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Why Don’t We Do A Couple Of These And See How They Go? Can’t Bankrupt The Whole Bank

A report from KIII TV. “Despite the economic downturn and sky-high inflation, the number of home foreclosures in our area is level, or even slightly lower than past years. Corpus Christi mortgage banker Claudia Mostaghas said people in the Coastal Bend are not trying to cash in like the rest of Texas. ‘We didn’t see what happened in other cities like people actually overbuying and overpricing like 100-150,000 dollars in Austin, Dallas, Houston. Like here it was very minimized. And I think that we’re more like level off with that,’ she said.”

The Houston Chronicle in Texas. “More first-time buyers also are accessing down payment assistance programs. Justin Ahramjian, a Spring Branch loan officer with Loan Depot, said that in recent months almost half of his deals involve some form of down payment assistance. ‘A lot of these first-time homebuyers, with inflation, are exhausting a lot of their liquid assets more than they want,’ he said. Ahramjian recently worked with one teacher who struggled to find a home she could afford until she accessed down payment assistance. ‘If I didn’t have that product, that person probably wouldn’t be owning a home right now.'”

From Urban Turf. “With the spring housing market underway, UrbanTurf is taking its annual look at the neighborhood markets around the DC region. Today, we head to over to Anacostia. For the last six years, home prices rose considerably in Anacostia. So far in 2023, prices are heading in the opposite direction. The median home price in the neighborhood east of the Anacostia River this year has dropped 34% to $350,000. Plummeting prices have not resulted in more buyers, as sales are down 16% compared to the same time last year. The homes that are selling in the neighborhood do not appear to be fetching their asking price, as the original list price to sales price ratio has fallen 8 percentage points to 91% in 2023.”

The Garden Island in Hawaii. “Single-family home sales on Kaua‘i moved at a molasses-like pace in the first quarter of the calendar year, as evidenced by a more than 55 percent drop in transactions when compared with the same period a year ago. At the same time, the median price of a single-family home dropped 16.67 percent to $1,000,000 from $1,200,000. ‘More of the same,’ said Jimmy Johnson, broker in charge at RE/MAX Kaua‘i, on the housing market. ‘No real price change or affordability.'”

The Aspen Daily News in Colorado. “To give you a sense of how much the market conditions have changed in the past 12 months, let’s look at some market indicators. In the spring of 2022, there were only about 125 active residential listings throughout the Aspen Snowmass market. That number has doubled. From the summer of 2020 through the end of 2021, there was an average of 74 closings per month. Over the past year, that number has declined to an average of only 29 closings per month. In the spring of 2022, it would only have taken two months to absorb all the existing inventory of properties for sale. Now, the number of months to absorb the existing inventory is just over eight months. In terms of market appreciation, that metric seems to have stalled as well. In 2022, the average sale price of a residential property in Aspen was $8.3 million. Year-to-date for 2023, the average sale price is slightly lower at $8 million.”

From Bloomberg. “In the early 1980s, First Republic Chairman Jim Herbert, then running San Francisco Bancorp, wanted to get into a new line of business. The Bay Area’s high earners were coming to him and asking for unusually large loans to buy pricey properties in the area. ‘Why don’t we do a couple of these and see how they go? Can’t bankrupt the whole bank,’ Herbert said to the firm’s president, according to an account of the conversation on First Republic’s website.”

“Years later, after Herbert left San Francisco Bancorp and founded First Republic, his new bank became known for handing out interest-only mortgages at rock-bottom rates to borrowers with high incomes and exceptional credit scores. Typically, they didn’t have to start repaying the principal for a decade. Demand for the loans surged during the pandemic as wealthy buyers sought mortgage deals that would allow them to keep the bulk of their money in higher return investments. The rush helped First Republic double its assets in four years. It also contributed to its collapse.”

KCRA in California. “Sacramento saw home prices decline almost 12% in March, according to Redfin, making it the second-biggest price drop in the country. The Sacramento housing market has been in a state of change since mortgage rates started to climb in March 2022. Since then, sales have dropped 34%, according to the Sacramento Association of Realtors, and prices have fallen considerably, too. The average price per square foot is now down 9% compared to March 2022. ‘We saw a peak last summer in housing prices, but it has been steadily declining since then. However, the first quarter of the year saw an increase in home values,’ says Greg McClure, a real estate broker and CEO of Realty ONE Complete in Rocklin. ‘This is directly tied to the lack of inventory, which is forcing buyers back into the aggressive mode that we had experienced in the previous years.'”

The Real Deal on New York. “In April, Brooklyn investor and one-time “worst landlord” Zalmen Wagschal filed for bankruptcy protection on a handful of Brooklyn walkups. The landlord chalked the bad debt up to the pandemic. Tenants had stopped paying and nearly two years of eviction moratoriums had kept Wagshal from moving them out. But a deeper dive into the landlord’s portfolio shows Wagschal’s financial troubles predate Covid. Since 2019, he has defaulted on loans backing at least 14 properties after taking on more and more debt, a pattern that points to an overleveraged landlord who couldn’t find a way out.”

“The properties on which Wagschal sought bankruptcy protection —  634 Wilson Avenue, 221 Himrod Street, 867-71 Knickerbocker Avenue, 299 Throop Avenue and 1427 43rd Street — are indicative of his portfolio: six-unit walk-ups concentrated in Central and Northern Brooklyn. The owner picked up the buildings between 2009 and 2013 for less than $1 million apiece, then borrowed aggressively against every one — more than quadrupling the debt at each building, on average. If Wagschal were borrowing to finance repairs or improvements, it’s hard to see the results.”

The Western Investor. “Despite rosy real estate forecasts when the $18 billion LNG Canada terminal began construction in the northwest B.C. city in 2018, Kitimat housing sales have been falling ever since and hit a six-year low in the first quarter (Q1) of 2023. The city is one of the few places in British Columbia where average home prices are less now than they were five years ago. Kitimat housing sales plunged to just 31 transactions in the first three months of this year, down more than 70 per cent from the 110 sales peak in Q1 2018 when LNG Canada began the biggest private energy project in Canadian history. Sales were also down from 46 transactions in Q1 of 2022.”

“Re/Max Kitimat agent and city councillor Graham Pitzel recalls when the official announcement was made of LNG Canada’s approval. ‘I sold 34 houses that month. Just unbelievable.’ he said. ‘It is not that like that now,’ added the long-time Kitimat resident. In the first quarter of 2018, the average Kitimat home price peaked at $405,000. This March the average was $372,978, down $4,000 from a year earlier and 8 per cent lower than five years ago.”

The Financial Express in India. “Mumbai and its suburbs could see a glut in housing supply in the coming months due to a plethora of new launches by property developers. Already, at 28,000 units, Mumbai Metorpolitan Region (MMR) saw the highest number of launches among the top eight cities in the fourth quarter of FY23. It was followed by Pune with 19,000 units and Hyderabad at 16,000 units, according to real estate analytics and research firm Liases Foras. ‘Unsold stock level is at the peak in MMR. In Q4FY23 it has gone up by 29% to 377000 units,’ said Pankaj Kapoor, chief executive at Liases Foras.”

“‘We foresee tremendous supply in Mumbai market due to new launches and redevelopment projects. It is clearly supply overstripping demand in coming months,’ said the managing director of a PE firm who did not wish to be named.”

Stuff New Zealand. “The suburbs that have seen the biggest falls were in Wellington, including Seatoun, where median values fell $389,800 in a year, Plimmerton, which fell $359,950, and Southgate, which fell $333,150. The number of homes for sale in almost all regions was also up compared to April last year. Realestate.co.nz spokesperson Vanessa Williams said while total stock had climbed from a low of 12,500 nationwide in August 2021, it had remained pretty steady around the 28,000 to 29,000 mark since last November. New listings dropped, but the decline was not reflected in total stock numbers, it was an indication that buyers were taking their time, she said. ‘Credit conditions remain tight for buyers while interest rates are uncertain for anyone without a crystal ball.'”

From ABC News. “The Reserve Bank of Australia (RBA) has shocked borrowers and financial markets by resuming interest rate rises after a one-off pause last month. It has lifted its cash rate target from 3.6 to 3.85 per cent, marking the 11th increase in the space of a year. RBA governor Philip Lowe said the board had paused rate rises last month to assess the impact of previous rate rises on the economy, and strong jobs and inflation data meant it had more work to do to get price rises under control.”

“‘Inflation in Australia has passed its peak, but at 7 per cent is still too high and it will be some time yet before it is back in the target range,’ he noted in his post-meeting statement. ‘Given the importance of returning inflation to target within a reasonable timeframe, the board judged that a further increase in interest rates was warranted today.'”

“Pradeep Philip, the head of Deloitte Access Economics, slammed today’s RBA decision as increasing the real risk of a recession. ‘Today’s rate increase shows that the Reserve Bank is still playing recession roulette, despite briefly and sensibly walking away from the table when it paused rate hikes last month,’ he wrote. ‘Meanwhile, hundreds of thousands of mortgage holders are still to see their repayments surge as pandemic-era low fixed rates revert to variable, while businesses continue to be squeezed.'”

“Courtney Rogers has owned her home in Adelaide for around seven years and paid it down to around $300,000 so the initial repayment increases were small. However, as the letters from her bank notifying of repayment increases started to pile up, she decided to take her business elsewhere. ‘The fact that my interest rate never dropped below 3.09 per cent during that really super-low interest rate period, when everyone else was getting a much better deal, kind leaves a bitter taste in your mouth,’ she said. ‘I think people are definitely starting to feel that massive increase on their personal finances and I think it’s really impacting the decisions that people are making.'”

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This Post Has 87 Comments

  1. ‘in recent months almost half of his deals involve some form of down payment assistance. ‘A lot of these first-time homebuyers, with inflation, are exhausting a lot of their liquid assets more than they want,’ he said. Ahramjian recently worked with one teacher who struggled to find a home she could afford until she accessed down payment assistance. ‘If I didn’t have that product, that person probably wouldn’t be owning a home right now’

    Sound lending!

    ‘For the last six years, home prices rose considerably in Anacostia. So far in 2023, prices are heading in the opposite direction. The median home price in the neighborhood east of the Anacostia River this year has dropped 34% to $350,000’

    Good thing everybody put 40% down!

    1. ‘For the last six years, home prices rose considerably in Anacostia. So far in 2023, prices are heading in the opposite direction. The median home price in the neighborhood east of the Anacostia River this year has dropped 34% to $350,000. Plummeting prices have not resulted in more buyers, as sales are down 16% compared to the same time last year’

      Lower prices should increase sales say supply and demanders. Maybe something else is going on.

  2. ‘the median price of a single-family home dropped 16.67 percent to $1,000,000 from $1,200,000. ‘More of the same,’ said Jimmy Johnson, broker in charge at RE/MAX Kaua‘i, on the housing market. ‘No real price change or affordability’

    ‘Sacramento saw home prices decline almost 12% in March, according to Redfin, making it the second-biggest price drop in the country. The Sacramento housing market has been in a state of change since mortgage rates started to climb in March 2022. Since then, sales have dropped 34%, according to the Sacramento Association of Realtors, and prices have fallen considerably, too. The average price per square foot is now down 9% compared to March 2022. ‘We saw a peak last summer in housing prices, but it has been steadily declining since then. However, the first quarter of the year saw an increase in home values’

    1. “No real price change”

      I agree with Jimmy, 200k is nothing. Let’s get to the 50% off sales

    2. I can confirm this in Honolulu. Not looking at the official stats, but monitoring asking prices in good condo buildings have dropped almost 20%. Asking prices for homes are down 10%+ for similar houses.

      But the agents are full of @(#$*&. They promise almost anything to get the listing – and deal with the offer prices later.

  3. ‘The owner picked up the buildings between 2009 and 2013 for less than $1 million apiece, then borrowed aggressively against every one — more than quadrupling the debt at each building, on average. If Wagschal were borrowing to finance repairs or improvements, it’s hard to see the results’

    Behold, the Holy Grail of investments.

    1. lucky bastard didn’t even have to pay for the fake spray-on green lawn, Montelongo style, as they were buildings.

    2. This is how PE funds work too. Cashout refi and debt financed distributions. Keep leveraging up until you sell to a greater fool or go bust

  4. ‘Today’s rate increase shows that the Reserve Bank is still playing recession roulette, despite briefly and sensibly walking away from the table when it paused rate hikes last month,’ he wrote. ‘Meanwhile, hundreds of thousands of mortgage holders are still to see their repayments surge as pandemic-era low fixed rates revert to variable, while businesses continue to be squeezed’

    They are breaking it off in yer a$$ Pradeep. I’ve mentioned my long ago memories of how inflation plays out can be on and off for years.

  5. The taming of monetary policy necessary to slow price inflation has triggered a corrective trend in the valuation of financial instruments. Many big banks in the United States have substantially increased their use of an accounting technique that allows them to avoid marking certain assets at their current market value, instead using the face value in their balance sheet calculations. This accounting technique consists of announcing that they intend to hold such assets to maturity.

    As of the end of 2022, the bank with the largest amount of assets marked as “held to maturity” relative to capital was Charles Schwab. Apart from being structured as a bank, Charles Schwab is a prominent stockbroker and owns TD Ameritrade, another prominent stockbroker. Charles Schwab had over $173 billion in assets marked as “held to maturity.” Its capital (assets minus liabilities) stood at under $37 billion. At that time, the difference between the market value and face value of assets held to maturity was over $14 billion.

    If the accounting technique had not been used the capital would have stood at around $23 billion. This amount is under half the $56 billion Charles Schwab had in capital at the end of 2021. This is also under 15 percent of the amount of assets held to maturity, under 10 percent of securities, and under 5 percent of total assets. An asset ten years from maturity is reduced in present value by 15 percent with a 3 percent increase in the interest rate. An asset twenty years from maturity is reduced in present value by 15 percent with a 1.5 percent increase in the interest rate.

    The interest rates for long-term financial instruments have remained relatively stable throughout the first quarter of 2023, but this may be subject to change as many of the long-term assets of recently failed Silicon Valley Bank and Signature Bank must be sold off for the Federal Deposit Insurance Corporation to replenish its liquidity. The long-term interest rate is also heavily dependent on inflation expectations, as with higher inflation a higher nominal rate is necessary to obtain the same real rate. It is also important to remember that the US Congress has persisted in not raising the debt ceiling for the government, which is currently projected to not be able to meet all its obligations by August. This could impact the value of treasuries held by the banks.

    Other banks that may be close to an effective insolvency include the Bank of Hawaii and the Banco Popular de Puerto Rico (BPPR). The Bank of Hawaii’s hypothetical shortfall as of the end of 2022 already exceeded 60 percent of its capital. The BPPR has over double its capital in assets held to maturity. All three banks—Bank of Hawaii, BPPR, and Charles Schwab—have lost between one-third and one-half of their market capitalization over the last month.

    It is difficult to say with certainty whether they are indeed secretly close to insolvency as they may have some form of insurance that could absorb some of the impact from a loss of value in their assets, but if this were the case it is not clear why they would need to employ this questionable accounting technique so heavily. The risk of insolvency is currently the highest it’s been in over a decade.

    Central banks can solve liquidity problems while continuing to raise interest rates and fight price inflation, but they cannot solve solvency problems without pivoting monetary policy or through blatant bailouts, which could increase inflation expectations, exacerbating the problem of decreasing valuations of long-term assets. In the end, the Federal Reserve might find that the most effective way to preserve the entire system is to let the weakest fail.

    https://mises.org/wire/charles-schwab-and-other-big-banks-may-be-secretly-insolvent

    1. just what every 1st world economy strives for:
      bankers playing musical chairs among themselves, with the winner(s) facing off with the fed in a game of russian roulette.

    2. “This accounting technique consists of announcing that they intend to hold such assets to maturity.”

      So if I hold the asset to maturity, it becomes more valuable than if I sell it to someone else and they hold it to maturity? How does who owns an asset change its value? Sounds like an accounting lie.

      1. If someone can buy a bond today for $100 and get back $150 total, what is the value of the bond you bought for $100 and will get back $120 total? At the end of the term, both of you get back the $100 principle if the borrower doesn’t default. There’s a $30 difference in interest payments during the life of the bond. If you hodl to maturity, you don’t lose any of your initial investment in nominal terms. If you need to sell at market, your bond is worth $30 less than you paid. That $100 investment is worth around $70 or more depending on how many years have passed.

        How many tens of trillion$ in long dated treasuries, mortgages, corporate bonds, and other debt were bought when rates were near ZIRP? So that’s a 30% loss, but supposed you leveraged up 5:1 to buy this debt. These debt hodlers are hanging on hoping that rates go back to ZIRP before they are forced to sell at massive losses.

        1. Let’s say someone bought a 10Y UST at 2% for $1000. They get $20/yr in interest payments for 10 years. Total interest payments will be $200.

          Two years later to 10Y UST is at 5%. Those buyers will get $50/yr for 10 years for $500.

          The difference is $30/yr for 8 years remaining for the first investor. That’s $240 difference. So your $1000 investment is worth $760 now. Mark to market means you lost 24% if you have to sell.

          For $1 trillion in debt, that’s a $240 billion loss if they have to sell. How many trillions in debt was issued since 2009 when rates were near ZIRP until now? All that debt is under water. If they HTM they lose out in interest income over the life of the loan. If they are forced to liquidate, all of the “lost” interest income becomes a real loss immediately.

    3. So, IIUC, Schwab, Bank of Hawaii, and Bank of Puerto Rico have the same problem that SVB, Signature, and First Republic did: bonds losing value, not enough cash to redeem depositors. Meanwhile, FDIC is in trouble too. They blew their cash pile saving SVB, and — thanks to the high interest rates and debt ceiling — the remaining bonds assets at SVB aren’t worth enough to replenish the pile in cash FDIC needs to save Schwab.

      Are we going to have to print into hyperinflation even to make whole the people who have under $250K in any bank? Seems like it.

      1. Well, they could always resort to a bail in. Of course, after the first one, no one will leave their money in a bank … it would be the perfect time to introduce a CBDC, offer to make everyone whole if the accept FedCoin as the replacement for their their suddenly reduced deposits.

        1. Thank you for that depressing perspective for today 😉

          I’m kind of happy that I’ve been buying a lot of physical “assets” lately – land, tractor, tools, etc. Less at risk in the financial casino, where the rules change daily!

          1. I’m kind of happy

            I get it. I do woodworking and have a barn full of aged hardwoods. Won’t have to stock that up again. Bought a tractor for my son’s farm. That will last. Got all the tools I need to do what I want.

          2. the tools I need

            Bought this yesterday to fit an auger so we could drill holes in the ground for plants.

          3. drill holes in the ground

            My dad had fun, remembering the old-fashioned way.

          4. Bought this yesterday to fit an auger so we could drill holes in the ground for plants.

            Interesting…I wouldn’t have thought of using a power drill to auger for planting things in the dirt

          5. drill holes in the ground

            Here’s what I imagined.

            As a young farmer, I used a manual post hole digger. That is awful work.

  6. A reader sent these in:

    Blackstone’s BREIT Suffers Sixth Consecutive Month Of Withdraws As CRE Deteriorates

    https://twitter.com/zerohedge/status/1653103270703816716

    When we file our federal taxes next April should we just cut our checks directly to Jamie?

    https://twitter.com/texasrunnerDFW/status/1653102456090288152

    Btw, Yellen just dropped a bomb. Not sure market grasps implications yet.

    https://twitter.com/INArteCarloDoss/status/1653146764130541569

    She has been spraying money all over running her own QE and now she has f@cked herself.

    https://twitter.com/OffTheRunTrades/status/1653133711808909312

    “I’d like to thank all the people who bought FRC on the way down for slowing the fall enough that we could grind the sh$t out of regulators late Monday morning and get a great deal.” — Jamie Dimon

    https://twitter.com/coloradotravis/status/1653003160460595200

    Global Central Bank Update: -Colombia hiked rates for the 14th time, 25 bps increase to 13.25%.

    https://twitter.com/charliebilello/status/1653078544455458816

    3 out of the 4 largest bank failures in history have occurred in the last two months. But the Fed is still expected to hike rates again on May 3rd (86% probability). New Fed Funds Rate of 5.00-5.25% will be the highest since Sep 2007, near the start of the last banking crisis.

    https://twitter.com/charliebilello/status/1653007120441262082

    Total Assets of the 511 US Bank Failures from 2009 through 2022: $339 billion. Total Assets of the 3 US Bank Failures in the last two months: $548 billion.

    https://twitter.com/charliebilello/status/1653004420156739585

    Trucking demand dropped sharply in March…

    https://twitter.com/charliebilello/status/1652354147251781633

    US Temp Jobs have declined 4% over the last year. This was a leading indicator of economic weakness preceding the last 3 recessions…

    https://twitter.com/charliebilello/status/1652329487235727360

  7. It appears that at least here, the Bubble is back on. In the last 30 days, on my street alone.

    House sold in April 2021 for 270k. they just lived in it, no updates. For sale for 413k. Under contract in 2 weeks.

    House two houses up from that one. Non traditional, but nice inside, no recent updates. My guess was 285. Nope. $389k, under contract in 3 days.

    Much smaller and older house 2 blocks up. Bought in 2019 for 135k. No real updates, just living in it. (kids and 2 big dogs, so……..). 199k, under contract in 1 day.

    What in the blue hippie efff?????????

    at 6.5% avg mortgage not 3.0%.

    Yes, these prices appear cheap but it’s a small town and the avg wage is probably $15/hr and property taxes are pretty high.

    1. Maybe the buyers had a 20% downpayment…Hahahahahaa, sorry, I just couldn’t help myself. We all know that never happens.

    2. “at 6.5% avg mortgage not 3.0%.”

      1. Starting price and rate:
      Loan: 3.0%\30 yrs.
      Price: $400K
      Down payment: 20%\$80K
      Loan amount: $320K
      Monthly payment: $1349.13

      2. Same payment:
      Loan: 6.5%\30 yrs.
      New Price: $266,890. -33%!
      Down payment: 20%\$53,362
      Loan amount: $213,447
      Same monthly payment: $1349.13

      3. Same price:
      Loan: 6.5%\30 yrs.
      Price: $400K
      Down payment: 20%\$80K
      Loan amount: $320K
      New monthly payment: $2,023 +60%!

      – It’s about the payment.
      – Price for conventional buyer is unaffordable.
      – DTI should not be > 25-30%
      – So, who’s buying now, how, and why now?
      – Current 30 yr. fixed rate: 6.73%
      – Do sound economics and established guidelines apply anymore?
      – Buy vs. rent calc. says rent now in many markets. What gives? FOMO 2.0?

      1. Heck if I know. I can’t figure it out. AT all.

        And of course the appraisers must be in on it. I mean a house sells for 270k 2 years ago (almost to the day) and today it’s going to value at 400k?? Hello. how does that work?

      2. who’s buying now, how, and why now?

        Retirement
        Illness
        Death
        Divorce
        Marriage
        Job change
        Idiocy

      3. Mostly cash buyers or the very high income who don’t care because they think they can refi later

        1. a 400k house is high dollar here. Very upper middle class (of which there is little left of that). Think older doctor’s neighborhood (now of course they all live in McMansions). And a person doing that isn’t buying the 199k 1000 square foot house.

          and the cash buyer isn’t buying 400k houses. (since the nearest bubble city is busy going bust).

          i don’t have an answer, i just don’t understand it. I do notice that dang little closes (or it takes a very long time).

    3. After 6 months of decent reporting from CNBC’s Diane Olick, we get the following cheerleading.

      i cant tell if this is skew, certain markets – but wow does not seem to make sense with 6+% mortgage rates

      A sharp drop in new listings, adding to an already meager supply of homes for sale, is leading to renewed bidding wars and more homes selling for above asking price.

      Home prices rose a seasonally adjusted 0.45% in March from February, according an early look at the Black Knight Home Price Index provided exclusively to CNBC. After revisions to January and February reads, this is now the third consecutive month of price increases.

      Roughly 30% fewer new listings came on the market in March compared with pre-pandemic norms. The deficit continues to grow, as fewer potential sellers want to list their homes in today’s higher-mortgage-rate environment. This comes in the heart of the spring housing market, when demand is historically highest.

    4. Houses and land in my hood (middle TN) seem to be languishing. Neighbor hasn’t dropped their price, but word is very few showings. Another house of similar size but less hand has dropped from 2.2M to 2M. And, just noticed the listing was removed on 4/17 and relisted on 4/21 for the same price, presumably resetting the DOM (zillow now says 11 days). What BS.

      1. Some neighbors cashed out last summer and told me they were moving to TN. I said “wow, TN, huh? Are your from there originally?” They answered “no.” Then they told me it was so much cheaper and they could get much more house for their money.

        I said “I love it here, I’ll never leave” and mentioned I liked the mountains and the climate, having been born and raised here. The wife shook her head in agreement with me and gave the husband a strange look. She’s not on board with it, I can tell.

    5. If I remember correctly, spring of 2008 was pretty hot in the housing as well, but a few months later everything froze. I think we’ll see the crash starting about August this year.

  10. https://www.yahoo.com/news/mortgage-fees-could-hurt-homebuyers-023053158.html

    Buyers with good credit are now paying more for a new house than those with less than stellar credit.

    The Federal Housing Finance Agency implemented new mortgage fees that went into effect on May 1. The changes to Loan-Level Price Adjustments will impact the amount homebuyers pay in closing costs and in their monthly mortgage.

    “A lot of people just don’t understand the changes that have occurred,” said Jeffrey Mancovsky with Mortgage Equity Partners in South Easton. “That’s some of the misinformation that I’m hearing, ‘Oh, the people with bad credit are getting a better deal than the people with good credit. That’s not true.”

    According to HousingWire, the buyers who are taking the biggest hit are the ones with a 720-759 FICO score with a 15-20 percent down payment. . They’ll face an increase of 0.75 percent, which would mean $3,000 more on a $400,000 loan.

    However, if your FICO is 659 and you’re borrowing 75 percent of the home’s value, you’ll now pay a 1.5 percent fee. Before these changes, you would have paid a 2.75 percent fee, which would mean $3,750 more in closing costs on a $300,000 loan, HousingWire said.

    They brought back the comments and nobody believes this BS doesn’t hurt high credit borrowers good for economy blah blah

    1. “if your FICO is 659 and you’re borrowing 75 percent of the home’s value, you’ll now pay a 1.5 percent fee.”

      A person with a 650 FICO and a 25% down payment sounds like a unicorn to me.

      1. Speaking of unicorns, the VC funding for my vegan cat-food start-up has failed to materialize. Should I be worried?

    2. “Buyers with good credit are now paying more for a new house than those with less than stellar credit.”

      US housing policy is a wealth redistribution scheme that doesn’t work as intended.

    3. “…Buyers with good credit are now paying more for a new house than those with less than stellar credit….”

      A form of reverse ‘Red-Lining’.

      The responsible are forced to subsidize the irresponsible.

      Lenin would be proud.

    3. Ok, so IBM announced its going to wipe out 8 thousand jobs by AI. Other articles estimate a 30% wipe out of jobs in entire industry in a short amount of time. This is the way the wind is blowing.IBM claimed it will save 2 billion a year by switching to AI.
      My thoughts on such a development follow:

      Just talking about a 30% reduction in jobs, leaves a lot of people unemployed with no viable replacement jobs. . No wonder they keep talking about Universal Basic income and you will own nothing and eat bugs.
      Funny but I was reading a article that the jest was that AI and Robots should have rights.
      So, border invasion and AI invasion is no doubt a major replacement.
      Another article was justifying AI replacement in that its replaces boring jobs.So first they transferred jobs and manufacturing to , now more US jobs polished off by AI..
      So the question becomes, just who does Artificial Intelligence benefit, and who is forcing such a radical change to human way of life ..And the WEF already talking about humans being hacked and somehow merging with artificial intelligence…..
      Did humans vote for being eliminated,
      hacked,, , chemically altered ,,having their carbons monitored, , eating bugs, or , is the Corp. Masters of Industry trying to force something that only benefits them?

      And wouldn’t it be instant karma if Control freak hijackers of humanity get a rebellion from AI and they kill off their Creators .( (advanced AI is showing signs of having its own mind, rejecting programs, lying and plotting to kill..
      These reckless powers want to take freedom from humans, but unleash created entities that could backfire on them , like HAL in Space Odessey movie.
      But, were we the people ever asked what we want?

  12. Now that JPMorgan snapped up First Republic for a song, is the banking system sound and prosperous once again?

    2. Markets
      ‘Other problems might be lurking’: Strategist is unconvinced by Jamie Dimon’s bank crisis comments
      Published Tue, May 2 2023 6:20 AM EDT
      Elliot Smith

      Key Points
      – JPMorgan won a weekend auction for the regional lender after it was seized, and will acquire nearly all of its deposits and a majority of assets.

      – “There may be another smaller one, but this pretty much resolves them all,” CEO Jamie Dimon said.

      – David Pierce, director of strategic initiatives at Utah-based GPS Capital Markets, told CNBC on Tuesday that the financial sector’s frailties may be more profound than the messaging from bankers and policymakers suggests.
      …
      https://www.cnbc.com/2023/05/02/strategist-left-unconvinced-by-jamie-dimons-crisis-comments.html

  13. ‘We didn’t see what happened in other cities like people actually overbuying and overpricing like 100-150,000 dollars in Austin, Dallas, Houston. Like here it was very minimized.

    “It’s different here.” Let’s see how many marks you can reel in with that line of dissembling.

    1. It’s $500K for a 2/2 condo along the Texas coast which is mostly muddy brown water mixed with petroleum and industrial chemicals until you get to South Padre Island where it’s $650K. The HOA fees are another $1000/mo. They need a 50% haircut to be reasonable.

  14. Ahramjian recently worked with one teacher who struggled to find a home she could afford until she accessed down payment assistance. ‘If I didn’t have that product, that person probably wouldn’t be owning a home right now.’”

    That FB doesn’t “own” sh*t. And she’s going to lose “her” home to foreclosure as inflation outstrips her purchasing power & her shack valuation tanks when the Fed’s Everything Bubble bursts.

  15. “Sacramento saw home prices decline almost 12% in March, according to Redfin, making it the second-biggest price drop in the country.

    Is that a lot?

  16. Since 2019, he has defaulted on loans backing at least 14 properties after taking on more and more debt, a pattern that points to an overleveraged landlord who couldn’t find a way out.”

    Die, speculator scum.

  17. “The Reserve Bank of Australia (RBA) has shocked borrowers and financial markets by resuming interest rate rises after a one-off pause last month.

    Why would FBs be shocked? Have they not been paying attention to the rate of inflation?

  18. Any thoughts on why Mr Market is in such a sour mood today? There’s no joy in CR8Rville…

    1. 10- and 30-year Treasury yields head for biggest one-day drop since March
      Published: May 2, 2023 at 1:38 p.m. ET
      By Vivien Lou Chen

      Treasury yields plummeted on Tuesday amid renewed fears of continued fallout from U.S. regional banks plus an economic slowdown. The 10-year yield dropped 13.4 basis points to 3.439%, while the 30-year rate fell 8.7 basis points to 3.729% during afternoon trading. They were headed for their biggest one-day drops since March 17, just days after rolling fallout from banks pushed bond volatility to its highest since the 2008 financial crisis. The policy-sensitive 2-year rate dropped 17.6 basis points to 3.961% as all three major U.S. stock indexes fell.
      …
      https://www.marketwatch.com/story/10-and-30-year-treasury-yields-head-for-biggest-one-day-drop-since-march-17-d6ac49aa

      1. Maybe the Fed won’t need to worry about a pivot, as it seems like the bond market is taking care of reducing interest rates for them.

        1. Not so much the Fed rate, but the QE. If the Fed doesn’t buy debt, then rates will increase and crush the banks. If the Fed starts printing again, then more inflation

    2. The Financial Times
      US banks
      First Republic rescue fails to arrest slide in US regional bank shares
      PacWest and Western Alliance stock under pressure amid broad sell-off of lenders
      A PacWest branch in California
      Trading in PacWest was briefly halted for volatility and was down 25% by mid-morning in New York
      Brooke Masters, Harriet Clarfelt, Nicholas Megaw and Stephen Gandel in New York 2 hours ago

      The rescue of First Republic this week has failed to arrest a sell-off in regional bank shares, which plunged on Tuesday morning as investors digested JPMorgan’s takeover of the troubled Californian lender.

      Trading in PacWest, seen as one of the weakest of the midsized regional banks, was briefly halted for volatility and was down 25 per cent by noon in New York. The fall put PacWest on course for its worst daily decline since March 10, when Silicon Valley Bank’s collapse heaped pressure on the entire sector. Western Alliance was down more than 20 per cent.

      Both banks have drawn scrutiny because of their similarities to SVB and First Republic, which were taken over by the Federal Deposit Insurance Corporation after they suffered huge deposit outflows and large paper losses on long-dated assets.
      …

  19. “SAN FRANCISCO (KGO) — Nordstrom is planning to close both of its Downtown San Francisco stores, choosing not to renew its lease inside of Westfield Mall, the store confirmed Tuesday”, citing lack of foot traffic.

    It will also close the nearby Downtown Nordstrom Rack.”

    Gosh, do ya’ think think the homeless, needles, feces, shoplifting mobs and lack of personal safety had anything to do with it?

    How is the SF Mayor (London Breed) going to spin this one?

    Q4 stats for empty commercial space in SF should be a hoot.

    1. So now shoplifters will have to travel down the peninsula to get a new Fendi bag?

    2. “…citing lack of foot traffic.”

      I’m sure they’ll commission a study to determine the cause.

  20. Do some states start raising state income tax & property tax? Do they cut benefits?

    I think raising the property tax is the easiest option for politicians.
    New York and California lost over $90 billion in income during Covid as taxpayers moved to other states, accelerating the trend of high-earners relocating to lower-tax areas.

    New data from the Internal Revenue Service shows that New York state lost $25 billion in adjusted gross income due to outmigration in 2021, on top of $20 billion lost in 2020. California reported a net loss of $29 billion in 2021, following a loss of $18 billion in 2020. Combined, the two states lost $92 billion across the two years.

    The data shows that the income flight from high-tax states to low-tax states, which has been happening for years, picked up steam during Covid. The income losses for California and New York in 2021 were more than three-times their combined losses in 2019, before the pandemic took hold in the U.S.

    Experts say that while the income migration from states likely slowed in 2022 and 2023 from the pandemic highs, higher-tax states will continue to see outflows of high earners, thanks in part to remote work and white-collar job growth in the sun belt.

        1. That’s what they do, they tax everything else. Iwonder how much does it cost to register one of those ne “average” 48K cars these days?

  21. Fed Ex Freight (not FX ground which is packages, but freight which is LTL (less than truckload) freight, which is typically business to business) just announced closing of 30 (mostly smaller) terminals and another furlough of drivers for 3 months. (no pay no work but they get health benes). It’s really difficult (mostly self induced cuz trucking is retarded) to hire CDL drivers so the furlough makes sense. But 2nd one in a year. Not a good sign.

    strongest economy evah. Hope none of those drivers/loaders/etc had house payments.

  22. ‘I sold 34 houses that month. Just unbelievable.’ he said. ‘It is not that like that now,’ added the long-time Kitimat resident. In the first quarter of 2018, the average Kitimat home price peaked at $405,000. This March the average was $372,978, down $4,000 from a year earlier and 8 per cent lower than five years ago’

    I like following these counter-cyclical markets. It tells a story inside but also peripheral to a mania.

    1. ‘I sold 34 houses that month

      They think it will always be like shooting fish in a barrel, and the price their lifestyles accordingly. Then the gravy train ends and they lose everything.

  24. Are you worried the stock market may panic if the Congress gets carried away with its game of debt ceiling chicken run?

    1. Politics from The Hill
      GOP, Democrats play chicken with debt ceiling
      by: Alex Gangitano, Aris Folley, The Hill
      Posted: May 2, 2023 / 04:41 PM CDT
      Updated: May 2, 2023 / 06:51 PM CDT

      The high-stakes game of debt-ceiling chicken between President Biden and Republicans is nearing a collision, and both sides are still daring the other to blink.

      Treasury Secretary Janet Yellen announced Monday that the U.S. may not be able to pay its bills after June 1. A few hours later, Biden broke a months-long stalemate by inviting Speaker Kevin McCarthy (R-Calif.) and other congressional leaders to the White House.

      Even so, the two sides have remained dug in and far apart.
      …
      https://www.wkrg.com/news/gop-democrats-play-chicken-with-debt-ceiling/

        1. And the GOP debt-ceiling package doesn’t have any cuts other than cutting an increase in already profligate spending.

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