Perfectly Normal Markets- 4/28/23

[DrStool]

4 hours ago, sandy beach said:

Is that a lot?

 

NYU Stern School of Business

Interest rate risk beyond MBS: The estimated losses on securities are only part of the total unrealized losses banks suffered from the rise in interest rates. Loans, like securities, also lose value when interest rates go up. Total loans plus securities as of December 2022 was $17.5 trillion. Applying the average duration of loans and securities (3.9 years), the total unrealized losses on total bank credit as of December 2022 is $17.5 × 3.9 × 2.5% = $1.7 trillion. This is only slightly less than total bank equity capital of $2.1 trillion in 2022. Hence, the losses from the interest rate increase are comparable to the total equity in the entire banking system.

https://pages.stern.nyu.edu/~pschnabl/research/DSS_SVB.pdf

Amazing how all the economists and mainstream media types are now pointing out things that I was shouting about a year ago. I shake my head. 

And of course they'll say that nobody saw this coming. 

I am nobody.  

[DrStool]

3 hours ago, Jimi said:

https://www.loopnet.com/Listing/25-Taylor-St-San-Francisco-CA/24293206/

9 million is generous. I'd love to do feasibility study on that. Was my specialty in the heyday of the RTC.  I see condominium written all over that. 

[DrStool]

Cities have cycles. 

Whodathunk. 

[fxfox]

5 minutes ago, DrStool said:

9 million is generous. I'd love to do feasibility study on that. Was my specialty in the heyday of the RTC.  I see condominium written all over that. 

Definitely. Or like a hotel. A „baby“ Waldorf Astoria 😂

[fxfox]

12 minutes ago, DrStool said:

How would throwing the mayor into prison solve the problem of clochards, drug addicts and braindead in cities?

You know in the US, there's virtually no social safety net for these people, unlike most European countries. 

Push and pull factors. With her policy she was a pull factor for the mentioned people. That policy has to end. So she must be sacked. Then they should sent that folks back where they came from.

[DrStool]

So to get to $9 million, you start with a market study to see whether rentals or condo sales produce the highest value at the current time. The market study requires market rent surveys, then estimating income and expenses, and deriving a market cap rate. Then you back out the development costs. That's the as is value of the rental scenario.

For condo, you'd have to do a market study of condo prices and absorption rates, then apply a market discount rate to the discounted sellout. Ho ho ho. Then you back out the development costs for the as is value. 

My guess is that once you factor the interior demolition costs, plus the legal costs of kicking out the remaining tenants or accrued losses from keeping them there until their leases expire, this property's value is zero, or even negative. 

There simply will never be enough housing demand at a high enough price to pay the cost of redeveloping millions of square feet of office space. Every million sq. ft. of office space would equate to 1000-1200 apartment units depending on market mix. 

[fxfox]

1 hour ago, DrStool said:

Bernanke was a master criminal. Powell is an idiot criminal. 

Given Bernanke‘s academic track record, it had to come that way. Like with the LTCM guys.

 

“Harvard makes mistakes too, you know. Kissinger taught there“.

(Woody Allen)

[fxfox]

8 minutes ago, DrStool said:

So to get to $9 million, you start with a market study to see whether rentals or condo sales produce the highest value at the current time. The market study requires market rent surveys, then estimating income and expenses, and deriving a market cap rate. Then you back out the development costs. That's the as is value of the rental scenario.

For condo, you'd have to do a market study of condo prices and absorption rates, then apply a market discount rate to the discounted sellout. Ho ho ho. Then you back out the development costs for the as is value. 

My guess is that once you factor the interior demolition costs, plus the legal costs of kicking out the remaining tenants or accrued losses from keeping them there until their leases expire, this property's value is zero, or even negative. 

There simply will never be enough housing demand at a high enough price to pay the cost of redeveloping millions of square feet of office space. Every million sq. ft. of office space would equate to 1000-1200 apartment units depending on market mix. 

Or you have to squeeze subsidies out of the mayor, like Trump did with Koch in NYC in the 70s 😂

If SF really goes down the shitehole that‘s what every developer gonna do.

[Jimi]

1 hour ago, DrStool said:

So to get to $9 million, you start with a market study to see whether rentals or condo sales produce the highest value at the current time. The market study requires market rent surveys, then estimating income and expenses, and deriving a market cap rate. Then you back out the development costs. That's the as is value of the rental scenario.

For condo, you'd have to do a market study of condo prices and absorption rates, then apply a market discount rate to the discounted sellout. Ho ho ho. Then you back out the development costs for the as is value. 

My guess is that once you factor the interior demolition costs, plus the legal costs of kicking out the remaining tenants or accrued losses from keeping them there until their leases expire, this property's value is zero, or even negative. 

There simply will never be enough housing demand at a high enough price to pay the cost of redeveloping millions of square feet of office space. Every million sq. ft. of office space would equate to 1000-1200 apartment units depending on market mix. 

Saw an interview or read something at some point in the past 12 months about an outfit repositioning an SF office building for condos. It was really interesting to learn how completely insanely complicated the project was. I remember elevators being one issue: locationally, you might put them somewhere different in the core for an office floor than a condo floor. Then there was utilities - electrical & plumbing has to be run fresh in ways never previously contemplated. Then there's fire escapes: an office may devote one side of the building for escape, but that doesn't necessarily work for a condo if the resulting escapes are behind someone's locked door.  It was very eye-opening.

[Jimi]

 

https://www.sfchronicle.com/sf/article/office-conversion-housing-17769370.php

https://abc7news.com/downtown-san-francisco-offices-into-housing-sf-buildings/13086443/

[fxfox]

17 minutes ago, Jimi said:

 

https://www.sfchronicle.com/sf/article/office-conversion-housing-17769370.php

https://abc7news.com/downtown-san-francisco-offices-into-housing-sf-buildings/13086443/

It starts with „need more affordable housing“ and ends up with public housing projects, which then gonna ruin the city once and for all. If they bring public housing to the city center you also could attack SF with tactical nuclear weapons. Result would be the same.

[Jimi]

The impact on the city’s budget is significant, too: Office-based industries account for nearly three quarters of the city’s gross domestic product. After years of surpluses, the government now forecasts a $780 million deficit in the upcoming two fiscal years — roughly a 6 percent cut in its general fund, according to the mayor’s office.

https://www.nytimes.com/2023/04/30/us/san-francisco-whole-foods-crime-economy.html
 

comments section is interesting with first hand accounts. 

[sandy beach]

40 minutes ago, Jimi said:

The impact on the city’s budget is significant, too: Office-based industries account for nearly three quarters of the city’s gross domestic product. After years of surpluses, the government now forecasts a $780 million deficit in the upcoming two fiscal years — roughly a 6 percent cut in its general fund, according to the mayor’s office.

https://www.nytimes.com/2023/04/30/us/san-francisco-whole-foods-crime-economy.html
 

comments section is interesting with first hand accounts. 

Is that a lot?