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Homebuilders Are Now Stuck With A Bunch Of New Houses That Are Hard To Sell

A report from Yahoo Money. “About 270,000 homebuyers who bought during the red-hot housing market this year already owe more than their house is worth, a new analysis found. Among the 450,000 underwater borrowers in the third quarter, nearly 60% had mortgages originated in the first nine months of 2022, Black Knight found. Borrowers with purchase loans backed by the Federal Housing Administration (FHA) or Veterans Affairs (VA) were most likely to have slipped underwater, the report found. These are more popular among first-time and lower-income buyers.”

“Early-payment defaults (EDP) — loans delinquent within six months of origination — were also rising across product types in recent months with the largest increases among FHA borrowers over the past year. As of October, EDP rates for FHA loans were 150% above 2013-2018 levels, and 25% above their early 2000 averages, the report found. ‘Such loans [FHA] rely on rising home values and principal pay-downs over time to gradually improve their equity position,’ said Ben Graboske, president of Black Knight data and analytics.”

From Realtor.com. “To close sales, more sellers are dropping asking prices than at any point in the past few years. In some parts of the country, as many as half of the homes on the market have had their price cut. It turns out, sellers are slashing prices largely in the areas that had been hottest for the past two years. So dramatic was the fall in values and demand that entire neighborhoods in the suburbs on the edge of the Phoenix metro area were filled with brand-new homes that remained empty after buyer demand evaporated.”

“‘We’ve never experienced anything like we did in 2020 and 2021,’ says Andrea Crouch, the Phoenix Realtors® board president. ‘It is a correction that needed to happen. As soon as interest rates increased in April, our price reductions started going through the roof.’ Again, Nevada is at the top of the list of where the housing market has turned. For shoppers looking in the Silver State, it’s not hard to find homes with reduced price tags. These new three-bedroom townhomes in Sparks, east of Reno, for example, are marked down $44,000, or about 12.5% from their initial listing six months ago.”

“After the run-up in values, prices are down around 12% in a place like Ogden, the Utah city with the highest portion of homes marked down, at 42%. The metro, about 30 minutes north of Salt Lake City, saw prices rise by 75% between late 2019 and mid-2022. So even with the price reductions, homes are still well above their pre-pandemic price. And it doesn’t take much searching to find the big discounts. This new, large four-bedroom home in Saratoga Springs, about 45 minutes south of Salt Lake City, is now listed for $654,000, after being listed for $730,000 in June.”

“Almost 30% of all homes for sale right now in Colorado have had their price chopped. In Colorado Springs, where the figure is even higher, at 39% of listings with a price reduction, this medium-sized, three-bedroom home is now listed with a 7% price reduction, which is just a little below the metro’s 9% decline in median listing price since June. South Carolina is another of the Southern states that saw pandemic buyers flocking there. But in some of the Palmetto State’s bigger cities, prices are down close to 10% since the peak earlier this year.”

The Review Journal. “Las Vegas house prices dropped to their lowest level of the year last month. Southern Nevada home prices have been largely sliding for months amid a broader slowdown in the market. All told, the median sales price of a previously owned single-family house has now dropped by just over $51,000 from a record-high $482,000 in May, according to Las Vegas Realtors data.”

My Northwest in Washington. “According to a report from Redfin, housing sales are down 42.2% from last year, as prices rise by 7.6%. A similar study from RE/MAX shows that Seattle’s active housing inventory in October was up 130% year-over-year. The current median home sale price is $675,000, down from April’s high of $757,750.”

The News Tribune in Washington. “Rising mortgage interest rates have added to the big chill this fall in Pierce County. According to Northwest Multiple Listing Service, Pierce County’s median closed home sale price saw another consecutive drop. In November it was $525,000, down from $535,000 in October, $538,000 in September and $555,000 in August. ‘The data show we’re in a changed market,’ said Dick Beeson, managing broker at RE/MAX Northwest in Tacoma/Gig Harbor. ‘High interest rates, doubled inventory levels, anxious lenders, contracts written with negotiations for repairs, closing costs, and other sundry things – all of these have returned to the market.'”

From Axios Boston. “The median sale price of a single-family home in Massachusetts dropped over 4% to $547,000 in October compared to September. Peabody has seen the area’s biggest dip in home prices with a 2.4% decline. North Reading prices were down 2.2%. ‘The historic pace and magnitude of interest rate increases have created a reset and softened the housing landscape as intended,’ said RE/MAX president Nick Bailey.”

Forbes on Arizona. “While many of these cities’ housing markets have displayed similar general trends to the Phoenix metro area as a whole, many have diverged. Wickenburg median sale price: $642,500 – $525,000 | -18.3%. Carefree median sale price: $1,300,000 – $835,000 | -35.8%. The percentage of active listings with price drops has risen significantly in most cities comprising the Phoenix metro area housing market. For instance, in October 2021, the percentage of active listings with price drops in El Mirage was only 10.3%. A year later, in October 2022, that figure had blown up to 68.3% of active listings with price drops.”

Houston Agent Magazine in Texas. “A report from Redfin shows that 29% of single-family homes for sale in the U.S. were new constructions in the third quarter of 2022. This increased inventory of new constructions for sale represents the highest percentage of third quarter listings of all time. ‘Homebuilders started scores of projects during the pandemic moving frenzy and are now stuck with a bunch of new houses that are hard to sell because mortgage rates have risen to 7%,’ said Houston Redfin agent Faith Floyd. ‘Many builders are offering more incentives than regular sellers. A lot of individual sellers are still pricing their homes too high because they’re having a hard time accepting that the pandemic housing boom is over and they’re not going to get 30 offers like their neighbor did last year.'”

The Press Democrat in California. “The once-booming real estate market from the past two years is slowing down as rising inflation and interest rates have potential homebuyers pressing pause on new offers for houses in Sonoma County. ‘For the last three years, everybody was used to getting whatever they want when they sell their house,’ said Brad Wilkinson, a real estate agent. ‘We’re seeing this weird limbo where the sellers don’t want to drastically lower their price… but at the same time, the buyers are like, ‘Why would we pay you over asking (price) just because people have for the last three years?’”

“‘Things started transitioning (mid-summer) as (the market) started transitioning due to interest rates starting to increase,’ said Carmen Cervantes, another Sonoma County real estate agent. ‘As we’ve gone now into fall, some listings and some sellers are still ambitious about pricing … when it’s not realistic.'”

NBC Bay Area in California. “Home prices are continuing to fall around the Bay Area, and it looks like the trend will continue into the new year. Zillow estimates the San Francisco metropolitan area will see a 3.6% decline in home values in the coming months, and even though prices have been dropping for several months, home buying has stalled. ‘We weren’t expecting it to be quite so dramatic, but it is starting to hit a little bit right now,’ explained Tim Yee, president of Re/Max Gold Bay Area.”

From Business Insider. “Home is where the heart is, but it might not be where the returns are anymore. For the past three years, investing in single-family rentals was the gift that kept on giving. Even as housing prices skyrocketed, companies managing so-called SFRs were happy to outbid everyone else to add to their inventory. The two largest single-family rental REITs — Invitation Homes and American Homes for Rent — have recently seen their ratings downgraded by Wall Street analysts, Insider’s Alex Nicoll reports. For SFRs, it’s a bit of a gut punch, as these investments are supposed to still be good bets during times of turmoil, Alex told me. The fact there is some cause for concern over SFRs show how seemingly no one is safe in this market, as Alex put it to me.”

From Bisnow. “In the weeks following a tough round of cost-cutting and layoffs, there’s plenty to lament in the commercial real estate industry. ‘The big opportunities for 2023 will be in forced asset sales and distressed debt,’ Bullpen CEO Tyler Kastelberg said. ‘We’re hearing more and more murmurs about sponsors being required to put more cash into a deal in order to refinance it out of a bridge loan into long-term debt. When they can’t come up with the cash, they are forced to put the property on the market. Per some of my broker contacts, this is becoming more and more common.'”

Better Dwelling in Canada. “Greater Vancouver real estate prices were slow to respond to higher rates, but it’s making up for lost time. Since peaking earlier this year, the price of a typical home has dropped by more than $130,000, and annual growth has finally turned negative. Peak buyers are experiencing a bloodbath, though it’s not as bad as the national market. Vancouver prices peaked April 2022, and have since fallen 9.2% (-$131,900) as of November. That’s a substantial decline, especially with such steep prices. However, this was much smaller than the -15% national rate reported a few weeks prior.”

The Canadian Press. “The Toronto Regional Real Estate board said Tuesday that November home sales activity was down by about half from last year, following a similar trend seen in recent months. The average price of a detached home was down 11.3 per cent to $1.39 million. the Quebec Professional Association of Real Estate Brokers said that sales numbers for Montreal dropped 38 per cent from a year earlier. ‘We’ve been going through growth, growth, growth year after year, so people almost don’t believe that the real estate market is actually cyclical,’ said Davelle Morrison, broker at Bosley Real Estate Ltd. ‘So this is a part of the regular market cycle. There’s going to be some up and there’s going to be some down. And now we’re just in that down period. And we haven’t hit bottom yet.'”

The Edinburgh News in Scotland. “Lewis Capaldi has expressed his regret over buying a property recommended by Ed Sheeran, calling it a ‘money pit.’ The singer, 36, splashed out on the £1.6million five-bedroom farmhouse on the outskirts of Glasgow in 2020. The singer admitted that he probably should have given the property a closer examination before moving in. Recalling his regret, he continued: ‘I didn’t maybe look around enough. I didn’t smell it. Yeah, I got very excited. And I’m here to tell you, the house is a f***ing s***hole. Yeah, it’s a money pit, and it has been the bane of my existence for the last couple of months.'”

From News.com.au. “A young new property owner is tightening her spending as the Reserve Bank of Australia hiked interest rates to a 10-year high. Sammie Baker, 24, strategically bought a Brisbane apartment in July this year when her borrowing capacity was still large enough to secure her dream place, but demand had dropped, meaning she was able to buy exactly what she wanted. However, she’s now concerned about what will happen if rates continue to go up while her property value goes down, as experts predict will happen in 2023. ‘There’s always that notion in the back of my head, will I be able to keep up with it (mortgage repayments),’ she told news.com.au. ‘There’s always that frightened uncertainty.'”

“Ms Baker signed herself up to a 30-year loan after securing the $440,000 apartment for herself. ‘I had some stocks that I liquidated for the deposit,’ she explained. When she started paying back the bank in July, her monthly mortgage repayments totalled $1986, which was when she was on a variable rate of 2.49 per cent. But just months later she is paying back $2310 a month and her rate is 5.04 per cent. That’s not even factoring in the latest hike after Tuesday’s announcement.”

“In a potential bad sign of things to come, the people next door to Ms Baker sold their property several weeks ago, and it went for $5000 less than the price she bought her own property for. Ms Baker says she has to more seriously think about her finances, including overseas trips, unlike many of her twenty-something peers who are more carefree.”

“Compare the Market’s General Manager of Money, Stephen Zeller, said that many properties were going backwards in terms of their value, putting borrowers in an even more difficult situation. ‘Negative equity creates concerns for borrowers and lenders,’ Mr Zeller said. ‘If you’re employed and making repayments on time, the bank might let you off the hook because you’ve just had some bad luck with the way the market has gone.But a borrower who is having difficulty making repayments and has negative equity might be asked for extra capital or the bank might pressure them to sell so they can get their money back.'”

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This Post Has 103 Comments

  1. ‘Early-payment defaults (EDP) — loans delinquent within six months of origination — were also rising across product types in recent months with the largest increases among FHA borrowers over the past year’

    DONG!

    Good thing everybody put 50% down.

    1. “…with the largest increases among FHA borrowers over the past year’”

      There’s no need to worry about FHA borrowers, because their loans are federally guaranteed. It’s turtles all the way down, just like cryptocurrency firms backed by FTX were.

      1. FHA is where some of the best deals will be had. As they get foreclosed they move to a HUD platform for disposal. By law HUD has to put a lock on these houses so that first time home buyers get a chance to bid without competition from investors. However, it is not necessarily in the best interest of the first time home buyer to buy during the lock. The best strategy is to wait for the glut when investors stop bidding, then lowball on languishing stock after the lock expires. That said, at the very bottom HUD will be dramatically discounting certain areas and the lock period can still be a very good way to snatch up something you have your eye on without having to go up against deep pockets. It varies by market and by timing but this is one of the best ways for people to get ahold of generational wealth but you have to learn about the process yourself. There’s not enough money in it for marketing teams and big commissions so no one is going to be trying to sell it to you. These days all of the inventory is databased online and you can review property nationwide to bid on. The best starting points are Fannie Mae and Freddie Mac websites. It is still early in this process but over time they will become swamped with properties for sale at big discounts. Florida for instance, will have metric crap tons that need to be disposed of and Texas will have so many that you might go blind trying to review them all. Patience WILL BE rewarded.

        1. Here’s the thing with this….. all the suckers, donkeys, kids who were still shitting yellow when I earned my first million are ready to jump in because prices fell to 2014 levels. This is gonna be a prolonged, protracted grind lower…. much lower. I wouldn’t touch a house at any price more than $100k. That’s where this is headed.

      2. If the earth rests on top of a turtle what does the turtle rest on ?

        Its turtles all the way down man 🤣

    2. In the auto loan world it is the, “First Payment Default.”

      The typical scenario is someone’s world is crashing around them, usually a career job loss due to a recession followed by a divorce, and they’ve decided to move out of the economically affected region. So they get a minivan, load it with their belongings and drive half way across the country with the reliable vehicle. Finally, a repo man in the destination area recovers the vehicle within 90-days or less.

      Sometimes the borrower got lucky and found a job in another industry, and the repo order was rescinded. In my repo days this occurred during the 1980s oil bust.

      1. FWIW, the 1980s oil bust was driven by falling oil prices that were high flying during the 70s OPEC oil embargo, and Volcker’s 15% plus interest rates slowed the economy to a crawl. Terrible times!

        2. It was complicated. Multiple things happened at roughly the same time. Oil dropped, and some more etc. Every bank and S&L in Texas failed eventually. It was real estate loans that did it. Commercial at first, seriously overbuilt. S&L fraud is exposed, look out below. Employment tanked as the magic money went away. Shacks weren’t crazy high priced. They did overbuild, they always do. But with the job loss, people handed back the keys.

          Texas constitution said all banks must be at least 51% owned by Texans. The Republican guvnah got that changed and carpet baggers swooped in and bought every failed bank that they wanted in the state. Many never opened again. The S&Ls went away. It was a multi-year depression by any measure.

      2. Finally, a repo man in the destination area recovers the vehicle within 90-days or less.

        So that’s how long it took the skip tracers to find them.

  2. ‘In a potential bad sign of things to come, the people next door to Ms Baker sold their property several weeks ago, and it went for $5000 less than the price she bought her own property for. Ms Baker says she has to more seriously think about her finances, including overseas trips, unlike many of her twenty-something peers who are more carefree’

    No avocado sammies fer you Sammie. But it was cheaper than renting.

  3. ‘Redfin shows that 29% of single-family homes for sale in the U.S. were new constructions in the third quarter of 2022. This increased inventory of new constructions for sale represents the highest percentage of third quarter listings of all time. ‘Homebuilders started scores of projects during the pandemic moving frenzy and are now stuck with a bunch of new houses that are hard to sell’

    I keep saying, it’s Harry Potter. He flies around, waving his wand – pow! more shacks! Zap, even more shacks!! Didn’t see that coming, eh Larry?

    1. “…are now stuck with a bunch of new houses that are hard to sell’”

      ‘Hard to sell’ just means they are unwilling to lower the prices to what prospective buyers are willing to pay.

  4. Kihei, Maui, HI Housing Prices Crater 32% YOY As Hawaii Slips Into A Cauldron Of Excess Housing Inventory And Foreclosures

    https://www.movoto.com/kihei-hi/market-trends/

    As a noted economist advised, “Why buy a house when you can rent one for half the monthly cost? Buy it later after prices crater for 70% less.”

    1. The Financial Times
      FTX Trading Ltd
      FTX held talks with Taylor Swift over $100mn sponsorship deal
      Negotiations between singer-songwriter and Sam Bankman-Fried’s crypto group collapsed this spring
      A montage of Sam Bankman-Fried and Taylor Swift with an FTX logo in the background
      Joshua Oliver and Nikou Asgari in London, Anna Nicolaou and Antoine Gara in New York 3 hours ago

      Sam Bankman-Fried’s FTX reached the late stages of negotiating a sponsorship deal worth more than $100mn with Taylor Swift, but talks with the pop star fizzled out just months before the exchange’s collapse in November.

      The discussions included a ticketing arrangement with digital certificates known as non-fungible tokens from the record-breaking “Anti Hero” singer-songwriter, according to people familiar with the matter.

      FTX’s talks with Swift and the nine-figure sum being negotiated underscore the ambition and reach of the crypto group’s drive for celebrity partnerships before it fell into bankruptcy last month. FTX had struck deals with US football star Tom Brady and supermodel Gisele Bündchen, as well as tennis star Naomi Osaka, and basketball players Shaquille O’Neal and Steph Curry.

      People with knowledge of the talks said the process also highlighted FTX’s unorthodox internal decision-making, and clashes between Bankman-Fried’s inner circle and more experienced executives brought in from outside.

      Bankman-Fried and a representative for Taylor Swift declined to comment.

      Thirty-year old Bankman-Fried initially favoured the deal, in part because he’s “a fan of Tay Tay”, one employee said, using Swift’s nickname. Claire Watanabe, a senior executive in FTX’s business development team, was seen by former employees as a driving force behind the pursuit of Swift and was also a fan of her music. Watanabe could not be reached for comment.

      Those pushing to scrap the talks, which began last autumn and ended this spring, employees said, thought the partnership with Swift was too expensive and questioned whether previous celebrity deals were delivering value for money.

      The deal was opposed by several members of the marketing team. “No one really liked the deal. It was too expensive from the beginning,” said one person familiar with the negotiations, adding that the price was “very high . . . really f*ck+ng high. That’s front of the soccer jersey level prices”. 
      …

    2. Helen Partz
      1 hour ago
      Bank of Russia wants to ban miners from selling crypto to Russians

      The Russian central bank supports the idea of legalizing the crypto mining business, but only if miners sell their coins to non-residents of Russia.
      Bank of Russia wants to ban miners from selling crypto to Russians

      The Russian central bank continues to maintain an extremely negative stance on cryptocurrencies, proposing to ban local miners from selling coins to local people.

      The Bank of Russia has supported the idea of legalizing cryptocurrency mining in Russia as part of a draft bill introduced in mid-November 2022.

      However, the Russian central bank wants to allow miners to sell their crypto only on foreign exchanges and to non-residents of Russia, the local news agency Interfax reported on Dec. 7.

      “We believe that cryptocurrency obtained as a result of mining can be sold exclusively using foreign infrastructure and only to non-residents,” the Bank of Russia’s press office reportedly said, adding:

      “In general, we adhere to the position on the inadmissibility of the circulation of digital currency on the territory of the Russian Federation.”
      …
      https://cointelegraph.com/news/bank-of-russia-wants-to-ban-miners-from-selling-crypto-to-russians

    3. The logo of the crypto trading firm FTX is reflected in an image of former chief executive Samuel Bankman-Fried. The collapsed company suffered a “complete failure of corporate controls” under Bankman-Fried, the company’s new chief executive said on November 17, calling the situation “unprecedented”. Photo: AFP

      Opinion
      The View by Andy Xie
      How the Federal Reserve helped create and burst the FTX crypto bubble
      – As the Fed boosted liquidity, the odds of cooking up a successful scam improved greatly – and more people did
      – Now that the Fed is winding down its bloated balance sheet, hot-air assets like cryptocurrencies are losing their life line
      Andy Xie
      Published: 1:00am, 30 Nov, 2022
      Updated: 1:10am, 30 Nov, 2022

      The Federal Reserve’s liquidity tsunami, especially its response to the Covid-19 crisis, supercharged financial bubbles and Ponzi scams. The collapse of the cryptocurrency exchange FTX is just one of many inevitable failures, as the US central bank unwinds quantitative easing.

      The Fed has actually kept the pace of balance-sheet unwinding rather slow (more on this later), given fears of a financial meltdown. But it is just prolonging the inflation crisis and keeping up the pressure for monetary tightening. Even if the Fed avoids the prospect of a thousand FTXes going bust together, the world will still see one collapse after another for the next couple of years.

      The founder of FTX apparently believed in “effective altruism”, a fad among the ruthless billionaire class. The idea, it seems, is to maximise total contributions to society: technically, it is OK to do a few bad things to make money, as long as you put that money to good use eventually.

      In the case of FTX, the money might have gone to top executives as loans. Good uses for that money may also have included donating to politicians to amass influence and buying a penthouse in the Bahamas.

      As the Fed’s liquidity engulfed markets in recent years, the odds of cooking up a successful scam improved greatly and more people crossed over to the dark side. “Effective altruism” is something these people say to convince themselves that everything is OK.

      Throughout history, questionable things have been done in the name of morality. One result is that Europeans have taken over much of the world, including North America and Australia, eliminating massive numbers of local peoples in the process.

      The whole world of cryptocurrency is pretty much a scam that was sold to the public as a way to replace fiat money. Cryptocurrency assets became popular with the public when they rose and rose in value, fuelling a retail mania like yet another Chinese A-share bubble.
      …
      https://www.scmp.com/comment/opinion/article/3201272/how-federal-reserve-helped-create-and-burst-ftx-crypto-bubble

    1. Markets
      CNBC TV
      Watchlist
      LIVE UPDATES
      Updated Wed, Dec 7 2022 7:59 AM EST

      Stock futures fall Wednesday as recession fears continue to batter market sentiment
      Samantha Subin
      Tanaya Macheel
      US futures point to modest losses at open

      Stock futures slid Wednesday, with traders fretting over the possibility of a recession as the Federal Reserve could raise rates for longer than expected.

      Futures tied to the Dow Jones Industrial Average were down 142 points, or 0.4%, while S&P 500 futures lost 0.6% and Nasdaq 100 futures traded lower by 1.1%.

      Wall Street is coming off another tough session, with the Dow falling more than 350 points, or 1.03%. The S&P 500 and Nasdaq Composite lost 1.4% and 2%, respectively.

      Investors have been losing hope that the Fed will be able to engineer a so-called soft landing that successfully tamps down inflation through higher rates and also avoids a recession. Instead, concerns are swirling around the state of the economy and the likelihood of a downturn in 2023.

      “All told, financial indicators point to a recession on the horizon,” wrote Wells Fargo’s Azhar Iqbal in a note to clients Wednesday. “The S&P 500 has peaked ahead of recessions with an average lead time of four months over the past few business cycles. Taken together with the inverted yield curve, markets are clearly braced for a recession in 2023.”
      …
      https://www.cnbc.com/2022/12/06/stock-market-futures-open-to-close-news.html

    6. The Financial Times
      Markets Briefing Equities
      US futures fall as China’s weak export data spark economic growth fears
      Chinese stocks tumble despite Beijing’s move to ease country’s stringent zero-Covid policies
      A container port in Shanghai
      November data showed China’s exports and imports contracted by their biggest margins in several years
      George Steer 48 minutes ago

      US futures pointed to a weak opening on Wall Street on Wednesday, as softening Chinese export data added to investors’ concerns that stalling global economic growth would crimp demand.

      Contracts tracking the US equity benchmark S&P 500 fell 0.7 per cent and the tech-heavy Nasdaq 100 was 1.1 per cent lower, signalling further declines after a strong sell-off in US equities on Tuesday. In Europe the regional Stoxx 600 fell 0.7 per cent and London’s FTSE 100 fell 0.1 per cent.

      Stocks in Hong Kong tumbled after data from China overshadowed Beijing’s move to ease its stringent zero-Covid policies, as authorities try to quell discontent and seek to revive the world’s second-largest economy.
      …

  9. “About 270,000 homebuyers who bought during the red-hot housing market this year already owe more than their house is worth, a new analysis found. Among the 450,000 underwater borrowers in the third quarter, nearly 60% had mortgages originated in the first nine months of 2022, Black Knight found.

    Thankfully, the Brandon regime has inculcated an ethos of honoring your financial obligations in line with the Democratic Party’s uncompromising moral code when it comes to disdain for parasites who freeload off the system.

    Oh, wait….

  10. The UK’s globalist Quisling parties, like our own Neo-Bolsheviks (D), have successfully destroyed any semblance of a work ethic or morality in the younger generations as a prerequiste for installing a collectivist regime. Forward, Soviet!

    Quarter of a million out-of-work young Britons plan to NEVER get a job, survey reveals – with two-thirds of 18-24-year-olds saying it’s too difficult to find decent employment and nearly HALF still relying on ‘bank of mum and dad’

    https://www.dailymail.co.uk/news/article-11510237/Quarter-million-unemployed-young-Britons-planning-NEVER-job-survey-shows.html

  15. A reader sent these in:

    Diane Swonk now explaining that the Fed won’t repeat the mistakes of history.

    https://twitter.com/RudyHavenstein/status/1600205454122319872

    “This isn’t FTX or anything.” – Barry Sternlicht (actual quote)

    “Never believe anything in politics until it has been officially denied.” – attributed to Otto von Bismarck

    https://twitter.com/RudyHavenstein/status/1600229201667235840

    Of course Sternlicht, like many billionaires,presents himself as only looking out for the little guy, but that’s not it. Higher rates mean lower returns for Barry. That’s it. He’s talking his book. One reason you can’t buy a house is because Barry owns (at least) 3,000 of ’em.

    https://twitter.com/RudyHavenstein/status/1600258506187476992

    “I’m looking at a building…we’re the senior lender, there’s a mezzanine position & there’s the equity. I can tell you that the equity is probably gone, the mezzanine probably owns the building. There’s gonna be a lot of that…a reshuffling of the chairs…” (i.e., Capitalism)

    https://twitter.com/RudyHavenstein/status/1600253415153889280

    Higher rates means he has actual competition for investor capital, most of these QE levered clowns are beta marketing machines and don’t welcome it – wait until he finds out the mezz doesn’t own the building either…

    https://twitter.com/DruckandTuck/status/1600262626717552641

    What is happening now with private REITs is more important to markets than the FTX blow up. More impactful and just as interesting, although without the Tom Brady storyline. Let’s unpack it. 1/

    https://twitter.com/philbak1/status/1600277515146182656

    Corporate ownership of single family homes destroys neighborhoods and increases the cost of housing for all. It’s not a viable business without cheap money. ZIRP has distorted all markets.

    https://twitter.com/EmmetteP/status/1600311335962583040

    “…most of what they bought was in 2021 when rates were super low & valuations super high… if BREIT redeems at NAV, and NAV is artificially high, that creates an incentive to get out now.”

    https://twitter.com/RudyHavenstein/status/1600337418472738816

    Offerpad wasn’t even around long enough for me to make fun of it. Sad. I guess at this point it’s a call option. $opad

    https://twitter.com/RudyHavenstein/status/1600347984906321920

    US rents crisis: About one in four millennials are living with their parents, that’s equivalent to about 18 million people between the ages of 26 and 41. More than half said they moved back in with family in the past year. – Bloomberg

    https://twitter.com/AlessioUrban/status/1600272374695219200

    Investors are frantically pulling money out of real estate. Nontraded REITs saw $3.7 billion in redemptions in Q3. This is a 12x increase over last year.

    https://twitter.com/GRDecter/status/1600265272551579648

    Weekly remittances from the Fed to the US Treasury. Probably the most underreported chart in global macro right now

    https://twitter.com/AndreasSteno/status/1600153486821236736

    $FTX gets to go on a apology tour claiming he didn’t know anything..Hardworking businesses to pay taxes on sales > $600 using Venmo. $PYPL

    https://twitter.com/rhemrajani9/status/1600342056756543489

    $BX Blackstone’s $50bn corporate lending fund also hit with 5% redemptions now, in addition to real estate. Remember when liquidity dries up, good funds also are redeemed to fund losses at bad funds! More redemptions to come…

    https://twitter.com/SpecialSitsNews/status/1600254058899853312

    * EQUIFAX CEO SAYS “WE’RE ALREADY IN A MORTGAGE RECESSION, PROBABLY THE DEEPEST WE’VE EVER SEEN” – CONFERENCE

    https://twitter.com/carlquintanilla/status/1600165969145503745

    literally everyone who bought a second $1 million home. 😂

    https://twitter.com/StephenPunwasi/status/1600271768714821632

    Aaron Layman

    Toll Brothers Q4 results.
    Higher sales, but orders collapsed.
    “Net signed contract value was $1.3 billion, down 56% compared to FY 2021’s fourth quarter; contracted homes were 1,186, down 60%.”
    Quarterly cancellations as % of signed contracts in Q4 jumped from 4.6% to 20.8% 😮

    https://twitter.com/dfwaaronlayman/status/1600279036059582465

    4,544 sales in November with almost 70,000 Realtors in TRREB. Hang on to your hats.

    https://twitter.com/REWoman/status/1600110566978117632

    Danielle DiMartino Booth
    #DownUnder
    @blackstone
    behemoth private credit fund hit its redemption limits for first time in its 2-year history as investors yank capital from the $50B corporate lending vehicle…redemptions worth around 5% of outstanding shares in Q withdrawal window ended Nov. 30

    https://twitter.com/DiMartinoBooth/status/1600240300852580352

    CarDealershipGuy

    People are taking ridiculously long car loans 😳 Percent of new car purchases with 73+ month loan terms:
    October 2017: 27%
    October 2022: 34% (!!!)
    No good.

    https://twitter.com/GuyDealership/status/1600218989183045675

    Buyers in ’22 not looking too good! Thank you, Mr. Chair.

    https://twitter.com/TheBondFreak/status/1600239378919325696

    🇨🇦’s the most generous county in the world. We embrace any immigrant that will provide low-cost labor, pay 30% of their income to taxes to fund services they can’t access, and another 50% to fill our investment properties. Because it’s 2022.

    https://twitter.com/StephenPunwasi/status/1600173610898841607

    Sellers are delisting because they still think this is a plateau and they can wait it out for the next upswing. When they realize this was the top and not a plateau, their logic will change and we’ll get a flood of listings
    Step 1 is more headlines about rents and vacancy rate

    https://twitter.com/NipseyHoussle/status/1600176061693952001

    Whoa…Anyone else notice that the price of #oil is now down -39% since its peak in June?

    https://twitter.com/menlobear/status/1600195469057007616

    The rent slowdown is occurring pretty much everywhere, but no markets encapsulate the craziness of the past couple years quite like desert duo of Phoenix and Las Vegas — which are on track to soon become the first major U.S. markets to see apartment rents drop year-over-year…

    https://twitter.com/jayparsons/status/1600144498369040385

    Aug 2022 Home sellers be like that 25 year old girl on Tinder who’s all, “I know what I’ve got” and proceeds to reject 15 suitable men who aren’t handsome or rich enough, only to end up on eHarmony a decade later taking whatever she can get

    https://twitter.com/texasrunnerDFW/status/1561883726748975105

    41% of survey respondents think a housing crash is imminent. 74% of those think it’s gonna be worse than 2008.

    https://twitter.com/mikesimonsen/status/1600133305982017540

    Those people that bought five or six homes used subprime loans, not QM loans. Non-QM loans are defined as subprime. The housing crash is already here and showed a space before Covid shut downs. I have about 10 years mortgage experience, and operated by old broker retail shop.

    https://twitter.com/ApprovalPre/status/1600162717876178952

    Kira Mason
    @kmasonrealtor
    This seems fine.

    https://twitter.com/kmasonrealtor/status/1600153249620758528

    Steve Saretsky

    Hearing lots of Real Estate stories everyday. Financial stress is building. Floating rates are destroying investor cash flow and prompting some to sell. Others loaded up on pre-sales with no strategy to close.

    https://twitter.com/SteveSaretsky/status/1600163635355353088

    Ryan Lundquist
    @SacAppraiser
    How did properties sell compared to their original list price in November? Here’s the scoop for the Sacramento region:

    – 9.65% sold at original list price
    – 73.5% sold below original list price
    – 16.7% sold above original list price

    https://twitter.com/SacAppraiser/status/1600165039838998528

    Realtor.com Economics

    2022 saw the largest rate of home completions in over a decade when analyzing the first three quarters of the year. In fact, builders completed more homes in the first 3 quarters of 2022 than in each full year from 2012 – 2016.

    https://twitter.com/RDC_Economics/status/1600165672956346368

    1. whoever puts these together everyday, really appreciate these. Read all the links (and their comments) some very under the radar stuff that no one else is talking about it.

      Thanks for putting them together.

    2. ‘4,544 sales in November with almost 70,000 Realtors in TRREB’

      And 90% of those sales went to 10% or less of the UHS.

  16. Stole another one
    Just like the other ones
    Drop box is full of it
    And those ballots ain’t legit

    Just show up to vote, my friend
    Bring your voter ID
    Just show up to vote, my friend
    Bring your voter ID

    https://youtu.be/pSgGCOHuO1U

    Wednesday Live: Loose Election Laws Give Dems Another Win

    The American Journal
    December 7th 2022, 7:50 am

    Georgia allows anyone to request a ballot by mail, which is ripe for fraud

    1. Fraud is not only commonplace but accepted. Reubs need to play the ball or go home.

      Also by voting for Walker I may be empowering McConnell, I don’t think I can do that. Just my $.02.

  17. ‘Those people that bought five or six homes used subprime loans, not QM loans. Non-QM loans are defined as subprime. The housing crash is already here and showed a space before Covid shut downs’

    Yep, remember the ebola! era?

    So here we are and the REIC lying about subprime is clear as day.

    ‘About 270,000 homebuyers who bought during the red-hot housing market this year already owe more than their house is worth, a new analysis found. Among the 450,000 underwater borrowers in the third quarter, nearly 60% had mortgages originated in the first nine months of 2022, Black Knight found. Borrowers with purchase loans backed by the Federal Housing Administration (FHA) or Veterans Affairs (VA) were most likely to have slipped underwater’

    1. “So here we are and the REIC lying about subprime is clear as day.”

      Isn’t vindication the oddest thing? To this day, broke assed debt donkeys here and everywhere else insist there is no subprime in spite of the fact over 90% of all mortgages since 2011 are in fact subprime.

      Renton, WA Housing Prices Crater 24% As Seattle Area Emerges As Ground Zero For Housing Bust

      https://www.movoto.com/renton-wa/market-trends/

      1. Are there any NO INCOME mortgages? (@kathomeloans )
        KatHomeLoans
        Dec 6, 2022

        With a mortgage loan professional in your corner, you’ll have a partner by your side to advocate for you and advise you through the entire mortgage loan application process.

        With me, we are going to find you the best home loan product that is available and you qualify for!

        https://www.youtube.com/watch?v=HFXEd6JA5fs

        2 minutes.

          1. These loans are always around. It’s a version of hard money lending. But there are or have been no down no doc mortgages. USDA and VA for example. USDA is reserved for poor people.

      1. I tear down any mask signs I find (and I won’t get instantly busted). I’ve torn down a lot over the last 2+ years.

        1. In my burg that was a fine for the store owner. Why vandalize them if they aren’t actually harassing you? All we needed here was to tear off the governor. Came close.

    2. The consequences of rigged elections can be enormous.
      Biden plans to sign a treaty with the United Nations unelected WHO corrupt Health Agency in January.
      The WHO is setting up the power dictate health policy globally , which would include power of censorship that would supersede all laws and Constitutional protections in Sovereign States that sign that treaty.
      The WHO could order lockdowns, mandate vaccines, dictate enforcement of health policy , or even have climate change lockdown..

      It was always the plan of the Globalists One World Order to transfer power to this WHO, that Bill Gates gives millions to, and
      Klaus Schwab and the CCP are cozy with.
      In other words , Biden is handing over power to a body of Commie infiltrators , ,
      including the CCP..
      Make no mistake that Biden is a traitor
      that is advancing the One World Order take over, and destruction of US.
      The fake climate change and Pandemic emergencies are the weapons of mass destruction to take away Constitutional protections.
      They are setting up for the next round of lockdowns , China style , where the WHO inflicts policy on all Countries that are members of the treaty.
      Gates is meeting with Fauci to implement the policies for the next panademic. So, our health agencies are captured, with them sitting up for the WHO to lock you down, and probably enforce fake vaccines.
      Climate Change lockdowns are in the works. WHO will supersede the US Constitution, if Biden signs that treaty in Jan, that he plans on doing.
      So, no other choice but for millions or billions to not comply with this pre-planned
      take over to enslave ,de- populate , and deprive the world of energy, food and freedoms using fake emergencies to implement their sinister agenda.
      Call you congressmen or senator to object to Bidens TREATY, and you can see DC isn’t talking about it , because they plan to sneak it in like thieves in the night.
      It should be the biggest topic of conversation , but bought off news isn’t covering it.
      You want to be forced to take 6 booster shots a year and be locked down China Style by this Innsurrection by psychopaths and tyrants that think nothing of killing you?

  22. Selling like hotcakes!!!! Eat yer crows Thornberg

    https://www.zillow.com/homedetails/18-Lansing-St-APT-403-San-Francisco-CA-94105/80748443_zpid/

    Price history
    Date Event Price
    12/5/2022 Price change $6,497 (-4.5%)$4/sqft
    Source: Zillow Rental Manager Reporta problem
    11/11/2022 Price change $6,800 (+36.1%)$4/sqft
    Source: Zillow Rental Manager Reporta problem
    11/11/2022 Listing removed $1,449,000$858/sqft
    Source: SFAR #422670312 Reporta problem
    10/20/2022 Price change $1,449,000 (-3.1%)$858/sqft
    Source: SFAR #422670312 Reporta problem
    9/12/2022 Price change $1,495,000 (-6.3%)$886/sqft
    Source: SFAR #422670312 Reporta problem
    6/17/2022 Listed for sale $1,595,000 (-8.8%)$945/sqft
    Source: SFAR #422670312 Reporta problem
    4/15/2021 Listing removed $1,749,000$1,036/sqft
    Source: SFAR #421526773 Reporta problem
    4/13/2021 Price change $1,749,000 (-5.9%)$1,036/sqft
    Source: SFAR #421526773 Reporta problem
    3/12/2021 Listed for sale $1,859,000 (+23.9%)$1,101/sqft
    Source: SFAR #421526773 Reporta problem
    3/1/2021 Price change $4,997 (-9.1%)$3/sqft
    Source: Zillow Rental Manager Reporta problem
    11/22/2019 Price change $5,500 (-8.3%)
    Source: Belong Reporta problem
    10/23/2019 Price change $5,995 (-9.2%)
    Source: Belong Reporta problem
    9/12/2019 Price change $6,600 (-2.9%)
    Source: Belong Reporta problem
    9/3/2019 Price change $6,800 (-2.5%)
    Source: Belong Reporta problem
    8/21/2019 Price change $6,975 (-17%)
    Source: Belong Reporta problem
    8/8/2019 Listed for rent $8,400
    Source: Belong Reporta problem
    8/3/2017 Sold $1,500,000 (-4.8%)$889/sqft

        1. It began to explode when they changed the way the capital gains tax worked. Remember you used to have to roll it forward and you got one lifetime exemption (for some amount I forget now) and then they changed it ot the 250/500k rule no questions asked. Boom, prices started exploding, people moving every 2 years. Flippers extraordinaire.

  23. Speaking of cucks…

    ‘It’s a mistake’: White House raps lawmakers over troop vaccine mandate repeal:

    “The White House still believes that the Pentagon’s Covid-19 vaccine mandate for troops should stay in place, even as lawmakers are preparing to overturn it, White House National Security Council spokesperson John Kirby said Wednesday.

    Speaking to reporters, Kirby defended the policy, which has come under assault from Republicans on Capitol Hill, and dinged GOP lawmakers who pushed the issue.”

    https://www.politico.com/news/2022/12/07/military-covid19-mandate-pentagon-00072715

    Note the word choices: under assault.

    COVID vaccines are poison.

    1. U.S. Economy
      Housing Costs, Inflation’s Biggest Component, Are Poised to Ease
      New rents are already softening, but that might not show up in official inflation data for months because of measurement delays
      Housing is influential because its is the largest component of the consumer-price index.
      Photo: Roberto E. Rosales/Zuma Press
      By Gwynn Guilford
      Dec. 6, 2022 9:00 am ET

      The end is in sight for one of the biggest sources of inflation. Surging housing costs helped keep inflation high this year but have likely already swung into reverse, economists say.

      The signal comes from private-sector indexes of rents on new leases, which tend to lead the consumer-price index measures by a little less than a year, said Alan Detmeister, economist at UBS. 
      …

      1. Keeping in mind that actual rents are not included in what the government tries to convince you is “inflation”. Rather, it is what FB’s think they “could always rent it out” for.

  25. Citibank has a 1Y fixed rate CD at 4.15% APY and a 12-Month No Penalty at 3.10% APY. Teller said people are doing the 3.10% and waiting to see if the other goes higher.

  26. The One World Order plans that nobody will own real estate or anything and all resources will be controlled by them .
    They want to construct what they call “smart cities” where the populations basically live like prisoners, with limited freedoms. A total 1984 type of control over humanity, where any choices are removed.
    Never allow another lockdown, bogus masks or fake vaccines ever.
    Covid 19 was basically a test run so they could figure out how to do Panademic round 2.
    Time is of the essence to stop this take over of the planet by this Terrorist Cult of
    Screwballs, who hate the human race. The plan is all in their writings , planned for over 100 years.

  30. The Bank of Canada Raises Rates 50bps: Inflation = More to Come
    Mark Mitchell – Mortgage Broker London Ontario
    Dec 7, 2022

    The Bank of Canada raised interest rates by 50bps this morning, putting Canada’s Policy Rate at its highest level since 2008, when inflation was at 2.4%. The Bank signaled it would consider raising rates higher to get inflation back down to the 2 percent target range.

    The rise in interest rates will no doubt put more pressure on holders of variable rate mortgages – but will the Bank of Canada pause it path of rate hikes for the foreseeable future?

    Links:

    The Bank of Canada’s next rate hike: a toss-up between 25 and 50 bps:

    https://www.canadianmortgagetrends.co…

    Bank of Canada raises key interest rate to 4.25 per cent, its highest since 2008:

    https://www.ctvnews.ca/mobile/busines…

    Central bankers have to make hard decisions — and sometimes they get it very wrong:

    https://www.cbc.ca/news/economy-infla…

    Food prices expected to keep rising in 2023 amid biggest inflationary wave in 40 years:

    https://www.thestar.com/business/2022…

    Bank of Canada Hikes Rate to 4.25%, Signals Potential Pause:

    https://www.bloomberg.com/news/articl…

    Bank of Canada maintains policy rate and forward guidance:

    https://www.bankofcanada.ca/2021/12/f…

    Bank of Canada increases policy interest rate by 50 basis points, continues quantitative tightening:

    https://www.bankofcanada.ca/2022/12/f…

    Opinion: Bank of Canada should now pause rate hikes and reflect:

    https://financialpost.com/opinion/ban…

    Consumer Price Index, major components and special aggregates, Canada – Not seasonally adjusted:

    https://www150.statcan.gc.ca/n1/daily…

    Saskatoon city council approves budget adjustment that will see property taxes go up 3.93%:

    https://www.cbc.ca/news/canada/saskat…

    City of Calgary says it seeks balance with proposed 4.4% property tax hike, rate increases:

    https://www.cbc.ca/news/canada/calgar…

    Vancouver councillors mull 5% increase to property taxes in 2023 budget:

    https://globalnews.ca/news/9315483/va…

    An ‘unfathomable’ fallout: Municipalities lash out at Doug Ford’s housing bill:

    https://www.thestar.com/news/gta/2022…

    Think house prices are too high? The rental market is even worse — with no relief in sight:

    https://www.cbc.ca/news/business/rent…

    Expect inflation to officially be over 8% and stay there a few months, Bank of Canada governor warns:

    https://www.cbc.ca/news/business/bank…

    How low can they go? Used car prices are falling, but don’t expect a return to prepandemic levels:

    https://www.theglobeandmail.com/drive…

    Gas prices in southern Ontario are set to drop to lowest point of 2022 this week. Here’s when:

    https://toronto.ctvnews.ca/gas-prices…

    Inflation, consumer prices for Canada: https://fred.stlouisfed.org/series/FP…

    6:27.

  32. You have to kind of laugh at these paltry rate hikes. They should have been aggressively hiking by 100 basis points starting almost 2 years ago. And they are expecting inflation to subside with funds rates that are less than half of CPI. Good luck with that.

    2. Yeah, I love the YT realtors who think we’ll be back to 4-5% mortgage rates by mid-2023 to rescue their dismal commissions from the last half of 2022.

  34. DemsAreFems

    It’s gotta nice ring I’m looking for other quick jabs with impact for bumper stickers.

  35. ‘potential homebuyers pressing pause on new offers for houses in Sonoma County. ‘For the last three years, everybody was used to getting whatever they want when they sell their house’

    Sound lending!

    1. The trail of destruction from this faulty lending and everything bubble is too big to even fathom. I see small towns up and down the west coast, where jobs are few and pay paltry, with tiny, rotting shacks boasting prices of $500k and more.

    1. The Financial Times
      Yield curve
      Bond market points to Fed standing firm in battle against inflation
      US yield curve is at its most inverted since 1981 in sign investors see recession on horizon
      The Federal Reserve building in Washington
      Shifts in the bond market show investors moving more in alignment with what the Federal Reserve has said it expects for the coming year
      Kate Duguid in New York
      59 minutes ago

      The gulf between short- and long-term US borrowing costs has reached its widest point since 1981, in a sign investors expect the Federal Reserve to stay the course in its battle to tame inflation, even as recession worries mount.

      The two-year Treasury yield traded on Wednesday at 4.2 per cent, while the 10-year yield stood at 3.4 per cent, bringing the difference between the two to 0.84 percentage points. The pattern, known as a yield curve “inversion”, has preceded every US economic downturn of the past 50 years.

      The deepening of the inversion comes after a report last week showing the US economy continued adding jobs at a robust pace in November and an important survey indicating activity in the vast services sector is continuing to grow rapidly.

      While the data paint an upbeat picture of the state of the economy, some investors are worried that it will also encourage the Fed to keep pushing interest rates higher next year, after taking them from near zero to a range of 3.75 to 4 per cent so far in 2022. Higher borrowing costs, in turn, are expected to heap pressure on the economy and potentially trigger a recession.

      “The market had been betting that the Fed would be forced to slow down. The past year has taught us that the market has been wrong over and over again on this assumption,” said Edward Al-Hussainy, a senior analyst at Columbia Threadneedle.
      …

    2. Is the Fed making a serious mistake by not running monetary policy in a manner that makes Cathie Wood’s high risk gambles pay off?

      1. Yahoo
        Fortune
        Cathie Wood says the Fed is making a ‘serious mistake’ by ignoring this critical recession indicator
        Will Daniel
        Wed, December 7, 2022 at 9:55 AM·3 min read
        Hugo Amaral—SOPA Images/LightRocket/Getty Images

        ARK Invest CEO Cathie Wood says that the Federal Reserve’s interest rate hikes have pushed the U.S. economy to the brink of recession and there’s one key indicator that proves it—the only problem is that Fed officials are ignoring the data.

        “The yield curve is more inverted now than at any time since the early ’80s when double-digit inflation was entrenched,” Wood wrote in a Wednesday tweet. “The bond market seems to be signaling that the Fed is making a serious mistake.”

        The yield curve describes the relationship between yields on U.S. government bonds with different durations—or maturity dates.

        Typically, short-term bonds yield less than long-term bonds. If you were to graph this relationship, you’d see an upward sloping curve. But when that relationship changes, and short-term bonds yield more than long-term bonds, the yield curve inverts.

        And that’s what’s happening now: The yield on the two-year Treasury was 4.32% on Wednesday, while the yield on the 10-year Treasury was just 3.50%.

        “Typically, an inverted yield curve is pointing to a recession and/or lower than expected inflation,” Wood explained.
        …
        https://www.yahoo.com/now/cathie-wood-says-fed-making-175528908.html

        1. “The bond market seems to be signaling that the Fed is making a serious mistake.”

          The bond market seems to be signaling that Cathie Wood’s cryptocurrency investments and other high risk gambles are CR8Ring.

      3. ARK is only down 62% so far in 2022…much better than cryptocurrencies.

        ARKK – ARK Innovation ETF
        NYSEArca – NYSEArca Delayed Price. Currency in USD
        34.35 -0.27 (-0.78%)
        At close: 04:00PM EST
        34.25 -0.10 (-0.29%)
        After hours: 07:59PM EST

  38. Does it seem like academic experts are more dialed in to the property bubble concept than they were a couple of decades ago?

    1. The Financial Times
      Chinese business & finance
      ‘What’s the point of buying?’ China’s property woes push young to rent
      Government looks to growing rental sector to ease crisis among real estate developers
      Children playing in front of apartment blocks.
      Beijing’s Shangdi residential neighbourhood. Increasing numbers of young urban Chinese are choosing to rent homes rather than buy
      Cheng Leng in Hong Kong and Thomas Hale in Shanghai 6 hours ago

      A few months after her wedding this year, Lilian Li moved from the south-western Chinese city of Chongqing to an apartment near Beijing’s financial district.

      But while Chinese newly-weds typically see property ownership as an essential next step after marriage, Li and her husband are instead renting a two-bedroom apartment in the capital for Rmb13,000 ($1,821) per month.

      To buy an identical apartment, Li and her family would need more than Rmb5mn just for the down payment — the equivalent of more than 30 years’ rent.

      “My husband and I had a deep conversation about the life we want, and we reached an agreement not to buy,” said Li, 28. “We don’t want to owe our parents a massive down payment or to fall heavily into debt.”

      Increasing numbers of young Chinese, the main buyers of urban homes, are making the same decision — with potentially far-reaching implications for the nation’s troubled property market.

      Affordability is a thorny issue for homebuyers in China, where average house prices have nearly doubled over the past decade. Rents have also increased, but by much less. The ratio of the cost to buy residential properties to their monthly rent was above 600 in major cities in June 2022, according to calculations by real estate data firm Zhuge Zhaofang. In 2007, the ratio was 400 or below.

      A ratio of more than around 200 is considered a warning signal of a potential property price bubble, according to a report by the Chinese Academy of Social Sciences, a state think-tank.
      …

    2. Australian economy
      Conflict of interest: have low cash rates created the ‘everything bubble’?
      RBA front

      In new book The Price of Time, economist Edward Chancellor explores the role central banks have played in the snowballing challenges of the past quarter century
      Peter Hannam
      Economics correspondent
      Sat 26 Nov 2022 14.00 EST
      Last modified on Sat 26 Nov 2022 21.48 EST

      Twenty years ago, a youngish economist destined to become a household name in Australia issued a warning to central banks everywhere.

      “[L]owering rates or providing ample liquidity when problems materialise but not raising rates as imbalances build up, can be rather insidious in the longer run,” he said.

      “They promote a form of moral hazard that can sow the seeds of instability and of costly fluctuations in the real economy.”

      So said Philip Lowe, the future Reserve Bank governor, in a paper he co-authored while on secondment at the Bank for International Settlements in Switzerland with senior BIS economist Claudio Borio.

      The two presented their report to a March 2002 conference hosted by BIS – dubbed “the bank for central banks” – on how risks could grow even over times of apparent calm.

      Of specific concern were financial imbalances, such as asset bubbles, that might emerge during stints of low inflation. In some circumstances, it would be appropriate for banks to take pre-emptive action “to preserve both financial and monetary stability”.

      How central banks should act – and what they actually do – is at the heart of a fascinating if somewhat alarming new book by UK-based economic commentator Edward Chancellor.

      The Price of Time explores the history and role of interest rates. Central banks, much like the nursery rhyme about “an old lady who swallowed a fly”, seem inured to solve each bout of market turmoil in a way that begets bigger instability in the future.

      The warning by Borio and Lowe that authorities should be alert to the dangers of speculation – and the moral hazards that result when bad decision-makers get used to being rescued – is a constant theme running through the book.

      The work is also timely, as an independent panel is halfway through a review of the RBA and its operations, due for completion in March.

      That interest rates might be climbing in Australia, the US, New Zealand and elsewhere doesn’t diminish Chancellor’s case. As he notes, nominal rates may be off the record lows set during the Covid pandemic but they remain well below inflation, leaving them negative in real terms.

      A favourite quote for the author is by Jeremy Stein, a Harvard University economist who served one term on the board of governors of the US central bank, the Federal Reserve.

      Firm regulation of markets was all very well but monetary policy “gets into all the cracks”, Stein said. Excessively low interest rates pump up all manner of asset bubbles as investors desperate for some return on their money snap up property, shares, and until lately, cryptocurrency.

      “All these extraordinary low interest rates [have] got into everything,” Chancellor told Guardian Australia. “And if we say we have the everything bubble, it sort of follows then that you’re going to have the everything bust.”
      …
      https://www.theguardian.com/business/2022/nov/27/conflict-of-interest-have-low-cash-rates-created-the-everything-bubble

Comments are closed.