What was cause of High Multifamily Vacancies during 2009
Most Popular Reply
Rental Property Investor · Brooklyn, NY · Member since 2014 · 722 posts · 1k+ votes
8yOriginally posted by @Joe Splitrock:
Originally posted by @Brian Hamel:
I think people are forgetting the first step that caused losing jibs, gas prices sky rocketed. My little Civic had never seen a $30 tank filling and it cleared $35 one day. Prices rose so quick there was never a step between. Think I saw $4.30 a gallon. Home heating same issue. Every new channel in the country had a camera at a gas pump and the whole country started talking about it. Everyone knew bad times were coming and stopped spending money. 6 weeks later corporate America felt the crunch and started cutting jobs. It became trendy to save money. No longer was being cheap something to be ashamed of. So people moved in together less embarrassed. If anyone said anything you simply had to say "with the economy being the way it is it just made sense". It made being cheap cool. As a country we more efficient with fuel. We replaced huge SUVs with compact SUVs. We flooded the market with Hybrids. We have better MPGs then ever and we produce more oil than we consume. Just wait self driving cars are going to cut our demands on fuel by an astonishing rate. Plus solar panels all over the place and wind mills. I'd say an energy crisis is behind us. I'd guess Automation will be our next big hurtle. Increase in joblessness causing frustration towards the haves by the have nots.
Actually oil prices started increasing after September 11th in 2001 and continued up until the 2008 crisis. Conflict in the middle east, including the war in Iraq lead prices to sky rocket. Prices temporarily dipped in 2008 after the stock market crash, then started increasing again, hitting peak in 2011. Hybrid car sales decreased after the 2008 crash. Hybrid sales in 2007 were a larger percentage of the car market than they were in 2010 or 2011. The oil prices ultimately recovered because domestic oil production had been increasing since 2006, when fracking started in North Dakota. By 2012-2014, we were producing huge amounts of oil in the US, which drove oil prices down further. Renewable energy such as wind and solar hasn't affected gas as much as it has electricity. Electric cars are still a very insignificant portion of the overall vehicles on the road. That will change over time, but today they are still too expensive. Better fuel efficiency helps, but ultimately domestic production is what is keeping OPEC from manipulating prices back up.
So, I wouldn't say it was oil (gas) that caused the recession. It was a factor along with many other things that came to a head in 2008. Of course the housing bubble was the catalyst in the end, but people had been struggling before the bubble burst. People like to think about a crash as a single event, but in reality trouble was brewing for many years. People also forget that many markets saw deeper pain in 2010 or 2011 than they did in 2008-2009.
I hope that energy crisis are behind us. As a nation we need to continue to increase efficiency standards and domestic production. Fuel prices have a deeper effect on the economy, because all goods and services are transported. That means higher fuel prices increase the cost of everything.
Self driving cars will take 20 years to become mass adoption. New features like this start as optional on luxury vehicles and as costs decrease, the feature will work it's way into lower cost vehicles. I say 20 years because really no cars are self driving today and cars last 15-20 years. No doubt it is coming.
Here are a couple charts showing oil production by hear and hybrid electric vehicle production as a percentage of vehicles sold.
You know what the tipping point for self-driving vehicles will be? When insurance companies have collected enough data to be confident in offering lower insurance rates for self-driving cars than human-driven ones. Almost all accidents are caused by human error. So, one day, if you are going to drive your own car, you are going to have to take out a very, very expensive liability policy for the privilege of doing so. At some point, only the very rich will be able to drive their own cars - if they want to.
Anyway, who would want to? I'd rather climb into the car at night, get a good night's sleep, and arrive at my destination (loser: the hotel industry and AirBnB), or be able to work for the entire ride while my car drives itself.
Of course, since "driver" is the single biggest job category in the US, our economy will nose-dive when autonomous vehicles take over . . .
22 Replies
- Real Estate Investor · Saint Louis, MO · Member since 2012 · 113 posts · 12 votes14y
A lot of multi family buildings especially 4 units or less were/are part of the foreclosures. I would actually guess that percentage wise, when relative to the total number of sfam houses, there is a higher percentage of multifam homes that have seen forclosure.. just a guess though and probably a geographical logic in my guess.
Yes. Thanks for responses.
Didn't really consider the vicious cycle of people losing jobs -> unable to pay rent -> doubling up occupancy by moving in w/ friends or relatives = higher rental vacancies
Jeremy: Wasn't aware of large percentage of multifamily distress (i.e. foreclosures) relative to single family residences. I would guess this cycle also began w/ high unemployment -> inability to pay rent -> lower NOI for multifamily owner(s) -> multifamily mortgage default
Regarding the high levels of vacancies, yes all information definitely points to regional differences in vacancy levels. It seems as though Midwest generally has higher home ownership rates and higher rental vacancies while rental vacancies in the south and west have historically been lower and are currently trending lower at a greater percentage vs other regions
Here is my attempt at embedding the chart again (hope it works this time).
This chart compares the NAHB Index vs US Census Bureau reported vacancies. Also interesting to note is the NAHB arrives at their figures by applying different weight to different classes of properties. Class A weight = 36%, Class B = 46% and Class C = 17%
- Investor / Syndicator · Austin, TX · Member since 2015 · 367 posts · 220 votes8yI think it’s instructive to separate multifamily units in the research. I’d expect 2-4 unit multifamily props to have experienced vacancy rates close to par with SFH during the period in question. But as far as larger commercial multifamily properties the vacancy rates, though higher, did not force foreclosures on a wide basis.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Depends on area.. why they went vacant in PHX and Vegas was that the construction industry came to a dead halt and half the renters worked in the trades and they ended up leaving all together to look for work elsewhere.
Also PHX had double whammy if you recall the politics at the time in PHX were booting Hispanics that did not have green card out of the country...
No asset class is ammune in a devesitating GFC like we had.
- Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes8y
That year I was told by a realtor in a Southwestern city that the rental business there was bad at the time. He said a lot of people were unable to sell their SFH without taking large losses. Instead of selling, they rented them out, driving rental prices down and increasing vacancies.
- Nashua, NH · Member since 2017 · 66 posts · 58 votes8yI think people are forgetting the first step that caused losing jibs, gas prices sky rocketed. My little Civic had never seen a $30 tank filling and it cleared $35 one day. Prices rose so quick there was never a step between. Think I saw $4.30 a gallon. Home heating same issue. Every new channel in the country had a camera at a gas pump and the whole country started talking about it. Everyone knew bad times were coming and stopped spending money. 6 weeks later corporate America felt the crunch and started cutting jobs. It became trendy to save money. No longer was being cheap something to be ashamed of. So people moved in together less embarrassed. If anyone said anything you simply had to say "with the economy being the way it is it just made sense". It made being cheap cool. As a country we more efficient with fuel. We replaced huge SUVs with compact SUVs. We flooded the market with Hybrids. We have better MPGs then ever and we produce more oil than we consume. Just wait self driving cars are going to cut our demands on fuel by an astonishing rate. Plus solar panels all over the place and wind mills. I'd say an energy crisis is behind us. I'd guess Automation will be our next big hurtle. Increase in joblessness causing frustration towards the haves by the have nots.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Brian Hamel I get my 35k Tesla in june or so.. and I have another 2 of them.. I have not bought gas in almost 2 years.. trading one in for the 35k one I don't need 3.. but I wanted to try one out before I went all in .. and I will NEVER go back to gas.. other than I might need a truck to pull a fishing boat.. they don't do well towing.. But to come home plug in at night and pay 2 bucks for a full week charge.. that is a game changer for many.. as you state.
the mortgage Crisis and liar loans started it all and all these other things fueled it. That's why Michael Berry made 500 million betting against mortgages.
- 8yLevi T.Pro MemberRental Property Investor · Tucson AZ / Nice FR / Washington DC · Member since 2016 · 1k+ posts · 1k+ votes
From what I had seen when buying MF back then, it simply comes down to one simple thing, you cant stuff a medium to large family into an apartment. As someone else pointed out, people children came home. I remember clearly two young guys I know lost their jobs, moved home, then their parents lost their jobs.. Everyone started shuffling down best they could. Three generations living under one roof in some places.
It is my opinion that the housing bubble was not so much a lending issue as the media likes to play it. Everyone likes the idea of big evil bankers, but really the price escalated as buyers assumed they could keep moving up in the size of home or the quantity of homes, most planned to sell if they could not make the payment. At the time it did not sound crazy as houses sold within 24hr of hitting the market. Banks where left with market demand, they had to compete. Once one bank is offering something, the next has to follow... Toss in a little Freddie and Fannie, and the party was getting started.. The numbers worked on paper back then, but no one really though the market was going to take a 50% haircut. It's like playing the flipping game, investors plan to get out before the banks come calling for the first payment, sometimes they don't.
At some point the market took a breather, that started the domino affect as people could not off load the property for more than they had in it before the bank came knocking. Interestingly LA figured it out, most investors went to cash only, and fractional ownership via investment groups once the prices outpaced buying ability for the average investor, which helped keep them from taking much of a hit.
This drove Millennials to stay home longer, a lot longer. You where crazy to be living at home at age 30... Now you hear about people over 40. That your sign tho, builders stopped building, people where forced to stay living with family, now we are left playing catchup for many years to come. #1 complaint I hear from single young adults about rentals, is the cost, and no one will rent to them and their 4-5 friends. We are waiting for their income gap to reach market. For now it's cheaper for them to stay home till they have created a life and a career for themselves.
I'm rambling.. I need some Zzzz, peace! - 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Levi T. I know this is history.. but you did have certain market conditions that really escalated this. and it was regional.. if we look back 70% of the mortgage problems were in 10 or so states.
NV AZ FLA Central CA had rampant speculation.. you had people buying 3, 4 , 5 homes that should no way have qualified and the idea was that in 6 months they would sell and make 50k that became a falling knife with nothing to hold It up.
And then credit FROZE... banks failed... its was a nightmare. And you had perfectly good assets being lost as the loans matured there was no way to refi and the underlying lenders foreclosed on perfectly good working assets because the owners could not retire debt in cash they had always banked on the ( OH MY BANK WILL roll the 20 due in 5 over they always have).. when they did not boom..
but I don't want to dwell on it I darn near ended up a statistic and its way in the rear view mirror.. but a combination of mortgage market liar loans credit freeze .. build stopped jobs lost this all fed into it.
take our PDX market .. 10k homes or doors built a year or more from 1990 to 2008... 2009 700 total that's all.. next year 1500 next year 2500 next year 3500 next year 5000 plus.. that's why new construction here is so darn hot.. we are still shy 20k houses from what normal demand is .. and inmigration is still happening.. so you have builders like us selling everything before its done and
like from 2017 to 2018 my exact same house I built and sold last year for 350k a door is selling for 430k a door and build cost only went up about 10k a door.. so for this year fingers crossed it going to be stellar to be a builder who has inventory.. and I bought the land 3 years ago at those prices.
it all cycles.. but this cycle when it get to the end of this year and cash in.. I will put on my retirement conservative hat and keep it close to the vest.. no need to go out and build a 50 million dollar real estate empire like I did before 08 only to just about die in the crash.. Literally.
- Rental Property Investor · Brooklyn, NY · Member since 2014 · 722 posts · 1k+ votes8y
@MARK F. It's often said that occupancy rose during the Great Recession, but this is not technically true. It rose as a result of the Great Recession, after the economy started growing again but when when it still felt to everyone who was not a professional economist that we were in a recession.
The Great Recession involved a massive loss of jobs, and that caused vacancies to spike, as always happens during a recession. The hit was worse for B/C properties that have more working class tenants, as these were the people who were hit hardest during the recession. (In contrast, unemployment for workers with college degrees never rose much above 3 percent.) Wherever there was a high concentration of working-class jobs, occupancies took a big hit.
But this fact is mis-remembered because the recession was also accompanied by a foreclosure crisis. Millions of people lost their homes during this crisis, but they were not necessarily the same people who lost their jobs, though there was definitely some overlap to be sure. Many people who had jobs saw their mortgages re-set to levels they could not afford, so they walked away from their homes or stopped paying mortgages and got foreclosed on.
At the same time, many new households were prevented from buying homes by skittish banks, and then by formally higher lending standards.
These two groups of people - employed people who could no longer afford their mortgages and would-be homeowners who were turned down for loans - had no choice but to rent. So, they flooded into rental housing, causing the historically high occupancies and rent growth that we saw after the Great Recession.
So, when people say that high rental occupancies were *caused* by the Great Recession, they are right. But when they say rental occupancies rose *during* the Great Recession, they are wrong in most cases.
The example of the Great Recession has been used by a lot of people (myself included at one point) to argue for the fundamental safety and recession-proof nature of apartment buildings, especially B/C properties. But I am beginning to re-think this point.
I don't think that we are headed for a Great Recession style meltdown again. But we will have a normal recession again, which will involve the usual loss of jobs. However, it won't be accompanied by another foreclosure crisis, which eventually sends people flooding to apartments, because there has not been a home ownership bubble. Lending standards are significantly tighter and there are many fewer marginal homeowners in possession of homes now.
The Great Recession was more likely an unusual confluence of events that worked to the benefit of rental properties. And, even then, as I said, there was a spike of vacancy caused by job loss, but this was then filled unusually fast by those who were foreclosed or no longer qualified for mortgages. Next time, we will see the spike in vacancy, but it won't start to drop until jobs return to the market. In other words, I think that the economy may not suffer as badly in the next recession, but the MFRE owners could suffer more - because vacancy could take longer to recover.
A look at past recessions, other than the Great Recession, would probably be helpful. I have not had a chance to look at this data. If anyone has it, I would love to see it.
JDT
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Jonathan Twombly Remember the 60 minutes piece on the strategic foreclosure.
YOUR POINT exactly... those folks still had jobs.. still had income.. but when they see their neighbors home in Scottsdale selling for 400k and they owe 650k against the same home .. they just stopped paying.. they decided what's my fico worth and its not worth negative 250k so I am walking.. and this was in non recourse states.. out our way purchase money mortgages have no deficiency IE banks cant sue you for the loss.. it became so bad though that govmit stepped in and would not let any bank sue a home owner for a deficiency and they made the IRS stop enforcing 1099c. now that has all stopped.
We were a little active in Vegas at court house steps it was not uncommon for the owner who walked away to have a relative show up and bid the house at the sale either and buy it back.. payoff the mortgage as the reduced rate the bank sold it for and never move.. It was wild in those days.
then with the wheels turning very slowly of course banks started to play ball and reset mortgages reduce rates etc etc..
But I was HML ing in those days and I had more than a few apartment owners call me looking for short term funding because their 20 due in 5 was not being rolled over and they could not find anyone to make a new loan.. I was not big enough to be making 2 to 5 million dollar loans.. so many of those people lost them.. and this current crop of syndicators who have been scooping this stuff up.. this is where it came from.. there and mismanagement of course you can always count on mismanagement to run a MF asset into the ground LOL and create a buying opportunity for the next group or investor.
Or they bought low C and had no clue as to how to manage that tenant demographic and they got schooled.
@Jeremy Namen As per Fannie Mae/Freddie Mac data, MF delinquency rates were significantly lower than SFR during the crisis. That is one the reasons over the past decade, MFs have been held up as examples of a better business model than SFRs. But you are correct, they do vary by geography and the Fannie Mae/Freddie Mac #s are national averages.
From my understanding, it all boils down to risk management. It is easier to weather than storm when 1 renter leaves in a 4 unit building than when 1 renter leaves/unable to pay in a SFR. In the case of large MFs, there was no competition. They fared better than most other types of real estate.
At the end of the day, no asset class had a great time during the financial crisis.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes8y
Originally posted by @Brian Hamel:
I think people are forgetting the first step that caused losing jibs, gas prices sky rocketed. My little Civic had never seen a $30 tank filling and it cleared $35 one day. Prices rose so quick there was never a step between. Think I saw $4.30 a gallon. Home heating same issue. Every new channel in the country had a camera at a gas pump and the whole country started talking about it. Everyone knew bad times were coming and stopped spending money. 6 weeks later corporate America felt the crunch and started cutting jobs. It became trendy to save money. No longer was being cheap something to be ashamed of. So people moved in together less embarrassed. If anyone said anything you simply had to say "with the economy being the way it is it just made sense". It made being cheap cool. As a country we more efficient with fuel. We replaced huge SUVs with compact SUVs. We flooded the market with Hybrids. We have better MPGs then ever and we produce more oil than we consume. Just wait self driving cars are going to cut our demands on fuel by an astonishing rate. Plus solar panels all over the place and wind mills. I'd say an energy crisis is behind us. I'd guess Automation will be our next big hurtle. Increase in joblessness causing frustration towards the haves by the have nots.Actually oil prices started increasing after September 11th in 2001 and continued up until the 2008 crisis. Conflict in the middle east, including the war in Iraq lead prices to sky rocket. Prices temporarily dipped in 2008 after the stock market crash, then started increasing again, hitting peak in 2011. Hybrid car sales decreased after the 2008 crash. Hybrid sales in 2007 were a larger percentage of the car market than they were in 2010 or 2011. The oil prices ultimately recovered because domestic oil production had been increasing since 2006, when fracking started in North Dakota. By 2012-2014, we were producing huge amounts of oil in the US, which drove oil prices down further. Renewable energy such as wind and solar hasn't affected gas as much as it has electricity. Electric cars are still a very insignificant portion of the overall vehicles on the road. That will change over time, but today they are still too expensive. Better fuel efficiency helps, but ultimately domestic production is what is keeping OPEC from manipulating prices back up.
So, I wouldn't say it was oil (gas) that caused the recession. It was a factor along with many other things that came to a head in 2008. Of course the housing bubble was the catalyst in the end, but people had been struggling before the bubble burst. People like to think about a crash as a single event, but in reality trouble was brewing for many years. People also forget that many markets saw deeper pain in 2010 or 2011 than they did in 2008-2009.
I hope that energy crisis are behind us. As a nation we need to continue to increase efficiency standards and domestic production. Fuel prices have a deeper effect on the economy, because all goods and services are transported. That means higher fuel prices increase the cost of everything.
Self driving cars will take 20 years to become mass adoption. New features like this start as optional on luxury vehicles and as costs decrease, the feature will work it's way into lower cost vehicles. I say 20 years because really no cars are self driving today and cars last 15-20 years. No doubt it is coming.
Here are a couple charts showing oil production by hear and hybrid electric vehicle production as a percentage of vehicles sold.
- Rental Property Investor · Brooklyn, NY · Member since 2014 · 722 posts · 1k+ votes8y
Originally posted by @Joe Splitrock:
Originally posted by @Brian Hamel:
I think people are forgetting the first step that caused losing jibs, gas prices sky rocketed. My little Civic had never seen a $30 tank filling and it cleared $35 one day. Prices rose so quick there was never a step between. Think I saw $4.30 a gallon. Home heating same issue. Every new channel in the country had a camera at a gas pump and the whole country started talking about it. Everyone knew bad times were coming and stopped spending money. 6 weeks later corporate America felt the crunch and started cutting jobs. It became trendy to save money. No longer was being cheap something to be ashamed of. So people moved in together less embarrassed. If anyone said anything you simply had to say "with the economy being the way it is it just made sense". It made being cheap cool. As a country we more efficient with fuel. We replaced huge SUVs with compact SUVs. We flooded the market with Hybrids. We have better MPGs then ever and we produce more oil than we consume. Just wait self driving cars are going to cut our demands on fuel by an astonishing rate. Plus solar panels all over the place and wind mills. I'd say an energy crisis is behind us. I'd guess Automation will be our next big hurtle. Increase in joblessness causing frustration towards the haves by the have nots.Actually oil prices started increasing after September 11th in 2001 and continued up until the 2008 crisis. Conflict in the middle east, including the war in Iraq lead prices to sky rocket. Prices temporarily dipped in 2008 after the stock market crash, then started increasing again, hitting peak in 2011. Hybrid car sales decreased after the 2008 crash. Hybrid sales in 2007 were a larger percentage of the car market than they were in 2010 or 2011. The oil prices ultimately recovered because domestic oil production had been increasing since 2006, when fracking started in North Dakota. By 2012-2014, we were producing huge amounts of oil in the US, which drove oil prices down further. Renewable energy such as wind and solar hasn't affected gas as much as it has electricity. Electric cars are still a very insignificant portion of the overall vehicles on the road. That will change over time, but today they are still too expensive. Better fuel efficiency helps, but ultimately domestic production is what is keeping OPEC from manipulating prices back up.
So, I wouldn't say it was oil (gas) that caused the recession. It was a factor along with many other things that came to a head in 2008. Of course the housing bubble was the catalyst in the end, but people had been struggling before the bubble burst. People like to think about a crash as a single event, but in reality trouble was brewing for many years. People also forget that many markets saw deeper pain in 2010 or 2011 than they did in 2008-2009.
I hope that energy crisis are behind us. As a nation we need to continue to increase efficiency standards and domestic production. Fuel prices have a deeper effect on the economy, because all goods and services are transported. That means higher fuel prices increase the cost of everything.
Self driving cars will take 20 years to become mass adoption. New features like this start as optional on luxury vehicles and as costs decrease, the feature will work it's way into lower cost vehicles. I say 20 years because really no cars are self driving today and cars last 15-20 years. No doubt it is coming.
Here are a couple charts showing oil production by hear and hybrid electric vehicle production as a percentage of vehicles sold.
You know what the tipping point for self-driving vehicles will be? When insurance companies have collected enough data to be confident in offering lower insurance rates for self-driving cars than human-driven ones. Almost all accidents are caused by human error. So, one day, if you are going to drive your own car, you are going to have to take out a very, very expensive liability policy for the privilege of doing so. At some point, only the very rich will be able to drive their own cars - if they want to.
Anyway, who would want to? I'd rather climb into the car at night, get a good night's sleep, and arrive at my destination (loser: the hotel industry and AirBnB), or be able to work for the entire ride while my car drives itself.
Of course, since "driver" is the single biggest job category in the US, our economy will nose-dive when autonomous vehicles take over . . .
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes8y
Originally posted by @Jonathan Twombly:
Originally posted by @Joe Splitrock:
Originally posted by @Brian Hamel:
I think people are forgetting the first step that caused losing jibs, gas prices sky rocketed. My little Civic had never seen a $30 tank filling and it cleared $35 one day. Prices rose so quick there was never a step between. Think I saw $4.30 a gallon. Home heating same issue. Every new channel in the country had a camera at a gas pump and the whole country started talking about it. Everyone knew bad times were coming and stopped spending money. 6 weeks later corporate America felt the crunch and started cutting jobs. It became trendy to save money. No longer was being cheap something to be ashamed of. So people moved in together less embarrassed. If anyone said anything you simply had to say "with the economy being the way it is it just made sense". It made being cheap cool. As a country we more efficient with fuel. We replaced huge SUVs with compact SUVs. We flooded the market with Hybrids. We have better MPGs then ever and we produce more oil than we consume. Just wait self driving cars are going to cut our demands on fuel by an astonishing rate. Plus solar panels all over the place and wind mills. I'd say an energy crisis is behind us. I'd guess Automation will be our next big hurtle. Increase in joblessness causing frustration towards the haves by the have nots.Actually oil prices started increasing after September 11th in 2001 and continued up until the 2008 crisis. Conflict in the middle east, including the war in Iraq lead prices to sky rocket. Prices temporarily dipped in 2008 after the stock market crash, then started increasing again, hitting peak in 2011. Hybrid car sales decreased after the 2008 crash. Hybrid sales in 2007 were a larger percentage of the car market than they were in 2010 or 2011. The oil prices ultimately recovered because domestic oil production had been increasing since 2006, when fracking started in North Dakota. By 2012-2014, we were producing huge amounts of oil in the US, which drove oil prices down further. Renewable energy such as wind and solar hasn't affected gas as much as it has electricity. Electric cars are still a very insignificant portion of the overall vehicles on the road. That will change over time, but today they are still too expensive. Better fuel efficiency helps, but ultimately domestic production is what is keeping OPEC from manipulating prices back up.
So, I wouldn't say it was oil (gas) that caused the recession. It was a factor along with many other things that came to a head in 2008. Of course the housing bubble was the catalyst in the end, but people had been struggling before the bubble burst. People like to think about a crash as a single event, but in reality trouble was brewing for many years. People also forget that many markets saw deeper pain in 2010 or 2011 than they did in 2008-2009.
I hope that energy crisis are behind us. As a nation we need to continue to increase efficiency standards and domestic production. Fuel prices have a deeper effect on the economy, because all goods and services are transported. That means higher fuel prices increase the cost of everything.
Self driving cars will take 20 years to become mass adoption. New features like this start as optional on luxury vehicles and as costs decrease, the feature will work it's way into lower cost vehicles. I say 20 years because really no cars are self driving today and cars last 15-20 years. No doubt it is coming.
Here are a couple charts showing oil production by hear and hybrid electric vehicle production as a percentage of vehicles sold.
You know what the tipping point for self-driving vehicles will be? When insurance companies have collected enough data to be confident in offering lower insurance rates for self-driving cars than human-driven ones. Almost all accidents are caused by human error. So, one day, if you are going to drive your own car, you are going to have to take out a very, very expensive liability policy for the privilege of doing so. At some point, only the very rich will be able to drive their own cars - if they want to.
Anyway, who would want to? I'd rather climb into the car at night, get a good night's sleep, and arrive at my destination (loser: the hotel industry and AirBnB), or be able to work for the entire ride while my car drives itself.
Of course, since "driver" is the single biggest job category in the US, our economy will nose-dive when autonomous vehicles take over . . .
Great point on the insurance. They are already giving discounts for cars with automatic braking which is just the first step towards self-driving for many auto makers.
I agree that driving a car isn't something I will totally miss, but keep in mind the self driving features will be programmed to strictly follow the law. Most drivers think a yellow light is a warning and red means "three more cars". How many people drive the speed limit? I doubt self-driving technology let us override the legal speed limit. This just proves your point that self-driving will be safer, but not everyone will like that idea. Also my boss drives a sports car and basically HATES the idea of self driving cars. For him and many others, driving is an experience.
My guess is hybrid will be the norm for a long time before cars go self-driving only. We will see, it will be fun to watch.
- Rental Property Investor · Brooklyn, NY · Member since 2014 · 722 posts · 1k+ votes8y
Originally posted by @Joe Splitrock:
Originally posted by @Jonathan Twombly:
Originally posted by @Joe Splitrock:
Originally posted by @Brian Hamel:
I think people are forgetting the first step that caused losing jibs, gas prices sky rocketed. My little Civic had never seen a $30 tank filling and it cleared $35 one day. Prices rose so quick there was never a step between. Think I saw $4.30 a gallon. Home heating same issue. Every new channel in the country had a camera at a gas pump and the whole country started talking about it. Everyone knew bad times were coming and stopped spending money. 6 weeks later corporate America felt the crunch and started cutting jobs. It became trendy to save money. No longer was being cheap something to be ashamed of. So people moved in together less embarrassed. If anyone said anything you simply had to say "with the economy being the way it is it just made sense". It made being cheap cool. As a country we more efficient with fuel. We replaced huge SUVs with compact SUVs. We flooded the market with Hybrids. We have better MPGs then ever and we produce more oil than we consume. Just wait self driving cars are going to cut our demands on fuel by an astonishing rate. Plus solar panels all over the place and wind mills. I'd say an energy crisis is behind us. I'd guess Automation will be our next big hurtle. Increase in joblessness causing frustration towards the haves by the have nots.Actually oil prices started increasing after September 11th in 2001 and continued up until the 2008 crisis. Conflict in the middle east, including the war in Iraq lead prices to sky rocket. Prices temporarily dipped in 2008 after the stock market crash, then started increasing again, hitting peak in 2011. Hybrid car sales decreased after the 2008 crash. Hybrid sales in 2007 were a larger percentage of the car market than they were in 2010 or 2011. The oil prices ultimately recovered because domestic oil production had been increasing since 2006, when fracking started in North Dakota. By 2012-2014, we were producing huge amounts of oil in the US, which drove oil prices down further. Renewable energy such as wind and solar hasn't affected gas as much as it has electricity. Electric cars are still a very insignificant portion of the overall vehicles on the road. That will change over time, but today they are still too expensive. Better fuel efficiency helps, but ultimately domestic production is what is keeping OPEC from manipulating prices back up.
So, I wouldn't say it was oil (gas) that caused the recession. It was a factor along with many other things that came to a head in 2008. Of course the housing bubble was the catalyst in the end, but people had been struggling before the bubble burst. People like to think about a crash as a single event, but in reality trouble was brewing for many years. People also forget that many markets saw deeper pain in 2010 or 2011 than they did in 2008-2009.
I hope that energy crisis are behind us. As a nation we need to continue to increase efficiency standards and domestic production. Fuel prices have a deeper effect on the economy, because all goods and services are transported. That means higher fuel prices increase the cost of everything.
Self driving cars will take 20 years to become mass adoption. New features like this start as optional on luxury vehicles and as costs decrease, the feature will work it's way into lower cost vehicles. I say 20 years because really no cars are self driving today and cars last 15-20 years. No doubt it is coming.
Here are a couple charts showing oil production by hear and hybrid electric vehicle production as a percentage of vehicles sold.
You know what the tipping point for self-driving vehicles will be? When insurance companies have collected enough data to be confident in offering lower insurance rates for self-driving cars than human-driven ones. Almost all accidents are caused by human error. So, one day, if you are going to drive your own car, you are going to have to take out a very, very expensive liability policy for the privilege of doing so. At some point, only the very rich will be able to drive their own cars - if they want to.
Anyway, who would want to? I'd rather climb into the car at night, get a good night's sleep, and arrive at my destination (loser: the hotel industry and AirBnB), or be able to work for the entire ride while my car drives itself.
Of course, since "driver" is the single biggest job category in the US, our economy will nose-dive when autonomous vehicles take over . . .
Great point on the insurance. They are already giving discounts for cars with automatic braking which is just the first step towards self-driving for many auto makers.
I agree that driving a car isn't something I will totally miss, but keep in mind the self driving features will be programmed to strictly follow the law. Most drivers think a yellow light is a warning and red means "three more cars". How many people drive the speed limit? I doubt self-driving technology let us override the legal speed limit. This just proves your point that self-driving will be safer, but not everyone will like that idea. Also my boss drives a sports car and basically HATES the idea of self driving cars. For him and many others, driving is an experience.
My guess is hybrid will be the norm for a long time before cars go self-driving only. We will see, it will be fun to watch.
I hear the world's tiniest violin playing for your boss right now. Once autonomous vehicles become common and it becomes clear that the overwhelming majority of accidents are caused by people doing things like driving sports cars through red lights because they are too important to wait 5 minutes, it will cost something like $2000/month for insurance on a human-driven car. Most people won't care. They desperately want to text in the car, rather than drive it, and autonomous cars will mean that they won't even have to stop texting during the time they are in the car, meaning that the only times they won't be texting will be when they are asleep. (Completely waterproof phones for texting in the shower must certainly be on their way as we speak.)
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes8y
Some cities, like mine, had population growth and low vacancy in 2009. Rents went up in my city.
People followed the jobs. They down sized to smaller houses or smaller apartments. In some cases they moved in with relatives or roommates to save money.
If you are looking for recession proof properties, look at the underlying job market and population growth of an area. Avoid the A class properties, which are more likely to become vacant.
- Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes8y
@MARK F. You also ran into some funky dynamics around the size of apartments. Those "standard" 2/1 units did better than 1/1. The 1/1 tenants just moved home with mom and dad. The 3/2 renters (that were worried about money) crammed into the 2/1 units. The 3/2 units ended up (in some cases) being this odd no-mans land where it was too expensive unless you were desperate for the 3rd bedroom. So it's not quite as simple as many people think around "hey, those homeowners that couldn't afford a house payment or walked away just started renting". I mean, they did, but it didn't mean that all apartment stock faired the same. So goes my anecdotal perspective...
- Realtor and Investor · Scottsdale, AZ · Member since 2017 · 1k+ posts · 1k+ votes8y
When the sales market crashed, so did the rental market. The most dramatic rental rate change I had was one of my SFR in North Scottsdale that used to EASILY rent for $3,200 per month that was now struggling to get a Tenant to pay $1,800.
Many people who couldn't afford to live in nicer houses, suddenly were able to. So, we saw a great many people vacate the lower class housing (multi-family included) to opt for better housing because they could now afford it....AND have their pick of properties. There was such an over saturation of supply. Many of them would also double up, so they would go in a place with family or friends to share in the expense and have a bigger, nicer place.
Also, in 2009, sale prices were so low, that people who had previously rented could afford to buy. We had houses for sale here in Phx for $20K! That is unheard of here. For a while (into 2010 and even 2011), you could regularly get a property in the $60K range, and that was a NICE house! So, renters were leaving their apartments left and right to buy a home for a fraction of what they paid in rent. Their house payment was Under $400 (PITI) AND the down payment was $3K. So, it was a very affordable way of converting renters to homeowners.
- 8yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Joe Splitrock:
Originally posted by @Jonathan Twombly:
Originally posted by @Joe Splitrock:
Originally posted by @Brian Hamel:
I think people are forgetting the first step that caused losing jibs, gas prices sky rocketed. My little Civic had never seen a $30 tank filling and it cleared $35 one day. Prices rose so quick there was never a step between. Think I saw $4.30 a gallon. Home heating same issue. Every new channel in the country had a camera at a gas pump and the whole country started talking about it. Everyone knew bad times were coming and stopped spending money. 6 weeks later corporate America felt the crunch and started cutting jobs. It became trendy to save money. No longer was being cheap something to be ashamed of. So people moved in together less embarrassed. If anyone said anything you simply had to say "with the economy being the way it is it just made sense". It made being cheap cool. As a country we more efficient with fuel. We replaced huge SUVs with compact SUVs. We flooded the market with Hybrids. We have better MPGs then ever and we produce more oil than we consume. Just wait self driving cars are going to cut our demands on fuel by an astonishing rate. Plus solar panels all over the place and wind mills. I'd say an energy crisis is behind us. I'd guess Automation will be our next big hurtle. Increase in joblessness causing frustration towards the haves by the have nots.Actually oil prices started increasing after September 11th in 2001 and continued up until the 2008 crisis. Conflict in the middle east, including the war in Iraq lead prices to sky rocket. Prices temporarily dipped in 2008 after the stock market crash, then started increasing again, hitting peak in 2011. Hybrid car sales decreased after the 2008 crash. Hybrid sales in 2007 were a larger percentage of the car market than they were in 2010 or 2011. The oil prices ultimately recovered because domestic oil production had been increasing since 2006, when fracking started in North Dakota. By 2012-2014, we were producing huge amounts of oil in the US, which drove oil prices down further. Renewable energy such as wind and solar hasn't affected gas as much as it has electricity. Electric cars are still a very insignificant portion of the overall vehicles on the road. That will change over time, but today they are still too expensive. Better fuel efficiency helps, but ultimately domestic production is what is keeping OPEC from manipulating prices back up.
So, I wouldn't say it was oil (gas) that caused the recession. It was a factor along with many other things that came to a head in 2008. Of course the housing bubble was the catalyst in the end, but people had been struggling before the bubble burst. People like to think about a crash as a single event, but in reality trouble was brewing for many years. People also forget that many markets saw deeper pain in 2010 or 2011 than they did in 2008-2009.
I hope that energy crisis are behind us. As a nation we need to continue to increase efficiency standards and domestic production. Fuel prices have a deeper effect on the economy, because all goods and services are transported. That means higher fuel prices increase the cost of everything.
Self driving cars will take 20 years to become mass adoption. New features like this start as optional on luxury vehicles and as costs decrease, the feature will work it's way into lower cost vehicles. I say 20 years because really no cars are self driving today and cars last 15-20 years. No doubt it is coming.
Here are a couple charts showing oil production by hear and hybrid electric vehicle production as a percentage of vehicles sold.
You know what the tipping point for self-driving vehicles will be? When insurance companies have collected enough data to be confident in offering lower insurance rates for self-driving cars than human-driven ones. Almost all accidents are caused by human error. So, one day, if you are going to drive your own car, you are going to have to take out a very, very expensive liability policy for the privilege of doing so. At some point, only the very rich will be able to drive their own cars - if they want to.
Anyway, who would want to? I'd rather climb into the car at night, get a good night's sleep, and arrive at my destination (loser: the hotel industry and AirBnB), or be able to work for the entire ride while my car drives itself.
Of course, since "driver" is the single biggest job category in the US, our economy will nose-dive when autonomous vehicles take over . . .
Great point on the insurance. They are already giving discounts for cars with automatic braking which is just the first step towards self-driving for many auto makers.
I agree that driving a car isn't something I will totally miss, but keep in mind the self driving features will be programmed to strictly follow the law. Most drivers think a yellow light is a warning and red means "three more cars". How many people drive the speed limit? I doubt self-driving technology let us override the legal speed limit. This just proves your point that self-driving will be safer, but not everyone will like that idea. Also my boss drives a sports car and basically HATES the idea of self driving cars. For him and many others, driving is an experience.
My guess is hybrid will be the norm for a long time before cars go self-driving only. We will see, it will be fun to watch.
Joe my Tesla's on auto pilot will only go posted speed limit on two lane roads on freeway I can go as fast as 80mph.
but you still have to watch these.. like if your coming to a split in the freeway it will wonder and you get nervous.
also it brakes pretty hard when it needs to slow down harder than I would.. were I love it though is in bumper to bumper there its genius.. it will come to full stop sit there start again etc.. I know you probably don't have a lot of that but in areas with it.. Chicago SF were I live LA seattle etc.. it will keep fender benders to a minimum and now the ladies can put on their make up driving to work with out ramming into cars in front of them. and it will solve the dangerous texting habits.. I will look at my e mail while poking along at 10 mph.
The price is also coming down the model 3 is 35k add 5k for fully automatic and there you go not much more than a loaded accord and twice as fast and twice as cool.. and in my area complete fill up at night for 2 dollars.. can't argue that. plus no oil no tune ups no nothing .. its all software driven software is updated at night when you sleep and they are always adding features.. regular cars it is what it is when you drive it off. unless you get after market stuff that you have to schedule and do surgery on your vehicle. its pretty cool there is at easter an Easter EGG thingee. you hit a few buttoms and your doors on the X open automatically lights blink and it does a little jig.. not that that's a reason to spend 100 to 150k on a car but it is cool.
but for me I kind of dig it... autopilot in the airplane can be less forgiving flying you into a rock at 200 knots.. or you sit there and look at it and say what the heck is this thing doing.. and why is it doing that.. the car autopilots are much less complicated . and they will come to a stop... of course airliners have auto land and auto brake etc.. but you know you have to spend a few million for those features :)
- Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes8y
Originally posted by @Mike Krieg:
I think it's instructive to separate multifamily units in the research. I'd expect 2-4 unit multifamily props to have experienced vacancy rates close to par with SFH during the period in question. But as far as larger commercial multifamily properties the vacancy rates, though higher, did not force foreclosures on a wide basis. See article here: https://www.steeplerockpartners.com/single-post/2018/01/24/Multifamily-Risk---the-tales-side-of-the-investment-coin
Regarding the steeplerock article, the high SFR delinquency rate and buttocks-clinched-tight lending were big contributors to the low delinquency rate in apartments...still is. All cycles are different though and certain asset classes may not be given floaties next time.
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