Landmark Links September 25th – Battle of the Bay

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Lead Story…. The flood of easy money from venture capital is having a huge impact on on the cost of living in cities where the tech industry abounds.  A new study from Zumper, an apartment rental startup (ironically venture backed) found that VC capital is responsible for up to 35% of the cost of rent in San Francisco, which also suffers due to restrictive zoning. See Also: As rents soar, even some people with full time jobs are homeless in San Francisco (even the guy who drives the Apple bus is living in a mini-van and he makes $30/hour).  At some point, the VC gravy train will slow down or stop and the fallout in some of these overextended markets will be ugly.  For a good primer on the lack of affordable housing in the Bay Area, this is the best I’ve found.

Landmark Transactions

Kind of a Big Deal: Landmark raised $100MM of non-recourse development debt on Portola Center South, a 626 unit residential project in south Orange County.  It’s our biggest deal to date!

Economics

Get Low: Interest rates across the globe are literally at their lowest point ever in the history of mankind.

Ghost Country: There are now approximately 8 million empty homes in Japan as population decline takes a serious toll.

Close Call: Last week’s Federal Reserve vote to keep interest rates unchanged was rather contentious.

Construction Lending Conundrum: New Basel rules are a major threat to construction lenders and to liquidity in the building industry.

Don’t Call it a Comeback: How the homes of iconic mid-century modern designer Joseph Eichler made a comeback.

Commercial

Booming Demand: Downsizing Baby Boomers are fueling the multi-family market.

Residential

Shots Fired: JP Morgan Chase and other big banks are giving FHA loans The Heisman because they believe that the FHA’s underwriting standards are too low.  “FHA requirements are down to a 520 FICO (credit score) and you only have to put 3.5 percent down; that’s subprime lending, and we’re not in the subprime lending business,” said Kevin Watters, CEO of Chase Mortgage Banking.  The NAR believes that this move by the big banks is hurting the housing recovery by making less credit available to lower income borrowers.  Ouch.

Taking Share: Mortgage origination was way down in 2014 mostly because mortgage rates were higher than 2013.  However, non-bank lenders made up a bigger portion of the market than any year since 2015.

Selling Out: New home sales were well above consensus for August as the market continues to slowly heal.

Drought

Break out the Tinfoil Hats: There is actually a growing movement that believes the California drought is part of a government conspiracy because some people are idiots.

Learning from the Past: Saudi Arabia plundered it’s groundwater, from the 1970s to 2000 and it’s agricultural industry collapsed.  California should take note.

Profiles

Loss of an Icon: Rest in Peace Yogi Berra, legendary baseball player, veteran, all-around good guy and a true American hero.

The Bill Belichick of Car Companies: Volkswagen is about as honest as the Patriots dirt bag coach.

Nip and Tuck: Plastic surgery in Brazil is becoming a major draw for international travelers since the real dropped to a record low.

Collateral Damage: The oil plunge has had a devastating affect on the surprisingly large market for sand.

Sports 

How About Them Cowboys: Jerry Jones’ evaluation of Brandon Weeden explains everything that you need to know about the Cowboys over the last 15 years or so.  I hope for his sake that he was heavily medicated after another plastic surgery procedure and just started saying asinine things.

Chart of the Day

The gap is closing, albeit slowly.

WTF

Disturbing Stat of the Day: More people have died this year from selfies than sharks.

Criminal Defense FAIL: A Pennsylvania robber who represented himself and blamed his evil twin for a string of armed robberies got 62-124 years in prison.

That Escalated Quickly: Watch a Dallas high school drill team dance-off become a brawl.

I Thought This Only Happened at Walmart: A 78 year old California man is recovering after he was punched in the face by a 24 year old over a sample Eggo Waffle at a COSTCO in Burbank.  In other news, I’ve pretty much lost all faith in humanity.

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

Visit us at Landmarkcapitaladvisors.com

Landmark Links September 25th – Battle of the Bay

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