The Fed-Enabled Apartment Bubble Is Unraveling \ stacker news ~econ

The Fed-Enabled Apartment Bubble Is Unraveling

2490 sats \ 9 comments \ @Undisciplined 12 Dec 2023 econ

Apartments are a part of the housing bubble that tends to get overlooked, but apparently that market is really loaded down with bad loans.

The Fed-Enabled Apartment Bubble Is Unraveling By Artis Shepherd "Thanks to Federal Reserve intervention, apartments and apartment buildings have turned into giant malinvestments. Once again, a federal entity intervenes in markets presumably to make them work better, but things end in a crisis."

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904 sats \ 6 replies \ @grayruby 12 Dec 2023

I think commercial real estate is a more dire concern than multifamily at this point.

121 sats \ 5 replies \ @Undisciplined OP 12 Dec 2023

That's been a really long developing issue. Especially with city zoning restrictions, it's going to take a long time to absorb all the extra commercial spaces.

490 sats \ 4 replies \ @grayruby 12 Dec 2023

I was thinking more along the lines that these properties are leveraged at x valuation but and are now worth y valuation that is vastly lower and what kind of systemic risk that could pose to the lenders and CRE bond holders.

100 sats \ 3 replies \ @Undisciplined OP 12 Dec 2023

Part of that valuation mismatch, though, is that cities have designated too much real estate as explicitly commercial. It would be worth more if the owners had the option to convert it to residential.

553 sats \ 1 reply \ @mmirate 13 Dec 2023 freebie

It's not just the zoning that's a problem there; in many urban city-center places there are also parking minimums for residential that would be stricter than for commercial.

And, given that not being able to park a vehicle at your residence usually means not owning a vehicle, and that for purposes of traveling more than a couple miles away, not owning a vehicle puts you at the whims of the policies of Uber et al (and/or, in the future, the whims of whoever might hack into the autonomously-delivered vehicle that you rent) ... I find it difficult to argue against these parking minimums at any level beyond the general principle of "it's their property, they should be allowed to do whatever tf they want with it short of harming other people".

123 sats \ 0 replies \ @Undisciplined OP 13 Dec 2023

That's a great point to bring up. I usually only think about the urban parking space issue in the context of ride-share services, but you're right about it being regulated differently for different types of real estate.

I forget who did the cost analysis of city parking, but just requiring street-side parking spaces is unfathomably costly. The point isn't that "it's their property...". The point is that urban space is very limited and people should be able to choose whether or not they want to pay for parking spaces, which are very expensive.

490 sats \ 0 replies \ @grayruby 12 Dec 2023

Agree to Agree

526 sats \ 1 reply \ @k00b 12 Dec 2023

We've all been watching the high rises getting built in Austin wondering who is going to fill them knowing several other recently built complexes are half empty.

One project decided to only build half the stories it originally planned to.

465 sats \ 0 replies \ @Undisciplined OP 12 Dec 2023

I've been seeing stories like that all over the place. For a long time, places like Austin were scrambling to keep up with all the CA and NY refugees, but now they seem to be realizing that too many projects were started than were going to be profitable.