Home Prices Hit Record Highs In Two-Thirds Of US Cities As Manhattan Rents Collapse

Even as sellers in high-end markets like Manhattan, London  and Greenwich, Conn. are being forced to pull their inventory from the market because of a paucity of offers (this despite the “wealth effect” that one might’ve expected to arise from rallies in stocks and bitcoin), home prices in two-thirds of US cities climbed to record highs during the fourth quarter as developers’ preoccupation with luxury housing has left buyers in mid-priced markets battling it out for a record-low supply of listings…

Prices for single-family homes climbed 5.3% from a year earlier nationally, reaching a peak in 64% of metropolitan areas, according to the National Association of Realtors. Of the 177 regions in the group’s survey, 15% had double-digit price growth, up from 11% in the third quarter.

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Meanwhile, Bloomberg claims the steadily improving job market has helped drive prices higher (we imagine the flood of money-creation by central banks also had something to do with it).

Here’s Bloomberg:

Home values have grown steadily as the improving job market drives demand for a scarcity of properties on the market. While prices jumped 48 percent since 2011, incomes have climbed only 15 percent, putting purchases out of reach for many would-be buyers.

The consistent price gains “have certainly been great news for homeowners, and especially for those who were at one time in a negative equity situation,” Lawrence Yun, the Realtors group’s chief economist, said in a statement. “However, the shortage of new homes being built over the past decade is really burdening local markets and making homebuying less affordable.”

Sales of previously owned homes, including single-family houses and condos, increased 4.3% to a seasonally adjusted rate of 5.62 million in the fourth quarter, the Realtors said. At the end of December, only 1.48 million existing homes were available for sale, 10.3% less than a year earlier.

Predictably, the most expensive markets were in densely populated coastal areas where job growth and wealth creation since the financial crisis have largely clustered…

The most expensive markets were San Jose, California, where the median price was $1.27 million, followed by San Francisco, the Irvine, California, area, Honolulu and San Diego.

The San Jose area had a 26 percent increase in prices, the biggest of any region, followed by Reno, Nevada, and the Putnam/Dutchess County area, north of New York City. The biggest decline was in Glens Falls, New York, where prices dropped almost 12 percent. Cumberland, Maryland, and Elmira, New York, followed.

In a demonstration of the extent to which the correlation between the most expensive urban markets and the rest of the country (a trend that will no doubt be exacerbated by the Trump tax plan, which caps SALT deductions) landlords in Manhattan, one of the country’s most expensive rental markets, were forced to slash rents to their lowest levels in 2014 as a massive flood of new supply swamped the market.

 

China’s Rapid Military Modernization Is “Remarkable,” Set To Challenge West On Several Fronts

China’s rapid military modernization is “remarkable,” and is no longer merely “catching up” with the West, reports the International Institute for Strategic Studies in their annual report on global military capabilities. 

China’s emerging weapons developments and broader defence-technological progress mean that it has become a global defence innovator” says Dr. John Chipman, Director-General and Chief Executive of the London-based think tank. 

Of note, Chipman points out that China’s Chengdu J-20 low-observable combat aircraft is set to challenge America’s “monopoly on operational stealthy combat aircraft.” As we reported yesterday, the J-20 is rumored to have already been deployed to the South China Sea along with several of China’s Su-35s, to take part in a joint combat patrol over the region, according to the Chinese Ministry of Defense whose release did not mention the J-20.

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A spokesman for the People’s Liberation Army (PLO), Shen Jinke, said that the J-20 would “help the air force better shoulder the sacred mission of safeguarding national sovereignty, security and territorial integrity,” adding that the air force was in the middle of a modernization program in order to fight enemies on all fronts.

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The IISS report also notes that China’s expanding array of advanced guided-weapons projects, such as the PL-15 extended range air-to-air missile which could enter service this year. “This weapon appears to be equipped with an active electronically scanned array radar, indicating that China has joined the few nations able to integrate this capability on an air-to-air missile,” reports Chipman.

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Also of concern is China’s ambitions at sea, as Beijing continues its ever-expanding fleet. 

Since 2000, China has built more submarines, destroyers, frigates and corvettes than Japan, South Korea and India combined. To put this further into perspective, the total tonnage of new warships and auxiliaries launched by China in the last four years alone is significantly greater than the total tonnage of the French navy. –IISS

Moreover, China’s navy is deploying further from home, including Europe, while their base in the Eastern African country of Djibouti will enable more naval deployments. 

China’s military computing technology is also rapidly growing, as vast resources have been sunk into “extremely high-performance computing and quantum communications,” which, along with their weapons advancements and overall defense capabilities mean the country is no longer merely “catching up” with Western progress. 

All of these developments have meant a rising defense budget, which has been pegged to GDP growth at 6-7% since 2016:

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While China’s rapid military advances are significant, all is not lost for the West, which will need to remain agile and adaptable:

Western governments still have it in their power to maintain an edge. Their military forces will need to be agile and adaptable, better at working with partners inside and outside government, and able to make flexible use of technological developments. Some governments in the West will look to ‘leap-ahead’ technologies to augment and deliver military power.

Chipman concludes that Western states need to plan for responses to persistent competition, and stresses the importance of “anticipating and detecting ambiguous as well as proximate threats.”  This means more than just better defense and better weapons; societies need to be made more psychologically resilient, “and resistant to attempts to erode their cohesion and will in peacetime as well as war.”

Translation; Despite our current military superiority, the West needs to solve the man-child epidemic, solidify alliances, and prepare to show the enemy our war faces at a moment’s notice – lest we lose what our ancestors so bravely fought for.