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It’s Going To Leave Us All Wondering What Kind Of Value Does It Have?

A weekend topic starting with Market Watch. “Wit Solberg founded Mission Peak Capital in 2008 to snap up messy commercial real-estate assets after the last big crisis. A dozen years later, he’s looking to untangle another kind of property mess, but this time on behalf of others. Solberg invested in European loan servicer Mount Street Group to help borrowers and international stakeholders in U.S. commercial real-estate figure out, for a fee, where they might stand as buildings start to reopen.”

“‘Korean investors have been devastated, and are the most aggrieved party in the U.S. during COVID,’ Solberg told MarketWatch. ‘And it’s because they don’t know what they’ve gotten themselves into and they have no service provider to help.'”

From WSB TV on Georgia. “Channel 2 Action News investigative reporter Justin Gray talked with landlords who are facing foreclosure. ‘So they put this moratorium on evictions. But where does that leave you?’ Gray asked Paxton Baety. ‘In trouble. Because I have to pay for somebody to live somewhere,’ Baety said.”

“Baety started with one rental home near his DeKalb County house and then over the years added two more. Now as he battles to recover from a stroke that has affected his speech and mobility, he’s also dealing with a loss of most of the rental income he relies on to pay his family’s bills. Baety is trying to sell this home. Because with the tenant paying nothing for nearly a year, he is in danger of foreclosure. ‘If I don’t pay my mortgage, I get put out,’ Baety said.”

Fox 9 on Minnesota. “Minnesota housing officials have launched a $375 million federally-backed rental assistance program after several weeks of bureaucratic delays. Christina Harding, a property manager in St. Paul, said some of her tenants are 10 months behind on their rents. Without income, Harding said she was forced to collect unemployment. ‘We’re very excited for this program. Hopefully, it starts paying quickly,’ she said, ‘so we can get these owners’ mortgages paid again and they don’t have to worry about when the rent’s going to come in.'”

From Finger Lakes 1 in New York. “State lawmakers and landlord advocacy groups joined in calling for Governor Andrew Cuomo and Democrat-controlled chambers of the legislature to avoid extending the eviction moratorium in place right now. Under One Roof recently conducted a survey, which found that 42% of small landlords have used personal loans and savings to cover expenses such as mortgages, property taxes, and utility bills.”

“In the Finger Lakes, Deb Hall, who serves as President of the Finger Lakes Landlord Association said there can be a common sense solution to the current situation. ‘The Democrat Majority and governor have taken away our property rights during this pandemic. Rental providers are calling for common sense by allowing the well-equipped court system to align renters with public housing services, some of which have funding to help renters, and to clean up the pre-COVID cases that continue to languish in non-payment.'”

From Bisnow New York. “Investment sales volume plunged across the board at the start of 2021, with commercial transactions down by nearly 50% year-over-year. A total of eight retail buildings traded during the quarter, per Avison Young’s figures, and almost all of those sales were either vacant or bought by an end user, per the brokerage. The average price of $1,996 was up from 2020, according to Avison Young, but down nearly 50% from $3,485 in the peak of 2016.”

“A recent valuation of one Fifth Avenue retail property, for example, pegged its worth at just $37.8M — a 70% drop from six years ago. Last October, three retail properties on Madison Avenue sold for $1,340 per SF, a reported 80% drop from 2014. ‘It’s bouncing around right now, it’s trying to find the floor,’ said Avison Young Tri-State Investment Sales Group Head James Nelson.”

The Houston Chronicle in Texas. “The impacts of February’s winter storm and Houston’s oversupply of apartments stood out in Camden Property Trust’s first quarter earnings report, driving up expenses in Texas markets and revenues down in Houston. All three of Camden’s Texas markets — Houston, Dallas and Austin — saw net operating income fall in the first quarter compared to the same properties in the same quarter a year before.”

“In Houston, where Camden is looking to sell properties, the average rent per apartment fell at the majority of its properties in the first quarter compared to all of 2020. At the worst-hit property, Camden Downtown, the average rent per apartment fell $226, or 9 percent, during that period. ‘The big challenge we have in Houston is not employment related,’ said Keith Oden, vice chairman of the board. ‘The issue in Houston is just supply… Last year, we dealt with 20,000 apartments delivered in Houston. This year, we’re dealing with another 20,000.'”

The San Francisco Chronicle in California. “If all that seems like a recipe for the city’s rents to start climbing again, conflicting data and lingering anxiety for both landlords and tenants point to a more complicated reality. ‘Most landlords that I talk to, they’re panicked about the market,’ said Ray Amouzandeh, principal broker with Targa Residential Brokerage. ‘They’re saying ‘God, is anybody renting?'”

From Bloomberg on California. “For the first time in more than 25 years, San Francisco is forecasting that its property tax base will fall – a decline that reflects the tough straits of the city that is among the hardest hit by the pandemic downturn. That tax base, the real estate values the city uses to calculate taxes, rarely drops even in the worst of times, thanks to a quirk in California law dating back to 1978. Not even the dot-com bust or the 2008 financial crisis was capable of nudging it lower.”

“‘San Francisco’s almost got a state of emergency in its economics,’ said Ken Rosen, professor emeritus at the Haas School of Business at the University of California at Berkeley who focuses on real estate. With an expected fall in commercial property values, ‘there’s no question that’s going to make the city have very tight budgets the next few years.'”

“‘Historically, offices have been a huge generator of revenue in San Francisco,’ said Megan Elliott, who manages a team of residential and commercial property appraisers for the city. Pointing to Salesforce’s high-profile cancellation of a lease, Ms Elliott said: ‘if that kind of thing continues to happen, it’s going to leave us all wondering what do we do with that space now and what kind of value does it have?'”

From Housing Today on the UK. “Prices now down 14% amid glut of supply as Rightmove says landlords working hard to avoid empty homes. The firm said that available stock in the capital is a fifth higher than at the same point last year, while outside London the availability of stock has sharply reduced. Two thirds of London boroughs now have rents lower today than five years ago, the firm said. Over the last five years the biggest falls have been in some of the wealthiest locations, including Barnes, Notting Hill and Knightsbridge, the firm said.”

“The Rightmove data follow figures from build to rent landlord Grainger earlier this year showing that one in ten of its rental properties were lying empty. Rightmove’s director of property data Tim Bannister said that landlords in London ‘obviously couldn’t foresee the effect that covid would have on rents, and right now they’ll be doing all they can to prevent voids and hope the drop in rents is fleeting.'”

From ABC News in Australia. “Sydney and Melbourne landlords (on average) have been forced to lower their rents (by 4.9 and 8.2 per cent) over the past year. ‘Current tenants have been known to make demands of rental decreases knowing that they have their landlords over a barrel,’ said Melbourne real estate agent Aly Walsh. ‘There are many landlords willing to take the lower rent just to get their property leased. A friend of mine was approached by her Carlton tenant, who pretty much demanded an unreasonable decrease, and advised if they didn’t get the decrease they would leave knowing that were plenty of options at lower rents. The agent confirmed this, so my friend took the cut.'”

From The Bulwark. “WeWork subleases buildings that it holds under long-term leases but does not own. By the mid-2010s, it had become ‘the largest lessee of office space in all of New York City.’ Rather than thinking of WeWork as merely a company that subdivides real estate, cofounder and former CEO Adam Neumann claims in one interview that the firm’s purpose is to ‘elevate the world’s consciousness.'”

“Did employees, customers, and journalists really buy into that patter? The documentary suggests, echoing the once-invincible status of Enron, that there was a reluctance to ask difficult or probing questions about WeWork’s questionable profitability or chaotic internal affairs. Some of this was probably a kind of bandwagon effect; it can be fun to believe in something, or even to be taken for a ride. But also crucial was Neumann’s charisma, with which he was able to hold off a lot of scrutiny. He appeared to believe fervently things that would, once detached from his aura, come across as nonsense or BS.”

“Most of mainstream journalism was useless on this front. It took Justin Zhen of Thinknum, a data company, to analyze publicly available data and determine that WeWork’s churn, or turnover rate, was high and accelerating. And it took marketing professor Scott Galloway to do some relatively simple math on building values and determine that WeWork was massively overvalued.”

“While at one point in the documentary Neumann makes fun of startups that don’t turn a profit, it turns out he was in the same boat. Galloway, whose screen time is brief but incisive, explains that WeWork effectively invented financial metrics: ‘We want to pretend to be profitable by ignoring these expenses.'”

“The documentary suggests but doesn’t really plunge into an important global-finance rabbit hole: the saga of holding company and venture capitalist fund SoftBank, a major investor and now the majority owner of WeWork. SoftBank is based in Japan but a lot of its money comes from Saudi Arabia via its sovereign wealth fund. And so the WeWork pump-up was about more than Americans being easily impressed by a startup; there was also a foreign ‘gotta put money in something’ angle.”

“The notion that WeWork was an example of the ‘sharing economy’—a term rarely used unironically anymore but embraced by Neumann—is as silly as the notion that it isn’t a real-estate firm. The imperative to grow necessarily conflicts with the ideal of ‘sharing.’ Uber ended up adding congestion to urban streets and leasing cars to its drivers; WeWork ended up leasing slapdash offices to Microsoft at cut-rate prices.”

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This Post Has 123 Comments

  1. ‘A friend of mine was approached by her Carlton tenant, who pretty much demanded an unreasonable decrease, and advised if they didn’t get the decrease they would leave knowing that were plenty of options at lower rents. The agent confirmed this, so my friend took the cut’

    That’s the spirit!

  2. ‘Most of mainstream journalism was useless’

    Here’s what’s nuts: this fiasco was multiples in size of Enron. It basically just disappeared, although it still exists – who knows why. Yet this financial media shares no shame in missing the no clothe thing. We are left to wonder, did this this really happen?

    ‘an example of the ‘sharing economy’—a term rarely used unironically anymore’

    See, the REIC just makes up concepts. Then drops them like it never existed when it proves to be horsesh$t. Like “safe deposits boxes in the sky”. They never revisit that nonsense, that they repeated endlessly to explain away irrational behavior.

    1. “See, the REIC just makes up concepts.”

      Lying realtors are masters at it. Fabricating themes, swapping and substituting counterfeits with a absolute free pass at it and never being held accountable.

      Remember the “we had a problem with our methodology” excuse when they were caught lying about collapsing demand.. Not just once did they lie about it. They lied every month for 4 years. And I haven’t been able to verify it 100% yet but I believe they are doing the same right now. They’ve haven’t actually put their lies in data form yet. It’s coming though. Liars who run organizations are crime syndicates and criminals always return to the scene of the crime.

      Crime is all that’s there once the thin veneer of “code of ethics” is peeled away. Pay close attention to the appraisal thing and as someone said yesterday, dismiss entirely what they’re saying and think about how this is happening. It can happen only one way.

    2. an example of the ‘sharing economy’—a term rarely used unironically anymore’

      Come to think of it, I haven’t heard “we’re all in this together” in a while either. 🤔

      1. Or the gig economy. Yes, we’re gonna drive our own cars into the ground for a sub-minimum wage with no benefits!

        1. I thought selfdriving electric cars were gonna take over like any day now?

          2. Ha ha
            Or drone delivery

            bull$hit and profit economy. all so called “technical innovation” in last 20 years has been in voyeurism. nation of perverts.

          3. Tesla admits it may never achieve full-self-driving cars

            Sure don’t hear much about this anymore from anyone, including google, who used to bombard us with the notion that fully autonomous, self driving cars were “imminent”.

            No doubt they’ve hit a wall they can’t get over. How do they identify those corner/edge cases where the car crashes? That car in Texas was probably doing great, to the amusement of its passengers who were convinced it could drive itself, until their luck ran out and the software failed.

          4. No doubt they’ve hit a wall they can’t get over. How do they identify those corner/edge cases where the car crashes?

            No, Musk is a stock and crypto pumping fraudster.

          5. who were convinced it could drive itself

            Because of dangerous and misleading marketing.

          6. Tesla’s partnership with Toyota and Mobileye both fizzled over safety concerns.

          8. “… to the amusement of its passengers who were convinced it could drive itself,…”

            Self driving cars are all about amusement. They are an unneeded product whose introduction to the mainstream would lead to many unfortunate, unnecessary deaths. Hopefully this won’t happen any time soon.

          9. In Colorado: No doubt they’ve hit a wall they can’t get over. How do they identify those corner/edge cases where the car crashes?

            This whole autonomous car thing is so very interesting. The most brilliant minds on the planet saw the problem as being relatively straightforward – keep the car on the road, between the line, avoid other cars and people – and thought it would be straightforward to have the current crop of computers and sensors be able to handle it. But the edge cases – that last 5pct or perhaps 1pct – has been extremely difficult.

            I was sitting at a poorly designed traffic circle, where the incoming traffic to my left was obscured by a portion of a bridge, as I am obscured to them, and they come in at speed because nothing is forcing them to slow down, not the design of the circle. I thought, how on earth would software handle this, where I have to crane my neck to the left to see what’s happening and then must go quickly?

            Easy to describe and solve most of the problem, very, very hard in practice to solve all of it. I’m sure a lot of very useful technology has been spawned from this effort though.

            Wonder if there are any parallels to the world of finance.

        2. People haven’t thought through the whole self driving car concept. Aside from the fact that it can eventually be used to control and restrict your movement, it can also be used to make life and death decisions. To avoid a calculated head on collision between two vehicles, the AI might decide that based on your social credit score you are the less worthy to live of the two drivers….and just drive you off the road into a tree. And that’s the more benign of possible uses for this technology. The whole thing is a misnomer anyway because the car isn’t self driving. It’s being driven by the people who programmed it.

          1. FWIW, one of the ideas was sharing rather than a family buying more vehicles, e.g., you drive to work and the car returns home if a family member summons it.

          2. a family member

            We did that in 1960. If my mom wanted the car for the day, she drove Dad to the train station in the morning. Sounds high tech, I know.

          3. w@h might alleviate some of the car pressure.

            My understanding of “sharing” vehicles was that some stranger could summon your car from a parking garage while you’re at work. Part of the “own nothing and be happy” strategy.

          4. one of the ideas

            One of the more ridiculous ideas was that the car would make money for you while you weren’t driving it. IIRC, that claim coincided with some new accounting shenanigans (residual value of leased vehicles?).

      2. The loudspeaker in the parking lot at the local King Soopers / Kroger is no longer broadcasting that every three minutes but the indoor one is. Park County, CO mask status: no indoor masks in Jefferson or Grant, indoor masks required in Bailey (closer to Dumver).

      3. I saw a pandemic billboard somewhere yesterday while driving around: “We’re all in this together…six feet apart.”

        1. I saw one of those lighted signs on the overpass telling everybody to get the vaxx so we could “get back to living” or some nonsense. Nevermind that I’ve never stopped living.

          1. Same here.

            It would be nice to be able to attend church, eat indoors at a restaurant, or attend other large scale indoor gatherings without wearing a Fauci scarf over my face.

    3. (yawn)

      Just using what works:

      “See, the REIC just makes up concepts. Then drops them like it never existed when it proves to be horsesh$t. Like ‘safe deposits boxes in the sky’. They never revisit that nonsense, that they repeated endlessly to explain away irrational behavior.”

      1. What they really mean to say is “property pyramid scheme.” What the REIC basically has done is set up an MLM program. Current ‘owners’ (and associated scammers like realtors) must always recruit new marks to make them whole and put money in their pockets. The marks include first time buyers and also speculators buying multiple properties. This scheme only works when prices continue to go up, thus the propaganda about get in now or be priced out forevah, bidding wars, etc. As we all know, all pyramid schemes eventually collapse.

  3. ‘Most landlords that I talk to, they’re panicked about the market…They’re saying ‘God, is anybody renting?’

    Baby jeebus ain’t gonna save you Ray, you live in a socialist sh$thole. How do those 5% cap rates look now?

    1. ‘Most landlords that I talk to, they’re panicked about the market…They’re saying ‘God, is anybody renting?’

      Bahahaha. This comedy just writes itself.

      1. It’s amazing how dumb these empty unit landlords are. Can’t they figure out that the reason they can’t find renters is that the rental market has cratered and
        they need to ask for less rent?

  4. ‘The issue in Houston is just supply… Last year, we dealt with 20,000 apartments delivered in Houston. This year, we’re dealing with another 20,000′

    QE is deflationary.

    ‘the WeWork pump-up was about more than Americans being easily impressed by a startup; there was also a foreign ‘gotta put money in something’ angle’

    This notion is actually repeated in the Houston article.

    1. Ahem…

      ‘Korean investors have been devastated, and are the most aggrieved party in the U.S. during COVID…And it’s because they don’t know what they’ve gotten themselves into’

      1. And it’s because they don’t know what they’ve gotten themselves into’

        Typical outcome from the time the uninformed dial the number until the day of closing. Then it’s too late.

    2. 40,000 new apartments.. but I thought we had a housing shortage?

      Oh right, maybe people (with jobs and money) don’t want to be on top of each other anymore. These luxe-boxes will become the new Projects.

      1. “don’t want to be on top of each other anymore.”

        Ha ha. Give it six months, people will be in a bidding war to stay on top of each other.

  6. “Under One Roof recently conducted a survey, which found that 42% of small landlords have used personal loans and savings to cover expenses such as mortgages, property taxes, and utility bills.”

    We’re all Under One Roof together…not!

    Where did the crazy idea that borrowing money to overpay for single family housing in order to rent it out to other families is a smart way to make a living even originate? It amounts to gambling on historically anomalous and ephemeral high rates of real estate price appreciation. If prices stop going up or rental income dries up, you’re screwed! Not a smart game for weak hands to play…

    1. Borrowing money to overpay for single family housing for any reason is a financial death sentence.

      When was the last time housing was in line with long term trend. 1998? That’s a whole bunch of people who over paid.

      Miami Beach, FL Housing Prices Crater 10% YOY As Surge In Underwater Borrowers Drives Mortgage Defaults To Record High

      https://www.movoto.com/miami-beach-fl/market-trends/

      1. “When was the last time housing was in line with long term trend. 1998?”

        The long term trend is broken because the current monetary and financial system is coming to an end. In terms of what we currently use as dollars, it will never be in line with the long term again.

    2. Dreaming of becoming a slumlord is commonly held by majority of third world-ers in Amerikka, whether a doctor or a strawberry picker.

      1. Good point. I’m grateful for our Vietnamese landlord’s participation in this trend, as he is very steady and usually is very responsive to our suggestions for home repairs, either doing the work himself or hiring an appropriate contractor.

        The one exception is the termite problem, which he seems willing to ignore despite our repeated suggestions to address it. But termite damage and mitigation is entirely his problem and financial liability.

    3. What’s concerning is that with rents falling, moratoriums on evictions, builders throwing up structures at breakneck pace, many small businesses still closed or functioning at reduced capacity housing prices are soaring. This might be the end. I am beginning to suspect that the treasury and central bank are going borrow and spend and print from here on out until they are ready to collapse the system. They are going to inflate inflate inflate until the dollar dies. As insane as all the bail outs have been, I think it might be nothing compared to what’s coming. A tsunami of money printing dwarfing anything seen before it in the history of human civilization combined with collapsing supply chains. This may be the last cycle of asset inflation before the monetary system fails.

      1. combined with collapsing supply chains

        They certainly did not fall down on their own.

    4. My wife and a lot of her friend believe this; to be fair, so fair it’s worked out for them (and she’s mad I didn’t jump on “the property ladder”)

    1. In the interest of fairness, it sounds like it’s time to aboish women’s sports. We’re all in this together now, and fairness means equal competition for all.

  9. I predict that the real estate market will crash when the masters of the Universe want it to crash.

    One thing the last year and one half has proven is just how unnatural the markets are , and how contrived everything is, and just how much Government is in on it.

    Nothing is rational regarding the narratives by fake news with censorship. Only option is to reject anything that this insurrection is trying to get you to do.

    1. “…when the masters of the Universe want it to crash.”

      They wouldn’t be the Masters of the Universe if they didn’t have full control over the timing of the next crash, would they?

    2. The MOTU are busy pumping up the bubble to absurd levels before shorting it, at which time they will cue Jay Powell and Co. to “pull it.” Happens every time.

  10. From the Dumver Post:

    Metro Denver’s housing market has run hot for nearly a decade now, so nobody would blame it for taking a breather, especially a year into a pandemic. Instead, the frenzied pace has only sped up, shattering all kinds of records, including how much buyers are willing to pay above a seller’s asking price.

    Gina Roth, an agent with the New Era Group at Your Castle Real Estate in Denver, experienced just how heated things are getting earlier this month on a listing for a Lakewood home. The property generated 74 showings in under four days and snagged 15 serious offers from buyers, all above the list price of $590,000.

    How desperate were buyers? The winning bid came in at $687,000, a premium of $97,000 or 16% above a carefully considered offering price.

    “$30,000 over the list price used to be fantastic,” Roth said. “Now it won’t get it done.”

    1. “They know they are overpaying and that it stinks,” she said. “But the hope is the market is going to keep rising and that they can hold onto the property for a while.”

      So if buyers are so desperate, why don’t sellers just list for 4% or 5% above what comparable sales in the area would say is justified?

      One danger of getting too far ahead of the market is that appraisers won’t support the price, which could cause a lender to reject a loan request, killing off a deal and wasting a seller’s time.

      But there’s an answer to that too. Realizing a seller might question and reject an over-the-top bid, more buyers are offering to cover the gap between the offer price and what a mortgage lender thinks a home is worth.

      1. I want more buyer regret anecdotes (Real Journalists only reluctantly report them).

        More waiving inspections too please. Millennial loanowners, please continue trying (and failing) to do your own electrical work from watching YouTube videos.

        Then you can call us to come fix it, assuming you even have two nickels to rub together left after overpaying by hundreds of thousands of dollars.

        As much as I like to complain about Dumver, our potential customer base is increasing exponentially with every overpriced shack sold. And new construction isn’t any better, that’s our customer base 2-5 years from now.

        WE ARE HERE TO HELP (and take your money)!!!

        1. “Millennial loanowners, please continue trying (and failing) to do your own electrical work from watching YouTube videos.”

          For decades now I have had “loanowners” ask us if we could put in a dimmer switch or hang a ceiling fan or take a look at a persistent drip in the upstairs bath tub or see if we could find out why the ceiling got stained every time there was a heavy rain etc. presumably because we were always on time, honest, clean as it gets for out trade and did good work in a timely manner. Besides that I would usually find out that the plumbers, electricians and roofers who had given them a price already had shocked the snot out of them. 🙂

          Nonetheless. for decades I have given them the same answer…

          I’m sorry Ma’am but we don’t screw with anything that sparks or leaks.

          1. Anecdotal: 120 volts kills more people than 277/480 volts, because people get complacent about working with 120, telling themselves it’s just a residential voltage, it’s not gonna kill me…

          2. For decades now I have had “loanowners” ask us if we could put in a dimmer switch or hang a ceiling fan

            Really? That stuff is easy peasy.

          3. “Really? That stuff is easy peasy.”

            At my house it is but not at someone’s house where I am neither licensed or insured for it.

    2. I suggested to my sister to sell her top floor mountain view condo near the Governor’s Mansion, but she doesn’t want to deal with the storage and relocation hassles. I wonder how much over what she paid the bud war frenzy could genetate…probably more than a year of her income, tax free.

      1. “top floor mountain view condo”

        Typing whilst looking at the mountains from my top floor mountain view rental, a few miles south of there.

        The governor’s mansion is at East 8th Ave and Pennsylvania St, the view may be nice but step outside and it’s all tents and needles and feces on the sidewalk…

        Thanks, but I’ll pass.

  11. According to Uncle Warren, housing isn’t the only part of the U.S. economy that is inflating…

    The Financial Times
    Berkshire Hathaway Inc
    Warren Buffett sees ‘significant’ inflation amid ‘red hot’ US recovery
    Billionaire investor admits surprise at economic rebound as group reports $12bn quarterly profit
    Warren Buffett speaking at Berkshire Hathaway’s virtual annual meeting on Saturday
    Eric Platt in New York May 1 2021

    Warren Buffett told Berkshire Hathaway shareholders on Saturday that he was surprised by the “red hot” US economic rebound and warned the company was being hit by inflationary pressures.

    “We’re seeing very substantial inflation,” the 90-year-old chair said in his address to investors that was held virtually for the second consecutive year because of the pandemic. “It’s very interesting. We’re raising prices. People are raising prices to us and it’s being accepted.”

    Berkshire Hathaway, which owns Geico, the insurer, railroad BNSF and Benjamin Moore, the paint maker, reported robust $11.7bn in profits earlier in the day, with some divisions disclosing price rises to keep pace with the increased costs of raw materials.

    “This has been a very unusual recession,” Buffett said. “Right now, business really is very good in a great many segments of the economy.”

    US household incomes rose by the most in recorded history in March as the country’s economic expansion accelerated, lifted by government stimulus and a healing labour market. That has sent reverberations throughout financial markets, with investors’ inflation expectations over the next decade rising to an eight-year high.

    “It just won’t stop,” Buffett added. “People have money in their pocket and they’ll pay the higher prices.”
    …

    1. I own shares of BRKB, and will HODL on to them for the time being. And zero expense S&P 500 and Russell 2000 funds.

      Buy stonks now or be priced out forever!

      1. I’m definitely feeling priced out of single family housing, at least in our zip code. My wife wanted to check on Zillow to see what our friends got on their home sale (“just barely under two million”).

        She also mentioned that there are only fifteen homes for sale under one million in our zip code, starting out at $400K. Thirteen are condos. The two houses are listed at $995K and $999K.

          1. Seems like a nice upper-middle class tract home. Bright and airy, room for a pool. Just DITCH the tile countertops (really, whose idea was tile countertops? Things just get stuck on them). Also, I’d fill in that pergola with a real roof, maybe screen some in some of that patio to make a sunroom.

        2. For context, similar homes were to those now listed at $1 million were going for $500K back in 2006, just before the last crater event.

        3. I’m definitely feeling priced out of single family housing, at least in our zip code”

          I just checked if I limit the search to 3 bedrooms 2 baths over 1750 square feet SFH most are over 1M in my area. Prices well above last peak. Not much for sale .

    2. Apr 8, 2021,
      06:00pm EDT | 711 views
      What Are The True Fundamentals Behind The Treasury Bond ‘Rout’?
      George Calhoun
      Contributor
      Markets
      Founder & Director of the Quantitative Finance Program and Hanlon Financial Systems Center at the Stevens Institute of Technology (New Jersey) and Advisory Board Member at Hanlon Investment Management

      The biggest macro-finance story so far this year is the “surge” in Treasury bond yields.

      (It is described as a “rout” when speaking about Treasury bond prices… A rise in yield means a fall in price, a loss for bond-holders.)

      Since January 1, the yield on the 10-year bond has almost doubled.

      The 1st quarter was the worst in decades for holders of long-dated Treasurys. Prices were down about 13%.

      “Safe haven” assets like long-dated Treasury bonds are not supposed to lose such a large chunk of the principal so quickly.

      However, the significance of this “surge/rout” goes beyond the question of losses to investors holding this particular asset class. The Wall Street Journal has called the 10-year Treasury yield the “most important price in the global economy.” It is the benchmark for the cost of quality-credit everywhere.
      …

  12. National Association of Realtors sponsored content “news” article.

    The Hill — Is the US headed toward a new housing bubble? (5/2/2021):

    “those unable to outbid competitors have upped the ante by waiving inspection requirements”

    I like it, I love it, I want more of it.

    “Experts say there’s no clear end in sight to the homebuying frenzy, but they don’t see the same red flags that preceded the collapse of the mid-2000s housing bubble.”

    LOL@ “much stricter home loan requirements”

    “A lot of the people who are buying today … are among the most creditworthy in the history of mortgage lending,” said Reggie Edwards, an economist at Redfin.

    “They have the highest levels of savings, and they’re taking out loans that have the most equity off the bat because they’re putting so much cash upfront. I don’t think we have any concerns about if people can afford the homes that they’re buying right now, especially compared to 2006, 2007.”

    Article concludes with a Lawrence Yun quote, LOLZ.

    https://thehill.com/policy/finance/housing/551276-is-the-us-headed-toward-a-new-housing-bubble

    1. “…because they’re putting so much cash upfront.”

      It’s going to be quite sad to see the rubes who put in large downpayments get wiped out in the next downdraft in prices, while those unburdened by downpayments walk away in droves.

  13. John Mauldin: Here’s where dinosaurs like me have a problem. I can look at metrics that show the market is as overvalued today as it was back in 2000. Powell can’t be any clearer. He’s not going to worry about inflation getting to 3% or so. He’s going to look right through it because he says, and I think he’s right, that it’s going to be transitory [over 1–2 years] because we’re coming off a low measure. Then he says, and this is where he’s wrong, they won’t raise rates until we get back down to an unemployment level we’ve only seen twice since the end of World War II. One was during the Vietnam era when we were shipping a half a million troops off to Vietnam. So, yeah, we employed them in the army and those people don’t count. And the other was in the Trump-era boom. Jerome Powell today is saying that’s normal, it’s where we should be, and until we get back to that number, we’re going to keep rates low. I just think that’s the height of foolishness. At some point, you have to start taking your foot off the pedal.

    1. Powell can’t be any clearer. He’s not going to worry about inflation getting to 3% or so.

      When will he worry? 6%? 10%?

      1. What we saw in the 70s was a Fed willing to let inflation spin out of control to double digit levels for nearly a decade, wiping out the savings of many retirees reliant on fixed income investments or pensions. After that came a period of Fed-orchestrated crushingly high interest rates in the early-1980s to stop inflation in its tracks, with a severe and protracted double-dip recession as collateral damage. Many households sustained severe economic consequences as a result of these central banking maneuvers.

        1. Footnote: This did provide a useful means to finance the Vietnam war without asking taxpayers to pay for it.

      2. Time for the dollar to lose half its value at different rates of inflation:

        Inflation Rate / Time to Lose Half
        2% / 36 years
        3% / 24 years
        6% / 12 years
        8% / 9 years
        10% / 7 years
        12% / 6 years

        Don’t let inflation destroy your savings. Buy stonks, houses, cryptocurrencies and gold!

      3. Don’t let inflation destroy your savings. Buy stonks, houses, cryptocurrencies and gold!

        One of the reasons I was okay “overpaying” on land — to diversify a bit and have a productive asset that hopefully helps insulate us from inflation and deflation — we have plenty of other assets, but the land at least guarantees us a place to live with water, and food once we get things in place.

        And if the land “value” goes to zero? We still get water and food, and aren’t relying on the property value fo retirement

        1. if the land “value” goes to zero

          Shouldn’t enter into it if you are going to live there. Not a speculative venture.

    2. “At some point, you have to start taking your foot off the pedal.”

      Some folks hit the brakes before reaching the brick wall, and others just keep going full speed ahead.

      It’s a lifestyle choice.

      1. I’ve been trying for months now to motivate myself to buy some stonks as an inflation hedge. I’m having a great deal of difficulty suppressing my superstitious belief that the market will crash shortly after the last of the bearish holdouts succumbs to their FOMO.

        1. I was all in on FTBFX (despite its 0.45% expense ratio) for a while last year, then got spooked and went 100% into cash by the end of 2020. Now buying:

          20% FTBFX
          40% FZIPX
          40% FZROX

          In those specific ratios with each purchase. I am as of today still 75% in cash, and as I told a friend who recently did a cash out refi to go all in on stonks, if hyperinflation happens, I’ll just take the Smith & Wesson retirement plan.

          This market and this eCONomy is a joke.

          1. The classic inflation hedges are “real” assets, that is, you can either drop them or walk on them. Oil, precious metals, base materials, real estate.

          2. classic inflation hedges

            You forgot to mention buying these things with borrowed money. A debtor doesn’t need to pontificate on inflation hedges, they need to get out of debt and learn some practical skills.

          3. I suppose I could bring up the “who pre-pays 30 years of rent thing.” And the most practical skill is the one that pays.

          4. the one that pays

            Who would have thought that sitting at home would one day be considered a practical skill.

        2. I’ve been trying for months now to motivate myself to buy some stonks as an inflation hedge

          IMO timing the market is a fool’s errand. Why not be invested in all potential economic conditions at all times? Own some stocks, some long bonds, some cash, some gold? Vs trying to time the time to jump in and out based on things you can never know???

    3. “Powell can’t be any clearer. He’s not going to worry about inflation getting to 3% or so. He’s going to look right through it because he says, and I think he’s right, that it’s going to be transitory [over 1–2 years] because we’re coming off a low measure. Then he says, and this is where he’s wrong, they won’t raise rates until we get back down to an unemployment level we’ve only seen twice since the end of World War II.”

      https://twitter.com/LukeGromen/status/1388129965699444740
      Luke Gromen @LukeGromen
      Post-COVID macro in a nutshell:
      Deflation/disinflation are not policy options for a twin deficit nation with 130% debt/GDP and which has lost a major source of external financing. Full stop.
      #BTC #Gold
      7:55 AM · Apr 30, 2021·Twitter Web App

      https://www.ema2.com/media/documents/ema-garp-fund-q1-2021-report.pdf
      EMA GARP Fund, LP. —Report for the First Quarterended March31, 2021
      “With over-indebtedness as a backdrop, history shows us that there are only three ways for a country to deal with a situation like this.”

      “1. Default. Debts collapse to worthlessness as entities fail. Which leads to Deflation.”
      “2. Restructure/Revalue against some superior form of money. Reset. (see Roosevelt 1934).”
      “3. Inflate the currency and GDP versus the Debt. (see US Post WWII).”

      “Option 1 is possible, and perhaps in due course, option 2 could be chosen. However, in our current political structure, we believe the most likely path the US will take is option 3 (Inflation). Therefore, we believe inflation is in our future. Not just a little bit of inflation, a lot of inflation!“

      “Given the magnitude of debt in the economy and at the Government level, the Fed will only be able to let rates go so high. Every 1% increase in US Treasury yields adds ~ $280 billion to the annual deficit.”

      https://hoisington.com/pdf/HIM2021Q1NP.pdf
      Quarterly Review and OutlookFirst Quarter 2021

      “The Case for Decelerating Inflation”
      “Contrary to the conventional wisdom, disinflation is more likely than accelerating inflation. Since prices deflated in the second quarter of 2020, the annual inflation rate will move transitorily higher. Once these base effects are exhausted, cyclical, structural, and monetary considerations suggest that the inflation rate will moderate lower by year end and will undershoot the Fed Reserve’s target of 2%. The inflationary psychosis that has gripped the bond market will fade away in the face of such persistent disinflation.”

      – I don’t know how the current inflation pulse will end, but while we’re certainly seeing a lot of inflation now, QE is ultimately deflationary. Still, with the massive twin deficits along with MMT and UBI raises the specter of hyperinflation. History has shown that “printing” $ to finance deficit spending (i.e.: debt monetization) hasn’t ended well. Ref.: Argentina, and there are many others. Certainly Gold and Silver are worth holding in this environment, since it can’t be printed. Once thing’s for certain, the Fed caused this mess and just like the last two bubbles, they can’t stop the outcome. Bubbles always burst, which is ultimately deflationary. “May you live in interesting times.”

      Fire and Ice
      Robert Frost – 1874-1963

      “Some say the world will end in fire,
      Some say in ice.
      From what I’ve tasted of desire
      I hold with those who favor fire.
      But if it had to perish twice,
      I think I know enough of hate
      To know that for destruction ice
      Is also great
      And would suffice.”

      1. “However, in our current political structure, we believe the most likely path the US will take is option 3 (Inflation).”

        Winner, winner, chicken dinner.
        I vote for fire, not ice.

    4. Weimar Boy doesn’t take his foot off the pedal – ever. He pushes it through the floorboard until the motor blows up.

  14. In support of the German doctor.

    SARS-CoV-2 Spike Protein Impairs Endothelial Function via Downregulation of ACE2

    Coronavirus disease 2019 (COVID-19) includes the cardiovascular complications in addition to respiratory disease. SARS-CoV-2 infection impairs endothelial function and induces vascular inflammation, leading to endotheliitis. SARS-CoV-2 infection relies on the binding of
    Spike glycoprotein (S protein) to angiotensin converting enzyme 2 (ACE2) in the host cells. We show here that S protein alone can damage vascular endothelial cells (ECs) in vitro and in vivo, manifested by impaired mitochondrial function, decreased ACE2 expression and eNOS activity, and increased glycolysis. The underlying mechanism involves S protein downregulation of AMPK and upregulation of MDM2, causing ACE2 destabilization. Thus, the S protein-exerted vascular endothelial damage via ACE2 downregulation overrides the decreased virus infectivity.

    (emphasis added)

    1. Used phones are pretty cheap

      People with 1/4 of my income have a better phone than I do. People on welfare have a better phone than I do.

  17. “‘Korean investors have been devastated, and are the most aggrieved party in the U.S. during COVID,’ Solberg told MarketWatch.

    When housing losses we must eat
    Let us stamp our little feet!

  18. ‘We’re very excited for this program. Hopefully, it starts paying quickly,’ she said, ‘so we can get these owners’ mortgages paid again and they don’t have to worry about when the rent’s going to come in.’”

    Another Bolshevik self-identifies. I sincerely hope that every landlord who has pulled the D lever in recent memory gets exactly what they voted for, good and hard.

  19. ‘Current tenants have been known to make demands of rental decreases knowing that they have their landlords over a barrel,’ said Melbourne real estate agent Aly Walsh.

    Mark Knopfler – The Bug

    Sometimes you’re the windshield
    Sometimes you’re the bug

    https://www.youtube.com/watch?v=GG5ghP8XLW8

  20. “Most of mainstream journalism was useless on this front.

    Real journalists and their globalist mouthpieces are useless on every front. If you want real news and real truth, you won’t get it from this industry of dissemblers, who make the REIC look like paragons of virtue by comparison.

  21. The hubris…

    “because of your hard work, we’re going to keep Gov. Gavin Newsom in Sacramento.”

    ~Kamala Harris

      1. Right, like they aren’t going to rig the recall vote here in California.

  25. Any thoughts on the Biden regime pressuring other countries to raise the business taxes to match the ones in the US?

    How would they do this? Trade embargoes against anyone who refuses?

    Or is this just posturing for when they raise taxes in the US?

    1. Why would any foreign country agree when US businesses might expatriate to their country?

  26. Does using the blockchain technology somehow make electronic counterfeit money become legal?

  27. Everything that is being done today is leading to goals of these Entities that are leading most Governments ,that are acting in unison. Its this One World Order program of control of all major populations.
    World Governments are just mouthing the narratives , while fake news is censoring any dispute.
    This is a fake Pandemic, with fake tests , fake death counts, and fake masks, and fake lock downs. Further the vaccines are experimental and there is no justification to vaccine the Globe for the risk of death of the disease being small.

    At this point these fraudsters need to be arrested for crimes against humanity. At the very least the people need to just reject this assault on their freedoms and their body by Big Pharmacy gone attack on humanity. Government is in collusion with it, so people have to just reject it outright and protect themselves from this obvious harm and insanity. If billions just don’t comply , than they can’t pull it off, no matter how much fake news they spew.
    Enough of the fake fear mongering and fraud . More Doctors have to come out with the truth instead of being silenced and complying with what they know is wrong. Thank God Doctors are objecting to this harm, in spite of them being censored . No these Doctors aren’t nuts, its Bill Gates who is nuts along with Big Pharmacy and the other big Entities that have taken over Government.
    Just reject, so they fail.

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