A report from Yahoo Finance. “Goldman Sachs is out with a new note revealing that of the largest 25 metro areas nationwide, four of them, Austin, Seattle, San Francisco, and Phoenix– you’re looking at them on your screen there– have higher inventory levels in pre-pandemic, and they’re actually dealing with an oversupply. DAVE BRIGGS: Those four cities that you mentioned there, the people you worry about are the ones that bought at peak COVID prices. They’re going to get crushed in that two-year period. But the people that brought prior to it are still going to see an increase over that period because prices went up larger than the numbers we showed. I don’t know if that makes a whole lot of sense to you, but–the people that brought prior to that massive increase, they’re going to be fine. Their price is still up over a three-year period. If you bought right in the middle, oh, boy, you’re getting crushed.”
Bisnow Dallas Fort Worth in Texas. “A Dallas-based business working to address a shortage of attainable rental housing has raised $50M to kick-start the development of 50 communities. Homz, a housing company focused on sustainable, wellness-focused multifamily developments, said it will use the money to form partnerships with leaders of secondary markets across the Southeast. The developments will primarily target ‘missing middle renters,’ Homz Board Member Kim Diamond told Bisnow, or those whose primary options are typically Class-B or C workforce housing with less access to desirable amenities, noting that there is a ‘glut of luxury and overpriced development’ in markets across the country.”
Bisnow Los Angeles in California. “Los Angeles’ office market has been on a bumpy road, along with basically every other major city in the U.S., for years now. But as the challenges continue, the bumps are also leaking out into other sectors of commercial real estate. The tide could be turning in Downtown LA, according to panelists at Bisnow’s Los Angeles Multifamily event. ‘With the change in interest rates and the change in cap rates, there’s a complete freeze of the debt markets and, really, a destruction of value’ unlike anything he has seen in his career, Cityview CEO Sean Burton told the audience.”
“With office vacancy near 30% and worsening perceptions of the neighborhood’s crime and homelessness issues, Burton said that DTLA was ‘the worst I’ve ever seen it since I’ve lived here.’”
KTVO in California. “The Institute’s Pandemic Recovery Index shows San Francisco ranks 24th out of the 25 largest economic regions in the country. The Index examined affordability, jobs, economic activity, investment and people. San Jose fared much better, coming in at #16. Many large Silicon Valley tech companies chose not to remain fully remote. ‘I don’t think it’s going to get too much worse than it is now, but it’s kind of a matter of what do we do with all of this vacant space now?’ said Abby Raisz, Research Manager with Bay Area Council Economic Institute. San Francisco’s office vacancy rate jumped 24 percentage points from 2019-2022. No one knows what future workforces will look like, but Raisz says thousands of leases are due to expire in San Francisco over the next few years.”
Oaklandside in California. “Pandemic eviction bans are phasing out around Alameda County, bringing relief to landlords and worrying tenants. A few hours before the board took up the housing items, a group of property owners bundled up for the rain and rallied in front of the building, holding signs that said ‘Stop the theft’ and ‘Gov’t enables abuse.’”
WAFF in Alabama. “The City of Huntsville has seen a home and apartment construction boom. The largest batch of new housing in almost 40 years is hitting the market. ‘We get emails, phone calls, daily from people you know, struggling to find a property that they can afford,’ said Brandon O’Connor of the Huntsville Apartment Company. ‘We’re starting to see a lot of people getting priced out of apartment living. What once was considered affordable, properties are being purchased and refurbished, refinished properties at a higher price point.’”
“The good news is that more units are on the way. Thousands of them. According to Dennis Madsen, Huntsville’s Manager of Urban and Long Range Planning, this is a long time in coming. ‘Apartments are frankly one of the best ways to accommodate growth,’ Madsen said. ‘So from our perspective, this is not so much an overbuild as it is a correction, that there had been a lot of multi-family markets that had been under-served for decades, that now that market’s kind of catching up too.’”
WFTS in Florida. “Opal Murray said her new apartment is great. She calls it heaven. Murray, who works taking care of foster kids, lives in one of the 50 new units here at The Shores Apartments on 31st street south in St. Petersburg. This complex is the latest affordable housing project in the Tampa Bay area. ‘You’ve got to find the land and also the financing. It’s very, very expensive. It’s not cheaper to build affordable housing. I think a lot of people might think that. But it’s very expensive because you have to be able to buy down the rents,’ said Kathryn Driver, executive director of the Housing Finance Authority of Pinellas County.”
From Reason. “Perhaps the simplest way to diagnose the problem with American politics right now is that it is out of touch. Democrats and Republicans have spent the better part of the last decade arguing about partisan peccadillos and culture war obsessions, while middle-class concerns have languished. And thus a new movement has risen mostly but not exclusively on the technocratic center-left, intent on refocusing liberal politics in general and Democratic politicians in particular on workaday economic concerns.”
“This movement has many strains and individual obsessions, but it is united by a shared thesis: The basics of middle-class life—especially but not only housing, education, and health care—have become too expensive, and politicians should seek to remedy this via policy interventions. This movement has banded together around a loosely defined ‘abundance agenda.’ At its best, this movement offers a critique of poor liberal governance, especially in urban areas.”
“Yet what’s notable about all of these middle-class basics is that they have already been subject to decades of policy interventions, often though not always from Democrats. These elements of middle-class life have become unaffordable in tandem with, and in some cases because of, decades of policy interventions designed specifically to make them more accessible and more affordable to the middle class. And today’s elected Democrats seem intent on repeating the mistakes that brought America to this point.”
“To be fair: Center-left proponents of the abundance agenda have often framed their outlook as a necessary corrective to the failures of subsidizing demand, at least where housing is concerned. But outside of housing, it’s far from clear that many elected Democrats have accepted this notion. Democratic Party leadership is still in the grips of the planner’s conceit, the delusion, common to those in power, that market-distorting subsidies and restrictive regulations can successfully manage supply and demand, that prices can be brought down by targeted transfers, that goods can be made cheaper by throwing ever-more government money at them. Which is to say: They are still out of touch with the causes of middle-class problems.”
From Mises.org. “The Reuters headline reads: ‘Fed needs a recession to win inflation fight, study shows.’ This was not Reuters referring to countless articles the Mises Institute has published regarding the coming recession. Rather, it was in response to a study a few mainstream economists presented at the University of Chicago on Friday, titled Managing Disinflation. They found that in the last 16 worldwide instances of a disinflation engineered by central banks, there was: ‘… no instance in which a significant central bank-induced disinflation occurred without a recession.’”
“While the stat is eye-catching, the last 16 episodes of disinflation ‘engineered by central banks’ doesn’t mean this 17th episode of central bank intervention will trigger the bust. Instead, After the Boom Must Come the Bust, as explained on Radio Rothbard last month. The recession became inevitable three years ago when trillions of dollars were created and many people celebrated a rising stock market and a rise in housing prices (the boom).”
“Subtle nuance, but notice how the Fed is normally cited as the entity who fixes the economy by disinflation, but never cited as the entity who broke the economy through causing inflation. The en-vogue mainstream critique of the Fed is that they made a mistake by raising rates ‘too late,’ implying that a recession could have been averted if only the Fed had acted sooner. But this misses the bigger picture, that the bust (or recession) was set in motion prior to 2021, beginning the moment the Fed intervened in the market.”
“Mises readers knew a long time ago the inevitability of recession, that there was no policy error. The only thing we can count on is that the Fed will try to fix the problem it created, by doing what it does best, creating more problems to fix.”
From Ambrose Evans Pritchard. “The Fed and the ECB are carrying out the most aggressive monetary squeeze of modern times. This is colliding with public and private debt ratios that have ballooned to 292 per cent of GDP in rich economies (IMF data) and 247 per cent globally – up by 50 percentage points since the pre-Lehman debt bubble. This has not yet set off serious credit defaults in the West, though a string of developing states such as Egypt, Pakistan, Tunisia, El Salvador, Lebanon, Sri Lanka and Ghana are in trouble.”
“Yes, this is still draining the monetary overhang created by central banks during the QE orgy during the pandemic. But at the end of the day, monetarists of all stripes agree on one thing: this picture cannot be reconciled with a fresh cycle of economic growth and inflation. It is certainly possible that these traditional indicators are obsolete in the modern electronic economy, but there are reasons why the winter rebound might be an illusion.”
“Matt King from Citigroup says central banks have added $US1 trillion of short-term liquidity over the past three months. ‘It’s basically as though they have been doing QE, even as they told us they were doing QT.’”