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The Media And The Public Will Think The Sky Is Falling, The Truth Of It Is The Sky Actually Fell Last June And Kept Falling

It’s Friday desk clearing time for this blogger. “When mortgage rates hit 7% in the fall, Austin-based mortgage broker Aaron Kovac was a little spooked. After a stunning rise in home sales amid ultra-low interest rates, ‘the market just went absolutely silent,’ the 32-year-old, who has been in the mortgage industry for six years, told MarketWatch. As the housing market slump drags on, fear has taken over. ‘This is my first time going through a decline in the real-estate market,’ Kovac said, ‘2022 has been the scariest year of my adult and professional life. It’s the same story everywhere — not just with other lenders, but also with real estate agents,’ he added.”

“Michael Burrage liked Fort Lauderdale ever since his first visit as a college student in the 1970s. Last spring, with the slowdown on the horizon, Mr. Burrage spent $13.45 million to buy three condominiums in the complex’s yacht-shaped building on the Atlantic Ocean. Now, the economic downturn is casting a cloud on this transformation: Home sales in Broward County in November 2022 were down 35% from November 2021, and real-estate listings rose for the fifth straight month. Sales and prices of luxury homes in Fort Lauderdale are declining from record highs in 2021. The average sale price of the city’s homes over $1 million dropped to $2.7 million in November 2022, according to Broward, Palm Beaches & St. Lucie Realtors, an association with several South Florida locations, down from $3.5 million in the red-hot market of November 2021. ‘I thought it was a decent investment, given what happened in other places,’ said Mr. Burrage.”

“Nearly 42% of home sellers gave buyers concessions during the last three months of 2022, according to Redfin. It’s the highest share ever recorded by Redfin, though bear in mind the data only goes back to 2020. ‘Buyers are asking sellers for things that were unheard of during the past few years,’ said Van Welborn, a Redfin real estate agent in Phoenix. ‘It took a while, but seller expectations are coming back down to earth,’ said Welborn. They realize that ‘they’re not going to get $80,000 over asking price like their neighbor did last year.’ San Diego was the city with the highest percentage of sellers giving concessions, at 73% in the fourth quarter of 2022, followed by Phoenix (63%) and Portland, Oregon (62%).”

“It’s a new year and a Las Vegas Home expert says home buyers here in the valley have major leverage when purchasing going into 2023. Jennifer Graff, the founder of New Home Experts says sellers are offering thousands of dollars in incentives. Some sellers are even offering up to 60 to 70 thousand dollars off of homes. ‘A lot of the builders have, especially towards the end of 2022, slashed prices to get those homes off of their books,’ said Graff.”

“Buyers and sellers will find themselves on a more even playing field as D.C.’s market nears more balanced pre-pandemic conditions. A ‘reset of expectations,’ says Harrison Beacher of the Greater Capital Area Association of Realtors, as everyone accepts that the intense bidding wars we saw early in the pandemic are a thing of the past. The 2023 landscape is a return to normal that not everyone wants. Buyers are longing for low interest rates, and sellers are kicking themselves for missing the early pandemic frenzy.”

“Gone are the days of homes selling within a week or two. Prices for homes in the Coachella Valley are dropping, as are sales. The most recent housing report issued by Greater Palm Springs Realtors shows the median price for a detached home in the Coachella Valley fell $26,000 between October and November, standing at $649,000 as 2022 came to a close. ‘Every city has lower sales now compared to a year ago,’ read the report. The largest percentage of sales declines are in the cities of La Quinta, Cathedral City, and Rancho Mirage, while Indio had the smallest sales decline. Sales in Palm Springs have dropped by 43% compared to last year.”

“A mostly vacant office building in Northbrook lost nearly all of its value in just over a decade. A venture of the Phoenix, Arizona-based real estate investment trust Orion Office sold an empty 197,300-square-foot office building to an unnamed buyer for about $2.5 million, Crain’s reported. It last sold in 2011 for $44.3 million, which means Orion lost about 95 percent of its investment. It’s also the latest reminder of the diminishing value of office properties in need of upgrades renovations.”

“The Greater Toronto Area capped off a tumultuous year with its ninth straight month of declining home prices and almost half the sales seen a year ago. Prices have dropped 19 per cent since March, when the declines began, and economists feel they still have further to fall. ‘There is no end in sight for the housing correction,’ Sal Guatieri, a senior economist with BMO Capital Markets, said in a note to investors Thursday.”

“When January and February 2023 numbers are released, ‘it’s going to feel like the sky has fallen,’ Ken Dekker, now president of the 3,900-member Ottawa Real Estate Board, said Thursday. In January, February and March of 2022, prices rose 20 per cent. That’s all gone and then some, Dekker said, so it will make year-to-year comparisons in the coming months look bleak. ‘The media and the public will think the sky is falling. The truth of it is that the sky actually fell last June and kept falling,’ he said. ‘It’s the worst turmoil I’ve seen in 29 years.'”

“Three investors have sought the intervention of Parliament fearing they could lose lifetime savings they put into a project by a real estate firm. In a petition filed by Alego Usonga MP Sam Atandi to the National Assembly, Josephine Awuor, Caroline Atieno and Omondi Abonyo said the company has delayed refunding their money after the housing project failed to take off. The petitioners claimed the company has been trying to sell off its properties and they fear it might dissolve with their money. ‘By the year 2018, some investors who were paying by instalment had each paid in excess of Sh3.9 million during which time it seemed the company had started to experience internal financial problems since no construction ever started,’ the petitioners said.”

“Auckland’s largest real estate agency says its average monthly sales in 2022 were the lowest since 2010. Failures to make sales had also resulted in a glut of properties sitting on the market. The agency had 4664 properties​ on the books at the end of December – 28% more than in December 2021. The glut was despite new listings in December being down by over 55% on the month before.”

“The Department of Statistics tells us that the total population of Malaysia in 2022 inched up to 32.7 million from 32.6 million in 2021, for an annual population growth of only 0.2%. Are developers hoping to lure foreign retirees from China and the West to fill up empty high-end condos? (Two of those three planned artificial islands in southern Penang Island appear to be aimed at the wealthy.) At present, even existing high-end tower blocks in several developed states are not fully occupied. Johor, Penang and Selangor each has a glut (overhang) of about 5,000 to 6,000 homes.”

“Why is there such a glut? If there is an overhang, it simply means developers are building homes that are too expensive or in unsuitable locations for most people. Unfortunately, this is something that many in government and in certain groups cannot seem to understand – or choose not to. Sometimes unsustainable mega-projects are selected, driven by crony interests – rather than the people’s real needs. Let’s focusing our limited financial and natural resources on infrastructure projects that will truly benefit everyone. The old days of ‘build and they will come’ are over.”

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This Post Has 55 Comments

  1. ‘In January, February and March of 2022, prices rose 20 per cent. That’s all gone and then some, Dekker said, so it will make year-to-year comparisons in the coming months look bleak’

    That brutal YOY thing has arrived early for the igloo clusters. Some of them wiped out more than 20% from the spring and are down 20% more. I’ll have baskets of crater this weekend.

  2. ‘Why is there such a glut? If there is an overhang, it simply means developers are building homes that are too expensive or in unsuitable locations for most people. Unfortunately, this is something that many in government and in certain groups cannot seem to understand – or choose not to. Sometimes unsustainable mega-projects are selected, driven by crony interests – rather than the people’s real needs. Let’s focusing our limited financial and natural resources on infrastructure projects that will truly benefit everyone’

    The author has a long list of things that would benefit the economy but everything gets pushed back to fund more airboxes. Bubbles are a waste of resources and then they crash.

    ‘The old days of ‘build and they will come’ are over’

    For the thousandth time.

  3. ‘San Diego was the city with the highest percentage of sellers giving concessions, at 73% in the fourth quarter of 2022’

    That’s some red hotness right there.

  4. ‘By the year 2018, some investors who were paying by instalment had each paid in excess of Sh3.9 million during which time it seemed the company had started to experience internal financial problems since no construction ever started’

    This is in Kenya, following the Chinese/Florida ponzi model.

  5. Where is Yoel Roth?

    Two months ago, this guy had the FBI, DHS, CIA all on speed dial, and now we are all just supposed to forget about him.

    Where are you, Yoel?

    4chan may or may not have the location of a “safe house” where Yoel Roth is, but we won’t discuss that here…

  6. ‘the market just went absolutely silent,’ the 32-year-old, who has been in the mortgage industry for six years, told MarketWatch. As the housing market slump drags on, fear has taken over. ‘This is my first time going through a decline in the real-estate market,’ Kovac said, ‘2022 has been the scariest year of my adult and professional life. It’s the same story everywhere — not just with other lenders, but also with real estate agents’

    Swimming neeked, drinking the kool-aid.

    1. That’s so cute, a guy who sells mortgages thinks he’s a “professional”. Well, whatever you are, it won’t be for long!

  7. 𝗦𝗮𝗻 𝗚𝗮𝗯𝗿𝗶𝗲𝗹, 𝗖𝗔 𝗛𝗼𝘂𝘀𝗶𝗻𝗴 𝗣𝗿𝗶𝗰𝗲𝘀 𝗖𝗿𝗮𝘁𝗲𝗿 𝟮𝟬% 𝗬𝗢𝗬 𝗔𝘀 𝗛𝗼𝘂𝘀𝗶𝗻𝗴 𝗧𝘂𝗺𝗯𝗹𝗲𝘀…. 𝗔𝗻𝗱 𝗖𝗮𝗹𝗶𝗳𝗼𝗿𝗻𝗶𝗮 𝗖𝗿𝘂𝗺𝗯𝗹𝗲𝘀

    https://www.movoto.com/san-gabriel-ca/market-trends/

    𝘈𝘴 𝘰𝘯𝘦 𝘓𝘈 𝘢𝘳𝘦𝘢 𝘣𝘳𝘰𝘬𝘦𝘳 𝘴𝘶𝘨𝘨𝘴𝘵𝘦𝘥, “𝘚𝘦𝘭𝘭𝘦𝘳𝘴 𝘢𝘳𝘦 𝘴𝘰 𝘥𝘦𝘦𝘱 𝘶𝘯𝘥𝘦𝘳𝘸𝘢𝘵𝘦𝘳, 𝘮𝘰𝘴𝘵 𝘰𝘧 𝘵𝘩𝘦𝘮 𝘢𝘳𝘦 𝘣𝘦𝘵𝘵𝘦𝘳 𝘰𝘧 𝘫𝘶𝘴𝘵 𝘸𝘢𝘭𝘬𝘪𝘯𝘨 𝘢𝘸𝘢𝘺.”

  9. “…I thought it was a decent investment, given what happened in other places,’ said Mr. [Michael] Burrage….”

    Well, Michael, due diligence goes way beyond “I thought”

    Yet another case study of how emotional buyers suspend all rational and rely on the lizard brain.

  10. A reader sent these in:

    “The increase in defaults is expected as companies in Europe struggle with challenges including an energy crisis, soaring materials costs and cash-strapped customers…”

    https://twitter.com/GoldTelegraph_/status/1610756837187457027

    FED’S BOSTIC: THE GREATEST OBSTACLE TO THE US ECONOMY IS INFLATION.

    https://twitter.com/financialjuice/status/1611004992407699457

    CarDealershipGuy

    We are witnessing the TOP. Percentage of car buyers who committed to a monthly payment of $1,000 or more:
    Q4 2020: 6.7%
    Q4 2021: 10.5%
    Q4 2022: 15.7% (!)
    By FAR highest it’s ever been.

    https://twitter.com/GuyDealership/status/1610961826954579970

    🏡 Luxury Home Sales post record Decline- thought there were so many cash buyers…

    https://twitter.com/DisruptorStocks/status/1611027173342683137

    CarDealershipGuy

    Another domino falls: Ford F-150 Raptor selling for MSRP. Typically goes for $10-25K over.

    https://twitter.com/GuyDealership/status/1611024315834671104

    The era is over. *BLOOMBERG NEGATIVE-YIELDING DEBT INDEX LOSES ITS LAST MEMBER

    https://twitter.com/biancoresearch/status/1610894108054425602

    2022 was a tough year for the U.S. mortgage market. Over the course of 2022, mortgage purchase applications declined more than 40% as mortgage rates increased 3 percentage points

    https://twitter.com/lenkiefer/status/1611025828699160576

    What you’re watching in real time is years of lies about a housing market shortage being proven false. It will only get MORE false over time as speculators try to find bagholders. -30% national

    https://twitter.com/GRomePow/status/1611039817059684353

    FED’S GEORGE: I DON’T SEE SOMETHING ON THE VERGE OF BLOWING UP IN THE FINANCIAL SYSTEM.

    https://twitter.com/financialjuice/status/1610995505663774720

    John Wake

    “Fed’s Esther George sees rates staying high at least into 2024”

    https://twitter.com/JohnWake/status/1611039898857005058

    China housing minister says does not support purchase of more than three houses, leaving no room for speculators to re-enter market.

    https://twitter.com/Sino_Market/status/1610974645246898179

    We need 10% 30yr fix mortgage rates for a decade. Let’s see what houses are REALLY worth

    https://twitter.com/GRomePow/status/1611044972463280128

    Lisa Abramowicz

    Labor market data continually comes in stronger than analysts expect. First, ADP. Second, initial jobless claims. 2-year yields rise.

    https://twitter.com/lisaabramowicz1/status/1610992424184152064

    “If passed, the measure would levy a countywide adjustable 0.75% capital gains tax to fund a program that would provide free legal representation for all tenants facing eviction.” @Oregonian

    https://twitter.com/evictionlab/status/1611044895195631617

    Like we said, 10yr and MBS could diverge from one another.

    Falling Treasuries, rising MBS are a real possibility going forward.
    Quote Tweet Realtor.com
    “The Freddie Mac fixed rate for a 30-year loan kept rising this week, reaching 6.48%, even as the 10-year Treasury slid in the first week of the year.”

    https://twitter.com/GRomePow/status/1611045645548421122

    Who should win the price for dumbest investment of the 2020/2021 mania? Investors in $ARKK, $TSLA or in Austria 100 years bond? (Deutsche Bank)

    https://twitter.com/MichaelAArouet/status/1611047086048280582

    The “successful real estate investors” should have NO ISSUE with interest rates rising. Since it was their ability and “hard work” that generated value, not interest rate manipulation. Right? Right……

    https://twitter.com/GRomePow/status/1611052058635022338

    Realtors today all became sell side analysts with zero indicators but only with denials. The housing market will have a major leg down in 2023 as the real economy tanks and the spring selling season or lack thereof gives sellers a strong wake-up call.

    https://twitter.com/traderpete/status/1611047773964468242

    The 3-month Treasury yield is now above 4.6%! This market is adjusting quickly (once again) to the “higher for longer” narrative, reaffirmed by the labor market data we’ve been receiving this week. Nonfarm payroll data is getting released tomorrow morning…

    https://twitter.com/CalebFranzen/status/1611054486218235905

    Lumber in the mid-$300s is a pretty clear indication of what that market thinks of new-construction on a forward basis.

    https://twitter.com/CXCarroll/status/1611062553609703445

    A U.S. bankruptcy judge has ruled that Celsius Network owns most of the cryptocurrency that customers deposited into its online platform, meaning most Celsius customers will be last in line for repayment in the crypto lender’s bankruptcy, per Reuters.

    https://twitter.com/unusual_whales/status/1610977160562446336

    Breaking: US ADP Employment Change 
    Actual: 235k
    Expected: 150k
    Exact opposite of what the Fed wants to see. Higher for longer!

    https://twitter.com/Mayhem4Markets/status/1610988583803813889

    Delete anyone from your network who pushed the narrative that real estate will never declines in value. They’re either incompetent or intentionally misleading. Delete them. Seriously.

    https://twitter.com/akm515/status/1611065813733150720

    San Diego had the highest share of concessions, but Pandemic boomtowns including Phoenix and Las Vegas saw among the biggest increases in concessions.

    https://twitter.com/TaylorAMarr/status/1611052259059847170

    Fun fact: the Fed’s balance sheet is likely on autopilot for the foreseeable future, set to be reduced at a consistent pace. I call this “the earthquake effect”.

    What happens as more liquidity gets drained from the system?
    Quote Tweet
    BULLARD: BALANCE SHEET RUNOFF LIKELY FOR ANOTHER 6 TO 12 MONTHS BEFORE RETHINKING

    https://twitter.com/CalebFranzen/status/1611080085133565953

    Toronto home prices already down 20% from peak, another 20% to go…

    https://twitter.com/SpecialSitsNews/status/1611087495671808000

    That resale inventory dip at the end of the year? Per my Redfin feed, those homes are back.

    https://twitter.com/ALROnHousing/status/1611080024450555906

    Steve Saretsky

    The Canadian government will regulate the internet to decide what is misinformation and what isn’t. What could possibly go wrong?

    https://twitter.com/SteveSaretsky/status/1611100379651125248

    “If you see the indicators in the labour market + if you look at very sticky components of inflation like services inflation, I think it’s clear that we haven’t turned the corner yet on inflation,” Gopinath said, adding that the fund’s advice to the Fed was to “stay the course”.

    https://twitter.com/dana_marlane/status/1611124576708083718

    This fractional ownership nonsense will be an incredible cluster-f*ck. Imaging 100’s of homes half syndicated, with titles in limbo. Idiots.

    https://twitter.com/Stimpyz1/status/1611045217406423041

    We need more stimulus to pay for the inflation caused by the last stimulus.

    https://twitter.com/leadlagreport/status/1611150710829350913

    O.C. Register

    Home equity lines, second mortgage lending spikes as consumer debt soars

    https://twitter.com/ocregister/status/1611117707713200129

    Spoke with one of the largest lenders of MF 100+ units. Phoenix office told me 80%+ of their volume last year was either bridge or floating rate. 😳

    https://twitter.com/scottyo21/status/1611099331842691073

    Corporate insiders aren’t betting on a market rebound. Recent market declines have pushed stock prices lower, but executives and directors haven’t been scooping up their companies’ shares. wsj.com

    https://twitter.com/Schuldensuehner/status/1611127728933068800

    1. “…Percentage of car buyers who committed to a monthly payment of $1,000 or more…”

      What is this? Zimbabwe? Venezuela?

      2. and with a auto loan you have to buy full collision coverage, so what’s that $200- 300 + more a month?

          1. What insurance company? That makes all the difference in the world. I’m with allstate and I can call my agent anytime and speak with him withing a minute or two. Some things are worth paying for. Just ask the Marshall fire victims.

          3. I’m old, don’t live in a big city and one of my cars is old. I’m sure it would cost more if I lived in Dumver.

          4. Slightly less than that with Erie. Truck, Airstream and fishing boat. Always had excellent customer service. Not commuting to work, good record and Fire with same company helps.

            They cut rates during the Pandemic.

    2. “O.C. Register

      Home equity lines, second mortgage lending spikes as consumer debt soars”

      Reminds me that we went to a popular local restaurant last night that was nearly empty. I couldn’t help but wonder whether the San Diego real estate crunch was keeping away customers.

    3. “Falling Treasuries, rising MBS are a real possibility going forward.”

      No kidding, at the end of the day someone has to actually BUY the MBS garbage now that Big Fed Daddy is at least appearing to act rationally.

    4. We are witnessing the TOP. Percentage of car buyers who committed to a monthly payment of $1,000 or more

      There’s no guarantee it’s the top. In fact, with rates continuing higher, I’d imagine it’s probably going to go higher. Dealer lots are still empty.

  11. “We need more stimulus to pay for the inflation caused by the last stimulus.”

    Let that sink in for a moment. Worse, these people are your rulers.

    1. Don’t you wonder if the markets wouldn’t do their jobs better without all the disruptive jostling and manipulation by financial regulators trying to steer their direction?

  14. “Buyers are longing for low interest rates, and sellers are kicking themselves for missing the early pandemic frenzy.”

    Absolute horseshit. Buyers are NOT waiting for lower interest rates. Some of us are really waiting for the overleveraged Realtards to stew slowly in a toxic soup of higher rates and constant bloodlettings while we nibble on our Schadenfraude biscuits waiting for the real ‘blood in the streets…’

    1. It would be awesome to see rates top 10% again, like they did the last time the Fed lost its grip on inflation.

    2. We’re right there with you. Hubby and I have been living off 50% of our income and stashing money away for the right house. I wish we could live off less, but that’s not really possible. I’m already confined to $75 a week for all groceries and household needs. It’s worth it, though.

        2. Yesterday at Safeway I bought pack of 6 rolls of Brawny paper towels, two avocados, four vine tomatoes, and a small spring mix salad for $37.20. No kidding!

  15. “China housing minister says does not support purchase of more than three houses, leaving no room for speculators to re-enter market.”

    What does a Chinese speculator do with three houses, especially if prices are falling?

  16. Biden to mark Jan. 6 anniversary by warning the Big Lie remains:

    “According to multiple advisers, Biden will use Friday’s address to again put center stage the danger and chaos posed by election deniers even as the November elections in which many of them lost their races for office begin to fade from view. He will link Republicans to the extremists who attempted to forcibly overturn the results of Donald Trump’s defeat.”

    https://www.politico.com/news/2023/01/05/biden-to-mark-jan-6-anniversary-by-warning-the-big-lie-remains-00076649

    The 2020 election was stolen.

  17. Due diligence and cryptocurrency investing do not mesh. Anyone who invests in cryptocurrencies should understand going in that they may lose 100% of their money.

  18. The Financial Times
    Southwest Airlines Co
    Southwest Airlines operation failures during blizzard to cost up to $825mn
    Outdated technology led to widespread disruption during December snowstorm while US rivals recovered fairly quickly
    Passengers queue to check-in at Denver International Airport, US
    Failures with the flight network system used by Southwest Airlines meant thousands of passengers had to sleep in airports
    Steff Chávez and Claire Bushey in Chicago 4 hours ago

    Southwest Airlines, one of the biggest carriers in the US, expects a profit wipeout in the fourth quarter after a December blizzard triggered an operational meltdown.

    The Dallas-based carrier, a pioneer in low-cost aviation, was unable to recover operations, and expects a net loss for the period after taking a hit of up to $825mn.

    The losses are a result of the airline’s inability to recover from the severe winter storms that swept across the US just before Christmas, stranding thousands of passengers and drawing a rebuke of the carrier from the White House.

    The fourth-largest airline in the US cancelled more than 16,700 flights between December 21 and December 31.

    The company said on Friday that it anticipated a “negative impact in the range of $725mn to $825mn” in the fourth quarter from the disruptions.

    Between $400mn and $425mn of that figure is an estimated revenue loss, while the rest is related to reimbursing affected customers, giving them airline miles as a “gesture of goodwill” and extra compensation for employees.

    The loss is at the high end of what investors expected, said Savanthi Syth, an analyst at Raymond James.

    The figure implies the company lost between $43,000 and $50,000 for each cancelled flight — still less than the high-water mark seven years ago at Delta Air Lines when a systemwide outage cost the airline $65,000 per cancelled flight.

    “We believe sentiment and, in turn, shares will continue to be weighed down by the longer term implications of the operations meltdown,” she said.
    …

    2. “In 2014, Hunter Biden, who was at a loose end having been discharged from the US Navy for a positive cocaine drug test, joined the board of Burisma, earning a reported monthly salary of $50,000.”

      Yawn. —Nancy Pelosi

  21. I live close to and frequently drive by the vacant foreclosed suburban office towers in the Chicago Crain’s article. The Chicago region is kinda collapsing. The natives are fleeing as illegals take up residence. The new residents don’t work in office towers. Companies are leaving IL: Boeing, cat, citadel, Allstate hasn’t decided yet and McDonald has been threatening if crime doesn’t go down. Our home prices were some of the smallest appreciation even in this bubble of all bubbles. The legislature is about to ban assault rifles and all magazines over 12 bullets and pass a sex ed bill that is whackier than any other state. The progressives are in charge and they’re burning everything down for equity.

    1. This play has been performed many times before–What happened to Detroit? It’s not whether Chicago is doomed, it’s just how long is it going to take? Same goes for all the other Democrat run rat nests. People never learn, that’s the only thing that is constant.

    1. Layoffs are sweeping Corporate America to kick off 2023
      Fresh job cuts are in the works already this year at Amazon, Salesforce, Goldman Sachs, and Vimeo
      Alexandra Semenova
      Thu, January 5, 2023 at 7:25 AM PST·4 min read

      As recession fears swirl, a fresh round of layoffs is in the works for at least four corporate giants to start the new year.

      Amazon (AMZN) CEO Andy Jassy said late Wednesday the company would cut “just over 18,000 roles,” a higher reduction than initially planned. Jassy’s message came the same day Salesforce (CRM) said it would slash 10% of its workforce while Vimeo (VMEO) cut headcount by 11% in its second wave of reductions.

      And it’s not just tech workers being let go.
      …
      https://finance.yahoo.com/news/layoffs-are-sweeping-corporate-america-to-kick-off-2023-152537476.html

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