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Davidson Southeast: Antioch, Century Farms, East of Brentwood


smeagolsfree

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If the Homeowners Assn. change the rules then the STR's will be out the door. We spoke about how the STR's have skewed the population numbers in Nashville too. A lot of these units being built are not occupied by permanent residents but are being used as STR's and when the recession hits, a lot of these will quickly be underwater as demand will fall, hotel rates will fall, and the folks that own these will soon find they can't make the 3 to 5 thousand a month and either sale them or rent them to locals at a reduced rate.

There will all the sudden be a glut of these hit the market. Now it depends on how serious the next recession is, and how badly Nashville is hit, but "WINTER IS COMING"

 

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1 hour ago, smeagolsfree said:

If the Homeowners Assn. change the rules then the STR's will be out the door. We spoke about how the STR's have skewed the population numbers in Nashville too. A lot of these units being built are not occupied by permanent residents but are being used as STR's and when the recession hits, a lot of these will quickly be underwater as demand will fall, hotel rates will fall, and the folks that own these will soon find they can't make the 3 to 5 thousand a month and either sale them or rent them to locals at a reduced rate.

There will all the sudden be a glut of these hit the market. Now it depends on how serious the next recession is, and how badly Nashville is hit, but "WINTER IS COMING"

 

Very few hoa’s allow STR. Just purchased a new place, it isn’t allowed. We do not allow it in my current building either. I for one would never move to a building that allowed it.

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48 minutes ago, samsonh said:

Very few hoa’s allow STR. Just purchased a new place, it isn’t allowed. We do not allow it in my current building either. I for one would never move to a building that allowed it.

The larger condo buildings to not allow STR and have limits on the number of units that can be rented.

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The issue with STRs (and to a lesser extent long term rentals) is that funding becomes an issue.  Traditional lending by way of FHA, Fannie, and Freddie won't give mortgage financing to people looking to purchase these.  That means these purchases need to be financed through in-house loans from a local bank, via credit line, or with cash.  Obviously, that significantly limits the pool of buyers.  

Contralto in Midtown on Church street is currently targeting this group of buyers. Their sales seem to be fairly strong so far, but it seems to me that it wouldn't take much to saturate that market.

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21 minutes ago, Philip said:

I've heard it wasn't like that before we ditched the gold standard.

I just did a little research...and it looks like 10 years is the longest period (I think from 1991 to 2001).  This appears to be the 2nd longest growth period in US history...so it's probably about time for another recession...though it hopefully won't be anywhere close to 2007-2009.

I was looking at those recession numbers from the 1700's up through WWII...and WOW!  Talk about volatile!  Some of those would have like a -35% growth!

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39 minutes ago, titanhog said:

I just did a little research...and it looks like 10 years is the longest period (I think from 1991 to 2001).  This appears to be the 2nd longest growth period in US history...so it's probably about time for another recession...though it hopefully won't be anywhere close to 2007-2009.

I was looking at those recession numbers from the 1700's up through WWII...and WOW!  Talk about volatile!  Some of those would have like a -35% growth!

I knew gold coins were abandoned around the Depression and silver in 1964, but I was under the impression that the boom/bust pattern didn't come about until after that. I just researched it too to make sure, and it seems things didn't start fluctuating like crazy until after the War between the States, but I didn't understand why. The value of gold seems to have been conrolled by the ratio of gold production and gold exports, perhaps the war sent that on a spiral? Of course there were other things like President Jackson kicking out the national Bank that probably made an effect.....also the cause of the boom/bust cycle is from the use of credit supply which has always been around as far as I know.

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The one indicater this time and for the last few is the inversion of the 2 and 10 year bonds. So when the returns for the two year outpace the returns for the ten year theres a problem. Its not happened yet, but they are very close. Thats just one indicator and I am sure I am under simplifying things.

Someone please help correct me on this as this is not anywhere near an area I follow closely.

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1 hour ago, smeagolsfree said:

The one indicater this time and for the last few is the inversion of the 2 and 10 year bonds. So when the returns for the two year outpace the returns for the ten year theres a problem. Its not happened yet, but they are very close. Thats just one indicator and I am sure I am under simplifying things.

Someone please help correct me on this as this is not anywhere near an area I follow closely.

Very close, Ron. The tell-tale "Inverted Yield Curve" has preceded every recession in the "modern" era (last 70 years). But it would be the 90-day Treasury Bill (short term) to the 10-year Bond (long term). Last I checked, it was around 82 basis points, which indicates a very low risk of recession. Last week the Fed announced that it would slow down (or even shorten) its planned fiscal "tightening" with resulting higher short term rates. If you look at other indicators, such as the GDP growth rate, which the FOMC in November pegged at 3-3.2, and a moderate inflation rate,  the next 6-12 months look very good. Of course, tariff matters could complicate that, but China reiterated today that the "truce" was a sign of a positive outcome for both sides in current negotiations. There's beneath-the-radar "whispers" that the Trump administration is using the EU as leverage for a quick resolution to the China trade talks. Two key points are protection of Intellectual Property and forced submission of ownership rights to the Chinese government. 

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13 hours ago, MLBrumby said:

Very close, Ron. The tell-tale "Inverted Yield Curve" has preceded every recession in the "modern" era (last 70 years). But it would be the 90-day Treasury Bill (short term) to the 10-year Bond (long term). Last I checked, it was around 82 basis points, which indicates a very low risk of recession. Last week the Fed announced that it would slow down (or even shorten) its planned fiscal "tightening" with resulting higher short term rates. If you look at other indicators, such as the GDP growth rate, which the FOMC in November pegged at 3-3.2, and a moderate inflation rate,  the next 6-12 months look very good. Of course, tariff matters could complicate that, but China reiterated today that the "truce" was a sign of a positive outcome for both sides in current negotiations. There's beneath-the-radar "whispers" that the Trump administration is using the EU as leverage for a quick resolution to the China trade talks. Two key points are protection of Intellectual Property and forced submission of ownership rights to the Chinese government. 

fredgraph.thumb.png.ed08ea7cae5ba3539a1bfdefc13186bb.png

The 10 YR yield minus the 3 MN yield has gone negative before each of the last three recessions (in gray above).  At the end of November, the spread was 0.64 percent.

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23 hours ago, fishsticks176 said:

Tourism will suffer, but tourism everywhere will suffer, and that may leave Nashville as a previously unconsidered budget option for many. 

When a recession arrives, health care and tech are two of the more stable industry sectors.  Nashville's HC sector will keep our recession from being as bad as the national average and, as mentioned by @fishsticks176, our location in the center of the eastern U.S. and draw for music lovers could help our tourism industry from being hit as hard as, say, Orlando's or Hawaii's.

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5 hours ago, MLBrumby said:

Definitely trending downward. I used data from a month earlier b/c it was all I had on my laptop. 

Also note that the downward trend is not as steep as previous Fed tightening cycles.  There's a good chance that the spread won't go negative because the 10 YR yield may rise along with the 3 MN.

In this credit cycle, households have not leveraged up like they did during the '00s.  This time it's corporations.  Many companies issued bonds at low rates to buy back stock after the Great Recession.  Now those bonds are rolling into higher interest rates, reducing the coverage ratios of many companies.  If CEOs are smart, they will reduce debt during this part of the cycle but this probably won't happen.

Note on naming conventions: Historically, recessions were called 'panics.'  Today, we call them 'recessions.'  After the Great Depression, economists decided that they should NOT use the "D" word again so the 2008 recession was called the Great Recession.  By many indicators, it should have been called a 'depression.'

Sorry.  I got carried away there.  Maybe we should get back on topic.

Edited by Mr_Bond
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  • dmillsphoto changed the title to Davidson Southeast: Antioch, Century Farms, East of Brentwood

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