LANDMARK LINKS – APRIL 14th: Hit the Floor

Quote of the Day….. “It’s tough to make predictions, especially about the future.” – Yogi Berra referring to recent surveys by Fannie May and National Housing Survey that indicate both consumers and senior mortgage executives believe that home prices will continue to rise this year in the United States.  REIS is also largely bullish on the commercial market.  At least for the next 3 years.

Economy

Americans are on a shopping spree these days and they are spending more than you think.  Companies that sell consumer discretionary products are reporting record sales that seem at odds with reported government retail statistics.

Middle Class Blues: ““families that are neither rich nor poor may be under more downward economic and financial pressure than common but simplistic rank-based measures of income or wealth would suggest.” – Federal Reserve Bank of St. Louis

See Also: Why American wage growth is still weak.

Corporate

Too much money chasing too few deals?

800 lb Gorilla: Blackstone is looking more and more like a real estate investor (as opposed to a private equity shop) with its purchase of GE Capital’s real estate assets.

See Also: Private equity is increasingly becoming a real estate dominated field.

Pretty soon you will be able to order a plumber to unclog your toilet with the click of a button the same way that you order toilet paper: Amazon and Google are making a run at the over $400 billion home services industry.

With few distressed homes left to buy at auction, major investors are now turning to technology and often buying sight unseen: “With the low-hanging fruit from the housing bust mostly picked, Wall Street-backed buyers of real estate are increasingly turning to quantitative data analysis as a way of accelerating their search for a dwindling supply of available homes that can be transformed into rental properties. Math-driven models powered by historical patterns can size up homes sight unseen and calculate future income in minutes, allowing private-equity giant Blackstone Group LP, the Alaska Permanent Fund Corp. and other bulk purchasers to skirt neighborhoods with softer rental demand or properties that need costly repairs.”

Bellwether Housing Markets

Active inventory in Phoenix is falling again potentially signaling an more rapid increase in prices later this year.  Inventory in Las Vegas is still rising, albeit at a slower rate.

International Real Estate

Hell of a business model you have there – some brilliant European banks that lent at extremely low spreads and didn’t set floors on their mortgages are now facing the specter of owing borrowers money on a monthly basis as indexes dip below zero.

Related: Central Banks are discovering that too much money is a big problem.  Especially when it has nowhere to go.  “Who’s right? It doesn’t really matter. The facts on the ground are the same. There’s too much money and not a lot to do with it. And that’s why we’re seeing investors make some interesting, seemingly non-economic decisions with their piles of cash.”

Housing

California’s housing market now faces two major scarcity issues that are 100% at odds with each other: water and housing.  Our economy is recovering quickly and people still want to move here but it’s increasingly expensive to rent or own and we aren’t building nearly enough residential units to meet demand due primarily to decades of awful housing policy and land use restrictions.  Add an epic, multi-year drought into the mix in a state that produces much of the agricultural products that Americans consume and you have the makings of a crisis.  In other words something has to give.  In reality, California is not running out of water.  It is running out of cheap, fresh water.  The calls for desalination are growing louder.  Expect them to continue.

Profiles

Back in the Saddle: Remember how Dick Fuld tanked Lehman Brothers?  He is now playing a major role in the tanking of a Malibu Golf Course.

Break out the World’s Smallest Violin (and the pine tree air freshener): Meet the NY Taxi mogul who is seeking a city guarantee for loans against taxi medallions which have been falling in value with the rise of Uber, Lyft and other ride sharing apps, leading to a liquidity crisis in taxi financing.

Chart of the Day

Negative Interest Rates

Source: Quartz

WTF

If you can watch a video where a drunk man skateboarding in a taco costume gets hit by a car and not laugh, you are a better person that I am.  You were also likely born without a sense of humor.

Police warned a Florida man (notice a theme here) not to stalk squirrels anymore.

Correlation vs. Causality: I haven’t a clue if there is anything to this or not but I’m finding myself craving a grilled cheese sandwich right about now.

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

LANDMARK LINKS – APRIL 14th: Hit the Floor

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