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Making Big Bets On Higher-Priced Homes A Poor Choice

A report from the Wall Street Journal. “In mid-November, bond investors got an unwelcome surprise from one of the main ratings firms in a hot corner of the bond market: About 25% of the bonds that it had rated were likely to be downgraded. Several days later, after calls poured in from confused investors, ratings firm DBRS Morningstar Inc. backtracked and said it had made an error. It was instead likely to upgrade about 25% of the bonds and downgrade only about 3%. Morningstar, known for its mutual-fund ratings, has hit a rough patch in its quest to become a big player in the bond-rating business. In its biggest-ever acquisition, Morningstar bought rival DBRS Inc. from two private-equity firms for $669 million in July, catapulting itself into the No. 4 spot globally behind longtime industry leaders Moody’s Corp., S&P Global Inc. and Fitch Ratings.”

“Morningstar’s error, which occurred while it was integrating its ratings system with that of DBRS, also came around the time that it was working to win ratings assignments on hotel deals by potentially applying new assumptions more favorable to bond issuers. The ratings in question are in a segment of the $1.2 trillion market for commercial mortgage-backed securities, which are bonds tied to loans on malls, office buildings, hotels and the like. The affected securities are backed by only one property or borrower and are known as single-asset, single-borrower deals.”

“Morningstar initially expanded its ratings business in 2010 by acquiring Realpoint LLC. That small firm was paid by bond investors rather than by the companies issuing the bonds, potentially eliminating the conflict of interest created by allowing issuers to pay for the ratings. Morningstar ultimately changed Realpoint’s business model to the one followed by the big ratings firms. Rob Dobilas, who founded Realpoint, sees the same problems with bond ratings as before the financial crisis. ‘The industry itself is designed to fail,’ he said.”

From Market Watch. “The timeline for a U.S. recession has been pushed out, but don’t get too excited. The investing gurus at bond-fund giant Pimco say synchronized monetary policy easing by global central banks, a vital force for stabilizing international economic growth rates this year, has already made use of policymakers’ tools available for fighting the next recession. These cautionary words are part of the fund manager’s annual macroeconomic outlook penned by its economic adviser Joachim Fels and its global fixed income chief investment officer Andrew Balls.”

“Investors should stay clear of the riskier corners in the corporate debt market. Bonds issued by highly indebted businesses were vulnerable to a sudden dip in the economic cycle and may struggle to find support from banks who may want to ration out their lending during a downturn. ‘With speculative grade lending currently around 35% of GDP, stress across these sectors would be more than enough to contribute to a recession,’ they said.”

From Bisnow on Georgia. “The owner of a long-planned luxury condominium tower in Midtown Atlanta is trying to sell part of its property as a loan on the project is soon to come due. Olympia Heights Management has tapped Cushman & Wakefield in Atlanta to market over half of its 4-acre parcel for an undisclosed price. Several announced dates for an official groundbreaking have come and gone. Throughout the years, trucks have appeared on the site at different points, moving dirt around in an effort to show as if construction is imminent. The developers continue to refinance the land with short-term loans, and the construction firm working on the site told Bisnow this past summer that there are no plans to go vertical anytime soon.”

“Many in the Atlanta residential real estate community previously expressed skepticism that Olympia Heights would ever build the project. ‘We’re going for construction,’ Olympia Heights’ development director, Roni Avraham said when reached by phone Tuesday evening. ‘Soon, very, very soon. I’m sorry. I cannot tell you more.'”

From Curbed New York. “It could take more than six years to clear all of Manhattan’s unsold condos at the pace of contracts in 2019, a report by Halstead Development Marketing shows. The borough has 7,050 unsold, newly constructed units; the majority of those, almost 6,000, have not been formally listed for sale, creating a ‘shadow inventory,’ according to the report.”

“This hidden inventory, the report says, is currently the largest in a swath of Lower Manhattan that includes the Financial District. There, 967 of these shadow condos exist on top of the 96 that are actively being marketed in the area.”

The Orange County Register in California. “It was a tough year for Southern California homebuilders. As 2019 started, builders found themselves stuck with the largest inventory of unsold residences since the Great Recession. Rising interest rates and economic anxieties cooled house hunting, making the builders’ big bets on higher-priced homes a poor choice. So for much of the year, builders were forced to discount slow-selling homes while retooling plans to create lower-priced product.”

“Two new rankings of the nation’s fastest-selling ‘master-planned communities’ — neighborhoods carved from large parcels of undeveloped land — provide a glimpse into how tough it was for local developers. These scorecards, from John Burns Real Estate and RCLCO, having slight differing results but show a common theme. Four Southern California projects were on both national lists of top sellers. Reviewing the past two year’s rankings, Burns shows sales at the four local communities were down 12% in 2019 vs. a 10% gain among the top 50 sellers nationwide. RCLCO shows local sales were down 19% vs. a 9% gain elsewhere.”

“This isn’t the only sign of weakness in new-home sales. Sales of all newly constructed residences in the four counties covered by the Southern California News Group were 15,716 in the year ended in November. That’s down 12% from the sales pace of the previous two years. Lennar Corp. says a sales drop forced it to cut average prices by 6% for its homes in the western United States, including California. ‘California has really fallen off … perhaps more than any other part of the country,’ Lennar President Jonathan Jaffe told Reuters.”

The World Property Journal. “According to a new U.S. housing report from Redfin, just 9% of offers written by Redfin agents on behalf of their homebuying customers faced a bidding war nationwide in December 2019, down from 12% a year earlier and setting another new 10-year low. As in November, San Francisco was the only market even moderately competitive in December. The bidding war rate there in December was 26%, down from 35% a year earlier and down from 28% in November.”

“‘Last month we saw more buyers than usual out looking for a ‘steal’ and bidding on homes, which led to multiple offer situations on some homes where all of the buyers came in below list price, rather than above,’ said Redfin San Francisco Market Manager Saleem Buqeileh.”

“Competition was still rare everywhere else in the country in December, with no other market experiencing a bidding war rate higher than 17%. The bidding war rate fell to zero in Raleigh and Dallas, and hit its lowest point in at least five years in Los Angeles. Aside from the zero rates in Raleigh and Dallas, Atlanta had the third-lowest bidding war rate in December at 4%.”

From Mother Jones. “Redlining is widely seen as the source of the vast disparities in housing and homeownership between white and Black Americans. Denied access to government-backed mortgages, Black people were consigned to areas of low investment in city centers during boom times in suburbia. It would stand to reason, then, that the end of government-sanctioned redlining, with the 1968 passage of the Fair Housing Act and the Housing and Urban Development Act, would have begun to reverse housing segregation and inequality. But in fact, writes Keeanga-Yamahtta Taylor in her new book Race for Profit, that was when things started to get worse.”

“There were two problems with the new government effort to insure mortgage loans to low-income African Americans in inner cities. First, the existing conditions—the resistance of exclusive white suburbs to any influx of African Americans, the wealth gap—made it just about impossible for the urban poor to move to areas of greater opportunity. And second, the government, less than fully committed to actually fair housing, all but abdicated responsibility for the program to the private sector. That meant that national housing policy was shaped in large part by unscrupulous lenders who saw profit in making risk-free loans to Black buyers for overpriced, dilapidated homes with serious undisclosed damage.”

“Q: Elizabeth Warren and Kamala Harris both proposed something similar to what you describe in the book: giving mortgage assistance to residents of formerly redlined areas. Would this cause the same problems as in the late 60s?”

“A: Well, it reinforces a central problem, which is segregation. There are two issues. One is that some of these historically redlined neighborhoods are actually gentrifying. So because there’s no race-specific language in these sorts of legislation, it’s not clear who would actually be benefiting from these low-interest mortgages.”

“The second problem is, in areas where they’re not gentrified, where they remain low-income segregated neighborhoods, what does it mean to guarantee someone the right to buy a house in an area where it won’t appreciate in value? That’s the whole issue in homeownership: It’s supposed to be an asset that accrues in value over time, that through its equity allows you to finance your children’s college education, that allows you to weather an unforeseen economic crisis, that allows for a comfortable retirement. So if a house is not in an area where it can develop equity over time and instead becomes a debt burden, then I’m not sure what the benefit is.”

This Post Has 164 Comments
  1. From the last link:

    “Q: I want to come back to this question of geographic targeting. It seems like you’re damned if you do, damned if you don’t. If neighborhoods have gentrified and are now mostly white or Hispanic, you’re not helping African Americans who have suffered from housing racism. If you’re helping areas that remain mostly Black and poor, you reinforce segregation. So is trying to target certain areas just a mistake?’

    “A: I think in a racialized market, it’s an invitation to problems. In some ways, it reflects the dynamic that could have been unleashed in 1968. The Fair Housing Act was supposed to open up the suburbs to allow low-income housing to be built there, which would have opened the entire market to African Americans. Something like that would mean that you’re not just consigning Black people to segregated, depreciating areas. If you did something like that, you would witness the absolute hysteria of white homeowners in those exclusive outlying areas rise up to prevent it.”

    “Q: The other question is whether homeownership actually ought to be the goal.”

    “A: Right. That raises the question about what it means to live in a society where the quality of one’s life is often determined by the ownership of this asset that’s not equally available to anyone. If you have access to homeownership as an appreciating asset, then it’s like you have your own private welfare state. And if you don’t, you’re left to the underfunded, anemic public services that are left for everyone else.”

    1. The quality of one’s life is based on your own decisions and hard work.

      If you are waiting on a government program to improve your quality of life, you are a fool.

      1. “If you are waiting on a government program to improve your quality of life, you are a fool.“

        – Unless you already own stocks and/or housing. 😉

        1. That’s the hypocrisy. The wealthy among us have been aided by the government. Without that assistance, their wealth would pale in comparison to what it is today.

        1. It can. But it’s either stupid or its own reward. It won’t be rewarded in the traditional sense.

    2. Unfortunately for this woman, financial illiteracy does not discriminate.

      And that’s as far down this rabbit hole I’m going.

      1. It’s a variation on the theme you can see all over the place. If shacks made you rich Lennar would keep houses, not sell them. And Johnny Depp would be the richest man in California.

        1. The shack is the mechanism by which the wealth is realized. Sell more shacks, get richer. Until you don’t…

      2. IKR? It even hits white men with advanced degrees and years of living, like my husband! I can’t wait to see what his solution is for us! My car is making nasty suspension noises dammit. He’s had enough of my throwing our money at it keeping it running (I don’t do car work myself and neither does he) and I think if I get an expensive Rx he’ll want to buy new. Given that he wants us to buy overpriced housing rn maybe I can convince him to let me buy used instead?! There are only a couple cars I’d buy new to run into the ground- a Honda Civic or maybe a Subaru Impreza and neither are too pleasing to me in their current embodiments.

          1. Admittedly, it’s gotten a lot harder recently with the rise in larger component modules that are only available as an entire unit, and the computerization (and DRM) of nearly everything. Not to mention cost cutting to the point where many components only last as long as the warranty.

            On the flip side, all those sensors and ODC II had made it a lot easier to diagnose problems – I am in no hurry to go back to an engine bay full of vacuum lines.

          2. I’ve only fixed a problem I had with a car once. Bought a book about repair (this was way before kindly youtube instructors), opened the hood and gave it a go. When the car started up, I was thrilled. I envy people who fix mechanical/computer or any stuff for a living. It’s concrete and satisfying and I have a lot of respect for them.

          3. Not to mention cost cutting to the point where many components only last as long as the warranty.

            Well, that’s why you don’t buy a German car 😉

            Kidding aside, when I see all the electronics and gadgets in current model year cars of just about any brand, plus the turbos, the unreliable umpteen gear automatics (or worse, CVTs) it’s becoming pretty clear that any car you buy new today will turn into a money pit before it hits 100K miles.

          4. Kidding aside, when I see all the electronics and gadgets in current model year cars of just about any brand, plus the turbos, the unreliable umpteen gear automatics (or worse, CVTs) it’s becoming pretty clear that any car you buy new today will turn into a money pit before it hits 100K miles.

            Those are a couple of the reasons that my current plan is to keep the old naturally aspirated 5-er wagon until at least 2026+ Parts available will start getting a bit weird around then, but the drivetrane is hopefully common enough to keep everything available and reasonable.

        1. Taking a loan out for a new car will drastically impair your borrowing ability for a house. 😉

          1. 2004 Subaru WRX STi for the win. It’s a track day car/3 kid hauler/ grocery getter all in one. Tires are expensive, but it’s cheaper than an SUV and way, way, way more fun than a minivan.

            Mr. Money Mustache is right on this one. Cheap, small and reliable is the way to go.

          2. 2004 Subaru WRX STi for the win.

            The good old days. Us Mitsubishi guys had fun going up against those :-). But they were definitely a nicer car.

    3. “The Fair Housing Act was supposed to open up the suburbs to allow low-income housing to be built there, which would have opened the entire market to African Americans. Something like that would mean that you’re not just consigning Black people to segregated, depreciating areas. If you did something like that, you would witness the absolute hysteria of white homeowners in those exclusive outlying areas rise up to prevent it.”

      Of course, it is currently most of the suburbs that were already built in 1968 that are declining. They are over 50 years old, and parts of the houses and the infrastructure need to be replaced.

      And each year more suburbs reach age 50.

      The inner cities boomed from 1900 to 1930. In 1968, they and their infrastructure was going past 50 years old. It is a whole different world now.

      1. This +1000

        Gentrification only discriminates against insufficient income, the article’s complaints notwithstanding.

        Happening in urban (and suburban) zip codes all around here.

        1. “The young libs just can’t see why people in expensive neighborhoods aren’t rushing to make lots of room for low income people.”

          The naive liberals don’t know the difference between no economic power and being poor.

    4. “It’s supposed to be an asset that accrues in value over time…”

      No, it shouldn’t.

  2. ‘With speculative grade lending currently around 35% of GDP’

    Oh dear…

    ‘forced it to cut average prices by 6% for its homes in the western United States, including California. ‘California has really fallen off … perhaps more than any other part of the country’

    But, the LA Times and others tell us everyday that it’s only luxury shacks getting cratered? BTW this 6% doesn’t include other goodies they throw in. So the percentage is likely way higher.

    Dallas at zero bidding wars? Raleigh! Why this means somebody at the Dallas Morning News is a lion too.

          1. The benevolent leadership at municipal and state levels assured me of this. Why would they lie? It’s not like asset inflation benefits them at all!

            (Being sarcastic, but that’s an excuse used here to justify $600,000 2 bed 1 baths built in 1909)

          2. “Utah is the new Silicon Valley.”

            Geebus I almost choked. You’ve GOT to be kidding me.

            Everywhere I go that has at least one big name tech satellite office in the area is thinking the same thing. Otherwise the bubble wouldn’t make sense.

          3. Psh, Utah is the new Silicon Valley, that’s what the local government tells us at least.

            Ditto in the Centennial State. Meanwhile, everyone I meet who “looks” prosperous is in someway involved in real estate, construction, development, etc. Anyone here remember discussing “Water Valley” in Windsor, CO? Well, it came back with a vengeance during bubble 2.0.

            I have noticed an interesting difference locally between bubble 1.0 and 2.0. During the peak of 1.0 you would see lines out the door at “casual dining” chain restaurants, and in many cases dad was still in his construction garb with the family as they waited for a table. Fast forward to bubble 2.0 and the lines at Applebee’s and Chili’s seem to be absent.

        1. Ann Arbor must win then !! WE will be the next Silicon Valley!!! That’s what they said in 1999 too don’t ya know, this time it will be! We got Harbaugh and everything! And lots of Airbnb! Indeed city council just voted to maybe regulate them. I checked since it’s relevant to the local news and see that for a random weekday I get 150 places to rent for 4 people at least, often it’s a whole house or a apartment. We’re only 110k people including like 45k students! That feels like a lot to me, and that was just on one rental platform. More student and YP apartment towers coming in though and toll and Pulte have at least 4 projects on the outskirts and one within city limits and infill condos at 500k to 1.3m selling like hot cakes! I think Silicon Valley has moved in, no wonder Raleigh Is tanking! All with 2.5% property taxes and poison water, we rock.

          1. Arbor must win then !! WE will be the next Silicon Valley!!! That’s what they said in 1999 too don’t ya know, this time it will be!

            That’s what they were saying back in 1984 when he had Schembechler. At least the water was a little more drinkable then.

    1. The housing criminals as much as admitted that the “bidding war” narrative was a flat out fabrication.

      1. ‘Morningstar initially expanded its ratings business in 2010 by acquiring Realpoint LLC. That small firm was paid by bond investors rather than by the companies issuing the bonds, potentially eliminating the conflict of interest created by allowing issuers to pay for the ratings. Morningstar ultimately changed Realpoint’s business model to the one followed by the big ratings firms. Rob Dobilas, who founded Realpoint, sees the same problems with bond ratings as before the financial crisis. ‘The industry itself is designed to fail’

        This article is a follow up on a previous one which disclosed these credit raters were being shopped for the ones that would slap investment grade on their junk. Note the US gubberment is swinging into action to clean all this up before it gets outa hand.

        Oh…

        1. “About 25% of the bonds that it had rated were likely to be downgraded.”

          Check. However …

          “Several days later, after calls poured in from confused investors, …”

          “confused investors” Bahahahahahahaha.

          “… ratings firm DBRS Morningstar Inc. backtracked and said it had made an error.”

          “An error”. Bahahahahahahaha.

          “It was instead likely to upgrade about 25% of the bonds and downgrade only about 3%.”

          An error, it made an error. It corrected this error and thus eliminated the confusion previously experienced by confused investors. So now all is well once again.

          Truly, this nation is populated by a bunch of totally dumbed-down morons.

          1. Moody’s, Standard & Poors, Finch all blew their credibility during the last economic meltdown. This left rating agencies such as Morningstar looking really good.

            So what does Morningstar decide to do? They decide to take such action that will inevitably follow the same route to dispair as those other rating agencies took.

            And why do they do this? Because their clients demand that they do this. If they do not do this then their clients will shop around for a rating agency that will.

            A nation of dummies.

            Folks, you really need to do your own homework and your own thinking. If you trust any of these rating agencies to look out for your interests then you are an idiot.

          2. “Truly, this nation is populated by a bunch of totally dumbed-down morons.”

            If I’ve learned nothing else from this blog, I’ve learned that the above statement is 100% true.

    2. “‘Last month we saw more buyers than usual out looking for a ‘steal’ and bidding on homes, which led to multiple offer situations on some homes where all of the buyers came in below list price, rather than above,’ said Redfin San Francisco Market Manager Saleem Buqeileh.”

      Bidding wars are back BOYZ!

      1. There are no “steals” right now. In fact, a cursory glance at the mls in any metro out west reveals a bubble more massive than ever.

      2. all of the buyers came in below list price, rather than above

        Could the market be trying to send a message to sellers?

        1. Its telling the sellers more than the realtors are telling us. Last offer i put on a shack was about 30% under asking and the shack had been in the market for over 3 months with 0 offers, coincidentally a day after my offer was submitted another “bidder” came in above me and the shack went in to contingent status, 2 months later the contract fell through. Realtor no doubt had a role in creating this (under) bidding war. Seller pulled the home off the market to relist next year. I am guessing i will see it back soon. This time im going in with a 50% offer 😉

  3. ‘what does it mean to guarantee someone the right to buy a house in an area where it won’t appreciate in value? That’s the whole issue in homeownership: It’s supposed to be an asset that accrues in value over time, that through its equity allows you to finance your children’s college education, that allows you to weather an unforeseen economic crisis, that allows for a comfortable retirement. So if a house is not in an area where it can develop equity over time and instead becomes a debt burden, then I’m not sure what the benefit is’

    Ding ding ding, we have a winnah!

    1. If you are buying a house to finance your children’s education and to fund a comfy retirement, you are delusional.

      And are going to wind up broke and living in a 1 bedroom apartment eventually.

      1. If you are buying a house to finance your children’s education and to fund a comfy retirement, you are delusional.

        Which means almost the whole nation is delusional. And the Fed will work to keep things that way for as long as possible.

      2. The problem is that many, many speculators have also benefited financially from buying multiple homes. This reinforces future behavior.

        I remember 10 or so years ago talking to an Asian woman. She had acquired multiple houses during the first run-up. Then it all went to hell, the houses were worth half of what she owed, so she started doing short sales and got rid of all of them. This was at the absolute bottom. A few years later I saw her again and she was lamenting the fact that she did the short sales. Why? Because prices had started going up again and she wanted back on the ladder.

        1. Sounds like my LL. The PM told me she owned 60+ SFR in LV at one time. Same thing might have happened to her. Her name shows she owns only three now.

          1. This lady was a flipper who got caught with her last handful of houses. But she had made a bundle on the earlier ones. Now, I have no idea what her financial state was at the time of the short sales, but she intimated that the getting was good for a while.

        2. I’m freaked out to hear from husband that multiple colleagues and friends — good salaries, probably 401ks are funded etc— are buying properties for retirement cash flow or as savings for kids college . Are they gonna cash out refi and pay for vassar with the winnings and keep renting it out all the while?! Is this what financial planners are advising people to do these days or what?! I call them miserable parasites and my husband gets all outraged lol

          1. “…buying properties for retirement cash flow…”

            Who wants to deal with deadbeat renters in retirement?

          2. When is Quentin Tarantino going to make a movie about some losers looking to get rich buying properties on credit to flip?

      1. Well, let’s face it, the only thing you can look forward to at the office are stagnant wages and getting laid off when you’re middle aged.

        Is it any wonder we’ve become a “get rich quick” nation?

        1. Nope and it conveys benefit when the ponzi cycle is mature to mostly the folks who run the corporations keeping wages low and job security non existent. Our consent via the hope that we too might make some of that landlord money or fundrise Roi is required.

    2. Well, you know, there’s also earned equity, not just unearned equity.

      And I liked it a lot better when houses were just for shelter, not a financialized asset.

      1. I only barely ever saw such a time and wish it could happen again. I would love to see analysis of what such a world could look like but economists are generally useless and probably nobody has done this projection

    3. You can still get a comfortable retirement if the value of the house stays the same, or even falls. You still get to pay VERY low rent during retirement; i.e, just P+I.

      And many many Greatest Generation elderly women (and some baby boomers) did just that. Stayed in their little house and lived on their husband’s Social Security.

    4. There are so many things wrong with this statement, yet the reporter doesn’t question the narrative at all. It boggles the mind. More evidence, if any was necessary, that the quality of journalism in this country is as impoverished as all the debt donkeys out there.

      1. I’m guessing it’s less an ignorance thing and more related to journalists who ask the wrong questions don’t have jobs for long. Kind of like real estate appraisers.

  4. That’s the whole issue in homeownership: It’s supposed to be an asset that accrues in value over time, that through its equity allows you to finance your children’s college education, that allows you to weather an unforeseen economic crisis, that allows for a comfortable retirement.

    Really? Because throughout recorded history houses have been for shelter, not speculation. And because unaffordable housing is playing a central role in the social unrest going viral around the world against corrupt, unaccountable elites.

    1. Until the media and politicians start talking about this fact, nothing will change. And bankers and the REIC don’t ever want a word breathed about this. They make a living on the churn.

    2. Again, agreed, anyone know of any good analysis of this in an economic way? I mean I guess I can get busy googling just thought you all might have something handy 😉

  5. Oh dear…

    I do hope no one overpaid or will be carrying two mortgages.

    Six years of feeding the alligator…

    “It could take more than six years to clear all of Manhattan’s unsold condos at the pace of contracts in 2019…”

    1. And they also openly discuss market manipulation. These are shameless bashtards we’re dealing with.

      1. From the Georgia article:

        ‘Since buying the land and announcing it planned to build the tallest residential building in Atlanta, the New York developer Olympia Heights, Shaya Boymelgreen, was investigated by the attorney general in his home state for fraud and shoddy workmanship on several of his condo developments. He built thousands of luxury apartments in Manhattan and Brooklyn in the 1990s until his business essentially collapsed during the Great Recession. Three years ago, Boymelgreen agreed to a two-year ban from selling condos in New York and paid some of the buyers back as part of a deal with then-Attorney General Eric Schneiderman.’

        Somehow these people can borrow tens of millions of dollars. That three year ban really left a mark.

  6. Oh dear…

    Maybe if interest rates were made even lower and lending standards made even super lower….we could fix this!

    “The bidding war rate fell to zero in Raleigh and Dallas, and hit its lowest point in at least five years in Los Angeles. Aside from the zero rates in Raleigh and Dallas, Atlanta had the third-lowest bidding war rate in December at 4%.”

  7. ‘A University of California-Los Angeles professor made her views on climate change public in a recent op-ed, questioning American private homeownership in response to climate change, particularly California’s forest fires.’

    ‘Professor Kian Goah, assistant professor of urban planning at UCLA, whose expertise includes urban ecological design, spatial politics, and social mobilization in the issues of climate change and global urbanization, argued in an op-ed for The Nation that what makes the California forest fires even worse is urban planning. Its subtitle reads, “if we want to keep cities safe in the face of climate change, we need to seriously question the ideal of private homeownership.”

    “We need another kind of escape route—away from our ideologies of ownership and property”

    “Yes, climate change intensifies the fires—but the ways in which we plan and develop our cities makes them even more destructive. The growth of urban regions in the second half of the 20th century has been dominated by economic development, aspirations of homeownership, and belief in the importance of private property,” she writes.’

    https://www.campusreform.org/?ID=14183

    1. Ever see the movie Dr. Zhivago?

      Kian Goh isn’t a “professor” that has concerns about the climate. She, and her buddies, are Bolsheviks that want to take property (and your posessions) away from you and your family. After that comes the indoctrination camps and starvation.
      https://www.historylearningsite.co.uk/modern-world-history-1918-to-1980/russia-1900-to-1939/bolshevik-land-reforms/

      One of her comrades:
      https://twitter.com/leahstokes

      Glacier National Park Quietly Removes Its ‘Gone by 2020’ Signs:
      https://wattsupwiththat.com/2019/06/07/glacier-national-park-quietly-removes-its-gone-by-2020-signs/

      1. Kian Goh isn’t a “professor” that has concerns about the climate.

        Which explains why her comments are unintelligible.

      2. “Professor Kian Goah, assistant professor of urban planning at UCLA, whose expertise includes urban ecological design, spatial politics, and social mobilization in the issues of climate change and global urbanization”

        That’s a mouthful…

    2. Colorado is only a few consecutive drought years away from experiencing fire and smoke like that in Australia now. Fortunately, as a renter, I can easily relocate when that happens.

    3. if Professor Kian Goah doesn’t have a house with a view then you shouldn’t either.

      Building house up canyons around here is risky why not let the free market , insurance etc. figure it out ?

  8. “The bidding war rate fell to zero in Raleigh and Dallas, and hit its lowest point in at least five years in Los Angeles.”

    – “The bidding war rate”

    – New housing metric

    – They seem genuinely disappointed that it’s no longer positive.

    – Peak absurdity. Peak market distortions. We have arrived, and I’m not saying that’s a good thing.

  9. I beginning to wonder if there may, in fact, be a housing shortage caused by the housing bubble?

    How much of the existing inventory, based on its age, location, and what might happen to the locality where it resides, may be in effect out of the market for the next generation?

    After all, in 20 years most of the Baby Boomers are gone, the Millennials are paid 25 percent less on average, and they will be facing other burdens as well. They will require less space, and less commuting cost.

    I think a wave of abandonment is coming, similar to the inner cities in the 1970s and rural areas and small towns before that.

    1. But what about the land those homes are resting on? It doesn’t generate any income for anyone if it’s vacant, apart from creating an artificial shortage of the remaining land that isn’t — which is yet another unsustainable bubble in the long term.

      In my neck of the woods, old smaller bungalows and ranches In desirable locations are being demolished to build McMansions on the land they once occupied. If millennials in general were really downsizing, you’d think these older, smaller homes would be preferred, and getting renovated instead.

      Probably the Fed market distortion causing that more than anything else.

      1. you’d think

        Saving a small house, great idea for living economically. If you’re living in the mania, go for what you can qualify for.

      2. Investors in my area bought all of the older houses, slapped on some new granite counters, and raised the price $100,000. Not worth going into big debt for a 100 year old shack with new paint even if the commute it reasonable.

        1. That’s how it is here too, but also shorter-commute/wAlking-distance to civilization also means toxic plume underneath, toxic water from the tap and much higher taxes probably going up considerably to cover water cleanup measures. But maybe I could Airbnb a basement on game days if I’m close enough to the stadium!

        2. Investors in my area bought all of the older houses,

          Part of the problem is that since the great QE events, we’ve seen ‘Investors’ world-wide, bit and small, scrambling to find better returns.

          And as a result, flipping houses or becoming a landlord has gotten a lot more attention and interest.

          However, doing the math and crunching the numbers, only a certain number of people can do that successfully (after which there aren’t enough regular buyers or renters to go around).

          I’m afraid that as long we live in a QE/ZIRP world, this will continue.

          1. ‘scrambling to find better returns’ is greed. It’s no excuse.

            “I bought an apartment complex that was cash flow negative, painted the parking lot and jacked up the rents 20%, but I was scrambling to find better returns.”

      3. “If millennials in general were really downsizing, you’d think these older, smaller homes would be preferred, and getting renovated instead.”

        The older, smaller homes are preferred. But you can’t make a profit at bubble prices without greatly increasing the square footage. The bubble is in the land, so builders need to maximize the use of the lot. That’s why they eventually go vertical.

        1. “The bubble is in the land.”

          In NYC, SF, Seattle, Denver, Austin, etc.

          Elsewhere, we may end up with the zero land value you had in many cities in 1980. Here is one of the most affluent counties in the U.S.

          https://westfaironline.com/118827/report-westchester-countys-affordable-housing-needs-should-tap-unused-office-parks/

          “Relying on population statistics from 2000 through 2017, the assessment found that the county had a slight decline in the under-19 age demographic and an 18.9% decline in those 30 to 44 years of age. It said that, in terms of economic development, the 30-to-44 group is considered to be the prime labor force.”

          “The assessment found that the over-85 group, often identified as frail elderly, jumped by more than 44% in Westchester since 2000, the 65-to-74 population went up 26.7% and the 75 and over demographic went up by 52.3%.”

          All those people will be gone in 20-30 years. Who are they going to sell to?

          “The report noted, ‘This is critical for future housing plans, especially when coupled with the fact that over 30% of the homes throughout Westchester County were built before 1940.'”

          Almost all of it was built before 1980.

          Anyone want to buy this house, in what was once a prime neighborhood in the poor city of Yonkers?

          https://www.zillow.com/homedetails/280-Van-Cortlandt-Park-Ave-Yonkers-NY-10705/81759077_zpid/

          “This home is in need of TLC.”

          Evidently, a flipper painted and did a third rate kitchen rehab. But the private street needs a new sewer, and my guess is the electrical, plumbing and HVAC system need to be replaced. One can see a second kitchen for an illegal second unit in the cellar. No one who can afford to rebuild a vintage 4,100 square foot house will want to live here.

          At this location, the city would have to allow a conversion to a three family for anyone willing to rebuild the property and maintain its quality elements. Even then, the price would have to be lower.

          1. The taxes are over $1,000 per month. Nobody in their right mind is going to touch that thing.

          2. The taxes are over $1,000 per month.
            Just about to say the same. I lived in Riverdale (the Bronx), then Yorktown Heights (Westchester). Our property taxes were around $800 or 900 a month when we left in 2006.
            Is it still true if you live in Yonkers and work in NYC, you have to pay NYC taxes too, along with Yonkers’ taxes?

          3. I guess it’s all perspective and kinda funny (not ha ha) when people talk property taxes. In the suburbs of Chicago an $800,000 house with $12,000 property taxes would be a steal. We just sold our $360,000 house with $12,900 taxes. Took us a damn year…

          4. And here my taxes are $600/mo ($~7100/yr) on over a $1M valuation. And no state income taxes. Not great, but I was paying $10k/yr on a $300K assessment in Texas 16 years ago.

            I expect to see tax burdens become more and more of a factor in people choosing to relocate.

          5. “I expect to see tax burdens become more and more of a factor in people choosing to relocate.”

            There is another alternative. Taxes become capitalized into the value of the property. The taxes are high, the schools are mostly not good, there is no mass transit. And the building needs substantial reinvestment, offsetting all its quality finishes.

            But if the property was cheap enough, and the mortgage payments low enough, and you could make it a three family with your kid’s family and your parents also living there and covering the nut, it could be made to work.

            In some places, however, the situation with generic housing distant from jobs with soaring taxes and collapsing infrastructure will reduce that value to zero. The houses will be occupied by their aging owners and perhaps then the dependent poor, without reinvestment, until they have to be abandoned.

          6. Look at the flooring inlay border in pictures 14-16. I’m sure it was beautiful in 1910, but YIKES! It all needs to be ripped out now.

          7. “The taxes are over $1,000 per month.”

            Likely the east coast version of Mello-Roos taxes to keep the barbarians fed, medicated and within certain boundaries.

    1. Speaking of which I am seeing land prices around here be nutty . I’ll try to find some examples .Wayne and Washtenaw County MI

      1. For fun, you could look in 48009 (Oakland County, actually). Not sure whether this or A^2 is the bigger of the two bubbles.

        Also the downtowns of Plymouth and Northville, and to a lesser degree Royal Oak and Berkeley.

      2. Also Dexter and, if there are no objections to the extended commute, Chelsea to the west.

        The money in this area is prioritized towards gentrification of older properties in walkable “urban” areas that have 19th Century history.

  10. ‘A surface-to-air missile brought down the Ukrainian plane that crashed on the outskirts of Tehran yesterday, senior US and British officials believe.’

    ‘American satellites are understood to have detected infrared blips of two missile launches moments before the Ukrainian International Airlines flight crashed, followed shortly by another infrared blip of an explosion.’

    https://www.thetimes.co.uk/article/iran-plane-may-have-been-brought-down-by-missile-dlw0l5vkv

        1. Well, we killed off their one competent general, so look what happens. You start throwing ordinance around as part of your political games, errors are bound to occur.

          I’m old enough to remember when the U.S. shot down an Iranian civilian airliner in a tense moment like this one, thinking it was a military plane.

          But this kerfuffle is good for both the Iranian regime and the Trump administration — in the short run.

          The regime gets people shouting “Death To America” who aren’t over age 60, and everyone forgets about how things suck there. Just like 1980! And The Donald tweets out the American flag in the hopes people under 60 forget how things suck here for them.

    1. All of their “temporary measures” from the first meltdown are still intact. It was nothing but a power grab. Next time they don’t even need congressional approval.

      1. “All of their “temporary measures” from the first meltdown are still intact.”

        Wall street swindled the world with derivatives and mortgage backed securities in 1998-2005, and the U.S. federal reserve is still dealing with the repercussions.

  11. Someone’s speaking with forked tongue.

    There’s a house for sale that’s over our backyard wall and across the street. The people living there were a source of entertainment for a few months as the lady of the house would scream and curse at her boyfriend at the top of her lungs whenever he left. Didn’t even notice that it had stopped, but I drove by a few weeks ago and it was being renovated. The tenants, I guess, had moved to greener pastures.

    The place has been on the market now for almost two months despite being in what’s regarded as the affordable range here in Las Vegas. They didn’t do anything to improve the outside but the inside’s been grayed and beiged and grieged and new appliances installed; decent size plot for LV.

    Expectations here are as low as the minimal down payment, so why isn’t it being scooped up?
    realtor.com/realestateandhomes-detail/4179-S-Pearl-St_Las-Vegas_NV_89121_M15206-60614

    1. “The people living there were a source of entertainment for a few months as the lady of the house would scream and curse at her boyfriend at the top of her lungs whenever he left.”

      SHIVERS. If my gf/wife ever did that to me, she would get one warning. The 2nd time I’d be gone.

      1. Ha. Yeah, the first time I called the cops because I thought someone was going to be murdered. Turns out, it was just routine.

    2. Because it’s not within walking distance of the new stadium? 😉

      I recently drove past a small new development on Russell, probably two to three miles from the stadium, that had a sign touting that you could walk to the stadium!

      1. within walking distance of the new stadium
        My brother lives not too far from there; he says stuff like that. It’s not on my radar. I didn’t know what the teams’ names were or what sports they play until a few months ago. Golden Knights crapola is everywhere now.

        1. It’s hard to imagine a sustainable tailgate economy but sure, people like to buy “experiences” now, it’s the new “stuff “

    3. $325K for that shack in LV? Just a few years ago $300K will get you a 2 story 3000+ sqft new house. If this is not a bubble, I don’t know what.

      1. Pretty much stereotypical for mid-lower range rentals here. These places were $100-120K in 2011 if you could get one. Now they’re $300-325K.

    4. had to look up that word. greige. The ratio of beige to gray in your greige …

      Apparently also a white man who pursues Asian women is being a greige .

      a: Jia Yi is so fine, I think I’ll impress her with my new safari tee and hiking boots!
      b: Maybe if you weren’t so greige she would actually pay attention.

      The internet a source of wonder.

    5. “New pool heater, newly resurfaced pool decking.” What’s the condition of the pool itself? It may need new plaster. Are the windows original? How’s the roof and exterior stucco? There’s got to be deferred maintenance that’s noticeable in person and a deterrent.

      1. Oh, it’s a pig, no doubt, with lip gloss (not even regular lipstick.)
        I just posted it because it’s sort of next door, listed for almost 60 days and no one has scooped that baby up, despite the FOMO they promote here (well, really everywhere.)

          1. 🤗 (that’s a hug, not very well depicted)
            I wanted to say something before, but I thought anything I say would be woefully insufficient. If I still feel bad about my mother passing away (at 85!), I can’t even imagine what you’re going through. Much love to you. We need laughs more than anything else.

    6. Noticed that though it’s only 1700 sq ft, it has a 3 car garage AND RV Parking. I guess it was built assuming people might be packed in?

    1. “This is far and away the strongest global economy I’ve seen in my business lifetime.” — U.S. Treasury Secretary Henry Paulson, July 12, 2007

      I remember watching Jim Cramer on CNBC in 2007 telling us to buy buy buy more stawks.

      My mother negotiated a short sale on her underwater Fort Lauderdale condo around that time.

      Today, I continue to invest 5% of my income in an S&P index fund (and 2.5% in bonds and 2.5% in money market) but my total portfolio is less than 30% stocks.

      Waiting for a 20% drop to reallocate more back into stocks. And waiting. And waiting…

    2. I don’t know if you follow Marty Armstrong at all but he’s called for Dow 40,000 years ago. Says it has NOTHING to do with our economy or fundamentals. Has everything to do with flow of funds from other countries to the U.S. because they are collapsing. I.e U.S is “cleanest dirty shirt”.

    3. Do you think they can pump it to 40,000?

      Well, consider that when things get scary globally, capital flees to the US. Don’t know if the DOW will hit 40,000.

        1. The trouble with rockets is that ROCKETS EXPLODE!

          Opinion: Giving the stock market more rocket fuel will work for only so long, El-Erian says
          By Mohamed A. El-Erian
          Published: Jan 9, 2020 4:24 p.m. ET
          We can’t count on the Fed or the ECB to keep us out of trouble in 2020
          Getty Images
          Central banks were able to keep the party going in 2019.

          SEATTLE (Project Syndicate) — After a year that involved one of the biggest U-turns in recent monetary-policy history, central banks are now hoping for peace and quiet in 2020. This is particularly true for the European Central Bank and the U.S. Federal Reserve, the world’s two most powerful monetary institutions.

          But the realization of peace and quiet is increasingly out of their direct control; and their hopes would easily be dashed if markets were to succumb to any number of medium-term uncertainties, many of which extend well beyond economics and finance to the realms of geopolitics, institutions, and domestic social and political conditions.

    1. ninedots.net/2020/01/04/greater-las-vegas-real-estate-market-update-january-2020/
      SFR inventory decreased to 2.3 months overall despite the increase in closings – primarily due to the lack of listings taken the last two months of the year. Only 2,646 residential listings were taken in December; that’s about half the listings taken in December 2018. Again, there is a wide variance from community to community – ranging from 1 to 44 months of inventory – depending upon the specific community. The level of over pricing The SFR Over Pricing Index is at 64%. This index was completely updated to reflect current market conditions along with the year over year change in supply and demand. It now includes all SFR listings and closings under $1,000,000 and the Days on Market have been increased to 45 days from 30 days to better reflect the market. That was done because over 2019 the average days from list to close has increased to about 46 days. But even with this adjustment 64% of the available inventory remains over priced. Inventory priced correctly sells as expected, but improperly priced listings continue to languish on the market – even when there are multiple price reductions!

  12. Bittersweet but big day today. We moved out all of the furniture from my mom’s house. When I got there this morning, a neighbor informed me that a woman had been passed out in front of the gate surrounded by wine bottles a few hours earlier. It reaffirmed my decision.

    1. Hope all goes well for you during this process. Those pesky realtors can be a real PITA, usually they are surrounded by boxed wine not bottled, check the kitchen to make sure she didn’t break in.

  13. ‘Families from around Massachusetts rallied at the State House Wednesday morning to protest new regulations for au pairs. A federal court ruled last month that au pairs in Massachusetts were covered by the state’s Domestic Workers’ Bill of Rights and, therefore, they are entitled to earn state minimum wage and overtime.’

    ‘The ruling will cost host families about $300 more a week.
    “What are we going to do? Panic mode set in, are we cutting hours, suddenly everything went haywire,” said Shawn McNamee, who has twin one-year-old girls and a two and half-year-old son. “In addition to ruining the cultural nature of the program it’s been to the tune of $15,000 more a year.”

    https://boston.cbslocal.com/2020/01/08/au-pair-regulations-protest-massachusetts-state-house-rally/

  14. ‘Boeing Co has released hundreds of internal messages that contained harshly critical comments about the development of the 737 Max, including one that said the plane was “designed by clowns who in turn are supervised by monkeys.”

    ‘The messages, disclosed on Thursday, show attempts to duck regulatory scrutiny with employees disparaging the plane, the company, the Federal Aviation Administration and foreign aviation regulators.’

    ‘In an instant messaging exchange on Feb. 8, 2018 – when the plane was in the air and eight months before the first of two fatal crashes, an employee asks another: “Would you put your family on a Max simulator trained aircraft? I wouldn’t.” The second employee responds: “No.”

    https://www.theglobeandmail.com/business/international-business/us-business/article-this-airplane-is-designed-by-clowns-boeing-releases-unacceptable/

  15. An interesging read …

    oftwominds-Charles Hugh Smith: The Fed Can’t Reverse the Decline of Financialization and Globalization
    http://charleshughsmith.blogspot.com/2020/01/the-fed-cant-reverse-decline-of.html

    (snip)

    “Financialization is the mass commoditization of debt collaterized by previously unsecuritized assets, a pyramiding of risk and speculation that is only possible in a massive expansion of low-cost credit and leverage for those at the top of the wealth-power pyramid: financiers, banks and corporations.”

    1. Eye$ sees it differently:

      ” … a pyramiding of ri$k and $peculation that is only po$$ible in a ma$$ive expan$ion of low-co$t credit and leverage for tho$e at the top of the wealth-power pyramid$: financier$, bank$ and corporation$”

      More!, More!, More!, … Fa$ter!, Fa$ter!, Fa$ter!

      Carnac the Magnificent:

      ?, “$is … Boom! … Baaah”:
      An$wer: “what a $heep says after it blow$ up.”

    2. Market$
      It’s a Tidal Wave of Liquidity. And Wave$ Cra$h.
      Are ea$y-money policies setting up global markets for the next Mins$ky Moment?
      Bloomberg |By John Authers | January 9, 2020

      He argued that the economic cycle is driven more by surges in the banking system and in the supply of credit than by the relationship which is traditionally thought more important, between companies and workers in the labor market. In “The Cost of Capitalism,” Robert Barbera’s explanation of Minsky’s ideas, this dynamic is laid out well here:

      The last five major global cyclical events were the early 1990s recession — largely occasioned by the U.S. Savings & Loan crisis, the collapse of Japan Inc. after the stock market crash of 1990, the Asian crisis of the mid-1990s, the fabulous technology boom/bust cycle at the turn of the millennium and the unprecedented rise and then collapse for U.S. residential real estate in 2007-2008. All five episodes delivered recessions, either global or regional. In no case was there as significant prior acceleration of wages and general prices. In each case, an investment boom and an associated asset market ran to improbably heights and then collapsed. From 1945 to 1985 there was no recession caused by the instability of investment prompted by financial speculation — and since 1985 there has been no recession that has not been caused by these factors.

      So, it may be more important to look at flows of money through the banking system and money markets than to check up on average hourly earnings and the unemployment rate. And they suggest a startling scenario.

    3. “The prey always seem limitless to the predators, but this illusion expires when suddenly there is no longer enough for the ravenous pack of financial predators. At that point, the predators turn on each other. That is the narrative that will come to the fore in 2020 and play out in the decade ahead.”

      This will be a great time for the debt-free to enjoy some of Neal’s popcorn.

      1. “This will be a great time for the debt-free to enjoy some of Neal’s popcorn”

        Bugs: “eh, maybee knot Doc! … Yikes!”

        Firefighter almost dies from poking at popcorn stuck in his teeth
        By Rob Bailey-Millado | January 7, 2020

        Adam Martin rests in the hospital while battling a life-threatening infection caused by popcorn stuck in his teeth.
        Adam Martin /SWNS

        This firefighter needed lifesaving open-heart surgery when he got a potentially fatal blood infection — for a really corny reason.

        Adam Martin, 41, was “on death’s door” after endocarditis left him fighting for his life. This infection of the inner lining of the heart chambers and valves occurs when germs from another part of the body spread through the bloodstream and damage the heart.

        https://nypost.com/2020/01/07/firefighter-almost-dies-from-poking-at-popcorn-stuck-in-his-teeth/amp/

    4. The Uber – Lyft thing is pretty slick.

      Imagine a coast to coast cab company you don’t have to buy the cabs or pay the drivers.

  16. Part 1:
    Injun’s, buffalo$ & burning grass:

    Why bringing back bison could help restore America’s lost prairie
    by Mark Tutton, CNN

    Once upon a time, vast expanses of North America were covered in wild prairie, shimmering oceans of grass festooned with wildflowers and teeming with animal life.

    Today, less than 15% of tallgrass prairie remains, most of it converted to farmland or lost to development. But as conservationists work to revive this iconic landscape, they are increasingly looking for help from an unusually hairy ally.

    “Here in the Midwest of North America the tallgrass prairie is a critically endangered ecosystem. In state of Illinois we’ve lost 99% of it,” says Elizabeth Bach, an ecosystem restoration scientist.

    “Prairie represents a habitat for a lot of plants, animals, insects and birds that don’t have another habitat to live in,” she tells CNN. “It also represents important cultural heritage. This landscape used to be covered in this type of an ecosystem and it’s still very meaningful for a lot of people who live here, as well as people who would historically would have lived here.”

    “Prairies have co-evolved with bison,” explains Bach. “It is an ecosystem that depends on grazing disturbance, so folks here brought that dominant grazer back into the system.”
    What makes bison such useful grazers is that they are relatively fussy eaters, who, unlike cattle, avoid consuming wildflowers.

    “Bison essentially are lawnmowers,” says Holly Jones.
    But bison do more for the prairie than just cut the grass. “We call them ecosystem engineers, because they have these outsized effects impacting how the ecosystem is shaped,” says Jones.

    “Really, they’re just sort of big disturbance machines,” she adds. “One example is their wallowing behavior. It’s one of the coolest things you’ll ever see — this one-ton animal rubbing its back on the ground, and their super short legs look kind of ridiculous, but when they do that they create these huge depressions in the ground without any plants.”

    These depressions can provide a habitat for ground-nesting birds and insects, and spring rains can fill the wallows with water, creating temporary ponds that are home to frogs and other amphibians.
    Bison manure and urine provide nutrients for prairie plants, and their hoof prints can help oxygen flow into the soil. But the real benefit comes when bison are combined with controlled fires.

    The idea is that by lighting controlled fires, it’s possible to “guide” bison to graze in certain areas. This creates a diverse patchwork of long and short grass, with each patch acting as a micro habitat suitable for different plants and animals. Each year at Nachusa they burn up to half of the 1,500 acres available to the bison, rotating which areas are burned from one year to the next.

    The technical term for this practice is “pyric herbivory” — a phrase coined by Samuel Fuhlendorf, professor of wildlife conservation at Oklahoma State University. Although Fuhlendorf pioneered research into using this kind of “fire grazing” for land management, the concept is not new. “I sort of stole it from Native Americans,” he jokes.

    “In the Great Plains, the big grassland area of North America, there are some areas that have lightning strikes but there’s not nearly enough, so for 15,000 years give or take, it was largely Native Americans lighting fires,” he says. “The argument is they lit fires for as many as 70 reasons, but one reason was to attract game, to drive game and manage game. The thought is they were really good at fire management and part of that is a connection with animals like bison.”

    Burning grassland might sound like a bad idea at a time when the world must drastically reduce carbon emissions to slow climate change, but grass keeps most its carbon in its roots, safe from the flames.
    “Everyone talks about the Amazon as the lungs of the planet, and certainly it produces a lot of our oxygen,” says Jones, “But grasslands are a better and more reliable storage for carbon than trees, partly because they store so much carbon underground, which means storage is resilient to things like wildfires.”

    It estimates that between 2009 and 2015, 53 million acres of the Great Plains were converted to cropland — an area half the size of California — releasing a total of 3.2 billion metric tons of carbon dioxide into the atmosphere — the equivalent of having 670 million extra cars on the road

    There are signs that the loss is slowing down: The area converted to cropland fell to 1.7 million acres in 2017, and conservationists say that provisions in the 2018 Farm Bill will help protect remaining grasslands.

    Coming Up: Part 2: Rabbits in Australia

  17. Part 2: Rabbits in Australia

    European rabbits (Oryctolagus cuniculus) were introduced to Australia in the 18th century with the First Fleet and eventually became widespread

    The current infestation appears to have originated with the release of 24 wild rabbits by Thomas Austin for hunting purposes in October 1859, on his property, Barwon Park, near Winchelsea, Victoria. While living in England, Austin had been an avid hunter, regularly dedicating his weekends to rabbit shooting. Upon arriving in Australia, which had no native rabbit population, Austin asked his nephew William Austin in England to send him twelve grey rabbits, five hares, seventy-two partridges and some sparrows so he could continue his hobby in Australia by creating a local population of the species. At the time he had stated, “The introduction of a few rabbits could do little harm and might provide a touch of home, in addition to a spot of hunting”

    In the 1840s, rabbit-keeping became even more common, with examples of the theft of rabbits from ordinary peoples’ houses appearing in court records and rabbits entering the diets of ordinary people.
    The rabbits were extremely prolific creatures and spread rapidly across the southern parts of the country. Australia had ideal conditions for a rabbit population explosion. With mild winters, rabbits were able to breed the entire year. With widespread farming, areas that might otherwise have been scrub or woodlands were instead turned into vast areas with low vegetation, creating ideal habitats for rabbits.

    In a classic example of unintended consequences, rabbits had become so prevalent within ten years of their introduction in 1859 that two million could be shot or trapped annually without having any noticeable effect on the population. It was the fastest spread ever recorded of any mammal anywhere in the world. Today, rabbits are entrenched in the southern and central areas of the country, with scattered populations in the northern deserts.

    Although the rabbit is a notorious pest, it proved useful to many people during the depressions of the 1890s and 1930s and during wartime. Trapping rabbits helped farmers, stockmen, and stationhands by providing food and extra income, and in some cases helped pay off farming debts. Rabbits were fed to working dogs and boiled to be fed to poultry. Later, frozen rabbit carcasses were traded locally and exported. Pelts, too, were used in the fur trade and are still used in the felt-hat industry.I

    Effects on Australia’s ecology

    Since their introduction from Europe in the 19th century, the effect of rabbits on the ecology of Australia has been devastating. They are suspected of being the most significant known factor in species loss in Australia. Rabbits are believed to have had an immense impact on the abundance of natural resource availability, primarily concerning overgrazing. The rabbits would first deplete the natural pasture vegetation, and would then resort to consuming woody vegetation, which included small shrubs, and the leaves and bark of trees. The extent of plant species’ loss is unknown at this time though it is known that rabbits often kill young trees in orchards, forests, and on properties by ringbarking them.

    Rabbits are also responsible for serious erosion problems, as they eat native plants, leaving the topsoil exposed and vulnerable to sheet, gully, and wind erosion. The removal of this topsoil is devastating to the land, as it takes many hundreds of years to regenerate.

    Control measures:

    A Royal Commission was held to investigate the situation in 1901. Once the problem was understood, various control methods were tried to limit or reduce the population of rabbits in Australia. These methods had limited success until the introduction of biological control methods in the latter half of the 20th century.

    Shooting rabbits is one of the most common control methods and can successfully be used to keep already low populations in check whilst providing food for people or pets, though it is ineffective for large scale eradication.

    Destroying warrens through ripping (a procedure wherein rabbits are dismembered or buried alive as a bulldozer dragging sharp tines is driven over their warrens/burrows), ploughing, blasting, and fumigating is widely used, especially on large farms (known as “stations”). The sandy soil in many parts of Australia makes ripping and ploughing a viable method of control, and both tractors and bulldozers are used for this operation.

    Poisoning is probably the most widely used of the conventional techniques, as it requires the least effort, and capable of destroying a local population, though re-infestation given the mobility of the animal is almost inevitable. Laying baits of pollard laced with a phosphorus-based poison, such as “S.A.P.” manufactured by Sayers, Allport & Potter, was an early method. The advantage of phosphorus is that in dry weather, assuming it has not been laid in clumps (obviated by use of a poison cart), it soon degrades to innocuous phosphoric acid and presents no further danger to livestock or pets. It does, however, present a real fire risk, and concentrated fumes can be toxic to operators. More modern poisons for rabbit control are sodium fluoroacetate (“1080”) and pindone.

    Another technique is hunting using ferrets, wherein ferrets are deployed to chase the rabbits out to be shot or into nets set over the burrows. Since the number of rabbits ferrets can kill is limited,[19] this is more a hunting activity than a serious control method. Although ferrets and other mustelid species are used as a control measure, Australia has significantly fewer wild mustelids to prey on the invasive rabbits while in their warrens or burrows compared to Europe and the United States.[20]

    Historically, trapping was also frequently used; steel-jawed leg-holding traps were banned in most states in the 1980s on animal cruelty grounds, though trapping continues at a lower level using rubber-jawed traps. All of these techniques are limited to working only in settled areas and are quite labour-intensive.

    Fences
    Ring-fencing can be highly effective way of providing a rabbit-free area. In the 1880s James Moseley ringed Coondambo Station with wire netting and fenced off the watercourses; at the first heatwave the rabbits perished of thirst. Shortly after 1900 he fenced off the deserted Yardea, Paney, Pondana, Yarloo and Thurlga stations in the Gawler Ranges with 150 miles (240 km) of wire netting, turning them within a few years from degraded land overrun with rabbits into a profitable sheep run.

    Biological measures: (rabbit ebola, & the virus escapes!)

    In 1950, following research conducted by Frank Fenner, myxoma virus was deliberately released into the rabbit population, causing it to drop from an estimated 600 million[30] to around 100 million. Growing genetic resistance in the remaining rabbits had allowed the population to recover to 200–300 million by 1991.

    To combat that trend, over three years from June 1991, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) comprehensively tested the potential of calicivirus, which causes rabbit haemorrhagic disease (RHD), for biological control of wild rabbits. The virus escaped from a quarantine compound on Wardang Island, South Australia, where the field tests were being carried out and, by late October 1995, it was recorded in rabbits at Yunta and Gum Creek, in north-eastern South Australia. By the winter of 1996, the virus was established in Victoria, New South Wales, the Northern Territory and Western Australia. The virus was discovered in these area by analyzing livers of dead rabbits.

    A legal vaccine exists in Australia for RHD, but there is no cure for either myxomatosis or RHD, and many affected pets have to be euthanized. In Europe, where rabbits are farmed on a large scale, they are protected against myxomatosis and calicivirus with a genetically modified virus developed in Spain.

    A team headed by virologist Francisco Parra, working with the University of Oviedo, in Asturias, northern Spain, identified a new variant of the virus in 2012.The pathogen, a new strain of K5 (RHDV1), is both extremely lethal and highly contagious. In 2017 it was released by Australian authorities at around 600 points on the continent. Owners of domestic rabbits were advised to vaccinate their animals.

    Coming up: Part 3: Australian brush fires

  18. When mixing epoxy catalyst, much better to “calculate than to guesstimate”

    Part 3: Australian brush fires. (Currently still raging on …)

    Sizing up Australia’s bushfires

    By Manas Sharma, Simon Scarr and Marco Hernandez
    Reuters |Jan 9, 2020

    More than 10.3 million hectares (103,000 sq km) of land – an area the size of South Korea – have been razed by bushfires across the country in recent months, with the east coast particularly hard hit. The states of Queensland, New South Wales, and Victoria account for 84% of that area.
    The figures are reported by each state’s emergency fire services

    https://graphics.reuters.com/AUSTRALIA-BUSHFIRES-SCALE/0100B4VK2PN/index.html

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