News Alerts. Jan. 18, 2014. #RealEstate

Linking ≠ endorsement. Enjoy and share:

1) Smart appliances hacked to send out over 750k malicious emails – SlashGear

2) Which countries will have the next financial crisis?

3) Taking the Temperature of the Market – YouTube

4) Q & A With America's Real Estate Professor: Foreign Real Estate | NBC-WKTV News Channel 2 – Utica News, Weather, Sports – | Real Estate News

5) Why real estate tech is booming in New York City | Inman News

6) What's hot in the real estate market

7) Housing Starts Down From November's Rate, But Still Strong – Invests.com

8) QM and Rise in Rates Force MBA to Drop 2014 Mortgage Origination Forecast to $1.12 Trillion | Mortgage News | Daily National and State Headlines

9) Landlords Snatch the Office Reins for 2014 | Office content from National Real Estate Investor

10) 7 ways homebuyers overpay

11) Daily Economic Update: Mortgage Applications

12) FRB: Beige Book – January 15, 2014 (Real Estate and Construction Section)

13) U.S. Property Markets Post Strongest Sales Volume Since 2007 – CoStar Group

14) Housing market: AquaVita condo gets tough on smoking – Sun Sentinel

15) Fed 'needs to do more' to stimulate economy – FT.com

16) Calculated Risk: Key Measures Shows Low Inflation in December

17) Why We Talk About the One Percent – NYTimes.com

18) Bill Seeks to Extend Federal Tax Exemption for Forgiven Mortgage Debt

19) JLL confirms 2013 strongest year on record for Asia Pacific commercial real estate investment markets

20) The roots of shadow banking | vox

21) Is JPMorgan Chase Too Big to Succeed? – TheStreet

22) Trust Preferred CDOs now exempt from the Volcker Rule | Credit Writedowns

23) Bruegel | 2014 Financial Odyssey

24) Global Risks 2014 in facts and figures | Forum:Blog Forum:Blog | The World Economic Forum

25) 5 Trends in Facilities Management from the Facility Management Journal

26) China Exclusive: Urgent supervision of shadow banking needed: official – Xinhua | English.news.cn

27) CLSA's Cheung on China Stocks, Debt, Economy: Video – Bloomberg

28) Debt and overcapacity in China – YouTube

29) Japan Companies Start Spending, Despite Looming Sales Tax – Japan Real Time – WSJ

30) Understanding Net Operating Income (NOI) | Real Estate Investment Blog by RealData

31) Trulia's housing indicator shows mixed market

32) U.S. Homebuilder Confidence | Home Builders

33) Economists Weigh in on Minimum Wage, Extending Unemployment, the Fed and More – Real Time Economics – WSJ

34) What to look out for in Asian bond markets in 2014 | Asian Development Blog

35) Home Exterior Facelifts Gain in Popularity | Mortgage News | Daily National and State Headlines

36) Sealing Air Leaks in Your Home | HouseLogic Home Air Sealing Tips

37) Why stopping the next financial crash is an impossible dream – The Week

38) Finance is inherently unstable: Adair Turner – Livemint

39) Apartment Markets Soften Slightly According to NMHC Survey – – NMHC – National Multi Housing Council

40) San Francisco Goodwill Placing Collection Bins in Multi-Family High-Rises – High Rise Facilities

41) Steady Real Estate Inflation

  1. Smart appliances hacked to send out over 750k malicious emails – SlashGear

    Landlords, managers, tenants, etc., need to know.

    A security service provider called Proofpoint has issued a report detailing what it believes to be the first documented attack on the Internet of Things. According to the report, over 750,000 malicious emails were sent out using over 100,000 compromised devices on the Internet of Things. The compromised devices include appliances, routers, TVs, and connected refrigerators.


  2. Which countries will have the next financial crisis?

    We won't reproduce any of Tyler Cowen's article here, as it is short without any intro or summary. It has plenty of links to follow. We'd read a few of them and even posted on some and will yet post on others (at least the subject matters).


  3. Taking the Temperature of the Market – YouTube

    Published on Jan 16, 2014

    Freddie Mac's Vice President and Chief Economist, Frank Nothaft, gives a video preview of the January 2014 U.S. Economic and Housing Market Outlook: http://bit.ly/19vySAG


  4. Q & A With America's Real Estate Professor: Foreign Real Estate | NBC-WKTV News Channel 2 – Utica News, Weather, Sports – | Real Estate News

    I am not saying that you cannot make money on far away real estate. However, real estate seems to work out best for people who are in close contact with their tenants and the properties. This will help you more easily resolve issues when they occur; and they will occur. For this reason I suggest you stay near your home base in your property endeavors.

    … you are right. I don't like negative cash flow prize properties. Buy the moderately priced boring ones that pay the bills and really add to your wealth!

    There are many investors who swear by absentee ownership, but they have great local managers. If anything were to happen to that manager/firm, would the landlord be able to pop another good one in place before the investment were to leak money like a sieve?

    On the beach property, potential damage from waves and wind are huge factors to consider.


  5. Why real estate tech is booming in New York City | Inman News

    The growth in the tech niche has been so rapid, in fact, it's enough to make one wonder: Was there something that kindled it?

    Mayor Michael Bloomberg played a large role in sparking a local "big data" renaissance, according to tech observers. His administration opened doors to startups by making once-obscure information public through application programming interfaces (APIs), they say.

    That appears to be the wave of the not-too-distant future across much of the globe and in many industries, including insurance.


  6. What's hot in the real estate market

    The investor trade in distressed homes is certainly not over; it has just migrated east, where there are more foreclosed properties due to delays in the judicial process. Atlanta, Chicago and Charlotte are seeing strong investor demand, but price gains are still relatively small compared to the so-called "sand states," where investors have now priced themselves out of the market.


  7. Housing Starts Down From November's Rate, But Still Strong – Invests.com

    Slow but still looking up:

    The U.S. Census Bureau and the Department of Housing and Urban Development have jointly announced new residential construction statistics for December 2013.


  8. QM and Rise in Rates Force MBA to Drop 2014 Mortgage Origination Forecast to $1.12 Trillion | Mortgage News | Daily National and State Headlines

    The Mortgage Bankers Association (MBA) has lowered its forecast for mortgage originations in 2014 by $57 billion to $1.12 trillion for the year, based on declining mortgage application activity and increasing interest rates.

    However, interest rates have come down due to the unemployment figures. Let's keep an eye out for revisions to the numbers from the BLS (U.S. Bureau of Labor Statistics).


  9. Landlords Snatch the Office Reins for 2014 | Office content from National Real Estate Investor

    The U.S. office market has now registered occupancy gains for 14 consecutive quarters. Vacancy fell to 15.1 percent in the fourth quarter, 220 basis points lower than its recessionary peak of 17.3 percent, according to a recent report from commercial real estate services firm Cassidy Turley. …

    … almost 80 percent of the national markets also increased office rents during the period, with lease rates ending the year 3.5 percent higher than at the end of 2012.

    Absorption should be slower than many anticipate because the nature of what constitutes an "office" and what is needed as such is rapidly changing due to mobile-computer networking, etc.


  10. 7 ways homebuyers overpay

    Open house fever

    [Married…] Couple on a different page

    Buyer in a hurry

    Lowball offer backfires

    Don't know the neighborhood

    Bidding fatigue

    Shifting the goalpost sale [sellers renege after accepting an offer, only to jack up the price]

    The article fleshes out those points.


  11. Daily Economic Update: Mortgage Applications

    Good point:

    Seasonally adjusted applications to purchase homes surged 11.9% in the week ending January 10th compared to the prior week. However, this improvement reflects a technical adjustment in the prior week as well as a rush to submit applications in advance of a major regulatory change in the current week.

    … purchase applications in subsequent weeks could suffer as a result of demand having been pulled forward. The impact of the new regulations will largely be smoothed out in time as most originators are already compliant with the new underwriting standards and understanding of limitations and legal liabilities improves with time, but the market faces adjustments in the near term.


  12. FRB: Beige Book – January 15, 2014 (Real Estate and Construction Section)

    The Federal Reserve Board of Governors in Washington DC.:

    Real Estate and Construction
    Most Districts reported increases in home sales in the closing months of 2013 compared with last year, but the Atlanta, Cleveland, and Kansas City Districts indicated that year-over-year residential sales growth had slowed relative to earlier quarters in 2013. The Boston, Philadelphia, Minneapolis, and Dallas reports noted that at least some areas within those Districts saw home sales below year-earlier levels. Home selling prices continued their upward trend in the Boston, Atlanta, Chicago, Minneapolis, Kansas City, and San Francisco Districts, while remaining stable in the Cleveland and Richmond Districts; New York noted mixed changes in sale prices across the District. Residential construction saw slight to moderate increases in most Districts; by contrast, Dallas cited a slight decline, New York reported no change, and Cleveland cited strong growth. Notwithstanding its decrease in overall residential construction, the Dallas District noted elevated construction levels for multi-family units; the Atlanta, Cleveland, and Chicago Districts also cited strong multifamily construction. Reporting Districts indicated that residential real estate contacts remained optimistic looking forward, while voicing concerns about declining inventory and potential changes in the mortgage market. The Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco Districts reported that contacts expected residential construction to pick up in the near term.

    District reports on commercial real estate contained much good news, although performance within some Districts was uneven across locations and property types. Commercial leasing activity increased in the Atlanta, Chicago, St. Louis, Minneapolis, and San Francisco Districts, as well as in New York City and Long Island, and held roughly steady in the Boston, Philadelphia, Richmond, Kansas City, and Dallas Districts. Industrial leasing activity weakened in the New York District in the fourth quarter but improved in both the Richmond and St. Louis Districts. Office and other commercial vacancy rates were mixed across and within metropolitan areas and across property types. Commercial rents increased at least modestly on average in the Boston, Chicago, Kansas City, and Dallas Districts and held steady in the New York and Richmond Districts. Commercial real estate investment continued to strengthen across numerous Districts, with brisk sales activity in the Boston, Chicago, and Minneapolis Districts and rising prices in those same Districts as well as in the Richmond and Kansas City Districts. Excepting the New York and Dallas Districts, which gave no information on recent construction, all other Districts reported increases in commercial construction activity in recent weeks. In the Boston and Richmond Districts, construction activity increased in the education and healthcare sectors. A significant number of commercial high-rise structures are being built (or planned) in the San Francisco District. Information concerning the commercial real estate outlook was largely positive where it was reported. Contacts in the Boston, Atlanta, and Kansas City Districts were optimistic that commercial real estate fundamentals would continue to improve at least slowly in 2014. The outlook for commercial construction activity was positive in the Philadelphia, Cleveland, Minneapolis, and Dallas Districts.


  13. U.S. Property Markets Post Strongest Sales Volume Since 2007 – CoStar Group

    According to CoStar COMPs data based on property transactions of all sizes that closed by Dec. 31 and were recorded as of Jan. 15, sales of office, industrial, retail, multifamily, hospitality and land totaled $366 billion in 2013 — 17% higher than the $312.4 billion in property that changed hands in 2012. …

    … preliminary figures clearly reflect the strongest year for CRE investment since 2007, when $489.6 billion in total transactions were recorded.

    For commercial property sales tallied as of Jan. 15, investors were especially active in the hotel property sector, with hospitality investment seeing a 40% increase to lead all major property categories in 2013, followed by sales of industrial property, which increased 23%. Office sales rose 18% and led all building types in dollar volume, followed by multifamily sales, which rose 14%.

    Retail property sales rose 10% over 2012, while land sales increased 5%.


  14. Housing market: AquaVita condo gets tough on smoking – Sun Sentinel

    Joyce Starr, a resident of the 144-unit Bonavida condominium in Aventura, said the smoking ban can't be underestimated.

    She said her development was "unlivable for so many people" because of second-hand smoke. In late 2008, she started an effort to change her condo's governing documents, an arduous process that finally was completed last year.

    Starr, who wrote a book about her experience, said AquaVita won't have to face the same problem because the ban will be in place from the beginning.

    "I think (buyers) will swarm to the building," she said.

    What do you think of such smoking bans? Is second-hand smoke a health hazard enough that the law should protect such bans and allow them to extend to entire properties?

    We suspect it's the wave of the future.


  15. Fed 'needs to do more' to stimulate economy – FT.com

    "The problem with what's in the statement right now is its going to become increasingly less useful once we fall below 6.5 per cent," said [Minneapolis Fed President] Mr Kocherlakota. Rather than lower the 6.5 per cent threshold, he said the Fed could bring in new guidance about how it will behave until unemployment hits 5.5 per cent, perhaps with a tighter get out clause on inflation.

    "We would say we intend to keep the Fed funds rate extraordinarily low in that interval between 6.5 and 5.5 per cent as long as the medium-term outlook for inflation stays sufficiently close to 2 per cent," he said. "I definitely feel it is important to be numerical about it. Words are always subject, I think, to multiple interpretations."

    Another policy option would be to cut the interest that the Fed pays to banks on their reserves from the existing level of 25 basis points. Mr Kocherlakota said he would even be interested in making that return negative.


  16. Calculated Risk: Key Measures Shows Low Inflation in December

    Bill McBride:

    The CPI less food and energy increased 0.1% (1.3% annualized rate) on a seasonally adjusted basis.

    Note: The Cleveland Fed has the median CPI details for December here. Fuel oil and motor fuels increased sharply in December.

    If US fracking increases to the point where the US becomes self-sufficient in oil and gas (with the US not exporting that fuel), we should see a dramatic impact upon the "CPI less food and energy" until climate change slams us (if we don't figure out how to reduce the CO2 without further damaging the environment) or until we hit a new "Peak Oil" situation because a new fracking-level "advancement" doesn't show up.

    Can technological advancements outrace the so-called "externalities" we cause?


  17. Why We Talk About the One Percent – NYTimes.com

    Paul Krugman:

    Many people in Washington, even those willing to concede that inequality has been rising rapidly, are uncomfortable talking about the famous 1 percent — perhaps because it sounds too populist, too much like an invitation to crowds with pitchforks. For a long time respectable discussion focused on the top 20 percent; today [Jan 17, 2014] I see my colleague David Brooks talking about the top 5 percent.

    But framing the discussion in terms of some broader group is in this case deeply misleading. Here's what the Piketty-Saez numbers tell us about the top 5 percent (incomes in 2012 dollars): …

    Click through to see the data and to finish reading Paul's short piece.


  18. Bill Seeks to Extend Federal Tax Exemption for Forgiven Mortgage Debt

    Foster's bill would ensure any qualifying reduction or cancellation of mortgage debt is not considered taxable income by extending this tax relief through January 1, 2016, for debt forgiven after December 31, 2013.

    It should be permanent.


  19. JLL confirms 2013 strongest year on record for Asia Pacific commercial real estate investment markets

    Too rosy?

    SINGAPORE, 16 January 2014 — Data just released by Jones Lang LaSalle (JLL) shows that 2013 was the strongest year on record for commercial real estate markets in Asia Pacific, with direct investment reaching US$126.7 billion by year-end. Transaction volumes over the year were up 29 percent on 2012, surpassing the previous record of US$120.5 billion in 2007.

    Stuart Crow, head of Asia Pacific capital markets at Jones Lang LaSalle said, "2013 proved to be an outstanding year for Asia Pacific commercial property markets, exceeding our revised expectations of US$ 120 billion. Unrelenting demand has prevailed in spite of macro concerns around China's growth outlook, stability in the EU, and the US government's fiscal strategy. As the market gains further clarity on these issues, we expect a more stable growth outlook which should lead to activity in 2014 surpassing that of 2013."


  20. The roots of shadow banking | vox

    Enrico Perotti:

    Appropriate tools are also necessary to align capital and risk incentives in banks and shadow banks (Haldane 2010). Security lending may also undermine Basel III liquidity (LCR) rules.

    At a time when all lenders seek security, questioning the logic of safe harbour provisions may seem unwise. Yet at the system level, it is simply impossible to promise security and liquidity to all. Uncertainty on the stock of pledged assets may create a self-reinforcing effect, feeding a frenzy among lenders to all seek ever-higher priority. This is already taking place, and is ultimately unsustainable at the individual and aggregate level.

    Finally, it is questionable whether the highest level of protection should be granted to collateralised lenders, and to shadow bank funding, over all other investors. For all these reasons, regulators and the wider society need to make an informed decision.

    The short of it is that the system is a Ponzi scheme. It's a game of musical chairs. Someone is left holding the bag without having a chair to sit in. That someone last time was the US taxpayer and other taxpayers around the world. The shadow bankers almost all found chairs, though law-enforcement has stepped it up a bit. JPMorgan Chase has had to pay a few billion.

    We think there should be no "shadow" banking. What's your view on it?


  21. Is JPMorgan Chase Too Big to Succeed? – TheStreet

    This article speaks directly to the issue of the US having undermined the Glass-Steagal Act, which we advocate resurrecting.

    Banks that are doing just banking, such as Prosperity Bank (PB_) in Texas and U.S. Bank (USB_) in Minneapolis, are doing awfully well these days.

    You could congratulate Prosperity for being located in Texas, with branches sitting along the Eagle Ford shale play. But U.S. Bank is in Minneapolis, and it's selling at a price-to-book ratio of 2.13, nearly twice the 1.13 of JPMorgan Chase (JPM_).

    The problem for the big banks isn't banking. The problem for the big banks is brokerage.


  22. Trust Preferred CDOs now exempt from the Volcker Rule | Credit Writedowns

    If they keep whittling away, there won't be anything left but another crash.

    Yesterday [Jan. 15, 2014?], after some intense industry pressure, US regulators (OCC, FDIC, SEC, etc.) collectively announced that the bulk of the so-called TruPS CDO securities issued prior to May 19, 2010 will be exempt from the Volcker Rule. Let's take a quick look at the issues around this decision.


  23. Bruegel | 2014 Financial Odyssey

    At present, investors have significant doubts about the quality of banks' assets and the potential losses still hidden in their balance sheets. Market-based valuations of banks in Europe suggest that investors' confidence remains low.

    The implementation of single supervision could greatly reduce these concerns. The far-reaching preliminary assessment of banks' balance sheets that will be conducted during 2014 can make balance sheet information more transparent, comparable and credible. For this to happen, some major uncertainties need to be addressed.


  24. Global Risks 2014 in facts and figures | Forum:Blog Forum:Blog | The World Economic Forum

    Debt crises, persistently high unemployment, water shortages, the widening gap between rich and poor and climate change are the global threats of greatest concern for the decade ahead, according to the World Economic Forum's Global Risks 2014 report.


  25. 5 Trends in Facilities Management from the Facility Management Journal

    Good point:

    Although more than a billion people in the world now telecommute in some capacity for work, the physical workplace has become even more important than before. The reason for this is that the office setting will now be used for only the most important activities: strategic meetings, collaborative work sessions, and interviews.

    Telecommuting has tasked the facilities department with the responsibility for now facilitating a workplace with a higher concentration of important interaction.


  26. China Exclusive: Urgent supervision of shadow banking needed: official – Xinhua | English.news.cn

    Analysts said that shadow banks are results of financial innovations that can guarantee money supply amid tight liquidity, but it involves risks.

    The central bank's vice governor Pan Gongsheng said earlier that local governments have turned to more expensive lending from shadow banks due to stricter requirements regarding banks lending to local government financing vehicles.

    "When property prices suddenly fall or debt risks in local regions break out, the risks of shadow banks will emerge," Zhao said, adding that he believes authorities will take timely measures to address potential problems regarding shadow banks.

    Let's hope so.


  27. CLSA's Cheung on China Stocks, Debt, Economy: Video – Bloomberg

    We think this is mostly correct.

    Jan. 6 (Bloomberg) — Francis Cheung, head of China and Hong Kong strategy for CLSA Asia-Pacific Markets, talks about the economic and political outlook for China. He speaks with Rishaad Salamat on Bloomberg Television's "On the Move." (Source: Bloomberg)


  28. Debt and overcapacity in China – YouTube

    This one fleshes things out more than the one above, but it's a bit dated (while still pertaining).

    Published on Nov 5, 2013

    To maintain its high levels of GDP growth in the wake of the global financial crisis, China instigated a huge financial stimulus. That money was meant to go on infrastructure but in reality, most of the spending went on industrial capacity. CLSA's China strategist Francis Cheung tells the FT's Josh Noble that the problem of excess capacity is only going to get worse.

    Thanks to DistressedVolatility for the link.


  29. Japan Companies Start Spending, Despite Looming Sales Tax – Japan Real Time – WSJ

    "Companies are looking at business investment from a long-term perspective, despite any temporary fall in demand after the tax hike," said Mizuho Research Institute economist Yayoi Sakanaka, referring to a planned rise in the sales tax to 8% from 5% in April.

    Yes, but why transfer taxes from corporations to consumers during stagnation?


  30. Understanding Net Operating Income (NOI) | Real Estate Investment Blog by RealData

    NOI, it's not as simple as most people assume.

    You might think of NOI [Net Operating Income] as the number of dollars a property returns in a given year if the property were to be purchased for all cash and before consideration of income taxes or capital recovery. By more formal definition, it is a property's Gross Operating Income less the sum of all operating expenses.

    We have now succeeded in confounding our readers and compounding their problem by replacing one undefined term with two.

    Let's take these two new terms one at a time: …


  31. Trulia's housing indicator shows mixed market

    It's going to be an uneven recovery, says Sean Aggarwal, Chief Financial Officer at Trulia, sharing his thoughts on the outlook on housing. We¿ve seen a very sustained recovery in 2014, says Aggarwal.

    Interest rates have no place to go but up? They've just come down, again.


  32. U.S. Homebuilder Confidence | Home Builders

    The National Association of Home Builders/Wells Fargo builder sentiment gauge fell to 56 in January, from 57 in December, but readings above 50 still mean most respondents are reporting good market conditions ….

    Lower mortgage rates will help.


  33. Economists Weigh in on Minimum Wage, Extending Unemployment, the Fed and More – Real Time Economics – WSJ

    Economists think the unemployment rate will fall to 6.6% by June 2014 and 6.3% by December 2014. As recently as August, economists expected the rate to fall only to 6.7% by end-2014. The expected accelerated downtrend reflects the speed with which the jobless rate declined in 2013, from 7.9% in January 2013 to 6.7% by December. The decline should allow the Fed to keep tapering its bond buying program. Almost all economists—87%—think the Fed will be out of the bond market by the end of 2014.

    The participation rate accounted for nearly all of the decline. Do they expect that to continue and to actually be that upon which we should base tapering QE? There seems to us to be a disconnect somewhere in there. What's your take?

    It is the Wall Street Journal, but did they only survey Austrians School economists? That's tongue-in-cheek.


  34. What to look out for in Asian bond markets in 2014 | Asian Development Blog

    2014 is shaping up to be another challenging year for bond markets in Asia after a see-saw 2013 which saw prices rise at the start of the year, and then fall back on news that the US Federal Reserve plans to reduce or 'taper' its quantitative easing operations. There are several key developments/trends which could have strong implications for the region's bond markets this year. Here's what to look out for: …

    That looks like China kicking the can down the road. How long can it keep doing that?


  35. Home Exterior Facelifts Gain in Popularity | Mortgage News | Daily National and State Headlines

    This works regarding landlords and tenants too.

    A home's curb appeal is crucial because it can be the first thing buyers notice about a home. That's why Realtors rated exterior projects among the most valuable home improvement projects in the 2014 Remodeling Cost vs. Value Report.

    "With many factors to consider such as cost and time, deciding what remodeling projects to undertake can be a difficult decision for homeowners," said National Association of Realtors (NAR) President Steve Brown, co-owner of Irongate Inc. Realtors in Dayton, Ohio. "Realtors know what home features are important to buyers in their area, but a home's curb appeal is always critical since it's the first impression for potential buyers. That's why exterior replacement projects offer the greatest bang for the buck. Projects such as entry door, siding and window replacements can recoup homeowners more than 78 percent of costs upon resale."

    NAR's consumer Web site HouseLogic.com highlights the results of the report in its "Best Bets for Remodeling Your Home in 2014" slideshow. The site also provides information and advice on various home improvement projects, including a guide to kitchen remodeling with the best payback and dozens of exterior replacement projects.


  36. Sealing Air Leaks in Your Home | HouseLogic Home Air Sealing Tips

    Good advice if a bit sketchy, but what do we want for a quick article?

    A typical family spends about a third of its annual heating and cooling budget—roughly $350—on air that leaks into or out of the house through unintended gaps and cracks. With the money you waste in just one year, you can plug many of those leaks yourself. It's among the most cost-effective things you can do to conserve energy and increase comfort, according to Energy Star. Start in the attic, since that's where you'll find some of the biggest energy drains. Then tackle the basement, to prevent cold air that enters there from being sucked into upstairs rooms. Finally, seal air leaks in the rest of the house. Here are eight places to start.

    The adhesive-backed EPDM rubber has to allow for locking the windows and doors.


  37. Why stopping the next financial crash is an impossible dream – The Week

    What about Congress? Given how it's acted in the past, I am dubious that it would make the difficult decisions necessary to prevent a crash, even if it could. While many blame Congress for inflating the housing bubble last decade, the laws that Congress made that led to the risky government-backed subprime lending didn't emerge from nowhere. They were in response to massive lobbying by the financial industry, which was looking for easy profit, and constituents who wanted help to become homeowners. If politicians don't make the laws people want, they get voted out. So it's hard to expect lawmakers to not make laws that are widely demanded by lots of different groups of people just because of the future possibility of an economic bubble and financial crash.

    As the mid-20th century economist Hyman Minsky put it, stability is destabilizing. The American economy experienced a period of relative stability from the end of stagflation in the early 1980s until the 2008 financial crash. Ben Bernanke called this period The Great Moderation. But how do people react to a stable world? Very often, they become more tolerant of risky behavior.

    During the Great Moderation, the financial industry began to make riskier loans at higher leverage ratios, with lower deposits, and even to individuals with no income and no job or assets (NINJAs). And risk-takers began hiding the risks by selling the future income from these risky loans on as asset-backed securities. Financial regulations like Glass-Steagall that separated publicly-guaranteed depository banks from investment banks — and which may have been partially responsible for the relative financial stability between the Great Depression and the 2008 recession — were repealed. Politicians were convinced by the financial industry, and by the long period of relative stability that such c urbs on risk-taking were no longer necessary. The long period of stability destabilized the system by making politicians and the financial world more risk-tolerant. Successful regulations became victims of their own success. Stability is destabilizing.

    Ups and downs are one thing, but crashes are another. In our view, we could have avoided 2008 by not deregulating in the wrong places. The deregulation mania and the mindset behind it is what caused 2008.


  38. Finance is inherently unstable: Adair Turner – Livemint

    Adair Turner:

    I think the huge issue which the world has to watch with great interest is whether the Chinese authorities do successfully manage the transition away from this very imbalanced economy. You got an economy which was already imbalanced and it has become even more imbalanced. Investment, which we thought was already high at 40% of the GDP (gross domestic product) is now 50% of the GDP. Once you start investing 50% of your GDP, you have to be very clever not to be wasting some of that and if you are financing that with debt and if simultaneously you are going down the path of opening up the capital account, so more that happens in your financial system links to the rest of the world. If you run the numbers forward, the Chinese economy by the early 2020s could be about $20 trillion and debt could be at 300% of the GDP, that would be $60 trillion of debt, and in the meanwhile there is significant element of capital account liberalization, you start to be very concerned. You want to know quite a lot about reassuring yourself that $60 trillion of debt is ok. It is just that figures are so big. Now the good news is that the Chinese authorities keep on saying we are going to start a transition away from too much investment focus, we are aware of problems in the financial system and we are going to control it and of course they have been a successful government for 30 years managing a set of transitions. So I am not in the camp of people saying that it is going to be a Chinese financial disaster. There were people in the middle of last year getting over excited at various points. So I am not in the over excited camp. But what I do think is if we do not see the Chinese authorities over the next 4-5 years achieving the transition which they say they are going to achieve, then we should start getting very worried about how they will make the transition without significant instability.

    We're a little more in the "excited camp," though excited isn't the term we'd picked but rather wary, very wary.


  39. Apartment Markets Soften Slightly According to NMHC Survey – – NMHC – National Multi Housing Council

    "New supply is finally starting to arrive at levels that will more closely match overall demand. In a few markets, we are seeing completions a little higher than absorptions, but this is likely to be short term in nature. Fundamentally, demand for apartment homes should be strong for the rest of the decade (and beyond) — provided only that the economy remains on track."


  40. San Francisco Goodwill Placing Collection Bins in Multi-Family High-Rises – High Rise Facilities

    Good idea (pun not intended):

    SFGoodwill is launching a new initiative that will make donating textiles as convenient as dropping a bottle in a recycling bin. Designed to serve multi-unit apartment towers, the Goodwill goBINTM lets residents donate — and do good — without leaving their buildings. Clothing, shoes, and accessories can be dropped in anytime, eliminating the weekend trip to Goodwill.

    I think we would have named it Goodbin.


  41. Steady Real Estate Inflation

    In December 2013, real estate inflation increased 0.2 percent over November 2013 on a seasonally adjusted basis and 2.2 percent from December 2012. Real estate inflation is currently 0.7 percentage points higher than the overall inflation rate. The owner's equivalent rent sub-component rose 0.2 percent in December 2013 and 2.5 percent year over year. The rent sub-component rose 0.3 percent in December 2013 and 2.9 percent over the same time last year.


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Furthermore, we, as insurance producers, are prohibited by law from disparaging the insurance industry, carriers, other producers, etc. With that in mind, we provide links without staking out positions that violate the law. We provide them solely from a public-policy standpoint wherein we encourage our industry to be sure our profits, etc., are fair and balanced.

We do not necessarily fact checked the contents of every linked article or page, etc.

If we were to conclude any part or parts of our industry are in violation of fundamental fairness and the legal standards of a state or states, we'd address the issue through proper, legal channels. We trust you understand.

The laws that tie our tongues, so to speak, are designed to keep the public from losing confidence in the industry and the regulatory system overseeing it. Insurance commissioners around the country work very hard to analyze rates and to not allow the industry to be damaged by bad rate-settings and changes in coverages. The proper way for people in the industry to deal with such matters is by adhering to the laws, rules, and regulations of the applicable states and within industry associations where such matters may be discussed in private without giving the industry unnecessary black eyes. Ethics is very high on the list in the insurance industry, and we don't want to lose the people's trust. That said, the industry is not perfect; but what industry is?

For our part, we believe in strong regulations and strong regulators.

We welcome your comments and ask you to keep in mind that we cannot and will not reply in any way or ways where any insurance commissioner could rightly say we've violated the law of the given state.

We are allowed to share rating-bureau data/reports and industry-consultant opinions but make clear here that those opinions are theirs and do not necessarily reflect our position.

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