Lessons Learned From Sebastian Inlet

9-1-24

Opening Comments

My last note was a review of Doma, the hot Med/Italian restaurant in Miami. The most opened links were the #1 beverage to drink for longevity and the Trump rally counter-sniper suggesting “evidence tampering.”

Correction from last report. An eagle-eyed reader saw that I wrote solar instead of wind. Apologies. Sloppy mistake. At the RR, we correct errors.

New York To Pay $155 Per Megawatt Hour For Wind-Power, Current Rate Is $36 Per MWH

• Crazy story about the costs NY is paying for solar (should have said “wind”) power that are more than 4x the cost for traditional power

The Rosen family went to Miami for Labor Day weekend and stayed at a friend’s condo at the uber-fancy Four Seasons Surf Club on 91st & Collins. The experience was amazing and the people who live in the buildings there are a who’s who of real estate, finance and Fortune 500 leadership. Units can go for up to $6,000/ft in the buildings. For perspective, there is a 1 bedroom, 2,000 sq ft unit asking $8.5mm and a 7 bedroom 7,387 sq ft unit asking $42mm. I will do a separate piece on the weekend but we went out to great dinners, played padel, checked out U Miami and had a great time.

• Video of the Day-Great Story of a Selfless Football Player

• Lessons Learned From Sebastian Inlet

• Quick Bites

  • Markets

  • Consumer/Cards/Savings

  • Pay Levels

  • CA Insurance Rates

• 2024 Election

• Israel/Middle East

• Other Headlines

• Real Estate

  • New Miami Condo Record on Per/Ft Basis

  • Alina-Boca Condos

  • Best R/E Markets

  • Other R/E Headlines

Video of the Day-Great Story of a Selfless Football Player

University of Oklahoma star linebacker, Danny Stutsman, wanted to give back to the walk-on players. He gave a locker room speech thanking the walk-on players for their hard work. Danny gave $50k to the walk on players from his Name Image Likeness (NIL) money. That is a leader. He sets the tone for the team. Danny’s parents most be proud. Well done, Danny.

Lessons Learned From Sebastian Inlet

When I surfed as a kid, the ultimate trip was a 3-hour drive north of my home in Pembroke Pines, Florida to Sebastian Inlet. It was the best wave in Florida and at the right swell, you could have a fantastic day surfing. I vividly recall 11-time world surfing champ, Kelly Slater at 10 years old surfing like a pro there. I was in awe.

Sadly, the waves in Florida are also few and far between, and so in many instances, we drove would drive all the way up to Sebastian Inlet here only to get skunked.

The first time I went up there, I was 12-years-old and went with some older boys who had a car. Let’s just say, as a 12-year-old hanging out with 15-17 year-olds I learned a lot about life and expand my vulgar vocabulary.

I remember a co-ed camping trip to Sebastian with 10 tents when I was about 13, and the youngest in attendance by three years. Suffice it to say, I had a far better understanding of high school ways after two nights in Sebastian listening and watching.

Bottom line-Sebastian was a desolate place in the 1980s. There were few homes around and nothing going on. I do not know the price of acreage 40 years ago, but would think it would have been pennies relative to today’s prices. Even when I went back to visit in the early 1990’s, the area was desolate along A1A in the North Vero Beach area.

I had to go up to that area again last week and drove back to Sebastian Inlet to check it out. I was amazed, as there are now a ton of gated golf communities with multi-million dollar homes near Sebastian Inlet.

I also learned that, in the last year, a house sold right near Sebastian Inlet for $13mm. I was in shock. My biggest investing mistake was not accumulating more real estate as I started making money in the 1990s. Everything was cheap. Going back to Sebastian reminded me of my investing error. I could have spent $1mm in the 1990s and bought up half the town.

My advice, take a long-term view. When you see something you think will be interesting to people down the line, buy it. Carrying costs for land are not horrible. I only wish I had bought up land where I grew up in Pembroke Pines, Florida or all the surf spots along the way to Sebastian (Jupiter, Stuart, Hobe Sound, Vero Beach….). There are $50mm homes now sitting on land that could not have been given away 30-40 years ago. In Vero Beach, a $60mm home is being built. Seems impossible to me, but it has become reality.

All my young readers, learn from my mistakes. Again, take a long-term view. Invest rather than consume. Stay away from depreciating assets and put your money to work. You will thank me for it later.

Remember, I am soon to be 55-years-old and these were shots of me from this April. I must show my stuff including this 20-second video of losing my hat, catching it and getting in a great barrel. Not bad for an old man that surfs two days a year.

Quick Bites

• The major averages suffered a steep sell-off at the start of the month, with the S&P 500 losing as much as 7.3% before recovering. The Dow and Nasdaq were down as much as 5.4% and 10.7%, respectively, at their lows this month. At the end of August’s trading, the S&P 500 posted a 2.3% gain for the month, while the Dow climbed nearly 1.8%. The Nasdaq Composite clinched a 0.7% advance for the period. The S&P 500 notched its fourth straight winning month. A surge in consumer staples, real estate and health care helped lift the broad market index in August. The PCE came out as expected at +.2%. The inflation data pushed the 10 year yield up 4bps to 3.9%. Crypto has had a rough ride as outlined in this video with Bitcoin -12% in August and Ether -24%.

  

• I have written about the consumer quite a bit. The resiliency of the consumer has been far stronger than I imagined. However, when you look at the recent earning reports, companies like Dollar General, Best Buy, Ulta Beauty, Lowe’s, Home Depot, Macy’s, William’s Sonoma, Estee Lauder, American Eagle, Five Below, and others cited consumer weakness. Sausage sales are soaring, as consumers shy away from more expensive meats is yet another sign of consumer weakness. Check out this chart showing record credit card debt with savings crashing. The need for instant gratification is a problem.

  

• I was surprised by the data in this WSJ article on pay levels for employees. Bosses are quietly trying to reset worker pay levels, saying the era of overpaying for talent is over. Pay for many white-collar recruits shrank last year, and now wages for new hires in construction, manufacturing, food and other blue-collar sectors appear to be ebbing too, according to an analysis of millions of jobs posted on ZipRecruiter.com. Job seekers report seeing roles that once offered salaries between $175,000 and $200,000 a year ago now being advertised for tens of thousands of dollars less, a change that has had them rethinking their pay expectations. Companies are also moving job openings to lower-cost cities or offering them as lower-paying contractor roles, recruiters and corporate advisers say.

  

• I have written extensively on the subject of property and casualty insurance and the ridiculous price increases. This Bloomberg article is entitled, “Allstate Approved to Raise Home Insurance Rates by 34% in Wildfire-Prone California and is another example of the skyrocketing cost of insurance. The rate hike, which will take effect from November, will impact about 350,000 policyholders across California. Some customers will face premium increases of up to 650%, while others may see their rates drop by as much as 57%, according to company filings. The increase is part of the broader upheaval in California’s insurance market, with top insurers like State Farm, Farmers Insurance and others pulling back from the state, citing the escalating costs of wildfires and regulations that have capped rate hikes for decades. Allstate, which stopped issuing new homeowner policies in California in 2022, pointed to these growing financial risks when it first paused coverage. My sponsor Kevin Lang of Lang Insurance, 866-964-4434, has helped dozens of my readers improve coverage, save money and protect their prized possessions. Reach out to Kevin and his team to help you. I did and saved a ton. He writes policies for Home, Auto, Jewelry, Fine Art, Wine, Umbrella, etc. in all 50 states with the best insurance companies.

2024 Election

• The Harris/Walz interview was recorded, allowing for editing, and was watched by 6mm people. At least they finally got in front of the camera. Dana Bash (CNN) did not attack the candidates but did ask some probing questions. I felt Bash missed too many opportunities for challenging follow-up questions when the original question was not answered. Watch the Bash interview of JD Vance and tell me that she attacked Harris and Walz with the same vigor. Bash went after Vance after many questions and never did the same with the Democrats. Harris evaded many direct questions, including the first one about what she would do on day one. Harris has moved sharply on positions from prior comments and Bash asked her about her new views. From what I saw, Harris did not implode but did not impress. Harris needs to be able to more clearly articulate her policies and do a better job of explaining her constant shifting positions. She tends to get flustered in questioning without notes. Given this was taped and I presume she received questions in advance, it is not a true test. I question many of the Harris policies (taxes, fracking, price gouging solution, border…). In the interview, she said she would not ban fracking despite saying she would previously and lied about it in the interview. However, she made strong statements in support of Israel. How there were no questions about her aggressive tax policy was a huge miss by CNN/Bash. Below are video clips of the interview and views from various news sources about the performance.

  • CNN Interview Part 1, Part 2, Part 3

  • Fox, NY Post, NPR, NYT, US News, Ben Shapiro’s Take

• Over the past few weeks, the polls and momentum were going towards Harris and I outlined it at length. See the latest forecast from Nate Silver showing Trump having a positive move.

  

• ABC News rejects Kamala Harris’ last-minute bid to change Trump debate rules, will keep muted mics

• Trump continues to tinker with his stance on abortion and IVF

  • Trump, be clear. Don’t flip-flop.

• How a Trump visit sparked turmoil at America’s most sacred cemetery

• Gold Star families slam Kamala Harris for 'playing politics' over Trump's visit to Arlington National Cemetery

• Mark Cuban polls followers on preferring their kids to be like Trump or Harris: Trump wins in a landslide

  • Remember, Cuban is no fan of Trump.

    

Israel/Middle East

• Israel kills one of most wanted West Bank commanders as operation continues

  • Palestinian Islamic Jihad confirmed the killing of its Tulkarm battalion leader, known as Abu Shuja’a, who was wanted by Israel for his role in terrorist attacks.

• American hostage Hersh Goldberg-Polin, 5 others 'brutally murdered' by Hamas right before rescue

• Houthis Release New Footage On Tanker Explosion; Satellite Imagery Suggests Oil Leak Has Begun 

• California district accused of crafting plan to promote antisemitic curriculum 'under the radar'

  • Lawsuit claims school officials were 'infected by antisemitism'

• Imam tells Columbia students to ‘take out’ Jewish professor

  • I listened. I took it as he meant to get the professor fired for speaking up and supporting Israel. Either way, this is unacceptable. The imam is trying to silence Jews.

• Jewish Columbia students were chased out of dorms, spat on, and pinned against walls: damning report

  • I do not believe any of these assailants served time. Why? This CNN article suggests most of those arrested are back in school in the fall. If I was involved in the school, they would be expelled. Zeldin called out Bragg for dropping most of the charges.

• Liz Magill, the former disgraced UPenn President, who couldn’t condemn the calls of genocide against Jews, has just been hired by Harvard.

• University of Michigan campus club fair erupts into mayhem as cops break up anti-Israel protests

  • The school has approximately 6,500 Jews and many of the top donors are Jews (Steve Ross, Alfred and Judith Taubman, Sam Zell…). You cannot make it up. The Jews are incredibly philanthropic and hated.

Other Headlines

• Eurozone inflation falls to 3-year low of 2.2%, backing September rate cut case

• Germany’s Struggling Economy Starts to Take a Toll on Its Banks

  

  

• Private sector jobs at recessionary levels

• Goldman Sachs to lay off over 1,300 employees

  • The bank will likely cut between 3% and 4% of its workforce.

• Nvidia’s earnings report shows the problem of being priced for perfection

• Dollar General shares crater 25% as retailer cuts outlook, blaming ‘financially constrained’ customers

  • Shares tumbled Thursday after the discount retailer slashed its sales and profit guidance for the full year, suggesting its lower-income customers are struggling in this economy. The company said part of the issue is its core, lower-income consumer is under financial pressure, but some of its problems are also self-inflicted.

• Affirm shares have best day in three years, surge 32% after earnings beat

• Gap beats earnings and revenue estimates, hikes profit margin outlook as results are posted early

• Lululemon cuts guidance, misses sales estimates after botched product launch

• Dell beats estimates as server sales soar 80%, riding AI wave

• Brazil blocks Musk’s X after company refuses to name local representative amid feud with judge

• 2,000 Workers Gone: Klarna Is First Major Company To Unleash Mass Layoffs Thanks To AI

  

• Electric vehicle (EV) sales in China have now overtaken conventional internal combustion engine (ICE) sales – In July, the market share of EVs in overall light vehicle sales reached 51.05% in the world's second-largest economy. For perspective, in May 2024, 8.5% of all vehicles sold in the US that month were electric.

  

• Shake Shack to shut 6 California locations, including 5 in LA, after state’s $20 minimum wage hike

• At 2 Elite Colleges, Shifts in Racial Enrollment After Affirmative Action Ban

• Drug addicts fuel violent crime in spiraling San Francisco, expert says

• 49ers rookie Ricky Pearsall shot in attempted San Francisco robbery

  • The rookie was shot in the chest as a teen tried to steal his watch at 3:37p.m. in Union Square. The crime policies in the city are awful.

• Newsstand worker robbed, pistol-whipped in second heist along upscale NYC street after moving there for the ‘good area’

  • I lived two blocks away for three years when I was at 81st and West End. This is the Upper West Side in a nice area. Policies have consequences.

• Homeless couple filmed having sex in parking lot under NYC’s FDR Drive: ‘A new low for the city’

• How the migrant crisis drained $150 billion from taxpayers in a single year

  

• Armed crew storms Colorado apartment building overrun by Venezuelan gang spilling out from sanctuary city: wild video

  • Are you kidding me? Could you imagine if you lived here with your family?

• Group of 20 migrants attempted to enter California school bus picking up students in ‘really scary’ scene

  • It is clear that the US cannot handle the millions of illegal immigrants we have let into this country. Over 600k of illegal aliens have criminal records.

• 35-year-old CEO shares the No. 1 red flag he sees in employees: People who aren’t self-aware ‘really struggle with this’

• This sleep routine can cut your heart disease risk by 20%: new study

  • New research finds that people who catch up on z’s on their days off can cut their risk of heart disease by up to 20%.

• Breakthrough as US researchers 'crack the autism code'

• Bud Light smartly tapped Shane Gillis for ads — the latest brand doing post-DEI damage control

  • Bud light getting back to its roots after the debacle of Dylan Mulvaney.

• Meet the Gen Zers skipping college to take blue-collar jobs and launch trade businesses: ‘One of the smartest decisions I ever made’

  • I am fully supportive of this decision. College is not for everyone. More kids should consider a trade and not go into massive debt for college.

• Taylor Swift concert terror plot intended to kill 'tens of thousands of people'

• How do restaurants actually get a Michelin star?

• What could be the world’s most expensive coin collection is going up for auction — after being banned from sale for a century

Real Estate

• Famous DJ, David Guetta sold his 37th Floor Setai condo for $6.3k/foot, a new record for Miami. He bought the property for $9.5mm in 2018. For perspective, the average sale price since 2020 is $2.5k/foot in the Setai. Yes, Guetta’s unit is a great one, but this price per foot is surprising given low ceiling heights, no private elevators and outdated finishes in the building. The 3-bed, 3 bath condo is 2,521 square feet. Good pictures in the link.

• As my kids are nearing college, I am considering selling the house as we get closer to empty nest status. I have been looking at condos and have spent time at the Alina in Boca. They are delivering units as we speak and there are 30+ units left with some nice, larger units available. The location is fantastic, as it is within walking distance to dozens of restaurants and shops. There are full-time doormen and valet parking attendants as well as amazing pools, gyms, gardens, terraces and views. The PH units have ceiling heights of 12 feet. Happy to help those who are looking in South Florida, as I have a license with Douglas Elliman. I also have partners that I coordinate with, from Miami to Jupiter.

  

• Newsweek article outlining the “Best” real estate markets today. While mortgage rates dropped below 6 percent this month, prospective homebuyers are still not eager to bite in many markets. But even as the nation's housing market remains uncertain right now, some areas are more promising for buyers than others. In particular, areas in the South and Southeast continue to be at the top of the pack when it comes to ideal markets for a home purchase, according to a WalletHub report. This list is based on 17 key indicators of housing market attractiveness and economic strength, ranging from median home price appreciation to housing affordability and job growth.

R/E Headlines

• Billionaire ‘Condo King’ Lists Aspen Mansion for $30 Million—More Than Three Times What He Paid in 2020

  • Miami real-estate developer Jorge Pérez purchased the roughly 10,000-square-foot property for $9.5 million

• Joe Farrell launches sales for 27 luxury single-family homes in Wellington

  • Hamptons-based spec developer bought 23-acre site for $12.6M last year

• Landlords Face a $1.5 Trillion Commercial Real Estate Maturity Wall by the end of 2025

  • Over $80 billion of multifamily assets are at risk of distress

    

© 2024 The Rosen Report LLC. All rights reserved. Does not constitute investment, financial, legal, or tax advice. Consult with your lawyers and professional financial advisers. Rosen Report™ #713 ©Copyright 2024 Written By Eric Rosen.