[davelj]

[quote=CA renter][quote=davelj]That’s an imperfect but reasonably good analogy.

And the Uncle Sam that’s bailing us out is… Us. And the specific “Us” that’s bailing us out is principally comprised of taxpayers in the top 10% of income earners, who collectively pay 70% of all federal income taxes (including SS and Medicare). And federal income taxes + SS + Medicare + corporate taxes comprise over 95% of all federal revenue. Now, I’m not complaining about this, I’m merely pointing out that it’s principally the top income earners who are financing this bail out. Which in many ways makes sense as arguably they – collectively – are the principal beneficiaries.[/quote]

Of course, one could also argue that all the public employees who are being made the scapegoats for our “financial crisis” are the ones who will really end up paying for this bailout.[/quote]

The fact is that most public employees don’t earn enough as it is (to have a big enough tax bill) to pay for this bailout. What percentage of public employees earn over $75K/year? It’s probably not a huge number. Now, that doesn’t mean they’re not overpaid (including pension benefits, etc.) in aggregate. I’m sure that in some cases they are and in some cases they aren’t. But that’s an issue that’s going to ultimately be decided by taxpayers (and their representatives). And it seems pretty clear that the taxpayers want to reduce the overall public compensation burden. Now, that will come with reduced services – there’s no free lunch – but I suspect taxpayers will learn to live with that.

[davelj]

[quote=CA renter][quote=davelj]That’s an imperfect but reasonably good analogy.

And the Uncle Sam that’s bailing us out is… Us. And the specific “Us” that’s bailing us out is principally comprised of taxpayers in the top 10% of income earners, who collectively pay 70% of all federal income taxes (including SS and Medicare). And federal income taxes + SS + Medicare + corporate taxes comprise over 95% of all federal revenue. Now, I’m not complaining about this, I’m merely pointing out that it’s principally the top income earners who are financing this bail out. Which in many ways makes sense as arguably they – collectively – are the principal beneficiaries.[/quote]

Of course, one could also argue that all the public employees who are being made the scapegoats for our “financial crisis” are the ones who will really end up paying for this bailout.[/quote]

The fact is that most public employees don’t earn enough as it is (to have a big enough tax bill) to pay for this bailout. What percentage of public employees earn over $75K/year? It’s probably not a huge number. Now, that doesn’t mean they’re not overpaid (including pension benefits, etc.) in aggregate. I’m sure that in some cases they are and in some cases they aren’t. But that’s an issue that’s going to ultimately be decided by taxpayers (and their representatives). And it seems pretty clear that the taxpayers want to reduce the overall public compensation burden. Now, that will come with reduced services – there’s no free lunch – but I suspect taxpayers will learn to live with that.

[davelj]

[quote=CA renter][quote=davelj]That’s an imperfect but reasonably good analogy.

And the Uncle Sam that’s bailing us out is… Us. And the specific “Us” that’s bailing us out is principally comprised of taxpayers in the top 10% of income earners, who collectively pay 70% of all federal income taxes (including SS and Medicare). And federal income taxes + SS + Medicare + corporate taxes comprise over 95% of all federal revenue. Now, I’m not complaining about this, I’m merely pointing out that it’s principally the top income earners who are financing this bail out. Which in many ways makes sense as arguably they – collectively – are the principal beneficiaries.[/quote]

Of course, one could also argue that all the public employees who are being made the scapegoats for our “financial crisis” are the ones who will really end up paying for this bailout.[/quote]

The fact is that most public employees don’t earn enough as it is (to have a big enough tax bill) to pay for this bailout. What percentage of public employees earn over $75K/year? It’s probably not a huge number. Now, that doesn’t mean they’re not overpaid (including pension benefits, etc.) in aggregate. I’m sure that in some cases they are and in some cases they aren’t. But that’s an issue that’s going to ultimately be decided by taxpayers (and their representatives). And it seems pretty clear that the taxpayers want to reduce the overall public compensation burden. Now, that will come with reduced services – there’s no free lunch – but I suspect taxpayers will learn to live with that.

[davelj]

[quote=CA renter][quote=davelj]That’s an imperfect but reasonably good analogy.

And the Uncle Sam that’s bailing us out is… Us. And the specific “Us” that’s bailing us out is principally comprised of taxpayers in the top 10% of income earners, who collectively pay 70% of all federal income taxes (including SS and Medicare). And federal income taxes + SS + Medicare + corporate taxes comprise over 95% of all federal revenue. Now, I’m not complaining about this, I’m merely pointing out that it’s principally the top income earners who are financing this bail out. Which in many ways makes sense as arguably they – collectively – are the principal beneficiaries.[/quote]

Of course, one could also argue that all the public employees who are being made the scapegoats for our “financial crisis” are the ones who will really end up paying for this bailout.[/quote]

The fact is that most public employees don’t earn enough as it is (to have a big enough tax bill) to pay for this bailout. What percentage of public employees earn over $75K/year? It’s probably not a huge number. Now, that doesn’t mean they’re not overpaid (including pension benefits, etc.) in aggregate. I’m sure that in some cases they are and in some cases they aren’t. But that’s an issue that’s going to ultimately be decided by taxpayers (and their representatives). And it seems pretty clear that the taxpayers want to reduce the overall public compensation burden. Now, that will come with reduced services – there’s no free lunch – but I suspect taxpayers will learn to live with that.

[davelj]

[quote=CA renter]

Dave,

Please bear with my ignorance here, but doesn’t that assume that losses going forward will be much smaller than past losses (on the existing, “toxic” loans)?

What if the future loans also suffer heavy losses that are greater than the 200 bp spread? What if interest rates go up (their cost of funds) so that they are no longer earning that spread on their existing loans?[/quote]

It assumes that EVENTUALLY the future losses will be much smaller than they are currently (probably a reasonable assumption, yes?). Whether that’s next year or in five years only affects the date we get our nominal dollars back, not “if” we get them back. Put another way, how the losses play out will not affect the nominal dollar loss (which will be zero), but rather the real dollar loss (which will be a positive number, no doubt, but a small fraction of the numbers we read about in the media).

I’ve addressed your spread issue before in a prior thread. I must assume that the folks running F&F have a reasonable grip on asset/liability management (their prior sins related to underwriting, as opposed to A/L management) and they are funding the long-term fixed rate portfolio with a combination of relatively long-term fixed-rate funding along with interest rate swaps (one Wall Street innovation that has been relatively helpful in aggregate). The rates on the floating portfolio will adjust as rates increase. So, I’m not implying that rising interest rates are a non-issue, but I’m not overly concerned about rising rates where the portfolio is concerned.

[davelj]

[quote=CA renter]

Dave,

Please bear with my ignorance here, but doesn’t that assume that losses going forward will be much smaller than past losses (on the existing, “toxic” loans)?

What if the future loans also suffer heavy losses that are greater than the 200 bp spread? What if interest rates go up (their cost of funds) so that they are no longer earning that spread on their existing loans?[/quote]

It assumes that EVENTUALLY the future losses will be much smaller than they are currently (probably a reasonable assumption, yes?). Whether that’s next year or in five years only affects the date we get our nominal dollars back, not “if” we get them back. Put another way, how the losses play out will not affect the nominal dollar loss (which will be zero), but rather the real dollar loss (which will be a positive number, no doubt, but a small fraction of the numbers we read about in the media).

I’ve addressed your spread issue before in a prior thread. I must assume that the folks running F&F have a reasonable grip on asset/liability management (their prior sins related to underwriting, as opposed to A/L management) and they are funding the long-term fixed rate portfolio with a combination of relatively long-term fixed-rate funding along with interest rate swaps (one Wall Street innovation that has been relatively helpful in aggregate). The rates on the floating portfolio will adjust as rates increase. So, I’m not implying that rising interest rates are a non-issue, but I’m not overly concerned about rising rates where the portfolio is concerned.

[davelj]

[quote=CA renter]

Dave,

Please bear with my ignorance here, but doesn’t that assume that losses going forward will be much smaller than past losses (on the existing, “toxic” loans)?

What if the future loans also suffer heavy losses that are greater than the 200 bp spread? What if interest rates go up (their cost of funds) so that they are no longer earning that spread on their existing loans?[/quote]

It assumes that EVENTUALLY the future losses will be much smaller than they are currently (probably a reasonable assumption, yes?). Whether that’s next year or in five years only affects the date we get our nominal dollars back, not “if” we get them back. Put another way, how the losses play out will not affect the nominal dollar loss (which will be zero), but rather the real dollar loss (which will be a positive number, no doubt, but a small fraction of the numbers we read about in the media).

I’ve addressed your spread issue before in a prior thread. I must assume that the folks running F&F have a reasonable grip on asset/liability management (their prior sins related to underwriting, as opposed to A/L management) and they are funding the long-term fixed rate portfolio with a combination of relatively long-term fixed-rate funding along with interest rate swaps (one Wall Street innovation that has been relatively helpful in aggregate). The rates on the floating portfolio will adjust as rates increase. So, I’m not implying that rising interest rates are a non-issue, but I’m not overly concerned about rising rates where the portfolio is concerned.

[davelj]

[quote=CA renter]

Dave,

Please bear with my ignorance here, but doesn’t that assume that losses going forward will be much smaller than past losses (on the existing, “toxic” loans)?

What if the future loans also suffer heavy losses that are greater than the 200 bp spread? What if interest rates go up (their cost of funds) so that they are no longer earning that spread on their existing loans?[/quote]

It assumes that EVENTUALLY the future losses will be much smaller than they are currently (probably a reasonable assumption, yes?). Whether that’s next year or in five years only affects the date we get our nominal dollars back, not “if” we get them back. Put another way, how the losses play out will not affect the nominal dollar loss (which will be zero), but rather the real dollar loss (which will be a positive number, no doubt, but a small fraction of the numbers we read about in the media).

I’ve addressed your spread issue before in a prior thread. I must assume that the folks running F&F have a reasonable grip on asset/liability management (their prior sins related to underwriting, as opposed to A/L management) and they are funding the long-term fixed rate portfolio with a combination of relatively long-term fixed-rate funding along with interest rate swaps (one Wall Street innovation that has been relatively helpful in aggregate). The rates on the floating portfolio will adjust as rates increase. So, I’m not implying that rising interest rates are a non-issue, but I’m not overly concerned about rising rates where the portfolio is concerned.

[davelj]

[quote=CA renter]

Dave,

Please bear with my ignorance here, but doesn’t that assume that losses going forward will be much smaller than past losses (on the existing, “toxic” loans)?

What if the future loans also suffer heavy losses that are greater than the 200 bp spread? What if interest rates go up (their cost of funds) so that they are no longer earning that spread on their existing loans?[/quote]

It assumes that EVENTUALLY the future losses will be much smaller than they are currently (probably a reasonable assumption, yes?). Whether that’s next year or in five years only affects the date we get our nominal dollars back, not “if” we get them back. Put another way, how the losses play out will not affect the nominal dollar loss (which will be zero), but rather the real dollar loss (which will be a positive number, no doubt, but a small fraction of the numbers we read about in the media).

I’ve addressed your spread issue before in a prior thread. I must assume that the folks running F&F have a reasonable grip on asset/liability management (their prior sins related to underwriting, as opposed to A/L management) and they are funding the long-term fixed rate portfolio with a combination of relatively long-term fixed-rate funding along with interest rate swaps (one Wall Street innovation that has been relatively helpful in aggregate). The rates on the floating portfolio will adjust as rates increase. So, I’m not implying that rising interest rates are a non-issue, but I’m not overly concerned about rising rates where the portfolio is concerned.

[davelj]

[quote=Eugene]On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don’t follow the downtown, but I wouldn’t expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.[/quote]

I already addressed these issues above. Vantage Point units are not for sale. Zell’s company bought the whole project as apartments a few months back.

The last few large projects to get completed downtown were Vantage Point, Smart Corner, Aperture, the Legend, and Bayside (might be a couple of others I’m missing here). These projects broke ground in ’07 or thereabouts (if memory serves). Nothing of size broke ground once ’08 began (as the lenders put a halt to things about three years too late), so it’s been over three years since a major project got underway. I doubt we’ll see anything break ground for another 5 years but we may see some proposals start to pop up in 3-4 years.

It’s a bit difficult to find out exactly how many new and existing units are available downtown but I’m pretty sure I can find someone who has that data, and I’ll report back once I have it. Having said that, my gut, which is not to be trusted, tells me it will be 2-3 years before we’re at anything resembling a “normal” level of inventory downtown simply because no new inventory will be coming on over the period.

[davelj]

[quote=Eugene]On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don’t follow the downtown, but I wouldn’t expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.[/quote]

I already addressed these issues above. Vantage Point units are not for sale. Zell’s company bought the whole project as apartments a few months back.

The last few large projects to get completed downtown were Vantage Point, Smart Corner, Aperture, the Legend, and Bayside (might be a couple of others I’m missing here). These projects broke ground in ’07 or thereabouts (if memory serves). Nothing of size broke ground once ’08 began (as the lenders put a halt to things about three years too late), so it’s been over three years since a major project got underway. I doubt we’ll see anything break ground for another 5 years but we may see some proposals start to pop up in 3-4 years.

It’s a bit difficult to find out exactly how many new and existing units are available downtown but I’m pretty sure I can find someone who has that data, and I’ll report back once I have it. Having said that, my gut, which is not to be trusted, tells me it will be 2-3 years before we’re at anything resembling a “normal” level of inventory downtown simply because no new inventory will be coming on over the period.

[davelj]

[quote=Eugene]On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don’t follow the downtown, but I wouldn’t expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.[/quote]

I already addressed these issues above. Vantage Point units are not for sale. Zell’s company bought the whole project as apartments a few months back.

The last few large projects to get completed downtown were Vantage Point, Smart Corner, Aperture, the Legend, and Bayside (might be a couple of others I’m missing here). These projects broke ground in ’07 or thereabouts (if memory serves). Nothing of size broke ground once ’08 began (as the lenders put a halt to things about three years too late), so it’s been over three years since a major project got underway. I doubt we’ll see anything break ground for another 5 years but we may see some proposals start to pop up in 3-4 years.

It’s a bit difficult to find out exactly how many new and existing units are available downtown but I’m pretty sure I can find someone who has that data, and I’ll report back once I have it. Having said that, my gut, which is not to be trusted, tells me it will be 2-3 years before we’re at anything resembling a “normal” level of inventory downtown simply because no new inventory will be coming on over the period.

[davelj]

[quote=Eugene]On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don’t follow the downtown, but I wouldn’t expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.[/quote]

I already addressed these issues above. Vantage Point units are not for sale. Zell’s company bought the whole project as apartments a few months back.

The last few large projects to get completed downtown were Vantage Point, Smart Corner, Aperture, the Legend, and Bayside (might be a couple of others I’m missing here). These projects broke ground in ’07 or thereabouts (if memory serves). Nothing of size broke ground once ’08 began (as the lenders put a halt to things about three years too late), so it’s been over three years since a major project got underway. I doubt we’ll see anything break ground for another 5 years but we may see some proposals start to pop up in 3-4 years.

It’s a bit difficult to find out exactly how many new and existing units are available downtown but I’m pretty sure I can find someone who has that data, and I’ll report back once I have it. Having said that, my gut, which is not to be trusted, tells me it will be 2-3 years before we’re at anything resembling a “normal” level of inventory downtown simply because no new inventory will be coming on over the period.

[davelj]

[quote=Eugene]On the other hand, are there any prospects of any significant inventory (aside from some possible supply @ VP) coming on the market in the next few years?

Are there any condo projects under construction right now? (I don’t follow the downtown, but I wouldn’t expect any.) Is anyone even going to break ground in 2011?

Downtown condos move at a rate of about 50 per month. 700 condos at VP would make a splash if they were all to land in the multiple listing system simultaneously, but they would be absorbed.

Looking at a wider picture, there are also some condos in North Park, and some more condos in Hillcrest, and lots of condos in Mission Valley, and VP would compete with them too to some extent.[/quote]

I already addressed these issues above. Vantage Point units are not for sale. Zell’s company bought the whole project as apartments a few months back.

The last few large projects to get completed downtown were Vantage Point, Smart Corner, Aperture, the Legend, and Bayside (might be a couple of others I’m missing here). These projects broke ground in ’07 or thereabouts (if memory serves). Nothing of size broke ground once ’08 began (as the lenders put a halt to things about three years too late), so it’s been over three years since a major project got underway. I doubt we’ll see anything break ground for another 5 years but we may see some proposals start to pop up in 3-4 years.

It’s a bit difficult to find out exactly how many new and existing units are available downtown but I’m pretty sure I can find someone who has that data, and I’ll report back once I have it. Having said that, my gut, which is not to be trusted, tells me it will be 2-3 years before we’re at anything resembling a “normal” level of inventory downtown simply because no new inventory will be coming on over the period.

[davelj]

[quote=wildta][quote=barnaby33]Do mean that Vantage point is solely, or even mostly responsible for a glut of units for sale? That doesn’t seem to be a realistic statement, because buyers there would seemingly be very different than buyers at BOSA or something more westerly.[/quote]

I concur. I live in the marina district and would never buy in the area of where vantage is located.[/quote]

I have no real opinion on Vantage Point or the area that surrounds it, but… those units are no longer for sale. Sam Zell’s company bought the whole project and they are now apartments. He paid what I thought was an outrageous $340/sq ft.; nevertheless, that’s 679 units off the for sale market and into the rental pool.

Generically, I think downtown prices are still about 20% too high (when comparing the cost of ownership versus renting) and I think that will correct over the next three years. The excess supply is slowly being absorbed and most, but not all, of the specuvesters have been wiped out and foreclosed on. But there are still a lot of short sales going on and there’s still a lot of new, never-lived-in inventory. But there will be zero newly completed units coming on the market for at least the next five years, and so long as interest rates remain low and prices don’t increase (which is unlikely) most of this inventory will get sucked up.

While I still think downtown is generically overpriced there are pockets of value here and there. I just bought a west-facing penthouse unit in a mid-quality mid-rise (built in ’05) with 18 ft. ceilings and a view of the bay and downtown for $270/sq ft. (includes renovation costs). HOA is $328/mo. and includes a decent gym (but no pool). The original buyer paid a whopping $640/sq ft. While not a “steal,” that seems pretty reasonable to me. And there’s plenty of stuff like that if you have the patience to keep at it.

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