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The Math Favored Handing The Keys Back To The Lender

A report from Deseret News. “The Federal Reserve is expected to raise interest rates this week — likely by 0.25% — for the first time in three years. As a result, mortgage rates will rise, too. ‘It’s bad,’ said Dejan Eskic, senior research fellow at the University of Utah who specializes in housing research. ‘A good two-thirds of Utah cannot afford the median-priced home anywhere because of how fast rates rose in the last couple of months. Typically when we see rates rise we do see a slowdown in demand. We see a slowdown in price. Sometimes the price actually falls,’ Eskic said.”

From Reuters. “First-time buyers accounted for 27% of existing home sales in January, according to the National Association of Realtors, near 2014 levels. With mortgage rates above 4%, around the highest in about three years, and expected to rise further, buyers on tight budgets may struggle even more to find homes they can afford. Conditions are hitting morale: A survey by Fannie Mae found just 29% of respondents think it’s a good time to buy a home, near a record low for a series launched in 2010.”

“Some people who had been pre-approved for a mortgage may find they no longer qualify for the same maximum loan amount after mortgage rates rise, said Jennifer Beeston, a senior vice president of mortgage lending for Guaranteed Rate. ‘What I spend 50% of my time doing now is pep talks,’ said Beeston.”

“Jason Harrison and Jamar Haggans are just getting started with their home-buying search, but they are already lowering expectations. Their search for a three-bedroom, two-bathroom house in Kansas City, Missouri, priced under $450,000 turns up only 10 to 20 new houses daily. After reviewing the quality of homes listed, they upped their budget by $75,000 and are nervous about over-paying. ‘My biggest fear right now…is that if we want to get a home we’re going to have to pay more than it’s actually worth,’ said Harrison, 36.”

A press release. “Demand for vacation homes dropped sharply in February, with mortgage-rate locks for second homes reaching their lowest level since May 2020, according to Redfin. Demand was still up 35% from pre-pandemic levels, but that’s significantly lower than the 87% increase the month before. ‘Rising mortgage rates, combined with rising home prices, are hitting the second-home market much harder than the primary-home market,’ said Redfin Chief Economist Daryl Fairweather. ‘That’s largely because vacation homes are optional. People don’t need a second home.'”

The Jacksonville Business Journal in Florida. “Zillow has sold at least 180 homes in Jacksonville over the past three months. Public record data for Duval County shows Zillow Homes Property Trust has been involved in 16 transactions since December 2021, as the company looks to sell off the more than 400 homes it owned in Jacksonville. Late last year, Zillow announced it was ending its Zillow Offers business, which was the company’s iBuying operation that would often offer sellers cash for their home. The end of Zillow’s buying program meant it is offloading the 7,000 homes it owned nationwide.”

The Seattle Times. “Leaders of Seattle-based Zillow face another lawsuit in federal court related to the closure of the company’s house-flipping operation, Zillow Offers. Attorneys for shareholder Leah Rosenfeld filed a complaint Thursday alleging, among other things, that Zillow’s board of directors ‘utterly failed to implement and maintain adequate internal controls and corporate governance practices critical to the Company’s success in pivoting from operating as a pure digital platform to competing in the highly competitive iBuying space.’ (iBuying is an algorithm-driven form of house-flipping.)”

“Zillow announced in November it would shutter Zillow Offers after acknowledging the company had been unable to accurately predict future home prices for the business. Share prices tumbled afterward, and shareholders have sued because of their losses. The suit isn’t the first fallout from the closure. Three other shareholder lawsuits against Zillow have been consolidated in federal court.”

The Real Deal. “Digital mortgage lender Better.com cut roughly 3000 employees, or about a third of its staff, citing lower demand for its services in a rising interest rate environment. ‘We have huge opportunities ahead to grow and to serve, but we must adjust to volatility in the interest rate environment and refinancing market to get there successfully,’ CFO and interim president Kevin Ryan wrote in a memo to staff. Employees learned about the latest round of cuts a day early when the company accidentally leaked severance payments. ‘No email, no call, nothing,’ an anonymous employee told TechCrunch. ‘This was handled disgustingly.'”

From Bloomberg. “One of the tallest office towers in St. Louis lost 96% of its appraised value. Denver’s former World Trade Center complex faces foreclosure. An oil company’s vacant Houston workplace sold this year at a $67.4 million loss to lenders. Those properties are among the 30% of U.S. office buildings — worth an estimated $1.1 trillion — that are at high risk of becoming obsolete as tenants’ tastes change in the hybrid-work era, according to Randall Zisler, an independent consultant.”

“As values for those properties slide, some landlords are walking away.  ‘We’re not saying bulldozers are arriving en masse,’ Zisler said. ‘But you’re going to see a repricing and, in some cases, reuse of these buildings.'”

“Renovations don’t guarantee success for buildings in weak locations. Empire State Realty Trust Inc. added a gym and dining facility in 2019 to a Norwalk, Connecticut, building that was only 46% occupied as of December. The company stopped paying a $30 million mortgage rather than spend more money to lease up space, Chief Financial Officer Christina Chiu said on a conference call last month. ‘The math favored handing the keys back to the lender,’ said Danny Ismail, a senior analyst at Green Street. ‘Increasingly, that’s a risk going forward.'”

“Values plunge after delinquencies. Reappraisals in the past two years of 60 office buildings with distressed commercial mortgage-backed securities fell by an average 67%, erasing more than $1.2 billion in collateral, according to data compiled by Bloomberg. The biggest wipeout of that group was 909 Chestnut in St. Louis, which was appraised in August at $9.2 million, down from $207.3 million in 2014.”

“In Denver, where downtown offices are 24% vacant, one loser is the former World Trade Center I & II towers, built in 1979 and appraised at $176 million in 2013. The owners failed to find a buyer who would cover the $132 million mortgage and agreed to surrender the property, now called Denver Energy Center. A foreclosure is expected this month.”

“More losses loom for landlords across the country. ‘We’re going to see a substantial decline in prices in buildings that are obsolete,’ Zisler said. ‘You’ll see it over the next four years, maybe even sooner.'”

This Post Has 81 Comments
  1. Chevy Chase, MD Housing Prices Crater 27% YOY As Soaring Inventory Sends Prices Diving Across Northern Virginia Area

    https://www.movoto.com/chevy-chase-md/market-trends/

    As one Washington DC broker lamented, “How can we possibly sell a resale house when builders are selling new houses on the same street for 20% and sometimes 30% less?”

  2. ‘A good two-thirds of Utah cannot afford the median-priced home anywhere because of how fast rates rose in the last couple of months’

    Oooh!

    ‘Zillow’s board of directors ‘utterly failed to implement and maintain adequate internal controls and corporate governance practices critical to the Company’s success in pivoting from operating as a pure digital platform to competing in the highly competitive iBuying space’

    Nobody made money on this stuff Leah, so what success are you talking about? If it’s internal controls etc, yeah let the trash talk begin. But what happened at the other money hemorrhaging shack flippers?

  3. ‘‘Rising mortgage rates, combined with rising home prices, are hitting the second-home market much harder than the primary-home market…That’s largely because vacation homes are optional. People don’t need a second home’

    Sacré bleu Darrel! Wash yer mouth out pronto!

    2nd shacks are gambling usually with borrowed money.

  4. First time buyer? How bout no time buyer…You qualify for a homeless meth addict loan however. Right this way to SF

  5. ‘The math favored handing the keys back to the lender’

    I was reading more foot stamping on the CO HOA thing. What about the foreclosures that weren’t in the one mentioned? If the guberment hadn’t told everybody to quit paying and foreclosing, how many articles on FB’s would we be seeing? In other words, if 8 grand in fines is pushing people out on their a$$, how shaky is the whole sh$tcart?

  6. “Reappraisals in the past two years of 60 office buildings with distressed commercial mortgage-backed securities fell by an average 67%”

    Hmmmm…. what do we have here…. “RE”-appraisal? Someone is inferring the first appraisal was….. ahem…… defective.

    Defective mortgages…. defective appraisals. Nobody says a word when it’s borrowed money….. until prices start falling.

    Austin, TX Housing Prices Crater 22% YOY As Subprime Mortgage Implosion Accelerates Across Texas

    https://www.movoto.com/tx/78617/market-trends/

  7. Ukrainian and Russian negotiators made little progress toward agreeing on a ceasefire or on terms to end the conflict, but issued a rare joint statement declaring that realtors are liars.

    1. Hello Boo Randy,
      God how I love your clever memes. Always good for a hearty chuckle.
      Thank you,
      –Geezer

  8. ‘My biggest fear right now…is that if we want to get a home we’re going to have to pay more than it’s actually worth’

    450 thousand pesos is a sh$tload of money Jamar. The appraisers will save you though.

    1. but in several of the articles they seem to be blaming fuel costs – and not that there is an all-up inflation happening.

      1. Since most consumer goods require large amounts of fuel to produce and deliver, even affecting labor costs due to household heating and commute expenses, it’s no surprise to see rising fuel prices drive up the prices of everything.

  9. from the Bloomberg article
    $1.1T + $1.1T – that is a lot. Pity the owners – insurance companies, REITs, pension funds.

    I especially like the phrase “mediocre middle” – could also apply to a lot of 10 year old condos and tract housing in the suburbs.


    In addition to $1.1 trillion of endangered buildings, another $1.1 trillion make up a “mediocre middle” with limited upside because of uncertainty about long-term demand and potential renovation costs, Zisler estimated. Top-tier buildings, worth about $3.2 trillion, are likely to gain value as tenants move up in quality.

  10. ‘That’s largely because vacation homes are optional. People don’t need a second home.’”

    That’s strange…. I take a long beach vacation every year and have for the last 20 years and not once did I ever have to sign up for a big fat mortgage…… Realtors are such liars.

    Littleton, CO Housing Prices Crater 21% YOY As Denvers Fraud Crippled Housing Market Staggers

    https://www.movoto.com/littleton-co/market-trends/

    1. Ukraine will be Russia’s most expensive real estate deal ever, and they’ll never be able to enjoy it for fear of being killed by a sniper, car bomb, etc., and it will destroy their economy before Putin’s head is forced into the gold plated toilet by his own people. 🙂

  11. Classical scholars using newly developed AI tools to decipher missing fragments of ancient texts report that nearly all of the restored damaged inscriptions said “Realtors are liars.”

    DeepMind’s new AI gives historians a powerful new tool to interpret the past

    https://arstechnica.com/science/2022/03/deepminds-new-ai-tool-helps-resolve-debate-over-ancient-athenian-decrees/

    Google DeepMind has collaborated with classical scholars to create a new AI tool that uses deep neural networks to help historians decipher the text of damaged inscriptions from ancient Greece. The new system, dubbed Ithaca, builds on an earlier text restoration system called Pythia.

    1. 81 million voters quiet?: that’s because 1/2 are literally sky-screaming privately at home in their living room, literally drunk on boxed wine w/3 cats.
      the other half are soy-boy bun-headed idiots literally trying to forget it all at the local “artisan hand crafted” beer pizza sandwich shop, literally preening for some tv reality show.

      literally.

      1. What’s happening is an influx of California Mormons bringing along $1 million or so in accumulated home equity wealth gains is driving up housing prices to levels that native Utah Mormons can’t afford. Luckily there’s Idaho, North Dakota, Wyoming and other more northerly states to choose from where housing is more reasonably priced.

          1. Nah…a whole polygamist family working at Utah wages couldn’t make enough to afford California prices.

  12. “‘It’s bad,’ said Dejan Eskic, senior research fellow at the University of Utah who specializes in housing research. ‘A good two-thirds of Utah cannot afford the median-priced home anywhere because of how fast rates rose in the last couple of months. Typically when we see rates rise we do see a slowdown in demand. We see a slowdown in price. Sometimes the price actually falls,’ Eskic said.”

    Sounds like what is needed to restore housing affordability is much higher interest rates. Luckily it seems like central bankers around the world are headed that direction.

  13. “The biggest wipeout of that group was 909 Chestnut in St. Louis, which was appraised in August at $9.2 million, down from $207.3 million in 2014.”

    That’s a 95.6% loss. Is now a good time to buy the CRE CR8R?

    1. No, first the banks need to go under which if these types of losses continue, they will soon. Then their assets get put into pools and it is those pools where the bargains will be had. It’s like a slow motion train wreck but you need to wait until the whole train is smoldering. These examples are evidence that the train is coming off the tracks but most of the passengers are still unaware. If they were to look up they would see the vultures circling but the vultures are smart and will wait until everything stops moving.

      1. “It’s like a slow motion train wreck but you need to wait until the whole train is smoldering.”

        That’s awesome…a knifecatcher’s paradise. The hardest part of buying at the bottom is created by the coordinated, uncompetitive, anti-efficiency efforts by whales in the banking industry to preserve the best crash buying opportunities for fellow Fed-financed whales. Good luck to the small fish trying to bottom feed at not catching yourself a falling knife.

      2. “…vultures are smart and will wait until everything stops moving.”

        My understanding is they prefer their prey dead as a doornail, and don’t mind if the decomposition process is already well underway.

    2. I just drove through St. Louis. $9.2 million is still too high, regardless of which building we’re talking about.

      1. Lived there for several decades, worked there for one. It’s definitely a rustbelt hellhole, and already was so when my family moved there half a century ago.

        1. Some years ago a head hunter cold called me about a job in St. Louis. I burst out laughing. Though I have to say, the way things are going, Dumver will soon be just as bad. I recently read that Dumver has the most car thefts per capita of any metro area. Do they still have those night kickball leagues in Dumver? Could be dangerous.

          1. Despite its reputation as a murder capital, St. Louis has its redeeming features, including cultural amenities, excellent opportunities for free lance musicians, and a great baseball team. It’s just a shame that you have to always watch your back in some parts of town.
            For instance, I’ll never forget when I once showed up at a music gig in East St. Louis. There were unrepaired bullet holes over the front door of the building where the rehearsal was held.

  14. Soothsayer- Caesar!
    CAESAR- Ha! who calls?
    CASCA- Bid every noise be still: peace yet again!
    CAESAR- Who is it in the press that calls on me?
    I hear a tongue, shriller than all the music,
    Cry ‘Caesar!’ ….. Speak; …. Caesar is turn’d to hear.
    Soothsayer- Beware the ides of March.
    CAESAR- What man is that?
    BRUTUS- A soothsayer bids you beware the ides of March.
    CAESAR- Set him before me; let me see his face.
    CASSIUS- Fellow, come from the throng; look upon Caesar.
    CAESAR- What say’st thou to me now? speak once again.
    Soothsayer- Beware the ides of March.
    CAESAR- He is a dreamer; let us leave him: …. pass.

    1. I think he is talking about the annual flu vaccine–the CDC has to guess at what flu strain(s) are going to occur in the coming flu season and then they manufacture the flu vaccine for those strains. Half the time they guess completely wrong since it’s a hit or miss kind of thing. Nobody really understands how the annual flu season works. That’s why it was a complete folly to think that anyone or any measure taken by governments could stop Covid-19.

      Masks don’t work against the flu. “Social distancing” isn’t even considered—it’s a joke. And lock downs, border closures and other closure measures don’t work against the flu.

      1. Masks don’t work against the flu.

        How about colds? They must work against colds! Nobody got a cold over the past two years because of these measures, right?

        s/

      2. But what did he say? I’m sure lots on this is to come, but what we contracted was mass formation psychosis.

      3. I think he is talking about the annual flu vaccine–the CDC has to guess at what flu strain(s) are going to occur in the coming flu season

        This is the argument that will be make for the coming mRNA flu jab. Just wait, we will be told that it works against all strains. Then people will still catch the flu and the retread excuses used with the Covid jabs will be trotted out. And all those unusual cases of heart attacks, strokes, clots and cancer will crank up and of course, it will be a coincidence.

        1. I doubt that the government will try and change the flu vaccine from the traditional technology based one which has been used for decades to a vaccine based on mRNA technology. If they do, there will be massive non-compliance and it’s going to be hard for anyone to say we need masks and lockdowns for an ordinary flu season.

      4. “Masks don’t work against the flu.”

        That doesn’t stop Asians from mask virtue signaling every flu season.

        1. That doesn’t stop Asians from mask virtue signaling every flu season.

          In Japan mask wearing in public was common long before Covid-19 came along. Wearing masks also has nothing to do with the flu since many Japanese wear masks all the time when outdoors, not just during flu season. For example, Japanese women frequently wear masks when they go out because they won’t have to put on make-up.

          Japanese also take their shoes off before entering homes. Like mask wearing, it is a social custom. I’m only mentioning the Japanese since I don’t have intimate knowledge of all the other “Asian” societies in the world, or even here in America.

          FYI, Japanese-Americans don’t wear masks during flu season–at least I’ve never seen one do so.

        2. That doesn’t stop Asians from mask virtue signaling every flu season.
          I’m quite sure that people in Japan wouldn’t know what you meant by “virtue signaling”. Social behavior in Japan is enforced by a rather strict set of rules both formal and informal. “Virtue signaling” is largely an American concept that means little or nothing to many Asian cultures. In Japan you can only DECREASE your amount of virtue by acting or behaving in a deplorable or dishonorable way. A person can’t INCREASE their virtue status with such a trivial display. In some ways, a person’s innate virtue/value/status is predetermined at birth–at least it was that way in the old days. For example, an “eta” could never become an important politician or samurai–in fact an eta probably couldn’t get into Tokyo University before the war.

      5. Masks don’t work against the flu.

        There’s some debate about this. My understanding was that some spread of flu is airborne, but most flu is spread by contaminated surfaces. If flu were primarily airborne, then wouldn’t it have an R0 greater than 1.5? And masks, even paper ones, do stop spread by surface contamination, simply by preventing your contaminated fingers from touching your nose.

    1. What was the name of the website that showed the estimated US population in 2025 being 160M? I know they “fixed it” since then.

    2. Why… because they’re taking birth control younger and younger. Women have been getting birth control blood clots long before COVID was a gleam in Fauxi’s eye. Or it could just be some environmental contamination.

  15. Another vibrant when you see his image:

    A man was arrested early Tuesday morning in D.C., after a search for the suspect who killed two homeless men and wounded three others in attacks in the nation’s capital and New York City.

    Federal agents apprehended Gerald Brevard, 30, after a tipster helped identify him Monday afternoon, D.C. police chief Robert Contee told reporters.

  16. https://gab.com/ASBMilitary/posts/107961806707367848 (2m19s video): American and British mercenaries are running away from the front lines in Ukraine — Ukrainians are cutting up their passports and sending them back to the front lines with no weapons and no kit. A few days ago, 100+ were killed in russian precision strikes on the housing complexes of foreign mercenaries in Ukraine

    1. “A few days ago, 100+ were killed in russian precision strikes on the housing complexes of foreign mercenaries in Ukraine”

      Sounds like an inside job.

    1. “This is well worth a watch.”

      I’m 2 minutes in and don’t have the time to watch the whole thing this morning, but if I do later should I expect anything more than the first 2 minutes of one sided PBS propaganda that I have already watched?

    2. Putin’s Road to War

      Perhaps listen to the man himself: https://t.me/inessas100/497

      “Empire of Lies” speech – 24 Feb 2022

      00:01 – NATO expansion, a changing world order
      05:00 – Lawless interventions in Belgrade, Iraq, Libya & Syria
      09:45 – Western support and funding of terrorism in the Chechen wars
      10:30 – Imposition of unnatural pseudo-values and the degradation of society
      12:00 – Unpreparedness and lessons of WWII, “We won’t make the same mistake twice!”
      15:30 – A red line was crossed with Ukraine
      16:15 – Donbass Genocide: attempt to rectify the situation peacefully for 8 years
      17:30 – Neo-Nazism and the threat to the Russian speaking regions of Ukraine
      18:15 – Nuclear weapons for Ukraine are only a matter of time
      20:00 – Announcement of Special Operation Z
      21:15 – Victory in WWII is sacred and we will protect that freedom
      22:30 – Address to the Ukrainian people
      24:50 – Important words for anyone who seeks to intervene externally
      25:30 – Our future is in reliable hands

        1. While it’s appropriate due diligence to examine all sides of an issue, one also needs to entertain the possibility that the individual causing a mass casualty event might not be straight with you. In dealing with those who have accrued a great deal of power, I’m a fan of Occam’s Razor when analyzing their behavior.

          1. might not be straight with you

            Like MSM trying to manufacture consent for WW3 while ignoring the hand our “leaders” had in creating this crisis?! I despise globalists. I despise how they’ve used our taxpayer money to pillage and destroy other countries and their people for their own personal gain. How many times do you have to be played before you say enough is enough?! I’d much prefer we mind our own f’n business.

          2. Like MSM trying to manufacture consent for WW3

            Shouldn’t be too hard. They got almost 80% of the country to roll up their sleeves for an experimental gene therapy jab.

    3. Frontline piece is the Globalists pot calling the Putin kettle black.
      Globalists Power grab wants a One World Order dictorship where you are altered genetically , with absolute control, having nothing and being happy.
      The tactics of all the power grabbers are the same.
      Funny how a Corporate owned fake news is critical of Putin’s control of news.

      I find the genocide , looting and destruction and power grab by Globalists, by a contrived Pandemic , by bio weapons and toxic injections a sinister warlike assault on humanity .

    4. “This is well worth a watch.”

      Any Russian conflict with NATO really means U.S. involvement, so we should have insured that the former Soviet satellite countries that act as buffer zone between Europe and Russia became neutral similar to Finland and Switzerland rather than NATO members with military bases.

      This phuc-up didn’t happen by mistake; more than likely globalists have been making money, and now the schitt has hit the fan.

  17. One of these creepy videos is this Nazi talking to the man who financed the “stop and steal” election Mark Zuckerberg and it speaks volumes.

    Video Thread: The Most Sinister Globalist You’ve Never Heard Of

    by Kelen McBreen
    March 15th 2022, 5:46 pm

    The clips posted below are just a sample of Harari’s public comments, mostly courtesy of the Thrivetime Show posting to Banned.video.

    “We humans should get used to the idea that we are no longer mysterious souls. We are now hackable animals,” he infamously told the World Economic Forum in 2020.

    Harari told CNN’s Anderson Cooper the next phase of the current spy state “is surveillance going under our skin,” adding that it is “not just dystopian, it’s also utopian.”

    In a discussion with Facebook co-founder Mark Zuckerberg, Harari admitted he thinks voters don’t know what’s best for them.

    In the near future, Harari claims the elite will be able to hack a human’s brain the same way one could hack a computer.

    https://www.infowars.com/posts/video-thread-the-most-sinister-globalist-youve-never-heard-of/

    1. “In the near future, Harari claims the elite will be able to hack a human’s brain the same way one could hack a computer.”

      Already I check under the bed for a giant pea pod before I go to sleep, and now this brain stuff. Now I’ll have to wear a 135-gauge tin foil hat too!

      1. Short of implanting a chip in your skull, I don’t see how they could do it.

        No chip, no job?

    1. The Financial Times
      Hedge funds
      Hedge funds make retreat from US stocks after big swings hurt returns
      Prime brokers report cuts to long and short positions in a ‘nowhere to hide’ market
      TV screens at the New York Stock Exchange
      The benchmark S&P 500 stock index has fallen 11 per cent this year
      © Bloomberg
      Eric Platt in New York and Miles Kruppa in San Francisco yesterday

      Hedge funds have dramatically scaled back their footprint in the US stock market as sharp swings have pummelled big money managers.

      Funds that trade with some of the largest banks on Wall Street including Morgan Stanley, Goldman Sachs and JPMorgan Chase have rapidly cut long and short stock positions, or bets on prices rising or falling, according to interviews with traders and data that the banks have circulated to their clients.

      The moves accompany the worst sell-off in the $46tn US stock market since it was rocked by the coronavirus pandemic two years ago. The benchmark S&P 500 index has fallen 11 per cent this year as investors react to surging inflation, tighter monetary policy from the Federal Reserve and Russia’s invasion of Ukraine, which has helped to drive up commodity prices and thrown global growth forecasts into doubt.

      “This has become a ‘nowhere to hide’ market,” said Charlie McElligott, a strategist on Nomura’s trading desk.

      Morgan Stanley last week notified clients that they had seen one of the largest five-day periods of selling in North American stocks by hedge funds on record, noting that the size of the sales trailed only the final week of January 2021, when the retail meme-stock frenzy was roiling markets, and the onset of pandemic lockdowns in March 2020.

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