Landmark Links November 9th – Getting High On Supply


Lead Story: A combination of rising interest rates, burnout from buyers and flat-lining rents have helped tamp down home buyer demand over the last six months in Seattle where home prices have fallen, thanks to a doubling in inventory over the past year.  See Also: Las Vegas home inventory was up over 50% year over year in October. Related:Mortgage applications have dropped to their lowest level in four years as interest rates hit an 8-year high.

My position for a while has been that supply drives home prices more than interest rates do and my assumption has been that builders will slow starts once sales slow, putting a lid on supply.  The ball is clearly now in the home builders’ court.  Housing sentiment is falling, and if sales don’t turn around soon, builders are very likely going to start cutting back on starts.  This will likely result in layoffs as well as some relief on the labor shortage front.  Eventually, lower starts along with the lock in effect of higher rates will put a lid on growing supply, making the likelihood of a substantial price correction less probable.  I suspect that we are going to find out if this assumption is correct or not very soon.


On Track: Last week’s employment report is likely to keep the Federal Reserve on track for December and beyond.

Shopping Season: US Christmas sales are predicted to surpass $1 trillion for the first time ever in 2018.

You Want Fries With That? A labor shortage amid the tightest job market in almost five decades combined with the propensity for longer-living Americans to keep working—even part-time—to supplement often-meager retirement savings have led to senior citizens replacing teens as fast food workers.


This Will End in Tears: A cryptocurrency millionaire bought 67,000 largely undeveloped acres in Storey County, NV and wants to build a new city with blockchain technology incorporated into all of its infrastructure and systems.

Same Old Story: Complain about high prices and low yields if you’d like but the fundamentals behind the industrial and warehouse sector in the US are still white hot.


Shrinkage: Builders are constructing smaller homes in an effort to appeal to first time buyers and those on a budget as affordability concerns continue to impact demand at the move-up level.

Correction: Lumber prices are still dropping like a rock and have  now fallen over 20% year over year.


Push-back: America is starting to fall out of love with Silicon Valley as scandal, obscene riches and data breaches have public opinion towards big tech companies falling like it did for Wall Street banks did a decade ago.

Pay to Play: The increasingly high cost of youth sports in America is creating a two tiered system where participation among the well-off is increasing at the same time that it is falling off among kids from poorer families.

Barrier to Entry: It would take roughly $6 trillion in infrastructure investment for electric cars to be a fully viable replacement for combustion engines.

I Have No Issue with This: How Lululemon and workout culture turned the US into a nation of yoga pants.

Chart of the Day

The McRib Effect: Correlation does not equal causality.


Giddy Up: A drunk man jumped on a horse and rode it at Churchill Downs during the Breeder’s Cup before being arrested by police.

Misdiagnosed: A doctor removed a woman’s kidney after mistaking it for a tumor during back surgery because Florida.

What a Way to Go: A retired light heavyweight pro boxer died from choking on a croissant during an eating contest in Argentina.  At least he died doing what he loved.

Can You Spot the Irony: A man jumped into a crocodile exhibit wearing only boxers and Crocs and was attacked by the crocodiles because Florida.

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