Landmark Links October 13th – Back to the Future

Back to the Future

Lead Story….. Back to the Future Part II predicted that the Cubs would win the World Series in 2015.  Sure enough, the usually inept Cubbies are still alive.  So perhaps it’s time for another idea from the past to make a comeback.  40-60 years ago, it wasn’t uncommon for residential home builders to build both for-sale and for-rent homes in the same project in order to move through a piece of land as quickly as possible.  However, over the past few decades residential builders have all but abandoned for-rent housing, making it the nearly-exclusive domain of apartment developers.  That may be changing.  Builders (including some publics) are now revisiting the New Home For Rent model as a viable way to boost absorptions, lower closing costs and reduce future liabilities.  Today’s must-read is from George Casey at Builder Magazine who argues that the time has come for single family for-lease projects.

Economy

High Water Mark: The latest data shows that the US economy has likely hit it’s high water mark for growth in this cycle.  The Fed still hasn’t raised rates, and uncertainty is only increasing as to whether or not they will be able to this year.  If job growth slows further, we may be looking at late-2016 or beyond.

Timber! Framing lumber prices are down sharply on a year to year basis and lumber futures have fallen to 2011 levels.

No Participation Trophy: A new report from Goldman Sachs projects that both the Labor Force Participation Rate and the Unemployment Rate should continue to fall through at least 2018.

Looking for a Lifeline: Here’s why higher interest rates would be good for bank profits.

Chasing Returns: Bond funds are becoming more and more aggressive with leverage to boost returns.

Passing Gas: Solar and wind energy projects are becoming more viable as capacity builds.

Commercial

Defying Gravity: Multi-Family landlords are expected to hike rents by an incredible 8% this year as rent continues to outpace wage growth by a large margin.  See Also: is 2015 “peak renter?”

Unicorn: Here’s the deck that WeWork, the startup co-working company that allows workers to lease office space by the desk used to convince investors that it is worth a whopping $10 billion.

Booming: Hotel occupancy is on track for its best year ever in 2015.  However, with a large number of new supply coming on board, the cycle is starting to look a bit long in the tooth.

Green For A Green Card: EB5, the immigration program that allows wealthy foreigners the chance to get a green card by investing in job creating developments is under increased scrutiny as it comes up for renewal.

Residential

Clouds on the Horizon? International buyers accounted for their smallest share of the California home sales market in 8 years, as China makes it more difficult to move money abroad.

Moon Shot: This cool interactive map shows how San Francisco went from un-affordable in 2010 to ridiculously un-affordable in 2015.

Reading the Tea Leaves: Bank earnings give good clues as to the health of the housing market.

Literally in a Bubble: Whether you think the housing market is in a bubble or not, I’m pretty sure that we can all agree that $455MM for the hideous Le Palais Bulles (Bubble Palace in French) is insane.

Drought

Too Big to Fail: According to scientists, the massive El Nino is now past the point of no return.  See Also: California’s drought will end eventually but it won’t be our last. Conservation is the new normal.

Profiles

Unsung Hero: There is an unsung hero to the NY Mets remarkable 2015 season who you aren’t likely to hear about during the MLB Playoffs.  He lives in a jail cell in Butner, North Carolina and his name is Bernie Madoff.

Pizza Delivery: Increasingly shady car title lenders have resorted to desperate measures like posing as pizza deliverymen for their repo operations according to consumer complaints.

The Cheesecake Factory of Bonds: Bill Gross filed a lawsuit against PIMCO, accusing execs at his former company of pushing him out to get a bigger slice of the bonus pool.  He also accused the Newport Beach based bond giant of losing focus and pursuing a Cheescake Factory investment approach.

Markets

Boom Town: Seattle is experiencing a building boom, brought on by a tech boom.  The city is trying to walk the fine line of maintaining it’s character while avoiding the mistakes that led to San Francisco’s affordability debacle.

What Happens in Vegas: The Sin City housing market is improving and prices are moving higher again.

High Rises, Higher Prices: Most of the new housing units being built in ultra-expensive Washington DC are high rises….which doesn’t do much to help affordability.

Chart of the Day

WTF

Paging Charles Darwin: Here’s a list of the 10 worst selfie-related accidents to date.

Hairy Situation: Bearded hipsters in Sweden were recently mistaken for Isis terrorists.

Lightweight: An Ohio stoner called police to report that he was “too high.”  They arrived at his home and found him “in a fetal position, surrounded by a plethora of Doritos, Pepperidge Farm Goldfish and Chips Ahoy cookies.”  In other news, Doritos, Pepperidge Farms and Chips Ahoy are in a bidding war to feature him in a Super Bowl commercial.  See Also: new research finds that, scientifically speaking, a runner’s high isn’t all that different from getting stoned.

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

Visit us at Landmarkcapitaladvisors.com

Landmark Links October 13th – Back to the Future

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