Shane's Feed
Apr 16, 2014
via Counterparties

The housing density is too damn low

Want to sign up for the Counterparties email? Click here.

Your rent really is too damn high.

Kim-Mai Cutler has a long, detailed explainer on San Francisco’s real estate crisis inTechCrunch. To begin with, she says, there’s just not enough supply: “San Francisco has a roughly 35% homeownership rate. Then 172,000 units of the city’s 376,940 housing units are under rent control”, a number equal to a remarkable 75% of the city’s rental units. That doesn’t leave much for the rental market. As a result, any rents which can rise, will rise. (Marc Andreessen notes that tech has been driving up prices in the area for at least 30 years, and population boom cycles have been part of the city’s history since the Gold Rush.)

Tech companies keep creating jobs in San Francisco and Silicon Valley without building more housing to accommodate the extra workers. As computer programmers flood in to the existing housing stock, the working class is pushed out completely. A big part of this problem, says Ryan Avent, is San Francisco’s restrictive zoning requirements. The city’s longtime residents are very good at keeping new construction out of their backyard. “However altruistic they perceive their mission to be, the result is similar to what you’d get if fat cat industrialists lobbied the government to drive their competition out of business”, he writes.

Apr 16, 2014
via Counterparties

The housing density is too damn low

Want to sign up for the Counterparties email? Click here.

Your rent really is too damn high.

Kim-Mai Cutler has a long, detailed explainer on San Francisco’s real estate crisis inTechCrunch. To begin with, she says, there’s just not enough supply: “San Francisco has a roughly 35% homeownership rate. Then 172,000 units of the city’s 376,940 housing units are under rent control”, a number equal to a remarkable 75% of the city’s rental units. That doesn’t leave much for the rental market. As a result, any rents which can rise, will rise. (Marc Andreessen notes that tech has been driving up prices in the area for at least 30 years, and population boom cycles have been part of the city’s history since the Gold Rush.)

Tech companies keep creating jobs in San Francisco and Silicon Valley without building more housing to accommodate the extra workers. As computer programmers flood in to the existing housing stock, the working class is pushed out completely. A big part of this problem, says Ryan Avent, is San Francisco’s restrictive zoning requirements. The city’s longtime residents are very good at keeping new construction out of their backyard. “However altruistic they perceive their mission to be, the result is similar to what you’d get if fat cat industrialists lobbied the government to drive their competition out of business”, he writes.

Apr 14, 2014
via Counterparties

The great retirement shift

Want to sign up for the Counterparties email? Click here.

Last year, Lydia DePillis gathered a group of charts from the Economic Policy Instituteon the rise of the 401(k) and the fall of the pension. In 1980, 38% of workers had pension plans. In 2008, just 20% did. Retirement saving is now predominantly individual, and reflects wider inequality trends. Since 1990, the retirement savings of the top-fifth income earners have increased more than 3.5 times, “while they’ve declined or risen only slightly for most everyone else”, DePillis wrote.

If you can’t rely on a pension, and have to take matters into your own hands, then you have to pay a lot of attention to fees. Matthew O’Brien shows how a 1.25% difference in fees between an actively managed fund and an index fund can make a six-figure difference in retirement funds.

Apr 14, 2014
via Counterparties

The great retirement shift

Want to sign up for the Counterparties email? Click here.

Last year, Lydia DePillis gathered a group of charts from the Economic Policy Instituteon the rise of the 401(k) and the fall of the pension. In 1980, 38% of workers had pension plans. In 2008, just 20% did. Retirement saving is now predominantly individual, and reflects wider inequality trends. Since 1990, the retirement savings of the top-fifth income earners have increased more than 3.5 times, “while they’ve declined or risen only slightly for most everyone else”, DePillis wrote.

If you can’t rely on a pension, and have to take matters into your own hands, then you have to pay a lot of attention to fees. Matthew O’Brien shows how a 1.25% difference in fees between an actively managed fund and an index fund can make a six-figure difference in retirement funds.

Apr 10, 2014
via Counterparties

Gross behavior

Want to sign up for the Counterparties email? Click here.

Sheelah Kolhatkar has a long profile of Pimco’s Bill Gross, in which Gross makes an attempt to rationalize his somewhat erratic behavior over the last few months. (The front cover of the magazine uses the headline, “Am I really such a jerk?”) Gross’s strange behavior has been chronicled since Pimco CEO and co-chief investment officer Mohamed El-Erian, the heir to Gross’s throne at the company, announced he was resigning from his post back in January.

Then, in February, a devastating article in the WSJ painted Gross as a terrifying and brutal manager who referred to himself as Secretariat. Not long after the WSJ article came out, Gross told Reuters’ Jenn Ablan, “I’m so sick of Mohamed trying to undermine me”. He also “indicated he had been monitoring El-Erian’s phone calls”. Last week, Gross devoted much of his Investment Outlook letter to remembering his dead cat, Bob.

Apr 10, 2014
via Counterparties

Gross behavior

Want to sign up for the Counterparties email? Click here.

Sheelah Kolhatkar has a long profile of Pimco’s Bill Gross, in which Gross makes an attempt to rationalize his somewhat erratic behavior over the last few months. (The front cover of the magazine uses the headline, “Am I really such a jerk?”) Gross’s strange behavior has been chronicled since Pimco CEO and co-chief investment officer Mohamed El-Erian, the heir to Gross’s throne at the company, announced he was resigning from his post back in January.

Then, in February, a devastating article in the WSJ painted Gross as a terrifying and brutal manager who referred to himself as Secretariat. Not long after the WSJ article came out, Gross told Reuters’ Jenn Ablan, “I’m so sick of Mohamed trying to undermine me”. He also “indicated he had been monitoring El-Erian’s phone calls”. Last week, Gross devoted much of his Investment Outlook letter to remembering his dead cat, Bob.

Apr 8, 2014
via Counterparties

Who’s afraid of rising prices?

Want to sign up for the Counterparties email? Click here.

Minneapolis Fed chief Narayana Kocherlakota — the only FOMC member to vote against the taper last month — said in a speech in Buffalo today that inflation is likely to stay under the Fed’s 2% target for another four years. Further, he said, that fact “tells us that resources are being wasted” because “demand for goods and services is too low to fully use the available resources in society”.

Paul Krugman agrees that inflation is too low, and blames bad policy for keeping it that way. The problem, he says, is that the very wealthy, who have more assets than income, have a lot of influence over policy decisions. “Modestly higher inflation, say 4%, would be good for the vast majority of people, but it would be bad for the superelite”, he writes.

Apr 8, 2014
via Counterparties

Who’s afraid of rising prices?

Want to sign up for the Counterparties email? Click here.

Minneapolis Fed chief Narayana Kocherlakota — the only FOMC member to vote against the taper last month — said in a speech in Buffalo today that inflation is likely to stay under the Fed’s 2% target for another four years. Further, he said, that fact “tells us that resources are being wasted” because “demand for goods and services is too low to fully use the available resources in society”.

Paul Krugman agrees that inflation is too low, and blames bad policy for keeping it that way. The problem, he says, is that the very wealthy, who have more assets than income, have a lot of influence over policy decisions. “Modestly higher inflation, say 4%, would be good for the vast majority of people, but it would be bad for the superelite”, he writes.

Mar 26, 2014
via Data Dive

Case-Shiller Index shows modest growth in home prices

The housing recovery continues, albeit modestly. The S&P/Case-Shiller composite index of house prices in 20 metro areas rose 0.8% in January (seasonally adjusted), according to a report released yesterday. Economists had predicted an 0.7% rise. On an year-to-year basis, home prices are 13.2% higher than they were in January 2013.

It’s not all good news, though. Unadjusted prices actually fell by 0.1% from December to January, according to ReutersBill McBride sees signs of a slowdown in housing prices coming:

Mar 26, 2014
via Data Dive

Case-Shiller Index shows modest growth in home prices

The housing recovery continues, albeit modestly. The S&P/Case-Shiller composite index of house prices in 20 metro areas rose 0.8% in January (seasonally adjusted), according to a report released yesterday. Economists had predicted an 0.7% rise. On an year-to-year basis, home prices are 13.2% higher than they were in January 2013.

It’s not all good news, though. Unadjusted prices actually fell by 0.1% from December to January, according to ReutersBill McBride sees signs of a slowdown in housing prices coming: