Bill Dudley is the President of the Federal Reserve Bank of New York. He is a member of Janet Yellen's inner circle. Dudley is the only Fed official not appointed by the President who gets a permanent vote on monetary policy. In a speech yesterday, Dudley seemed to endorse the idea that what the economy really needs is for more homeowners to again start using their homes as ATM machines. This was of course what boosted economic growth during the real estate bubble, but as most Americans found out (but apparently not Mr. Dudley) home-equity extraction is an unsustainable and dangerous source of … [Read more...]
These are the Most Expensive Housing Markets in the Country
Janet Yellen's 8-year yield heist has done wonders to help home prices recover from their 08-09 crash. But the gains made in home prices haven't been driven by sustainable fundamentals. Home prices have outpaced income gains in many housing markets. MarketWatch reports on some of the least affordable housing markets in the nation. New York County and San Francisco County predictably top the list, according to data from the U.S. Census Bureau comparing median home values against median household income. The median home price in New York County was 11.6 times the median income ($849,000 versus … [Read more...]
Are Parents Sick and Tired of Living with their Kids?
New data from the Census Bureau shows that almost 40% of young Americans were living with their parents in 2015. That's the highest rate since 1940. I have regularly encouraged Millennials to buy a home if possible (read here, here and here). Chris Kirkham reports in The Wall Street Journal that with so many young Americans living in their family homes, there's much lower demand for housing than there would be typically. The trend runs counter to that of previous economic cycles, when after a recession-related spike, the number of younger Americans living with relatives declined as the … [Read more...]
Rising Rates a Threat to Commercial Real Estate
The Wall Street Journal reports on the risks a reversal in interest rates presents to the bubble conditions in commercial real estate created by far too easy money from the world's central banks for far too long. The commercial real-estate boom of the past few years has been driven by global investors seeking out returns better than those found in low-yielding bonds. But that dynamic could start reversing, analysts said, as ultrasafe government bonds start to offer yields that make commercial property look less desirable in comparison, given the potential risks. Bonds have sold off beyond … [Read more...]
These Companies have the Highest Sales Per Employee
The table below shows the top five industry groups that have the highest median sales per employee according to Bloomberg. Real Estate, Energy, and Utilities make the top five. Why are these industries so profitable? All three are highly capital intensive. Owners are earning returns on the capital investments they make more than the labor they manage. Insurance and diversified financials also make the list. Diversified financials includes investment banking, investment management, and mortgage REITS. The financial industry is one of the most competitive industries, but also one of the most … [Read more...]
Gated Enclaves that Cater to Horse Lovers
The Wall Street Journal unveils a terrific new high-end concept in the niche residential gated communities marketplace. WSJ informs its readers that a select group of residents at Brays Island Plantation, a 5,500-acre gated community in coastal South Carolina, are pampered with massages, acupuncture therapy and custom diet plans. Gated enclaves that cater to horses—and the home buyers who love them—are laying on equine-friendly amenities like never before, with state-of-the-art stables, jumping and dressage rings, polo fields and miles of maintained trails. Residents can saddle up borrowed … [Read more...]
If More Rate Hikes are Looming, is Real Estate at Risk?
If markets really believe that Fed rate hikes are coming, will their impact be felt first in real estate markets that have enjoyed record low rates for the better part of a decade? The Financial Times reports: The US real estate sector faced heavy selling pressure on Thursday, as Treasury bond prices declined, amid rising expectations that the Federal Reserve will raise interest rates this year. The market-implied odds that the Fed increases rates in December have crept higher throughout October, hitting nearly three-quarters on Thursday from 60 per cent at the start of the month, as data … [Read more...]
Where Renting is More Popular than Buying
In the U.S., home ownership is regarded as a positive for society. The political class talks about an ownership society and promotes home ownership through the tax-code. Here Quartz explains why and how Germany became a country of renters. The home ownership rate in Germany, one of the richest countries in the world, is only 43% compared to 66% in the U.S. It’s just a fact. Many Germans can’t be bothered to buy a house. The country’s homeownership rate ranks among the lowest in the developed world, and nearly dead last in Europe, though the Swiss renteven more. Here are comparative data … [Read more...]
Amazing New Communities with 200 Square Foot Apartments
The Wall Street Journal explains David Hall’s communities of the future. David Hall lives in a 3,500-square-foot, redbrick home in a quiet suburb of Provo, Utah. In five years, he and his wife, Karen, plan to move into a space of 200 square feet. “Big houses are lonely,” says Mr. Hall, 69. The Halls are going to a unit in a 24-room Provo hotel that Mr. Hall is developing. Mr. Hall says he has spent about $100 million—and eventually plans to spend $250 million, or roughly his entire net worth—on planned communities. Each community will house around 20,000 people in 200-square-foot … [Read more...]
Want to Pay Low Taxes and Enjoy a Glamorous Lifestyle?
The place to be, as Mansion Global tells readers, is Monaco. Debbie and I were in Monaco a few years ago and can report that the principality is undoubtedly the wealthiest spot on earth as well as the safest! House prices in Monaco jumped by more than a quarter over the past five years as the tiny principality continues to attract wealthy buyers from around the world with its low taxes and glamorous lifestyle. “Prices are among the highest in the world, with its super-prime now touching €100,000 ($112,050) per square meter,” said Edward de Mallet Morgan, head of Knight Frank’s Monaco … [Read more...]
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