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We’re In Tears About This Every Week, It Just Sucks

A report from Capital and Main. “On a normal day, Marcella Nolan would be flashing her smile in the aisles of a Restaurant Depot, giving away samples and drumming up sales for the food brokers who hire her as an independent contractor. In 1999, she left behind her life as a carnival operator in Ohio and moved with her children to Lakeland, Florida, where Nolan was able to buy a piece of land outright for $11,000 and take out a mortgage for a double-wide trailer. She made improvements over the years – a new septic system, a pool.”

“In 2018, she refinanced the home and land together, mortgaging them for $56,000. Working full-time, the 57-year-old earns $2,400 a month, out of which she usually pays her $500 mortgage, sometimes even kicking in an extra $100 toward the principal.When coronavirus hit, though, her work dried up. She applied for unemployment March 16 but, six weeks later, still hasn’t received a dime and can’t check the status of her application because Florida’s website keeps crashing and phone lines are perpetually busy. She hasn’t received a promised $1,200 stimulus check from the federal CARES Act, either. Her now-grown daughters can’t help – they’re both in the restaurant industry and in similar binds.”

“What Nolan has received is a letter from her mortgage servicer saying that she will owe a lump sum when payments start again. ‘They reached out to me,’ she said. ‘If I take their deal, come July, I have to pay four months at once. There is no way I can do that.'”

The Los Angeles Standard in California. “Terra Phelps is a retired U.S. Air Force Veteran who owns a two-unit duplex in Leimert Park. He lives in one unit and rents out the other. While he is a landlord, he isn’t part of a large corporation. Phelps isn’t a big business that can weather this storm, and unlike a corporate landlord, he’s showing compassion to his tenant’s situation.”

“‘I have to work harder to meet my mortgage, and at the same time I would like to help out my tenant,’ he said. ‘I pretty much work with my tenant, understanding his situation. So not only did we do a forbearance, we forgave the rent for this month.'”

“This is the only property that Phelps owns, and while he agrees that tenants need aid from the government, he also feels that ‘mom-and-pop’ landlords should also be protected if they are to keep their property. ‘If we keep going this way, I’d have to sell,’ he said.”

The Laguna Beach Independent in California. “Nowadays, being a retail landlord ain’t no fun at all. The small tenants like nail shops, are closed, cannot pay rent, and trying to squeeze them will only result in them going broke. The big ones, called “credit tenants” because they have big balance sheets, are using the pandemic as an opportunity to demand concessions and many landlords are giving them.”

“All this, in turn, means landlords must go their lenders and ask for ‘forbearance,’ another way of stating they do not have enough cash flowing in to make their monthly payments. So far, most lenders are taking a hard line. The current forbearance most lenders are offering is pitifully little, maybe three months of ‘interest-only’ payments. This does no good at all, so just about every landlord is calling a bankruptcy attorney for advice on legal alternatives. Soon, a whole swath of foreclosures is bound to occur, and soon after that, the bankruptcy courts will be full.”

The Dallas Morning News in Texas. “Pending home sales — houses under contract but not yet sold— are down 22% from April 2019 levels. Even with the downturn in sales, median home sales prices in the more than two dozen North Texas counties included in the survey were still 5% higher than a year earlier. But year-over-year sales prices were down sharply in some neighborhoods. Median prices fell 35% from April 2019 levels in the Park Cities and were down 14% in Irving.”

The Review Journal in Nevada. “James Probst and Stepfanie Tyler are buying their first home together, a place being built from scratch with plenty of upgrades and space one day for a small pool and an outdoor kitchen. They already spent around $36,000 in deposits on the Las Vegas house. But their income plunged when the coronavirus pandemic shut down much of the economy virtually overnight — and canceling the sale isn’t so simple.”

“If they bail on the home purchase, they won’t get their money back. ‘We’re in tears about this every week,’ Probst said. ‘It just sucks.'”

“Across the valley, house hunters who signed sales contracts before the coronavirus outbreak have faced a similar question: Should they cancel the purchase and risk losing their deposit, stick with the sale, or wait to see what the world looks like as their closing deadline nears? As seen in emails Tyler provided to the Review-Journal, Probst told a Century Communities sales associate on March 20 that he had been furloughed, they will ‘barely be able to afford rent’ and the vast majority of their cash was tied up in escrow.”

“On March 31, the sales associate wrote that Century will not refund any deposits to buyers who passed their five-day right of rescission ‘as noted in the contract documents.’ ‘If you still would like to cancel at this point in time,’ she said, ‘the builder will not be refunding any money to you.'”

“The sale is expected to close in July. Probst and Tyler are waiting to decide what to do. Century, meanwhile, has sent ‘very happy emails’ with updates on the house, he said. Sales associates told the couple April 5 that framing had started. ‘Once again,’ the salespeople wrote, ‘congratulations on your new home purchase and welcome to the community!'”

This Post Has 123 Comments
  1. ‘We’re in tears about this every week…It just sucks’

    Well it was cheaper than renting Jim. We’re all in this together, congratulations on your new home purchase and welcome to the community!

    1. The dummies haven’t the math skills to figure that the $36k that just evaporated is far less than the losses they’d have taken had the sale gone through.

      Truly a “Meet The Cratertons” episode averted.

      1. How does someone who just lost a whopping part of their income continue to qualify for a 500k shack?

        1. Century, meanwhile, has sent “very happy emails” with updates on the house, he said. Sales associates told the couple April 5 that framing had started.

          Even crazier that the builder is continuing to build the shack, knowing well that the probability of it closing is close to zero and they will get stuck with the hungry and unsalable alligator.

        2. How does someone who just lost a whopping part of their income continue to qualify for a 500k shack?

          I’m guessing that shack is now worth a good deal less than $500K.

        3. How does someone who just lost a whopping part of their income continue to qualify for a 500k shack?

          Good question. I’d venture to guess they never should have qualified in the first place. Kind of like all those twenty-somethings driving $70,000 pickup trucks.

          I read a comment somewhere the other day where an old guy who was a manager at a lumber mill said all the young guys with fancy new trucks at his work had just stopped paying on everything – trucks, houses, etc.

      2. The $36k they just lost was real money. Money they sacrificed to save. Turns out their sacrifice was just an empty gesture.

    2. I dunno, Ben. I remember back to when I was in grad school, or in my lab job just after. This epidemic would have taken me out for sure. I had a few savings but probably not six months’ worth. And I wasn’t financially vulnerable because I bought a $60K pickup truck or a new flat-screen. Heck, I was pretty frugal and got around on a bike. But at that age, people are starting out and just don’t have that kind of cushion. We’ve all been there; even the frugal baby boomers with their unions and promised pensions were scraping by for a while. I can’t knock them for getting hit with bad timing. Now, the AirBnB braggadocios, on the other hand, are fair game.

      1. ‘buying their first home together, a place being built from scratch with plenty of upgrades and space one day for a small pool and an outdoor kitchen’

        It’s their first shack and it cost over 500k.

        1. “…over 500K…”

          That’s what California used home sellers call a starter home.

          1. Since they seem to have no more cash, I’m guessing that the $36K deposit was going to cover the down and closing costs. Not exactly 20% down.

        2. “…space one day for a small pool and an outdoor kitchen”

          Reminds me of the San Mateo couple who outbid everyone else because the place had an outdoor barbecue for having parties with friends.

      2. I remember back to when I was in grad school, or in my lab job just after. This epidemic would have taken me out for sure.

        For thousands of years the nuclear family has been the basic building block of civilized societies. That is, until the Democrats and feminists spent the last 40 years convincing women that all they needed was Uncle Sam’s strong supporting arm to be their provider and protector, while men found the entire system rigged against them. Now we are going to pay or terrible price for the destruction of the family as the ultimate social safety net, especially when FedGov goes bankrupt under the ever-growing demands of the welfare queens on Wall Street and the vast entitlement classes government at all levels have spawned and enabled, who are going to turn unruly when the free sh*t gets cut off.

        1. For thousands of years the nuclear family has been the basic building block of civilized societies. That is, until the Democrats and feminists spent the last 40 years convincing women that all they needed was Uncle Sam’s strong supporting arm to be their provider and protector, while men found the entire system rigged against them.

          I have an extremely un-PC question to ask on that topic. There is a wide variety women out there. But as a whole they do tend to lean left on average compared to the average man. Is it possible that in a democracy, women’s suffrage inevitably leads toward this result eventually? Or at best a 50/50 stalemate where there would have been general preference for freedom over security previously?

        2. until the Democrats and feminists spent the last 40 years convincing women

          That women could “have it all.”

          1. A career and a family.

            This has never been impossible. It’s just not easy and compromises get made. I did it myself as a single dad with a “career”. Jobs that required me to not parent weren’t for me.

          2. It’s just not easy and compromises get made.

            Some professions are more amenable to a work-life balance. The legal profession is not one of them. Speaking from experience, pregnancy discrimination still exists.

          3. “Speaking from experience, pregnancy discrimination still exists.”

            The FAA medical system doesn’t care for late term pregnancy of commercial part 135 pilots. Ditto for many state department foreign deployments. It’s not always up to the professional woman to decide if being pregnant and insuring a successful outcome as member of a critical team project can co-exist. There’s legalese and reality, e.g., getting out of a ticket for driving in an HOV lane while pregnant.

        3. That is, until the Democrats and feminists spent the last 40 years convincing women that all they needed was Uncle Sam’s strong supporting arm to be their provider and protector, while men found the entire system rigged against them.

          Women are now reaping what they’ve sewn. I’m long boxed wine and cats.

  2. ‘In 2018, she refinanced the home and land together, mortgaging them for $56,000’

    If you make subprime loans, you will get defaults. The majority of US loans the past several years have been subprime. I’m not saying the majority of borrowers are, but those are the loans they’re taking on.

    I’m not picking on this lady, but why did you need the 56k? Because it was there? I look at the title info behind a lot of pre-foreclosures and easily half, maybe more involve a cash-out refinance or HELOC.

    1. It seems like the folks who Helocked themselves out the wazoo to buy toys and enjoy fancy vacations were first in line for Obama era mortgage bailouts. Is it different this time?

      1. No, it’s not different. Even corporations who basically HELOC’ed to buy their own stock now want a bailout.

        1. Great point! Corporations who leveraged themselves silly during the boom time$ to enrich themselves and their shareholders by artificially pumping up their company’s stock price are now the deserving victims clamoring for bailouts, analogous to yesteryear’s bailout-worthy, heavily-helocked homeowners.

          1. It used to be illegal for corporations to buy back their own stock with borrowed money. For good reason. But between Ronald Reagan and Bill Clinton, all the former safeguards to curbing Wall Street greed and speculation were systematically dismantled. Now these leveraged-to-the-hilt corporations have two options: get bailed out by the Fed and middle class taxpayers, or blow up like supernovas.

          2. I wonder if the Fed buying corporate bond ETFs is a roundabout way of keeping the stock buyback scam in operation. Since corporations were using ultra low interest bond issuance to generate funds for stock buybacks, this seems like the easiest way for the Fed to levitate the stock market without directly buying equities.

    2. ‘In 2018, she refinanced the home and land together, mortgaging them for $56,000’

      This woman is having trouble servicing a mortgage of $56,000 – a $500 per month payment. It just goes to show how ludicrous house prices are and the system is rigged for most to fail. We have people in unstable jobs buying $500,000 starter homes. What in the f*** are people thinking? The answer is “they’re not.”

      1. What in the f*** are people thinking?

        They’re seeing their peers buying the 500K shacks and driving 50+K trux, and are “thinking” if they can do it, so can I.

        1. “They’re seeing their peers buying the 500K shacks and driving 50+K trux, and are “thinking” if they can do it, so can I”

          Amen to that. I see it all the time at work. I have no idea how there people live. I am guessing massive CC debt.

          I am also amazed by the number of people who really believe that the economy will be back to “normal” once the lock downs end (if they do) They just think you flip a switch back on, all the jobs come back and all businesses magically just open back up. Same goes for housing, everyone knows that!

    3. “why did you need the 56k?”

      For all the Heloc money that goes to vacations and jet skis, I think there is a lot that goes right back into the bubbles that make a basic standard of living so unaffordable in the first place. Education, down-payments for kids to buy, medical bills. The last bubble was more party helocs. A lot of this rebubble – I think – has been helocs just to survive and pay for the skyrocketing cost of living. A viscous cycle.

      The numbers in this story – $11k, $56k… $500 a month. It just shows how far down this whole bubble has had to dig to sustain itself. This lady isn’t even on the same planet as the $500k starter home couple.

      This is a sad story. Her job was stolen from her, every safety net has failed this woman, and now her home might be foreclosed. But hey, the Kennedy Center got $25 million, and I bet they got it on time.

      1. If I take their deal, come July, I have to pay four months at once. There is no way I can do that

        Sad story? Come July she’ll owe four months of $500/mo. She’ll have the $1200 stimulus check and UI will have caught up with her to the date she filed. If she just gets the Fed relief @ $600/wk it’s several thousand dollars. Besides, if she didn’t pay her mortgage in March out of February earnings something doesn’t add up.

      1. This news story seems to have some actual merit. If you have the money and you’ve been eyeing a beach cottage anyway, then why not snap one up at a COVID discount? But you don’t need to go through iBuyer. I’m sure any beach town realtor ™ has quite a few failed AirBnBs to look at.

        (Please note that I said “if you have the money.”)

        1. We’ll all have the money soon. The new UBI bill would give a married couple with 2 kids 8K a month.

        2. There are no good deals to be had this year. Prices would have to fall well over 50% to be supported by local incomes. Many knifecatchers have to take one for the team before that transpires. And the FED and .gov will, no doubt, be throwing the kitchen sink at the market to try to levitate it.

  3. ‘year-over-year sales prices were down sharply in some neighborhoods. Median prices fell 35% from April 2019 levels in the Park Cities and were down 14% in Irving’

    Tom?

    ‘If we keep going this way, I’d have to sell’

    ‘just about every landlord is calling a bankruptcy attorney for advice on legal alternatives. Soon, a whole swath of foreclosures is bound to occur, and soon after that, the bankruptcy courts will be full’

    And the myth of the prosperous California real estate “owner” evaporates.

    1. Market Snapshot
      Dow tumbles 200 points to kick off week after back-to-back gains
      Published: May 11, 2020 at 10:01 a.m. ET
      By William Watts and
      Sunny Oh
      Getty Images

      Stocks traded lower Monday, with analysts tying weakness in part to jitters over a pickup in COVID-19 infections in some parts of the world and the U.S., after equities ended last week with back-to-back gains.

      What are major indexes doing?

      The Dow Jones Industrial Average fell 226 points, or 0.9%, to 24,105. The S&P 500 slipped 20 points, or 0.7%, to 2,910. The Nasdaq Composite fell 28 points, or 0.3%, to 9,094.

      Stocks posted back-to-back gains Thursday and Friday that left the Dow up 2.6% for the week at 24,331.32, while the S&P 500 saw weekly rise of 3.5% to 2,929.80. The Nasdaq Composite jumped 6% last week to 9,121.32.

      Equities have bounced back strongly after the S&P 500 dropped by roughly a third from a February record high through March 23. Friday’s close left the Dow 17.7% below its all-time finish, while the S&P 500 is 13.5% below its record close and the Nasdaq is 7% away from its record finish.

      What’s driving the market?

      Analysts said some near-term consolidation may be in order after equities ended last week on a strong note. Investors appeared to shrug off Friday’s April U.S. jobs report, which saw the economy shed more than 20 million jobs and the unemployment rate surge to 14.7%.

      A slowdown in the rate of COVID-19 infections and efforts toward reopening parts of the U.S. economy have fueled expectations the economy will see a V-shaped rebound, though analysts cautioned that a rise in infections in some parts of the country cast doubt on that scenario.

      Bulls also point to a ramp up in federal spending aimed at cushioning the economy. Even more so, investors have argued that efforts by the Federal Reserve to backstop lending and ensure market functioning have fueled the rebound.

      Treasury Secretary Steven Mnuchin said it may take a couple of weeks before new spending bills were announced.

      Still, skeptics contend the reaction so far is pricing in a best-case scenario.

      “How long risk assets supported by unconventional policies can defy the real economy remains an open question for now. But from where valuations are standing, it seems a lot of the good news is already priced in, and in my opinion, the best-case scenario is to see some sort of consolidation around current levels,” said Hussein Sayed, chief market strategist at FXTM, in a note.

      “Until confidence returns to the real economy, the rally in risk assets will not be sustainable and investors will need to reconsider their positions at some point soon,” he said.

    2. Insiders are making cautious moves with their company stock after April’s big market surge. Why it matters
      Published: May 11, 2020 at 8:23 a.m. ET
      By Mark Hulbert
      One beaten-down industry sees buying, but most corporate executives aren’t biting
      Getty Images

      Corporate insiders turned bullish at the U.S. market’s March lows, but their enthusiasm for their company’s stock didn’t last long.

      At the market’s lows, insiders were aggressively taking advantage of the cheaper prices at which their companies’ shares were trading. In the wake of the market’s monster rally since then, they have just as quickly stepped back.

      That’s the conclusion that emerges from insider data provided to me last week by Nejat Seyhun, a finance professor at the University of Michigan and one of academia’s leading experts on how to use corporate insider behavior to gain insight into the market’s likely path forward.

      To review: Corporate insiders are company officers and directors as well as large shareholders. They are required to more or less immediately report to the SEC whenever they buy or sell their company’s shares.

      Seyhun says that the insiders worth paying the most attention to are officers and directors, since his research has found that firms’ largest shareholders — typically big institutional investors — don’t on average beat the market. Each month he calculates the percentage of firms for which officers and directors are purchasing more shares than selling.

      This percentage was cut almost in half in April from March, to 33% from 62%, as the accompanying chart shows. That March reading had been one the highest readings Seyhun has seen in his several decades of following corporate insiders. The April reading, in contrast, is just barely higher than the 10-year average.

      1. when they ask me what did I do during…and I want to tell them ‘I did more than I ever thought I could do,’ Jones said

        He put off buying the long range Gulfstream after finding out that New Zealand wouldn’t let him fly out to his bug out mansion.

        1. Now I understand why Larry Ellison bought himself a 140 sq mile Hawaiian island (Lanai). Only 3000 people live there and I’m sure his private jet at San Jose airport is always ready to whisk him away to his tropical hideaway should life become “interesting”.

          It’s far closer than Kiwiland and there is no pesky sovereign government that could turn him away.

          1. He’s got a punchable face. I loved hearing him squeal for a bailout, and being turned down, when Virgin Air was going down.

    3. Need to Know
      This is the trap awaiting the stock market ahead of a grim summer, warns Nomura strategist
      Published: May 9, 2020 at 3:38 p.m. ET
      By Barbara Kollmeyer
      Cruel summer. AFP via Getty

      Sell in pandemic May and go away?

      That is a fair question, as a six-month period that has traditionally been unfavorable for stocks gets under way, with painful coronavirus baggage piled on top.

      Nomura’s managing director, cross-asset macro strategy, Charlie McElligott, is on the go-away side, amid expectations that the next few months will deliver lots of bad corporate and economic news.

    4. Some commentators are assuming the Fed will eventually turn off the spigot of its current extraordinary interventions.

      Time will tell.

      1. The Financial Times
        Gambling on US equities is becoming more difficult
        Investment Bet
        © Matt Kenyon
        Rana Foroohar yesterday

        At the recent Berkshire Hathaway annual meeting it sometimes felt like Warren Buffett was trying to square words with actions. The Oracle of Omaha insisted, as he always has, that the best place for retail investors to be is in an S&P500 index fund. But he also told shareholders that his company had sold 16 times as much stock as it had purchased in the last month, including dumping the entire airline asset class. And he admitted that while you could still “bet on America, you are going to have to be careful how you bet”.

        When you look closely at his actions, he is still following the same strategy that he has employed throughout his career. It is an approach built on two things: first, value investing, which basically involves the forensic examination of corporate balance sheets; and, second, a belief not so much in America as in American companies and their ability to export their particular brand of capitalism abroad. Both of those pillars still hold much wisdom for investors who want to understand where markets — and the real economy — are heading.

        Mr Buffett learnt the skill of value investing from his former Columbia Business School professors David Dodd and Benjamin Graham, whose book, The Intelligent Investor, he memorised. They argued that investors should buy companies that have steady profits, low price-to-earnings ratios and very little debt. Following that logic, it is no wonder that Mr Buffett isn’t buying much stock. Corporate debt doubled between Mr Buffett’s bullish buying spree after the 2008 financial crisis and the end of 2019.

        Meanwhile, P/E ratios are not providing a true market signal when asset prices are being driven mainly by US Federal Reserve interventions. Many companies have stopped giving earnings guidance amid this historic downturn. Some people might respond that the Fed’s actions are the market signal. By that they mean that share prices will from now on be driven by the supply of money that central banks pump into the economy, rather than by the relationship of stock prices to corporate earnings. But as Gavekal Research co-founder Charles Gave wrote last week, everyone in Japan in the 1980s thought the correlation between the Topix and the country’s supply of cash and cash equivalents would last forever, too. But the value of equities there stopped tracking the money supply in 1990.

        We will continue to see plenty of companies and stocks flourish in the post-Covid-19 era, even after the Fed turns off the spigots of its recent interventions. But investors will need to conduct a new kind of forensic study to discover who the winners will be.

        1. “They argued that investors should buy companies that have steady profits, low price-to-earnings ratios and very little debt.”

          So, investors have nothing to buy now.

          1. …which is why Uncle Warren is HODLing a massive cash pile, watching, and waiting.

        2. But investors will need to conduct a new kind of forensic study to discover who the winners will be.

          Gee, they’re going to learn the ancient art of value investing? That’s gonna be a learning curve. And it’s gonna require honest data.

          1. Gee, they’re going to learn the ancient art of value investing?

            You mean they can’t just rely on Jim Cramer or the Motley Fool?

      2. Some commentators are assuming the Fed will eventually turn off the spigot of its current extraordinary interventions.

        There’s no such thing as tapering a Ponzi. The Fed will print and monetize debt until their financial house of cards implodes under the weight of its own fraud and debt.

        1. I tend to agree with you, especially given the evidence that they paid lip service to unwinding QE1, QE2 and QE3 after the end of the 2007-2009 financial crisis, yet never managed to do so over many years of the boom which preceded the current bust.

          I find it quite strange that the Financial Times writer talks about this as though it is a sure thing.

          1. All of these Fed “emergency measures” have become permanent. Remember when Zimbabwe Ben swore under oath to Congress that the Fed had no plans to monetize debt? He lied, and perjured himself. Read Adam Fergusson’s “When Money Dies” for a preview of where we’re headed as the Fed tries to print away all government and corporate debt. Buy your wheelbarrow now and beat the rush.

          2. I find it quite strange that the Financial Times writer talks about this as though it is a sure thing.

            Either he’s new to the scam or he’s in on it.

          3. “I find it quite strange that the Financial Times writer talks about this as though it is a sure thing.”

            Providers will lower themselves supporting a family.

      3. Some commentators are assuming the Fed will eventually turn off the spigot of its current extraordinary interventions.

        They shouldn’t be allowed to control the spigot in the first place.

    1. Terms like “Democrats” and “Republicans” have become meaningless. There are only globalist quislings – 99% of the members of both parties – and those rare few who will stand up for their constituents against the bankers and unregistered foreign agents for Israel’s Likud Party called neocons.

  4. I wish you guys were as smart as CNBC and Diana Olick 🙁

    Even if you are a successful businessman, or both parents are doctors, or come from the coke cola family or whatever wealthy class in Atlanta. Who buys a $3M home in the middle of a pandemic that causes 20% unemployment. And i am sorry for my impression – but that couple does not look like it can afford a $3M home (unless they got inheritances)

    —-
    At a two-hour open house in Atlanta on Saturday, about a dozen mostly masked families toured the six-bedroom, six-bathroom, newly built home priced at just over $3 million. Noah Graubart and his wife were looking for something close to their children’s new elementary school.

    That may be why the nation’s homebuilders are seeing a sudden surge in demand. There is simply not enough existing home supply. Homebuilders also tend to build in the suburbs and exurbs, farther away from urban cores. While urban living was incredibly popular with millennials, the stay-at-home culture of the coronavirus may already be reversing that trend. People want more space inside and outside of their homes.

    Compass, a real estate brokerage, said the average number of its listings going under contract bottomed on April 12 and were down 40% from the average before the shelter-in-place orders began in March. By April 20, Compass saw the average number of contracts back to where they were before the shutdown. By the end of April, contracts were 24% higher than before the shutdown, and up 64% from the April 12 bottom.

    https://www.cnbc.com/2020/05/11/coronavirus-as-states-reopen-homebuyers-rush-back-out.html

    1. And i am sorry for my impression – but that couple does not look like it can afford a $3M home (unless they got inheritances)

      I tend to agree. But if you didn’t know who Elon Musk is and you bumped into him, would you think he’s a billionaire?

      1. Elon is a bit different than our average billionaire. He’s personally made it point to drop on a couple of my friends when they were working at SpaceX and fanboy them. Granted, these guys were part of the team responsible for everyone’s favorite crowbar-wielding, headcrab-smashing mute…

    2. Noah Graubart and his wife were looking for something close to their children’s new elementary school.

      At those incomes they may as well hire a governess.

  5. Is a Housing Crash Coming to Florida?
    There are signs that another foreclosure crisis may be looming in this swing state.
    I got out of my FL gulf coast winter condo just in the nick of time! Thank You Thank You to the visionary persons on The Housing Bubble Blog for their sage foresight!

    1. Glad to hear that! I had the same experience waay back in spring 07, thanks to HBB (and OTM) was (correctly) convinced the bubble would pop within weeks…put my house on the market at about $10K under comps and had a buyer under contract within a week.
      LOTS of strategic defaults here in Calif. last time, seemingly with minor consequences…expect to see MANY more this time around if prices are cut in half again.
      I waited too long to try and buy again last time, in 2011/2012 was shut out by all cash flippers and speculators about a dozen times and eventually gave up, will not make that mistake again if I decide to buy again. But in the meantime have a decent affordable rental in a neighborhood I like so life is good…

      1. The only time there are deals on anything – houses, cars, boats, planes or any other big ticket items – is when there are no other buyers. If there are mass bidders in any marketplace, that’s a sure sign that it is most definitely NOT a good time to buy. When you’re the only one kicking the tires and the sellers are desperate is when to make offers.

        1. Nope. I bought that house in 1997 and was not the only buyer but the market had been flat for a few years and it retrospect it was a good time to buy, things took off shortly thereafter. 2011/2012 was a great time to buy locally price wise as the market had bottomed out, however I didn’t anticipate getting shut out by all cash buyers

  6. “James Probst and Stepfanie Tyler are buying their first home together, a place being built from scratch with plenty of upgrades and space one day for a small pool and an outdoor kitchen. They already spent around $36,000 in deposits on the Las Vegas house. But their income plunged when the coronavirus pandemic shut down much of the economy virtually overnight — and canceling the sale isn’t so simple.”

    No, it’s really that simple. Maybe you should have read the contracts? BTW, first time buyers in Vegas buying $517,000 houses? No wonder the median price is up. They were building expensive new houses in a place where you got low income, service jobs for the discretionary spending industry. This will end well.

    1. these morons were putting 3.5% and closing costs, that’s the 36K they gave to the builder. But they’re out of that money anyway. They’re not gonna be able to close on that 517K “in las Vegas” over a 1/2 mil in vegas… must bet land that is expensive and they’re running out of …/s

  7. holy deity!.
    What is the size of the shadow banking system in the US – or is this a Canada phenomena? What is impact if 20% (maybe even 30%) of mortgage holders cannot make payments of $1.5T. This seems to imply that shadow banking is 50% of the formal banking system.
    I hope that nobody’s ETFs or pension funds, or something else has invested in this.


    Non-bank lending has become a popular source of funding for would-be homebuyers and firms that are denied loans by the big banks or prefer an alternative form of financing. The CFLA says its industry is the biggest lender to Canadian businesses and consumers after the banks and credit unions.

    DBRS Morningstar, the debt-rating agency, said last month that shadow banking in Canada rose to US$1.5 trillion in 2018, compared with US$600 billion in 2010, growth that was mostly driven by money pouring into investment funds that help to bankroll borrowers.

    Canada’s shadow-banking system now controls assets worth about half of those owned by regulated banks, compared with about a third in 2010, the agency said. Non-bank financing also “provides an important funding source for the economy and is a valuable alternative to traditional banking,” a discussion paper by Bank of Canada staff observed last year.

    https://business.financialpost.com/news/fp-street/shadow-banking-lenders-and-borrowers-at-risk-of-being-left-out-in-cold-by-federal-credit-support-programs?utm_medium=Social&utm_source=Facebook&fbclid=IwAR2Vf6WlVp7qol7LgyIVPT1kW-DksswkC5io7KeU1UQ_pQWQ7fltWwrF5JA#Echobox=1589210861

    1. From the bank of canada (the equivalent of the fed in the US). Crap on a stick – it is everyone other than the federally regulated banks.

      ————————
      The shadow banking sector can be divided into five major subsectors:
      1. Investment funds, consisting of
      a. money market mutual funds (MMFs)
      b. other mutual funds and exchange-traded funds (ETFs)6
      ƒ fixed-income and alternative strategy mutual funds
      ƒ fixed-income and synthetic ETFs
      c. prospectus-exempt funds
      ƒ credit hedge funds
      ƒ credit pooled funds7
      2. Repurchase agreements (repos) and securities lending transactions that
      involve at least one entity that is not subject to prudential regulation
      3. Lenders that are not prudentially regulated, such as mortgage finance
      companies (MFCs), auto lenders, leasing companies, finance companies
      and mortgage investment corporations (MICs)
      4. Private-label securitization, including asset-backed securities (ABS), assetbacked commercial paper (ABCP) and commercial mortgage-backed
      securities
      5. Investment dealers that are not owned by prudentially regulated banks
      https://www.bankofcanada.ca/wp-content/uploads/2016/12/fsr-december-2016-chang.pdf

  8. “New-home buyers Probst, a director of product management at travel site Vegas.com, and Tyler, founder of marketing firm Blackfox Creative, are among those who could lose big if they walk away.”

    Great positions! Travel, Marketing, Recruitment jobs are first to go. during the Pandemic Lets hope they saved some money during the Everything bubble years. As we read about FBs in Australia and their pre-planned purchases, at costing you either need to bring more money to the table or the loan is off and bye bye $36k. But hey, it was still cheaper than renting.

  9. “This is the only property that Phelps owns, and while he agrees that tenants need aid from the government, he also feels that ‘mom-and-pop’ landlords should also be protected if they are to keep their property. ‘If we keep going this way, I’d have to sell,’ he said.”

    Why should taxpayers be forced to involuntarily “protect” landlords whose “investments” are going south?

    1. If the government isn’t going to let them evict, *something* needs to give.

  10. But year-over-year sales prices were down sharply in some neighborhoods. Median prices fell 35% from April 2019 levels in the Park Cities and were down 14% in Irving.”

    Is that a lot?

  11. “James Probst and Stepfanie Tyler are buying their first home together, a place being built from scratch with plenty of upgrades and space one day for a small pool and an outdoor kitchen. They already spent around $36,000 in deposits on the Las Vegas house.

    That’s adorable. Not even married and they’re already buying a $500K shack together. Well, it USED to be worth $500K…I suspect this relationship is going to unravel in no time as they both try to weasel out of the contract they signed.

    1. That’s adorable. Not even married and they’re already buying a $500K shack together.

      That has always been a head scratcher for me. Half of marriages, where a half hearted commitment was made at the altar, fail. But to buy a shack with an uncommitted lover? Some people are optimists, I guess.

      1. The over/under on unmarried couples who buy shacks together is pretty dismal, but the worst bet of all would be married couples where wifey has a hyphenated last name. Nothing says “Run like hell!” than a woman who won’t take her husband’s last name.

        1. When you’re Wife 2.0 with an established career, taking on your husband’s last name doesn’t make much sense.

          1. getting married

            Not a fan of the institution but after two pregnancy losses it begged the question why not.

        2. Actually, read the linked article, and the two Vegas MRKTG professionals are newlyweds. Clearly not readers of Ben’s esteemed blog.

  12. “If they bail on the home purchase, they won’t get their money back. ‘We’re in tears about this every week,’ Probst said. ‘It just sucks.’”

    $36,000 would’ve bought two years of rent in a nice place, plus the peace of mind of being an observer rather than a participant in the implosion of Housing Bubble 2.0. But I guess James & Stephanie would rather be in tears every week.

    1. “The urge to save humanity is almost always only a false-face for the urge to rule it.” — H.L. Mencken.

      1. Humanity has an inborn desire to destroy itself. If you don’t want that happening, you have to rule it and make it stop. Problem is, humanity is very creative when it comes to self destruction. It simply will not be denied…. so you end up being a tyrant and failing anyway.

      2. “The people always have some champion whom they set over them and nurse into greatness. This and no other is the root from which a tyrant springs; when he first appears he is a protector.” —Plato, Republic

        1. “It’s for the children.” — Comrade Pelosi and every other collectivist control freak.

    2. What We Can Learn (and Should Unlearn) From Albert Camus’s The Plague
      Liesl Schillinger on Catastrophe, Contagion, and the Human Condition
      By Liesl Schillinger
      March 13, 2020

      Usually a question like this is theoretical: What would it be like to find your town, your state, your country, shut off from the rest of the world, its citizens confined to their homes, as a contagion spreads, infecting thousands, and subjecting thousands more to quarantine? How would you cope if an epidemic disrupted daily life, closing schools, packing hospitals, and putting social gatherings, sporting events and concerts, conferences, festivals and travel plans on indefinite hold?

      In 1947, when he was 34, Albert Camus, the Algerian-born French writer (he would win the Nobel Prize for Literature ten years later, and die in a car crash three years after that) provided an astonishingly detailed and penetrating answer to these questions in his novel The Plague. The book chronicles the abrupt arrival and slow departure of a fictional outbreak of bubonic plague to the Algerian coastal town of Oran in the month of April, sometime in the 1940s. Once it has settled in, the epidemic lingers, roiling the lives and minds of the town’s inhabitants until the following February, when it leaves as quickly and unaccountably as it came, “slinking back to the obscure lair from which it had stealthily emerged.”

      1. “…and die in a car crash three years after that…”

        Was he enjoying a cigarette, vodka and getting his helmet shined?

  13. California’s coronavirus outlook worse than researchers expected, as cases and deaths rise
    LA Times – 8 hours ago

    While California has avoided the grim death toll of coronavirus hot spots like New York, there are growing concerns that the state’s most populous regions have not yet seen the rapid decline in deaths and cases needed to significantly reopen the economy.

    Cases and deaths in the state have remained relatively flat in recent weeks, with some areas, including Los Angeles County, continuing to see rapid growth, and some rural areas seeing much less.

    California is one of a handful of states where coronavirus cases and deaths are rising faster than researchers expected, according to the latest calculations in a widely relied-upon model of the COVID-19 outbreak.

    Christopher Murray, director of the University of Washington’s Institute for Health Metrics and Evaluation, said Sunday that the institute’s latest projections suggested the nationwide fatality count would reach 137,000 by Aug. 4. The current total is nearly 80,000.

    Researchers are now predicting that California could see more than 6,000 COVID-19 deaths by the end of August, up about 1,420 from projections they released last Monday. It’s the fifth-largest increase in projected death tolls among U.S. states, after Pennsylvania, Illinois, Arizona and Florida.

    1. where coronavirus cases and deaths are rising faster than researchers expected

      If you poke around California’s statistics it becomes obvious that the rate of case (positive test) increase is pretty constant while the number of tests is rising exponentially. It is pretty obvious that the case/population is falling rapidly. The death rate is also falling. Why is the media universally putting out these dishonest stories?

      1. The restaurant had its license revoked. It will be interesting to see what is next. Across the board civil disobedience?

        1. Going forward, the lawyers will be the only winners. Any one of them would love to have their case kicked uphill and tried before the state supreme court.

    1. Our governments have lied to us. The stay away stuff was to keep the hospitals below max capacity. Did any hospital anywhere get overrun? I don’t think so. The crisis passed in NYC a couple of weeks ago and they are still in lock down. In my county nobody even got sick and we are still in lockdown.

      The local pizza shop continues to do a brisk takeout business. The workers inside do not all wear masks. LOL.

      Gov Cuomo now says on his fireside chats that we are “over the mountain”. Yet we are still in lockdown. The clerks at the grocery store here haven’t died. They are vocally fed up with the plastic shield/mask thing. Wearing the mask just over the mouth is a thing now.

      Cuomo now wants to reinvent education before we go back to normal. Technology! Virtual teaching, it is so much more efficient. Let’s put it in place now permanently! Of course, his altruistic (cough) buddy Gates would run it.

  14. Who gave this answer to a real journalist today?

    You know what the crime is, all you have to do is read the newspapers except yours. 🙂

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