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There Are People Who Are Skeptical, And They’re Waiting On The Sidelines For Prices To Come Down

A report from Summit Daily in Colorado. “Summer and early fall are often the busiest times for real estate in Summit County. But with national news predicting an economic recession paired with a downturn in Denver’s real estate market, Summit County buyers seem to have backed off. July’s number of home sales, total sales volume and luxury home sales were all lower than July 2018, with decreases ranging from 10% to 18%. ‘There is a general cooling down on the economy, especially in Denver, and we’re close enough to be a bit affected by Denver’s market,’ said. Summit Association of Realtors president Thomas Coolidge.”

The Review Journal in Nevada. “The streak is over. Phoenix nudged Las Vegas aside to claim the fastest-growing home prices in the nation in June. About 7,800 houses were on the market without offers at the end of July, up 63 percent year-over-year, according to the Greater Las Vegas Association of Realtors.”

“Buyers have ‘become unwilling to pay escalating prices for the relatively low inventory of homes that are on the market’ and are making sellers wait or drop their prices, said Matthew Speakman, economist at Zillow.”

The Chicago Tribune in Illinois. “Different mindsets among buyers and sellers of homes along the North Shore is one reason towns like Glencoe are experiencing increasing home values while prices are down next door in Winnetka. Prices soared in Kenilworth, climbed slightly in Glencoe but fell more than 10% in both Winnetka and Wilmette for the 12 months ending June 30 against the same period last year, according to the North Shore-Barrington Association of Realtors.”

“With the average value of a home in Kenilworth, Winnetka and Glencoe at more than $1 million, Karen Arenson, managing broker for Coldwell Banker Residential Brokerage in Winnetka, said customers are adjusting to a changing marketplace. ‘The buyers and sellers are not on the same page while the market is not sure if it is a buyers’ market or a sellers’ market right now,’ Arenson said. ‘There is confusion between what they hear on the national news and the local markets. Real estate is hyperlocal.'”

From Boston Agent Magazine in Massachusetts. “‘Our housing market has proven to be remarkably resilient these last several years. However, after absorbing years of record high home values and steady price appreciation, not to mention unprecedentedly low levels of homes for sale, it appears our long-running seller’s market is nearing an end,’ said Greater Boston Association of Realtors President Jim Major. ‘Home values have been slowly moderating throughout the year, and in a number of communities prices have either reached their peak or are in decline.'”

The New York Post. “Veteran journalist Tom Brokaw is finally in contract to sell his Pound Ridge, NY, estate following a massive price cut. But he won’t break even on the Westchester property that he’s owned for decades, Gimme Shelter has learned. The 36-acre gated compound, which first asked $6.3 million in June 2018, was last asking $4.25 million. That’s around the same price Brokaw and his wife paid for the vacation retreat in 1998.”

From Curbed New York. “Back in January, we wrote about a Harlem megamansion, a combination of two townhouses, 32 and 33 Mount Morris Park West, asking a record-setting $27 million. Now, the two houses have listed again—but with a price cut—asking $14.9 million.

The Orange County Register in California. “Median home prices in San Diego and Ventura counties were unchanged from a year ago, and Orange County experienced a 0.8% dip in its median — the county’s fifth year-over-year price drop in the past six months. Some agents attribute falling prices to a lack of affordability in a county where the median price of a single-family home was $800,000 in July.”

“‘It’s hard for people to come up with that kind of money for a first-time buyer house,’ said Dustin Ives of TNG Real Estate Consultants in Los Alamitos. ‘As soon as you get above $1 million — and that’s the price for a lot of Orange County — very few people can afford that.'”

“This year’s mortgage rate drop helped home sellers in Riverside, said Carlos Gutierrez, an agent with Keller Williams Realty in Redlands. ‘That made lending more affordable,’ he said. But, he added, ‘it goes both ways. I know there are people who are skeptical, and they’re waiting on the sidelines for prices to come down.'”

“Zillow reported 15.7% of sellers in Los Angeles and Orange counties cut asking prices in July, vs. 14.3% in July 2018. And 17.4% cut asking prices in the Inland Empire, vs. 16.1% a year earlier. At the same time, for-sale inventory increased 6.4% in July from year-ago levels to more than 44,000 listings, figures from Reports On Housing show, giving buyers more homes to choose from and decreasing competition.”

From KSVN in Florida. “Condo problems in South Florida are nothing new, but one complex has such ‘complex’ issues that they’re staging a resident rebellion. Blue tarps have covered the Magnolia Lane condos in West Kendall for years. The roof is in terrible condition and the tarps are no match for South Florida storms. Francisco Rodriguez, resident: ‘When it rains hard, all the water runs down the window and runs into the units.'”

“But the roof is just a small part of the problem. Despite owners of the two hundred units paying around $300 a month in condo fees, the complex is in disrepair and the association is broke. Condo owners are organizing a recall to throw out the existing board and start fresh. But even if they do they still have to figure out a way to pay off the condo’s debts, and fix the roof. Oh, and pay the lawyers now required to sort it all out.”

“Francisco Rodriguez, resident: ‘I am constantly looking for another place to live, you know to try and get out of here.'”

This Post Has 100 Comments
  1. ‘last asking $4.25 million. That’s around the same price Brokaw and his wife paid for the vacation retreat in 1998’

    Oh dear…

      1. Per google his net worth is between 70 and 80 million. An average coder would have to work about 700 years to earn that much. That’s assuming a 100K salary. Some earn more than that, some earn less.

        1. “Per google his net worth is between 70 and 80 million.”

          He’d make one of those curvy Instagram Girls happy.

    1. I don’t think it’s a bubble issue. It’s a property tax issue. $4M in NYS is upwards of $80K/year. Which CAN’T be deducted from taxes anymore.
      Nobody wants a luxury second home in NY anymore.

        1. OK thanks. I didn’t calc the taxes. I just looked up any old $4M house on Zillow and used their numbers. So it’s more like $120K taxes? That’s a toughie if you can’t deduct any of it.

  2. ‘About 7,800 houses were on the market without offers at the end of July, up 63 percent year-over-year’

    One of these things is not like the other.

    ‘the relatively low inventory of homes that are on the market’

    And this YOY increase of 63% is on top of the whopping increases last year.

    1. What happened to all those cash buying, money laundering foreigners?! 1/3+ purchasers gone. Realtor roits will follow, food bank shortages, squirrel extinction, homeless fighting realtors for side walk and begging spots at intersections.

  3. ‘Despite owners of the two hundred units paying around $300 a month in condo fees, the complex is in disrepair and the association is broke. Condo owners are organizing a recall to throw out the existing board and start fresh. But even if they do they still have to figure out a way to pay off the condo’s debts, and fix the roof. Oh, and pay the lawyers now required to sort it all out’

    ‘I am constantly looking for another place to live, you know to try and get out of here’

    Well it was cheaper than renting Francisco. I’m sure you’ll find some sucker to dump that airbox on. Find a UHS!

    1. “Oh, and pay the lawyers now required to sort it all out”

      This was one of the major reasons i sold my last shack. The president of the HOA hired an “acquaintance” lawyer friend of hers to redo the CCR’s. Cost the HOA over 80k and at the end no one agreed on the newly created CCR and ended up hiring a management company that charged another 20k for this. Monthly dues for the HOA went from 300ish up to almost 500 soon after because we needed reserves (lawyer got his wallet filled). The woman that was president also sold right after all this went down. Made a nice profit off a cash sale to a foreigner, she was pretty much a speculator who bought in 2013 and sold at the end of 2016. I learned i will NEVER buy an HOA property again and extremely glad not to be there anymore 😉

      1. I agree that HOAs are a landmine. Not all of them work out the way you describe though. I was the president of an HOA association for a building of 48 condos. The developer lost the property (it was supposed to be a master planned livable/walkable community but went under in 2007-2008). Anyway, we managed to fix some of the shenanigans and underhanded revenue streams he had written into the CCRs for himself and shell companies. Eventually we increased the HOA fee modestly to build up a decent reserve. The whole experience was eye-opening and I don’t think the average condo buyer does enough due diligence regarding the HOA financials.

    2. “Despite owners of the two hundred units paying around $300 a month in condo fees, the complex is in disrepair and the association is broke.”

      (doin’ some complicated math here …)

      Why, that’s sixty-thousand dollars a month in homeowners fees coming in. Where in the hell is all that money going?

      (doin’ some more readin’)

      “Oh, and pay the lawyers now required to sort it all out.”

      Bingo!

      1. Mr. Banker observed:
        pay the lawyers now required to sort it all out

        I just chuckled thinking to myself how mixed your feelings about lawyers must be, Mr. Banker. On one hand…they’re your kind of people. On the other hand…they are competing with you for the same dollars.

        1. “I just chuckled thinking to myself how mixed your feelings about lawyers must be, Mr. Banker. On one hand…they’re your kind of people. On the other hand…they are competing with you for the same dollars.”

          Not quite the same dollars.

          Pukes need to pay dollars to the lawyers: That’s one pile of dollars.

          If it is worked right in order to pay the lawyers these pukes will have to borrow dollars from the bank: The fees generated from this borrowing generates another pile of dollars.

  4. ‘The streak is over. Phoenix nudged Las Vegas aside to claim the fastest-growing home prices in the nation’

    Remember how this game of tag has played out?

    Top spot – San Jose! DONG!

    Seattle! DONG!

    Las Vegas! DONG!

    I’ll have more on Phoenix tomorrow.

    1. The Valley of the Blast Furnace used to be popular for its cheap housing. THAT was the attraction. People could buy a brand new rambler in the west valley for $60,000. Why go there now?

  5. Unconventional Mortgages Attract Warning From Regulator

    Banks are urged to tighten underwriting standards for loans made to borrowers based on assets

    ‘A type of unconventional mortgage that focuses on a borrower’s assets to vet repayment ability has drawn a warning from regulators for banks to maintain tight underwriting standards.’

    ‘Asset-depletion loans, also known as asset-dissipation loans, are part of a small but growing subset of the mortgage market that includes subprime loans and other riskier products. They assume borrowers draw from assets to cover a mortgage, rather than just income.’

    ‘They are designed for people who don’t have a conventional paycheck, including retirees or workers in the gig economy, and were traditionally aimed at high-net-worth individuals with portfolios that could be easily converted into cash for mortgage payments.’

    ‘Now the loans are reaching a broader set of borrowers, raising concerns that lenders aren’t properly measuring their risk.’

    ‘In recent years Fannie and Freddie have eased standards for those loans, allowing lenders to ask for a smaller down payment from elderly borrowers or assume the assets would be tapped over a shorter period, increasing the estimated monthly payout.’

    ‘The mortgage giants also have increasingly backed loans to borrowers who have heavy debt loads.’

    https://www.wsj.com/articles/unconventional-mortgages-attract-warning-from-regulator-11567071004

      1. Now what? I’ve got a very conventional loan. And the way things are looking, I should have a very conventional paycheck starting in a couple months 🙂

    1. ISTM that that loans themselves aren’t bad. In fact, they are better than loans based on income. Income can disappear at any moment. Assets are at least a bird in the hand.

      The problem is this statement: “The mortgage giants also have increasingly backed loans to borrowers who have heavy debt loads.” Does this mean that buyers are using the same assets as collateral for multiple loans? And gov is backing this up? Ugh.

      1. “Does this mean that buyers are using the same assets as collateral for multiple loans? ”

        Probably a cocktail of car loans, student loans and credit card debt, and virtually nothing in the bank or the 401K/

  6. ‘The buyers and sellers are not on the same page while the market is not sure if it is a buyers’ market or a sellers’ market right now,’ Arenson said. ‘There is confusion between what they hear on the national news and the local markets. Real estate is hyperlocal.’

    WTF…what is hyperlocal mean???

    1. Hyperlocal:
      adjective
      relating to or focusing on matters concerning a small community or geographical area.

    2. Not to worry. The markets will soon settle on ‘stampede for the exits’ within your ‘hyperlocal’ market.

    3. WTF…what is hyperlocal mean???

      That’s what you say when you don’t want to answer any of the questions you’ll get if you say any of the things you normally say.

    4. A good example of hyperlocal would be Arlington and parts of Fairfax, VA. That’s where the new Amazon HQ is going. There’s a little inventory, but it’s all over a million bucks. Everyone is holding out for AHQ2 $$

  7. “Francisco Rodriguez, resident: ‘I am constantly looking for another place to live, you know to try and get out of here.’”

    As a renter, I can totally related to the woes of you condo bag holders.

    Oh wait. If my rental house has structural problems, I can just turn in my month’s notice and move elsewhere. So I guess I can’t relate at all.

    1. I have so much money left after “throwing money away on rent” every month that I don’t know where to throw it.

  8. The 36-acre gated compound, which first asked $6.3 million in June 2018, was last asking $4.25 million. That’s around the same price Brokaw and his wife paid for the vacation retreat in 1998.”

    Factoring in the Fed’s debasement of the dollar since 1998, and Brokaw is deep in the red on his asking price. And his shack still hasn’t sold.

    Oh dear….

      1. Do they get pounded there? Or are they such anglophiles that they still prefer to buy and sell in GB pounds?

  9. Pending home sales down in all regions last month. This despite low mortgage rates.

    From ZH article:
    “Pending home sales are often considered a leading indicator of existing-home purchases and a measure of the health of the residential real estate market in coming months.”

    Small bounce from low rates appears to be dissipating and downward trend resuming. Slow motion train wreck continues.

    Housing air pocket = Wile E. Coyote moment, but no worries, since the China trade deal appears to be back on and stocks are again up up up!

  10. “With the average value of a home in Kenilworth, Winnetka and Glencoe at more than $1 million…”

    In 2007, Kenilworth median home sale price was ~$1.8 mil.

    ‘There is confusion between what they hear on the national news and the local markets. Real estate is hyperlocal.’”

    Well Karen, I’d say after analyzing prices in the hyperlocal market, Kenilworth has been in the grips of an ebola outbreak for many moons.

    I’m sure the effective property tax rate north of 3% has nothing to do with it.

    That loss is already bad, until you consider the loss relative to inflation. Biggest unreported story in IL.

    https://www.youtube.com/watch?v=cn7piVTDUUc&t=904s

  11. I will not even bother to link to it, but the MSM is trying to use the environment to fight the border wall. Some on this blog say when did environmental concerns become political? The answer is when the left consistently started to use concerns for the environment for political purposes. A wall that prevents people from driving vehicles all over the fragile desert and people dumping garbage is better for the environment than the status quo, I do not think so. I do not even have to discuss how the increased population hurts the environment. Back when the environment was not used for political purposes many environmentalist were against large scale immigration, they were driven out of the movement by true leftists. Unfortunately now you have watermelons running the environmental movement green on the outside red on the inside. AOC’s AGW plan is much more about income redistribution than the environment. The tragic environment damage caused by wind turbines is ignored since it does not fit the narrative.

    1. Lefties would clutch at their pearls and swoon if informed of the massive damage to the environment caused by mining lithium for their Prius batteries.

      1. and swoon

        Probably they wouldn’t. People making government subsidy bank off putting up wind farms don’t swoon either, despite the evidence they are doing more harm than good. The harm is in someone else’s yard.

    2. ‘The tragic environment damage caused by wind turbines is ignored since it does not fit the narrative.’

      Not to mention all the cancer they cause!

      1. all the cancer

        Don’t be silly.

        They did make a bloody mess of the bird sanctuary in the Thousand Islands.

      2. Actually, do not be dismissive of the cancer claim. The turbines clearly cause sleep disruptions. Not only by noise you can hear but the noise not perceptible to the human ear but still capable of disturbing human sleep. Both sleep deprivation and stress have been linked to increased cancer. Both of these are caused by the turbines. Certainly, living near a wind turbine raises your cancer risk more than a nuclear plant. There are studies investigating the cancer risk because logic would dictate that they do raise cancer risks based on stress and sleep deprivation.

        1. Just google wind turbines, sleep deprivation and cancer and you will see once again Trump is far more informed than his critics.

  12. “Pound Ridge, NY

    “Names are important.”

    Some trivia …

    “The name Pound Ridge is credited to the Indians who originally lived in the area. They had a local pound in which they kept game on the hoof until they needed it for food. The Indians built an enclosure of saplings driven into the ground and drove their game into the pound. The name was spelled “Poundridge” until 1938, when the county bought the property and added the “Ward” to honor William Lukens Ward, Westchester’s Republican county leader from 1896 to 1933.”

    https://parks.westchestergov.com/ward-pound-ridge-reservation

  13. “The IMF just broke its own record of incompetence.”

    That was tough to do.

    ” … less than a year after its record, $57 billion bailout of Argentina was finalized, S&P just downgraded the country from B- to Selective Default – the equivalent to a default rating – following the government’s “reprofiling” of its debt on August 28, when it unilaterally extended the maturity of all short-term paper due to the continued inability to place short-term paper with private-sector market participants. Some $101 billion in debt is affected.”

    My, what is one to do? Let’s take a look …

    “However, the selective default state will last for just one day,… ”

    One day, the selective default lasted for one day.

    “… as only a few hours later, S&P will upgrade Argentina from SF to CCC-. As S&P explains, “under our distressed exchange criteria, and in particular for ‘B-‘ rated entities, the extension of the maturities of the short-term debt with no compensation constitutes a default. As the new terms became effective immediately, the default has also been cured. Therefore, we plan to raise the long-term ratings to ‘CCC-‘ and the short-term ratings to ‘C’ on Aug. 30, in line with our policies.”

    Bahahahahahahahahahahahahaha.

      1. A hundred years ago before statism took control Argentina was a rich country. The ideology does not have to turn into killing fields to inflict real damage on people.

    1. This is the equivalent of moving the goal posts after the kick is already in the air. In other words, every field goal is a winner.

  14. So, I’m renting a place in Boise the former tenant was a realtor. Had a bill collector just come to the door looking for her 🤷‍♀️

      1. They sent several letters that I returned then came here asking for her I said what for he had a Summons for her. He showed it to me it was from some collection bureau. I think the guy thought I was her

        1. If the deadbeat is a realtor she shouldn’t be hard to find.

          The bill collector could allow the circle of realtors to believe he was interested in buying a house and request the services of the deadbeat lawyer because “He heard such wonderful things about her”. Chances are very good that she would contact him.

        2. Norma, what neighborhood are you in? Boise market is so bizarre right now. Entire economy seems to be based on out of area equity/real estate/development… nuts. How do you see this ending?

          1. “Entire economy seems to be based on out of area equity/real estate/development”

            Isn’t that the story in most of the country? At least Boise has HP and Micron. Many others places don’t even have that.

      2. “A door to door bill collector? That sounds odd.”

        When I did auto repossessions, Saturday mornings were earmarked for making contact (kicking it in) at the addresses that were negative, i.e., didn’t see the vehicle. I always scouted around the neighborhood too for those clever types who liked to cache the vehicle.

  15. I’m trying to remember why, when I was looking for a house “no HOA” was at the top of my list above good schools, CBS construction, hip roof, city water and fenced backyard.

    Oh that’s right.

    “Despite owners of the two hundred units paying around $300 a month in condo fees, the complex is in disrepair and the association is broke. Condo owners are organizing a recall to throw out the existing board and start fresh. But even if they do they still have to figure out a way to pay off the condo’s debts, and fix the roof. Oh, and pay the lawyers now required to sort it all out.”

    1. Same here. I said I wanted an older home. Closer in, better built, no HOA. I drive around a lot and I see tons of townhomes and McMansions and plain-jane 2003 Colonials and fake Craftsman-style with 9-foot ceilings. And I wonder just who was beating down the door 12 years ago for these soulless houses. My guess is they were wife from the Suzanne commercial, looking for good schools.

  16. Ugh. lost most of the day dealing with pain issues now that I’m off my final med (gabap).

    by off chance, anyone from the HBB in the Seattle area going to PAX?

    OK, a couple things I’ve noticed looking around my neighborhoods.

    One is that some listings that were sitting have been pulled from the market after additional price cuts, including that one near me that txchick57 was looking at. I guess they can’t stomaching admitting they have been sitting there a while and going nowhere.

    The other is a couple homes I’m now watching. Not that far away there was new constructions that was incomplete and then in foreclosure for the longest time. Some GF came along last year and bought it at auction for 875, dumped some money into cleaning it up and finishing it and now wants 1.5m. Budget Lipstick on a pig, IMHO. The house itself is along the very steep east side of the island, just above East mercer Way. 75 to 90% of it must be on stilts or whatever you call it. Priced too high. There’s another that’s new construction a few blocks over that’s built on what also should have been too steep a hillside . Weird thing is it’s been under construction for like 18+ months now and they’re still not done. Looks like a speculative build by a smaller builder – their web site just shows a render and says “In permitting”. I’m going to watch both to see if they get any interest or just languish.

    1. They’re pilings, and if done right are down in bedrock and will hold the house for a long, long time. It beats the alternative, where they didn’t use them and just built on loose fill. I remember seeing a house above Alki where the hillside failed and the house was condemned. It was for sale for like $90k or something. Only a builder would even consider something like that….

    2. Drainage to prevent saturation is an issue too, but it can be properly mitigated with enough money. Unfortunately geotechnical preparation is where cost cutting frequently occurs.

      1. Yeah, from when I walked by it looked like there already was one slide just before the house and restoration work done. The upside is no lawn to maintain.

        Having the underside of the house that exposed isn’t something I know enough about to be comfortable with. I’m probably being irrational though. The house sat in a state of incompleteion for a few years before the new owner, I mean flipper, bought it. I remember seeing it without the driveway finished and connected and covered in moss. hopefully nothing important decayed then.

    1. This scenario could send sovereign bond yields a lot lower!

      China Economy
      China will likely wait out the trade war as it bets on its own economy
      Published Thu, Aug 29 2019 11:50 PM EDT
      Weizhen Tan
      Key Points
      – As trade tensions with the U.S. draw out, the world’s second largest economy will likely seek to beef up its domestic economy, which contributes more to growth than its exports, according to analysts.
      – “We describe China’s current strategy as ‘endurance’: the main goal is to preserve China’s economic resilience, while taking the higher US tariffs as a given fact,” Deutsche Bank economist Yi Xiong wrote in a report.
      – Meanwhile, China will also try to diversify its supply chains and accelerate its opening up to other countries – reducing its reliance on the U.S. in the longer term.

      1. Yes, everyone in China is going to sell each other real estate. China is going to follow the US circa 2007 model, good look with that.

        1. Good look and good luck. If China keeps it’s domestic economy going it is still going to have to import a lot of soybeans.

          Related, one thing that is not discussed is the possible link between China turning to Russia for animal feed when China tariffed the US and its African Swine fever epidemic. Russia had a problem with African Swine flu prior to the China outbreak. It can be spread by contaminated animal feed. Due to the fever it may have lost half of its swine herd. They may have been victims of the trade war. China has been accused of blaming the US of engaging in germ warfare. However, the most logical explanation is they bought substandard feed and their own substandard standards for animals has led to this devastation.

          1. Blue, the point wasn’t about soybeans. The point is China turned to Russia for or animal feed and probably got burned very badly. Not as bad is the quality issues with Brazilian soybeans, still they are inferior. Point is China is hurting not just from the tariffs imposed on it but the restrictions imposed on our goods. Meanwhile the junk it was selling us is being made by other developing countries and I doubt it will be any worse quality.

    2. So long as stocks keep going up, why worry about this pessimism?

      The Financial Times
      US equities
      How markets became curiouser and curiouser in August
      Investors close out a month that set records for low bond yields and signalled trouble ahead
      Joe Rennison, Colby Smith and Richard Henderson in New York 9 hours ago

      Financial markets “stepped through the looking glass” in August, challenging previously unassailable investment beliefs and signalling a profound unease about the future of the global economy.

      The Alice in Wonderland reference is from Scott Clemons, chief investment strategist for private wealth management at Brown Brothers Harriman. “A lot of traditional economic relationships have been called into question,” he said, and everyone is just going to have to get used to it. “That is the new normal.”

      As traders close out the month, here are five charts showing how markets became curiouser and curiouser.

      An extraordinary $17tn of bonds around the world now carry a negative yield, as investors bid up prices so high that they are guaranteed a loss if they hold them to maturity.

      The number has risen by $3.1tn in August alone, the biggest monthly rise since the start of 2016. Super-safe sovereign bonds account for most of negative yielding debt but there is also now $1tn of corporate bonds that trade with a below-zero yield.

      Geographically, it is Europe and Japan where the bulk of the negative-yielding debt lies. US dollar-denominated debt accounts for roughly 90 per cent of all bonds that still have a positive yield, according to Bank of America.

          1. I believe Dan is referring to “There Is No Alternative” (e.g. the idea that because of what the Fed is doing, it makes sense to go into the stock market).

      1. From further down the article:

        US stocks provide greater fixed income than fixed income

        The yield on the 30-year Treasury also fell below the dividend yield from companies in the S&P 500 index on Tuesday, before a modest rebound later in the week. With the exception of very short-term US government bills, that meant the yield on all maturities of government bonds and notes was less than the income offered by stocks, upending a relationship between equities and bonds that has held for decades.

        Many investors buy Treasuries for their consistent, virtually risk-free income from interest payments, so the development poses them with a dilemma. Stocks may offer higher income, but even the safest companies — utilities and real estate, for example, or consumer staples — come with the risk that their share prices might fall and dividends might be cut.

        1. I’m struggling to grasp the relevance of this passage, given that we have entered a new era wherein stock prices have decoupled from fundamentals:

          “…but even the safest companies — utilities and real estate, for example, or consumer staples — come with the risk that their share prices might fall and dividends might be cut.”

          “…but even the safest companies — utilities and real estate, for example, or consumer staples — come with the risk that their share prices might fall and dividends might be cut.”

          “…but even the safest companies — utilities and real estate, for example, or consumer staples — come with the risk that their share prices might fall and dividends might be cut.”

          1. struggling to grasp the relevance of this passage

            Seriously?

            Maybe you should turn the crack head news off for a week or two. Your head might clear.

          2. a pleasant good day to you, sir.

            Sorry if that came off as impolite to you Prof. Sometimes I find the “news” incredibly stupid.

          3. It would be tough to be responsible for making steady payments to annuitants with bond yields in the toilet.

        2. “…the yield on all maturities of government bonds and notes was less than the income offered by stocks, upending a relationship between equities and bonds that has held for decades.”

          This brings to mind Stein’s Law:

          If something cannot go on forever, it will stop.

          Unless we have entered a New Era, a Through-the-Looking-Glass world wherein the safest assets cost investors negative yields to purchase them, while risky assets pay higher incomes than government bonds of all denominations for the first time in decades, if not centuries, then something’s gotta give. The questions are of how this disequilibrium anomaly will break down and where the consequences will land.

      1. Thanks. Unfortunately I can’t see the chart. Could be a problem with EU wi-fi restrictions…

    1. When you “own” a home priced 50 times your income those little moves can hurt a lot. Lose 2 percent in a year and you have lost your income for a year.

      1. It’s crazy how much so many people worldwide have gambled on faith that “real estate always goes up,” while appearing to be completely oblivious to the risk of getting financially wiped out by excessive leverage in the face of real estate price declines.

  17. Business
    Trade war: US set to hit China with new wave of tariffs
    By Ana Nicolaci da Costa Business reporter
    8 hours ago

    The US is due to impose fresh tariffs on a range of Chinese goods, in a sharp escalation of a bruising trade war.

    On Sunday, the US is expected to hit billions of dollars worth of Chinese products with 15% duties, in the first of two rounds of new tariffs.

    Beijing said it has “ample” means to retaliate, while also calling for both sides to continue trade negotiations.

    The move comes amid heightened tensions between Washington and Beijing.

    By the end of the year, Washington aims to impose tariffs on almost all Chinese imports into the US.

        1. China seems to be winning that game, based on exchange rates. And it sux to be a HODLer of U.S. real estate whose valuation depends on Chinese investors waiting with all-cash offers.

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