Real estate in the aftermath

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Submitted by FlyerInHi on May 5, 2020 - 2:08pm

Retail and hotels will be most affected according to Sam Zell.
Multi family is doing the best.
All his tenants paid May rent
Warehousing is over supplied
Single family house rental is risky because when tenant lose jobs, you may have 100% vacancy.
Of course, Sam Zell is talking from the point of view of an institutional investor.

Young people will continue to move to the cities.

Interesting that manufactured housing has outperformed, but the future is unknown.

https://youtu.be/tR9qd65EBnc

Sam Zell is the Grave Dancer. But there are now many such grave dancers so the opportunities are diminished as compared to the past.

There won’t be a V shaped recovery.
People will be permanently scarred by this depression.

Submitted by The-Shoveler on May 5, 2020 - 2:21pm.

Interesting I hear the exact opposite when it come to inter city etc..

Suburbs gaining population as millennial's flee the city.

https://www.usatoday.com/story/money/202...

https://www.cnbc.com/2019/09/29/millenni...

Submitted by FlyerInHi on May 5, 2020 - 3:41pm.

The guy featured in the article is in westchester which is very suburban/rural already. Nice area with great access to NYC.
It’d say if he wants to more to Carolina to avoid NY taxes, it’s because he doesn’t have a lot of money, for a CEO.

He could just move a little up the Hudson River where he can find old village life, or live like a hermit in the woods.

Submitted by scaredyclassic on May 5, 2020 - 9:39pm.

FlyerInHi wrote:

The guy featured in the article is in westchester which is very suburban/rural already. Nice area with great access to NYC.
It’d say if he wants to more to Carolina to avoid NY taxes, it’s because he doesn’t have a lot of money, for a CEO.

He could just move a little up the Hudson River where he can find old village life, or live like a hermit in the woods.

And hes trying to bring legal psychedelics to america! Maybe try a cooler state.

https://www.businesswire.com/news/home/2...

Submitted by svelte on May 7, 2020 - 5:57am.

I went over to an engineer's desk one day and we worked through a problem. While we were talking he said he was moving to Montana for more privacy.

I asked where he lived now. He said a 10 acre avocado ranch in Valley Center. I looked at him confused.

He picked up on my confusion and said he was looking for a whole 'nuther level of privacy than he had now.

Submitted by Coronita on May 7, 2020 - 6:43am.

svelte wrote:
I went over to an engineer's desk one day and we worked through a problem. While we were talking he said he was moving to Montana for more privacy.

I asked where he lived now. He said a 10 acre avocado ranch in Valley Center. I looked at him confused.

He picked up on my confusion and said he was looking for a whole 'nuther level of privacy than he had now.

There is this monstrosity in Carmel Valley called One Paseo built by Kilroy. It's a ridiculously huge mixed use high density mall+high density housing supposedly catering to the high end tenants who want to live in a city like , higher density atmosphere. Even the rent reflected city likeness, with city like rent prices. There's only one problem... It's still just Carmel Valley in the suburbs. The vacancy was already pretty bad to begin with. After this covid scare, where people don't want to live in such a dense environment, I can't imagine them doing any better. I see some folks trying to get the hell away from high density housing if they can. And some , since they need to remain at home, are looking for a bigger place and contemplating buying.

And now, some of the folks that previously were looking forward to taking the trolley lines when they completed around UTC, mentioned to me they would be driving by themselves indefinitely. So looks like covid made people rethink just how far they want to take "going green". I have a large collection of plastic bags again too from grocery stores.
And all those hand wipes towels, latex gloves, and face masks, and plastic bottlesnofnhand santizer being tossed on a daily basis can't possibly be good for the environment.

Submitted by The-Shoveler on May 7, 2020 - 7:47am.

Having enough space for a home Office and some private outdoor space will be a base requirement for most going forward IMO.

Submitted by FlyerInHi on May 7, 2020 - 10:59am.

svelte wrote:
I went over to an engineer's desk one day and we worked through a problem. While we were talking he said he was moving to Montana for more privacy.

I asked where he lived now. He said a 10 acre avocado ranch in Valley Center. I looked at him confused.

He picked up on my confusion and said he was looking for a whole 'nuther level of privacy than he had now.

He sounds like a bearded hermit in the making.

Submitted by FlyerInHi on May 7, 2020 - 11:36am.

Coronita wrote:

There is this monstrosity in Carmel Valley called One Paseo built by Kilroy. It's a ridiculously huge mixed use high density mall+high density housing supposedly catering to the high end tenants who want to live in a city like , higher density atmosphere. Even the rent reflected city likeness, with city like rent prices. There's only one problem... It's still just Carmel Valley in the suburbs. The vacancy was already pretty bad to begin with. After this covid scare, where people don't want to live in such a dense environment, I can't imagine them doing any better. I see some folks trying to get the hell away from high density housing if they can. And some , since they need to remain at home, are looking for a bigger place and contemplating buying.

One Paseo is beautiful. It should be bigger. Have you been to Tysons corner near DC. It’s the city in the suburbs (by American standards).
I think it’s all got to do with the amount of leverage. At the right amount of indebtedness, dense multi family developments will successful and popular. I can see Sam Zell expanding his multi family empire. He made multi family popular with institutional investors and multi family got big investments thanks to him. Not good for a small guy like me, but good for urban planning.

Submitted by FlyerInHi on May 7, 2020 - 11:50am.

Interesting that countries most successful at containing the virus are densely populated Asian countries, including Vietnam which is poor and lacks resources.

The United States has not taken advantage of its low density and separation from the rest of the world. That was supposed to be the main asset that would keep us protected.

And now the virus is spreading in rural areas. They were smug and contemptuous of the plight of New York City. Let’s see how they handle it. If anything, rural low-education culture will be a detriment to containing the virus.

Submitted by svelte on May 7, 2020 - 12:06pm.

FlyerInHi wrote:
Interesting that countries most successful at containing the virus are densely populated Asian countries, including Vietnam which is poor and lacks resources.

...and therefore probably doesn't have a very accurate tally of how many died from CV.

Submitted by FlyerInHi on May 7, 2020 - 2:50pm.

I had a discussion with a realtor over real estate values. He said that the data doesn’t show any decline, in fact there is less inventory because people are holding off listing. I responded “Ha! Current data is no prediction of the future.” But, you know, realtors always say it’s a good time to buy.

Also if one predicts that there a demographic trend to less density, there should be a “narrowing of the gap” between the top 10 metro areas and the rest of the country. The data should eventually reflect that. I take the opposite view, and I am betting my money that the top 10 metros will attract more residents than mid to small towns. Anyroad, we shall see in 10 years.

Submitted by carlsbadworker on May 7, 2020 - 3:28pm.

FlyerInHi wrote:
I had a discussion with a realtor over real estate values. He said that the data doesn’t show any decline, in fact there is less inventory because people are holding off listing. I responded “Ha! Current data is no prediction of the future.” But, you know, realtors always say it’s a good time to buy.

What concerns me about the market right now is that rents are dropping much faster than house price. Normally, at Spring time, rental will go up...but landlords have less options if they have a vacant property (homeowners are prevented from being evicted without paying mortgage).

Submitted by Coronita on May 8, 2020 - 5:12am.

The-Shoveler wrote:
Having enough space for a home Office and some private outdoor space will be a base requirement for most going forward IMO.

I think I need a new house where I can put up a paint booth. I can't find a space to setup a decent sized paint booth.

Submitted by FlyerInHi on May 15, 2020 - 3:03pm.

San Francisco real estate going to collapse
What Jason Calacanis says makes a lot of sense.

Old people do not know how do manage people unless they can see them. But the young generations can work remotely.
https://youtu.be/nTg5cw1YeAs

Submitted by outtamojo on May 15, 2020 - 4:56pm.

What I see in these fearful predictions of urban real estate prices and people's desire to move away from urban centers is...
acceptance that our government and institutions are unable to protect us from future pandemics. Gee, I wonder why that would be.

Submitted by outtamojo on May 15, 2020 - 5:00pm.

... hell any decent mid manager would already be thinking about how to prevent the NEXT pandemic.

Submitted by utcsox on May 15, 2020 - 5:36pm.

outtamojo wrote:
What I see in these fearful predictions of urban real estate prices and people's desire to move away from urban centers is...
acceptance that our government and institutions are unable to protect us from future pandemics. Gee, I wonder why that would be.

Do you mean this globally or just the US?

Submitted by outtamojo on May 15, 2020 - 5:53pm.

utcsox wrote:
outtamojo wrote:
What I see in these fearful predictions of urban real estate prices and people's desire to move away from urban centers is...
acceptance that our government and institutions are unable to protect us from future pandemics. Gee, I wonder why that would be.

Do you mean this globally or just the US?

Ultimately US. America first and a 6 time bankrupt businessman prevent any hope for the time being.

Submitted by FlyerInHi on May 15, 2020 - 7:58pm.

outtamojo wrote:
... hell any decent mid manager would already be thinking about how to prevent the NEXT pandemic.

The next pandemic is in the fall.

Submitted by FlyerInHi on May 19, 2020 - 11:39pm.

Wow. The lowlife renters are squatting in luxury in the hamptons.
Landlords are going to lose big. With the moratorium to expire aug 20, squatters will be able to stay until October.

https://nypost.com/2020/05/19/non-evicti...

I wonder if there are squatters in San Diego beach houses.

Submitted by gzz on May 20, 2020 - 7:13am.

Stock market is higher than 5-6 months ago.

Money printer goes brrrrrrr, ride the wave!

Expected 30 year rate based on bond prices is 2.7% versus actual 3.3%. That means we have a likely additional half point decline in mortgage rates coming.

More work from home means more space needed. Family of four with two home offices needs a 5-bed not 3-bed house.

Also means tech employees can get double their value in San Diego and still commute to SV when needed.

Submitted by FlyerInHi on May 20, 2020 - 7:31am.

Maybe Sacramento real estate will go higher because people can drive their Teslas to Silicon Valley for meetings.

According to Redfin, San Francisco is the only market to register a year on year decline.

Submitted by Coronita on May 20, 2020 - 8:21am.

In CA, for many people who only made minimum wage, they are collecting UI benefits almost double of what they were making on top of their stimulus checks.

$450 from the state and $600 lump sum, or $1050/week in UI benefits is a lot more than working for $15/hr 40 hrs ($600) each week. And the $600 federal UI benefit virtually has no rules. If you can claim just 1 hr/$1 of loss of income from covid, you get the entire $600. So practically anyone who qualifies for state UI benefits (regardless of how much of that $450 state benefit they get) they automatically get the entire $600/week federal benefit. That's $2400/month for doing virtually nothing.

And that's just the UI benefits for 1 person. Two people in a household out of work is $2100/week in UI benefits, or $8400/month. They can afford to live in carmel valley with that, lol. And if there's a 3-4 person roommate situation, their combined UI benefits is $3150-4300/week...

So don't tell me that people can't afford to pay their rent. Maybe a few people, but come on now. It's not that bad. UI benefits alone is paying for people's rent. The government cheese right now beats working for many people. Why do you think the state UI office is swamped with millions of calls each day. If anyone wanted to work less and get paid more, this is probably a once in a lifetime event for many people to do that. It literally is a $2400/month free cheese from the federal government, at least until end of July....unless folks like Harris is successful in getting it renewed.

Come on now. Look at these numbers.... $600 extra/week, $2400/month => $14,400 extra money per person for 6 months, or $28,800 extra per couple.... That's a lot of money for many people in this country who only make min wage. How could people NOT afford their rents, unless they totally mismanage their money??

Submitted by FlyerInHi on May 20, 2020 - 8:24am.

Coronita wrote:
How could people NOT afford their rents, unless they totally mismanage their money??

Substance abuse and family dysfunction. That’s a big part of American culture.

Submitted by Coronita on May 20, 2020 - 8:38am.

And someone making minimum wage who is now claiming they can't afford the rent, they probably couldn't afford the rent even before covid...And that's not a problem with this Pandemic's economic impact. It's a problem with the shitty tenant pool a landlord's properties are being rented too even before covid. Those landlords were bound to have problems for any reason that the economy contracted.... In fact, if anything, the coronavirus gave these landlords that operate in the shittiest tenant pool submarket a temporary lifeline for the next few months, something they would have long been screwed over if the economy had a natural recession with no bailout. Me thinks these landlords that rent to the shittiest submarket are the first to get screwed and should be thankful for all the government cheese that is temporarily holding them over. (with emphasis on temporarily)

In fact, this is probably one of the few times that it's better to be an employee than a business owner...Government UI benefits and other cheese benefits seem to be a lot easier to get for individuals than businesses and people on these weird ass non-worker non-salaried employees. Like I said, welcome to United States of France. Interesting times.

Submitted by FlyerInHi on May 20, 2020 - 9:05am.

I agree that landlords should screen their tenants. But then again, even rich tenants in the Hamptons aren’t paying.

But you still have a big percent of the population that are shit tenants. So, all else being equal, a big portion of real estate is overvalued if you discounts for the shit tenants. It’s irrelevant why people aren’t paying, but that should be reflected in valuation (as you said government prop up is temporary).

Residential real estate is mostly based on comps and momentum. But there are periods when momentum reverses, and periods when values are based more on discounted cash flow. If you hold long-term or “forever”, you never want to buy at a high, on momentum.

If you were a buyer would you not want to discount for the possibility that there could be another flareup in the fall and that the government will impose another moratorium?

Submitted by Coronita on May 20, 2020 - 1:33pm.

Cities on the verge of a covid driven housing crisis

SF, LA, Fresno, Bakersfield, Riverside, Sacramento on the list. Scottsdale, AZ too.

SD #24

Las Vegas at the top of the list.

Interesting read.
https://www.usatoday.com/story/money/202...

Submitted by The-Shoveler on May 20, 2020 - 2:03pm.

It seems no one knows LOL

IMO SWRC should do OK.

Weekly mortgage applications point to a remarkable recovery in homebuying

https://www.cnbc.com/2020/05/20/weekly-m...

Submitted by FlyerInHi on May 20, 2020 - 3:35pm.

Coronita wrote:
Cities on the verge of a covid driven housing crisis

SF, LA, Fresno, Bakersfield, Riverside, Sacramento on the list. Scottsdale, AZ too.

SD #24

Las Vegas at the top of the list.

Interesting read.
https://www.usatoday.com/story/money/202...

I totally agree about Las Vegas probably half the casino employees will not return to work in the short to medium term.
I was lucky because I pretty much I bought at the bottom and all my properties are rented. My properties have a competitive advantage in that they are beautiful.

But I have friends who are not getting paid rent. The evection moratorium is currently indefinite with no date as to when it will end

If anyone wants to buy in Las Vegas, the next bottom is your window of opportunity

Submitted by scaredyclassic on May 20, 2020 - 4:13pm.

what would an expected price per square foot be around the bottom for a decent place in vegas?

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