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All It Takes Is One Fire Sale Of A Comparable Home In Your Neighborhood

A report from the San Francisco Chronicle in California. “Historically, the spring selling season in San Francisco is the most active of the year, with new listings, sales and market prices all climbing steadily out of the mid-winter slowdown. But today, the coronavirus has changed all that, altering the typical San Francisco housing market in the same way it has altered so many other aspects of our lives. Of the Bay Area counties, San Francisco County ‘has seen the greatest impact of the crisis,’ said Patrick Carlisle, Compass Realty’s chief market analyst. While it’s too soon to chart a change in sales prices, the striking shortage of new listings (less than 20 by the second week of March) is telling, as is the sharp decline in accepted offers.”

“All of this growth came to a skidding halt in March, including in San Francisco, where usually at this time, the market would be heading steadily up. ‘If unemployment gets as deep as some people are predicting, if it gets to the mid-teens, then it could be far deeper than the subprime crisis,’ said Sanjiv Das, CEO of Caliber Home Loans.”

The Los Angeles Times. “Actress Kaley Cuoco has sold her home in Tarzana for $3.95 million, or about $3 million less than the original asking price — $6.9 million. Cuoco bought the estate through a trust in 2014 for $5.499 million.”

The Real Deal. “April has been cruel for California residential landlords but the cruelest months may be ahead. Rent came due for the state’s six million apartments over a week ago, but multifamily owners have received 10-12 percent less in rental income compared to before the coronavirus pandemic, according to the California Apartment Association’s preliminary findings. For owners of single-family and duplex homes, the numbers were even worse: They received about 25 percent less in rental income.”

“‘I’m fearful in a few months there are going to be a lot of mortgage defaults,’ said Daniel Yukelson, executive director of the Apartment Association of Greater Los Angeles. ‘It’s going to get worse.'”

“Landlords say they received barely enough from their April rent checks to stay above water. A more significant drop next month will have devastating effects, they added. Neil Shekhter, whose companies own 2,200 apartments in Santa Monica and Los Angeles, said about 85 percent of his tenants had paid their rent as of April 7. ‘When you lose 15 percent of your rental revenue,’ he said, landlords begin to not have enough money to pay their loans, or do more than cover basic expenses.”

“Anything beyond that number, Shekhter said, could create a cascading effect. Landlords would be forced to withhold mortgage payments, or make other cuts like laying off maintenance workers whose tasks are vital for residents.”

From iNews Source. “For years, a lack of affordable housing and a booming short-term vacation market has squeezed renters in San Diego. Now, a statewide temporary ban on all evictions of renters affected by COVID-19 seeks to provide short-term security for them. Escondido residents Barry and Sharon Herbst said they invested their retirement savings into three rental properties — 20 units total — in Spring Valley, La Mesa, and National City. They fear they will lose their investments if they stop receiving rental income.”

“Herbst was forced into an early retirement after a layoff in 2014, he said. He and his wife downgraded to a smaller house in Escondido and invested their life savings in rental properties. But he quickly learned they would not be able to live off that income. Sometimes two or three months would pass before he could break even with management, maintenance and utility expenses, he said, so he went back to work at a property investment firm.”

“Now, he and his wife are worried about what will happen if their tenants are unable to make payments. The company he works with to manage his properties has already asked him to pay $20,000 — $10,000 right away and $10,000 in a couple of weeks — to cover property taxes and other expenses due this month. He had to borrow money from his son, he said.”

“‘We do not live a lavish or excessive lifestyle,’ Herbst said. ‘Many times, going out to dinner meant getting pizza or a hotdog from Costco.'”

From Your Stories 8. “Families all over the country have been canceling vacations to San Diego County because of the coronavirus pandemic. In this Your Stories investigation, News 8 spoke to people who are upset about the refund policy of one local, short-term-rental company. Jonah Mechanic is the owner of SeaBreeze Vacation Rentals in La Jolla. He’s back in the spotlight in a Facebook group calling itself SeaBreeze Vacation Rental Scam. While Mechanic’s rental management business is legitimate and technically not a scam, the name seems to be sticking for people on social media, who are peeved.”

“Atossa Jackson lives in Los Angeles. She and a group of 12 friends booked an estate in Temecula through SeaBreeze Vacation Rentals as part of a planned wine-tasting trip. Jackson’s group tried to cancel with SeaBreeze and got the same offer: a 50% refund or full credit for rebooking later. The owner of SeaBreeze said a 50% refund is fair, given the fact that he is under contract to pay property owners when their homes are booked.”

“‘Offering a 100% refund might be the right thing to do through the guest’s eyes, but what about the homeowner who also has bills to pay, who also has a mortgage to pay?’ said Mechanic.”

The Orange County Register. “Soon enough, jumbo mortgages will be as hard to get as Charmin and Purell. Just a few weeks ago, the entire private label jumbo mortgage channel stopped. Jumbos are mortgages greater than the ‘conforming’ amount that can be sold to mortgage giants Fannie Mae and Freddie Mac, or loans totaling over $765,600 in Los Angeles and Orange counties and over $510,400 in Riverside and San Bernardino counties. Private label jumbos are those typically funded by non-bank lenders.”

“Non-bank lenders fund 20% of the jumbo market while depositories (banks and credit unions) fund the other 80%, according to Guy Cecala, CEO and publisher of Inside Mortgage Finance. Nationally, jumbo mortgages represented 17% of the $2.3 trillion originated in 2019.”

“So what? We still have depository banks funding jumbos. Not so much. While Citibank and Chase continue to buy jumbos from other lenders, Wells Fargo Bank temporarily suspended the purchase of jumbo loans from other lenders last week. The nation’s largest mortgage servicer also is limiting jumbo refinance applications to existing customers who already have deposits or other asset accounts valued at $250,000 or more.”

“Last year, Southern California borrowers took out more than 56,000 jumbos totaling more than $66 billion, according to Attom Data Solutions. Statewide, borrowers received more than 146,000 jumbos last year, totaling more than $165 billion. Black Knight figures show that as of February, 13-14% of this year’s mortgages in Los Angeles and Orange counties are jumbos, as are just under 12% are jumbos statewide.”

“One lender raised its jumbo rates from the low 4% range without points just a few weeks ago to 8.625% with 3 points. Yes, over the moon! If you are thinking of getting a jumbo loan, you need to act fast. All it takes is one fire sale of a comparable home in your neighborhood to result in worse jumbo pricing for you or no jumbo mortgage because you don’t have sufficient equity.”

“And those lenders still offering jumbo loans may have their fill sooner rather than later. Or, they might get spooked by the next piece of news related to the coronavirus economic calamity and just put their cold, hard cash on ice.”

This Post Has 121 Comments
  1. ‘One lender raised its jumbo rates from the low 4% range without points just a few weeks ago to 8.625% with 3 points. Yes, over the moon!’

    DONG!

    ‘If you are thinking of getting a jumbo loan, you need to act fast. All it takes is one fire sale of a comparable home in your neighborhood…’

    Cue fire sale…

    “Actress Kaley Cuoco has sold her home in Tarzana for $3.95 million, or about $3 million less than the original asking price — $6.9 million. Cuoco bought the estate through a trust in 2014 for $5.499 million

    ‘…to result in worse jumbo pricing for you or no jumbo mortgage because you don’t have sufficient equity’

    No jumbo for you!

    1. “…Actress Kaley Cuoco has sold her home in Tarzana for $3.95 million, or about $3 million less than the original asking price…”

      Informal observation. For some reason (maybe too much $$$ earned too fast), many Hollywood celebrities seem to have a real talent to make really bad R/E investments.

      Nicolas Cage, M.C. Hammer, Toni Braxton, Jay Z, Kim Basinger are examples.

      Other the other hand some have done really, really well. Jay Leno, Mick Jagger, Howard Stern, Gene Simmons come to mind.

      1. Never forget Johnny “I want to be Keith Richards” Depp. He’s perhaps the dumbest of all.

      2. “Mick Jagger”

        It takes genius to make a successful 50+ year career as a rock star.

        Mick Jagger, Profit Maximizer
        July 26, 2007 @ 3:21pm
        by Stephen J. Dubner
        Facebook Twitter LinkedIn

        Today is the birth date of Michael Philip Jagger, known to the world as Mick. As true fans know, Jagger isn’t just the long-tenured front man of the Rolling Stones; he was also a student of finance and accounting at the London School of Economics.

        He did not graduate from LSE, however; he attended for just a short time. I have read that he was asked to leave after riding a motorcycle through the library, but I doubt this is true — not just because it seems very unlikely, but because Jagger has never been as wild as his image. I mean this as a compliment.

        Notwithstanding his short tenure at LSE, I do believe that Jagger is supremely smart when it comes to running a business. And that is what the Rolling Stones have primarily been for the past 20 or 30 years: a business, and a very well-run one. I have always thought that Jagger’s talents as CEO were overlooked — which probably suits him just fine, considering that when you are a rock singer, there’s some significant value in seeming more reckless and wild than a typical CEO.

        The smartest thing about the Rolling Stones under Jagger’s leadership is the band’s workmanlike, corporate approach to touring. The economics of pop music include two main revenue streams: record sales and touring profits. Record sales are a) unpredictable; and b) divided up among many parties. If you learn how to tour efficiently, meanwhile, the profits — including not only ticket sales but also corporate sponsorship, t-shirt sales, etc., — can be staggering. You can essentially control how much you earn by adding more dates, whereas it’s hard to control how many records you sell.

      3. I see Paris H outgrew the ThugLife scene, has settled for main squeeze and is actually wearing panties these days.

    2. the original asking price — $6.9 million

      For some reason I just don’t associate Tarzana with 7 million dollar homes. That prices seems high even for Beverly Hills or Bel-Air.

  2. ‘Sometimes two or three months would pass before he could break even with management, maintenance and utility expenses’

    Losing money every day. These people are speculators, who paid too much.

    ‘Now, he and his wife are worried about what will happen if their tenants are unable to make payments. The company he works with to manage his properties has already asked him to pay $20,000 — $10,000 right away and $10,000 in a couple of weeks — to cover property taxes and other expenses due this month. He had to borrow money from his son, he said’

    And the whole industry is in this boat. How do those 5% cap rate look now?

    ‘Many times, going out to dinner meant getting pizza or a hotdog from Costco’

    Well, you can still get a costco dog, even if you can’t afford the membership Herbst.

    1. “He had to borrow money from his son, ”

      It always boggles me when people lend money for recurring expenses. I understand lending money for one-time expense with a clear goal (still not a good idea). But begging for money to “just get me through this month” is ridiculous on its face. What are you going to do NEXT month?
      These people need to stop hanging on, declare BK immediately, salvage what they can, and start over.

  3. Our landlords certainly had the luck of timing on their side! If they had waited just six months to put their home on the market, they would have been stuck in the mire (they listed last September).

    1. Even without the coronavirus factor, they had to drop their eventual sale price by about $18K from their list price to sell it.

        1. I suppose that already having a quality tenant is considered a plus when selling an investment property. It already has the cash flow built in.

          1. But I seem to recall PB talking about how grossly negative the cash flow was. That’s like signing up to give away a portion of your monthly income.

          2. I know their expenses were not negligible, due to generously covering our costs of fit club membership, HOA, yard care, home maintenance contract, and major expenses, such as when the sprinkler system went kaput and they replaced the back yard with a pebble garden. I don’t know how the expenses, including principle payments, interest, taxes, insurance, real estate transactions costs on the purchase and the sale, and advisor fees to the real estate agent who helped them with paperwork, balanced out against our rental payments plus a small (1% annual) capital gain on HODLing the house.

            I’d guess it was close to a wash, and that the money I was able to save thanks to not owning a home over the 15 years we lived there exceeded their returns to landlordship. But that’s just a hunch. And without the luck of timing, it would have turned out much worse for them.

        2. The weird things about the home sale were the landlords sold it completely “as is”*, they never so much as visited it once while it was on the market, and they had open houses while we were home. It took them a month, but they eventually sold it. And then the frantic hunt for a new place began for us!

          * This is actually a smart strategy, as I know of other people who invested far more than the increase in sales price that resulted in getting a home up to the used home seller’s suggested standard of perfection. The used home seller makes more and the seller loses.

  4. “‘I’m fearful in a few months there are going to be a lot of mortgage defaults,’ said Daniel Yukelson, executive director of the Apartment Association of Greater Los Angeles. ‘It’s going to get worse.’”

    All hail true price discovery and the end of the Everything Bubble!

  5. ‘I’m fearful in a few months there are going to be a lot of mortgage defaults,’ said Daniel Yukelson, executive director of the Apartment Association of Greater Los Angeles. ‘It’s going to get worse’

    Wa? This is California you’re talking about Dan!

    ‘Landlords say they received barely enough from their April rent checks to stay above water. A more significant drop next month will have devastating effects, they added. Neil Shekhter, whose companies own 2,200 apartments in Santa Monica and Los Angeles, said about 85 percent of his tenants had paid their rent as of April 7. ‘When you lose 15 percent of your rental revenue,’ he said, landlords begin to not have enough money to pay their loans, or do more than cover basic expenses’

    That’s OK Neil, some vultures will be happy to pay your lender half. Well maybe less than half.

  6. Could this announcement possibly affect oil prices?

    Markets
    OPEC and allies finalize record oil production cut after days of discussion
    Published Sun, Apr 12 2020 2:08 PM EDT
    Updated Moments Ago
    Pippa Stevens
    Key Points
    – The 9.7 million barrels per day cut will begin on May 1, and will extend through the end of June. From July through the end of 2020 eight million barrels per day will be cut. Beginning in January the cut will be six million barrels per day, which will extend through April 2022.
    – The group, known as OPEC+, initially proposed cutting production by 10 million barrels per day on Thursday, but Mexico opposed the amount it was being asked to cut, holding up any final deal.
    – Under OPEC+’s new agreement, Mexico will cut 100,000 barrels per day, instead of the 400,000 barrels per day it had initially been asked to cut.
    – On Friday President Donald Trump said the U.S. would cut production in an effort to get Mexico “over the barrel.”

    1. With a global depression coming on, OPEC can agree to all the production cuts they want. It still won’t stimulate demand, or save the highly leveraged, money hemorraging U.S. shale plays.

  7. ‘When you lose 15 percent of your rental revenue,’ he said, landlords begin to not have enough money to pay their loans, or do more than cover basic expenses.”

    Let the cascading defaults begin.

    1. A recession will empty rents out by 15% or more. Observe the folly of building 90% + luxury apartments during the biggest multi-family boom in 40 years. Oh, and the value ad boom.

      1. But…but…housing analysts researched the market and assured developers that renters in our Greatest Economy Ever would have no problem paying a premium price for luxury living! The REIC shills on CNBC assured me of this.

    2. What happens to tenants if their landlord is foreclosed? Does the bank send them a bill for the rent? Do they get some rent free time? Do they get evicted? Or is it a “your mileage may vary” scenario?

      1. ‘Special Servicers and Pooling and Servicing Agreements’

        ‘CMBS loans are governed by pooling and servicing agreements (PSAs), which name the master servicer, the potential special servicer, and the rights of each of these parties. Many PSAs give a special servicer the right to purchase a property at a discount if the special servicer decides the loan cannot be salvaged, creating another conflict of interest between borrowers and special servicers. In essence, a special servicer may want to see a borrower simply so that they can keep the property for themselves.’

        ‘All this means that borrowers should be extremely careful about defaulting on conduit loans, as it is usually much more difficult to get a loan modification for a CMBS loan than it is for a traditional bank or life company loan. In addition, borrowers should take a close look at the loan’s PSA to see what special servicer will be used, as some companies have better reputations than others.’

        https://cmbs.loans/blog/what-is-a-special-servicer

      2. I think it depends on the state (how long the process is) but I remember reading stories of the last bust of landlords defaulting, still collecting rent for months and months and then the tenants getting a surprise when the house eventually forecloses. Then bank issues an eviction notice. Banks have no interest in being the local landlord.

        1. “ landlords defaulting, still collecting rent for months and months”

          Had a friend do this for about 2 years. Stopped paying his mortgage when the last bubble burst, moved 2 blocks away and rented the banks place out to college students and gave them a discount on the assumption the bank may be coming by at anytime to kick them out. Stand up guy too, just played the system like many others.

          1. Had a friend do this for about 2 years… Stand up guy too

            Nope, that’s not a “stand up guy.”

          2. … not to mention generously leaving any damage caused by the partying students for the bank to fix. Playing the system indeed.

          3. “Nope, that’s not a “stand up guy.”

            Your right this action wasn’t a qualifier for being a stand up guy. Outside of this he is a community volunteer, tax paying, and law abiding citizen. Thinking back to this time, i recall another friend that was on the flip side of this and rented from a woman for a year or so who’s home was going through a short sale, same assumptions as above on being kicked out at anytime. For this friend it worked out well because of lower rent and his flexibility. A third friend i know was under water on a condo and just walked away (more common). I dont think any of this was uncommon during the last housing recession. The current bubble will be interesting to how many get away with past behaviors and at what pace the banks take possession or how much forbearance is given. I anticipate the STR sector is going to collapse first.

      3. “What happens to tenants if their landlord is foreclosed?”

        A lease encumbers a property, but the lessee can settle upon an agreed amount and move-out.

        1. My understanding is that a lease is an encumbrance that survives a _sale_ of the property, but that a foreclosure effectively extinguishes all encumbrances. But IANAL, so YMMV.

          1. I think you are correct but it may vary a bit by state. But pretty sure if the house is foreclosed, all bets are off and the tenant is getting booted. How long the tenant has to get out probably varies widely by state.

  8. Sometimes two or three months would pass before he could break even with management, maintenance and utility expenses, he said, so he went back to work at a property investment firm.”

    I’m seeing a pattern of poor choices.

  9. “For years, a lack of affordable housing and a booming short-term vacation market has squeezed renters in San Diego. Now, a statewide temporary ban on all evictions of renters affected by COVID-19 seeks to provide short-term security for them.

    Screw “short-term security.” The sooner the cascading defaults and mass bankruptcies begin, the sooner speculative excesses can be purged from the housing market, and apartments and houses can resume their traditional roles as shelter for the common man.

  10. There is a raging debate ahead about whether the world economy would have gone into recession anyway without the coronavirus outbreak.

    The Financial Times
    Global economic growth
    Global economy already set for historic contraction
    Tiger index suggested collapse in activity before the height of the coronavirus crisis
    Kristalina Georgieva, IMF managing director, said that 170 of its 189 member countries would suffer falling output per head in 2020
    © AFP via Getty Images
    Chris Giles in London 2 hours ago

    Be the first to know about every new Coronavirus story

    The global economy was facing the worst collapse since the second world war as coronavirus began to strike in March, well before the height of the crisis, according to the latest Brookings-FT tracking index.

    The index comes as the IMF prepares to hold virtual spring meetings this week, when it will release forecasts showing the deepest contraction for the global economy since the 1930s great depression.

    With confidence indicators falling off a cliff, financial markets in turmoil and real economic indicators plunging, bankruptcies and job losses will leave deep scars on the world economy and hinder its healing for a long time to come, the data suggest.

    Kristalina Georgieva, IMF managing director, said that 170 of its 189 member countries would suffer falling output per head in 2020. “The bleak outlook applies to advanced and developing economies alike. This crisis knows no boundaries. Everybody hurts,” she said.

    Three months ago, the fund had expected increases in prosperity in 160 countries.

    With no country immune from the Covid-19 crisis, a recovery once the lockdowns have been eased is likely to be slower than hoped, said Professor Eswar Prasad of the Brookings Institution, who railed at the lack of a co-ordinated policy response from governments.

    “The inability of national governments to come together even at such a critical time to forge a common front against the pandemic highlights a dangerous fracturing of international co-operation. This is further damaging business and consumer confidence, which are already in free fall,” Prof Prasad said.

    “The US economy has come to a virtual standstill . . . France, Germany and the UK face historic recessions as all indicators of activity and trade tumble,” he added.

    The Brookings-FT Tracking Index for the Global Economic Recovery (Tiger) compares indicators of real activity, financial markets and investor confidence with their historical averages for the global economy and for individual countries.

    It showed historically large declines across financial indicators, real economic data and confidence indicators in March, well before the worst effects on the economies of most countries.

    1. The policy response so far is prescriptively based on “lessons learned” during the onset of the Great Depression about what not to do. One result is that the stock market is already in a bull market, even though employment is collapsing.

      An issue which may become increasingly evident going forward is that some bad economic developments are too big to rescue.

      1. Zimbabwe and Venezuela also experienced soaring stock markets as they kept adding zeros to their banknotes.

      2. One result is that the stock market is already in a bull market, even though employment is collapsing.

        I’d call it a bullsh!t market, but that’s just me. QE Infinity Unlimited means no price discovery.

      3. The earnings certainly don’t explain the price. It’s all a big scam, sans the Nigerian princes.

  11. Damn entertaining these folk$ hootin’ & hollerin’ & a howlin’:

    (The monie$.angel.wing$ gif, pricele$$)

    Toss-a-coin-to-your-Witcher ⚔️🛡🦠🧬@ChrisSpelter
    Replying to:
    @NorthmanTrader and @WSJ

    … the #coronavirus crisis clearly shows that the biggest monetary experiment in history cannot be hidden anymore. Politics & Central banks have started the path of monetary #socialism , capital market mechanics not functioning anymore as unsustainable businesses get bailed out

    Jim Orr@_TheYank

    Replying to:
    @NorthmanTrader and @WSJ

    If we took that $2.3 trillion and gave it to every American we could give everyone a check for $6,969.00. Might be more useful….

    https://twitter.com/i/status/1248881981489844224

    1. I get the feeling that the Fed is being run by Nigerian scammers operating out of an internet cafe in Lagos.

  12. South Lake Tahoe, CA Housing Prices Crater 10% YOY As Foreclosures Rot Southern California Housing Market

    https://www.zillow.com/south-lake-tahoe-ca/home-values/

    *Select price from dropdown menu on first chart

    As one Los Angeles broker conceded, “If you’re a buyer, the broker is lying to you. I know a liar when I hear one. I’ve been lying my entire life.”

    1. Lake Tahoe is nowhere near Southern California. It’s in Northern California. Just thought I’d point that out for you.

  13. “These boots is made for walkin’ & that’s just what they’ll do! One of these days these boots are gonna step all over you!”
    (Nancy Sinatra)

    👾 goes ahead steps all over us, munch, munch, munch. Thanks fer the free rides.

    HOME / FOCUS / NEWS:

    The Coronaviru% Can Spread Through the Soles of Shoes, According to the CDC

    By Ella Chochrek / April 12, 2020
    Footwearnews

    Medical workers on the front lines of the coronaviru$ should be sure to clean their shoes.

    In a new study published in one of the Centers for Disease Control and Prevention’s journals, Emerging Infectious Diseases, researchers tested air and surface samples at a hospital in Wuhan, China, where the coronavirus outbreak initiated. The researchers found that about half of health-care professionals working in intensive care units carried the coronavirus on the soles of their shoes. Further, the report showed that there was a 100% positive rate from the floor of the pharmacy, where only health-care workers traveled, not infected patients.

    “Therefore, the soles of medical staff shoes might function as carriers,” the researchers wrote. “We highly recommend that persons disinfect shoe soles before walking out of wards containing COVID-19 patients.”

      1. the Soles of Shoes
        This reminds me of a pair of dress shoes I kept in the closet for special occasions. The brand used to be made in Ohio, but had been outsourced to China. The composition sole was a little sticky to the touch & smelled very bad. But I kept them because they looked nice. One Easter I put them on & walked to my front door. The shoes felt funny by then. I looked down & the found soles had so deteriorated that they had delaminated step by step across my living room carpet, leaving black gummy footprints. After 15 feet of this, nothing was left of the original sole material. I took them off out on the porch & dumped the remains into the trash bin. That is how my shoes lost their soles on Easter.

    1. “We highly recommend that persons disinfect shoe soles before walking out of wards containing COVID-19 patients.”

      Are those worried about catching COVID-19 at the grocery store following this procedure upon leaving the store?

      1. I have read many accounts of health care workers removing their shoes outside their homes & put something else on before they go inside. Reverse process when they leave home for work. There probably have been any randomized double blinded etc. studies on how / what / when shoe sole disinfection methods work.

  14. Got a card from my landlord last week saying “Thank you for paying your rent on time in this challenging time.” Must be gettin’ bad out there.

  15. Have also seen a surge in “pending” properties go “back on market” in the areas I’ve been keeping an eye on (Hawthorne, Gardena, Lawndale, SoCal).

    Looks like the Wells Fargo gravy train e-brake maneuver is being felt already.

  16. “📣🎙”It’s just thee.common.cold folks!”
    Ra$h.limpbaugh$

    U.S. NEW$

    Nursing Homes Deaths Linked To Coronaviru$ Soar Past 2,600 In Alarming Surge

    The true toll among the 1 million mostly frail and elderly people who live in such facilities is likely much higher, experts say.

    AL News / By Bernard Condon and Randy Herschaft / 04/12/2020

    Because the federal government has not been releasing a count of its own, the AP has kept its own running tally based on media reports and state health departments. The latest count of at least 2,646 deaths is up from about 450 deaths just 10 days ago.

    But the true toll among the 1 million mostly frail and elderly people who live in such facilities is likely much higher, experts say, because most state counts don’t include those who died without ever being tested for COVID-19.

    Alarming outbreaks in just the past few weeks have included one at a nursing home in suburban Richmond that has killed 39 and infected 84, another at nursing home in central Indiana that has killed 24 and infected 16, and one at a veteran’s home in Holyoke, Mass., that has killed 37, infected 76 and prompted a federal investigation. This comes weeks after an outbreak at a nursing home in the Seattle suburb of Kirkland that has so far claimed 43 lives.

    And those are just the outbreaks we know about. Most states provide only total numbers of nursing home deaths and don’t give details of specific outbreaks. Most notable among them is New York, which alone accounts for 1,439 nursing home deaths but has so far declined to detail specific outbreaks, citing privacy concerns.

    1. I would think this pandemic will make at least some families with elderly loved ones think twice about putting them in extended care facilities and nursing homes in the future. Might not be good for all the extended care construction going on.

        1. We are there right now, with the first COVID-19 case in my parents’ community being reported last week. Even though I have a sibling living within close range who, in principle, could house them, my nonagenarian parents would not adapt well to living outside their own place, which includes nonportable accommodations for my dad’s disability.

          1. Most Americans would rather send their parents off to die than have to change their adult diaper and care for them in a time of need.

  17. This lucky agent has the divinity to know “market value” when valuations are out the window.

    “Property is listed UNDER market value for a fast SALE! Don’t miss out on this opportunity on this 1,306 sqft, 3 bedroom, 2 bath home. Home has laminate floors throughout. Carpet in the bedrooms, and tile in bathrooms. Detached garage converted to guest unit/ office space, not permitted. Easy freeway access.Close to markets, parks, and schools. Sold as-is. No repairs or credits. Priced to Sell quick quick quick!“

    1. “…CU took a $44 million hit refunding impacted students’ housing and dining costs and paying hourly and student employees throughout the crisis.”

      My daughter mentioned a similar story in Bellingham at WWU.

      1. Many of the students have left town and completing the Spring quarter on-line, so the trendy restaurants downtown will continue to feel the loss when the distancing is lifted.

  18. “While it’s too soon to chart a change in sales prices, the striking shortage of new listings (less than 20 by the second week of March) is telling, as is the sharp decline in accepted offers.”

    Most would-be sellers probably don’t want to list during the COVID-19 pandemic quarantine period. Who wants to buy when everyone is worried about illness plus staring into the maw of the worst economic dislocation since the 1930s, if not ever?

    1. What fortunate timing to have just published a book on stories that go “viral”!

      However, his discussion of the effect of coronavirus chatter on the economy seems to conveniently overlook all the collapse of much of the loose lending of the past decade over the past few weeks, which is a clear parable to one of the causes of the Great Depression in the wake of the easy money of the Roaring 20’s,
      or the long-term impact of the Fed’s $9+ trillion mop-up operation already in full swing, to the tune of $1 million in asset purchases per minute. I guess nobody on high thinks this will create any lasting problems.

      Trading Nation
      Robert Shiller: Pandemic of fear could tip economy into a depression
      Published Sun, Apr 12 2020 5:01 PM EDT
      Updated 4 hours ago
      Stephanie Landsman
      ‘This isn’t the same story as the Great Depression,’ Robert Shiller says

      Nobel-prize winning economist Robert Shiller warns a pandemic of fear could tip the economy into an undeserved depression.

      Shiller, an expert in how our emotions drive financial decisions, finds the sheer volume of chatter surrounding depression risks due to the coronavirus could severely hurt the economy.

      “This isn’t the same story as the Great Depression. The Great Depression lasted ten years. They didn’t have an unemployment rate under 12% until the decade was over,” the Yale University professor told CNBC’s “Trading Nation” on Thursday. “It’s a popular narrative. But this is a pandemic. It shouldn’t last ten years. It should be over in one or two years.

      Even though he suggests there are few parallels between the 1930s and now, Shiller contends there’s no question the downturn will be severe.

      “We may not be up to our previous peak for a long time,” he added.

      Shiller, who wrote the 2019 book “Narrative Economics: How Stories Go Viral and Drive Major Economic Events,” warned investors on “Trading Nation” in early March that the coronavirus panic was just beginning. He also said the market meltdown was far from over.

      1. could tip the economy into an undeserved depression

        Shiller may be great at maths and charts, but from up here in the bleachers he looks like a total idiot.

        1. LMAO! But from up there you can see that he wears a belt and suspenders, so he’s really not sure either.

        2. undeserved depression

          I have to laugh at the use of the word “deserve” here. First…”deserve” has nothing to do with it. Second I’m not sure I’ve ever heard of a system more deserving of collapse than our current ponzi scheme. I just wish it wasn’t going to affect everyone I care about.

      2. The Great Depression lasted ten years. They didn’t have an unemployment rate under 12% until the decade was over,” the Yale University professor told CNBC’s “Trading Nation” on Thursday. “It’s a popular narrative. But this is a pandemic. It shouldn’t last ten years. It should be over in one or two years.

        This comparison between the prospective duration of the current episode, which just began last month, and the Great Depression, which lasted ten years, keeps getting brought up in the chatter among big name economists surrounding coronavirus depression risks, including Ben Bernanke and Robert Shiller. I hope they are right to predict that the COVID-19 downturn will have a much shorter duration.

        However, as I mentioned here previously, my personal reading of Wall Street Journal print editions from late 1929 through early 1930 suggests that the financial press of the day had no idea that a 10-year depression was underway. And Professor Shiller’s famous predecessor at Yale, Irving Fisher, made a comment near the onset of the Great Depression which has proved far more memorable to anyone besides professional economists than have his lasting contributions to macroeconomic analysis:
        “Stock prices have reached what looks like a permanently high plateau.”

        So it seems premature at this point to predict how long the current slump will last.

        1. predict how long the current slump will last.

          Which is it Bozos, a few weeks of sick time or an economic crater?

        2. “So it seems premature at this point to predict how “long” the current $lump will la$t.”

          What were’$ “credential’$” hath thee “founder$” of: LONG.TERM.CAPITAL?

          hint:
          LTCM’$ succe$$ was due to the $tellar reputation of its owner$. Its founder was a $alomon Brother$ trader, John Meriwether. The principal shareholder$ were Nobel Prize-winning economist$ Myron Schole$ and Robert Merton.

          $ad.

          1. “Nobel Prize-winning economist$”

            They most certainly seemed to understand the economics of bailouts, and the related “privatize profits, socialize losses” strategy.


            The ghost of LTCM haunts a Bank for International Settlements report on last month’s bond market upheaval.

            By John Authers
            April 8, 2020, 9:00 PM PDT
            Beware of feedback loops.
            Beware of feedback loops.
            John Authers is a senior editor for markets. Before Bloomberg, he spent 29 years with the Financial Times, where he was head of the Lex Column and chief markets commentator. He is the author of “The Fearful Rise of Markets” and other books.

            A few weeks ago, I recommended When Genius Failed, Roger Lowenstein’s masterly narrative of the meltdown and rescue of Long-Term Capital Management in 1998, as one of five books to read in self-isolation. It is a great read, and I suggested it because it covers a crisis that was in many ways a rehearsal for the all-in disaster that would follow 10 years later. The interest rate cuts and coordinated bailout with which the Federal Reserve dealt with LTCM might even be seen as the crucial acts in stoking the moral hazard and over-confidence that gave us 2008.

            I must confess that I didn’t recommend it as a description of what was happening currently in the bond market. But it turns out that genius failed again. The Bank for International Settlements has put out a fascinating report on events last month. These are the key takeaways:

            – For a two-week period in mid-March 2020, government bond markets experienced uncharacteristic turbulence, sometimes selling off sharply in risk-off episodes when they would normally attract safe haven flows.
            – Evidence in the US Treasury market points to forced selling of treasury securities by investors who had attempted to exploit small differences through the use of leverage.
            – Even though government bonds are safe assets, large holdings by leveraged investors may detract from orderly market functioning and may necessitate interventions by the central bank.


            The 1% barrier had never been breached before, but once 10-year yields fell through that level, they were soon below 0.5%. Meanwhile, remarkable changes in the market for inflation-protected bonds, known as TIPS, meant that real interest rates moved from negative to positive and back again in the space of barely more than a week. Obviously, the market suffered some kind of an accident; there was no explanation for moves like this in the macro-economy.

            Dealing with that accident didn’t come cheap. The bond market has returned to (relative) calm this month, but only after the Fed threw some $2 trillion at the problem, with a massive program of asset purchases that in scale equaled the first wave of quantitative easing after the Lehman bankruptcy. It was far more costly than LTCM:

            [GRAPH FOLLOWS WITH THIS CAPTION:
            Buyer of Last Resort
            The Federal Reserve balance sheet has risen by $2 trillion in 7 months]

            The BIS researchers suggest the problem started with hedge funds taking on too much leverage to bet on what should have been simple market discrepancies. This is exactly what happened at LTCM: taking a long position in one security and a short position in another and then leveraging it up many times.

          2. Quick, somebody please alert Professor Shiller to read this article, so he can stop blaming last month’s financial crash, caused by hedge funds once again caught out using excessive leverage to fund high-risk gambling activities, on the sheer volume of chatter surrounding depression risks due to the coronavirus!

      3. “They didn’t have an unemployment rate under 12%…”

        Doesn’t “unemployed” mean the first 6-months out of work?

        That said, I believe that U.S. has a permanent (unemployable?) rate exceeding 12% due to off-shoring, technology, etc., but it’s rarely discussed because a viable solution is out of reach.

        1. Your point is taken, but for an apples-to-apples comparison of unemployment across time periods, you have to use the official unemployment rate produced by the Department of Labor.

  19. Agoura Hills, CA Housing Prices Crater 24% YOY As Foreclosures Rot Southern California Housing Market

    https://www.zillow.com/agoura-hills-ca/home-values/
    *Select price from dropdown menu on first chart

    As one Los Angeles broker conceded, “If you’re a buyer, the broker is lying to you. I know a liar when I hear one. I’ve been lying my entire life.”

  20. The Financial Times
    Opinion The FT View
    The dos and don’ts of wearing a face mask
    People need clear advice on face-coverings during the coronavirus pandemic
    The editorial board
    People wearing face masks in Tokyo’s Yurakucho area last month © Charly Triballeau/AFP/Getty
    The editorial board 17 hours ago

    Austria, the Czech Republic, Slovakia and Bosnia-Herzegovina have all made wearing face masks compulsory in some public places; many other EU countries advise against. Citizens of many Asian countries are donning them routinely. In the US, the Centers for Disease Control and Prevention recently issued new advice for people to wear cloth-based mouth coverings, even bandannas or T-shirts, in crowded areas. President Donald Trump has opted out. “I don’t think I’m going to be doing it,” he said.

    In few areas of the Covid-19 pandemic has advice appeared so inconsistent as that related to face masks. The World Health Organization has revised its guidance but still insists that the wide use of masks by healthy people in everyday life “is not supported by current evidence and carries uncertainties and critical risks”.

    Caution towards mask-wearing has been dictated in part by the need to prevent panic buying and ensure sufficient medical-grade protection for healthcare staff, amid shortages.

    The advice has, nonetheless, been largely based on scientific evidence — or the lack of it. Few proper clinical trials have taken place of how mask-wearing affects viral infection rates. A review by the University of East Anglia of all published research on masks’ effectiveness in respiratory viruses concluded that wearing them in crowded places such as shops or buses could help to protect the most vulnerable from Covid-19. Yet while masks had a consistent but small protective effect, this was not strong enough to recommend widespread use.

    Experts fear masks can create a false sense of security, tempting wearers to ignore social distancing, or may be seen as a substitute for other measures such as handwashing. Since the outer surface can become contaminated, wearers risk infecting themselves if they remove them clumsily. Homemade covers such as scarves can become damp, turning them into a potential transmission route.

    Masks can also cause skin damage through sweating and rubbing, leading to other forms of infection. Some homemade masks carry particular dangers; consumers have tried adapting vacuum cleaner filters that may contain dangerous particles.

      1. Only when I get out in public with a scarf over my face. Mass hysteria isn’t really my thing, but I can tell my days of resisting without serious consequences are numbered. May as well purchase a full body covering for future use.

        1. What’s odd is that the hysterics seem to be coming from you. Sitting outside a store, trying to muster up the courage to go in, etc. Just put the mask on and go, like the rest of us. It’s really no big deal.

    1. “Since the outer surface can become contaminated, wearers risk infecting themselves if they remove them clumsily. ”

      Where do they think that contamination goes when there ISN’T an outer surface of a mask??!?

      1. Could this help explain lumber’s buoyancy when other commodities are sinking?

        DHS Designates Residential Construction as ‘Essential Infrastructure Business’
        Filed in Construction Industry, Disaster Response, Home Building, Multifamily on March 28, 2020

        In a critical win for NAHB and the residential construction sector, the Department of Homeland Security (DHS) today designated construction of single-family and multifamily housing as an “Essential Infrastructure Business.”

        The designation will enable many home building firms to keep their businesses open during the COVID-19 pandemic and help to stabilize the housing industry and its supply chain in the near term. More detail about the construction workers who qualify as essential can be found in both the “Public Works and Infrastructure Support Services” and “Residential/Facilities and Services” sections of the guidance.

        1. I can just imagine the demand for houses with 30% unemployment. So no, that wouldn’t explain it. I’ll take “cashed up Wall St. speculators.”

  21. “‘Offering a 100% refund might be the right thing to do through the guest’s eyes, but what about the homeowner who also has bills to pay, who also has a mortgage to pay?’ said Mechanic.”

    Homeowner should of had the foresight to have a reserve on hand to tap in the event of an unforeseen crisis. Not the renters liability to cover or provide mandatory charity.

    1. the homeowner who also has bills to pay

      The debtor speculator is dishonest. He doesn’t “own” it he owes it. He’ll steal from anyone he can get his claws on.

      Homeowers.

  22. At least oil is going up for now.

    Market Snapshot
    Stock-index futures dragged lower while oil gains after historic agreement on output cuts
    Published: April 12, 2020 at 9:22 p.m. ET
    By William Watts
    AFP/Getty Images

    U.S. stock-index futures quickly give up early gains Sunday evening, as oil prices rose following a historic agreement by major producers to curb production, ending a price war between Saudi Arabia and Russia.

    Investors also remain focused on the COVID-19 pandemic, on the lookout for confirmation that the outbreak may be plateauing as they prepare for the kickoff of a brutal first-quarter earnings season.

  23. Key Words
    America should be ready for 18 months of shutdowns in ‘long, hard road’ ahead, warns the Fed’s Neel Kashkari
    Published: April 12, 2020 at 4:06 p.m. ET
    By Shawn Langlois
    Neel Kashkari is the president of the Federal Reserve Bank of Minneapolis. Bloomberg News/Landov

    ‘This could be a long, hard road that we have ahead of us until we get to either an effective therapy or a vaccine. It’s hard for me to see a V-shaped recovery under that scenario.’

    That’s Neel Kashkari, the head of the Federal Reserve Bank of Minneapolis, painting a rather gloomy picture in a CBS interview on Sunday morning of what lies ahead for the U.S. economy as the country continues to battle the coronavirus pandemic.

    Kashkari, while acknowledging the downside of what a prolonged shutdown could mean for the economy, said the U.S., “barring some health-care miracle,” is looking at an 18-month strategy of rolling shutdowns based on what has happened in other countries.

    “We could have these waves of flare-ups, controls, flare-ups and controls, until we actually get a therapy or a vaccine,” he said. “We need to find ways of getting the people who are healthy, who are at lower risk, back to work and then providing the assistance to those who are most at risk, who are going to need to be quarantined or isolated for the foreseeable future.”

    1. 18 months for, at best a semi-effective vaccine?
      I think it’s much longer than that.

      All the computing power in the world, and it’s no use except to spy on one another.

      Let’s shut this mother down!

    2. I heard that jackass on Bloomberg Global Communist Network this morning.

      The Frauderal Reserve seems to want this economic destruction more than anyone.

  24. No “pent-up demand” for $500,000 starter homes happening here:

    “The Millennials entered the workforce during the worst downturn since the Great Depression. Saddled with debt, unable to accumulate wealth, and stuck in low-benefit, dead-end jobs, they never gained the financial security that their parents, grandparents, or even older siblings enjoyed. They are now entering their peak earning years in the midst of an economic cataclysm more severe than the Great Recession, near guaranteeing that they will be the first generation in modern American history to end up poorer than their parents.

    It is too soon to know how the unfurling business-failure and unemployment crisis caused by this novel public-health crisis is hitting different age groups, or how much income and wealth each generation is losing; it is far too soon to know how different groups will rebound. But we do know that Millennials are vulnerable. They have smaller savings accounts than prior generations. They have less money invested. They own fewer houses to refinance or rent out or sell. They make less money, and are less likely to have benefits like paid sick leave. They have more than half a trillion dollars of student-loan debt to keep paying off, as well as hefty rent and child-care payments that keep coming due.

    Compounding their troubles, Millennials are, for now, disproportionate holders of the kind of positions disappearing the fastest: This is a jobs crisis of the young, the diverse, and the contingent, meaning disproportionately of the Millennials. They make up a majority of bartenders, half of restaurant workers, and a large share of retail workers. They are also heavily dependent on gig and contract work, which is evaporating as the consumer economy grinds to a halt.”

    https://www.theatlantic.com/ideas/archive/2020/04/millennials-are-new-lost-generation/609832/?=&

    “This sucker could go down” — George W. Bush

    1. Phuc Gen-Z; welcome aboard, Zoomer!

      “Zoomer is a nickname referring to members of Generation Z, those born in the late 90s and early 2000s. Its use is particularly popular as a contrast to baby boomer or boomer, but before Gen Z was established, zoomer was used to refer to especially active baby boomers.”

  25. “hey have smaller savings accounts than prior generations. They have less money invested. They own fewer houses to refinance or rent out or sell. They make less money, and are less likely to have benefits like paid sick leave.”

    Don’t think it matters. With central bankers like bernaqe, yellon, powboy, they will be loaned any amount of money they desire.

  26. https://www.reuters.com/article/us-jp-morgan-mortgages-credit-exclusive/exclusive-jpmorgan-chase-to-raise-mortgage-borrowing-standards-as-economic-outlook-darkens-idUSKCN21T0VU

    JPMorgan Chase & Co (JPM.N), the country’s largest lender by assets, is raising borrowing standards this week for most new home loans as the bank moves to mitigate lending risk stemming from the novel coronavirus disruption.

    From Tuesday, customers applying for a new mortgage will need a credit score of at least 700, and will be required to make a down payment equal to 20% of the home’s value.

    The change highlights how banks are quickly shifting gears to respond to the darkening U.S. economic outlook and stress in the housing market, after measures to contain the virus put 16 million people out of work and plunged the country into recession.

    1. About time — although I think that I would prefer to see some sort of graduated scale for the down payment, having it rise higher in step with the price of the property. The 20% requirement will push many first-time buyers of more moderately priced homes back out of the market.

      The skin in the game needs to be more targeted at luxury, not the entire market — although, in the short term, if the blanket requirement had the effect of correcting prices overall and popping the bubble, that might actually be a good thing.

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