Have We Hit The Top?

[Gregmal]

Yea awhile ago I owned Simon and part of the not expected but certainly possible super bull case was something along the lines of that stuff and perhaps some government allocated funds incentivizing the development. Nothing has happened yet but it makes sense. Development cost is a bitch though and Simon guys are too smart to foot all of it themselves. So I just revert back to JOE who has county and state pay for tons of their shit and then for the rest gets 40 year HUD loans at 3-5% fixed rate.

 

More reasonably though, housing is solvable, but the people who make the rules are housing people and won’t kill the golden goose. Everyone whines about government stock trading….stocks are small time. They all own tons of real estate.

[UK]

9 hours ago, Castanza said:

 

 

I'd rather be dead then move into complexes such as this. Between Europe and Canada I'll never understand why they move housing in this direction. Basically a prison if you ask me. To me if your country is popping up housing like this, it's time to re-evaluate your long term strategy....highlights long-term systemic risk. These are not homes...they are stalls with hay for the livestock citizens. 

 

It is the direction China is moving. I do not disagree with you on this from the point of the dwellers:), but why would it be a bad for a country? Isn't it just much more productive way to house you population? Much more resources left for other/more productive sectors or just carrier ships and nuclear weapons:)?

 

This is a good article on the whole topic: https://www.economist.com/international/2023/09/06/the-growing-global-movement-to-restrain-house-prices

 

In many English-speaking countries, inspired by Victorian worries about “slums”, planning laws tended to prioritise detached houses. For urban planners, such as Ebenezer Howard, density was seen as akin to crowding. In packed industrial hotspots, “downzoning” and slum clearance were used to flatten cities and spread them out by force.  The writer George Orwell was sceptical of the proceedings: “If people are going to live in large towns at all they must learn to live on top of one another,” he declared. But he reckoned that many workers in Britain did not “take kindly to flats”.

[UK]

https://www.bloomberg.com/news/articles/2023-10-27/worst-october-in-five-years-is-chasing-stock-bulls-out-in-droves?srnd=premium&leadSource=uverify wall

 

“It’s troubling that a market setback as internally deep as the current one hasn’t resulted in more improvement” in sentiment, said Doug Ramsey, chief investment officer at the Leuthold Group. “The ‘wall of worry’ accompanying much of the 2023 market action has morphed into a ‘slope of hope.”’

 

[John Hjorth]

Thursday, James Dimon was called by his wife, that he should bring home some toilet paper from work, while the household was running low on it, which - together with other tings - , caused him to decide to sell a bit, which again generated yet another market leg down [you heard it here first] :

 

JPM 8-K [October 27^th 2023] : Report of unscheduled material events or corporate event.

 

 

 

[SharperDingaan]

On 10/27/2023 at 7:00 PM, Castanza said:

lol I shared a pic of the USSR…but the reality is these type of developments almost never get better over time unless they are in prime locations. There is only so much value you can squeeze out of those types of complexes unless they are top end in prime locations. 

 

The realities are that the traditional 1950-80's solutions of green field (sprawl) mass affordable housing are 1) no longer affordable, 2) are too labour intensive. The masses cannot also afford the required car to get around, and/or the public transport time/costs from the former farmland to their place of work. It is also contrary to the new green economy (EV, smaller distances, vs ICE and longer distances).  

 

A 10-storey tower holds a lot of flats, and typically takes a lot less time to build than the equivalent green field housing. It's the common solution around the world, and today's industry is a lot better at brown field redevelopment than it used to be. Most new builds will also go a good 15-20 years relatively maintenance free.

 

Towers would get a lot of people on the property ladder, provide a lot of accessible work, fuel innovation/productivity, and create a lot of new population (babies + immigration) to refresh the demographics. The new supply (across the land) dramatically lowering both rent/housing costs, upgrading the available housing stock, and lowering systemic inflation. Northern communities benefiting from factory built updated/upgraded modular housing/food growing facilities, deliverable via sea-lift, &/or air-lift. Politicians either get with the program, or get run over.

 

Most of today's vocal NIMBY's will either be dead or in nursing homes within the next 10 years. Successors are a lot more open minded, and across the generations - the demographics favour a more progressive approach. Looks good for a Canada overall, but there are going to be a lot of busted heads; not a bad thing.

 

Obviously it plays out differently in different nations, and the different parts of every nation. As we all know, housing is primarily a local solution; not a global one.

 

SD

 

 

 

 

Edited November 4, 2023 by SharperDingaan

[Jaygo]

11 hours ago, SharperDingaan said:

Towers would get a lot of people on the property ladder, provide a lot of accessible work, fuel innovation/productivity, and create a lot of new population (babies + immigration) to refresh the demographics.

I really don’t think this is the case. Productivity can be misrepresented by numbers. Sure we can all see the efficiency in apartment towers and on a pure numbers basis humans living in small boxes uses less resources but many miss the societal pressure it induces. Also we miss the innovation that spawns from a dad and his child tinkering with a lawn mower or a bicycle in the garage ect
 

To me, cities breed a certain type of person who is less resourceful and probably less Inovative since the world they inhabit is already built and not in their domain to change anyway. 
 

A beautiful city can have inspirational and intellectual qualities but that not where most live. 

when it comes to repairing natural demographics a tower won’t cut. Kids need space and parents need space too. 
 

 

[SharperDingaan]

14 hours ago, Jaygo said:

I really don’t think this is the case. Productivity can be misrepresented by numbers. Sure we can all see the efficiency in apartment towers and on a pure numbers basis humans living in small boxes uses less resources but many miss the societal pressure it induces. Also we miss the innovation that spawns from a dad and his child tinkering with a lawn mower or a bicycle in the garage etc.

 

 

Depends where you start from ...

 

A great many people currently live in tents and shelters, and are driven elsewhere when a towns shelters are overwhelmed (Toronto->Niagara). It's at record levels, and while there's a pecking order within the shelter system; none of this is good for anybody. Mass apartment living vs tents/trailers and shelters isn't great, but it's a lot better than where we're currently at.

 

Obviously, not all towers are the same; the tower for shelter replacement is quite different to the tower for starter families, or affluent retirees. Furthermore; the starter family may only need the flat for a decade, after which they may either sell or rent out their place, and move onto something else a better fit for their needs at that time. What matters is that the shelter is fit for purpose/secure/comfortable/safe, accessible/affordable for a long period, and that future costs are reasonably predictable. The Mac Mansion can be bought later if/when the couple can afford it.

 

Choice between types of accommodation (MURB, duplex, suburbia, etc.) remains, but each type of accommodation is typically more costly. Every family/person decides upon what's best for their situation; but the tower is the default. Right now, that default is the tent/trailer, or a shelter.

 

Times change, we need to change with it, and there are no guarantees. All that we can really do, is what we thought best at the time.

 

SD

 

 

 

  

 

Edited October 29, 2023 by SharperDingaan

[Red Lion]

5 minutes ago, SharperDingaan said:

 

Depends where you start from ...

 

A great many people currently live in tents and shelters, and are driven elsewhere when a towns shelters are overwhelmed (Toronto->Niagara). It's at record levels, and while there's a pecking order within the shelter system; none of this is good for anybody. Mass apartment living vs tents/trailers and shelters isn't great, but it's a lot better than where we're currently at.

 

Obviously, not all towers are the same; the tower for shelter replacement is quite different to the tower for starter families, or affluent retirees. Furthermore; the starter family may only need the flat for a decade, after which they may either sell or rent out their place, and move onto something else a better fit for their needs at that time. What matters is that the shelter is fit for purpose/secure/comfortable/safe, accessible/affordable for a long period, and that future costs are reasonably predictable. The Mac Mansion can be bought later if/when the couple can afford it.

 

Choice between types of accommodation (MURB, duplex, suburbia, etc.) remains, but each type of accommodation is typically more costly. Every family/person decides upon what's best for their situation; but the tower is the default. Right now, that default is the tent/trailer, or a shelter.

 

Times change, we need to change with it, and there are no guarantees. All that we can really do, is what we thought best at the time.

 

SD

 

 

 

  

 

Maybe your Canadian homeless are different than the ones here, but apartments don’t fix the problem. Homelessness in California, and this is the epicenter in the USA, is not a housing shortage issue. 
 

It’s a drug and theft free for all, and all the losers in the entire country are gravitating towards the states with a combination of lax laws and warm climate. 

[Jaygo]

Not sure if the homelessness leads to drugs or they get there as a result of drugs and mental Illness but the majority are in a seriously unhealthy situation. 
 

Canada is cold enough to die for 2-3 months of the year so it’s not the same as posting up in San Diego or Phoenix but we certainly have tent cities. 
 

putting roofs over people who do not contribute to society is a social cost and one worth spending for many reasons. 
 

my issue is the powers that be making things so damn expensive and difficult for people who are contributing to get situated unless is it’s 600 sq ft 30 floors up. (They tax the development, they tax the sticks and bricks, they outlaw the nanny suite and basically just burden anyone who is not bringing in 300k plus. I’m not asking for favelas style development but maybe every building doesn’t need a public art installation budget ya know. Or in my fiends experience a demo permit of 18k for a house that strong fart could blow over. 
 

North America is the wealthiest most self dependent jurisdiction on the planet. I do not believe for a moment we can’t all live in a way we would like (within reason, pissing contest McMansions not included) 

 

I lived in a tower in Toronto for a few years, it was great, exciting and perfect for 21-24 but then we got married and moved to the country and had kids. Natural progression that is more and more being reserved for the very wealthy. 

 

Our economies are being held back in the exact opposite way as the post war baby boom and economic boom was being allowed to flourish. 
 

 

[Gregmal]

Ok even simpler. How many people, if given a piece of land, would even know the entire process to go about building? how much would it cost to simply go through the approval process? And how long would it take? It’s disgraceful. 

[Red Lion]

41 minutes ago, Jaygo said:

Not sure if the homelessness leads to drugs or they get there as a result of drugs and mental Illness but the majority are in a seriously unhealthy situation. 
 

Canada is cold enough to die for 2-3 months of the year so it’s not the same as posting up in San Diego or Phoenix but we certainly have tent cities. 

 

I'm not sure either. Here in my town in sunny California we still have homeless people dying due to exposure, especially around this time of year, so I'm sure it's terrible in Canada. 

 

In my city, we always put up a homeless shelter at taxpayer expense, then the homeless advocates file a lawsuit in federal court alleging some shortcoming (too hot, too cold, not enough clean needles, etc.) which results in a new injunction, a new plan, a new lawsuit. Meanwhile the homeless are ruining the city, and the state, and flocking here from all over the country.

 

It's disgraceful, but I don't know what the solution is. 

[Ulti]

20 minutes ago, RedLion said:

 

 

 

It's disgraceful, but I don't know what the solution is. 

Elect Newsome for President...then its all over the country

[Cigarbutt]

1 hour ago, RedLion said:

 

...homeless... 

It's disgraceful, but I don't know what the solution is. 

Every time i go to California (larger cities), this 'issue' is always kind of baffling.

This is not the area to 'argue' about this 'issue' but, recently, local journalism in my area, looking for models, produced balanced reviews of some kind of a 'model', made in Houston. Kind of interesting. Can we learn from each other?

https://www.governing.com/housing/how-houston-cut-its-homeless-population-by-nearly-two-thirds

It looks like some communities can achieve improvements but at what cost?

-----) Back to: have we hit the top discussions

[changegonnacome]

On 10/21/2023 at 5:02 AM, changegonnacome said:

 

Well 50yr and 100yr bonds sure maybe.

 

The reality is being smart about it didn't require reinventing the wheel and creating new types of bonds......20/30yr bonds would have worked very well for extending the avg. maturity of the aggregate Federal debt pile. Christ even 10yr notes would have been good!

 

Instead what we have is the below:

 

 

 

https://research.stlouisfed.org/publications/economic-synopses/2023/06/02/assessing-the-costs-of-rolling-over-government-debt

 

Like I said - if you were CFO of a corporate during ZIRP but especially during 2020/2021......and your companies debt stack looked like this i.e. most of the debt is gonna roll in the next three years......your CEO/board would fire you.

 

It is criminal how much federal debt has to roll into 5% paper. The graph above should be sloping the other way given where we've come from.

 

In some respects whats occuring at the long end of the curve is a response to the reality above....USA LLC. has a debt maturity profile that when rolled into higher rates at maturity will begin to consume larger and larger proportions of the govs net income (tax revenue).

Stan the Man must be reading CoBF

 

 

[UK]

 

[dealraker]

On 10/28/2023 at 9:22 AM, SharperDingaan said:

 

The realities are that the traditional 1950-80's solutions of green field (sprawl) mass affordable housing are 1) no longer affordable, 2) are too labour intensive. The masses cannot also afford the required car to get around, and/or the public transport time/costs from the former farmland to their place of work. It is also contrary to the new green economy (EV, smaller distances, vs ICE and longer distances).  

 

A 10-storey tower holds a lot of flats, and typically takes a lot less time to build than the equivalent green field housing. It's the common solution around the world, and today's industry is a lot better at brown field redevelopment than it used to be. Most new builds will also go a good 15-20 years relatively maintenance free.

 

Towers would get a lot of people on the property ladder, provide a lot of accessible work, fuel innovation/productivity, and create a lot of new population (babies + immigration) to refresh the demographics. The new supply (across the land) dramatically lowering both rent/housing costs, upgrading the available housing stock, and lowering systemic inflation. Northern communities benefiting from factory built updated/upgraded modular housing/food growing facilities, deliverable via sea-lift, &/or air-lift. Politicians either get with the program, or get run over.

 

Most of today's vocal NIMBY's will be in either dead or in nursing homes within the next 10 years. Successors are a lot more open minded, and across the generations - the demographics favour a more progressive approach. Looks good for a Canada overall, but there are going to be a lot of busted heads; not a bad thing.

 

Obviously it plays out differently in different nations, and the different parts of every nation. As we all know, housing is primarily a local solution; not a global one.

 

SD

 

 

 

 

SD, I laugh out loud when I read this post as I've been right there with you in thought for decades.  Of course I'm a part owner of a builders suppy and millwork business, retired contractor (and insuance man), and just bought with others about 500 acres of land.  So I go right into the la la land of stupidity as I just invested completely contrary to my themes that that I share with you.  Lord help me.

 

And then, some years ago now, Jerry who is the oldest cousin who runs the investment portfolio (3 of us meet and discuss but he makes the final decision) of the above companies (we have a "relatively" huge investment portfolio because we sold 4 builders supply business some 40 years ago and went into stocks) decided in 2009 or 2010 (can't remember) to buy Tractor Supply stock.

 

You can guess...ole dealraker was skeptical but somehow kept my mouth shut while another oblivious cousin (on the 3 person investment "team") said "Go-go-go".  And lord help us...we knocked the damn ball so far out of the park with that investment it blows my damn doors off!

 

Tractor Supply stock has fallen some recently, haven't heard a word from Jerry...and I have no idea what to expect if and when I do.  But for sure I'm clueless.  

 

And as usual I have serious doubts as to this culture of everybody having 5 to 50 acres and a farm and big house with acres to mow while working in some completely irrelated to the farm job.  But damn it seems to never end.

 

 

[UK]

https://www.bloomberg.com/news/articles/2023-10-31/uaw-strike-ups-drivers-writers-union-mark-record-wins-for-us-labor-movement?srnd=premium-europe&leadSource=uverify wall

 

Workers in the US are getting record-breaking wage hikes this year thanks to strategic strikes and stunning contract wins. The result is a boost in middle-income wages and a shift in the balance of power between companies and their employees. Even before the United Auto Workers reached historic contract deals with carmakers, unions across the country had already won their members 6.6% raises on average in 2023 — the biggest bump in more than three decades, according to an analysis by Bloomberg Law.

[Red Lion]

On 10/31/2023 at 4:09 AM, dealraker said:

 

And as usual I have serious doubts as to this culture of everybody having 5 to 50 acres and a farm and big house with acres to mow while working in some completely irrelated to the farm job.  But damn it seems to never end

It’s because they have learned if they spend 750 hours a year they can take farming losses against their regular income. 
 

Said losses consisting of accelerated depreciation on pickup trucks, atv’s, barns, etc. 

[JRM]

6 hours ago, RedLion said:

It’s because they have learned if they spend 750 hours a year they can take farming losses against their regular income. 
 

Said losses consisting of accelerated depreciation on pickup trucks, atv’s, barns, etc. 

 

bingo.  I work with a lot of guys that do this.

[Parsad]

On 10/29/2023 at 9:52 AM, Cigarbutt said:

Every time i go to California (larger cities), this 'issue' is always kind of baffling.

This is not the area to 'argue' about this 'issue' but, recently, local journalism in my area, looking for models, produced balanced reviews of some kind of a 'model', made in Houston. Kind of interesting. Can we learn from each other?

https://www.governing.com/housing/how-houston-cut-its-homeless-population-by-nearly-two-thirds

It looks like some communities can achieve improvements but at what cost?

-----) Back to: have we hit the top discussions

 

I travelled all over the UK last month and I have to say what I see in North America...I didn't run into it anywhere to such a degree.  Yes, there were pockets of poverty, homelessness, pan handling, etc.  But nothing like in big cities here.  Vancouver is an embarrassment to what I saw overseas!  Cheers!

[Parsad]

In terms of the "top or bottom"...I think the worst of it is over in terms of interest rate hikes.  While stocks aren't cheap overall, they aren't expensive as earnings year over year are growing well.  This has been one strange economy...strong jobs market and salaries; tight savings and budgets; strong earnings and growth; increased credit losses and writedowns on balance sheets...bizarre!

 

I think there may be some downside still relative to the risk free rate...but if rate hikes stop next year and/or decrease a bit, markets will rally until the next crisis.  Banks should also rally next year...earnings remain powerful, bond losses have slowed/stopped, prices are close to tangible book, balance sheets are still strong.  Maybe some headwinds from RE and CRE, but the balance sheets and earnings will eat up those losses. 

 

Still holding cash paying a risk free rate of 4.75-5.00%, but comfortable with my stock holdings too!  Cheers! 

[james22]

8 hours ago, Parsad said:

Still holding cash paying a risk free rate of 4.75-5.00%

 

When would you extend duration?

[changegonnacome]

 

The nature of tightening cycles is that the Central Bank is too late to the party and then stays too long. The current inflation numbers unfortunately don't provide a green light for rate cuts & the federal government's deficit spending is contributing to continued nominal spending growth exceeding productivity growth in a way that is ultimately counterproductive and doesnt allow the Fed to cut. Ironically the federal government, not the Fed, will be responsible this time for not delivering a soft landing.

 

It's a pity I suspect if 8% deficit spending wasn't occurring we might have drifted down to 2-ish% inflation with minimal labor market turbulence just based on the progress to date............which is there but not quite there in terms of getting us back to 2%.....nearly never won the race.......and thats kind of where we've landed I think....close to something approximating a soft landing (see Target CEO above on consumers moderating)....but not quite enough because the federal government is running recessionary like deficits with full employment....usually at this point in the cycle (the end!) you'd expect fiscal surpluses or at least balanced budgets......instead we have 8% deficits....which should be reserved for the beginning of the business cycle not now. It's inverse and perverse keynesianism.

 

We are a year out from the November 2024 elections......nothing meaningful is happening with fiscal spending in the months to come.......a mess of tough & some forced decisions await the new federal administration in 2025. Grandpa Joe must praying that he's shoved enough fiscal adrenaline into the economy to keep it limping on for another few months.

[Parsad]

9 hours ago, james22 said:

 

When would you extend duration?

 

I think I'll get to invest that capital in the next 12 months as RE and CRE get hit.  One third of restaurants are losing money in North America...that's a lot of commercial real estate that's going to be looking for new tenants.  WeWork is filing for bankruptcy...anchor tenants at malls are dropping like flies...offices aren't returning to normal nearly as quickly as many hoped...I think CRE loans, equity are going to look pretty interesting. 

 

In the meantime, the stuff I own is just killing it and growing.  Did add some JPM and VOO to my corporate account.  Had averaged down on M in non-taxable accounts as it fell...so break even already...anything higher is accretive.  FFH is just killing it!  META and GOOGL continue humming along.  Cheers!

 

Cheers! 

[Red Lion]

On 11/1/2023 at 8:10 PM, Parsad said:

 

I travelled all over the UK last month and I have to say what I see in North America...I didn't run into it anywhere to such a degree.  Yes, there were pockets of poverty, homelessness, pan handling, etc.  But nothing like in big cities here.  Vancouver is an embarrassment to what I saw overseas!  Cheers!

What do you think we are doing wrong? Is it the weather? 
 

The problem seems to be getting worse in California even as our population shrinks, seems like it can’t just be a housing issue. 
 

It definitely got worse when we decriminalized drug possession and theft but it was already a crisis before any of that.