Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-62468 Sun, 25 Jun 2017 14:08:37 GMT One57 ("Billionaire's Tower") could set NYC foreclosure record http://implode-explode.com/viewnews/2017-06-25_One57BillionairesTowercouldsetNYCforeclosurerecord.html previous foreclosure.]]> iehi-feed-62459 Fri, 23 Jun 2017 21:01:34 GMT Economists draw mixed conclusions over May new home sales report http://implode-explode.com/viewnews/2017-06-23_EconomistsdrawmixedconclusionsoverMaynewhomesalesreport.html "Despite May's good news, new home sales still have a long way to go to reach historic norms," Trulia Chief Economist Ralph McLaughlin said. "When taking into account the U.S. population, new home sales are still about 69% of the long-run average."

...

"Ultimately this report is a disappointment for those looking to builders to meaningfully help solve the pressing supply issues in the market overall, especially for entry-level buyers," Zillow Chief Economist Svenja Gudell said. "The median price of a new home sold in May was close to $350,000, by far the highest it's ever been and likely well beyond the budget of younger, first-time buyers that make up a sizable portion of the market right now."

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iehi-feed-62436 Tue, 20 Jun 2017 21:11:47 GMT Fed is Careening Into Housing and Stock Bubble... Look Out Below! - Ben Hunt http://implode-explode.com/viewnews/2017-06-20_FedisCareeningIntoHousingandStockBubbleLookOutBelowBenHunt.html What has happened (and apologies for the ten dollar words) is that the Fed's reaction function has flipped 180 degrees since the Trump election. Today the Fed is looking for excuses to tighten monetary policy, not excuses to weaken. So long as the unemployment rate is on the cusp of "instability", that's the only thing that really matters to the Fed (for reasons discussed below). Every other data point, including a market sell-off or a flat yield curve or a bad CPI number -- data points that used to be front and center in Fed thinking -- is now in the backseat.

I'm not the only one saying this about the Fed's reaction function. Far more influential Missionaries than me, people like Jeff Gundlach and Mohamed El-Erian, are saying the same thing. If you think that this Fed still has your back, Mr. Investor, the way they had your back in 2009 and 2010 and 2011 and 2012 and 2013 and 2014 and 2015 and 2016 ... well, I think you are mistaken. I think Janet Yellen broke up with you this week.

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iehi-feed-62435 Tue, 20 Jun 2017 17:49:33 GMT San Francisco and tech driven housing mania: The median home in San Francisco reaches a new high of $1.5M http://implode-explode.com/viewnews/2017-06-20_SanFranciscoandtechdrivenhousingmaniaThemedianhomeinSanFrancisco.html iehi-feed-62434 Tue, 20 Jun 2017 15:21:14 GMT Carrington Mortgage To Throw Korean War Hero To The Street http://implode-explode.com/viewnews/2017-06-20_CarringtonMortgageToThrowKoreanWarHeroToTheStreet.html iehi-feed-62427 Mon, 19 Jun 2017 16:31:43 GMT Ten years since the global financial crisis, world still suffers 'debt overhang' http://implode-explode.com/viewnews/2017-06-19_Tenyearssincetheglobalfinancialcrisisworldstillsuffersdebtoverha.html Today, the scars of the global financial crisis remain. There have been trillions of dollars in losses. And in a world of subpar economic growth, even optimists are downbeat about whether the economic medicine has been taken...

Firstly, excessive debt. In the aftermath of the world market crash, rather than pushing for debt destruction, world leaders used fiscal and monetary policy to fan demand. Global debt now stands at a staggering US$215 trillion.

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iehi-feed-62419 Fri, 16 Jun 2017 23:59:21 GMT Higher prices squeezing renters, would-be homeowners, study finds http://implode-explode.com/viewnews/2017-06-16_Higherpricessqueezingrenterswouldbehomeownersstudyfinds.html A diminished supply of available homes is swelling prices in large U.S. metro areas from New York to Miami to Los Angeles, squeezing out would-be buyers and pushing up rents as more people are forced to remain tenants.

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The tight supply of homes and a shortage of affordable rental housing have improved little in recent years for a variety of reasons. Among the key factors is that construction has yet to regain the pace of homebuilding that predated the bust.

"As the economy continues to recover, as income picks up as household formations pick up, it's not spurring a supply response," said Chris Herbert, managing director of Harvard's Joint Center for Housing Studies. "It's a worsening of the situation that was evident last year."

The real fascinating thing is the "not spurring a supply response" part. That suggests to us that there's a huge amount of corporate trepidation about the economy (and at this point, namely, that it's about to fall off a cliff...)

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iehi-feed-62399 Wed, 14 Jun 2017 14:31:31 GMT 1031 Exchange, a Cherished Real Estate Tax Break, Faces Extinction http://implode-explode.com/viewnews/2017-06-14_1031ExchangeaCherishedRealEstateTaxBreakFacesExtinction.html A much-loved tax advantage in the commercial real-estate industry is on the chopping block even as chances dim for the passage of a broad federal tax overhaul this year. Why? If a sweeping bill doesn't get traction in Congress, there is still a decent chance a narrower tax rate cut will get passed, according to lobbyists and Capitol Hill officials working on tax legislation.''

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The 1031 exchange could effectively have ended as part of the tax-overhaul plan proposed last year by House Republicans, which gained traction after Donald Trump was elected President. But that plan--named "Better Way"--would have included other provisions that would have made it more palatable for the real-estate industry.

Now real estate lobbyists say the Better Way plan is getting bogged down and it is looking like the real-estate industry might have to take the medicine without the spoon of sugar to help it go down even though they would benefit from the lower rates.

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real estate executives say getting rid of 1031 exchanges would be devastating for the economy as well as their industry. Like-kind exchanges are used in 10% to 20% of commercial real-estate transactions, according to Green Street.

They also have sparked the creation of a cottage industry of firms that pool 1031 exchange investments for smaller investors. If the provision is eliminated, "it would cause a lot of transactions not to occur," said Jeffrey DeBoer, chief executive of the Real Estate Roundtable.

The economic impact would ripple throughout the economy because investors who acquire real estate through 1031 exchanges are more likely to invest in those properties than those that pay cash. In such trades, they typically don't have to reach into their pockets, Mr. DeBoer explained.

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The 1031 provision of federal tax law applies to a wide range of assets--including cars, planes and patent rights. Real estate accounts for 36% of the exchanges, according to Ernst & Young LLP. In 2014, the Joint Committee on Taxation estimated that repealing like-kind exchanges would raise $40.6 billion in additional tax revenue over one decade.

Seems like another force that could cause the RE bubble to be pricked even further...

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iehi-feed-62397 Tue, 13 Jun 2017 19:06:45 GMT The Mall of the Future Will Have No Stores http://implode-explode.com/viewnews/2017-06-13_TheMalloftheFutureWillHaveNoStores.html Some landlords plug empty spaces with churches, for-profit schools and random enterprises while they figure out a long-term plan. Others see a future in mixed-use real estate, converting malls into streetscapes with restaurants, offices and housing. And some are razing properties altogether and turning them into entertainment or industrial parks.

Ford's 10-year lease at Fairlane Town Center [in Michigan] "brought 1,800 to 2,000 employed people to our property, people with a paycheck," said Mr. Powers. The mall, which is still anchored by Macy's , J.C. Penney and Sears, is currently 91% leased, he said, and its food operators are doing better in the daytime than they did before, as Ford workers pile in for lunch.

Ford liked the mall's proximity to its main facility in Dearborn, which is being rebuilt over the next 10 years, and its wide open spaces.

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In all, retailers have announced 2,880 store closings from January to April 6 of this year, more than twice as many as in the same period a year earlier, according to Credit Suisse . For the full year, the investment bank anticipates more than 8,600 stores to close. Analysts predict that 400 or so of the roughly 1,100 malls in the U.S. will close in the coming years.

Many mall owners are trying to liven up the experience, bringing more dining and entertainment tenants and eschewing the traditional mix of middling food courts, fashion retailers and department stores.

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One strategy is to convert enclosed malls into open-air properties that landlords call "lifestyle centers," with apartments, theaters, grocery stores, medical offices and other conveniences--and much less retail.

The Columbus Commons in downtown Columbus, Ohio, was previously home to a 1.25-million-square-foot mall. The park has spurred development around its perimeter, mostly office and residential.

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In Arlington, Va., landlord Forest City Realty Trust is redeveloping Ballston Common Mall by knocking down the main entrance to create a plaza, removing two-thirds of the roof and installing more windows to create wider vistas of open spaces. The Cleveland-based real-estate investment trust is also building 406 apartments linked to the mall.

"We're turning the mall inside out," said Will Voegele, senior vice president at Forest City Realty Trust. "We don't want a building with its back turned to the street."

The firm is converting what was once Macy's furniture store on the third level of the mall into a gathering space for residents, including outdoor patios, seating and landscaping. Its tenant mix will feature more food options and street-facing retail.

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[Columbus, Ohio] "surgically demolished" the [City Center Mall] over a two-year period to retain the underground parking structure, which was still used by workers downtown. In 2011, Columbus Downtown opened a park in its place called Columbus Commons, which has a performance space, two cafes, a carousel and bocce courts.

The park has spurred development around its perimeter, mostly office and residential, and hosts more than 200 events annually. The flagship Lazarus department store, which had been linked to the mall, is now an office building.

Taking some inspiration from parks and high-street retail in New York City, Mr. Worley said Columbus Downtown is looking to add restaurants and art galleries along the streets a block away from the park, preferring to keep the park-facing buildings for residential use.

While there have been no pure retail property projects around Columbus Commons, some retail stores are coming onboard that are "more organic, not national retailers," he added.

"Retail is coming back," he said, "but it's following residential."

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iehi-feed-62390 Mon, 12 Jun 2017 20:30:07 GMT Record "Wealth" in America Comes With a Litany of "Funny" Companion Statistics http://implode-explode.com/viewnews/2017-06-12_RecordWealthinAmericaComesWithaLitanyofFunnyCompanionStatistics.html The Federal Reserve in the United States just released a new report showing that "Total Household Wealth" in the United States has reached a record $94.8 trillion... Even more impressive is that Total Household Wealth has increased by $40 trillion since the lows of the Great Recession in 2009. No doubt there's probably a multitude of central bankers and bureaucrats toasting their success in having engineered such magnificent prosperity.

... The thing is that the VAST majority of that wealth, especially the incredible growth over the last 8 years, has been from increases in just two asset classes: real estate and the stock market. In fact, stocks and real estate alone account for roughly 2/3 of the wealth increase since 2009.

... [and] according to the Federal Reserve, only 35% of [non-employee] small businesses are profitable. Most are operating at a loss. In other words, only 35% of the companies which make up 80% of American businesses are profitable. You're probably already doing the arithmetic-- this means that a whopping 72% of all US businesses are NOT profitable.

... [then] there's the little factoid that an astounding 40% of young Americans are living with their parents-- the highest percentage in the last 75 years.

And who can blame them considering student debt in the Land of the Free also hit a record $1.4 trillion three months ago, more than double the amount since the Great Recession.

Speaking of record debt, US credit card debt passed a record $1 trillion, and total US consumer credit hit a record $3.8 trillion last month.

...

Then there's the issue of wages, which have remained essentially flat since the 2009 Great Recession if you adjust for inflation.

According to the US Department of Labor, inflation-adjusted wages, aka "real hourly compensation" in the US fell an annualized 0.9% last quarter, and fell a dismal 5.6% in the previous quarter.

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iehi-feed-62382 Sun, 11 Jun 2017 18:17:38 GMT Parents Of Casey Anthony Facing Foreclosure http://implode-explode.com/viewnews/2017-06-11_ParentsOfCaseyAnthonyFacingForeclosure.html iehi-feed-62373 Fri, 09 Jun 2017 22:48:54 GMT Startup now working on a real estate-backed cryptocurrency - "Brickcoin" http://implode-explode.com/viewnews/2017-06-09_StartupnowworkingonarealestatebackedcryptocurrencyBrickcoin.html iehi-feed-62369 Fri, 09 Jun 2017 16:25:26 GMT "Ultra Luxury" Rentals Feel The Pain in NYC http://implode-explode.com/viewnews/2017-06-09_UltraLuxuryRentalsFeelThePaininNYC.html Thanks to the recent condo boom that's turned scores of investors into landlords, there's an abundance of ultrahigh-end units on the rental market. And just like the rest of the rental market -- where landlords have been throwing out concessions for the better part of a year -- tenants in the uberluxe market are scoring fat discounts.

Browne estimated the high-end rental market is down 10 to 15 percent since late 2015. He said that one of his clients, who'd been getting $19,000 to $20,000 a month for his two-bedroom at 40 East 66th Street, agreed to discount the condo to $18,000 .

It's also taking longer to do deals. Douglas Elliman's Tal Alexander recently used "light staging" on a $20,000-a-month rental at One57, which still took about 60 days to rent. Alexander said he's telling clients that overpricing is a waste of time. "If [renters] see the apartment linger, they think it's more negotiable."

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Yet, the balance of power is no different in the overall rental market, where agents said supply continues to far outweigh demand, putting pressure on landlords to entice tenants. "There's a boatload of inventory," said Citi Habitats' Rory Bolger. "These landlords think if you build it they will come, but sometimes you wonder: Where are they coming from?"

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Citi Habitats' Dave Maundrell said his team is launching five new buildings in the next two weeks -- including 371 Humboldt Street in Williamsburg and 248 Duffield Street in Downtown Brooklyn. All five are no-fee with one month of free rent, which is now par for the course in new development.

Maundrell said he thinks landlords are coming to grips with reality after months of pressure to drop prices and offer concessions. "There's a lot of product that wasn't really worth what people were asking for it," he reflected.

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iehi-feed-62359 Tue, 06 Jun 2017 19:03:40 GMT Nationstar Puts Lipstick On A Pig And Calls It Mr. Cooper http://implode-explode.com/viewnews/2017-06-06_NationstarPutsLipstickOnAPigAndCallsItMrCooper.html iehi-feed-62357 Tue, 06 Jun 2017 16:53:52 GMT Americans Are Pouring Money Into Their Homes Like It's the 1990s http://implode-explode.com/viewnews/2017-06-06_AmericansArePouringMoneyIntoTheirHomesLikeItsthe1990s.html ``Americans' spending on residential construction projects -- from the pouring of foundations to home improvement -- just hammered out its strongest three-month period since 1994.

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Home sales continue to mount, albeit unevenly, and there are more one-family houses under construction now than at any time since mid-2008.

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What's more, Americans are spending more on home improvements. While a report Thursday from the Commerce Department showed a 2.9 percent drop in April outlays for improvements from the prior month, such spending was still 32.3 percent higher than it was a year ago. That's the strongest advance since January 2000, as the chart below shows.

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"The current strength of the remodeling market can be attributed primarily to economics -- low mortgage rates, strong existing-home sales, the bull stock market run, good job gains, and now more recently, wage gains," Mark Boud, chief economist at the provider of real estate research, said in a statement.

Yeah... this doesn't look peakey at all....

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iehi-feed-62346 Sun, 04 Jun 2017 14:03:42 GMT The Biggest Real Estate Bubble Of All Time Just Did The Impossible http://implode-explode.com/viewnews/2017-06-04_TheBiggestRealEstateBubbleOfAllTimeJustDidTheImpossible.html ... after a modest drop following last summer's tax the Vancouver housing bubble has bounced right back to new all time highs, as prices of detached, attached houses and apartment all surged to new record highs.

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In other words, all that the 15% surtax achieved was to drastically slowdown the rate of transactions (or perhaps home flipping). Meanwhile, as sellers held out to find more aggressive buyers, they were in luck as the new wave of buyers has emerged, and undeterred by the 15% premium, they have been slowly but surely lifting all available offers.

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iehi-feed-62345 Sat, 03 Jun 2017 21:25:46 GMT Shock Waves Spread from Spain's New Banking Crisis http://implode-explode.com/viewnews/2017-06-03_ShockWavesSpreadfromSpainsNewBankingCrisis.html ``Popular may not be a systemically important institution, but it's nonetheless an institution of great import. It has the largest portfolio of small business customers in Spain and enjoys the patronage of one of Spain's most influential institutions, Opus Dei. Its well-heeled members are among the bank's most important shareholders and investors, and they stand to lose a lot of money if a last-minute buyer is not found soon.

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And it's not just Opus Dei, or Popular's thousands of long-suffering retail investors, that could end up paying a heavy price. Popular's investors also include PIMCO, one of the world's largest asset managers, which owned €279 million of Popular's outstanding €1.25 billion of face value in AT1 bonds at the end of March, making it by far the largest holder at the time.

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So far, despite their high-risk nature, no AT1 [contingent-convertible] bond has ever been bailed in. But Popular, as a mid-sized bank that has arguably exhausted all its possibilities of resurrection, is in a terribly weak position.

"It would be the first triggering of an AT1," Lloyd Harris, an analyst at Old Mutual, told the FT. "These types of events are more likely for Popular than they ever were for Deutsche Bank," he added, referring to Deutsche Bank's Co-Cos that got trampled last year.

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iehi-feed-62325 Tue, 30 May 2017 17:42:16 GMT Mania Continues: Hong Kong Throngs of Thousands Defy Bid to Cool Home Market http://implode-explode.com/viewnews/2017-05-30_ManiaContinuesHongKongThrongsofThousandsDefyBidtoCoolHomeMarket.html "Successive moves by the government in recent memory to cool the property market only resulted in it becoming crazier," The Standard newspaper said in an editorial on Monday. "The result is a sea of madness."

The Hong Kong Monetary Authority has been tightening rules for lenders, including restricting levels of lending to developers, as it tries to limit financial risks and take some of the heat out of the market. The Centaline Property Centa-City Leading Index of existing homes has advanced 23 percent in the past year, setting new price records week after week.

At a Legislative Council meeting on Monday, HKMA Chief Executive Norman Chan said levels of demand were reminiscent of 20 years ago -- before Hong Kong suffered a property bust -- and he expressed concern that people with limited financial resources were buying just because they thought prices would only keep going up.

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iehi-feed-62323 Tue, 30 May 2017 02:34:52 GMT Disabled US Marine Takes On PHH Mortgage And Trump Administration http://implode-explode.com/viewnews/2017-05-29_DisabledUSMarineTakesOnPHHMortgageAndTrumpAdministration.html iehi-feed-62316 Sun, 28 May 2017 17:17:13 GMT New Home Prices Are Over 50% Higher In Canada Than The US http://implode-explode.com/viewnews/2017-05-28_NewHomePricesAreOver50HigherInCanadaThanTheUS.html