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This Negative Feedback Loop Has Led To Price Rediscovery In Favour Of A Downward Correction

A report from the South China Morning Post. “China’s residential property market has come to a standstill as sales offices are ordered to shut amid the coronavirus outbreak. Some agents are bracing for a slump in sales of as much as 80 per cent this month. ‘We sell 200 to 300 lived-in homes on the secondary market but now we basically have zero transaction,’ Wang, a Shenzhen-based agent with one of China’s largest real estate agencies, said by phone. He declined to give his full name. ‘Even if you want to view, most housing estates have barred visitors from their grounds.'”

From The Hong Kong Standard. “The escalating Wuhan coronavirus epidemic continued to weigh on the sluggish local property market, with secondary transactions for major projects remaining in single digits last weekend. In Yuen Long, In 498-sq-ft apartment at the Grand Yoho a sold for HK$7.68 million, or HK$15,422 per sq ft, compared with an initial asking price of HK$8.08 million. The seller bought the unit at HK$69.5 million in 2016.”

From Stuff New Zealand. “Auckland’s so-called ghost houses could be the answer to the city’s growing rental property shortage. Auckland Mayor Phil Goff said he had discussed plans with the Government to make renting the homes to key workers easier and more attractive to owners, saying it could be a “win-win situation” that puts money in owners’ pockets and helps the community. It was possible a new Government Agency could be formed to manage the rental of ‘tens of thousands’ of otherwise empty homes.”

“In 2016, the census recorded about 33,000 homes sitting empty in the Greater Auckland area. By the 2018 census, there were more than 39,000.”

From Domain News in Australia. “There are a handful of properties on the market across different parts of Sydney with motivated sellers who are willing to negotiate on price or have already discounted. In Sydney’s west, a brand-new two-bedroom apartment in Guildford is on offer with a price guide of $550,000 to $575,000. Guardian Property Specialists Roy Halabi said the vendors, who are the developers of the block of units, are willing to negotiate on price.”

“‘It’s very attractive to first-home buyers … they can get all the stamp duty exemptions, and it falls under [FHB concessions] thresholds,’ he said. ‘Price reduction,’ reads the listing. ‘Motivated vendor says sell!'”

From The Star on Kenya. “An increase in the number of mortgage defaults has forced property developers back to the growing board. A survey by the Kenya Bankers Association shows a pile-up of distressed properties continues to have an impact on the real estate market, with dealers having to reduce their asking prices. The distressed properties although certified for occupation, have remained unsold for more than nine months.”

“Owing to the subdued economic environment in 2019, a number of homeowners have been forced to auction off their properties. Those who sell distressed homes do so, not because they have a choice, but to offset what they owe a mortgagee or a lender. It is common for a distressed property to be sold below market value. ‘This negative feedback loop has clouded the house market outlook and led to price rediscovery in favour of a downward correction,’ KBA director of research and policy Jared Osoro said.”

From Zawya on Dubia. “Tens of thousands of apartments and villas were originally scheduled for completion in Dubai this year, but the promised number of residential units may not hit the market this year because of financing issues, construction delays, according to an analysis by experts. When asked why the delivery of property projects tend to get stalled, Lynnette Abad, director for research and data at PropertyFinder said some companies normally face ‘financing issues, contractual disputes, construction delays and licensing/ approval delays.’ ‘Some developers also tend to hold back completions to avoid flooding the market,’ Abad told Zawya.”

The Globe and Mail on Canada. “The last thing Calgary’s battered commercial real estate market needed was a breakdown at a major landlord. Thanks to the oil crash, and the exodus of numerous energy companies, the skyline already had lots of empty space. The downtown office-vacancy rate has been close to 30 per cent for the past three years, or roughly 15 times higher than Toronto and Vancouver. Now, dozens of office buildings owned by Strategic Group Inc. are in limbo, and may go up for sale, after a judge placed them into receivership in December.”

“Led by developer Riaz Mamdani, Strategic had sought court protection so it could restructure 56 of its Alberta properties, 46 of them in Calgary. It planned to sell some of the real estate, and turn some office buildings into other uses such as residences, retail and storage. ‘A lot of people think the high vacancy rate is because a lot of people got laid off. No. It is a combination of that and all that new supply coming to the market,’ said Greg Kwong, Alberta regional managing director for commercial realtor CBRE.”

The San Diego Reader on Mexico. “Skyline resident C. Valdez saw the news of the reported 16,000 abandoned homes in Baja California — with 4,000 in Tijuana — that are ‘invaded’ and inhabited by squatters. Valdez is an auto mechanic by trade; on his time off, he visits his elderly mother’s properties in Tijuana and Rosarito. ‘She owns a couple two-story houses down there and an apartment complex,’ he said, ‘she usually has people living in the one house for free, to keep an eye on the properties — I go there to talk to the caretakers; they catch squatters in our other house all of the time.'”

“‘Everything is invaded, all homes that are foreclosed are invaded,’ José Luis Padilla Gutiérrez reportedly said, ‘there must be about 4,000 in Tijuana, and 16,000 in the state of Baja California.’ ‘There’s like subdivisions down there,’ Valdez added, ‘you know the nice tract housing? Those are squatted in too.'”

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  1. ‘Price reduction,’ reads the listing. ‘Motivated vendor says sell!’

    Yeah, Sydney is to the moon Alice!

  2. ‘In Yuen Long, In 498-sq-ft apartment at the Grand Yoho a sold for HK$7.68 million, or HK$15,422 per sq ft, compared with an initial asking price of HK$8.08 million. The seller bought the unit at HK$69.5 million in 2016’

    DONG!

          1. “Evening star” chart pattern, meet “coyote about to drop to the canyon floor” pattern.

            Tesla shares’ ‘evening star’ chart pattern portends a reversal in progress
            By Tomi Kilgore
            Published: Feb 5, 2020 5:08 p.m. ET
            The stock’s ‘spinning top’ pattern depicts an epic battle between supply and demand, which the bulls have lost for the time being
            Getty Images

            Tesla Inc.’s stock (TSLA, -17.18%) is selling off hard on Wednesday, but the real drama occurred during the previous session’s rally, when a short-term “spinning top” appeared as part of an “evening star” reversal pattern to warn that the dramatic rally may have finally succumbed to gravity.

            The evening star is technically a three-day candlestick chart pattern that starts with a long white candle, which depicts a day in which the closing price is well above the opening price. Next is a small candle — the spinning top — followed by a longer black candle, in which the close is well below the open.

            Think of, when you throw a ball up in the air, the spinning top as where the ball stops in midair just before falling back down.

            The pattern can send a stronger message of a reversal in progress if the middle small candle (or body) is much smaller than the first and third candles, and is in the middle of the day’s range.

            That sounds exactly like what appeared in Tesla’s stock chart this week:
            FactSet, MarketWatch

            After running up 19.9% on Monday, the stock traded in a wide range of up 6.9% to up 24.2% before settling on Tuesday up 13.7%, which was the “first sign that there was confusion in the market,” said candlestick charting guru Steve Nison.

            On Wednesday, the stock tumbled 17.2% to $734.70, just above the middle of Monday’s body.
            …

  3. ‘By the recent estimate of Alix Partners, global auto makers will invest $225 billion in developing EVs over the next three years. Reuters estimated that Volkswagen committed $91 billion to the cause, and Daimler $42 billion—all this to meet political mandates. Seventeen all-electric models were offered in the U.S. last year. A dozen more will arrive this year—though one less than expected since Mercedes has delayed its $70,000 electric SUV until next year. Why might Mercedes be hesitant? Even with so many models to choose from, EV sales were flat last year, and one car—Tesla’s Model 3—accounted for nearly 80% of those.’

    ‘This is the pileup we warned you about. Roger Penske lamented in a conference call in November the customer cancellations flooding in for the Audi E-Tron, leaving his Northern California dealerships stuck with 30 of the highly touted SUVs. A Toyota executive told an audience an “electrified Armageddon” was coming. A Honda executive said the Tesla Model 3 wouldn’t be selling either if it had a Honda, Toyota or Ford badge on the hood.’

    ‘This column has been hard on Bloomberg News for forecasting a wholesale transition to electric cars in the near future based on vaporous promises by politicians eventually to ban gasoline-powered cars. Voters may have something to say about that, but such forecasts also ignore the reality that government policy everywhere has turned decisively toward relying on profits from gasoline-powered cars to support the money-losing electric cars that mainstream manufacturers are mandated to build.’

    ‘This only becomes more true as direct subsidies to buyers are phased out, as is happening in the U.S., China and everywhere. If the world is on the cusp of its first recession of incidents—a coronavirus here, a Boeing production halt there—one of the earliest tremors was Germany’s dieselgate scandal. In penance, the German industry, led by VW, has poured tens of billion into EV investments that aren’t likely to pay off, and with no other strategy in mind than throwing themselves eventually on the mercy of politicians when the contradictions become apparent.’

    ‘Tesla has proved that the market for electric cars is real, but so are the limits of that market, succinctly defined as the number of customers willing to pay a premium to be inconvenienced.’

    ‘So am I a believer in Tesla at the current stock price? No. The company expects to sell 500,000 cars next year; its market cap, at $169 billion, is more than $50 billion higher than GM’s, Ford’s and Fiat Chrysler’s combined, businesses that collectively sell 17 million cars a year.’

    ‘Tesla can earn a lot more profit per car, and can sell a lot more cars than it does now, and still its stock is priced as if its future profits will be coming from some unnamed something that is not the car-making business.’

    https://www.wsj.com/articles/teslas-stock-goes-to-heaven-11580859702

    1. People, by and large, don’t want EVs. What a major hassle they are. Drive around and look for a place to charge it for an hour? Give me a break. They’re going to have to liquidate these things at a massive loss as they pile up on lots.

        1. You mean an hour at home? That may be acceptable, but not out in public. If you can get a 50% charge in 15 minutes, that might be acceptable. That’s still much longer than it takes to completely fill a gas tank, and you’re only getting 50% of the range so you’re stopping twice as often.

          2. Bathroom breaks don’t take an hour. Even a potty break and a meal don’t take an hour. And many people would rather eat in the car. And those electric refueling stations would have to be 5x larger to accommodate an hour’s worth of charging cars.

            The electric cars have gotten ahead of the refueling infrastructure. Time to shift the subsidies to where they are needed.

        2. then it would be practical

          On the contrary, it will be even less practical, because you’d have to add another ton to the thing. You can’t make an inefficient vehicle more efficient by making it heavier.

          1. How about a gasoline-driven charger mounted on a small trailer towed behind the electric car and to be used to charge the car while you are driving it? This would only be needed on long trips; The rest of the time the trailer can be left in the garage.

          4. How about a gasoline-driven charger mounted on a small trailer towed behind the electric car and to be used to charge the car while you are driving it?

            I thought about that when Tesla’s first started getting popular. You would think that somebody could make one to match the car and it would be really popular. But the problem is a normal size generator isn’t enough. If you ran it all the time while driving down the interstate it would extend the range a bit using a standard little camping generator, but not enough to be worth it. You would need a big expensive heavy industrial generator to actually keep it at an even charge continuously, or even to be able to charge it overnight wherever you stop.

            I got excited when I figured out you could pull charge them fairly quickly. It actually makes more sense for somebody to start a business doing that. Use a semi tractor to just pull people down the road toward their destination for an hour to charge them back up. For a hefty fee of course. Which they wouldn’t want to pay…which brings us back to square one.

      2. I still don’t get the logic. EVs may be viable if you have a SFH with a garage and can charge overnight. But they don’t want us in SFHs!

        So what about apartment dwellers? You can’t very well have street parkers dragging extension cords out across the sidewalk and in to the street. Even those of us with garages in older apartments are out of luck. You think the landlord is going to retrofit all our parking spots with EV chargers? Makes no sense.

        1. Yeah, an EV would be okay if you don’t do road trips out of town, and can charge it in your garage. Otherwise, it’s a PITA.

          Personally, I wish I could wave a magic wand and change all vehicles into EV’s instantly. The traffic noise where I live is annnoying as f***. Nearly everyone would hate me, but at least it would be quieter. 🙂

        2. “You think the landlord is going to retrofit all our parking spots with EV chargers?”

          I have done that for two different customers, a luxury condo building in Cherry Creek and a rec center on the west side of Denver.

          People who really want them will pay for them.

      3. You make it sound like the climate crowd is planning on giving you a choice. And, if they get there way, superannuation of your gas powered vehicle will just be the start. Then they will start rationing the number of miles you are allowed to drive, how long you can keep the lights on in your house, how many times you can flush the toilet, the size of refrigerator you are allowed to own, how much meat you can consume, how many children you can have, how much you can use your heat or air conditioning. There is nothing in your life they don’t plan on making subjectvto their manufactured scarcity.

  4. This was just posted in the previous thread:

    https://www.realtor.com/realestateandhomes-detail/14105-Biscayne-Pl_Poway_CA_92064_M24805-10480?view=qv

    And I posted this detail:

    01/30/2020 Sold $4,300,000 $271
    01/21/2020 Relisted $4,999,000 $315
    10/16/2019 Price Changed $4,999,000 $315
    10/16/2019 Price Changed $4,999,000 $315
    08/21/2019 Listed $5,999,000 $378
    08/20/2019 Listed $5,999,000 $378
    12/04/2018 Listed $6,950,000 $438
    10/03/2018 Relisted $6,950,000 $438
    02/10/2018 Price Changed $6,950,000 $438
    11/29/2017 Listed $7,950,000 $501
    12/12/2016 Listed $11,500,000 $725
    12/08/2016 Listed $11,500,000 $725
    06/28/2013 Sold $9,075,000 $572
    01/21/2013 Listed $12,000,000 $757
    09/08/2011 Price Changed $12,900,000 $814
    01/04/2010 Relisted $14,995,000 $946
    09/28/2009 Listed $14,995,000 $946

    1. 06/28/2013 Sold $9,075,000 $572
      01/30/2020 Sold $4,300,000 $271

      The MSM isn’t going to tell you the bubble has popped, but it has.

        2. I don’t use the word ‘obscene’ very often, but this one is the exception.

          Holding costs have just got to be something off the charts.

          Estimate $~6mm/year just for property taxes.

          Certainly many 10’s of thousands just for insurance(s).

          But the real gotcha would be routine maintenance.

          Owner would have to hire a staff just to keep the place clean.

          (Probably would need a couple of people dedicated to
          bathrooms, let alone all the other stuff).

          (Probably not going to call Bubba the Plumber when one
          of the miles of pipe breaks/leaks/clogs.)

          Who is going to mow the lawn?

          Owner better get use to making a payroll every week.

          What a waste.

      2. They’ll catch on in a couple of years. MSM reporters are notoriously slow to detect momentous economic events.

      4. I’d like to see a bubble pop like this in affordable, everyday houses. And rents for said houses. I’m not seeing it at all yet. I also don’t recall the high end cratering like this last bubble, before the cheap stuff crashed.

        1. Yes, I am patiently waiting for prices to decline on houses I could reasonably afford (by traditional affordability standards).

      5. That’s a huge, huge drop from 2013.
        To be a contrarian, let me post another 2013-2020 sale in nearby LA County I just noticed closed recently –

        Jan 2013 Sold $850,299
        Jan 2020 Sold $2,150,000 (+137%, or +14.1% per year).

        (No major changes to the apartment or building btw – even the kitchen is the same – that +$1.3million is all bubble.) So in one case we have hyper-deflation for the uber rich (-52%), and hyperinflation for everybody else (+137%), in the exact same 7 years. Something doesn’t compute here.

        1. So in one case we have hyper-deflation for the uber rich (-52%), and hyperinflation for everybody else (+137%), in the exact same 7 years. Something doesn’t compute here.

          Which group gets to easily borrow cheap money to make the purchase?

          1. Both groups do, according to all the zero-down no doc loans documented here. What is interesting is that it does sound like FHA et al are trying to pull back on the fog-a-mirror lending standards at the low end recently, but it’s the ultra high end that has been sinking for years despite the free flow of credit.

            Imo they ran out of very rich people a lot longer ago than anyone wants to admit. This is a problem because the entire post-2009 world economy has been oriented around the very rich.

          2. Both groups do, according to all the zero-down no doc loans documented here.

            I thought the cheap easy money was limited to less than a million?

          3. Did you happen to see that foreclosure posted in the comments a few days ago, where people looked into the financing company? They were lending up to $5mil, 50% DTI, for foreign borrowers. For domestic borrowers it was worse, interest-only 10 year period on a 40 year loan up to $5mil. Not to mention the other sources of cheap lending available to high net worth people through private banks, portfolio loans, etc.

      1. Takoma Park? AGAIN? Seriously, if you’re ever in the DC area we’ll take a walk through that nabe to see those historic homes. Cheetos on me.

      1. Re: Texans moving: A former governor of NM is widely quoted as having said, “Poor New Mexico! So far from heaven and so close to Texas!”

        1. That’s a paraphrase of an older Mexican saying: “Poor Mexico, so far from God and so close to the United States”, which is attributed to Porfirio Diaz, over 100 years ago.

    2. A Blast from the Past …

      Texas Gov. Rick Perry tries to woo California businesses – Los Angeles Times
      https://www.latimes.com/business/la-xpm-2013-feb-12-la-fi-perry-jobs-20130213-story.html

      (snip)

      Texas Gov. Rick Perry is on a hunting trip in California. And the prey is Golden State businesses — and jobs.

      Perry kicked off his in-your-face campaign to woo companies to the Lone Star State this month with radio ads declaring that “building a business in California is next to impossible.” Now the governor is on a whirlwind trip through the state courting companies in person.

      “You fish where the fish are,” Perry said Tuesday during an interview in Beverly Hills, his slow drawl emphasizing each point. “You’re at a tipping point in California from the standpoint of high-wealth innovators. Many are looking for somewhere else to go, and we’d like them to consider Texas.”

      Perry’s not the only one who has come knocking.

      The Arizona Commerce Authority recently opened offices in California staffed with employees to pitch businesses full-time. Nevada has hired recruiters as well. And Iowa Gov. Terry Branstad said last year that he was making calls to California companies looking to move.

  6. ‘Even if you want to view, most housing estates have barred visitors from their grounds.’

    This reminds me of questions I raised a couple of days ago:

    Are wealthy all-cash Chinese investors still supporting the prices paid in west coast U.S. housing markets?

    If so, are they even welcome to visit the properties they are considering to purchase?

  7. ADP reports the most new jobs created in five years for one month. Tell us a few things: (1) still plenty of Americans available to work if you pay them fairly (2) we do not need to import immigrants legal or illegal, that is just a way to depress wage rates (3) no need to have an artificially stimulated housing market for employment (4) the economic measures taken by W and Obama were to promote globalism not for the benefit of working class Americans. KAGA

  8. Asset Management
    Investors yank almost $400m from China funds as coronavirus spreads
    Outflows end a positive run for Chinese equity funds, which until 27 January had pulled in around $3.3bn net
    Medical workers wearing protective masks gather during a protest outside the Hospital Authority’s head office in Hong Kong, China, on Tuesday, Feb. 4, 2020 Getty Images
    By David Ricketts
    February 5, 2020 12:01 am GMT

    Weekly flows into Chinese equity funds have turned negative for the first time in 2020, with investors spooked by the escalating coronavirus outbreak pulling almost $400m from stocks.

    Figures from EPFR, a data provider, show a net $387m was withdrawn from Chinese equity funds between 27 January and 31 January as the deadly virus — which has killed more than 420 people and infected another 20,000 — took hold.

    The outflows ended a positive run for Chinese equity funds, which until 27 January had pulled in around $3.3bn net.
    …

    1. My memory is foggy, but it seems like the number of confirmed cases has more than doubled within a couple of weeks.

      1. doubled within a couple of weeks

        If that doesn’t slow down, in three months it would be over a million.

        1. Good news: Unless this is much worse than SARS was, all the interventions that health authorities are undertaking will soon slow down the rate of new case growth.

          1. If China wouldn’t have hidden what was going on for so long, it would have prevented the spread to dozens of other countries via airplane.

        2. The real count or the Chinese released numbers? We have numerous credible experts saying the number was 100,000 about a week ago. Right now China is just showing us the epidemic’s history. The dates have been changed to protect the guilty. Authorities do not want to admit they allowed the numbers to reach tens of thousands prior to alerting the world.

          1. The world will find out eventually. And then Trump won’t need to wage any more trade wars with China. China has already cheated their way to killing American pets and harming children with tainted formula, not to mention the pollution. Who’s going to trust China after this?

          3. the number was 100,000 about a week ago

            One thing that theory does not explain is why there aren’t any outbreak epicenters outside of China traced back to travelers of two months ago. At least I haven’t heard of any.

          4. I’ve read that Moscow’s attempts to cover-up the danger from Chernobyl was a contributing factor to the fall of the Soviet Union. I’m certain it galvanized Ukranian nationalists.

          5. <em.I’ve read that Moscow’s attempts to cover-up the danger from Chernobyl was a contributing factor to the fall of the Soviet Union.

            The Soviet Union fell when the great mass of sheeple started seeing through the lies they were being fed by official spokesmen and media outlets like Pravda and Trud. The parallels with growing public rejection of our globalist MSM and discredited Deep State mouthpieces is uncanny.

          6. I’ve read that Moscow’s attempts to cover-up the danger from Chernobyl was a contributing factor to the fall of the Soviet Union.

            The Soviet Union fell when the great mass of sheeple started seeing right through the lies and propaganda they were being fed by official spokesmen and media outlets like Pravda and Trud. The parallels with growing public rejection of our globalist media and discredited Deep State mouthpieces is uncanny.

          7. My only guess(?) is that the maybe virus doesn’t live on surfaces nearly as long as other viruses, so it spreads mostly by close contact. If it were easily contagious from unclean surfaces, half of India would be sneezing by now.

            MGSpiffy’s tinfoil theory that the virus may have been engineered to target specific genetics — as unlikely as it may seem — at least can explain why it’s not spreading.

          8. Well this wont help calm people down any …

            Tencent may have accidentally leaked real data on Wuhan virus deaths

            Tencent briefly lists 154,023 infections and 24,589 deaths from Wuhan coronavirus

            I want to make it clear that I honestly doubt that the coronavirus was designed to target specific narrow genotypes.

            But that I do think achieving the ability to make designer viruses and bacterial pathogens that do most of their dirty work on a specific group of people with similar DNA — That is a goal that I believe more than one government has given a lot consideration to , both from an offensive and defensive standpoint.

            A highly lethal virus is going to be very hard to create, but imagine being able to ‘soften up’ an opponent by unleashing ‘diarrhea of doom’ on their population a week before you were going to start a border conflict…

            Consider that all the way back into the late 70s-early 80s several sci-fi authors were accurately describing nations nations states using hidden back doors built into the electronic chips of various civilian and weapon systems sold to their opponents.

          10. work on a specific group of people

            First you give that specific group free and compulsory vaccinations, which unfortunately induce severe respiratory distress when the real virus comes around? And oops, it was your own peoples.

    2. The Financial Times
      Coronavirus
      Coronavirus latest: World Health Organization plays down treatment hopes

    3. Still just two deaths outside of China. Death rate of under 1percent outside of China. As about as close to 2 percent, as you can get inside of China.

    4. A friend of mine from a city in Fujian province said the situation is bad in her city with a lot of people sick. Another friend just cancelled a flight home to Beijing which is quite far from Wuhan saying it’s not safe. Either my friends are getting bad information from home or the situation is much worse and more widespread than we are being told.

  11. Hello I’m back – I live in So Cal and lease an executive home (yes, that’s what it is called; don’t shoot the messenger). The other week when I posted that I was bearish on housing – but posted truthful observations and anecdotes about what I’m seeing from my angle – I got a lot of flack here. That says something, folks. Seems like a lot of emotion involved?

    As I said my mother in law stretched to buy in Silicon Valley in 1988. She has a huge amount of equity and does not seem to care or know about a 10-15% ‘pullback’ in prices in her area. That’s like $3.5 million down $500k. Who cares?

    My sister in law’s home value (comps near hers, Zestimate, Redfin) have gone up 1.8% in the past 30 days in a prime Bay Area zip code. There doesn’t seem to be any concern up there with them either. Go ahead an shoot me – but I’m telling you all the doom and gloom here is not realistic from where I see.

    I want to add – I see a bunch of negative stuff about California….but I love California. I grew up in the Midwest and it was cold and yucky. Happy to live out here and it is a relatively very high cost of living – and worth it to me. There are negatives about any potential place to live, and any ‘negatives’ for us here in So Cal are far-outweighed by the positives. If one does not like it, they can find somewhere that works better for them. But the So Cal bashing (that one female poster seems to bash San Diego / Encinitas a lot) seems ’emotional’ / personal to a few of you….says more about you than those areas. I understand things are in a bubble and it ruins it for a lot of people. After doing some work in the morning I often go down to the beach and enjoy the ocean and scenery. I drive a fun convertible and California and the weather speak to my soul. To me, this is nirvana. To each their own…

    During the Housing Bubble 1.0 I got caught up in two different foreclosures debacles….one in 2008 with a condo and the other in 2011 with a home…both ‘owners’ we were leasing from lost the places to foreclosures because they were grossly over-leveraged. The one debt-owner ‘owned’ had bought a $2 million home in Ladera Ranch with $100k down. Good times. He lost both his houses and went bankrupt.

    I had to laugh when I saw on this blog or another something about “construction workers and their pole-dancing wives”….we live up on a sizable hill in Laguna and there’s a neighbor down the hill a street or two and he has a HUGE speedboat…and drives a big (construction) pick-up…and the wife is bleach-blond and has big, fake head-lamps that sit up high. Guess what? Now their home is for lease. I told my wife I bet they took equity out of that house that we can see, and bought another house (because real estate only goes up and it makes sense to lever oneself to the hilt with O.C. real estate)…and will rent out the one that is near us. Funny thing is, they’ve still not been able to rent the place out for going on four months now…even though their rental ask is now 8% lower than the Zillow rent estimate. I bet they made some calcs on their ‘real estate venture’ — and forgot to factor in vacancy rates properly.

    I’ve witnessed two 30% (plus) ‘drawdowns’ in O.C. real estate…first was 1994 or so and then the Housing Bubble 1.0 fall. I’d love to see South O.C. real estate fall that much or more, but I’m not seeing anything like that (yet?) so far. (Plus, the last time it did that – the Fed started buying MBS and did the TARP program – and California raised the conforming limit way up to over $700k (I think to try to mitigate as much of the crash as possible)…..and, in the end, most people I know in South O.C. ended up *better* off after Housing Bubble 1.0….not worse off.)

    3. That’s like $3.5 million down $500k. Who cares?

      Uhh, the person who just paid $3.5 million, for starters.

      1. the person who just paid $3.5 million

        and will pay interest on that for 30 years.

        An insight rarely found in the executive home.

        Ironically, it is upwards of 10 years take home pay for the average family. But who cares…

        1. “and will pay interest on that for 30 years.”

          Weren’t you the wise man who made the timeless statement, “If you have to borrow for 15 or 30 years, you can’t afford it nor is it affordable”?

          A wise and timeless statement indeed.

    5. When people bash Poway, I provide a glimpse into owning on the coast. To each his own. That’s why I’m transferring equity inland.

      1. you have to look at the pros and the cons. for some one may be the other. i can relate to raising kids in a safe environment so i get your desire to migrate out but if i did not have the kids i would prefer to live near the ocean vs out in the scorching desert hills and deal with drunk realtors passed out in my yard.

    7. “the wife is bleach-blond and has big, fake head-lamps that sit up high.”

      Isn’t that ALL of California? Anyway if the positives outweigh the negatives, then good for you. More of the Mid-west/upper South leftover for me.

    8. I live in So Cal and lease an executive home…

      Newsflash: Most people–in Cali and elsewhere–don’t have that kind of income or privileged position. I’m sure things do look different from such a lofty perch.

    9. “all the doom and gloom here is not realistic”

      The doom and gloom of the housing bubble is not predictions that it might one day (or today) crash. The doom and gloom is the bubble itself: the misery, unfairness, inequality; the lost time, lost savings, lost potential; the human cost of 40 years of hyperinflation in housing prices and how it has destroyed our economy, our society and the lives of real people.

      “most people I know in South O.C. ended up *better* off after Housing Bubble 1.0….not worse off.)”

      This is the doom and gloom. Artificial winners and losers.

      “my mother in law stretched to buy in Silicon Valley in 1988…$3.5 million down $500k. Who cares?”

      This is the doom and gloom. People ending up with millions of unearned dollars simply for occupying a house for a few years, while that same basic human need became increasingly unaffordable for most everyone else.

      “HUGE speedboat…and drives a big (construction) pick-up, took equity out of that house”

      This is the doom and gloom. Overleveraged speculators rewarded for gambling.

      The doom and gloom is that circus continues.

      1. ‘all the doom and gloom here is not realistic’

        Yeah, lower shack and rents prices are doom and gloom.

    10. Socal jimbo, welcome back! CA real estate only goes up, ask anyone here except mafia blocks. Sounds like now is the best time to buy a loan. Giddy up and keep me up to date on those increasing, highly credible, Zildo estimates.

    11. “I drive a fun convertible and California and the weather speak to my soul. To me, this is nirvana. To each their own…”

      +1 Envy!

        1. Although I’m debt free I have two kids in college, my wife lacks economic power in employment and I am recently retired. I couldn’t pull this off down there.

      1. “Someone in my town is selling there backyard…”

        “Everything is for sale.” —John Gage [salacious grin]

    1. The corona virus seems contained. And the death rate outside of China is less than one percent. Of course with no medical it can be quite deadly particularly for elderly and other vulnerable populations. Finally the growth this quarter is estimated to be 2.9 percent so far. Low inflation, high job growth with modest wage growth and finally declining interest rates, this is a dream economy for wall Street and the best for mainstreet in decades.

      1. With a two week lag time between infection and symptoms, methinks you may be quite premature.

        1. Yeah, I think the only way it’s contained in North America is if either American living conditions/habits are less conducive to passing it from person to person OR if the rumors are correct that it’s actually harder to pass to a person of European ancestry for genetic reasons. And if there is a genetic component to the ease of transmission, where does that leave India and Africa?

          1. Well we should know if a few weeks but for right now if you look at the cases outside of China it is a flatline, inside China it is a parabolic curve. I cannot understand why a virus just for Han Chinese would be developed by the Chinese. For their minorities it would make sense but that does not appear to be who is getting it.

          2. I cannot understand why a virus just for Han Chinese would be developed by the Chinese.

            Well…if we were to speculate in ways that would get us kicked off other platforms…what if they stole it from the Canadians, not understanding the full implications of what it was? Or understanding what it was but planning to replace that part with something else and then it got loose accidentally before they could do that? Or you could get deeper into the tinfoil and suspect someone else of releasing it there to hurt them…

          3. Targeting a specific population would require massive amounts of genetic information from multiple populations coupled with big data processing capabilities. I don’t think we’re there quite yet. Please don’t help us get there by using consumer DNA kits!

          4. Targeting a specific population would require massive amounts of genetic information from multiple populations coupled with big data processing capabilities. I don’t think we’re there quite yet. Please don’t help us get there by using consumer DNA kits!

            We’re getting close. It’s getting harder and harder to keep your DNA out of the hands of governments. and that’s by design..

            https://www.aclu.org/other/newborn-dna-banking

            The DNA of virtually every newborn in the United States is collected and tested soon after birth.

          5. A little more than ten years ago, I was involved in the review of numerous next-generation sequencing technologies. It wasn’t clear then which technology would come out ahead. Illumina appears to have won that race. Now, we have consumer DNA kits being thrown at us left and right. Jenny Craig (owned by Nestle last I checked) is even offering DNA kits as part of their program! The effort to obtain massive amounts of genetic information is undeniable. I’m intellectually torn regarding the testing of newborns. I’m involved with Rady Children’s Hospital and their Institute for Genomic Medicine. I’ve seen how genomics can be used to save lives, but I’m not so naive to think that it couldn’t be used otherwise.

          7. @Redpilled Redhead

            I’ve been working with computers for over 40 years now. And if there is one thing that is easy to do, easy to deny, and can be untraceable, it’s making a copy of data that you don’t tell anyone you have.

            Think back 40 years ago to the main piece of biometric data that governments had that would stay valid for a long time – fingerprints. They had to physically keep the images. If a copy was made, that also required physical materials, and physical processed. To look up someone’s fingerprints if they weren’t there required finding out where an image of their prints might be, and getting it physically from that location in some manner.

            In the article I linked there is this bit:

            What happens to the blood spots after the testing is done? This is where newborn screening becomes problematic.

            It used to be that after the screening was completed the blood spots were destroyed. Not anymore. Today it is increasingly common for states to hold onto these samples for years, even permanently

            The blood samples retained are physical items, and subject to the same issues as fingerprints along with the added need to preserve from decay.

            But if you can sequence a person’s entire genome – even if you keep it raw – all 6.5 billion mega base pairs, our data centers are such that it’s now practical to store it (and other biometric data), make copies of it and make it all accessible (assume some compression, etc). That data, one every person in the US, is likely smaller than the communications data and meta that they personally generated which has been captured by automated infrastructure.

            And when the government (which part?) says they won’t keep copies of the digital data, or will delete them after a certain amount of time – there’s no way to know that will be true. They can delete their copy as promised. But how many other copies exist? backups before the deletion? shadow copies those government entities don’t even know about made by other entities? the tl;dr is that once the data is taken, there is no way to make it ‘un-taken’ and be truly sure that happened.

            and that’s a big source of my cynicism.

            My ex-wife thinks she had deleted all of the evidence of her her misdeeds. All I can say is “Ha!” And I’m one tiny nobody.

      2. The corona virus seems contained.

        How about the doubling of cases in Japan today? Now they’re at 45 confirmed. Seems to me this thing is proliferating rapidly, hidden only by the 2 week incubation time. This is going to get really ugly.

        1. The doubling was due to the coronavirus on the cruise ship. 20 people tested positive on the ship and were taken to hospitals on land. Those 20 now count as cases in Japan, hence the doubling.

    3. “Why has the DOW rocketed up more than 1,000 in a mere few trading days?”

      Nothing makes sense during a bubble. Everyone is just trying to grab some cash and is deeply jealous of their brother in law who made a killing trading Tesla stock. It will be fun to watch when the music stops.

  15. So, I bought a bunch of silver eagles last year. I was thinking it was a good “bet” because of the stormy seas I thought I saw on the horizon. While they’ve gone up $3 per, when you factor in the bid/ask spread – the dealer’s cut if you will – I’d be selling at a loss if I liquidated.

    My conclusion is that the dealers are the ones making all the money. Precious metals would probably be decent in a total collapse of the currency, but short of that I really don’t know what this purchase did for me. I’m not going to buy any more. I’ll sell if there’s ever a price move where I can get out a few bucks a coin ahead of what I paid.

    1. Checking prices…

      People like silver because of how cheap it is. But the premium over spot for coins is probably not worth it. Even bars are premium-heavy. Gold has a much lower premium by weight but few people can afford to throw down $1590 at once.

          1. Two and change.

            BTW, Before the great robbery that is the Federal Reserve got well underway, the gold version of the Eagle was worth what the Silver version is today, in terms of dollars.

    2. I have some Silver Eagles that I bought in the ’80s and ’90s. The dealer asked me why I was buying Eagles because it was the highest premium of my choices. But I thought they were pretty.

    3. Silver had never recovered from it’s displacement from photography. For years people have been saying that either PV and/ or EV will create sufficient new demand to make in soar. However due to thrifting it has not happen. I have a little physical not much and have some gold and silver mining shares as a hedge to my portfolios but only around 5 percent and have not seen any reason to go above that. Even have written options on them. I sold a lot of options when gold was over 1600, a lot of them will expire in June. I will rewrite, it has been the only way to make money on them for almost a decade now.

      1. With the Keynesian fraudsters at the Fed printing us down the road to Weimar 2.0, buying and holding physical precious metals is a no-brainer. Read Adam Fergusson’s “When Money Dies” for a preview of coming attractions.

      2. I believe that the historical norm is 1% portfolio. Gold bugs think 5% is considered optimal, and aggressive gold bugs go as high as 20%.

        I agree with Boo Randy that the next recession will look more like Wiemar than the Great Depression. When dollars are printed, they need to be backed up by *some*thing, be it labor, services, goods, or natural resources. Well, we’ve already printed trillions of dollars, so hyperinflation is the only way to back up the dollars. Since nobody wants to inflate wages, those dollars are going to be soaked up by goods or natural resources like food, oil, or gold. Not sure about real estate.
        Venezuela here we come!

        1. we’ve already printed trillions of dollars, so hyperinflation is the only way to back up the dollars

          We’ve already had a big inflation (credit expansion). Do you suppose that the only thing possible after a big inflation is a big inflation (credit expansion)?

        2. I believe that we will experience deflation when the massive debt load implodes in earnest, taking the money on the other side of the ledger with it. The cycle is vicious: as asset prices decline, there is even more incentive to sell, further depressing markets. Cash is king!

    1. That is truly insane and the Titans of high tech should be shot for forcing it on people. But maybe there is some method to their madness, they cannot get Americans to do it very long so they get to hire foreigners

    2. I know people who commute from east Bay to Santa Clara. What they do is start the day at home. Then, if there is a need to come into the office (say face to face meetings) they head out around 10 AM. They leave the office around 3PM and finish the workday at home. With this schedule they can usually avoid the worst traffic.

      A crazy way to live.

      1. I commute to Santa Clara from Milpitas. The distance is about 5 miles but can take from 18 minutes to one hour depending on traffic. Most of the time it’s like 30 mins on average.

        1. bro! you need a TESLAAAAA!!!! you can be in the privileged TESLAAA (loan owners) lane and put your nose up to the peasant, low class (probably renters) as you pass them at 10mph instead of the 5mph they are going on the freeway. Bay area traffic pretty much sucks from 6am-7pm and the 237 is usually a nightmare but when the new tesla triangle with that awesome combustible battery is ready, buy that and surround it in more armor (spikes?), then you can really show them losers who is boss! buy stawk, over leverage in RE, borrow much as you can…ITS FREEEEEEE (also drive TESLA)

  18. So no one is going to post about Trump’s aquittal? Or about Romney voting to convict? 🙂

    1. [The attempted impeachment] is a tale
      Told by an idiot, [Pelosi], full of sound and fury,
      Signifying nothing.

    2. The acquittal has been known for months. Meanwhile, what’s STILL not known is the final winner of the Iowa caucuses. Likely Mayor Pete.

        1. Even weaker is Iowa’s inability to count votes. 50 years after we flew to the moon, we can’t even safely and accurately count votes?

    3. “Or about Romney voting to convict?”

      Moot Romney certainly did vote to convict the president on charges of abuse of power.

  19. It is common for a distressed property to be sold below market value. ‘

    Wrong, REIC shill. Whatever price that distressed property ends up selling for = its new market value.

  20. A thought from Z Man on the blatant DNC primary rigging:

    “A big part of what holds Progressive whites inside the orthodoxy is their belief that they are part of a reformist movement, fighting against vested interests. If their party drops the mask and tries to rig the vote against Sanders or sides with a billionaire like Bloomberg, maintaining that delusion will be impossible for many. Dissidents could suddenly find themselves getting very different questions from their Progressive friends and family over the course of this campaign.

    “That’s not to say there will be a suddenly revolution on the Left, with white Progressives crossing no man’s land to embrace their brothers on this side. As with Trump, many dead end types will stay on the revolution. In every slave revolt, it is always a minority that does the revolting, while the majority play it safe. Still, it is an intriguing possibility that will offer up opportunities for dissidents. No one knows what will happen when a bunch of white Progressives get red pilled.”

    1. “No one knows what will happen when a bunch of white Progressives get red pilled.”

      They stop spending money, and start saving money?

      1. They become less Progressive when they realize the extent to which they’ve been manipulated?

  21. The acquittal was done deal for sometime. As far as Romney, he took his 40 pieces of silver a long time ago from the globalists. He has connections to the same corrupt Ukrainians as Biden. Now, if the Justice Department comes after him he can scream political retribution. He designed Obamacare 1.0, he is the scorpion and Utahns are the frog. They should have seen it coming.

    1. I didn’t catch all of Laura Ingraham’s opening but Romney appears to have been in her crosshairs.

  22. The poor showings in Iowa of the globalists’ Annointed Ones, Biden and Fauxahontus, with “Mayor Pete” as an acceptable hollow man alternative, is throwing the globalists into a panic. I expect the corrupt DNC to redouble its efforts to rig future primaries against Bernie Sanders and regain control of their corporate puppet show.

    https://apnews.com/8a6ea236b5abcb43b40f79cfbf3f8c20

    1. I bet everybody did. Especially the more deplorable types who live outside of town and wish he’d done it to them, registered D or not. I’m guessing not many of them voted for him.

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