Are you sick of this presidential election yet?

I am bone

weary it.

It’s so ugly!

Of course, in Manhattan, Trump means a lot more than the TV show and his recent circus act, or at least he used to represent other things.

Lots of noise.
I have this white noise machine in my 4-month old’s room- I wonder if we could replace it with a Trump Noise Machine- would he sleep as well with that?

Maybe he’d giggle in his sleep.

enough noise already

He writes in this month’s outlook:

In this high risk/low return world, the obvious answer is to reduce risk and accept lower than historical returns. But don’t you have to put your money somewhere? Yes, of course, except markets offer little in the way of double digit returns. Negative returns and principal losses in many asset categories are increasingly possible unless nominal growth rates reach acceptable levels. I don’t like bonds; I don’t like most stocks; I don’t like private equity. Real assets such as land, gold, and tangible plant and equipment at a discount are favored asset categories. But those are hard for an individual to buy because wealth has been “financialized”. How about Janus Global Unconstrained strategies? Much of my money is there.

Obviously, the discussion with many investors right now is the lack of decent returns in Manhattan when buying one-off investment property.

We’re talking about 2-2.5% returns.

In a softening rental market, this is pretty sensitive to the downside.

And what I think Bill Gross is talking about generally is the challenge that investors are facing even more broadly when thinking about real estate.

It used to be so much more of a mom-and-pop operation in the entire country, and we’re watching it get swallowed up, not just “financialized,” but institutionalized.

Smart people are going into real estate.

We see it in the brokerage community in Manhattan, we see it in the thoughtfulness of brokerage firms and how they are using much more sophisticated analysis to help buyers and sellers.

No question that it has made markets far more efficient.
Too Much Noise, Not Enough News
What else is annoying?

The wholesale claim that the New York City housing market is in tatters.

This article in today’s Bloomberg certainly focuses in on what is sure to be lower land prices.

A great quote towards the end:

“Just because the market for Bentleys has slowed doesn’t mean you can’t sell Lexuses.”
Amen to that.

The market is still selling at the lower end, and yet everyone likes to focus on the car wreck that seems to be construction currently happening on 57th street.

Even those buildings have a ton of interest baked in.

They may not fetch the $7000-10,000 per square foot, but they still have amazing inherent quality views and will certainly get attention.

So please make sure you consider the housing market not as a monolith, but quite broken out.

Our July absorption report is quite clear about what’s selling and what isn’t.

Can’t. Stop. Looking.

First, drunk driving deaths fall

by 22% in the state of Virginia in 2 years.

This has been attributed directly to Uber.

Some disagree, but only because there aren’t enough riders yet.

I still get happy/sad chills every time I think about it.

Of course, over the next few years we will have driverless cars.

What will happen then?
As the WSJ writes, the car insurance business represents a very profitable business that could be dramatically dented by driverless cars.
What they are not writing about is that the profit seems to be almost all in the car side of the insurance, and the property & casualty insurance business is the loss leader to get that business.
What happens when the car insurance model must change when drivers disappear?

Your homeowners policy won’t have car insurance to subsidize it- it is going to have to go up- or they’re going to have to find a lot more efficiencies there.