OscarNet

Friday, June 14, 2024

Young People Are Less And Less Likely To Own A Home

"Turning Point USA" founder Charlie Kirk discusses this piece from Axios: Trump's Bid to Steal the Youth

CHARLIE KIRK: So Axios is writing Trump is coming for the youth vote." Today, Donald Trump's podcast with Logan Paul is going to be publicized. But it's very important to remember that younger voters know they are missing out on the three Ms that create decent citizens: mortgages, marriage, and mating.

Young people are less and less likely to own a home. Do you know that, according to Federal Reserve data, one in four home purchases in Q1 of 2024 was done by investors? One in four. That is a record high. It's never been that high.

So what does that mean? Let's say you have a little extra money and you're looking for a nice return on investment. You go into Scottsdale, or you go into Atlanta, or you go to Santa Barbara, and you buy a single-family home for a million dollars and then rent it back to a 28-year-old who is not able to buy a home.

Renters have less roots in the community. When you rent, you do not care as much about property taxes or the business of the city. Renting is bad for our society. High-rise areas tend to be more liberal. The more horizontal you are able to build a society, as Arizona used to be, the more conservative those societies become. Density creates liberal politics. The more people congested in a certain area, the more dense it is, the more likely they are to support left-wing ideals. You are less likely to really care about being a neighbor. You can almost hide in the anonymity of the city. That is how New York is. Density creates left-wing politics.

Then let's get to marriage. Marriage rates are at an all-time low. Young people, younger voters, are having the hardest time finding a mate. And then finally, maiden: having children and reproducing. The fertility rate is at the lowest it's ever been. We are well below replacement level when it comes to how many children we are having in this society.

Put those three together: mortgages, marriage, mating. Young people realize they are not able to access the simple American dream that prior generations were able to enjoy.

And Donald Trump is leaning right into that, understanding that home prices have risen dramatically. The average median income to buy a home under Donald Trump was $71,000 a year. Now, under Joe Biden, it requires $125,000 a year. $71,000 a year to $125,000 a year. You need to get a $50,000 annual increase in your salary in just three years to be able to own a home, according to Zillow.com. Not to mention interest rates are super high.

You have a generation that owns nothing and is looking for a future. This is not overly complicated stuff.

And what are the Democrats selling? They're selling student loan forgiveness with other people's money. They're selling radical environmentalism. They're selling radical trans nonsense during Pride Month. They are putting the entire American economy in jeopardy. They want drive-through abortion clinics on every corner. This is what they are trying to sell to the next generation.

Increasingly, younger voters are like, "Yeah, I'm not putting up with that. I want a future," and Donald Trump has a rebel energy to him. The indictments are not helping them with younger voters. The indictments are significantly hurting them with younger voters. Younger voters think it's cool that Donald Trump is up against the system. They think it's pretty awesome that Donald Trump keeps on fighting.

He is a cultural icon. They have created him into a Nelson Mandela, Gandhi-type figure.

The Mockingbird media is weaker than ever before, and alternative media is ascendant, from Joe Rogan to Russell Brand. How young people see the world and consume information is not laundered through CNN, New York Times, or MSNBC. The Democrats are realizing they’ve lost a monopolistic control on younger voters.

https://www.realclearpolitics.com/video/2024/06/13/charlie_kirk_young_people_are_less_and_less_likely_to_own_a_home.html

Millions In Drug Money Has Made Its Way Into The South Florida Commercial Real Estate Market

A new report is revealing how illegal drug funds have made their way through the commercial real estate market in South Florida "and beyond", according to Bisnow.

Among examples was Miami's Sefira Capital, who agreed to forfeit over $29M in 2021 to settle a DEA investigation into money laundering, though it admitted no wrongdoing.

The firm was accused of ignoring red flags about investor funds and was implicated in a DEA sting operation, revealing millions in drug money flowed through its investment fund, Bisnow reports.

The probe included a $63M hotel acquisition near Washington, D.C., and an office building in Fort Lauderdale used by Broward County prosecutors.

This case is among five highlighted in a report on money laundering risks in commercial real estate by Global Financial Integrity and others, noting $2.6B laundered across 22 states, with California, Florida, and New York being the top destinations.

The DOJ alleged that between 2016 and 2019, Sefira Capital raised millions in criminal proceeds without sufficient due diligence, ignoring red flags like discrepancies in sender names and investment amounts.

The firm received funds from criminals using The Black Market Peso Exchange, which allowed drug traffickers to swap U.S. dollars for local currencies.

As part of the DEA investigation, dollars were bought on the black market and transferred to Sefira's U.S. accounts under the guidance of money laundering brokers.

Sefira Capital, founded by Aby Galsky and Mijael Attias in late 2015, purchased at least seven properties in Florida and three in South Florida from 2015 to 2021, allegedly using laundered money. In a statement to Bisnow, Sefira claimed no knowledge or intent regarding the funds' origins, stating they were passive recipients.

Sefira's joint venture with Highline Real Estate Capital included buying and later selling the Courthouse Place office near the Broward County courthouse. Highline’s founder, David Moret, stated the DEA did not investigate their joint venture properties.

Sefira’s acquisitions also included The Jaxon Apartments in Jacksonville, a Tampa office building, and a self-storage facility in Naples. A significant purchase was the Westin Tysons Corner, acquired with Driftwood Capital and Merrimac Ventures for $62M in 2018. Driftwood stated that Sefira was a passive limited partner.

In 2021, Sefira settled with the DOJ, agreeing to forfeit $22.5M in assets and pay $6.5M to avoid foreclosure. Galsky and Attias have since parted ways with Sefira and started new firms. Sefira's website remains active, listing several properties, but the company lacks social media presence and is not mentioned in the founders’ LinkedIn profiles.

https://www.zerohedge.com/markets/millions-drug-money-has-made-its-way-south-florida-commercial-real-estate-market

Thursday, June 13, 2024

2024 Will Have the Most Multi-Family Housing Completions in History

Housing starts have collapsed in percentage terms, but this will still be a record year for multi-family housing completions. What does it mean?

ApartmentList economist Chris Salviati discusses the last wave of the Multi-Family Construction Boom and its Impacts.

Following a period of record-setting rent growth, the national median rent has since dipped slightly from its late 2022 peak. One of the key factors in this rapid cooldown has been a surge of new apartment construction adding supply to the market. 2023 saw the most new apartments completed since the 1980s and the number of multifamily units under construction peaked late last year at a record level. With nearly a million units still in the pipeline, this year is on track to bring even more new inventory than last.
Looking further ahead, though, the end of the current supply boom is already in sight. There has been a sharp pullback in the number of new multifamily projects getting underway, and that will translate to a slowdown in apartments hitting the market next year and beyond. This report breaks down the latest data on multifamily construction trends and explores what it can tell us about where the rental market is headed.

Total Multi-Family Housing Permits

On one hand, we’ve seen an abrupt slowdown in apartment construction activity. But on the other hand, when viewed over a longer horizon, current permitting levels remain fairly robust even after the decline. If 2024 does end with 525 thousand units permitted, as the year-to-date trend suggests, that level would be 26 percent below the 2022 peak, but it would still be 9 percent higher than the 2015 to 2019 average and higher than any year from 1987 to 2022.

Completions Still Rising

Despite the pullback in permitting, completions are still on the rise. It takes a long time for multifamily developments to get completed, and construction times have been getting even lengthier. In 2022, it took an average of 17 months for multifamily projects to go from construction start to construction completion (with an additional three month lag between permits being issued and construction getting underway).
Because of the lengthy construction time for multifamily projects, the slowdown in permitting activity has not yet translated to a slowdown in units hitting the market. Rather, the multifamily projects getting completed today are largely those that got started during the permitting boom of a couple of years ago.

Completed Units

Even though permitting activity has been slowing for some time, we’re only now hitting the peak of new supply hitting the market. The number of multifamily units under construction peaked in late 2023 at over a million, an all-time record. More recently, the number of units under construction has been gradually declining as the number of completions has begun to outpace the number of new units being issued. But even after the recent decline, the number of units still in the pipeline (919K) remains higher than at any point in history before the recent peak.

Austin Leads the US

Austin, TX serves as the prime example of the construction boom – the metro has led the way for multifamily permitting per-capita for seven years running. In 2023, 9.2 new multifamily units were permitted in the Austin metro for every 1,000 residents. For comparison, Austin’s pace of multifamily permitting last year was 61 percent higher than that of the second-ranked metro (Raleigh, NC) and 31 times greater than that of the metro with the slowest pace (Birmingham, AL). Austin is currently on pace to see a dramatic pullback in permitting in 2024 – but even with that pullback, Austin is still on pace to log the most new permits-per-capita this year.
Austin’s rental market is also illustrative of the impact that increased supply can have on prices. We estimate that rents in the Austin metro have dipped by 7 percent year-over-year, the sharpest decline of any large metro. This dip in rent prices is taking place even as the metro continues to experience strong demand, as the rapid pace of new construction has more than kept pace with the influx of new renters to the area.

Note that ApartmentList price comparisons are for new leases as opposed to renewed existing leases.

This issue has led to many bad assumptions and reports for at least two years that “rents are falling” when they haven’t been.

However, I do believe that after 32 consecutive months of rents rising national at least 0.4 percent per month, some good news is finally on the horizon.

Looking Ahead

The influx of new apartment inventory this year should result in a continuation of the market conditions that defined 2023, when increasing levels of new supply collided with softening demand, leading to a rapid slowdown in rent growth and increasing vacancy rates. Looking ahead to the remainder of this year and into next, we expect that these conditions are likely to persist. Unless demand rebounds to levels solidly above the long-term average, it’s likely that rent growth will remain soft and that vacancy rates could continue to inch higher. These trends will be especially pronounced in the southern markets that are seeing the fastest housing stock expansion.

Rising at 0.4 percent per month, for 32 month, rent growth is not exactly soft. But it is much softer than before, down from increases sometimes near 1.0 percent.

Looking Further Ahead

These conditions will not be indefinite, however. The pullback in new projects getting underway will eventually translate to a slowdown in new completions. We expect that 2024 will be the peak for new apartments hitting the market, and that next year will see fewer completions. When this happens, demand could begin to outstrip supply again, leading to tighter market conditions. The prevailing conditions in the rental market are currently bringing some much-needed relief to renters, but over the medium term, those winds are expected to shift.

Thanks Chris!

Missing Discussion Points

Missing from above discussion are many points regarding demographics, immigration, and interest rates.

First we have a huge ongoing wave of illegal immigration. This impacts current housing demand.

The second large factor is the eventual die-off of tens of millions of baby boomers. At what speed will that happen?

Third, I presume Trump will win but that’s not certain. Nor, despite all the bluster, can we say for sure how fast Trump can stop the immigration wave if he is elected.

Fourth, stopping the immigration wave is one thing, deportations are another. Where are deportations headed and how fast?

Fifth, what happens to interest rates?

What finally cooled construction is a big set of rate hikes by the Fed. Where are interest rates and mortgage rates headed?

Finally, what about recession?

Looking too far ahead is fraught with too many potential errors, but short term we can see a huge wave of completions on the horizon.

There are too many moving pieces, including a potential recession, that prohibit looking further ahead.

It will take a miracle for the Fed, the next president (regarding immigration), and the homebuilders to all get this right. Mistakes will be costly.

https://mishtalk.com/economics/2024-will-have-the-most-multi-family-housing-completions-in-history/

Sunday, June 9, 2024

Homeownership Costs in the US Jumped 26% Since Pandemic Began

Bills for taxes, insurance, energy and maintenance soared
Typical buyers spending $1,510 a month more than in March 2020

The cost of owning a home in the US has increased 26% since 2020, as expenses including taxes, insurance and utilities all soared during a period of high inflation across the economy.

The average annual outlay for owning and maintaining a typical single-family home — not including mortgage payments — totaled $18,118 in March, the personal finance website Bankrate found. That works out to $1,510 a month more than four years earlier, when pandemic lockdowns began.

https://www.bloomberg.com/news/articles/2024-06-10/homeownership-costs-in-the-us-jumped-26-since-pandemic-began

Taxpayer-funded new LA high-rise for homeless features gym, cafe — and apartments with skyline views

A fancy, new, taxpayer-funded high-rise homeless shelter featuring apartments with skyline views, a gym and cafe is set to open in Los Angeles — looking more like a hipster haven than public housing.

The 19-story tower — whose 228 studios and 50 one-bedroom apartments cost about $600,000 a pop to build — is located in the heart of the city’s Skid Row and part of a three-building project to provide shelter and support for homeless adults, according to the Los Angeles Times.

The $165 million complex boasts amenities galore, including the gym complete with treadmills, rowers, bikes and a cable machine — as well as a communal patio area for residents to congregate, an art room, a soundproof music room, a computer room, a library and the cafe.

“We’re trying to make our little corner of the world look and feel a little better,” said Kevin Murray, president and chief executive of the Weingart Center Association, the nonprofit behind the project, to the paper.

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For the homeless lucky enough to score a room in the tower, feeling a little better won’t be hard.

The tower’s furnished rooms also are modern and clean, featuring a single bed, a microwave, oven, fridge and television.

On its website, Weingart crows that the South Crocker Street building — called Tower 1 — offers “high-quality apartment living in downtown Los Angeles.”

The project is being funded by financing from Proposition HHH, a supportive-housing program approved by city voters in 2016, according to the Los Angeles Housing Department.

It’s also buoyed by state housing funds, as well as $56 million in state tax credits, the Times said.

“Residents of Weingart Tower 1 will benefit from Weingart Center’s on-site comprehensive support services,” the nonprofit said. “These services are specially developed to help maintain housing stability and attend to residents’ health and wellness requirements.”

About 40 units are reserved for veterans who qualify, Weingart added.

The tower — which is meant to be a self-contained environment that will shield its formerly homeless denizens — is the first of three such high-rises planned for the area around the nonprofit’s headquarters, the LA Times said.

The still-under-construction second tower will have 302 rooms, the outlet said. The third tower, a 104-unit building, is still in the planning phase.

When the first tower opens, it will be the biggest permanent supportive-housing project in the city, the Times said.

“We aren’t in it for the developer fee, so we said let’s just build the biggest thing we can,” Murray told the paper. “You just can’t fix the problem at 50 units a pop.”

Still, the kinds of amenities the building offers aren’t common in the normally bare-bones shelters the homeless might be used to.

When the trio of buildings is finally done, it will create a campus that allows its 700 residents to escape the nefarious influences that lurk on Skid Row — a notorious haven for the homeless and destitute.

Several advocates and community leaders commended the project, the paper said.

“I see the tower as providing a great need, a great housing need in Skid Row and a design that says poor residents are worthy.”

https://nypost.com/2024/06/09/us-news/taxpayer-funded-new-hi-rise-for-homeless-features-gym-cafe-and-apts-with-skyline-views/