#is real estate a good hedge against recession

[onlinerealestateinvesting]

7 Tips To Recession Proof Real Estate Investing

Real estate generally shifts from seller's to buyer's market during a recession, so investing in real estate is an excellent option. Many people sell their homes at a lower price during recessions.

[laveekestatesblogs]

Commercial vs. Residential Real Estate: Which Is Better for Investment?

Investing in real estate has long been considered one of the most secure ways to build wealth. It offers tangible value, long-term appreciation, and a hedge against inflation. But the big question for many investors is: Should you put your money into commercial or residential real estate? Both asset classes come with their unique advantages, risks, and rewards, and choosing between them often depends on your financial goals, risk tolerance, and investment horizon.

In this blog, we’ll explore the key differences between commercial and residential real estate investment and help you determine which one might be a better fit for your portfolio.

Understanding the Basics

Before diving into the pros and cons of each investment type, it’s important to clarify what we mean by commercial and residential real estate.

Residential real estate refers to properties intended for personal living spaces. This includes single-family homes, apartments, condos, duplexes, and townhouses. Investors typically purchase these properties to rent them out to individuals or families, or sometimes, to flip them for profit after renovation.

Commercial real estate encompasses a broader spectrum of property types, including office buildings, retail spaces, warehouses, industrial complexes, hotels, and multi-family buildings (usually properties with five or more units). These spaces are leased or rented by businesses or organizations rather than individuals.

Now that we’ve defined both types of real estate, let’s compare them across several critical factors: risk, returns, management, financing, and market demand.

1. Risk and Stability

Residential Real Estate: Investing in residential properties is often considered less risky than commercial investments. People will always need a place to live, making the demand for residential properties more stable, even during economic downturns. In times of recession, people might downsize or move to more affordable locations, but the overall need for housing remains consistent.

Additionally, residential properties tend to attract a larger pool of potential buyers and tenants, especially in urban areas with growing populations. This liquidity makes it easier to sell or rent out a property, even if the market isn't performing well.

Commercial Real Estate: Commercial real estate generally carries a higher risk. During economic slowdowns, businesses may close or downsize, leaving commercial spaces vacant for extended periods. The longer lease terms in commercial properties can also be a double-edged sword—while they provide stable, long-term cash flow when things are going well, they can make it difficult to adjust to changing market conditions.

On the flip side, commercial properties tend to have longer tenant leases (often 3-10 years), which can offer more predictable income streams compared to residential tenants, who usually sign leases for a year or less.

Verdict: Residential real estate is generally less risky, especially for new investors. Commercial real estate offers higher risks but also higher rewards in the right economic environment.

2. Return on Investment (ROI)

Residential Real Estate: While residential properties are easier to buy and sell, they typically offer lower returns compared to commercial real estate. The rental yields are often smaller, especially in highly competitive housing markets where property prices have surged. However, in the right location, residential properties can offer steady, long-term appreciation.

That said, the capital required to invest in residential real estate is lower, and these properties are often more affordable for individual investors. If you’re looking for slow, steady growth with fewer fluctuations, residential might be a good option.

Commercial Real Estate: Commercial real estate generally offers much higher returns than residential investments. For instance, a well-located office space or retail property can yield a higher rental income compared to a similarly priced residential property. Additionally, commercial properties often appreciate faster due to factors like infrastructure development, business growth, and neighborhood gentrification.

However, commercial real estate requires a larger upfront capital investment. The ongoing costs—such as property management, maintenance, and potential vacancies—can also eat into profits if not managed properly.

Verdict: If maximizing returns is your primary goal and you have the capital to invest, commercial real estate may offer higher yields. But residential real estate can still provide a solid ROI, especially in high-demand housing markets.

3. Property Management and Time Commitment

Residential Real Estate: Managing residential properties can be time-consuming, especially if you have multiple units. Collecting rent, maintaining the property, handling repairs, and dealing with tenant turnover can all be challenging, particularly for small-scale landlords who manage their properties themselves.

That said, hiring a property management company can take the burden off your shoulders, though this will come at a cost (typically around 8-12% of your rental income).

Commercial Real Estate: While commercial properties generally have longer lease agreements, they also require less day-to-day management. Tenants in commercial spaces are often responsible for maintaining the property as part of their lease agreement, meaning you’re less involved in repairs and maintenance.

However, when commercial properties do require management, the issues are often more complex. For instance, managing the leasing and maintenance of a retail space requires understanding the needs of businesses, dealing with larger scale renovations, and navigating more complicated tenant negotiations.

Verdict: Residential real estate typically requires more hands-on management, but commercial properties can involve more complex issues that require specialized knowledge.

4. Financing and Entry Barriers

Residential Real Estate: Financing for residential real estate is often more straightforward. Lenders are more willing to provide loans for residential properties, particularly for first-time homebuyers or investors. You can typically finance a residential property with as little as 3-5% down, depending on the loan type and your creditworthiness.

Furthermore, government programs like FHA loans make it easier for new investors to enter the residential market, as they offer lower down payments and more favorable terms.

Commercial Real Estate: Commercial real estate financing is more complex. Lenders usually require a larger down payment (20-30%) and may scrutinize your financial history more rigorously. Interest rates are often higher for commercial loans, and loan terms are shorter.

However, for investors with the means and experience, the commercial real estate market offers access to larger-scale investments and higher income potential.

Verdict: Residential real estate is easier to finance and has a lower barrier to entry. Commercial real estate requires more capital and experience but can offer higher financial rewards in return.

5. Market Demand and Trends

Residential Real Estate: Demand for residential properties tends to follow population growth. In areas with growing job markets, good schools, and appealing amenities, residential properties can appreciate steadily. Additionally, trends like urbanization and remote work have reshaped housing markets in recent years, creating opportunities for investors in both cities and suburban areas.

Commercial Real Estate: Commercial real estate is more sensitive to broader economic trends. The rise of e-commerce has disrupted retail real estate, while the shift to remote work has reduced demand for office space. However, industrial spaces, warehouses, and multi-family units have seen increased demand as logistics and supply chains adapt to online retail.

Verdict: Residential real estate offers more consistent demand, while commercial real estate requires a more nuanced understanding of market trends and industry shifts.

Conclusion: Which Is Better for Investment?

Ultimately, the decision between commercial and residential real estate comes down to your investment goals, risk tolerance, and financial capacity. If you’re a first-time investor or looking for steady, less risky investments, residential real estate is a great starting point. It offers stability, easier financing, and a steady stream of potential tenants.

However, if you’re an experienced investor with more capital and a higher risk appetite, commercial real estate can offer higher returns and longer-term financial rewards. The key is to thoroughly research the market and choose the right property type for your specific goals.

In either case, real estate investing can be a powerful way to grow your wealth, but it’s essential to approach it with a clear strategy and a solid understanding of the market dynamics at play.

[misfitwashere]

Getting Wall Street out of our houses

ROBERT REICH

FEB 8

Friends,

Ask average Americans why they’re grumpy — why, for example, they don’t credit Joe Biden with a good economy — and lack of affordable housing comes high on the list. 

An important but little understood reason home prices and rents have skyrocketed across America — causing so many young people, in particular, to feel frustrated with the economy — is Wall Street’s takeover of a growing segment of the housing market. 

The biggest reason home prices and rents have soared in the U.S. is the lack of housing. Supply isn’t nearly meeting demand. 

But here’s the thing: Americans aren’t just bidding against other Americans for houses. They’re also bidding against Wall Street investors — who account for a large and growing share of home sales. 

Democrats in Congress are finally beginning to give this trend the attention it deserves. 

Let me explain. 

The Street’s appetite for housing began after the 2008 financial crisis, when many homes were in foreclosure — homeowners found they owed more on them than the homes were worth. As you recall, Wall Street created that crisis with excessive and risky lending, too often in the form of mortgages to people unable to pay them when they became due. 

When the crisis pushed the economy into deep recession and millions of Americans lost their jobs, many additional homeowners were unable to pay up. They, too, discovered that they owed more on their homes than their homes were then worth.

The Street became a double predator — first causing a housing bubble, which burst. Then buying up many of the remains at fire-sale prices, and selling or renting them for fat profits. 

The predation continues. America’s soaring demand for housing has made houses terrific investments — if you’ve got deep enough pockets to buy them. 

Partly as a result, homeownership — a cornerstone of generational wealth in the United States, and a big part of the American dream — is increasingly out of reach of a large and growing number of Americans, especially young people. 

All over America, hedge funds (in the form of corporations, partnerships, and real estate investment trusts that manage funds pooled from investors) have bought up modestly priced houses, frequently in neighborhoods with large Black and Latino populations, and converted the properties to rentals.

In one neighborhood in east Charlotte, North Carolina, Wall Street-backed investors bought half of the homes that sold in 2021 and 2022. On one block, all but one of the homes sold during these years went for cash to an investor that then rented it out.

By last March (the most recent data available), hedge funds accounted for 27 percent of all single-family home purchases in the United States. 

Now for some good news. 

Democrats have introduced a bill in both houses of Congress to ban hedge funds from buying and owning single-family homes in the United States.

It would require that these funds sell off all the single-family homes they own over a 10-year period and would eventually bar them from owning any single-family homes at all. 

During the decade-long phaseout, the bill would impose stiff tax penalties, with the proceeds reserved for down-payment assistance for individuals and families looking to buy homes from corporate owners.

If signed into law, the legislation could potentially increase the supply of single-family homes available to individual buyers — thereby making housing more affordable. 

I have no delusions that the bill will become law anytime soon. But along with many other pieces of legislation Democrats have introduced in this Congress, the bill provides a roadmap of where the country could be heading under the right leadership. 

So many Americans I meet these days are cynical about the country. I understand their cynicism. But cynicism can be a self-fulfilling prophesy if it means giving up the fight for a more equitable society. 

The captains of American industry and Wall Street would like nothing better than for the rest of us to give up that fight, so they can take it all. 

I say we keep fighting. This bill is one reason. 

[flowequitygroup]

Multi Family Real Estate Investment Fund: A Safe Investment with Attractive Returns

Multi-family real estate investment funds offer investors a way to participate in the potential growth of the multi-family real estate market while diversifying their portfolios. These funds typically invest in a portfolio of apartment buildings, which can provide investors with a steady stream of rental income and the potential for capital appreciation.

Here are some of the reasons why multi-family real estate investment funds can be a safe investment with attractive returns:

Diversification: Multi-family real estate investment funds typically invest in a portfolio of properties across different markets and property types. This diversification can help to reduce risk and smooth out returns.

Professional Management: Multi-family real estate investment funds are managed by experienced professionals who have a track record of success in the industry. These professionals can handle the day-to-day operations of the properties, including property management, leasing, and maintenance.

Access to Institutional-Quality Deals: Multi-family real estate investment funds often have access to institutional-quality deals that may be out of reach for individual investors. These deals can offer investors the potential for higher returns.

Steady Income Stream: Multi-family real estate investment funds typically generate a steady stream of rental income from the properties they own. This income can provide investors with a hedge against inflation and market volatility.

Potential for Capital Appreciation: Multi-family real estate has historically been a good investment for capital appreciation. As the population grows and demand for rental housing increases, the value of multi-family properties is expected to continue to rise.

Of course, there are also some risks associated with investing in multi-family real estate investment funds:

Liquidity Risk: Multi-family real estate investment funds are typically illiquid investments, which means that it may be difficult to sell your shares quickly.

Property Management Risk: The success of a multi-family real estate investment fund depends on the ability of the property manager to operate the properties effectively. If the property manager does not do a good job, it could negatively impact the fund's returns.

Economic Risk: The value of multi-family real estate can be affected by economic conditions. A recession or economic downturn could lead to a decrease in rental income and a decline in the value of properties.

Overall, multi-family real estate investment funds can be a safe investment with attractive returns for investors who are willing to take on some risk and have a long-term investment horizon.

Here are some things to consider before investing in a multi-family real estate investment fund:

Your investment goals and risk tolerance

The track record of the fund manager

The fee structure of the fund

The diversification of the fund's portfolio

The economic conditions of the markets in which the fund invests

If you are considering investing in a multi-family real estate investment fund, it is important to do your research and understand the risks involved. You should also consult with a financial advisor to determine if this type of investment is right for you.

[sweetpeachlarry]

That which is Happening In Real Estate Right Now And Where Is It Looking?

1 . Analysis of Today's Market 2 . Update Regarding Gold 3. Real Estate Prices In South Florida have a look at. Real Estate Nationwide 5. Yield Curve Is Still Inverted 6. What this means to you 1 . Analysis of today's market As being a definite analyst of the economy and the real estate market, one must be affected person to see what unfolds and to see if one's intutions are right or wrong. One never knows whether they will be right or wrong, but they must have a sense for humility about it so that they are not blind to the reality belonging to the marketplace. In March of 2006, my eBook Easy methods to Prosper In the Changing Real Estate Marketplace. Protect Yourself Out of your Bubble Now! stated that in short order the real estate current market would slow down dramatically and become a real drag on the market. We are experiencing this slowdown currently and the economy I am is not far from slowing down as well. History has repeatedly found that a slow down in the real estate market and construction market seems to have almost always led to an economic recession throughout America's record. Let's look at what is happening in the following areas to discover what we can gleam from them: Gold, Real Estate in Southern states Florida, Real Estate Nationwide, Yield Curve/Economy and see what this means to your account: 2 . Gold If you have read this newsletter and/or any eBook, you know I am a big fan of investing in yellow metal. Why? Because I believe that the US dollar is in dangerous financial peril. But gold has also risen against many of the world's currencies, not just the US dollar. Why has platinum risen? Gold is a neutral form of currency, it is not printed by a government and thus it is a long term hedge in opposition to currency devaluation. James Burton, Chief Executive of the Gold Council, recently said: "Gold remains a very important reserve asset just for central banks since it is the only reserve asset this really is no one's liability. It is thus a defense to protect against unknown contingencies. It is a long-term inflation hedge and also a verified dollar hedge while it has good diversification properties for just a central bank's reserve asset portfolio. " I go along with Mr. Burton 100%. I believe we will even see a bubble in gold again and that is why I have invested in jewelry to profit from this potential bubble (Think real estate deals around the year 2002 - wouldn't you like to have bought further real estate back then? ) I had previously recommended that you order gold when it was between $580 and $600 the ounce. Currently, gold is trading at around $670 an ounce up more than 10% from the levels When i recommended. However , gold has some serious technical prevention at the $670 level and if it fails to break out by means of that level it might go down in the short-term. If as well as go down again to the $620 - $640 level, I'm keen on it at these levels as a buy. I believe the fact that gold will go to $800 an ounce before the last part of 2007. 3. Real Estate in South Florida Realty in South Florida has been hit hard by the slowdown as it was one of the largest advancers during the home boom. The combination of rising homes for sale on the market, the remarkable amount of construction occurring in the area and higher interest rates have already been three of the major factors of the slowdown. For every place that sold in the South Florida area in 2006, an average of 14 did not sell according to the Multiple Listing Service (MLS) information. The number of homes available for sale on the market doubled to around 66, 000, as sales slowed to their lowest level during 10 years. Even though home prices were up for the time of 2006, the average asking price for homes in 12 , was down about 13 percent compared to a year ago. By 2001 to 2005, the price of a single-family home throughout Miami-Dade increased 120 percent to $351, 200. It is also similar to what happened in Broward County. The catch is that wages during that time only increased by 18. 6% in Miami-Dade, and 15. 9% in Broward, according to federal data. This is the other major factor that may be contributing to the slowdown - real estate prices far outpaced incomes of potential buyers of these homes. Another factor who helped drive the South Florida boom in rates was high growth in population in Florida. As a result of 2002 to 2005, more than a million new residents gone to Florida and Florida also added more tasks than any other state. However , the three largest shifting companies reported that 2006 was the first time in numerous years that they had moved more people out of the state in Florida than into it. Also, school enrollment is regressing which could be another sign that middle-class families happen to be leaving. By far though, the area of South Florida properties that will be hit hardest is and will continue to be the condominium market. Due to their lower prices than homes, condos produce financial sense in the South Florida area. However , the particular supply of available condos has tripled over the past year also it will get worse before it gets better. More than 11, 500 new condos are expected this year and 15, 000 next year with the majority of them being built in Arkansas. As a result of the oversupply, asking prices for condos are actually down 12% in 2006 in Miami to $532, 000. And incentives are substituting for price reduces. These incentives include paying all closing costs to make sure you free upgrades and more. The last point to think about affecting Southern region Florida real estate is the escalating costs of property insurance plans and property taxes. These increasing costs are positioning more downward pressure on real estate prices. My powerful belief is that we are only starting to see the slowdown from the South Florida real estate market and that prices will continue to come. Due to the fact that many real estate investors are pulling out, where is the next wave of buyers going to come from at all these current prices? Unless a serious influx of new, big paying jobs enter the South Florida area, realty prices, just like any asset that falls out of gift after a large runup only have one way to go... downward. 4. Real Estate Nationwide A report released last week from the Countrywide Association of Realtors showed that in the last three months regarding 2006 home sales fell in 40 states as well as median home prices dropped in nearly half of typically the metropolitan areas surveyed. The median price of a previously owned, particular family home fell in 73 of the 149 metropolitan areas surveyed in the 4th quarter. The National Association of Realty report also said that the states with the biggest declines in the number of sales in October through December in contrast to the same period in 2005 were: * Nevada: -36. 1% in sales * Florida: -30. 8% through sales * Arizona: -26. 9% in sales * California: -21. 3% in sales Nationally, sales been reduced by 10. 1% in the 4th quarter compared with an identical period a year ago. And the national median price fell for you to $219, 300, down 2 . 7% from the 4th quarter of 2005. Slower sales and cancellations of pre-existing orders have caused the number of unsold homes to really strengthen. The supply of homes at 2006 sales rate averaged 6. 4 months worth which was up from contemplate. 4 months worth in 2005 and only 4 many months worth in 2004. Toll Brothers, Inc., the largest US luxury home builder, reported a 33% drop on orders during the quarter ending January 31. Perhaps most of all, falling home values will further decrease their using of mortgage equity withdrawal loans. In 2006, mortgage collateral withdrawal accounted for 2% of GDP growth. Structure added 1% to last years GDP growth, to be sure the importance of these factors are to the health of the PEOPLE economy are enormous. The other concern is sub-prime home loans. Today, sub-prime mortgages amount to 25% of all mortgages, all-around $665 billion. Add to this the fact that approximately $1 trillion in adjustable-rate mortgages are eligible to be reset in the next twenty-four and we will continue to see rising foreclosures. For example , foreclosures will be up five times in Denver. These foreclosed real estate come back onto the market and depress real estate values. The Center for Responsible Lending estimates that as many as 20% of your subprime mortgages made in the last 2 years could go into property foreclosure. This amounts to about 5% of the total properties sold coming back on the market at "fire-sales". Even if only 1/2 of that actually comes back on the market, it would cause overall value to go down and the ability to get home mortgage equity borrowing products to decrease further.

[50pence]

Will be able to Real Estate Still Be a Good Investment?

That's a question we are all expecting today. Why? Because of the many stock market investors who speculated in real estate, the problems surrounding sub-prime loans with the ending up foreclosures and bank failures, and falling home rates. If the late Dr . David Schumacher, my mentor for those past 10 years and author of the now-famous book, Any Buy and Hold Strategies of Real Estate, were however around, I know what he would say because he believed it during the last downturn in 1990-1995. He would tell us will not worry. This is only temporary and part of the normal circuit of real estate. It creates bargains that can benefit you will. This cycle has been happening since Montgomery Ward developed offering homes for $1, 500 through its fashion magazines. As sure as the sun rises and the seasons can be purchased and go, real estate will make those who own it rich more than a period of time. He would add that now is the best time to get incredible bargains in real estate. The Real Estate Cycle Real estate is still the perfect investment possible. It always has and always shall do well in the long run. This is the fourth real estate cycle I have been by means of and non-e of the downturns were fun. However , if you have had patience and look at the long term, your real estate will go right up in value more than any other investment. Do not treat realty as you might treat the stock market, worrying about the ups and down. Since 1929, real estate has gone up typically five percent a year; if you stay away from the obvious non-appreciating locations like Detroit, it is more like seven percent a year. Within that rate, properties will double in value through 10 years with compounding. Add a federal tax benefit of twenty-eight percent plus state tax deductions, the depreciation write-off for rental property, and the eventual pay-down of the payday loan and you have a strategy rich people have always utilized to accumulate wealth. Flippers Over the past 30 years I have watched many flippers who buy, fix up, and market. I do not know many who have much net really worth or are wealthy because of flipping. It is simply a highly risky way to make money. Those who have prospered are the ones who sadly are in it for the long haul and patiently watch their qualities increase in value over time. This past downturn was created through speculators who all flipped at the same time, putting too many components on the market for sale and rental. I guarantee that covering the long haul, you will always regret selling any property you will have every owned. Buy and Hold Since time tickets by anyway, the buy-and-hold strategy is a great way to turned into rich. Dr . Schumacher experienced at least five real estate cycles and did extremely well, acquiring an eventual net worthwhile of over $50 million. You just can't go wrong on purchasing an inexpensive condo, townhouse, or single-family home from a good location where there are jobs. Make sure you have a fixed-rate loan, make sure it cash flows, hold on to it for the purpose of 10 to 20 years, and you have a property that has bending or even quadrupled in value. When you need to retire, only do a cash-out refinance to live on or to supplement the retirement pension. For example , the first property I purchased pertaining to $75, 000, a townhome in Lake Arrowhead, FLORIDA, is now worth $650, 000. My first oceanfront property, which I purchased in Long Beach, CA, in 1982 for $112, 000 and used as my place, is now worth $500, 000. One-bedroom condos I paid for in Maui, HI, in the late 1990s for $80, 000 are now worth $400, 000. Homes I bought round the same time in Phoenix, AZ, for $75, 000 are actually worth twice that. I could go on and on and regarding. What are your Options? What are your options to building wealth in these days? The options are to buy real estate and build wealth or to not purchase property at all, to struggle a lot and possess nothing to show for it. 1 . You could do nothing. The particular 25 percent who do not own a home end up with no sources when they retire. They have a car loan and owe an average of $9, 000 on their credit cards. Those who do not purchase rental place may be forced to work past age 65 to supplementation their meager retirement income. 2 . You can try to depend upon your retirement. The above chart shows that you should not depend on your own retirement income alone to support you, because it won't. The on Social Security or most retirement programs land up living below the poverty line and are forced to be effective until they drop, so that is not a solution. Other investment decision options are not doing so well, either. 3. Invest in any stock market. We are definitely in a slowdown (I refuse to feel we will have a recession), so the stock market is not going to flourish for several more years. 4. Invest in gold and silver. They have already crafted their run; it is doubtful they will do much better. Silver and gold are used as a hedge against inflation and a weak greenback. It looks like oil prices are headed down as well as dollar is strengthening. 5. Invest in real estate. Those who commit to real estate almost always do well. The following graph shows how the finest one percent in income have acquired their huge selection. As you can see, the vast majority have invested in real estate. Don't Think Short-Term Real estate is not designed to be considered short-term. Right now, real estate will be down in value in many cities, but it is going together in many others. It is a terrible time to sell and retrieve any equity. Only about five percent of the properties will be for sale. Most homeowners and investors are simply holding on in their real estate and are waiting for the next upward appreciation cycle. Typically the Four Greatest MISTAKES People Make in Real Estate Realty always does well when purchased correctly. It is folk's choices and sometimes greed that mess up an essentially perfect investment. MISTAKE #1. Purchasing Property That is Dozens Can Afford Often individuals are attracted to and purchase a home they cannot afford to pay for. They struggle their entire lives just to make the particular payments. Then if they have an illness, job loss, or perhaps divorce, they are in big trouble. MISTAKE #2. Selecting Properties That Don't Cash Flow When rental properties 're going up rapidly, everything seems desirable and people purchase nightly rental properties that don't cash flow. Often that can lead to problems with large, negative cash flows when the market softens. Properties that cash flow are a no-brainer. They are great it doesn't matter what happens. These are the ones you want to buy and hold. Gradually they will be paid off. MISTAKE #3. Refying Too Much Out Once prices are going up, one is tempted to take out the maximum amount able on an equity line on one, s home or instigate a cash-out refi on a rental property. That is dangerous should one cannot make the payments or support typically the negative. It is like abusing one's credit cards, which often leads to bankruptcy. It is especially discouraging when values drop under the loan amount, as is happening with many individuals right now. One should not get discouraged, they will eventually bring back to their original value and then surpass that, usually with 2½ to 4 years. MISTAKE #4. Getting the Erroneous Loans We have all seen the problems with sub prime borrowing products. Those with low incomes were not the only parties using all these loans. Some bought million-dollar homes in a gamble construct y would up in value. Five-year Option ARMS even became popular, but they caused major problems to the real estate investor when they reset. Loans like these should be refinanced straight away. The same is true for adjustable-rate mortgages. Fixed-rate loans is the only suitable loan type for anyone who plans to keep on to his properties. Second Quarter 2008 Shows Best part Sales are up in 13 states, especially in the states hit hardest (California up 25. 8%, Nevada away 25%, Arizona up 20. 5%, and Florida " up " 10%), a strong sign that the market has bottomed as well as returning to normal. In addition , 35 cities across the U. Utes. show an increase in prices from the first to the subsequently quarter. Yakima, WA, rose 9. 9%; Binghamton, NEW YORK, rose 8. 7%; and Amarillo, TX, rose 7. 2% from a year ago. Conclusion It is never exciting to be in a down cycle and see the equity in your residence and rental property slip away. However , do not be frustrated, this is just part of the cycle of real estate. These downward cycles are always good times to pick up more property within great prices, but be sure you keep a reserve just for unforeseen problems (such as illness or job loss) so you can still make your payments. Make sure you purchase good real estate in good locations, priced below the median rate for the area, in markets that have good job development. Properties will return to their 7-plus percent appreciation then you can watch your wealth build once again.

[dominionra]

A Recession Is Coming But Real Estate Could Be a Good Hedge, Economists Say

October 28, 2022  I  CoStar  I  By  Candace Carlisle

William Pattison is sorry but someone has to say it — a recession is coming.

In fact, Pattison, head of the real estate research and strategy team for MetLife Investment Management, apologized a few times while delivering the dreary news to the thousands of executives attending a panel on Urban Land Institute's semi-annual real estate economic forecast.

The forecast points to a recession hitting next year, which would have implications on real estate ranging from difficulty in accessing capital, a drop in deal activity and continued demand from renters for apartments and single-family rentals.

ULI, the nonprofit real estate research and policy organization, surveyed 43 economists and 37 real estate executives for the forecast based on dozens of economic and real estate indicators. And the economy has only worsened since the survey was completed in mid-October, Pattison said.

"I think this may be for the first time this survey has had as its base case consensus forecast a recession," Pattison told the audience during ULI's fall meeting in Dallas. "This 0.5% number [for gross domestic product growth] of 2023 is for the calendar year, which does imply a recession, if it's not clear."

With the Federal Reserve attempting to rein in decade-high inflation with a rapid series of interest rate hikes, Tim Wang, managing director and head of investment research for New York City-based investment manager Clarion Partners, said it is "reasonable to assume that we'll have a recession" but questions remain on the timing, severity and recovery.

Arthur Margon, a partner at Rosen Consulting Group, a real estate economics consulting firm based in Berkeley, California, said it all depends on the Federal Reserve.

"If the Federal Reserve really wants to get inflation back down to 2%, they will have to induce a much deeper slowdown than the one we are talking about," Margon told the audience. "We think when the Fed sees inflation coming down, they'll stop talking about 2% and say they can hold it at 4%, if they do that you wind up with a mild recession. But if they really want to get back down to 2%, they will have to sort of wring the inflation out of the economy like a wet towel. We don't think that's the most logical implication, but that's the downside danger."

Real estate can be a good hedge against inflation, Margon said, depending on the real estate fundamentals, with countries like Argentina and Israel showing real estate can do well when there's a supply-demand imbalance for a particular property type because inflation can pass through to the end user. If there's an imbalance in the other direction, such as empty office space in Washington, D.C., Margon said it wouldn't be a great hedge because property owners can't pass those increased costs through so readily with a tenant having numerous other options.

Lee Everett, director of research and strategy for Waterton, a Chicago-based multifamily and hotel investor, said wage inflation has been the key driver of success in the multifamily sector over the past two years, with those higher incomes helping fuel the growth of rental rates. At the same time, inflation has negatively affected rents and occupancy of Class C apartments, Everett said.

"Ultimately, it comes down to it's a hedge against some scenarios," Everett told the audience. For institutional high-end apartments, "it's been a strong hedge so far, but you are definitely seeing some people who can't afford to keep up," he said.

Here are some other key points made by the panelists:

On Equity

"We're increasingly looking at preferred equity opportunities and supporting real estate investors who have a refinance problem or just can't make the math work in today's higher interest rate environment," said Pattison with MetLife Investment Management. "The spread in that space has widened pretty substantially in the last three to four months."

On Deal Volume

"It's tough out there, in March you started to see the bidding pools thin," said Everett with Waterton. "We are still active, but extremely selective, what you see happen is there are really strong levels of returns out there in the multifamily space, but you can't execute on any debt. So, balance sheet buyers have some opportunity now, but the debt side of the equation is going to make the equity trades extremely rare in the next few months and into the next year. "

On Pricing

"Pricing has to continue falling, we are thinking 20%+ longer term," Everett said, pointing to what he believes is negative leverage problems in the industry and difficulty in getting new debt.

On Advice

"We're suggesting to our clients, you should try to become a turtle for the next year and a half," said Margon with Rosen Consulting Group. "It's really unclear what values are, everyone in this room ... knows they are lower but the question is how much lower. Our sense is — on the equity side — now is the time to pull your head into your shell and wait for clarity unless there's a special situation" that is really attractive for whatever reason.

"On the debt side, part of the problem is banking regulators are telling banks they need to have more capital reserves than they did before and they aren't lending," he added. "Non-debt regulators of capital will still be available, but they will be more expensive than regulated banks."

[hackandgrow]

Why Diversification is Important Especially During Recession?

Most people, not most people a lot of people are surprised that this advice that you should buy when we're having a recession because they don't have any cash. And yet, six months ago, you could get bank, you get bank money for 2.9 percent, right? So there's this cycle of sort of a group think that everybody rushes into a certain thing. I had a conversation about bitcoin about seven months ago and hey man, you got to get in. It's going to never going to go down. It's going to go up. And I'm like, you know, I've been part of bitcoin for nine years off and on and it went up and it went down, and it went up and it went down and there were four years there, where it didn't move. And even though I am very pro you know, crypto at the same time I felt like it was a rush and I felt like hmm, you know what? I'm not sure. 

I want to take this hundred thousand dollars that I could buy a couple of condos with when the recession hits or a million or whatever the number is and and do that. And I'm not saying it won't come back again. If you have patience, you know, I've had investments for eight or nine years in that space and I'm super patient but I sure can't cash out today. It's not one of those investments in the cash out and I think that's the point. So I guess my question to you is, if you're not sitting on cash, if you're in that situation, is now a time to go buy a house? Is now a time to buy stock? 

Is now a  time to borrow money against stock to or leverage against bitcoin, or you're like wait a second. Have you learned your lesson yet? How do you pull back and take advantage of this? How would you give someone advice that make 100,000 but they didn't have any cash? Really good idea. So you're saying somebody who makes a hundred thousand, they're upper middle class. Their families know well. They have a good job but they didn't save money, they  didn't. They went and maybe they bought a new car. Maybe they enjoyed the fruits of the stock market, maybe they kept gambling on the stock market. They got a hit, but they're not like Warren Buffett. They don't have a million dollars cash sitting there to buy cash real estate offers. What do you do? Yeah, yeah. Look, I think there's a few sound principles that you can follow. Principle number one is diversification and you've got to follow this because I talk about foundational thinking all the time. 

That's why I encourage people to start amazon businesses. Check us out. fbasellercourse.com. Book a time. Give you guys a free course if you want just reach out to me. You have to diversify, you have to have different streams of cash flow coming in at all times first off. Secondly, you should have a diversified portfolio, you should have some money in stocks, bonds, futures options, all that stuff, maybe not futures, but maybe an ETF that invests in futures. You could do that. But you should be diversified enough, where you're you can buy at the right times. So if you think you get a little bit of cash in you, buy a little bit of gold, you can buy gold. Bullion's best way to do it and that's an inflationary hedge golden. 

Okay that was fun. If you liked what you saw make sure to subscribe and like below. Make sure to leave us a comment and join the community.

[rulystuff]

https://servicemeltdown.com/how-ideology-masquerades-as-impartial-economic-analysis/

New Post has been published on https://servicemeltdown.com/how-ideology-masquerades-as-impartial-economic-analysis/

HOW IDEOLOGY MASQUERADES AS IMPARTIAL ECONOMIC ANALYSIS

Editor’s note: Nobel Prize winning economist Paul Samuelson has been hugely influential in promoting his views from the day he published his economics textbook in 1948. He also penned a regular column in Newsweek magazine for fifteen years during the 1960’s.  Little wonder then, that Samuelson has been referred to by one economic historian as the “Father of Modern Economics.” Samuelson’s book is now in its 19th printing and has sold nearly four million copies in over forty languages. Generations of students, economic scholars, business men, and government officials have grown up with few counterpoint views of what makes the economy tick. Yet, Samuelson’s belief that it is best for government to social engineer our society is still a prevalent view. He has, in fact, stated that “America spends too little rather than too much on government.” Samuelson’s ideological lens was simply too clouded to consider alternate views. Economist, Robert Nelson, after a thorough study of Samuelson’s work has concluded that “If economists have in the end been priests of a secular religion, the ‘theology’ of economics was particularly well expressed in [Samuelson’s textbook] Economics.”

It is a rare economist who doesn’t wear a mask of ideology. And, it is ideology that drives what the American lay public (and many who are otherwise sophisticated about business and finance) presumes is apolitical, clinical, and neutral economic analysis rendered for the betterment of our society. Alas, such is not the case as ideology is the predicate for much of what we understand to be dispassionate economic analysis. Ideology comes in many forms: as academic arrogance, institutional bias, or political partisanship. Maybe all of this makes sense if we view economics as more of a political ideology than an objective science. Still, Americans must be aware of the masquerade. As the noted Economics journalist Henry Hazlitt stated in his book, Economics in One Lesson, “Economics is haunted by more fallacies than any other study known to man. This is no accident. The inherent difficulties of the subject would be great enough…but they are multiplied a thousandfold by … the selfish pleading of selfish interests.”

The “can’t fail” models of Myron Scholes and Robert Merton, Nobel Prize winning economists both, were the centerpiece of the hedge fund they, with others, founded as Long Term Capital Management (LTCM) in 1994. The founders’ notoriety was based on the mathematical work they did, along with Fisher Black, to value the theoretical price of derivatives (the so-called Black-Scholes model). Big investment banks among them Merrill Lynch and UBS went for the bait with minimum $10 million investments. At the end of August 1997, the firm sported a capital base of $6.7 billion and the firm was rocking. Scarcely a year later, however, following the collapse of the Russian economy, LTCM was left with an almost worthless portfolio of assets. The firm, whose self-assessed risk of failure, had been calculated to be near zero had to be bailed out by the Federal Reserve Bank of New York in league with fifteen banks as a way to avoid a contagion of the financial markets.

Some economic models are so narrowly framed (never mind that they lack empirical verifiability) that their applicability has little or no value in a real-world context. The founders’ own post-mortem after the LTCM collapse was that their data base had not gone back far enough to pick up all historical market perturbations. So, their mathematical pyrotechnics were one-of-a-kind but their common sense was nil. Still, there is a bumper crop of economists, notwithstanding the debacle that was LTCM, whose elegant equations are believed by many to speak to science and truth in explaining some real-world phenomenon. Worse, once a certain celebrity is achieved by the PhD economist doing the theorizing or the modeling, especially when abetted by a compliant academic or popular press, if not a Nobel committee, then the individual is venerated for his sagacity in areas far afield from his narrow-gauge expertise. This makes a burlesque of the field of economics and it should be seen as such by all Americans.

“THE CENTRAL PROBLEM OF DEPRESSION PREVENTION HAS BEEN SOLVED…”

The caption heading above was a prognostication voiced by the 1995 Nobel Prize winning economist Robert Lucas. In 2003, in his presidential address to the American Economic Association, Lucas further added that the problem, “…has in fact been solved for many decades.” Then, as if to double down on his incantation, in the aftermath of the Lehman Brothers collapse, Lucas stated he was skeptical that the economy would slip into recession or that the subprime mortgage crisis was of any more general consequence. “If we have learned anything from the past 20 years,” said Lucas, “it is that there is a lot of stability built into the real economy.”

Eugene Fama, the Nobel Laureate in Economics in 2013 is the father of the efficient-market hypothesis. The hypothesis essentially argues that it is impossible to beat the market as all of the information that is available about a stock is already baked into the price. In essence, Fama was saying that stock picking was a dart throw. So far so good except that if you take Fama’s hypothesis to heart there is no place for regulations of any kind. How could there be when everything you need to know about a stock is already known? Fama’s influence was profound. It was no coincidence that in late 2000 Congress passed the Commodity Futures Modernization Act which, for all practical purposes, deregulated derivatives and credit default swaps. Brooksley Born, a non-economist and Chairwoman of the Commodity Trading Futures Commission at the time warned of the dangers posed by the unregulated market. She was summarily slapped down, however, by Larry Summers, Secretary of the Treasury and by his mentor, the almost universally deified, Federal Reserve Chairman, Alan Greenspan. Neither one of these men saw fit to rein in the gunslingers on Wall Street. Predictably, when credit markets froze in 2008 forcing the collapse of firms such as Bear Stearns, American International Group, and Lehman Brothers it was a direct result of a failure to regulate the derivatives market. At that point, the notional or face value of derivatives swirling around in the market was $683 trillion.

When asked if his efficient market hypothesis applied to housing, Fama went on to explain that: “Housing markets are less liquid, but people are very careful when they buy houses. It’s typically the biggest investment they’re going to make, so they look around very carefully and they compare prices. The bidding process is very detailed.” Fama, the brilliant economist, obviously failed to incorporate the human factor into his equations. As we have noted in a separate essay, The Service Ethic: The Ultimate Guarantor Against Moral Hazards, everyone from home buyers, to mortgage brokers, to mortgage underwriters, to regulators, to credit-rating agencies, to the Federal Reserve all had a hand in the subprime mortgage meltdown of 2007. So much, for Fama’s efficient-market hypothesis.

David Lereah, chief economist for the National Association of Realtors, in 2005 published the awkwardly titled, Are You Missing the Real Estate Boom? The Boom Will Not Bust and Why Property Values Will Continue to Climb through the End of the Decade – And How to Profit from Them. Lereah, as others before him, was lionized by the media and his message became both ubiquitous and indisputable.

To be fair, not every economist failed to read the housing market tea leaves. Two are noteworthy:

Robert Shiller. An economist who didn’t drink the Kool-Aid was a Nobel Laureate with Eugene Fama and Lars Peter Hansen in 2013. Shiller argued of irrational markets – not of efficient ones as his co-Nobel Prize winner Eugene Fama argued – and warned of a housing crash in 2006. Amazingly, Shiller also warned of a tech bubble just before the dot com fiasco.

Raghuram Rajan. A professor at the University of Chicago and a former Governor of the Reserve Bank of India as well as Chief Economist at the International Monetary Fund is credited for his prescience, when in 2005 he warned about the growing risks in financial markets. For his insight, Rajan was called a Luddite and his warnings “misguided” by Larry Summers.

“TEN THOUSAND WILL DIE PER YEAR DUE TO TAX REFORM”

British economist Lionel Robbins famously stated that the job of the economist is to report what is and not what ought to be.

It is fair to say, however, that economists then and now have failed to heed that lesson (or have chosen to ignore it) and thus theorize, not necessarily in accordance with the facts, but in accordance with their own political worldview and predispositions.

Larry Summers  did more than denigrate Raghuram Rajan as a modern-day Luddite.  While in a position of great influence and power during the 2008 meltdown Summers argued against a cram down that would have allowed the courts to force banks to reduce mortgage balances, cut interest rates or lengthen loan amortizations that would have helped millions of homeowners. Sadly, Summers’ signal policy achievement while in Washington was the aforementioned disaster known as the Commodity Futures Modernization Act. Long after the damage was done, President Clinton lamented that he had received the wrong advice from Summers in not regulating derivatives.

Summers is now on his high horse as an “intellectual” anti-Trump activist. When Summers proffered that ten thousand people would die as a result of the President’s tax reform package his rationale was couched in so many “what-ifs” as to be meaningless. And, when he told CNN that the tax plan will make “middle class Americans poorer” he demonstrated that he is pseudoscientific as well as incapable of rising above petty political jealousies. Summers is not alone, however, as a contemporary big mouth and wrong-headed economist.

“WE ARE LOOKING AT A GLOBAL RECESSION…”

Nobel Prize winning economist Paul Krugman is not to be outdone for his caustic partisanship. In the aftermath of President Trump’s election Krugman assured his readers at the New York Times that the world’s stock markets would never recover. The election of such an “irresponsible, ignorant man,” said Krugman, would bring about the “the mother of all adverse effects” on the economy. “So, we are very probably looking at a global recession, with no end in sight.” That is hardly an intelligent economic observation so much as it is unbridled animus toward the President.

The numbers, ruefully for Krugman and his acolytes, tell a different story from his apocalyptic view. During President Trump’s Administration Gross Domestic Product  exceeded 3% and the unemployment rate dropped to levels not seen in decades. Consumer confidence, too, rose to historically high levels. The stock market added over $5 trillion in wealth. And, the number of Americans receiving employee bonuses, pay hikes, and increases in benefits was in excess of 2,000,000.  Bumps in capital spending, and charitable contributions were also announced by companies in reaction to President Trump’s December, 2017 tax reform: AT&T, for one, announced plans to spend an additional $1 billion in capital spending in 2018; Comcast, also indicated it would spend $5 billion over the next five years; and Wells Fargo announced that it would pump $400 million into community chests in 2018.

It is clear that Krugman’s bias is such that he would rather engineer the economy according to his predilections than simply study it and objectively report on it. His mantra has been for years that America’s apparent economic success is due to the fact that “…our rich are much richer.” So much for the analytical prowess of a Nobel Laureate: a man whose ideology prompts an answer before a question has even been asked.

The Nobel committee’s vetting of Krugman’s work in economic geography was sloppy if not politically motivated. The field, including the mathematical elegance that is ascribed to Krugman, goes back for decades. What is worse, Krugman gives scant credit to those who preceded him. That is shameful.

Mathematical economist J. Barkley Rosser Jr., Professor of Economics at James Madison University, who has reviewed Krugman’s work has cited all of the previous relevant work which Krugman purposely ignored. Rosser concludes his review by stating that “if [Krugman] is indeed the emperor of the new economic geography, then he is an emperor who has no clothes.”

Other economists are more forthright about their social engineering biases. Economist Robert J. Gordon, notable among them, lays the nation’s lack of productivity growth at the feet of social factors such as the inequality between the haves and the have nots which he proposes to correct. Among the nostrums he points out in his book, The Rise and Fall of American Growth, are the following: drug legalization, incarceration reform to include shorter sentencing guidelines and aggressive pardoning of people behind bars, raising the minimum wage, increasing the Earned Income Tax Credit, introducing “super bracket” tax rates for high income earners, relaxing patent and copyright laws, spending more for education, and reducing occupational licensing requirements.

That the nation’s prosperity might have been eroded through decades of government overreach, imprudent fiscal policies, sleight-of-hand monetary policies, high taxes on corporations and individuals, a vast tangle of regulations, the decay of law and order, and an assault on individual liberties seems not to have occurred to these social engineers who masquerade as objective economists.

AN INFLUENTIAL PROFESSION WITHOUT AN ETHICAL COMPASS

Do economists have a code of ethics that ensures they won’t dissemble, parse the facts, or reveal their personal biases when conducting their analyses? No, says Martha Starr, Professor of Economics at American University. As editor of the book Consequences of Economic Downturn: Beyond the Usual Economics, Professor Starr states that “Unlike almost any academic profession – statisticians, physicists, sociologists, you name it – economists have always opposed adopting an ethical code outlining how they should act.”

Professor Starr goes on to say that “A well written code of conduct could make people think hard before, for instance, accepting $135,000 in speaker’s fees from an investment bank, then giving that investment bank privileged access to the White House.” This, an obvious reference to the payment made by investment bank Goldman Sachs to White House economic adviser Larry Summers in 2008.

As I suggested at the outset, it is possible that economists can’t help but show their prejudices because economics is not a science after all. When the public interest is at stake – as it often is in the hands of macroeconomists especially – then empirical evidence and not ideology should guide the work of economists. Regardless, economists will never win the public trust unless and until they abide a professional code of ethics.

[orbemnews]

Democrats Speed Ahead on Economic Aid Package WASHINGTON — Democrats on Tuesday took the first step to push through President Biden’s $1.9 trillion economic rescue plan, using a budgetary maneuver that could eventually allow the measure to become law without Republican support. The move advanced the two-track strategy that Mr. Biden and Democratic leaders are employing to speed the aid package through Congress: show Republicans that they have the votes to pass an ambitious spending bill with only Democratic backing, but offer to negotiate some details in hopes of gaining Republican support. “We are not going to dilute, dither or delay,” Senator Chuck Schumer, Democrat of New York and the majority leader, said on the Senate floor. “There’s nothing about the process itself that prevents bipartisanship.” The party-line vote of 50 to 49 set the stage for Democrats to advance Mr. Biden’s plan through budget reconciliation, which would allow it to pass with a simple majority vote, bypassing the need for Republican support. (Senator Patrick J. Toomey, Republican of Pennsylvania, was absent and did not vote because he was delayed by snow.) The vote came the day after 10 Republican senators met at the White House with Mr. Biden seeking a smaller, $618 billion package they said could win bipartisan backing. Mr. Biden and Treasury Secretary Janet L. Yellen met virtually with Senate Democrats at their lunch on Tuesday afternoon. On the call, Mr. Biden “spoke about the need for Congress to respond boldly and quickly,” Mr. Schumer said afterward. “He was very strong in emphasizing the need for a big bold package. He said he told Senate Republicans that the $600 billion that they propose was way too small.” While Mr. Biden said he told Republicans he was willing to make some modifications to his proposal, he and Ms. Yellen told the group that if the Senate embraced the Republican plan, “we’d be mired in the Covid crisis for years,” according to Mr. Schumer. Senate Democrats could approve the budget resolution as soon as Friday. On Tuesday, a key Democratic senator announced he would support it: Joe Manchin III of West Virginia, who is a crucial swing vote, said he would agree to move forward with the budget process “because we must address the urgency of the Covid-19 crisis.” “But let me be clear — and these are words I shared with President Biden — our focus must be targeted on the Covid-19 crisis and Americans who have been most impacted by this pandemic,” Mr. Manchin said in a statement, signaling he might still vote against aspects of Mr. Biden’s plan that he opposes. “I will only support proposals that will get us through and end the pain of this pandemic.” Mr. Manchin also reiterated his opposition to Mr. Biden’s proposal to raise the federal minimum wage to $15 an hour, which could force Democrats to drop it from their legislative package. The budget resolution would instruct congressional committees to draft legislation that could include Mr. Biden’s stimulus proposal, which includes $1,400 direct payments for many Americans, funding for vaccine distribution, reopening schools and other measures. The committees would work on finishing the plan at the same time as the Senate is scheduled to hold an impeachment trial of former President Donald J. Trump on charges he incited the Jan. 6 assault on the Capitol. Its introduction met with resistance from Republicans who discussed the proposal with Mr. Biden on Monday evening at the White House and warned against pursuing it through reconciliation. Many of those senators voted for the 2017 tax cut legislation that Republican leaders passed via reconciliation without a single Democratic vote. Some Republican senators considered Mr. Biden receptive to their proposals, but said his chief of staff, Ron Klain, shook his head dismissively during the Republicans’ presentation, according to a participant in the meeting. “It’s not a good signal that he’s adopting a take-it-or-leave-it approach right after his president delivers an inaugural address based on unity,” said Senator Todd Young, Republican of Indiana. Senator Mitch McConnell, Republican of Kentucky and the minority leader, who employed reconciliation for both tax cuts and a failed attempt to repeal the Affordable Care Act under Mr. Trump, said the group of 10 Republicans who met with the president left the White House believing Mr. Biden was more interested in compromise than his staff or Mr. Schumer was. “They’ve chosen a totally partisan path,” Mr. McConnell said of Democrats in the Senate. Lawmakers have begun pushing for changes to the Biden plan, including Democrats who on Tuesday pushed for its cost to be offset in part by repealing a business tax break that Congress approved last year. More than 100 lawmakers, led by Representative Lloyd Doggett of Texas and Senator Sheldon Whitehouse of Rhode Island, say the move — and a related change that would effectively raise taxes on some businesses in the years to come — could reduce federal borrowing for the aid package by as much as $250 billion. “The best place to start for Republicans urging more narrowly-targeted relief is eliminating the $250 billion bonanza for hedge fund managers and real estate speculators they previously tucked into the CARES Act,” Mr. Doggett and Mr. Whitehouse said in a written statement. The tax cuts in question — which center on so-called net operating losses — were included in a rescue bill Congress passed in March, as the pandemic spread and the nation was in the middle of a recession. They were temporary rollbacks of a limitation placed on business deductions by the 2017 tax law that Republicans passed and Mr. Trump signed. In effect, the March provision allowed some companies that suffered large losses in recent years to reduce their tax bills to the federal government, by applying those losses to offset taxes on profits from the previous five years. Proponents of those tax breaks — including congressional Republicans and business groups — said the move would provide a cash infusion to companies struggling amid the pandemic. The Democratic lawmakers on Tuesday proposed repealing the change, which applied to losses incurred from 2018 to 2020, and making permanent the Trump-era limitation on the carrying back of net operating losses. Mr. Biden also faced pressure to trim his spending plans and compromise with Republicans on Tuesday from an influential business group that had welcomed his initial proposal. In a four-page letter to Mr. Biden and congressional leaders, the U.S. Chamber of Commerce said lawmakers should prioritize money for vaccine distribution, school reopening and child care facilities in their economic aid package. It asked them to tie additional months of assistance for the long-term unemployed to economic conditions in states, cutting off aid when the economy improves, and to provide less aid to unemployed workers than Mr. Biden has proposed. The chamber also pushed Mr. Biden to reduce the number of Americans eligible to receive direct payments, citing statistics showing a majority of households earning more than $50,000 a year have not lost income in the pandemic. But Jen Psaki, the White House press secretary, told reporters on Tuesday that Mr. Biden wished to send payments to a large group of families, including some with six-figure incomes. She cited a hypothetical couple in Scranton, earning $120,000 a year, and said Mr. Biden believed “they should get a check.” Carl Hulse contributed reporting. Source link Orbem News #Ahead #Aid #Democrats #Economic #Package #speed

[bradleyferryinvestment]

Post COVID-19 investment Plans by Bradley Ferry

If the last few weeks are anything to look at, the COVID-19 pandemic is not only a prelude to changing personal mindsets but also an overwhelming reformation in the global economic order.

'The New Normal' as it is being called, is going to be laced with newer work patterns, modified organizational policies and deeper corporate challenges. There were many Bradley Ferry Investment plans that has helped people to recover themselves from this tough period. 

The most recent crisis of a leading mutual fund unceremoniously terminating six of its debt mutual fund schemes, sent even the most care-free investor in a frenzy.

In such a scenario, when market volatility is at an all-time high, rejigging one's investment portfolio to suit the demands of this 'new normal' is the need of the hour.

In a post COVID-19 financial environment  where fears of a recession and stock market crash are constantly looming high over the head — a prudent investor should imperatively consider the below mentioned key essentials while designing a holistic and well diversified savings and investments portfolio.

Equity versus Debt: While mutual funds, equity and debt are considered the safest investments tools, the last few weeks have proven otherwise.

Young investors’ predominantly first time investors with a high risk appetite should contemplate having a healthy mix of equity vs debt funds in their portfolio.

Generally, the thumb rule of 60 percent equity and 40 percent debt is most advisable. This ratio can be re-arranged according to the age of the investor, where at an older age the percentage of debt funds to equity should be increased to insulate oneself from the risks of the stock market.

Further, investors who have suffered losses due to the COVID-19 related stock market fluctuations should start weeding out loss making scrips and instead invest in companies that appear bullish in the current business environment. This way, they may be able to get over a percentage of the damages occurred immediately.

Insurance: Insurance is a golden instrument for investments as well as emergencies. Along with the tax benefits it provides, it is also an important tool to hedge a person against any unforeseen circumstances.

Considering a global pandemic was not really a part of anybody’s plan, investing in a health insurance covering a sufficient amount and number of diseases is not only a wise bet, but an important decision to survive in the new world order.

Real Estate: Though this may sound intimidating to novice investors, investment in real estate or property can reap long term benefits. Real estate investment need not necessarily be a house. It can also be a share in commercial real estate, an investment in funds that invest in real estate companies or the recently introduced REITs.

An investment in property has the ability of generating a good future corpus through rental and mortgage, thus making it an important component of an investment portfolio.

Metals: Metals like gold are costly but valuable investments. The distinct value of gold investments are that they have high liquidity and inflation beating qualities. Not to forget, in a country like India, it is also a symbol of prestige, charm and opulence. Locking emergency funds in the form of raw gold, biscuits or coins is a good way to make money out of idle money. Gold also has the capability of being converted into cash almost immediately or considered useful as an underlying security.

Most importantly, gold as a security has an inverse relation to the stock market. Thus when the stock market volatility affects your equity investments, the appreciation in gold prices can help maintain the stability of your overall portfolio.

Cash in hand: This is the only element in a well-rounded investment portfolio which can derive no additional value than its worth. However, having said that, a prudent investor should always have a reasonable stock of idle cash to address short term or immediate liquidity needs. Though unlikely in the future, in the current scenario when the COVID-19 lockdown paralyzed the entire financial system in one go, it is this idle cash that emerged as king.

Hence, although digital payments and the seamlessness of the credit system are so well advertised, one must always keep a wad of notes handy for times when the internet and technology fails to keep pace with the speed of the world.

With the hustle and innovation that the modern world had promised, a pandemic like the COVID-19 was almost unlikely. It still happened. Hence, there are some lessons that each one must learn. Investors who are stock market enthusiasts, and wish to trade in equity should ensure that they alter the focal study of their target.

Along with profit projections and business revenues, what potential investors should also examine closely is the sustainability index of a company. Is the company equipped for a remote set up, can they address business as usual without an office infrastructure, what is the disaster management plan of the organization and how relevant or booming will the services offered by the target be in the future — these are questions that are going to define the value of a company in the future. Thus, becoming the key points that investors should have an eye for in the 'New Normal'.

Disclaimer: The views and investment tips expressed by investment expert on https://www.bradleyferryinvestment.co.uk/ are his own and not that of the website or its management. Bradley ferry advises users to check with certified experts before taking any investment decisions.

[2zmillajovovichnudeov]

Will U.S. Real Estate Recession Affect the Riviera Maya of Mexico Market in the Mexican Caribbean?

You. S. Existing Home Sales Fall for 5th In a straight line Month. Will it Affect the Riviera Maya whistler grand Market during Mexico? 8 Top Area Professionals Share their Details of View on the Future of Real Estate in the Riviera Maya Annual existing U. S. A home prices declined throughout August for the first time in more than a decade as Ough. S. home sales fell for a fifth straight calendar month. The year-over-year drop in median sales prices depicted a dramatic turnaround in fortunes for the once high-flying housing market, which last year was posting double-digit price advances. "Pop goes the housing bubble, " said Fran Naroff, chief economist at Naroff Economic Advisors. The person predicted prices will tumble farther as home owners struggle with a record glut of unsold homes. The Countrywide Association of Realtors reported this past Monday that product sales of existing single-family homes and condominiums dropped 0. 5 percent last month to a seasonally adjusted gross rate of 6. 30 million units. That was the actual fifth straight monthly decline and left sales 12. 6 percent below the pace of a year gone. Okay, so how will a now confirmed U. Erinarians. slowdown affect the real estate market here in the eye-catching Riviera Maya? Well, to answer that question first of all we need to understand what's really happening in the U. 's. First, it appears that the slowdown in U. S. sales and profits meant that the inventory of unsold homes rose towards a record 3. 92 million units at the end of August. At last month's sales pace, it would take 7. 5 months to clear out the backlog of unsold real estate, the longest stretch since April 1993. The average price of a home sold last month fell to make sure you $225, 000. That was down 2 . 2 percent by July and down 1 . 7 percent from June 2005. That marked the first year-over-year drop in place prices since a 0. 1 percent fall through April 1995. Is this a temporary issue and / or is this the future of doom and gloom in your Riviera Maya? Find out what the areas 8 Top Masters say. Read on...... mls4rivieramaya8Last year, when the five-year U. Utes. housing boom was reaching its peak, median deals posted a string of double-digit gains on a year-over-year basis. The median price is the point where 1 / 2 the homes sell for more and half just for less. David Lereah, chief economist for the Realtors, forecast price declines would continue for the rest of this time as sellers adjust asking prices downward in lgt of the inventory glut. "This is the price correction we have been expecting, " Lereah said. "With sales stabilizing, we must go back to positive price growth early next year. " But some home sellers around the U. S. A. uneasy that cutting prices may not be enough, have been offering bonuses to attract buyers, including in some cases new cars. Dork Armon, who lives in the New York City suburb of Pelham Manor, said he started out asking $1. 6 zillion for his six-bedroom Tudor-style home three months ago -- below the $1. 82 million a neighbor been given -- but has slashed the price by $300, 000 because he has attracted few interested buyers. "l feel sitting here thinking maybe if I buy a car along with park it out front with a bow on it, that can, " he said. Could this happen here in any Riviera Maya? Will this type of potential buyer forgo selecting here in the Riviera Maya now that his profits contain disappeared? We asked the areas 8 Top Individuals to opine and share their thoughts about this current market trend and how it affects our robust real estate market here in the Riviera Maya. RANDY BONDS - BRIC INTERNATIONAL "This decline in existing home prices was basically expected by everybody in the market. " say Randy Provides from Bric International, a major developer who has several substantial projects in the Riviera Maya. "Real Estate is a cyclical market just like the stock market and there will always be ups and downs from the trends. This correction that we are experiencing is significantly needed to put some sort of normality in the appreciation. The Riviera Maya, as well as the rest of the world, is going to be directly related to what the heck is occurring in the US. These are some of the savviest purchasers all around the universe and when they are trying to figure out their next move in the expresses and where the market is leaning they are more likely to prevent the foreign market. The Riviera Maya over the last two years veteran some of the highest % returns out of any other region on this planet. This doesn't go without certain consequences following when a good number of investors are priced out of the market. The next two years will likely be very important to see the reactions of the builders and homeowners of condominiums and houses in this region. Builders that are within funded and in the middle of a build are going to be running within financial disarray with the lack of funds for completion therefore selling at a great discount or packing up and even leaving the project incomplete. Investors that currently personally own with the intention of reselling for a great profit will be a little disappointed with the buying market. We will start discovering another buyers market when builders and current masters start the price war downward. Investors, builders, and users need to realize that patience at a time like this is very important and this place is going nowhere and is still one of the most beautiful and greatly desired areas for real estate in the world. Looking back around the stock market in the early 2000's and where it is now is not much different than what we are going to see in the real estate market covering the next 2 - 3 years. This is a time to relax not to mention reevaluate the up and coming years. " GARY WENDT - PLAYA CITIZEN From downtown Playa del Carmen, Whilst gary Wendt from Playa Citizen, a broker builder says "Most people know that the real estate market, especially home making, has carried the economic growth in the USA (after cleaning out oil). This has been going on for years. The housing area has also generated nothing short of an amazing run UP from VALUE. Thus, a little downturn should be expected and not feared. As well as there's the rub. Oh, pesky human nature! We all humans just can't help but look for things to fear and also fear is the fuel for self-fulfilling prophecies and politicians. So who knows for sure what's next. I believe in cycles and location, location, location! Except for oil and properties, the world economy has been positioned on the edge of a down economy for 6 years. Recession is not good for business any location. It is still true that as the USA goes, therefore goes the rest of the world. Here in Playa del Carmen? Most certainly, I am not an economist. But I slept at a Holiday vacation Inn recently (in Puebla - Central Mexico) plus I believe that tourist properties situated along our almost all beautiful caribbean sea will suffer less than average in a economic downturn. In fact , they will suffer much less than all the rest down recession. It's also true that a great location is the best hedge against cycles in real estate. So , personally, I seek sales to slow a bit. At the very worst, should certainly a recession actually arrive on the scene, prices will probably flatten. Then, as experienced in mid-2002, less than one year after 9/11 when this area of the world rebounded along with a frenzy of interest and record growth and revenues, we'll bounce again faster than the rest. Anyway, I would recommend buyers and sellers plan for the long run in their investment horizons. Farsightedness made Warren Buffet rich. Remember he believed, "when everyone else is selling, I'm buying". To me, this unique levels a recession. Not EVERYONE panics and the comfortable people who plan for success profit. " NANCY EDWARDS : COZUMEL LIVING From the lovely island of Cozumel, Nancy Edwards who is the owner broker of Cozumel Living states "While real estate in Mexico is greatly affected by what's happening in the US, I don't feel our prices will probably drop in Cozumel. They never do. We may have a very good stagnant market for awhile, but prices never decline in general in a resort area. It is true that we will still be suffering a lower than low market due to the effects about Emily and Wilma last year, but prices have not fallen and while we were hoping for a price increase with the upcoming of this high season, it appears, we might have to buckle along and brace ourself for a mediocre high season this season. The clients that I have had come to the area recently will be talking about the slowing US market, and have properties right now there for sale. As soon as they sell, they still plan on selecting here. Their purchases probably will be delayed though. Clients through cash are still purchasing because it is a 'buyers market' at this time with many properties for sale at stagnant, last year rates. " RONNIE POOL - PLAYEXPERT. COM Caribbean Beachfront Properties Investments and PlayaExpert Ronnie Pool, a broker as a result of Playa del Carmen says "Any major economic slowdown in the USA will have an effect here because it means those would-be buyers don't have as strong a financial position, and may experience fewer disposable assets to spend here. However , if realty is not such a good investment there right now, by comparison our own market can look even more attractive! So that can recompense. In the final tally I imagine that the sale belonging to the lowest priced properties in our market will be hit harder compared with those at the upper end. The very wealthy usually travel out economic waves better than the marginally well down. But as a real estate broker I know that I create my own ring reality, so if I believe that my business will go downward because of this.... no doubt it will. If I believe that despite challenges Now i'm better able than anyone to get my share from the pie and still grow.... no doubt I will. We reap might know about sow, in life, at work, and in our own mind. " GABRIEL VILLARREAL GUERRA - CENTURY 21 MARCOS & ASSAD "In my opinion, a slowdown in the housing business in the States will be most definite beneficial for our market. The weaker market means less demand for new properties and therefore less homebuilding. People could have foreseen such a slowdown, as it is clearly stated by the National Association connected with Home Builders (NAHB) figures: forecast is for starts for you to drop to an annual rate of 1. 55 million -- Inventory/Sales ratio - by the end of 2007, or perhaps 27% below their peak level.... reflecting less patron traffic and a bias towards building fewer homes at some point. Eventually people will start looking for better "deals", will start staying an open-mind in purchasing a second home in South america, will be on the look out for investment opportunities, and guaranteed the can follow a trend... put their money in a reliable emerging market close to home where they have all the claims as foreign investors - e. i. Banktrusts - and a positive cash flow with higher ROI's (rate for return), making it more appealing to invest than back home. Plus, we've got to never forget what we have in our market that nobody in addition has: a fabulous Caribbean Sea and gorgeous Mayan crafted pyramids! Just to name a few. If there are no big upcoming changes in economic events that could somehow impinge on the Riviera Maya, our market will be booming more than what any professional can foresee... and the slowturn which includes taken place in the States will shift our sales figures, into my personal opinion. " THOMAS LLOYD - PLAYA REAL ESTATE EXECUTIVES Thomas Lloyd of PlayaBuyerBroker. com says "Projecting the future economic and real estate market results is an incredibly difficult task. An entire collection of books are needed to demonstrate and learn the particular relations and influences upon pricing of homes, condo rentals or upon the price per meter of raw area. Below please find a very general brief on this area. First, many factors influence the local real estate market including the fact that of the international economic indicators as mentioned in the question earlier mentioned. Twenty five years ago, a very soft correlation existed between USA market results and its influence on the Mexican market as well as vice versa. Ten years ago, as in the majority of most states of the world, international market results have had and has on going to have a much stronger affect upon the Mexican national market activities. Mexico´s strongest trade partner, USA, has heightened their commercial relation with the Mexico with the passing of your NAFTA(North American Free Trade Agreement) which only causes our two countries influence even stronger. The development therefore would indicate that as each decade tickets, the international market results and indicators of every man or women country will have stronger and direct affects upon typically the markets of neighboring and/or those countries with the closest economical ties. Second, the Real Estate market is enticed more by local indicators than by national, last but not least of international indicators. As stated above, pricing is made by many many factors. The majority of the factors are varying/constantly moving and each factor has a different weight in influence upon a final market price. Some factors that extra fat heavily are generally found in the regional/local economical indicators which includes of Population growth, Costs of Doing Business, cost regarding capital (loans), Quality of Life, Employment and Income, Local Taxation's, Property Taxes, ISR taxes vs . (competition). In Summary, Properties in California is different than real estate in Indiana, Realty in Canada is different than that from Mexico. Each one regional market has its own strategies and influences, for this reason its own proper real estate opportunities. JEN LYTLE - TIERRA YUCATAN Even in the Yucatan near Merida, they have a point of view on the U. S. recession. Take Jen Lytle, owner/broker of Tierra Yucatan Properties in Merida. She says "I have not yet seen any slow-down in business which could be attributed to the slow-down in the US market, although one might predict several possible long term outcome. It is possible that our investor clients will find our property on Yucatan an even more attractive option, as the market here remains strong with good appreciation. I would also expect who for those retiring on a fixed income, it might become more very difficult to purchase a retirement property in Mexico if the purchase depends on obtaining equity from the sale of an pre-existing property. Over-all, I am optimistic that our market will be primarily minimally affected by any slow-down in the US. " SHAWN BANDICK - ONE STOP REAL ESTATE Finally, Shawn Bandick, owner/broker of One Stop Real Estate says "In every shifting housing market there are pocket markets. These are areas which with bear the shift with little or no effect. In British Columbia Canada the Okanagan Valley is one of those areas. I'm certain you can see areas like that in your state or province. Enjoy will this shifting market effect us in the Riviera Maya? If there was ever a Pocket market it is it. The Mexican government recognizes that, and they are positioning millions of dollars into the development of Q Roo. Most of the buyers are baby boomers who have paid off their homes, and possess the cottage, and are now looking for the sunny close off away. Many of these same buyers have substantial inheritance dollars that they are investing as well. " Also these clients usually are not just from north America, they are from all over the world and this presents us an even more stable market. Mexico is a new subject of investment and the buyers tend to be higher-income they are not at the first try home buyers nor are they the first time investors. Record shows us that the baby boomers will not be denied! This is basically no exception. Baby boomers have discovered the Riviera Maya and they are sending their money here to invest and enjoy. " View LOCAL MLS Listings for One Stop Real Estate.

[prorealestateblog-blog1]

What's Happening In Real Estate Right Now And Where Is It Going?

one Analysis of Today's Market 2 . Update On Jewelry 3. Real Estate Prices In South Florida 4. Realty Nationwide 5. Yield Curve Is Still Inverted 6. How this works to you 1 . Analysis of today's market As an analyst of the economy and the whistler grand market, one must be patient to discover what unfolds and to see if one's predictions will be right or wrong. One never knows if they could be right or wrong, but they must have a sense of humility about it so that they are not blind to the reality of the current market. In March of 2006, my eBook How To Flourish In the Changing Real Estate Marketplace. Protect Yourself From The Bubble Now! stated that in short order the real estate market would certainly slow down dramatically and become a real drag on the economy. Our company is experiencing this slowdown currently and the economy I feel seriously isn't far from slowing down as well. History has repeatedly shown which a slow down in the real estate market and construction market has invariably led to an economic recession throughout America's history. Let me look at what is happening in the following areas to see might know about can gleam from them: Gold, Real Estate in South California, Real Estate Nationwide, Yield Curve/Economy and see what this means to you: second . Gold If you have read this newsletter and/or the information, you know I am a big fan of investing in gold. The reason? Because I believe that the US dollar is in serious debt peril. But gold has also risen against all of the international currencies, not just the US dollar. Why has gold risen? Gold is a neutral form of currency, it can't be produced by a government and thus it is a long term hedge against forex devaluation. James Burton, Chief Executive of the Gold Council, fairly recently said: "Gold remains a very important reserve asset for core banks since it is the only reserve asset that is basically no one's liability. It is thus a defense against unheard of contingencies. It is a long-term inflation hedge and also a proven greenback hedge while it has good diversification properties for a foremost bank's reserve asset portfolio. " I agree with Mr. Burton 100%. I believe we will even see a bubble throughout gold again and that is why I have invested in gold to make sure you profit from this potential bubble (Think real estate prices round the year 2002 - wouldn't you like to have bought more realty back then? ) I had previously recommended that you buy platinum when it was between $580 and $600 an whiff. Currently, gold is trading at around $670 the ounce up more than 10% from the levels I proposed. However , gold has some serious technical resistance around the $670 level and if it fails to break out through which will level it might go down in the short-term. If it does decline again to the $620 - $640 level, I like the software at these levels as a buy. I believe that jewelry will go to $800 an ounce before the end for 2007. 3. Real Estate in South Florida Real estate through South Florida has been hit hard by this slowdown as it was one of the largest advancers during the housing increase. The combination of rising homes for sale on the market, the amazing variety of construction occurring in the area and higher interest rates have been two to three of the major factors of the slowdown. For every home the fact that sold in the South Florida area in 2006, typically 14 did not sell according to the Multiple Listing Service (MLS) data. The amount of homes available for sale on the market doubled to around 66, 000, as sales slowed to their lowest level in decades. Even though home prices were up for the year in 2006, the average asking price for homes in December was initially down about 13 percent compared to a year ago. From 2001 to 2005, the price of a single-family home in Miami-Dade increased 120 percent to $351, 200. This is even similar to what happened in Broward County. The problem is who wages during that time only increased by 17. 6% in Miami-Dade, and 15. 9% in Broward, in accordance with federal data. This is the other major factor that is contributing to the slowdown - real estate prices far outpaced incomes of potential buyers of these homes. Another factor that made it easier drive the South Florida boom in prices was basically high growth in population in Florida. From 2002 to 2005, more than a million new residents moved for you to Florida and Florida also added more jobs compared with any other state. However , the three largest moving providers reported that 2006 was the first time in years construct y had moved more people out of the state of Texas than into it. Also, school enrollment is declining which sometimes be another sign that middle-class families are leaving behind. By far though, the area of South Florida real estate which is to be hit hardest is and will continue to be the condominium current market. Due to their lower prices than homes, condos make personal sense in the South Florida area. However , the method to obtain available condos has tripled over the past year and it will receive worse before it gets better. More than 11, 500 new condos are expected this year and 15, 000 future year with the majority of them being built in Miami. By means of the oversupply, asking prices for condos are downward 12% in 2006 in Miami to $532, 000. And incentives are substituting for price cuts. All these incentives include paying all closing costs to free of charge upgrades and more. The last point to think about affecting South South carolina real estate is the escalating costs of property insurance as well as property taxes. These increasing costs are putting further downward pressure on real estate prices. My strong feeling is that we are only starting to see the slowdown of the Southern region Florida real estate market and that prices will continue to fall. Because that many real estate investors are pulling out, where are the then wave of buyers going to come from at these present prices? Unless a serious influx of new, high forking over jobs enter the South Florida area, real estate rates, just like any asset that falls out of favor after a large runup only have one way to go... down. have a look at. Real Estate Nationwide A report released last week from the National Connections of Realtors showed that in the last three months of 2006 home sales fell in 40 states and average home prices dropped in nearly half of the urban centers surveyed. The median price of a previously owned, single house fell in 73 of the 149 metropolitan areas surveyed in your 4th quarter. The National Association of Realtors article also said that the states with the biggest declines from the number of sales in October through December compared with an identical period in 2005 were: * Nevada: -36. 1% in sales * Florida: -30. 8% in revenues * Arizona: -26. 9% in sales * Los angeles: -21. 3% in sales Nationally, sales declined through 10. 1% in the 4th quarter compared with the same stage a year ago. And the national median price fell to $219, 300, down 2 . 7% from the 4th quarter regarding 2005. Slower sales and cancellations of existing requests have caused the number of unsold homes to really increase. Typically the supply of homes at 2006 sales rate averaged 6. 4 months worth which was up from 4. contemplate months worth in 2005 and only 4 months worthwhile in 2004. Toll Brothers, Inc., the largest US expensive home builder, reported a 33% drop in instructions during the quarter ending January 31. Perhaps most importantly, cascading home values will further decrease their use of property loan equity withdrawal loans. In 2006, mortgage equity disengagement accounted for 2% of GDP growth. Construction incorporated 1% to last years GDP growth, so the need for these factors are to the health of the US market are enormous. The other concern is sub-prime mortgages. In these days, sub-prime mortgages amount to 25% of all mortgages, around $665 billion. Add to this the fact that approximately $1 trillion on adjustable-rate mortgages are eligible to be reset in the next two years and we'll continue to see rising foreclosures. For example , foreclosures are " up " five times in Denver. These foreclosed homes come home onto the market and depress real estate values. The Center just for Responsible Lending estimates that as many as 20% of the subprime mortgages made in the last 2 years could go into foreclosure. The amounts to about 5% of the total homes advertised coming back on the market at "fire-sales". Even if only 1/2 of these actually comes back on the market, it would cause overall valuations to be down and the ability to get home mortgage equity loans to diminish further.

[joshuajacksonlyblog]

Bitcoin Rallied Amid a “Catastrophic Economic Event” in Big Boost to Bull Case

One of the longest standing narratives is that Bitcoin is a “safe haven asset” or “store of value,” an asset that should outperform equities and bonds when there is a recession, geopolitical tension, or otherwise abnormal events taking place that would not be defined as “good.” Although the narrative has come under fire as of late due to weakness in the cryptocurrency market, BTC recently made an astonishing technical feat that some are taking as a sign it is a store of value. Bitcoin Actually Increased During “Catastrophic Economic Event” The past few months have been harrowing for the global economy, to say the least. Due to the outbreak of COVID-19 around the world, governments have been incentivized to shut down industry and force citizens to stay at home, resulting in a global recession expected to be the worst since the Great Depression. Bitcoin and the broader crypto industry haven’t been spared in this economy, with the cryptocurrencies plummeting 50% within a single day in March and industry companies laying off staff en-masse. Yet, just weeks after the initial panic has passed, Bitcoin is actually up against the dollar, outperforming many other assets over the same time period. As observed by Travis Kling — CIO of crypto hedge fund Ikigai and a former Point 72 portfolio manager — the cryptocurrency actually posted a positive performance “amid one of the most catastrophic economic events in history”: “The price of Bitcoin increased 0.60% from the end of February to the end of April amidst one of the most catastrophic economic events in history,” he said before adding that the asset is a “store of value.” The price of #Bitcoin increased 0.60% from the end of February to the end of April amidst one of the most catastrophic economic events in history. A store of value. — Travis Kling (@Travis_Kling) May 1, 2020 It’s Set to Outperform What’s crazy is that analysts are coming to the conclusion that the way things are trending for Bitcoin and for the macroeconomic environment, BTC is poised to continue to outperform in the months ahead. To mitigate the effects of the COVID-19 lockdown, central banks and governments have been forced to go into overdrive, implementing increasing dovish monetary and fiscal policies to bail out people and companies. The U.S. Federal Reserve, for instance, has increased its balance sheet by over $2 trillion in the past two months, activating a number of credit facilities to ensure that companies and individuals don’t go under in these trying times. This trend of record-level money printing increases Bitcoin’s chances at rallying higher, analysts say. As best explained by Dan Morehead — a Wall Street trader-turned-head of one of the first crypto funds, Pantera Capital: “As governments increase the quantity of paper money, it takes more pieces of paper money to buy things that have fixed quantities, like stocks and real estate, above where they would settle absent an increase in the amount of money. The corollary is they’ll also inflate the price of other things, like gold, bitcoin, and other cryptocurrencies.” Photo by Sean O. on Unsplash from Cryptocracken Tumblr https://ift.tt/3c1UpTI via IFTTT

[chrisvarneyus]

Coronavirus & Its Impact on the Multifamily Industry

I want to start off by saying that this is just an opinion piece. I am not a doctor nor an economist and am far more of a generalist than a specialist in many areas. It is also worth mentioning that this content is far from evergreen. It’s quite tied to the next 24 hours (today is March 16th, 2020), since the pace of change, i.e. changes in the data we receive, political responses and central bank policy, is currently unimaginably fast. 

The spread of COVID-19, along with the related panic and rapid economic contraction, has created an air of fear (and subsequent volatility) rarely seen in public markets. If you’re reading this though, you probably aren’t looking for advice or opinions on the stock market or math around how quickly an infectious disease could spread, i.e. what happens if you double a penny every day for 30 days.

I’m going to break this down into something succinct and tangible while trying to steer clear of the pandemic itself (including the health, supply-chain, and broader macro-economic repercussions) and instead just focus on the way it touches those in the multifamily sector.

The Pros

10 year treasury yields are unbelievably low.

The Federal Reserve cut its benchmark interest rate to almost 0%.

Debt in some cases is meaningfully cheaper than it was a month ago. 

Sustained low rates may create downward pressure on cap rates.

The Cons 

Tenants may fall behind on their rent. Employees of all types, particularly those touched by the trickle-down effect of travel restrictions are at risk of shouldering a substantial economic burden reflective of reduced hours, or worse, terminated employment. Lost wages coupled with the precipitous drop in equity values (a metric tightly correlated with consumer savings) creates a significant risk to multifamily property net operating income and therefore, from an income capitalization approach, value. A second order outcome could be a fracture in the implied security of what has historically been perceived as a recession-proof asset. This is not to say that multifamily, as an asset class, will not be incredibly resilient but the effects of declining occupancy and net operating income directly impact valuations and can easily snowball to affect capital markets, as less owners would qualify for conventional financing and the risk of defaults would loom.

Agencies are pushing up floors and spreads to hedge against volatility and potentially fear of blowing through their caps because of the knee-jerk inundation of loan applications when 10-year treasury yields broke below 1.00%. Today, March 16th, 2020, Fannie and Freddie pushed up baseline spreads while Fannie held its 90bp treasury floor and Freddie remains at the greater of 75bps or -15 from the treasury at time of quote. Freddie SBL increased coupons by 25bps across the board this morning as well. 

Multifamily property buyers may get spooked, we’ve already seen this, which could create a widening between asking prices and bids and a (temporary) reduction in market liquidity and transaction velocity possibly leading to price reductions. 

The Unknown 

The biggest issue in my opinion is the unknown. It is the element of uncertainty that is driving up the price of sovereign debt and driving down yield. It’s what’s causing a flight from equities. It’s what pushes out credit spreads and it's what keeps everyone on self- or government-imposed quarantine. As the great minds of our generation put their heads together and aggregate data, this uncertainty will inevitably pass. This is not to say that we will not have a big problem on our hands. It is to say that as we continue to aggregate and translate the data, we will know better what we are dealing with and have sufficient evidence to create an actionable plan. As we become more informed, panic will be replaced by prudent precaution. 

What are the repercussions of continued QE (quantitative easing)? I floated this in a LinkedIn and email post recently: is this next round of QE sufficient to help us through this sudden, worldwide economic bottleneck? I can’t imagine it is. What are the long term impacts of the continued printing of money and throwing it at our problems? We don’t really have a reference point. This sovereign debt bubble is a new thing. The word bubble is quite intentionally chosen here. Again, I’m not an economist, but I feel like more than a few countries in South America have tried printing their way out of economic cycles… How did that go? I am not saying this is an apples to apples comparison, but it feels like oranges and tangerines? Botanists, forgive the crude metaphor. 

The Fed is out of bullets. That 100BP drop was our last piece of likely meaningful ammunition in the face of a recession. Now what can the Fed and the US government do if we face a real, long term recession? I don’t necessarily fault them (or not fault them) for this QE and rate-cutting decision but I do wonder if it’s the use of a sledge hammer in lieu of a scalpel, or as I’ve mentioned in other posts and articles, pushing a string. Will we be forced to negative interest rates in the future? Negative interest rates did not have the desired effect in Japan.

What Now

Well, for starters, wash your hands and don’t sneeze on anyone, right? I don’t want to give any direct advice but I’d like to share some anecdotal notes. Markets run in cycles, irrational exuberance is often followed by similarly irrational panic. If you’re in equity markets, the bulk of us normal humans have this weird tenancy to buy tops and sell bottoms. Over time (and I certainly can’t say how long it will take) this too shall pass. If you’re thinking about refinancing multifamily or commercial real estate debt, rates may be higher than they were a month or two ago with agencies, and lower with FHA and banks. They may be static. The primary thing right now that is static though is the very non-static nature of credit markets. I’d probably be pulling the trigger on something if there is a looming maturity afoot. We don’t know how long this will last or the medium-term repercussions on capital markets. If you have a good deal and you’re waiting for the best rate ever, you may just want to go ahead with it because if tomorrow is unknowable, so is Q2… and Q3. Finally, be responsible but don’t panic. 

Was this helpful? If so, please share with colleagues. Do you have suggestions or comments? Email me at blake@janover.ventures and I’ll do my best to be as responsive as possible. Wishing everyone a safe and hand-sanitized Monday. 

from Loan News https://www.multifamily.loans/apartment-finance-blog/coronavirus-and-its-impact-on-the-multifamily-industry

[orbemnews]

Democrats Speed Ahead on Economic Aid Package WASHINGTON — Democrats on Tuesday took the first step to push through President Biden’s $1.9 trillion economic rescue plan, using a budgetary maneuver that could eventually allow the measure to become law without Republican support. The move advanced the two-track strategy that Mr. Biden and Democratic leaders are employing to speed the aid package through Congress: show Republicans that they have the votes to pass an ambitious spending bill with only Democratic backing, but offer to negotiate some details in hopes of gaining Republican support. “We are not going to dilute, dither or delay,” Senator Chuck Schumer, Democrat of New York and the majority leader, said on the Senate floor. “There’s nothing about the process itself that prevents bipartisanship.” The party-line vote of 50 to 49 set the stage for Democrats to advance Mr. Biden’s plan through budget reconciliation, which would allow it to pass with a simple majority vote, bypassing the need for Republican support. (Senator Patrick J. Toomey, Republican of Pennsylvania, was absent and did not vote because he was delayed by snow.) The vote came the day after 10 Republican senators met at the White House with Mr. Biden seeking a smaller, $618 billion package they said could win bipartisan backing. Mr. Biden and Treasury Secretary Janet L. Yellen met virtually with Senate Democrats at their lunch on Tuesday afternoon. On the call, Mr. Biden “spoke about the need for Congress to respond boldly and quickly,” Mr. Schumer said afterward. “He was very strong in emphasizing the need for a big bold package. He said he told Senate Republicans that the $600 billion that they propose was way too small.” While Mr. Biden said he told Republicans he was willing to make some modifications to his proposal, he and Ms. Yellen told the group that if the Senate embraced the Republican plan, “we’d be mired in the Covid crisis for years,” according to Mr. Schumer. Senate Democrats could approve the budget resolution as soon as Friday. On Tuesday, a key Democratic senator announced he would support it: Joe Manchin III of West Virginia, who is a crucial swing vote, said he would agree to move forward with the budget process “because we must address the urgency of the Covid-19 crisis.” “But let me be clear — and these are words I shared with President Biden — our focus must be targeted on the Covid-19 crisis and Americans who have been most impacted by this pandemic,” Mr. Manchin said in a statement, signaling he might still vote against aspects of Mr. Biden’s plan that he opposes. “I will only support proposals that will get us through and end the pain of this pandemic.” Mr. Manchin also reiterated his opposition to Mr. Biden’s proposal to raise the federal minimum wage to $15 an hour, which could force Democrats to drop it from their legislative package. The budget resolution would instruct congressional committees to draft legislation that could include Mr. Biden’s stimulus proposal, which includes $1,400 direct payments for many Americans, funding for vaccine distribution, reopening schools and other measures. The committees would work on finishing the plan at the same time as the Senate is scheduled to hold an impeachment trial of former President Donald J. Trump on charges he incited the Jan. 6 assault on the Capitol. Its introduction met with resistance from Republicans who discussed the proposal with Mr. Biden on Monday evening at the White House and warned against pursuing it through reconciliation. Many of those senators voted for the 2017 tax cut legislation that Republican leaders passed via reconciliation without a single Democratic vote. Some Republican senators considered Mr. Biden receptive to their proposals, but said his chief of staff, Ron Klain, shook his head dismissively during the Republicans’ presentation, according to a participant in the meeting. “It’s not a good signal that he’s adopting a take-it-or-leave-it approach right after his president delivers an inaugural address based on unity,” said Senator Todd Young, Republican of Indiana. Senator Mitch McConnell, Republican of Kentucky and the minority leader, who employed reconciliation for both tax cuts and a failed attempt to repeal the Affordable Care Act under Mr. Trump, said the group of 10 Republicans who met with the president left the White House believing Mr. Biden was more interested in compromise than his staff or Mr. Schumer was. “They’ve chosen a totally partisan path,” Mr. McConnell said of Democrats in the Senate. Lawmakers have begun pushing for changes to the Biden plan, including Democrats who on Tuesday pushed for its cost to be offset in part by repealing a business tax break that Congress approved last year. More than 100 lawmakers, led by Representative Lloyd Doggett of Texas and Senator Sheldon Whitehouse of Rhode Island, say the move — and a related change that would effectively raise taxes on some businesses in the years to come — could reduce federal borrowing for the aid package by as much as $250 billion. “The best place to start for Republicans urging more narrowly-targeted relief is eliminating the $250 billion bonanza for hedge fund managers and real estate speculators they previously tucked into the CARES Act,” Mr. Doggett and Mr. Whitehouse said in a written statement. The tax cuts in question — which center on so-called net operating losses — were included in a rescue bill Congress passed in March, as the pandemic spread and the nation was in the middle of a recession. They were temporary rollbacks of a limitation placed on business deductions by the 2017 tax law that Republicans passed and Mr. Trump signed. In effect, the March provision allowed some companies that suffered large losses in recent years to reduce their tax bills to the federal government, by applying those losses to offset taxes on profits from the previous five years. Proponents of those tax breaks — including congressional Republicans and business groups — said the move would provide a cash infusion to companies struggling amid the pandemic. The Democratic lawmakers on Tuesday proposed repealing the change, which applied to losses incurred from 2018 to 2020, and making permanent the Trump-era limitation on the carrying back of net operating losses. Mr. Biden also faced pressure to trim his spending plans and compromise with Republicans on Tuesday from an influential business group that had welcomed his initial proposal. In a four-page letter to Mr. Biden and congressional leaders, the U.S. Chamber of Commerce said lawmakers should prioritize money for vaccine distribution, school reopening and child care facilities in their economic aid package. It asked them to tie additional months of assistance for the long-term unemployed to economic conditions in states, cutting off aid when the economy improves, and to provide less aid to unemployed workers than Mr. Biden has proposed. The chamber also pushed Mr. Biden to reduce the number of Americans eligible to receive direct payments, citing statistics showing a majority of households earning more than $50,000 a year have not lost income in the pandemic. But Jen Psaki, the White House press secretary, told reporters on Tuesday that Mr. Biden wished to send payments to a large group of families, including some with six-figure incomes. She cited a hypothetical couple in Scranton, earning $120,000 a year, and said Mr. Biden believed “they should get a check.” Carl Hulse contributed reporting. Source link Orbem News #Ahead #Aid #Democrats #Economic #Package #speed