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What’s Happening Now Is Reminiscent Of What Happened Ten Years Ago

A report from the Los Angeles Times in California. “It’s not just renters who are benefiting from expanded unemployment payments. Nearly half of the tenants in the 16-unit apartment complex Kim Pierce owns in Echo Park are behind on their rent, Pierce said. She was able to defer her $10,000-a month mortgage for six months. But after that, her lender is adding the missed payments to her monthly bill over the next year.”

“‘Had I not gotten the help, for sure I would have gone bankrupt,’ Pierce said. ‘I could not possibly have hung on.’ Pierce is concerned that the expiration of the expanded unemployment benefits means even more of her tenants will fail to pay just as she’s needing to make up her missed mortgage payments. ‘I’m headed toward a cliff,’ she said. ‘And if something doesn’t give, we’re all going over.'”

From Socket Site in California. “As we highlighted last month, offers of complimentary rent have been on the rise in San Francisco. And with the weakness in San Francisco’s rental market accelerating, and Oakland now following suit, a big landlord is upping their rent concession ante while trying to maintain their advertised/base rents. And in addition to offering up to 8 weeks or 2 months of complimentary rent, Related is now offering $2,000 gift cards to signees of new leases in at least two of their buildings in San Francisco.”

From Fox Business on California. “On a year-over-year basis, the rent cost for a one-bedroom in San Fransisco dropped 11.8 percent, Zumper found. It is the first time San Fransisco’s rent price has fallen by double-digits, Zumper CEO Anthemos Georgiades said in a July 1 tweet. Georgiades also noted in his tweet that rent prices also dropped in the double-digits throughout Silicon Valley; rents fell 15.1 percent in Mountain View; 13.5 percent in Menlo Park; 11.1 percent in Palo Alto; and 15.7 percent in Cupertino. In San Jose, rent for a one-bedroom fell 5 percent to $2,300, and rent for a two-bedroom fell 3.1 percent to $2,860, Zumper found.”

“‘Two trends have driven this,’ Georgiades wrote. ‘One macro-economic, one micro: 1. Enormous recession brought on by #Covid19 2. Move to remote future of work for large tech employers like FB The Bay Area’s dips are sharper than any other major metro due to the latter.'”

From Fox News on Florida. “Jared Ringel, a principal agent at The Atlas Team in Miami, uses the word ‘abundant’ to describe the opportunities. ‘If someone truly didn’t need the cash now and wanted to get a market rate price for their home, they would have pulled it from the market during the pandemic,’ says Ringel. ‘Now buyers have more leverage and it’s the time to strike.'”

“According to Homes.com, in May, 27 percent of new listings in Miami were discounted below pre-pandemic prices. Still, just because the price is low today doesn’t mean it will be a good investment tomorrow. Ringel recommends thinking about the potential for return post-pandemic.”

From NBC Miami in Florida. “Business was slowly starting to come back for Andy Korge, who owns about 30 short-term vacation rentals in Miami-Dade County, most of them in condo hotels that are advertised on popular sites like Airbnb. It’s his main source of income. Last week, the county ordered new restrictions on the industry — capacity limits and rental agreements were only allowed on a monthly basis. On Tuesday, the city of Miami Beach rolled it back completely, announcing that all short-term rentals in the city had close down again by Thursday.”

“Those in the business, like Korge, say the blanket decisions are unfair. ‘I think the condo hotels need to be carved out of this order,’ Korge said.”

From AZ Family in Arizona. “It’s a growing problem across the Arizona. Many tenants are finding themselves unable to pay the rent, because they’ve gotten sick or lost their job during the COVID-19 pandemic. But any fears of being kicked out of their homes have been put on hold, with the Governor’s decision to extend his ban on evictions until October 31. Ajai Sherma is one of many property owners who understands why the Governor did what he did. However, Sherma said it will place a huge financial burden on landlords, who need to pay their mortgages, insurance, property taxes, and other expenses.”

“Sherma owns two apartment complexes in Mesa, and said the number of renters who haven’t paid, or delayed rent payments has doubled the past few months. And it may get worse. ‘Think about it. If somebody is not paying, not able to pay $900 for next month, that person will owe $1,800, then $2,700,’ said Sherma. ‘It will just keep piling up, and I really don’t see a way those guys are coming up with $4,000, 5,000 down the road.'”

From Real Estate Weekly on New York. “As New York City faced the worst impacts of the coronavirus pandemic in the second quarter of 2020, the city’s real estate market reeled. Demand for rentals plummeted at a time when it normally rises, interest in the outer boroughs shot upward, and rents in Manhattan fell for the first time since the Great Recession, according to StreetEasy’s Q2 2020 Market Reports. The period saw a record high for rental discounts in Manhattan: 34.7 percent of all borough rentals received a discount. Landlords cut a record 6.7 percent off the median asking rent in the borough.”

“‘Commuting to the office and living in the center of the city were simply not on the list of priorities for renters during this past quarter, and landlords reacted by slashing rents and trying new tactics in order to attract tenants,’ says StreetEasy Economist Nancy Wu. ‘Landlords are in for a much slower than normal summer rentals season, even as the city slowly begins to reopen. Remote work has given many renters the option to live anywhere they please, making it too soon to predict when rents will rebound.'”

From Market Watch. “It’s an open secret that commercial real estate owners take cash out of buildings. When they do, unlike homeowners, criticism often is sparing. After all, hotels, shopping centers, office towers and other commercial buildings are run as businesses, where the whole point is to reap a profit.”

“‘The real-estate industry is all about taking cash out, and on a tax-deferred basis, at that,’ said Scott Tross, co-chair of real estate litigation and dispute resolutions at Herrick Feinstein, a law firm. ‘That’s nothing new. But in may respects, what’s happening now is reminiscent of what happened ten years ago or so.'”

“By that, Tross was referring to the deluge of late payments, defaults and foreclosures that swept up some of the biggest names in U.S. commercial real estate in the wake of the 2007-08 global financial crisis, and saddled their investors will losses. ‘You had people borrowing as much money as they possibly could, none of it on a recourse basis. And if things move in their direction, that’s great,’ he said. ‘If they don’t move in their direction, they just hand back the keys.'”

“That threat of borrowers walking away once again looms over the commercial real-estate market. Another new twist is that borrowers, ahead of this downturn, pulled more equity out of U.S. commercial buildings than ever before, when they have refinanced in the commercial mortgage-backed securities (CMBS) market, a key source of loans for hotels, skyscrapers, warehouses and other business properties that end up packaged into bond deals.”

“Debt relief conversations already started in April, a month into the first round of coronavirus lockdowns, between the hardest-hit commercial property borrowers and their lenders. Since then, delinquent CMBS loans have climbed to nearly 10%, rivaling the worst levels of the global financial crisis.”

“‘I think people by nature are greedy, especially developers, who always want to tap into equity from one project and use it for another,’ said Stan Bril, chief executive officer of MCG, a private commercial real estate and small business lender. He also thinks the equity investment proposal is ‘like trying to put a Band-Aid on a gash,’ he told MarketWatch. ‘There’s nothing they can do to stop the hammer from coming down.'”

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This Post Has 84 Comments

  1. Some one mention the Japanese bust this morning. We could be headed into a bigger bust than that.

    1. That was my reference to how Japanese bought up real estate 30 years ago in the 1980s and how similar now with foreign all cash offers from China and bay area tech money. I am patiently renting and looking at homes in Sacramento, Folsom, Roseville, Loomis areas and each home that I saved over 100+ went pending less than 2 weeks on the market! I have NEVER seen this madness of low inventory and high prices before.

  2. ‘You had people borrowing as much money as they possibly could, none of it on a recourse basis. And if things move in their direction, that’s great,’ he said. ‘If they don’t move in their direction, they just hand back the keys.’

    Readers here have known this was going on. I listen to these guys radio shows.

    1. Now if only bay area money would quit flowing east to Sacramento driving up rents and home prices creating a housing shortage! I blame COVID lockdowns, FED bailout money, telecommute options for wealthy tech nerds and low interest rates plus redtape regulations that restrict new homes from being built here in northern California.

      1. It isn’t “Bay Area” money. It’s the $16 trillion (and counting) gusher of created-out-of-thin-air FedBux gifted to the Fed’s bankster and hedge fund cronies that have fueled the greatest speculative asset bubbles in human history.

  4. “I’m headed toward a cliff,” she said. “And if something doesn’t give, we’re all going over.”

    The renters will watch her go over the cliff, and they’ll sent their rent checks to the bank’s servicer.

    2. I don’t know about the rest of you, but I don’t plan to join Kim in her BASE jumping adventure.

    1. Root cause in California is the housing shortage

      Let’s be clear – there is no actual housing shortage, it’s an inventory listed for sale shortage. That’s a huge distinction.

        1. Forbearance programs, artificial demand due to speculation, STRs, shadow inventory from last bust, overpriced and vacant rentals, sellers “waiting until the economy improves,” etc.

          1. Hopefully these bailouts end after the election and prices tank and inventory rises and COVID fear passes.

          3. you could say most of those things for any housing market

            Oh, really? I don’t seem to recall forbearance programs, massive shadow inventory and AirBnb “empires” prior to last bust. FAIL.

      1. My son and I went off-roading with my dad earlier today. My dad was wearing the Trump hat I bought him as a belated Father’s Day gift. Two drivers we passed on the narrow trail commented “Like your hat.”

        The guy I bought the hat and a number of t-shirts from in Rancho Santa Fe I would have pegged as a Bernie bro if pressed to pigeon-hole him.

        My husband got his hair cut yesterday from our son’s stylist. Her business is really hurting. She’s a Trump supporter (purple hair and multiple tattoos) because she comes from a long line of small business owners.

        We live in interesting times.

        1. Two drivers we passed on the narrow trail commented “Like your hat.”

          The silent majority!

          1. The stylist has three teenagers: one boy, two girls. She was telling us about a conversation she had with her middle daughter who asked “what if we’re surrounded by Trump supporters and don’t know it” to which the stylist replied “honey, you live in Rancho Penasquitos surrounded by working-class Americans.” There is an RP home flying a Trump flag that you can see from SR-56.

      4. Watch “Woman lets out agonising screams as Trump is sworn in as President” on YouTube

        Pretty sure that’s a soy boy. Granted, its a blurry line between the high-testosterone females that supported Crooked Hillary and the estrogen-rich soy boys who were their bitches.

    3. 😱 I didn’t listen to them all, but the ones I did listen to were surprisingly weak.
      If the spirit moves me, and I’m driving alone, I scream in the car.

  8. 85 infants under age 1 tested positive for coronavirus in one Texas county
    By Faith Karimi and Raja Razek, CNN
    Updated 7:50 PM ET, Sat July 18, 2020
    How easily can children contract and spread coronavirus?

    (CNN) Eighty-five infants under age 1 have tested positive for coronavirus in one Texas county. And local officials are imploring residents to help stop its spread as the state becomes one of the newest hotspots.

    Since January, health authorities have identified more than 3.6 million Covid-19 cases throughout the United States. Nearly 140,000 people have died, according to Johns Hopkins University.

    In Texas’ Nueces County, where Corpus Christi is located, the number of new coronavirus cases skyrocketed in July after a flattening trend. The virus has infected dozens of babies and local officials are urging people to wear masks and practice social distancing.
    …

  9. That county is 60% Hispanic. That being said, I’d say it’s good news. The more people this thing infects, the sooner we can get over it.

    1. The common cold is caused by a coronavirus. I’m still waiting for my immunity to kick in.

      News
      Doctors caution that COVID-19 reinfection is possible
      Dr. Pauline Rolle of Florida Department of Health in Duval County: ‘With COVID-19, we don’t know how long immunity lasts’
      Erik Avanier, Reporter
      Published: July 15, 2020, 8:21 pm
      Updated: July 15, 2020, 11:26 pm
      …

  10. Julia Horowitz, globalist hack economics scribbler for CNN, falls back on the Orange Man Bad narrative to explain why the dollar is “stumbling.” Of course globalist Narrative purveyors like Ms. Horowitz will never even touch on the true cause for the dollar’s weakness: the Federal Reserve and its deranged money-printing.

    https://edition.cnn.com/2020/07/16/investing/us-dollar-coronavirus-trump/index.html

    When the novel coronavirus sent investors running for the exits in March, there was a mad dash to snap up US dollars, the world’s ultimate safe haven asset.

    But as the United States struggles with fresh Covid-19 outbreaks weighing on the economic recovery, the dollar has stumbled. Now, some on Wall Street warn it could fall further, due in part to President Donald Trump’s handling of the crisis and isolationist policies.

    “We expect the US dollar to follow a path of reduced dominance and weaken over the long term,” Nomura said Monday in a report to clients.

  11. ‘I’m headed toward a cliff,’ she said. ‘And if something doesn’t give, we’re all going over.’”

    Kim, were you somehow unaware that “investing” in property in a one-party state that exalts and enables parasitism as the supreme virtue might translate into getting stiffed by your renters?

  12. And in addition to offering up to 8 weeks or 2 months of complimentary rent, Related is now offering $2,000 gift cards to signees of new leases in at least two of their buildings in San Francisco.”

    Stop wasting renters’ time with gimmicks, landlords. You want people to move in? Then make rents affordable for median incomes in our oligarch-looted economy. If you can manage that, whoever buys your building at the foreclosure sale will be starting off with a much lower cash basis and can pass on those cost savings to their renters.

  13. ‘Now buyers have more leverage and it’s the time to strike.’”

    Nice try, Jared, but while I can sympathize with your increasing desperation over not being able to make your Lexus SUV payment, only a fool would buy into a bursting housing bubble.

  14. “Those in the business, like Korge, say the blanket decisions are unfair. ‘I think the condo hotels need to be carved out of this order,’ Korge said.”

    Two things:

    1. Andy doesn’t actually “own” those 30 hotel condos. He levered up on debt to acquire his mini real estate empire, and when he stops making payments – which it seems he will – those properties revert back to the lender.

    2. Is it “fair” that wanna-be real estate moguls like Andy made housing for the masses unaffordable with their Yellen Bux-fueled speculation? No? Then die, speculator scum.

  15. On a year-over-year basis, the rent cost for a one-bedroom in San Fransisco dropped 11.8 percent, Zumper found.

    Zumper and every other cutesy-named start-up is toast once the Fed can no longer defer the bursting of its Everything Bubble.

    2. I’m all for toasting startups, if only to be rid of the cutesy names. It’s even more annoying now than it was in 1998.

    3. Zumper rhymes with Thumper, which is connected to thump and thumped by subtractive and additive rhyme.

      These investors are getting their arses thumped.

  16. Ringel recommends thinking about the potential for return post-pandemic.”

    Looking at where the globalists and their collectivist minions are taking this country, maybe Ringle should recommend thinking about the potential for returns post-apocalypse.

  18. AOC is pushing for a wealth tax on billionaires who have been the sole beneficiaries from the Fed’s monetary policies. Good luck with that, sweetie. Note that not a single leftist will ever dare mention the true cause of wealth inequality: the Federal Reserve and its financial warfare against the bottom 95%. No supposedly “anti-capitalist” Antifa goons will ever take a spray can to any Fed building.

    https://news.yahoo.com/billionaires-tax-could-bail-working-141500368.html

    1. How does the wealth tax work with billionaires putting their money into 501(c)(3)s? The 501(c)(3) ecosystem is what needs an overhaul.

      1. I had to look that up. Nonprofits is what I assume you are talking about. I think you should expand/explain on that since most people aren’t familiar with what you’re even referencing. I know you’re probably asserting they’re using them as a tax shelter, but I’d like to hear it from you.

    2. No supposedly “anti-capitalist” Antifa goons will ever take a spray can to any Fed building.

      Yeah. I was thinking about how if Antifa was smart they would realize that anything that they let you destroy wasn’t really that important to them. Start attacking Fed governors and the Davos crowd and watch how fast the full might of the USA comes down on you.

  19. Jamie Dimon was the Chairman and CEO of this bank during the financial crisis when there was an insider whistleblower holding a law license, Alayne Fleischmann, that testified to the U.S. Department of Justice that she had observed “a massive criminal securities fraud” inside the bank involving the bogus mortgages the bank had sold in the billions of dollars to investors. But instead of using that first-hand evidence to prosecute the bank, Obama’s Justice Department under Eric Holder used that information to extract a large fine from the bank with no charges brought.

    https://thedailycoin.org/2020/07/13/using-bank-deposits-jpmorgan-chase-lost-3-2-billion-trading-stocks-and-credit-derivatives-in-first-quarter/

    2. I believe Jamie Dimon is a major Democratic party contributor, which could explain the light hand of judgment under the Obamanites.

    1. You know they’re going to extend that. It never should have been approved in the first place. If anything, it should have been a bonus “not to exceed previous wages.” Democrats were buying votes, and Republicans were too stupid to stop it. Now, if Republicans take it away, they stand to lose mass votes as they will be painted as punishing the little guy.

  21. Oh dear. Imagine being a globalist oligarch who wants to enjoy the fruits of their unfettered looting of the U.S. economy and the free trillions in Yellen Bux lavished on them by the Fed. Now their ultra-luxury skyboxes are starting to draw “anti-billionaire crusaders” – a first glimpse of what lies ahead as progressives and the radical left bilge the corrupt old-guard Democrats who rigged the game in favor of their oligarch and corporate statist patrons. Gosh, I certainly hope the growing popular anger against the rapacious oligarchs and Wall Street grifters doesn’t hurt the value of their ultra-high end real estate.

    https://www.bloomberg.com/news/articles/2020-07-18/aoc-s-anti-billionaire-crusaders-are-spreading-in-new-york-city?sref=5CqwjcI3

    The protest began at Madison Square Park, where Jeff Bezosspent $96 million creating his Manhattan dream home.

    From there, the small group marched to the Midtown offices of Governor Andrew Cuomo with a demand that has begun to grow louder as the pandemic grinds on: soak the super-rich.

    Friday’s demonstration in New York, and others like it, haven’t reached anything near the level of the Occupy Wall Street movement a decade ago. But this time, protesters have a hometown advocate in Alexandria Ocasio-Cortez, the progressive lawmaker who this week joined a campaign demanding Cuomo pass a billionaires’ tax for New York State.

    1. That was before Ocasio-Cortez backed the bill — sponsored by state senator Jessica Ramos — that aims to tax unrealized gains on billionaires’ wealth to create an emergency worker bailout fund for poor and undocumented New Yorkers. The bill will be considered after the state legislature returns Monday.

      It’s heart-warming to watch the globalist oligarchs who have been the primary financial backers and puppet-masters of the Democrats, as well as the most strident proponents of multiculturalism and identity politics, starting to reap what they’ve sown. Millions of Third World transplants imported as part of the globalists’ “fundamental transformation” of America, far from showing gratitude, are turning on their former masters. Ingrates!

    2. a campaign demanding Cuomo pass a billionaires’ tax for New York State.

      And once the billionaires aren’t enough they’ll come for the millionaires. And then the thousandaires….

      Either one is entitled to the fruits and successes of their labor or one is not. But for the mob to be able to simply make a claim because “they succeeded too much” is a horribly slippery slope…

      1. And once the billionaires aren’t enough they’ll come for the millionaires. And then the thousandaires….

        Yup. Then you reach the point where all you have left are parasites.

        2. ” Then you reach the point that all you have left is parasites.”

          Very true. When you have rigged markets you create a situation that becomes ripe for revolution.
          What gets me is that rather than unrigging the markets , the answer always becomes Communist takeover, which is the worse solution possible.

          And this Globalism/ monopolies/ Ponzi Schemes just rigged the decks so bad.

          This is not capitalism or free markets. The cards are stacked against the private sector working class.

  23. Denver, CO Housing Prices Crater 17% YOY As Rental Rates Plummet

    As one economist questioned, “Why buy a house when rental rates are half the monthly cost?

    1. I don’t think anyone has to worry about hoards of ghetto dwellers descending on rural and urban areas… Not with the way housing demand is collapsing.

      Palm Springs, FL Housing Prices Crater 12% YOY As Median Price Slips Under $150k

      https://www.zillow.com/palm-springs-fl/home-values/

      *Select price from dropdown menu on first chart

      As a distinguished economist stated, “A house is a rapidly depreciating asset that empties your wallet every day it owns you.”

    2. Here’s a great(and telling) quote from that article:

      So simply from the point of view that we would like to spend some of rich people’s money on things that benefit everyone, I think we should care whether or not those people leave.

  25. The Globalist don’t care how much government has to supplement for their looting. It’s all about using the Government to rig the deck.

  26. More proof of bubble prices

    https://www.trulia.com/p/ca/sacramento/1700-adonis-way-sacramento-ca-95864–2086005329

    The above home sold for 483k less than a year ago and now is listing for almost 400k more now. How da heck does a home expect to increase by almosr 400k in less than a year? As much as I hate renting and want a home, I believe that only stupid idiots would buy now at these inflated prices. That is why I patiently wait and pray for crash to come next year or soon.

      1. @rip,

        Unfortunately bad policy of FED hurts savers and debt free people like myself who want to buy a home to live in.

  27. Sunday dinner at my relatives was rudely interrupted by a real estate deal. My SIL and hubby are trying to decide on which of 10 offers to accept on the condo they are selling. Housing market euphoria is alive and well here in the Great Salt Lake Basin.

    1. I would love to know the details of the 10 “buyers.” I bet they’re debt junkies. Lots and lots of debt junkies. It’s party time right now. The FED has kept the music and financial opioids flowing. The people who OD’d just got another, bigger shot of financial heroin.

      1. Also how come realtors cannot reveal where the buyers are coming from and where the hot money is coming from on the offers way above asking? Is there a way to find out who the buyer is that is overpaying for real estate and if so how? I only see the pending or sold status online but never who the buyer is.

          1. Cool and I really want to know who the jack@ss was that paid over 50k asking price for the below property in Folsom:

            806 Willow Creek Dr
            Folsom, CA 95630

            I betcha they were wealthy CCP Chinese or Rich HINDUS from bay area.

          2. No name on the property tax bill here. In San Diego, you can see the taxpayer’s name. Let me check the MLS for you.

          4. Cool and I really want to know who the jack@ss was that paid over 50k asking price for the below property in Folsom:

            806 Willow Creek Dr

            I bet they had no choice if they wanted it right now. 3 car garage, fresh remodel, pool. Until Intel starts firing nothing is going to change. We’re still too much cheaper than the Bay Area to avoid attracting them here as long as everybody can work from home. And on top of that there are a bunch of locals who used to swim at the gym who now want a pool really badly.

        2. realtors cannot reveal

          Realtors don’t care. IIRC, some were advertising directly in China.

          1. Yeah I know. Do you have a link to how I can see what a real estate property sold in Sacramento County?

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