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A Reminder That Property Is An Illiquid Asset With Monthly Holding Costs That Need To Be Serviced

A report from CNN Business. “Buying a home of her own became a priority for Kelly Robinson during the pandemic, as she began to feel cramped in her Indianapolis apartment.Robinson set a budget for $250,000. But in her market — the suburb of Greenwood — homes began selling within days, with as many as 10 competing offers, and sometimes going for $100,000 over the asking price. So she decided to put the home search on ice and continue renting. ‘Crazy’ to me is not getting an inspection because you want to be number one on the homeowner’s list,’ she said. ‘That is a risk I’m not willing to take. And having to make an immediate decision the day you see it? That is another thing that makes me really nervous. If I overpay or don’t get an inspection, that will cause bigger issues down the road.'”

“First-time homebuyers Steven and Laura Andranigian planned to move from their home near Monterey, California, to the Coachella Valley in southern California, where they have family and Laura got a job teaching elementary school. Looking for a home that costs less than $500,000 has them chasing properties as soon as they are listed. Many times, the houses are gone before they can even make an offer. Twice they’ve been laughed at for asking for time to get a pre-offer inspection. The Andranigians have decided to abandon their home search.”

From NBC San Diego in California. “It’s a frustrating time to buy a home. If you don’t get the house initially, though, stay in contact with the buyer, said Mark Goldman, loan officer for C2 Financial Corporation. ‘A lot of deals are falling out of escrow,’ Goldman said. ‘I’m hearing about situations where the buyer might be second, third, even fourth in line and then end up with the property.'”

“But what does that mean for the future of the market? Goldman expects mortgage rates to go up slightly as the end of the year approaches. Also, don’t expect to see many foreclosures. ‘You don’t see foreclosures,’ Goldman said. ‘Values have gone up so much that if somebody is in financial difficulty and they need to sell, they can because they still have equity in the house.'”

The Los Altos Town Crier in California. “The 5150 El Camino Real property in Los Altos, site of an approved high-density housing project, is up for sale again after going into receivership. The former property owner, Dutchints Development LLC of Los Altos, lost the property in receivership after defaulting on a $41 million loan. The site is approved for a 196-unit housing project. Dutchints is mired in multiple lawsuits alleging misappropriation and mismanagement of investor funds.”

From Bisnow New York. “Office buildings in New York City were only 21.9% occupied the last week of June, compared to a national average of 32.7%. The full fallout of the virus for Manhattan office has yet to be seen, said Compass Vice Chair Adelaide Polsinelli, and values are likely to come down. ‘It’s going to take time … owners who have bought an office building any time between 2017 to 2019, you’re probably going to have some pain, especially if you bought at a higher price, and your loan is at a number that’s not feasible today,’ Polsinelli said. ‘What’s going to happen is that those are going to have to get shaken from the tree.'”

The Idaho Press. “There were 729 Ada County listings at the end of June, according to the Intermountain Multiple Listing Service. That number was 570 at the end of May and 361 at the end of April. Mike Pennington, a real estate agent for John L. Scott Real Estate who writes a monthly report, took note of the possibly shifting landscape.’We may finally be at a point where we are starting to see a correction,’ Pennington wrote. ‘Not a crash, but simply a plateauing of our housing market. If that is in fact the case, it is badly needed.’”

“‘As our inventory continues to increase, which would be normal to get to that four- or five-month supply to get to more of a balanced market, we should start to see more stabilization in prices,’ said Christina Ward, a real estate agent with Keller Williams Realty Boise. ‘Or we could even see a decrease in prices.'”

The Baltimore Sun in Maryland. “A 23-acre estate in Annapolis at 1604 Winchester Road, owned by the CEO of Phillips Seafood, is the most expensive home for sale in Maryland listed at $24.9 million, according to the real estate auction firm handling the sale. Five years and $30 million of renovations later, the Phillips family and Annapolis architect Charles Anthony created the current estate. The estate first hit the market in 2012, priced at $32 million but did not sell. The asking price has since been reduced to $24.9 million over the past year. Bidding for The Friary will start on Aug. 12 at 4 p.m. and continue for six days. It is listed as ‘no reserve’ with no base bidding cost so that the house will be sold regardless of the price.”

The Kansas City Business Journal. “After almost two years on the market and a 50% price cut, a castle-like mansion located at 5225 Renner Road inside the gated private community Lake Quivira is heading to the auction block. The auction is set to begin on July 23 with no reserve and end July 28.”

From Business Day in South Africa. “Property ownership has traditionally been considered a good path to building wealth. In the property boom period of 2004-2008, more than 80% of primary residence properties sold for more than a 25% profit. That changed with the global financial crisis of 2007-2008, which crashed the property party, sending almost 30% of properties into forced sales at a loss. This resulted in about one in five properties losing more than 10% of their value.”

“The Covid-19 pandemic has had a similarly negative effect on the property market, with a spike in forced sales as sellers discounted offers in 2020. With more than 2-million jobs lost at the height of the hard lockdown, quick sales were a relief from bond and property costs. Though the market has recovered slightly in 2021, it has undoubtedly been a tough period for property investors since the onset of the pandemic, with 18.6% of investment properties selling at a loss and a further 6.89% only just breaking even after estate agent commissions have been paid, according to TPN’s Vacancy Survey for the second quarter of 2021.”

“These trends are a reminder that property is an illiquid asset with monthly holding costs that need to be serviced.”

From Domain News in Australia. “The cost of renting an apartment in inner Melbourne has plummeted by as much as 24.5 per cent over the past year to historic lows and tenants are reaping the rewards, upgrading to better units and saving hundreds of dollars at the same time. In Southbank, where Alexander Moller has been renting since April last year, the cost of renting an apartment dropped by 21.6 per cent over the past year.”

“The massive price falls have been a boon for Mr Moller, who currently shares an apartment with a friend. The falling rents meant he was able to upgrade to a ‘much nicer apartment’ in the area late last year and still save $150 a week in rent. ‘I initially moved into an apartment in Southbank with a friend in April last year and there was only about five months left on the lease,’ Mr Moller said. ‘So, we started looking to see what else was available and there was just so much choice. We ended up moving into a much nicer apartment, in a newer building with more facilities and it was $150 a week cheaper than what we were paying.'”

“And there’s more good news for tenants in Melbourne’s CBD and surrounding suburbs: agents and property managers don’t expect falling rents to head in the opposite direction any time soon. ‘A lot of the apartments we manage are studio apartments that are located close to the CBD and the universities,’ said Nicholas Mitchell from Space Estate Agents Melbourne. ‘Before COVID, we would lease them overnight. They’d always go very quickly. I’d say now, the ones we do lease are going for 30 to 35 per cent less.'”

This Post Has 77 Comments
  1. ‘we started looking to see what else was available and there was just so much choice. We ended up moving into a much nicer apartment, in a newer building with more facilities and it was $150 a week cheaper than what we were paying’

    That’s the spirit!

  2. I’m hearing about situations where the buyer might be second, third, even fourth in line and then end up with the property’

    But winnah? The weather dammit!

    ‘You don’t see foreclosures’

    Eat yer crowz Mark, Thornberg is stuffed.

    ‘up for sale again after going into receivership. The former property owner, Dutchints Development LLC of Los Altos, lost the property in receivership after defaulting on a $41 million loan’

  3. Naples, FL Housing Pries Crater 15% As The Toxic Effect Of Subprime Mortgages Ripples Across US Housing Market

    https://www.movoto.com/naples-fl/market-trends/

    As one real estate economist observed, “Current asking prices of resale housing is 350% higher than long term trend and double construction costs. It’s a long way down from here.”

  4. ‘Office buildings in New York City were only 21.9% occupied the last week of June, compared to a national average of 32.7%’

    I first saw this stat a couple of days ago. Basically the CRE market is toast. Is that a lot? You betcha!

    ‘owners who have bought an office building any time between 2017 to 2019, you’re probably going to have some pain, especially if you bought at a higher price, and your loan is at a number that’s not feasible today’

    Not feasible? Are you talking about a$$ poundings Adelaide? Cuz it sounds like a$$ poundings to me.

  5. ‘There were 729 Ada County listings at the end of June, according to the Intermountain Multiple Listing Service. That number was 570 at the end of May and 361 at the end of April’

    Now Harry Potter this is getting ridiculous. We got all these UHS who swore there would never be more shacks for sale and we better roll with it, and with the flick of a wizards wrist, shazaam!

    ’We may finally be at a point where we are starting to see a correction…we could even see a decrease in prices’

    In Boise? Sacré bleu!

    1. It’s almost like someone uunclogged a toilet, and now all the backed up water is flowing freely again…

  6. ‘So she decided to put the home search on ice and continue renting. ‘Crazy’ to me is not getting an inspection because you want to be number one on the homeowner’s list’

    Manias are ultimately based in individual psychology. Weak minded people will hear (it doesn’t have to be real) no inspections and think, ‘we better go way over budget cuz it’ll be worth thousands more in a couple hours!’ No inspections = validation to speculate.

    When you run out of those, you are left with people who see the exact same trends as reasons to drop the purchase. No inspections = kiss my grits.

    ‘Twice they’ve been laughed at for asking for time to get a pre-offer inspection’

    1. An eventual shortage of greater fools is certainly one factor limiting the duration of manias.

      However, central bankers have proven themselves very effective in recent years with creating market conditions that increase the supply of greater fools. Pouring gasoline on an open fire has a similar effect.

      1. South Africa is the utopian vision of “fundamental transformation” that the Democrat Party has planned for the United States.

        1. I remember when the World Cup was held in SA, that:

          1) Foreign attendance was at record lows for a World Cup as people knew that SA was dangerous.

          2) Those brave enough to attend barricaded themselves in their hotels after the sun set.

          And that was 11 years ago. SA has deteriorated more since then.

          1. But they had World cup…they will get Olympic next.

            South Africa is like Obama….everyone knows it sucks…but can’t admit it just because…..

          2. they will get Olympic next

            Might as well. The Tokyo games will be held without spectators.

        2. South Africa is the utopian vision of “fundamental transformation” that the Democrat Party has planned for the United States.

          Yep, and it’s unfolding right in front of us, despite the media blackout on news that doesn’t fit The Narrative.

          1. despite the media blackout on news that doesn’t fit The Narrative

            I was surprised to see it covered on the BBC news website. But yeah, if you get your news from the US MSM, the South African riots have been memory holed.

  7. “‘Crazy’ to me is not getting an inspection because you want to be number one on the homeowner’s list,’ she said. ‘That is a risk I’m not willing to take. And having to make an immediate decision the day you see it? That is another thing that makes me really nervous. If I overpay or don’t get an inspection, that will cause bigger issues down the road.'”

    The people I know personally who bought earlier this year are well educated and fully understood the craziness of waving their inspection. But they also were fully convinced that purchasing a home in Austin was their best alternative, market conditions notwithstanding.

    1. “That is a risk I’m not willing to take.”

      Would having a pudgy husband have reduced the risk?

  8. Update: About a month ago, I posted a $765K listing for a house in Ellicott City, MD. This was the house that was built into a solid brick wall. Well, that house went pending within four days and closed 5 weeks later. I still can’t believe anyone would want to live in such a place. Imagine being caught inside during a fire or a riot.

    https://www.zillow.com/homedetails/10923-Atwood-Ln-Ellicott-City-MD-21042/126228499_zpid/?

    Here’s the google-map image of the back of the house — and its neighbors — being built into the brick wall.

    https://www.google.com/maps/@39.3047736,-76.887978,3a,75y,201.45h,87.53t/data=!3m7!1e1!3m5!1sQLQqH0KKNrdyU6eeJ6AlXA!2e0!6shttps:%2F%2Fstreetviewpixels-pa.googleapis.com%2Fv1%2Fthumbnail%3Fpanoid%3DQLQqH0KKNrdyU6eeJ6AlXA%26cb_client%3Dmaps_sv.tactile.gps%26w%3D203%26h%3D100%26yaw%3D65.739235%26pitch%3D0%26thumbfov%3D100!7i16384!8i8192

    1. Ox who owns the brick wall? They bricked in the windows, can the new owners undo it or is that a very heavy used street and they did it for noise reduction?

      1. I honestly don’t know who owns the wall. Who owns the inner walls in a condo building? The house is in a development with an HOA so I guess there’s some overarching corporation that controls those walls.

        The road is not busy; it’s more of an accessory road that goes only to those houses. Nobody bricked in those windows. It’s not even like the builder planned for windows and decided not to have them at the last minute. Nope, the bricked-in windows are original to the design of the house.

        If you look at the pix, you can see that the floor plan is designed specifically for bathrooms and utility rooms to be in the back of the house. Even the “open concept” kitchen is in the back of the house with no window or back door. There was never going to be a window in the back.

        I still can’t believe that someone would pay $750K+ for something like this. The house is really only 1.5 rooms from front to back. It’s 4 bedrooms but two of the bedrooms are in the basement with a full egress window. 🥺 I can’t wrap my head around it.

        1. And that’s not the only house built like that. It looks like seven houses on that street were built exactly the same way. I don’t know what the developers were thinking when they laid out the streets.

          1. And a half-mile further down the road there’s another street with another 7-8 houses like this. Yeah, for some reason I’m obsessed with this. I saw this when I was driving in the area and I had to double-back to confirm that those were houses and not garages or decorative gate-houses or whatever. I still can’t believe that the county approved this design. It just seems so dangerous, especially when there’s plenty of empty land for at least a narrow back yard. Nobody should be this desperate for a house, certainly not for $765K.

          2. for some reason I’m obsessed with this

            Let me suggest that the wall is a sound barrier to I70, to which these houses back up. Down the street, the wall is on the other side of the street and the houses are more normal. The developer simply built too close to the interstate and perhaps was required to provide the wall somehow. Cheap “solution”.

    2. i remember your original post, surprised it sold for as much as it did. Thx for the update Oxide

    1. “…every day it owns you.”

      Who knew that pet alligators would eat their owners alive?

  9. Can anyone who remembers kindly remind me of what happened next after the Fed let inflation run wild back in 2008?

      1. I can clearly remember President Ford trying to sell his “WIN” button. Whip Inflation Now. That of course was after Nixon tried price controls but Major League Baseball players [Vida Blue?] go HUGE increase on their salaries no one complained about. Man do I feel old sometimes, but also. remember 16% CD Rates at banks.

        1. “HUGE increase on their salaries”

          …. and there’s your inflation.

          Today? Not so much.

        2. If you want to “whip inflation,” don’t hand out silly buttons. End the Fed and bring back real money backed by silver and gold.

          1. Get rates back up into the long term historic range of 12%-15% and most of these problems go away on their own.

    1. Can anyone who remembers kindly remind me of what happened next after the Fed let inflation run wild back in 2008?

      Why, yes. On that very afternoon, thousands of realtors went forth and lied to someone. Fact!

    2. The Financial Times
      US Inflation
      Pace of US inflation picks up again in test for Fed
      Consumer price index jumps 5.4% from a year ago amid debate over the risk of runaway prices
      Petrol station in Bethesda, Maryland, US on July 8 2021
      The petrol pump is one place where US consumers are feeling the effect of rising prices
      Colby Smith in New York and James Politi in Washington yesterday

      The pace of US consumer price increases accelerated unexpectedly in June, challenging the view within the Federal Reserve and White House that high inflation during the US recovery will be temporary.

      The consumer price index rose last month at the fastest pace since August 2008, up 5.4 per cent from the previous year — well above the 5 per cent rise reported in May and the 4.9 per cent increase that economists had forecast.

      On a monthly basis, data released by the Bureau of Labor Statistics showed price gains of 0.9 per cent, the biggest one-month jump since June 2008.

    3. The Financial Times
      US Inflation
      Taper tensions: Jay Powell under pressure as US inflation surges
      Soaring prices will embolden hawkish Fed pushing for withdrawal of monetary stimulus
      Jay Powell is expected to face tough questions this week from Republican lawmakers who argue he is complacent about price rises
      James Politi in Washington and Colby Smith in New York yesterday

      Jay Powell, chair of the Federal Reserve, has so far succeeded in steering the US central bank and financial markets towards his view that the surge of inflation gripping America will be fleeting.

      But confidence in that judgment was called into question on Tuesday after a larger-than-expected increase in the June consumer price index raised new alarm bells about the extent of inflation in the world’s largest economy.

      The data, which showed the CPI jumping 0.9 per cent in June from the previous month — for a year-over-year increase of 5.4 per cent — will pile pressure on Powell to explain his position during congressional hearings this week.

  10. ‘You don’t see foreclosures,’ Goldman said. ‘Values have gone up so much that if somebody is in financial difficulty and they need to sell, they can because they still have equity in the house.’”

    What a lying sack of sh*t.

    1. I get so tired of Mr. Goldman being trotted out for comment on things in SD. I almost got a mortgage with him in 2005. We were discussing Option ARMs and my apprehension about using something like that. He told me that he had put his mom into one so she could enjoy the monthly savings with it. I wonder how that worked out.

      The quote about just selling ‘cuz equity is almost verbatim from the same conversation I had with him years ago.

      1. “We were discussing Option ARMs and my apprehension about using something like that. He told me that he had put his mom into one so she could enjoy the monthly savings with it. I wonder how that worked out.”

        Are these subprime mortgage brokers as dumb as they appear, or would they really sell their mother down the river for a little more income?

        A California Association of Used Homesllers (CAUH) used homeseller tried to fix us up with a broker who could get us into one of those things back in late 2004 as well, but I smelled a rat.

        PS We have a couple of mortgage brokers in our circle. One of them just moved to Utah, I guess since San Diego sales dried up with the recent parabolic bubble price blowout.

    2. Nobody could have possibly extracted all of the accumulated home equity wealth effects from their house, only to find themselves with no equity left to extract at the very point of desperation when they were forced by unforeseen financial circumstances to sell their home.

      That’s unpossible, right Mark?

  11. Several original “Lassie” scripts are to be auctioned off this week, including this unreleased scene:

    “Bark! Bark-bark! Bark!”
    “What is it, Lassie?”
    “Bark! Bark-bark-bark! Bark-bark!”
    “What, a realtor’s lying to someone?”

  12. I remember in the late 90s, we had day traders. Then in the mid 2000s we had house flippers. Then briefly we had both day traders and house flippers at the same time. After that, there was the GFD (Great Financial Debacle).

    Today, we also have day traders and house flippers at the same time. However, we also have a central bank that’s firehosing money into the system while suppressing interest rates. Be interesting to see how this episode turns out. “Permanently high plateau?” “To the moon, Alice?” Or typical bubble trajectory? I’ll get the popcorn.

    1. “Today, we also have day traders and house flippers at the same time.”

      Good observation. Are today’s crypto traders the beanie baby traders of the 90’s?

      THIS WILL NOT END WELL

    1. Agreed that’s horrible, though not the worst that can happen to you while trying to make headway through ever-horrific Bay Area traffic. When we lived there, the fear was of armed carjackings where the perpetrator would kill the driver and drive off in the stolen car.

  13. I am streaming some C-SPAN Radio right now and I just heard Asterisk Biden say he won the 2020 Presidential Election.

    You didn’t win.

      1. see more communications like this:

        I have to say old friend; this is gibberish nonsense.

      2. Messaging on Telegram from Dan Scavino and Kayleigh McEnany is indicating a return in 2021. DJT said at one of his most recent rallies that sometimes you have to show the people.

  14. “W.H.O. LEADERSHIP FACES DEATH PENALTY IN INDIA FOR MURDER THROUGH MEDICAL MISINFORMATION ON IVERMECTIN AND HCQ”

    no link, you’ll just have to trust me. india is getting based.

    reminds me of… “you can fool some of the people some of the time…” some of the people have just about had it with the lying tyrants.

    1. I guess a 1995 Impala in very good shape is up there now with the muscle car category:

      https://classics.autotrader.com/classic-cars/1995/chevrolet/impala/101540749

      I didn’t know that dad looking cars could command such. I guess the v8 engine makes them desirable. Anyway, I am discouraged looking for a new ride and probably will wait until autumn to try and lock in something if prices go down enough. Either the cars I am looking at for my price range are already bought up or I have to just accept that the new norm is a used vehicle is going to have over 100k miles on it already to make it meet my budget.

        1. Ditto RVs, boats, and other toys. There are some really stupid people out there paying ridiculous prices for stuff.

  15. Any thoughts on why the bovine herd has recently become so very much less bullish?

    A bear can’t help but wonder…

    1. The Financial Times
      Global economic growth
      Investors turn ‘much less bullish’ on global growth and profits
      Fund managers say economic peak has passed but remain optimistic on European rebound, poll shows
      A specialist rests his head in his hand as he works on the floor of the New York Stock Exchange
      Inflation and the risk of a disorderly market ‘tantrum’ as central bank support is withdrawn remain the top concerns for money managers
      Joshua Oliver in London yesterday

      Investors say the boost to global growth from economic reopening has already passed its peak even as they downplay the risk of the Delta coronavirus variant derailing the recovery.

      Coronavirus ranked fifth among risks to the global economy, according to 239 fund managers, who collectively run $742bn in clients’ money, polled by Bank of America in a monthly survey.

      The July survey found that investors had become “much less bullish” on global growth and company profits. The share of investors who thought the economy would continue to improve dropped sharply from a peak of 91 per cent in March to 47 per cent this month.

  16. Some Expert named Dr. David Martin says he can prove the Panademic and Delta is false by patents applied for going back to 1999.
    I went back and the interviews had already been removed.
    So, in summary he said that Covid has been around going back to 1999. Apparently, the Patents applied for shows they were trying to use Covid to make a HIV vaccine, if I understood what he was saying.
    So, based on all these Patents he was rattling off , he said it proves the Covid Panademic was false as well as Delta. To sum it up they wanted Panademic to unleash the vaccine program . I think he said that the motive was pure profit and a mass vaccine program, and Fauci was involved with all this.
    So, the spike protein technology goes back 20 years where patents were applied for in vet vaccine for dogs.
    So, I don’t know if this is a smoking gun or what by a examination of Patents taken out by Fauci and Pharmacy Companies for the last 20 years or so.
    Bottom line is the Patent Expert is saying that the Panademic is fake, so is Delta, and the objective was the vaccines.

    1. is the Patent Expert

      David E. Martin, Ph.D. is not a registered patent practitioner; I just checked the USPTO website. Is this the video you saw? Speaking as a registered patent attorney, I can’t even watch it because he’s so deep in the weeds and probably doesn’t have any experience drafting an application and/or corresponding with USPTO examiners. I’ll just say it’s a tedious art and dance. The real “smoking gun” is the email to Fauci with the subject line “Coronavirus bioweapon production method.” You don’t need to spend endless hours reviewing voluminous prosecution histories to reach a conclusion that it was man-made and for a nefarious purposes.

    2. can prove the Panademic and Delta is false by patents applied for going back to 1999

      I don’t understand what you mean by false. That it’s not real? Something can be real and unpatentable. Given that SARS-CoV-2 is 80% homologous to SARS-Co-V, they should have had problems with novelty and obviousness during prosecution. The claims should have had to focus on the 20% difference but only if they weren’t naturally occurring.

  17. I was having a hard time understanding what he was saying. Something about the Covid not being a novel virus.
    You know a lot more than I do about this stuff, so I was hoping you would see the post.

    1. Novelty is a term of art and the first requirement for patentability. Scientists love to use the word novel rather than new in their scientific publications not understanding that it has a very particular meaning amongst patent practitioners. Dr. Martin probably has a better understanding of it than the average layperson but he’s not admitted to practice before the USPTO, which requires passing the patent bar exam. He’s caught between speaking to people who won’t understand and people who know more.

        1. The patent law profession is extremely snobbish and favors graduates degrees in addition to a law degree, but PhD patent agents frequently practice law without a license and undercut those of us who’ve gone to law school and passed a state bar exam. Those of us who’ve gone through all of the hoops don’t appreciate posers.

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