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Buyers, Anticipating Prices Will Fall Further, Are Practicing Wait-And-See

A report from the Seattle Times in Washington. “Home prices in Seattle and the surrounding counties took a dip of 1.3% in June compared to last year, according to the latest datafrom the S&P CoreLogic Case-Shiller home price index. The downturn reported by Case-Shiller, which tracks a three-month average of home sale prices in King, Pierce and Snohomish counties, was driven by contraction in King County, where home values are on a monthslong slide, according to Zillow.”

“In the immediate Seattle area, July home values are down 4.3% since last year, to $714,400, Zillow data shows. That’s supported by Case-Shiller data showing the prices of area homes over $628,000 — which includes most of the homes in the city — fell by 3% over last year. In Seattle, confidence in the housing market is waning, said Matt Van Winkle, the owner of RE/MAX Northwest.”

“‘Listings that a year ago or two years ago would have been gold — say, a townhouse in Ballard — aren’t anymore,’ Van Winkle said. Buyers, anticipating the market will continue to slow and prices will fall further, are practicing wait-and-see, he said.”

From Variety. “The palatial New York City apartment of billionaire apparel magnate and film financier Sidney Kimmel has been priced at a still eye-popping $29.5 million after it first came up for sale late in 2018, amid a deluge of publicity, with an aggressive asking price of $39.5 million.”

“On the West Coast, the Kimmels bunk down in an ultra-modern Beverly Hills showpiece they picked up in 2017 for almost $25 million from leveraged-buyout billionaire Alec Gores. And, earlier this year, after it was initially listed with a profoundly unrealistic $81.5 million asking price, they sold their multi-parcel estate on Malibu’s Point Dume, previously the longtime home of Johnny Carson, for $40 million.”

From Mansion Global on New York. “Three Manhattan apartments asking $10 million or more found buyers last week, the first deals of that size since New York raised a set of transfer taxes on luxury home sales, according to a weekly report. The most expensive deal last week was a townhouse asking nearly $18 million, down from the $22.775 million the seller originally was seeking when the home hit the market last year.”

“The second most expensive deal was also a townhouse—this one on the Upper East Side—asking nearly $15 million. The five-story Greek Revival townhouse, which is subdivided into six apartments, hit the market last September asking $19.25 million and was marketed as a hit renovation, according to the report.”

From Socket Site on California. “Priced at $45 million last year, which was misreported by some as being “the most expensive home ever listed” in San Francisco, ‘Residence 950’ at 950 Lombard Street has just been relisted anew with a reduced $40.5 million price tag.”

From Curbed San Francisco in California. “The California Association of Realtors tabulated house sales across the Bay Area last week and found that, once again, prices overall dropped in July compared to last year in almost every Bay Area county. The overall drop came in at 3.1 percent from July of 2018, to a Bay Area median sales price of $950,000 year over year.”

“By and large, this is pretty much what house prices in the nine counties have done all year. The interesting thing is that this time San Francisco saw a dip too, bucking its usual trend of, well, bucking the trend. The median price for SF was down three percent year over year, dropping to $1.6 million. San Mateo County also slipped three points, down to $1.56 million.”

“Alameda County declined 2.1 percent to $950,000, while Contra Costa County slipped 5.4 percent to $660,000. Santa Clara County saw the biggest year-over-year drop outside the North Bay, down 3.9 percent and landing at a median of just less than $1.3 million. Napa County saw the worst treatment (or best, depending on one’s point of view) in July with a 5.8 percent decline from last year, the new county average coming out to $685,000. Marin County was close at 5.1 percent down and more than $1.25 million for a median.”

“The median price for a condo during roughly that same period increased from around $1.1 million to about $1.2 million. But even that number is potentially deceptive; Compass also warns that ‘SF has a large luxury condo market, which affects median values.’ Which is to say, the high end tends to drag the average disproportionately upwards, disguising the realities of cheaper multi-family homes further down the chain.”

From Pasadena Now in California. “Pasadena’s Arden Villa, famous for being the mansion where many scenes of the hit 1980s soap opera ‘Dynasty’ were shot, has sold for $15.6 million, according to the Los Angeles Times. The 17,600-square-foot gated estate, a favorite Hollywood filming location, was listed for $28 million back in 2017, before the price dropped to $19.5 million last January.”

“The last time the property changed hands was in 2013, when it sold for $20 million.”

The Tampa Bay Times in Florida. “Tampa Bay’s foreclosure rate ranked 23rd among major metro areas in July. According to ATTOM Data Solutions, the bay area had 1,043 homes in some stage of foreclosure that month, including 299 that had gone through the foreclosure process and had been taken back by the lender. Several places in Florida, including Jacksonville, Orlando and Lakeland, had higher foreclosure rates than Tampa Bay.”

Related Posts

Prices Are Dropping Like Crazy Here!

https://www.youtube.com/watch?v=E5XxE_PLTjk https://www.youtube.com/watch?v=R3gLV-12N5Y https://www.youtube.com/watch?v=e9VwDdeyxr8 https://www.youtube.com/watch?v=zxgJxLKw6gw

This Post Has 108 Comments

  1. ‘‘Listings that a year ago or two years ago would have been gold — say, a townhouse in Ballard — aren’t anymore,’ Van Winkle said. Buyers, anticipating the market will continue to slow and prices will fall further, are practicing wait-and-see’

    But redfin? Wa happened redfin? you said bidding wars any day now!

    Of course you said that about the bay aryans too. Eat yer crowz redfin!

    2. If only the sellers would slash to 50 percent off comps, we’d get bid wars out the wazoo.

    3. Sierra Foothills above Sacramento:

      About 50% of the listings above $800,000 are just sitting on the market. Now we are seeing price reductions. 3-5% drops.

      A speculator bought a foreclosure for $625,000 in May 2018. Finally sold it for $660,000 in July after multiple price reductions. Break even at best and now he is unlikely to try it again.

      2. I assume part of the Foothills inventory just sitting is that it’s getting impossible to get fire insurance up that way. The inlaws policy was just cancelled, and that’s getting to be the norm. Why would anyone who doesn’t already live there buy into a situation like that?

  2. ‘Pasadena’s Arden Villa…has sold for $15.6 million…“The last time the property changed hands was in 2013, when it sold for $20 million’

    Oh dear…

  3. ‘the bay area had 1,043 homes in some stage of foreclosure that month, including 299 that had gone through the foreclosure process and had been taken back by the lender. Several places in Florida, including Jacksonville, Orlando and Lakeland, had higher foreclosure rates than Tampa Bay’

    We were told these FB’s could “just sell”?

    1. “We were told these FB’s could ‘just sell’?”

      Tell ’em what they want to hear.

      Use what works.

    2. We were told these FB’s could “just sell”?

      That’s what BrazilBubblebananaboy told us too. We never heard back from him.

      1. IIRC he was banned. But he said that he owned his home outright, so he could sell and not take a loss. But he’d have to live somewhere.

  4. “The median price for a condo during roughly that same period increased from around $1.1 million to about $1.2 million. But even that number is potentially deceptive; Compass also warns that ‘SF has a large luxury condo market, which affects median values.’ Which is to say, the high end tends to drag the average disproportionately upwards, disguising the realities of cheaper multi-family homes further down the chain.”

    You see, it’s a mix problem.

    1. Once the high end tanks, everything of lesser value gets squashed down in sync.

      Is that what this ‘mix’ gobbledygook describes?

      1. PS Recently had dinner in SF with an old friend, who shared that like ours, their household also rents, and also expressed genuine consternation over the recent escalation of the homelessness crisis. This is someone who grew up in the Bay Area and has a deep love for it, and is not short on dinero, either.

        1. I have it on good authority that there is no homelessness crisis, only a perception problem of people who are living in “the ghetto” and stepping over them every morning on their way out the door. Just as Jeff “everybodyIknowismakingmoremoneythanever” in Florida.

          3. “That’s a good chip on your shoulder kind of thing.”

            Says the most bitter person on the blog.

          6. “Bitter?

            Blue is more at peace than anyone here.”

            Right. Which is why he’s constantly bickering. HOUSING, remember?

            “How da hood?”

            I don’t know, Jeff, how is it? I’ve never lived there.

            You’re lookin’ better today, though. New dealer? LMAO.

            https://imgur.com/a/DUQkcK2

          7. To your “everybodyIknowismakingmoremoneythanever”

            If you haven’t made money the last 2 years in Palm Beach County you are either too damn stupid, lazy or special (and I do mean Special Olympics special) to make money.

            Now maybe you fall into one of those categories Chin but the skilled tradesmen and subs have commanded higher dollars than I have ever seen before. Restaurants are booming, mechanics and tire places always have cars being worked on and hell, I know girls that cut hair and they are doing better than ever. Bottom line, around here things have been good.

            Now it may all end tomorrow, sooner or later it always does but as of today this area is still doing fine.

            So look Fredo, you can drag your @ss back to MSNBC and write stories for Rachel Maddow about the homeless problem and how the rich have raped the country but until it ends, I’m going to keep churning out $ form the boom that seemed to start when Trump reduced regulations right after your friend went to see him sworn in as president…

            https://www.youtube.com/watch?v=wDYNVH0U3cs

          8. Chin and Jeff,

            Your experiences aren’t mutually exclusive. IIRC, Chin is in WA and Jeff is in FL. Federal, state and local governments as well as the industries in the areas all play a role in what each of you is seeing.

          9. Those bath salts have really rotted your brain, Jeff. I voted for Trump, and I told you as much before. In fact, you can go back years on this blog and verify that.

          10. “You’re lookin’ better today, though. New dealer? LMAO.”

            Chinbabwe

            I met a poster on this blog for a burger a few years back and he like myself is laughing at the thought of you stepping back from your keyboard and actually saying that to me in person,

            Now if you will excuse me I have to go back to work to make more money.

  6. Does it seem like the stock market is remarkably buoyant, given that pesky Treasury yield curve’s recent propensity to repeatedly invert?

  7. I have come across 8 different articles/coverage in the past week reporting on skyrocketing insurance premiums or outright denial of coverage for housing in wildfire prone areas. Weeks ago it seemed a localized issue (at the least the reporting was) to the Sacramento area, now Washington state, Colorado, Montana and California have significant complaints being brought to the State offices regulating Insurance. WSJ, NYT etc No insurance, no sales as noted here on HBB a couple of weeks ago. Prices go down, perhaps as far as “not interested”. Local and State revenues will not fare well.

    1. “…Local and State revenues will not fare well….”

      Yet another under reported story in the MSM.

      Once the R/E wheel starts rolling down the hill, state/local taxing authorities are in for a very bad ride.

      That includes property tax, insurances of all kinds (fire, homeowners, maybe earthquake, etc).

      The Government Industrial Complex needs property and local tax revenue to prop up those massive government worker salaries and pensions.

      Want to check for yourself? Type in the name of your favorite government worker @

      http://www.transparentcalifornia.com

    2. “Weeks ago it seemed a localized issue (at the least the reporting was) to the Sacramento area, now Washington state, Colorado, Montana and California have significant complaints being brought to the State offices regulating Insurance.”

      Our home was recently inspected (and approved) for over-growth by a contractor working for Allstate. High winds and lots of dead Russian Thistle (tumble weeds) contribute to the fast moving range fires every summer.

  9. RE: Declining prices. 1) Foreign, esp. Chinese buyers are pulling back, 2) Prices have become unaffordable again for most shelter-buyers, 3) Central bank and gov’t ag’cy/entity “extend and pretend” policy is about out of juice (I.e. scraping the bottom of the subprime/greater fools/knife-catchers barrel), 4) Very low interest rates having only a very small, transitory effect here.

    Unconventional buyers exiting the market, few traditional buyers able to fill the gap. Without (further) housing market nationalization, it’s logical that prices move lower from here. Slow motion train wreck similar to housing bubble 1.0. Should get interesting in a year or two during next recession… To keep tabs, follow Ben’s blog and keep the popcorn handy.

    1. similar to housing bubble 1.0

      It’s the same bubble. The problems of 10+ years ago were never fixed and prices never normalized. A dip sure, but not a correction.

      1. The current housing bubble (2,0) could be considered the echo bubble to 1.0. See bitcoin as example of typical asset bubble behavior, but history is littered with the corpses of many. We’re arguing semantics here. If it walks like a duck…

        I agree that nothing was fixed in 2009-10; no consequences for the perps and so we’re doomed to repeat a similar outcome. Short stocks and RE. Buy gold (and popcorn). 😊

        1. so we’re doomed to repeat a similar outcome.

          My point is that if it’s the same bubble, the outcome may not look at all like the arrested decline of the first peak. I don’t know, maybe we’ll have three tetons up, but I don’t think so.

        2. “The current housing bubble (2,0) could be considered the echo bubble to 1.0. See bitcoin as example of typical asset bubble behavior, but history is littered with the corpses of many.”

          It’s just tsunamis of liquidity running to anything that can produce yield. At this point, I wouldn’t be surprised if there were a 3rd, bigger housing bubble. Am I betting on it? No. But nothing is shocking anymore.

    2. No mention$ of Corporation$ + Con$umer debt$ level$ … well anywho$:

      Insiders$ are $elling $tock like it’s 2007

      By Matt Egan | CNN Business | Tue August 27, 2019

      August is on track to be the fifth month of the year in which in$ider $elling tops $10 billion. The only other times that has happened was 2006 and 2007, the period before the last bear market in stocks, TrimTabs said

      the TrimTabs report makes it clear that insiders are selling more than they have at any other point during the bull market, which began in March 2009.
      Last week alone, top executives from Salesforce (CRM), Slack (WORK), Chipotle (CMG), Visa (V) and Home Depot (HD) all sold shares, according to OpenInsider, a site that tracks insider stock sales.

      Buyback$, another sign of confidence, have also $lowed, albeit from extremely elevated levels.
      US companies announced $2 billion of buybacks per day during earnings season, according to TrimTabs. That’s the weake$t pace in two years

      The leader$ of Corporate America are ca$hing in their chip$ as doubt$ grow about the $ustainability of the longest bull market in American history.

      Corporate insiders have sold an average of $600 million of stock per day in August, according to TrimTabs Investment Research, which tracks stock market liquidity.

  10. Just a small data point.

    By happenstance, read the “Trentonian” newspaper of central New Jersey. 15 pages of Sherriff Sales in the classified section.

      1. Low ground cover burning off doesn’t alarm me much. It’s not like the pine forest fires that start by the hundreds in the north every summer (lightening strikes). Looks like it might even be controlled farm field burns. If it was a real serious forest fire, show us some satellite imagery.

  15. “In the immediate Seattle area, July home values are down 4.3% since last year, to $714,400, Zillow data shows.

    Congratulations, winners of Seattle’s 2017-2018 bidding wars! You might want to start scouting around for sturdy cardboard boxers and shopping carts for your new, more mobile phase of life. And give the vagrants change when they ask – you’ll need to start building relationships among your future peers.

    1. Biden: Racism in US is institutional

      How long have you been in DC Joe?

      It’s alright, that’s all they have. The United States has never had more opportunity for all, and less racist than it is today.

        1. I know people who voted for Obama – twice – that voted for the President. Are they racists? And if you look at the states that flipped last election, there are probably a whole buncha people who did the same thing.

          I heard today that Biden is polling at 6% of people under the age of 50.

          1. “I heard today that Biden is polling at 6% of people under the age of 50.”

            Who ya li$tening too? Briefart.new$, faux.new$, pe$o’$.fer.thee.wall, Ann.don’t.grope.my.privates.Coulter

            Plea$e di$close!

          3. “Plea$e di$close!”

            Biden had so many bad numbers to hear perhaps Ben heard one of them wrong.

            By STEVEN SHEPARD 08/26/2019 01:03 PM EDT

            The poll shows Biden’s slippage coming across the Democratic electorate, rather than from a specific demographic or ideological group. He is down 14 points among white and nonwhite voters. He’s down 14 points among men, and 13 points among women. He’s down 15 points among voters younger than 50 years old, and 9 percent among voters 50 and older.

            Biden also slipped 18 points among Democratic voters who described themselves as moderate or conservative, and 9 points among self-identified liberals.

            https://www.politico.com/story/2019/08/26/bernie-sanders-elizabeth-warren-joe-biden-poll-1475440

          4. 3-Way Lead as Dem 2020 Picture Shifts

            “Biden has suffered an across the board decline in his support since June. He lost ground with white Democrats (from 32% to 18%) and voters of color (from 33% to 19%), among voters without a college degree (from 35% to 18%) and college graduates (from 28% to 20%), with both men (from 38% to 24%) and women (from 29% to 16%), and among voters under 50 years old (from 21% to 6%) as well as voters aged 50 and over (from 42% to 33%). Most of Biden’s lost support in these groups shifted almost equally toward Sanders and Warren.” (emphasis added)

      1. I do not want to see anything that says three way and then lists Biden, Warren and Sanders.

  18. Just got this in my email. Not sure how this realtor got my email. Needless to say, I think we ran out of greater fools.

    “Hello!

    Exciting News to share on Saving your hard earned money when Purchasing a Home!

    It is a Buyer’s Market, high Inventory of Homes – combined with LOW Mortgage Interest Rates – plus my Buyer’s Rebate Program! You can buy a house with No Money OR Very Little Money Down- Loan Programs are available for Down Payment Assistance!!!”

    1. The hungry realtors are going back and scraping the bones off their old squirrel carcasses. I had a couple emails this years from an agent I contacted back in 2012. Did you know (per these realtors) it’s a great time to buy AND sell!

  19. Are you concerned that negative sovereign bond yields might portend a global deflationary depression?

    1. “… concerned that negative $overeign bond yield$ might portend a global deflationary depre$$ion?

      Dear Professor, what’$ yer “end game”? You get to buy a $helter.$hack @ > 65.86% di$count & declare victory? … How old will bee yer child$ when that happen$?

      1. “end game”

        1. Financial survival
        2. Space to place belongings when not traveling
        3. Room for musical performance and instrument storage
        4. Ownership only if it makes sense, which it hasn’t for most of the 21st century thus far

        1. “end game”

          1. Financial $urvival

          How did that work out for person$ who had x100,000 time$ yer inputs? (Aka.Lehman Bro$)

          just.a$king.

        2. A gho$t from Xma$ past:

          A ‘Lehman-like’ market disa$ter could happen this week, analyst warns

          Shawn Langlois | MarketWatch | 8/27/2019

          (Great photo!)

          Beari$h $entiment currently correlates well with $entiment before the collap$e of inve$tment bank Lehman Brother$ in 2008, Takada argues. So investors should prepare for carnage in the stock market due to “panic-selling by fundamentals-oriented investors and $ystematic $elling by trend-following technical investors.”

    2. Opinion Markets Insight
      Bonds with sub-zero yields are an urgent call to action
      Governments should respond to consistent distress signals from the bond market
      David Riley
      yesterday

      The fastest-growing asset class so far this year? Negative-yielding bonds that, if held to maturity, are guaranteed to impose a loss on investors. The stock of such bonds has almost doubled since the start of the year to about $16tn, or one-third of the global bond market.

      A lot of commentators have dismissed the dramatic fall in bond yields and rise in negative-yielding debt as evidence of a bond bubble. But this is not a reflection of investors’ irrational exuberance. It is a call for politicians to act now to prevent a deflationary global economic downturn.

      The best explanation for the dramatic decline in high-grade government and corporate bond yields worldwide, along with the surge in negative-yielding debt, is that investors are rationally responding to the rising risk of a deflationary global recession. Business confidence and investment are being eroded by the uncertain ebb and flow of the US-China trade war, the threat of US tariffs on autos and Brexit, along with the slowing Chinese economy that has been the bedrock of growth for many global (and especially European) manufacturers.
      …

    3. As US brawls with China, yield curve’s recession warning continues
      By James Langford
      Published
      August 27, 2019
      China
      TariffsFOXBusiness

      Market volatility with an inverted yield curve

      Stocks are turning lower as bond yields slide again.

      The risks of a recession Opens a New Window. grew on Tuesday, according to a bond Opens a New Window. -market Opens a New Window. indicator that traditionally precedes downturns, as the White House Opens a New Window. refuses to back down in a trade dispute Opens a New Window. with China that is roiling international commerce.

      A so-called inversion in the yield curve between two-year and 10-year Treasury notes steepened, signaling that bond-buyers are even more dubious about the economy’s immediate prospects relative to its long-term strength than they were earlier this year — or even this week.
      …

      1. Or maybe it just a normal development when you have negative interest rates overseas and a Fed who was raising interest rates when the rest of the world was lowering them. Maybe the bond market is saying that the Fed is going to have to lower them so back up the truck and buy longer duration, might not be saying anything about our economy in a world of negative yield. Today’s stock market seems to be saying that the fears are misplaced.

  20. Yellen bux sometimes pour into the strangest nooks!

    Home
    Personal Finance
    This 50-year old dogwalker retired after making over $1 million — working just three days a week
    By Brett Arends
    Published: Aug 27, 2019 8:03 p.m. ET
    Kristin Morrison started a business doing what she loves
    In Her Image photo
    Dogwalker Kristin Morrison with Breezy.

    When Kristin Morrison was in her mid-20s, she had no idea what she wanted to do with her life. It was the mid-1990s. She had no career and no direction. She was living in Tiburon, Calif., just across the Golden Gate Bridge from San Francisco, taking classes and trying to figure things out.

    Then one day she went for a walk and everything changed.

    “When I talk about it I get chills,” she says now.

    On her hike she met a woman walking two dogs. The woman wore a T-shirt that advertised a dog-walking business. “It wasn’t a thing like it is now,” she says. “I thought, ‘Can people get paid for this?’”

    Morrison introduced herself. The two got to talking. The woman hired her. Three months later Morrison had started her own business, Woof! Pet Sitting Service. “I just realized this is what I should be doing,” she says. “I loved to walk, and I love animals…To be able to combine the two was mind-blowing to me.”

    By 2013, when she sold the business for an amount she can’t reveal, it had more than 30 employees and had generated “millions of dollars in revenues,” she says. By then she had been working just three days a week for more than a decade. Her income broke the $100,000 barrier in 2000, and from there “it went up and up and up,” she says. According to the U.S. Census, the average person in Morrison’s Marin County, Calif., made $44,000 in 2001 and $72,000 today.
    …

    1. The Financial Times
      US Treasury bonds
      US yield curve sends most dire signal since 2007
      Bond market indicator of recession flashes warning as fears grow about US-China trade war
      Investors are sceptical that Donald Trump’s more conciliatory rhetoric in recent days will lead to a swift resolution of the trade dispute
      Colby Smith and Joe Rennison in New York yesterday

      A widely watched indicator of recession sent its most dire signal since the early days of the financial crisis on Tuesday, reflecting increasing gloom in the US bond markets about the economic consequences of Washington’s trade war with Beijing.

      Yields on two-year Treasury notes were 5.3 basis points higher than those on the 10-year government bond — the largest gap since March 2007. This kind of inversion of the yield curve — in which shorter-term rates are higher than longer-term ones — has preceded every US recession of the past half century.

      At the same time, another closely followed portion of the yield curve — reflecting the difference between the yields on three-month and 10-year Treasury securities — blew past its recent lows, settling at minus 51.4bp.

      “It’s the ultimate flashing red light,” said Tom di Galoma, a managing director at Seaport Global Holdings, who forecasts a recession within 12 to 18 months. “What is taking place today is that bond investors are realising that lower rates are upon us.”
      …

    2. You have to pity the greater fools who will soon find themselves the angry HODLers of underwater mortgages, due to taking ever lower interest rates as a signal to purchase an overpriced house in the U.S. just ahead of an epic crash.

      1. ” …due to taking ever lower interest rates as a signal to purchase an overpriced house in the U.S. just ahead of an epic cra$h. ”

        They could knot wait 30 day$ for a “eye’m Powell, knot Burn$!” 1/2 % Fed.Fund$ rate discount? … What’$ the hurry, oh yeah, new $chool year begin$ … T$k, t$k.

      2. “You have to pity the greater fools who will soon find themselves the angry HODLers of underwater mortgages, due to taking ever lower interest rates as a signal to purchase an overpriced house in the U.S. just ahead of an epic crash.”

        You are using the wrong word, the word “pity” should be changed to the word “exploit”.

        Here …

        “You have to exploit the greater fools who will soon find themselves the angry HODLers of underwater mortgages, due to taking ever lower interest rates as a signal to purchase an overpriced house in the U.S. just ahead of an epic crash.”

        1. “You have to pity the greater fools who will soon find themselves the angry HODLers of underwater mortgages

          I have zero pity, only schadenfreude. These greater fools and speculators made housing unaffordable for the prudent and responsible, and it won’t bother me in the least to see them slinking away from “their” houses under cover of darkness after mailing the keys to their reckless and greedy lenders.

    4. The yield curve inversion tells me the long-deferred financial reckoning day is closing in, despite the frantic, doomed efforts of the Fed and PPT to forestall the inevitable.

      Got gold? Got silver? Got lead and brass?

      1. Quick back the truck up Greece’s benchmark interest rate is 0 percent. This is while Germany is just sliding into recession. If I was in Europe buying US bonds makes a lot of sense. Too much demand will cause price increases in the bonds which move inversely to their yields. Such high demand historically has occurred in this country just before a recession but ithere is no reason why it cannot be created by Europe forcing interest rates down to insane levels.

    1. That cover photo is interesting for the lack of sunlight, i.e., living in the shadows of buildings.

      People in San Francisco have been used to renting rooms and sharing the rest of the house as far back as I can recall. However, this trend is totally new in the region’s suburbs. The give-away is the number of cars parked on suburban streets these days.

    2. I think that the headline suggests three possibilities: (1) the reporter is completely economically illiterate and thinks houses 15 times incomes is sustainable (2) just wants to hurt Trump by suggesting that it is a sign the economy is in trouble. (3) both, which is my bet.

      I would add that if Trump did not want a correction in overpriced, overtaxed housing markets, he would have vetoed the tax bill. Letting the air out of these bubbles makes it less likely that the Fed can engineer a collapse in 2020.

      1. Letting the air out of these bubbles makes it less likely that the Fed can engineer a collapse in 2020.

        I would think that avoiding a collapse would be much more difficult than engineering one at this point.

  23. For those who say the Trickle Down Theory is bunk, we’ll see. Stay tuned …

    The rich aren’t spending, signaling a possible recession ahead
    https://www.cnbc.com/2019/08/28/the-rich-arent-spending-signaling-a-possible-recession-ahead.html

    (Some snips)

    “A sudden pullback in spending among the wealthy could cascade down to the rest of the economy and create a further drag on growth.
    High-end real estate is having its worst year since the financial crisis.
    Luxury retailers are struggling while discounters like Walmart and Target thrive.

    From real estate and retail stores to classic cars and art, the weakest segment of the American economy right now is the very top. While the middle class and broader consumer sections continue to spend, economists say the sudden pullback among the wealthy could cascade down to the rest of the economy and create a further drag on growth.

    Luxury real estate is having its worst year since the financial crisis, with pricey markets like Manhattan seeing six straight quarters of sales declines. According to Redfin, sales of homes priced at $1.5 million or more fell 5% in the U.S. in the second quarter. Unsold mansions and penthouses are piling up across the country, especially in ritzy resort towns, with a nearly three-year supply of luxury listings in Aspen, Colorado, and the Hamptons in New York.

    Retailers to the 1% are faring the worst, with famed Barney’s filing for bankruptcy and Nordstrom posting three consecutive quarterly declines in revenue. Meanwhile, Wal-Mart and Target, which cater to the everyday consumer, are reporting stronger-than-expected traffic and growth.

    At this month’s massive Pebble Beach car auctions, known for smashing price records, the most expensive cars faltered on the auction block. Less than half of the cars offered for $1 million or more were able to sell. But cars priced at under $75,000 sold quickly — many for far more than their estimates.

    In the first half of 2019, art auction sales were down for the first time in years. Sales at Sotheby’s dropped 10% and Christie’s auction sales were down 22% from a year ago.

    There are many reasons for spending declines — tax changes, for instance, are to blame for some of the real estate slump.

    And parts of the high-end economy have retained their shine — from luxury new car sales to Swiss watches and fashion.

    Yet recent data suggest that the U.S. wealthy are beginning to shut their wallets. If their spending falls further, the broader economy could start to feel the pain. The top 10% of earners account for nearly half of all consumer outlays, according to Mark Zandi, chief economist at Moody’s Analytics. But their spending has fallen over the past two years, while spending for the middle class has accelerated.

    “If high-income consumers pull back any further on their spending, it will be a significant threat to the economic expansion,” Zandi said.

    The savings of the rich has also exploded, more than doubling over the past two years, suggesting that the wealthy are hoarding cash. The middle earners, or those in the 40% to 89.9% of the income distribution, have largely picked up the spending slack from the rich.

    “If job growth slows any further, unemployment will begin to rise, (the middle earners) will pack it in, resulting in an economic downturn,” Zandi said.

    There are two main reasons for the wealth slump: volatile markets and slowing global growth. The top 10% own over 80% of stocks in the U.S., so they are far more sensitive to the recent swings in stocks and bonds.

    Also, because many of the wealthy also own companies that do business overseas or have foreign exposure, they have become an early warning system for the economic storms forming around the world.

    The middle-class consumer, however, is being buoyed up by strong employment and a relatively stable housing market. A U.S. economy that for over a decade has been defined by the rich reaping the gains and fueling the spending, has now flipped. Now, it’s Main Street that is prospering, while the investor class is signaling a consumer recession. The rich still have plenty of wealth to spend. But spending at the top is driven by confidence and certainty. And right now, they are finding little of either in the global stock markets and trade war.

    1. A key passage …

      “The top 10% of earners account for nearly half of all consumer outlays, according to Mark Zandi, chief economist at Moody’s Analytics.”

      1. I find the article all over the place. It talks about purchases that only the .1 percent can make. Then it talks a little about the 1 percent and then talks about the top ten percent but does not give examples how that group is cutting back. No question that the diminishing of globalism will hurt the .1 percent. Now many of the 1 percent own small business which may actually compete with Chinese companies and big box stores which hire cheap illegal labor. They benefit from what is going on. As does most of the top ten percent who actually tend to work and are not rich enough to live off of investments.

  25. Red-letter headline in this morning’s Drudge Report: “Mortgage Defaults Rise First Time Since Financial Crisis.”

    Oh dear….

    Getting harder for UHS to maintain those Botox perma-grins while chirping, “”There’s never been a better time to buy!” with headlines like this.

    1. I dunno, but the globalist quislings who want to kow-tow before the unelected EU bureaucrats in Brussels are stamping their little feet after BoJo suspended Parliament for the next five weeks.

    2. What suspending the UK parliament means for Brexit
      Analysis by Matt Wells, CNN
      Updated at 1159 GMT (1959 HKT) August 28, 2019

      London (CNN) — Opponents of a no-deal Brexit just got royally outflanked.
      British Prime Minister Boris Johnson’s wheeze of getting the Queen to order a five-week suspension of Parliament means his critics have much less time than they thought to prevent the UK leaving the European Union without a deal on October 31.
      …

    3. Don’t look now, but the Treasury yield curve is now inverted all the way out to 30 years.

      Bonds
      30-year Treasury bond yield falls to record low under 2% as global recession fears grow
      Published 5 hours ago
      Updated 13 min ago
      Thomas Franck

      The rate on the benchmark 30-year Treasury bond sank to a new all-time low on Wednesday while the U.S. yield curve inverted even further as fixed-income traders continue to bet on tepid inflation and slower growth around the world.

      The 30-year bond yield dropped to as low as 1.907% early Wednesday morning, breaking its prior all-time low of 1.916% clinched earlier in August. The 30-year rate later moved off those lows to trade at 1.916%, still below yields on U.S. debt of far shorter duration such as 3-month and 1-month bills.
      …

    4. Brexit …

      8/28/2019 … Dow implied open :

      25,743.61

      Exactly (-1000.10) from 9/19/2018:

      26,743.51

      3 days ’till $eptember, … < 64 days 'till Ireland protest for their own potatoes "Freedom.frie$" … Fa$ter!, fa$ter!, fa$ter! … (Long.live.the.Queen.of.Scotland!)

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