Now and again I ask readers for input on what they are seeing locally, a sort of regional check on the statistics and media reports on how the economy is faring.
I’ve seen some things in my backyard that have me puzzled and wondered if readers see similar patterns.
On the one hand, New York City should be faring better than the country overall. It’s dominated by finance, which benefits from ZIRP. Wall Street had a decent bonus year last year and both bonuses and staffing levels are forecast to rise this year. The real estate market here is smoking, due at least in part, I’m told, to Russians and other foreign buyers being leery of property markets in the Eurozone, and so New York is high on a shorter-than-ever list of places to buy.
Yet…I have never seen so many vacant retail stores in my neighborhood, even in the worst of the crisis. And the pattern isn’t the “all storefronts for one building vacant” sort, which means a building is slotted for demolition or a major makeover. And some long-established local mini-chains have gone bankrupt.
Now it might be that the staid Upper East Side is losing out big time to the hipper parts of the city. But I asked a buddy who is in real estate and whose wife runs a store. He says her business is just hanging on this year, and he’s not clear if she will make it. And it’s partly due to the rents. He said a lot of landlords gave tenants breaks during the crisis so as not to put them out of business. But now that the economy is supposedly better, they aren’t cutting commercial tenants any slack, and are putting through increases (note I’m not clear on the level of increase, and wonder if they are also largish, either due to looking at how the residential purchase market is doing and suffering from profit envy, or coming to close to the same place by trying to put through what they feel are past-due rent increases all at once). Given how many stores I’ve seen vacant for more than a month or two (these in good locations, like nice blocks on Madison, Lex, and Third), this strategy does not look so smart.
Another weird tidbit: I took a cab to the airport in May and chatted up the driver, and asked how his business was. It turns out he owned a limo but was no longer driving it. He said he used to be able to make $800 to $1200 a day driving the limo, but now he’d be lucky to pull in $150 to $200 regularly, while he could earn $200 to $300 a day driving his cab. He’d had a contract with a large fund management company (I recognized the name) among others, and after the crisis, they kept squeezing on fee levels until it didn’t make sense to work for them. And the sort of casual business he’d get, that of being hired for a few hours by someone who wanted to do a lot of shopping, or go to dinner and theater, or pick up a client from the airport, had never recovered. This of course is the opposite of what I expected given that the official data shows that all of the income gains in the recovery have gone to the top 1%, to the degree that the rest of us are a bit worse off.
Do you see any local cross currents? Can you make sense of them?
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Out here in southern Maine it’s mixed, but on the down side from what I can see: Some new businesses opening and those, like my hairstylist, doing comfortably at least Y-o-Y, but also many stores closing and vacent fronts.
My own business, which is not local but depends on clients who depend on investment, is terrible. There is plenty of work, but the clients are out of money and are constantly scrambling. Worse, I’ve been noticing how many well-funded companies will negotiate for investment deals with clients over very long periods and then suddenly pull out at the last minute. So, lots of time and money wasted. It seems like those who have the money are just sitting on it, too afraid to start anything new.
Thannks, Helicopiter Ben. Too band your QE and TARP didn’t get the message of noblesse oblige you gave to your Princeton grads.
All noblesse, no oblige: the yellow rain of trickle down.
Yves: what’s going on is that the 0.1% — who are still collecting all the money — are hoarding it rather than spending it.
Pretty simple.
Where does the money go? It doesn’t go to buying things in stores.
It goes into the stock market and the commodities market and the real estate market.
This is for a couple of reasons: the 0.1% are already buying all the consumables they need or want. The only thing they can do with their ill-gotten billions is to “invest” it, they can’t possibly spend it.
As for the rest of the 1%, while they have gotten some money, they can see what the 0.1% did to everyone else. They expect trouble ahead, they expect to be fleeced by the 0.1%. They are, just like everyone else, afraid, and are trying to stockpile savings in case of disaster.
You might see a rise in durable goods orders as part of that preparation for collapse, but you’ll see really low sales of consumables.
So what you see, Yves, is exactly what I’d expect. If you print money and give it to POOR AND MIDDLE CLASS PEOPLE, you get a boom in business: production, sales, etc. If you give all the money to RICH PEOPLE, you get a boom in asset values, but you get a collapse in business.
This is how high inequality destroys economies. Asset values will eventually start dropping due to the lack of actual business activity. The only way to deal with it is to redistribute the money from the 0.1% back to the poor and middle class.
The other aspect, which several people have noted, is that the corporate culture of most of the Fortune 500 companies is a culture of chiseling (encouraged by the social factors Veblen describes).
At this point the corporate chiseling has gotten bad enough that it’s actually hurting the bottom lines of the corporations who are cheating their suppliers. But that isn’t going to stop them — it’s a *culture* of chiseling, and just because they’d make more money by treating their suppliers decently doesn’t mean they’re going to do so, because that would be a *cultural change*.
Up here in Central Maine, the joke goes “Depression? We’ve always been depressed!” We never had the bubble here, so we never had the collapse. My sense is more a long grind downward as infrastructure (roads, schools, and especially housing stock) decays.
Adding, the one bright spot in my own small town is food, not only for university students but for the surrounding area. Those business are growing; it used to be that downtown had like five barber shops. Now they’ve been crowded out and that’s good. No new small businesses have succeeded, though several have tried, but no old ones have gone under, either. However, the old small business owners lament that they can’t cash out. That’s the lament of a lot of “This Old House” owners, too.
Ha! Here in Western New York (Buffalo area) we say the exact same thing. No boom, but no bust.
Upstate and Western NY are like Maine in a lot of ways. Thanks heavens we have no hydrocarbons.
Black-car drivers are indeed hurtin’ in NYC, and I’m not surprised some have gone back to cab-driving. The big firms are chiseling on rates, ruthlessly switching providers to the lowest bidder, and have cut back on car service drastically–just in the recent past, young associates/analysts got black-car service to and from; now they’re forced (did I say ‘forced?’–poor darlin’s) to use their corporate cards & take cabs instead, and that’s a lot of black-car biz down the tubes, and a lot of jobs too–black-car drivers are the rolling equivalent of mom & pop small businesses, and when their work contracts, that’s less in gasoline, auto parts, tolls, mechanics’ wages, etc. I work back-office at a finco you’d recognize, and layoffs on the IB side have been drastic, forcing equally drastic support-staff layoffs. I gather the IB business model is in transition, no one quite knows to what, and my little cadre of back-office colleagues feel like the deck stewards on the Titanic. As IB’s contract, there’s been no corresponding financial-company expansion I’m aware of; once out of work, one tends to stay that way for quite a while. A lonnnnnng while.
I live on the upper east side and note the same as you, Yves. RiteAid on Third Ave in the 60’s has closed. The unknown factor in these observations is the building of the Second Ave subway which has re-locations of biz from Second Ave to First Ave. First Ave. seems to have more open store fronts than it has had in the past, possibly because of the subway construction and the growing medical complexes on the far east side. However, stores on First Ave are smaller and lacking in silk-stocking elegance.
Re the driver’s experience, I totally get the squeeze on corporate suppliers. It was key in driving my company out of business. We just could not profitably deliver what clients wanted at the price they demanded. We had clients expecting us to replicate past service at 56% the price they’d paid years earlier. And then … get this … when we told them we were going out of business, some of them got really mad at us! These are some of the same Fortune 500 companies that also implemented: only paying after 120 days, closing their accounts payables department for months at a time, and charging fees to process the invoices they owed us.
There is an imbalance of power in business dealings. Corporate 500 is increasing its profits at least in part by squeezing their suppliers. Not everything can be off-shored to India or implemented over the internet.
When you get physical segregation, wealth discrepancies(i.e. gated communities…), empathy drops like a rock.
http://articles.latimes.com/2012/feb/27/science/la-sci-0228-greed-20120228
“Those findings led to a series of experiments that revealed that people of higher socioeconomic status were also more likely to cheat to win a prize, TAKE CANDY FROM CHILDREN (emphasis mine), and say they would pocket extra change handed to them in error rather than give it back.”
… Take candy from children, the fuck? To be fair though I can totally see the Koch Bros doing that, but still, that sounds ridiculous.
Veblen explains this.
It’s not that rich people are inherently psychopathic thieves….
….it’s that psychopathic thieves TEND TO GET RICH more than other people. Being a psychopathic thief helps you get rich.
These high-functioning psychopathic thieves are very good at hiding amongst the general population, and using their charisma to manipulate other people. Until we can figure out how to identify psychopathic thieves and remove them from the population early, we have to deal with them by taking money and power away from rich people.
if your sorting/sifting machine favors certain properties over others, it will sort for those.
reverse social Darwinism.
this is why i’m FOR free higher education, by the way. most people do not realize that the system as it is favors those who have money from day one. if you’re going to a poorer school with poorer parents who can’t help tutor you and can’t pay the rent, much less buy you a computer, you are going to lose that race. not to mention, poverty conditions on the developing brain and lack of cultural and other kinds of developments in a stimulus-poor environment.
rich or comparatively rich people believe they are “smart” by their achievements alone, when really it is a system set up to favor them from the beginning.
our economic system AKA psychopath sorting machine has been going full throttle since, when? even before mediaeval times. so we’ve got a nice, thick crop of them now and their high status has made those values THE values, so we have a lot of pseudo-psychos who reward themselves every time they emulate Scrooge.
Ian Welsh:
“The post-war liberal state was fundamentally different from the one we have today. It was open. The bureaucrats and the politicians and even the important private citizens were not nearly as cut off from ordinary people as they are today… This is all of a piece. The closing of politicians and bureaucrats from public contact, the soaring CEO and executive salaries which allow them to live without seeing anyone who isn’t part of their class or a servitor…”
http://www.ianwelsh.net/the-decline-and-fall-of-post-war-liberalism/
In a picture:
http://dc.curbed.com/archives/2011/07/the-alexandria-home-built-by-gerald-and-betty-ford.php
Representative for 25 years
House Minority Leader
Vice President
President of the United States
In essence, social liberalism has been replaced with economic liberalism. They are both liberal in that they want people to be left alone, but within different spheres.
Very interesting study. Thanks for the link.
I’ve noticed stores closing in NYC also.
For a while it seemed NYC was immune to the recession. I guess it has caught up to us.
“These are some of the same Fortune 500 companies that also implemented: only paying after 120 days,”
Depending on the due date on your bill, this is likely illegal.
“closing their accounts payables department for months at a time,”
While not illegal, this doesn’t give them any legal right to not pay their bills.
“and charging fees to process the invoices they owed us. ”
This is always illegal.
I suppose the cost of retaining an in-house lawyer to file suit against these companies over each and every unpaid bill was enough to shut your business down.
I probably would have done that just to develop a legal record so that I could start claiming punitive damages for repeated bad behavior.
In Dallas, it was like the 2009 recession never happened. Yes, a few restaurants closed, but that was about it.
In the last years I’ve seen Dollar General stores pop up everywhere, even in affluent neighborhoods. One opened next to a Whole Foods a mile from my house. Of course the Whole Foods is closing and moving to a space they couldn’t afford two years ago.
Everyone is talking about selling their house, but I don’t know a single person that has bought one. Mostly out-of-town money.
The meme about poverty moving to the suburbs seems to be true. Of course, Wal-Mart, the food distribution arm of the federal goverment, is opening stores wherever they can grease city hall for the permits/zoning.
Due to the fair share of business failures here in Cincinnati and the overbuilding of commercial space in the mid-to-late 90’s & early-to-mid 2000’s, there continues to be a robust vacancy rate. The remaining businesses, however, have been able to hang on by constantly moving around, in search of ever cheaper and cheaper rents. This is a town where people only drive to local businesses, but only to their nearest shopping district, so for these businesses, this strategy seems to be sort of working. Also, this does give a bit of an illusion of prosperity, but it’s a lousy one.
The other thing I’ve noticed is that ongoing transition of the residental market from buying to renting. Despite what the “Chamber” says on TV, prices for both are back at late 1980’s levels. There’s virutally no house building, only an occasional new apartment project can be seen, in less regulated parts of town. There’s also been a huge transition in people moving from ownership in McMansion subdivisions (where there’s at least 20% vacancy, by the looks of unoccupied homes with no For Sale sign in front of it) to rentals in older neighborhoods with smaller homes & apartments, and into condos. Condo purchase prices are literally, I kid you not, at early 1970’s levels, so many are reverting back to apartments.
That’s curious–I’m also writing from Cincinnati (actually Montgomery) and there’s been a recent surge in construction activity here, back to pre-bust levels even. Many tear-downs of perfectly liveable ranch homes as their aging inhabitants leave for smaller units or for assisted living elsewhere, to be replaced by two-story houses too large for their lots, and the new houses are selling very quickly.
Cincinnati’s one of these places where children tend to live in the same area as their parents. I’m sure in a 1% part of town like Montgomery (adjacent to infamous Indian Hill), trust fund babies, who want to stay in the area, just aren’t pleased with their parents’ older home, so they’re razing them for McMansions. This happens occasionally in other parts of town, I’ve seen, such as Edgewood or Hyde Park.
Things are not good here in RI, the basket case of New England. I was in Newport a week and a half ago. The number of empty storefronts in the tourist district has grown considerably since last year. It was shocking. Where will visitors get their trinkets? The rest of the state looks as shabby as usual, in part because the infrastructure continues to crumble. Thankfully the new leaves on the trees help soften the harshness. Instead of fixing roads the corrupt legislature gave $75 mil to Curt Shilling, a retired baseball player, so he could develop his dream gaming company. But things went south on that and the citizens have been left picking up a $110 mil tab. This is what you get when you have one party (Dem) rule.
There is some growth here: Cynicism is up, as is despair. Depression too I suppose. In contrast, out on Block Island they’re having real growth, building houses like crazy, often tearing down perfectly good ones to up up oversized MacMansions. The wealthy have to have some place to stash their cash. In the process, they’re going to love that place to death.
Except Schilling is a rockbottom Republican. But don’t let that get in the way of the bunting on your narrative.
“As Wall Street goes, so goes the nation. And here’s a look at the closing numbers:
racism’s up, human rights are down, peace is shaky, war items are hot. The House claims all ties. Jobs are down, money is scarce, and common sense is at an all-time low on heavy trading. Movies were looking better than ever, and now no one is looking, because we’re all starring in a “B” movie.” – Gil Scott-Heron, “Nuthin’ but a B Movie” http://www.azlyrics.com/lyrics/gilscottheron/bmovie.html
Here in Massachusetts, there are jobs. But many of my friends (18-35) aren’t getting “good” jobs unless they are in science or banking. I’ve had one friend in a perpetual state of retail employment hell. Another, a 2-tour Afghanistan Marine vet, is on a long wait list to be a Firefighter so has had to settle on being a bouncer at a local bar (which kills his weekends as he works til 3-4am).
Another lot of friends are realtors, and business is booming….but for the wrong reasons. Bidding wars for houses ensue, which means people are willing to put more cash upfront as well as to eschew inspections to get to the head of the list. Rents are skyrocketing due to low vacancy rates and good ole gentrification. I fear the neighborhood I live in, Allston, is next. New Balance is expanding a building and commuter rail in the area, and Harvard is buying up property left and right. Many have moved to Allston to escape the 8-25% YOD rent increases in more popular neighborhoods (due to location near downtown, Fenway, and colleges) like Mission Hill (where I grew up), Longwood, the South End, Jamaica Plain, and towns like Cambridge/Somerville/Brookline. So I eventually fear that the developers will aim for my part of the city next.
Businesses are being created, but you generally have to be pretty well educated to get a job. Jobs are waning here, and the jobs that do exist either pay good, but have no benefits….or pay crappy but have crappy benefits (like my NeoLiberal employer).
I really feel as if buoyancy of the economy is catching up to people. It’s not near our necks, yet….but its close. Closer than the people who run our institutions want to admit.
Atlanta- homeless shelters unable to pay utilities are closing. high-end neighborhoods (ex. country club of the south) now have strip malls with dollar stores (never seen before). schools are closing weekly (13 of 85 in the city) my personal he!l is all the CHASE banks…ive NEVER seen anything like it! they’ve taken over video stores, liquor stores and even waffle house…when i run errands i see more chase signs than gas stations.
cynthia mckinney once said…I can’t be calm when I drive through sections of Atlanta that look more like Kinshasa, Democratic Republic of Congo, than America.
she’s not exaggerating…its CHASE + CONGO = HOTLANTA
I’ve never lived in Atlanta, but that area seems to be a favorite on HGTV’s “House Hunters” and some of the episodes have blown my mind.
Huge, beautiful McMansions on large well-landscaped lots with all hardwood floors, 5 bedrooms and 4 baths, extravagant “man caves,” coffer ceilings, moldings, granite countertops–the whole nine yards for UNDER $200,000. The house hunters are SINGLE hairdressers and middle school teachers buying FHA with minuscule down payments in what looks to be a posh, dream neighborhood.
The kicker is that these buyers routinely turn up their noses at one thing or another–not BIG ENOUGH, don’t like the light fixtures or the tile in the foyer, EXPECTED TO GET MORE FOR THEIR MONEY!!! According to the narrator, some look at 50 or more houses!
Once again, I don’t know much about Atlanta, but these look like executive neighborhoods with what should be million dollar residences. What in the world?
the divergences here are so broad they don’t fit on charts…there are pockets of mcmansions sitting in foreclosure but funders are stepping in to scoop them up.
arrogance runs like kudzu thru this city…it’ll catch up and left to rebuild will be more corrupt culprits from the brain-dead incest!
Atlanta is a driving town. Everything in ATL is based on automobiles.
Since no one walks anywhere, building a new neighborhood 5 miles out is just an extra 10 mins away. Plus, since there’s no water front, mountains, ect… views are all practically the same. As a result, the desirability of housing is usually based on the amount of traffic /commute time around it.
Urban sprawl = cheap land prices = cheap home prices
so true Bonds and wait till the toll roads start popping up…its coming!
http://www.myajc.com/news/news/traffic/metro-atlantas-next-toll-lanes-i-75-in-henry-and-c/nXS6F/
These are classic Great Depression conditions, as we would expect in the Second Great Depression.
For some reason we have no equivalent of the Bonus Army. Yet.
An interesting if not so strange RE divergence in the Seattle Downtown core: new ‘tall boxes’ going up with cranes everywhere again, while the street level retail places vacant since 2008 largely remain so.
This is all within sightline of the Ama-zone and Allentown, where Amazon and Paul Allen respectively continue developing their spatially interpenetrated Nodes of the Universe. So the new building is either apartments or 21st century commercial for high tech and gen-tech. Some of that is on sites motballed for the last 4-5 years as unleasable if built over that time, but now greelighted. In other words, the ‘growth’ is all an outgrowth of fin-banks lending to the hot projects of the moment lined up by Big Corps. This isn’t demand-driven building, but corporate strategic maneuvering for other high end corporate tenants and property buyers. Building for the corporate 1%. Nothing like that kind of building is happening farther out, let alone in suburbia, not at all in single family homes.
As said above, vacant retail space has stayed vacant for extremely long times. I walk by daily decent space which has been empty for four years. Long time local tenants and businesses continue to go under; blink your eyes and a clevel clothier or specialty bookshop of modest chain operation which had held on for years is wrapped in a brown paper shroud. The one kind of business which seems largely immune is auto-maintenance, since without the vehicle many folks are unemployable, so it’s the one thing into which they keep putting money. Yes, a few of these places fill in; something on the market long enough draws a bite of interest to be sure. What stands out to me about this in-fill is how poorly capitalized the outfits look: a low end optometrists; a two person dress shop with sensibly limited inventory; a no-moxie pub where an upper end restaurant used to be. Hope (of gain) springs eternal but very, very few opening a business seen to have much operating capital. And _none_ of them are sinking capital if they have it into a fully tricked out shop, meaning they don’t expect to be doing booming business so are keeping their plans modest. Many places still around seem to be just hanging on, getting picked off one by one by a rent hike or an inventory rollover they can’t finance.
Which raises the question: Just who is going to _rent_ the retail levels of all these new profit boxes going up with Other People’s Money? Amazoids and Microsofties are buzzing their own little swarm, but outside of a few cocktail joints it’s hard to see them keeping the local economy going by themselves. The long time major employer in the region, Boeing, is locked in its death-feud to kill off it’s local work ties, yet again anouncing moving jobs out of state to weak or non-union locales. We have Harvard grads applying for barista positions here, and getting turned down for folks with actual experience, that’s how much slack there is in hiring for the under 30s. If you work for a bank or a tech firm, it’s all rose-colored window panels, but down on the sidewalk it’s all ‘For Lease.’ And this is as good as it gets for 700 miles in any direction.
Re: Seattle.
Seattle has $2bn in deferred transporation maintenance. The state’s budget is in a deadlock in a zero sum game between education and transporation, and the people doing the holding up (Rs) want neither. Single Family housing prices have jumped 10% and are approaching the levels we saw in 2008 right before everything shit the bed. Trade, logistics, and shipping carried part of Seattle economy during the downturn, but is losing steam. Conversely, jobs in construction are rising because of the development mentioned above, but also because of the tunnel project. Boeing and Microsoft are laying off again. There is a lot of spending in the 20 something disposible income category, as all the hip restaraunts and bars are packed on the weekend, but that might be a remark on increased density in those neighborhoods. Rents have gone up around 50% since ’08
and the high rents back then seem cheap by comparison. SF ousing and codos did deflate but never became affordable, and so people are still opting to rent, which is driving up demand. The county is about to cut bus service routes by 17% because of shorfalls. In politics, the city continues to be deadlocked on extraneous BS, such as public financed spots arenas and bike lanes, as well as our problematic and corrupt police force and federal interstate commerce issues “coal trains”.
An elephant in the room for the Seattle area and the state as a whole is the lack of a state income tax, which has been voted down by the legislature since a 2/3rd of a vote is needed to pass it. The lack of revenue from the inability to levy such a tax aggravates the battles for the neccessary spending for education and transit. The Governor has said he has no interest in tax increases and chooses to nip around the edges by close various loopholes for business.
As mentioned below, the lack of a state income tax seriously exacerbates short term funding squeezes, and makes long term financial stability problematic in WA. The fact that we do as well as we do is attributable to the major tech, engineering, and port facilities, which provide enough financial throughput that living standards remain high relative to the country as a whole. My larger point is that there is a lack of small business capital. Everything is dependent upon the big few and on agricultural exports to Asia. Jobs are tight.
Re: the bars, there are two hot spots for bars and restaurants, both in Seattle, one in Pike/Pine, the other in Ballard. I should know, I dine in either one regularly. But the reality of these is that they are the entertainment focus for an urban area closing in on 2 million, they aren’t neighborhood-dependent. Any place looks good if all the loose cash for far round is dumped on a few spots. One of those, Pike/Pine is largely the result of a single, well-heeled property entrepreneur who bought up much area cheap, enticed focal businesses and restaurants to seed the area, and is building or encouraging apartment construction having done the same for condos previously. I’m not down on the guy. We have to understand that this ‘night life district’ is not organic but a hot house. If that guy gets in a pinch and goes BK—I don’t see it happening, but consider—the air goes out of the enterprise. Much depends upon a few here, that’s my observation.
The Puget Sound area (Seattle) appears to be doing quite well. Boeing has hinted that it may someday slash some engineering jobs, and they are desperate to move production to “right-to-work” states, but so far it hasn’t hit. The paper was just touting a 10% increase in King County real estate prices (quoting out of my head). On a recent stroll through hipster haven Ballard, my girlfriend found all of the restaurants bursting at the seams. I haven’t seen any blight. This city will get its come-uppance some day. Maybe we will get an earthquake or Boeing will finally decide to make planes with minimum wage slaves, but for now this place seems to have a magical quality. That being said, I volunteer in a low income legal clinic and there is plenty of hardship here too, but not of the type that tradnslates into empty store fronts. This place is yuppie paradise with all of the nauseating pretension.
Good description of our area, I agree. Michael Parks, a Seattle area establishment economist, said recently living in Seattle feels like being in the Truman Show.
Except for the roads, Seattle’s roads are falling apart. TPTB have let them rot for years. Keep waiting for whole sections to fall into a sinkhole.
The good news is that gasoline will become so expensive that you won’t even want to drive on all those decrepit roads.
I see the same thing on Capitol Hill. The bars are so full… and news ones open regularly.
Things are really looking up since with the latest rise in house prices, almost no one is underwater:
http://www.zillow.com/local-info/WA-Seattle-home-value/r_16037/#metric=mt%3D34%26dt%3D1%26tp%3D6%26rt%3D8%26r%3D16037%252C250206%252C272001%252C271990%26el%3D0
I’m seeing an entirely different picture. But I live on the south end, and not in Ballard.
RE Seattle, if your niche is IT, Aerospace, or Health Care, you’re doing well for the most part. Outside of those niches, you’ll struggle.
Agreed. Many new home owners in Seattle are probably in one of those areas.
Here in the southern Midwest, in my small town and area, nothing much has changed, which is actually a good thing. All of our several small manufacturing plants remained open throughout the recession preventing any spike in unemployment. The local farmers, who raise chickens and cattle, continue with their land and their stock. The chickens are actually supplied and controlled by the big chicken processing plants that operate in the state, but everyone has stayed in business.
I bought my home at what everyone calls the peak of the housing boom, but it’s held its value. I tell my relatives and friends outside the area that we had no crash because we had no boom. Building is off somewhat, though, from what I hear. Possibly that’s uncertainty related somewhat, due to the recession news throughout the country. The moment one of our plants should close, all of our relatively good fortune will begin to change.
Retail-wise, it’s all Walmart all the time. Little businesses open continually with few making it. Clothing shops/boutiques open and close, open and close. The local appliance, auto-parts store, I don’t know how it stays in business. There’s no one in it. Walmart’s parking lot stays full. But that’s been going on for years.
Good to see you here, Jon. ;-)
Thanks, Carla. Good to see you too!
A quick survey yesterday in my mid-TN suburb found double the ‘normal’ number of For Sale signs – including two long-empty foreclosures. This is above the level at the height of the housing crisis a few years back.
In Pittsburgh, PA, things are hot, hot, hot especially residential RE – if it’s move in ready it moves fast and commands asking price or over. If it needs work, forget it. We have several large downtown commercial building projects. The jobs market seems decent. I work for an OLD Fortune 500 company and we have seen increase in turnover as young people are able to get higher paying jobs in Pgh area. I think Marcellas Shale is helping economy.
Shale has done nothing but suck the clout out of Pittsburgh. Tech and healthcare led the boom. Shale is hanging off their coattails and taking all the credit. Most surrounding areas remain depressed, and shale is banned in areas in the south that are seeing booms. The south is also where engineers go when they want to raise kids, which, again, tech not shale.
The city was well positioned during the crash. There were a number of local efforts (governmental and private) to spur tech startups and healthcare that started about 10 years ago with the first fruits being seen about five years ago. There wasn’t much of a crash since the city was still relatively depressed beforehand. With all those plans pulling the city up while the rest of the country went down helped it leapfrog cities that were more prominent before the crash.
I can’t add much to Richard’s, armchair’s, and PF’s comments about Seattle, but I’m in construction, and it is pretty good right now, jobwise, probably because we had over 25% UI at the height of the crisis. More opportunities, wages and bonuses beginning to trickle in, but no floodgate or anything.
What I’ve seen this year is a pretty big increase in the apartment and Senior Housing segments. More projects this year than the past five combined. Retail is slowly, slowly coming back, but nowhere near five years ago. Office TIs kept many firms going, but those are slow, too, because as Richard pointed out, the techies just build something new – no need to remodel some tired old space. This points to a relatively soft level of employment in the tech areas, I’d say – I remember years ago they’d move into an old warehouse and barely put paint on the walls before setting up door desks and hiring ten people to do the job of five.
Nobody is fully staffing up. Many firms are still very tight on labor and expecting everybody to work twice as hard for half the money…as I said, there has been a little easing in that regard, but NOthING like Good times.
I’m just glad to see things moving along, but I sometimes get the “Potemkin village” vibe, given the fundamental realities of what’s really going on in our economy.
One thing I have noticed since the recession is how nice looking baristas are, and how attentive cashiers are at fast food restaurants. Crappy service may be a good indicator of a hot economy and it has been years since I have had a long run of crappy service.
The other thing I’ve noticed is that suppliers are just completely tapped out. They are “Just in Time” all the time. This has been like this for some time. There is NOTHING on the shelf waiting to purchase – even simple things like hollow metal door frames have to be ordered, often with 4-5 week lead times. I can remember when you could get a few of those off the shelf, or maybe inside of a couple of week.
And around here most of the trades are NOT giving an inch on price. They haven’t had a raise in 5-7 years, so those guys who are still in business are staying firm on pricing. Most Owners haven’t noticed yet, but there will be no bargaining.
I also live on the Upper East Side and can make some sense of Yves’ observations. But New York City is really different economically from the rest of the country, and even within the city there is a divergence between the core/ Manhattan and the outer areas.
Basically there has been alot of hot money coming in from abroad, buying up real estate as a place to park or launder it. Rents have continued to increase. Because rents are continuing to increase, actual businesses operating in New York are getitng squeezed by the increased rent. These businesses also can’t afford to hire, so you have more unemployed people sitting in their apartments, whose rent is increasing, who then can’t go out and make other purchases.
So this is a classic case of increased financial churn hollowing out, and I suppose eventually destroying, a “real” local economy.
However, you have a huge tourist business, and businesses and people are hanging on hoping things will improve, so the process I’ve just decribed haven’t really manifested itself in more than some vacant storefronts. But three years ago I started noticing entire parts of neighborhoods with little commercial activity, which is really unusual for New York.
Seems that the commercial landlords are dumb not just in Europe.
The story about shops closing due to rising rents is something I heard from quite a few shopowners (from a few different EU states). Apparently, rarely if ever they have a replacement tenant and the shops end up vacant for long periods of time. Why would that make commercial sense beats me..
In the UK there’s the additional burden of business rates which are fairly high, so added to the rent it kills a lot of businesses.
I’ve wondered about that–I’ve seen that around where I live in NC.
Yves, I will try to lay out the causes for decreased economic activity as I see it from my perspective in Chandler, Arizona.
#1 Boomers peak earning/spending years are now 7 years in the rear view mirror, Generation X, and Millenials are years away from reaching a level of earnings where they could pick up the slack.
#2 Household fragmentation has made economic stability more fragile on the home front, with the massive increase in single person households, single parent households, and with nuclear families now representing only 21 percent of households.
#3 Electricity and gasoline as a percentage of monthly income are increasing on a regular basis, and with wages being stagnant or falling for most households over the past 6 years these increases really hurt. Gasoline sales have been falling for years because of demographics, and the simple fact that people of all ages have been forced to cut back on driving.
As a household we switched to LED light bulbs this past winter, raised the thermostat level in the summer, and our electrical bill is still climbing on our Smart-metered apartment.
#4 Our local Chandler mall saw 13 stores close in the winter of 2012, and a similar number of businesses failed this past winter and spring. What has been fascinating is to watch the mix of stores move down the economic ladder from things like jewelry stores to sports apparel consisting of hats and T-shirts.
#5 Demographics is a dominate theme in the local restaurants that have failed, and those that have survived. The mid-tier restaurants have been getting decimated, while the extreme low end and high end restaurants have been on whole more stable. What has been funny to watch is the number of failed restaurants that have been repurposed to sell Chinese food only to fail within 2 to 6 months after opening.
#6 The Chandler area has a lot of vacant electronics stores, restaurants, and office buildings, and although there was a slight upturn in activity around a year ago, I would say say the area appears to be sliding again.
#7 I think the true measure of how an area is faring is to drive around and actually look at maintenance of the landscaping and the homes themselves. I did that yesterday in an area of Tempe, Arizona that I know quite well, having lived locally for 17 years. It was really sad to see what had been a decent area starting to slip so badly, in spite of what the relentless real estate propagandist would have us believe. Now here is the kicker Yves, the grades that the schools in this specific area have been getting from the state mandated tests have been slipping badly. So in the end what you see happening to the outside appearance of a home may all too accurately reflect the true state of the family that resides there.
Metropolis in a desert bowl, the clock ticks.
From ranchers (Dobson Ranch memories as a kid – now golf course) to cotton and sugar beets to trac housing all the way to south mountain and the winds. The previous occupants could have informed them of the folly… by hard won experience, but…
Skippy… Oak creek, slide rock, Owl restaurant, trout fishing and rock hopping have given away to elitist compounds and spiritual touristification… sigh.
I look at the price difference between regular and premium gasoline to guage economic conditions in the U.S.
My rule of thumb is that as long as the price difference is grater than 20 cents per gallon, it indicates that people still have money to burn (literally), since only about one car per thousand actually needs priumium gas.
Right now in the Washington, D.C. area premium gas is offered at +40 cents over regular. Therefore I expect eqites to resume climbing any day now.
http://www.eia.gov/todayinenergy/detail.cfm?id=11131
Washington DC is doing very, very well, yes.
In my NYC neighborhood (way uptown in Manhattan) there is a lot of talk of outrageous rent increases for commercial space. And there are a surprising number of empty storefronts in a pretty bustling area. I would love to know what kind of tax break owners of these spaces get when they are unoccupied — it’s hard not to conclude that it’s more profitable for owners to jack up rents and keep them unoccupied with a tax break than to actually rent the spaces out. Not to mention that the landlords don’t have to deal with the day to day responsibilities of ownership like maintenance, etc.
Meanwhile, those looking to open and run small businesses are left wondering how they can manage. And it seems they often cannot.
You have to ask the lawyers. Tax laws, zoning and all that are prime opportunities for corruption in NYC and elsewhere. The more complex the laws the more corruption.
First, agreement Bias led me to hesitate to reply; so, be careful how you interpret these responses. It is a powerful force that works especially in groups that share values.
Real Estate is local. The entire West Side of Manhattan is booming all the way up to trendy southwest Harlem. 3 new stores have taken over vacant shops just this year (2 restaurants and 1 hair salon) because the Hudson Yards is coming nearby and because trendy Chelsea is merging with trendy Hells Kitchen. Re: Upper East Side: my friends’ parents have sublet up there for years each winter and they told me how the prices have been coming down for years. It’s just not trendy which is a requirement because NYC is awash with trust fund kids and dot.com wealth. It’s the place parents can brag that their kids graduated and are having fun: sometimes getting paid tuppence in the arts or philanthropies (trustifarians). “Parents buying for children” is such a prevalent phrase even in HDFC “low to moderate income” buildings. Parents like to live vicariously and have bragging rights because any post-graduation NYC existence for their kids is valid by default (true for upper middle class liberals and for NYC-produced-Fox loving conservatives.)
I can also attest to (non-West) Texas booming – from trendster Austin to Dallas and Houston. Incomes are minimum-wage-low but land and rents are cheap. Prices never seem to rise in most metro areas in Texas. Locally within metro areas some neighborhoods rise slightly but not like here. “Parents buying for children” is prevalent there too.
Also, your own web page has recently highlighted the fact that large banks are buying real estate; so it’s difficult to tell what’s the cause of regional or local price fluctuations.
In Kansas City, the economy seems healthy. Most companies are doing much better than 3-4 years ago. Residential real estate is coming back and more houses are popping up (and selling!) on the market. I still can see signs of banks holding back RE inventory in the Under $100K side of the market, so there could be some artifical price inflation on that side of the market. Some commercial vacancies are being filled–a good sign.
In the Overland Park/Prairie Village side of the city, houses in the under $200,000 range are selling quickly (very often in less than a week). They tend to be houses in the 1500 sq. foot range and are affordable for utilities and taxes etc.
The downtown of Overland Park seems to be pulling off some kind of miracle and new small businesses have opened in the past year that seem to be thriving. My main example is a Mystery Bookstore owned by a friend of mine that always has business.
But, I live in the North part of the city that never had a bubble. I’m not sure you could rebuild the homes for the sale price.
We live in the SF Bay area and recently purchased a Toyota Prius. Toyota is offering zero interest 60 month financing which says volumes about the current economic landscape. While we put 50% down the dealer mentioned that most people just sign and drive, that is no money down. By the way I am getting 52 MPG.
Here in Boulder County, CO, the economy is very busy. Stores are opening, restaurants are full, breweries are starting up. Real estate is bubbling again with low inventory, quick sales, and multiple offers on desireable properties. In Boulder, the main financial energy drivers are the University, big government science like NOAA and NCAR , sports companies, and high tech. Retail appears to be doing ok. I was in my favorite paint/art supplies store which has several locations and there was a hiring notice for 7 positions, although it’s summer now and many students who usually fill those positions have left town.
But fracking is coming soon since the county moratorium ends on June 10. If the gas industry decides to really pound the county then who knows how that might affect the economy here.
Ahhh Boulder, Co…
That seasonal stamped of students coming and going, like a cyclone of money. Was there during the final take over by out of state students and then the people that positioned them selves to tap that buying power in RE and life style biz… sigh. Like one big funnel for cash with taps to every enclave of wealth nationally.
skippy… still… the the trails which to Indian run up and down like a madman to others, the sink pizza, walnut brewery, that crazy sax playing sushi chef, sunsets on the roof at the west end bar, more cocaine than snow pack, deadheads blowing through town chasing there gawds…
PS. Although you forgot the US dept. of Commerce HQ on Broadway and 27th st, still not identified on Google maps when the optometrist next door is… Lmmao… what if King was horribly wrong in the Stand…
In Vegas there’s a McMansion building boom going on, while at the same time there are whole neighborhoods that are half to two-thirds vacant. I had filled out some form online a year ago about selling my house, and I never got an answer until last week, when a realtor contacted me saying he had investors willing to pay cash–was I still interested in selling?
Gambling win is down. Restaurants that would have lines forming from 5 p.m. on are now half empty even at peak times. The only time you see lines for restaurants is when you see a bunch of locals in line holding a special coupon.
One of the comedy clubs on the Strip was half empty recently on a Friday night. There are many more show tickets available at the half-price outlets.
A neighbor who runs nature tours in the area (horseback riding, mountain biking in Red Rock Canyon, etc.) is now lucky to get enough clients for one outing a week.
I own web sites that make money through affiliate sales. Sales in April and May fell to 40% of the recent norm, even though traffic at the web sites was up.
I have worked for consumer bankruptcy attorneys for more than 10 years. My clients are in PA, NY, CT, CA, MS and WI.
Businesses that rely strictly on discretionary spending and tend to higher ends have been on a downtrend for several years and no significant change has been occurring. Those businesses that depend on discretionary spending and tend to the low end are diverging: those with guilty daily pleasures like the coffee shop are hanging on (not comfortably but not barely either); those that serve ‘status’ expenditure like car wash detailers, salons, regular services (landscaping, pool, cleaning…) are dying in droves.
Lots of construction guys are working 60 hour weeks but NOT hiring back the 5 or 10 person crews they were running 7-8 years ago….they are doing the work and hiring as needed/per job.
People that have jobs are working harder and longer right now than they did 2-3 years ago, because businesses let people go 2-3 yrs ago and are not hiring them back. So things APPEAR to be getting better but the level of rot in the foundations is growing…
Homes on the Eastside of Seattle are selling quite well, in the $700,000 to over $1 million range. Microsofties, no doubt. I was in St. Louis recently, near Barnes hospital. Reminded me of Newark.
I do not at all have any confidence in our economic system. Obama’s failure to hold financial institutions and execs responsible for the massive fraud they have committed is a terrible failure that we will all ultimately pay for.
Its like watching a circus tent being rolled up.
From diminishing labels on store shelves (more home brands occupying prime shelving space), growing almost past used by date pile near checkouts or in cold section, bag of fruit and veg for a few bucks.
Beer – wine and spirits index to GFC levels
Constant bombardment in the letter box, phone and email for 1-2% loans (Audi finance on selected models for starters) or extended free interest periods ratcheting up past 3 years
Plethora of credit card 0% interest on balance transfers up to 2 years
Complete lack of trades men driving on the roads in morning, during the day or afternoon.
Very light traffic on weekends
Friends and acquaintances in CPA – finance, for decades, resemble Zombies for they know what the average punters balance sheet looks like.
Local and state Gov publicly announcing hairshirt trend to go turtle neck and long sleeve and possibly body shirt if people don’t cheer up.
Federal Gov in taters over hiding the facts so the market magic fairy’s don’t turn into harpy’s (big banks engineering RMBS fraud), plus PM is clueless as to why labor constituency frowns upon backstabbing mates when that’s a liberal party trait (survival of the fittest thingy).
Then there’s the weather… it won’t stop raining or eating beaches.
http://www.youtube.com/watch?v=O8i1ZNqSXDs
skippy… tenuous comes to mind….
“like a circus tent being rolled up” = priceless metaphor.
Someone ought to give the ‘millionaire’ owners of the properties on the Gold Cost beach a clue. King Canute tried this:
“he commanded that his chair should be set on the shore, when the tide began to rise. And then he spoke to the rising sea saying “You are part of my dominion, and the ground that I am seated upon is mine, nor has anyone disobeyed my orders with impunity. Therefore, I order you not to rise onto my land, nor to wet the clothes or body of your Lord”. But the sea carried on rising as usual without any reverence for his person, and soaked his feet and legs. Then he moving away said: “All the inhabitants of the world should know that the power of kings is vain and trivial, and that none is worthy the name of king but He whose command the heaven, earth and sea obey by eternal laws”.”
http://faculty.history.wisc.edu/sommerville/123/Canute%20Waves.htm
Portland OR is in the unenviable position of being a slacker-hipster magnet despite the painful fact that there’s just no work for the multitudes of creatives who keep swarming here.
Real estate does well in the city due to continued influx of refugees from sky high rent / no work areas in Cali.
Id like to say we’re like a smaller Seattle, but this town has very little diversification of industry to sustain employment during downturns. Nike is not exactly hiring Americans. Instead they filch German immigrants from Adidas…
To quantify a specific New York rent situation, my daughter works at 46th and sixth. Two retail shops in her building closed. One, Starbucks, had their rent raised to over $20,000 a month.
Here in San Jose commercial buildings and campuses are being torn down and replaced by rental housing and some condos. On my short street the Sony property is having 1900+ apartments put up. Across the street from that there are two projects one of 400+ units. At the other end of the street a three building campus is being replaced by 800 units. Rents in these units are in the $2000+ range, high for the market. These projects are all on my street. There are many such projects visible in the immediate area. To say there will be an oversupply is an understatement. The 1900 unit project is already offering rent concessions and the other projects are not open yet. Someone must think it’s a safe way to park money.
San Francisco is a mixed bag, construction for housing moving quickly, vacant storefronts on Sutter street and some large spaces -former art galleries-vacant for years. Economy rests on tech and tourism-America’s Cup and maybe a World Series.
I’ve worked in downtown Chicago for 10 years, and while continuing to see the same faces of the homeless when I walk to and from the commuter trains, I’m noticing something new – couples (or seemingly so, men & women together) and visibly pregnant women & new moms with babies in hand asking for money. And this new development knows no ethnic or racial boundaries – these moms, babies, and families who have to resort to this have the faces of all of us. They are us.
It is sad enough seeing the same man everyday with a sign that simply says, “BROKE AND ALONE.” Seeing mothers with their babies in the same situation is, well, soul crushing.
Given my concentrated issues, I’m not sure if I’m the right person to comment on Southern California, but here goes:
The real estate market is insane, and it’s frightening. It shot up like a rocket, in L.A., not so much inland. (There you have the speculators, as noted yesterday in the NY Times.) But you have to have all cash or superlative credit. My bank called my commercial loan, and due to my bankruptcy and the fact the banks have been refusing my payments and destroying my credit, (and the City of L.A. reporting lates to the bureaus as another way to strong arm us citizens) it’s really difficult to get a commercial loan, even if the rents are high and the value’s there. Hard money guys want a 600+ FICO score for a 60% LTV with a large payment cushion from the rents. Yes I could sell, but where the fk would I live? Rents are rising fast too. I frankly don’t see how anyone can afford to keep this going.
While I was fighting my little battles the r/emarket took of, especially here in the trendy Silverlake/Echo Park part of L.A., and in some cases we’re back to pre-2006 levels. The wealthier neighborhoods are also doing brisk business after years of foreclosure.
Lots of Korean and Chinese cash skewing the results. Multiple offers on flippers, fast closings. It’s all too fast.
There has been a lot of suffering in this town. I myself laid off 7 workers, stopped using all my subs. They called for years looking for work, cutting their rates, but I couldn’t help them other than handouts.
Now all the construction guys are working again.
Our retail/restaurant sector was really hard hit. What I notice is that there are less closings, more openings. Hope springs eternal. The new places seem to hanging on. The millenials in the hood have less money, drive basic cars, and love to hang out locally, which is good for the local trade. They do seem much less materialistic, generally, than the generation before IMO.
Two of the biggest factors I have observed personally: There is a huge bifurcation in the economy. 80 percent of the people are doing well or OK, and seem to have no awareness of the other 20 percent who are hard hit. (Me included.) My tenant prospects come to my admittedly high rent apts., and if I mention the strained economy they just look at me, as if I’d just used a new language on them.
Our Los Angeles City Government is unbelievably corrupt and makes doing business or living here tough. All the city employees who can generate revenues are aggressively citing people, the police are aggressively ticketing people, our school system charges parents $250 if their kids are late or don’t show up for school. My tenant’s look at me, and viz the traffic tickets, doubling garbage fees, etc. say “It’s seems like they’re just trying to make money.” Duh!
The City Council is bought and paid for by Unions and Big Developers (often working in concert: i.e. Gve us city land for free and we will build something using union labor, although we will need a tax break for the next 50 years to do it. Our new mayor LOVES big developers. He’s given lots of free land to them already, and he was just in the City Council. The rest of us pay for it.
Higher Education has gotten expensive, since all our taxes and fees are being diverted elsewhere. One of the guys in my lumberyand had to cut back on city college classes because they raised the fees so much. Made me sick.
Small fry don’t have a chance. The City keeps coming up with new “Fees” post Prop 13. They devised a $23 fire inspection fee (in high fire zones, which keep expanding to raise more fees) to complement their fines. If you miss paying the fee, the city reports you to the credit bureaus, thus ruining your credit. (They will not remove it, even if you pay.) Our Bldg. Dept. wouldn’t approve my tiny addition to a project because they “didn’t like my [licensed] engineer and architect,or the plans they drew and stamped. I lost that bldg. after it sat vacant for a year while I tried to find someone they did like to do my new plans. A friend of mine lost his 4 plex to same Bldg. Plan Check guy,, with the exact same line. he couldn’t afford new plans. I realize now the City Plan Check guy was looking for a bribe. Wish I’d have realized it them. The FBI has a field day with corruption here – they just raided another state Assembley rep’s office yesterday.
The City Attorney was generating money for himself by allowing bill collectors to use his letterhead, as Yves reported was happening elsewhere a while back.
Unfortunately, if you are not a revenue generating city/county employee, your. dept. has been on a freeze.
Another child was just killed by his
parents because Child Protective Services is hugely understaffed and overworked.
Yes the economy is doing better, but if you are not a government employee or part of the 1 per cent, you are getting seriously squeezed from both sides by rent seeking, and so you have a lot less to put into the general economy. As a result, it’s a really slow slog here.
I want to add having read DolleyMadison’s very touching personal story on the posts yesterday, that I do not want to personally whine. SHE has her unbelievable challenges, and my heart and my thoughts go out to her. So many people really have it tough, and I don’t see how they ever get out of it given the horror show that has become the U.S.
My anarchist nature keeps popping up, wanting to get out the meat hooks and start hanging certain oligarchs by their ankles from lamp posts. A serious message needs to be sent in this country, or all is lost.
The new order of things we are experienced has been engineered over decades and is culminating. In LA the people doing well maybe 80% but in many areas that is much less. This order basically has calculated that if you can create a culture which is divided–where people of one culture or race or class can be pitted against another feelings of solidarity go away. People are “white” or “black” or “Christians” first and being “American” is not that important. So if you more that 50% of the people are happy and doing fairly well and feel secure then the current oligarchs will maintain business as usual. If you are marginal–you’ll still support the system because you have no choice and there are no political or social movements with any heft to offer an alternative. And if you’re doing badly then you are so stressed you have no room for anything except managing your despair and, increasingly, that despair is caused less by not having money and more from being ignored, demonized and penalized by both the state and the general public.
If the economy (read JOBS!) was really improving in L.A. wouldn’t the traffic be getting worse? The traffic is no fun, but it doesn’t seem any worse than a couple of years ago. The storefront vacancies do seem down a bit, but many stores have never reopened. My rent has been stable for 4-5 years, though the realtor listings on housing prices are up.
Oh and about flipping, there’s a house sold recently being fixed up for a flip a block or so away. So yea there’s flipping.
The Chinese money is government officials buying bolt-holes in the states. It’s insurance against prosecution or , worst-case-scenario revolution.
San Diego:
Better neighborhoods of Point Loma and Mission Hills mirror portions of N.Y. Vacant grocery store (for several years) just reopened as part of a Souther California chain (Ralph’s) to great cheers. Some gas stations closed. Chase bank (lots of banks in these neighborhoods) offering $150 to open a new checking account. Down side, more tattoo parlors (open 24 hrs) McDonald’s open 24 hrs. and hair salons.
Restaurants doing fine. Housing in Mission Hills selling quickly — well over asking price–but often lowballed listing price (new twist by realtors)–and often by fast money from investor groups. One smells “flipping” in the air. Lots more houses for sale…and failing that “for rent.”
Streets in disrepair, pot holes big issue in Mayor’s race. Developers want a new football stadium and more “in-filling” in older neighborhoods like MissionHills (as a way to avoid paying sewer/water and school fees associated with new construction in suburbs). Hence, more crowds.
San Diego may be the “new Hong Kong” as a renowned economist recently opined. However, the problems of border security, infrastructure needs, and city budget problems persist.
However, the weather is fabulous!
The Palisades in NW DC are no place for fear, loathing or paranoia. Take a tour of Potomac Houses for $25. Build it and sell it, for the rich, they will come. Kangaroo cranes, condos and a blaze of activity until a short drive into the ghetto passed the disenfranchised holding their signs until the cops chase ’em off.
The internet (AMZN) is killing street-level retail for non-perishables. Strip centers and malls are dying everywhere. I see in in NY and PA.
Economic rent (land values) not in line with income opportunities for the masses – higher rents and reflation of housing costs while pay scale is retreating is not sustainable. Economic rent extraction and speculative gambling has caused hyper destabilization of the economy. Most people and small business money is tied up in servicing debt or paying rent on assets that were inflated (everyone wants to be an Astor and play the property game – written in the 1920’s). – thus, demand is down because income down and a larger portion income goes to service debt and does not go to the productive economy.
NW FL
I’ve been renting since I moved back to the area and my rent has been stable the past three years. However, the housing market here has been improving so much that I’m afraid that the family who owns my condo will be selling it this year.
As an example, my sister had her house listed on and off for the last two years. The last time, it was unlested for about five months. When she re-listed last month, it sold on the first day for the asking price. New housing is increasing as well. I do not know who is buying, but someone is.
As far as commercial space goes, there are fewer mom & pop /mini-chains than ever, but big chain stores and restaurants are on the rise. Even the vacancies left by closed-out grocery stores and Wal-mart relocations are being filled, reinvigorating strip malls.
Again, I do not know what the driving factor is here. Most of the jobs in the area are service-based with a smattering of middle-class jobs at the various military bases. It is a coastal community, so our transient population tends to be wealthy; it could be the 1% money trickling down…well trickling somewhere since it is driving up housing costs for the local residents.
San Diego Par II
Forgot to mention. Poorer neighborhoods getting poorer. Lots of store front vacancies in every neighborhood. (One assumes the death of bricks and mortar due to online sales and retail cannibalizing competitors’ products.” Costco, started here–now offers new car sales, online sales, home furnishings, real estate and financial planning, etc.)
Also, repositioning U.S. defense, to face the East, has improved jobs in shipbuilding, repair, cleaning, etc. The superior universities (U.C.S.D., San Diego State, etc.) are attracting brains, capital for bio-tech, clean fuels, startups, and Qualcomm jobs.
Money concentration similar story as elsewhere–lopsided.
Even U.C.L.A. study out today says California economy “not good”—turnaround hasn’t happened, yet.
But, having a frugal Governor helps.
I’ve heard it called a natural thing this decline and we should all just accept this because everything is going digital and to the internet.
Its pretty funny really(not really).
Stand by and accept. Just let things happen and everything will get better somehow. Except hhats not how things work or have ever worked. We have built and fought and moulded things to the way they are.
Everyone just seems to want to watch things fall into entropy. Thats all this is, systems have been left to decay for too long without being changed or improved(we have over a hundred year old justice systems which have barely changed).
Its just the natural entropy, but this time it seems nobody wants to fight against it.
Unlike Mish — who believes and laments the Fed/D’s (R’s) policies acceleration of prevailing trends — I think “the sooner, the better”.
The longer we draw things out, the more people slip thru the cracks and don’t get noticed. We *need* change to come in the form of another crisis.
Market street near Powell in SF. A couple of long time empty, 4+ years retail spaces are now filled. One office building is pushing out small business owners, jewelers, lawyers, insurance agents, acupuncturist hoping that a tech company will rent out the whole floor. This is pushing up rents for small offices in other buildings. But rents are up everywhere office, apt and house. On Polk Street empty stores stay empty for long periods and are usually filled with a bar, or nail salon. Seems like the plan is to have nothing but big corporate businesses as smaller businesses are squeezed out, unless you do nails and serve ethanol.
“Laborers knowing that science and invention have increased enormously the power of labor, cannot understand why they do not receive more of the increased product, and accuse capital of withholding it. The employer, finding it increasingly difficult to make both ends meet, accuses labor of shirking. Thus suspicion is aroused, distrust follows, and soon both are angry and struggling for mastery.
It is not the man who gives employment to labor that does harm. The mischief comes from the man who does not give employment. Every factory, every store, every building, every bit of wealth in any shape requires labor in its creation. The more wealth created the more labor employed, the higher wages and lower prices.
But while some men employ labor and produce wealth, others speculate in lands and resources required for production, and without employing labor or producing wealth they secure a large part of the wealth others produce. What they get without producing, labor and capital produce without getting. That is why labor and capital quarrel. But the quarrel should not be between labor and capital, but between the non-producing speculator on the one hand and labor and capital on the other.
Co-operation between employer and employee will lead to more friendly relations and a better understanding, and will hasten the day when they will see that their interests are mutual. As long as they stand apart and permit the non-producing, non-employing exploiter to make each think the other is his enemy, the speculator will prey upon both.
Co-operating friends, when they fully realize the source of their troubles will find at hand a simple and effective cure: The removal of taxes from industry, and the taxing of privilege and monopoly. Remove the heavy burdens of government from those who employ labor and produce wealth, and lay them upon those who enrich themselves without employing labor or producing wealth.”
Tax Fact – circulated in the 1920’s – available as a PDF from google books
Link: http://books.google.com/books?id=-xoLAQAAIAAJ&pg=PA12
I’m contributing simply because an observer returning to a place he’s known after many years comes with an advantageous perspective. I don’t know much about real estate (RE). Recently I returned to my ancestral neighborhood after many years. Kalihi Valley is a neighborhood in Honolulu that, put kindly, wouldn’t have a clue about what the term “upscale” even means. Suburban Honolulu neighborhood valleys radiate outward from downtown terminating in the Ko’olau mountain range. As the valleys narrow, they become steeper and less accessible. Exclusive for some but not for others such as Kalihi for historic reasons. All of these neighborhoods have the advantage of proximity to downtown Honolulu which is plagued with horrific traffic congestion from outlying areas. To make a long story short, I got involved with selling a property in Kalihi. The RE market in Honolulu is beyond “smoking.” Realtors don’t bother putting up “for sale” signs. Sellers are besieged by interested buyers alerted by word of mouth. Lots are tiny and never horizontal. Streets are effectively one lane because of cars parked on either side. Unbelievable. A real bubble.
Hey Charles, I’m out in Waipio Gentry. Don’t have the paperwork in front of me but IIRC my townhouse value peaked at $310K (unbelievable) in 2006 and then dropped to something like $240K (still unbelievable) in 2009, and now has recovered a bit to about $250K now. Of course it being Hawaii this is way above what a similar place would be worth in most of the U.S.
Whatever bubble that was is nothing like Maui though where a relative’s property lost half its value in the last few years and hasn’t recovered much.
We had a wave of new businesses here (Costco, an autoplex, Kaiser clinic) starting about 10 years ago but not much new lately.
From where I’m sitting, everybody seems to be moving around in a last-ditch effort to grasp at a chance at prosperity. It will probably play out within a year, maybe less. Total despair by next summer. Then maybe people will figure out that there are no individual solutions.
DC Metro – MD suburbs
Hard to see the sequester effects here. You know it’s there but can’t see the generalized impact. Neighborhood is fully of 2-story bump-out additions and higher end landscaping projects underway. Took us 2 months to get a new lawn put in . . . several landscapers were too busy to even call us back.
Ah, you must be in one of those zipcodes. Right next door to blight. PG County, Glebe Road, Alexandria, areas in Montgomery, pockets of ghetto. We’ve all got it better than “those” areas in Baltimore, i.e. the haves and those that have nothing.
As an ex-DC long-time DC area resident I can tell you that the area attracts the hustlers of the world. The federal budget is not as important as it once was because you have and have had since the 80s a dramatic influx of the very rich and their operatives. These people are getting larger slices of the pie and are there mainly to influence legislation that will give their company, their industry, their countries, their political agenda greater power, money and so on. So the budget can be going down a bit (it really hasn’t gone down that much) and growth will still happen in the DC metro area.
You are so right. The change is the visible manifestation of the change in the government. It used to be that apart from a core of decently paid federal workers and hangers on, Washington was a transient town. Then the Democratic Party lost its 40-year grip on Congress. Now the permanant government of lobbyists and PR personnel, not to mention the privatized self-styled “defense” department, sprawl all over the countryside.
These giant houses have one message for the American people: we are not leaving town, ever.
Hideous and disgusting. And all paid for by tax dollars.
And amazingly robust–there is no opposition movement.
We are all too busy scrabbling for the crumbs and hoping for the best to mount a protest. Gotta pay for our $500k shitty 800 ft^2 townhouses.
Economic activity has just changed. People spend more time online and I think there’s a lot of activity there. Retail is not going go be good unless you make your store is very niche and community oriented.
Here in North Carolina I’ve noticed real estate pick up–we’re feeling the effect of Wall Street funds buying up properties by the gross. In our area (around Lake Norman) it’s doing fairly well but the poorer areas of the state and region really are suffering. In North Carolina the poor are generally seen as “lazy” and getting by on food stamps, medicaid and larceny which, is actually true to some extent–how else could they get along?
I recently talked to somebody from a rural town that says here entire community is on drugs, legal ones, through having themselves classified as disabled and gettin on Social Security–it’s a whole culture Chris Hedges wrote about in one of the sections of his last book. People are either dealing the drugs to live or just sitting in front of a screen and waiting to die–it’s sad.
Food stamps, really unpopular on Zero Hedge. Our legislators are planning on letting people go real hungry, which means more police state via this new, bold austerity built into Ag legislation. Killing people frees up inventory, Larry Summers knows the drill. (thanks Counterpunch!)
Letting large numbers of people go hungry is the single stupidest thing any government can ever do.
There is no amount of police-state tactics which can prevent a revolution if enough people are hungry. No amount.
Not sure about that–it depends on the number of the hungry. For the most part, in the U.S., there’s very little sympathy or interest in the plight of the poor by the media or the public. I think you could easily have 20% of the American people on the edge of starvation and it would be ok for the ruling elites All they have to do is call them drug addicts, terrorists, criminals, lazy, and so on. While America is the most “Christian” nation in the OECD it is the least Christian nation.
“it depends on the number of the hungry.”
I absolutely agree with you.
I also agree that 20% could go hungry and this would be sustainable.
Take it up to 50% hungry, and I would start expecting revolution.
Take it up to 80% hungry, and I’d be certain of it.
In upstate NY my rustbelt city continues a multi decade decline. There is ample reantal housing cheaply available; much of it section 8 which is being filled with NYC transplants. Most of these folks are poorand the majority of children in the city qualify for medicaid. The local hospital has seen it’s surgical volume go down; we don’t know why exactly: economy? competition? high deductibles? Cosmetic surgery is down as well.
The state continues to suppor tSaratoga county just north of us with tax breaks for businesses. The biggest was 6-700 million for the chip plant awned by an arab wealth fund. The latest will be for a new casino if they are allowed. So that county has very low unemployment/taxes etc.
Cross-posted from FDL;
I posted this at the end of January, but it still describes what I see now.
As I observe our economy, my latest pre-occupation has been with the observation that “Everybody is doing the same thing”.
What I mean by this, and what I think is obvious, is that everywhere you look, in every work-place and every business, managers are attempting to restrain or roll-back the cost of labor by limiting or cutting wages, and/or reducing the number of workers employed.
All of these are normal features of the business environment but it has gotten to the point where the ‘normal’ functions of business are being negatively impacted, and I’m wondering why this hasn’t resulted in any obvious changes in the trend.
Let’s look at an example of what I’m talking about so there’s no doubt that we’re looking at the same situation.
You go to a department store, it doesn’t make any difference whether it’s Macy’s Nordstrom’s or JC Penneys, there are less salespeople on the floor and you have to work harder than ever to find a salesperson to help you.
Add to the story that these employers are paying the people on the floor less and less, and it means when you do find them, they aren’t in a great mood.
These employees who are making less and less per hour, and working less hours per week are attending more and more meetings where they are given instruction on how to treat customers, how to sell, how to reduce losses due to theft, and where they are threatened with being written up for failure to sign customers up for ‘loyalty accounts’, read credit cards.
Credit cards which, by the way reliably charge interest rates of 29%!
Some companies are making more from the finance charges associated with their credit cards than they are on profits due to sales.
All the while, the results are, ill-treated and demoralized employees creating ill-treated and disappointed customers, lower sales, and of course, rocketing losses due to theft from under-staffed stores.
There’s a version of this story going on in every part of the retail industry, employees who are barely scraping by, paid dwindling wages and facing a rising cost of living, trying to help customers who are in the same boat, themselves employed by managers who are attempting to implement the same cost savings in their own business in an effort to bolster bottom-lines or possibly just keep the doors open.
All of these managers are waiting for ‘things-to-get-better’, or ‘things-to-get-back-to-normal’.
What I want to know, is how are things going to get better, how are things going to get back to normal, if everyone, and by this I mean YOUR CUSTOMERS, are making less and less per hour, working less hours, and paying more, and more to live?
Now I know that what I’m describing has been noticed by a lot of people, because when I explain it, just as I’ve done so far here, they all say, “yeah, I know what you mean…”
I’m sure that even store managers know that there’s something wrong with the game-plan they’re being forced to run, but they have no real choice in the matter because there’s a corporate agenda to work from and with it comes a ‘plan’.
What I’m driving at, is that the ‘plan’ is faulty, it’s doomed to failure, and it’s the very definition of a Race-to-the Bottom.
What I further intend to point out, is that at some point this Race–to-the Bottom will become a Flat-Spin.
A flat spin is a term used in aviation to describe what, at one time was generally considered an unrecoverable spin which would only end with the airplane impacting the ground.
So what I’m talking about here, is a pervasive business strategy that far from improving business health, and bolstering bottom lines, has become a literal ‘race to the bottom’, which at some point threatens to become a virtual flat spin that will end only in business failures and bankruptcies.
What I’m pointing out to over-worked middle managers who I describe as ‘Working for the Clampdown’, to borrow a phrase from the punk-rock band, the Clash, is that in executing the strategy dictated by your corporate bosses, you are driving your businesses into the ground.
Working for the Clampdown, is racing to the bottom, is willfully entering a flat spin, which ends predictably with a crash.
What I’d like to point out, is that the fact that ‘everybody is doing the same thing’ looks suspiciously like there is a plan, and if there is a plan, it looks an awful lot like the same plan, you might even call it the ‘Central Plan’.
So why are those who supposedly worship ‘Free Markets’ involved in executing what looks to me, like the biggest example of ‘central planning’ ever attempted?
Why don’t they understand that when they succeed with their plan, we fail, and when we fail, they fail?
It’s because the ‘Plan’ is rooted in an ideology, an ideology that the MOTU find appealing, but the end results of which, they haven’t examined too closely.
All over the world, our corporate masters are busy executing a plan that I call the Clamp-Down, it’s a recipe for imposed austerity, and it has a predictable outcome that they don’t acknowledge.
This plan is driven by adherence to an ideology that leaves its proponents blind to the fact that the ground is coming up real fast.
I just want to second the observation, from what I’ve been hearing. For workers, depending on skills, the future is bleak. The business, generally, will try to squeeze anything they can out of workers. It really surprises me because treating people right and providing good service to customers should be a central part of any business. But it is surprisingly rare.
A hint about what is behind some of this came when there was a big move towards “flat” management and a lot of talk about being “customer-centered.” There were meetings, seminars, retreats and a lot of money spent and made on these trendy management theories. But usually the result I saw was that things returned to normal very quickly. Why? Because most managers are into control–it’s not just about making money it’s about power. People don’t like to share power and in the U.S., you tend to advance to the degree you’re an a-hole. Yes, many businesses are full of great people–but it takes ruthlessness to succeed and it is almost always rewarded. Even though it is true that flatter organization and being customer-centered will get you better results.
You see what I see.
For workers, depending on skills, the future is bleak.
I’ve been hearing that blithering idiotic talking point from various blithering idiots (pseudo-econ, Robert Reich, who has significant problems with arithmetic and large data sets) for the past 40 years: it is always printer after Jack Welch offshores thousands of engineering, and programming, and tech, and scientific R&D jobs.
Or after Micro$oft brings in increasing number of foreign visa scab workers from India and Pakistan and China.
Let’s stop the free propaganda, please…..
I don’t think you’re being coherent, frankly–I don’t see how it’s propaganda at all. What I think you mean is that Reich and others who advocate “retraining” are really addressing the problem. Everybody that follows what I right knows that I believe the system is deeply corrupt and Reich and others don’t really address the system itself.
But the fact is, at this time, that if you have the right skillz at the right time you do well–all of a sudden apps were the big thing a few years back and suddenly javascript libraries became was the hot technology–and you could get any job you wanted if you knew how to do that.
My own experience in IT was that relying on immigrants or outsourcing can be a problem when your project requires teamwork and clear communication–it just didn’t work very well in my experience.
More to the point, is that many jobs will be eliminated through automation, robotics and AI which are all growing at astonishing speeds. We have to move away from the whole system including the concept of “jobs” which is inherently alienating. If we don’t perish from environmental catastrophe we’ll perish from stress largely due to the cultural values of “success” we hold.
At the end of the day though – its the – mental positioning that creates the future… a projection… life is a “buy product” of seeking price or life setting price (the stage for).
skippy… the classical’s were a severely inward looking bunch… that projected what they saw… eh.
this is exactly how its done. around here, just last year or so a plumbing company lost their business license in the state due to the tactics that they kept pounding into the heads of their plumbers.
I happen to know someone who worked there when ownership/management changed from a moderately sized local concern to out-of-state management whose game plan was to go into most states in the union and buy up the moderate local guy, bank on his name then start obliterating the company by turning it into a scam outfit. they did this by
1) forcing their employees to switch from hourly to commission–the employees had no choice as they were reminded that the 2007/8 crash meant that the wolf was at the door. nearly all of them took what they could get
2) weekly meetings where they beat these guys over the head with sales tactics, add on costs, etcetc. my friend said that it became a “how to rob a little old lady through non-existent fears” thing
3) the last straw, at least for my friend: they decided that they weren’t going to compensate them for any of their time that wasn’t billable. no travel time. no meetings paid for. violation of labor laws, but I think they were hoping that the same fears as situation #1 (TINA) would prevail.
this company finally got caught in the act of overbilling, scamming people into multi-thousand dollar repairs they didn’t need, and preying on seniors. last i’d heard, they couldn’t operate (the parent co, out of S. Carolina or somewhere like that) in the state. what probably happened, given the climate around here, is that they paid a fine, cried and said “we won’t do wrong no more” and are back at it just the same right now.
this is the method that ALL mgmt. seems to be using. as someone here posted up the other day, a restaurant was charging its workers to wash their uniforms and doing other time card shenanigans, then firing anyone who would speak up.
as I said, at the end of 2011 I left a job in property management where the boss was being insane in a variety of legally liable ways. he also used the “it doesn’t take this long for anyone to do this job–subtext=you NEED this job and are powerless & won’t fight back” when shortening my hours on my timecard a few times. I could tell quite a few tales about that guys lack of moral quandaries, but it would bore you.
Excellent comment.
What you’re describing is one version of the deflationary cycle. There are three ways out of it.
(1) Electing a government which will print money and give it to poor people. This is by far the best option.
(2) Waiting until there’s some lucky technological development which happens to cause a boom. This is the most *common* option, historically.
(3) Bloody revolution massacring the existing leaders, destroying the existing institutions, abrogating pre-existing rules, and starting fresh. This happens occasionally, and the situation afterwards is usually (not always) better, but I’d really rather not live through it!
San Francisco:
Long-time small business dropping like flies: rent is too damn high.
Most vacant commercial spaces convert into upscale restaurants, or into ironic, vanity theme parks for the tech kiddies (slot cars, bowling, miniature golf).
Nearly every vacant lot left in the Mission, SOMA, and the Market St corridor is currently being built up in a massive market-rate condo-loft/apartment expansion which dwarfs the similar boom during the dotcom era.
$2500n for a studio apartment, sounds reaonable, eh?
People don’t understand that building mostly market rate housing only raises the overall cost of housing, causing a vicious cycle of spiraling housing costs. Increasing the supply of expensive housing increases the cost of ALL housing, as landlords cash in on the increasing average cost of housing, by raising their rates to the new, higher average.
It’s an interesting moment we live in. Cities are becoming great areas where the very rich can live and socialize with the “right” people and the less wealthy are forced to the periphery where possible. The more beautiful and interesting the city the more expensive it will become in order to make them as convivial as possible for the wealthy to live there. We have, as a culture, basically lost the sense of all being Americans–we are now very much identified by social and economic class (not always the same).
Slot cars are still around, and upscale? Wow. When I had one 40+ years ago the only track in town was in a place that doubled as a poolroom, along with a few pinball machines. Things change…
San Francisco, pt 2:
The rich are doing swell, thank you very much.
The tech kiddies don’t seem to mind spending half their pay on rent — they’re never home, anyway. And they don’t need cars, because they take the frigging google bus.
The minorities, poor, and working poor (i.e. everyone not in tech) are on the losing end of an extreme economic and uni-lateral class warfare, as housing, utilities, education, and food costs spiral out of control.
well honey, further south, in the gut of Sly Con Valley, my neighbor who (at least until he gets a bit older) works for one of the connected valley firms, just sold one of his three vehicles (not including the requi$ite green bike), and the two upstairs have three vehicles (not including the requi$ite two green bike$), many times taking up much of the visitor parking and, on way too many occasions, not even parking a one of their vehicles in their assigned space, they prefer to make sure that the wife is always parked in the space closest their front door, which is a visitor space. Apparently they don’t get the concept that other people have also had babies (along with some of their neighbors) too, in the history of humanity.
Little do they know what’s in their future, and certainly they represent very few of the ‘younger set’ in Sly Con Valley. I only remain where I am due to a landlord who is at least kind enough not to charge so called “market” rent (he charges at least 50% under (which, honestly (though it’s not his fault) is still way, way too high. I could be tossed out next month after ‘investing’ near 90K in rent over less than a decade).
Austin is in a boom. The degree of which is scary.
Real estate in Austin flipped a switch in late 2012. Houses (~150K to ~700K) are selling based on pre-listing emails. The day the listing is placed there are multiple offers already on the table. Only listings that are significantly higher than the already double-digit inflated prices from last year go unsold.
Construction is booming. All of the subcontractors I’ve spoken to have more work offers than they can take. Concrete, roofing, framing, cabinets – it’s all the same. If you don’t have a good, long-term relationship with a sub expect to pay +50% if you want your work done in a reasonable timeframe. I’ve seen some bids 2x last year.
Car sales – wow. I am shopping for a car. One dealer (Ford) told me they just had they’re busiest weekend *ever* over the Memorial holiday. All of them are telling me they’re selling out of their 2013 inventories and are pulling in cars/trucks from elsewhere to be able to meet demand until the 2014 starts arriving.
Yes, it’s all local. But, I’m feeling a big bubble brewing.
I’m not sure in Austin it is a bubble. Austin, for a variety of reasons, is a desirable location for certain types of people that appreciate the culture there. Now, the people who come to Austin will be more and more upscale–this has happened to many places around the world in large and small areas. Here in NC we have Asheville which is more like SF or Portland than any place I know of in the region. But it’s a convivial place to live thus desirable and thus expensive. There are desirable little towns and neighborhoods in the state that will prosper–usually if they are around a convivial culture.
The bubble in real-estate is liable to be present in the suburbs where houses are being bought up as speculative investments–during the next downturn perhaps in a couple of years–that’s my prediction it could get ugly in burbs.
Austin is not immune to bubbles. There was a spectacular burst in 2001/2. In 2000, I had 5 minutes at 8am to decided whether to sign a lease agreement on a 2-bed apartment with a line of people outside the door. I had already missed out on numerous other rentals. By 2002, in my block of 6 apartments, only 2 were occupied. Landlord would not let me out of the remainder of my lease (I was leaving town after having been downsized like everyone else) for any price.
No tech jobs in Austin except for contract work, huge change since 2007 as there used to be a lot of electronic hardware design & manufacturing here…
Austin is boomy at the elite high end (another example: SXSW tickets are now completely unaffordable for us debt-slaves). For us Ninety-nine Percenters (I’m a lowly adjunct with too many degrees, hopeless student debts, and make just below the Federal poverty level), it’s grim.
The TX state government jobs are still here, and the high-tech sector has recovered. Plus, UT Austin pumps in huge amounts of cash into the local economy each year. But “for lease” signs are everywhere, small biz continues to stumble, and most baristas now have two or even three degrees. I shudder to think of what will happen when the next recession hits.
Denver Metro – Many of the empty storefronts are slowly filling up with a variety of local business with varying success. No new large box store building but in my area there is a boomlet in Hotels. The corporate jet airport up the road is extending it’s runway, which I am told is the reason for all the hotel building. Before the recession the neighboring city built a small events center with a development around it that has been taking off over this past year.
The local office complex is still pretty quiet, but traffic has picked up. Home sales in my neighborhood have also picked up with many for sale and not staying on the market long. It is an area that held it’s value due to proximity between Boulder and Denver but they are not McMansions by any stretch. I have heard that Boulder is the place to find a job right now and the traffic up there is horrendous. A new housing development has been approved just over the city limits from me and I was told a 20,000 unit housing development is planned for south edge of Denver. So it seems things are definitely getting better here economically.
The oil and gas boom in Northern and Western Colorado (bigger than I have ever seen and encroaching on civilization daily) has had an effect on employment, but seeing a clear view of the mountains and the famous deep blue sky has definitely been the loser in that race. The regular haze reminds me of the early 70’s when it was a big deal and people actually seemed to care about cleaning it up. Our Gov is an oil and gas guy so he won’t be trying to restrain them anytime soon.
The legislature was actually able to put some money back into the education budget because the tax revenue was more than projected. Downtown Denver is a pretty busy place these days and though it never seemed to slow down during the recession, there are multiple cranes set up over the past 6 months as building has increased.
A lot of positives, not many negatives…
There’s still nobody in line at Gristedes supermarket on York Avenue. Nobody ever is, except an occasional old lady.
That’s why I shop there.
There’s 10 employees for every customer. If you want quarters for the laundry machine, there’s 3 people glad to hand you a roll. Or even two rolls, without any trace of exasperation. The store manager will open the safe for you, even, and ask if all you need is one roll.
If you’re in the check-out aisle and somebody’s grandmother is in front of you fumbling for cat food coupons, there’s two other aisles free and clear with checkout clerks leaning back against their registers staring out the window. They’re actually happy to see you with your groceries. The window view doesn’t change very often, I suppose.
If the economy totally disappeared, it probably would’t make any difference, although the employee to customer ratio might hold steady through erosion of both numerator and denominator. It’s hard to come to any conclusion from this data, I realize, but it’s the only shopping I ever do.
Gristedes is a 100 year old NY chain, so, eesh.
I wonder how much of the real estate bubble, at least on the West Coast, is people getting their money out of China?
At Costco in Austin last week, in the middle of the day in the middle of the week, in a ginormous parking lot….no parking spaces available. Had to park in the also very crowded Whole Foods parking lot next door.
I’ve been living west of Hell’s Kitchen in NYC for a few years now. A bunch of new residential development projects have been popping up in the area.
One lot near me, which has been a big empty pit for 5 years (the dev company failed in the crisis), has recently begun construction again. There are almost 10 new developments visible just from the north end of the High Line. Like @anon mentioned above, the west side has become the hot new area, spurred on by the Hudson Yards development.
Oddly, new stores are opening up in old(er) buildings, while storefronts in the new ultra-lux apartment buildings remain persistently vacant. From what I can tell, the ultra-lux apartments are being bought by international buyers and large corp/consulting firms. The international buyers hold them or rent them out to the bankers/lawyers at more reasonable prices. The corps/consulting firms use their ultra-lux apartments as short term housing (the exorbitant short term leases are apparently still cheaper than paying nyc hotel prices for a month).
Rents in the area are skyrocketing. My apartment remained relatively cheap up until last year when the landlord requested a 20% bump. He’s asking for another 20% increase this year so I’m looking for a new place. Most of my friends (mid-20’s) have been fleeing to Brooklyn or upper Manhattan unless their lucky enough to have help from parents.
I keep wondering how rents for mid-market apartments in this area keep rising. It’s not very trendy or close to transportation. I imagine rents will start to fall once all the new massive residential complexes are complete and people realize the neighborhood lacks character.
On a positive note, there seems to be a mass exodus of young people from banking/consulting into tech and startups. The hours may be just as long, but at least you’re changing the world!
I live in Mexico, but have traveled to the US Rocky Mountain states every summer for the past three years. The areas that have industry or tourism/retirement potential seem to be doing well, or even thriving. Those areas that are not so industrialized or not considered “destinations” seem worse than in past years. Restaurants I liked, are now out of business. Homelessness seems greater. I had a conversation with one homeless man in Silver City, NM who was asking me about how things were in Mexico, because he was beginning to anticipate things getting worse in the US, and esp so for people in his socioeconomic quintile. When the homeless are considering emigrating south of the border, I can’t help but think that something is amiss in the US.
I think it is that lowest quintile that is feeling the effects of our divergent, unequal recovery more than most, and in our more economically depressed regions it is beginning to spread up the socioeconomic ladder. I also believe that is why so much energy is now being exerted by the PTB to turn the middle class against the lower classes, so that they will identify with the 1% more than the “rabble” when the economic divergence of the classes begins to hit them where they live. Other than that, my observation is that people in the US seem generally less happy than in the past. While these observations are mostly anecdotal, the shift in the civic gestaldt across the income spectrum, between this year and last year seems profound.
I think you are right–we are less happy, on balance and more cynical. Even the demographic that usually is rah-rah America is pretty discouraged about the country as a whole. We are deeply divided and victims of massive-mind control that wants us to be weak, passive, and despairing. That’s the programming and it works. Divide and conquer is very easy particularly when the mainstream media acts as a Ministry of Information and the “opposition” (nearly all of the “left”) is like the Stasi opposition in East Germany.
“also believe that is why so much energy is now being exerted by the PTB to turn the middle class against the lower classes, so that they will identify with the 1% more than the “rabble” when the economic divergence of the classes begins to hit them where they live. ”
Oh, that’s definitely what’s being tried.
I don’t think it’s going to work. Foreclosure fraud is one of the reasons it’s not going to work.
People can be very sensitive about being *defrauded*, and it’s one thing which causes upper-middle-class people to start identifying with the people “below” them rather than the people “above” them (who DEFRAUDED them or their friends, dammit).
Check out the trailer for “World War Z” (as in instead of the movie itself.)
It’s disturbing. The ‘zombies’ look just like regular people.
Then there’s this scene where Brad Pitt (who looks like hell these days) is in first class on an airplane. Then he ‘senses something wrong’ for no reason to find the coach class has gone zombie.
There’s another scene where literally thousands of zombies just climb up on top of each other to climb this huge wall (Now that I think of it, it looks like the concrete slabs in Israel/Palestine) while a helicopter gunship fires at them.
Dehumanization is the plan.
Read Marcel Clements essay on The Rise of the Mutant Elite. It’s from the early 80s, but right on target. Their motto, “so sue me”.
“When the homeless are considering emigrating south of the border, I can’t help but think that something is amiss in the US. ”
Mexico seems to understand the feudal social contract better than our domestic psychopaths. Heck, they’re implementing single-payer health care.
Yes Nathanael, and oddly enough I got priced out of US healthcare insurance about 6 years back when I developed a condition that got reclassified as “pre-existing” after I went thru a divorce, and had to subscribe to a plan other than my ex-wife’s. After moving to Mexico, and becoming a legal immigrant, I was able to enroll in the Mexican national health plan, (Immss), for the Crazy Eddie, (“These prices are INSANE!”),cost of about $200 US/year. While Mexican government is far less than perfect, after living here for the past three years, I am growing more and more discouraged by the political and economic machinations in my native country, the US, and more content to be living under that semi-“feudal social contract” south of the border.
Brooklyn, near Green Street
I stayed down there for a few days in the spring and it seemed “the old normal.” A fine example of mixed use development (I stayed in a loft that was once a factory, then Richard Serra’s first studio). Dense street life, mult-culti stores, no vacant shops, no homeless, no razor wire everywhere feeling, but not hipster intense or twee, either. Seemed like New York as it should be, competent and robust…
My husband likes to ask, “where is the money tree?”
We can’t figure out where everyone is getting the money to buy things like houses, massive SUV cars, designer clothes, etc.
Sacramento suburbs: small store vacancies for years. Grocery stores on level with Wal-Mart all showing limited stock. Major brands are lowering their prices. Appliances need to be ordered if not the major two or three best sellers. Home repair companies mostly gone. Low real estate inventory perhaps due to being significantly under-water. Rentals still in short supply in good areas. Crime up in low-cost areas.
Unemployment 10.8%. No prospects for new jobs. More cuts from county government due to lower tax income. More cuts to police and the court system.
From Nolan Hamilton’s (at Gawker) tracking, re the unemployment front:
Hello, …from the underclass
(I do wish Nolan would have noted, in one of his prefacing commentaries, how many middle aged have been seemingly permanently tossed under the bus though. But then, the intertoobz have always maligned age, much to the delight of the not so very young at all (for the most part) robber barons such as Schmidt (Page and Brin are no longer ‘youthful either) Murdoch, Buffet, Gates, Ellison, Thiel, Andreessen, Nolan Hamilton’s own Bawss (Nick Denton), etcetera, all of whom, I’m positive, have saved up to billions of dollars hiring the young and naive to replace the middle aged, particularly in those areas of their companies which are never paid any attention to, where experience should (but doesn’t) still matter, if a company is actually concerned with doing the right thing (quality control, customer service (which requires understanding thoroughly, the product being sold and being able to answer all questions regarding that product), truth in advertising, respect for its customers privacy, respect of consumer protection laws which are now flagrantly broken, accounting, paying its fair share of taxes, etcetera, for the society it has been allowed to exist among and PROFIT OFF OF, to a hideous deadly, totally one sided manner (for solely majority ‘$hareholders,’ their Political Lackeys and “Non Profit Foundation” Board$, at this point), and used to be required.
That’s not at all to say that the youth aren’t being slaughtered in the job market, as very, very, very few of them, despite their talents and other wonderful qualities, will ever be hired at those oligarchies, a feature, not a bug.)
An example re the middle aged versus the youth: from Nolan (bolding mine):
Looking at those photos he’s provided, I see a significant amount of the middle aged. (Also, re those Europeans, Huh(?), there’s actually any difference as compared to those born here(?), if that’s what he means, I’d like love to see his stats on that.)
sorry, should have ended his quote, versus my succeeding comment about it, directly after:
Fixed. “If you open it, close it” is the way to think about HTML markup.
thanks for the fix, I usually do close my ‘HTML Blockquotes’ (etcetera), though sometimes mess up like all else, I believe that’s been pretty obvious.
Upper Midwest:
I work in water supply – wells, treatment, etc. In 2007 I saw the workload drop off the edge, and 2008 was all wrap-up and no plans/specs. 2009 was dismal (except frac sand exploration), with nearly no construction or plans. At a conference, the number of wells constructed dropped by 75% in MN between 2007 and 2010.
So far this year, I have 1 new well being constructed (compared to 4-10 per year prior to 2008). I have also seen the number of well rehabs jump this year, and a lot of them are due to deferred maintenance resulting in catastrophic pump failure (3 times so far) and well collapse (2 times) – these are all separate ocurrences. I have seen only one of each in the last decade prior to this year.
From my persoective, no new demand for water supply – even given the recent droughts – equals no growth. The deferred maintenance to me indicates that the municipal water suppliers are really hurting.
In Hawaii, very rich people continue to come here, build super expensive homes, deposit super expensive toys, and then leave.
I was able to rent a $5 million dollar boat for a day of fishing for $1500, complete with caretaker captain. The fishing out of Kona was outstanding.
More from central Maine:
Whenever you’re in a civil society-type meeting, like an activist group or a church group or AA or whatever, just look around and tally who has work and what kind. At one meeting I attend, the men:
(2) Full time job
(1) No regular employment, spouse has job
(1) Self-employed
Oh, and all “home owners” of one sort or another.
(1) System D
Of course, we can all “pass” as middle class. But that’s not really what’s going on, is it?
Adding… All are “home owners” of one sort or another.
enlighten this dummy, but what is “System D”?
food stamps and prayer?
anon y’mouse: Close!:
One way to look at the integration of consumer reporting with IRS-driven eligibility under ObamaCare is as a dagger aimed right at System D in this country (since System D — correct me on this — is also outside the control of at least the usual rent seekers).
An interesting view and ongoing commentary about Greenwich, CT real estate highlighting how concerned the well to do are about their homes. Check out the comments about the local schools! And taxes!
http://christopherfountain.wordpress.com/
On the east side of San Francisco Bay. Being only about 50 miles from Silicon Valley appears to be pushing home prices. Both my son-in-law and son are in commercial and residential construction trades. Their respective companies have all kinds of work, a lot of it upgrades of existing structures. Google, Twitter and Facebook employees upgrading fine old homes in depressed neighborhoods have recently accounted for a lot of my son’s work.
The son was out of work for a good while and had to move back home. We get along well and I am enjoying his company and his help during a period of debilitating illness.
The daughter has worked for Pixar many years now. No worries so far on her horizon.
Heart of Silicon Valley update (From SFO to Sunnyvale):
Residential RE is insane: price up anywhere from 25% to 40% in the LAST 6 MONTHS (not kidding). Multiple offers over asking on virtually all properties. Lots of “all cash” offers. My pure speculation as to reasons: 1) Continued low interest rates; 2) Ultra-low inventory, 3) Foreign (Chinese) buyers parking “black” money. Houses purchased and are left empty. Also seeing lots of SFR basically turned into “rooming houses” (the tell is 4-6 cars parked in front of one house) For those of you not familiar with SV, a 3br 1960’s ranch on a 5,000 sq ft. lot sells for $700k minimum (depending on neighborhood – could easily be $1.5mm). Some new apts and condos being built.
Commercial retail: not so good. Many empty storefronts (some empty for years). New retail is solely restaurants or things you can’t get via an App on your iPhone (music schools, nail salons, spa’s, etc). Example — Circuit City is now a Ballet School. How many Chinese restaurants can one area support? In some areas, every third storefront is a Chinese restaurant. Rents are very high compared to possible retail revenue, but commercial is under Prop 13 so taxes may be very low. Owners have a price in mind and don’t drop it; marginal strip malls ask $2+ sq ft NNN – so a 1,000 sq ft storefront runs $2,500/month.
Commercial office: no noticeable new construction (some further south – San Jose); still many empty complexes from dot.com. Seibel complex in Foster City (midway between SFO and Google) remains vacant 5 years on (multi-building complex, good location).
Overall impression: for some, things are VERY good indeed. Lots of Tesla Model S’s on the crumbling roads. Upper end restaurants are busy. Traffic is marginally up; real estate dramatically up. Jobs are plentiful – but requirements are hyper-narrow with lots of experience required, H1B, or engineering grads who don’t realize that the free food and haircuts are so you don’t have to stop working (I think Mike Bloomberg had the epiphany that he could get an hour of work for the price of a corned beef sandwich). Social media keeps chugging along developing trivial products created by young engineers who think hanging out and coding all night long is (still) fun.
Hard to say how long it’s going to last – nobody has cracked the nut on monetizing mobile applications not counting the technology providers like Apple and Google (and mobile and social are where all of the technology effort is) – most have a business plan like Tumblr – sell out for an insane amount of money to a huge company looking for the next great thing.
Laissez les bon temps rouler
Yep, and welp Ed, I’m sure you might agree that a lot of those State and Local politicians (not to mention Federal) are doing quite fine, thank you very much.
I’ll never forget a fairly recent conversation with a small business owner (life long resident) in one of the now most voraciou$ly high co$t of living, ‘Sunny,’ Sly Con Valley ‘communities.’
After having been forced (via the techno age where all of a sudden creative talents were supposed to be offered up for free, as if no one needed to make an income off of their abilities, in a sickening pyramid game of Musical Chairs, where only the Robber Barons benefitted), out of her vocation into trying to make ends meet as a ‘sole proprietor.’
She was rightfully outraged – that certain local politicians were making around $300K while lifelong residents of the communities those local politicians presided over (offering no vaseline, yet pricey Tesla charging stations, in city lots where 99.9999999999999% percent of residents (read many, if not a majority, now hapless renters)) could never afford a Tesla, let alone felt they had the disposable income to peruse that small business owner’s store, where the prices would have been highly affordable if at least 50% in that community were still making a liveable wage.
As a small town, downtown merchant, I would posit that one factor in the empty storefronts is that owners of commercial spaces are potentially missing two things: a) They may not have adjusted expectations of what a realistic rent is these days for a small business (especially relative to other rising costs), and b) They have have not demonstrated enough willingness to put skin in the game with small retailers and service businesses–for example, offering smaller rents for the early months, stepping up the rent over time. Motivated owners could even help new entrepreneurs through some of the steps to ensuring a viable business for at least a year or two, relative to the rising rent costs and revenue expectations.
Startup costs are startup costs, and an entrepreneur needs to have those covered. But many people are just bootstrapping, trying to get something started through modest means, like a consignment clothing shop, sandwich shop, or used bookstore. Even if someone has startup costs that are low, the high rent in those early months can kill you before you’ve even gotten off the ground.
What I see is storefront owners requiring the full level of rent right from the start, full up-front deposits, etc. Then the utility and phone company hit you with deposits and fees. In many cases, the new business owners who have overestimated how much money they can bring in during those early months. (This shit job market has resulted in many people trying out entrepreneurial options, having lost or failed to find good jobs; unfortunately, perhaps also with too much expectation that the new business will actually produce an income you can take out of the business.)
This is not a good mix of factors, and in my observation leads often to a failed business (in as little as 3-6 months) and yet another empty storefront. Once you’ve had a few of these failures in the same space, people think it’s snake-bit.
What I’m afraid of is that, for many owners, the tax benefits of an empty storefront outweigh any desire to go to extra lengths to get and keep quality businesses in those spaces.
I suppose also some of these business owners would have been able to borrow a little money from a bank, too, to get over the hump. I doubt that’s available to many these days.
Here in sunny Santa Cruz, CA, much of the economy depends on tourism, which to my eye seems to still be flourishing. The “staycation” phenomenon has led to more people from the Bay Area and Silicon Valley looking for a local entertainment destination.
The problem with tourism is that it doesn’t generate living wage jobs. Rents are perpetually high due to the student population; houses are starting to sell again and prices are rising. Storefronts and even entire buildings sit empty, but commercial renters can’t catch a break on prices, which never seem to decrease. I suspect big money is holding these properties.
People work really long hours, made longer by commutes to the larger metro areas nearby. People who work “over the hill” make up to a third more in wages than those who don’t, but they sacrifice their lives inside their vehicles. Unemployment in the city of Santa Cruz is about 13%, but it’s 20% in some of the surrounding smaller cities.
The homeless population either is growing, or due to pressure to move them out of the tourist areas is spreading into areas of the county where they didn’t used to be seen in the past, I’m not sure which. All the local governments care to do about it is step up police enforcement and pass new versions of laws designed to criminalize standing, sitting, lying down, talking, and holding signs. The homeless are everywhere. They are an object lesson set before everyone’s eyes all the time: this is how far you can fall.
I first noticed what is happening now in 1971 on a rugby tour in Cumbria. A small town called Millom was the worst. Unemployment was the problem – coal and iron processing were dying. I was fortunate to spend a lot of the next 40 years abroad, but the Millom effect spread to nearly all Northern England and Scotland. The problem is the shafting of big, heavy industry that is never replaced – all the ‘new jobs’ tend to pay poorly and have worse conditions and pensions.
Shopping is a chore not an interest to me, so I don’t care about hustle and bustle high streets disappearing. Typically one in five shops are shut and the rest are dull charity, take-away, bookmakers and other gambling, everything a pound, smelly products for women, tat shoes and clothing and so on.
I would regard success being to do with these retail places closing down and something much more communal replacing them. We’ve been had so deeply we have no idea what a thriving economy really is, reduced as we are to flanneurs attracted to bright lights like moths.
If I could double my fees I would spend no more on the High Street. I might walk longer in the council maintained river park with the dog. We’ve been hornswaggled in regard of what a successful economy is.
I took a trip two weeks ago to Washington DC and couldn’t help noticing the differences between what I was used to and what I saw. No wonder Washington doesn’t care what’s going on elsewhere; all the places I saw were yuppified bubbles, no homeless, everyone walking around in smart suits or dresses, everything so clean, people so polite and willing to help if you looked lost. I want to know how much they spend so the subways don’t smell like piss, like they do in San Francisco and Chicago. It must equal the GDP of a small country.
I’m sure it’s changed quite a bit from when I visited decades ago, with a friend wanting an abortion who got seriously infected by a filthy clinic within quite close view of the main swamp where Nixon ate din din. But I’m betting if you had walked a little further in the opposite direction of Obomber’s abode, you would have run into severe poverty, after all, they couldn’t have swept it away that quickly, it’s been around for over a century.
Most stunningly wealthy areas are bordered by poverty:
In California:
The FaceFiend Campus and East Menlo Park/Palo Alto
San Francisco and Hunter’s point.
SanDiego and its surrounding slum ‘Naval Base’ with all those confederate named ships.
Etcetera
In other States:
Wall Street, and it’s surrounding slums.
Chicago and it’s ‘slums.’
Etcetera, etcetera
After all, it takes many living in poverty for a handful to live in obscene luxury.
From Bushwick/Bed-Stuy, NYC
I, too, would like to know where the money tree is. I’ve lived in NYC for 15 years, and my wages have stayed exactly the same since I moved here. After living in every borough except Staten Island, I settled into Bushwick in 2006, because it was cheap, close to the subway, and relatively safe. Now, our landlord’s not giving out leases anymore; he’s doing year-to-year “agreements” because he wants us low-paying renters out. Everyone is 22 years old and paying 3x what we’re paying for half the space. In the meantime, there’s less prostitution but there’s probably more spare-changing. I call it ghentrification– the rents go up, but it’s still the ghetto. It must be said, of course, that this is the oldest story in New York, so I’m not sure how this reflects on the macro situation.
Smallish town in NC –
New storefronts mostly pawnshops, tatoo shops, and junk shops. Even taverns have a hard go of it.
Construction seems to be mostly multifamily apts.
Recent hitchhiker ex heavy equipt worker out of work since 2008. Now homeless,lost home job and car. On $ 225 per month foodstamps and is praying to subsist till social security kicks in in two years.
Alternative location VA Beach – perhaps 30% of beachfront condos / apts unoccupied, Federal wrks no raise in 4 years and expecting 20% paycut due to furlough housing starts. Some multifamily construction.
I live/work in western Los Angeles, right off of La Brea Avenue, which is right on the line between municipal LA and West Hollywood (and considered to be a mid-city area). And La Brea Avenue has been going through a MASSIVE construction boom over the past six months. From Sunset and La Brea to Wilshire and La Brea (a distance of two and a half miles) there are six or seven large to huge buildings having either been recently finished or still under construction, plus one massive, longstanding and formerly unoccupied building being renovated now. And then just this past week another building on La Brea right near my house was also razed to make room for even more construction. Other buildings are undergoing smaller scale renovations. The doughnut shop near my office is also being gentrified. It’s undergoing renovation right now. They say that when it reopens it will still sell doughnuts, but will appeal to a more high class customer base. (?)
I work in the casting of television commercials, and business there has been erratic all through the past three years. Oddly, it actually gets busier when the economy is looking like it’s heading south, bad economic news often means a rush of business through the door. July of 2011 was extraordinarily busy. Normally commercial casting is never busy in July, but July of that year was one of the busiest months I have ever seen, period, and it coincided with the debt ceiling standoff in Washington.
Hipster doughnuts? Organic doughnuts are well established. http://www.mightyo.com/ What’s it going to take to stand out?
Cro-nuts. They’re croissant dough donuts. No, I didn’t make this up.
I run a one man shop electrical contracting business in a Hartford, CT suburb, pop. 60k. Business is up dramatically
from a horrendous ‘012. I’m puzzled to account for the difference. I don’t know if this is merely an tax refund
financed bubble that will end in a few weeks or a substanative indication of a emergence of a return to economic vibrancy fueled by more people working. if it is a
refund bubble, would it run this late into the year?
Here in west-central Florida, about 90 miles north of Tampa, things are aweful. Jobs left in 2008 and still have not come back. The self-sabatoged nuke plant now owned by Duke Energy will be mothballed, taking the high paying jobs with it. A couple of the grocery store chains have cut back locations. Prices for the most part have stayed low with the exception of food which saw a big jump about 6 months ago. If a job does open up it is strictly part time.
The only bright spot is retirees are still coming to Florida. They buy up everything that isn’t nailed down in the large thrift store I work at (I can’t find full time). They are mostly doing it with cash, too. Walmart opened a new location and I’m guessing the home improvement places are doing well. Looks like economic stratification is about to get bigger.
Blackstone’s Invitation Homes has lifted quite a few residential properties here in Sacramento.
http://www.invitationhomes.com/Pages/default.aspx
Neighborhoods generally characterized by higher than average crime rates and low incomes.
Congratulations Blackstone! You’re officially a slumlord. Now if you could only add payday lending, cash4gold, vacant property services, and a debt collecting business you’d be guaranteed to generate sky high multiples and IRRs throughout the cycle.
Almost forgot subprime auto lending:
http://www.reuters.com/article/2013/04/03/us-usa-qe3-subprimeauto-special-report-idUSBRE9320ES20130403
I live in MN and work for a manfacturer in the building industry.
At work it feels like people have started doing expensive deferred maintenance. With our (high) price point they either have cash on hand or access to home equity lines. But new home builders are trading down to lower quality lines than they used ten years ago.
I’m on the board for my townhouse HOA. The owners that were trying to short sell have mostly succeeded and our delinquencies are going down. The people buying are mostly young couples, parents buying for their kids, or kids buying for their retired parents. We’re at rental capacity and aren’t allowing more, so no investors.
Overall, houses that are priced fairly are moving fast. Some friends just went to contract in less than a week for over asking price. Their buyers were a couple looking for a forever house.
Shall we use more scientific measurements?
Student loans and rate of employment? Local deficits? Structural unemployment and stagflation under reported? Weakening dollar/purchasing power? Older population? Failing education system not producing a competitive workforce? Rich companies and individuals not sharing their wealth but rather hiding it or “investing” it in remote corners of illiquid and opaque pools?
Cab drivers and the Upper East? How about giant artificial bubbles with no ability to assess valuations the day after interest rates rise and QE ends? How about HFT and derivatives and dark pools and mysterious assets that are never marked to market? Want to ask the private equity guys about super trenches and the exists they will (not) show for when they are past their 10 years deadline? Ask REIT people what happens when they get regulated, as the authorities already see the risk they create?
There is so much more it is admittedly numbing…
This was just not the day to ask this question about Philadelphia, but I need to talk. As I write, the death toll reached 6 from a collapsed demolition site on the main street of downtown, Market Street. 13 injured and even at this hour, someone pulled alive from the ruble, search and rescue going on throughout the night. It was supposed to be a sign of ongoing reinvention, another block with a sordid past being readied for development. To understand what Market St is, and where this happened, at the corner of 22nd Street, West of City Hall and East of 30th Street Train Station, the former Pennsylvania Railroad station, now for Amtrak and regional commuter transit, you need to know that at the foot of Market Street is the Delaware River where stands a bronze statue to the Lenni-Lenape Indian Chief Tamanend. Willian Penn signed a treaty with him and the other chiefs to establish friendship and trade relationships. Not as a conquest but as something more diplomatic, Penn’s Treaty served as a foundation of political freedom for the new comers, more idealistic than other rules and regulations found to the North and the South of Penn’s Woods.
Moving West at 5th and Market is Independence Hall National Park, The Liberty Bell’s home. The park is flanked by the US Mint, The Federal Reserve Bank, the US Constitution Center as well as a number of national museums, and more federal buildings/ courthouse complex. At the center of the city is City Hall and Market Street proceeds in a circle around that building going West along a redeveloped central business district that was once choked by locomotive smoke and bisected by the “Chinese Wall” of the Pennsylvania Rail Road, whose tracks lead to the doorstep of City Hall. The reinvention of the city from an Industrial Age powerhouse, to a more diversified economy has been the city’s tale since the end of WWII.
This tragic block is across the street from a Trader Joe’s/lux rehab apartment, inside a former clothing factory for After 6 formal wear.
The devastated area was mercifully being torn down after years of neglect and use as a porno theater and live peep show with a police record of ongoing prostitution that never could be quite stamped out. The local Philadelphia Italian Mafia was in control of this property and at the death of the owner, Samuel Rappaport, the worst slumlord in recent Philadelphia history, his NYC counterpart, the putative Porn King Of Times Squares and 42nd Street at its nadir took control of the real estate portfolio. This scumbag approaching 90 years of age got an epiphany of trying to do some legacy making, while all the while trying to get the city and the Salvation Army to sell out to him to complete the parcel assembly. The years of neglect, the by passing of permits, safety precautions and use of knucklehead lowlife demolition squads resulted in the death as of now, of 6 people who were shopping in a thrift store run by the Salvation Army.
One of the dead was a 68 year old man who worked there for the past 8 years after coming from Liberia. He escaped that place only to die at the hands of greedy slumlords and the pot at the end of rainbow of highrise condo development overtaking the new and improved downtown scene.
At 10:30AM people are shopping in a thrift store where a towering brick wall is being torn down with absolutely no protective scaffolding in full view on THE STREET THAT DEFINES THE ENTIRE HISTORY OF THE CITY AND THE NATION THAT WAS FOUNDED HERE and NO ONE in any capacity saw fit to do something to prevent what was obviously a disaster waiting to happen. AND IT DID HAPPEN, killing and terrorizing dozens of people. Right next door, is The Mutter Museum of Medical History where doctors, Penn Students, clearly educated and prominent people go to on a daily basis, and not word. It is as they live in another dimension, just waiting for the gleaming new highrise to appear that they will then take notice of, but not a minute before. Of course, now, everyone takes notice, the bus lines, the subways, the trolleys, the streets were shut down for hours and the safety perimeter in the immediate vicinity is closed off, creating inconvenience.
Not the risk of death or catastrophe but the traffic jams, the missed commuter connections, that will be the notice to make people finally ask, why is this happening to me? This is such a prominent location that so many TV news camera crews, so many reporters heading to and from City Hall, so many commuters from 30th Street TRains from the suburbs to office towers, so many high ranking elected officials, so many affluent condo owners looking out their floor to ceiling windows, so, so many people some of whom have the capacity to do something and just did not notice. How the world functions with the idiot wind blowing through from top to bottom makes me believe that only a higher intelligence somehow separated humanity from the rest of the animals, because on days like this, I can’t see how we accomplished anything at all on our own and survived.
Michigan government continues tilting at windmills or such imaginary beasts as RTW, capping automotive medical insurance, and sodium discharge into groundwater. Left as they were, these help the common man in the end; but, people are more concerned about getting theirs at the expense of them. RTW has yet to do anything for states as other economic and environmental factors come into play. Capping automotive medical expense seems to be the wrong way to go when considering life lasting injuries and the cost of monthly care. Supposedly we are doing this for business and giving the low income people an extra 10 dollars a month so they can buy automotive insurance.
The City of Detroit has been assigned a financial manager who supersedes voter rights and the elected mayor. I still can not figure out how this will play out. I see a federal court challenge to this. The city has always been in dire straits since the schools were blocked from integrating with the communities around it and businesses relocated out of it causing the tax base to decrease. Without the city, Royal Oak, Bloomfield Hills, and the surrounding state would be little more than a vegetable truck farm.
The state’s newly appointed city manager has decided the DIA’s art can be considered assets to be used in the potential bankruptcy of Detroit. As a member and often time visitor to it, this to me is an unnecessary and catastrophic reaction on the same level as potentially emptying out NYC’s MOMA of Guggenheim to save the city. Michigan and its government have taken actions to save businesses and it could do the same for a city through which is the portal of business with the countries largest trading partner. Gerrymandered districts have given the Republicans control of the House and Senate besides the governorship and its Detroit we are talking about not repaving Woodward Ave for the “Dream Cruise.”
After a decade of economic decline and the 2009 bailout of automotive, jobs appear to be on the upswing in Michigan. The salaries and hourly rates are not quite what they have been in the past; but, companies are hiring and people are moving around again. With more people working, local community revenue coffers begin to refill. There are still many empty stores and buildings in shopping malls; but, there is hope yet. Michigan was in recession well before the rest of the nation due to the mismanagement of its automotive business. We are used to hard times.
The 2008 crisis was the most predictable crisis ever. Smart money escaped real estate pyramid schemes and hid in bank accounts.
All of a sudden, this money is back in the real estate game: note all the cash-only deals and the flipping. It is as if the crisis never occurred.
The specs timed the market once and are confident they can do so again if need be. They believe they will be bailed out if there is another crisis and they get caught out.
There is fringe buying of doomsteads by those looking for places to hide once the wheels come off. This represents the entire Chinese, Koreans, Japanese and Russian interest in US real estate. Our police state looks good from certain perspectives …
There is little in the way of economy anywhere outside of speculation and burning up capital. There is no future in it but don’t tell anyone, they might punch you in the mouth.
Northern Virginia is mad with traffic as always despite gas prices near $4/gallon. A new pickup truck will set back the happy buyer $63,000 or more. There are new fill-in tract-house developments everywhere you look. At the same time, everything is balanced on the edge of a knife. A single-point rise in interest rates … (finger cutting throat gesture).
The multi-billion dollar freeway ‘improvement’ in the way of state-subsidized private toll-lanes has few users. Government agencies are cutting headcounts. The ‘Beltway Bandits’ … Defense Department contractors that have gotten fat on the war business … are shrinking. Most of the office buildings in the NoVa area have significant vacancies or are see-through. Half the regional shopping centers are ‘dead malls’ slated for razing/reconstruction. Meanwhile, the ballpark is filled every home game.
From here the zombie looks almost good but everyone knows in their hearts that it is still a zombie.