Landmark Links April 21, 2015 – The Blob

Quote of the Day….. “We’ve got enough millionaires here.  What we need is some houses for regular working people” – Director George Lucas trolling the shit out of his Marin County neighbors about his plans to build a large affordable housing project on his property there.  Lucas wanted to expand his Skywalker Ranch studio and the NIMBY neighbors said “hell no.”  This is quickly becoming one of the best Nimby fights ever.  Be sure to make yourself some popcorn before reading the highly entertaining comments in this article.


Murica!: Move over Saudis, the US is quickly becoming the swing producer in the oil market.  The change over from a state-run to market-based swing producer will likely be one of the biggest global economic themes in the coming quarters.  In other words, expect volatility.

Happy Days are Here Again: The 9-month west coast port labor debacle finally ended in February.  Port traffic is rebounding big time.

Student Debt Disaster?  Not quite, if you believe a recent report from Goldman Sachs.  Goldman views large student loan balances as a substantial economic headwind but argues that the probability that they will trigger economic disaster as quite low.


Office Space: Anyone who follows office markets knows that one of the headwinds facing that particular product type is the steadily reducing footprint of each office worker largely due to the proliferation of group work space and open office plans that originated in Silicon Valley.  Workers are beginning to push back against what they view as an inefficient layout.

Dollar Denominated Debt Debacle: The development business is perilous enough without taking currency risk.  One major Chinese developer is finding this out the hard way as a Chinese slowdown coupled with the dollar’s rise and a corruption probe cause it to default on dollar denominated debt.


Bring on The Blob: The date is late 2015.  California is now about to enter its 5th year of a drought that has led to dried up crops, crippling water use restrictions, a plunging water table and economic chaos.  The only thing that can save us now is The Blob, currently lurking in his lair out in the middle of the Pacific Ocean.  If that doesn’t work out, William Shattner is trying to raise $30 Billion (with a B) on Kickstarter to build a water pipeline from Seattle to LA.

On the bright side, necessity is the mother of invention and we are about to see even more focus on water saving technologies in new homes.


There is a growing drumbeat out there that the home market is about to pick up.  Recent activity in publicly traded home builder stocks as well as a dramatic reduction in distressed sales certainly seem to point that way.  However, temper your enthusiasm a bit because even Lawrence Yun, the permanently bullish National Association of Realtors economist has admitted that Boomerang Buyers – the +/- 9.3 million folks who lost their home to foreclosure in the bust and will now buy again – “won’t be a significant factor to the housing market going forward.”

Some expensive west coast markets like San Francisco are finally getting more new development but it isn’t enough to even put a dent in demand.

Commercial Real Estate

Commercial real estate has been on an incredible tear as private equity is increasingly becoming a real estate focused investment leading to too much money chasing too few deals.  There are several signs that the good times will continue to roll.  In further confirmation of this trend, US REITS are the top-producing asset class over the past year.


“The Dumbest Person in Your Building Is Passing Out Keys to Your Front Door!” Air BnB has become one of the most controversial startups around.  Supporters of the room share app claim that the company helps travelers have a “more authentic” travel experience while allowing homeowners and renters to defray some of their bills.  Affordable housing advocates claim that it drives housing prices up by taking units off the market as they are converted from long-term to more lucrative short-term rentals.  New York is ground zero for this battle which has become personal.

Chart of the Day

West Coast Port Rebound

cotd west coast ports



Caveat Emptor: John Corzine (yes THAT John Corzine) is considering launching a hedge fund.  Given his past track record at MF Global, if you invest in this, you are an idiot.

Here’s a creative way to keep drunks from peeing on your building: a wall that pees on you if you pee on it.

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

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Landmark Links April 21, 2015 – The Blob

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