thehousingbubble@gmail.com
Blog

Extrapolated Expectations Eventually Hit A Wall

A report from Reuters. “Federal Reserve Bank of Richmond President Thomas Barkin on Tuesday said surging home prices are being driven by a jump in demand and constrained supply but not by excess leverage, reducing the potential risk to the broad financial system should prices fall.”

“‘I don’t look at plummeting house prices as a first order risk, but if it were to happen, it only becomes a financial stability risk if you’ve got too much leverage against it,’ Barkin told the Wilmington Chamber of Commerce in a virtual event. ‘That’s what I watch is the leverage in the housing market and again, based on what I can tell, I don’t see it going to excess levels yet; that of course is something we are going to have to watch as we get into this.'”

From Housing Wire. “In 2020, the use of ‘blind’ appraisal waivers reached staggering, record highs. In these scenarios, no inspection or appraisal of any kind is performed on the property. While waivers make sense for certain loans — and certainly provided some temporary capacity relief to appraisers who were struggling to keep up with order volume — the rate at which they’ve been issued over the last year represents a new high-water mark.”

“During peak months, 70–80% of all rate-and-term refinancing transactions have been executed without an appraisal. The lack of boots on the ground means that both the lender and the GSEs buying the loans have reduced visibility into the true condition of the property.”

The Colorado Sun. “It’s not just Telluride. Across Colorado’s resort communities, a real estate frenzy is breaking records and transforming cultural landscapes. The record-setting pace of sales over the past year has turbo-charged a trend that has unfolded in recent years with more urban refugees relocating to mountain towns. This resort-home mania has happened before — and it didn’t end well.”

“In the few years leading up to 2007, mountain real estate brokers trumpeted their successes like a broken record. And, in fact, every month, quarter and year did break a record, thanks largely to loose lending that pushed ill-qualified buyers into homes with no money down and principle-only mortgage payments. When that lending fiasco fell apart, a yearslong recession and mighty crash in real estate values followed, leaving long-lasting impacts.”

“‘If you are going back further than a couple months to look at comps, they are not really comps because the market has gone up so much in the last three months,’ said Timm Kluender, a broker with Berkshire Hathaway. ‘You almost have to look at active and pending sales to get an accurate comp right now.'”

“Brianna Anthony and her boyfriend, Keenan Montague, have lived in three homes over the past six months in Telluride. The five-bedroom house that the local bartenders rented with friends sold last fall, and the new owner, an East Coast doctor with a home in nearby Mountain Village, launched a major renovation. They moved into another house, which this spring sold — sight unseen — for $2.2 million. And they moved again as that owner began renovations.”

“They found a rental home in Rico, about 30 minutes away. And, yes, that house just sold. Now they are looking again for a place to rent. Montague has an idea about what Colorado’s resort towns are going to look like when locals are priced out. Food will take hours at local restaurants. Galleries and shops will be closed for most of the week. Ski resorts will struggle to remain open. Long waits for everything will be the new normal.”

“‘The impacts will be known soon, when the customer service goes down at every business in town,’ Montague said. ‘I’m afraid that will be the only thing that will wake everyone up to the impacts of this real estate craziness. Everyone wants to come here and buy here for the atmosphere, but they are the ones who are actually killing that atmosphere.'”

From Bloomberg. “States and cities, including Philadelphia, are cracking down on a niche in house-flipping known as wholesaling conducted by a flood of largely unlicensed intermediaries lured in by YouTube tutorials and a torrid market.”

“Bearing fast cash, wholesalers can help distressed homeowners sell quickly, but they have been accused of strong-arm tactics and misinformation. Unlike fix-and-flip investors, who take title to homes, renovate them, and put them back on the market, wholesalers typically negotiate with homeowners just to put homes under contract and sell those contracts to flippers.”

“‘I don’t buy houses. I solve problems,’ said Scott Sekulow, who leads an Atlanta-area congregation of messianic Jews and bills himself as the Flipping Rabbi. He said clients come his way when they’re going through a divorce, can’t afford massive home repairs, or run into other trouble. Sekulow said he can get them cash while also beautifying a neighborhood.”

“Hedge funds are paying top dollar for the contracts, he told a conference of prospective moguls: ‘When you can get in with them, they’re there paying stupid money.'”

The Globe and Mail in Canada. “‘Expectations becoming extrapolative.’ The Bank of Canada isn’t known for poetic flourishes but, in its description of the mania at the heart of Canada’s housing market, there’s a delightful cadence, appealing alliteration and a lot of truth. In plain terms: Prices are soaring, in part because buyers believe they will keep on soaring. People are assuming a future of higher prices, by extrapolating from a present where prices are rising rapidly.”

“These assumptions are a very human tendency. But they’re also dangerous, because extrapolated expectations eventually hit a wall. The central bank, in its annual financial system review released last week, cited ‘imbalances in the housing market’ as one of six key vulnerabilities. It also worried about ‘many households’ now shouldering large mortgages. In the event of a job loss or other shock, their debt burdens could quickly become unaffordable.”

“The Bank is just the latest institution to worry about the direction of Canada’s housing market. Yet for all the concerns, there isn’t much any of this country’s policy makers are willing to do about it.”

The Epoch Times. “Chinese companies are facing mounting pressure to repay their dollar debts, as more than $100 billion in Chinese corporate dollar bonds are due to mature this year—the largest wave of maturities in history. China’s wave of dollar maturities will reach $118 billion, according to Refinitiv, a global financial market data provider.”

“According to the report, corporate debt risk is regional, with SOE bond prices in Hebei, Henan, Chongqing, Yunnan, and Xinjiang falling the most. ‘This worsening market sentiment could spread to other regions where SOEs are under pressure to repay their debts,’ the report says.”

“In the first quarter of this year, Chinese companies defaulted on $15.1 billion in domestic and overseas debt, with real estate companies bailing in large numbers, accounting for 27 percent of those defaults. The default rate among Chinese property developers has risen rapidly in the past few years. According to China Securities Journal, data from some research institutions show that in 2021, the total maturing debts of Chinese real estate enterprises (excluding the ultra-short-term bonds to be issued in 2021) is expected to reach 1.2 trillion yuan ($193.5 billion), a year-on-year increase of 36 percent and a historic breakthrough of over a trillion yuan ($100 billion).”

From Stuff New Zealand. “The Government’s predicted halt in house price growth is already being felt in provincial centres like Whangārei, as investor interest falls away, real estate experts say. Finance Minister Grant Robertson said it was a ‘very sharp adjustment in house prices, but a very necessary one,’ as the Government comes under pressure to arrest New Zealand’s runaway housing market.”

“Reserve Bank loan-to-value restrictions also kicked in on March 1, meaning most investors need at least 30 per cent equity in a property. The result has been some landlords selling their investment properties, and a lot fewer investors looking to buy at the moment, according to Whangārei real estate agents. From March to April, Whangārei median sales prices fell 7.6 per cent to $670,000, compared with a 1.8 per cent fall nationwide to $810,000, according to figures from the Real Estate Institute of New Zealand.”

“Infometrics senior economist Brad Olsen​, formerly of Whangārei, said Northland has experienced a bit of a slow-down in sales already, and he expected that to continue for the rest of the year. He thought provincial areas like Whangārei would feel this ‘a touch quicker’ than other areas as the new rules kick in, and investing in property becomes less viable for those who are heavily leveraged.”

From Domain News in Australia. “More than 130,000 households in NSW and Victoria are on the brink of financial crisis as a result of mortgage stress, a shocking new report from consumer group CHOICE has revealed. As more people grow desperate to get into the rising property market and take on bigger mortgages, financial counsellors across the country admit they can barely keep up with their caseloads. And it’s now putting more pressure on the federal government’s plan to scrap responsible lending laws.”

“‘These are households where from fortnight to fortnight, people are spending more than they are earning,’ said CHOICE CEO Alan Kirkland. ‘That means that they have to make difficult choices, like whether to put food on the table or keep up with repayments. If they can’t maintain the juggling act, they risk losing their homes. Safe lending laws were put in place to avoid the huge damage to families and communities caused by mortgage stress – by making banks take care to avoid giving people loans they won’t be able to afford to repay.'”

“Figures show that more than 70,500 households in Victoria and more than 63,500 in NSW are in major trouble. The worst-hit Sydney suburbs are Airds, Appin, Glen Alpine, Casula, Liverpool, Moorebank and Warwick Farm. The Melbourne suburbs struggling the most are Fountain Gate, Narre Warren, Berwick, Harkaway, Hoppers Crossing, Tarneit and Truganina.”

The Daily Mail Australia. “Cate Blanchett’s former trophy home in Sydney’s ritzy Hunters Hill has been sold for a loss of $750,000 despite surging house prices in the Harbour City. The home was sold by investment banker Chris Barter and his wife, Katrina, to expatriate lawyer Brooke Lindsay and her partner, Marcus Hill, for $17.25 million. The Barters had owned the historic home, named Bulwarra, for just three years after purchasing it from the Hollywood actress for $18 million in 2017.”

Related Posts
This Post Has 119 Comments

  1. ‘During peak months, 70–80% of all rate-and-term refinancing transactions have been executed without an appraisal’

    That’s some sound lending right there.

        1. ” No-appraisal mortgages account for borrowers’ credit histories and how much each owes on their existing mortgages. This type of mortgage does not consider the going price for similar homes in the area.”

          Remember in 07 they were called “no doc mortgages” and your income was not verified. Now its the value of the property thats inflated.

      2. (another snip) …

        “No-appraisal mortgage programs are found throughout the market. They are offered to homeowners who don’t qualify for conventional refinancing from banks or direct mortgage lenders by different agencies. The majority of these borrowers are underwater, meaning they owe more than their homes are worth because their properties declined in value since the original date of purchase.”

      3. We were in escrow putting over 50% down so Bank of America said they weren’t going to order an appraisal because it was considered a low risk loan. We didn’t wave the appraisal and were surprised BofA didn’t order one. The price was higher end. We ended up backing out of escrow because we didn’t like the inspection report. An investor friend of ours told us to offer a heavy down payment in our offer but when we go work up our financing tell the bank you’re putting the minimum down. He said the bank will always order an appraisal and he told us the appraisal will always come in lower than ask price. So, we followed his formula for our next offer – 1) offered heavy down payment to the seller, 2) “changed our mind” at financing and told the bank we’re only putting minimum down, 3) bank orders appraisal 4) appraisal came in lower than ask. The formula worked!! We backed out of that house too because we again didn’t like the inspection report. This offer and formula was followed pre-covid in a normal market. It seems like all the rules in this insane market are thrown out the window. I should add that after appraisal comes in lower, tell the bank you changed your mind back, and want to put your heavy down payment down again. Contract must state you will never pay more than appraisal.

        1. “We were in escrow putting over 50% down so Bank of America said they weren’t going to order an appraisal because it was considered a low risk loan.”

          I put down $50k on a $125k purchase back in 2003, and Countrywide skipped over the appraisal, but we still needed the title search to insure against any outstanding liens.

  2. ‘In the first quarter of this year, Chinese companies defaulted on $15.1 billion in domestic and overseas debt, with real estate companies bailing in large numbers, accounting for 27 percent of those defaults’

    Is that a lot?

    ‘Cate Blanchett’s former trophy home in Sydney’s ritzy Hunters Hill has been sold for a loss of $750,000 despite surging house prices in the Harbour City’

    Wa happened to my red hotcakes Sydney?

  3. Time to send Jesus into Re/Max to flip over some tables.

    Scott Sekulow, who leads an Atlanta-area congregation of messianic Jews and bills himself as the Flipping Rabbi.

    1. ** ” . . the Flipping Rabbi”

      clever by half. 100% funny!
      well done, sir. (if you are a sir)

  4. ‘If you are going back further than a couple months to look at comps, they are not really comps because the market has gone up so much in the last three months…You almost have to look at active and pending sales to get an accurate comp right now’

    That’s OK Timm with two M’s, cuz there’s hardly any appraisals going on.

  6. Last night in Portland:

    https://mobile.twitter.com/mrandyngo

    Multiple video clips from last night have been posted. Arson, assault, looting, carjacking, and vandalism.

    When you buy a house in, and pay property taxes to, a Democrat Party sh*thole city, this is what your tax dollars are paying for.

    1. Sure they burned murdered and looted. But on Jan 6 a few people went on an unguided tour of the Capitol building. THOSE are the real terrorists.

        1. Perhaps you should tell that to the rioters in Portland since they’ve been attacking federal property there.

          3. The #Narrative of these Deep State globalists is that January 6th was worse than 9/11 or Pearl Harbor.

            Joe Biden is not the legitimately elected president of the United States.

            The 2020 election was stolen.

          5. I’m neither a Trump nor a Biden fanclub member.

            I would never join a club that would have me as a member.

            — Groucho Marx

          6. fanclub member

            It has nothing to do with being a fan club member. When your comments display an ignorance of facts (e.g., police statistics and this), it shows that you consume too much of The Narrative. It takes less than five minutes for me to search and post the information for you.

  7. “…surging home prices are being driven by a jump in demand and constrained supply but not by excess leverage,…”

    Is there at least some chance the Fed’s Quantitative Easing measures, including mortgage-backed securities purchases, might lead to excessive leverage in the housing sector?

    This seems completely obvious to me, but perhaps I am missing something.

    1. The Fed isn’t going to stop buying MBS just yet
      Despite strong housing market, Powell says he wants to see “substantial further progress”
      April 28, 2021, 5:35 pm
      By Alex Roha
      …
      “We don’t have to get all the way to our goals to taper asset purchases, but we need to make substantial further progress,” Powell said in a FOMC press conference.

      Currently, the Federal Reserve Bank of New York, which executes market orders for the central bank, is buying about $80 billion in Treasuries and about $40 billion of mortgage-backed securities a month. The Fed’s presence in the bond markets, an emergency measure to support the economy during the COVID-19 pandemic, helped to keep credit flowing and put downward pressure on mortgage rates.

      For now, the Fed noted the health of the mortgage and housing industry, with Powell citing it as the “strongest housing market that we have seen since the global financial crisis.”

      “I would say that before the pandemic, it was a very different housing market than it was before 2008,” Powell said. “So we don’t have that risk of a housing bubble where people are overleveraged and owning a lot of houses.”

      Powell did acknowledge that the Fed has been monitoring the rising home prices borrowers are experiencing as limited inventory puts upward pressure on affordability and demand. The National Association of Homebuilders reported on Wednesday that due to lumber prices tripling in the last 12 months, the average price of a single-family home increased by nearly $36,000 — an impressive spike that has taken a toll on first-time homebuyers, Powell noted.

      “It’s part of a strong economy that there are people that have money to spend and want to invest in housing, but my hope would be, over time, housing builders can react to this demand and come up with more supply,” Powell said.

      Despite housing’s consistent recognition from the Fed as one of the strongest markets in the pandemic, Powell reiterated that it began buying MBS as the market was originally experiencing severe dysfunction. Now, a year later, the Fed noted that its MBS purchases were not meant to provide “direct” assistance to the housing market, but rather keep it level with the Treasury market. Though, eventually, the Fed will bring asset purchases back down to zero when the time is appropriate.

      What the Fed said it will avoid is another “taper tantrum” like that of 2013 when former Fed Chairman Ben Bernanke announced that the Fed would be reducing the pace of its purchases of Treasury bonds to reduce the amount of money it was feeding into the economy.

      Bond yields immediately jumped, giving birth to the phrase, “Taper Tantrum,” though Powell said history will not likely repeat itself this time around.

      “So many of the financial crack-ups in all countries, all Western countries, that have happened in the last 30 years have been around housing, and we really don’t see that here,” said Powell.
      …

      1. “It’s part of a strong economy that there are people that have money to spend and want to invest in housing, but my hope would be, over time, housing builders can react to this demand and come up with more supply,” Powell said.

        If the 10-yr Treasury ever recovers to keep pace with CPI the investors will stampede each other as they attempt to exit housing.

        1. And that’s exactly why I don’t expect the Fed will voluntarily end their interest rate suppression policy, exit strategy announcements notwithstanding to the contrary.

          So the question gets down to what would force their hand…

      2. “I would say that before the pandemic, it was a very different housing market than it was before 2008,” Powell said. “So we don’t have that risk of a housing bubble where people are overleveraged and owning a lot of houses.”

        Somebody, somewhere, needs to stop this guy. Immediately. This guy is the most dangerous cawksucker this country has ever seen.

      4. We talked about what impact the Federal Funds Rate (FFR) had on the housing market versus the Fed’s post-2008 QE and bond buying programs designed to push down long term rates.

        While the FFR may not directly affect mortgage rates (or maybe it does, there are a lot of gears in the bond market to which I’m not privvy), what it will more likely do is allow cash and cash equivalents to have a return. And that pulls money out of RE and stonks, which would cool those markets.

    2. It seems like the weight of the Fed’s knee on the housing market’s neck is easily underestimated.

      1. U.S. Economy
        U.S. Home-Price Growth Surges as Demand Overwhelms Supply
        March marked highest annual rate of price growth—13.2%—since December 2005, according to Case-Shiller index
        By Nicole Friedman
        Updated May 25, 2021
        4:02 pm ET

        Prices for new and previously owned U.S. homes are surging, as strong demand continues to overwhelm the housing supply.

        The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 13.2% in the year that ended in March, up from a 12% annual rate the prior month. March marked the highest annual rate of price growth since December 2005.

        Also on Tuesday, the Commerce Department said the median price of a new home sold in April was $372,400, up 20.1% from a year earlier, the strongest annual gain since 1988.

        The median sales price for existing homes rose 19.1% in April to $341,600, the National Association of Realtors said last week.

        Robust homebuying demand, driven by ultra-low mortgage interest rates,
        …

        1. up 20% in a year of lockdowns, unemployment and some business bankruptcies.

          The only reason is cheap lending and poor lending standards. How will they ever start to repair it? Imagine if they just gave back the 20% increase – the outcry would be deafening – and that is just to stay even.

          1. “up 20% in a year of lockdowns, unemployment and some business bankruptcies.”

            Bingo! Makes no sense. So either the economy better rebound quickly to carry those new debt burdens, or a correction is got to occur

        2. Dumb question of the day:

          How many years in the entire history of U. S. real estate markets before the Housing Bubble really took flight around Y2K did prices appreciate on a national level by over 10%?

          I’m guessing none, but please correct me if I am mistaken.

  8. King Biden doubled down on lumber tariffs. Plans to build some Russian style apartment buildings I guess.

  9. The nightmare is finally over. We have moved into our new rental. We will deal with the landlord is small claims court.

    As far as the old home, records show it was listed in 2016 for $380k. The house was just listed for $725k. It shows pending so we must have had people lined up before we moved out.

      1. We have communications where he agreed to a home a year extension. He stated the end date of the new contract and the new rental rate (higher). He’s been collecting the additional rent for a couple of months. Out of the blue, he says he wants to sell, gave us a move our notice and told us to get the hell out in 30 days.

        We had to scramble to find a new home last minute and had to overpay for movers.

          2. We had a similar situation year-end 2019. It’s pretty fun to find a new rental and relocate over the course of a couple of months…an undocumented risk a housing mania creates for those who prefer not HODL real estate purchased with massive leverage.

        2. a lease works BOTH WAYS, did he return your full deposit and pay your moving expenses? You cant deduct damages if you intend to move back in or sell the house….. And if he closes while you are still living there, the new owner gets your deposit at the closing…………If the landlord wants to break the lease it should not cost you anything out of pocket.

  11. Brett,

    Did the new contract have a sales clause? I have a couple of rentals and in my contracts, I always have one. That is, if I decide to sell I can break the lease with X days notice. In my case X is 60 days.

    1. No clause to break the lease. The clause was that he could sell it at anytime and advertise it, but not to kick us out.

    2. I would SUE you if you were my landlord……if you didn’t return my full deposit and pay for my moving expenses……I break the lease I pay you and you break it you pay me…..

  12. Is there any dog or human on the planet who doesn’t work at the Fed who can’t see the connection between COVID-19 stimulus and bubbles in most flavors of asset class?

    1. The Motley Fool
      5 Ways I’m Preparing for the Stock Market Bubble to Burst
      These steps have helped me stop panicking about the next crash.
      Robin Hartill, CFP
      (TMFRobinHartill)
      May 26, 2021 at 6:37AM

      Stock market crashes are expected, yet totally unpredictable. Historically, a stock market correction (a drop of 10% or more) happens about once every 1.8 years. While we know that another crash is coming, we also have no idea when it will happen.

      Fortunately, there are plenty of moves you can make to prepare. Here are five ways I’m safeguarding my finances for when the bubble bursts.
      …

    2. Finance
      From Dutch Tulips to Internet Stocks, How to Spot a Financial Bubble
      Long before SPACs and NFTs, investors clamored for everything from exotic bulbs to Pets.com. What history shows is that an inventive corner of the financial world can turn into a mania that attracts swindlers and wipes out investors.
      You may also like:
      NFTs Are Fueling a Boom in Digital Art. Here’s How They Work
      Nonfungible tokens, or NFTs, have exploded onto the digital art scene this past year. Proponents say they are a way to make digital assets scarce, and therefore more valuable. WSJ explains how they work, and why skeptics question whether they’re built to last.
      Photo Illustration:
      Jacob Reynolds/WSJ
      By Jon Hilsenwrath
      Updated May 7, 2021 2:01 pm ET

      About 300 years ago, financiers in Europe found themselves agog about the financial prospects of novel trading companies granted special rights in international commerce by the governments of France and England. The shares of these trading vehicles—England’s South Sea Company and France’s Mississippi Company—soared and then collapsed in 1720, wiping out hordes of angry investors.

      Episodes like that have some economic historians wrinkling their brows about what is happening in financial markets today, with Wall Street once again in the embrace of perplexing crazes for new investment vehicles.

      The price of bitcoin, the cryptocurrency, has risen more than sixfold in the past year. Meantime, shell companies called special-purpose acquisition companies—also known as SPACs, which list on a stock exchange and then buy target companies—have raised more than $100 billion this year, according to Dealogic. Investors are also clamoring for nonfungible tokens, digital certificates to online collector’s items, like art or autographs.

      Do these instruments signal a bright new world in finance, or something else?
      …

    3. COMMENTS / EXPERT ASSESSMENT
      Will Biden’s fiscal largesse cause inflation and implode the bubble?
      By Wen Sheng
      Published: May 09, 2021 03:12 PM
      Illustration: Chen Xia/GT

      The US Federal Reserve has promised it will probably not raise interest rates before 2023 to support recovery of the pandemic-ravaged US economy. However, prices of raw materials and manufactured commodities keep rising, causing inflation to raise its ugly head. It won’t be long – the end of 2021 or start of 2022 – before the central bank is forced to take action by upending its too loose monetary policy.
      …

    4. The good news is that we seem to be getting near or perhaps even past the peaks in at least some of the COVID-19 stimulus bubbles, such as SPACs and cryptocurrencies.

      1. The Financial Times
        Special purpose acquisition companies
        Spacs lose their deal ‘pop’ as fever fades
        Instead of popping, share prices now typically slide on takeover announcements
        Soaring Eagle Acquisition is trading below $10 despite last week announcing a $17.5bn deal to take Bill Gates-backed Ginkgo Bioworks public
        Ortenca Aliaj, Miles Kruppa and James Fontanella-Khan
        May 16 2021

        Shares in special purpose acquisition companies are sliding following takeover announcements, a marked reversal of the enthusiasm for these vehicles earlier this year which could threaten their ability to do deals.

        Of the 13 Spacs that have announced acquisitions in May, only one is trading above $10, the level at which shares in blank-cheque companies are originally priced, according to a Financial Times analysis of Refinitiv data.

        As recently as March, about nine out of 10 traded above $10 in the wake of a deal announcement, according to Spac Research — and many significantly above.
        …

      2. Sections

        CORONAVIRUS
        U.S. News
        Politics
        World
        Local
        Business
        Health
        Investigations
        Culture Matters
        Science
        Sports
        Tech & Media
        Decision 2020
        Video Features
        Photos
        Weather
        Shopping
        Asian America
        NBCBLK
        NBC Latino
        NBC OUT

        TV

        Today
        MSNBC
        Nightly News
        Meet The Press
        Dateline

        Featured

        NBC NEWS NOW
        THINK
        BETTER
        NIGHTLY FILMS
        STAY TUNED
        SPECIAL FEATURES
        NEWSLETTERS
        PODCASTS

        More from NBC

        CNBC
        NBC.COM
        NBC LEARN
        Peacock
        Next Steps for Vets
        Parent Toolkit
        NBC Archives

        Follow NBC News

        Facebook
        Twitter
        Tech News
        How big is Bitcoin’s carbon footprint?
        Elon Musk said Wednesday that Tesla would no longer accept bitcoin, citing the cryptocurrency’s energy demands.
        Musk said he was especially concerned by Bitcoin’s use of coal, “which has the worst emissions of any fuel”.
        Musk said he was especially concerned by Bitcoin’s use of coal, “which has the worst emissions of any fuel”.John W Banagan / Getty Images file
        May 13, 2021, 5:43 AM PDT / Updated May 13, 2021, 10:18 AM PDT
        By Reuters

        Tesla boss Elon Musk’s sudden u-turn over accepting bitcoin to buy his electric vehicles has thrust the cryptocurrency’s energy usage into the headlights.

        Some Tesla investors, along with environmentalists, have been increasingly critical about the way bitcoin is “mined” using vast amounts of electricity generated with fossil fuels.

        Musk said on Wednesday he backed that concern, especially the use of “coal, which has the worst emissions of any fuel.”

        So how dirty is the virtual currency?
        …

  13. Joe Biden threatens Ukraine with pulling $1 billion in US aid if they don’t fire the prosecutor investigating Burisma Holdings, the gas company that paid his son, no nothing about energy Hunter $100,000 a month for sitting on the board of directors, brags about it on a video and nothing happens but a massive storm of Fact checkers spinning the story until it says absolutely no wrong doing here move along.

    Yet I see the story about Manhattan district attorney convening a grand jury to see if Donald Trump overvalued his properties and whether or not he or any of his family members should be charged, all over every Major news outlet and even read by one of our local newscasters this morning with a look of disdain on her face.

    2. I distinctly remember the New York Post’s official Twitter being suspended just before the election for reporting on Crackhead Biden.

      Jack Dorsey is a communist terrorist.

      1. I wish somebody would pull a Jihadi Johnny on Dorsey. The cuck deserves to have his head separated from his body.

    3. “…Burisma Holdings, the gas company that paid his son, no nothing about energy Hunter $100,000 a month for sitting on the board of directors…”

      A generous sinecure tied to the $1-Billion in U.S. aid to Ukraine.

    1. How about insane sealed-price bid wars where fifty buyers bid on the same house with no idea of what their rivals are offering?

    2. There’s going to be something nefarious and new that, sure, makes it different than last time.

  16. Business
    San Diego home price up nearly 20% in a year
    A single-family resale home in Chula Vista.
    A single-family resale home on Franceschi Drive in Chula Vista listed for $719,000 in late May.
    (Phillip Molnar/The San Diego Union-Tribune)
    Experts say factors they thought would slow price gains have not happened.
    By Phillip Molnar
    May 25, 2021 11:03 AM PT

    San Diego home prices increased 19.1 percent in a year as of March and outpaced nearly every city in the nation.

    Nationwide average price increases in the 20-city index were 13.2 percent as of March, the S&P CoreLogic Case-Shiller Indices reported Tuesday. It was a rate of increase not seen since December 2005. Phoenix was the only metro to have a faster gain than San Diego at 20 percent.

    San Diego’s substantial increase reflects a full year of pandemic pricing from March 2020 to March 2021. The year was marked by a surge in demand from stay-at-home workers, low mortgage rates and national housing shortages.

    The last time prices went up this fast in the San Diego metropolitan area was in March 2014 as the region rapidly climbed out of the Great Recession. It is still lower than the housing boom days when prices increased 33.4 percent in July 2004 (only to drop 26.7 percent in October 2008).
    …

      1. That price is no problem at all. You see, Powell says as long as he doesn’t see people levered to their teeth, the actual skyrocketing prices are of no significance. Pay no mind to the horde of millions of homeless people who are unable to rent even the most rundown shack in the worst neighborhood.

        Powell is absolutely destroying the young, the poor, the elderly on fixed incomes, and the middle class. He is a financial terrorist the likes we’ve never seen before. A firing squad would be too humane. He should be drawn and quartered.

  19. What happened to the quaint notion that cryptocurrency was outside of the realm of financial regulation?

    1. The Financial Times
      Cryptocurrencies
      Bitcoin gyrates on fears of regulatory crackdown
      Digital asset market under intense pressure after China warns on use of cryptocurrencies
      A depiction of bitcoin against a Chinese flag
      The Chinese government, including its central bank, has sought to limit the use of cryptocurrencies in recent years
      Thomas Hale and Tabby Kinder in Hong Kong, and Philip Stafford in London
      May 19 2021

      Cryptocurrency markets swung in chaotic trading and related stocks were hit after Chinese regulators signalled a crackdown on the use of digital coins, which have soared in price this year.

      Bitcoin tumbled as much as 30 per cent to a low of $30,101, before clawing back its losses to less than 8 per cent.

      Other digital coins were also hit by heavy selling, with ethereum, one of the best-performing cryptocurrencies in the past month, losing a quarter of its value before moderating to losses a little over 20 per cent. More than $8.6bn of positions have been liquidated over the past 24 hours, according to data from bybt.com, a cryptocurrency data provider.

      The sharp moves came after the People’s Bank of China warned financial institutions about accepting cryptocurrencies as payment or offering related services and products, amplifying investor concerns that regulators could tighten oversight of the freewheeling asset class.
      …

  21. Curious what people think will happen for the rest of the year.

    My prediction is that there will be a bailout package bigger than any previous. It will include

    1. a provision of some kind to bailout people in forbearance.

    2. an increase in the conforming loan limits and a decrease in minimum credit scores for the GSEs.

    3. broad programs for downpayment assistance and 100% financing for “disadvantaged” borrowers.

    4, slavery reparations by another name…outright grants to African Americans to buy commercial real estate…farmland, office buildings etc.

    5. an institutionalized standard for GSE/FHA lending to illegal aliens with no social security number or proof of legal identity.

    This will keep the bubble expanding for at least another year,.

    2. Debt-based booms have a very standard pattern: first the good borrowers are all used up, then you have to get into the bad borrowers. So the next stage would be loosening lending standards. With a nationalized mortgage market, foreclosures should have a limited impact on the financial markets.

      There is only one requirement for any new program: it enriches either government (federal, state or local) with enhanced tax revenue or the financial sector. That is the common theme IMO. The Federal Reserve is the face of the financial-government complex. Through that lens – enrichment of financial sector or government – one can come up with any number of programs to funnel more money into the housing sector.

      What do I think is going to happen going forward? I think we’ll see at least a temporary slowdown. Even tulip bulbs and stocks, despite not being debt based, eventually turn around. Housing has some significant differences which I discussed in my other post. The RE market is heavily juiced right now with low interest rates, massive MBS buying, covid-initiated low inventory. But buyers have to think they stand to improve their financial situation. If the buyer is tapped out and either a) cannot buy due to prices or b) can buy but doesn’t think a purchase will improve his or his family’s financial situation, he won’t; also, there’s the whole “waiting till the frenzy / covid dies down” thinking as well which might suggest a slowdown. Also, as people go back to work, there’s less time to surf the real estate websites.

      I think there will be some slowdown can’t imagine a significant slowdown; but any policy has to enrich the financial sector and enhance tax revenue.

        1. I don’t like what the PTB has done to boost house prices. I think it’s destructive for the society to have so much money tied up in real estate, starving other sectors; to have the society so highly indebted. I don’t like the power of the financial-government complex – it makes the military-industrial complex seem comically small and weak. I don’t like the fact that society has created a de facto wealth-stripping program which pulls wealth from young to older via education and housing bubbles. But if I ignore these things and their effects, I’m deluding myself, which does not help me.

    3. Here’s another factor: Let’s say you have a humble house. You want to upgrade. But if all you see out there is other humble houses or worse, and for the nice ones, you’d have to a) get your maximum price and b) on top of that, take out a large mortgage, you might just stay put. Not saying that’s a major factor but it could be one factor which would suggest less of a growth in inventory.

      1. Local article on that subject from a week ago.

        Colorado Sun — As Colorado’s older homeowners consider moving, a hot housing market often keeps them stuck where they are:

        “For many older adult homeowners, the idea of downsizing or simply moving to a home where the design and layout — plus accompanying financial considerations — makes more sense has run up against some of the same challenges that vex even first-time homebuyers. Few available options fit their needs, and those that do tend to be outrageously expensive.”

        https://coloradosun.com/2021/05/19/colorado-older-homeowners-stuck/

    4. Ill take $5000, I have no student debt no credit card debt, the car is paid for i have safe drivers……a nice place to live, own a 2 family house with my brothers, so why cant i be rewarded too and pass the debt on to the “woke” kids????

    5. CA governor Newsom is going to blow the state’s surplus in an attempt to keep from being recalled .

    6. a problem with keeping prices artificially inflated is, new buyers dont want to enter the real estate market. The industry operates on new buyers.

      I believe we will have another “crisis” which will be reason to justify another ballout like in 2008-9. i think you are right about a massive ballout.

      1. “…new buyers dont want to enter the real estate market.”

        They can’t afford to buy real estate, or any other asset class since they’ve all been inflated beyond reach.

        2. I recall that families were doubling up during the previous bubble, as in two siblings or cousins and their families.

  22. Delores?

    Check out this tweetstorm from Redfin CEO Glenn Kelman yesterday. “It has been hard to convey…how bizarre the U.S. housing market has become,” he said. One buyer in Maryland “included in her written offer a pledge to name her first-born child after the seller,” he said. “She lost.”

    1. That is so idiotic on the buyer’s part. Naming a kid after me has zero financial value for me. Add in an extra $25k to the bid…. that will impress me.

        1. I would not be so interested in the name of the kid as I might be in the kid … herself.

        2. What was Hunter Biden doing in the bedroom half naked with his niece Natalie, who was 14 at the time the pics were taken?

          The New York Post didn’t ask that question. They got suspended from Twitter just before the election for asking much tamer questions.

          Thank the weaponized autism of 4chan for sleuthing out where Real Journalists do not dare to tread…

          1. The New York Post didn’t ask that question.

            They didn’t need to. It was on video.

  23. This resort-home mania has happened before — and it didn’t end well.”

    On a Zoom call with team at work and all were informed that they will be required to come back to office after Memorial Day part time. Then After July 4 return to pre pandemic normal expected. At least they can enjoy those high priced cabins on the weekends.

    1. Good luck taking care of that resort home from afar. It will slowly crumble back into the earth if they do not pay somebody a pretty penny to take care of it.

  25. The housing market is not like the tulip bulb or stock markets – no one needs tulip bulbs or stonks to live. You do need shelter to live. And that’s either rented, or bought, or other (couch surfing, moving in with relatives, etc). The demand for houses is always high.

    On top of that, the Fed (the face of the Financial-Government complex) has cratered interest rates, is buying 480 billion of MBS a year at least (it has 2.8 trillion in mortgages and has to continuously buy in order to keep that size stable); the government buys or insures virtually all newly originated mortgages; and state and local government have a myriad programs to inject money in the market under various ironically named affordability programs.

    On top of that, covid suppressed listings, spurring the market into a frenzy to bid for what listings existed (there were more sales, record territory last year, combined with fewer listings).

    And yet, if buyers ever think they are not getting suitable value for their money, they could pull back despite all that market support. If having a house means spending every last dime of discretionary income on carrying costs, as great as a house is, it may not be worth that. Perhaps they also think waiting till the frenzy dies down might be the way to go (although we’ll now start seeing stories that this is new normal, a “structural shift” for the housing market, so no point in waiting – you’re just going to get more fully FOMO’d. Although of course, if buyers already feel they’ve missed out, that will be a factor in reducing the market frenzy).

    Mr. Barkin may be right about the lack of excessive debt in homebuyers. To see for ourselves, the Urban Institute puts out a monthly look at the housing market titled “Housing finance at a glance: A monthly chartbook”. This is the current month: https://www.urban.org/research/publication/housing-finance-glance-monthly-chartbook-april-2021/view/full_report

    The median LTV at origination jumped from 80 percent pre-mortgage crisis to 95 percent post mortgage crisis. However, DTI remained stable which I guess means higher incomes?

    However, this visualization, which shows county level debt to income ( https://www.federalreserve.gov/releases/z1/dataviz/household_debt/county/map/#state:all;year:2019 ), and the NY Fed report on household debt ( https://www.newyorkfed.org/microeconomics/hhdc ) suggests a different story.

    Anyhow, despite the purported lack of leverage (of which I’m a bit skeptical, especially if they’re basing that on the FOR (Financial Obligations Ratio), which itself says it’s an unreliable indicator, and is showing that it is currently at historic lows, going back 40 years: https://www.federalreserve.gov/releases/housedebt/about.htm ), a slowdown could occur, even in this maximally juiced market. The financial-government complex is very clever, and it is willing to spend vast public resources on juicing the real estate market. So they could come up with some, more zany and outrageous funneling of public resources into juicing the real estate market. But still, as important and desirable as a house is to many, buyers have to think they are getting some significant value for their money. Having money for unexpected expenses is important; food and technology and tutors and cars and travel are still important for human satisfaction and success.

    1. The FBI should just rename themselves the Stasi or the NKVD to reflect their new role as the secret police for the Deep State.

    2. I miss the flag parade caravans, just before the 2020 election. It’s like living behind enemy lines out here. And we don’t have an ocean or the intracoastal, so there are no boat parades here.

  27. I’m not sure how it’s going to work out, but while I watch everybody levering up for asset purchases of all iterations, I am busy saving every penny I possible can. They make payments every month on their expensive vehicles, stucco sh!tboxes, etc., and I pay myself that every single month. We’ll see who comes out ahead.

    1. “every penny”

      I have never paid more than $12,000 to buy a vehicle.

      Depreciating assets are not investments. They are a noose, tied to your neck, with a cinder block tied to the other end. As you fall off the end of the pier in handcuffs.

      Debt is slavery.

    2. Same here…been making monthly payments to the Bank of Mom and Dad for years. Also had to make many withdrawals over the years to raise our kidz, but it has been nice to have the financial flexibility to do this without the financial albatross of a mortgage around our necks for most of parenting years.

    1. “Well if floyd behaved nothing would have happened…”

      He was probably on parole, and passing “funny money” is a federal crime, so he likely resisted arrest.

  29. Forward, Soviet!

    Trump Supporters Unequivocally Support Extremism, According To Pentagon Official Overseeing Efforts To Root Out Extremism

    https://dailycaller.com/2021/05/25/bishop-garrison-pentagon-trump-extremists/?fbclid=IwAR32ZMVS96Z9zhuJOvwa2QzRlcQZ8SNlDPgtpqSO228Gizw-n1zxLgHR-xw

    The leader of a Pentagon working group overseeing efforts to root out domestic extremists in the military tweeted in 2019 that any supporter of former President Donald Trump unequivocally supports extremism and racism.

    “Support for him, a racist, is support for ALL his beliefs,” Bishop Garrison, who was appointed by appointed by Secretary of Defense Lloyd Austin to lead the Countering Extremism Working Group (CEWG), tweeted in July 2019 in reference to Trump.

      1. An event horizon. Once you pass it, all that you see is the maw of the black hole.

    2. Forward, Soviet!

      There is no voting our way out of this. Even though inflation will burn through the economy, while homelessness, violence, unemployment, hopelessness and anger grow to levels never seen before, the 2022 midterms will be a landslide for the Dems, who will claim that everything is just great.

  33. This history of the few wanting to control the many, that has sought to stop the meek from inheriting the earth , is making their big criminal power grab now.

    From the time America set up this Constitutional Republic there were forces trying to sabotage this concept of Constitutional protections for the individual with US being a sovereign Nation.
    George Washington clearly said in essence to not get involved with foreign entanglements, and he didn’t like the concept of political parties either.

    Woodrow Wilson set the stage for Big Government by passage of Federal Income tax, UN One World Order set up, and he got us into World War One, which set the stage for World War 2.

    What’s going on today is like a backtrack to control by the few of the many by a One World Order of Billionaire owned Corporate Monopolies , Money changers and Elite characters who think the World belongs to them.
    They want to alter the sheep into the perfect drone slave , or worse depopulate the slaves they have looted for centuries.

    They criminally rigged the election to put their Puppets in, and they launched a fake Pandemic so Medical Tyranny could be used as a weapon of mass destruction.

    So, I predict that they will fail because its already apparent now that they are anti human and psychopaths who are the greatest extentiall threat to the World. This attempt to force experimental vaccines on the globe over a Medically fraudulent Pandemic, with useless lock downs and masks with fake news and censorship at the same time is obvious.
    Its a criminal insurrection of government by the people by fraudulent One World Order psychopaths that are no different than Hitler, Mao or Stalin, in fact they are using the same methods for this power grab.
    This is a opportunity for a reexamination of Big Pharmacy, the Medical Cartel, and what the agenda is of this Powerful force of one big Pharmacy experiments of destructive unsustainable harm to humans. A reexamination of what really produces health, verses this unsustainable looting and assault on the health of mankind.

    A reexamination of the criminal fraud of the One World Order Innsurrection that seems to be asserting itself in a big way right now. I predict they will fail, but I don’t exactly know how it will happen.

Comments are closed.