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Office real estate crash will be so sharp, values unlikely to recover by 2040

fortune.com

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Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#221

Post by epgui »

GauntletWizard wrote: post #210
JumpCrisscross wrote: post #207

Earlier quoted context omitted.

> it’s less important when discussing systemic problems It’s unimportant whether commercial property owners are fraudulently or not inflating their property values? That seems incredibly important to what kind of solution is appropriate.

Everything is worth what the market will bear. If you can achieve a price, it's a fair price - some relator, probably.

It’s just not true that every market price is fair. There are all sorts of sources of market inefficiencies, and this is one of the reasons why governments spontaneously arise or form.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#222

Post by smugma »

cowsandmilk wrote: post #51
xbmcuser wrote: post #5

Current market prices for a lot of commercial real estate seems to be a ponzi scheme especially in the US. It is not in the interest of any of the players to decrease prices only the renters. Local government need higher prices as without the high property prices their property tax receipt will tank making them unable to meet their budgets. Banks need higher prices as they are highly leveraged and will be on the hook…

> Local government need higher prices as without the high property prices their property tax receipt will tank making them unable to meet their budgets. California is the only state facing this due to Prop 13. Most jurisdictions are able to adjust real estate tax rates in response to the drop in valuations and many did so when property values dropped in the Great Recession.

It’s the opposite in California. Even if prices drop 30%, if a property wasn’t traded in the last few (5-7?) years, it’s probably worth more than the assessed value.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#223

Post by dragonwriter »

epgui wrote: post #221
GauntletWizard wrote: post #210

Earlier quoted context omitted.

Everything is worth what the market will bear. If you can achieve a price, it's a fair price - some relator, probably.

It’s just not true that every market price is fair. There are all sorts of sources of market inefficiencies, and this is one of the reasons why governments spontaneously arise or form.

Its...not.

Though it is one of the retroactive justifications for government from non-minarchist market ideologues.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#226

Post by mrunkel »

nocoiner wrote: post #16
RyanAdamas wrote: post #4

This is why changing zoning laws is so important. These buildings and their underlying values can be saved by 'going condo' or conversion to smaller unit spaces for the purpose of housing so many who are struggling with massive increases to rent. Most rent does not increase because of increased asset expenses, it increases because of increased owner expenses and that quickly becomes a slippery slope in the face of ad…

This is not really how a lot of this works. Zoning is basically irrelevant - the problem is that the cost of converting an outmoded commercial building to residential is usually within the same order of magnitude as knocking it down and putting up something built for purpose. I would bet real money that there aren’t more than a handful of municipal governments that would die on the hill of maintaining existing zoning…

> Also, just nitpicks, but when was $5k a down payment for a house? 1955? And BlackRock isn’t a hedge fund.

The first house my parents bought in 1976 was $26,500. So I wager $5k down payment would have covered it. (And this was in Los Angeles County)

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#228

Post by joenot443 »

hotpotamus wrote: post #182
dmbche wrote: post #113

Earlier quoted context omitted.

Probably more ground - but that's not the point. The f-35 is built to be good in all conditions, have long range and carry quite a lot of ordonance, all the while being quite stealthy. It's a do-it-all plane.(80-120M usd) The f16 is made to stay close to airbases and defend against intrusions. Kinda cheap - relatively.(60 M usd) The f22 is the peak stealth air superiority fighter. It's made to go anywhere and murder…

> but that's not the point There's a saying in systems engineering that comes to mind: "the purpose of a system is what it does". It's why I've only become more and more convinced that we should leave the rest of the world alone.

Kraut has a video which explains why the position "US should leave the rest of the world alone" is a pretty elementary one which doesn't hold up to scrutiny.

https://www.youtube.com/watch?v=uhXFgKEkwbU

I'd be curious for your thoughts.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#229

Post by joenot443 »

hotpotamus wrote: post #78
joenot443 wrote: post #71

Earlier quoted context omitted.

So what are you referring to then? No need to be evasive - just point out the conflict you had in mind. Like I said, it'd be ignorant to make the suggestion without some kind of example, so I'm giving you the floor for an explanation. Remember, your statement was that F-35s are mostly used for mowing down the housing of undesirables, all you need to do is explain where you got that idea from.

I'm referring to the experience of a lifetime - they load these things with bombs, but the examples of them falling on those with high-income individuals is vanishingly rare. To be honest, I wasn't referring to the F-35 all that specifically, it just seems to happen when you give governments bombs and planes; they aren't about to let them sit idle.

Excellent, it sounds like you're learning then. The F-35 is, as it were, not a machine designed to mow down civilian buildings.

Re: Office real estate crash will be so sharp, values unlikely to recover by 2040

#230

Post by caeril »

heywhatupboys wrote: post #23
baremetal wrote: post #19

Earlier quoted context omitted.

I don't think most people fully grasp what is likely coming down the pike. Normalcy bias is a helluva drug.

meh, we have much more stable financial institutions in 2023 than 2008.

This is by institutional change, not fundamental balance sheet change.

In 2023, if Bank A comes to the Fed/FDIC/SEC/Treasury/Congress in the middle of night after a huge margin call, our institutions now have the processes in place to declare different accounting or collateral rules for that specific bank at the stroke of a pen.

"Ok Mr. Dimon, as of midnight tonight, you no longer have to mark all of your shit paper to market. Carry it at the valuation you think is cool, bro"

That's a different definition of "stable" than we had prior to the GFC.

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