Lead Story: The US trade gap narrowed by a massive 19.2% in April as the effects of the West Coast port debacle finally faded. We appear to have finally worked through the backlog of goods that was sitting on ships during the dispute. In addition, the May jobs report was a blockbuster.
Dude, where’s my raise? Private employment is increasing and jobless claims have now fallen to their lowest level since 2000. However, wages are rising but not by much. In other words, we are close to full employment but you wouldn’t know it by looking at wage growth, especially for the middle class. This is just one factor that led to the IMF cutting its US forecast and warning the US Federal Reserve to delay raising interest rates until 2016. However, the Fed will have something to say about that after today’s strong job numbers though. When it comes to finding a job that pays well go west of the Mississippi, West Coast = Best Coast.
Commercial Real Estate
Class B as in Booming: Tech companies love class B office space and in some markets that is leading to rising rents and declining vacancy in an often unloved portion of the market. In a related story, look for office rents to continue higher in 2015-2016 as the market keeps improving.
Improving but….: Stuart Miller, CEO of Lennar summed up the housing market perfectly in an interview on Wednesday: “For the average American across the country … it’s really tough to buy a home. Homes are in short supply and we haven’t seen production come back.”
The plunge in the bond market in the past couple of weeks and corresponding rise in mortgage rates has led to weekly mortgage applications slowing to a trickle. The reduction in down payment requirements for government backed loans seem to be working as average down payments have fallen to 14.8%, a 3 year low. Remember all of those folks talking about how houses would be getting smaller after the Great Recession? They couldn’t have been more wrong. Despite a brief blip 5 in 2009, houses today are bigger, have more bedrooms, more bathrooms and larger garages than ever before. Here are some fascinating charts of how new homes have changed over the past several decades.
When your only tool is a hammer, every problem looks like a nail: Unless you’ve been living under a rock, you’ve probably heard that housing prices in LA and San Francisco are out of control and leading to an affordable housing crisis. The cause? Strong economies and extreme land use restrictions. A logical person would think that the cities would be doing everything that they could to encourage construction of more housing units. However, this is SF and LA we are talking about so logic plays no role in their response to the crisis. San Francisco’s solution was to try to introduce a luxury housing moratorium on building in the Mission District. A majority voted in favor of the moratorium but, thankfully it fell two votes short of the required number to pass. Not to be outdone, LA is considering banning certain AirBnB landlords who are being scapegoated as culprits in the city’s ever-rising rents. At least there is some good news in LA. Turner Impact Capital announced that they are attempting to raise a $1 billion fund that will target building or redeveloping apartments for people who make 80% of the area’s median income.
FIFA Foe: Meet Andrew Jennings, the curmudgeonly British reporter who took down Sepp Blatter and FIFA.
Chart of the Day
New homes in the US keep getting bigger.
Source: Business Insider
Aspiring Jihadists take note: Taking a selfie in front of ISIS headquarters and posting it on a social media site is a really stupid idea. America. F*&k Yeah! (h/t Tom Reimers)
Homeless Heroes: Find out how some homeless people in Portland became my heroes by knocking over a port-a-potty.
Name Hall of Fame: A doctor named Run Wang published a study that found that drinking 2-3 cups of coffee a day could reduce the likelihood of having erectile dysfunction.
Adult Science Fair: Snoop Dogg is under fire for calling Bruce Jenner a science project.
Landmark Links – A candid look at the economy, real estate, and other things sometimes related.
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