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What We Are Witnessing, We Will All Look Back At And Realize, Was The Slow Leak Of A Once Over-Inflated Real Estate Market Balloon

A report from the Times Leader in Pennsylvania. “‘Home values in the region saw more growth from 2020 to 2021 than the entire previous decade,’ said Jill Avery-Stoss, Director of Operations at The Institute for Public Policy and Economic Development. ‘Lackawanna and Luzerne Counties saw year-over-year increases of 18% and 26%, respectively. Pennsylvania as a whole saw a 20% increase in home values from 2020 to 2021, equating the previous decade’s growth in just one year.'”

From Inside Tucson Business in Arizona. “‘We are seeing homes stay on the market a little bit longer, and we’re even seeing some home price reductions,’ said Jodi Koch, president of the Tucson Association of Realtors. Tucson’s real estate market remains a seller’s market for homes in certain price ranges, Koch said. But sellers, in general, are not going to be receiving 20 offers and are probably going to have to reduce their price. Buyers, Koch points out, are seeing more opportunities to purchase a home this year. ‘Last year at this time we only could show a buyer one house every few days,’ Koch said. ‘Today, if a buyer calls me, I might have 10 homes to show him.'”

The Colorado Springs Business Journal. “The Colorado Springs real estate market finally began to cool off during June. Active listings of homes for sale in El Paso County were up 108.9 percent in June compared to 2021, and sold listings were down 7.8 percent, CAR reported. There are early signs that the market and high buyer demand is and will trend downward, according to Patrick Muldoon.”

“‘For the buyers who sat on the sidelines, whether on purpose or because they could not swing the insane real estate market, it is going to pay off,’ said Muldoon, a Springs-based realtor and spokesperson for CAR. ‘What we are witnessing in real time, we will all look back at and realize was the slow leak of a once over-inflated real estate market balloon across the Front Range.'”

“Muldoon said it’s an encouraging market for buyers and warned sellers that their ‘time has now come to an end.’ ‘Buyers, you finally have inventory hitting the market that you have not seen in years,’ he said. ‘The inventory is not selling as fast and sellers are price dropping, accepting concessions, and most sellers know that the market has shifted and they are being reasonable.'”

The Tampa Bay Business Journal in Florida. “Nationwide, people are canceling deals to buy homes at the highest rate since the start of the Covid-19 pandemic. The data shows that 23% of pending home sales fell out of contract throughout Tampa Bay last month. In addition to purchase agreement cancellations, homebuilders’ cancellation rates also saw a jump last month, according to research done by John Burns Real Estate Consulting. ‘Home builder cancellation rates jumped in June. Already above end of 2018 levels when rates touched 5% and approaching 2020 COVID panic peak,’ — Rick Palacios Jr.”

From Go Banking Rates. “The data, released by Redfin, indicates that figure (14.9%, to be precise) as the highest percentage of home sale cancellations on record excepting March and April 2020, when the housing market halted due to the onset of the coronavirus pandemic. It is also a significant increase compared to the 11.2% of canceled deals in June of 2021. ‘Buyer’s remorse and cancellations shortly after contract are increasing. Builders state buyers are nervous about a potential recession, struggling to get comfortable with higher payments, or expecting home prices to decline,’ Jody Kahn, senior vice president with JBREC, told CNBC, adding that in her mid-June survey she continued to see cancellations on the rise.”

The Nevada Appeal. “It was just a couple of months ago that we were in a super strong seller’s market. Over the past couple of months, interest rates have about doubled, housing inventory (residential lots included) has increased, and offers are not as forthcoming as they were just a short time ago. Homes can now be on the market for a couple of weeks without seeing an offer. While this is actually quite normal in the real estate world, when it is compared next to the tumultuous market we experienced over the past 18-24 months, it seems as if we are dead in the water.”

“Prices are being adjusted downward a bit, but nothing like the freefall of 2008-09. Some interesting things are occurring, however, that can give pause to ponder. Nationally, 14.9 percent of the active escrows in June canceled. It is risky comparing our Northern Nevada market to national phenomenon as we have limited privately owned land (remember, Nevada is 87 percent federally owned) and we are close to our feeder market, California.”

“Some escrows are being lost due to the loan locks either expiring, or, in some weird instances, the lenders not honoring their rate locks due to the dramatic increase in rates. Either way, escrows are lost. This is impacting builders in a big way as their escrows are extended longer than the average escrow due to the time required to complete the build. If the market falls in a big manner, things like inspections and appraisals become more important. The results can open the exit door for a buyer leaving the seller holding their home. This stops the dominoes from falling in a contingency sale causing tight jaws all around.”

From Candy’s Dirt in Texas. “My phone started ringing off the hook on June 5 with Realtors asking me what the heck was happening and what could they do to move a house faster. I scrolled through luxury home listings last Friday, as I do every week, particularly looking at homes priced at $3 million and above in my search for a worthy Monday Morning Millionaire. Most properties desperately needed staging. I heaved a sigh and thought about how we could help Realtors convince their clients to do what is necessary to market these luxury homes that look, well, not so luxurious.”

“We have luxury homes sitting on the market for 400 and 500 days. We have millions of dollars in price reductions on some of these. It’s time to make some decisions and face reality. If you choose not to, you are going to be in a situation where a listing is on the market for two years and you will have had to lower the price by several million. No one is going to be happy. I called up the stagers that work on our luxury listings to get their insight. I suggest you download this post and put it in your listing presentations. That way, you can weed out the bad clients immediately.”

The Los Angeles Business Journal in California. “The house-buying craze in Los Angeles has lost momentum, in some cases forcing agents to advise clients to lower list prices, rely less on bidding wars and in certain scenarios even cut commission rates. ‘We’ve definitely started to notice a pullback in the market,’ said Jon Grauman, director of estates at The Agency. ‘The market is literally shifting beneath our feet, and until the market finds its footing, it’s hard to get an accurate gauge. But there’s certainly a sense of hesitation in the market.'”

“Kerry Ann Sullivan, a real estate agent at Pardee Properties, said she noticed a shift in the market beginning in May, when talks of rising interest rates began. Between February and April, Sullivan said homes she had on the market were receiving 10 to 15 offers, while now her properties receive one or two.”

“‘That, to me, let me know that buyers are experiencing fatigue and there’s fear now starting to creep in because of what was being talked about in the media and on the news and by economists,’ Sullivan said. ‘By the middle of June, we’re starting to see the sellers who are realizing that their properties aren’t selling for the same prices that they would have sold for in that hot spring market, and we started to see some of the sellers accepting either lower offers or starting to do their price reductions.'”

“Grauman said that agents should have ‘frank, honest, candid’ conversations with their sellers to let them know what is happening and what they can anticipate. ‘We try to have an honest conversation with our clients about the fact that we are likely headed for some type of a dip here and that it starts with a decline in the volume of transactions,’ he said. ‘As that happens, there’s likely to be an adjustment to the housing prices, which will be reflective of whatever the new level of demand is, but the hit to home prices will ultimately be predicated upon how high interest rates go and how long they stay there for.'”

The Los Angeles Times. “Don’t look now, but Southern California’s hot housing market might be cooling off. Sales are down, inventory is up and some properties are even getting price cuts — including a few featured below. East Los Angeles feels like one of the few remaining areas around L.A. where $700,000 buys a lot of house. Not some one-bedroom bungalow with 500 square feet or a possibly illegal accessory dwelling unit tucked behind a property, but a real house with two stories, three bedrooms and maybe even a garage.”

“The largest home on the list at more than 1,800 square feet, this blue abode boasts three bedrooms and three bathrooms, as well as an open floor plan with a fireplace. It’s down $135,000 from its original asking price, and the listing also notes that the seller will pay $5,000 of the buyer’s closing costs. The address: 4121 Zaring St., Los Angeles, 90063. The price: $714,900.”

The Globe and Mail. “Negative equity is a concept Canadian homeowners have not had to deal with in decades, but rising interest rates and falling real estate prices now have advisors bracing for a wave of clients with homes worth considerably less than what they owe their mortgage lenders. Hilliard MacBeth, financial advisor in Edmonton and author of the 2015 book When the Bubble Bursts: Surviving the Canadian Real Estate Crash, warns waiting might not be an option for homeowners who bought during the recent pandemic-fuelled buying frenzy.”

“‘Anybody who bought in the past couple of years is probably very vulnerable to negative equity fairly quickly,’ he says. ‘If you look at some of those suburban markets around Toronto, there are tons of people that bought a home for $1.5-million who now can’t sell it for $1.2-million.'”

“Mr. MacBeth adds that unless they put a substantial down payment of well over 20 per cent, which he doubts, they’re already in negative equity. If any of those homeowners encounter life events such as an illness or job loss and need to sell their home, ‘they’re now in real trouble,’ he says.”

The Daily Telegraph in Australia. “It was once a path to the Aussie dream for those willing to get their hands dirty, but doing home renovations has more recently become the ultimate nightmare for property owners. With materials costs soaring, tradie shortages looming and budget blowouts on the cards, many once exuberant home renovators are now abandoning their projects after numerous setbacks. Some have even called it quits after works had already started. A raft of half-built homes, some stripped to an empty shell of roof beams and structural timbers, have been coming up for sale – often below the prices the vendors paid. Some of these sellers admitted the monetary loss was a better and sometimes cheaper option than completing a renovation in the current climate.”

“Former Northmead resident Bianca Pratt is among the Sydney homeowners who abandoned plans to renovate their homes and said the decision became an obvious one. Her family had ambitious plans to renovate their property but when they realised the cost would blow out to more than $400,000 they decided proceeding with the plan wouldn’t be worth it.”

“‘We would have spent all that money and we still wouldn’t have got all the work we wanted,’ she said. ‘It was also hard to know how long it would take. We tried to get quote for work, but we couldn’t even get a trade to come in and look at the property. They just weren’t interested.'”

The South China Morning Post. “Three quarters of China’s most indebted developers have missed completion and handover deadlines. Known in Chinese as lanweilou, these unfinished apartments, villas and homes lie strewn across an estimated 218 housing projects in more than 80 cities all over the country, sending thousands of buyers into revolt. In defiance, many buyers are refusing to pay their mortgages to their banks, putting pressure on the financial system. The borrower revolt, egged on through open letters circulated on China’s ubiquitous social network WeChat, has spread like wildfire, enveloping the cities of Zhengzhou, Changsha and Xi’an in China’s heartland.”

“‘The hole in China’s housing market is much bigger than the bond defaults or declines in developers’ shares that we saw last year,’ said Tommy Wu, the lead economist of Oxford Economics. ‘[The developers] just do not have enough money, and the spillover effect to ordinary people’s lives and banks could be haemorrhaging.'”

“Sam Chen, who bought a home being built by China South City in eastern Jiangxi province, is one of those who has been drowning in the aftermath of the country’s liquidity tsunami for developers. After signing for the home in July 2020, he has spent two years struggling to pay his 2 million yuan (US$296,000) mortgage at a rate of 7,000 yuan per month.”

“‘What did I do wrong? That is the question that I have constantly asked myself in the past year,’ said Chen, who was supposed to be able to move into his190 square metre condo in the provincial capital Nanchang last September. ‘Probably ever since the moment I decided to buy this house, my whole life just cannot be right again.'”

“After construction halted in mid-2021, Chen and hundreds of other homebuyers did not get a direct answer from the developer. News about China South City finally came in January, when it was revealed that the developer begged its creditors to extend two US dollar-denominated bonds totalling US$700 million. On a recent visit, Chen’s condo sat in a shell of a building among dozens of others, some three kilometre’s walk from the city’s government, with windows and pipes for gas and sewage nowhere to be found.”

“‘Can you believe that a parcel of land that is close to the government can just sit unfinished? I do not know what I can trust nowadays,’ Chen said.”

“Chinese homebuyers are now losing patience. Buyers of properties across nearly 100 projects in more than 50 cities have made public letters they sent to banks to inform their lenders that they would no longer be paying their mortgages, according to China Real Estate Information Corporation (CRIC), one of the country’s largest real estate brokers.”

“‘The contagion is spreading from these property companies’ liquidity issues to banks and it could end up with more pressures on those already distressed companies, as banks will be extremely cautious with mortgages while potential home seekers may step back to the sidelines in the short term,’ said Yan Yuejin, director of the Shanghai-based institution. ‘We are seeing a vicious cycle,’ Yan added.”

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This Post Has 114 Comments

  1. From the 8 minute video above:

    Wall Street and the iBuyers Leaving Real Estate? Jul 16, 2022

    00:00-01:12 – The market is “normal” now? NOT!!
    01:13-01:45 – The Shift! Where are we now?
    01:46-03:14 – 10% Interest rates in the Future?
    03:15-05:08 – Is Wall Street still going to buy homes?
    05:09-07:47 – Why all the buyers quit at once… Could the market drop $100,000?

    Orlando Florida.

  2. ‘We have luxury homes sitting on the market for 400 and 500 days. We have millions of dollars in price reductions on some of these. It’s time to make some decisions and face reality. If you choose not to, you are going to be in a situation where a listing is on the market for two years and you will have had to lower the price by several million’

    This website is focused on Dallas Fort Worth.

  3. The good old Nevada Appeal:

    ‘Some escrows are being lost due to the loan locks either expiring, or, in some weird instances, the lenders not honoring their rate locks due to the dramatic increase in rates’

    Wa?

    ‘Either way, escrows are lost. This is impacting builders in a big way’

    This area got washed out as bad as Vegas last decade.

  4. ‘Home values in the region saw more growth from 2020 to 2021 than the entire previous decade’

    And it was already a bubble. But this is the basic problem. Inflation/rates just provided the pin. Note the REIC is now saying those CCP virus boomtowns are leading the retreat. Maybe it was just all the phony money and QE after all.

  5. ‘What did I do wrong? That is the question that I have constantly asked myself in the past year…Probably ever since the moment I decided to buy this house, my whole life just cannot be right again’

    Well it was cheaper than renting Sam. One peculiar aspect of this Chinese per construction ponzi scheme was they have to make payments, for years, on an airbox that doesn’t exist.

    The media focuses on the guberment: “finish the airboxes!” They don’t need these things, it is in oversupply right now.

    1. ‘What did I do wrong? That is the question that I have constantly asked myself in the past year…

      Well, it started with your parents conceiving an imbecile….

      1. Well, it started with your parents conceiving an imbecile….
        You are brutal, just brutal! Damn funny

  6. ‘Anybody who bought in the past couple of years is probably very vulnerable to negative equity fairly quickly,’ he says. ‘If you look at some of those suburban markets around Toronto, there are tons of people that bought a home for $1.5-million who now can’t sell it for $1.2-million.’

    You know it has hit the fan if the Globe is quoting MacBeth.

  7. A reader sent these in:

    Starting to see substantial price drops on new construction in desirable Collin County suburbs now, not just exurbs

    https://twitter.com/OGtexasrunner/status/1548724465089085444

    New home construction cost cutting tips. And the job went to the lowest bidder…

    https://twitter.com/WallStreetSilv/status/1548563155336544258

    Home builders are building the highest ever number of new homes into a rapidly weakening housing market.

    https://twitter.com/ParResGroup/status/1548817040814776323

    Update from the housing market: the giant corporation I work for is in absolute chaos and it’s clear they’re just riding this out until it’s allowed to crash

    https://twitter.com/TheMcKenziest/status/1548080005556551681

    Why did the Fed buy mortgage bonds and keep rates at 0% month after month despite blatant evidence of a 2nd housing bubble forming over the last 2 years? No one will ask them that question.

    https://twitter.com/charliebilello/status/1548309990464634880

    China’s real estate sucks.. Soviet union style apartments. Nobody in china wants that sh$t

    https://twitter.com/AlessioUrban/status/1548797486634045441

      1. Something about building a super city (Tri-State City?) which would be the capital of the world or something like that.

    1. Armed ‘Good Samaritan’ stopped Indiana mall shooting

      “Someone we are calling the ‘Good Samaritan’ was able to shoot the assailant and stop further bloodshed. This person saved lives tonight. On behalf of the City of Greenwood, I am grateful for his quick action and heroism in this situation.” —Mark Myers, Greenwood Mayor

  9. “‘Home values in the region saw more growth from 2020 to 2021 than the entire previous decade,’ said Jill Avery-Stoss, Director of Operations at The Institute for Public Policy and Economic Development.

    Not coincidentally, that’s when the Keynesian fraudsters at the Fed flooded the financial system with Yellen Bux funny money. Fully 40% of the U.S. dollars in existence were printed during that binge of QE.

  10. ‘What we are witnessing in real time, we will all look back at and realize was the slow leak of a once over-inflated real estate market balloon across the Front Range.’”

    “You’d be a fool to buy into this insane housing bubble,” said no realtor ever.

  11. Unemployed people in our Biden “recovery” won’t be doing much driving.

    U.S. Gasoline Prices Set To Fall Below $4

    https://oilprice.com/Latest-Energy-News/World-News/US-Gasoline-Prices-Set-To-Fall-Below-4.html

    Gasoline prices in the United States fell to a national average of $4.605 on Thursday, with GasBuddy’s Patrick de Haan saying we should see that drop below $4 per gallon by mid-August.

    “Americans will spend $165 million LESS today on gasoline than a month ago,” according to de Haan. “We’re on target for the national average to drop to $3.99 by Aug 14,” he added.

    1. U.S. Gasoline Prices Set To Fall Below $4

      Wishful thinking, just like “inflation has peaked.” In fact, crude is on its way back up.

      1. From what I can tell, there’s no good way to predict inflation because there are several competing influences

        1. Fed raising rates.
        2. Bond markets simultaneously pricing in rising rates (happening now) and falling rates (will happen *when* Powell pivots).
        3. Inflation calculations using 3-month-old housing data. Back then, home prices at closing were still pretty high. Lower prices haven’t been closed or reported yet.
        4. Ditto for jobs data. Companies are in the phase of hiring freezes and cutting hours; actual layoff are still a couple months in the future and don’t figure into the calcs. (Tech, mortgage originators, and banks are in the lead.)
        5. Constant retooling of supply chains based on which side of the bed Pootie and Pooh got out of today.

        That’s off the top of my head, but it makes any of these stats a moving target, at best.

  12. The Fed is about to go full Zimbabwe with its bond buying (paid for with Yellen Bux funny money created out of thin air).

    Death of The System: UNLIMITED BOND BUYING.

    https://gregorymannarino.substack.com/p/death-of-the-system-unlimited-bond

    By Gregory Mannarino TradersChoice.net

    This coming week central banks, beginning with the European Central bank, embark upon yet another round of debt market SUPER-RIGGING. This new round of debt market manipulation, ON AN UNLIMITED SCALE, is to further allow central banks to continue to inflate. Furthermore, to also push off for now an immediate lock up of the system.

    Just this past Friday it was Bloomberg who first broke the story of the ECB to begin UNLIMITED BOND BUYING, which reads as below.

    The European Central Bank will unveil an unlimited bond-buying tool next week to help markets better adjust to steeper and faster interest-rate increases.

    Look at the wording of the Bloomberg statement/report above. This unlimited bond buying TOOL is being sold as a way to “help the markets better adjust to steeper and faster interest-rate increases.” What is being left out of this report is this; an unlimited bond buying move by the ECB, which will be followed up by the Federal Reserve, IS MASSIVELY INFLATIONARY.

    2. You seem like a halfway intelligent guy. I’m surprised you haven’t realized that Mannarino is FULL OF SH!T. He literally makes stuff up.

      1. I love seeing reports of falling housing prices plastered all over his comments section though.

      2. Yeah, I got tired of Gregory saying “I’m tried to explain to to all of you DUH” 90% of the time. And he gets most of his material from Danielle DiMartino Booth anyway.

        1. The problem I have with him is the making sh!t up. I watched that video just to see what he was barking about, and it’s the same old nonsense. He’s citing a Bloomberg article, but giving his own interpretation and spin. And then he says “click on the link to the article,” but the link is to his own Substack which is, again, just his own interpretation.

          When you search for the actual Bloomberg article and read about it, it specifically states that if the ECB were to institute this bond buying, they would be actively selling down their own portfolio to offset the new purchases, to keep inflation at bay. Did he mention that? Of course not, because he’s a click-bait scammer.

  13. What the actual f##k…do Chinese central planners think lenders are philanthropic organizations? Lenders aren’t going to want to “provide credit” to insolvent, fraud-riddled developers to finish these White Elephant apartment developments, because the collateral that would be underpinning these “loans” is cratering as China’s epic real estate bubble is imploding. But if PRC lenders don’t do what the CCP “requests” them to do, they could end up being involuntary organ donors or sent to prison camps on trumped-up charge. Cuz that’s how commies roll (hat tip to Democrats)…this is going to be a train wreck no matter what.

    China asks banks to fund housing projects amid mortgage boycotts

    https://www.straitstimes.com/business/property/china-asks-banks-to-fund-housing-projects-amid-mortgage-boycotts

    BEIJING (BLOOMBERG) – China’s banking regulator has asked lenders to provide credit to eligible developers so they can complete unfinished residential properties after homebuyers stopped paying mortgages on at least 100 projects across 50 cities.

    The guidance from the China Banking and Insurance Regulatory Commission was issued in response to the mortgage boycotts and is aimed at expediting the delivery of homes to buyers, a newspaper published by the watchdog reported on Sunday (July 17), citing an unidentified senior officials at the agency.

  15. Will the mid-term elections end up monkey-wrenching the Democrat-Bolshevik control freaks’ efforts to carry out the orders & agendas of their globalist masters?

    Bring Covid curbs back AGAIN, say top medical journals: Editorial calls for new clampdown on Britons that could include ‘restrictions on gatherings’ and mask mandates

    https://www.dailymail.co.uk/health/article-11024137/Bring-Covid-curbs-say-medical-journals-Editorial-calls-new-clampdown-Britons.html

    1. They say it is time to face the fact that attempt to ‘live with Covid’ is ‘straw that is breaking the NHS’s (National Health Service) back’

      That’s what happens when you have rationed “free” healthcare.

        1. The NHS is light years ahead of Obamacare. The NHS is Britain’s government socialized healthcare for all. It is so bad and underfunded that private insurance has become a common fringe benefit at many work places. The NHS has loooong waiting lists for procedures. Their hospitals are small and it isn’t uncommon for them to have patients in beds in the hallways.

          1. Interesting you mention this. I just got an email from a man in France — high level diplomat — who avoided the FRENCH medical system to have his leg operated on by Americans in Paris after a horrific accident. He didn’t trust his own country’s medical system in spite of the fact that he would have been treated particularly well given his position.

            Agreed about the NHS, btw. We’re getting there in the US, slowly but surely.

    2. ———
      “Virus-tracking surveillance data has even shown the latest resurgence has peaked, with pressure on NHS facilities also set to ease in the coming days…

      …Yet only a third of ‘patients’ needing care primarily ill with the virus itself. The rest have incidentally tested positive, NHS figures show.”
      ——–

      I wonder if the “surveillance data” is monitoring the sewage system, which is turning out to be pretty reliable in predicting the future.

      Our area is very close to turning “orange,” where indoor masking will be recommended/required, likely on Friday. I’m actually ok with that because I don’t think it will be for long. With prior variants, masks slowed down the spread. It saved lives but stretched everything out for a very long time. With this BA.5, masks aren’t going to slow anything. It’ll rip through no matter what. I think we have another month. And really, it is basically a cold/flu by this time. And I think it’s good that we all get it NOW, instead of waiting until fall when we’re inside and no sunlight.

      1. ” I’m actually ok with that”

        Citizens don’t wear masks. Slaves wear masks.

        You are a slave.

        1. Slaves wear masks.

          Remember the latest Met Gala? Where all the “people who matter” were maskless and the hired help were all masked up.

          I will not wear a mask again. They can go to Hades. I’m done with this nonsense.

          1. agree 100%: no more masks for me also.
            and if Perry’s wife starts yellin’ again it’s bing, bang, zoom. straight to da’ moon w/Alice!

          2. I went to the nearby dying mall earlier today. I was surprised by the number of people still masking up.

      2. “With this BA.5, masks aren’t going to slow anything.”

        My wife and I didn’t catch BA.5 from my son who quarantined in his bedroom for two weeks. He wore an 3M N95 with straps whenever he left the bedroom to use the bathroom, and we had wipes in there for him to use on anything touched. We masked-up while he ate meals. Hopefully it’s behind us now.

        1. “With this BA.5, masks aren’t going to slow anything.”

          Is it not still the size of a virus?

          2. IIUC, it’s not the virus size. There are some other variables like: how stable is the virus, how well does the spike protein bind to ACE2, how fast does it multiply, and how many days is a person is above the contagious threshold.

            These variables basically affect
            1. how many particles an infected person exhales.
            2. how many inhaled particles are needed to cause infection.

            For example, let’s say a person was wearing even a cloth mask (~N-50) which blocked half the particles. With the original strains, infected people didn’t exhale many particles, so blocking 1/2 of that small number means an even smaller number get through. And that 1/2 number of small particles is still not enough to infect the receiver. Result: much less likely that an encounter would result in spreading infection.

            But with the Omicron strain, it appears that people are breathing out many more particles, and it takes fewer particles to cause infection. So now, our 50% mask is still blocking 1/2 the particles, but it’s blocking 1/2 of a much larger starting number of particles. And the receiver doesn’t need to inhale as much to be infected. So for Omicron, blocking 50% is not enough to block infection, because the 50% that DOES get through will still cause infection. Or, for example, even 80% could be blocked, and one could still be infected by the 20% that gets through.

            Those are made-up numbers, but it illustrates why masking barely works anymore. Not enough particles are being blocked and even the few that get past the mask are enough to cause infection. Masks barely worked in January and they won’t work now.

        2. I’ve never taken a Covid “test” and frankly if we all stopped “testing” the whole thing would be over immediately. There are no new symptoms, just repackaging and rebranding of a hodgepodge of typical illnesses.

  16. Chinese banks have tightened paper gold/silver trading. You can sell, but you can’t buy. Curiouser and curiouser, to quote Alice in Wonderland. Banks released about RMB 300B. These funds bought huge quantities of physical silver in the market. Many buyers bought half a ton or a ton and more, resulting in a shortage of physical silver. The Keynesian fraudsters at the PBOC, and the CCP, know things are moving into the end game and want to stop the sheeple from exchanging their soon-to-be worthless fiat currency for REAL money: gold & silver. Watch & learn, ‘Muricans. Coming soon to a Fed-debauched fiat currency near you.

    https://twitter.com/oriental_ghost/status/1548626713491296256

    1. I’m keeping an eye on the pm market. The scuttlebutt is that traders are using the paper market to keep spot price low so they can (1) make short-term profit on the shorts (2) and more important, load up on the real stuff in the back door at the low prices.

  17. Another follow up from my previous questions (much appreciated for the thoughtful answers by the way, you guys are great.)

    While this time around we don’t have the “fog a mirror” loans, valuations seem to be even more crazy than ever. I did a quick number run on the zip code I work in, and the median home price to median family income is a whopping 19.4. The China news above along with the news being reported out of places like Boise, Arizona, Las Vegas are the same sorts of canaries in the coal mines that we saw in 2005-8. Assuming the fed doesn’t cut rates to zero (because it has to defend the dollar), what are the chances that we see an actual real estate crash and capitulation back to something that approaches normal levels of valuation? And with such a pullback as we are saying, how bad is the contagion going to be for the US financial system? Are we going to have Lehman Brothers 2.0?

    Thanks in advance again.

    1. Im hoping for a blowoff top so i can invest in 3x inverse funds like FAZ, maybe it will get below 20 again.

    3. “what do you guys think”!?
      “oh brother!!” is what i think!
      someone who writes such a cohesive, typo-free, syntaxicly sensational summary of a topic, then trolls for feedback !??!
      please. just . . . please. save it for those basement dwelling cheeto-covered thumb sucking on-first-name-basis-w/door-dash-delivery-driver incels on reddit.

      btw, you missed some open house sandwich signs on the corner. better collect ’em up lickety split before the druggies swipe ’em for a perm “anthying helps” median ad. they already been huffing the balloons.

      1. I’ve been a reader of this blog since 2005. The question is genuine in soliciting the thoughts of the readers of this blog, who have a certain perspective that is impossible to find basically anywhere else on the internet. I’m genuinely trying to figure out what is going on, and where things are headed. Part of the reason I never bought a house (which has to this point been one of the best financial decisions I’ve ever made) is because of this blog.

        Perhaps a little bit more kindness, fellow internet stranger, if you please. This is the most uncertain I’ve been about the economy and markets in my life, including 05-08, and the questions are genuine in seeking the perspectives of the denizens of this blog.

        1. Other than rampant mortgage and appraisal fraud and falling prices, what is left to “figure out” my good friend?

          Tucson, AZ Housing Prices Crater 14% YOY As The Toxic Effect Of Subprime Mortgages Ripples Across Arizona Housing Market

          https://www.movoto.com/az/85745/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.”

        2. Unlike the rest of HBB, I don’t think there’s going to be a major crash. There are too many investors in the game for that. If prices fall significantly, investors will borrow money cheap and buy properties outright, sidestepping the 6% mortgage rates. They can then fixup and rent in bulk and sell rental-backed securities, a system they set up in the last crash. Investors will snap up properties before prices can fall to where end-consumer families can afford them. I’m guessing a fall to 2018 prices, at best.

          And this time, any financial crash will NOT be driven by the housing market. The next banking crisis will be a currency and inflation crisis, possibly an international supply-chain crisis.

          Oh, and if Powell and pivots and drops rates again, then mortgage rates will return to 3.5%, which will restart the housing market again.

          3. Thank you for this comment –
            It was most helpful –
            and
            – NO
            you don’t sound like ‘all the other speculators’ –
            At all.

        3. what are the chances that we see an actual real estate crash

          Hey Pyro.

          If we knew the future, we wouldn’t read what Ben posts here.

          My opinion is pretty simple. I don’t overpay (much) for things I want (but don’t need). If prices do not come down to practical levels, just don’t buy. Don’t borrow. Make other arrangements. Enjoy life. Good luck!

        4. Pyro

          Well, my good sir: thou has me at an advantage as I have merely been a “denizen” of this blog since 2006.
          However, you have simply answered your own question by reason showing that the same faculty & initiative which led you to seek out this blog oh so many years ago, would perchance now add the arrow of experience to thy quiver.
          Mayhap thee has failing eyesight or dropsy, in which case I highly recommend to forsake such trivial tasks as real estate, and get thee to a nunnery for some funnery, as time waits for no man.

          Your humble servant
          Aqius

      2. “save it for those basement dwelling cheeto-covered thumb sucking on-first-name-basis-w/door-dash-delivery-driver incels on reddit”

        Did I hear somebody mention Reddit?

        Go back to Reddit.

        Go back, and stay there.

        1. yes, I mentioned reddit. geez, take it ez,
          simma down now. SIMMA !!

          next thing ya know yer mom has to pick you up at Starbucks where you got too worked up & forgot yer inhaler while poaching wifi in the corner leering at the “baristas”.

          * I heard the the purple-haired one with only 3 nose rings just got outta rehab: go get ‘em tiger!

    4. ‘The China news above along with the news being reported out of places like Boise, Arizona, Las Vegas are the same sorts of canaries in the coal mines that we saw in 2005-8’.

      That is the question – as China had a huge housing bubble for years BUT unlike in the US the Chinese government (until now) made sure that there isn’t the same Boom and Bust system where regularly and suddenly everything gets liquidated.
      AND the FED doesn’t have to defend the dollar – as doesn’t the dollar -(and the Swiss Franken) always rule supreme in times of (worldwide) crisis?

      And isn’t the main purpose of the FED -(and all other Central Bankers) to stop inflation?

      So what ‘oxide’ wrote?

  18. “If you look at some of those suburban markets around Toronto, there are tons of people that bought a home for $1.5-million”

    How many people around Toronto are (or were) pulling down $500K? Subprime by definition.

  22. ‘For the buyers who sat on the sidelines, whether on purpose or because they could not swing the insane real estate market, it is going to pay off,’

    The payoff will reward the patient. How many years will they have to wait for falling prices to reach the bottom of the CR8R?

  23. ** “Not some one-bedroom bungalow with 500 square feet or a possibly illegal accessory dwelling unit tucked behind a property”

    I really don’t understand how people can get away with such obvious & flagrant ADU violations?!

    heck, anytime, and I do mean each & EVERY TIME I so much as walk out the door, there are nasty-tempered nosy neighbors hiding behind blinds, craven cowards just watching my every move, ready, willing & proven very capable to report ANY infractions, no matter how minor, to code enforcement.

    if I even tried to build an covert ADU there would be a SWAT team fast roping into my backyard within the first shovel of dirt. and huge fine sent without delay.

    are these ADU’s in such a bad location that no one gives a crap? how is that possible, when bad locations are the worst for predatory residents, that waste no opportunity to rat each other out!?

    perplexing, to say the least.

    1. if I even tried to build an covert ADU there would be a SWAT team fast roping into my backyard within the first shovel of dirt. and huge fine sent without delay.

      Do you live in Gavin Newsom’s utopia?

      1. My folks live in a legitimately wonderful part of Gavin’s state and some neighbors have easily put in ADUs. The local government doesn’t care because more revenue. But try to cut down a tree? Oh boy!

      2. Gavin Newsom

        Lefty’s going to be our president some day if the deep state gets their way. Better practice bending thy knee for when the chariot rolls by.

      3. I do live in gavin’s golden state. suburb of the capitol, in fact. CA native, also.

        there was a time when one was proud to say all that. . .

  25. “‘Anybody who bought in the past couple of years is probably very vulnerable to negative equity fairly quickly,’ he says.

    Soft Landing Happy Talk

    In 30 days, it’s gonna be “anybody who bought since 2014″… then “anybody who bought since 2009″….. and so on.

    The poor donks….. the poor poor donks.

    Sebastapol, CA Housing Prices Crater 18% YOY As Sonoma County Homeowners Get Barbecued

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

    1. Danielle DiMartino Booth

      Yes, the @NAHBhome
      monthly headline collapse was biggest since May 2020. But it’s Prospective Buyers Traffic falling to to 37 vs 48 in July that’s bigger news

      One wonders when we’ll see capitulation in the NARRATIVE. Some holdouts continue to maintain that it won’t be “that bad”
      9:25 AM · Jul 18, 2022

      https://twitter.com/DiMartinoBooth/status/1549037702288637953

      1. Eric Basmajian

        HUGE decline in the NAHB Housing Market Index.

        This is the second largest monthly drop since 1985.

        https://twitter.com/EPBResearch/status/1549034527351517184

        Eric Basmajian

        Traffic of prospective buyers, a leading indicator of housing demand, collapsed to 37 in July.

        The housing market is a leading indicator of economic activity, and it’s moving lower at an accelerating pace.

        https://twitter.com/EPBResearch/status/1549034533139652608

        Wow.

      2. Some holdouts continue to maintain that it won’t be “that bad”

        I seem to recall reading one of them up the thread.

  28. Fake Money Is Fueling A Very Real Debt Crisis

    https://oilprice.com/Energy/Energy-General/Fake-Money-Is-Fueling-A-Very-Real-Debt-Crisis.html

    Fool’s Gold comes in many guises, whether it is in fake paper money, Ponzi investment schemes, fake and manipulated gold derivatives, Bitcoin, or just fake gold discoveries in Uganda, all of which are discussed in this article.

    ‘The tendency of an inconvertible paper money is to create fictitious wealth, bubbles, which by their bursting, produce inconvenience.’ – Lord Liverpool 1810 (UK Prime Minister 1812-27)

    The elegant and understated courtesy of the English is well known. “Inconvenience” is for an early 19th-century aristocrat what a modern Englishman today would call a “bloody mess.“

    Confucius described this trait 2,500 years ago:

    “The noble-minded are calm and steady. Little people are forever fussing and fretting.” – Confucius

  29. Morgan Hill Housing Update June 2022 | Living in Morgan Hill
    Jul 18, 2022 We’re seeing a shift in the market, not only in Morgan Hill and South Santa Clara County, but all over the Bay Area.

    https://www.youtube.com/watch?v=qwq-uBEeRM0

    3:34. Hard to follow presentation, but at 2:20 says 30% of last months sales were below list price.

    1. His Youtube About page shows a city skyline and in another video he talks about land on the “Main Line.” He’s in downtown Philly.

      1. Genetics? Are you kidding. Her plastic surgeon should be given some sort of award. (I wish I knew who it was!)

        1. I meant, despite her unhealthy lifestyle, she’s still kicking at 82. I did not mean to say that she looks great. She is an old bat, after all.

          2. At one point or another, we’re all going to be old bats.

            At age 82, many, if not most of us, will be dead. Hence my comment about good genetics.

  32. Soros-Linked Group Wins $172M Contract from Biden to Help Border Crossers Avoid Deportation

    JOHN BINDER17 Jul 2022

    The arrangement lasts until March 2023 but can reach as high as $983 million if renewed until March 2027, the agreement shows. This appears to be the largest federal contract Vera has secured for immigration-related services for any single year dating back to the mid-2000s.

    The Vera Insitute, meanwhile, is propelled by taxpayer-backed government grants and contracts like the one it secured in March. Between July 1, 2020, and June 30, 2021, $152 million of the group’s $191 million in revenue came from government sources, its most recent financial audit shows.

    The institute seeks to end “mass incarceration” by cutting down on the number of jails, prisons and detention centers in the United States. The group has also signaled support for defunding police. [Emphasis added]

    As Breitbart News reported in 2018, the Vera Institute of Justice was previously awarded $310 million by the Obama administration to help UACs avoid deportation.

    https://www.breitbart.com/politics/2022/07/17/soros-linked-group-wins-172m-contract-biden-help-border-crossers-avoid-deportation/

    1. Replacement theory is not a theory.

      It is the globalist blueprint for Exterminate Whitey.

      1. Hanged, drawn and quartered

        To be hanged, drawn and quartered became a statutory penalty for men convicted of high treason in the Kingdom of England from 1352, although similar rituals are recorded during the reign of King Henry III (1216–1272). The convicted traitor was fastened to a hurdle, or wooden panel, and drawn by horse to the place of execution, where he was then hanged (almost to the point of death), emasculated, disembowelled, beheaded, and quartered (chopped into four pieces). His remains would then often be displayed in prominent places across the country, such as London Bridge, to serve as a warning of the fate of traitors. For reasons of public decency, women convicted of high treason were instead burned at the stake.

  33. said Chen, who was supposed to be able to move into his190 square metre condo

    Thats 2045 square feet….that’s bigger than the house we grew up in… it was barely 1500 sq ft

  34. The Deep State has had enough of the Supreme Court:

    Federal agencies lay the groundwork to ignore the Supreme Court.

    In Weyerhaeuser v. U.S. Fish and Wildlife Service, the Supreme Court held that land designated by the U.S. Fish and Wildlife Service as “critical habitat” under the Endangered Species Act (ESA) must be habitable for the species the Service seeks to protect. But the Service recently jettisoned the rule defining “habitat” that it adopted to comply with Weyerhaeuser. In doing so, it undermined the Supreme Court’s holding in Weyerhaeuser, ignored the Constitution’s separation of powers, and reinstalled a regime of capricious habitat designations.

    I was wondering how long until this happened. The Republic is standing at the edge of a cliff, staring down into the abyss. It really does feel like we are at a “it’s now or never” type of moment.

  35. Why is gold and silver cratering day after day? Gold and silver are cheaper today than they were back in 2011.

  36. What are the implications of the drying up of the SPAC pipeline for Wall Street investment banking and stock prices?

    1. The Financial Times
      Goldman Sachs Group
      Goldman Sachs warns of job cuts even as traders help beat profit forecasts
      Wall Street bank’s second-quarter net income falls 47% amid decline in dealmaking revenues
      Goldman Sachs logo
      Goldman Sachs said its board of directors had approved a 25% increase in its quarterly dividend to $2.50 per share
      Joshua Franklin in New York yesterday

      Goldman Sachs warned on Monday that it would slow hiring and may cull underperforming staff even as the Wall Street giant’s traders helped it overcome a slump in dealmaking and report better than expected profits in the second quarter.

      With fears of a recession mounting, Goldman chief executive David Solomon warned of increasing uncertainty owing to high inflation, monetary policy tightening in the US and the war in Ukraine.

      “In my dialogue with CEOs operating big global businesses, they tell me that they continue to see persistent inflation in their supply chain,” Solomon said in a call with analysts.

      Finance chief Denis Coleman said the bank was “closely re-examining all our forward spending and investment plans”. This includes slowing the pace of hiring and potentially reintroducing the year-end performance review of its employee base, which it had largely halted during the coronavirus pandemic.

      The Financial Times reported last week that Goldman had paused hiring some replacements for bankers who left this year.

      The downbeat outlook contrasted with the market’s reaction to Goldman beating earnings, with the bank’s share price up about 2.5 per cent on Monday.

      One analyst remarked to Solomon and Coleman that “your guys’ tone sounds very, very cautious” despite “pretty strong results”.

      For the second quarter, Goldman reported net income fell 47 per cent to $2.9bn or $7.73 per share, from $5.5bn or $15.02 per share in the same period last year. This was ahead of analysts’ estimates for $2.6bn or $6.65 per share, according to consensus data compiled by Bloomberg.

      Revenue from investment banking was down 41 per cent at $2.1bn, in line with analysts’ estimates and a smaller decline than the 61 per cent reported last week by rival JPMorgan Chase and the 55 per cent fall at Morgan Stanley.

      Investment banks are suffering in particular from a dearth of equity underwriting activity, following a slew of initial public offerings and listings by special purpose acquisition companies last year.
      …

    2. The Financial Times
      Investment Banking
      Investment banking slowdown sparks fears of Wall Street belt-tightening
      Some firms are dragging their feet on recruitment and telegraphing lower pay
      A Wall Street sign
      A drop-off in dealmaking has left executives grappling with whether to reduce staffing levels
      Joshua Franklin and Imani Moise in New York, and Stephen Morris in London July 15 2022

      Disappointing earnings reports from JPMorgan Chase and Morgan Stanley have set the stage for a tense summer on Wall Street as bank executives grapple with whether to reduce staffing levels.

      A decline in investment banking fees had always been expected this year after a record haul in 2021, but bankers were still hoping for an above-average performance, telling investors as recently as January that deal pipelines were healthy.

      However, the slowdown has been worse than anticipated. Results on Thursday from JPMorgan and Morgan Stanley failed to meet analyst expectations in large part because of a dearth of equity issuance in 2022. The downturn follows a rush of initial public offerings and listings by special purpose acquisition companies last year.
      …

    1. The Financial Times
      Markets Briefing Equities
      US stocks retreat as Apple reported to be slowing down hiring
      Strong advances in Europe and Asia had driven Wall Street higher earlier in the day
      A trader works on the floor of the New York Stock Exchange
      The S&P 500 and the Nasdaq Composite both gave up 0.8%
      Naomi Rovnick in London, Nicholas Megaw in New York and William Langley in Hong Kong yesterday

      US stocks gave up their early gains on Monday afternoon after reports about slowing spending at tech group Apple reignited concerns about a potential recession.

      The S&P 500, which had risen as much as 1 per cent earlier in the day, swung to a 0.8 per cent decline after Bloomberg reported that America’s most valuable company was planning to slow hiring and spending growth in some divisions. The Nasdaq Composite also slid 0.8 per cent.

      Fears about a potential recession have been hanging over markets in recent weeks as the Federal Reserve struggles to tame inflation without pushing the US economy into contraction. Solid retail sales data provided some reassurance last Friday, but the report about Apple suggested worries are growing even at companies that have successfully weathered previous downturns.

      Apple’s stock dropped 2 per cent, having climbed as much as 0.9 per cent earlier.

      US stocks had begun the day brightly following strong gains in Europe and Asia. A broad FTSE index of Asia-Pacific shares rose almost 2 per cent after Chinese state media reported Beijing regulators were urging banks to finance developers in the wake of homeowners boycotting mortgage payments on unfinished houses.
      …

      1. “Chinese state media reported Beijing regulators were urging banks to finance developers in the wake of homeowners boycotting mortgage payments on unfinished houses.”

        What exactly about this news should make Chinese stocks seem attractive?

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