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↑ CONSUMER PRICE INDEX – MARCH 2014
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in March on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.5 percent before seasonal adjustment.
↑ Weak Job and wage growth hobbles housing – OC Housing News
… what’s the right policy? Should we do as the Austrian economists suggest and do nothing, or should we continue printing money as Keynesians suggest to force the economy to improve? The Keynesian approach is in vogue today; the federal reserve embraces intervention, and politicians under pressure from a weary electorate supports the federal reserve. The Austrian economists will continue to point out the negative consequences of this policy, but the policy will go on for as long as it takes, and when the economy finally does improve, Keynesians will claim it was due to their meddling, true or otherwise.
As our readers know, we believe that the Fed’s policies have been only somewhat effective but that what we’ve really needed is more and vastly better targeted fiscal spending on productive infrastructure, which would have put many more millions back to work years ago had we done it years ago.
↑ ZERVOS: Markets Pricing In Fed Mistake – Business Insider
The drop in yields in the “long end” of the curve this year has raised concerns that in winding down stimulus too soon, the Fed is giving up on its goal of reflating the economy.
↑ Brooklyn landlords illegally harassed, targeted rent-stabilized tenants: suit – NY Daily News
Another tenant, who lives at 424 Hawthorne Ave., said Wasserman tried to get her evicted by claiming she was harboring a dangerous pit bull in her apartment.
In reality her dog, Royal, is a 15-pound dachshund, she said.
“He took a picture of a pit bull and brought it to court saying that it was in our apartment,” said Marquetta Bell, 45, who has lived in her three bedroom apartment on Hawthorne Ave. since 2003 and is a leader of the Howard Gardens Tenants Association.
“We showed pictures to the judge of my dog, showing it was a little dachshund … The judge threw him out of court, saying it was frivolous and foolish,” Bell said.
↑ Southland home prices surge but sales plummet – latimes.com
Southern California home prices are surging as the spring buying season heats up, with the median price in March hitting $400,000 for the first time in six years.
But a deeper look at the market reveals a recovery divided between the rich and everyone else.
A number of factors have sapped demand, Appleton-Young said. Lending standards remain much tighter than during the housing bubble of the last decade. With wage growth stagnant, most middle-income families aren’t seeing more money in their paychecks. Add in issues such as rising student loan debt, and the mortgage payment becomes that much harder to afford.
↑ Southern California housing market shows two sides in March
Southern California’s tepid housing market took on a split personality in March, with sales stuck near a six-year low and prices at a six-year high, a market tracker said Tuesday.
Last month across the six-county region, sales of new and previously owned houses and condos fell 14 percent from a year earlier to 17,638 properties, according to La Jolla-DataQuick.
That is the second lowest total for a March since 1995 when 17,613 sales of properties were recorded.
↑ Home prices continue to climb
Racine Board of Realtors President Jim Chiappetta of Coldwell Banker attributed the continuing price inclines partly to a lack of housing inventory, both in homes ready to move into and “fixer uppers.”
“There are not a lot of nice properties on the market,” he said, “… and foreclosures are starting to get chewed up quick.”
↑ Home prices rise in Orlando – Orlando Sentinel
An increase in closings on foreclosed homes helped drive the core Orlando real estate market in March, with more sales, slightly higher prices and a shrinking inventory of listings compared with February, according to a new report.
Despite rising interest rates, sales increased and the median price rose to $160,000 in March from $158,000 in February, according to the report, released Wednesday by the Orlando Regional Realtor Association. The report includes association members’ sales primarily for Orange and Seminole counties.
Home prices were 14 percent higher last month than in March 2013, far exceeding historic appreciation rates but lower than the heady price increases of as much as 28 percent seen in 2013.
↑ Is There A Real Estate Bubble in Seattle? Inflation and 11% of our Home Equity Says No. – Seattle Waterfront Homes
Inflation makes general consumer prices rise, no matter if the market is hot or cold (we rarely see price deflation in the overall U.S. economy). In 2007 we saw 2.8 percent inflation. In 2008, as the downturn really got rolling, we hit 3.8 percent. The worst economic year we’ve seen in decades saw just a 0.4 percent deflation rate, which was immediately wiped out by 1.6, 3.2, 2.1, and 1.5 percent inflation rates through 2013.
The big picture here? We’ve probably seen price inflation across the country of around 15 percent since 2007.
Well, as we’ve seen from the links above, lack of inventory is what’s mostly propping up prices.
The vacancy rate in the Sacramento region retail market came in at 9.14 percent in this year’s first quarter, the best opening-quarter result in five years, according to the latest commercial real estate report by the regional office of Voit Real Estate Services.
↑ Real Estate Has Benefited Most From SEC’s General Solicitation Rule Change | Entrepreneur.com
One explanation offered for the breakout success of the real-estate industry is that investors are comforted by having a tangible object to serve as collateral should a business venture end up bankrupt.
Also, says Cox in an email with Entrepreneur.com, investments in real estate developments is comparatively profitable and doesn’t demand exceptionally huge amounts of capital to invest. “Real estate backed crowd financed investments, especially in distressed properties, appear to be appealing to investors given returns can range from 6 percent to 8 percent in some funds, the relatively low investment minimums (averaging $25,000), and risk mitigation (because of the hard asset securitization),” she says.
↑ China economic growth slows to 18-month low in first quarter | Reuters
China’s economy grew at its slowest pace in 18 months in the first quarter of 2014, official data showed on Wednesday, with signs of waning momentum already prompting limited government action to steady the world’s second-largest economy.
Authorities have ruled out major stimulus to fight short-term dips in growth, and some analysts think the economy will continue to lose momentum into the middle of the year.
↑ Yellen Suggests That Fed Will Push to Shore Up Market for Short-Term Debt – NYTimes.com
In her speech, Ms. Yellen said that additional regulation might be needed to address potential weaknesses in places like the repo market. Wall Street firms say that they try to closely match the money they borrow in the repo market with the repo loans they make to their clients. On the surface, that matching practice looks safe and balanced. But in panics, even the most carefully managed repo books can fall apart. That may happen when a Wall Street firm cannot raise money quickly enough to pay off its fleeing repo creditors. Runs in the repo market contributed heavily to the demise of Lehman Brothers and the near collapse of Bear Stearns.
U.S. homebuilders’ confidence in the housing market rose modestly in April but remained at low levels for the third straight month, reflecting the impact of tight credit for home buyers and a shortage of workers and land.
↑ Asian Pollution Impacts Pacific Storm Track, Study Finds : Environment : Nature World News
A comparison of historical climate data has led researchers to conclude that man-made air pollution generated in Asia has an impact on the Pacific storm track, which influences weather around the globe.
↑ BBC News – Amazon trees vulnerable to fire and climate combination
Dr Brando said the abrupt high tree-mortality rates had a lasting impact on the landscape as grasses invaded the space once occupied by trees.
“You do not need drought anymore to observe high density fires because grasses can accumulate way more fuel than the native, wood vegetation,” he explains.
As well as observing the loss of a number of tree species, Dr Brando said there were wider ecological consequences as a result of losing tree cover.
“Burned plots were four degrees warmer because they had fewer leaves and less capacity to cool down the system through photosynthesis,” he observed.
↑ Senior Housing Market Update from Ventas – YouTube
Hear the latest on the sector including cap rates, financing, yields and the latest trends affecting the market. Join show host Michael Bull and senior housing REIT Ventas.
↑ Austin’s Apartment Market is Entering Uncharted Territory – Apartment Market Dynamics – YouTube
For the first time in more than two decades, Austin’s apartment sector is expected to see big growth in both the local economy and in new apartment supply. In previous periods of big job growth, new supply has been limited. And in previous new supply booms, job growth has disappeared. So how much can Austin’s projected economic growth cushion the apartment sector from the effects of a 20-year peak in new development?
↑ US-China relationship needs a reset – YouTube
For the past few decades, the relationship between China and the US has been simple: China made the goods, the US bought them. But according to Stephen Roach, Senior Fellow at Yale and author of ‘Unbalanced: The Codependency of America and China’, that relationship no longer works. He tells the FT’s David Pilling that while China is shifting towards a more consumer-led economy, the US is still too dependent on Chinese goods and Chinese savings.
↑ Angry Bear – Wage Inflation and Expected Price Inflation
There is no sign of an effect of lagged price inflation on wage inflation.
↑ Rebuttal for Rajan: Bernanke Defends U.S. Policy in Visit to Mumbai – Real Time Economics – WSJ
Mr. Bernanke suggested it was unfair to suggest that developed countries are not thinking of other countries when they ease their monetary policy to jump start growth.
He said the Federal Reserve consulted extensively with emerging economy policymakers before making decisions, holding eight to ten meetings a year with emerging economy officials.
“There’s the perception the U.S. doesn’t pay attention to emerging economies. Nothing could be further from the truth,” he said. “We’ve always recognized that what happens elsewhere affects the U.S. so it feeds into the discussion.”
↑ Tech Leaps, Job Losses and Rising Inequality – NYTimes.com
What if technology has become a substitute for labor, rather than its complement?
As J. Bradford Delong, a professor of economics at the University of California, Berkeley, wrote recently, throughout most of human history every new machine that took the job once performed by a person’s hands and muscles increased the demand for complementary human skills — like those performed by eyes, ears or brains.
But, Mr. Delong pointed out, no law of nature ensures this will always be the case.
It was a canon written by economists like Robert Solow, who won the Nobel in economic science for his work on how labor, capital and technological progress contribute to economic growth. He proposed more than 50 years ago that the share of an economy’s rewards accruing to labor and capital would be roughly stable over the long term.
But evidence is emerging that this long-held tenet is no longer valid. In the United States, the share of national income that goes to workers — in wages and benefits — has been falling for almost half a century.
The only safe route into the future seems to be to already have a lot of money.
What are your views on this?
↑ Landlord Jailed Over Tenant Crime – American Apartment Owners Association
… there are steps that landlords can take to avoid renting to nuisance tenants:
Be careful who you allow in the property; always screen each adult occupant, including a criminal background check.
Adopt a crime-free lease policy that tracks your local nuisance laws. Make sure you have the ability to evict a tenant who violates the policy, even if you can’t prove they violated the law. …
Keep a close eye on the property by performing regular property inspections. If you suspect drugs or other dangerous activities, call the police rather than trying to solve the problem yourself.
theknow the neighboring property owners, or at the very least, make sure they have your phone number ….
The number of the new homes that builders started construction on rose a bit, actually, over the past couple of months, but the couple of months before that, it crashed really hard. So, the long-term view here is that we’re about 6 percent below where we were a year ago. And by other metrics, too, the housing market’s been slumping. So this is starting to make some economists nervous.
They say, look, the recovery is already been frustratingly slow. This is the general economic recovery. Wages are flat. Job growth’s been anemic. A healthy housing market could do a lot to help create jobs and boost the economy, but we’re just not seeing that right now.
Brad Krueger moved to Fort Wayne from Chicago about six months ago, and he’s been looking to rent or buy a house in the southwest part of town.
One way he’s been shopping around is by going to real estate websites, and he’s run into something surprising.
He keeps stumbling across bogus listings.
This is nothing new. …
… some of the bogus listings were showing up not on Craigslist but on popular real estate websites that real estate agents use.
This month’s CoStar Commercial Repeat Sale Indices (CCRSI) provides more evidence of two broad trends in the commercial real estate investment market: the continued strong demand for top quality institutional-grade assets by big investors, and widening investor demand for mid- and lower-quality commercial property as the pricing recovery extended to smaller markets and secondary property types.
In keeping with the pattern set in previous years, the number of properties trading hands over the first three months of year is typically one-third lower than year-end sale volume. However, despite the slowdown, the CCRSI noted that transaction activity through February 2014 suggests that the year as a whole will be very active for commercial real estate investment. Having racked up a composite pair volume of nearly $10 billion through the first two months of the year, 2014 has already exceeded first quarter 2013 totals.
Detroit is the Motor City, birthplace of Motown, and now, the best place to be a landlord? Yes, that’s the conclusion of a new realty-track report.
… you’ve also got to find reliable tenants, something that can be hard to do in places with high unemployment, like Detroit.
↑ Japan downgrades its assessment of economy – MarketWatch
Economy minister Akira Amari said last week the effect of the recent sales tax increase has already been felt widely across the retail sector, with sales of home electronics falling 20% year-on-year in the first week of April.
Japan’s Prime Minister Shinzo Abe made a final decision to raise the sales tax from 5% to 8% last fall. The government plans to raise the tax further to 10% in October 2015, with Mr. Abe expected to give a final go-ahead later this year.
Not a good plan.
↑ Resilient Cities and Why They Matter – YouTube
Dr. Richard Barkham, group research director at Grosvenor Group, discusses the Resilient Cities Research Report released at the ULI Spring Meeting in Vancouver last week. Barkham defines resilience as the ability of a city to avoid or bounce back from an adverse event, and it is a factor that long term real estate investors like sovereign wealth funds and pensions should have at the top of their list when determining investments.