now support legalizing marijuana.

Chart of the Day

Multifamily housing starts are falling rapidly.

A big reason is inventory overhang.  For those of you interested in how the construction labor shortage will resolve, this could eventually be it.

Source: The Daily Shot

WTF

Gotta Hear Both Sides: A man trashed a hospital while being treated for consuming a Tide Pod because Millennials.  Reminder: its time to raise the voting age.

Pimpin’ Ain’t Easy: Dennis Hof – assembly candidate and brothel owner – suddenly died last week but is still highly likely to win his election because Nevada. Remember, if you feel like your job is useless and your contributions mean nothing, it could be worse.  You could be the person who ran an assembly campaign and lost to a dead pimp.

Darwin Award Attempt: A guy who skinny dipped in an aquarium shark tank was arrested in Canada because drugs are bad.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

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Landmark Links October 23rd – Barbarians at the Gate