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The Market Experienced A Temporary Exuberance, Maybe Detached From Rationality A Little Bit

A report from Business Insider. “After wealthy New Yorkers fled to the seaside haven on Long Island during the pandemic, the boom has ended. One Hamptons broker told CNBC that the area was ‘chocked with supply,’ while another told the outlet that there is ‘too much inventory at every level.’ While CNBC cited price reductions spanning between 10% and 20%, it’s possible that ‘greater discounts will show up,’ one agent told CNBC. An excess of Hamptons summer rentals is starting to become a trend. Last year, a similar glut of rental properties cropped up without the requisite demand to match, leading homeowners to slash rental prices by up to 30%.“

The National Desk. “The pace of rent growth has slowed for 11 consecutive months. ‘There’s a lot of supply hitting the market, and that’s helping tilt the balance of power in the rental market back in favor of renters – who suddenly have a lot more options than they did in 2021 and early 2022,’ said Jay Parsons, chief economist of RealPage. One of the pandemic’s fastest-growing metros in Austin, Texas saw a 14.3% decline in asking rents from last year, which comes as home values have also declined by double digits. Other areas that saw large declines were Phoenix falling 9.6%, Las Vegas dipping 7.1% and Oklahoma City dropping 6.4%. Redfin said eight of the 10 metros with the largest declines were in Sun Belt states.”

From KXRM. “Hundreds of people in Colorado Springs are stressing out over their new property evaluations – some homeowners are furious because the value of their homes has more than doubled, which means their property taxes will reflect that. Many homeowners are confused, because when they look at housing websites the current market price of their house does not reflect these valuations. The El Paso County Assessor’s office says that’s because it was required to assess the market by June 30, 2022, which at that point, was a peak real estate market.”

“‘Leading up to that June 30th of 2022… interest rates were at all-time lows… and the market experienced a temporary exuberance, maybe detached from rationality a little bit,’ said Matthew Arvidson, the El Paso County Chief Deputy Assessor.”

The Orange County Register in California. “Orange County housing lost eight million-dollar ZIP codes in a year while adding three ‘affordable’ neighborhoods. Countywide, the median selling price was $990,000 in March – off 3% in a year, according to CoreLogic data. Sales totaled 2,109 existing and new homes – off 34% in a year. Biggest one-year price dips …Anaheim 92808 – off 33% to $710,000. Orange 92866 – off 30% to $857,500. Laguna Beach 92651 – off 29% to $2.08 million. Yorba Linda 92887 – off 27% to $923,500. Santa Ana 92706 – off 27% to $827,500. Silverado 92676 – off 25% to $735,000. Corona Del Mar 92625 – off 21% to $2.65 million. Cypress 90630 – off 20% to $825,000. Costa Mesa 92627 – off 19% to $990,000. Dana Point 92629 – off 18% to $1.2 million.”

“Pricier financing is a big factor in the sales slump. The 30-year mortgage rate averaged 6.5% in March vs. 4.2% 12 months earlier. The typical Orange County buyer got a 27% bigger payment – $5,027 monthly on the $990,000 price median vs. $3,957 on a year ago’s $1,015,000 home. And that payment requires $198,000 for a 20% downpayment.”

From Bankrate. “Mortgage credit availability declined in April to its lowest level since January 2013, according to the Mortgage Bankers Association (MBA). An April survey by the Federal Reserve found the stricter standards don’t affect conventional conforming loans bought by Fannie Mae and Freddie Mac — the majority of mortgages originated in the U.S. —  or loans issued through the Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) programs. Instead, lenders are holding back on niche products such as subprime mortgages, home equity lines of credit (HELOCs) and non-qualified, or ‘non-QM’ jumbo mortgages.”

From Reuters. “Amid a modest gain in overall household borrowing levels during the first quarter, the level of those taking on new housing-related debt dropped sharply, the New York Fed said Monday in a report. The New York Fed took special note of how housing-related debt has performed since 2020, when the pandemic struck and the Fed slashed rates to near-zero levels and bought bonds that helped ensure mortgage rates were super-low, which in turn sparked a huge surge in home prices and purchases. The bank noted that 14 million mortgages were refinanced between 2020 and 2021, some five million borrowers extracted $430 billion in home equity during the period.”

From CTV News. “Home sales continued their decline last month in some of the major markets in northeastern Ontario. Statistics from the Canadian Real Estate Association (CREA) said the biggest decline last month was in the Timmins, Cochrane and Timiskaming Districts, where sales declined by 35.3 per cent compared to April 2022. ‘Home sales were 21.3 per cent below the five-year average and 12.8 per cent below the 10-year average for the month of April,’ the CREA said. ‘On a year-to-date basis, home sales totaled 298 units over the first four months of the year. This was down sharply by 42.7 per cent from the same period in 2022.’ The average sale price last month was $259,642, a drop of 6.3 per cent compared to a year ago.”

“Sales in North Bay also dropped, dipping 33.6 per cent compared to April 2022. Home sales were 30.4 per cent lower in April than the five-year average and down 30 per cent compared to the 10-year average. So far this year, home sales are down by 364.6 per cent compared to a year ago. The average sale price in April was $426,475, down by 19.2 per cent compared to 2022. In Sudbury, meanwhile, sales declined by 29.5 per cent last month and are down by 35.9 per cent for the first four months of the year. The CREA said the average sale price in April was $460,012, down 9.1 per cent compared to April 2022. ‘The dollar value of all home sales in April 2023 was $84.6 million, a big decline of 35.9 per cent from the same month in 2022,’ the CREA said.”

From Reuters. “South Korean house prices weakened for an 11th consecutive month in April – its longest streak of declines in 11 years – but the pace of falls continued to slow, data showed on Monday. The data showed the house price index fell by a combined 8.53% during the 11-month period, the worst since 2003 when the board began to release the data. Still, the current cycle of decline was partly due a price correction following a non-stop rally over 32 months until May 2022, the data showed.”

The South China Morning Post. “Triangular debt, a problem that first troubled China’s economy over three decades ago, has resurfaced as the country’s post-pandemic recovery is challenged by weak demand at home and abroad. Triangular debt arises when delayed or partial payments leave companies owing money to each other and to their banks. It discourages production and investment and the resulting liabilities or bad loans can put a damper on growth and exacerbate financial risks. Liu Ge, who runs an industrial printing company in Guangdong province, said the problem of overdue payments had been getting worse by the year and the insufficient supply of orders faced by most SMEs this year would definitely make the situation worse.”

“‘For the same supplier, the payment term is extended by an average of about 20 days compared to last year,’ he said. ‘But, for the domestic market, it is impossible for a company to avoid the problem of extension of payment terms, unless you stop doing business. I think the fundamental reason is that the profitability of private firms, especially small businesses like us, is getting lower and lower. Firms are trying their best to maintain their own operations by delaying payments and keeping more cash in hand.'”

“Liu Yun, a property decorator from Zhuhai, Guangdong, said the overall environment seemed a bit better this year, but payment terms had yet to shorten significantly. His company was owed tens of millions of yuan late last year by clients who included some state-owned real estate developers. ‘There are more construction projects than last year, mainly municipal engineering works, and the cost of construction is generally the same as last year,’ he said. ‘But small- and medium-sized subcontractors like us hardly win bids. The real estate developers have repaid us some cash, but most of the rest still require us to accept some of their presale dwellings as payment. That means we will lose at least 10 per cent of what we budgeted for, due to China’s property market slump.'”

From Pedestrian TV on Australia. “In case you need any more reason to distrust real estate agents, a Sydney realtor not only landed himself in deep shit with angry Facebook commenters, but also been suspended from his job after he basically admitted to having disdain for renters. Honestly, this is why no one likes y’all! The drama began when Abhnit Kumar, a 23-year-old real estate agent from Ray White Macarthur Group in Campbelltown, posted about a home he helped sell for $958,000 on his Facebook page.”

“‘The market doesn’t dictate your home’s price, the agent does,’ Kumar wrote alongside his sale, encouraging homeowners to reach out if they wanted to sell. One Facebook commenter asked why Kumar was ‘artificially inflating house prices during a period of high inflation.’ Kumar, not having yet picked up on the scent of danger crackling through the air, brazenly admitted prioritising money over people and told the commenter he could ‘maximise on the profits you can make’ when selling their ‘biggest asset.’ Big mistake, buddy.”

“‘You said you inflate prices, so that the market is overpriced. Your words, not mine, I know when I’m in the market for a house I will be staying well away from your agency,’ they wrote. ‘It’s no wonder real estate agents are one of the least trusted professions.’ Aaaand this is where the drama really kicked off, because Kumar then responded: ‘Hey buddy you must clearly be a renter. Please stay away from my agency as we would not like to deal with people like you.'”

“Naturally, the comments took a nosedive as the real estate agent was then accused of being anti-renter, and by extension, anti-poor people. The backlash prompted him to apologise though, and he deleted the post. Things don’t end here, though: the online hullabaloo was clearly picked up on by Kumar’s agency, who immediately suspended him and kicked off an internal investigation.”

“The wildest part to me about all this is the real estate agency’s claims that Kumar wasn’t acting like he was supposed to. Just last year a Ray White real estate agency in Queensland was exposed for telling its agents to convince landlords that they should take advantage of the housing crisis and hike rent by another 20 per cent. I’m pretty sure we’re all aware inflating house price is common practice among real estate agents looking for a juicy commission. Let’s not pretend Kumar wasn’t behaving exactly like the culture in the real estate world has taught him to.”

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This Post Has 82 Comments

  1. ‘One of the pandemic’s fastest-growing metros in Austin, Texas saw a 14.3% decline in asking rents from last year, which comes as home values have also declined by double digits’

    Rents and prices sinking like a turd in a well. That’s some shortage! But it’s still a sellers market.

    1. Yahoo
      Benzinga
      A Sign The Housing Market Has Hit Bottom? JP Morgan Plans To Acquire $1 Billion In Single-Family Rentals
      Kevin Vandenboss
      November 17, 2022·2 min read
      In this article:

      There’s a new player in the single-family rental market — a joint venture between Haven Realty Capital and institutional investors advised by JPMorgan Chase & Co. (NYSE: JPM) — that aims to acquire and develop $1 billion worth of single-family rental communities.

      The partners are seeding the venture with three communities in the Atlanta area totaling approximately 250 homes and are set to deploy $415 million in equity to acquire more than 2,500 houses. The partners will look at communities of 50 to 200 homes in the Sun Belt.

      “The for-sale housing market has been significantly hampered by recession fears, inflation and rising interest rates placing a burden on homebuilders and their ability to add to the housing stock,” Sudha Reddy, founder and managing principal of Haven, said in a press release.

      Data from Redfin shows that the median sale price for homes in the U.S. fell nearly 6.2% from May to September this year, while the number of homes sold fell by almost 16% over the same period.

      However, some U.S. markets appear to be leveling out or even rebounding. The median sale price in Miami fell by only 0.2% from September to October while Atlanta actually saw an increase of over 9.7%.

      Despite the common fears of a housing market crash, some experts believe talks of a crash are mostly hype. Ryan Frazier, CEO of Arrived Homes, told Benzinga, “It’s impossible to predict the future, but concerns about a housing crash are over-exaggerated. While many markets will see price decreases, we don’t see another 2008 crash repeating. There is plenty of institutional capital backing the market, and current homeowners should be able to service their debt given the tighter credit requirements, unlike in 2008.”

      Regardless of home prices, investment companies like Arrived and Haven are mainly focused on the strength of the rental market. While the median sale price for homes in the U.S. fell 6.2% from May to September, the median monthly rent price fell by only 0.2%, according to data from Rent.com.

      Eric Kim, Haven’s managing director and head of capital markets, added, “The fundamentals of the single-family rental industry remain solid, and J.P. Morgan believes, as we do, in the strength and viability of the asset class along with our ability to execute.”
      …
      https://finance.yahoo.com/news/sign-housing-market-hit-bottom-165447193.html

      1. “Last year, a similar glut of rental properties cropped up without the requisite demand to match, leading homeowners to slash rental prices by up to 30%.“

        Heh heh heh…here’s to hoping Megabank, Inc. loses their azz on their rental property venture, just like they did last time on subprime.

      2. Interesting – but what about all the housing supply coming onboard. Is it that folks dont want to rent older stock.

        While the median sale price for homes in the U.S. fell 6.2% from May to September, the median monthly rent price fell by only 0.2%, according to data from Rent.com.

      3. Single-family rental market slammed by headwinds
        Some nonbank lenders, however, are positioned to profit from the market gale
        January 13, 2023, 5:00 am
        By Bill Conroy

        The nation’s single-family investment-property sector and the lenders serving those borrowers face some major challenges in 2023 as rent growth is slipping, vacancy rates growing, home-value growth faltering, and a possible recession looms.
        …
        https://www.housingwire.com/articles/single-family-rental-market-slammed-by-headwinds/

      4. What a Housing Downturn Means for Single-Family Rental Portfolios
        While much capital stalled earlier this year, those with liquidity and friendly relationships with their lenders can strike while the iron is hot and acquire value-add assets for their single-family portfolios.
        Shanti Ryle | Apr 28, 2023

        Shifting interest rates and general concern over how a hawkish Fed will impact the financial markets have affected the housing market, unearthing opportunities for investors to enter the single-family housing space. Last season’s interest rate hikes and sky-high prices stalled many would-be owner-occupants—particularly in younger generations—directing their attention to the rental market instead. But these tenants don’t want to compromise on the desirable space, privacy and safety of houses, leading to increased demand for single-family homes. The savvy investor may see plenty of opportunities to take advantage of a paused market and enter the sector at discounted rates, despite a potential housing crash.
        …
        https://www.wealthmanagement.com/sfr/what-housing-downturn-means-single-family-rental-portfolios

      5. JP Morgan Plans To Acquire $1 Billion In Single-Family Rentals

        All part of the plan for the wealthy globalists to own and control all assets and everything needed for a human to survive. The entire US economy is being hollowed out and turned into one giant “company store” model.

        1. wealthy globalists

          Don’t forget for a moment that we fund this every time we charge something on a credit card (even if you don’t carry a balance), buy a car on credit, buy products from Debt Donkey companies or go the death pledge on a house.

          1. +1 . Folks are happy to give their money to these folks, then complain about what they do with it

  3. ‘But small- and medium-sized subcontractors like us hardly win bids. The real estate developers have repaid us some cash, but most of the rest still require us to accept some of their presale dwellings as payment’

    Well…

  4. This is also important – everyone talks about QE and Fed spending. But $430 in ‘extracted’ equity is also huge. No wonder folks could buy $60K trucks and other spending – while at the same time keeping the housing bubble going.

    The New York Fed took special note of how housing-related debt has performed since 2020, when the pandemic struck and the Fed slashed rates to near-zero levels and bought bonds that helped ensure mortgage rates were super-low, which in turn sparked a huge surge in home prices and purchases. The bank noted that 14 million mortgages were refinanced between 2020 and 2021, some five million borrowers extracted $430 billion in home equity during the period.

    1. “But $430 in ‘extracted’ equity is also huge. No wonder folks could buy $60K trucks and other spending – while at the same time keeping the housing bubble going.”

      A lot of equity extracters may soon find themselves submerged in a sea of debt.

      1. “submerged”

        I love the metaphor of drowning to describe these people. And even better, they did it to themselves.

      2. No wonder folks could buy $60K trucks

        That’s just a piddly half ton these days. If you want a “real man’s truck,” you need go big with $100k. Seems sustainable, right?

        1. I must admit, I do lust for our trim carpenter’s power wagon a little bit each time I see it.

    2. No wonder folks could buy $60K trucks and other spending

      IIRC, prior to the previous bust, 40% of all car sales were financed with HELOCs.

  6. “homeowners are furious because the value of their homes has more than doubled, which means their property taxes will reflect that”

    The winnahs?

    What happened to #MuhEquity? You couldn’t shut up about it, and what financial geniuses you all were.

    1. “their property taxes will reflect that”

      The takers need their raises, gold plated insurance and fat pensions.

      There’s only one place to get it, the makers.

  7. Guess what happens to birth rates when it is too expensive to rent or own a place?

    They plummet.

    1. California’s Plunging Birth Rates
      photo – Mother Kissing Forehead of Baby in Her Arms
      Hans Johnson

      California’s birth rate has reached near-record lows, contributing to a slowdown in the state’s population growth and portending decades of slow growth to come. What is—and is not—driving the state’s lower birth rates?

      California’s birth rate (births per 1,000 residents) is at its lowest level in more than 100 years. The number of births has fallen from a peak in 1992 of 613,000 to 420,000 in 2021 (2022 is on track to be similar to 2021).

      Moreover, California’s total fertility rate (the number of births a woman will have in her lifetime) is now the lowest since records have been kept. A rate of 2.1 children per woman is necessary to maintain a population at its current level (immigration and migration aside). California and the nation had fertility rates near population replacement levels in 2008, but every state falls below those levels today. California has fallen faster than most, dropping from 2.15 to 1.52—that’s from 17th highest to 43rd highest. California’s decline is just behind Arizona, Nevada, Utah, and Idaho. The lightly populated upper plains states (the Dakotas and Nebraska) now have the highest fertility rates in the country.
      …
      Without migration, California and the United States will experience population losses as people age and deaths outnumber births. Fewer children will mean declining K–12 enrollment and more school closures. Longer term, it will weaken demand for infrastructure, including housing and transportation.
      …
      https://www.ppic.org/blog/californias-plunging-birth-rates/

      1. “Without migration, California and the United States will experience population losses as people age and deaths outnumber births.”

        Not to worry, Biden and the Dems have a plan.

        1. “How is that NOT treason?!”

          I guess the same way firing all the IRS agents on Hunter’s case the same day (today) isn’t treason.

          1. Our county is F@#$ed. California now wants to give illegal immigrants unemployment benefits. Shoot me now or wake me when it’s over.

          2. Are we even going to make it to Nov ’24, or will the Deep State just declare that we are an empire while they tear up the constitution?

  9. Anaheim 92808 – off 33% to $710,000.”

    Affordable housing comes to Mickey Mouse’s neighborhood!

    Unfortunately these are plain, small, nondestinct post-WWII houses. It’s hard to imagine paying nearly $1 million for one of them.

    “Orange 92866 – off 30% to $857,500. Laguna Beach 92651 – off 29% to $2.08 million. Yorba Linda 92887 – off 27% to $923,500. Santa Ana 92706 – off 27% to $827,500. Silverado 92676 – off 25% to $735,000. Corona Del Mar 92625 – off 21% to $2.65 million. Cypress 90630 – off 20% to $825,000. Costa Mesa 92627 – off 19% to $990,000. Dana Point 92629 – off 18% to $1.2 million.”
    …
    “Countywide, the median selling price was $990,000 in March – off 3% in a year, according to CoreLogic data.

    How can so many zip codes with losses over 20% add up to an overall loss of 3%? I need to review my relitters math.

    1. “Costa Mesa 92627 – off 19% to $990,000.

      This house below (1718 Labrador Dr) is located across the street from the house that I grew up in. My parents bought our house in 1970 for $30K, it appreciated to the $170,000s during the inflationary late 70s and was sold by my parents in the pretty much dead housing market of 1992 for $240,000.00 after my father retired.

      https://www.redfin.com/CA/Costa-Mesa/1718-Labrador-Dr-92626/home/3693968

      Last bubble (2006-07) the price for homes on the street got up to the mid $500,000.00. Evidently, one can’t get into the neighborhood now for under a $million.

      When friends asked me where I lived I would reply the slums of Mesa Verde because we were situated on the outskirts of the much nicer homes located on or nearby the local golf course. The guy who use to live in the Redfin.com listed house had a restored Indian motorcycle with a suicide clutch that he claimed was found off the Long Beach pier and that he restored it in the 50s when he was in the Navy. Probably BS but it was a good story and he was a good mechanic which proved helpful as I was beginning to race motorcycles and was happy to accept any assistance offered.

      I’ve lost track of the neighbors over the years so I can’t report on the neighborhood as it exist today. However, the grammar school located nearby on Giesler Street is listed as being over 40% “Asian” and what was once the local grocery store (Market Basket) is now advertised as an asian market.

      1. This house below (1718 Labrador Dr)

        That looks a lot like my parent’s house in Fountain Valley, which they sold in the 1970’s.

      2. At the estimated 1.36 M price, the monthly payment estimate from Zillow is below…assuming no HOA LOL

        Monthly cost
        Estimated monthly cost
        $8,687

        Principal & interest
        $6,844 (at 6.53% 30YR)

        Mortgage insurance
        $0 (assuming 20% down)

        Property taxes
        $1,371

        Home insurance
        $472

        HOA fees
        N/A

        Utilities
        Not included

        1. Estimated monthly cost
          $8,687

          Which is $104,000 per year how many households in Costa Mesa gross that much per year?

          Per wikipedia: “During 2009–2013, Costa Mesa had a median household income of $65,830”

          How long until half of California either leaves or becomes homeless?

  10. Credit & Debit
    Updated on May 15, 2023 11:50am EDT
    Household debt hit record $17T last quarter as inflation squeezes Americans
    Credit card debt hovers near record high in first quarter, bucking typical trend
    By Megan Henney FOXBusiness
    Inflation has ‘annihilated’ the consumer: Jeff Sica

    Circle Squared Alternative Investments founder Jeff Sica explains why he is looking at Walmart and Target earnings as an indicator for consumer health on ‘Varney & Co.’

    Americans racked up more debt at the beginning of 2023 – and a growing number of households fell behind on payments for several types of loans, according to a New York Federal Reserve report published Monday.

    In the first three months of 2023, total household debt surged to a fresh record of $17.05 million, an increase of $148 billion, or 0.9% from the previous quarter. Balances are now $2.9 trillion higher than they were at the end of 2019, before the COVID-19 pandemic began.

    Debt largely grew across the board.

    Mortgage balances jumped by $121 billion to $12.04 trillion at the end of March, even as mortgage originations plummeted to the lowest level since 2014. Auto loan balances, meanwhile, rose by $10 billion in the first quarter – bucking the typical trend of balance declines in first quarters. Student loan debt also posted a modest increase, rising to $1.6 trillion.
    …
    https://www.foxbusiness.com/economy/household-debt-hit-record-last-quarter-inflation-squeezes-americans

    1. “Household debt hit record $17T”

      That’s $51K per household…and a lot of interest payments!

      1. Another fun factoid

        Current. * As of May 1, 2023, the U.S. Treasury’s official figure for the debt of the federal government is $31.5 trillion, or more precisely, $31,457,398,880,451. [7] This equates to: $93,988 for every person living in the U.S.[8]

        1. the debt of the federal government

          But raise the ceiling because they’ve done it every time before!

  11. They used to say “government shut down” in the past, but now they are just saying “us default.” Curious, why such a sudden change in the language? I am guessing they are just running out of words to scare the masses. Or is it really different this time?

    1. Their audience is of a mind that failure to increase the credit limit ends in failure to make the payments.

      Liars talking to debtors in their own language.

  12. I continue to wonder whether residential real estate prices will reach a more fundamentally sound level, with the top end being median home price to median income ratio as 3:1.

    It’s been something like 30 years since we’ve seen that and I’m just so skeptical that the fed will allow it to happen when the recession inevitably shows up in economic data.

    1. the fed will allow it to happen

      It’s also an individual choice. My house was less than 1/3 my income at the time. My choice.

      It will end when greed, stupidity and mania end, one person at a time.

      1. It actually could end with a lot of people at a time, in a classic race to the exit.

    2. “…home price to median income ratio as 3:1.”

      It was traditionally in the low end of the 2 to 3 range in the Midwest, and 5 to 6 on the coasts. This was before the Housing Bubble began inflating, circa 1996.

    3. The Fed may not have a choice this time around if the dollar hegemony is truly at risk from the BRICS folks.

  13. RE: Kumar was ‘artificially inflating house prices during a period of high inflation.’

    Were they expecting house prices to go down during high inflation, or what?

    Price inflation is not an act of God but the logical outcome of monetary inflation by legalized currency counterfeiting by the Central Banks and no one is holding them accountable.

    Ever since Nixon abandoned the gold standard in 1973 and turned the US dollar overnight into an inherently worthless piece of paper representing nothing real (like the stock certificate of a defunct company), the prices of everything measured by it from houses to the Big Mac have risen roughly tenfold which means it is the dollar which has lost 90% of its purchasing power and is not worth a dime any more, to paraphrase the great philosopher Yogi Berra.

    Price is what the highest bidder is willing to pay and there is nothing “artificial” about price setting. The agent could set whatever price he wanted to but as long as he was not forcing them to buy at gunpoint, it is their own fault to have willingly paid those prices expecting greater fools to buy from them at even higher prices for which they are now holding him responsible with a display of convenient righteousness in order to hide their red-faced embarrassment over their own decisions.

    The sellers were not blaming him for those high prices, though . . .

  14. The wildest part to me about all this is the real estate agency’s claims that Kumar wasn’t acting like he was supposed to.

    Last weekend I attended an open house. Immediately when I entered the scantily clad realtor lady came to tell me they had multiple offers and my best offer was due by 5pm.

    I asked her how many offers they have. She smiled, and told me she cannot tell me. I smiled and stopped talking to her.

    3. Tell them you are just scouting future foreclosures so you can be ready when whoever buys it walks away. They will pretend to be insulted but privately it will sting.

    1. RH stock plunges 8% after Warren Buffett’s Berkshire Hathaway dumps its entire stake in the home furnishings company
      Matthew Fox
      May 16, 2023, 10:35 AM PDT
      Charlie Munger, left, and Warren Buffett, right
      Charlie Munger and Warren Buffett. Nati Harnik/Associated Press

      – RH stock price plunged 8% on Tuesday after Warren Buffett’s Berkshire Hathaway sold its entire stake in the home furnishings company.

      – Berkshire Hathaway began building its RH stake in the third quarter of 2019, and it was last worth about $575 million.

      – Shares of RH have plunged 67% from their post-pandemic high, but Buffett still likely made a profit on the company.
      …
      https://markets.businessinsider.com/news/stocks/rh-stock-price-warren-buffett-berkshire-hathaway-sells-restoration-hardware-2023-5

    2. Home Depot hits the brakes: Three-year robust sales run ends amid pull back on home improvements
      By Nathaniel Meyersohn and Parija Kavilanz, CNN
      Updated 12:42 PM EDT, Tue May 16, 2023
      A general view of the Home Depot branch on September 23, 2022 in Philadelphia, Pennsylvania. (Photo by Tim Nwachukwu/Getty Images)

      New York CNN —

      Home Depot couldn’t keep its protracted robust sales streak going any longer. The home improvement chain reported a dismal quarter as consumer spending on home improvement projects – which was buoyed by the stay-at-home pandemic lifestyle – come to a screeching halt.

      The retailer posted disappointing sales for its first quarter and lowered its outlook for the year after customers slowed their spending. Home Depot (HD) said sales fell 4.5% at stores open at least a year during its latest quarter, and its income decreased 6.4% from the same stretch a year ago.

      Total revenue for the quarter slipped 4.2% versus a year ago, to $37.3 billion. The retailer also cited falling lumber prices and weather-related challenges, including heavy rains in California during the period, for denting its sales.

      “After a three-year period of unprecedented growth for our sector, during which we grew sales by over $47 billion, we expected that fiscal 2023 would be a year of moderation for the home improvement market,” Home Depot CEO Ted Decker said Tuesday.

      The company also lowered its sales expectations for the year. It expects sales to decline between 2% and 5% in 2023 from a year prior.

      The change in the tide for Home Depot comes after a long period where it was among a few big winners during the pandemic. Spending on homes became a priority for families as many Americans suddenly found themselves living, working and studying from home.
      A Gap store in San Francisco, California, US, on Thursday, April 27, 2023. Gap Inc. will eliminate about 1,800 positions as part of a broader restructuring plan that aims to speed decision-making and reduce overhead expense, the retailer said Thursday.

      American consumers are growing worried about a US debt default

      But just as people have returned to some semblance of a post-pandemic life, for Home Depot, it’s been less of a celebration. The money that was perhaps previously earmarked for spending on fixing and beautifying the home is now being spent more freely on eating out, traveling, shopping and other indulgences.

      As a result, Decker told analysts during a call held Tuesday to discuss the company’s earnings that business from both its DIY customers and professional contractors in the quarter was less than expected, as consumers continue to take on smaller home improvement projects. In addition, higher interest rates and inflation are taking a toll.
      …
      https://www.cnn.com/2023/05/16/business/home-depot-shoppers-pulling-back/index.html

  17. Does it serm incredible how much home prices have already dropped in some locales, despite the low for-sale inventories?

    Just imagine how fast prices may fall if investors eventually decide to cut and run, rather than ride the falling knife all the way to the CR8R floor!

    1. Yahoo Finance
      Housing expert: Sellers are ‘just bowing out’ this spring
      Gabriella Cruz-Martinez
      Tue, May 16, 2023 at 9:37 AM PDT·
      3 min read

      Elevated mortgage rates are still keeping some homeowners from listing this spring, despite market conditions tipping in their favor.

      According to Realtor.com, there were 21.3% fewer homes listed for sale in April compared with the same month last year, largely due to potential sellers feeling ‘rate-trapped’ by their current mortgage. A separate study by Altos Research revealed that inventory of single-family homes for sale in the U.S. fell to 419,000 for the week ending May 8, during a period when listings typically inch up.

      Said Redfin chief economist Daryl Fairweather on Twitter: “Homeowners are quiet quitting the housing market.”

      For homeowners, the decision to stay put doesn’t come as a surprise; high rates and home prices make, for many, the prospect of trading up unappealing — especially folks with low rates.

      At the same time, the lack of supply has worsened affordability for potential homebuyers as demand picks up. “Homeowners were able to lock in 3% mortgage rates during the pandemic and they don’t want to give those up, especially if they have to move they’re going to be facing a 6.50% interest rate,” Fairweather told Yahoo Finance Live (video above).

      “They’re just bowing out,” she added. “New listings are down over 20% from last year, which is really constricting inventory and means that if you’re a buyer, there isn’t much to choose from, and you’re still going to be competing for those really desirable homes on the market.”
      …
      https://finance.yahoo.com/news/housing-expert-sellers-are-just-bowing-out-this-spring-163735234.html

      1. As a renter, if I bow out of the market, that’s just another 12 month lease. As a borrower, that’s another 12 months of utilities, maintenance, insurance, and mortgage costs. At least home values always go up, so HODLing is worth it.

        I’m going to bow out of the market this spring and save room for other people that are just willing to work harder for it!

  18. I just wanted to follow up from yesterday that I have always owned american cars, after Michigan voted for Biden and full on democrat after 2022, F Michigan. Trump did so much for that state and if they repaid him by voting democrat, then screw Michigan. I bought Japanese just to screw over democrats in Michigan, who btw, just repealed their right to work laws. Screw that state and those voters. My car was built in the US in a free state. F Michigan and I mean that living less than 90 mins away from the Michigan state line.

  19. In case there is a recession later this year, will it go down in history as the most widely predicted on record?

    1. The good news is that stocks will do well, even if earnings are squashed…or so I heard.

      1. Markets
        Wall Street legend Paul Tudor Jones says a recession could hit the US this fall
        Jennifer Sor
        May 16, 2023, 12:09 PM ET
        Paul Tudor Jones, founder and chief investment officer of Tudor Investment Corporation, speaks at the Sohn Investment Conference in New York, May 5, 2014.
        REUTERS/Eduardo Munoz/File Photo

        – The US could be in for recession as soon as this fall, Wall Street legend Paul Tudor Jones said.

        – Jones pointed to the boom in debt and asset prices in recent years, which suggests a downturn is imminent.

        – But even if the economy slows, the stock market could still do well, he said.
        …
        https://markets.businessinsider.com/news/stocks/paul-tudor-jones-us-recession-economic-outlook-asset-bubble-stocks-2023-5?amp

        1. “But even if the economy slows, the stock market could still do well, he said.”

          I know this time is different, but for the record, stocks did not do well when the wheels fell off the Wall Street bus in fall 2008, at which point it came to light that the US economy had entered a recession in December 2007.

    2. Inversion Of The Yield Curve: Prediction Of The Next Economic Downturn From Historic Pattern
      by Alphanso, Benzinga Contributor
      May 15, 2023 3:49 PM | 3 min read

      The inverted yield curve has predicted the last seven recessions. And it is inverted again.

      2023 kicked off with a promising start for the markets. With investors betting on a pause in interest rate hikes by the Fed, there was genuine anticipation for a slowdown in inflation growth. However, after the reliant US economic data suggested persistent inflation, most investors were inadvertently pushed to the corner, resulting in a steep market decline.

      Earlier this month, Bloomberg reported interest spread between the 2-year and 10-year Treasury had reached 86 basis points, the widest since the 1980s, resulting in a more intense yield curve inversion.
      …
      https://www.benzinga.com/23/05/32404484/inversion-of-the-yield-curve-prediction-of-the-next-economic-downturn-from-historic-pattern

    3. recession later this year

      We’ve been in one since last year. Q3 GDP was manipulated (something to do with trade IIRC) for the mid-term election.

    1. A lot of offices are still empty — and it’s becoming a major risk for the economy
      May 16, 20235:32 AM ET
      Arezou Rezvani
      4-Minute Listen
      The 777 Tower in downtown Los Angeles’ financial district is one of two buildings that Brookfield, the city’s largest office owner, defaulted on this year.
      Arezou Rezvani/NPR

      The next big potential risk to the U.S. economy may be lurking in corporate towers across the country’s downtown districts.

      With many people still working from home, companies are cutting back on so much office space that it threatens to unleash even more headwinds for the U.S. economy.

      An unraveling of the office sector spells trouble not only for banks that are owed an estimated $1.2 trillion in outstanding office loan debt, but also for countless small businesses that depend on white-collar customers as well as cities that benefit from the property taxes tied to office buildings.
      …
      https://www.npr.org/2023/05/16/1174938708/commercial-real-estate-property-offices-work-from-home-remote-work

      1. Elon Musk says remote work is “morally wrong” and people need to “get off the goddamn moral high horse with the work from home bullsh!t.”

  21. The trouble with a domestic crackdown on an international crime ring is that they can just move their operations offshore.

    1. The Financial Times
      Cryptocurrencies
      US crypto clampdown pushes exchanges to go offshore
      Overseas rivals taking market share with less fear of regulatory reprisals
      Coinbase logo on a phone
      Nasdaq-listed Coinbase said securing a licence in Bermuda would increase ‘economic freedom and opportunity’ for its customers
      Scott Chipolina in London May 15 2023

      US cryptocurrency exchanges are setting up offshore venues in a hunt for overseas customers and to escape being ensnared in a regulatory blitz from US authorities.

      Two of the largest venues, Nasdaq-listed Coinbase and Gemini, have stepped up plans to launch marketplaces outside the US following enforcement cases against domestic crypto companies.

      US regulators have toughened oversight of the digital assets market following the failure of lenders such as Celsius Network and FTX, the exchange run by Sam Bankman-Fried. Besides targeting individuals, watchdogs have also deemed some products illegal in the US and forced companies to pull lucrative business.
      …

  22. Can anyone who understands kindly explain why real estate investors prefer to HODL their highly leveraged investing losses rather than cutting them before they lose a lot more?

    ‘Tis a puzzlement.

    1. Yahoo
      2023’s Housing Correction Could Be The Largest Since Post-WWII
      Dawn Allcot
      Mon, May 15, 2023 at 7:31 AM PDT·2 min read

      If you have been waiting for prices to drop to buy a house, 2023 could be your year. However, the fall in housing prices doesn’t bode as well for current homeowners — or the overall U.S. economy.

      Housing prices in October 2022 were 38.1% higher than they were at the start of the pandemic in March 2020, based on Fortune’s figures. However, they started to fall in November 2022, with prices down 2.4% from the peak in June 2022, according to the Case-Schiller National Home Price Index. Experts are predicting another 10% to 15% drop by the second or third quarter of 2023, according to multiple sources.

      Several other factors point to a further home price correction. U.S. home construction fell for the third straight month in November, Reuters reported. Single-family housing starts fell by 4.1% in last fall, according to a Commerce Department report.

      Additionally, institutional homebuyer YieldStreet reduced buying levels by 90%, while Blackstone-owned Home Partners of America also slowed their purchases. “We’re pretty much on pause across all [home buying] strategies,” Tejas Joshi of Yieldstreet told Fortune.
      …
      https://finance.yahoo.com/news/2023-housing-correction-could-largest-165335648.html

      1. “2023’s Housing Correction Could Be The Largest Since Post-WWII”

        Correct me if I am wrong, but I believe that includes several major CR8R events, including the 2006-2012 housing bust that led to multiple bailouts, including Quantitative Easing to purchase mortgage backed securities.

        “We’re pretty much on pause across all [home buying] strategies,”

        The dissapearance of the institutional knifecatchers represents a major drop in housing demand and a big gap in liquidity. Remember when the institutional investors recently had a standing offer to snap up anythiing that came on the market? I do.

      2. “However, they started to fall in November 2022, with prices down 2.4% from the peak in June 2022, according to the Case-Schiller National Home Price Index.”

        According to more timely data often reported here, they started to fall after May 2022. Using Case-Schiller to detect turning points is like driving while looking through the rear view mirror.

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