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They Have Been Left Holding The Bag

A report from Boca News Now in Florida. “Home values in Boca Raton and Delray Beach dropped precipitously between from the second to third quarter of 2021. According to the Elliman Report prepared by Miller Samuel Real Estate Appraisers, the average price of a single family home in Boca Raton dropped 16.9 percent from the second quarter to the third quarter. The average sales price from April through June was $1,284,350. But that dropped in the July through September time frame to $1,067,735. By square foot, pricing dropped from $327 per square foot to $304.”

“The average sales price for ‘luxury’ homes in Boca Raton also dropped quite a bit. Defined as homes in the top ten percent of for sales, the average selling price dropped from $2,146,250 during the second quarter to $1,572,500 in the third quarter.”

From Community Impact in Texas. “Home prices in Community Impact Newspaper’s Central Austin coverage area continued to cool off for a second month, according to the Austin Board of Realtors. The median home price for the area was $662,000 in September, down from $672,000 the previous month. Leading up to August, home prices had increased each month of 2021 in the heart of Austin, peaking at $725,000 in July. ‘More homes are beginning to hit the market, evidenced by the increase in new listings in September, which is creating a greater number of opportunities for buyers. While this is a positive step forward, there is a long way to go for this to be a balanced market,’ ABoR President Susan Horton said.”

The Real Deal on California. “‘I hear from landlords all the time that they have been left holding the bag,’ said Dan Yukelson, executive director of the Apartment Association of Greater Los Angeles. ‘Now that we’re rounding the corner on a year and a half of [the pandemic], they’ve got to do something to get the money out faster.'”

The New York Post. “An iconic oceanfront Montauk home owned by legendary TV host Dick Cavett has sold for $23.6 million — far less than its original $62 million asking price in 2017.”

From The Advocate in Louisianan. “Local real estate specialists aren’t totally convinced that the sizzling New Orleans market is suddenly about to turn cold. Missy Whittington, CEO of NOMAR, said it was more likely that rising prices would slow down rather than stall. ‘I don’t think weakness is the right word for what we’ll see; I think it’s going to be more a shift in gears,’ she said.”

“The number of homes for sale had started to rise over the summer. NOMAR’s September housing-market report said that there is likely more inventory coming onto the market, which could mean competition for homes may soften. That ‘could even bring a moderation in sales prices, which, after 114 months of year-over-year gains, would be music to the ears of homebuyers.'”

From DS News. “About 1.4 million homeowners are still in forbearance and all eyes are examining the possible risks. In the midst of this, Ginnie Mae’s evolving pooling rules for RPLs have spurred a run on the lucrative early buyout (EBO) market with benefits that include mitigating ongoing P&I losses and balancing DQP ratios. Holders, however, need an airtight servicing strategy to cure these loans.”

“Dave Vida, a mortgage industry veteran and EVP of Business Development at Computershare Loan Services (CLS), states, ‘EBO buyers need to ensure they are adequately staffed to manage non-performing loans and are prepared for changing market conditions. This includes having the proper level of expertise to manage a surge in loss mitigation.'”

From Mortgage Professional America. “Canada’s appetite for mortgages and other forms of debt has reached the point of aggravating the financial vulnerabilities of an already overstressed economy, according to researcher David Rosenberg and economist Julia Wendling. ‘Despite being among the most indebted of their peers pre-pandemic, Canadian households expanded their liabilities at the fastest rate in nearly a decade – primarily driven by a huge uptick in demand for mortgages as low interest rates prompted a surge in house prices,’ Rosenberg and Wendling said in their recent contribution to the Financial Post.”

“The unrestrained borrowing pushed the Canadian household debt-to-GDP ratio from 101.3% at the end of 2019 to 119.6% by mid-2020. This trend is likely to negate any gains from the (temporarily) improved purchasing power that borrowers enjoy, the analysts said.”

“‘With mortgage debt accounting for more than two-thirds of liabilities and real estate as a share of disposable income reaching a record high of 501%, Canadians are exceptionally vulnerable to any correction in the housing market, which has already shown signs of cooling off,’ Rosenberg and Wendling said. ‘All in, the long-term fundamentals of the Canadian economy are on shaky footing, further crippled by excessive debt, and we fully expect future economic growth to remain subdued.'”

From Globes on Israel. “The list of those harmed by Eldad Peri (44), the real estate developer hot dead in the street outside his synagogue in Rehovot on Friday morning, is a long one. Peri is suspected of having spun a web of illusions over the years, and apparently ran a Ponzi scheme with the money he received from members of buyer groups, needing a constant inflow of new money to finance previous activity, without which the business goes into freefall, as happened to Peri.”

“Eldad Peri left behind him debts of hundreds of millions of shekels and a series of lawsuits over money that disappeared, payments that never reached trustee accounts, multiple caveats in Tabu (the Land Registry), loans upon loans that were never repaid, and failure to provide collateral to buyers.”

“During the good times, Peri’s ostentation included luxury offices in the Azrieli Towers in Tel Aviv, massive advertising, investment in football clubs, huge salaries for well-known managers, appearances at business conferences, and so on, all in order to project an image of a businessperson in the big league.”

“It was found that it was very difficult to separate between Peri himself and his companies, and that Peri was designated the borrower in loan agreements amounting to at least NIS 280 million. ‘To advance projects by the companies, loans were taken amounting to substantial sums by the Peri group from non-bank lenders, and as part of the collateral given to secure these loans, besides mortgages on the plots of land that were the subjects of the loans, the debtor mortgaged his private assets,’ Haver’s report states.”

From AFP. “Chinese property giant Evergrande’s shares plunged today after resuming trading in Hong Kong, with the failure of a unit sale deal deepening fears the indebted firm will collapse and send shockwaves through the world’s second-largest economy. Evergrande said it would continue to implement measures to ease its liquidity issues, cautioning that ‘there is no guarantee that the group will be able to meet its financial obligations.'”

“‘I don’t think it will be a surprise to see a default (on the offshore note),’ said Chen Long, partner at research firm Plenum. ‘Actually, it’s the other way around. It would be a surprise to see Evergrande not default.’ Chen said Evergrande did not start the contagion, noting that many developers had borrowed too much money and found themselves in trouble with tighter restrictions and a cooling housing market. ‘Evergrande was not the first, and it’s not going to be the last,’ he told AFP. ‘It just turned out to be the largest.'”

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This Post Has 71 Comments

  1. ‘The median home price for the area was $662,000 in September, down from $672,000 the previous month…peaking at $725,000 in July’

    Good thing everybody put 20% down.

    1. This leg of asset inflation seems to have exhausted itself. Time for more Fed taper talk and a short-lived futile attempt at tightening followed by Big Bang style explosion of money printing.

      Prices still levitating in San Diego. An outdated mediocre house on a small lot around the corner just sold for 850k after a short time on market. This is a just above average type of neighborhood nowhere near the water.

      “When asked whether the government would consider sending the National Guard to help unload cargo ships in Southern California or help ease a national shortage of truck drivers, White House Press Secretary Jen Psaki said on Tuesday that the Administration has not taken “options off the table.” Similarly, Transportation Secretary Pete Buttigieg told NBC that the National Guard has not been ruled out as a potential solution.”

      The national guard implementation at hospitals is expanding. If they start with ports and airports and other transportation, we can assume the back door maneuver at martial law has been activated. These kind of questions by the press are usually planted to make it look like it wasn’t the culprits who said it first and to sheep dip the public into not be alarmed by the power grab when it actually happens.

      1. The Port of Long Beach and Port of L A were both ranked at almost 350 in terms of efficiency in the world. Meanwhile, there are empty ports all up and down the west coast which could easily unload all of those ships. But no, I’m sure the union is preventing that.

      2. I don’t want to know how Secretary Pete will act around a bunch of National Guardsman. He’d probably put on his “breasts”.

  2. Another Chinese domino tumbles. But I’m sure the CCP has matters well in hand, so this is no cause for alarm.

    Evergrande crisis: developer Modern Land (China) cancels US$250 million bond repayment plan on liquidity issues

    https://www.scmp.com/business/banking-finance/article/3153095/evergrande-crisis-developer-modern-land-china-cancels

    China’s property market has taken another turn for the worse as developer Modern Land (China) has cancelled its plan to repay a portion of a US$250 million junk bond and extend it just days before it was set to mature, joining China Evergrande Group and other peers in a financial mess.

    At the same time, Chinese Estates Holdings, once Evergrande’s second-biggest shareholder, said it sold its holdings in high-yield bonds issued by another Chinese developer Kaisa Group Holdings at a loss. The sales this week at prevailing market rates came just days after Kaisa said it made an interest payment due on its debt last week.

  3. ‘Ginnie Mae’s evolving pooling rules for RPLs have spurred a run on the lucrative early buyout (EBO) market with benefits that include mitigating ongoing P&I losses and balancing DQP ratios. Holders, however, need an airtight servicing strategy to cure these loans’

    ‘EBO buyers need to ensure they are adequately staffed to manage non-performing loans and are prepared for changing market conditions. This includes having the proper level of expertise to manage a surge in loss mitigation.’

    They use too much jargon at this site. But I have been seeing reports of “re-performing” loan sales out of all the GSE’s. Many billion$ of loans. It’s press release stuff, you won’t read it in the REIC media. As I’ve mentioned, ‘proper level of expertise’ will be guys who just started shaving, etc.

  4. ‘I hear from landlords all the time that they have been left holding the bag…they’ve got to do something to get the money out faster’

    Get up off yer knees Dan and stop begging.

  6. Someone please explain to me how Turkish developers intend to repay the massive euro- and dollar-denominated loans they took out from PIIGS banks to fund their speculative building spree, when the Turkish lira is in a free-fall against those currencies.

    Lira Tumbles to Record Low After Central Bank Cuts Rates Again

    https://www.bloomberg.com/news/articles/2021-10-21/lira-tumbles-to-record-after-central-bank-cuts-rates-again?sref=ibr3A0ff

    The Turkish lira fell to a record low after the central bank cut its key interest rate for a second straight meeting despite the deteriorating inflation outlook.

    The lira slumped more than 2% to 9.4867 per U.S. dollar. The Turkish central bank reduced the one-week repo rate by 200 basis points to 16%. The median estimate in a Bloomberg survey was for a 100-basis-point cut.

  7. ‘Despite being among the most indebted of their peers pre-pandemic, Canadian households expanded their liabilities at the fastest rate in nearly a decade – primarily driven by a huge uptick in demand for mortgages’

    What does highly indebted plus super high prices equal? Subprime.

    1. “What does highly indebted plus super high prices equal?”

      DebtDonkey

      Sacramento, CA Housing Prices Crater 21% As California’s Fraud Riddled Housing Market Implodes

      https://www.movoto.com/ca/95825/market-trends/

      As one Sacramento area broker explained, “There’s always been some level of fraud in housing sales. It’s just how business is done.”

    2. ” Subprime”

      Subprime’s
      All right with me
      Subprime
      Is the way it should be
      Subprime
      Is the right way
      It don’t matter what you pay

      Sun comes up
      In the morning
      Realtor says it’s nice
      Next day, without no warning
      You offer over asking price

      Cause Subprime’s
      All right with me
      Subprime
      Is the way it should be
      Subprime
      Is the right way
      It don’t matter what you pay

      Neil Young – Homegrown (Official Audio)

      https://youtu.be/-0gpr-cdXZE?t=59

  9. Anyone imbecilic enough to believe a $2 trillion spending bill packed with Democrat patronage and graft projects will add zero to the deficit is a prime candidate for court-ordered sterilization. FJB and everyone who voted for him.

    ‘What are we doing? This is the USA dammit’: Biden urges warring Democrats to come together to pass his $2trillion spending package and whispers that it will cost nothing and won’t add to the deficit

    https://www.dailymail.co.uk/news/article-10113711/Biden-urges-warring-Democrats-come-pass-agenda.html

    1. add zero to the deficit

      If the money is borrowed, a real debt donkey will argue that you will actually save money.

  10. Oh dear….

    Shares in China’s Evergrande plunge as deal collapses

    https://www.aljazeera.com/news/2021/10/21/shares-in-chinas-evergrande-plunge-as-deal-collapses

    Deal falls through as debt-ridden property developer faces looming bond payment deadline.

    Shares of China Evergrande Group, the world’s second-largest economy’s most indebted property developer, have plunged as much as 14 percent when they resumed trading on the Hong Kong Stock Exchange following a two-week suspension.

    Thursday’s opening bell sell-off came after Evergrande announced that a deal to sell a $2.6bn stake in its property services unit had fallen through.

  11. The Comrades of Proven Worth (D) in our NEA indoctrination mills are now taping masks to the faces of students. This is about ensuring mindless compliance to globalist diktats, not educators doing their job.

    Colorado school district investigates after parents say teachers taped masks to students’ faces

    https://www.foxnews.com/us/colorado-school-district-investigates-teachers-taped-masks-students-faces

    A Colorado school district is investigating allegations that teachers taped masks to students’ faces at one of its schools.

    The school district in Colorado Springs opened its investigation after a photo of a student at Chinook Trail Middle School with a mask taped to her face circulated on social media over the weekend.

  12. ‘More homes are beginning to hit the market, evidenced by the increase in new listings in September, which is creating a greater number of opportunities for buyers.

    “Opportunities” to get schlonged. No thanks, UHS. Think I’ll just recline here on my lawn chair, popcorn in hand, and watch the carnage play out.

  13. The New York Post. “An iconic oceanfront Montauk home owned by legendary TV host Dick Cavett has sold for $23.6 million — far less than its original $62 million asking price in 2017.”

    If it’s any consolation, Dick, the knife catcher who took it off your hands is going to get an even bigger haircut on a percentage basis.

  14. “ The New York Post. “An iconic oceanfront Montauk home owned by legendary TV host Dick Cavett has sold for $23.6 million — far less than its original $62 million asking price in 2017.””

    It looks like a mega high maintenance house.

    1. “…It looks like a mega high maintenance house….”

      Any structure, oceanfront to approximately 1 mile inland are essentially land locked boats.

      Here in SoCal, wind driven salt water corrosion will destroy anything and everything.

      Even solid copper sheathing, rain gutters, plumbing fixtures are no match for Mr. Ocean.

      I can imagine the Atlantic seaboard is even worse, due to more frequent and much stronger winds.

    2. Here’s the house: https://www.zillow.com/homes/176-Deforest-Road,-Montauk,-NY_rb/2088014985_zpid/

      Year built: 1882 (well, no)
      Heating: Forced air, Oil

      More info from celebritynetworth:

      “Roughly 50 years ago, Dick purchased around 100 acres of land in Montauk, Long Island. He sold 77 acres of the property to the US government in 2008 for $18 million. That land is now a nature preserve. The remaining roughly 20 acres were listed for sale in June 2017 for $65 million. The property features a home that burned completely down in 1997. The home was re-built almost exactly to its previous specifications.”

      But yeah, it’s still high-maintenance. Probably needs a full time maid, landscaper, and high-skill handyman. Open-flame gas stove in the middle the kitchen — no thanks. No discernable party space outside — I guess they partied on the porches. You can’t get to the sea/beach directly because there’s a 15-20 foot cliff. Unless you’re going to subdivide those 20 acres, it doesn’t seem worth it. And Montauk is a hundred miles from New York. You may as well get something in Atlantic City.

      2. I took another look. Doors have only two skimpy hinges not four which is standard on a luxury home. Other skimping throughout and the money was dumped on making the interior intricate which is overdone aesthetics and perpetual endless housekeeping — better have maids quarters will need live in staff.

  16. Here in SoCal, wind driven salt water corrosion will destroy anything and everything.

    Even solid copper sheathing, rain gutters, plumbing fixtures are no match for Mr. Ocean.

    I can imagine the Atlantic seaboard is even worse, due to more frequent and much stronger winds.

    Here is a map entitled “Salt Air: How far inland does salty air affect metals?”

    https://images.app.goo.gl/c12SxUJXU4c7MsJm9

    Note that those of us who live in Southern California are mostly spared from enduring the plague rust and other metal corrosion. There are two reasons for this:

    1. The humidity in Southern California is low.

    2. This is God’s Country and thus we blessed people who are fortunate to live here are treated as being really something very special, and deservedly so.

    1. Mr. B: sorry to burst your bubble but Leslie Appleton Young has already slapped the “Gods Country” label on Marin County quite some time ago . . .

      “It’s God’s country, what can I say,” Leslie Appleton-Young, chief economist for the California Association of Realtors, told an audience of agents Tuesday (April 2007) in Terra Linda. “When is the 30 percent decline in Marin County’s market going to happen? Not in my lifetime.”

      after all, she’s a Realtor in a power-pose-pic on the bus bench. on the side of the bus.

      and if you disagree w/her you’ll soon be under the bus

      (btw, it’s finally raining here in N.Cal. could I trouble you for your umbrella, old chap!?)

      1. I’ve seen a couple touristy documentaries on California. Parts of California — Tahoe and wine country — were quite beautiful, even to my Eastern girl eyes. Of course most of it has burned down by now.

      1. Some used cars from Hawaii need the engine compartment wiring harness replaced, and they’re easy to buy these days, but lots of work doing the installation.

    4. The Atlantic is saltier than the Pacific. Plus as you know the East Coast is humid. That house would make someone a slave. The wood everywhere and all the different woods a d colors and patterns, just to upkeep the decking and they placed the outlets in the baseboards in the main rooms but skimped in the other rooms. Kitchen cabinetry looks inset and prett nice actually but no cover with fan over the open stove top? No the house is not worth being a slave to it no way.

  17. This is a pearl clutching article.

    How Spanish-Language Radio Helped Radicalize A Generation Of Miami Abuelos:

    https://www.huffpost.com/entry/miami-spanish-language-radio-misinformation_n_616dbd3ee4b005b245c0b57e

    Remember, there is nothing, nothing ever, more racist than a white liberal who is confronted with any non white who leaves the Democrat Party plantation.

    Reading this article made me really hungry for a good Cuban sandwich. I haven’t had one since I was in Fort Myers in January 2020.

  18. Is Gollum setting up for a replay of The Big Short, where they make bank while Rubes lose their shirts?

      1. “Unfortunately for those sidelined buyers, there’s more bad news. In the next 15 months—through the end of 2022—Goldman Sachs is forecasting U.S. home prices will soar another 16%.”

        1. It’s amazing that Zilldo and the other eBuyers would leave a prospective 16% gain on the table!

      1. Ox i hope Ben allows this, but my gut instinct tells me this was not a domestic violent couple….even though both had a temper. think s&m rough s#x pulling hair choking…and it went too far. it was an accident but no one would believe him. Depeche mode has songs about this behavior 30 years ago. https://www.youtube.com/watch?v=MHRabky4Ajc

          1. she was “strangled” that could mean almost anything. from your thumbs on her windpipe to tying a rope around her neck, we just dont know.

      2. An MSM distraction from the sorry state of our country. Why should I care, especially now, about a wannabe social media influencer killed by her abusive boyfriend?

      3. Did he off his GF, travel 2000 miles, and then off himself?

        He probably didn’t panic until he got home.

  24. Are you concerned that a stock market which appears to be permanently protected by central bankers from ever again facing another correction could morph into a historic crash which none could have seen coming?

    1. Stock Market Crash of 1929

      The stock market crash of 1929 began on Oct. 24. While it is remembered for the panic selling in the first week, the largest falls occurred in the following two years as the Great Depression emerged. In fact, the Dow Jones Industrial Average (DJIA) did not bottom out until July 8, 1932, by which time it had fallen 89% from its Sept. 1929 peak, making it the biggest bear market in Wall Street’s history. The Dow Jones did not return to its 1929 high until Nov. 1954.

      https://link.investopedia.com/view/561dd6ab3b35d045798b9502f4xeb.ju5m/945b7bc6

    2. The Financial Times
      Commodities
      China property bust undercuts talk of new commodity ‘super cycle’
      Neither current shortages nor the green transition may deliver the sustained high prices that exporters hope for
      A residential development in Shanghai
      China’s property sector accounts for an estimated 30 per cent of the country’s annual output
      © Qilai Shen/Bloomberg
      Jonathan Wheatley in London and Michael Pooler in São Paulo October 20 2021

      It is almost exactly 20 years since China joined the World Trade Organization as a $1tn economy. Since then, China’s economy has grown to almost $15tn, unleashing a wave of prosperity in developing countries that helped lift more than 1bn people out of poverty.

      But now a crisis in China’s property sector, as manifest in the financial problems of developers Evergrande and Fantasia, has many worried that China’s near-insatiable demand for raw materials, which long proved a potent engine of growth for emerging economies, has run out of steam.

      “China’s property sector is right at the end of a boom period. That is negative news . . . particularly for countries that have ridden the coattails of that boom,” said William Jackson, chief emerging markets economist at Capital Economics, who expects that the commodity power houses of Brazil and South Africa will be hit especially hard.
      …
      Arguably the biggest factor is the slowdown in China’s property sector, which accounts for an estimated 30 per cent of the country’s annual output. Chinese economic growth fell to 4.9 per cent in the third quarter of this year, versus 7.9 per cent in the previous quarter.

      “China’s poor September figures reflect supply-side constraints, but of greater concern is the weakening demand side due to a deepening property downturn,” Gavekal Dragonomics wrote to clients on Monday.

      Construction alone accounts for about half of China’s steel consumption, and iron ore prices have almost halved since late July when Evergrande’s problems intensified.

      “A long and drawn-out transition for China’s property sector lies ahead,” Larry Brainard, chief emerging markets economist at TS Lombard said. “This points to a reversal in the bullish commodity price outlook that has favoured some emerging markets.”
      …
      … it is future prospects for commodity demand that has analysts worried. That is especially so given that Beijing’s “common prosperity” agenda seeks to shift the economy away from construction-led investment and towards consumption.

      The effect of that shift may be profound. According to the IMF, China delivered 28 per cent of all global output growth between 2013 and 2018. If China’s property sector accounted for a third of that, the sector was responsible for more than 9 per cent of worldwide growth worldwide over that period.

      “I find it bizarre that people talk about global inflation in the context of container prices and ships being in short supply, as if these changes will be permanent,” said Bhanu Baweja, chief strategist at UBS and an emerging markets veteran. “Yet nobody is talking about the biggest contributor to global growth.”

      Additional reporting by Fenella Rhodes and Jyoti Mann.

      1. a wave of prosperity in developing countries

        As the Developers fail we can start saying China is overdeveloped.

        1. The problem with the illusion of Ponzi financed, debt funded prosperity is that eventually, someone has to pay the piper when the Ponzi cookie crumbles.

    3. China Economy
      Evergrande is ‘just the beginning’: Professor says more firms must exit China’s property sector
      Published Wed, Oct 20 2021 8:12 PM EDT
      Yen Nee Lee

      Key Points
      — China’s real estate sector has to be “substantially smaller” to keep the overall economy healthy and stable, said Li Gan, economics professor at Texas A&M University.
      — “We have too big of a risk in the sector. We built too much housing, so the stabilization first has to come [from] trimming the sector,” said Gan.
      — Gan estimated that about 20% of China’s housing stock is left vacant, yet developers continue to build millions of new units each year.

      China’s real estate sector has to be “substantially smaller” to keep the overall economy healthy and stable, said a top expert on the Chinese housing market.

      “We have too big of a risk in the sector. We built too much housing, so the stabilization first has to come [from] trimming the sector,” Li Gan, an economics professor at Texas A&M University, told CNBC’s “Street Signs Asia” on Wednesday.

      Gan estimated that about 20% of China’s housing stock is vacant as buyers rack up second and third properties as investments. Even then, developers continue to build millions of new units each year, he said.

      Chinese property developers have grown rapidly following years of excessive borrowing. Troubles in the sector came to the forefront in the last few months as Evergrande and other developers missed bond repayments and face the threat of defaulting.

      Using real estate sector to pump up GDP growth is not … a sustainable path for China.
      Li Gan
      Economics Professor, Texas A&M University

      Authorities in China have ramped up efforts to rein in excesses in the property sector and curb speculation among homebuyers. Measures include limiting rampant borrowing among developers and tightening rules for mortgage lending.

      There are signs that demand for housing has cooled in China, said Gan, who is also director of the Survey and Research Center for China Household Finance at Southwestern University of Finance and Economics in the Chinese city of Chengdu.
      …

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