Friday, January 08, 2010

Friday night reading...

* Consumer Credit in U.S. Drops Record $17.5 Billion in November - "We have not seen such a wholesale reduction in consumer credit since the last time we had double-digit unemployment rate following the early ‘80s recessions.”

The series of 10 straight declines in consumer credit was the longest since record-keeping began in 1943.

* In Beijing’s Chaoyang district, which represents a third of all residential property deals in the capital, homes now sell for an average of almost $300 per square foot. That means a typical 1,000-square-foot apartment costs about 80 times the average annual income of the city’s residents.

* Marijuana Stores Trump Starbucks in Denver - Denver's City Treasurer Steve Ellington tells ABC New affiliate Channel 7 that at least 390 pot dispensaries applied for a sales-tax license recently. That compares to 208 Starbucks in the entire state of Colorado, the station reports. Denver's city council took a step toward regulating the marijuana stores last night, and the businesses are filing their tax applications.
The Denver statistic sheds light on a business that is becoming more institutionalized as local governments try to figure out ways to raise revenue.

In an election year with governments struggling for revenues watch for this wedge issue to gain traction this year.

* Further slide seen in NYC commercial markets - There are 920 football fields of available office space in Manhattan. More than 180 major buildings totaling $12.5 billion in value — from Columbus Tower at 1775 Broadway to the office tower 400 Madison Avenue — are in trouble, meaning in many cases they face foreclosure or bankruptcy, or have had problems making mortgage payments. Rents for commercial office space fell faster over the past two years than in any such period in the last half century.

“I have been in the business for 12 years. I have never seen it this bad,” Peter Von Der Ahe, vice president of investments for the brokerage Marcus & Millichap, said of New York City’s commercial real estate market.
And that is not the most sobering assessment.

“It hasn’t hit bottom,” Mr. Von Der Ahe added.

* One former California Dream - Every few weeks I get a warm and fuzzy feeling when I see my old house for sale in the Wall Street Journal. I’m sure you’ve seen it. It’s the 8,000 square foot, four bedroom, seven bathroom white elephant perched on a mountain peak, with a dramatic waterfall pouring into a marble swimming pool, an elevator, and panoramic 360 degree views of the San Francisco Bay Area.

I picked it up for a song from the Sultan of Brunei in 1998, when crude crashed to $8/ barrel, and he was dumping properties to meet a cash flow crisis. The actor, Steve McQueen, had owned the property once.

But one day in 2005, my gardener, José, mentioned that he had just obtained a $500,000 loan to buy a new place in which to house his seven kids, along with a home equity loan to cover the first year’s mortgage payments. How would he make the next year’s payments? The broker said the value of the house would go up, and he could then increase his home equity loan to cover that too.

I knew I had to sell my home immediately, hitting the bid for a tidy $12 million, along with the rest of my real estate holdings around the Fog City and Lake Tahoe. At the closing, I couldn’t help but notice that my broker, Olivia, was drunk with greed, with 360,000 dollar bills dancing in front of her eyes. Regretfully, I had to let José go. I have been renting ever since. The last price I saw for my former “Xanadu” was $7 million, and I know that a cash offer well below that would talk. I could also lease it for $19,500 a month, which wouldn’t even cover the taxes and the maintenance.

Finally, Let's Go Cowboys! Is this the year we finally win a playoff game???


1 comment:

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