A weekend topic starting with the Denver Gazette in Colorado. "'Spring felt like a failure to launch, which has led to a summer kick-off where the natural rhythm of the Denver real estate market simply feels off,' said DMAR Chair and Realtor Libby Levinson-Katz. 'Due to the lack of inventory, buyers are experiencing a bit of fatigue as they wait for either the perfect home or to uncover a good deal.' Another bright spot in the report included the 'active listings at month’s end' category, which stood at 5,228 in May, 13.2% higher than April and 43.2% higher than May 2022 'showcasing a slower absorption of listings on the market.' Buyers closed on 4,167 homes — both single family and condominiums — which is down 28.7% from last year."

From 94.9 WSJM. "After a burst of steam in March, the housing market in southwest Michigan chilled in April, with sales and selling prices falling behind last year. The Southwestern Michigan Association of Realtors says the number of homes sold in April in the region was down 26% from the same month last year. The average selling price was also down, at $324,000, compared to $364,000 last year, or an 11% decline. Inventory is slightly up bringing the inventory of houses for sale up to 3.3-month supply. It was 2.5 months in April last year."

The Los Angeles Times. "State Farm General Insurance Co. said last week that it’s no longer accepting new applications for property and casualty coverage in California because of soaring wildfire and construction costs and 'a challenging reinsurance market.' Now, Allstate Corp. has told the state Department of Insurance that it stopped selling new home insurance policies last year. The notice was part of a recent request for a nearly 40% rate increase for home and business property and casualty insurance. 'We have a lot of people going naked, which means they have no insurance,' said Bill Dodd, a Democratic state senator representing fire-scarred Napa County and other parts of Northern California."

"New home buyers could be forced to pay more, regardless of their home’s proximity to wildfire dangers. Before State Farm’s announcement, the company requested a 28% rate hike on homeowners’ insurance; Allstate has filed for a 39.6% increase. In San Francisco, real estate agents say they have seen deals fall through because would-be buyers couldn’t get insured. 'What we’re hearing is that now, when buyers present an offer on a property we’re not only asking them for pre-approval for a lender, we’re also asking them if they’ve spoken to their insurance agent if they’ll insure the property,' said Joske Thompson, a broker at Compass Inc. with 40 years’ experience in the area."

From Fortune. "Between July 2022 and April 2023, Austin home prices as measured by the Zillow Home Value Index have fallen 10.02%—that's 10 times greater than the national decline (1%) registered by ZHVI during the same time period. That's the biggest decline, so far, among the nation's 400 largest housing markets, just beating out San Francisco (-10%), Bend, Ore. (-9.5%), and Boise (-9.3%). 'Once the cost of money [mortgage rates] went up, a lot of [Austin] speculators stopped buying,' Sean Fuentes, a long-time real estate agent and housing investor in Austin tells Fortune. 'Some of them are in trouble, some are taking haircuts on their investments, and others are still having to pay $100, $200, or more per month to support the property.'"

Bisnow Dallas Fort Worth. "Skyrocketing property values are the latest headache for multifamily owners in North Texas who have spent the last few months fending off hits to their bottom line. 'It’s not the funnest time to be a property owner, and it was so fun for a decade,' Ashland Greene CEO Shakti C’Ganti said. 'It makes sense that we have a couple years of pain — what goes up must come down.'"

"The majority of buyers in the DFW multifamily market used bridge financing to acquire properties in the first half of 2022, C’Ganti said, and many have seen mortgage payments skyrocket amid a series of interest rate hikes totaling more than 500 basis points. 'Increased costs on the bridge loan are almost doubling our mortgage, which is by far our largest expense,' he said. 'You’re having a cash crunch at all properties.' The risk of defaults at a growing number of apartment buildings is on the rise as owners with floating-rate debt struggle to refinance, leaving many with no choice but to sell. 'You’re going to see some sales because they don’t have $2M sitting on the side to go by a new interest rate cap,' C’Ganti said."

The Real Deal on Illinois. "The developers behind a high-rise project that stalled out in River North are jumping through hoops to block their lenders from foreclosing on the property. Entities with ties to Symmetry Property Development, a venture of New York intellectual property attorney Jeffrey Laytin and Chicago investor Jason Wei Ding, filed for Chapter 11 bankruptcy protection Wednesday, leading to the last-minute cancellation of a sheriff’s sale of the parcel that had been scheduled for Thursday, Crain’s reported."

"Laytin and Ding proposed a 60-story condominium-and-hotel tower for the site in 2017. The venture raised about $50 million from 90 Chinese investors through the EB-5 program — a federal initiative that grants U.S. residency to overseas citizens who invest in qualified projects. But officials blocked the proposal, leaving the developers with nothing but a brigade of angry investors and ensuing legal trouble. The investors are still waiting to be paid back. The lenders filed a foreclosure suit in 2019, claiming the Laytin-Ding venture defaulted on more than $22 million in debt."

"'These filings are an illegitimate use of Chapter 11 which is meant for reorganizing viable businesses,' Doug Litowitz, a Deerfield-based attorney who represents the Chinese investors, told the outlet. 'Chapter 11 is not meant for companies who have no assets except underwater real estate. This strikes me as an abuse of the bankruptcy laws to block a legitimate foreclosure.'"

The Globe and Mail. "This time last year, the R-word was on everyone’s lips – and panic was setting in. With energy prices soaring and consumers rushing back to restaurants and hotels, annual inflation spiked to 8.1 per cent, forcing central banks to get aggressive with their interest rate hike campaigns. In July, the Bank of Canada went so far as to surprise with a full percentage point rate increase, its largest since 1998. The question wasn’t whether Canada would have a recession, but, rather, just how painful it would be. What no one seems to ask is: What if a recession is a good thing? What if a prolonged economic slump is exactly what Canada needs?"

"The economy has also been warped by years of cheap debt – a byproduct of ultralow interest rates and the vast sums of money created to facilitate stimulus spending. 'Fifteen years of that amount of liquidity, or free money, distorts the financial system,' says Mark Wiedman, of the global client business at BlackRock Inc., the world’s largest asset manager. 'It also starts to distort the real economy.'"

"In Canada, much of the paper wealth has accumulated in the housing market. Strong demand, low supply, cheap money and rampant speculation have conspired to drive up prices to eye-watering levels. Canadian households are now the most indebted among the Group of Seven countries, as a percentage of gross domestic product (GDP), largely due to the oversized mortgages they’re paying down."

"Short-term pain for the long-term greater good became the gospel for central bankers. That’s changed in the past 15 years. Now pain is avoided at all costs. It is hard to pinpoint precisely why, but one credible theory is the financial crisis was so terrifying that it forced policy makers to pull out their bazookas to restore order. Once central bankers and politicians had a whole new set of policy tools available, they got a bit addicted to their power."

"But at what point does the stimulus drip need to stop? While it props up metrics such as GDP growth, the economy’s foundation doesn’t necessarily get any stronger. Perhaps the goal for policy makers shouldn’t be to avoid all pain, but to minimize it where they can. If that becomes the target, they might realize this is actually a rather opportune time to let the economy weaken. Corporate bankruptcies remain remarkably low; unemployment is barely noticeable; and the financial system is on much better footing following reforms made after the financial crisis. If a recession hit and everything collapsed from here, maybe this economy was all a charade to begin with."

The Standard. "This is how you get off heroin. Debt is the most destructive and addictive form of economic behaviour we have in New Zealand. For everyone who lives in a house whether landlord or straight homeowner you feel the bank slipping that good leveraged needle of joy from fear back into eyes-rolled-back blissful security. For the majority of New Zealanders mortgage debt is a promise to yourself and your family that, decades into your future, somehow, you’re going to get out of this hellhole and live free. Whatever free means. Your land, your apartment, your property. But there is simply no way you can get to that pure free joyous plane unless you take the debt and let it tap your blood."

"This post won’t talk too much about specific policies. It’s going to focus on the pain of mortgage debt addiction. Through 2021 our job incomes were secured by the government, so New Zealand went into a most almighty mortgage debt binge. We chose to secure our future with the only reliable asset class we had: property ownership through mortgages."

"Apparently we spent over $14 billion on coastal property alone in one year. Those who could reach for a leveraged rental went for the lower end of the price range, out to the poorer periphery for multi-homeowners in Gisborne (where they were 83% of sales), Taharoa in Waikato (82% of sales), Tokomaru Bay (78% of sales), Okura Buch in Auckland (74%) and Te Kaha (73%). I’ve got a cousin who bought two little rentals in Westport. Westport!"

"The Reserve Bank had its base rate around 2% and your bank could tie the rubber tube around your forearm and insert the needle at around 3.5% and man it would kick you back for a while, and let you dream big and eyeball wide. At the same time the government underwrote our mortgages if we got into any trouble, with a mortgage payment deferral scheme that at peak had about 80,000 mortgages on deferral: about 7% of all of New Zealand’s mortgages. That’s the government putting a pillow under your head while you glide through the high."

"The question is only, for every addict, how long can you hold the high. Finally, here comes the answer. As early as March 2022 Statistics New Zealand reported that household debt had gone up 29%. And now as the banks central and Australasia start to limit the heroin supply they will give you, from half a kilo to an ounce a week, the trends are getting worrying. Centrix Credit Bureau says the number of missed mortgage payments grew for the seventh consecutive month in February 2023. Overall, 1.29% of mortgages (18,900) were in arrears, up almost a quarter year-on-year. Centrix say this could be attributed to people rolling off fixed home loans and being unable to service higher interest rates."

"Unsecured personal loans are up 7.8% in February this year and Buy Now Pay Later arrears are near an all time high. Consumer arrears are the highest they have been since 2019. We are only at about 6-8.5% for bank mortgage rates but yes this is going to go to over 9%. That heroin fix just gets more and more expensive to buy every time."

"If you want to see the scale of pain that deleveraging out of real estate debt looks like, turn your eyes to China. Like New Zealand they have been warned for a decade that a real estate debt boom will leave scars all the way up your arm. Instead of being a growth driver, the whole real estate deal was a massive downer cycle. China is now in a world of deleveraging pain. And China is telling us that deleveraging out of real estate mortgage addiction is very, very, very very hard to do. Once you do crack, you never go back."

"By March this year New Zealand’s median sale price was down 13.9% on a year previously. In Wellington it was down 20.6% and Auckland’s was down 15.2%. Pain. We’re going to hear many, many more very painful stories like we did in 2009 of people just walking out and telling the banks where to shove it. Or couples breaking up under the strain. Of choosing to eat out of a can rather than give up on their one shot at getting up and getting out."

"Most analysts bet average sale value prices will come down to about 2019 levels. And of course after Cyclone Gabrielle all that coastal rental property in Gisborne, southern Bay of Plenty, and peripheral Auckland ain’t going to sell for a very, very long time. It ain’t karma it’s pure fate and that’s a dirty mattress to sweat on."

"We don’t yet know if mortgage defaults and forced bank sales will follow suit yet. But they usually do. Suicide. Marriage breakups. Kids with no social mobility. Permanent social damage. But in a timespan about as fast as the 1988 sharemarket crash. There will be no shift from real estate to other asset classes (such as they are here), because most are now just trying to hang on to what they have and ride it out for as long as they can. Also, mortgage heroin is what our banks deal, so that is the stuff we use."

"Mortgages are New Zealand’s very high grade heroin and we are being forced to come down off a most spectacular high into a rage-inducing forced withdrawal. We’re only just starting the shakes."