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There’s Going To Be Sectors That Are An Absolute Bloodbath

It’s Friday desk clearing time for this blogger. “It was already going to be a challenging spring in Manhattan, where prices are down about 20 percent from the peak in 2016 amid a glut of luxury condos. In a small survey of 43 offers entered after the stay-at-home order in Manhattan, Queens and Brooklyn, the average offer was 14.5 percent below asking price, according to Fritz Frigan with Halstead Real Estate. Among accepted offers, the discount was about 8 percent.”

“Elliot Bogod, president of Broadway Realty, said he was trying to purchase about 20 units at a 20 percent discount from an Upper West Side condo he would not name, because of competition from other bidders. (In an unusual move, he said he was negotiating with the lender, not the developer, suggesting the property might be in financial distress.)”

“In late April Kathy Murray, a Douglas Elliman agent, closed a deal on an Upper East Side studio listed a year ago. Before the pandemic, the price was cut twice, from $745,000 to the last asking price of $695,000, and she said the buyer, a Harvard student from Hong Kong, negotiated an additional 9 percent discount as the market grew more uncertain. Crucially, the buyer and his parents requested to include the seller’s furniture.”

“Residential property sales on Hawaii island and Kauai in April plummeted between roughly 20% and 60%, according to the report from Hawaii Information Service based on data from the Hawaii Island Realtors and Kauai Board of Realtors. Kauai condos sold for a median $497,250 last month, down 10% from $550,000 a year earlier. For condos sold on Hawaii island, the median price dropped 17% to $349,900 in April from $419,000 a year earlier.”

“Businesses and individuals have started to see some relief to get them through the coronavirus, but ‘there’s only so much the government can do,’ said Deco Capital founder Bradley Colmer. ‘There’s going to be sectors that are going to be [an] absolute bloodbath.’ Colmer and his partners have been tweaking plans for Eighteen Sunset, a luxury residential building with retail and restaurant space in Miami Beach’s Sunset Harbour. In April, a proposal submitted to the Miami Beach Planning Board changed that to include two penthouse residences but replace the other residential units with two floors of Class-A office because of the soft condo market in Miami Beach.”

“Lori Devault survived and rebuilt her Julian home after it burned down in the 2003 Cedar Fire. Now she is worried she might not survive her mortgage lender as she is already two months into a maximum six-month mortgage forbearance agreement with Irvine-based Rushmore Loan Management Services. ‘Rushmore requires the missed payments to be made up by the end of the forbearance period,’ said Devault. ‘I don’t have the money.'”

“Under Chapter 13 of the bankruptcy code, you may be able to keep your home indefinitely, said bankruptcy attorney Michael Nicastro. But, he added, ‘Treading water is not swimming. It’s delayed drowning.'”

“Housing purchases have taken a downturn in the city of Estevan. ‘We’re not in a completely dead market. We still have people looking, there’s still sellers listing their properties and those prices are becoming more realistic and competitive for the market now,’ said Josh LeBlanc, a real estate agent. He added there are lots of buyers right now, but they’re only willing to deal with sellers who are realistic.”

“In the past week, property professionals report that buyers are emerging on the hunt for bargains. David Galman, the sales director at Galliard Homes, one of the UK’s largest property developers, says a Chinese family office recently bought three flats in Galliard’s Trilogy scheme in Borough, south London. ‘I would have expected to sell each unit for £1.1 million, but I was happy to sell for £1 million each, so they’ve got a decent 10 per cent discount,’ he says. However, Galman adds that he has heard of other developers receiving ‘silly offers’ that they are declining. ‘I’ve received a cheeky offer that was, in my opinion, relatively derisory. I don’t blame them for making it, but I just said, ‘We’re not ready, thank you very much.’”

“Ed Lewis, the head of residential development sales at Savills, says: ‘Our average discount is 5.8 per cent, while before the lockdown it was 4.8 per cent. That’s a dealing margin rather than a discount — although the biggest discount doesn’t necessarily represent the best deal. Some assets are overpriced, and just because you’ve got a 25 per cent discount it doesn’t mean you’ve done the best deal.'”

“Landlords in high-end estates are counting losses as effects of the spread of the Covid-19 pandemic continues to erode rental earnings. Rent income from high-end estates such as Runda, Spring Valley, Loresho, Kitisuru and Lavington fell marginally in the first quarter of this year, with analysts warning the worst is yet to come. Land prices similarly fell across both suburbs and satellite towns in the first quarter of this year, sustaining the decline recorded in previous quarters. ‘The COVID-19 pandemic has left some landowners with unexpectedly limited liquidity and as a result we may see a bigger supply in land moving forward,’ said Sakina Hassanali, Head of Research and Marketing at Hass Consult.”

“Singapore saw total auction listings decline 31.1% year-on-year to 235 in the first quarter of 2020, revealed an Edmund Tie report. And much like in 2019, the proportion of mortgagee sales significantly increased to 68% in Q1 2020 from 46% in Q1 2019. Residential properties accounted for 51% of mortgagee listings in Q1 2020, industrial properties 31% and retail properties 15%. ‘The higher proportion of mortgagee sale listings came amid an already gloomy economic outlook made worse by the onset of the COVID-19 pandemic, which resulted in owners defaulting on mortgage payments,’ said the report.”

“Despite the increase in listings, the auction success rate declined to 1.6% in 2019 from 3.8% in 2018, reflecting a more cautious sentiment in the buyers’ market.”

“The slide in Hong Kong’s property market is dividing analysts at Wall Street investment banks who are telling clients different stories on the outlook for home prices this year. ‘We had hoped for residential prices to bottom in March 2020 and go up by 10 per cent thereafter,’ said Praveen Choudhary, a managing director at Morgan Stanley. ‘Since then, the Covid-19 outbreak has resulted in significantly lower GDP and the unemployment rate has gone up to 4.2 per cent, a 10-year high. These are generally negative for residential prices.'”

“Home ownership in Australia is on the decline and likely to worsen but it’s not just housing affordability responsible for the shrinking numbers, new research shows. Rather, it’s the increasing incidence of unstable, casual work with no guarantee of pay, and a growth in property investors that have seen a shift in the market where more Australians are now facing a future of living in long-term rentals. The housing market in Australia had become ‘financialised’ with developers building apartment complexes specifically for the investor market and Australian tax policy assisting investors through negative gearing, said Australian Housing and Urban Research Institute researcher Professor Terry Burke.”

“‘The financialisation of housing is an international factor and is best understood as the process where housing is treated as a commodity to be invested in rather than a home, meaning more and more money flows into housing but without any necessary improvement in housing supply or quality,’ he said.”

“April saw state and territory governments implement measures to support the residential rental market through the economic downturn caused by the CCP virus crisis with most opting to put a moratorium on evictions for six months, following the national cabinet doing the same for the commercial market. Real Estate Institute of New South Wales CEO Tim McKibbin is unhappy with the rent waiver, saying landlords are subsidising the tenant’s occupation.”

“‘The NSW Government has made it very clear that landlords are expected and required to ‘waive’ all, or a significant portion, of the rent due by the Tenant; and ‘waive’ is a good descriptor, because the Landlord is waving goodbye to the money due to them,’ he said. He said the majority of landlords are ‘Mum and Dad’ investors with just one property and a mortgage they can’t take a holiday from paying. Banks won’t waive mortgages, instead offering deferrals that come at a substantial cost. ‘Landlords will still pay and pay it all, just a bit later on!’ he said.”

“Hobart saw a staggering 60 percent more listings, Melbourne jumped by 20 percent, Sydney by 18 percent, Adelaide by 8 percent, and Brisbane by 7 percent. Domain senior research analyst Dr. Nicola Powell said the surge of listings is largely due to the release of Airbnb and other short-term properties into the long-term leasing market.”

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This Post Has 135 Comments

  1. ‘The higher proportion of mortgagee sale listings came amid an already gloomy economic outlook made worse by the onset of the COVID-19 pandemic, which resulted in owners defaulting on mortgage payments’

    There already were a bunch of foreclosures in Singapore. Now we got em in California!

    ‘‘Rushmore requires the missed payments to be made up by the end of the forbearance period…I don’t have the money’

    But Lori, UHS says you can sell, red hot!

  2. ‘The NSW Government has made it very clear that landlords are expected and required to ‘waive’ all, or a significant portion, of the rent due by the Tenant; and ‘waive’ is a good descriptor, because the Landlord is waving goodbye to the money due to them’

    Look at the bright side Tim. You can deduct all those lost moneys! And you’ll make it up with appreciation.

    DONG!

    1. Free rent for everyone – awesome. I am going to go rent a $5K/month luxury rental. I will then put off paying because of the pandemic, … and then keep deferring.

      —
      Chagani argues his situation, and that of some of Roper’s previous landlords, illustrates how a tenant who knows the system can take advantage of the lengthy process at the Landlord and Tenant Board (LTB) to delay eviction, and live rent-free.

      And now there’s no end in sight for the soon-to-be father of two. His LTB eviction proceeding against Roper — like most evictions across Ontario — has been suspended indefinitely due to the COVID-19 pandemic.

    2. The NSW Government has made it very clear that landlords are expected and required to ‘waive’ all, or a significant portion, of the rent due by the Tenant

      “I’ll make it legal!” – Darth Sidious

      Talk about bizarro world. We could end up with a permanent situation where people don’t pay rent, while the PTB implement ever crazier ideas to keep the plates spinning. Maybe the Fed will buy the properties from insolvent LL’s, or buy them at foreclosure auctions, turning them into defacto public housing. Throw in some UBI for everyone and hang onto your hats: welcome to the Brave New World (free soma included)

  3. ‘Galman adds that he has heard of other developers receiving ‘silly offers’ that they are declining. ‘I’ve received a cheeky offer that was, in my opinion, relatively derisory. I don’t blame them for making it, but I just said, ‘We’re not ready, thank you very much’

    David, meet Ed:

    ‘That’s a dealing margin rather than a discount — although the biggest discount doesn’t necessarily represent the best deal. Some assets are overpriced, and just because you’ve got a 25 per cent discount it doesn’t mean you’ve done the best deal’

  4. FYI I’ve never seen so much crater, I just put down some of it and hope to catch up this weekend.

    1. I just got this in an email:

      ‘Construction employment declined by 975,000 jobs in April as a new survey by the Associated General Contractors of America and data from construction technology firm Procore show deteriorating demand for construction, officials with the association announced today. The new economic data underscores the need for new federal measures to help the construction industry recover, including infrastructure funding, safe harbor provisions and fixes to the Paycheck Protection Program guidance, association officials added.’

      “Today’s jobs report, our new survey results and Procore’s data make it clear that the construction industry is not immune to the economic damage being inflicted on our country by the pandemic,” said Ken Simonson, the association’s chief economist. “Without new federal help, it is hard to see a scenario where the construction industry will be able to recover any time soon.”

      ‘The economist said the loss of 975,000 construction jobs from March to April constituted nearly 13 percent of the industry’s employment and was, by far, the worst one-month decline ever. He added that unemployment among workers with recent construction experience soared by 1.1 million from a year earlier, to 1,531,000, while the unemployment rate in construction jumped from 4.7 percent in April 2019 to 16.6 percent.’

      Wa happened to my worker shortage?

      1. There never was a shortage in any of the trades…. not since 1990 or so.

        FYI- Procore makes a good CM suite with topshelf support but I don’t know if take any of their market observations relative to what is or isn’t on the street very seriously.

      2. the need for new federal measures to help the construction industry recover,

        Is there ANYOne who doesn’t have their hands out for government cheese?

        1. Well maybe they should hand out gov cheese our storage bins are full and people are hungry….There is always someone who has cheese on sale at 1/2 price or less here

        2. government cheese

          Ironically, the government itself is within a walled fortress. Every one of its employees is still fully enrolled and at full pay. Half (or whatever) the civilian population is out of work and would gladly catch any cheese crumbs thrown to them from the fortress wall.

          Should we look at this like a doubling of the effective size of government, or just a doubling of our tax burden? It’s all just temporary, I’m reassured.

    2. Blue states going all in to implode their economies to try and get Kiddie sniffing zombie elected and then get bailed out. Saw this coming when a lot of them built (or rather, pretended to build) fake rail transit systems that became multi billion dollar boondoggles. They were already bankrupt prior due to obscene pension obligations. Their solution will be to tax anything and everything up the azz, but never ever lay off a single .gov employee.

      Basically, Bolshevik revolution 2.0, almost exactly a century after the first one. Same goals, same tactics, and even the same tribe behind it.

      1. Excuse me, but Democratic Presidents don’t do bailouts. Bailouts are the exclusive domain of Republicans. Always has been – always will be. Bolshevik revolution 2.0? – mere foreplay compared to the criminal Crony capitalists running the senate.

        2. Yup, that’s right.
          After all, Obama’s $1,000,000,000,000 “stimulus” bill was ALL spent on “shovel-ready infrastructure” and not a cent was sent to bail out state and local governments…right?

      2. The virus don’t care — red or blue — doesn’t matter.

        In the old pre-virus world it was blue states bailing out red.

        1. And now we have the virus munching on red, blue, black, yellow, white…you name it! Any color of human identity group will do.

      3. Low IQ progs coming out of the woodwork. They cant understand that their dear leaders destroyed:
        the education system (absurd costs, abysmal outcomes)
        their labor market (offshore jobs + import millions of low IQ types like themselves to reduce their opportunities and wages further)
        their economy (absurd valuations of everything from real estate to stocks to collectibles based on manipulation)
        their arts (most music, art of any form currently is done by low IQ types or high IQ sociopaths that are laughably devoid of talent but skilled in the ways of grifting)
        their culture (QED based on the above)

        But keep licking the your leaders’ jack boots and blaming those who chose not to live weak and pathetic lives. If any of you could read and understand history, you would know that unmarked grave being dug for you is under direct order from the very leaders you mindlessly worship.

          2. It’s going to seem like the smart option, up until whenever it collapses.

      4. Basically, Bolshevik revolution 2.0, almost exactly a century after the first one. Same goals, same tactics, and even the same tribe behind it.

        Bingo. Same bankrollers, same brains of the operation, and same end state: the whole transfer of the nation’s wealth and productive enterprises to a truly evil cabal of oligarchs.

  5. ‘Treading water is not swimming. It’s delayed drowning.’

    I’m reminded of the movie “The Abyss”. IIRC just when all hope was lost a giant alien ship lifted everyone from the deep to the surface and magically prevented them all from getting the bends. It was a miracle. We all expect that now, and call it “The Fed”.

    1. I can’t believe that, “The Abyss,” hasn’t been remastered on Blu-ray. Great movie!

  6. “Ed Lewis, the head of residential development sales at Savills, says: ‘Our average discount is 5.8 per cent, while before the lockdown it was 4.8 per cent. That’s a dealing margin rather than a discount — although the biggest discount doesn’t necessarily represent the best deal. Some assets are overpriced, and just because you’ve got a 25 per cent discount it doesn’t mean you’ve done the best deal.’”

    Thanks ED. I’ll just wait a few years for the foreclosures special

  7. ‘he was trying to purchase about 20 units at a 20 percent discount from an Upper West Side condo …(In an unusual move, he said he was negotiating with the lender, not the developer, suggesting the property might be in financial distress.)

    That’s more than suggesting NYT.

    ‘the price was cut twice, from $745,000 to the last asking price of $695,000, and she said the buyer negotiated an additional 9 percent discount as the market grew more uncertain. Crucially, the buyer and his parents requested to include the seller’s furniture’

    Did they get the moving letter from the sellers with photos of the kids on the balcony playing with Fluffy?

    2. Seller’s furniture? Sounds like somebody is planning their next big AirBnB empire.

  8. https://www.masstransitmag.com/alt-mobility/shared-mobility/car-sharing/news/21137173/ca-uber-layoffs-following-lyft-airbnb-add-to-sf-economic-pain

    The low paying service jobs will come back. It might take a year, 2 years but it will come back once this crisis is go away. American has short memory. However, these $150k – 300k tech salary working at cash burning unicorns are gone for good. Even if the economy recovers, these jobs will be rehired in (1) cheaper parts of US (2) outsource to India or other places (3) never as unicorns that can make profits soon will go bankrupt

    1. The low paying service jobs will come back. It might take a year, 2 years but it will come back once this crisis is go away.

      This could be the perfect time to automate many of them.

    2. Why pay someone in San Jose $200k to write code, when you can pay someone else $100k to do the same job remotely in Raleigh, Columbus, etc…?

        1. Fed says otherwise…you’re gonna have a 200K techie job, or make $12hr working for GrubHub

          1. Not to mention that he can’t do the work the 200K guy does.

            There’s a reason silly valley hasn’t been offshored to India.

        2. Hopefully he speaks/writes better than you do, but I kind of doubt it so maybe you can end up as his coworker?

        3. And I will rewrite Apu’s code when it doesn’t scale and can’t be easily maintained.

      3. Why pay someone in San Jose $200k to write code

        FWIW, that is on the high end. Most mid range coders in Silly Valley are paid less, more like 120-130K, though the same job in flyover will pay much less.

          1. YMMV. If you work at a FAANG you might get all those. At others places, not so much.

    3. “..(1) cheaper parts of US (2) outsource to India or other places..”

      That transition was well underway even before C-19.

      There are some exceptions: If you require a security clearance, your job ain’t going nowhere. Just moving test data across US borders (even Canada) requires Export Control Clearance. Lots of paperwork, time delays.

    4. Go away? Where does it go?? The virus may wax and wane but it aint “gone away”

    5. Wait — weren’t those ridiculously high paying tech jobs supposed to disappear after the original dot.com bubble burst? Silicon Valley has a really short memory.

      1. Silicon Valley has a really short memory.

        They remember. But it’s always different this time. Just like real estate.

      2. They did.
        Most of the developers I know in SV in 1999 ended up leaving (I’m in a niche where the pay isn’t Google-level, but job security is good, and there isn’t rampant ageism).

    6. We’re heading into a depression. I doubt things will not go back to “normal.” Anywho, does anyone want to go back to “normal”? The greatest wealth gap? The Health insurance industry eating everyone alive? Onward soldier. Into the wild we go.

        1. More like buy the never-ending rally. This bull cannot be cowed by coronavirus concerns!

  10. People have begun listing houses in our neighborhood again after taking 6-8 weeks off. There are 3-4 listed right now out of about 120. A house on the next street over had an open house on Saturday. My teenager reported seeing multiple families there for it, despite the current Stay at Home orders. I noticed that it was listed as contingent/pending as of Monday or Tuesday. We’ll see if the deal goes through.

  11. https://www.bostonglobe.com/2020/05/05/business/how-walmart-worcester-became-coronavirus-hot-spot/

    A Worcester, Massachusetts Walmart had an outbreak among the employees. “…the company had agreed to pay for the testing of all employees, and UMass Memorial Medical Center was able to coordinate tests on-site, setting up a staging area in the store’s outdoor garden center while the interior underwent a deep clean. Over the course of two days, nearly 400 workers were tested, revealing a number far higher than anyone anticipated: In all, 81 employees tested positive for the virus, many of whom were asymptomatic.”

  12. “It was already going to be a challenging spring in Manhattan, where prices are down about 20 percent from the peak in 2016 amid a glut of luxury condos.

    You mean to tell me the crater started all the way back in 2016? B…b…but the REIC shills said everything was coming up roses until COVID showed up.

  13. However, Galman adds that he has heard of other developers receiving ‘silly offers’ that they are declining. ‘I’ve received a cheeky offer that was, in my opinion, relatively derisory.

    Anyone making offers now, even lowball offers, is an idiot.

  14. ‘Rushmore requires the missed payments to be made up by the end of the forbearance period,’ said Devault. ‘I don’t have the money.’”

    Then you had no business buying a house in the first place.

  15. The housing market in Australia had become ‘financialised’ with developers building apartment complexes specifically for the investor market and Australian tax policy assisting investors through negative gearing, said Australian Housing and Urban Research Institute researcher Professor Terry Burke.”

    Aussies elected globalist quislings who made sure the oligarchs had free rein to plunder the proles with impunity. Now they get to reap what they voted.

  16. “Hobart saw a staggering 60 percent more listings, Melbourne jumped by 20 percent, Sydney by 18 percent, Adelaide by 8 percent, and Brisbane by 7 percent.

    Is that a lot?

  17. I’m not seeing any price drops and houses are still selling in weeks if priced well. I’d love to pick up some cheap real estate right now but it’s just not out there, at least nowhere close to me. Covid slowed down sales for maybe a month. over the last maybe 2 weeks, it’s like the pandemic never happened.

    This one house came on the market that I genuinely like. Downside is it’s on a somewhat busy street that has the potential to get even busier as the area grows. Too bad. But the more I drove by it the more I thought it may be an ok trade off since it has pretty much everything we’re looking for. Nice size, well maintained, huge yard, detached garage which I really like. And it is set far back from the street so with some trees in front would block the traffic if it ever got really bad. This could work agreed my wife. Anyway, called up the agent we have worked with before agent and said we’d like to see it. Got a text a few minutes later, home has an accepted offer. Less than a week on the market.

    This is what I’m up against trying to find something reasonable to buy. I’ve been waiting years for the market to get back to sanity. I though for sure covid would if not bring a 50% price drop at least stop the buying frenzy. Even a worldwide pandemic doesn’t seem to do much. I have no idea where people are getting the money to buy, but the money is coming from somewhere.

    It is beyond frustrating and I wish it weren’t so. But it is and I hate it.

    Rant off.

    1. I’d love to pick up some cheap real estate right now but it’s just not out there

      That means there are still too many other people out there like you thinking the same thing that need to lose their a$$es first. Are you more patient than them and in a stronger position than them?

    2. Give the market a few years to adjust, and you should be able to find something that works for you.

    4. Housing markets don’t change quickly, especially on the way down.
      For my local market, sales are WAY down (like 50% or greater drop). Yes, some houses are still selling, but I’ll note that in the low end, the only two that have sold in the last couple weeks had very low price per sq ft.

    5. I hear ya. I live in Boston area, currently rent and have to find a new place to live in the next couple of years. Hoping to buy a reasonably priced and well-situated place to live out my golden years as I’m slouching towards hopeful early retirement. Naturally,, I continue to read and hear that Boston housing won’t be much affected by this current situation.

      We’re only two months into the coronavirus pandemic and prices have not budged much around here. I’m seeing price decreases but I’ve been seeing that for a year or so as everything is wayyy overpriced to begin with. I’m hoping we’ll start to see more significant overall price decreases this fall into 2021 as the true economic fall-out from job losses due to Covid-19 come into full view. Then again, it could take longer. I can wait.

    6. @ still waiting… I can smell your desperation from over here. Dude chill out, it’s like 7 weeks. Wait till February 2021 and the picture will look a lot different than now. It takes time to change the course of the Titanic.

      P.S. you must be in health care or Government that your job is so secured.

    7. “Downside is it’s on a somewhat busy street that has the potential to get even busier as the area grows.”

      We can’t “see” the emission of hydrocarbons, carbon monoxide, nitrogen oxide, etc., but we’re breathing them in varying concentrations especially if you live or work adjacent a busy street or highway.

    1. “Temporary” layoffs are becoming permanent job losses.

      I was amused with the media repeatedly using the word “furlough”, knowing well that most of those job losses were permanent.

  19. Since the 1970s, the oligarchy has been driving family farmers off the land and consolidating farmland in huge agribusinesses that feed huge meatpacking plants, all importing huge numbers of Third World wage slaves and keeping animals in horrendous conditions to maximize profits. Now American consumers are going to pay the true price of that “cheap” factory farm-raised meat.

    https://www.marketwatch.com/story/hedge-fund-blames-us-meat-processing-oligopoly-for-excessive-concentration-reduced-competition-anda-decline-in-resilience-2020-05-08?mod=mw_latestnews

    1. That hybrid potato they had in Ireland in 1840 was certainly a good one. I guess that’s why they decide one variety would do.

    2. keeping animals in horrendous conditions to maximize profits not to mention the horrendous conditions the worker carcasses of the meathouses endure, while processing those animal carcasses.

      1. We need a new Upton Sinclair to write a new “The Jungle.”

        Agribusinesses have used their political puppets to make it illegal in many states to go undercover to film the mistreatment of the animals at these factory farms and slaughterhouses.

  22. “Lori Devault survived and rebuilt her Julian home after it burned down in the 2003 Cedar Fire.”

    Julian is beautiful and a great weekend outing, but it has to be one of the most fire prone areas in the U.S., situated in the San Diego mountains and surrounded by dry forest lands.

    1. I am reminded of a SoCal family vacation taken some years ago. The first few days were spent at Disneyland. There was some huge fire not terribly far away and you could smell the smoke in the air. When night fell, I could see the ash in the air highlighted by the floodlights in DL. When we got back to the hotel room, we all showered, as our hair was full of ashes.

      Smelling smoke isn’t usual in SoCal during fire season, and we experienced it when we lived in Escondido; but the ash laden hair was a new experience.

      1. Having lived in in Escondido, you know it’s just downwind of Julian under Santa Ana conditions.

        2. Um no, no it’s not. Poway yes, Escondido, no. Santa Ana winds do not come from the south.

          1. But they definitely can blow east to west, and can shift direction from north to south, as happened during the Witch Creek Fire in 2007. One minute we were watching a large plume of smoke progress along the mountain ridge; within 8 hours the winds had shifted and the smoke was blowing through our neighborhood. And the fire skirted just north of us, through Lake Hodges Canyon, in Escondido.

          2. A new property on the western edge of Poway came on the market that looked interesting but State Farm won’t insure it. Next.

          3. Having a look at the fire map for the Witch (Creek) Fire in this page, it appears to have started just west of Julian then moved west through Ramona and eventually Escondido. We first spotted it high up on the ridge in Ramona on a warm, sunny, beautiful, October Sunday afternoon, with an otherwise clear blue sky. That was less than 24 hours before we evacuated.

    2. “…Julian is beautiful and a great weekend outing…”

      Highly recommend for day trips, also.

      Great places to lunch and the best Cherry pies.

      1. I’ve scraped the footpegs of my ST1300 a few times on CA78 while en-route to Ocotillo Wells and points East. It doesn’t have the panache of Mulholland Hwy but it is pretty in the spring.

  24. “…the buyer, a Harvard student from Hong Kong, negotiated an additional 9 percent discount as the market grew more uncertain. Crucially, the buyer and his parents requested to include the seller’s furniture.”

    How does NYC housing work for a Harvard student? Does he commute by helicopter?

    1. Must be a Jared Kushner properties? Buy a house and get a greencard deal?

  26. The ECB is going to need a bigger printer. Turkey’s lira has plunged to new lows, making it next to impossible for the country’s developers, who took out huge Euro-donominated loans from tottering PIIGS banks to fund a speculative construction spree, to repay their loans. Once the cascading defaults can no longer be held at bay by the ECB’s extend and pretend, it’s game over for the Eurozone’s asset bubbles and Ponzi markets.

    https://finance.yahoo.com/news/turkish-lira-falls-record-defying-063745925.html

  27. The recent stock market rally is based on an implicit assumption that the Fed will be able to indefinitely continue backstopping the market at its recent level of support, excessive optimism over nearterm prospects for reopening the Main Street economy, and a willingness to overlook the prospective lingering effects of the labor market and credit events currently transpiring.

    In other words, buy stocks now, often and always, because the stock market can only go higher from here on out.

    1. The Financial Times
      Coronavirus business update 30 days complimentary
      Markets Briefing Equities
      Wall Street closes higher despite dire US jobs data
      Gulf between darkening Main Street and rebounding markets continues to widen
      The benchmark S&P 500 index has climbed back to levels last seen in September
      © AFP
      Eric Platt and Colby Smith in New York, Adam Samson in London and Hudson Lockett in Hong Kong 3 hours ago

      The gulf between a buoyant Wall Street and withering Main Street, which has perplexed many investors for more than a month, was widened further on Friday by a rally in stocks despite the biggest decline in US payrolls on record.

      The benchmark S&P 500 index climbed 1.7 per cent, back to levels last seen in September, months before coronavirus infections had first been identified. The technology-heavy Nasdaq Composite, which was up 1.6 per cent, had already erased its losses for this year and is within striking distance of its all-time high. The two indices ended the week up 3.5 per cent and 6 per cent, respectively.

      Those gains came in the week government data confirmed more than 20m Americans were cut from payrolls last month and household names in the retail sector filed for bankruptcy.

      “Stocks have decoupled from the economy,” Kristina Hooper, chief global market strategist at Invesco, said.

      Investors have pointed repeatedly to one force that has driven global asset prices higher: swift actions from the Federal Reserve, the European Central Bank and the Bank of Japan. It has been enough, at least for now, to outweigh the economic toll since business activity in the developed world ground to a halt.

      “The Fed has really altered the landscape for capital markets,” Ms Hooper said. “By providing such extraordinary and somewhat experimental monetary policy, it has altered risk and reward profiles for asset classes.”

      Line chart of Year-to-date performance (%) showing Fed interventions send US stocks surging

      The Fed alone has snapped up roughly $1.5tn of Treasuries over the past two months, having committed to buying an unlimited quantity of government securities. Beyond its historic asset purchase programmes and slashing interest rates close to zero, the US central bank has also rolled out emergency measures to shore up the markets for commercial paper, municipal debt and corporate credit, among others.

      That intervention has helped to stabilise debt markets, allowing some companies to access much-needed financing. Those which have, including the likes of Walt Disney, Coca-Cola and Apple, are better insulated to withstand the shocks from the pandemic than small and midsized businesses, which together cut 11m jobs in April, according to the payroll processor ADP.

      Large companies, particularly those in the technology sector, have come to dominate stock indices.

      Markets around the world have rebounded at a historic pace in recent weeks, with MSCI’s measure of global equities rallying by a quarter in just 34 trading days since reaching a bear market trough on March 23. But the benchmark is still down 15 per cent from the end of 2019.

      Investors’ confidence has been bolstered by a “significantly improved” outlook on the trajectory of Covid-19 and governments’ abilities to begin reopening their economies, said Marko Kolanovic, head of quantitative and derivatives research at JPMorgan.

      “We saw an earlier-than-expected apex and lower peak of hospital resource use, broader-than-expected spread of the virus, and estimate a lower mortality rate than consensus models,” he said. “This means economic activity could pick up sooner than most expected, and any potential future virus waves are likely to be less severe.”
      …

      1. “By providing such extraordinary and somewhat experimental monetary policy, it has altered risk and reward profiles for asset classes.”

        There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.

        – George W. Bush

        1. Fool me — you can’t get fooled again. There is a time to fool and a time to be fooled, and this time is not one of them – Inspector Jacques Clouseau

    2. Though I tend to be quite aware of the ups and downs of the stock market, I have to confess that Oxide’s recent post about the reasons why the stock market rally underway might soon give way to another wave of panic definitely put the fear of God’s wrath in me.

      Congratulations. It’s pretty hard to make me even more pessimistic about stocks than I already was.

      1. The Financial Times
        Coronavirus business update 30 days complimentary
        Markets
        Fear factor threatens stocks’ Covid-19 fightback
        China’s example suggests that life will not snap back to normal, strategists say
        China has reopened but many indices are not yet back to previous levels
        © FT montage; AP
        Philip Georgiadis in London and Robin Wigglesworth in Oslo 14 hours ago

        Wall Street economists are warning that public fears of coronavirus could undermine efforts to reopen economies, leaving the stock market’s powerful recovery vulnerable.

        Several US states and European countries are tentatively emerging from tight restrictions on movement put in place to stop the spread of Covid-19. President Donald Trump is itching to reopen the world’s largest economy even as he acknowledges that relaxations could lead to a flare-up of cases. The UK is set to ease certain measures from Monday.

        But strategists tracking real-time indicators from countries further along this process, including China, report that it is unlikely that economies will see a quick snap back to normal levels of activity.

        “The economics of ending a lockdown depend on fear and confidence,” said Paul Donovan, chief economist at UBS Wealth Management. “If lockdowns end too early and deaths keep rising, that confidence is missing and the economic downturn continues independent of the lockdown policy.” Dana Peterson, an economist at Citigroup, agreed that the “fear factor is really going to matter” as countries lift restrictions.

        The push to reopen economies has been one of the factors behind a rebound that has led to global stocks rising by about a quarter from their lows in the March sell-off. On Wall Street, the S&P 500 is just 15 per cent off its all-time high of late February, while the Nasdaq 100 has reached positive territory for the year.

        China’s economy has slowly restarted following a particularly strict lockdown, but data show measures of activity such as property sales and coal consumption in large power plants remain well below pre-Covid-19 levels.
        …

        1. Investors haven’t been this bearish on stocks since April 2013, one measure shows
          Matthew Fox
          May. 8, 2020, 05:09 PM
          Reuters
          – Bearish investor sentiment has risen over the past month as shocking economic headlines due to the coronavirus pandemic hammer investors week after week, a survey found.
          – The Labor Department said on Thursday that 3.2 million Americans filed for unemployment in the week that ended on Saturday, bringing the seven-week total to 33 million.
          – The department said on Friday that 20.5 million jobs were lost in April and that the unemployment rate spiked to 14.7%.

          Investors haven’t been this bearish on stocks since April 2013, the American Association of Individual Investors’ latest investor-sentiment survey found.

          Bearish sentiment jumped to 52.66% in the weekly survey, a sizable increase from the previous bearish reading of 44.03%.

          Bullish sentiment among investors surveyed declined to 23.67% from 30.6%.
          …

  28. Tampa, FL Housing Prices Crater 17% YOY As Guf Coast Housing Market Turns Toxic On Rampant Appraisal And Mortgage Fraud

    https://www.zillow.com/tampa-fl-33617/home-values/

    *Select price from dropdown menu on first chart

    As a leading economist advises, “Mortgage debt is the most toxic and damaging debt of all. Avoid it at all costs.”

  29. “This means economic activity could pick up sooner than most expected, and any potential future virus waves are likely to be less severe.”
    Really?? Crystal ball or a myriad of charts? Or…….?

  33. Simple investing advice for pandemics: Until the Fed rides into the rescue with guns ablazing, don’t HODL risk assets.

    1. The Financial Times
      Coronavirus business update 30 days complimentary
      Opinion Personal Finance Advice & Comment
      Warren Buffett held the wrong stocks as the music stopped
      Few investors went into this crisis with a portfolio they were entirely happy with
      Merryn Somerset Webb
      Warren Buffett admitted that holding airline stocks had been a mistake
      © Johannes Eisele/AFP/Getty
      Merryn Somerset Webb
      May 7 2020

      How many fund managers went into the GVC (great virus crisis) with the portfolio they would have liked to be holding? Not many. And not even poor Warren Buffett.

      In his downbeat online shareholder meeting last week, he told investors that he had spent much of March and April selling his huge stakes in the US’s four biggest airlines (United, American, Delta and Southwest) on the basis that “the world has changed” and holding them had been a “mistake”.

      Unfortunately, it has not been the only mistake the world’s one-time greatest investor has made recently. Thanks to holding much of Berkshire Hathaway’s portfolio in out-of-fashion value stocks in an age of growth obsession, its shares have underperformed for a decade.

      They are up 126 per cent in the past 10 years. That sounds fine — until you look at the S&P 500 index, which is up 140 per cent.

      On the plus side, the fact that even Warren Buffett has been caught with the wrong portfolio as the music stopped should come as some reassurance to many others in the same boat.
      …

      1. From 2017 …

        7 ways Warren Buffett blasted the airline industry before investing billions in it – Business Insider
        https://www.businessinsider.com/warren-buffett-blasted-the-airline-industry-before-investing-billions-in-it-2017-3

        (snip)

        “In 1989, Berkshire Hathaway CEO Warren Buffett decided to buy preferred stock in USAir, a predecessor to today’s American Airlines.
        “The investment quickly went downhill. For 25 years thereafter, Buffett repeatedly criticized the airline industry as being a terrible place to invest.

        “Thus, most investors were shocked when Berkshire Hathaway revealed that it had invested in several airlines last summer.

        “Buffett continued his buying spree in the fall, and Berkshire Hathaway now owns roughly 7%-9% of each of the four largest U.S. airlines. These investments are collectively worth about $9 billion.

        “Here are seven different criticisms that Warren Buffett leveled at the airline industry before his sudden change of heart last year.

        “Airlines have been perennial money losers”

        “The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, and then earns little or no money. Think airlines. Here a durable competitive advantage has proven elusive ever since the days of the Wright Brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.
        — Warren Buffett, in the 2007 Berkshire Hathaway shareholder letter

        “Buffett’s remark that investors would have saved billions of dollars if someone had shot down the Wright Brothers’ plane is perhaps his best-known criticism of the airline industry. Indeed, just in the 2001-2005 period, U.S. airlines collectively lost $40 billion.

        “Unfortunately, that period of deep losses wasn’t an isolated incident. For decades, airlines across the world have tottered between profitability and losses. In most cases, the losses have outweighed the profits over time.

        “The lowest-cost carriers can disrupt rivals”

        “As the seat capacity of the low-cost operators expanded, their fares began to force the old-line, high-cost airlines to cut their own. … [E]ventually a fundamental rule of economics prevailed: In an unregulated commodity business, a company must lower its costs to competitive levels or face extinction.
        — Warren Buffett, in the 1994 Berkshire Hathaway shareholder letter

        “The U.S. airline industry was disrupted in the early 1990s by the rapid growth of low-cost carriers. These airlines undercut the legacy carriers’ fares. Legacy carriers were forced to match those prices — otherwise, their customer bases would have melted away. However, this led to big losses across the industry, as the legacy carriers’ costs were way too high.

        “In the past 25 years, legacy carriers have reduced their costs significantly. But unit costs are starting to creep up again. Meanwhile, a new crop of ultra-low-cost carriers — led by Spirit Airlines — is growing rapidly, driving fares down even further. Time will tell whether the major airlines can avoid a repeat of their early-1990s meltdown.

        “Irrational competition is an even bigger danger”

        “Since our purchase, the economics of the airline industry have deteriorated at an alarming pace, accelerated by the kamikaze pricing tactics of certain carriers. The trouble this pricing has produced for all carriers illustrates an important truth: In a business selling a commodity-type product, it’s impossible to be a lot smarter than your dumbest competitor.
        — Warren Buffett, in the 1990 Berkshire Hathaway shareholder letter

        “Another one of Buffett’s key insights about the airline industry was that one or two irrational competitors could drag down the entire industry. Price wars can rarely be contained.

        “This fact has reasserted itself recently. American Airlines has led the way in matching Spirit Airlines’ low fares since 2015 in order to avoid losing market share. The resulting fare war has even spread beyond the markets that Spirit and its fellow ultra-low-cost carriers serve. This has damaged the legacy carriers’ margins.

        “Periods of profitability can prove fleeting”

        “USAir’s revenues would increasingly feel the effects of an unregulated, fiercely competitive market whereas its cost structure was a holdover from the days when regulation protected profits. These costs, if left unchecked, portended disaster, however reassuring the airline’s past record might be.
        — Warren Buffett, in the 1996 Berkshire Hathaway shareholder letter

        “Today’s airline investors take comfort from the industry’s consistent profitability since 2010. However, this isn’t the first long run of airline profitability in history. (To be fair, though, profit margins are much higher than during previous periods of industry profitability.)

        “The airlines of the 1980s had especially high cost structures. But even today’s leaner legacy carriers face a severe cost disadvantage. On average, their non-fuel unit costs are nearly double those of Spirit Airlines. This could come back to haunt them if consumers begin to accept ultra-low-cost carriers’ no-frills service.

        “When the airline industry is bad, it’s really bad”

        “Unfortunately 1991 was a decimating period for the industry, as Midway, Pan Am, and America West all entered bankruptcy. (Stretch the period to 14 months and you can add Continental and TWA.)
        — Warren Buffett, in the 1991 Berkshire Hathaway shareholder letter

        “Another problem in the airline industry is that one bankruptcy can lead to another. If a major airline runs into trouble, it can use the bankruptcy process to reduce its costs and get relief from debt that it may have taken on to fund its expansion. It can then use its lower cost structure to undercut other airlines on price — potentially forcing them to seek bankruptcy restructurings of their own to regain an even footing.

        “Too many variables to forecast results”

        “However, we have no ability to forecast the economics of … the airline industry.
        — Warren Buffett, in the 1989 Berkshire Hathaway shareholder letter

        “The volatility of airlines’ earnings is another factor that can confound investors. Even at the time that he invested in USAir, Buffett knew he couldn’t forecast the company’s future earnings; he was just relying on its track record and the extra security of holding preferred stock.

        “Airline executives have shown themselves to be no better at forecasting their earnings. To give just one example, American Airlines CEO Doug Parker stated in late 2015 that the company’s profit margin would probably decline in 2016 before bouncing back in 2017. American’s adjusted pre-tax margin did sink by 2.7 percentage points last year. But analysts expect the company’s profit margin to fall once again in 2017.

        “Consolidation isn’t necessarily a fix”

        Investors have poured their money into airlines … for 100 years with terrible results. … It’s been a death trap for investors.
        — Warren Buffett, at the Berkshire Hathaway 2013 annual meeting

        “Even after airlines’ profitability started to rise a few years ago, Buffett wasn’t convinced that the upturn would last. As he acerbically pointed out at Berkshire Hathaway’s 2013 annual meeting, every previous airline industry upturn — of which there have been many — has been followed by a plunge deep into the red.

        “Thus, Buffett wasn’t convinced that industry consolidation had fundamentally altered the airline industry’s long-term outlook.

        “Is this time different?”

        “Clearly, Warren Buffett has changed his opinion about airline stocks. Indeed, consolidation has helped to reduce irrational forms of competition, at least somewhat. Furthermore, there is more differentiation within the industry today, with the legacy carriers focusing on business travelers while most low-fare carriers have leisure-oriented route networks.

        “Nevertheless, some of his previous criticisms of the airline industry still stand. Given that Buffett was wrong about the airlines in 1989, investors shouldn’t ignore the possibility that he’s wrong about them now, too.”

  34. There has been some comment about the 200k IT jobs not coming back. I think the following figure may be of intrest in that debate

    The average salary for a Software Engineer / Developer / Programmer in India is ₹486,002.

    That translates to a dollar equivalent of 6436.77.

    1. In my experience the guys in India get the carcass jobs no one wants to do: maintaining very old legacy code.

      I am still being deluged with emails and phone call from recruiters.

      1. “It’s important to understand there is no shortage of food in this country, be it milk, dairy, beef, pork chicken,” Thad emphasized. “Where the shortage is coming into play is that it’s not being able to be processed because plants are being shut down for lack of help because the virus has affected them, all across the United States.”

        https://www.ncnewsonline.com/news/local_news/dairy-farms-face-hardship-from-covid-19/article_d45c34d9-eecf-5e12-8221-1bfd5dbc7f90.html

      2. from an article below that one regarding elections:

        “Often, pollworkers are older people who won’t be able to participate this year due to being part of the vulnerable population.”

        Dangerous ground here.

    2. Actually, U.S. taxpayers are the ones that are ultimately going to be fooked by this — it should come as no surprise to anyone that this is all being staged to attempt to direct federal funding towards underwater blue state bailouts.

      1. this is all being staged

        Assuming a grand conspiracy is not necessary when stupidity and fear can easily explain something. States (Red or Blue) may not get bailed out, regardless of the team jersey of their governors.

        We’re all in this together!

      2. it should come as no surprise to anyone that this is all being staged to attempt to direct federal funding towards underwater blue state bailouts.

        If the D’s retake the WH and Senate it will be bail outs galore. Countless six figure pensions will be saved, spending programs fully funded, the consequences be damned.

  37. Major studies coming out now from around the World that the C-19 extreme cases are linked to vitimin D deficiency.
    This would explain why some areas get it worse than others.

    Of course the articles are urging not to start hording vitimiin D supplements. No doubt people will start buying up and hording it.

    It’s crazy because the Sun is a big cheap sourse of vitamin A one can get the natural way. Than you will get the people that will think more Is better and overdose on D supplements.

    But , could it be that these snarly viruses are easy to defeat by simply having enough vitiamin A that makes your immune system work right ?

    I don’t think the Medical system is going to go for such a cheap solution like vitiamin A or Sun because vaccines are the big go to.

    But, modern medicine isn’t big on the idea of deficiency of food or sun to combat disease.

    2. Democratic governors: “Stay inside!”

      (Vitamin D deficiency…)

      Democratic governors: “Go outside!”

      1. Good point. Although judging from the health status of nonagenarian female relatives on both sides of our family, being female and winning the genetic lottery don’t hurt.

        1. I don’t think men in general take care of themselves as well as women do.

          But, another point, I have always noticed that in animal medicine they go for the deficiency approach to disease often times. Why would humans be any different than animals?

          I have always favored the defencity of something approach, or something is out of balance, or maybe your just not getting enough sleep, or maybe stress is tearing down your health.

          1. “I don’t think men in general take care of themselves as well as women do.”

            I wear a blue-tooth heart rate monitor that straps around my chest that links with my phone’s GPS activity software when I ride either one of my bicycles. Depending on the route, 60 to 90-min, I maintain 120 to 130-bpm stopping only for water after the 9% grade hill climb back into my neighborhood. It’s a great way to start the day.

  38. New listings in 48009 have jumped about 20% in the past week or so. Zero movement on prices.

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