mishtalk.com / Mike “Mish” Shedlock / May 14, 2017
In response to California Banker: Views from the Business Banker’s Chair I received a pair of emails from readers tuned into Virginia.
Livs in Virginia (LIV) writes …
Richmond VA, where I live, is inundated with radio commercials to get rich quick by flipping houses. And I’ve seen articles in the paper about flippers. I, too, viewed this as being indicative of a top.
We’ve also seen a huge surge in new restaurants.
There has been a really big surge has been in microbreweries, and its now in the bubble phase, something not seen since 1996. The GM of Legend Brewing, which has been around for 22 years, told me he’s counted > 25 new breweries opened in the greater Richmond area. Most of these have no distribution, no access to shelf space in grocery stores, and are simply trying to find a niche in a crowded market. They will be washed out in the next recession; good brands and brewing tanks will sell for 10 cents on the dollar. I suspect that most of these ventures have been funded with private capital and SBA loans rather than bank lending, but I have no hard data to support this view.