The Seeds Of A Bust Are Sown Throughout A Boom
A weekend topic starting with Yahoo Finance. “As Wall Street debates the cause of First Republic’s troubles, one analyst blames the nation’s top financial regulators. Fed Chair Jerome Powell and Treasury Secretary Janet Yellen were ‘advocates of the strategy called ‘go big at the Fed’, Chris Whalen, Whalen Global Advisors Chairman tells Yahoo Finance. ‘After 2018…we had a big problem in the money markets, so I think Chairman Powell…panicked in Washington, and they decided to provide more reserves.'”
“As the COVID-19 pandemic hit, the central bank acted again, bringing the Fed’s balance sheet to nearly $9 trillion. ‘What they did, in essence, was throw a lot of money at a perceived problem, but they’ve created a real problem now, which is that interest rates have risen,’ Whalen says. ‘The Fed has created a huge market risk, so these outliers like Silicon Valley, First Republic, have tipped over in a difficult funding market.'”
From ABC Business. “News wires are reporting the US Federal Deposit Insurance Corporation is preparing to place First Republic Bank under receivership. In simple terms, San Francisco-based First Republic Bank is facing collapse. Its shares crashed 43 per cent by the close of trade in Friday New York trade. Analyst Henry Jennings from stock market newsletter Marcus Today is confident the bank has indeed met its end. ‘Another one bites the dust,’ he said. He said it was a continuation of the ongoing international banking crisis. ‘It will not be the last,’ Jennings told The Drum. ‘There will be other targets.'”
From Go Banking Rates. “Certain states, like California and Florida have a number of cities on this list where home values have skyrocketed in these 14 years, some well above the median home value of $327,390. Victorville, California: June 2009 Home Value: $140,969. February 2023 Home Value: $401,548. Median Home Value Dollar Growth (2009 to 2023): $260,579. Median Home Value Percent Growth (2009 to 2023): 184.85%. Rialto, California: June 2009 Home Value: $179,345. February 2023 Home Value: $525,678. Median Home Value Dollar Growth (2009 to 2023): $346,332. Median Home Value Percent Growth (2009 to 2023): 193.11%.”
“LeHigh Acres, Florida: June 2009 Home Value: $67,222. February 2023 Home Value: $252,472. Median Home Value Dollar Growth (2009 to 2023): $185,250. Median Home Value Percent Growth (2009 to 2023): 275.58%. Kansas City, Kansas: June 2009 Home Value: $40,019. February 2023 Home Value: $163,853. Median Home Value Dollar Growth (2009 to 2023): $123,834. Median Home Value Percent Growth (2009 to 2023).”: 309.44%.”
The Flathead Beacon in Montana. “Three years since the pandemic building boom began, city managers in the Flathead Valley say demand remains strong, but it’s begun to cool. ‘We definitely had that peak in ’21,’ Kalispell City Manager Doug Russell said. ‘We had a lot of big multifamily projects that started in ’21 and are being built in 2022 … However, there’s no doubt we are seeing a cooling of the residential industry.’ ‘We are seeing the development occur,’ said Whitefish City Manager Dana Smith. ‘Unfortunately, it’s just not at that affordable rate for our workforce.'”
From KRDO. “County assessors across the state are now seeing the effect of red-hot housing markets the past two years, and homeowners and other property owners will soon feel the financial pinch. Assessors said that increases in property values — specifically, for residential properties — have reached heights never seen before in Colorado. Median increases range from around 40% in El Paso and Pueblo counties, to between approximately 35% and 45% in metro Denver counties — with increases in the ski resort towns even higher, from 40% to nearly 70%. ‘With a lot of our vacant land in rural areas, we’re looking at increases of 200%,’ said Pueblo County Assessor Frank Beltran. ‘I’ve been in the assessor’s office since 1980 and I’ve never seen increases like this.'”
From Market Watch. “Growing up in the California Bay Area, one of the most expensive housing markets in the U.S., tech worker Ramya Jagarlamudi knew the high bar he had to meet to own a home. But then came the twist: His wife’s employer asked all employees to return to the office. ‘It was a bit of a surprise,’ Jagarlamudi, who works as a software engineering manager, said. ‘So I started ruling out Sacramento as an option, and started focusing on the Bay Area.’ They settled on a new home in Tracy, Calif. — 65 miles west of the Bay Area — for slightly over $1 million. The builder, Lennar, had dropped prices slightly, and offered to pay closing credits of up to $6,000 as an incentive. The couple closed on the home in late April.”
“Jagarlamudi decided to take an adjustable-rate mortgage with a California-based credit union called Golden 1. The couple took out a mortgage with a five-year term at a rate of 5.6%. ‘My hope is once rates go down, I can refinance,’ he said.”
“For many aspiring homeowners, buying a home worth $1 million can seem daunting. But in California, given high home prices in the state, a homeowner’s monthly mortgage payment can run up to nearly $4,000. Yet the median annual household income is only around $82,000. Put more bluntly: In one year, given the 2021 estimated income from the U.S. Census Bureau, a household in California would have spent nearly 64% of its pre-tax income on their mortgage.”
From RTE Brainstorm. “Property prices in Ireland and across Europe are falling for the first time in around a decade. But are we now looking at a bubble bursting — and a further fall in prices — or just a bit of a cooling off period? By January 2022, prices were 15% higher in Ireland than the previous year and they finally began falling in January 2023. But although prices are technically falling across Europe, they’re falling from great heights. Public broadcaster LSM reports the Latvian housing market saw a 10% rise in prices between 2021 and 2022, while Slovenian prices also reached record highs in 2022, according to national broadcaster RTV.”
“Finnish prices are also down on last year and demand is at a seven-year low, reports broadcaster YLE. Lithuanian property prices saw a whopping 22% increase at their peak in 2022 and unlike in most other European countries, price increases have slowed but not actually decreased, for now, reports Lithuanian National Radio and Television, LRT. Sweden has seen its property prices plunge by around 15% and faces a recession.”
“Interest rates seem to have played a part in reversing a very long trend. House prices in Europe had been steadily on the rise since the last bubble burst. Eurostat data shows prices have increased by 47% overall since 2010. Of the 24 EU countries whose data Eurostat recorded, prices increased in 24 countries and decreased in just three. House prices more than doubled in Estonia (+199%), Hungary (+174%), Lithuania (+142%), Luxembourg (+136%), Latvia (+133%), Austria (+126%) and Czechia (+125%).”
“Prices ‘simply can’t keep increasing at the pace at which they did last year because people can’t afford it. It’s as simple as that,’ says says Kieran McQuinn, Research Professor with the ESRI and adjunct professor of economics at TCD.”
From Newsroom. “Although Kiwis are arguably the most extreme property fanatics in the Anglosphere – at least those who have and can afford property – there are common threads that we share with other countries. In New Zealand homebuilders have produced record numbers of new homes in the past year, and housing shortage estimates are no longer being regularly reported in the media. However, eerily familiar headlines are commonplace overseas and call for 106,000 additional homes in Australia, 250,000 in Ireland, 3.5 million in Canada, 4 million in the UK and 6.5 million extra homes in the US to resolve their respective housing shortages and achieve affordability.”
“If a rush of new supply is added to a hot, buoyant housing market, as was the case in Ireland before the global financial crisis, then this simply feeds housing speculators and causes prices to race further ahead of incomes and rents. My recent research article on rental property purchases in Auckland found that nearly all are speculative and amount to bets placed on future capital gains. A further paper I co-authored found that investors’ speculative activity pushes up house prices. That said, it is critical to recognise that investors are enabled by a well-heeled accomplice: the bank.”
“Residential property investors are a core client of banks throughout the Anglosphere. Investors’ largest presence is in Australia where a fifth of all taxpayers own a rental property and over a third of new mortgage debt is used to fund investment purchases. Over the past decade roughly a quarter of new home loan debt in New Zealand was channelled to investors. In America a quarter of homes are sold to investors with an increasing presence of institutional buyers. Canadian cities have seen a steady increase in investor activity, which currently nets a fifth of home purchases. In the UK, ‘Buy-to-let’ loans account for 14 percent of new mortgage debt.”
“Based on current Auckland house prices and market rents, investors are buying dwellings with gross yields below 4 percent. This is simply the ratio between annual gross rent and the purchase price. Of course, a landlord will never realise a gross yield because they must pay outgoings including insurance, rates, property management, maintenance, etc from their rental income. Even if you disregard interest payments, which tends to consume much, if not all, of the rental income, investors’ cash-on-cash returns will be considerably less than 4 percent. Put into context, current term deposit rates are over 5.5 percent.”
“Unsophisticated ‘Ma and Pa investors’ can potentially be excused for failing to appreciate the concept of risk and return, but it is inexcusable for commercial banks to lend on such ‘businesses’ incapable of outperforming a risk-free return in the absence of speculative capital gains. This same fundamental issue is facing all countries in the Anglosphere.”
Yahoo Finance Canada. “For many young homebuyers, the days of being able to follow in their parents’ footsteps and buy a traditional, detached starter home have largely come to an end in Canada’s big cities, according to realtors. ‘In most cases, I would say the traditional idea of the starter home is completely dead,’ said Rhiannon Foster, the owner of the Opportunity Homes Collective under Century 21 In Town Realty in Vancouver.”
“That’s the same trend that Cailey Heaps, a Toronto-based realtor says she’s seeing, as the price of single-family homes has soared in recent years. ‘It’s remarkable to think about a starter home being north of a million dollars. That just seems wild to me, but in reality, that’s what it is in Toronto unless you’re in a condominium,’ she said.”
From Mises.org. “The latest Canadian housing data showed a slight uptick in prices and a pause from 2022’s correction, and a new wave of dip buyers has already begun to call this a buying opportunity, as if valuations at ten times average annual income and 50 percent more expensive than their cash flows were anything but still extremely overvalued. This is merely the most recent development in what appears to be the end of Canada’s massive housing bubble and the beginning of a potential 2008-style recession for the Canadian economy.”
“Following the 2008 global financial crisis (from which Canada emerged relatively unscathed), the Bank of Canada’s record-low interest rate policy fueled an unprecedented bull market in Canadian real estate. While prices showed signs of reversal in 2019, the events of 2020 provided justification for the Bank of Canada’s mind-boggling balance sheet expansion, which virtually quintupled in a matter of months. Central planners had decided to pour metaphorical gasoline on the country’s already raging-hot fire, creating an outright manic buying frenzy.”
“The penultimate state of the bubble in late 2021 was astronomical: Residential property prices in Toronto and Vancouver had doubled to quadrupled in little more than a decade. Canada’s overall nonfinancial debt amounted to almost 350 percent of gross domestic product (GDP) and household debt surpassed 110 percent of GDP, both higher than the levels seen in the United States before the 2008 global financial crisis.”
“Homeownership rates surpassed the two-thirds mark. Canadian real estate, construction, and financial sectors combined to form over 28 percent of GDP! By almost every statistical measure, Canada’s housing bubble was one of the largest on record. As is typical of every bubble, timeless tropes were regurgitated in order to justify the madness.”
“The most often repeated argument was that the Canada Mortgage and Housing Corporation (CMHC), Canada’s public mortgage insurer and a Canadian version of Fannie Mae, would never allow a bubble to occur because they are supposedly more responsible than US regulators. This argument fails on numerous counts.”
“The seeds of a bust are sown throughout a boom in the form of malinvestments rendered profitable by artificially low interest rates, and thus the severity of a recession is ultimately determined by the degree to which malinvestment permeates the economy. It is safe to say that after more than a decade of nationwide real estate malinvestment, a significant portion of Canadian bank assets is correlated to housing, which will expose Canadian banks to the threat of insolvency in the event of a large-scale market correction.”
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‘Kansas City, Kansas: June 2009 Home Value: $40,019. February 2023 Home Value: $163,853. Median Home Value Dollar Growth (2009 to 2023): $123,834. Median Home Value Percent Growth (2009 to 2023).”: 309.44%’
There’s over 20 sh$tholes mentioned here. Worth a look.
‘valuations at ten times average annual income and 50 percent more expensive than their cash flows’
Why doesn’t the media or guberment even mention the times income stats? They used it all the time last decade. I saved this link:
Published October 10, 2021
Wealth, not annual income, is driving purchases of costly homes by some of the lowest-paid workers in British Columbia, a new study suggests.
The gap between home prices and local wages is stark in the province, where houses have been selling for well above $1-million in the Vancouver region for years.
Now, new data show that a typical buyer in the lowest income quintile, with a median annual income of $29,800, spent a median of $499,000 on a home in 2018, according to the report from Canadian Housing Statistics Program (CHSP).
“The divergence between property prices and incomes in some areas demonstrated that sources other than income can play an important role in homeownership,” the report said. Annik Gougeon, a CHSP senior analyst, said the data suggest many home buyers are either taking out very large mortgages or using savings and wealth to make purchases.
The study found that B.C.’s median price-to-income ratio of 5.4 was more than double the ratios in Nova Scotia and New Brunswick.
The highest median price-to-income ratio was found in West Vancouver, followed by Richmond. There, buyers spent 17 times and 12 times their incomes, respectively.
https://www.theglobeandmail.com/business/article-wealth-a-bigger-factor-than-income-in-vancouver-home-sales-new-study/
Wealth, not annual income, is driving purchases of costly homes by some of the lowest-paid workers
The wealthy poor? How about wild expectations of Wealth.
wait, wut? “a median annual income of $29,800, spent a median of $499,000 on a home in 2018,”
Who the heck is lending on that?
That person doesn’t even make enough to make the monthlies much less everything else?
As someone always says “that’s some fine lending there”
‘Unsophisticated ‘Ma and Pa investors’ can potentially be excused for failing to appreciate the concept of risk and return’
If yer borrowing 500,000 pesos, you aren’t ma and pa anything. You are a highly leveraged gambler.
‘but it is inexcusable for commercial banks to lend on such ‘businesses’ incapable of outperforming a risk-free return in the absence of speculative capital gains’
How many times have we read: don’t borrow the max a lender will loan you? Banks aren’t ‘protecting’ you. They will bury you in debt and sell off the paper. Nobody mentions moral hazard at the central banks either. Something Greenspan talked about all the time.
‘They settled on a new home in Tracy, Calif. — 65 miles west of the Bay Area — for slightly over $1 million. The builder, Lennar, had dropped prices slightly, and offered to pay closing credits of up to $6,000 as an incentive. The couple closed on the home in late April’
‘Jagarlamudi decided to take an adjustable-rate mortgage with a California-based credit union called Golden 1. The couple took out a mortgage with a five-year term at a rate of 5.6%. ‘My hope is once rates go down, I can refinance’
You got schlonged Ramya.
“They settled on a new home in Tracy, Calif. — 65 miles west of the Bay Area — for slightly over $1 million.”
It’s a 90-minute commute each way from Tracy to the tech employers in the Bay Area. A car will last about three years before it becomes an unreliable commuter and a mechanic special. Their decision is the definition of insanity.
I guess software engineer is not synonymous with intelligent.
Who’d a thunk!
65 miles West of the Bay Area is in the Pacific Ocean. ESE of the Bay Area maybe. If realtors are liars, journos are idiots.
“65 miles West of the Bay Area is in the Pacific Ocean.”
Good catch!
When I lived in San Jose I knew someone who commuted daily from Tracy. He was always tired and slept during lunch. An 8 to 10-hr workday and two 90-minute commutes, grocery shopping, lanudry, etc., and I’m sure he slept all weekend to recover. Then, bam, it’s Monday morning again!
“65 miles West of the Bay Area is in the Pacific Ocean.”
Ironically, if you head east from Bodega Bay for 65 miles you’re still in the “Bay Area”.
H1b’s role in jacking up american jobs and now housing.
That dissertation can win a nobel prize in economics or something
DISCLOSURE: I’ve been financially burned by an ABCD (American-Born Confused Desi) married to an FOB (Fresh Off the Boat) Indians. Their initialisms, not mine!!!
Based on observation and experience, I suspect the caste system to which they are accustomed motivates them to own things like Teslas and expensive houses as status symbols.
The FOB physician husband acted very mafiaso and together they thought they were smarter than me. I proved them wrong.
‘New Zealand homebuilders have produced record numbers of new homes in the past year, and housing shortage estimates are no longer being regularly reported in the media’
Ahem…
AirB&B follies.
https://www.dailymail.co.uk/news/article-12026637/Philadelphia-landlord-suing-Airbnb-170K-squatters-trashed-home-hit-bat.html
A reader sent these in:
“In recent months, the crisis has entered a tense phase that could damage local economies and cause financial hits to real estate investors and scores of banks.”
https://twitter.com/DiMartinoBooth/status/1651644247265759233
A tad bit more than they’d alluded to a few days ago. If it wasn’t for Sears, I’d say this was the slowest dying retail brand in modern U.S. history.
https://twitter.com/DiMartinoBooth/status/1651579050421362689
Discarded AirBnb inventory coming soon to a housing market near you!
https://twitter.com/texasrunnerDFW/status/1651959303761272834
JUST IN – Taiwan sinks into recession, economy contracts by 3% in the first quarter – worse than expected.
https://twitter.com/disclosetv/status/1651870277796605953
Amazon’s earnings just collapsed by ~50% YoY and the stock still trades at 115x earnings with virtually no revenue growth in real terms.
https://twitter.com/TaviCosta/status/1651724871939031040
Close to 30% of San Francisco’s office space is now vacant, more than 7x higher than the vacancy rate from early 2020.
https://twitter.com/charliebilello/status/1651793360976265218
The shoeshine boy indicator is flashing red 🚨 on short term rental investment properties
https://twitter.com/texasrunnerDFW/status/1652032891625275393
Homeowners in HI in March were paying the highest median monthly mortgage payments, per @MBAMortgage. CA comes next, followed by D.C.
https://twitter.com/aarthiswami/status/1652034321882947590
The number of realtors reached an all-time high of 1.6 million in the US in October, per BI.
https://twitter.com/unusual_whales/status/1651979837878288385
With core PCE on the rise and the speculative insanity still being witnessed in “markets,” really don’t see how Powell can avoid throwing a donkey punch at FOMC next week.
https://twitter.com/BP_Rising/status/1652031967569780744
Day by day, more and more people joining the ranks of “want to move but can’t move.” Few houses listed. “Golden handcuffs” on their current 2.75% mortgage. I feel sorry for the young couple expecting their first baby, need one more bedroom, but impossible at 6.43%.
https://twitter.com/JeffWeniger/status/1651673770027806724
@Flagstar saw the biggest decrease in retail volume between Q3 and Q4, with a drop of -80.36%. Read here to find out more about the performance of the top 20 residential depository lenders.
https://twitter.com/NatMortgageNews/status/1652026763692613643
Multi-tenant apartment building sales have dropped 74%, the most since 2008, per WSJ.
https://twitter.com/unusual_whales/status/1651924472625246209
Lumber peaked: 5/9/2004
Lennar peaked: 7/17/2005
Lumber peaked: 3/3/2022
Lennar peak: ?????
“This time is different”
https://twitter.com/GRomePow/status/1651689708437790721
New data shows US foreclosure filings jumped 22% in the first quarter compared to last year. Foreclosure activity in the US has increased for 23 straight months. Higher unemployment and inflation are the primary factors. Housing affordability is now below 2008 levels.
https://twitter.com/KobeissiLetter/status/1652001015539937285
More liquidity coming out. May want to keep that in mind while FOMO chasing into tech stocks +10%/15%. Or not, up to you 😉 Just saying.
https://twitter.com/NorthmanTrader/status/1651688545340334080
Fire captain in California made $312k in overtime? What’s the math on that
https://twitter.com/GRomePow/status/1652153034636668928
Jane Roberts, the wife of SCOTUS Chief Justice John Roberts, made $10.3 million placing lawyers at elite firms from 2007-2014 after Justice Roberts received his SCOTUS placement per BI
https://twitter.com/unusual_whales/status/1652054328331366402
“I’m in a highly desirable area. Why am I not getting any bookings? Do you have to get a super host status for your place to show?
LMFAO. Enjoy the negative returns, speculator scvm.
Amazon’s earnings just collapsed by ~50% YoY and the stock still trades at 115x earnings with virtually no revenue growth in real terms.
More layoffs coming.
“Close to 30% of San Francisco’s office space is now vacant, more than 7x higher than the vacancy rate from early 2020.”
SF Mayor London Breed says it’s contained, her office has a plan, don’t write-off the city, not yet.
Good luck getting the convention business to come back.
want a home on a hill-slide
The beloved “Casa Romantica” is on an oceanfront bluff near the San Clemente Pier.
https://news.yahoo.com/san-clemente-landslide-threatens-beloved-231831763.html
Record rain -> record mudslides, record floods, and record fires this fall. But hey, at least the record drought is on hold for a year or so.
record rain – Cause: Climate change (previously called Global warming)
record drought Cause: Climate change (previously called Global warming)
How does this make any sense and who is “stupid enough” to really believe it. I suspect a lot of people don’t believe it but are getting “rich” off it (see college professors presenting the data to Congress and all over the world at conferences) and politicians.
don’t believe it but are getting “rich” off it
Most people will sell their soul just to eat apparently. Rich isn’t required.
who is “stupid enough” to really believe it
The majority, apparently.
“There is no time in history where people who where censoring speech were the good guys.”
Robert F Kennedy
This above was the first official statement by RFK to ABC news editing and censoring his interview.
Kennedy, in summary ,goes on to quote the law it violates, addresses the defamation of it, and goes on to vow as President to address it.
With a bunch of of European Countries trying to enact ” Hate Speech Laws”” currently, including US, you can see that free speech is being attacked by the Global Cabal.
I’m not a Democrat, but Kennedy is being silenced,,censored, edited, defamed, .etc.
Corporation advertisers are the face of the election interference, just as they were with the Covid Campaign, that they are covering up the massive harm.
Like Gabbard, he’s a leftist, but is too “moderate” for the current Dems. So they will marginalize him, just as they did with Gabbard.
“There is no time in history where people who where censoring speech were the good guys.”
And yet he is still a Democrat who won’t read the writing on the wall. I get it, he’s a Kennedy, so he can’t become a Republican. But if he’s going to stay put he needs to come to terms with what the Dems stand for now:
The scamdemic
Open borders
Rampant homelessness
Reckless spending
War mongering
Race baiting
Gender nonsense
Pedophilia
etc.
Colorado,
So far RFK reminds me of the old style Democrate, not the Biden New World Order treason version of Democrate.
You would think any democratic contender to that “thing” in the White House could beat him, if they don’t censor challengers, or stuff the ballots, etc.
My theory is they are going to rig election to put Biden in ,but he chooses someone like Newsom as VP. . Than Biden resigns early on for Medical Reasons.
If I was betting, I think Tucker was taken out because he would of provided a forum for candidates against Biden, like Trump and RFK..
I don’t think RFK Jr has a snowball’s chance in Hades of being nominated.
Choosing the party candidate isn’t anything like an election. The party bosses decide. Is it not so?
I’ll just drop this here: RFK Jr and the CIA (4m54s)
BTW, RFK Jr is polling higher than DeSantis.
I don’t like that he’s married to a Hollywood actress.
“Put more bluntly: In one year, given the 2021 estimated income from the U.S. Census Bureau, a household in California would have spent nearly 64% of its pre-tax income on their mortgage.”
Something must give to reach equilibrium of 30% income/mortgage ratio. Either incomes must drastically increase (highly unlikely) or housing prices must decrease (happening).
Wishful thinking is that mortgage rates will decrease to the level of nearly “free” money as inflation is stubborn.
The poor sap in California that purchased a $1 million (!) home in Tracy, an armpit in the Central Valley, hoping that interest rates decrease? Good luck with that. Even if they do, the appraisal at that time will be far south of seven figures.
the appraisal at that time will be far south of seven figures
ANd that is when he and his wife will jingle mail and have their first foreclosure.
I can see the scenes at future cocktail parties, where people compare notes as to how many times they were foreclosed. But on the bright side they got to keep the Teslas.
Our rent is around 21% of our pretax income…including the rent subsidies we pay to our young adult children. LOL
We’re at 16% and by no means wealthy. While waiting on the next home it allows us to do more for the kids as well. My SIL will be very surprised and happy when his new riding lawn mower arrives! An acre is a lot.
‘Another one bites the dust,’
https://m.youtube.com/watch?v=rY0WxgSXdEE
You can never go wrong with Queen!!!
In one year, given the 2021 estimated income from the U.S. Census Bureau, a household in California would have spent nearly 64% of its pre-tax income on their mortgage.”
True. I make 200k a year and refuse to buy. No way I want that much tied up in an asset that requires you to hold it for a decade to make a bit of profit. Yes, I’m paying someone else’s mortgage, but to buy the equivalent property would double my monthly housing outlay. Not forgetting forking out a massive out-of-pocket down payment. One more benefit of renting is no surprise home repairs and a free gardener! Now if mortgage payments and rent meet like for like, that’s a different story.
“One more benefit of renting is no surprise home repairs and a free gardener!”
It is beautiful to have a kind, generous landlord to take care of costly home repair and maintenance plus gardening expenses.
It is beautiful to have a kind, generous landlord to take care of costly home repair and maintenance plus gardening expenses.
If you’re lucky to get a landlord that does those things, vs just letting the house rot and doing the cheapest possible ‘fix’ (my general experience)
“No way I want that much tied up in an asset that requires you to hold it for a decade to make a bit of profit.”
How would you like to be one if those poor suckers who bouught around May 2022, only to watch the value of your new property sink further and further underwater compared to your mortgage loan debt each month since?
Sadly, Professor Bear, they’ll cling on to that sub 3% loan, by their nails, so they’ll have something to chat about at the annual neighborhood BBQ. Oh whilst complaining about higher and higher HOA’s.
My former FIL had a 3% mortgage from 1960. He clung to it until his retirement, then bought cash in a low cost area in the exact middle of nowhere.
Times of San Diego
Business
San Diego, with Rents Still on Rise, Ranks in Top 10 of Costliest U.S. Markets
Avatar photo
by Editor 11 hours ago
San Diego real estate market
A rental sign outside a North Park apartment complex. Staff photo
San Diego ranks as the seventh most expensive city for renters, according to a monthly survey of costs across the country.
The median price of one-bedroom units in San Diego increased 1.3% to $2,400 last month, Zumper.com reported, while two bedroom units grew 2.6% to $3,180.
Four of the top 10 priciest markets are in California, with San Francisco coming in third nationally. San Jose followed in sixth place, trailed by San Diego and Los Angeles. Oakland, Santa Ana and Anaheim finished just outside the top 10.
New York tops the list at $3,570 a month for a one bedroom.
…
https://timesofsandiego.com/business/2023/04/28/san-diego-with-rents-still-on-rise-ranks-in-top-10-of-costliest-u-s-markets/
“…while two bedroom units grew 2.6% to $3,180.”
It seems that San Diego rents have reached unsustainable heights and are set to plunge into a deep, dark, bottomless CR8R…
“Tucson is the most affordable western market, at $910 for a one bedroom, up 3% in the past year. Nationally, Akron, Ohio and Wichita, Kan. tied as the most affordable places to rent in the U.S. at $700 for a one bedroom.”
We have friends in Tucson. Its size is a turn-off, but I could snow bird there for a few months per year. However, the water resource issue would deter me from buying there.
Does it seem like we have entered a slow-motion, rolling banking crisis?
“How did you go bankrupt?
Two ways. Gradually, then suddenly.”
– Ernest Hemingway,
The Sun Also Rises
ABC News
Is the banking crisis over? Experts weigh in after First Republic Bank shares plunge
Shares of the nation’s 14th-largest lender plummeted 75% this week.
By Max Zahn
April 29, 2023, 3:12 AM
Turmoil in the financial system returned this week as shares of First Republic Bank, the nation’s 14th-largest lender, plummeted more than 75%.
The selloff took hold after the bank revealed that depositors had fled en masse last month after the collapse of Silicon Valley Bank, the largest U.S. bank failure since the 2008 financial crisis.
The ongoing distress at First Republic rekindled questions about whether the banking industry has regained solid footing or teeters on the brink of wider failure.
While the financial system remains under stress, experts said, the current unrest is unlikely to pose a systemic risk, since the damage is contained within a relatively narrow group of banks vulnerable to high interest rates and depositor panic.
…
https://abcnews.go.com/Business/banking-crisis-experts-weigh-after-republic-bank-shares/story?id=98936489
CryptoPotato
Home » Crypto News »
Bitcoin Could Prosper Amid the US Banking Crisis, Financial Advisor Bernstein Urges
Author: Dimitar Dzhondzhoro
Last Updated Apr 28, 2023 @ 14:30
The banking calamity in the US could fuel a mainstream bitcoin adoption, Bernstein’s analysts claimed.
Analysts at Bernstein Private Wealth Manager think the shaking banking system in the United States could benefit bitcoin adoption and potentially increase the price of the asset.
The experts went further, advising people to invest in BTC, which could soon enter a new bull run due to the shaking condition of traditional finance.
Weak Banks Could Pump BTC up
Analysts Gautam Chhugani and Manas Agrawal believe the banking crisis in America could worsen in the future and suggested bitcoin might emerge as a savior. In their view, the numerous bank collapses could push investors away from traditional finance, triggering a mainstream adoption and a new bull run for BTC.
“The safe haven signal will lead to a new crypto cycle, pushing digital wallets as on-chain savings accounts. The gap between Treasury rates and bank deposit rates will continue to hollow out banks, with weak balance sheets leading to another round of mass migration to money markets.”
Recall that the US authorities shut down Silvergate Capital, Signature Bank, and Silicon Valley Bank (SVB) in March after they disclosed severe liquidity difficulties.
The concern of a potential contagion in the sector intensified recently after First Republic Bank (one of the top 20 largest financial institutions in the US with over $200 billion of assets under management) saw its shares crashing to record lows. The 55% drop (on a weekly basis) occurred shortly after the entity revealed its disappointing Q1 earnings report.
…
https://cryptopotato.com/bitcoin-could-prosper-amid-the-us-banking-crisis-financial-advisor-bernstein-urges/
Lost a letter:
Author: Dimitar Dzhondzhorov
Crypto gains are a great barometer for the severity of the silent banking crisis…LOL!
Bitcoin Up 75% YTD as Banking Crisis Resurfaces
The Tokenist | Apr 27, 2023 03:32AM ET
The latest trigger for Bitcoin’s rally comes from the First Republic Bank (NYSE:FRC) earnings report and rumors of federal seizure.
For a long time, after Bitcoin launched, it was commonplace to say that Bitcoin is a hedge against inflation. After much adoption and maturity, this thesis was tested in 2022 when the Federal Reserve began the fastest hiking cycle in 40 years to curb an equally historical inflation rate. Bitcoin’s price hit $30,000 today as another US bank seems to inch closer to collapse.
Bitcoin Gains from Banking Woes
As the Fed increased its M2 money supply by 39% from 2020 to 2022, all crypto assets were beneficiaries. The historic surge in liquidity ballooned both stocks and cryptos, with the latter nearing the $3 trillion market cap milestone in November 2021. This was when Bitcoin’s price hit an all-time high at $67.5k.
…
https://m.investing.com/analysis/bitcoin-up-75-ytd-as-banking-crisis-resurfaces-200637589
The Motley Fool
Bitcoin Miners Thrive as Banking Crisis Unfolds: What’s the Deal?
By Anders Bylund – Apr 26, 2023 at 2:42PM
Key Points
– Bitcoin miners TeraWulf, Riot, and Marathon are surging thanks to Bitcoin’s 8.8% price increase.
– The ongoing banking crisis pushes some investors toward cryptocurrencies as alternatives.
– Bitcoin miners are cashing in on the banking crisis. Here’s why three leaders in the crypto-mining space soared on Wednesday.
What happened
Today, Bitcoin miners TeraWulf (WULF 5.33%), Riot Platforms (RIOT 1.01%), and Marathon Digital (MARA 0.10%) are showing serious price jumps, as Bitcoin’s price surged 8.8% higher in the past 24 hours. TeraWulf’s stock’s intraday moves peaked at a 24.5% gain this morning, while Riot rose as much as 12.8%, and Marathon Digital posted a peak price increase of 18.5%.
The ongoing banking crisis, exemplified by First Republic Bank’s precarious situation, has investors seeking alternatives to the traditional financial system. Many are turning to cryptocurrencies like Bitcoin, which is great news for companies that make a living from minting new Bitcoin tokens.
…
https://www.fool.com/investing/2023/04/26/bitcoin-miners-thrive-as-banking-crisis-unfolds/
Bitcoin Miners Thrive as Banking Crisis Unfolds: What’s the Deal?
Are Jerome Powell and his central banker buddies buying Bitcon?
US banking crisis: federal body prepares to put First Republic into receivership
Move comes as Federal Reserve report admits it failed to take ‘forceful enough action’ before Silicon Valley Bank collapse
Guardian staff and agencies
Fri 28 Apr 2023 17.27 EDT
First published on Fri 28 Apr 2023 13.21 EDT
The US Federal Deposit Insurance Corporation (FDIC) is preparing to place First Republic under receivership, Reuters reported on Friday, as the worst banking crisis since 2008 continued to hammer mid-sized US banks.
The California-based bank looks set to be the third such financial institution to collapse this year, following the failure of Silicon Valley Bank and Signature in March.
On Friday trading in First Republic was briefly halted after its share plunged close to 50%, the second such fall in a week. The bank revealed on Monday that it had lost $100bn in deposits during last month’s banking crisis.
Although the withdrawals have abated at many banks, First Republic appears to be in peril, even after receiving a $30bn infusion of deposits from 11 major banks in March.
The US banking regulator has decided that the troubled regional lender’s position has deteriorated and there is no more time to pursue a rescue through the private sector, Reuters reported.
First Republic and FDIC representatives did not immediately respond to requests for comment.
The news comes as the Federal Reserve has admitted it failed to “take forceful enough action” ahead of the collapse of Silicon Valley Bank last month. In a hard-hitting report released on Friday, the Fed blamed extremely poor bank management, weakened regulations and lax government supervision for the failure.
Silicon Valley Bank’s collapse triggered an ongoing banking crisis for mid-sized US banks.
…
https://www.theguardian.com/business/2023/apr/28/fed-silicon-valley-bank-collapse-report
“Although the withdrawals have abated at many banks, First Republic appears to be in peril, even after receiving a $30bn infusion of deposits from 11 major banks in March.”
What a great prelude to systemic riskiness and bailout worthiness. Those 11 major banks must mot be allowed to lose their deposit$ infusion!
Dumb questions of the day:
1) Will the Fed eventually restart Quantitative Easing to put the kibosh on the banking crisis?
2) Will their inflation reduction campaign go by the wayside as a result?
The Financial Times
US inflation
Rise in US labour costs and inflation strengthen case for Fed rate rise
Employment cost index rose 1.2% in first quarter signalling persistent price pressures
In this file photo people walk past a ‘We’re hiring!’ sign posted at a store in New York City
The employment cost index is closely watched by Federal Reserve policymakers as one of the most reliable indicators of wage growth
Nicholas Megaw in New York yesterday
Two closely watched US inflation reports rose by more than expected, highlighting persistent price pressures and resilience in the jobs market that strengthen the case for the Federal Reserve to raise interest rates next week.
The labour department’s employment cost index, which tracks wages and benefits paid by private and public sector employers, rose 1.2 per cent in the first three months of this year, up from 1 per cent in the last three months of 2022 and higher than consensus forecasts of 1.1 per cent.
Total pay for civilian workers rose 4.8 per cent year on year — down slightly from the previous quarter, but still well above its pre-pandemic average of 2.2 per cent.
…
Inflation is still smoldering and could reignite into a raging conflagration with the addition of just a little fuel…
3) Did real estate investing become such a no-lose cash cow that everyone from households to investment companies to private banks to central banks to govermment agencies overinvest in it to the point where it is a guaranteed loser?
Beautiful Loser
2.1M views · 3 years ago
Bob Seger
https://m.youtube.com/watch?v=5BRSTJeHwEk
How did Shinzo Abe fare?
The totalitarians behind the scamdemic lockdowns are now engaging in revisionist history – but the internet doesn’t forget, and neither will those who paid the price for such CCP tactics.
https://twitter.com/FreeBeacon/status/1651307624418164736?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1651307624418164736%7Ctwgr%5Ee2e83fc17918f9cdb75fccb8f16ec1b1a37cc2c6%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fwww.zerohedge.com%2Fmarkets%2Fno-remorse-whatsoever-teachers-union-boss-weingarten-shredded-mass-school-shutdowns-during
A notorious market bear who called the 2000 and 2008 crashes says a 60% decline in the S&P 500 is likely as high valuations and weak investor sentiment create a ‘trap door’ scenario
William Edwards
Apr 29, 2023, 2:00 AM PDT
sad nyse trader
A trader stands outside the New York Stock Exchange September 29, 2008. REUTERS/Shannon Stapleton
This story is available exclusively to Insider subscribers. Become an Insider and start reading now.
Over the long-term, stock performance is a question of simple math, says John Hussman.
Higher valuations mean lower returns, and vice versa. Right now, valuations remain at some of their highest levels in history, the president of the Hussman Investment Trust who called the 2000 and 2008 market crashes, said in a recent note.
…
https://www.businessinsider.com/stock-market-crash-sp500-forecast-valuations-sentiment-recession-bubble-hussman-2023-4
sad story Mayor Craig Coyner, a man from one of the most prominent families in Bend, Oregon,But by age 75, Coyner was occupying a bed at the shelter on Second Street, his house lost to foreclosure, his toes gnarled by frostbite, his belongings limited to a tub of tattered clothing and books.
https://www.yahoo.com/news/homeless-city-where-once-mayor-140800579.html
Good catch; interesting story.
Would you buy an asset at a 97% reduction off its recent valuation?
What could possibly go wrong?
The Financial Times
First Republic
US regulator asks banks including JPMorgan and PNC to bid for First Republic
FDIC tries to gauge how much it will cost taxpayers to take over struggling California lender
First Republic shares have lost more than 97 per cent of their value since early March
Brooke Masters, James Fontanella-Khan, Stephen Gandel and Colby Smith in New York and James Politi in Washington an hour ago
The US government has asked JPMorgan, PNC and several other financial groups, including a handful of non-bank investment firms, to bid for all or part of First Republic, as US regulators try to determine how much it would cost taxpayers to take over the embattled California lender.
Over the past 24 hours, it has become clear to both First Republic and the government that stabilising the bank will almost certainly require the Federal Deposit Insurance Corporation to take it over, four people briefed on the situation said.
First Republic shares have lost more than 97 per cent of their value this year, driven down by concerns about paper losses on its mortgage book and other assets and massive deposit outflows after the March 10 collapse of Silicon Valley Bank.
…
“FDIC tries to gauge how much it will cost taxpayers to take over struggling California lender”
I thought deposit insurance covered this loss?
With a banking crisis and a looming debt default, is this the best time ever to ditch the dollar and go all in on cryptocurrency?
Bitcoin could jump nearly 70% if the US defaults on its debt, Standard Chartered analyst says
Filip De Mott
Apr 29, 2023, 5:51 AM PDT
Bitcoin. Photo by Getty Images
– Bitcoin could climb by $20,000 if a US default happens, Standard Chartered’s Geoff Kendrick said.
– Not every crypto would act similarly, with some behaving more like equities, he told Insider.
– “So actually, the optimal trade would probably be long bitcoin, short ethereum.”
…
https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-us-default-debt-ceiling-crisis-ethereum-price-2023-4
“Bitcoin. Photo by Getty Images”
How do you photograph imaginary coins? It’s clear the MSM is all in on the scam.
More than once I have had to explain to people that cryptocurrencies have no physical media and that the shiny coins in the pictures are props.
Very noble of you to volunteer your time to assist the mentally challenged.
“Bitcoin. Photo by Getty Images”
Why do they use a gold coin image? Total scam.
a gold coin image
You can shine up a turd. It’s still a turd.
Legacy Research Group
Don’t Be Blindsided by a U.S. Debt Default
Chris Lowe | Apr 26, 2023 | The Daily Cut | 8 min read
If you’ve seen the 1955 movie Rebel Without a Cause, you’ll remember the iconic scene.
Dean plays troubled teen Jim Stark. He’s clashed with a local delinquent called Buzz Gunderson. And Buzz has challenged him to a game of “Chicken Run” at a seaside cliff.
The two teens steal cars… point them toward the abyss… and put the pedal to the metal.
The idea is to see who jumps out of his car first, proving the other player “chicken” in the game.
Neither Jim nor Buzz is planning on dying. They just want to prove a point.
But as his car races toward the cliff, a buckle on the sleeve of Buzz’s leather jacket gets caught in the door handle… he’s unable to jump from the car… and he plunges to his death.
It’s no surprise this kind of game can end in tragedy…
…
https://www.legacyresearch.com/the-daily-cut/dont-be-blindsided-by-a-u-s-debt-default/
The Chicken Run: Rebel Without A Cause (1955) – YouTube
https://m.youtube.com/watch?v=BGtEp7zFdrc
Thanks!
Footloose (1984): A chicken race with tractors
“I wrote to you on Monday about how bitcoin is one potential winner if Congress doesn’t raise the debt ceiling.
During the worst of the banking crisis last month, it proved a reliable alternative to leaving your money on deposit in the bank.
T-bills are another supposedly safe place to park your cash. If investors start to see them at risk from a default, expect more inflows into bitcoin.”
Since lots of CONgress critters luv HODLing crypto, a debt default on Treasurys could provide them with a nice payday.
Something to watch for in future news…
if Congress doesn’t raise the debt ceiling… a default,
We hear this same fear talk every time there’s a debt ceiling drama. Ironically, stopping the debt increase is exactly what will not lead to default.
It should be an SNL skit: How can we repay our debts if we can’t borrow the money?
“It should be an SNL skit”
https://www.cnn.com/2023/04/24/politics/biden-tennessee-lawmakers-white-house/index.html
“We hear this same fear talk every time there’s a debt ceiling drama.”
Debt Limit Kabuki is a better model than Chicken Run.
“Ironically, stopping the debt increase is exactly what will not lead to default.”
Maybe over the long run, but Janet Yellen sez all hell will break out over the near term if the debt limit is not increased.
all hell will break out over the near term if the debt limit is not increased
My Ex was of the same opinion. Funny thing, without her influence the debt was paid off in short order and things improved.
“My Ex was of the same opinion. Funny thing, without her influence the debt was paid off in short order and things improved.”
Her role was to stimulate the economy.
Laguna Niguel, Orange County finally showing signs of softening.
Jun 2022 purchase price 1,155K
Mar 2023 list price 1,269K
Apr 2023 reduced 1,195K (Live Auction Bidding Starts at)
Apr 2023 reduced 1,149K Now below 22 purchase price. I guess that live auction bidding didn’t go so well!
Drove through much of coastal OC yesterday. Bought the GTI in San Juan Capistrano yesterday morning. Left hubby to do the paperwork and took his car to Dana Point Nursery (what a gem!) and Roger’s Gardens. Saw quite a few for sale signs.
“Bought the GTI in San Juan Capistrano yesterday morning.”
Attagirl
Contemplated the R for a few minutes but it was an additional $10K. And, I would probably get a few speeding tickets driving it properly. 🙂
https://www.youtube.com/watch?v=3zcm4oS9IaM
Enjoy!
The Pomelo Yellow Metallic for the 40th Anniversary Edition is hideous!!!
Hubby is OCDing over the car. Some things are missing that are required in EU but not US. Poor salesman.
You’ll live in a camper van, and you’ll like it.
https://www.thisismoney.co.uk/money/article-12028235/Couple-fed-Londons-extortionate-property-prices-camper-van-save-1-400-month.html?
“Outdoor camping” is outlawed in my little burg, and the city just did a camp sweep. Leftists expressed their rage on NextDoor, calling the sweep “inhumane”. The camp was next to a railroad track, which might have prompted its expedited removal.
The camp was next to a railroad track
Preparing for a derailment?
🙂
The tracks run through the downtown area, and they are sort of out of sight, so perhaps the campers were hoping to not be noticed. But being near main street meant it was a short walk there to panhandle.
“We used to pay around £900 on rent, £150 on council tax, and £200 on energy bills each month; alongside other living expenses, we ended up spending around £1,800 per month.”
So the people who pay rent also pay for those who don’t?
My understanding is that the council tax finances local government.
GBP is 1.26 to the US dollar. UK wages aren’t that great, and they get taxed out the wazoo, so rents this high have to be pushing people to the breaking point.
https://www.theguardian.com/money/2023/apr/28/average-monthly-rents-hit-2500-in-london-and-1190-for-rest-of-uk
and they get taxed out the wazoo
Plus they pay 20% VAT (sales tax), but that’s OK, because the tax is included on the displayed price. For some reason Euros find not including the sales tax in the price in the US to be infuriating, even though the sales tax is much lower. Go figure.
pushing people to the breaking point
The last time I was there (2017) I was floored at how expensive everything was. The only things that were reasonable were the premade sandwiches they sell everywhere and a pub chain called Wetherspoons.
“…and they get taxed out the wazoo…”
“If you take a walk, I’ll tax your feet” —The Beatles
A song dedication for the FBs who bought at the peak of Housing Bubble 2.0.
https://www.youtube.com/watch?v=qRDaJQoHczg
An interesting and shocking story…
The COVID Tracking Project Part 3
The final episode of our three-part series takes listeners inside the failed federal response to COVID-19 and explores the massive volunteer effort to collect data about the disease.
April 29, 2023
Previous episode The COVID Tracking Project Part 2
This is the third episode in our three-part series taking listeners inside the failed federal response to COVID-19. Series host Jessica Malaty Rivera and reporters Artis Curiskis and Kara Oehler bring us the conclusion of The COVID Tracking Project story and an interview with the current CDC director, Dr. Rochelle Walensky.
We look at the myth that COVID-19 was “the great equalizer,” an idea touted by celebrities and politicians from Madonna to then-New York Gov. Andrew Cuomo. Ibram X. Kendi and Boston University’s Center for Antiracist Research worked with The COVID Tracking Project to compile national numbers on how COVID-19 affected people of color in the U.S. Their effort, The COVID Racial Data Tracker, showed that people of color died from the disease at around twice the rate of White people.
The COVID Tracking Project’s volunteer data collection team waited months for the CDC to release COVID-19 testing data. But when the CDC finally started publishing the data, it was different from what states were publishing – in some instances, it was off by hundreds of thousands of tests. With no clear answers about why, The COVID Tracking Project’s quest to keep national data flowing every day continued until March 2021.
…
https://revealnews.org/podcast/the-covid-tracking-project-part-3/
This is the third episode in our three-part series taking listeners inside the failed federal response to COVID-19.
They got 80% of the country to submit to an experimental vaccine. I suppose they would consider that a success, even if the jab didn’t really help.
And a lot of people still believe that while the jab won’t keep you from getting sick, it will make it less deadly, because there are “studies”. Funny, I recall that there were studies that claimed the jab would keep you from getting sick and spreading it, until it became impossible to keep spinning that narrative. Now it’s “you just won’t get as sick”, which of course you have no way of knowing if that’s true. When they told you that you wouldn’t get sick and you still got sick, you knew they were lying.
you knew they were lying
So you should have considered the next thing they told you to be a lie, and the thing after that and so on.
Exactly. Yet I meet people who still believe that the jab offers some modicum of protection. One relative, who is jabbed and boosted, got knocked onto his keister by the lowly Omicron variant. His faith in the jab has not been shaken.
“…New York Gov. Andrew Cuomo…”
I recall Cuomo sending recuperating hospital patients to rest homes to infect the elderly infirm rather than the federally leased hospital ship because he didn’t want any success stories attributed to DJT.
Is it smart to make unhedged bets on a Fed pivot?
The Financial Times
SVB Financial Group
SVB discussed selling up to $20bn in bonds months before bank run
Lender considered drastic action to stem liquidity crisis as early as November last year, documents show
People line up outside a Silicon Valley Bank
Silicon Valley Bank’s plan, if enacted, would have marked the second time in nine months the group had decided to reverse its interest rate hedging strategy
Mark Vandevelde in New York and Tabby Kinder in San Francisco 13 hours ago
Silicon Valley Bank discussed selling a chunk of its bond portfolio at a loss as early as last November, according to newly released documents that show executives grappling with a liquidity crisis at the lender months before it succumbed to a historic bank run.
In an internal presentation codenamed “Project Phoenix”, SVB executives debated selling up to $20bn worth of bonds at a $2bn loss, while warning that there was “no silver bullet” to solve the increasingly urgent problem of deposit outflows that were projected to continue.
“Investor reaction is expected to be very negative,” the November board presentation said, with the last two words in bold and underlined.
That warning proved apposite. A day after the bank launched a version of the plan in March, shares in SVB Financial fell by 60 per cent. Regulators seized the bank the next day, and its parent company declared bankruptcy.
Internal SVB discussion documents, dated November 8, were released by the Federal Reserve on Friday as part of the central bank’s review of its handling of the second-biggest bank failure in US history.
“While we do not plan to move forward at this time,” the presentation stated, “these are options that we can consider should current market conditions persist”.
The plan, if enacted, would have marked the second time in just nine months the bank had decided to reverse its interest rate hedging strategy.
At the beginning of 2022, SVB owned interest rate hedges intended to offset the losses on its bond portfolio if interest rates were to rise.
But in March that year, SVB was so confident of its financial position that it began shedding the hedges so as to maximise its gains in the event that a recession forced the Fed to pivot to cutting rates.
…