News: Real Estate, Risk, Economics. Jun. 21-23, 2014

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Table of Contents
(Click to sections below.)

1) [Recommended] Building a better Jackson: Understanding blighted properties

2) Washington's mountain of real estate debt coming due – The Washington Post

3) Four charts showing that the Chinese housing market slump can still get a lot worse – Quartz

4) Homeowners believe someone was inside when Thornton house exploded – 7NEWS Denver TheDenverChannel dot com

5) [Yellen] Still a Dove – Tim Duy's Fed Watch

6) What Janet Yellen Is Trying to Tell Us – NYTimes dot com

7) LA Times – SunTrust to pay nearly $1 billion to settle mortgage-abuse allegations

8) This is What Happens if You Stare at the Fed's Dots for Too Long | Jared Bernstein | On the Economy

9) Five facts about shadow banking – YouTube

10) View of the Multifamily Investment Market via AH Capital – YouTube

11) Once a Top Performer, El Paso's Apartment Sector is Now a Laggard – Apartment Market Dynamics – YouTube

12) Flood damage to Bosnia estimated at 2 billion euros

13) Mount Etna erupts forcing shutdown of Sicily's major airport – World – News – The Independent

14) Branstad issues disaster proclamation for 5 Iowa counties

15) Walker Says Most Owners Of Property Damaged By Storm Have Insurance | Wisconsin Public Radio

16) Investigators seek cause of fire that killed 6 – pressofAtlanticCity dot com: New Jersey

17) SCAM ALERT: "Storm chasers" look to cash in on damage

18) Fire guts 100 cloth shops in Narayanganj

19) 2 dead after tornadoes flatten tiny Nebraska town | Dallas Morning News

20) Commercial Real Estate Didn't Boom and Bust. Is This Why? – Businessweek

21) Summer: Humidity & Mold

22) Planning Smart Rental Property Upgrades | Real Estate and Rental Marketing Blog for Professionals – Zillow Pro Blog

23) Houston's Anti-Hoarding Ordinance Gives City Room to Move | Property Management Insider

24) REALTOR® University Speaker Series: Long-Term Vacant Housing in the United States – YouTube

25) Robert Skidelsky knocks the scientific halo off mainstream economists' teaching and research. – Project Syndicate

26) Latest Look at the Budget Deficit

27) Calculated Risk: Merrill Lynch: Inflation: bump up or bust out?

28) What secular stagnation means for interest rates: Is it secular or is it stagnation? | The Economist

29) The Fed's Ever-Burgeoning Market Manipulation Support | naked capitalism

30) Sober Look: Is the recent US CPI increase just noise?

31) Janet Yellen isn't giving up on the long-term unemployed – The Washington Post

32) Where Is the Slack in the Labor Market? | St. Louis Fed On the Economy

33) Austerity and Hysteresis – NYTimes dot com

34) What the Gap Between CPI and PCE Means for Fed Overshooting – Real Time Economics – WSJ

35) Home Prices and Appreciation Higher in Markets with Higher Natural Disaster Risk – Forbes

36) More come forward sharing horror stories from Denton landlord's properties | wfaa dot com Dallas – Fort Worth

37) Treasury 30-Year Bonds Drop as Investors Fight Fed – Bloomberg

38) The bond market is ignoring Janet Yellen and setting up a TIPS trade – The Tell – MarketWatch

39) Shelter Inflation Will Continue To Rise – Business Insider

40) State of the Multifamily Market with AXIOMetrics – YouTube

  1.    [Recommended] Building a better Jackson: Understanding blighted properties

    The issue

    Rows of abandoned homes clutter the streets of Jackson, a symptom of the fluctuating economy and population shifts from the last several decades. The dilapidated buildings — many of which are left to disrepair by owners who have since moved out of the area — provide an unappealing view of the capital city and are increasingly being used for criminal activities.

    The article goes on to do a solid job explaining why such blight is very bad for all concerned.

    Add your comment.


  2.    Washington's mountain of real estate debt coming due – The Washington Post

    Analysts of loans backed by commercial mortgage-backed securities have begun pointing to a dramatic rise in the value of those loans that are scheduled to come due on Washington-area properties beginning in about 18 months. The services firm JLL found almost $5 billion in CMBS debt coming due on local commercial properties in 2017 alone, about four times the amount this year.

    The article cites a number of reasons why it all may be quite manageable.

    Add your comment.


  3.    Four charts showing that the Chinese housing market slump can still get a lot worse – Quartz

    Local governments all over the country are loosening housing restrictions. And Chinese leaders are rolling out more of those "microstimulation policies," recently launching another round of cuts to the reserve requirement ratio (RRR) for various commercial banks, which in theory will pump more loans into the economy. Target banks this time include the big mortgage lender China Merchant Bank, as well as China Minsheng Bank and Industrial Bank. All three are among the most active of China's many shadowy lenders.

    We shall see.

    Add your comment.


  4.    Homeowners believe someone was inside when Thornton house exploded – 7NEWS Denver TheDenverChannel.com

    Very little of the structure remains and the debris is piled atop two cars and an RV. The only recognizable part of the remaining structure appears to be part of a garage.

    The siding of a neighboring home was knocked off in the blast, exposing the insulation beneath.

    Add your comment.


  5.    [Yellen] Still a Dove – Tim Duy's Fed Watch

    Tim Duy:

    … the FOMC has moved in a slightly more hawkish direction, raising the possibility that Yellen could become more isolated in the months ahead in her generally dovish stance, assuming of course that the tension between the Fed's stated policy goals and the stance of policy continues to grow.

    And, as Joe Weisenthal at Business Insider notes, Yellen again proves she is indeed a dove. She dismissed recently higher inflation readings as noise, specifically drew attention to broad measures of unemployment, and said (correctly) that wage growth itself does not necessarily indicate inflation pressures would be far behind. No indication that she is in any rush to raise rates whatsoever.

    Add your comment.


  6.    What Janet Yellen Is Trying to Tell Us – NYTimes.com

    She [Janet Yellen] emphasized that those month-to-month inflations were "noisy" and said that inflation seemed to be evolving broadly along the lines the Fed had been expecting. Had she said nothing, that would have implied she was laying the groundwork for the recent uptick in inflation as a rationale for, say, tapering off the Fed's bond buying program faster or raising interest rates sooner.

    Add your comment.


  7.    LA Times – SunTrust to pay nearly $1 billion to settle mortgage-abuse allegations

    A nearly $1-billion settlement with California and other state authorities as well as federal agencies will close out two major investigations into possible mortgage wrongdoing by the home-lending arm of Atlanta's SunTrust Banks Inc.

    About 4,700 Californians are eligible for the foreclosure payments, Harris ["California Atty. Gen. Kamala D. Harris"] said. The borrower payment amount will depend on how many borrowers file claims.

    Add your comment.


  8.    This is What Happens if You Stare at the Fed's Dots for Too Long | Jared Bernstein | On the Economy

    Now, this may have you scratching your noggin a bit: if they think growth this year is going to be significantly slower than they thought before (see figure), why are they doing less?

    Source: Federal Reserve

    Well, for one, they're always trying to see around the next corner and they think things are generally looking up since that dismal read on Q1 GDP of -1%. They like the steady payroll jobs growth, diminished fiscal drag, deleveraged households, appreciated home prices. Though their statement continued to worry about an inflation rate below their 2% target, I wouldn't doubt that recent accelerated core CPI readings have raised an eyebrow or two over there.

    For another, they could be wrong.

    We think they are.

    Add your comment.


  9.    Five facts about shadow banking – YouTube

    Shadow banking is the talk of the town — and the talk of the FT, with a week-long series of pieces analysing this little-understood industry. Financial editor Patrick Jenkins offers the five important facts to remember about shadow banking.

    Add your comment.


  10.    View of the Multifamily Investment Market via AH Capital – YouTube

    The show provides enlightening industry intel on the U.S. apartment market. Experts take a look at the performance of the market in the first quarter of 2014, and share what to expect moving forward.

    Add your comment.


  11.    Once a Top Performer, El Paso's Apartment Sector is Now a Laggard – Apartment Market Dynamics – YouTube

    El Paso has proven to be a counter-cyclical apartment market over the last six years. In the recession, El Paso held steady and then quickly surged to rank as the nation's leader for rent growth through most of 2010. But in recent years, El Paso has ranked among the nation's weakest apartment markets. What happened?

    Add your comment.


  12.    Flood damage to Bosnia estimated at 2 billion euros

    Bosnia's record floods in May have caused damage estimated at two billion euros ($2.7 billion), seriously affecting the country's economy, an international expert group said on Wednesday.

    Add your comment.


  13.    Mount Etna erupts forcing shutdown of Sicily's major airport – World – News – The Independent

    While Catania airport in Sicily remained open, flights into and out of the terminal were disrupted as the island's volcano began spewing molten lava and ash from a crater on the south-east side of Etna.

    Add your comment.


  14.    Branstad issues disaster proclamation for 5 Iowa counties

    Gov. Terry Branstad has issued a disaster proclamation for five Iowa counties …

    three to five inches of rain that fell in northern Iowa on Monday night added to weekend rainfall. The rainfall has overwhelmed northern Iowa drinking water systems, sewer treatment plants and animal feeding operations, the Iowa Department of Natural Resources announced in a news release Tuesday.

    Add your comment.


  15.    Walker Says Most Owners Of Property Damaged By Storm Have Insurance | Wisconsin Public Radio

    Gov. Scott Walker, who spent Tuesday touring the storm damage caused by tornadoes in Platteville and Verona, said that it appears most of the owners of damaged homes in the two communities have sufficient insurance to make the necessary repairs.

    In Verona, 19 homes were damaged, as well as an elementary school.

    Add your comment.


  16.    Investigators seek cause of fire that killed 6 – pressofAtlanticCity.com: New Jersey

    NEWARK — It was pride of ownership that led a New Jersey family to decorate the front of their home with bright plastic flowers, and it was those same decorations that acted as a fatal accelerant in a fast moving blaze that killed everyone inside, prosecutors said Monday.

    The home didn't appear to have working smoke detectors ….

    Add your comment.


  17.    SCAM ALERT: "Storm chasers" look to cash in on damage

    Even though the storms have passed, homeowners are still at risk, this time of scammers looking to solicit business to remove trees or repair roofs. Sometimes the companies are local and trustworthy, but oftentimes they're from out of town and are providing fake information.

    The destruction on Friar Street in Madison from Tuesday morning's tornado is overwhelming.

    Add your comment.


  18.    Fire guts 100 cloth shops in Narayanganj

    At least 100 cloth shops and factories were gutted as a devastating fire swept through a tin-shed market in Narayanganj city [Bangladesh] ….

    Add your comment.


  19.    2 dead after tornadoes flatten tiny Nebraska town | Dallas Morning News

    PILGER, Neb. — A storm packing rare dual tornadoes tore through a tiny farming town in northeast Nebraska, killing two people, crumpling grain bins like discarded soda cans and flattening dozens of homes.

    Pilger's 350 residents evacuated their homes after the powerful twisters slammed the area Monday afternoon. Nebraska State Patrol closed all roads into town.

    "More than half of the town is gone — absolutely gone ….

    Add your comment.


  20.    Commercial Real Estate Didn't Boom and Bust. Is This Why? – Businessweek

    "REITs played a central role" in discouraging speculation in commercial real estate of the kind that led to doom in housing, write the authors. "Commercial markets stayed in balance throughout the biggest real estate bubble in the United States since the 1920s."

    That's not a perfect demonstration because other, unseen factors could have affected the construction of office buildings over time that the researchers didn't measure. The authors acknowledge that markets have also moderated in European and Asian countries that don't have well-developed REIT markets.

    The commercial sector wasn't preyed upon by predatory lenders because the people in commercial-real-estate investing were usually more sophisticated concerning major financial transactions. Most home buyers during the lead up to the crash were even encouraged not to worry about anything because supposedly property appreciation would continually pay off their loans. That's something most commercial investors simply would not believe.

    Now, is that a theory, or are those just the facts? We'd have to test it; therefore, it's definitely a theory, but those still may well be the facts. Your thoughts?

    Add your comment.


  21.    Summer: Humidity & Mold

    Clean and remove visible mold with an EPA-registered mold and mildew disinfectant (Moldex disinfectant, Anabec, and BacShield are examples). Bleach is found not to be as effective, as mold spores can re-grow after treatment with bleach.

    Read the whole article for additional important information.

    We've found that letting your bathroom (shower; tub) area air completely out until dry via open windows (and running a ventilator if available and where windows are not operable) can be helpful. This is true during the cold months as well, but take care not to let your pipes freeze. You can research about that quite readily on the Internet.

    Add your comment.


  22.    Planning Smart Rental Property Upgrades | Real Estate and Rental Marketing Blog for Professionals – Zillow Pro Blog

    Good tip from Jennifer Chan:

    Instead of upgrading your units all at once, experiment by improving a couple of units at a time. Monitor resident responses to rent increases and satisfaction with the upgrade ….

    Finish is important to many; but once people live in a place for a while, fit can become as important. Seal up the cracks. Tighten the weatherstripping. Install new and better exterior doors. put down more flooring underlayment (even another layer of plywood under wall-to-wall) to reduce sound transfer and squeaking (along with extra screws in strategic spots).

    Also consider real kitchen and bathroom ventilation as opposed to just stove hoods that are grease traps only that don't ventilate to the buildings exterior and tenants having to rely solely on bathroom windows to air and dry.

    The potential tenant may not notice these things on his or her own, but you could certainly mention and point them out saying how your existing tenants really have appreciated the attention-to-detail upgrades.

    Add your comment.


  23.    Houston's Anti-Hoarding Ordinance Gives City Room to Move | Property Management Insider

    In April, the Houston City Council passed an ordinance making it a misdemeanor to hoard in an apartment, townhome or condominium. The ordinance makes it unlawful to accumulate objects or substances in such quantity that it creates a health or safety hazard for the resident or neighbors.

    Houston police will enforce the ordinance and violators could be fined up to $500 a day until the mess is cleaned up and the person gets help.

    A heavy fine might exacerbate the persons problems. Enforcement would be a court order allowing social services to work with the hoarder to come to understand the why of his or her hoarding and to compassionately whittle possessions down to a safe level, to help the hoarder dispose of excess property in a humane and sensible, sensitive manner, including donating items, selling items, storing items in rented storage units, etc.

    For the person who simply won't comply even in the face of patient attempts to help, then there's removing the person and then removing the contents.

    If it were to get to that point though, it would probably indicate required institutionalization, a sad outcome.

    We have seen though that hoarding can be extremely dangerous and deadly. It's a very serious matter.

    Add your comment.


  24.    REALTOR® University Speaker Series: Long-Term Vacant Housing in the United States – YouTube

    The audio on this video is terrible, but you can follow along via the slides.

    Dr. Raven Molloy, Senior Economist for the Federal Reserve Board of Governors discusses Long-Term Vacant Housing in the United States, how it is calculated, and what it means for the health of housing supply and the housing market.

    Add your comment.


  25.    Robert Skidelsky knocks the scientific halo off mainstream economists' teaching and research. – Project Syndicate

    Robert Skidelsky:

    … "the mainstream within the discipline (neoclassical theory) has excluded all dissenting opinion, and the crisis is arguably the ultimate price of this exclusion. Alternative approaches such as Post-Keynesian, Marxist, and Austrian economics (as well as many others) have been marginalized. The same can be said of the history of the discipline." As a result, students have little awareness of neoclassical theory's limits, much less alternatives to it.

    The aim, according to the students, should be to "bridge disciplines within and outside of economics." Economics should not be divorced from psychology, politics, history, philosophy, and so on. Students are especially keen to study issues like inequality, the role of ethics and fairness in economics (as opposed to the prevailing focus on profit maximization), and the economic consequences of climate change.

    … The great classics of economics, from Smith to Ricardo to Veblen, go untaught.

    For now, the best that curriculum reform can do is to remind students that economics is not a science like physics ….

    We completely agree.

    Add your comment.


  26.    Latest Look at the Budget Deficit

    Lawrence Yun:

    Tax revenues are pouring in to Washington. Through May, tax receipts were up 7.5 percent from one year ago. By September, the end of the current fiscal year, a cool $3 trillion could be collected — a record high — and a jump from $2.77 trillion collected last year.

    Federal spending is down by 2 percent. The decline is driven by cutbacks to National Defense, which spent 6 percent less compared to the prior year.

    Even with the massive revenue influx and spending reduction, the federal government will still have spent more than it collects. Total spending is projected to be $3.4 to 3.5 trillion, resulting in $400 to $500 billion in deficit. Because of the annual deficit, the overall cumulative debt still rises. However, due to a larger economy, the deficit as a percentage of GDP will be around 3%, the lowest since 2008.

    Add your comment.


  27.    Calculated Risk: Merrill Lynch: Inflation: bump up or bust out?

    Ethan Harris:

    Since the beginning of the economic recovery, monetarists have argued that with the Fed's massive balance sheet strong inflation could be just around the corner. Our response has always been: reserves are not money, and unless those reserves stimulate a surge in bank lending and spending, they are not inflationary.

    While there is a lot of talk about higher wage growth, there is very little evidence. …. In our view, there is still some slack in the labor market; when slack disappears, the rise in wage growth will be very slow, and as Yellen made clear at the press conference, the Fed will welcome the initial rise in wage inflation as a sign of normalization rather than inflation.

    As our consistent readers know, we've been saying that there's plenty of labor slack, that many more people really want to work again then most pundits and statisticians and economists imagine.

    Add your comment.


  28.    What secular stagnation means for interest rates: Is it secular or is it stagnation? | The Economist

    The fact that unemployment has fallen far faster than GDP can explain may be down to demand – a lot of discouraged workers have quit the labour force – and thus require zero rates for longer; or it may be because potential growth is lower, which means the output gap is closing quickly ….

    We think slack has more to do with it than anything. We think it's much more stagnation. It's a demand issue because so many people don't have the money to spend. They been paying down debts and then saving if possible. They need a boost for jobs. The private sector has been deleveraging and hot-money investing, which hasn't helped the US economy. The public sector should have, and still should, step up for the duration. It should create jobs better than it did in the New Deal and WWII but without the war. The war should be on unemployment and low-paying jobs. The war should be on a lack of high-skills training. Debt-free currency should be used to pay for it too: No bonds, no inflation, no deflation, just real, sustainable productivity gains.

    Add your comment.


  29.    The Fed's Ever-Burgeoning Market Manipulation Support | naked capitalism

    Yves Smith:

    … as we pointed out repeatedly during and after the crisis, the officialdom pretended that the meltdown was a liquidity crisis, simply a massive loss of confidence, rather than a solvency crisis. That belief served as the justification for failing to force writedowns of bad debt, require much higher level of capital, and at a minimum imposeg management changes on firms that needed bailouts ….
    … While it makes sense to prevent the collapse of the financial system, that needs to include serious penalties with no discretion, including the ouster of the management and repayment of the assistance out of firm capital over time. The price of a rescue has to be huge penalties for the firm and its key decision-makers or they will just pile on risk.

    But this is where we are. Our central bank seems happy to be the counterparty of the last resort and absorb all sorts of risks so as to provide smooth sailing for financiers. Where this ends I cannot fathom, but I do not expect it to be pretty.

    She's talking about using mark-to-market, which would have meant government taking over the insolvent banks (which it has done plenty of times) and avoiding moral hazard. The Fed has created a hazard by giving the banks the idea that the banks will be bailed out for being reckless and even fraudulent. Of course, the Fed is a quasigovernmental agency at best. It is primarily run by the banks that actually own it, lock, stock, and barrel, the very same banks it regulates, which means those banks are self-regulating and self-dealing. The US government could change all of that and should, but the bankers and the bank's shareholders (owners) are very powerful politically because they control so much money and can afford to give generously to campaign coffers and to pay lobbyists to advance their interests over the interests of everyone else.

    Add your comment.


  30.    Sober Look: Is the recent US CPI increase just noise?

    Walter Kurtz:

    If the CPI report from the US Bureau of Labor Statistics was "noise", is there another measure that can give us a sense of where prices are headed? Today's Philly Fed report provided one such an indicator. The Manufacturing Prices Paid Index clearly showed firmer upstream prices.

    It's true that the Manufacturing Index leads the CPI, but what's underlying the Manufacturing Prices Paid Index uptick?

    The surveyed respondents indicated that price increases for purchased inputs were more widespread this month. The prices paid index increased 12 points and has now increased 24 points over the past two months. Over 36 percent of the firms reported higher input prices this month compared with 25 percent last month. The prices received index, reflecting firms' own final goods prices, however, declined from 17.0 to 14.1. The percent of firms reporting higher prices (22 percent) exceeded the percentage reporting lower prices (8 percent), but 71 percent of the firms reported steady prices. http://www.philadelphiafed.org/research- and-data/regional-economy/business-outlo ok-survey/2014/bos0614.cfm

    We don't think it's time to yell fire in the theater, not that Walter's doing quite that. It may not be entirely noise, but it's premature to turn hawkish.

    Add your comment.


  31.    Janet Yellen isn't giving up on the long-term unemployed – The Washington Post

    Matt O'Brien:

    The Fed is focused on the long-term and shadow unemployed. The biggest question about the economy today is whether the millions of people on the margins of the work force will rejoin it. Alan Krueger, former chair of the President's Council of Economic Advisers has found that the long-term unemployed rarely do — which would mean there isn't as much slack in the economy as we think, and inflation will pick up. But Fed researchers dispute this, and their own work shows that the short-term and long-term unemployed exert equal downward pressure on wages.

    It's a debate that, the Wall Street Journal reports, even carried over to a wedding that Yellen and Krueger both attended — only to be broken up by dance music. But, at the Fed at least, she's won it. Though Yellen admitted that "it's conceivable there is some permanent damage" to the long-term unemployed, she was still optimistic that a faster recovery would pull more people back into the labor force. It's an empirically supported hope. As I've shown before, the less unemployment there is, the more people outside the labor force find work. In other words, a strong job market sucks in the "shadow unemployed" of discouraged workers.

    Add your comment.


  32.    Where Is the Slack in the Labor Market? | St. Louis Fed On the Economy

    Hours worked in construction fell far below trend during the recession and have not yet recovered ….

    Adjusted for population growth? Adjusted for lower wages?

    Add your comment.


  33.    Austerity and Hysteresis – NYTimes.com

    Paul Krugman:

    Suppose, in particular, that we look at the correlation between austerity policies and the decline in potential output. In the figure below I plot the IMF's estimates of the change in structural deficits as a percentage of potential GDP, 2009-2013, against Ball's estimates of the decline in potential output in 2013 relative to pre-crisis expectations:

    This suggests that austerity equal to one percent of GDP reduces potential output by around 1 percent. That's huge — easy enough to make austerity a hugely self-defeating policy even in purely fiscal terms.

    Add your comment.


  34.    What the Gap Between CPI and PCE Means for Fed Overshooting – Real Time Economics – WSJ

    Josh Zumbrun:

    The Fed targets the Personal Consumption Expenditures price index, not the better-known Consumer Price Index. As we've explained before, the PCE index is persistently lower than the CPI.

    This is why we've been calling for a 3+% CPI, so we can hit a 5% or lower unemployment rate with good wages.

    Add your comment.


  35.    Home Prices and Appreciation Higher in Markets with Higher Natural Disaster Risk – Forbes

    Daren Blomquist:

    RealtyTrac specifically analyzed the 34 counties nationwide with at least 500,000 housing units for any connection between natural disaster risk — using tornado and hurricane data from the National Oceanic Atmospheric Administration (NOAA) and earthquake data from the U.S. Geological Survey (USGS) — and home prices.

    The findings were somewhat counter-intuitive.

    The places where natural disasters of that type can occur more frequently and severely are also places with highly attractive aspects. Also, we're talking on average about areas that had boomed and then busted and have been on the recovery side.

    Add your comment.


  36.    More come forward sharing horror stories from Denton landlord's properties | wfaa.com Dallas – Fort Worth

    … her case has a twist: Denton building officials posted this "stop work" order on the door last May. Among the issues cited:

    • Electrical work done without permits.
    • Air conditioning not cooling.
    • Electrical devices and openings that didn't work.
    • Plumbing not draining properly.

    "They told me that I needed to move out, because we're going to be pulling all the meters, because the house was never brought up to the code to begin with," Vardas said.

    When she told Sadeghian about it, he responded that "I still owed him money," she said. She began moving her belongings out of the house and refused to pay the rent for that month.

    Sadeghian took her to court, winning a $4,300 judgment.

    Vardas said that during the court hearing, the judge took Sadeghian's word for it that she owed several months rent. She said the judge did not want to see any of the paperwork she had showing that she could not possibly owe that much.

    If all of that's true, the judge should be investigated.

    Add your comment.


  37.    Treasury 30-Year Bonds Drop as Investors Fight Fed – Bloomberg

    Daniel Kruger:

    Treasury 30-year bonds dropped as investors bet on faster inflation even as Federal Reserve Chair Janet Yellen dismissed signs of rising consumer prices.

    This will raise mortgage rates, which will slow the recovery and lessen inflationary pressures. This is happening in the face of the Fed tapering, which caused money to flood to Treasurys and lowered yields that lowered mortgage rates; but now the Fed will be facing a greater uphill battle if the bond traders don't revert. What will the smart money do? Will they wait a bit and buy Treasurys after the prices have dropped enough due to possible premature, herd selling?

    Add your comment.


  38.    The bond market is ignoring Janet Yellen and setting up a TIPS trade – The Tell – MarketWatch

    Ben Eisen:

    Of particular mention is that TIPS investors and the Fed are looking at different indicators. TIPS are based on CPI, which continues to climb, while the Fed likes to use personal consumption expenditures, which stills lags the Fed's target. In April, it had an annual reading of 1.4% — still well below 2% — and the next data is due out on Thursday. That disconnect means the Fed may let CPI continue to rise past 2% before acting to rein it in, Stith notes.

    If CPI keeps climbing, TIPS only look more attractive. And if the Fed is willing to overlook rising inflation, or at least wait until its preferred gauge hits the target, TIPS could see growing demand ….

    True, but we don't see the fundamentals for much in the way of a heating recovery. We've seen repeated calls that turned out to be simply wishful thinking. We think Yellen is right to want to wait to really see some activity before doing what will otherwise slow things down more than they already are.

    Add your comment.


  39.    Shelter Inflation Will Continue To Rise – Business Insider

    Mamta Badkar:

    Housing supply in America is tight, which has increasingly been blamed for holding back the housing recovery and providing less of a support to the economy. And it is factoring into a key Fed consideration: inflation.

    Add your comment.


  40.    State of the Multifamily Market with AXIOMetrics – YouTube

    Join Michael Bull and Stephanie McCleskey Director of Research AXIOMetrics as they take a look at the performance of the multifamily market in the U.S.

    Discussions include cap rates, how levels of new construction will affect the market and investment opportunities for this point in the cycle.

    Add your comment.


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