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The Mortgage Companies Are Continuing To Ask Very Difficult Questions

A report from Narcity in Canada. “Toronto’s Regional Real Estate Board offered a glimpse into the housing market in April, and it’s not all bad news. According to the report, Toronto housing prices actually dropped this month. Detached homes were hit the hardest and actually saw a 9.1% drop in prices. According to TRREB, Toronto saw a decrease of a whopping 69% in home sales compared to what last year’s average was at the time.”

From Toronto Storeys. “The old saying, ‘what goes up must come down’ definitely rings true when it comes to Toronto’s current housing market. According to real estate agent Doug Vukasovic, prices in the freehold segment have dropped -8% last week, as a result of detached homes declining -9% and rowhomes at -17%. ‘The declines in the number of homes sold seem to have tapered off in the past two weeks, establishing perhaps a new baseline of around -75% for freehold and -80% for condos versus the prior year,’ says Vukasovic.”

“Currently, the average price for detached homes in Toronto is $1.28 million; $1.13 million for semi-detached; $1.01 million for rowhomes; $657,000 for condo apartments, and $694,000 for condo townhouses, according to Vukasovic.”

The Globe and Mail. “Real estate sales in the Toronto area are slowing to a trickle as sellers delay listing and some buyers try to wrangle a ‘COVID discount’ on deals they’ve already struck. John Lusink, president of Right at Home Realty Inc., says he’s still been busy in April, but much of the work involves closing transactions that have already been agreed to. ‘That tap is slowly getting turned off,’ Mr. Lusink says. ‘It’s going to be a very dry May and June.'”

“Meanwhile, some buyers are turning to him for advice because they are suddenly finding their financing in peril just before they complete a transaction. The risk departments at financial institutions are scrutinizing many deals and the buyer’s financial stability, he says. ‘The mortgage companies are continuing to ask very difficult questions.'”

“Carl Langschmidt of Property.ca Inc. says business has plunged more dramatically each week since mid-March. As a broker, Mr. Langschmidt says, he has signed lots of mutual releases as agreements fall apart. In some cases, buyers have a conditional offer accepted and then use that condition as leverage to get out of a deal.”

“In another instance, he knows of a buyer who signed an agreement to purchase a condo unit preconstruction and is now walking away from his $5,000 deposit. The 10-day cooling off period had expired, Mr. Langschmidt says, but the buyer is gambling that the developer won’t pursue him in court. ‘He’s just trying his luck.'”

“Agents will feel the greatest impact in May, June and July, Mr. Lusink says, because sales are so thin today. Part of his efforts now involve figuring out to what extent agents will qualify for programs such as Canada Emergency Response Benefit. As self-employed workers, agents are eligible, he says, but he’s not sure if the program will extend into the months when commissions dry up. ‘We’ll also see some brokerages that, unfortunately, won’t be able to hang in.'”

From Global News. “Signs of trouble are already appearing in Metro Vancouver, which put up reasonably strong home sales in March that have since dropped off sharply — despite April traditionally being one of the hottest months of the year. ‘I suspect you’ll probably see sales volumes for April down about 70 per cent from last year,’ said Vancouver Realtor Steve Saretsky.”

“The mortgage picture has also changed. The Bank of Canada has lowered its overnight lending rate, but banks have actually hiked rates on fixed-term mortgages. Vancouver mortgage broker Sherlock Yam said the hikes reflect what banks see as growing risk in the housing market. About 20 per cent of his clients are investors sitting on the sidelines, he said, waiting for homeowners to panic. ‘They’re expecting that there will be a few defaults, and a few people that won’t be able to afford their mortgage payments after this pandemic and after that six-month deferral program,’ said Yam.”

The Financial Post. “From the outside, the roughly diamond-shaped Nexen tower is one of the more recognizable features of Calgary’s skyline. On the inside, it’s a barren landscape. All 37 floors are empty. In Canada’s energy capital, they’re suffering from a triple dose of misery: the pandemic, an oil crash and a severe hangover from a building spree. More than 20 per cent of office space is vacant, and one firm projects more than 33 per cent of downtown will be open by early 2021, creating a cycle of falling rents, declining values and ‘a huge crater’ in local government finances.”

“It’s a cruel twist for a once-thriving city that has more corporate head offices than any other in Canada’s west, where downtown space was nearly impossible to get during last decade’s energy boom. The tight market then, and the oil market’s quick rebound from the 2008 financial crisis, spurred a wave of development that expanded downtown office space by millions of square feet.”

“Now there’s an epic glut. Net asking rents — what the landlord receives — for high-quality office space have fallen to less than $15 (about US$10.60) per square foot, according to data from Altus Group Ltd. That’s less than half the cost in Vancouver and Toronto, two of North America’s tightest office markets, says Ray Wong, vice president of data operations at Altus.”

“‘There was the Calgary that everyone was used to: boom, bust, boom,’ said Roelof Van Dijk, CoStar’s director of market analytics for Canada. ‘Whereas now, it’s been bust for a long time.’ His firm sees the city’s downtown office availability rate rising to 33.1 per cent by the first quarter of next year, exceeding vacancies in other energy-driven cities such as Houston and Dallas.”

“‘It’s going to hurt assessment values and the taxes that they’re paying on these properties. That creates a huge crater in city finances,’ Van Dijk said.”

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This Post Has 111 Comments

  1. ‘creating a cycle of falling rents, declining values and ‘a huge crater’

    Is that enough crater for ya Tom? Cuz I got more on the way.

    1. A male turkey is often referred to as a Tom.

      Another name for a male turkey is gobbler. So Tom = turkey = gobbler. Take from that what you will.

    2. Touche, Ben. It is a quote from the guy (i.e. a subjective opinion), but not any hard data demonstrating real cratering.

      Please don’t shoot the messenger for asking for evidence. I hope that sales / transactions off a cliff will lead to PRICES off a cliff…but the two are not necessarily the same.

      Tom the Turkey 🙂

        1. a shack in Toronto

          “Here’s some evidence from the nation’s heartbeat housing market, where prices and rents have already started to descend. The average Toronto property fetched $931,788 in the early weeks of last month. By last week that was down to $819,665 – a decline of $112,000, or 12%.”

          Perfect storm for my neighbors and friends in Canada. Not a great time to be among the most indebted peops on the planet, nor to be a resource based economy. The height of the RE bubble in Ontario is staggering.

          1. i mentioned this yesterday
            we are now in downtown toronto (2 miles west of Bay St). During our allowed daily walk we go through side streets. The amount of re-hab’ing and re-doing of houses is immense. They are taking houses from 50-70s and redoing it to flip for 1.X $M

            These are not big companies – but smaller investor types who might be doing 1-5 houses.

            I also noticed all the fancy $60K full size pickup trucks

            —–

            Wowo

          2. Prices pretty much peaked here (SoUtah) 4Q 2018. Here’s an unfinished house being marketed in Green Springs (Washington) for $499,000.00.

            https://stgeorge.craigslist.org/reb/d/saint-george-for-sale-4-bed-25-bath-3/7110496512.html

            The local building concerns plunked down over a hundred homes in this neighborhood during the last couple of years and many are still sitting unoccupied after completion.

            I have a friend trying to unload a similar house in the same neighborhood. Even finished, with countertops, carpet and landscaping, the house listed above wouldn’t get $400,000.00 in todays St George market.

          3. the house listed above wouldn’t get $400,000.00 in todays St George market

            St. George has to be the poster child for the bubble. A remote town with harsh summer weather and no real economy to speak of. A flyover town.

          4. 500K house in Remote Utah… ok ok ok. What kind of moronic Lala land Americka are we living?

            This is ludicrous.. 500-600K houses are standard in every town across the west and east of the country.

            That brand new Utah house should be 250K. we need a 50-60% drop in real estate.

          5. That’s why theyre not selling.

            As a noted economist said, “I can ask 50k for my ten year old Chevy pickup but where is the buyer at that price? So it is with all depreciating assets like houses and cars.”

            Orem, UT Housing Prices Crater 12% YOY As Utah Housing Demand And Rental Rates Plummet

            https://www.movoto.com/orem-ut/market-trends/

          6. “That brand new Utah house should be 250K.”

            Still too high by historical standards.

            If $250k was a first home you’d need $50k for the 20% down; know any young families that flush?

  2. ‘Detached homes were hit the hardest and actually saw a 9.1% drop in prices…prices in the freehold segment have dropped -8% last week, as a result of detached homes declining -9% and rowhomes at -17%’

    ‘About 20 per cent of his clients are investors sitting on the sidelines, he said, waiting for homeowners to panic. ‘They’re expecting that there will be a few defaults, and a few people that won’t be able to afford their mortgage payments’

    Looks like a huge crater to me!

    1. See my post directly above.

      For Toronto, these houses in the older neighbourhoods need to be refurb’ed to get the full price. I am not sure how this is going to happen in the next 6-12 months.

      So investors on the sidelines waiting for 20% from the high – might not have a good strategy

    2. “Freehold”

      I learn something new every day. So freehold is where you own the house and the land. SFH is where you own the structure but lease the land for 99 years, or something like that.(?) So I guess that’s why the pricing scheme could be different. Were all those Canadians fixing up their houses on HGTV really paying ground rent?

      [We have ground rent in the US to, but I’ve only seen it for trailer parks.]

      1. That’s a common thing in Palm Springs. Depending on where the house sits, the owner may have to lease the land from the tribe. You’ll often see in listings “YOU OWN THE LAND!” or it will say when the lease runs out.

    1. Aside from you posting the same cherry picked area, you are still wrong. You are just making it up.

      Median Sales Price:

      Mar 2019 80908 $574K
      Mar 2020 80908 $707K

      That is a 23% increase. There is no crash.

      1. Jeebus, just get the Joshua Tree extension, and put us all out of your misery. If not I’ll get rid of you.

  4. “Toronto’s Regional Real Estate Board offered a glimpse into the housing market in April, and it’s not all bad news. According to the report, Toronto housing prices actually dropped this month. Detached homes were hit the hardest and actually saw a 9.1% drop in prices. According to TRREB, Toronto saw a decrease of a whopping 69% in home sales compared to what last year’s average was at the time.”

    Eat yer crows “Tom”

    1. I saw the -9.1% and was very happy…maybe a little giddy.

      Let’s hope for double digits (downward, in price) soon.

      -Tom the Turkey

  5. eet my good friend eet!

    Mountain View, CA Housing Prices Crater 14% YOY As Bay Area Tech Layoffs Surge And Vacancies Skyrocket

    https://www.zillow.com/mountain-view-ca-94043/home-values/

    *Select price from dropdown menu on first chart

    As one Bay Area 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.”

  6. Can’t wait for Toronto homes to crater down to 800K. Will be moving my family there to take advantage of the culture, weather, and rock solid job market.
    /s

  7. “There’s no indication that fewer buyer activity will lead to price declines,” Yun said. “Sellers won’t [decrease] prices and buyers aren’t expecting lower prices.”

    2. Stop… my sides.

      Yet something like 60% of Realtors report buying clients expecting lower prices.

      Larry is a clown. 🤡

    3. Y’all are gonna hate me (as if you don’t already), but Yun might be partially right. It depends on whether a seller has to sell. If buyers aren’t buying and sellers don’t have to sell, then prices could remain the same.

      The question is whether sellers have to sell. In the 2009 crash, people had to sell because their three-year I/O mortgage reset. This is where Yun gets it wrong. There are no I/Os this time, so he thinks sellers won’t have to sell this time. But in this crash, people might have to sell because they lost their job to COVID. So I still expect price declines.

      1. With enough bailout money, you and Yun could be right in the short run. But it would have to include groups such as all-cash Chinese investors and highly-leveraged speculators who must sell.

        And then there are the problems of collapsed demand during the quarantine, followed by the after-effects of lost wealth and incomes during the quarantine and a reversion to prudent lending standards. When the coronavirus pandemic quarantines end and the dust settles on the damaged economy, demand will not be anywhere near where it was previously, at which point your and Larry’s hopes will be disappointed.

      2. “If buyers aren’t buying and sellers don’t have to sell, then prices could remain the same.”

        Likely correct.

        I’m looking for a deal on a low mileage Honda or Toyota for my daughter right now on craigslist, and I have noticed that expired listings are not being relisted, so I assume that the payment moratorium has allowed the cash-strapped to add another 90-days mileage.

      4. So all these AirBnb superhosts that has 20 houses sitting empty dont need to sell? Even with forbearance, there are still other costs besides the mortgage. And dont bet on those “rich” Chinese speculators. We know they weren’t good at speculating in the US real estate market like the Japanese in the 80s. However, they were even “worser” speculators in the US Oil market.

        https://on.mktw.net/2VNTa3K

      5. If buyers aren’t buying and sellers don’t have to sell, then prices could remain the same.

        Even if only 1% of sellers have to sell or choose to sell the price drops. It only takes a few comps. Don’t forget about Airbnb. The only way you can be right is if the Fed makes sure every house sells at full price, to them if there are no other bids.

  8. I have also noticed Toronto is having a pretty decent cold, snowy and long winter after a few years of mild ones.

    “Real estate sales in the Toronto area are slowing to a trickle as sellers delay listing and some buyers try to wrangle a ‘COVID discount’ on deals they’ve already struck.”

    1. The funny thing (here on local Toronto neighbourhood facebook housing groups) is that they are thinking the CORVID discount is only going to be 10-15%. they cannot even envision 20-25% – or more.

      Also real estate agents must be getting bored (or have to now hustle) because they are on these fb groups offering to provide analysis for folks condos or houses.

      Many of these condos in the last 2-3 years were apparently ‘investors’ who put down deposits while the building was being built and took ownership to then rent. What happens when rents drop or when some of these folks have to move in with family members

      1. “they cannot even envision 20-25% – or more.”

        True of all recent buyers, or they wouldn’t have bought. Which is weird, because there are tons of sites with the price history of their house (or their of neighbors) showing that prices just 5 years ago were about half of what they are now. It’s not hard to envision, it’s there in black and white in recent memory. More like a mental block.

        1. More like a mental block.

          I think as legitimate ways of making a living continue to disappear a lot of people felt they had no choice but to gamble on the real estate and just try to not think about the risk. Nickels and steamrollers has become a sport now, kind of like a cleaner version of gladiator fighting for a living.

          1. no choice but to gamble on the real estate

            There has always been a choice; living modestly. You did it. I did it. Gambling large sums that you don’t have has never been the only choice.

          2. FWIW, Carl is an engineer. Not everyone is cut out to be one, regardless of #LearnToCode

            For a lot of people, $40K a year is as good as it’s ever going to get

          4. Gambling large sums that you don’t have has never been the only choice.

            “They felt”. I agree that they were way too easily swayed by the siren call of easy riches.

          5. “Easy riches”

            Or priced out forever; that was a big part of it. But who can look at a price history like every property in the US and think, “yeah, I want to buy at this point”? No one can say they weren’t warned.

  10. Vancouver, WA Housing Prices Crater 19% YOY As Portland, OR And Seattle Housing Markets Meltdown Under Weight Of Toxic Mortgages

    https://www.zillow.com/vancouver-wa-98684/home-values/

    *Select price from dropdown menu on first chart

    As a noted economist stated so eloquently, “A house is a rapidly depreciating asset that empties your wallet it every day you own it.”

  11. Bill Gates buys 5000 sq ft shack in Del Mar for $43M.

    “Microsoft co-founder Bill Gates and his wife Melinda Gates have purchased a massive oceanfront home near San Diego for $43 million.

    The deal for the Del Mar property is one of the largest in the area, according to The Wall Street Journal.

    The six-bedroom home spans about 5,800 square feet, according to the listing, the Journal reported. It has a 10-person Jacuzzi overlooking a fire pit, a long oceanfront deck, limestone flooring and a swimming pool.”

    Other than it being beach front in Del Mar, that house sure doesn’t sound like $43M. Actually, even for being beachfront that price seems very excessive. The property tax will be over 400 grand a year.

    https://www.foxnews.com/tech/bill-melinda-gates-nab-oceanfront-home-san-diego-43-million.

    Then again, that is 1/2000 of his net work. The typical worker bee spends a higher percentage of his net worth on a pizza.

    1. Just west of 28th Street and Camino del Mar. In addition to an equestrian estate in nearby Rancho Santa Fe.

      1. And he quit early. Larry Ellison is in his 70’s and looks better.

        George Soros looks likes he’s already dead.

        1. “Larry Ellison is in his 70’s and looks better.”

          ’cause he eats that cage-free Stanford chicken.

          1. “Has he had plastic surgery?”

            Like cheekbones, Johnson or ???

            He’s certainly had way too much sunlight exposure; no undoing that damage, not in 2020.

        1. Neither has DO$.

          Sort of. But when you work with weird hardware problems in Windows (such as dealing with SAS/SATA HBAs for attaching arrays of hard drives) and you call for support, the first thing they will tell you is “I’m going to need you to boot to DOS”. And when you say “how? I haven’t had a floppy drive in 20 years?”, they lead you through making a bootable USB drive with DOS on it. I was amazed the first time that happened to me. Now I expect it.

          2. DO$ … (as a user interface) … long.gone.dead!

            Maybe on the desktop. But on servers (UNIX, Linux) the CLI lives on in BASH and Korn Shells.

          3. DOS script morphed into CMD script, which became extensive even having registry (create/edit/delete) options, but PowerShell is the choice for real work these days where granularity is essential.

          4. Typing?, knot.my.thing … sad eye know.

            ( 32 words per minute best, in the 7th grade, only took it because the lil’ redhead girl was too.)

  12. Good weather conditions for selling homes in Canada…unless there is a raging pandemic underway!

    COVID-19 and the rising costs of social distancing: ‘We’ve seen a real escalation’
    Sharon Lindores
    April 22, 2020 3:21 PM EDT
    News Canada

    There was a time when singing Happy Birthday to a friend, walking through a park with your children, or standing in line in a grocery store were simple everyday occurrences, but not anymore.

    The COVID-19 pandemic has turned some of these actions into violations that could lead to fines of more than $1,500. Fear of contagion and measures to control the spread of the coronavirus, which can lead to the deadly disease, have seeped into every part of Canadians’ lives.

    Social distancing — keeping at least 2 metres apart — is a main tenet, as are the orders to stay at home, only go out for essentials, and to not gather in groups (which can be two or more people unless they live together).

    As the number of coronavirus cases have grown to more than 30,600 since the pandemic was declared on March 11, so too have the number of tickets and charges related to social distancing and concern about enforcement.

    “We’ve seen a real escalation,” said Abby Deshman, the director of the criminal justice program for the Toronto-based Canadian Civil Liberties Association. The group is tracking complaints and considering contesting some cases.

    “A lot of people who have been in touch with us are people who were trying to do their best to follow rapidly evolving rules,” she said, adding they’ve been given tickets ranging from $880 to $1,200 for infractions such as walking on the grass in a park with their children.

    “For people who are facing job uncertainty and in severe financial distress this is a lot of money,” she said, adding over-policing broad and vague laws can do more damage than good.
    …

    1. There’s a political war going on right now over HCQ. HCQ is best when it is given to patients in combination with zinc, early on in the disease progression. The VA study which screamed “more death!!” (posted here yesterday) didn’t use zinc and only looked at very sick patients who were too advanced for HCQ to work. That study is not even a real study.

      The next study, — run by Novartis, is again using HCQ only on hospital patients, and I don’t know if they’re using zinc. Even Trump said to combine it with zinc. I guess Novartis is conducting the study because they don’t have a drug in development? Gilead, maker of expensive Remdisivir, of course, really wants HCQ to fail.

      People are suppressing HCQ right now, partially to make Trump look bad, and partially to promote some other much more expensive drug. But I’m optimistic. I’m hoping that HCQ is effective enough that eventually it will be widely adopted, regardless of political or financial implications. Done right, this HCQ cocktail — if effective — could be given right at the point of a positive test, at any doctor’s office or clinic. If we do that, we could have a death rate LESS than that of the flu and alleviate the suffering of millions of people with “mild” cases at home.

      And there would be no hurry for a vaccine, and we could open back up again.

      1. no hurry for a vaccine

        A vaccine seems extremely unlikely. There isn’t one for any Coronavirus.

        It’s a civil war, being fought on TV.

        1. https://www.bbc.com/news/health-52394485

          Coronavirus: First patients injected in UK vaccine trial
          …
          The vaccine was developed in under three months by a team at Oxford University. Sarah Gilbert, professor of vaccinology at the Jenner Institute, led the pre-clinical research.

          “Personally I have a high degree of confidence in this vaccine,” she said.

          “Of course, we have to test it and get data from humans. We have to demonstrate it actually works and stops people getting infected with coronavirus before using the vaccine in the wider population.”

          Prof Gilbert previously said she was “80% confident” the vaccine would work, but now prefers not to put a figure on it, saying simply she is “very optimistic” about its chances.

          Good luck. They’re gonna need it.

          1. The trial volunteers will be carefully monitored in the coming months. They have been told that some may get a sore arm, headaches or fevers in the first couple of days after vaccination.

            They are also told there is a theoretical risk that the virus could induce a serious reaction to coronavirus, which arose in some early Sars animal vaccine studies.

            As pressure for coronavirus vaccine mounts, scientists debate risks of accelerated testing

            Studies have suggested that coronavirus vaccines carry the risk of what is known as vaccine enhancement, where instead of protecting against infection, the vaccine can actually make the disease worse when a vaccinated person is infected with the virus. The mechanism that causes that risk is not fully understood and is one of the stumbling blocks that has prevented the successful development of a coronavirus vaccine.

      2. Novartis is conducting the study

        https://www.novartis.com/news/media-releases/novartis-sponsor-large-clinical-trial-hydroxychloroquine-hospitalized-covid-19-patients

        “Novartis has reached an agreement with the US Food and Drug Administration (FDA) to proceed with a Phase III clinical trial with approximately 440 patients to evaluate the use of hydroxychloroquine for the treatment of hospitalized patients with COVID-19 disease. The clinical trial drug supply will be provided by Sandoz, the generics and biosimilars division of Novartis.”

        “Patients in the trial will be randomized into three groups. The first group or arm will receive hydroxychloroquine. The second group will receive hydroxychloroquine in combination with azithromycin, which is an antibiotic therapy. The third group will receive placebo. Patients in all treatment groups are receiving standard of care for COVID-19. Researchers at the company compressed months of work into a few weeks to design the large clinical trial in order to rapidly respond to the need for COVID-19 disease treatments.”

        1. 1. Hospital patients. Very late in the game.
          2. No zinc.

          Game over. HCQ will fail this study too. Enjoy your forced contact tracking through your phone. Enjoy your half-ass patented Big Pharma treatment that doesn’t work, at $7500/pill. Enjoy your forced vaccine.

          2. From what I gather: HCQ enhances Zn uptake. Zn inhibits virus RNA polymerase activity. AZ wards off secondary bacterial infections.

    1. Behold the future of housing demand:

      Business
      Record US jobless claims wipe out post-Great Recession employment gains
      A record 26 million Americans likely sought unemployment benefits over the last five weeks, confirming that all the jobs created during the longest employment boom in U.S. history were wiped out in about a month as the novel coronavirus savages the economy.
      FILE PHOTO: Outbreak of the coronavirus disease (COVID-19) in New Orleans
      FILE PHOTO: A woman looks for information on the application for unemployment support at the New Orleans Office of Workforce Development, as the spread of coronavirus disease (COVID-19) continues, in New Orleans, Louisiana U.S., April 13, 2020. REUTERS/Carlos Barria/File Photo
      23 Apr 2020 12:11PM
      (Updated: 23 Apr 2020 12:15PM)

      WASHINGTON: A record 26 million Americans likely sought unemployment benefits over the last five weeks, confirming that all the jobs created during the longest employment boom in U.S. history were wiped out in about a month as the novel coronavirus savages the economy.

      Thursday’s weekly jobless claims report from the Labor Department will add to a growing pile of increasingly bleak economic data. It will come amid rising protests against nationwide lockdowns to control the spread of COVID-19, the potentially lethal respiratory illness caused by the virus.
      …

  14. Facebook Ad

    “Many people are wondering if the home prices will fall in response to COVID-19. The consensus among experts is no. Forecasts taking this pandemic into account are calling for appreciation over the next three years

    Please take most informed decisions for your families

    #irvinecalifornia #irvinerealtor #newportbeachrealtor #woodbridgenorthlake #westpark #losangelesrealestateagent #orangecountyrealtor”

    – Tom the Hungry Turkey

    1. ” Tom the Hungry Turkey”

      👾 … gobble🏠$ales, gobble🏠appreciation$🏠, gobble🏠 Airbnb$, gobble🏠🏧♻️

      👾 … 💭👁🗓♻️🍁 … munch, mu ch, munch …

    2. The consensus among experts is no.

      The experts ALWAYS say everything is looking good. Even as they start moving for the exits themselves. Like those leaders who got briefed on the virus in January and then sold stock while telling everyone there was no problem.

  15. Someone please alert Ms. DiMartino Booth to review all of Ben’s recent posts on the collapse of nonbank subprime mortgage lending!

    Economics
    Another U.S.-Wide Housing Slump Is Coming
    The coronavirus pandemic will cause many cash-strapped Americans to sell their homes, flooding the market with excess supply.
    By Danielle DiMartino Booth
    April 10, 2020, 4:00 AM PDT
    The housing market will suffer.
    Photographer: Bloomberg

    A U.S. housing crisis is coming and although it won’t be anything like the last one, that won’t make it any less painful. Even though there has been no rampant speculation or subprime mortgage fraud, housing is still overvalued. And the dearth of inventory that’s plagued the current cycle will reverse in violent fashion once the worst of the virus has passed as financially strapped homeowners seek to raise cash. And as affordability collapses with fewer buyers eligible to buy a home, the only way to rectify the mismatch between supply and demand will be via declining prices.

    Home prices dropped about 35% between mid-2006 and early 2009 in the first nationwide decline since the Great Depression as measured by the S&P/Case-Shiller home price index. They have since recovered, and are now at 117% of their prior peak level in 2006. Home prices historically meandered in a range of three to four times median incomes, jumping to 5.1 times in December 2005 before collapsing. The ratio is now at 4.4 times, a level that was unprecedented prior to June 2004.
    …

    2. 👾 munch🛢, munch🛢, munch🛢🎈📌💣💥

      Teddy Cruz, repubican US $enator from the oil$ & ga$ & windmill$ abundant Texa$, has $omething to say to you Mr.Banker:

      U.S. Senator Ted Cruz, from the oil-producing state of Texas, said on Twitter on Tuesday:
      “My message to the $audis: TURN THE TANKER$ THE HELL AROUND.”

      BUSINE$$ NEW$:
      Reuters / APRIL 22, 2020

      $audi Arabia may re-route tanker$ if U.S. impo$es crude import$ ban

      By Jonathan Saul, Devika Krishna Kumar, Olga Yagova

      Some 40 million barrels of Saudi oil are on their way to the United States and due to arrive in the coming weeks, piling more pressure on markets already struggling to absorb a glut of stocks, according to shipping data and sources.

      U.S. officials have said in recent days that Washington is considering blocking Saudi shipments of crude oil, or putting tariffs on those shipments, adding to difficulties for the cargoes now on the water.

      Shipping sources said the kingdom tried to seek storage options for the cargoes from tanker owners when the ships were chartered last month, but many pushed back given booming rates and not wanting tied-up vessels.

      Shipping data showed 19 supertankers, each capable of carrying 2 million barrels of oil, were sailing to key U.S. terminals, especially in the U.S. Gulf. Three separate tankers, also chartered by Saudi Arabia, were currently anchored outside U.S. Gulf ports, the data showed.

      Additional costs, known as demurrage, were estimated at $250,000 a day based on rates last month when a lot of vessels were booked.

      Daily tanker rates soared to nearly $300,000 in the past month, and though they have retreated to $150,000 a day this week, they are still significant and would be in addition to other costs including insurance if the ships are held up.

      Most of the large buyers of Saudi oil are along the West Coast. The region accounts for about half of all Saudi crude imports to the United States, according to the U.S. Energy Information Administration. Storage there was already 66% full as of April 17.

      The Gulf Coast is the second biggest destination in the United States for Saudi oil, and storage there was about 58% full.
      The slump came as traders scrambled to get out of the contract to avoid taking delivery of barrels due to a lack of storage.

      The imminent arrival of the cargoes comes at a time when the main U.S. storage hub in Cushing, Oklahoma, the delivery point for WTI crude, is expected to be full within weeks.

      Last week, Frank Fannon, the U.S. assistant secretary of state for energy resources, said tariff$ were a po$$ibility.

      Poor mB$, … poor Czar Putain, .
      .. $ad, $o $ad.

      (Additional reporting by Rania El Gamal in Dubai; editing by David Evans, Emelia Sithole-Matarise and Leslie Adler)

  17. The Financial Times
    Eurozone economy
    European business activity crashes under coronavirus lockdowns
    Companies in services and manufacturing sectors warn of impending fall in employment
    Protective plastic covers on a halted production line at a Toyota plant in Onnaing, northern France
    © Bloomberg
    Martin Arnold in Frankfurt and Valentina Romei in London an hour ago

    The coronavirus lockdown is doing “unprecedented damage” to European business activity as companies across the services and manufacturing sectors report a record deterioration and warn of a substantial fall in employment, according to data published on Thursday.

    The IHS Markit flash eurozone purchasing managers’ index for services crashed from 26.4 in March to 11.7 in April, the lowest since records began in 1998. The index indicates how activity has changed compared with the previous month; a reading below 50 indicates that a majority of businesses reported a deterioration.

    “April saw unprecedented damage to the eurozone economy amid virus lockdown measures coupled with slumping global demand and shortages of both staff and inputs,” said Chris Williamson, chief business economist at IHS Markit.
    …

  18. The Financial Times
    Leveraged loans
    Rating agencies put 1,000 CLO slices on review for downgrade
    Economic effects of coronavirus push up risks for leveraged loan investors
    An empty shopping centre in Dresden on Monday
    Rating agencies are reviewing CLOs that are exposed to loans affected by lockdowns in sectors such as retail, hotels and entertainment
    © REUTERS
    Joe Rennison 2 hours ago

    Rating agencies have placed more than 1,000 slices of debt backed by leveraged loans on review for downgrades, anticipating that strains emerging from the global economic shutdown will damage Wall Street’s debt machine.

    Special vehicles known as collateralised loan obligations package up leveraged loans to back new tranches of bonds and equity that have varying exposure to the default risk of the underlying corporate debt. Such structures have enabled a surge in borrowing by riskier companies, many of them owned by private equity firms.

    But the coronavirus pandemic has led to severe drops in revenues that have hurt companies’ creditworthiness, with around 20 per cent of the loans held in the roughly $600bn CLO market already downgraded, according to Bank of America analysts. That has prompted rating agencies to reassess the risks to investors in the CLOs themselves.

    “This is the paramedics coming to the mortuary,” said Daniel Zwirn, chief executive of Arena Investors, of the prospect of downgrades of CLO tranches. “It’s the beginning of a recognition of a reality that already existed two months ago.”

    Rating agency Moody’s has placed a total of 976 debt tranches on review for downgrade across Europe and the US, affecting $23.3bn worth of debt. Its peer S&P Global has put 155 US CLO tranches on review, while Fitch Ratings has a negative watch on a total of 210 European tranches and 17 US tranches.

    A large portion of the debt under review already carries a high-yield, or “junk” rating but roughly a third of all US triple B-rated tranches — the lowest rung of investment-grade — were also put on review, according to estimates from Barclays.
    …

  20. The stock market is apparently predicted that most of the $trillions of our childrens’ and grandchildrens’ dollars that we are borrowing from the Chinese, Arabs and Russians will go to big corporations again.

    I wonder how big a payday the C-suiters deserve for their brilliant management — of Congress and the Trump Administration.

    1. – I like this guy! 🙂

      https://www.cnbc.com/2020/04/22/palihapitiya-buybacks-show-growing-strain-of-incompetence-among-ceos.html

      Chamath Palihapitiya: Buybacks show ‘growing strain of incompetence’ among CEOs

      Published Wed, Apr 22 20201:20 PM EDT Updated Moments Ago
      Jessica Bursztynsky

      “Buybacks are the primary example of a growing strain of incompetence amongst CEOs and amongst boards,” Palihapitiya said on CNBC’s “Fast Money Halftime Report.” “And it’s where we need to start thinking about how the rules need to change.”

      “Palihapitiya was defending his comments from two weeks ago, when he said poor-performing CEO’s deserve to be “wiped out” rather than bailed out from coronavirus-related economic issues.”

  21. From BC – not just Vancouver
    —-
    These are a lot of people, their housing is contingent on them having a secondary suite, that’s how they got their mortgage financing for their principal residence,” said David Hutniak, the CEO of LandlordBC.

    “They all have regular jobs or they’re pensioners on fixed incomes, and we’re getting a lot of very nervous folks.”
    —-
    Mazdak Gharibnavaz was laid off from his job at the end of February, and applied for B.C.’s emergency rent supplement as soon as the program was announced on March 25.
    Gharibnavaz was able to pay rent for April, but it’s a different story when it comes to May. He still doesn’t know whether he’ll get the $300 supplement by the time his rent is due, and although he was able to successfully apply for employment insurance, that benefit only covers up to 55 per cent of earnings.
    Before the impacts of COVID-19 started rolling through the economy and Gharibnavaz was working full time, his $1,500-a-month rent already ate up half his pay check.

    https://thetyee.ca/News/2020/04/23/Canada-Housing-System-Cracking-Under-Crisis/?fbclid=IwAR2mHBEM9yyW_B2WgXigKm5jnXmAfXRwEDYYjVmZt3swCbPHIpr9UBx74VY

  23. This is funny:

    https://www.baystatebanner.com/2020/04/22/relief-is-on-the-way-for-mass-renters-owners/

    ‘The Massachusetts Legislature last week passed a bill that would ban foreclosures and evictions and require that banks grant up to six months of mortgage forbearance to homeowners’

    Sure, step right into millions of contracts the guberment had nothing to do with, act like they have the authority to re-write it and pretend to enforce it. We are at peak insanity.

    ‘In other news, Walsh announced that the city has extended the due date for property tax bills from May 1 to June 1. The city is also waiving interest on late property tax and motor vehicle excise tax payments that were originally due after March 10. Residents will have a grace period, with no late fees, until June 30.’

    Wa? No forbearance of the moto tax? It’s a lump sum at the end dammit!

    Are they gonna cancel the lotto? It might save one life, somewhere somehow!

    Oh hell no.

    1. “We are at peak insanity.”

      – RIP:
      – The rule of law (i.e. contract law in this case)
      – Free markets, absent massive interventions by a centrally-planned, command and control central bank and government.
      – Small government
      – Low Taxes
      – Low national deficits and debt

      – If you don’t like the rules, then change them. Ref.: FASB Rule 157, mark to market.

      – Now I know these are extraordinary times, but It used to be that bankruptcy courts would handle these issues. All of this is only going to prolong the slowdown; just more “can-kicking”, if you as me, but it probably buys some votes.

      1. AST BAY:
        West Oakland, 900 Market parking lot, 9:30 AM

        ‘Join us on April 25th at 10:30 AM in your car to demand the cancellation of rents and mortgages statewide, immediate housing for all, and full aid and rights for the undocumented!
        Let’s make some noise, plaster “Cancel the Rents” and “CancelTheRents.org” on our cars and windows, and make our voices heard! It’s time to send the signal that the working class is fighting back!’

        ‘While we and society recognize the First Amendment and the exercise of First Amendment rights as essential, our April 25, 2020 “Cancel the Rents” car caravan will practice the socially responsible regulations outlined in the statewide “shelter-in-place” executive order, including physical distancing and mask-wearing. We believe that we must act now to defend the essential right of all people to housing during and after the COVID-19 crisis.’

        https://www.indybay.org/newsitems/2020/04/22/18832578.php

  24. – No surprises here.

    https://www.zillow.com/research/march-new-home-sales-2020-26913/
    March New Home Sales: Worse than Expected
    By Matthew Speakman on Apr. 23, 2020

    > New home sales fell 15.4% from February and 9.5% from a year ago, to 627,000 (SAAR), according to the U.S. Census Bureau.
    > The median sales price of new homes sold in March 2020 was $321,400.
    > Inventory of new homes available for sale was up 2.8% from February but down 1.2% from March 2019.

    – The median price rose, but that’s a lagging indicator. NHS is a leading indicator. Price follows sales volume.

    – Where’s my “V”-shaped housing recovery?

      1. (Meant for Oxide’s post above but landed down here…) A small chunk of quote can be your friend.

    1. Not to worry! Every real estate industry economist can attest that there is no correlation between home prices and sales volumes.

      U.S. new home sales drop 15% in March because of coronavirus
      Published: April 23, 2020 at 10:11 a.m. ET
      By Jacob Passy
      Sales of new U.S. homes fell by more than 15% in March as the coronavirus pandemic weighed on buyer traffic. New home sales dropped to a seasonally adjusted annual rate of 627,000, according to the monthly report from the U.S. Census Bureau and the Department of Housing and Urban Development. The larger decrease compared to the March decline in existing-home sales is a reflection of the data that guide the two reports. “Because new home sales are based on contract signings, an early step in the home buying process, they showed a larger decline than existing home sales data, which came out earlier this week,” said Danielle Hale, chief economist at Realtor.com.
      …

  27. Well prices keep rising in prime areas of Sacramento, California. Lower inventory and low interest rates are causing homes to go pending fast. The ones under 500k are selling or going pending in days or a week now.

  28. After a $100K price drop and another $50K price drop, 836 San Dieguito Drive is pending again. As readers my recall, it had multiple offers at its original asking price of $1.599M despite needing “a ton of work” but fell out of escrow. Quote from a neighbor/realtor.

    2. I hope that’s a desirable location — even with sweat equity, it’s going to get well into the tens of thousands to get that place is livable condition, unless it’s just going to get rented to people who don’t care.

    3. Its next iteration, if they don’t go overboard like 1160 Arden Dr will probably look like 911 Arden Dr or the main house at 110 Requeza St, which isn’t selling because the lot across the street was recently subdivided into three lots with plans for one unit and ADU each. As if street parking weren’t bad enough already.

  29. Silver Spoon Sandy from affluent Westchester doesn’t want low-income workers to go back to work.

    AOC suggests low-income workers should boycott after coronavirus shutdown ends

    By Sam Dorman, Fox NewsApril 22, 2020 | 9:40pm

    Rep. Alexandria Ocasio-Cortez (D-N.Y.) argued Wednesday that many Americans should protest economic insecurity by refusing to work after coronavirus-related restrictions are lifted.

    “When we talk about this idea of reopening society, you know, only in America does the president — when the president tweets about liberation — does he mean go back to work. When we have this discussion about going back or reopening, I think a lot people should just say ‘no’ — we’re not going back to that,” she said.

    https://nypost.com/2020/04/22/aoc-suggests-low-income-workers-should-boycott-after-coronavirus-shutdown-ends/

    1. (Is Wall $treet getting ANY of the (0%) a$ in Zero%?, ANY of thee x$6+ Trillion$, ANY of thee “UNLIMITED!”?)

      👀👾🆘 🌊💰💲💰💲💰💲💰💲💰💲💰💲+💉📈↗📈↗📈↗📈↗📈↗📈⬆📈🎉🎡🎪🃏♻

      Thee.🍊.jesus is in a self.induced conundrum$ about thee.🍑$tate:

      Blow yer nose & get’$ yer poor, $orry arse’$ back to work, now!
      …
      On 2nd thought$, No!, wait$ … don’t do that!
      …
      On 3rd thought$, ye$, Blow yer nose & get’$ yer poor, $orry arse’$ back to work, now!
      …
      On 4th thought$, No!, wait$ … don’t do that!
      …

      Listen, whatever happens deeth👾 wi$e, it’$ the Governor Kemp & Stacie Adam’s fault & maybee that Tallahassee mayor Florida too!

      Next cornfusing question!

    2. “low-income workers should boycott”

      And watch your employers hire a bunch of sainted illegals to do the jobs you refuse to do.

    3. Apparently the menial wage crowd is getting more from the enhanced unemployment bennies than from their old paychecks. Of course the unemployment check boost is supposed to be “temporary”, for just a few months. But I’m sure many are counting on it to become permanent, and with no 26 weeks and you’re on your own limits.

      I recall reading an article where some menial workers were upset that their workplace got some Paycheck Protection money, as going back to work meant a pay cut vs. unemployment.

      1. I recall reading an article where some menial workers were upset that their workplace got some Paycheck Protection money, as going back to work meant a pay cut vs. unemployment.

        I heard that too. But I also hear almost nobody is getting any unemployment checks yet. At some point I would expect that to matter more if they don’t go out soon.

        2. “But I also hear almost nobody is getting any unemployment checks yet.”

          I heard that the state’s reserve funds have been exhausted on healthcare, so they’re waiting on federal monies to fund the unemployment checks, and the administration is currently reviewing the governor’s criticisms; meanwhile Joe Sixpack waits.

          1. ” …so they’re waiting on federal monie$ to fund the unemployment check$”

            Oh fer gawds $ake, that’$ no i$$ue!

            In$tead of $6+ Trillion$ 💰💲💰💲💰💲💰💲💰💲💰💲+

            just $lip in x1 more$:
            + x$1 Trillion 💰💲

            As Radical.Rick says: “how tough i$ it?”

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