Will Real Estate Ever Be Normal Again?

The third time Drew Mena’s manager asked him about relocating to Austin, Texas, he and his wife, Amena Sengal, began to seriously consider it. They had deliberated each time before, in 2017 and 2018, but landed on a hard no: Drew and Amena had lived in New York for more than 10 years, and they loved it. They owned a two-unit townhouse in the Bedford-Stuyvesant neighborhood of Brooklyn, and they felt lucky to have it, with its yard and the kind of close-knit neighbors who compete to shovel one another’s sidewalks after a snowfall.

But now it was August 2020, and the pandemic had changed their calculus. When the city shut down, their daughter, Edie, was 7 months old; Drew and Amena co-parented while working full time, one at the kitchen island, the other at the breakfast table. In May, they escaped to Drew’s family’s cottage in New Hampshire, and gradually their tether to the city began to fray. When the relocation offer came in from Drew’s employer, an asset-management company, they started browsing listings online, and it looked as if they could get a lot more space in Austin. They would certainly save money on everything else, like gas and groceries. The world is ending, they said to themselves. Why the hell not?

Amena, who was born and raised in Houston and attended the University of Texas at Austin, called her parents to solicit their opinion. They were so thrilled at the thought of her return that they suggested she consider buying, and offered to help with the down payment. They could all share the home as an investment property if Drew and Amena moved on. Amena crunched the numbers and quickly realized a truth about America: Thanks to persistently low interest rates and tax policies that favor the rich, you can almost always get more space with a mortgage than with the same amount in rent.

So she threw herself into the search with zeal. She mapped commutes to Drew’s new office downtown; she found a dozen preschools she liked, and video-toured more than half of them. In her mind’s eye, she drew a backward C around central Austin, cutting out downtown and the expensive west side. Their maximum budget was $550,000, $575,000 tops. They were looking for a house that was move-in ready, maybe around 1,500 square feet overall, with three to four bedrooms, two baths and a shed or office space for Amena in the backyard — she planned to keep her New York job in education policy and telecommute.

She reached out to John Gilchrist, a close friend from college who was now a real estate agent and, in January, he began taking her on up to four FaceTime tours a day. In the background, she could see other intent buyers, masked but often encroaching on one another. She could sense quality, but scale was harder to discern. “How many paces is that?” Amena would ask Gilchrist. “Can you put your hand in that sink? It looks tiny.”

The day that she and Drew were scheduled to fly to Austin for house-hunting, at the beginning of February, New York was buried in snow and flights were being canceled, so they opted to reschedule theirs. Feeling stranded and agitated, Amena began bidding on houses. There were two for sale in Johnston Terrace, on Emmitt Run, on the same block as Amena’s best friend from high school. Both were two stories and 1,700 square feet. One, listed for $437,700, was a bouquet of beiges — beige interior and exterior paint, beige carpets, beige linoleum floors and beige oak cabinets. The other, listed for $50,000 more, was being remodeled by its owner and his friends: modern gray paint, white cabinets, dark wood luxury vinyl plank. “We’re all putting lipstick on a pig trying to get our houses sold,” the owner told me.

Amena bid on the beige, imagining she’d use the extra money to do her own remodel. It went under contract for $45,800 over the asking price, or $43,500 more than her bid. A few days later, Amena bid on another home she’d been dying to see on their trip, a black-and-white ranch house in South Austin listed at $460,000. At the urging of Gilchrist, who told her how tight the market was, she bid more aggressively, offering $495,000, and was chagrined when she lost that house too.

For Amena and Drew, their Austin home-buying odyssey was just beginning — a monthslong ordeal that would teach them quite a bit about the cruel realities of America’s housing market, in which home prices nationwide have risen by an astonishing 24.8 percent since March 2020. And this first lesson, appropriately enough, demonstrated just one of many ways that the old, measured rules of home-buying no longer applied — that the cutthroat competitiveness that once defined only a few U.S. markets (San Francisco, New York, Los Angeles) had now become standard across the country, as the median home price in small- and medium-size metropolitan areas rose by jaw-dropping levels: Boise, Idaho, 46 percent; Phoenix, 36 percent; Austin, 35 percent; Salt Lake City, 33 percent; Sacramento, 28 percent.

By bidding on two properties she had never visited, in a city nearly 2,000 miles away, Amena joined the 63 percent of North American home buyers in 2020 who made at least one offer on a home that they had never stepped into. Homes had been one of the few things resistant to online shopping: We browsed online, but we didn’t buy. The pandemic changed that. The result was a market that moved much, much faster.


Drew Mena and Amena Sengal’s first 15 bids in Austin’s cutthroat home market were rejected. (Tap to cycle through the houses that got away.)


What Amena and Drew would ultimately learn about Covid-era real estate was not just the necessity of raising their budget and lowering their expectations. It was also that the whole mind-set required to buy a house, the most important purchase that most Americans will ever make, had undergone a fundamental transformation — possibly a long-term one, given the realities of both supply and demand. Freddie Mac estimated at the end of 2020 that the United States was 3.8 million housing units short of meeting the nation’s needs.

Combine that with the surge of millennials into the housing market — they represented more than half of all mortgage originations last year — as well as the insatiable appetite of investors, who now snatch up nearly one in six homes sold in America, and the contours of a new, lightning-fast, permanently desperate housing market come clearly into view.

“It’s so irresponsible,” Amena lamented, when discussing those first, remote bids they made, and Drew chimed in: “In a normal market you would never do that.” By “normal,” Drew meant a time when a home buyer could tour a house in person, mull it over, go back a second time with her parents or friends and then make an offer with time for an inspection and an appraisal. But there’s reason to fear that America’s real estate market, after passing through the pandemic madhouse, might never get back to that kind of normal again.

Several Austin real estate agents told me the same story about when the “flip switched” during Covid: a sale on Ephraim Road, in the suburb of Brushy Creek, on New Year’s Day 2021. The house was “well cared for,” a buyer’s agent told me, but “nothing out of the ordinary”: two stories in brick, with a large arched window — the sort of place one of Tony’s underlings might own in a Texas spinoff of “The Sopranos.” It was listed on Dec. 30, 2020, for $370,000, and it seemed like mere minutes until buyers and agents began lining up in the bitter rain to tour the house one by one, a process that took hours.

Agents texted Google Maps screenshots to one another, noting the red traffic jams around the property. By the 11 a.m. deadline on New Year’s Day, the house had received 96 offers, with the winning bid clocking in at $541,000 — a mind-boggling 46 percent above asking. “Just when you think you know a lot about real estate, you realize you don’t know anything,” the listing agent told me. “The market shifts and keeps shifting.”

Austin real estate has been hot for years. Over the last decade, an average of more than 100 people have moved into the area every day. But 2020 broke the levees. In July, Tesla announced it would build an auto plant in Austin. Facebook and Apple, meanwhile, were expanding their local campuses. All were attracted by Texas’ lower cost of living and business-friendly tax and regulatory environment.

In December, the database giant Oracle said it was moving its headquarters from California to Austin. That month, the median sales price for homes in the Austin metropolitan region was up 23.7 percent year-over-year. “Before the pandemic, you would see a line of 20 people standing outside a restaurant downtown,” Albert Saenz, who has been a real estate agent since 2003, told me at the time. “Now you drive downtown, there’s nothing happening. But out in the suburbs, you see lines of 20 people waiting to see a house.”

The last time U.S. housing saw such rampant price growth was in 2005, and the market corrected itself, infamously, in 2008. But the underlying reality today is different. Back then, a geyser of subprime adjustable-rate mortgages sputtered out as borrowers defaulted. (According to Bloomberg News, 60 percent of mortgages during the bubble years were adjustable rate; fewer than 0.1 percent of mortgages are now.)

The current boom is better compared to a river, one fed by streams that have long been visible on the horizon: high demand, low supply and a dysfunctional economy in which wages are stagnant while restrictive zoning and poor public policy have turned housing into an artificially scarce commodity. Historically low 30-year fixed mortgage interest rates, hovering between 2.68 and 3.08 for the last year, are narrowing the riverbed, quickening the current.

After a decade of too little development, the pandemic made the low inventory lower. Construction stopped. Sellers, afraid of inviting the virus into their homes or reluctant to move in uncertain times, didn’t list, and inventory declined by nearly a third from February 2020 to February 2021, falling to the lowest level relative to demand since the National Association of Realtors began record-keeping almost 40 years ago.

At one point in January 2021, the month the Ephraim Road sale broke everyone’s brains, Austin had just 311 homes listed for sale; in a normal month, the number would be 5,000. An estimated 65,000 starter homes were completed nationwide in 2020, less than a fifth of the number built annually in the late 1970s and early 1980s. A typical home listed for sale on Zillow was available for a median of 14 days in December 2020, compared with 33 days the year before. Now it’s nine.

As the pandemic made the poor poorer, meanwhile, it made the rich richer. Homeowners, already more than 40 times as wealthy as renters, were more likely to keep their jobs, profit from the stock market and have enough savings to take advantage of low interest rates.

Then there’s the role played by investors and speculators. Large corporate and Wall Street landlords, like Invitation Homes, American Homes 4 Rent, BlackRock and Blackstone, are arguably the most toxic players, driving up rents in the select markets they saturate, lobbying for corporate tax cuts and fighting tenant protections. But a majority of investment buyers are smaller companies and individuals: mom-and-pop landlords, tech workers looking to diversify their portfolios, teachers who supplement their paltry paychecks by Airbnb-ing properties on the side.

The ease with which they can access credit strains the market and drives up prices. Those effects are likely magnified when investors target homes in cities less expensive than the ones in which they live, whether they’re Chinese investors in California or Californian investors in Texas.

Perhaps the most important factor driving the new housing market is demographic inevitability. Millennials — the 72 million Americans born between 1981 and 1996, including Amena and Drew — are aging into their prime home-buying years and belatedly entering the market. This has been made possible in part by a recent rise in wages, after years of stagnation. Even so, millennials, many of whom came of age during the Great Recession, will probably never make up all those lost earnings from their early adulthood.

Now the largest living generation, they control just 4 percent of America’s real estate equity; in 1990, when baby boomers were a comparable age, they already controlled a third. What’s more, because of the financialization of housing, millennials need more savings or to take on greater debt to buy a house than previous generations did. The end result is that millennials buying their first home today are likely to spend far more, in real terms, than boomers who bought their first home in the ’80s.

Given these handicaps, they have to approach things differently, and that’s changing real estate, too. In a housing market riddled with speculators, the only way millennials can break in and compete is by acting like speculators themselves.

Back in 2012, Stephanie Douglass greeted a new East Austin neighbor in her usual manner, with a tin of pecan sandies. The woman who opened the door reminded Douglass of herself: cute and casual and blond. Except while Douglass was teaching fourth grade and bleeding away half her earnings on rent, this woman, just a few years older, had bought her house, and was building equity. As a math teacher, Douglass could crunch the numbers.

Shortly afterward, Douglass, who was 24 and had $35,000 worth of student loan debt, bid on nine houses in East Austin before winning one so far east it was almost outside the city: $180,000 with 5 percent down. Her friends thought she was nuts, planting roots at such a young age, but she fixed up the home herself; to cover half her mortgage, she rented the second bedroom to a friend from grade school in Houston.

When Douglass moved in with her boyfriend, she rented out her whole house, and when the relationship ended, in 2016, she told her mom that she didn’t want to waste money renting until her tenants left. They decided to buy a bungalow together and found one with popcorn ceilings and terrible wood paneling that would accept a 5 percent down payment. They spent July and August sharing a mattress on the floor and fixing up the place themselves.

Douglass loved her fourth graders, but not the way she loved her houses. At the end of summer, she dreaded returning to school, dreaded waking at 6 a.m. to work from 7 a.m. to 5 p.m. “Remodeling this house was the first time I had been passionate about anything,” Douglass told me. She was a high achiever, but she had fumbled through college looking for a sense of purpose. With real estate, “I’d figured out how to take control of my life, and it was insanely exciting. I thought, This is cool, and everyone needs to know there’s another way.”

That same year, she got her real estate license and moonlighted as a sales associate, soon earning more than $100,000 annually in commissions. Her closest friends, who once thought she was crazy, now saw her as their financial guru. They began to follow in her footsteps — using her as their real estate agent, of course. Six of them now own homes within a mile and a half of her in East Austin; four of those friends, all under age 35, own at least two properties.

“We wouldn’t be able to stay in the city if we hadn’t bought,” Douglass told me. She has invested in 13 properties around Austin, often adding additional units. Her mother, Meshelle Smith, oversees 10 of them as Airbnbs. (Smith quit her teaching job to found an Airbnb management company, which has 51 listings.) Douglass’s passive net cash flow is $14,000 a month, and her net worth exceeds $3 million.

In 2017, Douglass had what she calls “the best first date ever” with Kristina Modares, a real estate licensee and investor who messaged Douglass on Instagram after following her home-renovation posts. They talked for seven hours and over the next few months decided to found an agency focused on the clientele they were already serving, clients most Austin agents don’t want to touch: first-time buyers looking at homes under $200,000 or $300,000.

Douglass quit teaching, and in June 2019, they opened their agency, Open House Austin, with a party at their office, a once-derelict commercial property on the east side that they (of course) bought and renovated themselves. In 2020, Douglass and Modares started offering Homeschool, a self-directed, six-week course (“The Surprisingly Simple Path to Buying Your First Home With an Investor Mind-Set — Even if You Know Nothing About Real Estate”), which quickly sold out. Amid the economic turmoil of 2020, Open House sold 101 homes to millennials and earned a million dollars in net profits.

On a recent Wednesday evening, Douglass and Modares logged on to a video chat to answer questions from their third Homeschool class, a group of 30 students from across the country, almost entirely millennials and younger. It was the first meeting, which called for an icebreaker. “What is your first item you want to buy in your new house?” Kristina Modares asked. “Or first renovation,” Douglass added.

“I live in the Washington, D.C., area, in the suburbs, in Maryland, currently at my childhood home,” a young woman said. “Hopefully temporarily, but then we had a pandemic, so I was sort of stuck here. I’ve been looking to buy for a long time, looking to stay in my area and just find a house and a yard. The first thing I want to get is a dog.”

Another woman said that she and her husband lived in San Francisco but were originally from Fort Worth; they were torn about whether to buy in the Bay Area or in Texas near most of their friends and family. “We are in a super, super small apartment in San Francisco, so I imagine we’ll have to buy a lot of furniture.”

Another attendee, a local, said, “I’ve always dreamed of building a little ‘catio’ for my cat, so that she can just go outside safely whenever.”

Most of the students found Open House through word of mouth or social media, and they signed up for the class ($979 for the homeowner track, $1,697 for investors) because they were intimidated by the market. Open House has more than 8,600 Instagram followers and 41,800 on TikTok. In one TikTok post with 1.1 million views, Modares acts out “Your parents buying a house VS You buying a house”:

MOM [Modares in ’80s glasses and a gray blazer]: Well, you’re definitely going to have to save 20 percent for your down payment.

DAUGHTER [Modares in a black tank]: I don’t think so. I talked to my lender, and they said actually I could put 3 percent down.

MOM: Me and your father have been living there for 30 years. It’s a big commitment.

DAUGHTER: Yeah, wow, so I’m actually going to live here for maybe two, three years tops, and then I’ll probably rent this out on Airbnb.

MOM: Well, don’t you think you should be married before you buy your first house?

DAUGHTER: No, I got preapproved on my own. I’m actually going to house-hack, and my whole mortgage payment will be covered by someone else.

MOM: [Looks puzzled at the phrase “house hack”]

DAUGHTER: [holds up a sticker that reads, “Houses before spouses”]

Joking aside, the skit encapsulates a truth: Much of Open House’s messaging nudges buyers to think beyond the traditional path of homeownership, built on long-term investment in one home. Instead, they encourage first-time home buyers to start as early as possible with whatever they can afford, typically small or farther-out homes chosen primarily for their investment potential. Open House advises buyers to use credit to leverage whatever they have to bet on appreciation and swiftly vault themselves into better and better homes in different budget brackets.

House hacking, cash flow, passive income, financial independence: These are the buzzwords, but they aren’t new concepts. This is the natural culmination of the way in which housing has been transformed into an investment vehicle over the last 50 years — and it’s a recognition of the economy younger generations have inherited.

When Amena and Drew finally made it to Austin on Thursday, Feb. 11, they brought Snowmaggedon with them: sleet, snow, freezing temperatures and statewide power failures that amounted to one of the costliest disasters in Texas history. “We thought: We’re rugged New Yorkers. No one else wants to drive on this ice, but we’ll do it as a competitive advantage,” Drew told me. Gilchrist had scheduled more than 20 showings, and so on that first weekend, as the state froze, they saw as much as they could, including trendy new houses and the Emmitt Run home being remodeled by its owner and his friends. It was weirder in person. Drew said they built the base of one vanity out of two-by-fours. “And then just like slapped the sink on top of it. It wasn’t even sanded.”

But by Sunday, much of the city lost power, including the friends they were staying with. They moved in with friends at a different house — which lost power an hour later. Everyone slept in the dark, and the next day they trucked over to a third friend’s house. The kitchen was being renovated, and they were washing dishes in the tub, but it had a hot plate and heat.

One of the last homes Amena and Drew were able to visit was a powder blue condo on a street crammed full of identical homes. It retained power because it was on the same grid as a major hospital. Driving up to the address, Malvina Reynolds’s “Little Boxes” played in Amena’s head: “Little boxes on the hillside,/Little boxes made of ticky tacky,/Little boxes on the hillside,/Little boxes all the same.” “It was just like, Oh, my God, they’re all the same! But it was fully done, had the backyard, had all of the space and the rooms that we wanted, had a loft upstairs for me to have an office plus a guest bedroom and a room for the baby and the master,” Amena told me.

As night fell, Amena submitted three offers on her phone: on the powder blue little box; on a 2005 home that felt too far south but was across from a good Montessori school; and on an East Austin condo from 2006 with concrete floors that reminded Drew of the Greenpoint loft apartment they once rented in a former pencil factory. Doing three at once “felt so reckless,” Amena told me. But they weren’t the only ones submitting simultaneous offers — a taboo during “normal” times.

The highest offer on the first house they bid on, the black-and-white ranch house in South Austin, fell through within an hour of execution, because the buyers learned they were also the highest bidders on another home that they liked better. “People kind of just started losing their minds: ‘I’ll offer whatever it takes,’” the listing agent, Ashley Tullis, told me. “We learned some big lessons about the buyer’s remorse.” As a consequence of backing out, the buyers lost their option fee, a sizable $3,000 (before 2020, a typical option fee was $500 or less). But such was the price of playing in this market.

On their simultaneous bids, Amena and Drew never went more than 8 percent over asking price, and they returned to New York having lost out on all three. Amena began to panic. The second house they considered on Emmitt Run, the one with the homemade vanity, erupted in flames during its inspection, injuring the inspector. The buyers pulled out, and it was taken off the market and re-listed, a month later, for nearly $50,000 more. It was hard to imagine a better metaphor for their search: Austin real estate was literally on fire. (The house sold above listing price, after again receiving multiple offers.)

By the end of February, Amena and Drew realized that if their budget was $550,000, they had to look at houses listed for $400,000. “Turnkey” — move-in ready — properties in central Austin were out of reach. For a brief moment, they sought homes needing a gut renovation. But anything less than $300,000 was inevitably being hoovered up by some investor paying all cash. Frenzied buyers were waiving their inspection periods and their appraisal contingencies, meaning they were contractually committing to buying homes even if their lender wouldn’t cover the full price.

And the market was moving so fast that this had become a real risk: Prices from a month before — generally the most recent data available to appraisers — were already outdated, leaving buyers scrambling to make up gaps of as much as $100,000. Others buyers were offering absurdly large option fees (say, $10,000) that they wouldn’t get back if they canceled the contract.

Amena began bidding on any house that seemed acceptable, click-click-clicking through DocuSign at 11 p.m., exhausted, right before falling asleep. Homes blended together. A 1949 bungalow, totally renovated, in East Austin. A fixer-upper owned by a professor of Russian literature at U.T. A handful of other 1950s ranch houses in Windsor Park. Amena was offering between $40,000 and $95,000 over asking. A squat yellow home from 1977 stood out because of its location on Duval Street, walkable to the coffee shops and vintage stores of North Loop.

But the one that most seized Amena’s imagination was a 1955 home on Westmoor Street, brick and wood that was painted purple, green and blue, like a preschool. “It was a mess of a place — we would have to do everything over — but it was huge and beautiful in terms of its potential,” Amena told me. It was listed at $375,000, and she bid $400,000, needing to reserve cash for renovations. In her love letter to the seller, she wrote, “You will probably be offered all cash by someone, but please don’t take it.” Amena and Drew couldn’t bail on Austin. Drew had signed a contract, and they’d rented out their New York apartment.

“More bad news, my friends,” Gilchrist texted. “We got passed over for Duval and Westmoor. Westmoor acknowledged how brutal the market is with an apology, and Duval said they got 28 offers.” Westmoor got 27.

“This is market is no fun,” the Westmoor listing agent told me. “People think that realtors are making money hand over fist, but that means 26 realtors didn’t get to feed their families.

“My client had a big heart and was sentimentally attached, but the less risky bids for her were cash and no contingencies,” the listing agent continued. “This was her nest egg.” She chose an all-cash bid from a buyer planning to tear down her house and rebuild. At this point Amena and Drew were on their 10th failed bid. “It’s like a danceathon,” Drew told me. “Last person standing wins.”

Often, the person still standing was that most hated figure in the Austin real-estate market, the California investor. The winning bidder for Ephraim Road, for example, was Michael Galli, a Silicon Valley real estate agent. “Here’s the interesting truth,” he told me. “I’ve never been to Austin.” He toured the Ephraim Road house on FaceTime.

In 2019, Galli decided he wanted to diversify, so he spent eight months studying cities online and kept coming back to Austin. It had high-income job growth and an influx of venture capital, the very things that had made Bay Area real estate so lucrative. Galli bought a large map of Austin and mounted it on the wall, studying it in the evenings with a glass of red wine in hand. He stuck Post-its onto points of interest: Apple, Samsung, Tesla, new transit lines.

He believed he understood what tech workers wanted: spacious feng shui- and Vastu-compliant homes, with a bedroom on the first floor to accommodate foreign parents on long visits. And most important, good school districts. He resolved to acquire 10 homes within a 12-minute drive of Apple. For $1 million down, he’d own $5 million in assets that he would rent out for top dollar and that he believed would double in value in five years and double again by 12 years.

Then there was a 35-year-old tech worker in Long Beach, Calif., who bought a house in Round Rock for $300,000 last October. By January 2021, it was worth roughly $400,000; in February, he bought two more. His winning bids were two of dozens that his real estate agent, a former equities trader who now works primarily with individual investors, made sight unseen, all of them for at least $40,000 over the asking price. “I’m part of the problem,” the buyer acknowledged to me, though he was not your stereotypical speculator: Despite earning six figures, he drives a 2005 Honda Civic and, when I spoke to him, was renting a room for $900 a month, preferring to save and invest. (Scarred by graduating into the Great Recession, he aligns with the Financial Independence, Retire Early movement popular on Reddit.)

He marveled at how FaceTime, DocuSign and electronic transfers made everything seamless, but because real estate money can now move so easily, it meant what he had liked about real estate investing in the first place — its stability and relative slowness — no longer held true. “We’re gamifying real estate investment to the point that it’s almost like throwing money at the stock market,” he told me.

Some Austin real estate agents have positioned themselves to capitalize on all this out-of-town money. On a steamy 95-degree day in late June, Matt Holm lifted the winged door of his Tesla Model X so that I could hop in the back seat behind his client, Jon, a man who worked in commercial real estate financing in Santa Monica. (Jon asked that I withhold his last name because he hasn’t shared his relocation plans with his friends and family.) During the pandemic, Jon, originally from Madison, Wis., began to rethink what was keeping him in California. “I’m getting a little anxiety about making a longer-term commitment to L.A., just given the political climate, the tax climate, the homelessness problem,” he told me.

Jon had traveled to Austin three times in as many months and was getting a handle on the “resi” market. He was looking for a home where he could declare residency to take advantage of Texas’ lack of income tax — but he also wanted to live elsewhere half the year, and so he was looking for a place he could easily rent out and make money on. And he wanted guaranteed appreciation. “I mean everything’s an investment, right?” he told me. A friend of his who had just relocated to Austin introduced him to Holm, whose dirty-blond hair was pulled into a sleek ponytail.

He founded the Tesla Owners Club of Austin in 2013 and proudly referred to himself as the “Tesla realtor” in town. When Jon slipped in to look at a short-term rental, Matt told me that Jon would like to spend $500,000 to $700,000, “but he’s going to spend 1.3 to 1.5 by the time he’s done.”

“There’s nine million square feet of office being built,” Holm said, as we drove through downtown, cranes and glass skyscrapers glinting above stalky yellow-limestone and red-granite buildings. (The Austin Chamber of Commerce gave a lower but still shocking figure, 6.2 million square feet.) “And it’s being built, like, it’s not occupied. So those jobs are coming. People are telling me, like, Oh, you know, we peaked. … As far as the metrics, the Texodus is not slowing down. We’re about to get a tidal wave.”

“People haven’t even factored in the Elon effect,” he continued, “I can’t tell you the number of people that are saying, Oh, Elon’s building a factory. Like, no, Elon’s not building a factory — this is headquarters for everything Elon. He hasn’t officially announced it, and I don’t know anything behind the scenes, but I can see very clearly the people that are moving here, and they’re not factory workers.” (Indeed, in October, Musk made it official.)

Holm and Jon spoke the same language. They analyzed every parcel for how to maximize profits and shared tips for minimizing taxes. Walking through a cavernous tiled-and-carpeted two-story in Travis Heights, Holm suggested that with its many bedrooms, it would make an excellent Airbnb. Although Austin and the state stipulated that owners could rent only their homestead and only for a maximum of six months a year, “that could be every weekend,” Holm said.

“The investor I know that’s killing it right now is a systems guy,” he continued. “And I told him for four years that he had to get into the Airbnb business and he thought I was B.S.ing him on the numbers. And finally, he believed me, and now he has 13 Airbnbs.”

“How does he do that?”

“Because he’s bought them all in the ETJ” — the Extraterritorial Jurisdiction, a broad swath of unincorporated land bordering Austin that isn’t subject to the city’s short-term rental restrictions. “Dripping Springs is about 30 minutes west of here, and it’s the wedding capital of Texas,” Holm said. “You see these people getting married with cowboy boots on and a wedding dress, and they’re on top of a hill and all that [expletive]. That’s where they are. But there’s like no hotels out there. … Well, if you can get a big-ass house out there where the entire wedding party can stay together, jump in the pool after the wedding … there’s almost a completely unlimited market. … He doesn’t take any Airbnb bookings that don’t gross rent $30,000 a month.”

“I like this place,” Jon said of the house. At 3,000 square feet and $1.2 million, this home was over Jon’s budget. The question was how much was he willing to live in his investment. “I don’t need so much house unless I was really going to take on the project you describe,” he said. “But that puts me in a bit of a conundrum, because I am living here six months a year. You don’t want it to be a complete party house either.”

Next up was a condo with clean white walls, black fixtures and gray oak floors. At $1 million, it didn’t offer the same opportunities for monetization: He couldn’t build, and there were fewer rooms to rent.

“Everybody is from San Francisco today,” the seller’s agent said when we got there. “What about you guys?”

Despite the competitive market, despite having to work double the hours and write triple the offers, Open House’s agents were moving cash-strapped millennials and some Gen Z’ers into houses in record numbers: 130 so far this year, 88 percent of them first-time home buyers, at an average price ($369,000) far below the Austin metro median of $450,000. Because they were encouraging clients to think of property first and foremost as an investment, their young charges were going after what they could, buying new homes in neighborhoods with homeowners’ associations, older condos with perhaps-less-than-ideal natural light and suburban fixer-uppers that reeked of cigarette smoke. Anything to break in and start building equity.

At those price points, Open House clients were inevitably snapping up stock in once-affordable neighborhoods. For the last decade, East Austin, the historically Black and Latino neighborhood atop the city’s less-desirable clay soil, has been among the city’s hottest destinations. It began with a couple of fun dive bars and an excellent Japanese fried chicken truck and exploded into the site of award-winning restaurants, a hipster honky-tonk, a Whole Foods and, now, some of the highest-price-per-square-foot real estate in Austin. Gut-renovated bungalows and new homes in moody shades of midnight blue, hunter green or white were rapidly multiplying, squeezing out the weathered old houses with pit bulls and barbacoa pits, the piñata shop, the tire-repair place.

In the spring, Douglass, Smith and Douglass’s uncle, Moose Mau, took out a hard-money loan to buy their fifth property together (and Douglass’s eighth property in East Austin), a run-down 1,614-square-foot home on the floodplain, along with a vacant lot next door. The cost for both was $550,000. As usual with Douglass, one project spawned another: The empty lot came with a shipping container filled with junk, and she decided to turn it into an Airbnb. For $20,000 she was going to carve out some windows, add a kitchen and bathroom and insulate it from the inside. For another $78,000, she ordered a tiny house to put in back. (During one drive, I saw three such miniature homes traveling the Texas highways.)

The Latino family that sold the two lots was using the profits to purchase a larger parcel of land outside the city, a move common among people of color selling their homes on the east side. Gentrification has different effects in different geographies, as research by Virginia Tech’s Hyojung Lee and Georgetown’s Kristin L. Perkins has shown. In New York, where the cost of living is high for miles and miles, it tends to lead to densification — doubling and tripling up. But in Texas, where the sprawl is decidedly more affordable, it spurs suburban migration. The proportion of the Austin population that is Black has been declining for decades. Many of those selling homes in the city were moving to the parched suburbs of Pflugerville, Buda and Bastrop. Or they were moving on to the next phase of life, aging into retirement or nursing homes.

In the late spring, Mau flew in from Southern California, where he works as a mortgage broker, to help with the renovation. He was clearing trash in the front yard when a young man walked by and asked if he needed help. As they worked alongside each other, the man mentioned that his girlfriend was helping the woman next door. The woman said she’d sell her home for between $200,000 and $250,000, he said.

“We’re like, ‘Whoa, that’s supercheap,’” Smith told me. So she went over to the run-down yellow house, which seemed to be made of little more than splinters and asbestos. The owner, Maria Saldaña, was in her late 60s and partially blind and spoke little English. An orange Home Depot five-gallon bucket with a toilet seat on top sat beside her bed, because the toilet didn’t work. She was eager to sell and asked for $210,000. Smith agreed. Micah Domingues — Smith’s employee at her Airbnb management company and her middle daughter’s 28-year-old boyfriend — was interested.

Before the sale closed, one of Saldaña’s sons moved her into an affordable senior living facility. He vaguely described where it was located so that Smith and Domingues could visit her and finalize the sales contract. After studying the map, Domingues and Smith drove to the most likely complex, but the receptionist didn’t think Saldaña had arrived. So the two started knocking on doors there, rapping, rapping, rapping as instructed by Saldaña’s son, who told them to continue to knock so that she could follow the sound. She opened the third door they tried. She was alone and unfamiliar with her surroundings, so Smith and Domingues led her by the hand around the room.

“You have a new couch, and it’s over here,” Smith said, helping her grasp the cushions. “Here’s your table, and there’s a box of cereal on top of it.”

“There’s cereal?” Saldaña said. “I have a little milk.”

Smith poured milk and cereal into a bowl, and Saldaña dug in as if she hadn’t eaten all day. The air-conditioning was too cold for Saldaña, and so before leaving they led her out onto the patio she didn’t know she had and brought out a chair so she could sit in the sun.

In the end, the sale fell through. There was a cloud on the title. Saldaña had been married, and although her husband was dead, he had grandchildren from a previous marriage who potentially could claim a share of the property, and two of them wouldn’t sign off. Micah, who had been so excited to purchase his first property, told me that by the end, “I had no more emotions.” Given his budget — $300,000 was his upper limit — he worried he’d have to wait a long time before stumbling upon another off-market house.

Real estate agents have a saying: “There’s a buyer for every house, but there might not be a house for every buyer.” That’s the definition of a seller’s market — and a pithy indictment of the way America subsidizes homeownership, in an era when a majority of Americans are utterly shut out of it. All the changes that Covid brought to the market have only made things worse.

It doesn’t exclude just those who can’t muster all-cash offers, or those without the financial cushion to take on the risk of losing a large option fee or forgoing an inspection. It also disadvantages those who are unable to drop everything to make a play for properties. In the Covid-era Austin market, there was seldom a house for anyone who couldn’t house-hunt full time.

In keeping with seasonal trends, September 2021 brought an easing in the market, both in Austin and nationwide — but the city’s median sale price was still its highest on record for a September. The Case-Shiller home price index reported that the August 2021 year-over-year appreciation was 19.8 percent nationwide: “That’s just an astronomical pace of price appreciation,” Jeff Tucker, a senior economist at Zillow, told me. “The only remotely comparable points in time in the modern era of low inflation were late 2005, when price appreciation peaked in the 14 percent range for many months, and 2013,” when prices finally began to rebound after the Great Recession. “And again, there it didn’t quite crack 11 percent,” Tucker said.

As for Drew and Amena, things were still dire a month before Drew had to report to work in Austin. Amena began flirting with the idea of renting, but friends of hers were having as much difficulty finding a rental in Austin as she was with buying. Renters were offering $500 more than the monthly asking price and signing two-year contracts. Some were offering an entire year up front. Amena applied to four or five, and was rejected on all of them.

But two days later, miraculously, she and Drew were under contract to buy. The home had taken extra clicks to be located on Zillow because it was for sale by owner. It was smaller than they had wanted — 1,200 square feet, about the same size as their unit in Bed-Stuy. But it had a guest room for Amena’s parents, and the master bedroom was at the back of the house looking onto a huge backyard with a mature fig tree. They could build a home office, they figured — or a home gym or a rentable backhouse.

It was also in Windsor Park, a sleepy community of ranch houses that they’d come to love. The neighborhood was so close to so many major highways that it was no more than 20 minutes away from almost all of the major tech campuses. At $525,000, it was listed higher than comparable homes, but Drew and Amena had learned their lesson. They bid $50,000 over asking with an expedited five-day option period.

“I think, maybe, it’s looking good,” Gilchrist said shortly after they submitted. “The guy is currently asking whether or not you will water and harvest the potatoes in their backyard for them once you close and then share the potato harvest.”

“We will take a potato-cultivating class if that’s what he wants us to do,” Amena said.

Amena and Drew went under contract, having seen only photos of the house online and a video shot by Gilchrist. The backyard was recently added to the flood zone, meaning they’d have to pay for a FEMA-approved flood-insurance policy. While talking to their lender, they also learned that the city wouldn’t let them add anything to the backyard — a heartbreaker.

With two days left on her option period, Amena flew to Austin for 24 hours. Gilchrist picked her up at the airport and drove her directly to the home. She walked through the low-slung rooms with their boxy windows and opened every drawer, closet and cabinet. She FaceTimed Drew: The living and dining area was cramped, but the owners, who were moving with their two children 30 minutes south of Austin to Niederwald, where they could afford more square footage and more outdoor space, had large furniture. Most important, the house didn’t smell, and it was theirs if they wanted it. They would redo the bathroom and reconfigure the kitchen. It would work.

The home was still under renovation when they moved in, in July. And it would be for quite some time, because houses weren’t the only thing in short supply during the pandemic: The same was true of appliances, cabinets, vanities, sinks and shower heads. In October, they still didn’t have kitchen counters. They were creatively laying cardboard and cutting boards atop the open cabinets. “It’s actually convenient from the standpoint of the silverware drawer,” Drew told me. “You don’t have to open anything,” Amena said. “You just reach in and grab.”

But even before they were settled in, Amena couldn’t see staying in Austin long term. The problem with Austin wasn’t that housing deals sometimes hinged on potatoes. (The owners harvested them and left Amena and Drew a small bounty, which was reportedly delicious.) The problem, they felt, was that the city seemed too staid, too homogeneous, too white — and each sale in this crazy real estate market seemed to be making it even more that way. When it came time to celebrate Drew’s 40th birthday, they considered a number of destinations: Mexico, Cuba, Portugal. But in the end, the place they most wanted to go was New York.

“I still miss Brooklyn — I kind of want to move back,” Amena said, her voice echoing off the bare walls and hardwood floors of her empty new home. “To be honest, the Austin housing market was a little demoralizing.”

Francesca Mari is a journalist based in Providence, R.I., and a national fellow at New America. She has written about housing, inequality and con men for The New Yorker, The Atlantic and The New York Review of Books, in addition to the magazine. Dan Winters is a photographer and portraitist based in Austin, Texas. He is widely recognized for his celebrity portraits, scientific photography, photo illustrations and drawings.

Source: Will Real Estate Ever Be Normal Again? – The New York Times

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More Contents:

Shiller, Robert (June 20, 2005). “The Bubble’s New Home”. Barron’s. The home-price bubble feels like the stock-market mania in the fall of 1999, just before the stock bubble burst in early 2000, with all the hype, herd investing and absolute confidence in the inevitability of continuing price appreciation. My blood ran slightly cold at a cocktail party the other night when a recent Yale Medical School graduate told me that she was buying a condo to live in Boston during her year-long internship, so that she could flip it for a profit next year. Tulipmania reigns. Plot of inflation-adjusted home price appreciation in several U.S. cities, 1990–2005:

Plot of inflation-adjusted home price appreciation in several U.S. cities, 1990–2005.

“Sources and Uses of Equity Extracted from Homes”

Credit Suisse To Tighten The Reins After String of Scandals

Credit Suisse will unveil a new centralized structure on Thursday in an attempt to bring its far-flung divisions to heel and draw a line under a string of scandals that have cost the Swiss bank billions of dollars, two sources said.

Over the past year, Credit Suisse has been fined for arranging a fraudulent loan to Mozambique, tarnished by its involvement with defunct financier Greensill, racked up $5.5 billion in losses when U.S. family office Archegos collapsed, and been rebuked by regulators for spying on executives.

Credit Suisse drafted in seasoned banker Antonio Horta-Osorio as chairman in April to stop the rot and he will lay out his charter to reform Switzerland’s second-biggest bank on Thursday when it presents third-quarter results.

One key change is expected to be the creation of a single wealth management division that caters to a global elite, centralizing oversight at the bank’s headquarters in Zurich, two people familiar with the matter told Reuters.

Under the current structure put in place six years ago, wealth management straddles three divisions: a Swiss business, an Asia-Pacific arm catering mainly to rich Chinese and an international arm based out of Switzerland.

Merging the wealth division would make Credit Suisse simpler and potentially pave the way for cost cuts.It would also rein in local bankers who have enjoyed much autonomy, making them more answerable to senior managers who have often been blindsided by the risks that triggered past scandals, the sources said.

One of the people told Reuters that managers at the bank’s headquarters had become very risk averse and they did not want to give leeway to local bankers, regardless of how much profit they were making. A spokesman for Credit Suisse declined to comment.

Credit Suisse’s financial humiliation stands in stark contrast to its cross-town rival UBS (UBSG.S). In the wake of massive losses and a bailout during the financial crisis, UBS successfully pivoted away from investment banking to wealth management and is now the world’s largest wealth manager with $3.2 trillion in invested assets.

Its shares have climbed 57% in the past 10 years while Credit Suisse has slumped 53% over the same period.Shareholders have deserted Credit Suisse this year following the slew of bad headlines. Its shares are down 12% while UBS is up 36% while Wall Street rivals are riding high on the back of a boom in equity trading and M&A.

Andreas Venditti, an analyst at Swiss private bank Vontobel, said it would take more than “minor changes and a new divisional set-up” at Credit Suisse to reverse the trend.The expected revamp at Credit Suisse has also encouraged some high-profile dealmakers to approach the bank’s senior management to suggest it merges with a rival, another person with knowledge of the matter said.

Those ideas have been rejected so far, however, the person said. Nonetheless, the prospect of a challenge by investors demanding the break-up of the bank, or that its shrinking market value makes it a target for a hostile foreign takeover, have long troubled managers, sources told Reuters earlier this year.

‘WARNING SIGNALS’

With a market value of $28 billion, Credit Suisse is worth less than half of UBS and a fraction of Wall Street giants such as JPMorgan (JPM.N) weighing in at half a trillion dollars. But an approach from the United States would not go down well in Switzerland. Relations between Swiss banks and Washington were damaged when the United States pressured them into giving up their strict secrecy code more than a decade ago.

A combination of Credit Suisse and UBS, which has been touted as an alternative alliance, would face its own problems. For one, it would dominate the Swiss market. Another source said that while Credit Suisse had examined a sale or spin-off of its asset management business, that had been shelved. The person said, however, that once further efforts were made to cut costs and boost growth, a sale, or listing of the business on the market, could be back on the cards.

The bank’s drive to centralize its operations is drawing on lessons from some of its recent failures, including Archegos. Earlier this year, Credit Suisse published a report blaming a focus on maximizing short-term profits and enabling “voracious risk-taking” by Archegos for failing to steer the bank away from catastrophe.

Despite long-running discussions about Archegos – by far the bank’s largest hedge fund client – Credit Suisse’s top management were apparently unaware of the risks it was taking.

The bank’s chief risk officer and the head of its investment bank recall hearing about it first only on the eve of the fund’s collapse. “There were numerous warning signals,” the report said. “Yet the business … failed to heed these signs.”

By and ,

Source: Credit Suisse to tighten the reins after string of scandals | Reuters

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Related Contents:

B. H. Meyer; Hans Dietler (1899). “The Regulation and Nationalization of the Swiss Railways

Hill, Kelly (1999). Cases in Corporate Acquisitions, Buyouts, Mergers, and Takeovers. Gale. ISBN 0-7876-3894-3.

Atkinson, Mark (4 August 2000). “Swiss banks agree $1.25bn Holocaust deal”. The Guardian

Grant, Linda (19 August 1996). “Will CS First Boston Ever Win?”. Fortune. pp. 30–34. Archived from the original

Strom, Stephanie (30 July 1999). “Japan Revokes Credit Suisse Unit’s Banking License”. The New York Times.

Kandell, Jonathan (March 2012). “Swiss Banks Adjusting To Radical New Regulations”. Institutional Investor. Vol. 46 no. 2. p. 33.

Crawford, David (8 November 2012). “Germany Probes UBS Staff on Tax-Evasion Allegations”. The Wall

Owen Walker (30 July 2020). “Credit Suisse launches restructuring after trading profit boost

Braze Begins The IPO Process Amid Pandemic-Era Growth In Digital Marketing

A decade after its founding, the marketing tech startup Braze is beginning the process of becoming a publicly traded company.

Today, the New York-based company filed its Form S-1 with the U.S. Securities and Exchange Commission to go public on the Nasdaq stock exchange under the ticker symbol “BRZE.” Braze is part of the growing industry of marketing campaign management software companies, a market sector that the research group IDC says could reach $15 billion in 2021 and $19.4 billion in 2024.

The customer engagement company provides technology for brands to interact directly with consumers through various channels. By using Braze’s platform, companies can use data from email, apps and other digital platforms to better understand their customers before targeting them with personalized messages. Well known brands that use Braze for their marketing include Burger King, Anthropologie, Birchbox, Grubhub, IBM, Hinge, Nascar, PayPal, HBO, iHeartRadio, Sephora and Rosetta Stone.

According to its SEC filing, Braze reported large revenue growth in the past two years with $150.2 million in fiscal-year 2021 and $96.4 million in 2020. While the company has experienced momentum in 2020 and 2021, it’s still not profitable: Net losses totaled $31.43 million in 2021 and $31.36 million in 2020. Braze also reported annual recurring revenue passing $200 million in 2021, up from $100 million in 2019.

When Braze was cofounded in 2011 by CEO Bill Magnuson, Jon Hyman and Mark Ghermezian, it wanted to build a business that was mobile-first to help companies adapt to changing consumer behaviors. At the time of publication, the company was unavailable for comment about its IPO plans, but in a letter included in the S-1 Magnuson wrote that the “goal was to build a company that would capitalize on new technology to help the world’s best companies grow by trusting us with their most valuable asset: their customer relationships.”

“While technological change drove us forward, we knew that humanity should always guide us,” Magnuson wrote. “Great human relationships are built on mutual understanding, engaging communication and shared experience. It’s thus no surprise that the secret weapon of exceptional, enduring companies is the quality of their customer engagement.”

In the past two years, Braze has continued to grow its customer base from 728 in January 2020 to 890 January 2021 and 1,119 as of July 2021. The company has also continued to scale its cloud-based platform and now reaches 3.3 billion monthly active users through its customers’ applications, websites and other digital platforms—up from 2.3 billion in January 2020 and from 1.6 billion in January 2019.

Issues around privacy are also something Braze listed as a risk factor, citing international, federal and state regulations including newly passed legislation in California, Virginia and Colorado and existing laws such as the European Union’s General Data Protection Regulation. Several pages of the S-1 detail many of the laws and provide a glimpse into the various ways rules around data privacy could impact the company both legally and financially.“The laws are not consistent, and compliance in the event of a widespread data breach could be costly,” according to the SEC filing. “In addition, while we contractually limit the types of data our customers may process and store using our platform, we cannot fully control the actions of our customers. The failure of customers to comply with their contractual obligations may subject us to liability, and we may not have sufficient recourse to cover our related liabilities.”

Braze’s S-1 filing comes just a day after the advertising technology company Basis Globally Technologies—formerly known as Centro—confidentially filed its own S-1 with the SEC, further adding to the string of ad-tech and mar-tech IPOs that have taken place this year. Companies that have either gone public or begun the IPO process in 2021 include the content recommendation company Taboola, ad measurement firms DoubleVerify and Integral Ad Science and other marketing tech companies such as Zeta Global and Sprinklr.

Over the past decade, Braze has raised $175.1 million, according to Crunchbase. It raised an $80 million Series E round led by Meritech Capital Partners in 2018, just a year after raising a $50 million Series D round led by ICONIQ Capital. Other investors have included Battery Ventures, InterWest Partners, Rally Ventures and Blumberg Capital.

While Braze was growing quickly even before the Covid-19 crisis began, the company said the pandemic has accelerated the adoption of digital and mobile usage. Braze is also betting on the increased reliance on first-party data, especially as companies adapt to finding ways to reach people without as much third-party aggregated data.

“Modern brands know that when a customer is intermediated by a third-party aggregator, ad platform or distribution channel, it’s not really their customer relationship,” Magnuson wrote. “The highest value customer relationships are informed by first-party data and cemented through direct engagement.”

Follow me on Twitter or LinkedIn. Send me a secure tip.

I’m a Forbes staff writer and editor of the Forbes CMO Network, leading coverage of marketing and advertising especially related to the ever-evolving role of chief

Source: Braze Begins The IPO Process Amid Pandemic-Era Growth In Digital Marketing

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Shine on Sustainable Bonds Wears Off, Especially for Riskiest Borrowers

Rising regulatory scrutiny is damping investor appetite for sustainable bonds, especially those issued by riskier companies. Bonds sold to fund environmentally friendly projects and companies generally fetch higher prices and lower yields than conventional bonds. This “greenium,” though, has been shrinking in recent weeks as global regulators forge ahead on new disclosure rules and investors start to look more closely at companies’ claims about sustainability.

The selloff is sharpest for high-yield sustainable bonds, whose price premium over comparable conventional bonds has nearly halved since early September, dropping to 0.17 percentage point from 0.30, according to ICE bond indexes. The yield on a broad index of sustainable junk-rated bonds has risen to 3.82% from 3.33% over the same period. Yields rise when prices fall.

The greenium for investment-grade bonds has shrunk, too, though more slowly, halving since April to 0.03 percentage point.

Sustainable investing—also known by the acronym ESG for its environmental, social and governance factors—has attracted hundreds of billions of dollars, but until recently there has been little consensus about what qualifies as a green asset. Money managers are increasingly worried about being duped by companies exaggerating their sustainability bona fides. They are also having to prove the claims they make to their investors about how they evaluate green investments.

In a bellwether case, the Securities and Exchange Commission is investigating whether Deutsche Bank AG’s asset-management arm lived up to claims it made about its ESG investing criteria. A whistleblower and internal emails say that only a fraction of its assets went through a sustainability assessment, contrary to the firm’s public statements. DWS has said it stands by its disclosures.

This new scrutiny is prompting some investors to be more careful when assessing sustainable bonds, particularly those sold by lower-rated issuers, which tend to be smaller and disclose less about their businesses, said Tatjana Greil Castro, a credit portfolio manager at Muzinich & Co.

“There is definitely an understanding that you cannot just slap on your tick-box approach,” she said. Market dynamics may be partly to blame, too. Inflows into sustainable-investment funds haven’t kept pace with a flood of new issuances.

Investors put $95 billion into ESG funds in the second quarter, down from $142 billion in the first, according to the latest available data from Morningstar. Meanwhile, issuance of sustainable bonds stayed relatively stable, with $295 billion in the second quarter and $299 billion in the first, according to Bloomberg New Energy Finance.

With less money earmarked for green assets spread across more deals, investors can be choosier about which to buy and can negotiate higher yields.

Sustainable debt sold by higher-rated issuers are still finding strong demand. The yield on the European Union’s first-ever common green bond has fallen from 0.45% when it was issued Oct. 12 to 0.37% as of Wednesday. Investors piled into the U.K.’s debut green bond last month, which priced at a yield of 0.87%.

But corporate borrowers, especially those with lower credit ratings, are finding less appetite for their debt in the secondary market. A green bond issued by Daimler AG was yielding 0.51% on Wednesday, compared with 0.52% for the German auto maker’s comparable conventional bond. In February, the green bond was yielding 0.16 percentage point less.

A green junk bond issued by Ardagh Metal Packaging SA was yielding 2.20% on Wednesday, up from 1.81% in mid-September.

By: Anna Hirtenstein

Anna Hirtenstein is a reporter at The Wall Street Journal in London, covering financial markets. She was previously a reporter at Bloomberg in London, an investment banker at Greentech Capital Advisors in Zurich and has also worked as a field correspondent with a focus on oil in Northern Iraq and West Africa.

Source: Shine on Sustainable Bonds Wears Off, Especially for Riskiest Borrowers – WSJ

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13 Ways to Invest in Yourself

When you hear the word “investing,” you probably think about stocks, bonds, maybe commodities. It’s far less likely that your reflex will be inward – but indeed, you can, and should, invest in yourself, too.

Investing is an enormous industry solely dedicated to the idea of using capital to create more capital. We highly suggest you do it. But in many instances, investing time and energy – which, just like money, are in finite supply – in yourself can lead to a meaningful payoff, too. And sometimes that payoff includes the accumulation of wealth.

It’s just a matter of application, and making a plan.

To that end, here’s a rundown of 13 different ways to invest in your career, your mind and your happiness that have nothing to do with buying low and selling high. Becoming a more marketable worker, earning a chance to be your own boss and simply broadening your horizons can yield rewards, too.

Find a Mentor

Spending time with a mentor is one of the best investments you can make. Mentors are plentiful. It doesn’t cost much to talk with them – just the price of a cup of coffee, or maybe an Uber trip if your mentor works elsewhere. And they can provide you with a wealth of benefits: They can improve your current job skills, help you network within your field and potentially become an employer in the future.

What workplace mentorship looks like will vary from one employer to the next. But in almost all cases, it could and should involve a senior employee acting as a guide for a newer worker with less company-specific experience. In some cases where management is willing to provide time off and funding, leadership “camps” and team-building experiences can also make employees more effective.

But what if your employer doesn’t facilitate such programs? Be the organizer of a formal, company-wide effort that pairs newer workers with veterans. It’s not a difficult sell. Your boss will benefit from a staff that at the very least better knows one another, and they’ll probably appreciate the subsequent synergies too. Meanwhile, you’ll make new intra-office contacts.

You can find mentors outside of your workplace, too. A simple way to start is by simply reaching out to leaders and other knowledgeable members of your field for “informational interviews” – nothing more than a cup of coffee or lunch to talk about the profession.

Depending on the topic, you might be able to find more plentiful outside resources. For instance, small-business entrepreneurs have a host of options at their fingers, such as Score.org, which pairs individuals up with local SCORE (Service Corps of Retired Executives) chapters to pair them with one of more than 10,000 volunteer business experts.

More Education for a Career Change

Many young college graduates might be happy working in the field they just finished studying, but some individuals further into their careers might be mulling a change – perhaps a pivot toward one of these top jobs of the future.

In many cases, however, these individuals don’t feel they can because they lack a degree related to their new dream job. Or if they do “change things up,” they make a move within the industry rather than taking on a whole new category – even when that new job could prove more lucrative.

Knight Kiplinger points out the benefit of such an investment in his “Keys to Financial Security”: “A $30,000 pay hike can be viewed as an annual return on a capital investment, like earning a continuous yield of 6% on $500,000 of savings. You know how hard it is to save up $500,000. Maybe that $30,000 boost in salary is easier to achieve.”

There’s good news for the hesitant, however. More than 80% of people who changed careers after they turned 45 years old found success in their new field, according to the American Institute for Economic Research.

For some occupations, such as teachers and nurses – two of the most popular second careers for older rookies – might require a brand-new degree. But the advent of the internet has changed the way we learn. Traditional college classrooms are still an option, though career-changers with families who might need to work at the same time they’re going back to school have plenty of internet options. Roughly one-third of college-level studies are now done online, and many employers see this classwork as credible.

Professional Certifications

In some cases, a college degree might not be the right kind of continuing education for you. Some employers are more interested in specialized skills and credentials. Company hierarchies in the modern workplace are optimized by a diversity of detailed, focused knowledge that sometimes comes in the form of a professional-level certificate.

And at the least, there aren’t many industries that don’t encourage the attainment of specialized credentials.

Take the finance industry as an example. Most career-minded jobs in the sector require a minimum of a college degree. But some of the most successful financial planners are Certified Financial Planners, with a CFP designation. Chartered Financial Analysts (CFAs) also enjoy a high-level of credibility within the investment management arena. There’s even a professional designation for investment professionals that specialize in analyzing stock charts: Chartered Market Technicians.

The technology arena arguably offers the most, and most diverse, options for readily attainable certifications. Certificates aimed at demonstrating expertise in Cisco networking, Microsoft systems and coding languages such as Java and C++ can all be earned in just a few months.

In most cases, these certificates can be secured while you work a full-time job. Some employers will even pay the costs associated with them.

Join Toastmasters

Even when Toastmasters International was in its infancy nearly a century ago, the organization invoked the occasional eye roll. Some outsiders snickered as the seemingly silly gathering of like-minded people that just wanted to practice public speaking in front of other members wishing to do the same.

However, the clubs – all 16,800 of them that meet regularly in 143 different countries – are no joke. Aside from a judgment-free, supportive environment where individuals can get comfortable confronting the one thing they fear more than death itself, Toastmasters is a chance to network with other aspiring business-minded individuals in the area.

And the organization certainly has its share of high-profile success stories. MSNBC’s Chris Matthews, comedian and actor Tim Allen, the late iconic Star Trek actor Leonard Nimoy, and the late James Brady, former presidential press secretary, are all former Toastmasters members, along with a whole slew of other recognizable names that leveraged their Toastmasters experiences into successful careers.

Toastmasters charges $45 in semi-annual dues as well as a $20 new member fee. Meeting frequency varies by club but typically are held weekly or every other week, for one to two hours per meeting.

Move

It doesn’t sound like a way to invest in yourself. It sounds more like a chore, or even just a flat-out expense. But you might find that simply moving from one place to another can open all sorts of doors … and not just career-oriented ones. New locales bring new people into your life, new kinds of entertainment, lower expenses and new scenery that can make your life better in a myriad of ways.

The latest relocating-minded trend is an exodus from the nation’s biggest cities and the establishment of new roots in less urban areas. Bustling New York City lost 76,790 residents in 2019, and 143,000 in the year before that, mirroring a bigger trend evident across the entire northeaster portion of the country. Lousy weather is cited as one reason for the growing disinterest in the region, though the bigger concern is the sheer cost of living in places such as New York City and Washington, D.C.

Conversely, there are still good reasons to head toward the pricier parts of the country, particularly for people looking for jobs in the financial and tech arenas. Most Wall Street-type jobs require you to actually live somewhere near Wall Street, and Silicon Valley in northern California is the nation’s technological development hub. If you want to work there, you typically have to be there.

If you’re broadly looking for a place to start, consider these states with the fastest rates of job growth. And if you’re looking to figure out how much to budget, Moving.com says the average cost of a long-distance move (1,000 miles) is $4,890, based on a two- to three-bedroom move of about 7,500 pounds.

Start a Side Gig

The idea of a “job” has changed dramatically in just the past few years. Gone are the days when individuals clocked in at 9 a.m., worked for an employer that was trusted to remain in business, and then clocked out at 5 p.m.

The new normal is … well, there is no new normal, given the statistics.

Roughly one-third of U.S. workers claim they utilize “alternative work” arrangements as their primary source of income. That is, they don’t necessarily run their own businesses per se, but rather are contracted, self-employed people that rely on middlemen to connect with a stream of customers. Think driving for Uber, completing projects through Amazon Mechanical Turk, or picking up regular work at a website like Freelancer.com. In some cases, these workers might see more income by being self-employed. But certainly, some see less.

It doesn’t have to be an either/or matter for the entrepreneurial-minded, though. Side gigs can be managed without “giving up your day job” by doing work outside of regular work hours.

The effort is arguably worth it. A recent survey performed by The Hustle found that the average side-gig operator spent an average of 11 hours per week as their own boss, and earned $12,609 per year – an average of about $22 per hour. Real estate, management and money-related side gigs appeared to be the most lucrative, according to the survey.

The payoff can be more than in immediate income. You can use a side gig to hone new skills or test new ideas that can be used to fuel a career shift.

Set Up a (Real) Home Office

Whether you’re self-employed or just one of the lucky corporate employees who are allowed to work from home, there’s much to be said about a space that functions and feels more like an office and less like a bedroom or basement. Indeed, you might be more productive working at home, for yourself or for an employer.

Despite all the noise often made about the pros and cons of working from home, it’s not as widely available an option as you’d think. Only 7% of employers facilitate work-from-home options, according to Fundera, even though the option saves companies an estimated $44 billion per year. Fewer than 4% of employees (including freelance workers) are allowed to work from home for at least half the workweek, says Small Business Trends.

In other words, if you do have an employer that allows you to work from home, be sure to perform just as you would if in an office setting. Companies remain broadly suspicious of the practice.

The one area where it pays to spend more than you might like to on a home office is on a new computer. It is, for better or worse, the centerpiece of the modern work world. Not only are computers used to create and store documents, they’re also becoming the key means of communication with clients and customers. They’re even replacing phones with apps such as Skype. An unreliable or underpowered PC can quickly turn into a nuisance.

Get Healthy

The benefits of living a healthier lifestyle are clear: A longer life, feeling better and being able to physically do more are all good things.

However, there’s a financial upside to eating better and getting more exercise too. More than one, in fact. Chief among them is the sheer cost of being unhealthy, and as such, needing to see a doctor more often.

As part of efforts to make health insurance, and therefore health care, more affordable for everyone, deductibles have soared in recent years. In 2008, according to the Kaiser Family Foundation, the average deductible for a single-person health plan was $735. It has since soared to $1,655. Premium prices are up, too, at $7,188 annually as of 2019, and the maximum out-of-pocket expense in 2019 for an ACA-compliant plan was $7,900 for individuals, and $15,800 for family plans.

Although health insurance is effectively a must-have, using it can prove expensive.

The other financial upside to healthier living: Feeling better, or not being distracted by fatigue, lets your mind stay sharp during sales calls, when meeting new people and when simply being sized up (literally and figuratively) by someone interested in your work. Every interaction or connection is in some way an effort to sell something. Being at your best makes it likelier you’ll perform well.

Get Organized

Most individuals who live disorganized lives, personally and professionally, would argue they don’t have time to organize. In reality, it takes more time, energy and money to not be organized.

Did you know the average American spends 2.5 days per year trying to track down lost items? That’s the case, according to a study by Pixie, a smart-location solution for missing objects. Did you also know that the National Association of Productivity and Organizing Professionals (yes, it’s a thing) reports that between 15% and 20% of the average household’s budget is wasted by buying items to replace ones that simply can’t be found? Here’s the kicker: NAPO also estimates that 40% of housework currently being done in the U.S. wouldn’t be necessary if we were willing to de-clutter.

It’s not just time and money. Your mental well-being is at stake, too. People who have successfully mastered the art of self-organization find they’re less stressed, sleep better and ultimately end up being more productive. In the workplace, a more organized desk, office, briefcase or vehicle makes a good impression on prospective clients, co-workers, even your boss.

Keep Your Brain Sharp

By many measures, it’s a cruel trick. Never before have people been expected to stay as focused as they are now, yet never before has it been so difficult to prevent your mind from being overwhelmed by a constant barrage of digital data.

Your smartphone has much to do with that. We check our phones for no particular reason about once every 12 minutes; some of us, more frequently.

But the challenge extends beyond just phones. On average, says productivity expert Chris Bailey, we’re distracted by something every 40 seconds. Bailey also says all the regular distractions we experience ultimately extend the time needed to complete a task by 50%. Plus, it can take several minutes just to resume the work being done before the distraction took place.

So, how do you keep your mind sharp in this kind of environment?

For one, try to put down the phone a little more often. Then, start following some of the other steps on this list.

Staying in shape isn’t just a good way to cut down on medical costs – it also helps brain health as you age. Art Kramer, professor of neuroscience and psychology at Northeastern University, tells Kiplinger that people who do more aerobic exercise tend to be better at solving problems, have better memory and show lower rates of dementia.

You want to “network,” too – but not just professionally. Being socially active has many positive effects on the brain, including areas that have to do with memory. So, as you can, try to interact with friends and family more often.

Build Your Own Website or Portfolio

The upside of building your own professional website or portfolio will vary from one person to the next, and with the intent. But if there’s any arguable reason not to invest in yourself in this way, cost isn’t it. The hosting price for a low-end (though still professional-looking) website can be less than $10 per month; for those willing to make a longer-term commitment, requesting and registering the domain name is often free.

What you can do with even the simplest of websites, however, is almost limitless.

Chief among those options for a job-seeker is the use of a website as a digital resume of sorts. But a website can provide a potential employer with work-related details that might otherwise be difficult to present with just one sheet of paper.

In that same vein, a website could serve as a repository of past work for individuals who offer services on a regular basis. Writers, artists and architects are just some of the people who benefit from being able to publicly showcase their work.

And naturally, any entrepreneur with e-commerce ambitions will want to develop a website, and spring for a few more of the bells and whistles required to do business online.

Hire a Career Coach

Sometimes it’s difficult to push yourself to the proverbial next level, whatever that might mean in your given field. Stagnation can sap creativity, and disappointment can quell drive. It’s all too easy to become complacent and resign yourself to doing the exact same thing until it’s time to retire.

A career coach might be just the kick in the pants you need.

But first, you need to understand what a career coach is, and what it isn’t. Career coaches aren’t headhunters. They also can’t tell you what sort of job you should be seeking. And they most certainly won’t be able to help if your impasses are personal rather than professional in nature.

A career coach can, however, help you identify your strengths and weakness as other people see them, assist you in formulating a career-advancement strategy and advise you on how to make a successful career change.

They’re not necessarily cheap. On a per-hour basis, they can charge anywhere between $75 and $250. Some ask for a longer-term, multimonth commitment that can cost a total of anywhere from $1,000 to $2,500.

But they can be worth the outlay. A promotion-related raise or a job offer with a new employer can easily fund such an investment within just a year.

Read Books

There’s a universe of great information floating around, ready to be gleaned. Much of it can’t be found at your workplace. Instead, it’s at a bookstore – or, for the more economically minded, a library.

The statistics on the matter are nothing short of amazing. Fast Company says the average CEO reads 60 books per year. Ben Eubanks, human resources analyst with Brandon Hall Group, believes “people who are successful are often crazy about reading. They make time for that because they understand how important it is, and it’s kind of like a secret weapon.” However, a person in the United States only reads between two and three books per year, most of those purely for pleasure.

A lot of that has to do with time available, but if you have recreational time you aren’t spending on reading, you might consider re-allocating it to hitting the books.

The upsides? Aside from the knowledge and perspective gained from teaching yourself about something new, reading also expands your vocabulary and opens up opportunities to discuss new ideas with your boss (current or prospective). There’s something powerful about being able to say, “That’s something I was just reading about the other day.”

One word of caution: Reading a work-related book just for the sake of being seen reading a work-related book can easily backfire. Most experienced managers can spot an effort get the wrong kind of attention. They might not like the tactic. Just read a book on faith that it will eventually matter, even if that means with a different employer.

By: James Brumley

Source: https://getpocket.com/

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