Landmark Links September 11th – Straight Outta Land


Lead Story…. Must read of the day comes from Noah Smith at Bloomberg: As economies become more complex, industries tend to cluster closer together and people tend to want to live in more desirable, productive environments.  The result?  Land values in the most productive areas go through the roof as scarcity reigns supreme even if there is plenty of land available for development in other, less desirable areas. Residential property is becoming a steadily larger percentage of GDP which can lead to slower economic growth long-term.  Not good.


Fed Up: Odds are that there is going to be quite a bit of dissent among voting members regardless of what the Fed chooses to do next week.  Calculated Risk provides a great overview of what’s going on.  See Also: Bond traders aren’t convinced that the Fed will actually raise rates.

Secret Sauce: Is an increase in interest rates what US banks need to finally break out of the malaise left over from the Great Recession?

Other Side of the Coin: On Wednesday, we talked about how housing hadn’t done much to contribute to economic growth in this cycle.  The potential upside to that?  Housing could provide a strong tailwind to the economy for quite a while……if it reverts back to the mean.


Chinese-Made Life Preserver: Bank of China helped keep the commercial real estate market afloat in New York as domestic lenders pulled back during the Great Recession. Some are looking for the state-owned behemoth to make an even larger push into foreign markets as economic chaos reigns at home.

New High: Multi-family investment in the US has never been higher as demand for rentals remains relentless despite concerns about overheating.


Chicken or the Egg: Why is home building lagging job creation? Ask a realtor and they’ll likely tell you that it’s a supply problem.  In other words, by focusing mostly on high price points, builders aren’t producing much product that middle-income buyers can purchase in large volume.  Ask a builder and he’s likely to tell you that it’s a demand problem and that builders would construct more units at lower price points if there was enough demand to justify it.

Consolidation Conundrum: In 1994, the largest 10 builders in the US controlled less than 10% of the new housing market.  Today, they control over 26%.  With less financing available for smaller builders and of most of the large builders executing a business plan that Ivy Zelman of Zelman & Associates describes as “shooting down the very straight, narrow fairway,” has consolidation hurt the home building industry?

Rental Redux: During the later stages of the Great Recession, large private equity firms bought up distressed housing inventory and held on to it as a leased investment, helping to eat up supply and stabilize the market.  Most of those opportunities are long gone but some investors have begun purchasing new homes as for-lease investments.  Some large builders such as Lennar are actually designing and building homes specifically for lease.  Is this a trend that can continue as rents rise (but land prices do as well)?

I Call Top Bunk: If you can’t afford an apartment in San Francisco, you can now rent a bunk bed for $1,800 per month in a hostel via AirBnB.

Sports – NFL Opening Weekend Edition

Subsidized Money Machine: The NFL is an incredible cash-generating machine yet somehow billionaire owners still manage to shake down taxpayers to build new stadiums.

Shady Dynasty: Tom Brady’s suspension might have gotten overturned this week but the Pats have been a sketchy operation for a long, long time.

Have You Ever Wondered.…what all 32 starting NFL QBs would look like if they were bald? Now you know.

Football Taken Literally: If you haven’t heard, overpaid buffoon and Bills head coach Rex Ryan has a thing for feet.  We were reminded of that fact recently when a photo shoot for a local animal shelter group in Buffalo revealed that he keeps a framed photo of his wife’s feet on his desk.

Chart of the Day


Idiots: A 777 headed to London caught fire on the runway in Las Vegas and was engulfed in flames earlier this week. Rather than evacuating immediately, some passengers took the time to grab their carry on bags because people are morons.

Word of Advice: Do NOT take a pee in a field where poisonous snakes might be present.  It can end very, very badly.

Busting the Budget: Alabama lawmakers recently passed a budget bill that included a 40% porn tax.

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

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Landmark Links September 11th – Straight Outta Land

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