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This Financialisation Of Housing Is A Worldwide Trend

A weekend topic starting with Mortgage News Daily. “Quontic Bank has expanded its very popular No Ratio program such that the borrower doesn’t put income or job on the application for owner-occupied borrowers. The borrower could have opened a business yesterday. No bank statements for income; No tax returns; No P&L and No Accountant’s letter. No DTI Calculated, up to 75% LTV, Loan Amounts up to $3,000,000. 100% gifts allowed which can include reserves. First-time Homebuyers welcome.”

“Once again Luxury Mortgage Corp. is here to save the day and is optimally prepared to serve as your trusted Non-QM partner. With the recent announcement of Fannie and Freddie limiting their buying of second home and investment mortgages to just 7% of their total portfolio, Luxury is best positioned as a market leader to bridge the gap. Luxury provides the most competitive alternative solutions with its suite of Non-QM products. Most notably, on investment properties, Luxury will allow loan amounts from $150k-3.5 million, maximum LTV to 80% (purchase, rate/term refi), and 75% cash out. Both Full and Alt doc types available as well as DSCR loans. No history of managing rental properties to verify. Luxury also offers I/O options as well as 40-year terms.”

“Top originators gauge the temperature of the rental market, since very few people go straight from a college dorm to home ownership. And versus the bond market, where Chairman Powell continues with his script, saying, ‘…we’re not going to act pre-emptively based on forecasts… and we’re going to wait to see actual data,’ we indeed have data that MLOs can use.”

“The Mortgage Bankers Association’s Research Institute for Housing America released a study on the location of affordable and subsidized rental housing across large U.S. cities. Nearly all of the 50 largest MSAs since 2001 have become less affordable for renters and prospective first-time homebuyers, with annual median rent growth rising at 2.0 percent above inflation, compared to an 0.8 percent real increase in annual median income.”

From Bloomberg. “Bay Street veteran David Rosenberg said he’s seeing signs that stress in some of Canada’s hottest housing markets is worse than when he first sounded the alarm over the U.S. subprime mortgage crisis nearly two decades ago. Rosenberg, the chief economist and strategist at Rosenberg Research, said in a television interview Friday that by almost any metric he watches, financial conditions in the Toronto and Vancouver housing markets have deteriorated to the point where policymakers should have grave concerns.”

“‘I’m taking a look at all the metrics I had in my hands when I called the housing bubble in 2005 and 2006 in the United States. I was looking at home price-to-rent ratios, I was looking at home price-to-income ratios, I was looking at the extent to which the household sector was overexposed to residential real estate on their balance sheet,’ he said.”

“‘I’ve got news for you: the numbers in Canada, on all the metrics, are higher now than they were at the peak of the U.S. housing bubble 13 years ago.'”

“Amid that rising home price environment, Rosenberg has been steadfast in his call that the market is in a bubble, comparing it to his experience trying to convince Americans they were staring down a similar crisis more than 15 years ago. ‘It’s like listening to [former Federal Reserve Chair] Ben Bernanke in 2006, when he told everybody, ‘Oh, don’t worry, house prices nationwide never go down, don’t worry.’ I’ve got to tell you, when I was at that perch as chief economist at Merrill Lynch, I was laughed out of meeting rooms talking about a housing bubble in 2005 and 2006,’ he said.”

The Globe and Mail in Canada. “‘There are bidding wars on many homes throughout the Lower Mainland, on the Island, and even in the Kootenays,’ says Rudy Nielsen, an industry veteran. ‘Realtors, mortgage brokers, mortgage lenders, have never been busier and are making a fortune.'”

“The Bank of Canada hasn’t yet made a move to increase interest rates, but Elton Ash, regional director and executive vice president for Re/Max Western Canada, said the industry is getting the message that rates will go up likely sooner than expected. That too will have its impact, and he hopes that people aren’t caught out.”

“‘The issue Bank of Canada is faced with is that real estate has led the growth in the GDP. So they are between a rock and a hard spot. They need to stimulate the economic growth that we experienced in 2020, but how do they do that and try to put some brakes on real estate? It’s impossible. So it’s a tough situation, but we are seeing the signaling that interest rates will start to move slowly in the interim.'”

“Mr. Ash, who’s worked in real estate for 40 years, said it worries him when he sees buyers who are willing to overpay due to the low rates. ‘I’ll be frank, I do get concerned when I see the kind of activity with multiple offers, even in Kelowna, with properties selling over list price.'”

From Western Australia Today. “Lending to highly-geared home buyers rose in the December quarter as the property market also rebounded, sparking debate over whether riskier lending is starting to re-emerge. As regulators keep a close eye on the surge in house prices, figures from the Australian Prudential Regulation Authority (APRA) on Tuesday showed a rise in the proportion of new loans with high loan-to-valuation ratios (LVRs), and loans with high debt-to-income multiples.”

“Analysis by UBS economist George Tharenou found the share of new loans that were more than four times the borrower’s income rose from 57.7 per cent to 59.3 per cent, the highest level since the figures started in 2018. Mr Tharenou said loans with an LVR above 80 per cent also rose from 39.9 per cent to 42 per cent, the highest since 2008. ‘We assess today’s data on home loans as showing a significant quarter-on-quarter increase in ‘higher risk’ home loans,’ Mr Tharenou said.”

“With property prices forecast to keep climbing, some analysts have predicted banks may curb riskier lending later this year. One lender, ME Bank, this week tightened some credit standards for customers who were very highly-geared, saying it would decline customers wanting to borrow more than seven times their income. The bank said it had a positive outlook towards property and the changes were aimed at making sure customers could meet their repayments.”

“Despite the focus on potential risks in bank lending, regulators on Tuesday signalled they were not yet overly concerned, as they remain focused on helping the economy recover from the massive shock of COVID-19. The Reserve Bank’s latest board minutes, also published on Tuesday, made it clear the central bank has a close eye on property prices, but it viewed lending standards as ‘sound.'”

From ABC News in Australia. “On the eve of Victoria’s last lockdown, Peter Mares was feeling cautiously optimistic. He was about to bid on behalf of a friend for a two-bedroom apartment in Princes Hill, in inner Melbourne. ‘I was authorised by my friend to bid up to $780,000, but I didn’t get to put my hand up because it sailed past that and went to $845,000,’ he says.”

“A few streets away, another friend of his had just moved into a similar apartment to take advantage of falling rents. It was a lighter, better place than her previous house, and much cheaper. ‘Theoretically rent is an indication of the value of housing,’ Mares, a journalist who has researched the Australian housing market, says. ‘The rental return should rise with the value of housing. But if you see prices going up in one place and rents going down in another, it seems quite odd.'”

“Sky high prices have become all too familiar to Hal Pawson, a Professor of Housing Research at University of New South Wales. Professor Pawson says the problem is structural, because Australian governments have effectively subsidised housing investment through tax incentives for home owners. Combined with low interest rates, this has changed the way many of us think about our homes – they are an asset, a place to grow capital and transfer wealth to the next generation.”

“‘It is a worldwide trend, this ‘financialisation’ of housing, but it’s on steroids in Australia,’ Professor Pawson says. This has consequences for the economy. ‘There’s a lot of drag on economy from the way our housing system operates,’ Professor Pawson says. ‘We’re talking about the relationship between incomes and the cost of housing — when you’re paying too much for housing, you don’t have as much left to spend on other forms of consumption, other goods and services that may be more may more employment generating than housing.'”

“‘The flip side of that is that we are over investing in our housing, which is essentially an unproductive asset.'”

From Stuff New Zealand. “A copy of the Auckland Star from 1975 reveals how much the city’s housing market has changed over that time. Found in the wall of a Westmere house in the midst of a renovation, the battered property pages of the paper provide a window into a past where there was no housing shortage and house prices were reasonable. The properties for sale were largely priced in a range between the early $20,000s and the early $50,000s. An average income at the time was about $125 a week.”

“Given the Auckland region’s average value is now nearing the $1.2 million mark with CoreLogic’s latest data putting it at $1,198,564 in February, the 1970s prices advertised are startling. They also beg the question of what those properties might be worth in 2021, so Stuff selected one of those advertised to get an idea what it might go for in the current market.”

“The property we zeroed in was a three- to four-bedroom, brick and tile house at 12 Moana Terrace, Maraetai. Built in 1965, it was for sale for the highest offer over $36,000. Using the Reserve Bank’s inflation calculator to adjust the house’s value for inflation reveals it was worth $1,038,757 in the third quarter of 2020 (which is the most recent comparison date available).”

“Veteran housing affordability campaigner Hugh Pavletich says the house price to income ratio was very different in 1975. He and his wife bought their first home in Christchurch around that time. It cost $24,000 with a mortgage of $20,000. They were a single-income household, as was common then, and his income was $8000 per annum.”

“‘That equates to roughly three times my income for a new home – and that was normal in that era,’ Pavletich says. ‘There were no housing affordability issues as there were plenty of new homes available to buy and their cost was more in line with the average income.'”

“These days the latest Demographia international housing affordability report puts Auckland’s house price to household income ratio at 10.0, which makes the city the fourth least affordable in the world.”

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This Post Has 93 Comments

  1. ‘The borrower could have opened a business yesterday. No bank statements for income; No tax returns; No P&L and No Accountant’s letter. No DTI Calculated, up to 75% LTV, Loan Amounts up to $3,000,000. 100% gifts allowed which can include reserves. First-time Homebuyers welcome’

    The people who say loans are sound have their heads deeply wedged up their a$$. Also from that link:

    “Stop me when you’ve heard this one before: inflation fears boosted Treasury yields yesterday. And that was even after Fed Chair Powell dismissed longer term inflation at his press conference on Wednesday. Those fears easily overshadowed the latest jobless claims report, which showed another unexpected increase in new claims, up 45k to 770k when it was expected to decrease. It paints a clear picture of a labor market still struggling with business closures and health concerns.”

    “As of March 16, 2.59 million homeowners remain in forbearance, representing 4.9 percent of all homeowners with mortgages. Of the 1.2 million homeowners in forbearance whose plans were scheduled to expire at the end of this month at the start of March, some 620k March-end expirations remain. Extension and removal activity will be worth keeping an eye on over the next few weeks, as it will be very telling regarding what to expect in coming months.”

    “The NY Fed Desk continues to support the demand for fixed-income securities by conducting two MBS purchase operations targeting 2 percent and 2.5 percent across $1.9 billion in GNIIs and $2.9 billion in UMBS30s.”

    1. “As of March 16, 2.59 million homeowners remain in forbearance, representing 4.9 percent of all homeowners with mortgages.”

      At the end of forbearance, can’t the lender just increase the amount owed on these loans by the accumulated balance of unmade monthly payments, and refinance.

      “The NY Fed Desk continues to support the demand for fixed-income securities by conducting two MBS purchase operations targeting 2 percent and 2.5 percent across $1.9 billion in GNIIs and $2.9 billion in UMBS30s.”

      Is deliberate suppression of mortgage rates to below market levels scheduled to end along with other extraordinary pandemic relief measures? What would be the longterm consequences of never ending these MBS purchases?

      1. What would be the longterm consequences of never ending these MBS purchases?
        permanent restructuring of the economy – wasting human talent on the REIT instead of the rest of ecomomy?

      2. “At the end of forbearance, can’t the lender just increase the amount owed on these loans by the accumulated balance of unmade monthly payments, and refinance.”

        Certainly, but the loan’s rankings deteriorate as the balance increases. Reminds me of Marsellus Wallace explaining to Butch that ability don’t last!

  2. A prevailing matter these days is the central banks and guberments aren’t even hiding the use of shacks to prop up their globalist sh$t economy, especially in the countries with a queen on their peso. But these people are dangerous idiots:

    ‘‘There’s a lot of drag on economy from the way our housing system operates,’ Professor Pawson says. ‘We’re talking about the relationship between incomes and the cost of housing — when you’re paying too much for housing, you don’t have as much left to spend on other forms of consumption, other goods and services that may be more may more employment generating than housing’

    ‘The flip side of that is that we are over investing in our housing, which is essentially an unproductive asset’

    That’s right: we’d all be way better off to get off this roller coaster. We’d have more jobs, more disposable income, pay less interest, more productivity – forever.

    So why do they keep going back to this insanity? Globalism doesn’t work for average people. It’s an economic race to the bottom. So they gin up these bubbles to compensate and the people who inevitably get burned – fook em.

    1. “So why do they keep going back to this insanity?”

      In the U.S. at least, most people who vote and have money are homeowners who benefit from ever spiraling home prices.

      Never mind the nasty crash this entails every ten years or so…that’s why God invented bailouts.

      1. ‘It’s hard to shake the faith Canadians have in the housing market, but the surge in real estate prices during the pandemic may have done it. Asked in an informal poll whether recent developments in housing are good for the country, respondents overwhelmingly said no. A strong majority think the housing market is either in or approaching bubble conditions, and that they or someone in their family will never be able to afford a home.’

        ‘The sampling of reader opinion was featured in a recent edition of my e-mail newsletter, Carrick on Money. Responses totalled 6,432 as of midweek. While this was a quick online callout and not an independent poll, the large response conveys to me how strongly people feel about the housing market’s performance during the pandemic.’

        ‘The head of Canada Mortgage and Housing Corp., a federal agency concerned with housing affordability, said he was struck by how one-sided the poll results are. “The mood is one of frustration,” Evan Siddall said. “There’s a certain lack of hope.”

        ‘Thanks to low interest rates and a desire to have more space during pandemic lockdowns, the housing market has followed up a decade of steady gains by hitting an even higher gear. The Carrick on Money poll results suggest many people think it’s too much. Almost 84 per cent do not agree that what’s happening with housing is good for the country. Only 6.5 per cent said yes, while the others were unsure.’

        ‘There’s also a clear sense of people seeing housing as having pulled away from today’s economic realities. Just 11.4 per cent agreed housing is going up for reasons that make good economic sense, 10.4 per cent said maybe and a little more than 78 per cent said no.’

        ‘The term bubble is starting to be used in connection with real estate – economist David Rosenberg said recently that the country’s housing market is in a “huge bubble,” with specific reference to prices rising way ahead of incomes. Seven in 10 poll participants see the housing market as approaching bubble conditions or already there, and almost two in 10 said maybe.’

        https://www.theglobeandmail.com/investing/personal-finance/article-almost-no-one-thinks-whats-happening-in-the-housing-market-is-good-for/

        1. ‘crash this entails every ten years or so’

          This isn’t true. We didn’t used to have booms and busts in housing. The fact this is world wide, and synchronized, proves it’s a widely used policy. As the poll shows, ordinary people do understand such issues. Is it really so complex to understand that if we pay much less for an unproductive asset, we have loads more money to spend on other things? That artificially high shack prices are ultimately wealth destroyers? No, this is a policy of fools.

          2. I also don’t believe that the Fed deliberately and directly took a stake in targeting housing prices before Ben Bernanke introduced the policy cerca 2012. It may seem shocking, but there once was a time when the Fed was primarily in favor of free markets, aside from their limited roll in regulating short term interest rates.

          3. “I also don’t believe that the Fed deliberately and directly took a stake in targeting housing prices before Ben Bernanke introduced the policy cerca 2012.”

            The dot com crash was huge, and Greenspan decided that the economy needed cash infusions. Since they hadn’t yet found QE in their toolbox it was time to liberate the family’s home equity.

      2. In the U.S. at least, most people who vote and have money are homeowners who benefit from ever spiraling home prices.
        it is very hard for the middle class to save $20K or $100K. But hell your house just went up in value by $10K without you having to do anything.

        1. Again, is it that hard to understand that if you refinance, you have to pay it back, with interest? Or that if you sell yer windfall is an additional 30 year burden on the buyer, with interest? That this is an overall negative for the economy is not rocket surgery.

          1. I disagree here. Some folks are working hard and are struggling on the day-to-day toil. Unfortunately they cannot look out 10-30 years (and are fooled by their friends and mortgage brokers). They might be tempted to grasp at these golden straws.

            Of course there are also the purely lazy that want to live in the here-now and buy toys.

          2. Isn’t this where talk of debt jubilees, where whole classes of borrowers are suddenly freed from their obligations by the stroke of a pen, arises? With modern monetary theory, printing press technology can be used to make any amount of debt vanish forever onto the central bank’s balance sheet.

          3. “Isn’t this where talk of debt jubilees, where whole classes of borrowers are suddenly freed from their obligations by the stroke of a pen, arises?”

            Lifeguard float rings are white with four red strips whereas economic float rings are either blue or red, and right now only blue float rings are being handed out.

          4. It’s the biggest transfer of wealth in human history. And the donkeys think they’re in on it. Gimme my $15 an hour! Hahaha!

      3. In the U.S. at least, most people who vote and have money are homeowners who benefit from ever spiraling home prices.
        But of course this causes taxes to sky rocket. I was looking at “modest homes” in the South Suburbs of Chicago and the damn taxes were the same amount as the house payment.

        1. We have low property taxes in Utah and I count dozens of empty properties whenever I jog. Low taxes cause their own distortions.

          1. Low taxes cause their own distortions.

            I’ll take low taxes any day over high taxes, especially in socialist sh!tholes.

        2. ‘But of course this causes taxes to sky rocket.’
          This. It’s a stealth bailout of poorly managed municipalities with nonpayable pension liabilities.

    2. “So why do they keep going back to this insanity? Globalism doesn’t work for average people. It’s an economic race to the bottom. So they gin up these bubbles to compensate and the people who inevitably get burned”

      +1

      – RE is a shell game. We’ll ship your job overseas, and steal you blind in every other way we know how. We’ll also blow massive asset bubbles so you won’t notice (until they burst). Rinse and repeat. This works until the masses wise up, and then it’s torches and pitchforks. Are we there yet?

    3. https://www.piggington.com/

      San Diego SFH up another 19% year YOY. Inventory down to less than one month which may an all time record. There has been some debate on the site about the ability of the FED to inflate asset prices using cheap money. Ten years into this and they are still blowing up real estate prices. I don’t think the average person cares anymore how much a house costs. As long as they can be convinced they can make the payments, the price tag doesn’t mean anything anymore in the collective consciousness. Prices can keep going up as long as there is money to borrow. And with Biden in office I’d expect the GSEs to open the spigots to anyone with a pulse…and maybe to some that don’t, judging by the last election. Every dollar that is backed by the government will be borrowed. And why wouldn’t it? In the end, it’s someone else’s problem.

      1. ‘another 19%’

        I see these stats here and there. Keep in mind this is compounded. If this went on for just a few years every shack would be way over a million. Are these “experts” blind? How could this possibly appraise? If true, the only explanation is seriously fudged appraisals, massive loan fraud, or both. But just on the face of it it’s a huge red flag.

        1. If this went on for just a few years every shack would be way over a million

          Like in New Zealand?

      2. It took me a along time to realize it but there is never a point at which the average person is going to say “ housing prices are crazy I can’t afford this, I better not buy a house”. As long as someone will loan them the money, people are going to keep buying houses. There is no self-limiting mechanism. Housing prices will continue rising until people can’t borrow the money anymore. It’s the only variable that factors into the equation.

        1. First, realize that it’s largely married people buying homes, and for many men their wives are unwilling to move vary far from their mothers even if a corporate promotion opportunity exists. And once the children are old enough to develop their own roots, e.g., friendships, schools, etc., it’s even more difficult to relocate just because “it pencils out.” And if it’s two-income household than there are the added challenges of childcare, pre-school, etc., and of course two cars, expensive business clothing for her with the additional cosmetics, hair, nails, etc., and those post-college dreams of doing fun things become a distant memory. Marriage and family are difficult enough, and the fed.gov is right in there screwing you too! George Carlin’s truth is so real that it has to be presented as comedy or people would listen to it.

        2. It took me a along time to realize it but there is never a point at which the average person is going to say “ housing prices are crazy I can’t afford this, I better not buy a house”.

          I saw this at the office. Everyone was 100% convinced that houses only go up and that 2008 was an aberration caused by the great recession.

  3. And they lie:

    ‘L.A.’s 41st mayor, Antonio Villaraigosa, is electing to sell in Hollywood Hills, offering up his scenic home for $2.595 million. The L.A. native served as mayor from 2005 to 2013 and bought the property two years later for $2.5 million, records show. During his stay, he preserved and updated the hillside house’

    https://www.latimes.com/business/real-estate/story/2021-03-08/former-l-a-mayor-antonio-villaraigosa-lists-hollywood-hills-perch

    So where’s the red-hotcakes? I find this kind of stuff, and serious a$$ poundings, day in and out.

    1. ‘During his stay, he preserved and updated the hillside house’

      Sounds like he poured his money down a rathole.

      1. I love how real estate journalists who pimp housing write their headlines to suggest that whatever the seller lists as the home’s asking price equals the market value.

        I guess there’s no law against listing at 25% above the Zestimate and hoping for that one dumb Chinese buyer to come along and snap it up at an above-market price.

        $2,595,0004 bd
        3,660 sqft
        2742 Creston Dr, Los Angeles, CA 90068
        For sale
        Zestimate: $2,062,340
        Est. payment: $11,545/mo

        https://www.zillow.com/homedetails/2742-Creston-Dr-Los-Angeles-CA-90068/20806843_zpid/

        1. Price history
          Date Event Price
          3/8/2021 Listed for sale $2,595,000 (-13.4%)$709/sqft
          Source: CRMLS #21700244
          12/1/2019 Listing removed $2,995,000$818/sqft
          Source: Westside Estate Agency Inc.
          5/7/2019 Listed for sale $2,995,000 (+19.8%)$818/sqft
          Source: Westside Estate Agency Inc.
          2/20/2015 Sold $2,500,500 (+0.6%)$683/sqft

          1. If you use the last sale (2015), the price went up over $2 million in 21 years. It sold for $398,075 in January of 1994.

        2. Public tax history
          Year Property Taxes Tax Assessment
          2020 $33,663 $2,747,345(+2%)
          2019 $33,663(+4.9%) $2,693,476(+2%)
          2018 $32,105 $2,640,663(+2%)
          2017 $32,105(+2.2%) $2,588,886(+2%)
          2016 $31,404(+2.4%) $2,538,124(+60.6%)
          2015 $30,679(+59.5%) $1,580,519(+2%)
          2014 $19,239 $1,549,560(+2.5%)
          2012 — $1,512,313

          It was still cheaper than renting

        3. I’ve also seen the zestimate bounce up to whatever what is asked. It looks strange, in Zillow’s historical zestimate record, to see the price bounce up instantaneously.

          When that bounce doesn’t happen, what does it mean? Or is the zestimate just random?

      2. Sounds like he poured his money down a rathole.

        It just shows that they weren’t expecting LA to turn into an utter sh!thole and are trying to unload while they still can, even if it’s at a loss.

        Of course, being a former mayor and thus a political insider, he should have seen the writing in the wall when he bought the shack. I guess they believe their own lies.

      3. It’s more appropriate to say poured money into a glass house.
        By the way, glass houses are extraordinarily expensive to upkeep!

    2. Former L.A. Mayor Antonio Villaraigosa Owned “Ugly,” “Dirty” Eyesore, Infuriating Neighbors
      Villaraigosa says he didn’t know of code violations and would have fixed problems if he did. “Looks like shit,” neighbor says.
      By Jessica Garrison
      Posted on July 15, 2014, at 2:20 p.m. ET
      Jessica Garrison / BuzzFeed

      During his eight frenetic and flashy years as mayor of Los Angeles, Democratic Party star Antonio Villaraigosa often pointed to his success at improving the quality of life in the nation’s second largest city.

      But 65 miles east of Los Angeles, neighbors of a rental property the mayor long owned take a dimmer view.

      “He’s a slumlord, that’s what he is,” complained Steven Patzer, who lives next door to the small house on Eucalyptus Avenue in the city of Moreno Valley.
      Advertisement

      Town records show that the house — which recently featured boarded-up windows, peeling blue and white paint, and cinderblocks in the weed-choked front yard — racked up a series of code violations, including for unmaintained landscaping and discarded junk in the yard. Villaraigosa owned the house from 1990 until last month, county records show.

      “You see it for yourself. It looks like shit, and you can quote me on that,” said Patzer, 42. He said it “shocked the living daylights out of me,” when he learned last year that the absentee owner he had long resented was the former mayor of Los Angeles. A charismatic politician and a leading ally of both President Barack Obama and Hillary Clinton, Villaraigosa chaired the 2012 Democratic National Convention. Many believe he has a shot at being California’s next governor or senator.
      …

      1. Same story different politician. Al Gore was a slum lord in TN. I think I remember a story that one of his rentals was so dilapidated the impoverished tenant fell through the porch and the Gore family refused to pay for the medical expenses. I lived in TN for a couple years. The Gore family was also known for the environmental violations of the mining operation they owned. I think it was zinc mine.

    3. So where’s the red-hotcakes?

      Not in socialist sh!tholes, where houses built on mudslide hillsides cost $2.6 million, that’s for sure. Look in the red states, shady suburbs, McMansion outer burbs, and semi-rural half-acre homes. Mini-homesteads, w@h, gunz. And below $500K.

    4. “During his stay, he preserved and updated the hillside house”

      Imagine the monthly landscaping and swimming pool maintenance bills on some of these places.

    5. My zipcode appears to be red hotcakes. When I looked last week, there were less than 50 houses for sale, half of them pending. Today, there are less than 40 houses for sale, 70% of them pending. Lots of churn, I guess.

    1. The Financial Times
      Federal Reserve
      Wall Street tests Jay Powell’s mettle as long-term bonds tumble
      Federal Reserve’s low-rate approach sharpens investor angst inflation will run too hot
      The ripple effect of Jay Powell’s hands-off approach to the rise in yields is spreading around the world’s bond markets
      Colby Smith in New York 2 hours ago

      The US Federal Reserve is locked in a high-stakes showdown with markets.

      This week, chair Jay Powell won plaudits for acknowledging a rapidly brightening economic outlook and the chance of a push higher in inflation, while emphasising his commitment to keeping interest rates at rock-bottom levels for the foreseeable future.

      But this relaxed attitude to inflation is biting in to the price of long-term US government bonds, sending ripples across global markets. Despite Powell’s hands-off approach to the rise in yields, in contrast with his peers in the eurozone, investors are continuing to question how long the Fed can allow this to run.

      “It is not the level of yields that matters, but how it interacts with risky assets,” said Gene Tannuzzo, global head of fixed income at Columbia Threadneedle Investments. “If yields are moving up at a pace that is causing the stock market to fall and credit spreads to widen, then [Powell] will be a lot more concerned.”

      In just the past week, the yield on the benchmark 10-year note jumped as high as 1.75 per cent, having traded around 1.6 per cent just days earlier. Since the start of the year, long-dated Treasuries, which mature in 10 years or more, have dropped almost 15 per cent on a total return basis, according to a Bloomberg Barclays index. If those losses are sustained, the first quarter of this year will mark the worst since at least the early 1970s.
      …

        1. Anyone who believes the CPI’s fake inflation stats is a moron. By all the measures that count, real inflation is running at least 6-8%.

          1. of course we have issues with the official CPI

            But Powell (and the central bank) believe it – and thats what they will act on

          2. By all the measures that count, real inflation is running at least 6-8%. Last week I went shopping to replenish my stock of plastic trash bags. Prices (even for packs of 80) went up about 300%.

    2. For the bottom leg of the K economy (it’s not a “K recovery” it’s a K economy) this is a stagflationary depression.

      It’s time to start killing globalists.

  6. A reader sent this in:

    Apr 11, 2017

    ‘The key driver of Britain’s wildly inflated property market might not be what we think it is’

    ‘in her new paper, Lancaster University academic Dr. Alisa Yusupova suggests that more than being centered on supply and demand, much of Britain’s house price growth in recent decades has been fuelled by speculation and exuberance.’

    “Neither demand-side factors such as household income, mortgage rates and credit availability, or the supply of new houses explain price rises during some of that period,” the paper’s abstract says.’

    ‘Yusupova continues: “We find that a comprehensive model of housing that includes demand side factors such as household income, mortgage rates, credit availability, demographics, inflation as well as supply side factors such as supply of new houses relative to the growth in working age population, and regional spillover effects, cannot fully capture house price dynamics in certain periods of the sample.”

    ‘Instead of simply being related to supply and demand, Yusupova argues that a succession of what she calls “house price exuberance” bubbles have originated in London before rippling out across the country, inflating prices.’

    ‘House prices in the UK have climbed drastically since the 1980s, with the period since the global financial crisis seeing particularly rapid inflation. The average house price in the UK is now around £217,000, compared to roughly £150,000 in early 2005, data released by the ONS on Tuesday shows.’

    ‘Dr. Yusupova’s argument, while less aggressive in its language, has some parallels with a similar conclusion drawn by Societe Generale strategist and arch-bear Albert Edwards, who last year blamed the Bank of England for inflating a bubble in the British housing market.’

    “I’’m sorry, but if monetary policy is too loose, you can concrete over the entire length and breadth of the UK and house prices would still rise. There is no shortage of housing. What there is, is an imbalance between demand and supply and demand is excessive because of crazily loose monetary policy,” Edwards wrote in April 2016.’

    https://www.businessinsider.com/britains-housing-market-is-not-being-driven-by-a-supply-and-demand-imbalance-2017-4?r=US&IR=T

    1. ‘if monetary policy is too loose, you can concrete over the entire length and breadth of the UK and house prices would still rise. There is no shortage of housing’

      The supply and demanders have their heads up their a$$ too. A housing bubble makes you poor and then it pops. Every single time.

    2. much of Britain’s house price growth in recent decades has been fuelled by speculation and exuberance

      This reminds me of boiler rooms hacking up the prices of penny stocks – except it is real estate agents in fancy suits and cars fooling the upper middle class and rich.

      1. “fooling the upper middle class and rich.”

        They’re not buying houses.

        It’s the degenerate gamblers and broke down financially crippled class that are signing up for 30 years of crushing debt servicing.

  7. ‘Built in 1965, it was for sale for the highest offer over $36,000. Using the Reserve Bank’s inflation calculator to adjust the house’s value for inflation reveals it was worth $1,038,757 in the third quarter of 2020’

    As I’ve long said, if you look at this mania, the first question should be, when did it start? In the US from what I’ve read it was in the mid-80’s, when Fannie and Freddie were first allowed to get out of control.

    ‘The average price of homes in the U.S. increased from below $50,000 in 1963 to $384,500 in 2020. Then came the 2007 housing bubble but by 2013 housing prices had returned to pre-2007 levels. However, by 2018 nationwide housing prices had leveled off.’

    ‘In 1975 every region of the country had an average home sale price of under $75,000 but by 2020 the Northeast had an average sale price of over $500,000 while the South and Midwest had an average price of just more than $300,000.’

    https://www.hannapub.com/ouachitacitizen/opinion/columns/bill-roark-sussing-out-the-truth-about-home-prices/article_73d49da8-0e21-11eb-a320-fb2da5592050.html

    1. “In 1975 every region of the country had an average home sale price of under $75,000 but by 2020 the Northeast had an average sale price of over $500,000 while the South and Midwest had an average price of just more than $300,000.”

      Seems like many things began going awry when Nixon abolished the gold standard in 1972. Then the Yom Kippur war and the resulting OPEC oil embargo threw gas on the proverbial fire.

  9. President Trump was right when he said that “the media are the enemy of the American people.”

    1. The evidence shows that the rein of Globalist Monopolies, and Foreign enemies, has created all the problems that face America today. The corruption of Government and USA Goverment agencies in favor of their false narratives and criminal insurrection of the USA by election fraud and Medical Fraud Tyranny is evident.
      No justification what so ever for mass vaccination of billions over a survival rate of 99.97% with experimental vaccines that would never be approved unless a false Pandemic was declared.
      They are suppressing all the negative news on people dying or having damage from the vaccines.
      When has a Fed Government ever been so combative against over half the population, treating them like insurrections in their own land , targeting White people as the enemy.
      Pandemic -false
      Climate Change -false
      Open borders- suicide
      White Privileged/Racist themes/USA bad- false creation of enemies to divide and conquer.
      Criminal stealing of election putting traitor nut Puppets in White House and Congress/Senate to destroy Constitutional Republic with treasonous agenda that would usher in Top Down total control based on false narratives.
      While this criminal power grab is being confused by a fake Pandemic and other false narratives that the White Race is the enemy, their obvious fake narratives are absurd and a National Security threat.
      You Judge something by the destruction based on falsehoods and insane unprovable assertions made.
      These are dangerous Entities that have stolen the election who are looters and destroyers of a once great Nation. They have shown their true colors in every way and they need to be defeated just like Hilter did.

  10. Have you seen the new spy movie, Courier? It convincingly brings early 1960s Moscow back to life (albeit filmed in Prague). I woke up quite early thanks to this lovely reminder of early childhood experiences during the Cuban Missile Crisis.

        1. Moochelle Obama Reads Dr. Seuss Books to Kids.

          In the words of Muhammad Ali…

          She’s a bad man!

        2. If Michael is a man that would explain this push for transgender rights that actually step on regular female rights.
          As I have said before that in order to defeat the Majority population you need to use minority groups to attack these groups to take away their right to exist or have values and culture they choose. It’s the Rein of the Minority Groups to defeat the Majority, with Globalist Monopolies and enemies of the US asserting these false and outright kooky narratives to divide and conquer.

          1. I’m not even religious but it’s in the bible, in Deuteronomy, where God calls trannies an abomination.

            You can go play dress up and LARP as a woman all you want, but stop touching kids, stop grooming kids.

      2. I was thinking more along the lines of putting sad old Joe on a gurney and having 6 strong men carry his carcass up and down the stairs.

  12. Given the Auckland region’s average value is now nearing the $1.2 million mark with CoreLogic’s latest data putting it at $1,198,564 in February, the 1970s prices advertised are startling.

    They got it backwards. It’s today’s prices that are startling.

    How can shacks cost one million in an agrarian economy?

  13. ‘Oh, don’t worry, house prices nationwide never go down, don’t worry.’ I’ve got to tell you, when I was at that perch as chief economist at Merrill Lynch, I was laughed out of meeting rooms talking about a housing bubble in 2005 and 2006,’

    As we know, a primary sign of an expanding bubble is widespread agreement among experts that there isn’t one.

    1. I prefer to believe the Ken Lay style of experts, e.g., Enron is a great buy…while he is unloading every last share!

  14. ‘It is a worldwide trend, this ‘financialisation’ of housing, but it’s on steroids in Australia,’ Professor Pawson says. This has consequences for the economy. ‘There’s a lot of drag on economy from the way our housing system operates,’ Professor Pawson says. ‘We’re talking about the relationship between incomes and the cost of housing — when you’re paying too much for housing, you don’t have as much left to spend on other forms of consumption, other goods and services that may be more may more employment generating than housing.’”

    “‘The flip side of that is that we are over investing in our housing, which is essentially an unproductive asset.‘”

    – It’s “Strewth, mate.” “Fair dinkum.”
    – It’s all fine. “No worries, mate, she’ll be right”
    – This will end up being a “Dog’s breakfast.”
    – It’s “Better than a ham sandwich. Better than a kick up the backside.”
    – “Bastards” = Central Banksters

    https://andersen.sdu.dk/vaerk/hersholt/TheEmperorsNewClothes_e.html

    The Emperor’s New Clothes
    A translation of Hans Christian Andersen’s “Keiserens nye Klæder” by Jean Hersholt. Info & links

    “So off went the Emperor in procession under his splendid canopy. Everyone in the streets and the windows said, “Oh, how fine are the Emperor’s new clothes! Don’t they fit him to perfection? And see his long train!” Nobody would confess that he couldn’t see anything, for that would prove him either unfit for his position, or a fool. No costume the Emperor had worn before was ever such a complete success.”

    “But he hasn’t got anything on,” a little child said.

    “Did you ever hear such innocent prattle?” said its father. And one person whispered to another what the child had said, “He hasn’t anything on. A child says he hasn’t anything on.”

    “But he hasn’t got anything on!” the whole town cried out at last.

    “The Emperor shivered, for he suspected they were right. But he thought, “This procession has got to go on.” So he walked more proudly than ever, as his noblemen held high the train that wasn’t there at all.”

    1. – It’s “Strewth, mate.” “Fair dinkum.”
      – It’s all fine. “No worries, mate, she’ll be right”
      – This will end up being a “Dog’s breakfast.”
      – It’s “Better than a ham sandwich. Better than a kick up the backside.”
      – “Bastards” = Central Banksters

      Don’t forget that oldie: It dies in the arse

    2. The story needs an update and a new title. But “The Central Banker’s New Housing Bubble” just doesn’t seem to have the same ring to it as the original.

  16. You know what’s hilarious?

    Fraudsters coming to the HBB to somehow “correct” the hosts thinking and steer the messaging.

    You’re just not that sophisticated…. and never will be.

    1. if you like paying $6 a gallon for gas

      The $20 combo burger meal, coming to a fast food joint near you.

  18. Looting with unsustainable bubbles is not a financial system that creates anything but disaster in the long run.

    1. “… is not a financial system.

      Perhaps it is best to think of as a redistribution system.

  19. “Sellers are receiving multiple offers within hours of their home hitting the market. Buyers are offering thousands or tens of thousands above the asking price — depending on price point — for even a shot at the home, and sellers are demanding that buyers waive appraisals and in some cases even inspections”

    “It is unprecedented.”

    . “An agent in our firm received 17 offers on a property before they cut off receiving any additional offers. Twelve of the offers were cash, all above list, and most buyers not even seeing the home. They are just grabbing.”

    There’s no precedent baby!

    https://www.wfaa.com/article/money/business/it-is-unprecedented-buyers-beware-in-dallas-fort-worths-supercharged-housing-market/287-ee94998d-932a-49d9-88cf-57103821c6e2

    1. An agent in our firm received 17 offers on a property

      So why aren’t the builder boyz building like there is no tomorrow? Is it because municipalities are restricting new subdivisions? I read that in my little burg you need to have water rights before you can subdivide, and right now those are pricey over here. But what about east of the Mississippi? No water shortage there. Or is local guberment coming up with other excuses?

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