More news now from the United States. And another entry into the ever-growing list of biggest, tallest, most expensive towers in the world.
Looking from afar, the only tangible thing that seems to come from such news is it sets the bar for the next developer to simply build something that’s even bigger.
Welcome to the final years of the 18.6-year Real Estate Cycle!
Have you ever asked yourself just how it continues to turn on time?
Can you see this process in action around you? And if so, what does it mean?
This news about the US’s tallest proposed tower is a great illustration of this.
The reason behind why it’s being built where it is, and why it’s happening now, won’t really make the news headlines.
But if you have ever wanted to know how to correctly forecast your own real estate market, then today’s newsletter is aimed at you.
There is so much more than meets the eye happening here.
You must understand why.
They wanted to build the US’s tallest tower…where?
A new development in an otherwise run-of-the-mill story caught my eye.
This is something that you must follow.
Source – Fox Business
Now I can only speak for myself, but when I hear about a nation’s tallest proposed building, I immediately start thinking of New York City, Chicago, or Los Angeles.
But would you think…. Oklahoma City? Hardly anyone outside the US could even point to its location on a map.
From the above article.
An ambitious real estate developer has announced plans to build what would be the tallest building in the U.S. in unlikely Oklahoma City.
Matteson Capital, a firm based in California, announced last week it would ask city officials to increase the height of the Boardwalk at Bricktown Tower construction project to a colossal 1,907 feet. If the request is granted, it would be the largest skyscraper in the U.S. and the fifth tallest in the world, according to a news release.
“Oklahoma City is experiencing a significant period of growth and transformation, making it well-positioned to support large-scale projects like the one envisioned for Bricktown,” said Scot Matteson, CEO of Matteson Capital.
Now I have nothing against our Oklahoma City cousins. I’m sure that Oklahoma is a great state to work, live, and play in. And right now, they do have one of the very best and most enjoyable basketball teams in the NBA.
But on the surface, this really is quite a surprising development.
However, for those of you who study the land market, it is something else entirely.
No matter where you reside, there are a few key lessons from this announcement that you can take and apply to your own city or country.
And when you do, you’ll understand and can follow how the real estate cycle is tracking near you today.
To forecast what’s due to come next near you.
The best explanation of how the economy works.
Our first clue comes from the article itself.
The developer approached city officials to amend the initial development application to increase the height of the tower to 1,907 feet. It’s an admission of the obvious.
This only makes business sense if more floors, and therefore more square meters to rent out, are added. And the reason why is because since the development paperwork was submitted, the land price has continued to increase.
Which forces developers to build higher and higher to achieve the desired margins of profitability.
But something else happens too.
By asking for more height, the outcome means you’ll now need to go back to your bank or private credit provider and ask for more money!
Of course, the article doesn’t mention this.
But you know it happened. And it’s almost certain the developer will get extra funds too. Why?
Where are we in the 18.6-year Real Estate Cycle?
It’s time for easier credit conditions for the purpose of speculation.
There’d be no point whatsoever with pushing on with this project unless the credit had been guaranteed.
This relationship between access to easier credit and tall towers shows you the cycle remains on track and on time.
So, there’s that.
Also note that the extra rent, or gains, now made via the approved application to increase the height will now be absorbed by the lot of land this tower will be built on.
Which further perpetuates the cycle. Improving the rents attainable on a given location increases the value of the land and thus allows the owner to now refinance in the future and gain even more credit lent against this increase.
And this can go on and on, until one day, it doesn’t.
Now let’s look at precisely why this tower will be built where it is.
This is the key to understanding, and timing, how the real estate cycle is tracking regardless of where you reside.
Volcanos are now the ‘hottest’ buys on the market.
I said that I was surprised when I read this article. I assumed the biggest tower in the US would have been built in one of the more famous and well-known cities or states.
So, it begs the question: why in Oklahoma City?
I decided to do some research.
I looked for someone who had experience of the Oklahoma real estate market.
What I found was very interesting. Below is an excerpt from an article I found, bolded text below is my own.
National Association of Realtors Chief Economist Lawrence Yun expects Midwest markets like Oklahoma City to experience gains from being in the most affordable region of the U.S.
OKCMAR Board President Emilykaye Mitchelson expressed confidence Friday that 2024 will outperform 2023. As one of the nation’s most affordable markets, the Oklahoma City metro is seeing steady price appreciation, unlike more expensive markets like San Francisco, where Redfin reports homeowners are selling at a loss.
And here the truth behind the ‘why’ becomes clear.
And for those of you who study the land markets, this is a perfect example that demonstrates why the timing for the US land market is right on cue.
Why wasn’t this tower proposed to be built in San Fransico or New York?
It’s because the premier cities in the US are now so expensive that it no longer makes economic or business sense to build certain types of property and hope to make enough to provide a decent profit.
Why did this tower get built in Oklahoma City instead?
If San Fransico or New York makes no business sense to build, then you need to move further away to the margins to find land that has not yet had its future gains priced in.
And what did we discover from the above article?
As one of the nation’s most affordable markets, the Oklahoma City metro is seeing steady price appreciation.
It’s a critical part of understanding the timing not just of the US land market, but of the land market where you yourself live.
Once the premier locations are built out and become unaffordable, the only option is to move further away and start gentrifying more marginal locations.
This stokes more demand for cheaper land, and as this develops, prices now get bid up to secure the best locations. This is why Oklahoma is seeing large price appreciation even though it’s recognized as being one of the most affordable areas.
So, for you, no matter where you live, you now have a template to use to determine where your own city, region, or country may be in its own real estate cycle.
Why is that important? Because you can use this knowledge of the land market to time your market better than 99% of all the other speculators who are now rushing to these marginal areas.
And position yourself correctly and on time when the land peak becomes bust.
Do you consider knowing what’s going to happen in advance a good market edge to have?
Then understanding the cycle and the land markets is key to this, here’s how you get it, via a membership to the Boom Bust Bulletin (BBB). Let me guide you through the real estate cycle each month as it turns.
You will learn to read the news correctly using the lens of the cycle and empower you to best position yourself for the next few years as speculation goes into overdrive.
And then what you need to protect those same profits when peak turns into bust.
This trend will not stop now everywhere across the world. It’s a vital clue to where we are in the cycle and can provide you an idea of just how much potential damage to your local neighborhood and surrounds may occur.
That’s the point at which something global becomes very personal.
One of the last few remaining US states that you could call cheap for housing is Puna on the island of Hawaii.
So desperate are locals there for someplace to live they are prepared to accept this standard of living.
Source – WSJ
If the smell of sulfur and views of black molten slag is what gets you up in the morning, then this deal is for you!
Land under an active volcano is now attracting speculative money. Scarcely believable unless you understand what’s to come should history repeat.
We now have locals whose dream to buy their own home in their local neighborhood has been dashed by speculators coming in and buying up vast tracts of land.
Have you thought about what happens to these people? What kind of damage will be done when the credit punchbowl is removed? How does the rest of the world handle an American land market turning to bust and bring their whole economy down with it?
Forewarned will be forearmed.
And only our research can give you that. All it will cost is $4 per month. This amount buys you virtually nothing these days, except for the pure gold of insight into what’s happening in the business cycle and what’s coming next.
Do you really want to miss out when it’s available to you for virtually nothing?
Best wishes,
Darren J Wilson
and your Property Sharemarket Economics Team
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This content is not personal or general advice. If you are in doubt as to how to apply or even should be applying the content in this document to your own personal situation, we recommend you seek professional financial advice. Feel free to forward this email to any other person whom you think should read it.