Chris Walen on the commercial real estate bust

On the commercial side, because of such uncertainty as to what some of these assets are worth, a lot of the big buyers have stepped back and said, "ok, wait, we're going to see what happens."  So, for example, look at some of the marks that the banks are talking about.  Look at what Bank of America's talking about on their commercial loan exposures.  They basically have cut them in half.  And I think that's the appropriate posture for the banks to take.  If they get the money back later, great, they can take a gain.  But I think for now, when you're talking about urban commercial properties, especially older properties, you've got to be very very cautious.  If you read The Real Deal, which is one of my favorite reads, they're cataloguing all of these restructurings and foreclosures and everything else, and it's because these assets are underutilized.  Walk around New York City.  We have lots of tourists, but he buildings are empty.  We still have a really significant underutilization of office buildings in New York, most of the major cities around the country, including the South.  You would think Texas and the rest of the South would be different; they're not.  Atlanta.  It's astounding, but all of these cities are dealing with a sudden change in the use case for commercial properties that nobody anticipated.  It's like we wound the clock back a hundred years, we've taken Henry Ford and kidnapped him, right?  So we don't have this car-centric, commuter-centric model for cities anymore.  People realize that they can work at home.

~ Christopher Whalen, interview, Forward Guidance, 2:45 mark, October 17, 2023

Doug French on the housing bust and "stuck factor"

Existing home sales are undergoing a historic sharp contraction in sales.  And, what will keep the residential market sluggish is what [Ivy] Zelman calls the “Stuck Factor.” An incredible 92% of homeowners with mortgages have a 5% rate or lower.  Nearly half of those with a mortgage have a rate of 3.5% or lower.  As long as rates stay where they are, or higher, people aren’t moving anywhere except in the case of the three D’s-divorce, death, or default.

~ Doug French, "'Poison Ivy' Zelman's says 'Stuck Factor' has Housing Market Stuck," DouglasInVegas.com, October 19, 2022

Henry Ellenbogen on migration trends and location independence

As a result of the pandemic, there has been a significant change in how and where Americans want to work.  I discussed this at last year’s Roundtable, and the past year has confirmed it: We are on the move in ways we haven’t been in many years.  People largely are moving to the Southern and mountain states, and Florida and Texas. 

We are monetizing the scale of America.  As we move from high-cost to low-cost locations, that unlocks productivity.  In addition, as people spread out, companies need to innovate to serve them.  That means innovating not only on digital platforms but also digitizing the U.S. enterprise.  That speaks to deflation.  It also unlocks innovation.  As people move away from medical centers, we are seeing telemedicine increase.  We need to provide better education and training remotely.  Last year, in recommending Intuit [INTU], I discussed the spread of remote tax and accounting services around the country.  What is happening in America is unique.  Most other countries are just countries.  We are basically a continent.

~ Henry Ellenbogan, CIO and managing partner, Durable Capital Partners, Barron's 2022 Roundtable, January 15, 2022

Jon Miltimore on news that Goldman Sachs is considering moving its HQ to Florida

On Sunday, news broke that the multinational financial services company Goldman Sachs, one of the largest companies in the US, is considering a plan to move its headquarters to the South. 

[...]

Goldman’s announcement could not come at a worse time for New York City, which currently “has the most office space available since the aftermath of the Sept. 11 attack,” according to Bloomberg. Goldman Sachs has an estimated market value of $71 billion and employs more than 38,000 people worldwide.

[...]

The reality is the coronavirus exacerbated New York’s economic plight, but it’s not the source of it. The city’s fundamental problem is an open hostility to markets and freedom. From policies such as universal pre-K and mandated paid sick leave to the city’s $15 minimum wage, rent-controlled housing, and oppressive tax climate, New York’s political class has shown a disdain for capitalism, private property, and business concerns, and a troubling affinity for central planning.

[...]

A departure from Goldman Sachs would signal that New York City’s days as the financial capital of the world are over. In some ways, the only surprise is that it took so long.

~ Jon Miltimore, "Goldman Sachs Eyes Florida Exit as Financial Exodus from New York Continues," FEE.org, December 8, 2020

Joel Kotkin on the exodus from California

When I talk to my class, 36 kids, and I ask them, "How many of you are going to stay in California?" Four. That never would've happened twenty years ago. Why would anyone want to leave California? With great weather, beautiful topography, all sorts of culture, great food, all the stuff that is really unique to California. It takes policy genius of some diabolical sort to push people out of California.

~ Joel Kotkin, "The Reasons Why So Many People Are Leaving California," 25:15 mark, The Epoch Times, February 19, 2020

Joel Kotkin: "Most California politicians are economically illiterate"

Basically, most California politicians are economically illiterate. The vast majority of the Democrats in particular in the California legislature have no business experience. Now, in Texas, Democrats and Republicans both have business experience. So they don't even understand how it [the economy] works.

~ Joel Kotkin, "The Reason Why So Many People Are Leaving California," 11:50 mark, The Epoch Times, February 19, 2020

Matt Levin on demographic shifts in Texas

Recent polls show President Trump with only a narrow advantage — two to five percentage points — over Democratic challenger Joe Biden in Texas. Some polls show the race as essentially tied, and very little polling has been done since Trump’s COVID-19 hospitalization upended the campaign. 

While the prospect of Texas as a swing state may shock those who associate the state with George W. Bush, it shouldn’t surprise anyone paying attention to its politics over the last decade. While Barack Obama lost Texas by 16 points in his 2012 re-election bid, in 2016 Hillary Clinton closed that gap to single-digits. Two years later, Democrat Beto O’Rourke lost to incumbent Republican Senator Ted Cruz by less than three points. 

The improving performance of Texas Democrats tracks well with the exodus of Californians into Sun Belt states over the past two decades. Since 2008, more than 700,000 Californians have moved to Texas, at first propelled by the Great Recession and later by their home state’s increasingly untenable cost of living. 

Henson warns it’s seductively reductionist to attribute Texas’ rapid statewide purpling simply to California expats. When you factor in the number of Texans that have moved to California over the last decade, the net political effect on a state with 29 million people is less progressive tidal wave and more trickling blue-ish tributary. With a rising Latino population and growing metropolitan areas, Texas’ internal demographic shifts have combined with out-of-state immigration (not just from California) to alter its politics.

~ Matt Levin, "How California expats are helping turn Texas into a battleground state," Cal Matters, October 8, 2020

James Altucher on the exodus from mega-cities and decentralization of opportunity

It's not like every city with 400,000 people are leaving.  Some cities, real estate is insane.  Real estate is going through the roof in some second and third tier cities.  People are buying houses sight unseen for 50% higher than listing price...  It's a scary trend, but the optimistic thing is that, for the first time ever, opportunity is now dispersed throughout the country.  It's decentralized.  It's no longer just in New York City, LA, San Francisco.  You could be a young person and find success anywhere now.  We all got comfortable communicating remotely and a lot of talented and skilled people are leaving the major cities, but particularly New York City, unfortunately.

~ James Altucher, "The Death Knell of the Urban Era," RealVision, 7:55 mark, September 17, 2020

Nerdrotic on the mass exodus from San Francisco

I don't want to live in a city where rioting and looting is allowed.   I know, that sounds crazy.  I'm the bad guy here.  But I don't want to live in a place where it's against the law for my wife to go and run her business, but it's perfectly ok if someone wakes up in the morning and burns down my wife's business.

~ Nerdrotic, " San Francisco's Mass Exodus," YouTube, 2:08 mark

James Altucher on the death of New York City

OK, OK, but NYC always comes back... 

Yes, it does. I lived three blocks from Ground Zero on 9/11. Downtown, where I lived, was destroyed, but it came roaring back within two years. Such sadness and hardship — and then, quickly, that area became the most attractive area in New York. 

And in 2008 and 2009, there was much suffering during the Great Recession, and again much hardship, but things came roaring back. 

But this time it’s different. You’re never supposed to say that, but this time it’s true. 

If you believe this time is no different, that NYC is resilient — I really hope you’re right.

I don’t benefit from saying any of this. I love NYC. I was born there. I’ve lived there forever. I STILL live there. I love everything about NYC. I want 2019 back. 

But this time it’s different. 

One reason: bandwidth.

~ James Altucher, "New York City is dead forever," New York Post, August 17, 2020

Altucher meets Henry Winkler at his comedy club
(before coronavirus)