Landmark Links November 10th – Out of Balance

seesaw

Lead Story… 2015 has been filled with stories about how housing starts have missed the mark and what’s to blame: a shortage of lots, a shortage of labor, fear of rising interest rates, etc.  But what if the answer is something simpler?  Adam Artunian from John Burns Real Estate Consulting put out a research note last week illustrating that many markets in California now have median new home prices that are above GSE conforming loan limits, making obtaining financing harder for new home buyers.  This means that over half of new home buyers need jumbo mortgages which are significantly more difficult to qualify for, all of which stifles demand, leading to lower starts.  Want to see a real time example?  Look no further than Orange County where new home sales have slowed for 10 straight months while sales of existing homes surge.  On average, new homes cost $250,000 more than existing homes in OC.

Economics

Best Yet: October’s non-farms payroll report was by far the best of 2015 and there were also upward revisions to prior months.  There was a lot to like including an increase in hourly wages and full time employment.  There were even signs of hope for workers who don’t have a high school diploma.  Now all eyes are on the Fed’s December meeting.  Many believe that this latest jobs report will give Janet Yellen and the Fed, the ammo that they need to finally raise rates.  However, there is also a large camp that wants to see more improvement in wage gains before the Fed acts.

Silver Lining: The dollar has been on the rise all year and the October jobs report will only provide more fuel for that fire.  This has taken a toll on US exports as the higher dollar makes our goods more expensive for foreign consumers.  The bright spot for US exports has been services, which have not been hit nearly as hard.

Highly Concentrated: Check out this cool 3d map from MarketWatch that shows where economic output is in the US.  Spoiler: it isn’t the flyover states.  See Also: the 20 richest cities in America.

Commercial

Subsidized: Taxpayers are subsidizing billionaires in blockbuster apartment deals.

Much Ado About (Almost) Nothing: Despite a lot of hand-wringing AirBnB has had very little impact on the hotel industry (but that could change during the next recession).

Residential

The Squeeze: First time home buyers continue to retreat from the US housing market. However, “desire to own” is on the rise as rents continue to spike.

Nature is the New Golf: As golf continues to dwindle into irrelevance, developers are increasingly turning to nature as an amenity by building developments around preserves.

Can You Spot the Problem? It now costs an average of $289,415 to construct a new house in the US.  The nationwide median home price per Zillow is approximately $182,500.  Still wondering why there aren’t many new homes being sold to entry level buyers?

Road Map: AirBnB’s highly successful campaign against Proposition F in San Francisco provides the room-share company with a template to fight proposed regulations in other cities.

Profiles

Game Changer: There is a lot of questionable stuff going on in the biotech world like this and this.  However, a new experimental “designer” immune cell therapy that could cure leukemia appears to be the real deal.  (h/t Mike Deermount)

Careful What You Wish For: A new study shows that success can cause an identity crisis for long suffering sports fans.  See that, Cubs fans: I found a silver lining for you.

Transformation: Fascinating story of how the development of UCI Irvine helped to transform the Irvine Ranch.

Necessity is the Mother of Invention: Last week, we posted an article about how coyotes are becoming more and more prevalent in populated areas.  A company called Coyotevest has come up with a novel approach to keep your purse rat safe from the wiley predators: body armor for small dogs, complete with spikes that emit a remote control electyric shock should little Fifi get snatched on a walk. Or you could just get a real dog and the coyotes will leave it alone.

Chart of the Day

WTF

Do it For Science: A lab called OpenBiome in Medford, Mass (home of my alma mater Tufts University) is offering $250 per week or $13k per year to people who donate their poop every day to be used in something called a fecal transplant (I’m not making this up). The catch is that you have to live near Medford to participate. This is the first time in 15 years I’ve considered moving back to Boston. 

Kids These Days: Apparently “Sexting Rings” are now a thing….at least in Colorado.

Tax Dollars at Work: The German government is still paying the pensions of Spaniards who volunteered to fight for the Nazis in World War II.  And I thought that the way that California spent tax dollars was bad.

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

Visit us at Landmarkcapitaladvisors.com

Landmark Links November 10th – Out of Balance

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s