From the Manhattan Institute:
Economics Newsletter: Fed Survey Shows Widened Inequality as Stock and Home Prices Rise
Last week, The Fed released its tri-annual Survey of Consumer Finances, a survey that offers a detailed look into American household finances. It shows that contrary to many reports, many households are struggling especially with inflation. This figure is the value of financial assets by income group. Despite stimulus checks and being stuck at home, low-income households did not save much money. They still have less than they did in 2007. Meanwhile, higher stock and home prices means inequality has widened.
Frist
Grim – Any letters?
Not yet, no.
Though another fun anecdote – we were in talks with two contractors that we knew prior to listing, both would have been private party cash sales. Both turned down our counters as being too high. We’ve blown well past that net number (sale price less commission). Good for us, too bad for them.
Another fun one, the range in offer prices is more than $100k at this point. There has got to be a telling data point when you’ve got this level of price opacity in the market. We’ve transcended price discovery.
Closing it up at 5pm today. I didn’t get the updated count from the agent, but we’ve got to be somewhere north of 50-60 written offers at this point, and we’ve got best and finals coming back in on top of that. Should have spreadsheets from the agent this morning with the current view.
Another clarification – the 200 attendees was names on the sign in sheet, it was not the total headcount, which the agent thinks was probably closer to 400. The neighborhood was gridlocked for most of the afternoon. Parking is already pretty scarce on that street, so people were parking blocks away and walking.
This is not an impressive house by any means, rental property, small 2 fam cape (2/1 over 2/1) on a typical North Jersey 50×100, detached garage, and needs plenty of work.
North Jersey 2 Fam market is insanity.
Grim, Almost impossible to accurately value real estate in the current environment. Recently came across a house in Leonia that sold twice in 10 months and was not substantially improved between sales. Second sale was 8.66% higher than the first.
Everyday record prices are being paid for homes in North Jersey. Real estate geeks like me notice the highest priced paid for a 3/1.1 house in a community. There is no reason or logic to the prices being paid.
2 family cape? Even with dormers front and back the 2nd floor cannot be very comfy, and the noise has to permeate the whole place.
Are tulip bulbs a part of these transactions?
Tulips wrapped in dogecoin foil.
Last week local realtor sent info on 10 or so summer sales above asking price. No inventory and some new construction never making it into the market.
Bitcoin, ETH, SOL, are starting to run again.
Bystander says:
October 24, 2023 at 8:15 am
Tulips wrapped in dogecoin foil.
Maybe I should just cash out. I don’t know what to do….really tough decision.
Lib, you def sold a little too early, but you made your money.
“North Jersey 2 Fam market is insanity.”
Any opinions if I should sell or hold?
It produces sweet passive income, but everyone knows how much a headache it is to deal with tenants. Also, can buy assets like Bitcoin/stocks with way more upside. Bonds, I am better off holding, because the passive income generated will pass up the passive income generated from bonds after I am forced to pay all the taxes on the sale.
Tough, but if anyone has an opinion, I am all ears.
Man, biotech has been destroyed….seriously can get some really really good deals if you have time to wait for the conditions for borrowing capital to improve. DNA, BEAM, CRISP, NTLA….I don’t see how you lose buying now, and holding.
Interest rates go up to slowdown economy. Deposit in my IPhone gives me $5k in interest.
The Great Pumpkin says:
October 24, 2023 at 9:06 am
Maybe I should just cash out. I don’t know what to do….really tough decision.
Lib, you def sold a little too early, but you made your money.
“North Jersey 2 Fam market is insanity.”
I don’t see how you lose buying now, and holding.
You said that when they were 4 times their current price
It’s not rocket science. That’s how much of a deal you are getting now thanks to the insane rise in the 10 yr. If you could afford to let money sit with no interest, then this is where you want to be. Patience is a virtue. Take what the market gives you.
BRT says:
October 24, 2023 at 9:52 am
I don’t see how you lose buying now, and holding.
You said that when they were 4 times their current price
I have made between 5 and 6% on my 700K in the bank from the sale of that multi since I sold and I haven’t had to deal with tenants anymore. That’s about 40K a year (pre tax), without lifting a finger. And due to compounding and Powell, that number keeps going up. And when I load that 800K into the stock market, it will turn into 2 million in 10 years or so.
I am very happy.
Economy ain’t slowing down
Libturd says:
October 24, 2023 at 10:02 am
I have made between 5 and 6% on my 700K in the bank from the sale of that multi since I sold and I haven’t had to deal with tenants anymore. That’s about 40K a year (pre tax), without lifting a finger. And due to compounding and Powell, that number keeps going up. And when I load that 800K into the stock market, it will turn into 2 million in 10 years or so.
I am very happy.
Lib, so what are you saying? I should sell?
Help wanted signs everywhere. We urgently need more immigrants to fill up those jobs and pay taxes for boomers social security
When you can make more in the bank than in your rental and when you know, deep down inside, that houses aren’t really worth what they are selling for (ask Gary), then it’s probably not a bad time to sell. Also, you must look at the tax implications. Trump and company, through the SALT reduction, definitely made it somewhat less profitable. I also got creamed between the pandemic (rent freeze) and then the rent control they put in place in Montclair. They also wanted me to replace the lead pipe to the town water supply. Quite frankly, going forward, I would not own an investment property in Montclair simply due to the local governance. In Montclair, they really like spending landlord’s money.
…and when you know, deep down inside, that houses aren’t really worth what they are selling for…
You mean 60 to 70 offers in a weekend isn’t worth it?
Libturd says:
October 24, 2023 at 10:11 am
Trump and company, through the SALT reduction,
I am a little confused, how does SALT apply to a rental ? Taxes are 100% deductible as a business expense because it IS a business. Please explain what SALT has to do with a rental.
We could have kept the properties, they were free and clear, the math just didn’t make sense. What calculus someone is doing to justify the valuations, at the current rates, might as well be string theory to me.
The only universe that justifies current valuations is one that is pricing in anticipated future growth, significantly above the pace of inflation.
That money can easily be parked in a vehicle that generates better returns, with zero headache, and far lower risk.
When the employers increase the salaries and benefits the signs will come down.
It’s called supply and demand, been around for quite some time.
Just like the term “turnover” which is also increasing as that is how you “increase” your pay, by “monkey branching.” What works as a technique for women to find better men helps anyone who is working as well. Stability is out. Whoring for top dollar is in.
Very Stable Genius says:
October 24, 2023 at 10:08 am
Help wanted signs everywhere. We urgently need more immigrants to fill up those jobs and pay taxes for boomers social security
Lib,
My favorite post about Montclair-but how many boxes today?
Alex says:
June 13, 2017 at 9:17 am
Hypothetical Montclair Girl Scout cookie sales meeting:
Troop Leader: Next year girls, we were thinking about sponsoring the funding of a single Montclair classroom through sales of Girl Scout Cookies!
Scouts: Yeah!!
Troop Leader: For every $4 box of cookies we sell, 84 cents will go towards the classroom.
Scouts: Yay!! Troop leader, how many boxes of cookies will we have to sell to fund one classroom?
Troop Leader: 476,190 boxes.
Girl Scouts: Is that a lot?
What works as a technique for women to find better men helps anyone who is working as well. Stability is out. Whoring for top dollar is in.
So, for today’s modern women, stability is measured in a man’s net worth or ability to earn?
10:02 Mazel Tov!
11:07 same as it ever was…..
https://youtu.be/5IsSpAOD6K8?si=vReCQ6mosIBSm6N1
Look at it this way. You have a 7 handle on your home. How much do you think someone needs to earn in order to pay that plus taxes, kids college, BMW, vacations, healthcare, etc. All of the things a woman want or need.
Add that number up. How much income to get that? What percentage of single earners make that kind of money if she wants to be a SAHM?
And if she does it herself- loses a job, gets an illness- where is the stability?
Fast Eddie says:
October 24, 2023 at 11:07 am
What works as a technique for women to find better men helps anyone who is working as well. Stability is out. Whoring for top dollar is in.
So, for today’s modern women, stability is measured in a man’s net worth or ability to earn?
Call it the Great Reset. Across the US, labor unions are winning surprisingly large contract settlements as workers have reset their expectations to demand considerably more than they did just a few years ago, and that has in turn pressured many corporations to reset – and increase – the pay packages they are giving in union contracts.
The result has been a wave of impressive – sometimes eye-popping – union contracts over the past year, far more generous than in recent decades. In August, 15,000 American Airlines pilots won pay increases of 46% over four years. In a huge labor confrontation last summer, 340,000 Teamster members at UPS won raises of $7.50 an hour over five years, with drivers’ pay climbing to $49 an hour and part-time workers receiving a pay increase of 48% on average.
After a three-day strike earlier this month, 85,000 Kaiser Permanente workers won raises of 21%, as well as a $25 minimum wage for Kaiser’s workers in California. In March, 30,000 Los Angeles School District workers – bus drivers, cafeteria workers and teachers’ aides – won a 30% wage hike over four years. In Oregon, 1,400 nurses at Providence Portland hospital secured raises between 17% and 27% over two years.
Union leaders and rank-and-file workers hailed these contracts as great and historic, but Thomas Kochan, a longtime professor of industrial relations at MIT, put it another way: “All this reflects a a reset in expectations and wage norms for workers and for employers.
“These successes,” Kochan continued, “are a reflection of the workforce’s strong expectations and the workforce’s demands to make up for lost ground due to inflation – and to signal that times have changed. The modest wage increases of the past will no longer be adequate to deal with our situation.”
They haven’t experienced this level of pressure from unions or this amount of bargaining power on the side of workers
Thomas Kochan
Workers are feeling not only rising expectations, but also rising frustration and anger, seeing corporate profits and CEO pay soar, while their pay has often failed to keep up with inflation. The United Auto Workers, before going on strike a month ago against GM, Ford and Stellantis, kept hammering the point that auto workers’ hourly pay has trailed inflation by 19% since 2008, while CEO pay has jumped by 40%. The union’s initial bargaining proposal was for a 46% raise, far more than the union won from Detroit’s automakers in 2019 – a four-year contract with raises of 3% in the second and fourth years and a 4% lump sum (but no raise) in years one and three.
“I’ve talked with labor relations people at several companies,” Kochan said, “and they have had to get their CEOs and CFOs [chief financial officers] to reset their expectations. They were used to getting modest wage settlements, but they haven’t experienced this level of pressure from unions and they haven’t experienced this amount of bargaining power on the side of workers.”
Feeling angry and emboldened, workers have been flexing their muscles. There were 301 strikes in the first nine months of his year, up from 172 over the same period in 2021, according t0 ILR Labor Action Tracker. This has ratcheted up pressure on employers, and this increased militancy has often translated into better contracts.
“I’ve never seen a moment quite like this. I’ve never seen this level of action and enthusiasm among workers, especially among young workers,” said Lane Windham, associate director of the Kalmanovitz Initiative for Labor and the Working Poor at Georgetown University. “People drew a line in terms of their expectations. For 40 years, workers have been putting up with low wages and bad jobs. But after coming through the pandemic, many people said, ‘I’m not going to do this any more. I’m not going to put up with this any more.’”
If you want to know why apartment rents got so high, some people say look to big data. Many landlords outsourced their pricing decisions to software that told them what rents to charge.
These algorithmic pricing systems analyze giant troves of information about the rental market. Then they direct landlords on how much to increase rent for each lease renewal, or what to ask for newly vacated apartments.
Algorithms and other big data have changed the way many landlords do business. In the past, landlords would often make deep cuts to rents when the market started to head south, but algorithms showed them that wasn’t always necessary. Many building owners also once believed keeping their apartment buildings as full as possible was the best way to maximize profits.
Algorithmic pricing systems, by contrast, calculated that some landlords could earn more money by pushing up rents, even if that brought about higher vacancy rates.
At least dozens of landlords across the U.S. rely on pricing systems from two companies—RealPage and Yardi Systems—to determine what they charge millions of renters.
Now, these two firms face allegations that their rent-pricing systems facilitate collusion among some of the country’s biggest apartment owners.
Two lawsuits, one against RealPage and one against Yardi, allege that the pricing systems enable an exchange of confidential pricing information to set rents across buildings and markets. That reduces much of the natural competition that might exist if landlords didn’t outsource their pricing decisions to software, the complaints allege.
The lawsuits, brought by tenants in federal courts in Tennessee and Washington, allege that the two companies and their landlord customers are engaged in illegal behavior, and that it has translated into higher rents for tenants.
The U.S. Justice Department might soon weigh in on whether algorithms unlawfully drive up rents. The department’s antitrust division has been investigating RealPage’s practices and is considering a potential enforcement action, according to people familiar with the matter.
https://www.wsj.com/real-estate/commercial/thanks-to-big-data-landlords-know-how-to-squeeze-the-most-out-of-renters-eb7e5f02?mod=hp_lead_pos1
I can’t wait till the teacher unions start pushing it up. Used to get 4-5% when I started….it will come back.
LAX says:
October 24, 2023 at 11:25 am
Union leaders and rank-and-file workers hailed these contracts as great and historic, but Thomas Kochan, a longtime professor of industrial relations at MIT, put it another way: “All this reflects a a reset in expectations and wage norms for workers and for employers.
Problem for me, after taxes, won’t make as much income as the property produces. I have below market rents….all under 2k. Yet, still almost produce 6 figures in income. Someone buying my house for 1 million will make their money back in little over 10 years.
So, do I want to lose out on appreciation, and on top of that almost 1 million income over 10 years? Chit is annoying and work, but that’s good money hard to find anywhere else.
grim says:
October 24, 2023 at 10:25 am
We could have kept the properties, they were free and clear, the math just didn’t make sense. What calculus someone is doing to justify the valuations, at the current rates, might as well be string theory to me.
The only universe that justifies current valuations is one that is pricing in anticipated future growth, significantly above the pace of inflation.
That money can easily be parked in a vehicle that generates better returns, with zero headache, and far lower risk.
BREAKING NEWS!
The pro-Trump lawyer Jenna Ellis became the fourth defendant in the Georgia election-interference case to take a plea deal.
Tuesday, October 24, 2023 10:10 AM ET
Ms. Ellis, who amplified Donald Trump’s baseless claims of election fraud as part of what she called an “elite strike force” legal team, pleaded guilty to a charge of aiding and abetting false statements and writings.
Phoenix,
Don’t be too logical. All will have six figure earning spouse with illegal live in nanny who learns 20k. Avg household income is $350k. The numbers are lying.
Lax,
That is nice that union workers are getting big increases. What about 90% not covered by unions, getting d%ckall with corps that have no rules on automation and wage arbitrage?
I like the idea of moving away from equities, or at least having a higher allocation going forward, into some sort of credit instruments yielding 7-10%. high yield corporate?
It’s interesting that there’s been this break in radio silence by the street, with Bill-sell SBUX the world is going to end-Ackman covering his fund’s TLT short, and now everyone is out recommending to clients to buy/add duration. Premature?
The UAW at the GM plant in Arlington just went on strike. I guess my neighbor will have more time to work on his yard now.
Stories like Grims house sale are making me think of adding to my home builders position. I’m going to read the last 3-4 years of NVRs 10ks and than reread the 10ks for the 2 I own and see if I want to add more.
I don’t own any NVR.
Hey, my recommendation all last decade was to borrow as much free money as the bank will give you, and buy cheap real estate that everyone seemed to think was expensive at the time. I saw the writing on the wall with demographics, and knew this housing boom was coming for the patient who bought in last decade.
I don’t need anyone to confirm that this was the greatest call in this blog’s existence. Absolutely “legend” status. People yelling at me at the time for giving them the best advice of their lives. Of course, no one acted on it. I even got screwed by a conservative wife that knows nothing about investing and making money.
Hold my beer says:
October 24, 2023 at 12:26 pm
Stories like Grims house sale are making me think of adding to my home builders position. I’m going to read the last 3-4 years of NVRs 10ks and than reread the 10ks for the 2 I own and see if I want to add more.
I don’t own any NVR.
STFU, you predicted 9T of Powell and Dumpys money printing, zirp and COVID socialism handouts? You followed none your of own advice. Go play on your highway.
If it was such an easy call, why did mock it all last decade? Sir, you need a glass of stfu.
Bystander says:
October 24, 2023 at 1:39 pm
STFU, you predicted 9T of Powell and Dumpys money printing, zirp and COVID socialism handouts? You followed none your of own advice. Go play on your highway.
Grim found the listing, I don’t think you should have staged it so well. The dream catcher on the wall for example, it’s too much.
Tell me about it.
4pm – 1 hour to go – 70 active offers in-hand.
…it was the dream catcher.
This is bordering on stupid.
Grim ,
Congratulations , always go for the cash offer without any inspections. Saves time and money too. I am amazed how much people are bidding up these houses, where does it end?
Jim: Where does it end?? With a crash?
Grim – Make sure you let the NJ Advance Media aka NJ.com know about the amount of offers.
3B
Powell should take a lesson from the Volcker playbook, 5% is nothing compared to 12-15%. Powell continues to pussy foot around as inflation runs rampant , and the Fed spends like drunken idiots, not worrying about paying the piper.
3B – Price controls. It’s been 50 years what is old is new again. They cannot raise rates and expect to be able to finance the government.
Juice/ Jim: What did they think was going to happen when the raised rates? 10 year at around 5 and mortgage rates around 8 and some believe it is the end of the world. If it is, then this demonstrates how the Fed has made an absolute mess of things.
3B – The secret is they want inflation, and what I mean is more than the official magical man behind the curtain 2%.
Stuart Steven’s new book, “The Conspiracy To End America”
https://www.google.com/books/edition/The_Conspiracy_to_End_America/loTEEAAAQBAJ?hl=en&gbpv=1&dq=the+conspiracy+to+end+america&printsec=frontcover
The truth. Invest accordingly. DEBT SAYS SO.
Juice Box says:
October 24, 2023 at 7:10 pm
3B – The secret is they want inflation, and what I mean is more than the official magical man behind the curtain 2%.
Jim,
I agree. I think there’s limited runway to quell inflation before debt on the liabilities gets out of hand. And for this reason, a Vockler type move made more sense. Instead, he’s waiting to see this or that, meanwhile treasury rates head higher. There’s a finite amount of time to get to the target. I wonder if a move to 7.5% back then right away and a faster tapering would be fiscally advantageous than a slow taper up. I think so, right? After all the long end of the curve, fives and tens, would have stayed more anchored.
Musk had them load Starship with propellant today. He does not have FAA approval to launch. I wonder what kind of pressure there might be to force him to scrub it. Remember without Starship flying Elon won’t be able to build his V2 constellation of Satellites that includes cell phone service, those satellites don’t fit in the Falcon fairing quit so nice, thee need the wider body of Starship and lift capability to take these much larger satellites into orbit.
FYI – They have a whole fleet under construction in various stages. Who said the6 were going Mars anytime soon, Dr. Evil needs to conquered this planet first.
I even got screwed by a conservative wife that knows nothing about investing and making money.
Here’s a word of advice. Your wife is the breadwinner in your family. Best not to badmouth her on a public forum in writing. You stand nothing to gain from it other than stroking your ego and probably everything to lose.
I agree with BRT. You are no soothsayer , let her wear the pants.
All a judge needs to do is read about three of Pumpkin posts and she’ll get the homes, the cars, the kids and the dog. At best, Pumps will get grandma’s downpayment back.
She cost me a lot of money. She is not the breadwinner. Only fool would say so. You guys underestimate me over and over…it’s laughable.
I ask you this. What 19 year old in 1999 was talking about investing in investment property? You know of none. I am an anomaly. Not cocky, just know the truth about my ability. I don’t give a f’k about praise, because nobody gives a f’k about you. Praise is a waste of time. I am here for pride, proof that standing up against the crowd is a winning bet over and over…
.real estate is dead…blog wrong.
Wfh is forever…wrong again.
Not going to point out anymore…but i rest my case. No one has any right to bust my balls after the calls i have made. Wife the breadwinner…yea, sure. “Breaking Bad” moment…I am the threat! Aka the breadwinner. Wake the f up.
And I didn’t have mommy and daddy helping me…suck my d’k with the grandma “gave me this” you little cunts.
BRT says:
October 24, 2023 at 10:04 pm
I even got screwed by a conservative wife that knows nothing about investing and making money.
Here’s a word of advice. Your wife is the breadwinner in your family. Best not to badmouth her on a public forum in writing. You stand nothing to gain from it other than stroking your ego and probably everything to lose.
Pumps – I agree even if your wife is not the “breadwinner” you need to STFU. There are lines not to be crossed in your marriage.
I don’t know how you measure winning, but if you don’t measure capital…i killed it. Smart enough to go into teaching so i can listen to people like phoenix and LIB cry about how good i have it . I can lose on every investment and still be fine for the rest of my life at 43. Go suck a fat d’k! Standing up for myself on this forum for once. ,p
And watch…these biotech stocks like DNA are going to make a lot of money down the line. Just look who they are lined up with for godsake. You think alphabet, pfizer, bayer, novo, and various govts/colleges(penn st announced today) is not going to be a future winner…i don’t know what to say to you. You are blind .
Amgen baby….
Judge won’t need to read the post. Just do a quick look, see who has the grand tetons vs the frank and beans.
Frank and beans almost guaranteed to lose, even if the guy is a saint.
Libturd says:
October 24, 2023 at 10:16 pm
All a judge needs to do is read about three of Pumpkin posts and she’ll get the homes, the cars, the kids and the dog. At best, Pumps will get grandma’s downpayment back.
I really enjoyed my time in NJ….looks like my old home is worth upwards of $650k.
We thought it was pricey at $300k. Couple that with the tax bill and there’s noooooo way I would ever buy in NJ again. Overall pretty happy with the experience out west. My wife & daughter are thriving. It’s been great for them. Me? It’s been a mixed bag.
But I’m loving the weather.
Boomer Remover says:
October 24, 2023 at 8:51 pm
Jim,
I agree. I think there’s limited runway to quell inflation before debt on the liabilities gets out of hand.
I absolutely agree! Ultimately, it took a crackdown by cigar-chomping Fed chairman Paul Volcker to break the cycle of rising prices and wages. Volcker slammed the brakes on the economy by raising interest rates to 20% — tough medicine to prove he was serious about getting inflation under control.
Everybody is crying now with 5.5% interest, the current administration lowers inflation by removing food and energy, what do they remove next rents and real estate? Powell has no balls.
What would you pay for this?
https://www.redfin.com/NJ/Rahway/1507-Saint-Georges-Ave-07065/home/38010216