Lead Story… The oil crash has left Houston, once the darling of the US recovery in a difficult spot. Despite much touted attempts to diversify it’s economy, the 3rd largest city in the US is still an energy hub at it’s core and is getting hammered by falling prices that have led to layoffs, vacancies and falling home prices. The high end is not immune. Wealthy communities, fine dining and even the Houston Orchestra are now getting hit. As an aside, I had a conversation with a local commercial broker friend over a year ago who related that “the music had already stopped” when it came to activity in Houston office space. Today there are over 70 office spaces of 100,000 or greater available in the Houston MSA. Look for rents and values to continue to fall as the market adjusts to the harsh realities of much lower oil prices. As bad as things are in Houston, it could be much worse. For all of it’s issues, Houston is still a vibrant international city that people want move to and there are other strong industries like logistics and banking (although energy is dominant). North Dakota is not so lucky. Literally no one who moved to the barren arctic tundra that is North Dakota in the past 10 years would have gone there had it not been for the fracking boom. Now they are paying the price. At least the transplants can move though. Anyone who built new rental or for-sale housing there is now stuck with a ton of inventory in a place where no one wants to live until oil surges again. Best of luck with that. See Also: Check out this fascinating interactive graphic of the deployment of oil rigs over the past 5 years….and then watch it vanish almost instantly in 2015 when the market hit the wall.
Bumpy Road: Bad loans aren’t just popping up in the energy sector. Auto loans are seeing a rise in defaults as well.
Steady Decline: Durable goods have been getting cheaper since the mid-1990s, even as services and non-durable goods continue to get more expensive.
Top it Off: Oil inventories are at record highs and the market is so oversupplied that traders have resorted to leasing idle rail cars as so-called “rolling storage” to stash excess crude in.
Bigger is Better: Size matters when it comes to mortgage REITS. There has been quite a bit of consolidation in the space to diversify risk and there is a good chance that we will see quite a bit more in the coming months.
Getting Crowded: RealtyShares latest fundraising round is just the latest example of how crowdfunding is becoming a more mainstream source of capital in real estate deals.
Shut Out: As the housing affordability crisis deepens, manufactured homes are the only viable option for many families. However, financing options are limited and often times much more expensive than conventional home financing. A new FHFA proposal would give borrowers more access to government backed mortgages, bringing rates down closer to the level of traditional home loans.
Meh: New home sales were down over 5% Year over Year in January as consumers expressed caution in the face of an uncertain market.
On the Comeback Trail? The Phoenix market has been in a new home slump for the better part of the past 7 years. However, strong January numbers including a 57% increase in building permits indicate that the market might be headed in the right direction.
Fading Away: Once considered the “next big thing,” tablets are on the decline due to long replacement cycles, the rise of larger phones and a lack of ability of manufacturers to turn a profit.
Misleading: Sorry to break this to you but your Fitbit is more full of BS than a politician in an election year.
Packed Like Cattle: America’s airlines are introducing a class below economy because America’s airlines all suck.
Chart of the Day
Whisky Tango Foxtrot
Totally Worth It: A Florida man was shot at a Cleveland strip club after getting into an argument about whether Florida or Ohio strip clubs are better. I’m generally not a big strip club fan but I’d probably have to guess that Florida wins this one. However using Cleveland as a comparison in just about anything is setting the bar really low.
Gullible: Police in Madera County, California fielded a call about a runaway “unicorn” last week that led to officers chasing a white pony with a horn strapped to it’s head all over town for 3 hours. Police even resorted to employing a helicopter with heat-seeking radar to track down the faux mythical creature in a orchard before finally catching her. I wonder how much that cost? Your tax dollars at work.
Be Sure to Wash Your Sheets: Hampered by new LA County regulations, porn producers are now renting out AirBnb listings in surrounding cities for shoots, often without the owner’s knowledge. One homeowner filed a lawsuit after she found sex toys under a bed. A recent rumor that AirBnb has offered to start giving their landlords black lights has not been confirmed when this blog was published.
Video of the Day: Listen to a cockatoo go on a verbal f-bomb tirade as it’s cage is destroyed.
Landmark Links – A candid look at the economy, real estate, and other things sometimes related.
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