News

Landmark Links January 22 – Substantial Impediment

 

Must Read: The Federal Reserve published a study last week that looked at student loan borrowers from 2005 – 2014 and concluded that the $1.5MM in outstanding student loan debt has translated to 400,000 less Millennial home owners.

Economy

Help Wanted: America’s tremendous need for skilled immigrants isn’t going anywhere.

The Real Problem: While a trade agreement may soothe investors about China suddenly anemic economic growth, it won’t solve the real crisis in the Chinese economy – a massive pile of debt – built up by multiple rounds of government stimulus and made more risky by capital flight – that is likely much worse than official government statistics would have you believe.  The ultimate cure will come from shifting the country’s growth engine from investment to consumption but that doesn’t appear to be happening quickly enough.

Commercial

Recap: From cycle questions to cost inflation to redefined retail, a rock solid industrial market, Qualified Opportunity Zones and the compression between equity and debt returns  – here’s a great rundown of last week’s IMN’s 16th Annual Winter Forum on Real Estate Opportunity & Private Fund Investing held in Laguna Beach at The Montage.

Tax Breaklandia: When Qualified Opportunity Zones were being identified by states, Oregon took the audacious step of putting all of Portland – much of which is already quite wealthy – in one.  This is not at all what the law was intended to do.

Residential

Short Term Memory: A lot of young people associate recessions with housing market crashes since the only recession in their adult lives occurred in 2008.  However, recessions historically do not typically result in plummeting home values on a national basis and the next one is unlikely to as well unless it fundamentally alters the current dynamic between supply and demand.

Everything Must Go: Southern California home builders are cutting prices in order to move a glut of unsold homes.  According to Zillow, 25.9% of new homes on the market in LA and Orange Counties in the 4th quarter had price cuts which averaged 8.5%.

Refugees: South Florida Mansion sales are surging as tax exiles seek savings after losing SALT deductions.

Profiles

Block Chain: Lego collection has delivered huge (and uncorrelated) market returns.

Insatiable Demand: The secondary market for private equity is booming and assets are hitting record values thanks to relatively lower risk than new offerings.

Targeted: Amazon’s consumer database is incredibly valuable to advertisers since the company knows more about consumer online buying habits than anyone else.  The company is ramping up its advertising services in order to further monetize this knowledge and its high conversion rate may make the service a serious risk to both Google and Facebook, the reigning kings of online ads.

Chart of the Day

The uptick in new housing inventory has been getting a lot of press lately and rightfully so.  However, when it comes to existing homes, which make up the vast majority of the housing market, the actual number of units on the market has barely budged and months of supply is still near historic lows.

Source: Calculated Risk

WTF

Distracted Driving: A New Hampshire man was stopped at a red light by police while smoking crack and getting oral sex.  He has a prior conviction in Florida, which is now apparently exporting its more colorful citizens to the rest of the country.

Come Again? An Irish man was hospitalized after injecting his own semen to treat back pain.  I like to think that there was quite a bit of whisky involved in this incident.

That Stinks: A substitute teacher was arrested for smearing human feces around a park to sabotage a girl’s birthday party because Florida.

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

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