Gone Are The Days Of A Seller Just Naming A Price Because Their Home Has Four Walls
A report from Fortune. “Fed Chair Jerome Powell took the podium on Wednesday to announce that the central bank would hold interest rates flat in June. Powell didn’t rule out future hikes, and called this move a ‘skip.’ At the end of November 2022, Powell said a “housing bubble” had formed during the Pandemic Housing Boom. ‘Coming out of the pandemic, [mortgage] rates were very low, people wanted to buy houses, they wanted to get out of the cities and buy houses in the suburbs because of COVID,” Powell said in November. ‘So you really had a housing bubble, you had housing prices going up [at] very unsustainable levels and overheating and that kind of thing.'”
USA Today. “‘What we’d like to see is credible evidence that inflation is topping out and begging to come down,’ Powell said. ‘We have to get inflation down to 2% and we will but we just don’t see that.’ He added, ‘Perhaps more restraint (through higher rates) will be necessary than we thought at the last meeting.'”
11 Alive in Georgia. “‘If you look at a couple of trends though, one of them is that… if you compared May to a year ago, average home prices actually have fallen,’ said Emory University Goizueta Business School Associate Professor Raymond Hill. ‘We had a peak that had been going up lately, but year-on-year home prices fell. They fell the most for the biggest houses… I don’t think they fell at all for smaller houses.'”
KXAN in Texas. “Both sellers and buyers are seeing ‘more opportunity’ in the Austin housing market, according to the Austin Board of Realtors. The median price for homes sold in May was $467,500 across the Austin metro, a decline of 15% year-over-year. Since last May, the median sales price within Austin city limits fell from $667,000 to $550,000, a 17.5% decrease. In the same timeframe, median prices have dropped 18.5% in Travis County as a whole, 14.9% in Hays County, 13.6% in Williamson County, 9.6% in Caldwell County and 7.7% in Bastrop County.”
The Coastal View in California. “Gone are the days of a seller just naming a price because their home has four walls. As you look at the median home price YTD through May there is a 7% drop comparing the first five months of 2023 to 2022. The big news over the last few weeks is that there are more listings! We have 20 properties available for sale and nine currently under contract in Carpinteria as of May 13, 2023. For Carpinteria specifically, we have had 33 homes and condos sales for the first five months of 2023. This is a 37% decrease compared to 2022 total sales of 52.”
From Market Place. “In yesterday’s Consumer Price Index report, we saw that the cost of rent was up 8.7% year-over-year in May. That sounds like a lot, but it doesn’t fully reflect where rental prices are headed. A lot of long-awaited new apartments are finishing construction, says Taylor Marr at Redfin. ‘Now the new supply is here. And it’s continuing to come. There’s nearly a million rental units right now that are under construction,’ said Marr.”
Wealth Management. “The borrowers who feel the squeeze the most took out floating-rate, short-term debt just before rates began to rise, when high-leverage capital was easily available and valuations of apartment properties were at their peak. Many of those loans are set to come due in the second half of 2023 and early 2024—and fatigued lenders are unlikely to offer extensions. ‘Those are all starting to come due in the latter half of this year and the beginning of next year—so you’re really just starting to see the beginnings of borrowers acting to get out of those deals,’ says Kyle Draeger, a senior managing director for CBRE Multifamily.”
“ANAX Real Estate Partners plans to provide $200 million in rescue capital over the next 18 months to apartment properties in New York City that need an infusion of capital. Each of the properties that ANAX has considered so far is a partially-built multifamily development that no longer has enough capital to finish construction. In some cases construction has stopped entirely, and ANAX is working with at least one construction lender who seized an unfinished building.”
“They are similar in that in many cases, apartment owners have realized the value of their properties have changed as interest rates rose – taking some of their equity with it. ‘In many cases, if you can get 50 percent of your equity back, isn’t that a win?,’ says Eric Brody, founder of ANAX. ‘We realized that with the way that the interest rates went up, I don’t care what the net operating income was, it did not cover the higher interest rate.'”
The Real Deal on Illinois. “A venture that owns a Rolling Meadows office building has hammered the final nail in the coffin on its investment, as it plans to hand the keys to the lender on a $23 million debt and kiss the property good-bye. The venture, led by Chicago real estate investor Chet Balder, plans to give back the 12-story, 256,000-square-foot office building at 1600 Golf Road, Crain’s reported. Balder lost one of its largest tenants last year and stopped making payments on a $20.6 million loan balance tied to the property earlier this year. Rather than trying to revive its holding, the Balder venture isn’t planning to fight its lender to hold onto the property — a common theme amongst office landlords who have struggled to overcome the remote work movement ramped up by the pandemic.”
The Globe and Mail. “While many Canadians still aspire to own a lakeside haven or oceanfront retreat, the frenzy to buy has subsided to a languid search. Anita Latner, broker with Anita Latner Realty Inc., says the sprint to find a safe haven that spurred on competition in 2021 has slowed to a calmer pace in many parts of Ontario cottage country. ‘It was really panic buying during the pandemic,’ she says of the frenzy that saw 10 or 15 bidders vying for one property in some cases. During the winter months of 2021, buyers were trudging through knee-deep snow to view properties and submitting unconditional offers without the benefit of a home inspection. In some areas, prices skyrocketed by more than 100 per cent in one year.”
“Ms. Latner says some of the more impulsive buyers during that time may have discovered they’re not really cottagers, while others may have discovered flaws such as a weedy shoreline or water too shallow for swimming when the snow melted. The spring market so far has been a little bit sluggish, in her opinion. Some properties are selling quickly at good prices while others are languishing if they are priced too high. ‘A lot of the sellers still have pandemic eyes and the buyers are over it.'”
“In a swathe of Ontario cottage country that includes waterfront property sales tumbled 32.9 per cent in the first four months of the year compared with the same period in 2022, according to the Lakelands Association of Realtors. The median price in April was $973,500 for a waterfront property, which marks a decline of 19.2 per cent from the median price of $1.205-million in April of last year. In April of 2020, the median price was $535,000, according to Lakelands.”
From The I in the UK. “A serious housing market downturn is in progress. So what now? In 2017 I bought a flat with my ex-boyfriend. It’s exactly the sort of home I wanted to live in, so I was over the moon. It has also spared me years of extortionate rents and dodgy landlords, giving me the sort of stability that actually makes it possible to build a life. But, while I have no regrets, I am currently in negative equity, having to pay the bank to remortgage and buy my former boyfriend out and, when all is said and done, pretty sure that it will turn out to be the worst financial decision I ever made.”
“Worse than using credit cards at university. Worse than that time I took out a personal loan to pay letting fees before they were banned. Worse than the one time I used a Buy Now, Pay Later scheme (to buy a Dyson AirWrap, if you’re interested. Would recommend). Why? Because house prices are falling, and interest rates are rising. To know that the housing market is in trouble you don’t need to know that the average house in the UK currently costs around nine times’ average earnings, based on data as of 30 November 2022. Or that the last time house prices were this expensive relative to average earnings was in 1876 (nearly 150 years ago). Or, even, that core inflation is embedded, and lenders are increasing their mortgage rates.”
“All you need to do is look in an estate agent’s window in the cold light of day in London and ask yourself if a one-bedroom flat like mine could ever be worth nearly half a million pounds. If it ever was?”
From News.com.au. “More than half of Australians say Philip Lowe should lose his job after jacking up interest rates, according to a new poll. The Resolve Political Monitor survey of 1606 voters conducted for The Sydney Morning Herald found 52 per cent believe the embattled Reserve Bank governor should get the boot when his term expires in September. Asked who is primarily responsible for keeping inflation down, 33 per cent of voters in the Resolve Political Monitor Survey said it was the RBA — but 44 per cent pointed the finger at the federal government.”
“Writing in The Australian Financial Review last week, economist Steven Hamilton argued ‘the government’s claims this is all someone else’s fault are increasingly untenable,’ saying ‘there should be no doubt in the mind of any economist’ that the budget’s energy subsidies and other spending would drive up inflation.'”
“But Prof Hamilton noted the root of the problem went back much further. ‘There’s a longer-run story — we certainly haven’t experienced rates of this level since around 2007, so really over the past 15 years we’ve had a period of very low interest rates that I think put in people’s minds the notion that it would be like that forever,’ he said. ‘People buying houses now for the first time have never experienced high or even moderate interest rates in their working lives. I think this is why this kind of moderating interest rate environment has come as such a shock, both psychologically but also economically. People did make long-run financial decisions on the basis that things would be like that forever.'”
Stuff New Zealand. “Homeowners in suburbs with the biggest house price falls need not panic over finding themselves in negative equity, while the current housing market provides a gilt-edged opportunity for first time buyers, one expert says. Fresh off the back of CoreLogic’s latest Mapping the Market analysis of the hardest-hit suburbs, OPS Partners economist Ed McKnight joins Newsable to explain negative equity. ‘Negative equity is when the value of your mortgage is larger than the value of your house,’ he explains. Those homeowners who find themselves in this situation should stay the course, McKnight advises.”
“‘Let’s say you purchased at the top of the market, chances are you’re probably not going to move house for another five odd years from today. So there is a very good chance that by the time you come to sell that property it will likely have increased in value and recovered it,’ he said. McKnight thinks there are ‘a lot of smart young people out there’ looking at the decline in house prices in Auckland and Lower Hutt (22% and 30% respectively), ‘saying I think we’re going to buy now because A, we can afford to, and B, there are a lot more options out there on the market.'”
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‘Since last May, the median sales price within Austin city limits fell from $667,000 to $550,000, a 17.5% decrease. In the same timeframe, median prices have dropped 18.5% in Travis County as a whole, 14.9% in Hays County, 13.6% in Williamson County, 9.6% in Caldwell County and 7.7% in Bastrop County’
If Austin was a ‘pandemic boomtown’, why are these huge sh$thole counties sinking like a turd in a well?
‘Gone are the days of a seller just naming a price because their home has four walls’
Sound lending!
Lets hope no one overpay in that environment! Don’t forget love letters and feeding the squirrels. You got to roll with it.
Those counties were just fine before the techies and greedy investors got there. The Hill Country is beautiful and you could get a nice small ranch that was affordable. The area is now unrecognizable from just 10 years ago.
Dallas just banned STR’s in residential neighborhoods. Whoopsie!!!
https://www.youtube.com/watch?v=OxJO72fHjHE
‘In many cases, if you can get 50 percent of your equity back, isn’t that a win?’
They are winnahs! Eric.
‘We realized that with the way that the interest rates went up, I don’t care what the net operating income was, it did not cover the higher interest rate’
How do those 5% cap rates look now?
‘They are similar in that in many cases, apartment owners have realized the value of their properties have changed as interest rates rose – taking some of their equity with it. ‘In many cases, if you can get 50 percent of your equity back, isn’t that a win?’
This is where the rubber hits the haircut. Behold, the magic pixie dust that is cap rates: works the same in reverse.
You will own nothing.
its coming TRUE………..remember my fathers kenwood stereo had the instruction book with a 2or 4 page schematic and parts list so the local hifi techie could fix it from radio shack parts…….
The Biden administration told car manufacturers not to comply with a state law that would allow independent auto shops and car owners the ability to fix their own vehicles.
https://www.yahoo.com/news/biden-administration-tells-car-manufacturers-203000865.html
Biden administration DESTROYS right to repair in the most corrupt way possible 😞 Louis Rossmann
https://www.youtube.com/watch?v=2nXVljRUnoc
How much was this one worth to the big guy? He doesn’t do these things for free…
Making it onerous to repair vehicles is but one way of getting them off the road sooner than later, and as we all know here, they are coming for our cars.
‘So you really had a housing bubble, you had housing prices going up [at] very unsustainable levels and overheating and that kind of thing.’
Bravo!
“‘What we’d like to see is credible evidence that inflation is topping out and begging to come down,’ Powell said. ‘We have to get inflation down to 2% and we will but we just don’t see that.’ He added, ‘Perhaps more restraint (through higher rates) will be necessary than we thought at the last meeting.’”
How does a risk asset gambler find cheer in statements like these?
The Fed is being 2 faced. They are raising rates while still pumping out liquidity. My thought is they are hoping for stagnation and a soft landing
Re: “What we’d like to see is credible evidence that inflation is topping out”
And what does that exactly mean? The prices will remain at their currently stratospheric levels, only going up at a slower pace like a terminally obese patient saying thank God I am not getting even fatter?
For your much-needed education Jerry, what is needed is not the endlessly parroted 2% inflation (where on earth did you get that number, anyway?) but a bone-crunching Deflation and remember that, back in 1971, a raging 2% inflation had scared Nixon enough to slap on wage-price freeze.
Lord. what fools these mortals be – Shakespeare
“The lady doth protest too much, methinks.”
+1
I estimate the cost of many food items I buy (or used to buy) have easily gone up 40-60%.
I estimate the cost of many food items I buy (or used to buy) have easily gone up 40-60%.
Have you tried to eat zee bugs?
40-60%
Everyone I talk to says the same thing. Many tell me that beef is off the menu in their homes, as they can’t afford it.
Hubby just mentioned peanut butter is scarce on grocery store shelves. Cheap protein?
I read something about CostCo shoppers skipping the beef and buying more chicken. CostCo shoppers tend to be middle class to upper middle class, from what I have observed. If they can’t afford beef then things aren’t as rosy as the regime claims they are.
this week here at stop and shop has prime beef in air tight sealed packs $7.99lb , they put in on sale for $3.99 then i get another $1 off pe pound with a digital coupon…..the catch….limit 2 and use or freeze by june 23rd…..so 1 goes in the crock pot and the other in the freezer.
prices will remain at their currently stratospheric levels
It’s a theft. They won’t give it back. They will talk to you like they are doing you a favor by slowing down the stealing.
“prices will remain at their currently stratospheric levels”
“It’s a theft. They won’t give it back. They will talk to you like they are doing you a favor by slowing down the stealing.”
– Yes, inflation is a gooberment policy for highly indebted nations. Direct result of Fed balance sheet and $ supply. $ creation ex nihilo (out of nothing). It’s a covert tax. It’s intentional.
– Core inflation (CPI) currently 5.3% YoY. It’s been over 5% since Nov., ‘21. It’s been estimated that actual inflation is more like 2x CPI…
– Rule of 72: 72/5.3%=13.6 yrs. to lose 1/2 your purchasing power. It would be 36 yrs. for 2% inflation, but same result. This has been going on at least since August 15, 1971. Do not wonder why we po’ folk. Prices rising, while real (inflation-adjusted) wages are declining.
– Need serious DE-flation to reverse it. The Fed will fight this tooth and nail.
“Need serious DE-flation to reverse it.”
Seems like many city’s downtown CRE office and retail are getting hammered, and housing will be next. The fed postponed a rate hike hoping to salvage the summer buying season as families move when their kids are on the K12 summer break. SoCalJim expects the fed to jump in with a rescue scheme before long.
They will not give it back
This is what has happened to non-food necessities such as clothes, small appliances. I have never seen them come back. While food sales are huge, they do drop in price depending on seasonality and demand.
While food sales are huge, they do drop in price depending on seasonality and demand.
Agree Eggs are $1.59 a dozen this week.
Not out here. I paid $6 for 18 at King Soopers the other week. This is in part because now all eggs sold here have to be “cage free”.
…all eggs sold here have to be “cage free”.
Those damned birds will demand reparations some day.
$6 for 18
$2
Egg prices are local I guess.
Egg prices are local I guess.
Most of us don’t have Amish or Mennonite communities nearby.
“The big news over the last few weeks is that there are more listings! We have 20 properties available for sale and nine currently under contract in Carpinteria as of May 13, 2023. For Carpinteria specifically, we have had 33 homes and condos sales for the first five months of 2023. This is a 37% decrease compared to 2022 total sales of 52.”
We took a mini-vacation last week near there. It’s a lovely area, but off the beaten path.
I did notice the Zestimate for the SFR AirBnB where we stayed was down by $15K from what the first-time buyer paid for it last year. And usually those are upwardly biased, which helps explain why Zillow bailed on its iBuyer program.
Technology
Zillow iBuyer program officially ends as last homes leave the market
A year after announcing it would abandon its iBuyer program, Zillow has offloaded the last of the homes it bought with Zillow Offers, marking the end of a major chapter in real estate history
by Jim Dalrymple II
October 07, 2022
…
https://www.inman.com/2022/10/07/zillow-ibuyer-program-officially-ends-as-last-homes-leave-the-market/
“It’s a lovely area, but off the beaten path.”
Used to be where Santa Barbara’s blue collar workforce lived.
Now that the Fed has paused on rate hikes, is it safe to assume they are finished with their campaign to contain inflation?
The Financial Times
European Central Bank
ECB increases rates to highest level since 2001
Central bank warns inflation will be ‘too high for too long’
EU flags flutter in front of the European Central Bank’s headquarters in Frankfurt
The European Central Bank is wrestling with both an apparent wage-price spiral and a stagnant economy
Martin Arnold in Frankfurt
47 minutes ago
The European Central Bank has raised interest rates by a quarter-point to 3.5 per cent, warning that inflation is far from vanquished.
The ECB’s decision on Thursday to raise its benchmark deposit rate to its highest level in 22 years comes as the central bank grapples with both an apparent wage-price spiral and a stagnant economy.
The bank, which raised its inflation forecast and trimmed its growth prediction for the next three years, repeated its warning that it expects inflation “to remain too high for too long” as it will not return to its 2 per cent target for another two years.
…
Yahoo
Yahoo Finance
Stock futures slide as ‘hawkish’ Fed preys on mood: Stock market news today
Karen Friar
Thu, June 15, 2023 at 5:39 AM PDT·1 min read
In this article:
Stock futures were pointing to losses early Thursday after the Federal Reserve’s ‘hawkish hold’ on Wednesday suggested more rate hikes are likely later this year while rate cuts in 2023 are now off the table.
Near 8:35 a.m. ET, Nasdaq futures were down more than 0.7% while futures tied to the S&P 500 were off about 0.5% and Dow futures were off 0.2%.
Futures took another leg lower early Thursday after data showed retail sales in May were stronger than expected in the US. Investors were also digesting news the European Central Bank further raised rates as monetary policy remains tight across developed markets.
…
https://finance.yahoo.com/news/stock-market-news-live-updates-today-june-1-2023-103652850.html
The Financial Times
Federal Reserve
Jay Powell struggles to explain ‘hawkish pause’ to sceptical economists
Federal Reserve takes a breather on rate rises but signals even more tightening ahead
Fed chair Jay Powell: ‘It seemed to us to make obvious sense to moderate our rate hikes as we got closer to our destination’
Colby Smith in Washington yesterday
When the Federal Reserve announced its first reprieve in an aggressive 15- month-long campaign of interest rate rises on Wednesday, there was a sting in the tail.
As widely expected, the US central bank held its benchmark rate steady after 10 consecutive interest rate increases. But it also signalled it would need to squeeze the world’s largest economy much more before the year is out in order to get a handle on stubbornly high inflation.
Rather than raising rates just once more by a quarter point, as had been widely anticipated, most officials are now forecasting there will have to be two such increases this year, according to the so-called “dot plot” of their projections that accompanied the rate move.
…
Realtors are liars.
I bought my pit of burned out rubble “as is” a rare example of realtor honesty.
A reader sent these in:
Gotta be comfortable with being broke to be rich … lawwwwdy 👀 This realtor has an honest take on what it feels like to be an investor bag holding pre-cons right now.👇🏽
https://twitter.com/ManyBeenRinsed/status/1668312345930506240
British Columbia real estate furus, gurus & tier 1 fudus are the most unhinged. They are also the most leveraged in this f*ckery. They chirp at the top, bottom, side, meow & all … they also have the most delusional narratives. BC will be hit the hardest. I’m sorry. 🙏🏽
https://twitter.com/ManyBeenRinsed/status/1668418613651415041
Upper Beaches of the Toronto. World class my raaaaasssss. Fix housing … fix mental … fix education … fix healthcare … fix socio and then we can talk.
https://twitter.com/ManyBeenRinsed/status/1667999043597811720
Mark my words, you are dealing with a Fed that was adamant inflation was transitory in early 22 when run of the mill models they use where clearly pointing to needed policy rates close to 6%, so they are either dissonant, incompetent or disingenuous, right? You can totally expect them to declare victory on inflation whenever a high 2% handle is in sight. They would have technically kept their target, just were flexible about it…
https://twitter.com/INArteCarloDoss/status/1668386087264190465
What a difference a year makes! Quote from the 2007 article: “I feel our market is immune to decreases in value,” he said. “We might slow down a little and just hover, but then it picks up again”
https://twitter.com/texasrunnerDFW/status/1668306553319960606
Some central banks are beginning to see that their policies are not as restrictive as they thought. The same could also be said for the U.S., where common channels of policy transmission have behaved in unexpected ways. This may impact the terminal rate.
https://twitter.com/FedGuy12/status/1668299855280893953
State of housing market: We make $75,000 a year, but we’re convinced everyone else who makes the $200,000/yr needed to afford our and all our neighbors houses are out there and want to buy when we’re ready to list. Good luck
https://twitter.com/GRomePow/status/1668301066423906305
Private Equity is jumping ship from the housing market. What do they see? Barry better get on the news and cry again FAST! Taking ANOTHER impairment, this time on 2,000 Single Family homes for a total of $80,000,000
https://twitter.com/GRomePow/status/1668701698163109897
“Most banks have a significant portion of their balance sheets tied up in low-yielding assets. During the first 20 mos of the pandemic, U.S. banks bought nearly $2 tn of MBS and Treasuries when 5-year yields were below 1%. They are now nearly 4%.”
https://twitter.com/RJWholeLoans/status/1668295246638186496
“We’ve made significant progress on reducing our security holdings.”
-Jerome Powell (6/14/2023)
https://twitter.com/Stephen_Geiger/status/1669052168437915691
that’s not an investor. just a clueless blondie child hoping to strike rich on other peoples backs. that’s the problem with low rates, every child thinks he is a great investor. 🙂
The Economist
Finance & economics | Nasty hangover
After debt-ceiling negotiations, America faces a debt deluge
Its coffers depleted, the Treasury will flood the market with bills
Jun 8th 2023 | Washington, DC
Having flirted with madness, Congress decided to avert a sovereign default and allow the government to resume borrowing. But although the debt-ceiling negotiations are over, their aftershocks will ripple through financial markets for months to come. In order to stave off disaster, the Treasury spent much of the past six months running down its cash holdings, eventually reaching the point where it had almost nothing left. Now it must scramble to replenish its cash, creating a potential hazard for the economy.
The Treasury general account—the government’s main account at the Federal Reserve, used for official payments—fell to just $23bn at the start of June, far less than the amount of net spending on a typical day. Normally the Treasury tries to maintain a balance of at least $500bn, enough to cover about a week of cash outflows. Thus its task is to rebuild buffers by selling bills and bonds (it will mostly rely on bills, because it is easier to raise cash quickly via short-term debt sales). At the same time, it will have to sell even more paper to finance the government’s deficit. The result will be a surge in issuance. Mark Cabana of Bank of America forecasts that the Treasury will issue more than $1trn in bills over the next three months, roughly five times its total in an average summer.
…
On an average weekday working day in Denver I see anywhere from ten to fifty tent encampments driving around the city, depending on where I’m working.
Once you start noticing them, you can’t stop noticing.
The media says there are about 12,000 homeless in metro Denver, it’s at least double that or more.
I wonder how many of them die of overdoses on a weekly basis? I doubt the gooberment publishes those numbers. Of course, they probably consider that a feature, not a bug.
Ask this guy. Oh wait, he’s passed out on the sidewalk at 2:30pm:
https://ibb.co/kBvCcDd
By the Englewood King Soopers. This is the “New Normal” everywhere you go around Denver.
Man who picks bottom often wakes up with smelly finger.
Yahoo+
Fortune
Fed Chair Powell: The U.S. housing market is ‘putting in a bottom’
Lance Lambert
Wed, June 14, 2023 at 2:06 PM PDT·3 min read
Getty Images
Fed Chair Jerome Powell took the podium on Wednesday to announce that the central bank would hold interest rates flat in June. Powell didn’t rule out future hikes, and called this move a “skip.”
Towards the end of the press event, Powell was asked to give an update on the nation’s most interest-rate-sensitive sector: the U.S. housing market.
“Housing is certainly very interest [rate] sensitive. It’s one of the first places that is either helped by low rates or held back by higher rates, and we certainly saw that over the course of the last year. We now see housing putting in a bottom, and maybe moving up a bit. We’re watching that situation carefully. I do think we’ll see rents and house prices filtering into housing services inflation [overall housing costs as tracked by CPI], and I don’t see them coming up quickly. I see them wandering around at a low level.”
…
https://finance.yahoo.com/news/fed-chair-powell-u-housing-210627006.html
Sounds like he’s saying there is a floor for house pricing.
Knowing there is a Fed put under housing prices should offer investors the encouragement they need to put in a housing price bottom.
But does that matter? Even if you manage to stall the fall of house prices, and you get a “leveling off”, eventually it has to collapse at current pricing. The only way you keep it going is appreciation, which gets people extracting massive amounts of cash either through refi or sales and then reinvestment in either more real estate or other speculation. And then you get the boom, but a boom based purely on massive appreciation, not the fundamentals of affordability which equates to sustainability. So even if you manage to hold current pricing, like any Ponzi scheme, it collapses. Without artificially juicing the market (Fed policy and massive stimi money like during COVID) you have to go back to fundamentals. People think fundamentals no longer apply, and look at me like I’m crazy when I mention things like proven ratios of affordability. But hey, I’m an uneducated douche. A lot of people here are smarter than me. Am I wrong? I’d like some input. Do I need to re-educate my naive a$$? Am I just not getting it?
“Am I wrong? I’d like some input. Do I need to re-educate my naive a$$? Am I just not getting it?”
I had similar feelings in 2006 before the wheels finally began coming off in 2007. Jim Grant once said something like “bull markets only end once the bears turn to doubting their own senses” (because things have been so insane for so much longer than any sane person would think possible).
I work tangentially to the real estate industry and anecdotally I’ve heard that the most unqualified buyers are trying to prop up the market. Bankruptcies, lower income, bad credit, all trying to get qualified before THEY GET PRICED OUT FOREVER
In every bubble they say the same things. First they say there is no bubble and could never be a bubble. Then they finally admit maybe things got overheated. Then they say there is a floor under it, or a ‘permanently high plateau’, or whatever the talking point of the time is. (We are here.) Then SHTF.
By studying historic bubbles and living through some of them you learn to see all of the signs. This is what makes bubble spectating interesting.
So many mistakes/miscalculations have been made during this bubble and they are going to have to be reckoned with. It is a process and it takes time. My advice as always is to prepare while you wait for this process to ripen. In most markets there will be deals you never thought would be possible.
Investors should avoid stocks even amid this year’s bullishness because a recession is still on the way, JPMorgan’s Marko Kolanovic says
Filip De Mott Jun 14, 2023, 2:12 PM ET
A photo of a man in silhouette looking at a line chart pointing downward.
Bartolome Ozonas/Getty
– Investors should be wary of stocks as a recession is still likely, JPMorgan’s Marko Kolanovic said.
– In a Wednesday note, he remained underweight equities and overweight cash.
– “The past year’s monetary tightening have yet to be felt and ultimately a recession will likely be necessary to return inflation to target.”
…
https://markets.businessinsider.com/news/stocks/stock-market-strategy-cash-bonds-recession-outlook-jpmorgan-marko-kolanovic-2023-6
I would be careful because in 2006 stocks kept going up even as hundreds of banks failed and foreclosures piled up. Credit Suisse might have been the Bear Stearns moment. When is the Lehman moment?
SF Gate — Cinemark movie theater closing in downtown SF, days after Westfield departure news (6/14/2023):
“Downtown moviegoers will lose one of their only theater options this week. Cinemark announced the closure of its theater in Westfield San Francisco Centre this week via an email to its customers. The final movies are scheduled for Thursday.
Cinemark confirmed the closure in a statement to SFGATE: “Cinemark can confirm it has decided to permanently close the Century San Francisco Centre 9 and XD theater shortly before the conclusion of its lease term following a comprehensive review of local business conditions.”
https://www.sfgate.com/bayarea/article/cinemark-closing-san-francisco-centre-18152215.php?IPID=SFGate-HP-CP-Spotlight
Local business conditions? Sounds like a “doom loop” kind of thing.
News
Divided San Diego City Council passes controversial homeless encampment ban
People opposed to a San Diego ordinance containing prohibitions against camping on public property hold signs during the City Council’s June 13 meeting.
(Nelvin C. Cepeda / The San Diego Union-Tribune)
The ordinance prohibits camping on any public property when shelter beds are available and at all times in places where public safety is a concern, such as city parks and near schools or existing shelters.
By Gary Warth
June 14, 2023 Updated 1:32 PM PT
The San Diego City Council voted 5-4 on June 13 to adopt a controversial policy to ban homeless encampments on public property after hearing hours of public testimony.
The ordinance, proposed by Councilman Stephen Whitburn, was supported by him and council members Joe LaCava, whose District 1 includes La Jolla, Marni von Wilpert, Jennifer Campbell and Raul Campillo.
Mayor Todd Gloria also supported what backers referred to as an unsafe-camping ordinance, with Gloria and Whitburn saying it would address a public safety issue while helping to get homeless people off the streets and into a shelter and connected to services.
…
https://www.lajollalight.com/news/story/2023-06-14/divided-san-diego-city-council-passes-controversial-homeless-encampment-ban
This ordinance was written to be a toothless lip service to the problem. Nothing is going to change except which side of the street they are camped on. Hopefully the Governor of Texas sends a bus or two to add to it soon. He sent some to LA a couple of days ago but he should have dropped them off on skid row for the best results. Let everyone see the depths of their hypocrisy.
I’m going to guess that you can’t use a shelter unless you follow certain rules.
A relative is joining the CalExodus, selling their SoCal SFR at about an 80% markup to what they paid in 2012 and moving to a Red State.
Their purchase in 2012 was at a 30% discount to what the previous buyer had paid in 2005.
Buy low, sell high, they say…
Who bought their shanty? Was it a corporate landlord? A speculator> Or some illegal family with a mysterious stash of cash?
This is latebteaking news. But it was an arms-length sale by a relitter, so I don’t know if they have those details.
“A relative is joining the CalExodus, selling their SoCal SFR at about an 80% markup to what they paid in 2012 and moving to a Red State.
Their purchase in 2012 was at a 30% discount to what the previous buyer had paid in 2005.”
I was going to do that after I got let go in March but then foolishly found another job .
Related detail: A few years back, there was discussion of purchasing one of the high rise condos in downtown San Diego. However, a look around the surrounding homeless encampment put the kibosh on that plan.
How on earth did one of the world’s most beautiful cities devolve into a drug infested hell hole?
California authorities seize enough fentanyl in San Francisco to kill city’s entire population nearly 3 times over
More than 4.2 kilograms of fentanyl has been seized in the past six weeks.
ByMorgan Winsor
June 15, 2023, 2:30 AM
Authorities seize enough fentanyl in San Francisco to kill city’s entire population
The California Highway Patrol has seized en…
California Gov. Gavin Newsom announced late Wednesday that the state’s highway patrol has seized enough fentanyl in San Francisco in the past six weeks to kill the city’s entire population nearly three times over.
…
https://abcnews.go.com/US/california-authorities-seize-fentanyl-san-francisco-kill-citys/story?id=100097924
Precursor chemicals made in China, then manufactured in Mexico and shipped over USA open border by the cartels.
They’re allowing it on purpose.
It has to be an effective way of culling the homeless population, plus there are probably brown envelopes involved.
It’s amazing just how much harm and damage democrat malgovernance can inflict. IIRC, mayor London Breed is begging businesses to not leave, and that she will do something about the runaway crime.
I wonder who will be the next big player to close their doors?
Swift Real Estate is the latest office owner to default as debt stress builds in San Francisco
The Business Journals|14 hours ago
The owner of a historic office building in downtown San Francisco has fallen behind on loan payments— and its case is no exception.
I hear CA will try and cash you down if you move out of state 😂
Wasn’t east Germany kind of like that ? I guess they had a wall with minefields etc.
My relative who is moving out of state, after he and his spouse retired from CA state government jobs, is about to test that theory. I don’t see how CA could claw back nearly $1 million in home equity gains they realized on selling their home, but I might be missing something.
Franchise Tax Board (California’s IRS) was evil and overreaching 30 years ago, i can’t imagine how bad it is now.
Some questions have no answers.
Other questions are so blatantly obvious that they (hopefully) are rhetorical.
Your question falls into one of those categories.
Or a question from someone willfully blind.
By voting blue no matter who?
About 23,800,000 results (0.37 seconds)
In political jargon, a useful idiot is a term currently used to reference a person perceived as propagandizing for a cause—particularly a bad cause originating from a devious, ruthless source—without fully comprehending the cause’s goals, and who is cynically being used by the cause’s leaders.
Finance ·real estate
Jerome Powell just admitted that some banks are in trouble with their commercial real estate holdings: ‘We do expect that there will be losses’
BY Alena Botros
June 14, 2023 at 2:25 PM PDT
Fed Chair Jerome Powell says he expects bank “losses” resulting from commercial real estate troubles.
Getty Images
After announcing its first pause on interest rate hikes since March of last year, Federal Reserve Chair Jerome Powell told reporters that he’s keeping an eye on commercial real estate and watching the situation as it pertains to the banking system “very carefully.”
…
https://fortune.com/2023/06/14/commercial-real-estate-downturn-will-create-banking-losses-fed-chair-powell-says/
Government Job Numbers Make No Sense
JUNE 15, 2023
BY SCHIFFGOLD
Headlines in the mainstream media declared the headline employment data to be evidence of very strong job growth and economic success. According to Politico, the latest jobs numbers are evidence of a “remarkable resilience of President Joe Biden’s economy” and NPR declared the job market to be “sizzling hot.”
Yet, May appears to be yet another month in which it seems nearly every economic indicator except the payroll jobs data points to an economic slowdown
https://schiffgold.com/guest-commentaries/government-job-numbers-make-no-sense/
Number 41 song from Fiddy years ago with an album cover from today’s current events.
Long Train Runnin’ · The Doobie Brothers
https://youtu.be/CVsLEI-hCXw
James Gang — Funk 49:
https://m.youtube.com/watch?v=U_qHU_6Ofc0&pp=ygUSamFtZXMgZ2FuZyBmdW5rIDQ5
Joe Walsh one of the greatest musicians to come from Northeast Ohio.
James Gang — Walk Away:
https://m.youtube.com/watch?v=zo0vBdlWQs0&pp=ygUUamFtZXMgZ2FuZyB3YWxrIGF3YXk%3D
Funk 49
A favorite on my not quite old enough to drink yet juke box in a lttle bar on the Mianus River bacck home.
“I had more fun being 20 in the 70s than I do being 70 in the 20s” — Joe Walsh.
This!
I’m thankful to do both.
Fox News
OPINION
Published June 15, 2023 4:00am EDT
Gov. Newsom: California homelessness crisis is ‘disgraceful
Fox News host Sean Hannity exclusively interviews California Gov. Gavin Newsom, who addresses the homelessness crisis and businesses leaving his state.
Seeing California Gov. Gavin Newsom say he took responsibility for the homelessness problem in California and calling it “disgraceful” while being interviewed by Sean Hannity this week was unexpected.
Newsom cited housing costs as being too high and regulatory thickets being too problematic, and he acknowledged the disparity of over 170,000 homeless in California compared with 26,000 in Florida, states with comparable good weather, as Hannity pointed out. “I own it,” the governor said boldly.
But one central issue he didn’t “own” but should have acknowledged is the associated mental health crisis. Dr. Maria Raven, chief of Emergency Medicine at University of California, San Francisco, pointed out to me on Doctor Radio Reports on SiriusXM this week that there is frequently nowhere for the mentally ill to go from the emergency room after a brief hold except back out on the streets.
…
https://www.foxnews.com/opinion/newsom-owns-another-california-crisis-along-homeless-problem
Bloomberg
Markets
JPMorgan’s Michele Says It’s Time to Exit ‘Cash Trap’ and Move Into Bonds
– September Fed cut causes cash returns ‘to start to evaporate’
– Treasuries, high-grade debt seen offering capital appreciation
JPMorgan’s Michele: September Rate Cut Still on Table
WATCH: Bob Michele, JPMorgan Asset Management global fixed income CIO, says he still sees a recession by the end of the year and expects capital appreciation in bonds.
Source: Bloomberg
By Denitsa Tsekova and Jonathan Ferro
June 14, 2023 at 7:33 AM PDT
It’s time to exit the “cash trap” of money market funds and move into bonds as the Federal Reserve is set to pause its rate-hike campaign and then cut as soon as September, according to Wall Street veteran Bob Michele.
“If we are right and we’ve seen the last Fed rate hike and the market starts pricing in rate cuts and they start cutting rates, then those cash returns will start to evaporate,” Michele told Bloomberg Television’s The Open on Wednesday. With a switch to bonds, “you will have locked in not only the carry but will also get some capital appreciation,” he said.
The chief investment officer for global fixed income at JPMorgan Investment Management Inc., who has previously recommended five-year Treasuries and US investment-grade corporate bonds, said the central bank is set to hold rates “where they are” when its policy-setting committee meets on Wednesday. Michele sees the US economy entering a recession within a year as unemployment rises.
“Unemployment at 4.5% is recession, I don’t think there’s ever been a jump of 1.1% in unemployment and the NBER (National Bureau of Economic Research) hasn’t come in and said we’re in recession,” Michele said. “So the Fed is predicting recession there.”
…
https://www.bloomberg.com/news/articles/2023-06-14/jpmorgan-s-michele-says-exit-cash-trap-for-bonds-on-rate-call#xj4y7vzkg
RNC Research
@RNCResearch
“Why did the Ukraine-FBI informant file refer to you as ‘the Big Guy’?”
BIDEN: “Why’d you ask such a dumb question?”
https://twitter.com/RNCResearch/status/1669412953576095753?s=20
President Briben
$5 million for the unelected occupant, and another $5 million for his crackhead son, in addition to his $1 million a year “salary” from Burisma.
No mention in the:
New York Times
Washington Post
The Guardian
ABC
NBC
CBS
CNN
NPR
Et cetera…
We’re Number 2!
Business
How expensive is San Diego? Our inflation rate is No. 2 in the U.S.
Rent protesters pass through downtown San Diego.
Housing costs were one of the main drivers of inflation in May in San Diego County.
Pictured: Protesters pass through downtown San Diego demonstrating from their cars as part of a “Food Not Rent” caravan in May 2020.
(Sam Hodgson / The San Diego Union-Tribune)
Inflation is easing across most of the U.S., but San Diego County still has seen prices increase at a faster pace than other metros
By Phillip Molnar
June 13, 2023 2:56 PM PT
San Diego has one of the highest inflation rates in the nation, despite the overall trend of price growth slowing.
San Diego County prices increased 5.2 percent in the 12 months ending in May, said data released Tuesday by the U.S. Bureau of Labor Statistics’ Consumer Price Index. That’s down from 8.3 percent at the same time last year and a sign that price hikes might be easing.
The San Diego region had the second-highest inflation rate of the 12 cities included in the report. Tampa had the highest rate, up 7.3 percent, but most areas have seen inflation ease toward historical averages. Minneapolis had the lowest rate, 1.8 percent, and urban Hawaii was 2 percent.
San Diego County’s inflation rate was pushed up the last two months by cereal and bakery products, rent and used car prices going up again. Gasoline costs were down after an increase earlier in the year, as were meats, poultry, fish, and eggs.
Alan Gin, an economist at the University of San Diego, said higher numbers here have been the result of electricity and housing costs. While these are issues present in most metros, he said San Diego could have more pressure on housing costs than other areas of California because our population isn’t dropping.
…
https://www.sandiegouniontribune.com/business/story/2023-06-13/san-diego-inflation-largely-unchanged-higher-than-most-cities
Everyone who leaves will immediately be replaced by foreigners until San Diego begins to look like a favela. There are areas of the city where this is already the case. Borders matter.
I guess they didn’t raise rates enough to keep dollar HODLrz in the game?
Yahoo
Moneywise
‘A natural way to diversify’: Janet Yellen now says Americans should expect a decline in the USD as the world’s reserve currency — what’s really going on and how can you prepare?
Bethan Moorcraft
Thu, June 15, 2023 at 5:55 AM PDT·6 min read
In this article:
The U.S. dollar saw an 8% decline in its share of global reserves in 2022 — causing some to question whether the dollar’s days of dominance are over.
Treasury Secretary Jannet Yellen gave her two cents on the matter of so-called “de-dollarization” during a congressional hearing on Tuesday — stating that no currency currently exists that could displace the greenback.
…
https://finance.yahoo.com/news/natural-way-diversify-janet-yellen-125500087.html
Would crypto effectively become too-big-to-fail if Blackrock entered the game?
The Financial Times
Bitcoin
BlackRock delves deeper into crypto with push for bitcoin ETF
Asset manager’s product would be first publicly traded spot bitcoin exchange trade fund in US if approved by SEC
Larry Fink was once sceptical of cryptocurrencies, but has since vowed to ‘explore the digital assets ecosystem’
Brooke Masters in New York
42 minutes ago
BlackRock pushed further into cryptocurrencies on Thursday by filing an application with the US Securities and Exchange Commission to offer a spot bitcoin exchange traded fund.
If the SEC approves the application, the fund would trade on the Nasdaq stock market, making it the first publicly traded spot bitcoin ETF in the US.
The $9tn money manager already runs a private spot bitcoin trust that it launched last year. The ETF marks a further expansion of its partnership with embattled crypto exchange Coinbase, which would be the custodian of the fund’s bitcoin.
…
BlackRock has STOPPED BUYING HOMES (2023 Firesale Coming?)
https://m.youtube.com/watch?v=BaQazwu6_Ro
“Rents are now going negative in many US cities.”
This guy shares lots of useful information the REIC will not provide.
Is now a good time to invest in the US housing market?
Corporate landlords caused billions in lost wealth, study says
By Tyler Dukes
Updated June 07, 2023 2:02 PM
Tricon Residential, a publicly traded company that owns thousands of houses across North Carolina, advertises a home for rent on the corner of Horseback Lane and Offshore Drive in Raleigh in early 2022.
New research out of one the nation’s hottest housing markets shows that Wall Street-backed landlords reduced homeownership as they converted homes to rentals, removing billions in wealth from one metro area in the process. As large firms bought up thousands of homes in the Atlanta area after the Great Recession, they were responsible for a “substantial” portion of the metro’s declining homeownership rate, according to an analysis by Georgia Tech School of Public Policy Assistant Professor Brian An published this week. The research shows Black residents felt the brunt of those impacts, experiencing a larger drop in homeownership as firms snapped up homes.
…
Read more at: https://www.newsobserver.com/news/business/real-estate-news/article275982381.html#storylink=cpy
The Wall Street Journal
TUESDAY, MAY 30, 2023
5/30/2023 4:16:00 PM
The Downfall of a Real Estate Empire
Over the past four years, Jay Gajavelli built a real-estate empire using funds from small investors who wanted to make passive income. Last year, Gajavelli’s company owned more than 7,000 apartments in the Houston area. Now he’s at the center of one of the biggest commercial real-estate blowups in years. WSJ’s Will Parker details what happened and what it says about the housing market going forward.
Further Reading:
– A Housing Bust Comes for Thousands of Small-Time Investors
Full Transcript
This transcript was prepared by a transcription service. This version may not be in its final form and may be updated.
Kate Linebaugh: Out there on social media, there are a lot of get rich quick videos.
Speaker 2: Okay, I’m going to show you how to make $900 in three hours using this stupid easy side hustle.
Speaker 3: Here’s a really easy side hustle that even in an 11-year old could do. Check this out.
Kate Linebaugh: And one of these types of videos in particular has argued that the best way to make money without working is by taking advantage of a hot housing market and investing in real estate.
Speaker 4: Doing well, and I want to share in this video with you some ways that you can get started in real estate with no…
Speaker 5: I’m going to share with you my dirty little secrets to start getting rental properties now with no money. And I’m going to tell you exactly where you should be looking to buy your first rental property.
Kate Linebaugh: In some of these videos, people show how successful they’ve been by flaunting their luxury cars and flashy lifestyles. Our colleague Will Parker has been watching a lot of these videos.
Will Parker: And they want you to jump on board with them, give them some cash so they can make you rich like them, and you can live a fabulous ostentatious lifestyle like they do.
Kate Linebaugh: And do you have to work?
Will Parker: Well, no. The way it’s pitched is that this is a passive investment. You just give this guy all this money and he makes the investment work and pays you returns because he needed your cash in order to buy this big apartment complex or whatever building. The whole pitch is that you don’t need to work or worry about it. You can make money passively without having to manage the day-to-day. You just watch it go up and down and hopefully it goes up.
Kate Linebaugh: But now, as the housing market cools, these supposed sure thing investments are not such a sure thing. And one apartment empire shows just how quickly it can implode. Welcome to The Journal, our show about money, business and power. I’m Kate Linebaugh. It’s Tuesday, May 30th. Coming up on the show, the hype around real estate investing and the story of one of the biggest foreclosures in America in over a decade. Those get rich quick videos have reached a lot of people, including one guy in Texas named Jay Gajavelli. He immigrated to the US years ago from India and built a career in corporate IT.
…
https://www.wsj.com/podcasts/the-journal/the-downfall-of-a-real-estate-empire/3a4d1a34-2653-4316-93ca-64c13f963332
Investing / Real Estate
What’s Scaring Wall Street Away From the Housing Market – and Should It Scare You?
5 min Read
May 18, 2023
By John Csiszar
Real estate market stock.
Aslan Alphan / Getty Images/iStockphoto
One of the consequences of the coronavirus pandemic in the United States was plummeting interest rates and falling home prices. This offered an opportunity for both institutional investors and individual homebuyers to pick up property at a low cost. In 2022 and 2023, however, the housing market changed dramatically, and Wall Street began aggressively pulling back.
According to data from John Burns Research and Consulting, 90% fewer homes were bought by institutional investors in January and February of 2023 compared with the same time period in 2022. Invitation Homes, the largest owner of U.S. single-family homes, actually sold more properties than they bought in the first quarter of 2023.
So, why are institutional investors turning their backs on the housing market, and what does it mean for you as an individual?
…
https://www.gobankingrates.com/investing/real-estate/whats-scaring-wall-street-away-from-the-housing-market-and-should-it-scare-you/
Large Investors Slowed Home Purchases by Late 2022
Investor purchases of single-family homes is dropping though still above pre-pandemic levels.
By Meg Cunningham
Published May 22, 2023
Home with a sold and home for sale sign
Ariel Skelley / Getty Images
Institutional investors, which acquired or built more than 700,000 single-family homes, are reducing their purchases as prices rise and rent-growth slows.
Key Takeaways
– The share of investor purchases peaked in February 2022, with 8.9% of homes bought that month going to investors.
– Rising mortgage rates and slowed rent growth caused some large investors to pull back on their activity.
– Metros in the South and Midwest saw the largest shares of investor-purchased homes.
The single-family rental business has grown steadily since the Great Financial Crisis, as Wall Street investors such as Invitation Homes, Blackstone, KKR and Tricon Residential buy houses across the country. Large investors have bought more than 700,000 homes.
An analysis by Realtor.com shows that investor purchases in the housing market accounted for 8.2% of monthly sales in December 2022, down from a high of 8.9% in February. While investor purchases remained greater than 8.5% through June of last year before sliding a little, they picked up pace again starting in October.1
While small investors have for years dominated housing investment activity, growth of purchases by large investors picked up from 2021 to 2022, with activity from larger investors outpacing smaller investors in 2021 and the first half of 2022.
Why Are Large Investors Pulling Back?
The pandemic saw a shift in housing demand away from larger cities, and with investors driving up prices, would-be homebuyers were effectively priced out. Unlike many homebuyers, who would rely on a mortgage to finance a home purchase, large investors could offer all-cash deals to sellers. In the last two years, about 85% of large investors bought properties with cash, as opposed to 67% of small buyers, according to Realtor data.
…
https://www.investopedia.com/investor-activity-in-the-housing-market-is-slowing-down-7501073
Markets
Watchlist
China Economy
China’s real estate slump predicted to last for years, threatening to spill into the wider region
Published Tue, Jun 13 2023 8:11 PM EDT
Jihye Lee
Key Points
– “We only assume an ‘L-shaped’ recovery in the property sector in coming years,” Goldman Sachs economists wrote in a weekend note.
– JPMorgan’s Tai Hui told CNBC, “I think that recovery is going to be slow, but I think there also a huge divergence between the state-owned developers versus the more private sector developers.”
– Morgan Stanley, in its mid-year outlook report, warned that further weakness in the property sector will likely bring more headwinds for China’s growth.
…
https://www.cnbc.com/2023/06/14/chinas-property-market-to-see-persistent-weakness.html
Locked-Up Shelves ‘Irritating’ Workers and Shoppers at San Francisco Target, Walgreens and Safeway
https://sfstandard.com/business/locked-up-san-francisco-shelves-irritating-workers-and-shoppers-at-target-walgreens-and-safeway/
*the progressive lifestyle 🙂
The Financial Times
Federal Reserve
‘A major failure’: Fed under fire for handling of trading scandal
Resignation of second-in-command reignites debate over whether officials should be able to buy and sell assets
Illustration of Federal Reserve chair Jay Powell
Federal Reserve chair Jay Powell said the central bank was taking the trading scandal ‘very, very seriously’
Colby Smith in Washington
January 12 2022
When a trading scandal first erupted at the Federal Reserve in September, prompting the resignation of two regional bank presidents, chair Jay Powell pledged to tackle the controversy head-on.
“It’s something we take very, very seriously,” he said at a press conference that month. “This is an important moment for the Fed, and I’m determined that we will rise to the moment and handle it in ways that will stand up over time.”
But four months later, the scandal has flared up again, with the central bank’s second-in-command stepping down this week following new revelations about his trading activity. Richard Clarida’s departure has resurfaced thorny questions about the central bank’s response to one of the worst reputational crises in its history.
The Fed quickly responded in October with tougher rules to curtail trading activity by officials. But lawmakers, former staffers and ethics experts warned that the controversy would not go away without further action.
“For an institution that prides itself on communication and prides itself on transparency, this is a major failure,” said Simon Johnson, a professor at the Massachusetts Institute of Technology who was a member of Joe Biden’s transition team focusing on the Fed and other regulatory agencies.
“This makes it harder for people to stick up for the Fed and insist on the Fed retaining its independence.”
…
Are Federal Reserve Bank leaders permitted to make stock trades based on insider knowledge of interest rate policy?
The Financial Times
Federal Reserve
Atlanta Fed chief Raphael Bostic reports fresh trading violation
Money manager transacted on behalf of official and his spouse during forbidden ‘blackout period’
Raphael Bostic: ‘As I now understand, transactions in such accounts are not exempt from the reporting requirements and FOMC blackout period trading restrictions’
Colby Smith in Washington 8 hours ago
The head of the Federal Reserve Bank of Atlanta disclosed new transactions that violated the US central bank’s trading guidelines, reviving one of the worst scandals to hit the institution.
Raphael Bostic on Thursday revealed transactions involving 19 exchange traded funds made on May 2 of last year, just one day before the Federal Open Market Committee gathered for a two-day policy meeting. At that time, officials were in a so-called blackout period during which public communications were limited and trading prohibited.
Bostic was not a voting member at the gathering, after which the Fed raised its benchmark policy rate by half a percentage point.
…
LOL the Crain’s Chicago article really hits home. I can see both golf road building from my office several blocks away. I can actually see the both of them while sitting at my desk and looking out the window. The world is getting crazy and Illinois is in a for a world of pain. Oh and did you hear, our governor wants to be president?
Your governor and our governor as well…of the State of Disaster called California.
Expect a Lot More Californians Looking for Refuge in Idaho | https://newsradio1310.com/expect-a-lot-more-californians-looking-for-refuge-in-idaho/
Idaho is doomed.
Are professional worriers’ recession worries overblown?
Or have we joined a real life version of The Boy Who Cried Wolf?
Finance · economy
Deutsche Bank’s top minds put U.S. recession chance near 100%—and say avoiding a hard landing would be ‘historically unprecedented’
BY Christiaan Hetzner
June 15, 2023 at 3:57 AM PDT
Federal Reserve chair Jay Powell will not be able to avoid a recession, predicts Deutsche Bank.
Deutsche Bank predicts Federal Reserve Chair Jay Powell will begin aggressively cutting interest rates in March 2024 as the U.S. tips into recession.
Drew Angerer—Getty Images
It appears as if U.S. economists may have popped the Champagne corks on a soft landing too early—at least according to Deutsche Bank.
The German multinational bank’s top research team believes Washington has sparked a boom-bust cycle that now is nearing its end stage. In its house view, the recession slated to arrive as soon as October is the inevitable consequence of a series of aggressive rate hikes designed to extinguish the very flames of inflation that policymakers ignited through their own actions during the COVID pandemic.
“Avoiding a hard landing would be historically unprecedented,” warned group chief economist David Folkerts-Landau in a research report titled The Clock Is Ticking, published on Wednesday.
This bleak view contrasts with recent investor bullishness as well as the belief that the Federal Reserve has seemingly pulled off the impossible by cooling an overheated economy without sparking a recession, leaving only deflated asset prices as collateral damage—a “non-recession recession” as private equity firm Apollo Global Management called it last month.
Germany’s only bulge bracket bank uses an indicator that attempts to measure the probability of a recession in the next 12 months. Currently it is handicapping the chances of a contraction in U.S. economic activity “near 100%”—in other words, a virtual certainty. But in order for this to occur, one thing has to happen first: Consumers must exhaust the last of their savings stored up from COVID lockdowns.
“These will not be depleted until nearer year-end,” Folkerts-Landau wrote, so “things are going to script for our Q4 recession timeline.”
…
https://fortune.com/2023/06/15/economy-recession-federal-reserve-powell-deutsche-bank-hard-landing/
Yahoo
Business Insider
The stock rally will end soon, recession will hit, and the Fed won’t hike interest rates again, markets guru Jeremy Siegel predicts
Theron Mohamed
Wed, June 14, 2023 at 5:22 PM PDT·2 min read
Jeremy Siegel.
Steve Marcus/Reuters
– Jeremy Siegel is wary of stocks, expecting a recession, and predicting the Fed won’t hike again.
– The retired Wharton professor doubts the stock market will keep surging or hit a new low.
– Siegel sees a mild recession and the Fed ending its war on inflation to minimize job losses.
The stock-market rally will run out of steam, the US economy will sink into a mild recession, and the Federal Reserve won’t hike interest rates any higher, Jeremy Siegel has predicted.
The S&P 500 has surged by more than 20% from its most recent low, marking the start of a bull market. However, Siegel warned that during both the dot-com and housing crashes, stocks rebounded by over 20% then promptly erased all of those gains.
“This recent bull market move is no guarantee we are out of the woods from the downturn,” the retired Wharton finance professor said in his weekly commentary for WisdomTree, published on Monday.
“I remain cautious and I do not think we have the start of a major up move here,” Siegel continued, adding that stocks are also unlikely to slump below their October lows.
The veteran economist and author of “Stocks for the Long Run” also weighed in on the future direction of Federal Reserve policy. The US central bank has hiked interest rates from virtually zero to upwards of 5% since last spring in a bid to cool historic inflation, stoking fears of falling asset prices and recession.
While the Fed is widely expected to lift rates next month, Siegel suggested it might refrain fom tightening its monetary policy anymore.
“We’re entering political season and there is already a ton of pressure not to create a deep recession,” he said, referring to the run up to next year’s US presidential election. “I expect a shallow recession that the market has arguably already positioned for.”
…
https://finance.yahoo.com/news/stock-rally-end-soon-recession-221135510.html
There are a couple of small problems with Professor Bull’s shallow recession prediction:
1) So far as I am aware, we have never had one before, at least going back 100 years.
2) The Pandemic Recession was arguably deep but short. But keeping it short came at the cost of the Fed unleashing a tidal wave of inflation they are presently trying to contain. Something tells me they won’t follow the same path again, contrary to the beliefs of the pundits, like Professor Bull.
3) He pretends the Fed is in control of the storm-tossed financial seas, which clearly they are not.
Ignore the yield curve inversion at your peril:
https://m.youtube.com/watch?v=q7pXf25eYr4
Professor Bear’s prediction:
Soon to be heard again on The Street:
“Nobody could have seen it coming!”
The Financial Times
US banks
Wall St bank job cuts set to surpass 11,000 as CEOs unwind hiring binge
Executives try to reverse pandemic recruitment spree that propelled headcounts to record highs
A Wall Street sign in New York
Wall Street job cuts come as executives try to unwind a recruitment spree that started as the economy rebounded in the aftermath of Covid-19
Joshua Franklin and Stephen Gandel in New York yesterday
Job cuts at the largest US banks this year are on course to surpass 11,000 as Wall Street contends with the worst recruitment market since the financial crisis following a pandemic-era hiring binge.
Citigroup this week became the latest big US bank to announce significant job cuts, telling investors that it planned to complete 5,000 redundancies by the end of the second quarter, mostly in investment banking and trading. That followed cuts affecting thousands of bankers at Goldman Sachs and Morgan Stanley.
…
I’d also be curious for examples of a ‘growth recession, not a true recession’ at the end of an abrupt series of Fed rate hikes to contain inflation, a conjecture often floated these days in the MSM by the soft landing crowd.
Did this even once ever happen since 1913?
Finance ·economy
There won’t be a true recession anytime soon—but a ‘growth recession’ is still on the menu next year, BofA warns
BY Will Daniel
June 15, 2023 at 2:00 PM PDT
The New York Stock Exchange.
Michael M. Santiago/Getty Images
After taking over the chief economist gig at Bank of America last July, Michael Gapen quickly warned that the U.S. economy was headed for a “mild recession” by year’s end. Gapen’s predecessors had long avoided overly bearish predictions, but he feared the worst amid persistent inflation and rising interest rates. However, the former Barclays exec revised his initial forecast in September after consumer spending and the labor market “held up” better than he’d expected, arguing that a mild recession wouldn’t come until the first half of this year.
…
https://fortune.com/2023/06/15/recession-forecast-growth-recession-economy-inflation-labor-market/
Does it seem wrong for Governor Newsom to pay his state workers so little that they can’t even afford rent, especially given the state’s corporate landlord deal with Blackstone?
CalMatters
Posted in California Divide
Corporate landlord’s California buying spree alarms tenants: ‘I only earn enough to pay the rent’
Avatar photo by Alejandro Lazo and Wendy Fry May 24, 2023
Gladys Balcazar in her apartment in Imperial Beach on April 18, 2023. Balcazar, who puts 83% of her income toward rent, is a single mom living with her son who has a disability. Photo by Ariana Drehsler for CalMatters
In summary
Two years ago, Blackstone bought 66 relatively low-rent apartment buildings in San Diego County from a charitable foundation. Tenants of those 5,800 dwellings say they see rent increases, maintenance issues and evictions in their futures.
Gladys Balcazar says she can barely afford food after paying rent to her new landlord, Blackstone Inc, one of the world’s largest private equity firms.
Balcazar, a 60-year-old janitor, lives with her 27-year-old son in a two-bedroom apartment in Imperial Beach. She supports her son, who has a disability, on a salary of $2,800 a month.
Blackstone bought her building and 65 others in San Diego County in 2021, becoming one of the region’s biggest landlords and alarming lawmakers, affordable housing advocates and Balcazar. In March Balcazar’s monthly rent rose $200 to $2,000.
“All of this has really depressed me because I don’t see a way out,” she said in Spanish. “I only earn enough to pay the rent, and after that there is nothing left.”
…
https://calmatters.org/california-divide/2023/05/california-renters-fear/
And the son’s disability benefits?
Speaking from personal experience and advising others, accessing disability benefits in CA is lengthy, convoluted, time-consuming, and frustrated by wrong information from government employees in high turnover positions. The system is meant to make you give up.
“The system is meant to make you give up.”
That’s exactly like the VA Hospitals.
Unless you’re a new illegal immigrant with massive amounts of time to spare and hand-holding at every stage courtesy of the unelected Biden regime, good luck accessing benefits.
‘Down to our last dimes’: State workers say California paychecks no longer cover the bills
Jeanne Kuang
CalMatters
Tammy Rodriguez, 52, is an employee with the San Luis Obispo Department of Motor Vehicles. Rodriguez has 27 years of state service, including five years in San Luis Obispo.
When Tammy Rodriguez landed a job with the California Department of Motor Vehicles 27 years ago, she felt like she had “struck gold.” It was her first job, she said, and she felt secure knowing she was earning not just a salary, but a pension for later in life.
Over the years she thought about looking for work at private companies to make more money, especially after she had a child. But she liked the other benefits of state work: the health care coverage, the flexibility of transferring departments when her family moved and the job security when she went on maternity leave.
Now, at 52, she’s feeling less financially stable. The $2,100 monthly rent she pays for the home she and her teenage daughter share eats up half her earnings at the DMV in San Luis Obispo. Halfway through each month, she takes stock of their expenses and budgets to ensure she can afford gas for her 30-mile daily commute.
…
https://www.vcstar.com/story/news/2023/06/14/state-workers-say-california-paychecks-no-longer-cover-bills/70322369007/
The University of California Is Bailing Out Private Equity Giant Blackstone
By Matthew Cunningham-Cook
Amid a housing crisis that is leaving thousands of its students and employees homeless, the University of California is bailing out private equity behemoth Blackstone, siphoning billions of dollars to privatized student housing and corporate landlords.
As the world’s largest private equity firm faces potential losses from a cloudy real estate market, its executives blocked jittery investors from withdrawing their money from one of its real estate funds, while insisting that rent increases and evictions will bolster returns.
Now, the Blackstone Group’s real estate investment trust has received a multibillion-dollar bailout from a source whose employees and students are already suffering through the housing crisis: California’s public university system.
Just months after Blackstone’s real estate investment trust purchased America’s largest owner of private student housing, the same trust received a $4.5 billion infusion from the University of California’s Board of Regents, two of whom have close ties to the company. The investment rewards the financial firm only a few years after the company and its executives spent $5.6 million to kill California ballot initiatives that would have expanded rent control in the state.
Blackstone, a firm that’s valued at $111 billion and manages $991 billion in assets, also faces broader headwinds in its real estate sector. The profits that the firm distributes to shareholders plunged 36 percent last year, driven by real estate losses.
Effectively, University of California (UC) is funneling cash into privatized student housing and corporate landlords — doubling down on a controversial investment strategy that comes with a massive layer of fees and Wall Street profits — instead of doing its part to address a growing housing crisis, one that affects its students and employees.
In 2021, 5 percent of UC students, or more than fourteen thousand, experienced homelessness, while the university’s unions report that many of their mostly blue-collar members simply cannot make ends meet due to California’s spiraling cost of rental housing.
…
https://jacobin.com/2023/04/university-of-california-private-equity-blackstone-corporate-real-estate-investment
Yahoo
Blackstone REIT Continues Trend Of Bad News For Real Estate Investors
Eric McConnell
June 5, 2023·5 min read
In this article:
Blackstone real estate investment trust (BREIT) is known as one of America’s largest and most dependable privately held REITs when it comes to delivering investor returns. However, 2023 has proven to be a difficult year for real estate investors, and Blackstone is not immune. As of May 1, 2023, Blackstone announced it is limiting investor withdrawals from its REIT, which is worth an estimated $70 billion.
This move is not a new trend, as Blackstone has been limiting monthly investor withdrawals since November. A clause in Blackstone’s standard shareholder agreement allows the company to limit withdrawals if the total amount of the withdrawal requests exceeds 5% of the fund’s net asset value. In what can be seen as a sign of the times for the troubled real estate market, Blackstone hasn’t released an estimate on when it may fulfill all investor redemption requests.
…
https://finance.yahoo.com/news/blackstone-reit-continues-trend-bad-193739975.html