News

Landmark Links April 12th – Flip or Flop?

Must Read:  Home flips are approaching bubble peaks, at least in terms of the percentage of total sales that they make up.  However, data from Corelogic suggests that profit margins are substantially larger and that today’s flippers typically add value by renovating homes as opposed to just purchasing units and waiting for market appreciation.  This comparison of profit margins in the two cycles is particularly interesting:

Flippers made a median economic profit of nearly 23% on homes flipped in the fourth quarter, according to CoreLogic. At the peak of the last housing cycle, in the first quarter of 2006, flippers made a median economic profit of 9%.

Economy

Quicksand: The fact that sums owed to pension fund retirees are accelerating faster than assets on hand to pay those future obligations in the midst of a 10-year bull market run is frankly terrifying.

Tighter Conditions Ahead?  Strong employment growth could lead to talk of resumed Federal Reserve rate hikes this summer.

Bottoms Up: Retail workers are seeing better wage gains than almost any other part of the economy.

Ceasefire? A US/China trade “deal” could end up being little more than a cease-fire.

Hot Streak: Any way that you measure it, LA’s economy is booming and the run-up to the Olympics could help keep it that way.

Commercial

Brushing Off: Investors in the industrial sector remain unfazed by trade tensions and potential Chinese tariffs.  See Also: Mega box leasing deal activity remains strong.

Evolving: A trend towards outpatient care is providing a tailwind for medical office demand and retail centers may end up being the biggest beneficiarySee Also: UBS estimates that 75,000 more retail stores in the US will need to close by 2026 thanks in large part to the growth of eCommerce.

Black Hole: Saying that WeWork is spending like a drunken sailor is an affront to drunken sailors everywhere.

Residential

On Hold: People in the US are getting married later than ever before and that’s great news for multi-family demand.

Don’t Call it a Comeback: Foreign buyers in general and Brazilians in particular came back to Miami in droves in 2018, sparking the luxury condo market there.

Profiles

Out of Business: China was once home to about 70% of Bitcoin mining.  However, the Chinese government is now looking to ban the practice completely amid concerns over speculative bubbles, fraud and wasteful energy consumption.

Of Course They Are: Parents charged in the college admissions scam are now hiring “prison life consultants” as fear of life on the inside has now overtaken fear of their offspring not getting into USC.

Along for the Ride: Income sharing agreements where investors take a set percentage of a college grad’s pay in exchange for funding their education are slowly but surely gaining steam.

Chart of the Day

There is absolutely nothing healthy about this chart.  If that gap can’t close during a decade-long bull market then it probably can’t close without some very painful consequences.

Liabilities and Assets

WTF

Nope: A massive 9-foot alligator was found in backyard pool when the when the homeowner was letting her dog out in the morning because Florida.  See Also: Scientists captured a 17-foot long female python in the Everglades that weighed 140 pounds and contained 73 developing eggs.

Netflix and Chill: A new app called Slutbot has been launched to help would-be sexters up their game.  In related news, the company – which has no other apps – just closed a funding round led by SoftBank that valued it at $1.5 billion.

Money Can’t Buy Everything: A wealthy man who recently purchased an island for $8MM was arrested for shoplifting $300 worth of goods from Kmart because Florida.

Get Low: A woman twerked and flashed an entire plane full of passengers while getting thrown off at the gate for refusing to turn off her cell phone because Florida.  Also because Spirit Airlines.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

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