Miami Real Estate Is About to Collapse; High U.S. health care costs; Dave Barry's Year in Review 2019; Question No. 10 to ask before you marry someone

By Whitney Tilson

Friday, January 3, 2020

1) My friend Harris Kupperman (aka Kuppy) wrote a smart post about a conversation with a friend on his Adventures in Capitalism blog: Miami Real Estate Is About to Collapse… Excerpt:

Me: Will it really be as bad as last cycle?

Friend: Last time, a lot of the stuff that defaulted was upper middle-class product. It just needed lower prices and it eventually cleared. This time, the glut is fake “super-luxury.” 3,500 ft units with private exterior jacuzzies don’t ever clear. The property tax is $50,000 alone. Who the hell can afford this stuff? You can give it away for free. A middle-class guy cannot afford to hold it. Last cycle, it was a few hundred units of high-end that went bad. Now you have whole city blocks that are nothing but high end. 200 units per building. There’s thousands and thousands of these things. The property prices can halve and that means the property tax halves, but you’re still paying condo fees and remember, when your neighbors stop paying, you’re on the hook for their payments.

There aren’t enough rich Venezuelans and Russians to buy all these units. Besides, those guys aren’t buying here anymore. They’re scared of Trump and they’re broke anyway. This time it really is gonna blow…

Harris wrote this in late September, so I checked in with him to make sure his views hadn’t changed. He replied:

Nothing has changed in my view. If anything, inventory keeps building and the sales pace has only slowed since then.

This is a good local report: BHS Third Quarter 2019 Market Report – Miami Residential. Absorption exceeds 20 months in most submarkets and price per foot is now dropping. I would say that the clearing price is a good deal lower than listed prices (hence why absorption rates keep getting worse).

In the end, Miami has some of the worst affordability in U.S. (carrying costs/income) and the bid from foreign escape capital is softer than in the past as many prominent countries (Argentina, Brazil, Venezuela, Russia, etc.) have big issues. I keep hearing from friends that other gateway cities are having similar issues at the higher end. That likely trickles down to the mid-end over time – especially with 30-year rates ticking higher.

2) Some shocking statistics on our out-of-control health care costs: In the U.S., an Angioplasty Costs $32,000. Elsewhere? Maybe $6,400. Excerpt:

Why does health care cost so much more in the United States than in other countries? As health economists love to say: “It’s the prices, stupid.”

As politicians continue to lament the system’s expense, and more Americans struggle to pay the high and often unpredictable bills that can accompany their health problems, it’s worth looking at just how weird our prices really are relative to the rest of the world…

Patients and insurance companies in the United States pay higher prices for medications, imaging tests, basic health visits and common operations. Those high prices make health care in the U.S. extremely expensive, and they also finance a robust and politically powerful health care industry, which means lowering prices will always be hard.

For a typical angioplasty, a procedure that opens a blocked blood vessel to the heart, the average U.S. price is $32,200, compared with $6,400 in the Netherlands, or $7,400 in Switzerland, the survey finds. A typical M.R.I. scan costs $1,420 in the United States, but around $450 in Britain. An injection of Herceptin, an important breast cancer treatment, costs $211 in the United States, compared with $44 in South Africa. These examples aren’t outliers…

For most of the studied cases, prices for services and drugs in other developed countries are less than half of those in the United States.

“It is staggering how much the United States is more expensive,” said John Hargraves, the director of data strategy at the Health Care Cost Institute, a group that aggregates claims data from several large American insurance companies and provided the U.S. data to the study.

3) In Tuesday’s e-mail, I wrote about why 2019 was the best year ever. To balance this optimism, here’s a hilarious column by comedian Dave Barry: Dave Barry’s Year in Review 2019. I couldn’t agree more with this line in particular: “Twitter, a medium that has the magical power to transform everything it touches, no matter how stupid it is, into something even stupider.” Excerpt:

It was an extremely eventful year.

We are using “eventful” in the sense of “bad.”

It was a year so eventful that every time another asteroid whizzed past the Earth, barely avoiding a collision that would have destroyed human civilization, we were not 100% certain it was good news.

We could not keep up with all the eventfulness. Every day, we’d wake up to learn that some new shocking alleged thing had allegedly happened, and before we had time to think about it, the political-media complex, always in Outrage Condition Red, would explode in righteous fury, with Side A and Side B hurling increasingly nasty accusations at each other and devoting immense energy to thinking up ways to totally DESTROY the other side on Twitter, a medium that has the magical power to transform everything it touches, no matter how stupid it is, into something even stupider.

Fact: This year O.J. Simpson got a Twitter account, and the reaction of nearly a million people was: “What? The attention-seeking psychopath who got away with murdering two innocent people wants followers? Count me in!”

Speaking of attention-seeking psychopaths: The epicenter of the year’s eventfulness was of course Washington, D.C., an endlessly erupting scandal volcano, belching out dense swirling smoke plumes of spin, rumor, innuendo, misdirection and lies emitted by both sides, A and B – or, if you prefer, B and A – filling the air with vicious rhetoric, always delivered with the pious insistence that OUR side, unlike the OTHER side, is motivated not by ego, power-lust, greed, or hatred, but by a selfless desire to Work for the American People.

Meanwhile, from out beyond the Capital Beltway, the actual American people warily watched the perpetual tantrum that was supposed to be their government. And more and more their reaction, whatever side they considered themselves to be on, was: Nah.

Which is pretty much how we feel about 2019 in general.

4) Question No. 10 to ask before you marry someone:

Does he or she have similar views on big issues such as where to live, children (how many, what religion), whether one of you will stop or cut back on working to raise the kids, and finances (spending habits, lifestyle, and debt)? Will he or she be a good parent and be willing to shoulder an acceptable share of the child-raising workload?

As your relationship deepens, you’ll want to think about these things – and have some conversations about them, however difficult that might be.

Regarding religion, I remember on my first date with my wife, I told her we could raise our kids Jewish. It was awfully premature – I said it with a smile – but it’s a critical conversation to have if you are from different religions. (I wasn’t raised with any, so it wasn’t a sacrifice for me – and I’m delighted that my daughters are Jewish, as I fully embrace the values of the religion.)

Another huge issue is balancing both of your careers with the demands of raising a family. A lot of guys have the sexist assumption that their wives will sacrifice their careers once kids come along, which can lead to anger, resentment, and eventually, divorce.

Best regards,


Whitney Tilson

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About Whitney Tilson

Prior to creating Empire Financial Research, Whitney Tilson founded and ran Kase Capital Management, which managed three value-oriented hedge funds and two mutual funds. Starting out of his bedroom with only $1 million, Tilson grew assets under management to nearly $200 million.

Tilson graduated magna cum laude from Harvard College with a bachelor’s degree in government in 1989. After college, he helped Wendy Kopp launch Teach for America and then spent two years as a consultant at the Boston Consulting Group. He earned his MBA from Harvard Business School in 1994, where he graduated in the top 5% of his class and was named a Baker Scholar.

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