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A Financial Bubble That Began Inflating Nearly Three Decades Ago Is Finally Fizzling Out

It’s Friday desk clearing time for this blogger. “Softening luxury markets throughout major U.S. metros have pushed average sales prices down for top-priced homes from the turbulent highs of a few years ago, leaving many luxury homeowners—from New York City to Los Angeles to Miami—sitting on their hands while their listing’s ‘days on market’ ticks painfully up. Managing sellers’ expectations can be a delicate dance, realtors say, especially coming off years of ‘fast and furious’ price escalations in condo markets, said Moira Holley, co-founder at Realogics Sotheby’s International Realty based in Seattle.”

“In downtown Seattle, the condo market was so hot in mid-2016 that buyers camped outside overnight to be first in line to purchase new units. By contrast, the average sales price for all homes in the top 5% of the market declined 14.4%, to roughly $2.2 million, in the second quarter of 2019 compared to the same period in 2018. ‘Sellers remember those high highs and then as a market starts to shift, the prices soften,’ Ms. Holley said. ‘Our job as realtors in the luxury market is to help them come to terms with the market that we’re in and what the value of selling (in this current market) truly is.'”

“In Manhattan, where some 65% of owner-occupied housing stock consists of co-ops, the question of whether to rent a luxury unit often comes down to what city regulations and co-op boards will allow, said Lisa K. Lippman, a broker with Brown Harris Stevens. While the ultra-luxury sales market (properties typically $10 million and up) is soft, it hasn’t come to a grinding halt, Ms. Lippman said. ‘Things are selling; it’s just all about pricing—meaning you may not get the price you want,’she said.”

“There are signs that the market is stabilizing after years of prices in overdrive fueled by strong demand and tight supply. Redfin’s Delince Louis said he is seeing more inventory on the market this time of year than he has in the past five autumns. Some properties are also taking longer to sell and are going for less than asking, he said.”

“‘We’re seeing a lot of price reductions already. Generally speaking, I’m seeing price reductions as high as 5 percent,’ Louis said. ‘In South Boston this week we had eight listings that went through a price reduction. … Buyers have said: ‘That’s enough. We’re not going to be emotional about transactions. We’re going to be looking at other areas like Dorchester, Roxbury, Jamaica Plain. We’ll take our time.'”

“‘Right now, I have three listings in South Boston which traditionally would’ve been gone by now,’ he said. ‘There are 125 condos on the market today, average days on market is 98 days, which, given this time of year, to me, that’s a little more inventory that I’m comfortable with. My only concern in the spring is, if these units don’t move now, will we have an influx of properties.'”

“The world’s biggest shale patch is now officially a drag on jobs creation in the Lone Star state. Housing is also starting to take a hit there, the Dallas Fed said. In October, the region’s median home price fell 2.6% from August to $301,045. Monthly home sales fell 3.6% from September.”

“Postmedia’s David Carrigg produced a couple of catchy stories last week about prices of some detached homes falling sharply in Metro Vancouver. In less than three years, one west-side owner lost $800,000 on a home that sold for $2.4 million. No doubt the owner felt that was a ‘hard landing.'”

“While a ‘soft landing’ is a real thing in the world of aviation, Punwasi suggests it can seem like ‘gibberish’ in housing. ‘The concept implies that irrational markets will act rational if the government tells them to,’ said analyst Stephen Punwasi, who notes Ontario politicians have failed to resolve any of Toronto’s affordability problems.”

“A sharp decline in the number of landlords entering the buy-to-let sector in Aberdeen has been blamed on a glut of rental properties. ‘There is a glut of both houses to buy, particularly in the £250,000 and below bracket, and also to rent. This means that landlords are having to be more competitive and rents are reducing,’ said George Hepburne Scott, director of development for Savills in Edinburgh.”

“Right now discounts are offered at all ends of the market, by builders large and small, and savings range from tens of thousands of pounds to hundreds of thousands. After a reassessment, prices at Galliard Homes’ Orchard Wharf, have been dropped, with one-bedroom flats reduced from £499,000 to £460,000, and two-bedroom flats down from £699,000 to £665,000. In Bayswater W2, Chestertons has just cut the price of a luxurious three-bedroom flat in Porchester Road from £2.5 million to £2.25 million — a saving of a cool £250,000.”

“Singer Daniel O’Donnell spoke of how he got talked into buying property during the Celtic Tiger, but lost out badly in the economic collapse. ‘We bought a luxury apartment in Dublin and a few other places as the advice we got at the time was, you couldn’t put your money into anything safer than bricks and mortar. We bought at the height but now this stuff isn’t worth anything like the price we paid for it.'”

“Adel Divine Court was supposed to be a manifestation of the Indian Dream — a posh, gated high-rise complex of about 1,000 apartments in the New Delhi suburb of Faridabad. Instead, the development has become a nightmare. Eight years after the residences were put up for sale, the project remains uncompleted, with some buyers demanding refunds while others fight to have the construction finished.”

“This is not an isolated case. Stalled construction has become a problem of epidemic proportions in India’s urban property markets. Well over half a million housing units are in limbo as builders run low on cash and bad debts ripple through the country’s financial sector.”

“Ashoka Mody, a visiting professor at Princeton University, last week warned that the current slowdown is ‘not a short-term disruption.’ On the contrary, Mody said, ‘a financial bubble that began inflating nearly three decades ago is finally fizzling out.'”

“The number of unsold private homes in Singapore is increasing and with more launches coming up, the Monetary Authority of Singapore (MAS) has warned that a potential oversupply of unsold units could put pressure on the property market. Mr Chia Ngiang Hong, president of the Real Estate Developers’ Association of Singapore, had previously warned that an estimated 43,000 units would be launched for sale in the near future. With only about 4,200 units sold in the first half of this year, he estimated that it would take four or five years for the market to absorb this excess supply of units.”

“If prices get lower, the central bank’s message to homebuyers is still one of caution: ‘Prospective buyers should be mindful of their ability to service long-term mortgage obligations and be cautious on taking new commitments to debt-financed property and other large purchases.'”

“Speculators such as local financier Pollyanna Chu and Shimao Properties chairman Hui Wing Mao, who acquired 75 percent of The Center, a 73-storey office building on Queen’s Road Central from Li Ka-shing’s CK Asset Holdings for HK$40.2 billion ($5.2 billion) in October 2017, may be caught in a bind. After having financed their acquisition of the Center with bonds yielding as much as 15.25 percent, some members of the Center consortium are paying dearly for their market optimism. Not a single sale of a unit in the Center has been recorded since Hong Kong’s protests began in June.”

“The three-storey penthouse atop the Stamford Residences tower at The Rocks is about to offer a glimpse into the ever-changing fortunes of Sydney’s high-end market when it returns to the market for $15 million in coming weeks. It was bought by one of China’s richest men, Richard Qiangdong Liu, for his bride-to-be with the angelic smile, Zetian Zhang, six months before they married in Sydney in 2015.”

“Zhang is not the only high-profile buyer from China who has lost money on their prestige Sydney home. Shipping tycoon Shannian Huang had bought the penthouse atop The Residence tower overlooking Hyde Park in 2013 for $17 million when it was new. It was returned to the market last year with a $26 million price tag that was revised to $21 million this year and sold last weekend for $14.5 million.”

This Post Has 140 Comments
  1. ‘Ashoka Mody, a visiting professor at Princeton University, last week warned that the current slowdown is ‘not a short-term disruption.’ On the contrary, Mody said, ‘a financial bubble that began inflating nearly three decades ago is finally fizzling out.’

    I’ve long said if one accepts or even considers there is a housing mania, the first question should be, when did it start? After years of consideration I believe in the US it started in the mid-80’s, when Fannie and Freddie doubled their market share. And that share has only gone up since.

    1. “I’ve long said if one accepts or even considers there is a housing mania, the first question should be, when did it start?”

      IMO it started when Joe Sixpack lost his fear of debt.

      The Joe Sixpack that emerged out of the Great Depression emerged with a Great Fear of debt. This Great Fear was relentlessly chipped away during following generations until it morphed into becoming something that closely resembles a view that Debt Equals Wealth.

      1. If the Greatest of Fools is the fool able to garner the most amount of borrowed money to plunk down on a house then this Greatest of Fools is the fool that sets the price of the comps.

        Note: Setting the price of the comps determines the values of the comps. If the values of the comps rises then – presto! – equity wealth is magically created for … for entire neighborhoods.

        A true economic miracle, all brought about by fools who have absolutely no fear of debt but do have access to enormous quantities of borrowed money.

        1. It’s telling that the media stopped using the years of income to shack prices measure. When one article about it did come out years ago, it revealed the highest ratios were in the most expensive areas, with San Jose sitting way up there and Mercer Island at the top with 13 years.

          1. “It’s telling that the media stopped using the years of income to shack prices measure.”

            The media is nothing more than a mouthpiece of the PTB designed to shape public opinion in the form and in the direction that the PTB desires it to be shaped.

            This would not work well on a well informed public but, as one can readily see if he/she cared to take al look, it works well on our current totally dumbed-down population of ignorant pukes.

          2. The tiny, hollowed-out logging towns of western WA and Oregon, where any job is a good job, are sporting median house prices of 10x income. It’d be laughable if it wasn’t so sad. Worse, rents are so high now that the locals have taken to living in campgrounds and in the woods in tents. Heckuva job, Obama!

          3. “…So because of all these actions we’ve been taking, our housing market is beginning to heal. Home prices are rising at the fastest pace in seven years. Sales are up nearly 50 percent. Construction is up nearly 75 percent. New foreclosures are down by nearly two-thirds. Millions of families have been able to come up for air — they’re no longer underwater on their mortgages. (Applause.)

            And just like the crisis hit Phoenix very hard, thanks to some great leadership here locally, Phoenix has also led one of the biggest comebacks in the country. (Applause.) So you should be proud of what you’ve done here. Home prices in Phoenix have risen by nearly 20 percent over the last year. New home sales are up by more than 25 percent….”

            https://obamawhitehouse.archives.gov/the-press-office/2013/08/06/remarks-president-responsible-homeownership

      2. Mid-80s is when Joe Six-pack lost his fear of debt, so of course that’s when the consumer credit bubble started. It started small, at the grocery store. IIRC, people went directly from paying cash to paying with credit cards (debit cards were later). It was no big deal to pay back $20-$50, since most people had that in cash anyway. Fast forward 40 years later, and it’s no big deal for a strawberry picker to think he can pay back $750K.

        1. “Fast forward 40 years later, and it’s no big deal for a strawberry picker to think he can pay back $750K.”

          And today’s mortgage banker expects to be made whole again.

    2. I would say 1993.

      Recession. Gulf war with very high oil prices. Interest rates at 15%. Housing in the toilet.

      I still remember articles from that time on discussions how it was cheaper to own than rent.

        1. Rates are just one piece of the puzzle. The current FHFA guy is polar opposites to Mel Watt. What’s getting changed is loan to value, debt to income, credit scores and down payments. Most important is a reduction of a combination: called risk layering.

          1. I’m waiting for the -ist labels to be applied to Calabria. His tightening policies are hitting POCs pretty hard.

      1. Bill Clinton’s repeal of Glass-Steagall (for which the Clinton Crime Family has been generously rewarded by Wall Street) set the stage for the speculative manias that followed.

      2. “I would say 1993”

        I’ve posted these figures before, but they are so illustrative: SF Bay Area Real Estate Market Cycles 1984-2017 (from bayareamarketreports.com)

        1984-1990: + 100% (6 years)
        1991-1994: -11% (3 years)
        1995-2001: +100% (6 years)
        2001: -10% (1 year)
        2002-2007: +59% (5 years)
        2008-2011: -27% (3 years)
        2012-2017: +80% (5 years)

        So in probably the bubbliest US metro, that 1993 “correction” was a minor drop after prices doubled in 6 years. The bubble started in the 80s.

        1. “The bubble started in the 80s.”

          You are likely correct as Ronald Reagan deregulated the financial industry paving the way for easy credit.

          1. Nice attempt RMS at revisionist history. Interest rates dropped after Carter’s high inflation rates were crushed during the Reagan years. The drop in interest rates was a natural result as Volcker no longer needed to keep interest rates artificially high. Supply side economics produced more good so shortages no longer kept inflation high. This was best seen in oil which dropped from $40 a barrel to $10 a barrel by the mid-1980s. It has nothing to do with deregulation at that point or artificially engineered low interest rates which occurred under Obama. It was market forces in a good economy with plummeting rates and high gdp growth. Housing was going up on fundamentals including much higher demand due to baby boomers reaching adulthood. Now after Reagan when globalist Bush took over, the attempts to keep consumer demand high by housing asset inflation to buy overseas goods did begin, so the late eighties did begin the creation of bubbles, which Clinton perfected.

          1. True. The gold standard would never have let us run huge balance of payment deficits. The globalists could not have shifted our wealth overseas by creating asset bubbles which encouraged people to spend money to promote globalism. As soon as the gold ran out we would not have been able to buy more foreign goods.

    3. “After years of consideration I believe in the US it started in the mid-80’s…”
      That time frame matches up well with the start of the long term reduction in interest rates.
      In 1985, a 12% interest rate for a 30 year fixed rate mortgage was a steal. By 1986 the 30 year fixed rate fell into the single digits. Of course one can argue that the Fannie/Freddie implied government backing accelerated the process.

  2. ‘We’re seeing a lot of price reductions already. Generally speaking, I’m seeing price reductions as high as 5 percent,’ Louis said. ‘In South Boston this week we had eight listings that went through a price reduction. … Buyers have said: ‘That’s enough. We’re not going to be emotional about transactions. We’re going to be looking at other areas like Dorchester, Roxbury, Jamaica Plain. We’ll take our time’

    ‘Right now, I have three listings in South Boston which traditionally would’ve been gone by now,’ he said. ‘There are 125 condos on the market today, average days on market is 98 days, which, given this time of year, to me, that’s a little more inventory that I’m comfortable with. My only concern in the spring is, if these units don’t move now, will we have an influx of properties’

    Can you see what the Boston Globe is doing here? After over a year of ducking and weaving about price declines, now they are publishing more than one article a week letting sellers know they need to start sawin’ and a slashin’. This is a classic REIC media tactic, BTW.

    1. The first link is a similar tale:

      Don’t Panic and Turn the Home You Can’t Sell Into a Rental

      In the U.S., it’s best to wait out the soft luxury market and sell, not lease

      ‘In most cases, a better strategy for a sluggish listing is to lower the price and try to meet the market where it’s at, experts said. Another common tactic is to remove the listing altogether, wait a few months, and relist it at a new price. ( Multiple Listing Service rules require properties to come off the market for a certain number of days in order to reset the “days on market” count. The Northwest MLS, for example, which covers Seattle real estate, requires 90 days off market.’

      Openly discussing market manipulation.

      “My general recommendation is that no one’s ever going to take care of your house the way you’ve taken care of it, and I don’t recommend that clients rent their house in most cases,” said Tori Horowitz, an estate director at Compass’ Hollywood, California, office and the owner of Canyonhaus, a bespoke real estate firm in Los Angeles. “In some cases, if there’s a pressing financial issue and they need a chunk of cash, then of course we just lower the price and get the house sold. It depends on the reasons why people are selling.”

      Bespoke Tori, why would rich people in California have a pressing financial issue? It can’t be they are broke-a$$ and over-leveraged can it?

      1. ‘The word bespoke (/bəˈspoʊk/) has evolved from a verb meaning “to speak for something” to its contemporary usage as an adjective that has changed from describing first tailor-made suits and shoes, and later, anything commissioned to a particular specification (altered or tailored to the customs, tastes, or usage of an individual purchaser), and finally to a general marketing and branding concept implying exclusivity and appealing to snobbery.’

        https://en.wikipedia.org/wiki/Bespoke

    2. Remember sellers.

      It is not about you getting the highest sales price

      It is about getting to closing and getting a commission check generated.

      Those Lexus car payments are not going to pay themselves!!!

  3. “Managing sellers’ expectations can be a delicate dance, realtors say, …”

    – You don’t say?

    – Similar quote and comment for buyer’s expectations. 🙂

    “At this juncture, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.” – Fed chairman, Ben Bernanke, Congressional testimony, March, 2007

    “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.” – Chuck Prince, former chairman and CEO of Citigroup (told to the Financial Times on July 10, 2007).

    1. “In downtown Seattle, the condo market was so hot in mid-2016 that buyers camped outside overnight to be first in line to purchase new units. By contrast, the average sales price for all homes in the top 5% of the market declined 14.4%, to roughly $2.2 million, in the second quarter of 2019 compared to the same period in 2018.” [YoY]

      – The essential characteristics of another financial asset bubble. We’ve already been through two of these in the 21st century. The third is playing out now. And yet, the repeating phenomenon is completely missed by the MSM and REIC. It’s almost as if there’s a concerted effort to ignore the behavior and it’s root cause.

      “All I know is what I read in the papers, and that’s my alibi for ignorance.” ~ Will Rogers

      “The man who reads nothing at all is better than educated than the man who reads nothing but newspapers.” – Thomas Jefferson

      “If you don’t read the newspaper, you are uninformed.  If you do read the newspaper, you are misinformed.”  ~Author unknown, commonly attributed to Mark Twain or Thomas Jefferson

      “As a dog returns to its vomit,
          so fools repeat their folly.” – Proverbs 26:11

      “Those who want to understand clearly the events which happened in the past and which (human nature being what it is) will at some time or other and in much the same ways be repeated in the future.” – Thucydides, Peloponnesian Wars, 431 BCE, Translation by Rex Warner

      “What’s past is prologue.” – William Shakespeare, The Tempest

      “Those who cannot remember the past are condemned to repeat it,” – George Santayana

    1. “Debt is slavery.”

      Yep. Place yourself of the wrong end of this slavery and you are screwed. Place yourself on the correct end of this slavery and you have it made.

      It’s all about choices.

      1. Nirvana for a lender is being able to convince a puke to sign a multi-year loan document that has imbedded in it an agreement that the borrower shall commit himself to paying to the lender a monthly payment that is to be determined sometime in the future due to the interesting provision that includes the very interesting word “adjustable”, as in adjustable mortgage rate.

        Only a totally dumbed-down fool would agree to such terms and recent history had shown that millions of these totally dumbed-down fools willingly lined up to lay down their signatures on an assorted number of such loan documents placed before them.

        A nation of dummies.

    2. Black Friday reminder:

      Debt is slavery.

      Except of course when one is replenishing certain items previously lost in a tragic boating accident.

      1. “Except of course when one is replenishing certain items previously lost in a tragic boating accident.”

        Back when I was in the military we were doing a river training op in an inflatable boat that tumbled when the river channel narrowed. Both of the M60 belt fed weapons sank, and the training was halted until divers recovered them. All serial numbers were verified before we hit the river again.

        1. Yeah, we’ll send them to Mexico all day long but we want to be 100% certain that nobody shoots up a McDonalds with a weapon that our military was responsible for.

  4. ‘Managing sellers’ expectations can be a delicate dance, realtors say, especially coming off years of ‘fast and furious’ price escalations in condo markets, said Moira Holley, co-founder at Realogics Sotheby’s International Realty based in Seattle…In downtown Seattle, the condo market was so hot in mid-2016 that buyers camped outside overnight to be first in line to purchase new units. By contrast, the average sales price for all homes in the top 5% of the market declined 14.4%, to roughly $2.2 million, in the second quarter of 2019 compared to the same period in 2018. ‘Sellers remember those high highs and then as a market starts to shift, the prices soften,’ Ms. Holley said. ‘Our job as realtors in the luxury market is to help them come to terms with the market that we’re in and what the value of selling (in this current market) truly is’

    So they over-paid and camped out to do it. Check!

    ‘There are signs that the market is stabilizing after years of prices in overdrive fueled by strong demand and tight supply…Louis said he is seeing more inventory on the market this time of year than he has in the past five autumns. Some properties are also taking longer to sell and are going for less than asking…‘We’re seeing a lot of price reductions already. Generally speaking, I’m seeing price reductions as high as 5 percent,’ Louis said. ‘In South Boston this week we had eight listings that went through a price reduction’

    Wa happened to supply and demand? And where did all these shacks and airboxes come from? Don’t tell us they were there all along and this supply horse-hockey was made up. That would suggest somebody was a lion.

    1. “…In downtown Seattle, the condo market was so hot in mid-2016 that buyers camped outside overnight to be first in line to purchase new units. By contrast, the average sales price for all homes in the top 5% of the market declined 14.4%, to roughly $2.2 million, in the second quarter of 2019 compared to the same period in 2018…”

      This goes to show how glacial the pace of the real estate market really is.

  5. Eye see $tealth levearge$ … in the village$, in the citie$, across thee land, North, $outh, Ea$t, We$t … when cometh our.winter$.of.di$content?

  6. ‘Mr Chia Ngiang Hong, president of the Real Estate Developers’ Association of Singapore, had previously warned that an estimated 43,000 units would be launched for sale in the near future. With only about 4,200 units sold in the first half of this year, he estimated that it would take four or five years for the market to absorb this excess supply of units’

    That’s nothing Chai, above $3 million, Miami Beach has over 20 years of supply.

    It is disappointing to see Singapore slide back into a bubble though. They had been one of the more astute governments dealing with the problem.

  7. The tsunami is coming…

    “My only concern in the spring is, if these units don’t move now, will we have an influx of properties.’”

  8. Herb$ and hotel$: The small busine$$es helping revive rural Portugal

    Reuters | by Sophie Davies

    “Now he grows an array of aromatic plants including lemon thyme, lemon balm, peppermint and common mint, mainly for export. “We decided to come back (here) to improve our quality of life,”

    Herbas is one of a growing number of small businesses cropping up in Portugal’s sparsely populated rural interior, drawn by the availability of land, rising tourist interest and business funding opportunities

    https://www.reuters.com/article/us-portugal-land-business-trfn/herbs-and-hotels-the-small-businesses-helping-revive-rural-portugal-idUSKBN1Y202V

    $ounds kinda like “Home$teading.lite”, circa American 1931

    1. I am 1/2 Portuguese Hwy…Have a number of friends that have homes there and go back often..One who is a contractor goes back for 3 months every summer…The secret is out on Portugal…A lot of people looking there…

      1. Eye did knot nows scdave, but eyes gonna visit SE Spain soon, & plan on wanderin’ (willfully lost) in Portugal on a electric bicycle, venturing upon a personal quest to encounter that strange fruit called: Port

          1. Ruby or tawny! Funny story: my husband and I flew to Boston for a friend’s wedding years ago and went to Grill 23 & Bar. Our hotel was nearby and we were completely disheveled after our flight; I had dried soda all over me. Our waiter didn’t warm up to us until we started talking port.

  9. I am praying for Sacramento inventory to rise and prices to drop. So far the choice areas like midtown, Land Park, East Sacramento, and Curtis Park are not having any price reductions. Since I work downtown, I don’t want a 2 hour daily commute. But I am not paying 500k for a tiny 2 bedroom house when it would cost me double over renting a small apartment.

    1. Why buy a house when prices are falling? Rent one for half the monthly cost. Buy later after prices crater for 70% less.

      Sacramento, CA Housing Prices Crater 19% YOY On Rampant Mortgage And Appraisal Fraud

      https://www.zillow.com/sacramento-ca-95825/home-values/

      https://snag.gy/m5EzRB.jpg

      As a noted economist said so eloquently, “A house is a rapidly depreciating asset that empties your wallet every day you own it. Rent a house for half the monthly cost of buying it.”

    2. I am praying for Sacramento inventory to rise and prices to drop. So far the choice areas like midtown, Land Park, East Sacramento, and Curtis Park are not having any price reductions.

      I’m hoping that spreads to Folsom in the next year. It’s been slow going but most of the fall inventory did finally get sold with only minor price cuts.

  10. ‘The world’s biggest shale patch is now officially a drag on jobs creation in the Lone Star state. Housing is also starting to take a hit there, the Dallas Fed said. In October, the region’s median home price fell 2.6% from August to $301,045’

    I’d bet most of the shacks out there were built for 50k. Or less. So why the run up? Federal loan guarantees.

    1. The government distorts the market place and make housing unaffordable with all thier government programs?

      Do the democrat presidential candidates know this?

          1. A full range of stable jobs — preferably spread out over the entire US to take advantage of the vast infrastructure instead of packing into 10 cities — is how we build wealth in America.

            Housing is a symptom of a stable job, not a builder of wealth. How many times did we say thing on HBB? And Warren knows this full well. But she can’t say it anymore.

          2. A full range of stable jobs — preferably spread out over the entire US to take advantage of the vast infrastructure instead of packing into 10 cities — is how we build wealth in America.

            I believe the only way to build wealth is to create the right type of jobs and circumstances that allow savings + investments to grow faster than expenses. But that is a difficult proposition when you have housing/medical/transportation costs rising faster than income.

            “Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” – Charles Dickens

          1. Fauxahontus heap big fraud. Blocked an audit of the Fed, which would’ve showed how these Keynesian fraudsters are colluding with their Wall Street grifter accomplices to bilk the proles out of their wealth and assets, while enabling runaway speculation in the housing market.

          2. Blocked an audit of the Fed,

            I get that you are not a fan of Warren, but she is no friend of banks. I loved Ron Paul, but auditing the Fed would have done almost nothing. It was, and is, a symbolic gesture. Changing the carried interest loophole, re-instating Glass Steagall, or even changing the tax system so that capital gains and ordinary income are taxed equally would actually accomplish something. Audit the fed, not so much.

          3. ‘auditing the Fed would have done almost nothing’

            I passed the CPA exam. Auditing the Girl Scouts is important. The annual act of auditing is important for any organization. What’s more, they are audited, I can guarantee you that. They just don’t make it public.

  11. ‘not a short-term disruption.’ On the contrary, Mody said, ‘a financial bubble that began inflating nearly three decades ago is finally fizzling out.’

    Sounds like the Fed better fire up the printing press to high blast and drive Treasury bond yields a little closer to the zero bound.

    My question for this guy is, what about the current situation means the end game is on? Or stated otherwise, what would stop the Fed from sustaining the Everything Bubble forever?

    1. what would stop the Fed from sustaining the Everything Bubble forever ?

      Hyper inflation….Although, I consider the last 4 years in asset classes of all sorts to be Hyper inflated…Seeing appreciation rates on assets of 10-15% a year every year I would think is Hyper Inflation by definition…

      1. ” …what would stop the Fed from sustaining the Everything Bubble forever? ”

        A very large monkey wrench, from a very $mall country.

        1. Long the the King of Wale$!

          WORLD NEW$ |NOVEMBER 29, 2019

          Briti$h PM Johnson to Trump: keep out of UK election

          Reuters |By Guy Faulconbridge, Andrew MacAskill

          “What we don’t do traditionally as loving allies and friends, what we don’t do traditionally, is get involved in each other’s election campaigns,” Johnson, 55, told LBC radio.

          “The best (thing) when you have close friends and allies like the U.S. and the UK is for neither side to get involved in each other’s election.”

          Johnson has said that, if he retains power, he will deliver Brexit by Jan. 31 — after nearly four year$ of political cri$is following a 2016 referendum in which Britons voted to leave the European Union.

          He said he wanted to keep in place government preparations for a possible no-deal Brexit – under which Britain would leave without agreement on the terms with Brussels and potentially expose itself to more economic uncertainty – but that he expected to secure a trade deal with the EU by the end of 2020.

          “Many of those preparations will be extremely valuable as we come out of EU arrangements anyway,” he told reporters.

      2. what would stop the Fed from sustaining the Everything Bubble forever ?

        Social unrest. Despite our fake Soviet-style inflation and employment statistics, and the captured media’s “Everything is Awesome!” permabull cheerleading, the increasingly pauperized middle and working classes are becoming increasingly hard pressed as the Fed’s debasement of the currency and the oligarchy’s financialization of everything means the cost of living is getting untenable. The screwed-over proles are getting close to the breaking point, while the Internet has broken the Oligopoly media’s code of silence when it comes to exposing the Fed’s swindles against the 99%.

    2. U.S. stock market is overvalued, IMF says
      Published: Oct 17, 2019 7:27 a.m. ET
      Belief in Fed rescue is allowing investors to ignore tensions over international trade policy – IMF
      By Greg Robb
      Senior economics reporter
      A statue of George Washington overlooks the New York Stock Exchange in New York.

      An environment of low interest rates has set off a search for yield and created stretched valuations in risk assets, including the U.S. equity market, according to an International Monetary Fund report released Wednesday.

      “Equity markets appear to be overvalued in Japan and the United States,” the IMF said, in its latest Global Financial Stability report.
      The U.S. stock market just became overvalued since the spring.

      When markets have stretched valuations, it raises the possibility of sharp sudden adjustments, the report warned.

      The IMF said investors seem to believe that the Federal Reserve and other central banks will respond quickly to sharp tightening in financial conditions, “hence implicitly providing insurance against significant declines in stock prices.”

      This sort of safety net was first dubbed the “Greenspan put” after the October 1987 stock-market crash. It is now updated to the notion of a “Powell put”, in an allusion to the function of an actual put option giving the holder the right but not the obligation to sell the underlying asset at a set price, serving as an insurance policy against a market decline.

    3. As I have been saying for twelve years in posts high inflation and we will see it reflected in gold prices. If gold is essentially flat, they have control. The globalists could not turn housing prices around to 2011, which not coincidently was when they broke the upward trend in gold prices. Up until recently gold was heading higher and homes were trending lower. Gold has been stopped in its tracks and we are just starting to see some evidence of housing prices stabilizing. Will this counterintuitive correlation continue? Yes, I think so, the Fed will do everything it can do to keep the bubbles going since they want to keep globalism going and they have learned that recessions promote populism.

  12. There are signs that the market is stabilizing after years of prices in overdrive fueled by strong demand and tight supply. Redfin’s Delince Louis said he is seeing more inventory on the market this time of year than he has in the past five autumns. Some properties are also taking longer to sell and are going for less than asking, he said.”

    – Now that housing has been financialized and converted from shelter into just another asset class, these general guidelines from Bob Farrell also apply. There’s no “stabilization in a bubble; there are no “permanently high plateaus.” Bubbles always pop, but we don’t seem to learn the lesson and avoid them.

    Mr. Farrell, Merrill Lynch’s chief market strategist from 1967-1992 penned some pretty decent “Rules to Remember”…
    2) Excesses in one direction will lead to an opposite excess in the other direction.
    3) There are no new eras – excesses are never permanent.
    4) Exponential rapidly rising or falling markets usually go further
    than you think, but they do not correct by going sideways.

    1. “The federal government has dramatically expanded its exposure to risky mortgages. In 2019, there is more government-backed housing debt than at any other point in U.S. history, according to the Urban Institute. A growing number of homeowners faces debt payments that amount to nearly half of their monthly income.”

      “‘There is a point here where, in an effort to create access to homeownership, you may actually be doing it in a manner that isn’t sustainable and it’s putting more people at risk,’ said David Stevens, a former commissioner of the Federal Housing Administration. ‘Competition, particularly in certain market conditions, can lead to a false narrative, like ‘housing will never go down’ or ‘you will never lose on mortgages.’”

      “The Federal Housing Finance Agency, at the time under Director Mel Watt, began working on plans to direct Fannie Mae to purchase loans with higher debt-to-income thresholds, Watt said. ‘It is intuitive – you think the higher somebody’s debt-to-income ratio, the more problems they are going to have,’ he said from his home in North Carolina, where he is now retired. ‘But that’s just not the best criteria to apply to be quite honest.’”

      http://housingbubble.blog/?p=2452

      1. The best criteria is how many free sh!t votes it can buy…

        “But that’s just not the best criteria to apply to be quite honest.”

      2. ‘housing will never go down’ or ‘you will never lose on mortgages.’

        They forgot one of the perennial canards:

        California real estate always goes up.

        1. California real estate always goes up.

          If you measure “always” by the human lifespan, for many that has proven true. They bought, made millions, rode out minor corrections and then died without ever being proven wrong.

    2. 3) There are no new era$ – excesses are never permanent.

      Internal combustion engine$, $ilcon transistor$, digital.device$

      items that could argue, whilst knot permanent, do represent new eras of tran$ient ma$$ transformation$.

  13. “The world’s biggest shale patch is now officially a drag on jobs creation in the Lone Star state.”

    Maybee bowling & Drive.inn movie makeout theaters will become hit attraction$ in West Texas bush country yet again!

    1. Sure, relabeling “vegan” to “plant-based” sure had an effect: it just made them sound even more arrogant.

      Here are the new labels that were suggested in the article:

      Global Meltdown, Global Melting
      Climate Collapse, Climate Chaos
      Boiling Point, Melting Point
      Emission Critical
      Planet Critical
      Pre-Extinction
      The Great Collapse
      Earthshattering

      If you ask me, none of them will work. The trick behind a good label is that nobody knows you’re manipulating them (as they say, if you know you’re being put under a magic spell, the magic ceases to work). These are so inflammatory that people will know in a second that they are being had.

      1. It’s pretty wet and cold in San Diego this Thanksgiving weekend. We’ll have to pump water out of the man-made stream in Encinitas because the millennial ecology conartisans didn’t plan for this much rain.

        1. Well, iffin’ the combustible internal motor.vehicles never leaked fuel & oil & grease onto the road pavements, then they would knot have to paint: “drains to the ocean” above all the street drains. How far is Encinitas from the sea cliffs @ moonlight beach, like 20 miles? Then again, who cares about old.men, boys & gryls, surfing in a toxic brew of salinty?
          Now, let’s discuss local sewer treatment outflows …

          Go, Surfrider Foundation!

          1. Local News today

            Ocean and bay areas remain closed from Newport Beach to Dana Point following 4-million-gallon sewage spill

            The spill was first reported at 4:40 p.m. Wednesday and was due to a broken main in Laguna Beach, officials said Friday.

            (Orange County Health Care Agency)
            By CITY NEWS SERVICE , DAILY PILOT STAFF NOV. 29, 2019

          2. Less than a mile from my property.

            That is too bad. I spent a lot of time on Moonlight beach. Lots of family in Encinitas. Most have now relocated to Calrsbad though.

          3. Eye lived 1/2 mile from “Beacons” straight up Leucadia Blvd @ Hermes. Juanitas’s rolled tacos …

      2. ” …it just made them $ound even more arrogant”

        eye’m a card carryin’ member of this $ocial club:
        “Beef, it’s what’s for dinner.”

        Nix, nix, nix … no face.book … & a non paying member of the the green.meat club:
        “Leaf, it’$ what’$ for dinner.”

        1. The top runner for the last couple of Peloton Treadmill sessions I’ve been running on is “PoweredByPlants”. He’s in his 40s and is really fast. Likes to advertise his vegan credentials while smoking everyone else in workout sessions.

    2. “Renaming climate change:”

      Geez, an American (1837) foresees this before Marketing Media & $pin.ma$ter$:

      “Live in each season as it passes; breathe the air, drink the drink, taste the fruit, and resign yourself to the influence of the earth.”

      “What is the use of a house if you haven’t got a tolerable planet to put it on?”

      H.D. Thoreau

  14. How China & Brazilian NON.wanker.bankers are $upporting Brazilian farmer$! … (Amazon jungle land must bee cheap & easy to clear!)

    BUSINE$$ NEWS | NOVEMBER 29, 2019

    Farm machinery maker$, Brazil bank$ working on private financing – Deere

    Reuters |Marcelo Teixeira

    The Brazilian government’s moves to reduce its role in the sector disrupted one of the world’s largest markets for agriculture machinery earlier this year.

    A government-sponsored financing package for farmers ran out earlier than expected, leaving a gap of credit in the sector that hit sales of tractors, combines and other equipment.

    “The money was over, and we stayed 90 to 120 days with very low activity (in sales),” said Paulo Herrmann, Brazil CEO for the maker of John Deere brand machines.

    Herrmann said he expects credit from the so-called Crop Plan, a government annual policy that extends subsidized financing lines, will end around March next year, a couple of months before a new package comes.

    “But this time the government already said that there will be no more money, so the companies in the sector are working on alternatives along with banks,”

    Herrmann said the outlook is positive for the new grain season, with an addition of around 1 million hectares in cultivated area in Brazil.

    But he said Brazil could do a better job on communications, when it comes to fierce international criticism the country faces over environmental problem$.

    ($o, the gubbermint wishes to exit sub$idizing farmers using Non.bank private equitie$ loans, then when those Wanker.banker$ fail, who is left to $ave the collap$ed financial entitie$? If, you guess the gubermint, via taxe$ you might bee on to $omething!)

  15. (Feel free to arrange the likely chronologie$)

    Coming attraction$: New U$A States & citizen$,

    51st: Hong Kong
    52nt: Puerto Rico
    53rd: Guam
    54th: California $outh

  16. “In downtown Seattle, the condo market was so hot in mid-2016 that buyers camped outside overnight to be first in line to purchase new units.

    These FBs’ camping experience will serve them in good stead once they are financially ruined and living in homeless encampments.

  17. In less than three years, one west-side owner lost $800,000 on a home that sold for $2.4 million. No doubt the owner felt that was a ‘hard landing.’”

    I believe that meets the criteria for a hard schlonging.

  18. ‘We bought a luxury apartment in Dublin and a few other places as the advice we got at the time was, you couldn’t put your money into anything safer than bricks and mortar.

    Guess you’ll be forever inoculated against taking advice from touts with a vested financial interest in selling you something, ay, Daniel?

  19. A quick glance at the SFHs listed in my area shows things are still about the same – a mix of small price cuts and a lot of days on the market for about half the listings.

    A look at what has sold doesn’t have anything leaping out at me as to what make them different from the ones languishing enough are still selling, though 60-70% of activity is happening below the last reported median price. Casa Spiffy is still looking like a very good deal compared to most recent activity, though I would say average prices per pound is continuing to trend downward.

    I hope everyone is have a good holiday weekend. I’m off to assemble some shelves in the garage, and other ReallyExcitingThings(tm). I’m having to double down on getting stuff done on weekends as I now have 2 clients overlapping for the next 3 months (can’t complain about the $$$ though), so you won’t see me posting here very often. And so much for trying to lose some weight before year end (Mrs Spiffy is baking up more Peach Cobbler)

    1. ….depends on what you paid for it relative to production cost.

      What other DebtDonkeys borrowed and paid have zero to do with anything.

    2. Fasting and keto for the weight. If you can’t resist the peach cobbler, at least stick to the fasting and ditch the carbs later. Start off with 16/8 or 18/6 and go from there.

      1. “Fasting and keto for the weight.”

        Learning what to buy and how to prepare it should be the diet strategy, IMHO. Eating right takes lots of time and effort. Most of the packaged schitt at the grocery store isn’t good for you, and it’s expensive; save yourself and your money!

          1. I’m doing the shopping and 70% of the cooking. I’ve always done the dirty dishes, cookware and utensils. That fugg’n dog is still fawned over while I clear the fenced yard of it’s schitt and vacuum its hair from the carpets. SIMP 🙂

  20. Bond defaults are soaring in China. The globalist mouthpiece “Economist” tries to spin this as a good thing, but the cascading defaults won’t be confined to China alone. And when social unrest spreads to China, look for its elites to distract the masses by embarking on some foreign military adventurism, which our feminized, PC military is ill-equipped to confront.

    https://www.economist.com/finance-and-economics/2019/11/28/bond-defaults-have-soared-in-china

    1. In China, it’s good to be connected to the state:

      “The problem for China is that the broader trend masks a chasm between state-owned and private companies. Of the firms that have missed payments on bonds this year, 89% have come from the private sector, according to Fitch. s&p Global calculates that 12% of private issuers since 2014 have defaulted, compared with just 0.2% of state firms.”

  21. Are you ready for the rug to get pulled out from under the market, just when the last bear finally throws in the towel and goes all into stocks?

    1. Like this article says, you shouldn’t time the stock market. Rather put all your money into the market all the time, in order to give Wall Street whales the best possible opportunity to clean your clock.

      Don’t time the market, but if you do, here’s when the bear might come knocking
      By Andrea Riquier
      Published: Nov 29, 2019 10:32 a.m. ET

      More money has been lost by investors trying to anticipate corrections, than has been lost in corrections themselves

      https://www.marketwatch.com/story/dont-time-the-market-but-if-you-do-heres-when-the-bear-might-come-knocking-2019-11-29?mod=home-page

    2. Are we in for a repeat of the ‘Long Depression’?
      By Andrea Riquier
      Published: Nov 29, 2019 8:38 a.m. ET

      There are a lot of parallels between the present moment and the late 1800s, including a backlash against globalization: economist
      Courtesy Everett Collection
      Nope, not the Great Depression – there was one that by many accounts was even worse

      A financial crisis that left in its wake deflationary price pressures, low productivity, stagnant incomes, a spike in populism, a backlash against globalization: if that all sounds familiar, you may not like the following insight.

      https://www.marketwatch.com/story/are-we-in-for-a-repeat-of-the-long-depression-2019-11-27?mod=home-page

  22. “In Manhattan, where some 65% of owner-occupied housing stock consists of co-ops, the question of whether to rent a luxury unit often comes down to what city regulations and co-op boards will allow, said Lisa K. Lippman, a broker with Brown Harris Stevens.”

    Again, for those of you who don’t know, a cooperative is an only in New York form of housing in which you don’t own your housing unit, only a share in the building that give you a right to live in the housing unit. And the co-op board has to approve anyone you decide to sell to, or rent to. A libertarian is a liberal who was mugged by a co-op board.

    All the new housing built since the 1970s is condominium. It can be rented out at any time.

    Most of the co-ops were pre-1973 luxury apartments that were converted to co-ops in the 1980s, to get out from under rent control.

  23. “Those who want to understand clearly the events which happened in the past and which (human nature being what it is) will at some time or other and in much the same ways be repeated in the future.” – Thucydides, Peloponnesian Wars, 431 BCE, Translation by Rex Warner

    When universities stopped making an understanding of Greek and Roman history an essential part of education, we lost the underpinnings of our Democracy.

    1. When universities (and every other institution) started emphasizing diversity and “inclusion” over excellence and merit, that’s when our terminal decline began.

    2. ‘I’m seeing price reductions as high as 5 percent.’

      Meh.

      ‘the average sales price for all homes in the top 5% of the market declined 14.4%’

      Still meh, but heading in the right direction. Of course, my expectations are set for a 50% off sale at the full market median here in Portland.

      1. I think we are seeing a huge reluctance by sellers to reduce by more than a couple percent at a time. To slash the price 10% in a single day would be an admission that things are a lot worse than anyone is currently willing to admit… so it’s a ‘waiting for everyone else to go first’ mindset.

        1. “To slash the price 10% in a single day…”

          Back when the Germans were chipping away at the concrete walls adjacent Brandenburg Gate an engineer friend in the defense industry said the old-timers saw the beginning of the end, quickly had their homes appraised and promptly listed them at a steep discount, 20% or more!

          My friend was barely established with a young family and lacking in experience; he was stuck there in Lancaster, upside-down, for 10-plus-yrs while the LA developers quietly relocated the ghetto to the high desert. They eventually sold at the first opportunity, missing the HB#1 appreciation, but they were glad to leave and never looked back.

    1. Regardless of what goes down on the 29th, across the US, the intersections of mass transit, the rising cost of living, surveillance and policing, and gentrification and housing – are already inspiring revolt. Over the past few weeks in New York, thousands have taken to the streets to engage in mass fare evasion, clashing with police, and even sabotaging turnstiles. These actions were in part inspired by the ongoing insurrection in Chile, which was ignited by youth organizing mass fare evasions.

      Whoop, there it is. At the core of the coming social unrest will be rising popular anger as the soaring costs of living and housing has outstripped the ability of debt serfs and wage slaves to pay for it, much less have a decent life.

      Heckova job, Ben, Janet, and Jerome.

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