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One of the issues with NY real estate that Louis Rossman discovered is how the mortgages for NY real estate work. Essentially, landlords are able to make partial (or even no payments) on their mortgages, and instead the missing payment is simply added to the mortgage. This means that there is little to no incentive for landlords to lower rents, but even worse, it basically means it's impossible for them to go bankrupt. While no one likes bankruptcy, one benefit of it is that it acts as a reset button in cases where prices have gone overboard. Because many landlords can't go bankrupt, it means that their mortgages continues to go up and up, meaning they have to keep raising rents, and then in they sell the building, they have to sell it at a much higher price to pay off the loan, and then the new owner also has to raise prices even more. It's just a never ending cycle of stupidity
defaulting on Gov't debt would basically make the US un-investible to foreign capitol. Or atleast very unattractive. Also at the de-facto reserve currency the whole world would be thrown into chaos
@@biometal770 This is just stupid right wing mantra for cutting social programs that then themselves don't believe in. The government can and will print money and we need certain level of government debt for economy to function actually.
Yea but their irresponsibility is gonna affect us all in the long run. Eventually the only place you’ll be able to find reasonable rent is Timbuktu, MiddleOfNowhere
Weird because in NYC the landlord is stuck with taxes tied to rising values, but can’t rent out based on those values. Nah, this is all on politicians.
@@tonycrabtree3416 Thats crock. Its based on the value after an assessment. Did you watch the video ? The narrator mentions a 30% drop in values which means lower property taxes are possible if you just reassess your property and if that doesnt lead to lower property taxes than you werent paying the taxes corresponding to market rate.
@@jaad9848as someone who has friends and family that are nyc landlords and am a renter myself I can tell you for a fact they are paying more property taxes and insurance than before
Strong balance sheet at a particular point in time. Just like with debt to the American government - strong balance sheet 50 years ago. The reckoning will come.
About the current bank situation, I'm really concerned. I am worried about a lot more if a bank the size of SVB may fail. I have a friend who manages a fast-growing startup and was severely impacted by the bank run. I have taken more than $840k out of my bank. Since the FDIC only provides coverage up to $250K, an implosion could have negative consequences. presently want to invest in the stock market. Does anyone have any ideas on how I might proceed?
I've never felt secure keeping a large sum of money in a bank, so I invest through my financial advisor, reap the benefits, and then spend the money. We fail to realize that banks are commercial enterprises that are driven by greed as well. The over-leveraging of assets by banks starting in 2020 was one of the factors that led to SVB's collapse.
We were traveling in the same direction, my wife and I. I withdrew my money over the past two years and invested with her wealth manager. I won't be able to match her earnings over time, but at least I make more. Haha.
I looked up her profile online since I was curious. I saw her website, her credentials, and how tight she came across. At first, I thought this was overblown nonsense.
I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
One strategy for protecting against a recession is to buy equities. Investors, especially during a recession, need to know where and how to put money in order to make money while avoiding inflation.
It has never been easier to understand how to build your money than it is right now, when you may study and experience a completely variegated market passively by employing a successful portfolio-advisor. The impacts of the U.S. dollar's gain or fall on investtments, in my opinion, are complex.
Working with a Financial Advisor to help guide you on your wealth-building journey if you're just starting out is a wonderful way to get started and thats how i was able to accrued good gains . They helps to manage investment overall risk profile , prevent permanent loss of capital consider maintaining a broad diversification of your investments that reflects your personal risk tolerance, time horizon, and the nature of your financial goal
When ‘Carol Vivian Constable’ is trading, there's no nonsense and no excuses. She wins the trade and you win. Take the loss, I promise she'll take one with you.
A New York law incentivized landlords to deliver poor service to increase tenant turnover, and then the rug was pulled. Banks may have to start factoring legislative volatility risk into their assessments.
For a time city centers were dominated by factories, then mass transit was invented. For a time city centers were dominated by office buildings, then the internet was invented. Only a handful of industries (like law) need to be centrally located these days.
No, factories were in the city center until the mid 20th century. The infamous Triangle Shirtwaist factory actually still stands on the NYU campus, the meat packing district didn’t get that name for nothing, and just look at a picture of the west side of manhattan from anytime prior to the 1950’s and you will see basically the whole side of the island was lined with working docks.
@tripplefives1402 Sure, *some* of NYC was farmland 150 years ago. Lower manhattan, where my examples were was not. Again with the specific example of the Triangle Shirtwaist Factory, it was built in 1901 in lower Manhattan which had been urbanized for close to 100 years at that point.
I am in doubt that they "didn't know they have to revise their loan evaluation". So many cases throughout the years where banks would claim something like that only to later find out during their bankruptcy proceedings that actually there were some internal info, which was completely disregarded in the name of short term profit. Well, that's how 2008 in fact happened. So I wouldn't trust any bank that would claim that they did not know how changing market conditions would impact their portfolio.
The awfully messy situation with housing in New York City is a big reason why rents are so ridiculously high and people are moving away from the city in large numbers. It's going to cause a massive price crash that could see a huge number of homes in NYC suddenly go on the market at essentially fire sale prices.
3000 for a studio? Remember when New York was both the cultural center of the country and one of the cheapest places to live. A bit seedy but a small downside.
The last thing we should be worrying about is the health of real estate developers and the people who loaned them money. Shit, Trump Tower has a 12,000 sq ft. footprint but a floor with 30,000 sq ft. Let’s punish bad practices.
the whole market that NYCB was so dominant in was created by the NYC government's Rent stabilization law. Obviously, any changes to the law is going to disrupt that market. It's not the landlord's fault, without that law, those landlords wouldn't even be taking out loans for those projects. This is basically what happens anytime the government thinks they can control the market. Every new law or change in law is going to sink someone who was operating under the old law.
The crisis would have happened without the law, it would have simply played out differently. Ultimately everyone was just speculating the notoriously expensive NYC rent woukd keep going up.
@@samsonsoturian6013 no. NYC has a heavily regulated real estate market. It does not operate under traditional market forces, and so defies conventional analysis. The reason why NYC real estate is behaving oddly is because of government interference. Otherwise, you'd see the market work things out on its own. If things are truly unaffordable, then the growth will eventually stop as people can afford it anymore. That rents continue to rise means that people are willing and able to pay it. Or that it is better for landlords to have vacant properties at high rent asks than to accept lower paying tenants (this is what gov interference created).
@@justhecuke you do realize that almost every law we have is the result of an attempt to solve a problem. And many problems were created by excesses of capitalism, such as speculation and greed. A good example is the FDA. It was created to regulate the medicine market, as it was full of snake oil salesmen and pharmaceuticals of sub-par quality, resulting in many deaths. I am not supporting one position or the other, but I do think unrestrained capitalism has been shown to be deleterious for consumers and the wider population many times over.
@tripplefives1402 The people living there should own it. And when they move they sell their interest to the next person. Idk how that didn't occur to you.
@@GerbenWulff The FDIC is paid for by the banks through insurance fees. So are you wrong? No. But at the same time those fees subsidized over a long time prevent banking disasters. It is money well spent. Or are you suggesting we should not have an FDIC?
The stupidity of depending so much on the residential sector is incredible, it breaks confidence in the entire economy They want quick and safe money, well the game of capitalism doesn't work like that, someday you have to come across risk
The new rule caping of the rent increase after renovation is crazy to me. As a tenant you have the choice to accept an agreed upon increase as payment for the renovations. If you don’t want to pay more you don’t get a new bathroom. It’s not like the landlord can force you to have the kitchen redone…
Both signature bank and SVB bank should have been left alone and left to fold. These banks were accommodating risky companies with no risk mitigation, servicing a small pool of high net worth clients, and were severely miss manages by their own accord. At the same time, this meant these banks were heavily insulated from the market. Therefore they were at a relatively low risk of causing any cascade/knock-on effect with other banks. Not letting these banks collapse was a missed opportunity as they client profile made them ripe for a contained demolition. Meaning they were a truly amazing opportunity for the economy to cleanse itself of the excess cash driving inflation. Instead, the buck has been passed, the FDIC has wasted our collective insurance and we creep closer towards the inevitability of more connected/important banks collapsing. Ones that are at more risk of igniting a total banking sector collapse.
Blaming rising rents on incomes is a bit ridiculous, the government flooded the economy with cash and it went almost entirely to the holders of assets like stocks, properties, you know, the stuff banks and landlords own.... Its because the workers got paid sure...
What i don’t understand is that when properties now qualify as ‘stabilised rent’ under new regulations, wouldn’t the the landlord just sell of the property when the current tenant cancels their lease agreement? As long as the current tenant remains in the property the pre-regulation contract would still be in effect.
The problem for NYCB would be best put into the laps of banking regulators. Incompetent bankers are supposed to be regulated by the FDIC and others. The regulators should've seen that 50% of their loan base was one category of real estate asset. "What happens if the market changes?" If their mortgage portfolio was diversified, the percentage of bad loans would be far smaller and NYCB wouldn't be facing a liquidity crisis. Technically without that bailout stock sale? They are illiquid and regulators would sell them to another bank. The same regulators who should have recognized the risk from an over consolidated portfolio. In 1929 half of US banks were carrying margin loans to stock brokers and also held stock as part of their asset base. Guess all of those regulations had to be changed after 8,000 banks went out of business. We knew some guys who had a car loan operation back in the day. They sold a few of the loans but kept a lot of them that were high interest to lower classes of borrower. 2008 hit and they had to repossess 20% of their portfolio.
So you’re assuming nearly a quarter of NYCBs multi family loans will be charged off? If that happens I’m pretty sure the rest of the economy will have already imploded.
Rents are rising with WFH because of WFH. To WFH, people are looking for more space. Shared arrangements turn into dedicated 1-beds and studios, 1-beds into 2-beds (for couples, for example), and yes, some people move out of the area, but the demand for housing has actually grown specifically DUE TO WFH, because more utility is required from the living units.
Sorry Marius, no. Rent has been rising for a much longer time. Gary Stevenson has some interesting things to say about this and says that the rising inequality means that the average people can't afford to buy a house, so instead rich people get to buy all assets, meaning there is a huge demand for assets, and rent on assets rises, which increases inequality, which increases the demand for assets... etc. It's interesting, look him up.
This vid kinda misses the mark, because the landlords still have 99% full properties and the rents in stabilized units NEVER fall. The losses are coming from the fact that cost inflation is hitting landlords hard (repairs, maintenance, insurance), and the rent increases aren’t enough to keep up. In the past, rents barely went up, but the LL’s costs didn’t go up either. Also, many buildings are taking losses for people who didn’t pay rent for 4 years during the pandemic.
Another reason for the loss of business occupancy, is that there is in fact a recession in the USA right now, which we will confirm only in retrospect.
Everyone knew even 10 years ago that they were overbuilding in every large city. It was the ‘mall era’, except vertically. Skyscrapers have a lot of problems. They seem to have a ‘prestige’ factor going for them for a while- then reality hits.
Where does the "median income" numbers come from? It seems pretty bogus that the MEDIAN income (50% make that much or less) is about the same as min wage in NYC.
NYC median income is 40K a year, NYC minimum wage is 15$ an hour which is roughly 30K a year if the person is doing full time, not everyone does full time, and also people that are self employed could make less then that (and or not report that income)
Rent stabilization is absolutely necessary and NYC doesn't go far enough. Shelter should not be subject to market forces because when it is the people with money choose to have more money no matter what the consequences are. Guardrails need to exist. That said, NYC makes terrible legislation. I think in the long run, everyone would have been happier with stricter rent controls. Banks would be happier giving out loans that they know they would make reliable returns, landlords would be discouraged to engage in parasitism as they wouldn't be incentivized to turn over tenants and since they wouldn't really be able to compete on price but would still need to fill units to pay their mortgage, they would have to compete with amenities and improvements to the unit. I honestly hope that when these buildings start falling under default, the city allows for them to be converted to co-ops.
Uh big cities without rent control normally have many more available units and lower rents than places like NYC. Government is very bad at figuring out how a market works best, mostly because it’s populated by people that never had to work in a real free market.
Where would the people who need a place to live live if there were no landlords to build or maintain the dwellings these people need to live in? You need to think your socialism through.
I mean I see your point, but the alternative for NYC style high-density housing is you own your unit but have some kind of committee you pay into to manage shared building expenses. Out in the suburbs we call those HOAs or condo associations and if you think those can't get as toxic, expensive and corrupt as any landlord situation I have terrible news for you.
I love your channel and have been binging it lately its great, but I h a t e the segues into the add it feels a little cheap given that i pay close attention to what you say lol i would prefer to have more consent in the process by you just cutting in and saying "brought to you by so and so". This might be a problem i have with youtube as a whole though not just you. Again great work
Government intervention in markets ALWAYS has unintended consequences that are virtually always worse & longer lasting than the original problem it was meant to resolve as future interventions are enacted to solve for the problems caused by the previous ones. It becomes a cascading series of worsening problems that causes exponentially more pain & destruction in the end than had they just done nothing and let the market work itself out from the start. Rent control is a prime and undeniably obvious example of this iron clad rule of economics.
"let the market work itself out" - please read "The Jungle" by Upton Sinclair and see how your value system is similar. The market failed a very very long time ago in the US. In order to fix it, you would need to put a lot of people in prison that are currently in charge of it and most likely you need to re-distribute billions of $ that where stolen in the last 150 years alone. The market is awesome, but sadly it was killed in the US by the hands of a few ultra-rich people that are not limited by moral standards.
Rent stabilization laws mean well but cause prices to go up because many landlords don’t want to rent with rent control so the supply of rentals shrinks big time. Let’s compare the cost of renting in New York with strict rent control laws to Alabama which outlaws rent control which area does the tenants pay the lowest rent?
Is it jest me or was the script for this episode very weird? It went over basically everything that was said twice, but with slightly more detail the second time.
Rent stabilization has ruined the lives of many, many landlords, and it has nothing to do with rent increases or not. It's because NYS or NYC has added so many insanely dumb rules to restrain what a landlord can and can't do about problem tenants. Housing regulation authorities and judges have failed landlords, and they don't protect would-be tenants that are duped by excessive application fees and then not given any unit.
Not really? He’s not a corporate large company. He’s doing his job and revenue is going to be needed? Just like if you had ads on your hard work…. Would you like to see someone saying this to you? It’s easy to point fingers at a channel like this. But he’s doing a great job then. He’s making the channel more valuable just by your comment valuing him exponentially.
life lesson: communist economics AKA central government sets prices...is always a disaster. Get the government out of the way & let builders stabilize rents by increasing housing supply. Democrats cant figure out the basics all they know is government power.
Real estate crisis really doesn't matter when you have just imported all the prisons in the third world. America is about to learn that culture matters, expect things to drastically worse.
Housing literally cannot be a human right, I seriously don't think people understand what a human right even is, housing can only be a human right on the stipulation that you can build your own private dwelling which im fine with
You can have a free market with no rent controls which would require a relaxation of zoning laws and heritage restrictions to allow super high residential towers being built everywhere to come anywhere close the supply necessary to meet demand or else have all but the richest New Yorkers priced out of the city (like SF), or you can have rent controls which cause a basket case of bizarre incentives like intentionally trying to undermine the soundness of your own property to get people to move out. So with the new reforms you can only lift rents 2% when you get a new tenant in. Is there still the incentive to renovate and improve the property? If so then the rent controlled landlords of NY should start a home improvement contracting company so that they can bill themselves millions to change the drapes, repaint the walls etc. Also lets suppose the most efficient way to reduce rents would be to knock down ageing apartment buildings and replace it with a well built, brand new tower with four times as many apartments in it that would offer a higher quality of life for all tenants. Can you force people to vacate a rent stabilized home to knock down and rebuild? Rent control could actually be forcing the rents up by inadvertently constraining supply.
in other words, it’s not the bank who did the mistake it’s politics. the stabilzed rent changes are nonsense. why should people profit from below market prices. I am sure the hypocrites. Don’t take a job and work at 30% discount.
If you look at Airbnb, long before there were a lot of towns that did not allow boarding houses but did not do code enforcement. So it was a known risk for bankers that lent to Airbnb investors. This sounds the same except there isn’t a discount for ex Airbnb while stabilized will lose value.
You should make a video on the recently launched Destiny Tech 100 ETF (NYSE:DXYZ) that just launched a few days ago. They invest in private companies like SpaceX, OpenAi, Discord, Stripe but their stock price is way overpriced above their NAV of $4.80. I would be interested in your thoughts on this.
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*Louis Rossman cackling in the distance*
I hope all of Louis Rossman's dreams come true.
@@llynnmarks3382I hope so too!
Louis is a great guy. His shop fixed my dead hard drive after several other people told me it was unrecoverable.
I get that reference.
who is Louis Rossman and what is cackling?
One of the issues with NY real estate that Louis Rossman discovered is how the mortgages for NY real estate work. Essentially, landlords are able to make partial (or even no payments) on their mortgages, and instead the missing payment is simply added to the mortgage. This means that there is little to no incentive for landlords to lower rents, but even worse, it basically means it's impossible for them to go bankrupt. While no one likes bankruptcy, one benefit of it is that it acts as a reset button in cases where prices have gone overboard. Because many landlords can't go bankrupt, it means that their mortgages continues to go up and up, meaning they have to keep raising rents, and then in they sell the building, they have to sell it at a much higher price to pay off the loan, and then the new owner also has to raise prices even more.
It's just a never ending cycle of stupidity
This is how I feel about the US government debt. We need a reset, a default. It will be painful, but we will be better for it.
defaulting on Gov't debt would basically make the US un-investible to foreign capitol. Or atleast very unattractive. Also at the de-facto reserve currency the whole world would be thrown into chaos
@@biometal770 This is just stupid right wing mantra for cutting social programs that then themselves don't believe in. The government can and will print money and we need certain level of government debt for economy to function actually.
It would be a shame if like…. The government started declaring differences in market value and book value bank fraud or something.
That wasn’t discovered by him. It’s how basically every commercial mortgage works everywhere in the US.
Like Louis Rossman said, it’s not lying it’s New York real estate
Yeah but New Yorkers has a choice and they chose all this. Remember who brought New York back the first time? Now they are the ones going after him.
Landlords abused the old law by letting their properties become dilapidated to raise the rent 20%. I dont feel bad for them or AirBnB hosts.
Yea but their irresponsibility is gonna affect us all in the long run. Eventually the only place you’ll be able to find reasonable rent is Timbuktu, MiddleOfNowhere
The mildest most boring pyramid scheme evar....
Weird because in NYC the landlord is stuck with taxes tied to rising values, but can’t rent out based on those values. Nah, this is all on politicians.
@@tonycrabtree3416 Thats crock. Its based on the value after an assessment. Did you watch the video ? The narrator mentions a 30% drop in values which means lower property taxes are possible if you just reassess your property and if that doesnt lead to lower property taxes than you werent paying the taxes corresponding to market rate.
@@jaad9848as someone who has friends and family that are nyc landlords and am a renter myself I can tell you for a fact they are paying more property taxes and insurance than before
If loans were given to clients with strong balance sheets then they should have no problem taking their losses, no bailout! No tax payer bailout!
tax payer funded crisis creation through voting for the wrong people.😂
Strong balance sheet at a particular point in time. Just like with debt to the American government - strong balance sheet 50 years ago. The reckoning will come.
Got to love Socalisim in the USA, unlike Capitalsim in China where the Chinese govt let shareholders take the hit for being stupid.
Privatized profits, socialized losses. Why take a loss when you can take a bailout?
About the current bank situation, I'm really concerned. I am worried about a lot more if a bank the size of SVB may fail. I have a friend who manages a fast-growing startup and was severely impacted by the bank run. I have taken more than $840k out of my bank. Since the FDIC only provides coverage up to $250K, an implosion could have negative consequences. presently want to invest in the stock market. Does anyone have any ideas on how I might proceed?
I've never felt secure keeping a large sum of money in a bank, so I invest through my financial advisor, reap the benefits, and then spend the money. We fail to realize that banks are commercial enterprises that are driven by greed as well. The over-leveraging of assets by banks starting in 2020 was one of the factors that led to SVB's collapse.
We were traveling in the same direction, my wife and I. I withdrew my money over the past two years and invested with her wealth manager. I won't be able to match her earnings over time, but at least I make more. Haha.
Would you mind telling me how to contact this specific coach using their service? You seem to have the solution, as opposed to the rest of us.
Her name is “Vivian Carol Gioia” can't divulge much. Most likely, the internet should have her basic info, you can research if you like
I looked up her profile online since I was curious. I saw her website, her credentials, and how tight she came across. At first, I thought this was overblown nonsense.
I suggest you offset your real estate and get into stocks, A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
One strategy for protecting against a recession is to buy equities. Investors, especially during a recession, need to know where and how to put money in order to make money while avoiding inflation.
It has never been easier to understand how to build your money than it is right now, when you may study and experience a completely variegated market passively by employing a successful portfolio-advisor. The impacts of the U.S. dollar's gain or fall on investtments, in my opinion, are complex.
Working with a Financial Advisor to help guide you on your wealth-building journey if you're just starting out is a wonderful way to get started and thats how i was able to accrued good gains . They helps to manage investment overall risk profile , prevent permanent loss of capital consider maintaining a broad diversification of your investments that reflects your personal risk tolerance, time horizon, and the nature of your financial goal
please who is the consultant that assist you with your investment and if you don't mind, how do I get in touch with them?
When ‘Carol Vivian Constable’ is trading, there's no nonsense and no excuses. She wins the trade and you win. Take the loss, I promise she'll take one with you.
u mean we can't raise the rent by $3,000 a month every year forever?😮
NYC says no, but they’ll raise taxes every year. Politicians created this mess.
@@tonycrabtree3416its a politicians and greed problem. Greedy markets become unstable.
@tripplefives1402Only if the renter stays in the apartment; otherwise kinda no
This is a crisis I can get behind.
Come on. Investors and taxpayers are the same people, just composed differently
@@samsonsoturian6013 All taxpayers are not investors i.e. they are not the same
A New York law incentivized landlords to deliver poor service to increase tenant turnover, and then the rug was pulled. Banks may have to start factoring legislative volatility risk into their assessments.
This reminds me of Louis Rossman and everything he said about the New York real estate market.
For a time city centers were dominated by factories, then mass transit was invented. For a time city centers were dominated by office buildings, then the internet was invented. Only a handful of industries (like law) need to be centrally located these days.
No, factories were in the city center until the mid 20th century. The infamous Triangle Shirtwaist factory actually still stands on the NYU campus, the meat packing district didn’t get that name for nothing, and just look at a picture of the west side of manhattan from anytime prior to the 1950’s and you will see basically the whole side of the island was lined with working docks.
@tripplefives1402 not originally
@tripplefives1402 dude, urbanization was due to faxtories
@tripplefives1402 Sure, *some* of NYC was farmland 150 years ago. Lower manhattan, where my examples were was not. Again with the specific example of the Triangle Shirtwaist Factory, it was built in 1901 in lower Manhattan which had been urbanized for close to 100 years at that point.
@tripplefives1402suburbs are the worst way to grow a city. walkable cities (with mass transit) is the best option in the long term.
I am in doubt that they "didn't know they have to revise their loan evaluation". So many cases throughout the years where banks would claim something like that only to later find out during their bankruptcy proceedings that actually there were some internal info, which was completely disregarded in the name of short term profit. Well, that's how 2008 in fact happened. So I wouldn't trust any bank that would claim that they did not know how changing market conditions would impact their portfolio.
But this is good, they weren't improving the propierties anyways, so lower rent price for the win.
The awfully messy situation with housing in New York City is a big reason why rents are so ridiculously high and people are moving away from the city in large numbers. It's going to cause a massive price crash that could see a huge number of homes in NYC suddenly go on the market at essentially fire sale prices.
I seriously doubt that. It’s the not 70s
3000 for a studio? Remember when New York was both the cultural center of the country and one of the cheapest places to live. A bit seedy but a small downside.
The last thing we should be worrying about is the health of real estate developers and the people who loaned them money. Shit, Trump Tower has a 12,000 sq ft. footprint but a floor with 30,000 sq ft. Let’s punish bad practices.
Won't someone please think of the poor landlords and banks!
Wait a minute... NYCB is my bank... am I about to learn what the FDIC process is going to be like
Nah. Most of NYCBs deposits are FDiC insured and the remainder that aren’t are covered by the banks liquidity. Not a lot of risk of a run.
Probably some other bank will take over your account. You won’t lose, unless you have more than $250k in deposits there.
A lot of apartments in new York are vacant. Landlords are doing this to charge more money in rent by keep supply low relative to demand.
That's the whole economy since the pandemic
the whole market that NYCB was so dominant in was created by the NYC government's Rent stabilization law. Obviously, any changes to the law is going to disrupt that market. It's not the landlord's fault, without that law, those landlords wouldn't even be taking out loans for those projects. This is basically what happens anytime the government thinks they can control the market. Every new law or change in law is going to sink someone who was operating under the old law.
The crisis would have happened without the law, it would have simply played out differently. Ultimately everyone was just speculating the notoriously expensive NYC rent woukd keep going up.
@@samsonsoturian6013 no. NYC has a heavily regulated real estate market. It does not operate under traditional market forces, and so defies conventional analysis.
The reason why NYC real estate is behaving oddly is because of government interference. Otherwise, you'd see the market work things out on its own. If things are truly unaffordable, then the growth will eventually stop as people can afford it anymore.
That rents continue to rise means that people are willing and able to pay it. Or that it is better for landlords to have vacant properties at high rent asks than to accept lower paying tenants (this is what gov interference created).
@@justhecuke you do realize that almost every law we have is the result of an attempt to solve a problem. And many problems were created by excesses of capitalism, such as speculation and greed. A good example is the FDA. It was created to regulate the medicine market, as it was full of snake oil salesmen and pharmaceuticals of sub-par quality, resulting in many deaths.
I am not supporting one position or the other, but I do think unrestrained capitalism has been shown to be deleterious for consumers and the wider population many times over.
Can't imagine why people so disdain landlords
Even the name itself is insane. Land Lords? Bugger off with the Lords of the Land, gimmie a damn house.
The problem is that New York is the extreme ends of that dynamic, embodying the worst possible scenarios and the worst possible landlords.
If you need someone to work as a manager of an apartment unit that's fine but nobody should own the place another person lives.
@tripplefives1402 The people living there should own it. And when they move they sell their interest to the next person. Idk how that didn't occur to you.
@tripplefives1402 Yes I'm against renting that was the first thing I said and thus the reason we're talking now
NY residents are screwed when their tax dollars are used to bail this out.
No one is bailing out anyone
That's not how it works at all... The FDIC covers it - not the taxpayers.
@@ultimaIXultima If the FDIC covers it then people are paying for it through banking fees and lower interest rates on deposits.
@@GerbenWulff The FDIC is paid for by the banks through insurance fees. So are you wrong? No. But at the same time those fees subsidized over a long time prevent banking disasters. It is money well spent. Or are you suggesting we should not have an FDIC?
The stupidity of depending so much on the residential sector
is incredible, it breaks confidence in the entire economy
They want quick and safe money, well the game of capitalism doesn't work like that, someday you have to come across risk
Dude, it's a regional bank. That's what they exist for; Originating mortgages.
@@samsonsoturian6013 good for them, they don't know their own market
@@samsonsoturian6013 they are really geniuses in their field
The new rule caping of the rent increase after renovation is crazy to me. As a tenant you have the choice to accept an agreed upon increase as payment for the renovations. If you don’t want to pay more you don’t get a new bathroom. It’s not like the landlord can force you to have the kitchen redone…
"Investing group led by former treasury secretary Steve Manuchin" that seems like a huge conflict of interest
If your property is worth that much but nobody is gonna pay it.... real state brains
Both signature bank and SVB bank should have been left alone and left to fold. These banks were accommodating risky companies with no risk mitigation, servicing a small pool of high net worth clients, and were severely miss manages by their own accord.
At the same time, this meant these banks were heavily insulated from the market. Therefore they were at a relatively low risk of causing any cascade/knock-on effect with other banks. Not letting these banks collapse was a missed opportunity as they client profile made them ripe for a contained demolition. Meaning they were a truly amazing opportunity for the economy to cleanse itself of the excess cash driving inflation.
Instead, the buck has been passed, the FDIC has wasted our collective insurance and we creep closer towards the inevitability of more connected/important banks collapsing. Ones that are at more risk of igniting a total banking sector collapse.
Thank you. Learned a lot
Cities should build social housings.
Louis Rossmann
Rent stabilization is clearly justified
Blaming rising rents on incomes is a bit ridiculous, the government flooded the economy with cash and it went almost entirely to the holders of assets like stocks, properties, you know, the stuff banks and landlords own....
Its because the workers got paid sure...
What i don’t understand is that when properties now qualify as ‘stabilised rent’ under new regulations, wouldn’t the the landlord just sell of the property when the current tenant cancels their lease agreement? As long as the current tenant remains in the property the pre-regulation contract would still be in effect.
The problem for NYCB would be best put into the laps of banking regulators. Incompetent bankers are supposed to be regulated by the FDIC and others.
The regulators should've seen that 50% of their loan base was one category of real estate asset. "What happens if the market changes?" If their mortgage portfolio was diversified, the percentage of bad loans would be far smaller and NYCB wouldn't be facing a liquidity crisis. Technically without that bailout stock sale? They are illiquid and regulators would sell them to another bank.
The same regulators who should have recognized the risk from an over consolidated portfolio. In 1929 half of US banks were carrying margin loans to stock brokers and also held stock as part of their asset base. Guess all of those regulations had to be changed after 8,000 banks went out of business.
We knew some guys who had a car loan operation back in the day. They sold a few of the loans but kept a lot of them that were high interest to lower classes of borrower. 2008 hit and they had to repossess 20% of their portfolio.
The Official NY Bureaucrat Response: "Whoaaaa..."
We need to tax them now. At 20-30%
Never heard this before. Debasio gets all the credit for this❤.
So you’re assuming nearly a quarter of NYCBs multi family loans will be charged off? If that happens I’m pretty sure the rest of the economy will have already imploded.
Never understood people willing to live in NYC...
You can't put a price on walkable neighborhoods
NYC is awesome
Suburbs are expensive and boring
Can you make a video about Bank of Credit and Commerce international scandal, or the downfall of Barings Bank?
Is this common knowledge in NYC? I’ve never heard this story. Thanks for the video. Well done.
Rent and house prices are all hyper inflated by greedy ass companies.
fantastic job as always
Can you make a video about the downfall of atos?
Rents are rising with WFH because of WFH. To WFH, people are looking for more space. Shared arrangements turn into dedicated 1-beds and studios, 1-beds into 2-beds (for couples, for example), and yes, some people move out of the area, but the demand for housing has actually grown specifically DUE TO WFH, because more utility is required from the living units.
Only applies for housing outside of cities. People are fleeing the cities
Sorry Marius, no. Rent has been rising for a much longer time.
Gary Stevenson has some interesting things to say about this and says that the rising inequality means that the average people can't afford to buy a house, so instead rich people get to buy all assets, meaning there is a huge demand for assets, and rent on assets rises, which increases inequality, which increases the demand for assets... etc. It's interesting, look him up.
This vid kinda misses the mark, because the landlords still have 99% full properties and the rents in stabilized units NEVER fall. The losses are coming from the fact that cost inflation is hitting landlords hard (repairs, maintenance, insurance), and the rent increases aren’t enough to keep up. In the past, rents barely went up, but the LL’s costs didn’t go up either. Also, many buildings are taking losses for people who didn’t pay rent for 4 years during the pandemic.
They always knew what they were doing was shady, exploitative, and unsustainable.
Ya know, you sound a lot like Fireship UA-cam channel about programming.
Another reason for the loss of business occupancy, is that there is in fact a recession in the USA right now, which we will confirm only in retrospect.
We're already in a recession, but the politicians forgot to tell us they changed the name to 'Reduced market conditions".😅
Everyone knew even 10 years ago that they were overbuilding in every large city. It was the ‘mall era’, except vertically. Skyscrapers have a lot of problems. They seem to have a ‘prestige’ factor going for them for a while- then reality hits.
I think the prestige is a cultural thing. If you live in Atlanta or Dubai, maybe, but nobody in London wants to live in a skyscraper
Why did the New York City banker bring a ladder to work?
The rent is so they’re trying to climb their way out of debt!
Thats not funny.
Tier : below dad jokes. Not even ironically funny
Go too far??? It's the second most expensive city in the world and home of financial speculation. Who's side are you on??
I haven't see an increase of wages.
Where does the "median income" numbers come from? It seems pretty bogus that the MEDIAN income (50% make that much or less) is about the same as min wage in NYC.
NYC median income is 40K a year, NYC minimum wage is 15$ an hour which is roughly 30K a year if the person is doing full time, not everyone does full time, and also people that are self employed could make less then that (and or not report that income)
Rent stabilization is absolutely necessary and NYC doesn't go far enough. Shelter should not be subject to market forces because when it is the people with money choose to have more money no matter what the consequences are. Guardrails need to exist.
That said, NYC makes terrible legislation. I think in the long run, everyone would have been happier with stricter rent controls. Banks would be happier giving out loans that they know they would make reliable returns, landlords would be discouraged to engage in parasitism as they wouldn't be incentivized to turn over tenants and since they wouldn't really be able to compete on price but would still need to fill units to pay their mortgage, they would have to compete with amenities and improvements to the unit. I honestly hope that when these buildings start falling under default, the city allows for them to be converted to co-ops.
Price fixing is a failed concept. This includes the price fixing of interest rates, which got us into this absurd mess.
Rent stabilization and zoning failures is why NYC is such a broken nightmare
Uh big cities without rent control normally have many more available units and lower rents than places like NYC.
Government is very bad at figuring out how a market works best, mostly because it’s populated by people that never had to work in a real free market.
Landlords trying to make livings on rentals are so gross. Get a real job and stop fucking over people who just need a place to live.
Where would the people who need a place to live live if there were no landlords to build or maintain the dwellings these people need to live in?
You need to think your socialism through.
You are free to buy a house because without a landlord you will live in a cardboard box.
I mean I see your point, but the alternative for NYC style high-density housing is you own your unit but have some kind of committee you pay into to manage shared building expenses. Out in the suburbs we call those HOAs or condo associations and if you think those can't get as toxic, expensive and corrupt as any landlord situation I have terrible news for you.
Crisis, or market correction?
seems like market correction to me, please, let it fall, this is how it should be, no artificial bail outs
I heard that cities gone down the drain
I love your channel and have been binging it lately its great, but I h a t e the segues into the add it feels a little cheap given that i pay close attention to what you say lol i would prefer to have more consent in the process by you just cutting in and saying "brought to you by so and so". This might be a problem i have with youtube as a whole though not just you. Again great work
In example, at the end of the add you say "and now back to the video" it would be great to get that before the add as well
Why are all the ad reads from this channel for sketchy financial companies? Doesn't the hypocrisy jar with you?
dude needs to make a paycheck. They are obviously sketchy, don't purchase from them.
If you buy sh*t from Sh*t in a Jar Inc. its your fault
He doesn’t know what he’s talking about half the time anyway, so I wouldn’t take his commentary or ad reads as gospel truth.
Government intervention in markets ALWAYS has unintended consequences that are virtually always worse & longer lasting than the original problem it was meant to resolve as future interventions are enacted to solve for the problems caused by the previous ones.
It becomes a cascading series of worsening problems that causes exponentially more pain & destruction in the end than had they just done nothing and let the market work itself out from the start. Rent control is a prime and undeniably obvious example of this iron clad rule of economics.
This is an hysterical exaggeration
"let the market work itself out" - please read "The Jungle" by Upton Sinclair and see how your value system is similar.
The market failed a very very long time ago in the US. In order to fix it, you would need to put a lot of people in prison that are currently in charge of it and most likely you need to re-distribute billions of $ that where stolen in the last 150 years alone. The market is awesome, but sadly it was killed in the US by the hands of a few ultra-rich people that are not limited by moral standards.
What ever happened with Masterworks?
1:40 these are projects not normal apartment buildings
Rent stabilization laws mean well but cause prices to go up because many landlords don’t want to rent with rent control so the supply of rentals shrinks big time. Let’s compare the cost of renting in New York with strict rent control laws to Alabama which outlaws rent control which area does the tenants pay the lowest rent?
Counterpoint: One is Alabama and one is New York you waffle
they will fail... i know people inside and its a mess that will come out soon
Fail how?
Is it jest me or was the script for this episode very weird? It went over basically everything that was said twice, but with slightly more detail the second time.
I don’t feel bad for them. Housing is a human right
So expensive
Rent stabilization has ruined the lives of many, many landlords, and it has nothing to do with rent increases or not. It's because NYS or NYC has added so many insanely dumb rules to restrain what a landlord can and can't do about problem tenants. Housing regulation authorities and judges have failed landlords, and they don't protect would-be tenants that are duped by excessive application fees and then not given any unit.
not good look to blend your ads into your good content, hypocritical considering you have a channel of corporate type squeezing every dime
Not really? He’s not a corporate large company. He’s doing his job and revenue is going to be needed? Just like if you had ads on your hard work…. Would you like to see someone saying this to you? It’s easy to point fingers at a channel like this. But he’s doing a great job then. He’s making the channel more valuable just by your comment valuing him exponentially.
3-4 million laying around 😂😂😂
They will wait until it becomes a complete disaster before they do anything about it. That snowball just got started.
😅 10:58 boo boohoo those poor profiteering landlords
ponzi collapse
Rent raise due to Inflation.
Nah. Inflation is manufactured.
Get rid of the interstitial ads you read.
Canada is the same
These banks collapsed due to over investment in Cryto.
Only one or two
Whoever the govt gets involved in the economy the result is unintended consequences which are invariably negative
7:45 Correction: That is mostly inflation.
Commenters blaming landlords for doing what the NYC government told them to do 😂
Maybe the landlords will be forced to get a real job!
Again? •_•
life lesson: communist economics AKA central government sets prices...is always a disaster. Get the government out of the way & let builders stabilize rents by increasing housing supply. Democrats cant figure out the basics all they know is government power.
Now everyone with good credit is paying for those failures.
Real estate crisis really doesn't matter when you have just imported all the prisons in the third world. America is about to learn that culture matters, expect things to drastically worse.
If housing is a human right, why let corporations and private citizens control the market? Oh wait it's not 💀
Housing literally cannot be a human right, I seriously don't think people understand what a human right even is, housing can only be a human right on the stipulation that you can build your own private dwelling which im fine with
You can have a free market with no rent controls which would require a relaxation of zoning laws and heritage restrictions to allow super high residential towers being built everywhere to come anywhere close the supply necessary to meet demand or else have all but the richest New Yorkers priced out of the city (like SF), or you can have rent controls which cause a basket case of bizarre incentives like intentionally trying to undermine the soundness of your own property to get people to move out. So with the new reforms you can only lift rents 2% when you get a new tenant in. Is there still the incentive to renovate and improve the property? If so then the rent controlled landlords of NY should start a home improvement contracting company so that they can bill themselves millions to change the drapes, repaint the walls etc. Also lets suppose the most efficient way to reduce rents would be to knock down ageing apartment buildings and replace it with a well built, brand new tower with four times as many apartments in it that would offer a higher quality of life for all tenants. Can you force people to vacate a rent stabilized home to knock down and rebuild? Rent control could actually be forcing the rents up by inadvertently constraining supply.
All your sponsorships are scams. Great job
great
😮
After you said the Bitcoin EFTs were a failure it was hard to take you seriously any more.
This mite be a bad buy fore now
in other words, it’s not the bank who did the mistake it’s politics. the stabilzed rent changes are nonsense. why should people profit from below market prices. I am sure the hypocrites. Don’t take a job and work at 30% discount.
If you look at Airbnb, long before there were a lot of towns that did not allow boarding houses but did not do code enforcement. So it was a known risk for bankers that lent to Airbnb investors. This sounds the same except there isn’t a discount for ex Airbnb while stabilized will lose value.
If all banks invested in crypto the price of btc would be near 500k. Theres only a few banks as of now in the system.
ponzi logic
if all banks invest in crypto, when people starts dumping it (a.k.a taking profit), all banks will be in HUGE trouble
Thats a shame......
Bad things happening to NYC is a win for the world
I’d laugh like hell if NY were to go bankrupt while Trump is President 😂😂😂
First
Nice, started watching at 53, was 1300 by the time I was done lol. Such a good channel
You should make a video on the recently launched Destiny Tech 100 ETF (NYSE:DXYZ) that just launched a few days ago.
They invest in private companies like SpaceX, OpenAi, Discord, Stripe but their stock price is way overpriced above their NAV of $4.80. I would be interested in your thoughts on this.