Millions of Americans skipping payments as wave of defaults and evictions looms
npr.org
npr.org
These tenants are often not accepted by landlords because they're thought to cause more issues. Mine are great. They keep the units spotless, mow the lawn for me on my multi unit properties. When I have a tenant like this, I never raise their rent, and if they can't pay the hundred bucks the government won't I sure don't care.
I used to have this same mentality. Until the person who was renting one of my properties decided to lie about certain issues (like claiming a shampoo bottle lodged down one of the toilets was there for years). When I decided to not renew the lease with that tenant, they decided to cause considerable damage to our property.
Sometimes, when things come easy to people, they don't appreciate it. Holding people accountable helps them lift themselves up too.
I'm not sure we have any idea of the real value of things these days, including what work is worth. Credit has distorted the system; just because someone who is work full-time (however many jobs that takes) can't pay the rent rate the market seems to be dictating doesn't mean someone stepping in to fill the gap is giving them a "handout".
It's not charity, it's account-settling.
Widespread homelessness is a bad look for any culture that likes to see itself as civilised.
Surely the lesson here is that "this person was a criminally inconsiderate jerk", not "all Section 8 tenants are untrustworthy". (cr__ put it more punchily while I was posting: https://news.ycombinator.com/item?id=23409805 .)
> Sometimes, when things come easy to people, they don't appreciate it. Holding people accountable helps them lift themselves up too.
How does denying housing to someone who needs it help them lift themselves up?
https://webcache.googleusercontent.com/search?q=cache:CoWtuC...
Also people growing up in poverty experience higher stress, so the probability of them doing the 'going mental' thing is higher.
Many mom & pop and breaking even on a mortgage landlords cannot afford that kind of catastrophic loss.
You have to be careful who you rent to. Sometimes someone down on their luck would make a much less demanding and better tenant overall. Be careful chasing away the poor because they actual need your place and may take better care.
As a challenge, I would like you to find an landlord insurance policy that explicitly covers intentional damage by a tenant and a price estimate on the internet, because I'm having a hard time finding it!
I thought I was being kind and "helping them out". When, in reality, that individual didn't appreciate it and they didn't take better care of the place because of it. When other factors (e.g. the lying) caused me to not want to renew with the tenant, they caused over 10k damage and flooded my house in retaliation.
I am sorry that I read too quickly, and misunderstood your point, which I think I now understand. Although I see now that you specifically quoted your parent's point "if they can't pay the hundred bucks the government won't I sure don't care" before disagreeing with it, I reacted too quickly and thought incorrectly that you were disagreeing with the parent's broader point about why it was good to have Section 8 tenants.
I think you have a very misguided idea of what it's like to live in poverty.
This goes both ways. You have to be careful who you rent from, too.
Of all the investment opportunities available to people, I'm not particular sympathetic to purchasing property to seek rents.
If forbidding renting properties to tenants would solve problems, I would be on your side.
People will always need to rent. A society has to allow them to without allowing them to be exploited. But once you allow renting, you have to protect property owners from tenant caused damage as well.
I'm not saying we're there - we may be far from it. But renting is not only useful, it is necessary.
We can at least lower the rent down to zero over [say] 40 years but it would be more reasonable to make the tenant the owner after he paid for the place 3 times over.
Maybe it's different in other parts of the world but where I live, rent seldom covers the mortgage on a property, let alone all other expenses. The profit, if any, generally comes from capital gains when selling the property (which right now isn't on the cards for pretty much anyone.)
I'm a member and live in a housing complex owned by a cooperative. The rent you'll pay in this kind of setting is at the lower end of the market, the services you get are at the upper end. Being a cooperative means I own shares, so I get dividends and balance sheets etc. Even with this great (for renters) setup, they still pay out 4% dividends and expand like crazy (not to produce more dividends but to provide more apartments). They could pay out much more than 4% but they don't want to optimize for profit and make it an investment, the dividends are meant to incentivize members to invest/save more than legally required.
The place I lived at previously had higher rents and less services. I don't know how much of a profit they made annually, but I'm sure it wasn't anywhere close to 4%.
Don't forget that "covering the mortgage" involves building the landlord's equity, so it's not as if this portion is lost to the bank while the landlord has to depend on appreciation. If I "only just cover the mortgage" while renting for the entire term of the mortgage on a house that doesn't appreciate above inflation, the landlord still goes from owning 20% of a house to 100% of a house over that term.
No offense but bullshit.
In my experience most people serve their own interests. Commercial enterprises in fact select for those who serve their own interests over morality because those parties are most likely to succeed.
In America you are lucky if your interests coincide sufficiently with the owner class that you can both get along productively. Expecting beneficence as well is unproductive.
In my country (Ireland) over the previous two generations, houses went from dirt cheap to extremely expensive. In the generation that came of age in the late 80s and early 90s, you could work a normal job and buy a house, easily. If you had a good job, you could buy several houses.
Now, my generation. We came too late. Houses now cost so much that you will be en-debted to a bank for life if you buy one. Now we have a rent crisis. For many people, they can barely even afford to rent a house and buy basics like food. Meanwhile, anyone who was lucky enough to be a bit older and smart enough to jump on the property wagon when it was cheap, they are rolling in money. They earn thousands of euros from doing essentially nothing except be born in the right generation.
It's very hard not to look at them, look at the hardships of the people my age who struggle to pay rent, and not think of landlords as social parasites.
And in combination globalization/corporatization has put a lot of high paying jobs in a small number of areas.
In my opinion it’s basically generational warfare or at least a hidden retirement tax paid for by professionals in booming cities for old people who happened to own property in those cities. Even if you don’t subscribe to that hot take, it should be uncontroversial that property values massively outstripping wages in some areas reduces quality of life and contributes to inequality.
The solution is far more affordable housing but how we get back to that 1960's era English and Irish council housing model I have no idea in the current political and financial climate...
Also, people often have a short memories when it comes to people that help them out financially. They might remember and appreciate it more if you help them move, or help them learn a craft.
There was a story about how charging some nominal amount for a mosquito net led to more consistent usage and lower malarial rates, than if they just gave the net for free.
Why? Because the "price" of something is a signal as well. If it's free, who cares? If you paid something, well then it's yours and you should look after it.
Your experience points to the human race sucking not poor people.
Yeah, it sounds like moralizing to avoid coming across as ignorant of class issues. However, ironically, it gives you away, because people who think that's excusable are generally ignorant of class issues.
Do you honestly believe I expected them to beg for mercy at my feet? You need a reality check. The problem is that you don't fully understand the situation, the background, etc.
And yes, from your comments we cant understand nor judge the situation at all. Even if you would describe it in great detail it would merely be one side of the story.
People can at times end up in a downwards spiral of crap. A mix of stuff that is their own fault and things they couldn't do anything about. At some point one may throw the hands into the air and get careless and sloppy about it. You should obviously get rid of people like that but it isn't like they stop existing when you do.
If you didn't mean to imply that housing comes easy to poor people who are on Section 8, then what did you mean?
People living in poverty don't have those luxuries. Their chances of having an eviction record are higher. Their ability to pay a higher deposit are drastically lower, since just staying alive consumes basically all of their paycheck. The chances of them being able to pay above market rates are basically nil; their chances of being able to pay market rates are not great. If they get evicted, there is a significant chance they end up homeless. There is a significant chance their new circumstances will result in them losing their job as they struggle to find somewhere to live, because priority 1 is not sleeping in a shelter (which I absolutely understand). To add on to that, they might have children who also follow them into their new circumstances. 28.9% of children below 50% of the federal poverty line experience an eviction before they turn 15, and 25.6% of children between 50% and 100% of the federal poverty line experience an eviction before they turn 15.
All of which is to say, the possibility of eviction is far more threatening to people living in poverty. Their lives are not cushy even when they have stable housing. I can absolutely understand that losing their housing could be the straw that broke the camel's back, and they lash out irrationally. I don't think they suck. In fact, they're probably stronger than I am, I don't think I could endure the things they deal with on a daily basis. But I also don't discount the possibility that they react more vehemently to losing their housing than someone who has less to lose.
This is a situation where I think the private sector does a poor job of handling the situation. In a market where there is perpetually more demand than supply (who has a housing glut, other than Detroit?), there is always going to be some bottom percent of less profitable potential buyers who get screwed. For non-necessary goods, this is fine, but not for housing. I don't think any first world countries should have citizens that have persistent worries about how long they will have a roof over their heads.
Being disrespectful is not probably not correlated with being poor or not.
Yea I’m invoking Poe’s law on this coming from a landlord. Are you trolling?
I assume section 8 is our equivalent of Housing Benefit. I know plenty of landlords who wont accept HB tenants because properties have come back absolutely trashed before.
Never thought i'd find a reddit style anti-landlord on HN.
You're ignoring the potential effects on property value.
Bingo. Surprised nobody else brought this up. Not to mention the neighboring home/property owners are going to be pissed off because it's a potential drag on their property value. Though the stigma against section 8 may not even be warranted. I wonder whether there are any studies on the effects of section 8 on communities.
Or separate entrances for the social housing flats and regular flats in the same building (regular as in how it was intended to be built, not with extra walls to create extra rooms or with no living rooms at all).
Or with social housing residents being asked to pay separately for communal areas maintenance (because the government doesn't pay for that but you can't really stop people from walking on the grass) that they didn't ask for.
Some counties even provide free legal help for landlords if their section 8 tenants do something bad. It's actually pretty low risk.
The main downside is the increased overhead of paperwork and inspections. The government wants to (rightly) make sure you aren't a slumlord so they do a lot more inspections.
High paid tenants seldom miss payment - I've setup automatic EFT withdrawal from their accounts, so I don't even need to process checks, and they aren't really impacted by the rise in unemployment right now - most just work from home.
I think the bitter spot for being a landlord (especially now) is to manage low-mid income units. ...it's just a constant stream of problems - people moving in and out - single mom's that chronically cannot afford the rent - unregistered tenants - people that refuse to pay and refuse to move out - drug and police raids... like it was a total total nightmare.
Managing 12 low-mid income apartments was a full-time nightmare. Managing 12 high income lux units now takes about 4 hours every other weekend and is usually a pleasure to do.
Is it the case that most people are in the middle, with not enough section 8 and luxury qualified people to go around? In my naiveté, I thought that there would be more section 8 people. (Of course, I also thought they would be worse than the middle income people. So I guess that shows how much I know about it.)
Anyway, if the majority of the market are those low-mid people, I mean, that's a problem. I was under the impression that those people normally bought houses they couldn't afford and so didn't negatively impact the rental market that much. (Again, maybe just a stereotype I had?)
Exactly. Section 8 is difficult to get as there is a fixed allotment of housing available and it can take years to get your voucher.
The other thing that's surprising is how many people are renting their homes. My own naiveté had me believing renters lived in apartments. Not even close! Most renters live in houses in regular neighborhoods from the low-end to the high-end. There are higher-end neighborhoods near where I live where 20%-30% of the houses are being rented, not mortgaged. In lower-end neighborhoods the percentages are much higher. That was before the 2008 housing crises, the percentages have increased since.
Of course it comes down to the people, regardless of the psychological incentives. But maybe the incentives promote some poor behaviors enough that its such a shared experience of poor behaving tenants.
I own an apartment in Rome that I rent because I don't live there anymore.
It's rented to a Bengali family that nobody wanted as tenants because they're immigrants and such (you can guess the reasoning behind it)
They used to bring the grocery home to my mother, so I gladly accepted to rent my house to them when they asked
They've been the best tenants I've ever had and due to covid they found themselves in the position of being one of the few local shops still open in the neighborhood, so their business didn't suffer much from the lockdown.
Many in Italy stopped paying the rent for 2-3 months as of now, but they always paid in time and in full, I asked them if they needed a cut on the rent to save some money, due to the bad situation, but they refused the offer.
So I'm installing air conditioning at my expenses in exchange
It's good when things go smoothly despites the odds
What a great story.
I just did what it felt right
I'm inclined to say that racism in Italy is different from the general notion of it: I mean, there are certainly racists in Italy, no point in denying that, especially towards some ethnicities (Africans, middle Eastern and South Americans in particular, they are considered too loud and unreliable - coming from us it's really something - and often also worse than that) but Italians are mainly suspicious of what they don't know (yet) until they know them, like we still live in small state cities, surrounded by walls, that don't trust each other. But it's mostly a trust thing: still people from the north usually don't trust people from the south and vice versa. In Rome I've seen many times that Romans prefer Romans like them, just because it makes them feel safer. Until they realize they really don't like each other.
Think of it as "the evil you know".
I must also say that they are often wrong and that there is a good chunk of the population who really doesn't care where you come from and just loves being with others.
In at least half of the young families (kids aged elementary to high school) I was around in Milan, one or both parents were originally from the south. They spoke of it almost like how immigrants do: they'd moved north for better jobs/better life, with the implicit sacrifice of being close to family/environs where their real roots were. I guess the southerner stereotype to northerners was sneaky/mafia etc, while the reverse was something like overly bourgeois, slick without substance, moneygrubbing etc. Very interesting and a bit sad (that development in the country seems so uneven).
I never got to visit the south so if I ever get to go back I hope to spend just as much time in the south as I did in the north.
The only other place I know well with such strong and old regional beefs is South Korea and that's really only between two regions, plus people from Jeju stereotypically don't trust mainlanders I guess.
That's correct.
A lot of families moved from the south to the north in the past 70 years and they lived the same experience you hear from migrants today: discrimination, poverty, segregation etc etc
So many moved to the point that at least half of the north, especially in Lombardy, is made by families with roots in the south (usually grandparents, many are from Sicily)
There are many popular stories about the infamous "we don't rent to people from the south" you could find on the listings all over the north (from Bologna to the Alps)
My parents moved in the late 60s from the country side 100kms south of Rome to the city to find a job as well
My uncles went to Germany, Belgium, Argentina and then have come back only because their parents were becoming old and needed support
I moved from Rome to Milan as well, not in the same conditions of course, I moved for a well payed job, but I still had to move to get it
It is so engrained in our recent history that it's taken for granted that if you are stuck in your homecity in the south the only way to change things is move to the north, that there is even a comic movie from the 80s titled "thanks to Apulia region for giving us the Milanese"
On the other hand people move to the south when looking for a better lifestyle, better climate, better food or just being closer to the sea, and many of those that moved to the north try to go back to where they are from as soon as possible
Including my parents that went back to their city in the country as soon as they retired, especially my father
The north is beautiful, the food is good, but the stereotype says that in the south everything is much better, and I somewhat agree with it. I can't help it, Milan is not Rome, it will never be. A risotto will never beat a carbonara. But that's just my opinion :)
Now that we live almost 800 Kms apart I see my parents rarely, especially my father who really enjoys being alone, away from the crowded city
He went to Rome only to work, he lived there for 50 years, raised two children, but he never really felt part of it, he never lost his accent and never took the Roman one.
So in a way in Italy we are all trying to go back home, one day.
Source: been through insurance claim on a business that burnt to the ground with months of finished product stock (and which our accountant had accidentally under-insured. Very painful!)
I can't imagine that response passing muster in court, because as another commenter pointed out, all damage would involve some kind of collision between two objects which means that if we accept their response then the policy would be worthless because it wouldn't be able to cover anything.
It's implied (in the context of motor vehicle insurance) that "collision" in their case means collision between two vehicles but they're now trying to be pedantic about it when it's in their favor.
A friend had an Aston Martin that caught on fire. About a $120k car. It took months of investigations to close that claim. Insurance pointed finger at AM, AM wanted their own investigator, fire inspector involved, etc.
And that’s not even large relative to a house or business.
This car burst into flames overnight while parked. Turns out it was an electrical short in the dashboard wiring. But, cars don't often self-immolate, so the suspicion of wrong-doing caused a delay.
I also don't know if they paid before the investigation was completely closed. They may have, but even at that, it was a few weeks.
It's way worse for a business, when I went to the MDRS for a week the bistro's kitchen in our Flagship restaurant went up in flames. The cause was unknown, but all in we lost 4.5 weeks of work due to unnecessary down time, not including the equipment repairs, contractor labor and misc costs because the city's investigators wouldn't come out to assess the damage in the allotted time slot to investigate and approve the repairs because of snow (IT'S COLORADO!) and then the Insurance stonewalled and tried to delay things further by not playing nice with the city that delayed reopening.
All told I wouldn't be surprised if we lost over a couple 100ks in lost profits and limited operational costs (we still had the bar/grill upstairs) and having to rebuild the Kitchen plus labor. Corporate paid us bonuses, which were really just 1/3 of our normal pay to help offset expenses, because of limited hours.
Bourdain was right: restaurants really are horrible businesses. Insurance which is mandatory, compounded with local government regulations and approval, makes it way worse.
As an example, my policy covers general losses arising from physical damage, but then explicitly excludes losses from earthquakes, floods, oil spills, and acts of war.
If I buy only that coverage and a flood or earthquake damages my property, it's not my insurance company's fault that I'm not covered.
I'm literally not understanding your claim, so it seems like we are indeed having significant difficulty communicating. Because of the way contracts are written, I think your claim is pretty close to obviously false.
Concretely: if riots are not covered, it is overwhelmingly likely that the contract will be structured as "physical damages are covered except as listed below" listed below: "riots are not covered"
I'm just saying you're making a whole lot of points without actually addressing the literal contents of my message, which would make this conversation much smoother because otherwise we are speaking past each other.
It looks like that presumption is wrong because riots will be covered under the umbrella of "physical damage" but you haven't really explicitly made that point by addressing mine, so it's hard to move forward with you to a productive conversation.
If the purchaser of the insurance makes the choice to purchase insurance which obviously and explicitly does not cover riots, they ought not be surprised when riots are not covered and it's not the insurer's fault.
The fact that they are trying to waste people's time and money to litigate that out where they most certainly will not win is just unconscionable.
[0] https://www.reddit.com/r/legaladvice/comments/7p3ubz/updateo...
https://en.wikipedia.org/wiki/Judgment_proof
But if it's Section 8, maybe he can find some govt agency to sue?
Disclaimer: I know very little about them, this is not a recommendation I probably have some details wrong, just something I've seen floated around.
Edit: Someone want to jump in with what they are then? Not like I said go do this right now or something, would genuinely like to learn what I'm wrong about here. Downvoting without a response continues to be the weakest part about this community.
Another difference is that REITs own many types of commercial real estate, ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and timberlands, but usually real estate retail investors own are for housing.
What do you mean by this? That the loan can't be eagerly collected in full? That the repayment is on a schedule?
In contrast, if you buy stocks on margin, they will forcibly sell your position if the value of the collateral gets anywhere near the loan value.
You could buy a house worth $500,000 with 20% down and a 30 year note. As long as you pay the mortgage, it doesn't matter how much the market value of the property changes. A drop of 40% in real estate prices that lasts for five years is not necessarily a problem.
On the other hand, imagine you put $100,000 into a brokerage account and were able to get 2:1 leverage. You could then borrow $100,000 and buy $200,000 of stock.
However, if the market runs into a bad patch and that stock decreases in value to $120,000, your equity is now only ~16.7%. This is below the minimum margin requirement (25%) for your account. Your brokerage calls you up and says you need to put an additional $10,000 in your account - that's a margin call.
If you don't have the $10,000 then your brokerage will sell enough of your position to bring your account back within requirements; possibly at the bottom of the market.
Real estate: 5:1 leverage, no margin call Margin account: 2:1 leverage, plus margin calls
Thanks for the info!
[0] This might be a little weird to wrap your head around. Suppose I am a landlord and, over the years, depreciate a building by $200k. That is a "phantom" cost. On my balance sheet, it decreases my cost basis in the building and decreases my taxable profits from the rental business. When I sell the property, because I've shifted that rental income into depreciation, my cost basis has fallen, so my gain on sale rises by $200k, but that $200k is now taxed at 0~20% not plausibly 50%+ (top individual bracket + state taxes + self-employment taxes).
(I have somewhat better than casual understanding of this because my father worked in real estate all his life and other family run mom-and-pop real estate operations, but feel free to run past your friendly local tax advisors.)
You are not incorrect per sé. REITs exists in an awful large number of varieties in every possible flavor and indeed broadly reflect what you describe, i.e. an exposure to a Real Estate. You get paid a dividend (which would be similar to the cashflow you receive from a rental property you own). There are a number of upsides of investing in REITs over buying a property and renting it out: - less work (no need to manage tenants) - less risk (it's a diverse set of properties across multiple locations vs a single property in one location). - highly liquid (you can buy any amount and sell virtually whenever you want you need to liquidity)
there is some downside: - it is not tangible as a property (sometimes that means that if you don't understand exactly what you bought under what conditions it can mean you have some unknown exposure/risk you were not aware of). - it has less upside generally (in terms of risk/reward, it is a much safer investment but with that there is also upside as if you were to own a single property in the right neighborhood). - less leverage (generally you get more leverage on your mortgage than on your investment account)
Particularly the last points is what catches people often. I.e. if you are renting a property and everyone else is owning, and the properties go up, you will feel 'stupid'. People love bragging how they got rich by buying and 'flipping' and ofcourse this happens and has happened in the past. But for all those great stories you don't hear the people that bought and were stuck with the house, had to sell at 'firesale price' because they lost a job/got divorced/etc etc. In the end, buying and owning property with leverage is a choice that fits a certain lifestyle and SHOULD not be for everyone. There are a lot of other investment opportunities in the set for any individual that would be better suited but are often considered 'complex'. Owning a house is simple and has been pushed for decades to 'build' wealth.
The reality is that for most people their housing cost is by far the largest fraction of their cost of living. Owning alleviates this costs to a certain extend if only psychologically, but it does not come risk free (the number of times I heard people say 'house prices only go up'). The leverage factor aside (which is a real thing), looking from a person investing their savings, an appropriate allocation would be something dependent on their age but in any case not much over 10% in Real Estate. About as much on commodities (GOLD/precious metals/etc), Fixed Income depending on age but somewhere between 20% percent earlier in career with little commitments and up to 70% in retirement, with the rest in stocks ideally globally diversified. That all being loosely based on the highest risk-adjusted return models (or how any active manager would run your fund from a top level).
Obviously, this is boring and it is way more smarter to buy this sexy property and flip it a couple times and those tenants are not an issue cause 'you love dealing with them anyways and have nothing better to do'. Basically risk-free money and you didn't even work for it. /s
My wife and I own a number of (8) rental properties. My wife manages them and we rarely have problems with tenants.
I will tell you what I think is the secret. My wife figuratively crawls up the ass of all prospective tenants. She needs to see credit history, pay stubs, and proof of punctual rent payments in their current situation (if applicable).
I don't think many landlords do this type of background checking because it's extra work and it can come across as confrontational.
But you'd be amazed at the number of prospective tenants who don't come back after being asked for that information.
"Do you do criminal background checks?"
"Yes."
"Ok, thank you, goodbye."
There are probably a limited number of landlords who rent to felons, and they have to just make 1000 calls to find a place.
I've been reading Evictions: Poverty and Profit in the American City on recommendation from HN and it has been eye opening. They don't make 1,000 calls, but there are several stories of people making a little over or under 100 different calls because of prior evictions and/or felony convictions. The quantity is only magnified by the fact that they're limited to apartments that are ~$500/month (which is already ~75+% of their monthly income). The book is heavily anti-landlord, although I'm not versed enough to say whether that's the truth or if there is a heavy bias.
I don't know what the solution is. There's a delicate balance of trying to give people a chance to recover or rehabilitate without also forcing landlords with cheap property to enter into blind negotiations and potentially damaging their own property. Frankly, Section 8 seems like a bad solution, and that we should go back to government owned and leased housing where you won't be evicted for complaining about sub-standard conditions because the landlord knows you can't afford a lawyer.
As for public housing, there used to be housing projects in the city I live in. The murder rates within those blocks were probably higher than in any country in the world.
So true. I get so many emails like “we can move in tomorrow” or “hook me up”. If they call, voicemails are only marginally better. Makes screening easier though as I simply do not respond.
Rent-seeking sucks. People just want a place to live.
I think we treat the tenants fairly. My wife's background checks are her way of assessing whether someone can actually pay the rent that we're asking for. If the applicant makes $20K / year and the rent is $1300 / month, both parties are just asking for trouble if they sign a lease.
> People just want a place to live.
Can I stay at your place?
What assurances would you want before loaning it to someone to drive cross-country and back? Would you want to see their driving record? Would you want to know their financial situation?
For a multi-room home:
1) Find a foreign female student to act as the primary tenant. It is easy to target rental availability to this market.
2) Let her find additional roommates.
Foreign female students usually are well-funded by rich parents. And, if a resident of a "single family home" (the first tenant) is seeking roommates they can discriminate more than a non-resident landlord can.
The last thing I want to do is get into the landlord business so I keep pushing back.
Note, when I was a kid, my mom had a hell of a time evicting a Section 8 tenant. It took months and they left behind tons of garbage and damage. It was tough on my mom because she felt so duped by the lady that rented her house while we were living in another part of the country. My mom was a struggling single mom too, our family of four lived in a basement of her friend for several months until the eviction cleared. And then it took a week to clean up the home before we could move back in.
In uni one of the Chinese master's students fell asleep with a hotplate turned on and burned down the apartment a couple down from us. Students gonna student.
Bear in mind that the tenants have already ignored requests to stop destroying the trees, and they have opposable thumbs.
I could never imagine this scenario. But I have a Tree Addendum I had drafted specifically because I don’t want my tenants to even lay a hand on the trees. I’m more worried by negligent tree trimming that kills a tree. But it sets value to each tree too. Something like “$1000 per inch diameter at 18” above ground.” Sorry about this situation you’re in.
As a HUD-VASH veteran recipient in Los Angeles, I have hoped to discover that there are reasons to expand programs for more low-income people in the United States. I am EXTREMELY fortunate as a veteran to receive housing assistance. Thanks for making it possible for people in need to have a safe and affordable option! Blessings!
It is a terrible outcome if millions of Americans are about to go broke and the relative winners are people who (a) totally rely on government handouts and (b) rely on people who are totally reliant on government handouts.
This story points to a situation where a rational person would rather be involved in ventures that produce less resources than they consume. That will really start to hurt the absolute measures of prosperity if it persists for long.
It'll be worse in downtown areas. I've heard from multiple firms that are looking at downsizing their expensive office space and continuing to allow employees to work from home. if a person doesn't have to work downtown they will often choose not to live there either.
COVID is going to change the face of urban real estate. So if you have a tenant, they're gold and do what you can to keep them.
"In determining the lowest gross rental amount pursuant to this section, any rent discounts, incentives, concessions, or credits offered by the owner of such unit of residential real property and accepted by the tenant shall be excluded."
So if your rent is $3k/month, and the landlord gives you 3 months rent-free, your rent according to AB 1482 is still $3k.
It's certainly not the people moving in from outside the area who want to rent for affordable rates.
Landlords are part of the NIMBY problem, but not the only part.
You are saying that "the supply line isn't to blame for the demand line" when the problem is where they intersect.
I realize Im oversimplifying the supply constraints because landlords aren't all of the NIMBY problem.
No times been better than post-covid for a desire to branch SV outward. My two cents would be looking at how to employ the people outside SV. Like is it noise about quality of their education or abilities? Not being able to interact with them locally?
I had this thought recently to make a programming “agency”. How to structure an organization that actually works on a programming task comparably to how a 1-3 person team would, but regardless of program complexity. Wonder if this and hiring people to WFH are compatible.
The core problem is Prop 13, not that Prop 13 doesn't exclude for-profit properties. There are a ton of property/owner classes that should absolutely not get the Prop 13 discount. Malcolm Gladwell did an episode on why golf courses (specifically member-owned courses) in California are massive misallocations due to Prop 13.
No one wants to live in Social housing projects in the U.K. and for a good reason they are all rubbish, the U.K. has had some of the worst designed and built social blocks in the world many of them were demolished within 1-2 decades.
Stuffing poor people into high density housing is a horrible idea every study shows that spreading them out is not only cheaper but also much more beneficial to them.
1. Not all social housing is high rise or high density. Look outside of the cities for example - new towns. Lessons can be learned this time.
2. Much of the social housing was sold off in the 80's I think, the trick is to keep government ownership of it, not sell it for a pittance and let private landlords profit from price increases.
Concentrating poor and vulnerable people isn't a good strategy they do better when they are surrounded by the better off, having 2 low income families on a street would produce a much better outcome and shoving 200 of them.
Social housing in the UK is complex, at some point nearly 80% of the people lived in social housing, it wasn't for low income families but rather for nearly anyone but the most affluent which often held titles and on the other spectrum the most remote and rural communities.
Social housing was seen as a means to bring workers into the cities during the industrialization of the UK.
Today despite the fact that anyone is still eligible outside of political corruption which ironically nearly exclusively plagues Labour councillors, MP's and party officials which somehow jump to the front of the queue despite earning well above the mean council housing is seen as a solution for the working poor.
Councils already offer rent assistance, have council properties which are used to temporary house vulnerable people, building more of those won't help just look what happens when you have council flats in new build projects, drugs, anti social behaviour and damage to properties simply due to the high concentration of these individuals.
So while having 20-30% social flats in a new build project might seem like a good idea the only thing that it causes is a huge backlash from the regular tenants due to this behaviour and nearly always they end up winning.
0/10 would not use AirBNB again. Sleep on a friend's couch or floor, or shell out the money for a hotel. Or use a hostel if money is tight.
I'd be in more favor of rent control if it would also freeze property taxes, electrician bills, utility costs. It is turtles all the day down.
But again: the reason rent control is passed is because enough people with significant political leverage were hurting. We need to be able to show them a better alternative if we don't want the pain of rent control's (un?)intended consequences to linger.
Utilities across the US also have regulated rates.
Let me guess, you have huge problem with the homeless situation, but are unwilling to consider lowering rents? Is that right?
I suspect that number is still a long way below normal, because lots of people are moving in with friends or family (students, young professionals, etc.).
My experience in London is the ratio of people looking for a house to houses advertised is the lowest I've ever seen in 10 years.
I would have guessed the lower rents were more about money drying up, and landlords being desperate to hang onto any tenant who can pay.
I'm just saying that its definitely on the horizon given the conversations I'm having, even if evidence at the moment is scant.
A lot of companies aren’t ending WFH till 2021 or fall. Plenty of young people are not renewing their lease and staying with their family outside the city or state.
My building had has four tenants move out in the past week - one a family.
They’ll probably be back and rent again but by then rents will have dropped.
In our case, instead of moving away, we'd be pouncing on the way-below-baseline price, high-quality rentals that have been popping up for the last couple months.
The market's totally inverted. It used to be that if deals like these appeared, they'd be snapped up within 48 hours or less. Nowadays, they linger for days and even weeks in some cases.
To clarify, I've been tracking 1-2BR apartments in the Clinton Hill-Brooklyn Heights-Park Slope-Carrol Gardens quadrangle. I've heard that other neighborhoods are popping in the other direction, but I don't follow them as avidly.
This crisis is terrible in many ways, but it's also a perfect opportunity to find your long-term rental "forever-apartment", if your lease is up.
Funny, the religion in these parts is usually that building more apartments is the only way to drop rents.
What I’ve heard is that’s either supposed to free up other older apartments or we’re supposed to wait 30 years for the new luxury apartments to become old and cheaper.
I think we need rules about constructing diversified units, not exclusively luxury ones but proportional numbers of basic, medium and luxury.
https://www.theatlantic.com/technology/archive/2019/02/singl...
Edit: Also note this appreciation driven dynamic is something of a product of QE - printing money. As the treasury dumps money into markets, anything of apparently reliable value, "money-like", becomes more valuable - commodities and land being examples but the "best" companies also. This appreciation process becomes more important than the ordinary use of the object in the case of land (empty mansions in London being the prime example but we may wind-up with many more if the approach continues).
If you just want to target holding but not renting property because it decreases housing supply you can do that even more aggressively.
I'll take 100% of appreciation for the months it sat unoccupied if it sat unoccupied for 3 or more months for 1000 Alex.
A good friend just moved to a 1-bed in SF last weekend. Small building (6 units). Rent was $2,200 per month, which is about the same as what it was last year. And they looked at a lot of units. They definitely noticed rents softening as they could knock $100 off most rents with little effort.
I just accepted a lower price with a tenant because it helps them and was way better then them leaving and trying to find a tenant now.
My personal experience is small owners are "reasonable" and open to building a relationship and large owners could give an eff, but mileage varies. Cheers.
When I’ve looked for apartments in the past I’ve seen almost no difference in rents (as advertised on Craigslist, apartments.com, Zillow) between large corporate landlords and small time landlords, except for very high end luxury apartments I’m not in the market for.
Yet I’ve heard countless horror stories about unresponsive/malicious small time landlords and very few about large landlords. To the contrary, while renting from large corporations I’ve found that my service requests are addressed very quickly, there’s almost always someone in the property management team I can talk to about anything, and everything operates smoothly.
Perhaps the “mom and pop” landlords only advertise via word of mouth but every time I’ve looked for apartments I’ve come away thinking that renting from those same large, faux-luxury (as opposed to unrenovated since 1985 for the same price) corporate landlords are the best deal when renting in expensive areas.
I move around a lot so rents getting raised aren’t as important to me.
There's also no way to negotiate with a person who has any actual power. You can talk to polite mooks all you want, but they can't actually change anything. You're guaranteed to get the maximum legally allowable rent increase every year and a huge pain in the ass battle for your deposit every time you move out.
An underlying pandemic throws most of the historical data out the window.
Just ask Hertz, AMC and Las Vegas.
I'm sure many/most landlords are still rooted in reality and are still using the infamous investing formula of "where there are losers, there are winners" (aka buy low, sell high).
In many metro areas owner occupied real estate is overpriced relative to rents. When this imbalance corrects rents will rise, as before the correction owner occupants were subsidizing renters by overpaying for property even though renting made more sense.
It appears Ford operates on the Google customer service spectrum of only helping those who can gain support of public outcry.
What I would like to see is a response from Ford that they will open an investigation to review everyones requests which have been denied for skipping payment.
I'm sure there have been a few instances, somewhere, there must be, right? I just don't recall reading or hearing about them in my entire life, ever.
Almost everybody is taking a haircut this year.
One day, they'll be able to pay, and then you'll get paid.
I dunno though. It's a small enterprise that doesn't do a lot of business even in good times. I'm ok helping them out. It can be my good deed for the decade.
A high-margin business with low cash on hand, that's temporarily impacted by COVID is another story - they might be able to pay up later.
IMHO this is a really good idea while not giving money away due to each party covering a part of the deal.
The only businesses in that town that have been booming are retirement homes... but after this I assume there will be a lot of empty properties.
I haven't had a haircut since febuary. (cutting my actual hair) :)
Some of my friends look a little bushy too.
I've paid the lady who cuts my hair anyway, I've been seeing her forever and this is her only income.
It’s.. ok. Very short though.
After June 30, companies that took PPP money are free to fire people without repercussion.
I'm waiting for a very large shoe to drop in a few months. How big will depend on whether consumers feel comfortable about their jobs+health.
This is a very frightening sentence because obviously not many consumers feel comfortable about either right now.
The fed and congress have been very on point with the stimulus response speed this time around and so I think we’ve seen the bottom of the market through this. And most investors are voting with their dollars that this is true.
(I’m just parroting Ray Dalio.)
I think a lot of people haven't realized that for many workers, being furloughed or having your hours reduced can result in an effective raise under the current Coronavirus aid package.
A friend's company furloughed everyone on Fridays. She was disappointed at first, until she realized this hours reduction qualified her for the $600/week Coronavirus aid. Now she's making more money, working less, and enjoying 3-day weekends.
Now everyone at her company is trying to convince management to continue the Friday furlough until the $600/week stimulus runs out.
This is why I don't trust the unemployment claim numbers until after July. Too many perverse incentives to increase the number of claims.
No new business was able to be drummed up and now massive lay offs of 90% of the US offices starting June 15 with a paycheck severance so effectively June 30. The EU offices have faired better with more work, and few layoffs of only receptionists.
All and all it’s bleak for the events industry. I’m sure that a lot of convention centers, caterers, AV rental houses, independent producers, PAs, will all be on the dole and you’ll see a huge spike in unemployment on Aug 1.
“Los Angeles County, which has recorded the highest number of coronavirus cases and deaths in California, has extended stay-at-home orders indefinitely.”
https://www.sfchronicle.com/bayarea/article/LA-to-extend-sta...
NJ stay at home order continued indefinitely | FOX 5 New York https://www.fox5ny.com/news/nj-stay-at-home-order-continued-.... And many many more...
Flattening the curve was the refrain but we seem to have forgotten that.
It's going to be very interesting going forward. The American public (myself included more times than I would care to admit) is really good about moving on and having a short-term memory on things (Lots of these things happened back in 1918 with masks, social distancing, lockdowns, people hating the lockdowns, etc). I worry what happens when you couple that urgency to move on with something that, from all indications, cannot be swept under the rug.
Lockdowns are/were intended to prevent jamming hospitals with COVID patients which would lead to non-COVID emergencies being put at risk.
The idea is to lockdown an area not to STOP, but to SLOW the trickle of new patients into hospitals at a rate they can be serviced: e.g., balancing the pipeline. In anticipation of the huge surges seen in the North East US, many hospitals built-out their capacity but didn't need it. Thankfully, and hopefully they will not.
As for "natural repercussions," the different phased-reopening plans that governors are drawing up all share the same thing: let's try opening a little, and if the cases shoot up again, lock down if hospitals are at risk of overflowing. We just don't have a national policy, it is patchworks of different state alliances.
It was the best idea at the time, and we all know the only other proposed solution was to NOT lock down and let those who are susceptible pay the price. Some people on the news vocally approved of that idea, most people did not according to surveys.
The US lockdown should have been used to buy us time to put procedures in place to stop further spread.
The first US fatality was reported on Feb 29. There are reports that it started spreading in the US in late December. It took two months to notice it, 3.5 to panic. That said, people are looking for it now, so that helps.
I don't think anyone is claiming to totally eradicate it, or did I miss something? Because as long as people travel, it will still exist, e.g., we still have SARS and MERS and ZIKA, just very low numbers.
I thought the mindset was minimize it until we have a vaccine. I could be wrong.
That's already happening. The current slow reopening is restarting the economy in order to help millions of Americans get back to work. For example, the jewelry store in my neighborhood in CA is now open, but for 1 customer at a time (OK in their case because even before the pandemic they controlled the number of people inside). However, the breakfast diner nearby with closely packed tables is still shut down. Even if they could open, the owner has to figure out how to run that business with appropriate social distancing.
An additional problem is that the economy was fragile even before the lockdown. Many employers likely won't rehire nearly as many people as they let go. Those who are still hiring have slowed down their hiring rate.
And until people feel safe consuming services and gathering in public like they did before, the main street economy can't recover fast enough to employ everyone who was laid off during the lockdown.
This is why government support for laid off workers must continue until enough confidence exists that things are safe, even without the lockdowns, and that might take years for some sectors of the economy.
Daily new infections have more than doubled here in North Carolina in the last two weeks since "reopening" [0]. We have had more new cases in the last two weeks (2200) than in the entire length of lockdown from March until then (2000). The death rate has massively spiked beginning May 24th, exactly two weeks (the median time from infection to death) from May 9th, the day the governor relaxed restrictions [1]. The dream of this thing just magically going away is absolutely delusional.
[0] https://www.nytimes.com/interactive/2020/us/north-carolina-c...
[1] https://www.nytimes.com/interactive/2020/us/north-carolina-c...
With increased (including employment-related) testing, case count should be increasing everywhere, but some of those could be recovered or asymptomatic.
We know that most hospitals were well below capacity, so new cases can be treated.
Here's the best resource Ive found for comparing all the relevant data:
http://91-divoc.com/pages/covid-visualization/
Playing around with the data there, it looks like yes NC has had an increase in cases recently, but it tracks an increase in testing. Test positivity rates are about flat. It really is completely pointless to discuss increases in cases without also comparing to increases in testing and positivity rates.
Deaths are up, but as another poster pointed out it's hardly statistically significant. The rolling 7 day average is 2.2/1m now, vs 1.7/1m on May 1st.
How is a 34% increase not statistically significant?
Because going from a daily death rate of 0.00017% to 0.00022% is still such a very small number, what might be called statistical noise.
If one person in my town is murdered this year, and 2 are murdered next year, that's a 100% year over year increase in the homicide rate. But it's obviously a meaningless increase.
2.2 out of a million is a small number. More people in NC are dying every day from cancer or heart disease.
I know you're not debating NC, but looking again at the state, it was mostly the last few weeks that looked flat. If you compare to the peak in positivity 42 days ago, they've gone from 16% positive to to 7% positive, using rolling 7 day averages. So, if I were in NC I wouldn't be overly concerned.
NC has only seen a slight uptick in hospitalizations: https://covid19.ncdhhs.gov/dashboard and it's been flat for the past week.
The government failed badly at communicating this.
So now you have half the people saying the shutdowns were useless (cause the virus still exists) and another half saying they have to continue (cause the virus still exists, also)!
If we had realistically wanted to squash this thing, the examples of other countries suggest we would've needed much more aggressive tracing and isolating of people, widespread early mask distribution and wearing, and more tracking.
I fear that the government also may have failed miserably at taking advantage of them to bring more capacity online. Maybe the minimum stuff like masks and clothes and ventilators are taken care of, but we still seem in a very precarious place.
Voluntary changes in behavior persist, though, which will make things very hard to untangle "effect of shutdown" from "effect of people being cautious about high-risk environments."
I see friends (US and 2 countries in Europe) who are not affected by job losses booking vacations like crazy to take advantage of low prices to visit places they always wanted. So I suspect there will be a lot of travel again in the near future.
So it's all right for deaths to spike if the hospitals don't expend their resources dealing with it? What are the hospitals for, then?
Figuring out how to mitigate the virus, and thus making people feel more confident about economic activity, is what the economy needs.
Like good luck with it, but if 95% of Americans started wearing masks in the next couple of weeks, it's pretty clear that this would be a big boost to the economy over the next 6 months. But we don't do group oriented statistical mitigations here.
Also the increase in deaths you link to is not statistically significant, given it is in the rage of 10-30 over the course of several months in a state with 10 million people.
Those numbers don't prove your point.
A penny doubled daily is $0.64 after a week, $81.92 after two, $10,485.76 after three, and $1,342,177.28 after four.
Upwards movement in cases and deaths in something that spreads exponentially is... not great.
Daily deaths across pretty much all nations are decreasing even as lockdowns are removed. Nit pick all you'd like, be as afraid as you like, but the numbers you supplied don't support your assertions.
Exponential growth of the disease isn't tied to an arbitrary "week" timeline. It's delayed because of a 0.25 - 4.0 weeks. Different environment and behaviors will cause it to spread at different time intervals (not just a different number of recipients per spreader).
> Daily deaths across pretty much all nations are decreasing even as lockdowns are removed.
And COVID death doesn't happen within days of new exposure. It's delayed 3.5 - 5+ weeks after exposure and the people most likely to die aren't the ones walking around in public on the first day of end of SiP.
Your parent comment wasn't as outrageous as you make it seem.
Parent didn't account for vastly increased testing capacity in their assertions, and characterized a statistically insignificant increase in deaths as "massive". I objected to that.
I grant that this is not over and needs to be closely watched. I object to the exaggeration of the threat.
I grant that the worst might not be behind us, but I also keep in mind that the experts said from the beginning that most likely outcomes are that this will become another variant of the common cold or flare up some years similar to a bad flue season [0]
I also agree that this needs to be watched, and I appreciate your realistic appraisal of lockdowns despite the possible remaining danger.
[0] https://www.statnews.com/2020/02/04/two-scenarios-if-new-cor...
From the linked article [0], quoting a number of infectious disease experts, coronavirus researchers, epidemiologist, etc:
>OC43 and 229E are more prevalent than other endemic human coronaviruses, especially in children and the elderly. Together, the four are responsible for an estimated one-quarter of all colds. “For the most part they cause common-cold-type symptoms,” said Richard Webby, an influenza expert at St. Jude Children’s Research Hospital. “Maybe that is the most likely end scenario if this thing becomes entrenched.”
>Odds: Moderate. “I think there is a reasonable probability that this becomes the fifth community-acquired coronavirus,” Adalja said, something he expanded on in his blog. Webby agreed: “I have a little bit of hope that, OK, we’ll put up with a couple of years of heightened [2019-nCoV] activity before settling down to something like the other four coronaviruses.”
>Odds: Pretty good. What we may be seeing “is the emergence of a new coronavirus … that could very well become another seasonal pathogen that causes pneumonia,” said infectious disease expert Michael Osterholm of the University of Minnesota. It would be “more than a cold” and less than SARS: “The only other pathogen I can compare it to is seasonal influenza.”
(The article had a lot of other interesting and relevant information.)
[0] https://www.statnews.com/2020/02/04/two-scenarios-if-new-cor...
Maybe deaths being down means something positive, but it also could be a lagging indicator to some extent. It could reflect different record-keeping in the areas that are becoming more prominent in new cases.
But, as I originally stated, there are a lot more tests being done now, and that could explain why the number of confirmed cases is increasing. Some weeks ago they only tested those requiring hospitalization, and as time went on now anyone can get a test.
It would be nice if there were weekly samples of 20k people to serve as a valid week-to-week measure of the population infection rate.
Conversely, the places that were hardest hit in the first wave are also having more tests done than previously, and at least before full reopening, are not yet having cases jump up.
https://www.cbc.ca/news/canada/toronto/strange-symptoms-flar...
Regardless, your second sentence is true.
Confirmed cases, not infections. The hospitalization numbers are about 30% higher or so which is about-ish how much new deaths have increased. Which is bad, but not 2x bad.
All said, NC may have one of the highest spike of any state (reopened or not). Texas and Florida have flat hospitalizations; Georgia is slightly decreasing.
Since we don't really know what's going on yet, almost anything that happens is going to seem kind of magical. Right now we're operating on guesswork and superstition.
[1]: https://kubrick.htvapps.com/htv-prod-media.s3.amazonaws.com/...
[2]: https://boston.cbslocal.com/2020/06/02/george-floyd-protests...
[3]: https://www.wcvb.com/article/new-group-of-watchdogs-begins-i...
However...it appears that new infections have been rising again globally since May-ish. It looks to me like it is becoming exponential again, although the slope on a log scale is considerably less than the first time.
This is my interpretation of the charts at: https://www.worldometers.info/coronavirus/
...titled Daily New Cases and Daily Deaths.
Deaths still seem to be declining, but you would expect that to lag regardless.
There seems to be a pattern where the larger countries that weren't hit so hard at first are picking up as developed Europe gets things under control. For instance, India, Brazil, Russia, Pakistan etc.
And within the US, as NY and NJ have fewer new cases, Texas, California, Illinois, and Arizona are starting to take the lead. Over 90% of new cases are outside NY and NJ now.
Mortgage rates are super low, so some may see this as getting an asset they can leverage in an improved environment later.
I'm hesitating to bid because 1) price is still high 2) unemployment benefits will run out in 2 months, and I do think teh COVID effects have a long tail, that takes time to pan out. Thus the curiosity about the thought behind the "hot" market right now.
Your observation does not deviate notably from typical market behavior.
I think there will be massive economic damage in 6 months that we aren't focusing on right now.
Yeah, that's the ticket.
It was "dread and desperation" that caused people to loot the Louis Vuitton store in downtown Portland.
https://www.reddit.com/r/Portland/comments/gt9lby/pioneer_pl...
My wife started a co-working space January this year, it was her office and the co-working bit was to save on the rent with a prediction of some profit in a year or two.
Then covid happened, so we gave our notice to the landlord and are looking for a bigger house, with a spare room she can use as an home-office
We're saving money from the office rent and investing them in a less potentially profitable solution, but safer, at least for the moment.
Apparently this is a thing not just here, but it's global.
I think that's gonna keep the market alive for the next few months, I really can't say what could happen after that.
I assume if prices drop, they won't stay low for long as people see it as an opportunity to jump into the market.
e: edited
And no, real estate prices in SF are not collapsing.
During the last financial crisis I sold lots of stuff that was dear to my heart but wasn't essential like motorbike, mtb, etc.
Is it the cultural gap that I'm not seeing as a European? Or something else?
The wisdom of having purchased such a large vehicle on credit to begin with is another discussion entirely. Americans are, on average, far more relaxed about owing a lot of money on a vehicle than, say, Germans. I grew up assuming a car payment was just part of adult life; my husband, a German, was raised to believe that borrowing for anything other than property was foolish. I've since come around to his point of view, and am the reasonably content co-owner of a 12 year old Fiesta, though considering our upgrade options as we have a baby on the way.
Why a large truck in the first place? A lot of American men, especially in the South (where this guy is), consider small sedans to be unmanly. If they're overweight like most Americans, they also think they're going to sit more comfortably in a larger vehicle. Plus, SUVs and trucks are less expensive in the US than they are over here - for what I'd have to pay for a new Corolla hybrid station wagon (my current coveted car) in Germany, I could get a Toyota Highlander mid-sized SUV in the US, which Toyota doesn't even bother trying to sell here.
Yes, and I don't understand it. The S&P500 is within 8% of its all-time high (3393). Even without a second wave of coronavirus cases and deaths, the current levels of unemployment, defaults, and bankruptices, I can't see what supports these asset price levels. Any ideas?
Add that demand with demand from rich people from other countries for the same services (who might just loot their country and therefore aren't subject to the same domestic economic pressures) and prices keep going up.
The market is effective at allocating funds among equities, but the overall valuation of the equities market is another issue entirely.
https://www.forbes.com/sites/greatspeculations/2018/11/19/pe...
1. Stock prices follow trends. Increasing stock prices make stocks more attractive. These are the foundations of financial bubbles. History repeats itself.
2. Most of the valuation of an index like the S&P 500 is derived from a few stocks. 17.5% of the S&P 500 is the valuation of FAAAM.[0] Take a look at other members of the top 30 like Proctor & Gamble, Johnson and Johnson, Visa, Mastercard. The S&P 500 is mainly composed of companies essential to the daily functioning of the average American's life.
3. The stock market is essentially an unknowable process. Even the most profitable trading firms making billions of dollars a year make countless unprofitable trades each day and will go for years without turning a profit.
[0] https://www.cnbc.com/2020/01/28/sp-500-dominated-by-apple-mi...
We can’t continue kicking the can down the road forever. If people are over leveraged or insolvent we have to bear the pain eventually. It’s part of the credit cycle and it’s how savers get their foot in the door regarding asset ownership. Otherwise we will have basically embraced some absurd worst-of-both-worlds kind of socialism in which we bailout the people who are leveraged and over-exposed-to-risk at the expense of future generations and savers.
The Fed/Government can probably kick it down the road until November though.
It is going to be a major problem for renters.
Correct though that renters will be hurt more, though it will likely have less systemic effects.
(This isn't good, it's just the way we've structured the economy.)
I agree with the latter point. We've seen in the past 10 years or so that the regular economy will be sacrificed to save the financial industry. This has resulted in a complete decoupling of the two. The regular economy can be in a state of total collapse and the stock market goes up.
(By "the financial industry" I mean top politically well connected banks, not necessarily smaller private equity or smaller financial institutions. Those will crash and burn and be sold off in fire sale prices to larger banks that get bailed out, just like 2008.)
If we ever have real leadership again, one of the tasks before that real leadership is going to be undoing the loss of integrity and trust created by the 2008 bailouts. Like the second Iraq war, people have yet to even grasp how much damage was done in those years.
So they're donating what would have been spent on rent to an appropriate cause? Surely they're not keeping the money if it's just that. /s
From what I've seen, the 1% vs the 99% is catchy but wrong. The reality is more like the 0.01% vs the 99.99%.
We are probably nearing the point where we will see actual change, since we're approaching a place where the wealth distribution hockey stick is so steep the upper middle class and "merely rich" will start seeing themselves as "the 99%." You'll see working class and hippies marching with lawyers, doctors, and owners of businesses that make "only" a few hundred million a year (and don't have lobbyists).
Wish it didn't have to get that bad, but that appears to be the case. We'll probably do something about CO2 when NYC is underwater.
Bad positions are just an opportunity for arbitrage.
There's a lot of people who were already barely hanging on, and now covid and demonstrations have pulled the rug out from under them.
We're only 2 months in. Things will get worse before they get better.
1. https://www.valuepenguin.com/banking/average-checking-accoun...
Does that count money market and savings accounts? And given interest rates are so low I wonder if people invest in more riskier stuff.
Most Americans have health insurance of some form.
1. Insurance only pays some fraction of what can be very high bills, and providers notoriously send bill-like invoices trying to get you to pay for things which were paid in full by your insurance company. Many people will be pressured to pay things and uncomfortable standing up to a huge provider’s legal department.
2. Many employers have favored plans which increase deductibles, and the people with the worst plans are also paid the least and so will struggle to have enough cash in reserve for those larger payments.
3. Hospitals commonly have unrelated specialists show up for a couple minutes to add billable consultation hours. If one of those doctors isn’t covered by your plan, you get the bill even if the hospital itself is in network or you were, say, unconscious at the time or unaware that you could turn down their “help”.
4. Insurance is tied to employment: if you have a medical emergency which affects your ability to work, guess what happens to your coverage?
PSAVERT went from a very steady baseline in the ~6-7% range for the last five years to 33% in eight weeks between February and April.
probably
"Quantitative easing (QE) is a monetary policy whereby a central bank buys government bonds or other financial assets in order to inject money into the economy to expand economic activity."
Sounds pretty inflationary to me. Especially when they buy up illiquid mark to fantasy assets that nobody wants and unloads them on the taxpayer to foot the bill while their buddies get a wad of cash to redeploy, into the stock market as it turns out. How is that not inflationary exactly? Oh, the destruction of those bad assets? Yeah I suppose but the socialization of that across America hides that and what's left is pumped up asset prices that cause the average American to have to work even harder to save up to buy and get worse returns because the fed's buddies got in first and drove prices higher.
Have you happened to look at the price of assets since 2008 vs. the actual recovery of the economy? Have you seen that S&P earnings were flat to down for the past 4 years going into this crisis? Yet what's happened to stocks? That's right they've tripled since 2009. Go look at any piece of real estate now almost anywhere vs. 10-20 years go and tell me there's been no inflation.
I realize it's different everywhere but the idea that we've had "low inflation" over the last 10 years is completely laughable because the calculation removes the highest cost items. The fed has effectively destroyed any price discovery on any assets. It's taken increasingly larger amounts of QE to goose the fake economy. And now for its encore it has overreacted to save their buddies and decided to lower rates to zero and tell the world that it will never let assets fall. How in the world is that not inflationary when you're flooding the market with free money and enabling those at the top to buy up assets and run up prices?
Every single person that works to earn USD and saves USD should be livid and rioting in the streets for the theft that's been, and continues to occur.
Also, your example of Japan isn't apples to apples. The US has the world's reserve currency and can print as much of it as it wants, Japan does not. Japan is a nation of savers so getting them to spend is harder than a US citizen.
We may have short term deflation and that's what the fed is scared of but make no mistake about it what they've done is inflationary as they will well overshoot whatever deflationary impact any failures have. Hell, they've made it clear that's what they're gonna do.
Crucially, these cash reserves are held by the central bank and pay an interest rate just as the treasury bonds did. In a sense the Federal Reserve swapped ten year treasury bonds with hypothetical Federal Reserve Bonds. That’s why you can see a graph of the money supply that shows a massive increase, and yet inflation has not spiked. The money never entered the economy - it is being held in a vault at the central bank (or more realistically is just a number in a spreadsheet). In practical terms it was an asset swap, not a true increase in the money supply."
https://www.cassandracapital.net/post/quantitative-easing-ha...
This is just incoherent. The money does enter the economy because now the banks can lend out money without their cash reserves dipping too low.
The reason that inflation is not spiking is because of the actual reason that the Fed reserve felt that it was necessary to engage in QE in the first place - huge amounts of deflationary pressure. Without the QE, we would be seeing deflation right now.
>Try proposing that after the last round of QE finally fails.
>But even if the Fed tried to print a fraction of that, it still wouldn’t result in hyperinflation.
>Europe has printed almost twice as much as what we have, when compared to GDP, and it has very low inflation and lower growth than the U.S. That’s because our workforce and demographics are flattening, but not declining, as is the trend in Europe and Japan.
https://www.economyandmarkets.com/economy/central-banks/japa...
QE is deflationary.
You're right that it's idiotic to describe QE as "deflationary" (don't know where they go that idea) but QE is neither inflationary nor deflationary as either description would be reasoning from a price change [0].
> The fed has effectively destroyed any price discovery on any assets
Don't see why this would be the case - price discovery is relative.
All this talk about rioting in the streets - inflation is projected to go down in the next few years, which should help the average American saver. If there is any place for outrage, it's over the Fed not acting forcefully enough!
As it stands now, the Feds policy stance is contractionary, just as what followed 2008.
[0]: https://www.themoneyillusion.com/never-reason-from-a-price-c...
Tell me how I'm wrong about housing prices in the last ten years doubling and tripling in some areas. Tell me again how my USD are just fine and buying the same amount of goods and services they did 10 years ago, because I contend their buying power has been effectively halved by the moral hazard presented by the fed and Congress not allowing failures to happen. They're doing the exact same thing right now. How will this end? Deflation? I used to think so but not anymore. JPow even said himself that he has unlimited power to print money. They'll sooner destroy the currency than allow a deflationary depression to take hold.
Again, please, educate me as to what my "many issues" are with any of what I've said.
One is that overall inflation does not make price discovery problematic, because price discovery is a mechanism based on the relative pricing between things.
Two is that inflation is projected to dip below historical levels, so claims of a great inflationary spike that should be met by riots are not at all backed by empirical evidence.
You're not really engaging in good faith, so I'm not going to continue this chain.
Try reading this and you’ll get it: https://www.economyandmarkets.com/economy/central-banks/japa...
It's not even slightly controversial that QE causes deflation? That's just laughable, honestly. Look, mainstream economists disagree with you [0].
QE usually occurs in the context of a real shock that induces deflationary pressure, but the fact that QE and deflation sometimes co-occur is correlation, not causation.
[0]: https://www.themoneyillusion.com/how-strong-is-the-case-for-...
If you can't tease out the difference between correlation and causation, I suspect that you are the one in over your head.
I have experience in academic economics, you clearly, do not.
https://www.themoneyillusion.com/wp-content/uploads/2019/10/...
Guess when Japan's deflation ended?
Wikipedia... lol that isn’t allowed for a high school paper. You really showed me.
Why not read the sources you link?
>market peaked in the JulySeptember quarter of 1991. Those peaks were followed by steep declines in asset prices, culminating in contractions of real GDP in several quarters of 1992 and 1993 and deflation as measured by the CPI from July 199
My point was to find a right wing source that should be agreeing with you, but is agreeing with what I said. Or you can google it, there are a number of sources. Here’s another I linked above: https://www.economyandmarkets.com/economy/central-banks/japa...
It’s obvious you’re wasting my time tho. Read it or don’t, I don’t care but you’re clearly wrong and we both know it.
If you read your own linked paper, you will see that this is not what occurred - monetary base was substantially increased, sure, but that is not synonymous with money supply and there was no corresponding increase in M2.
To your second link, which is not from a reputable source, your CATO paper directly contradicts claims of "huge" QE. It was actually smaller than the prior effort:
> Throughout his tenure, Shirakawa was a reluctant expansionist, frequently making speeches to the effect that QE alone would never succeed in reviving the Japanese economy. Originally, he had intended that the QE program would be completed by the end of 2011, but with the CPI still falling in November and December 2011, operations were extended through 2012 and 2013. Compared to QE1 in 2001–06, Shirakawa’s QE2 was a much weaker program
Here, again, is the paper you linked saying that QE policies combat deflation:
> For better or worse, the Federal Reserve did not counteract the downturn in money growth in 1931–33, either with security purchases or money creation, and thereby exacerbated the depth of the recession, the level of unemployment, and duration of the deflation.
Just because the paper "mentions deflation" doesn't mean that QE "causes" deflation - and the paper is pretty clear that this is not the case. Japan's QE was ineffective, sure, (for a variety of reasons) but in the absence of QE the deflation would have been worse.
Also, I will note that right wing sources are exactly who I would not expect to agree with me. They are hawkish on QE.
>Also, I will note that right wing sources are exactly who I would not expect to agree with me. They are hawkish on QE.
Right wingers are the ones most likely to argue QE leads to inflation--see Ron Paul. This conversation is a waste of my time. You're basically saying "I'm an expert, I know more than you" which is an appeal to authority, and I'm just pointing out that based on real world examples that we have, that isn't what happened. Theory and reality are not the same thing. End of discussion for me.
https://www.usinflationcalculator.com/inflation/historical-i...
QE contains an easy break on inflation. If it starts surging, the market can just have the assets the fed holds added back to it.
The inflation is there, clear as day. You're just not looking in the right place and you think you're so smart because of it.
(and if this doesn't hold, I would love to understand why)
Fed policy has a clear impact on AD.
We're not seeing inflation because there would have been a huge AD collapse and deflation in the absence of Fed action.
You're waiting on CPI inflation.
The inflation that did actually happen was in equities, startup valuations, risk-adjusted debt (interest rates are far lower than the underlying risk would be without QE), fine art, yachts, healthcare, college tuition, etc. None of these are in the CPI because they aren't consumer staples.
In fact a sharp decline in demand seems to have outweighed reduction in supply leading to if anything, deflation. (which is in line with data as inflation has slowed to about 0.3%, down a percent from last year).
Given how large the service sector is in particular in the US, and how strongly it is affected by social distancing measures, disinflationary preasures are very likely to persist for a while.
https://abcnews.go.com/Health/wireStory/us-food-prices-histo...
Inflation is measured, for very obvious reasons, by looking at the general price level of goods and services in the economy, not just any given sector.
So yeah food goes up 2% is basically nothing.
You can call it cherry-picking, but any presentation of data in this format will be guilty of that, so it's not a particularly damning indictment.
As I said before, I don't agree with the previous version of the other post, but I think you're being a bit broad.
https://www.bea.gov/news/2020/personal-income-and-outlays-ap...
https://tradingeconomics.com/united-states/personal-savings#....
So millions are defaulting, but millions of others are awash in newfound cash and savings.
I'm a gold bug libertarian end the fed kind of guy and even I don't think we are at any risk for hyperinflation. That is definitely not to say these policies can't have seriously negative consequences but I don't think hyperinflation is one of them, at least not for the US in the next decade.
Sell the car, get a cheap used beater, reduce expenses, keep looking for a job. Not sure what NPR wants me to take from this example.
And that's not even addressing the fact that the entire country went into economic free fall, so "Just sell the X" isn't quite the advice it used to be.
It gives me a mixed feeling about the policy because it turns out I personally know the one example conservatives would like to point out. However, I’d like to read a deep study about the impact of the measures taken before I form an opinion on them. I want to believe that the policy had a positive effect unless data says otherwise.
Say that $1600/wk is perfectly livable for her. That means formerly, she was working at a job that did not pay her enough to live, but she was forced to because the alternative is worse. Arguably, for many people, they could live on even less than that.
Countless people who are forced to be in the job market, slaving away at crappy jobs at the threat of poverty and homelessness. They are forced to be at jobs they hate, propping up industries that survive only because of exploitation of human labor, and they don't even get a proper living wage from it. Human life is very limited. Time is the greatest asset we have and it goes away even when we do nothing. Yet we force so many people to trade their time for a pittance.
If these people were provided a base amount of money they could live on and do something else, then those jobs would either be unfilled (and the industries die off) or the businesses will be forced to raise the wage, thus providing more money to people who are willing to work for it.
How does it do that?
The CARES Act specifically pays money per week in addition to what unemployment pays.
So, whatever you made before, even if it was a sustainable wage, you make more by not working right now, even if you could be working.
It helps a lot of people who really needed it, especially hourly wage workers in the service industry who instantly took a hit from the shutdowns and these workers tend to not have healthcare insurance to begin with due to the low wages. It would be foolish for someone who had a well paying job with benefits to permanently stop working for "more" money on paper temporarily, especially considering you would also risk being unemployable afterward. Does +$600 to your weekly pay outweigh the health benefits that you got while being employed?
The explicit intention behind CARES was to provide some resemblance of financial security during a very uncertain time. If paying people a couple hundred more dollars per week than they'd earn while working is what achieves that... and it's temporary... ok fine.
But the CARES Act will continue to payout through December... which is a long time from now... and that's if it doesn't become a political wiffle ball and get extended.
None of that has to do with the value an employee brings, or can earn while in the service industry.
Into the weeds, but... With a growing anti-tipping movement, I don't see how we can argue service industry workers can be paid more than they already are. If the market had the appetite for $30 diner burgers, we'd already be paying those rates, no? Wouldn't the business owners raise prices and just pocket the difference if people were willing to pay more?
I think that results in fewer people eating out... which leads to fewer service industry workers, which leads to some other problems.
Way into the weeds - I've long thought the solution isn't just to command more money be paid to service workers. We should instead focus on trade school and education to empower people to seek skilled jobs that pay far better. I'd fully support free or low cost trade schools and community colleges, and would rather pay taxes into that versus a $30 mediocre burger.
We should have fewer people making careers at unskilled jobs. Nobody can provide for a family comfortably doing that.
Instead, it should be a starting position; an entry into the workforce as you learn a trade, skills or gain knowledge.
The loan company should be barred from repossessing for generating subprime auto loans or whatever these are called, but this was still directly caused by lack of financial awareness.
In fact, in my opinion, all secured loans should be this - you should be able to hand over the security to the lender, and walk away without penalty.
https://jalopnik.com/not-even-a-pandemic-will-stop-american-...
Now - they are drawn by 0% financing which is hard to get on a used truck.
How long this keeps up is hard to tell.
NPR wants you to see that a lot of ordinary people who made ordinary life choices are going bankrupt.
What's a moderately priced car to you? 50K?
Working class people are going to be decimated. No income and the cost deferral cliff.
Middle class (office workers are least) and upper class people will do very well. They still have their jobs and their costs have collapsed.
I am no longer paying for gas, childcare, bussing fees, car insurance, and all manner of other things. I can shop at Costco now that I have more time, saving me even more. Nobody is buying lunch out as we now have tons of saved time to make food ourselves. I used the crisis to squeeze by suppliers of internet and cell phone and whatnot. We now save 40% of our take home pay.
Personally the crisis has been great for me.
I actually started collecting the URLs, but there are so many it's not worth centralizing.
Verizon: https://www.verizonwireless.com/support/covid-19-faqs/#bill
AT&T: https://about.att.com/pages/COVID-19.html
Cox Cable: https://www.cox.com/residential/support/coronavirus-response...
Comcast Xfinity: https://www.xfinity.com/prepare
Not sure how either country will lift from this without having a negative impact, as not only was it giving emergency funds to people, but in a lot of cases giving up to 200-300% of what they earned prior.
It will be a shitshow.