June 28, 2018

Perspective

FT – Migrant millennials are redrawing the map of America – Andrew Edgecliffe-Johnson 6/26

  • “As a recent analysis by Brookings Institution demographer William Frey found, the strongest growth in America’s millennial population between 2010 and 2015 was not in coastal cities such as New York and LA, but in smaller ones in the south and west. The double-digit increase in 10 large metro areas, from Colorado Springs and Denver to San Antonio and Austin, contrasts with Midwestern cities such as Chicago and St Louis, whose millennial populations rose less than 1%.”
  • “This millennial migration is largely being driven by affordability, says Karen Harris of the macro trends group at Bain & Company, the consultancy. ‘Tier one cities have become incredibly expensive; as a result they have become the province of rich people, single people and empty nesters.’” 
  • “Few places tell this story better than Denver, Colorado. Its middle-of-the-country location, affordable universities, plentiful jobs and easy access to a snowboarder’s paradise in the Rocky Mountains have drawn tens of thousands of millennials in recent years, transforming its population and economy.” 
  • But…
  • “Denver’s residential property prices are 50% above their pre-crisis peak, dividing the city into those who bought and have watched their assets appreciate and those wondering if they will ever get on the housing ladder. Since Colorado legalized recreational marijuana in 2014, Denver has been rife with stories of dispensary owners driving the market up by putting their unbankable cash into property.” 
  • “For now, disillusioned leavers are outnumbered by new arrivals to Denver, but there are signs that its millennial-fueled population boom is slowing. Its growth rate peaked in 2015 and it has dropped down the Census Bureau’s list of fastest-growing cities, which is now topped by San Antonio and Phoenix.” 
  • “Mike Newlands moved to Denver after college in 2006 to work in the sporting goods industry, and is living with a friend while saving for a down payment on a property. He worries that anyone who did not buy by 2010 is effectively priced out of Denver. ‘People are asking now where the next Colorado is,’ he says, listing more affordable alternatives like Jackson, Wyoming, and Boise, Idaho. ‘People like me who make $75,000 a year are going to be gone.’”

Worthy Insights / Opinion Pieces / Advice

A Wealth of Common Sense – Playing in Traffic – Ben Carlson 5/27

  • “Our brains find it easier to process situations where there’s a clear explanation. Not knowing what’s happening or, more importantly, why it’s happening, makes people extremely uncomfortable.”
  • “Being uncomfortable with uncertainty is one of the reasons a long commute can make people unhappy:”
    • “As Harvard University psychologist Daniel Gilbert argues, ‘You can’t adapt to commuting, because it’s entirely unpredictable. Driving in traffic is a different kind of hell every day.’”

Markets / Economy

WSJ – Harley-Davidson Is Fighting the Trade Wars on Two Fronts – John D. Stoll 6/25

Real Estate

Bloomberg – Investors Are Piling In to NYC Condos at a Record Pace – Oshrat Carmiel 6/27

WSJ – Looking for an Apartment? It Is a Great Time to Rent – Laura Kusisto 6/27

  • “It is a great time for anyone looking to rent an apartment: vacancy rates are rising and there are little or no rent increases in many major cities.”
  • “For landlords, though, the U.S. apartment market suffered its worst spring since 2010, near the depths of the housing crisis. Driving this dynamic is a flood of new apartments and weakening demand.”
  • “Rents rose 2.3% in the second quarter compared with a year earlier, the smallest annual increase since the third quarter of 2010, according to data from RealPage Inc. scheduled to be released on Wednesday. Rental growth was flat in major cities with otherwise strong economies—such as Austin, Portland, Seattle, Dallas and Washington, D.C.—due to large amounts of new supply.”
  • “Landlords have enjoyed a record 32 straight quarters of annual rent growth on average, as the U.S. economy strengthened and millennials delayed homeownership. But the reports of slowing, which began in a few markets in late 2016, have intensified to the point that the balance is shifting towards renters and away from landlords.”
  • “The cause of the slowdown is primarily new supply. Developers responded to escalating rents by building the most new apartments in 30 years, sending a flood of new high-end units to downtown areas across the country. Developers are expected to add 300,000 new units over the next year across the U.S., Mr. Willett (Greg Willett, chief economist at RealPage) said.”
  • “At the same time as there are signs renter demand is starting to wane because millennials are marrying, having children and buying homes or moving into single-family rentals. The U.S. added 1.3 million owner households in the first quarter over the same period last year and lost 286,000 renter households, according to U.S. Census data released in April.”
  • “Despite the recent slowdown, apartment owners note that the market is far from crashing and rent growth remains just below historic norms.”
  • “Little concern has arisen that the softening could have broader economic repercussions for the U.S. financial system. Compared with the last real-estate crash, owners say there are unlikely to be many foreclosures because they are carrying much less debt.”
  • “Jay Hiemenz, president and chief operating officer of Phoenix-based Alliance Residential, an apartment company, said banks are only giving loans to developers for about 65% of the cost to build a project, compared to 80% or more previously.”

Cryptocurrency / ICOs

WSJ – Daily Shot: Ripple 6/27

  • “Ripple is down 87% since early January.”

Entertainment

WSJ – The Pop Diva Identity Crisis – Neil Shah 10/18/17

Asia – excluding China and Japan

Bloomberg – Hermes Bags, Diamonds Worth $273 Million Taken in 1MDB Raids – Anisah Shukry 6/26

  • “Malaysia’s police seized about 1.1 billion ringgit ($273 million) of items that included Hermes International handbags, Rolex watches and cash in raids linked to former Prime Minister Najib Razak amid investigations into troubled state fund 1MDB.”
  • “Luxury goods such as a 6.4 million ringgit diamond necklace, 51.3 million ringgit worth of Hermes bags and more than 200 sunglasses valued at 374,000 ringgit were taken from five residences and an office linked to Najib, Amar Singh, commercial crime investigation department director at the police, told reporters on Wednesday.”
  • “The police had to form eight teams consisting of more than 150 officers to analyze the items for weeks, even working through the Eid al-Fitr Muslim holiday, Singh said. Valuations may increase as not all items seized have been analyzed.”

FT – Malaysia police value assets seized in 1MDB-linked raids at $275m – Stefania Palma 6/27

China

Bloomberg – Chinese Stocks Enter Bear Market as Trade, Growth Risks Increase – Richard Frost and Jeanny Yu 6/25

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