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The Gold-Digger Mentality Is Gone, With People Buying Silly Things For Silly Money

A weekend topic starting with Bisnow South Florida. “Short term rentals have proliferated across Miami as developers race to meet demand that surged during the pandemic. At least 4,312 short-term rental units across 12 projects have been proposed or started construction in Miami just since November, based on an analysis by Bisnow. ‘Buyers like it because it’s flexible,’ said Harvey Hernandez, CEO of Newgard Development Group, which has two short-term rental properties under development in Miami. ‘The times of the consumer buying an asset that they cannot monetize are over.'”

WKRN in Tennessee. “Helping buyers is inventory. Nashville has the biggest year-over-year increase in the U.S. at 102.5%. Meanwhile, prices are down 6.3% from last year, with the median price now at $440,000. ‘When Nashville has the highest rate of inventory increase, or among the highest, in the nation, that is really indicative of just how low our inventory was at the peak of this whole housing thing,’ said Jeff Checko, relocation director with The Ashton Real Estate Group of RE/ Advantage.”

Community Impact in Texas. “In May, the median home price in the city of Austin dropped 16.7% year over year to $550,000. The median home price in the Central Austin region also dipped about 8% year over year from $810,000 in May 2022 to $710,000 last month. Housing inventory in the Central Austin region reached 4.9 months last month, a roughly 300% increase since last year.”

From Go Banking Rates. “In May of this year, ATTOM recorded a sharp uptick in foreclosure rates around the United States. Adding up notices of default, repossession by banks and auctions on the calendar, the report found 35,196 American properties with foreclosure filings. ‘The lifting of all COVID-19 related moratoriums that have finally unclogged the pipeline of distressed properties,’ said Kristen D. Conti, the co-chairwoman of Default Industry Leaders. ‘Those people who chose to take advantage of programs where they could not pay their mortgages and put the payments on the back end of the loan are now faced with homes whose prices are leveling out and they find themselves underwater. The escalation of prices put many marginal buyers at the very top of their qualifying range. Any change affecting household income can be catastrophic right now as prices become more prevalent and prices decrease.'”

“Conti explained that new construction is being delivered to the market on a consistent basis, pumping up the inventory while demand has taken a deep decline because of high interest rates. ‘I believe foreclosure rates will continue to increase,’ Conti said. ‘I know the clients I work with are gearing up their loss mitigation departments in preparation for what is next in our market. We certainly don’t expect another downturn like 2008 but some stabilization and balance are a welcome change from the Post COVID craziness of multiple offers, waiving of inspections and appraisals and other risky decisions.'”

The New York Post. “Inflation in the new era of remote work is creating a global commercial real estate ‘apocalypse’ where zombie properties sit vacant and owners with loans coming due hand their keys back to lenders, according to experts. Commercial real estate owners in hubs like New York, San Francisco, London and Hong Kong are handing keys back to lenders for properties worth less than the debt secured against them. Harold Bordwin, a managing director at Keen-Summit Capital Partners, said lenders will choose between ‘pushing mark to market’ or ‘extending and pretending,’ tactics that were used to crawl out of the ’80s and ’08 financial crisis. ‘Things were sold at pennies on the dollar, and regulators made their way through that inventory,’ he said.”

“Another option would be the ‘extend and pretend’ tactic that was used during the financial crisis of 2008, where borrowers ‘take loans, allowing banks not to think about what collateral is really worth,’ Bordwin explained. However, ‘there is just a massive amount of obsolete space,’ the real estate expert said. ‘Nobody has a great answer to how that could be dealt with,’ he added, noting that ‘a portion of these buildings could end up getting knocked down eventually’ if they’re deemed unable to be converted into residential or lab space.”

Bisnow San Francisco in California. “Real estate professionals have doubts about the effectiveness of office-to-residential conversions as the answer to the city’s problems. ‘[Office conversion] is not going to be the solution,’ Grosvenor Senior Vice President of Investment Angela Biggs said. ‘Even if these impact fees get passed, you are still a full 200 grand-per-unit to get to a number that you know pencils, and this is when everybody is scrambling for capital.'”

The Globe and Mail. “Central bankers worldwide are spooked – like a herd of zebra catching wind of a lion pride. The predators they fear are inflation and inflation expectations. And those are more significant threats than they thought just weeks ago, particularly the latter. Businesses have become experts at convincing us that 10-per-cent-plus annual price increases are justified, whether they are or not. It’s a tough cycle to break but the Bank of Canada and its global peers have no choice but to kill these mindsets. And the only way to do it is with aggressive interest rate increases, hikes that leave no doubt the central bank means business.”

“In the last few months, policy-makers around the world have raised rates in surprise fashion. We’re talking Britain, Australia, Norway and New Zealand to name a few countries –and, of course, Canada. All are finding core inflation more difficult to tame than anticipated. That’s an anxiety-maker for variable-rate mortgage borrowers. Families are now watching in dread of higher payments, which is exactly what we’ll get if bond market investors are right.”

This Is Money. “Insanity is doing the same thing over and over again and expecting different results. That apocryphal quote may not really have come from Albert Einstein but Britain does need to wean itself off the insanity of the two-year fixed rate mortgage. Once again, our love of fixing the interest rate on a lifetime debt over a period that flashes by all too quickly, is massively exacerbating problems in the mortgage market. Two-year fixed rates aren’t responsible for the current mortgage mayhem – we have years of Bank of England and government economic blundering to thank for that – but they are certainly compounding the misery.”

“Ultimately, the Bank of England, the government, banks, building societies and mortgage brokers know that two-year fixed rates are a fundamentally risky product. Yet, they are still flogged with merry abandon to unwitting homeowners without sufficient warning of what might go wrong if rates suddenly rocket, or the mortgage market seizes up. Figures from the IFS show how this is hammering a generation of homeowners in their 30s and 40s. The Bank of England owes them and others an apology, as it spent years reassuring borrowers that when rate rises came, they would be ‘limited and gradual’ – whereas instead they have been brutal and rapid.”

The Irish Times. “German residential property prices have experienced their steepest fall in 23 years, ending a decade-long boom that saw many ordinary earners increasingly priced out of their home cities. The largest price declines compared with the same quarter of the previous year were logged in cities that have noticed the sharpest rises in the last decade: Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Düsseldorf. Here prices for semidetached houses fell by 10.4 per cent, while apartment prices are 6.4 per cent down on average.”

“Overall average Berlin apartment prices have jumped 180 per cent in the last decade, with prices in certain areas often far exceeding that average. Berlin property agents said they sensed a residential price slump as long ago as this time last year, expedited as the year went on by the European Central Bank interest rate increases. Since August 2022 the total value of home loans granted has dropped from €25.8 billion to €13.8 billion – though agents notice a new stabilisation in the last weeks. ‘The gold-digger mentality is gone, with people buying silly things for silly money,’ said one western Berlin agent.”

The Sydney Morning Herald. “Residents of several outer fringe suburbs who can no longer afford their mortgages face the prospect of selling into a weakening local property market. In the mortgage-belt neighbourhoods that have high numbers of indebted households, many have falling property prices, rising listings or both, CoreLogic head of Australian research Eliza Owen said. Owen said a rise in listings in an area where prices were falling was a ‘red flag’ and indicated homeowners weren’t choosing to sell but were unable to hold off until favourable market conditions arrived.”

“‘When you look at some of the areas like the Melton-Bacchus Marsh area and the Blacktown north market for Sydney, this is where we see a slightly worrying trend of listing volumes rising,’ she said, although property prices have edged up in Blacktown. ‘Why are new listings rising across Melton and Blacktown? Usually, this time of year it’s winter and listings should be going down, not up. New listings continue to rise, which is pretty curious. Maybe there are some people who feel they need to sell their property.'”

“Other highly mortgaged areas that had a drop in prices but a rise in listings included the southern part of Melbourne’s Casey Council and the Knox Council area. In NSW, it included Gosford and Wyong on the Central Coast.”

From City AM. “Earlier this month, I spoke at the European Parliament on the unfolding economic situation around the world. The fragility in the banking system over the last few weeks has caught many policy-makers by surprise, yet much of what is happening is entirely predictable. In 2018 and 2019 I gave a series of speeches in the European Parliament detailing the consequences of zero percent interest rates—the unparalleled growth in debt and build up of risk in the global financial system that was developing.”

“For the last forty years, through much of the developed world, each recession has been responded to by central banks setting lower and lower interest rates, thereby creating larger and larger debt bubbles. This is a phenomenon that has taken place across almost all of the developed world. For instance in America—which as the holder (at least for the time being) of the world’s reserve currency has special importance—when the bubbles in property and other asset classes burst in the late 1980s, the response from Alan Greenspan was to set interest rates at 3 per cent, the lowest for a generation, and then follow up with several iterations of the so-called ‘Greenspan Put,’ thereby creating the Dot Com Bubble.”

“When the Dot Com Bubble burst in 2000, the response from the Federal Reserve was even lower interest rates, of 1 per cent, which then created an even larger bubble—the Housing Bubble. When this burst in 2008, the response was the lowest interest rates in history, 0 per cent, with some central banks even setting negative interest rates, for more than a decade. The main consequence of this, far from bringing back prosperity, has been to generate an even larger global debt bubble.”

“In fact, with each phase of the growth of the global debt bubble from the 1980s onwards bond quality has fallen as issuing more debt became the solution to every problem—thereby making the economy more reliant on artificially low interest rates. Unlike previous business cycles from the last hundred years, we now have to unwind an entire generation of ever-larger distortions. Now that this iteration of the generational debt bubble is beginning to burst, it is an opportunity to re-examine the role of interest rates in the economy and view them as an important and systemic pricing mechanism rather than a ‘policy tool’ for central bankers.”

Related Posts

It Just…Stopped!

https://www.youtube.com/watch?v=2UGymKDG1xk https://www.youtube.com/watch?v=cAl5786Z6Bo https://www.youtube.com/watch?v=-Bq565Y7vSs

This Post Has 78 Comments

  1. The last link is worth reading in full.

    ‘some stabilization and balance are a welcome change from the Post COVID craziness of multiple offers, waiving of inspections and appraisals and other risky decisions’

    Jerry and the girls didn’t see this at the time? I did. We saw almost every little sh$thole in the US double or more in a very short period of time, and shacks were already a bubble:

    March 26, 2020

    “As America heads into a deep recession, the $11 trillion residential-mortgage market is in crisis. Investors who buy home loans packaged into bonds are dumping even those with federal backing because of panic that millions might not make their payments. Yet one risky sector had started to show cracks long before the coronavirus pandemic sparked the worst financial meltdown in 12 years: the federal government’s largest affordable-housing program, whose lenient terms are geared toward marginal borrowers.”

    “As real estate prices soared in recent years, working-class adults everywhere have increasingly relied on mortgages backed by the Federal Housing Administration — and U.S. taxpayers. Since 2007, the FHA’s portfolio has tripled in value to more than $1.2 trillion, almost 11% of the market. While private lenders make these loans, they are packaged into Ginnie Mae bonds, common in mutual funds and pensions.”

    “Before Covid-19 started roiling China, a November FHA report found that 27% of borrowers last year spent more than half their incomes on debt, a level it describes as ‘unprecedented.’ The share of FHA loans souring in their first six months has doubled over the last three years to almost 1%.”

    “Not long ago, Alex Castillo drove his shiny black Infiniti SUV through an office park north of the San Antonio airport, along a busy seven-mile stretch of highway that loan officers call ‘Mortgage Row’ because of its abundance of small independent mortgage companies that dominate FHA lending. Castillo, who has the words ‘The Dream Starts Here’ stitched into his jacket, works for Pennsylvania-based American Residential Lending. Oddly, amid the pandemic, his business is booming. His customers locked in FHA mortgages after interest rates plunged this month — adding to federally backed mortgage debt.”

    “‘If the government tells me you’re good enough to get a loan, I have to trust and believe in the government,’ Castillo said. ‘Then we just hope and pray that the client doesn’t get foreclosed on.’”

    “In downtown San Antonio, scores of investors stood on a parched lawn beside the city’s historic granite-and-red-sandstone courthouse. It was the first Tuesday of February, the day of the foreclosure auction. Matt Badders, a San Antonio lawyer who represents lenders, auctioned off two houses. The failed mortgages remind him of the run-up to the financial crisis 12 years ago, when lending to customers with spotty credit nearly brought down the world’s financial system. ‘We’re almost back to 2007, when mortgage originators are waking people up on park benches, saying sign here,’ Badders said.”

    “At the auction, the crowd bid on 338 homes, a third with FHA mortgages, according to Roddy’s Foreclosure Listing Service. One house had dual master bedrooms, a game room and granite kitchen counters. It sold for $202,000 — $52,000 less than the homeowner borrowed only two years ago. The taxpayer-backed FHA insurance fund will take a loss.”

    “Dave Stevens, FHA commissioner under President Barack Obama and former chief executive officer of the Mortgage Bankers Association, said a recession will expose hidden risks in home lending. ‘This should be an alarm bell to policymakers,’ Stevens said. ‘Sometimes you get blinded by a good economy and suddenly look at it and see a bubble of defaults coming.’”

    “The federal government has decided it doesn’t want to pursue — and has asked a judge to dismiss — a lawsuit against Utah-based Academy Mortgage Corp. The judge refused. The suit claims the company’s staff would repeatedly feed information into an automated federal underwriting system, manipulating it until the computer gave the green light. ‘Decline is a curse word,’ Plaintiff Gwen Thrower, a former underwriter, quoted a manager as saying. ‘We don’t use it.’”

    http://housingbubble.blog/?p=3070

    1. “saw almost every little sh$thole in the US double or more in a very short period of time, and shacks were already a bubble:”

      I see comments daily that it’s not going to be like ‘08 bubble. Correct! It’s way worse!! I anticipated a bubble burst last time around to hit about ‘05. But crazy sub-prime gave the market another 1 to 2 years (I was a mtg broker back then). But even during those last two years we didn’t see prices double. The big increases had already happened. It just put the market on life support. But you’re right Ben – at the beginning of ‘19 we were on the threshold of another bubble burst and then COVID, ZIRP and stupid crazy stimi money and we witnessed a bubble expansion unlike no other. Not gonna be like ‘08? Sure…..you’re going to wish for ‘08 when this is all done.

      2. Colorado has a housing affordability CRISIS. The median household incomes in the metro Front Range do not support the current prices.

        8x or 10x incomes is in no way sustainable.

        1. A friend recently paid $465 for a new-build shack despite my warnings (wifey entitlement was a factor). Now that they’ve settled in, they’re discovering all sorts of issues with the build quality & materials. Buyers’ regret in a major way, with wifey now saying he should’ve caught those issues before they signed on Mr. Banker’s dotted line, while refusing to acknowledge her hen-pecking pushed him into buying the shack against his better judgement. Not a happy home – bet this is happening on a vast scale.

          2. “…with wifey now saying he should’ve caught those issues…”

            Sure, disavow responsibility. LOL

          4. “Not exactly the response I was expecting from you.”

            Did you miss, “wifey entitlement was a factor?”

          5. $465K. You can buy years of “wifely” comforts without attachments for that price. And, no nagging.

  2. ‘‘When you look at some of the areas like the Melton-Bacchus Marsh area and the Blacktown north market for Sydney, this is where we see a slightly worrying trend of listing volumes rising,’ she said, although property prices have edged up in Blacktown. ‘Why are new listings rising across Melton and Blacktown? Usually, this time of year it’s winter and listings should be going down, not up. New listings continue to rise, which is pretty curious. Maybe there are some people who feel they need to sell their property’

    This is why you make the big bucks Eliza.

  3. ‘When Nashville has the highest rate of inventory increase, or among the highest, in the nation, that is really indicative of just how low our inventory was at the peak of this whole housing thing’

    Housing thing? Wa happened to my shortage Jeff?

  4. From the Texas link:

    “Last month, homes sold for 94% of their original list price. The continued uptick in that figure demonstrates that sellers are pricing their homes more accurately and buyers are more responsive to those prices than in the earlier part of 2023,” ABoR housing economist Clare Losey said in the report. “Context matters, and May’s 2022 median home price, $550,000, was the highest median home price the Austin region has ever seen.”

    Clare is a lion. Look at the graph, Austin’s median hit 667k in May 2022. These Austin UHS are scurvy dogs with the manipulation.

  5. Are you looking forward to the Fed riding in on a dark horse to rescue the swooning stock market?

    Good luck! Those days are over, pal. Market forces are back.

    1. Financial Times
      Markets Briefing Markets
      Global stocks cap worst week since March as data fuels recession fear
      FTSE All-World index declines 2.2% over past five sessions with investors concerned about possible interest rate rises
      A montage of a globe and a chart
      The S&P 500 fell 0.8% on Friday day and 1.4% over the week’s four trading days
      Daria Mosolova in London and Nicholas Megaw in New York yesterday

      Global stocks fell on Friday, capping their worst week since March as investors in the US and Europe fretted over the prospect of further interest rate increases and potential recession.

      The FTSE All-World index, which tracks the largest companies globally, slid 1 per cent, bringing its weekly fall to 2.2 per cent — its worst performance since the US regional banking crisis began in March with the collapse of Silicon Valley Bank.

      The Europe-wide Stoxx 600 and Wall Street’s benchmark S&P 500 also suffered their worst week since March. The S&P 500 dipped 0.8 per cent for the day and 1.4 per cent for a week shortened by the Juneteenth US holiday on Monday. The Stoxx 600 slipped 0.3 per cent on Friday and 2.6 per cent over the week.

      The moves followed a week of hawkish signals from policymakers in the US and Europe, as central banks prioritised their battle against stubbornly high inflation even as several economic indicators pointed to a slowdown on both sides of the Atlantic.
      [Column chart of Weekly price change for Stoxx Europe 600 index showing European stocks have their worst week since March]

      “The sell-off today shows you that the market hadn’t quite accepted that we are now in a very different economic regime,” said Georgina Taylor, head of multi-asset at Invesco.

      Investors who had become used to “policymakers riding to the rescue” in times of economic hardship “are all having to adjust, and that’s what keeps the volatility in markets”, she added.
      …

  6. Do you find it reassuring that the pension fund manager for your retirement plan has bought into the myth of private equity, hook, line and sinker?

    1. The Myth That Drives Private Equity
      IDEAS
      BY BRETT CHRISTOPHERS JUNE 23, 2023 7:30 AM EDT
      Christophers is professor at Uppsala University in Sweden, and author of Our Lives in Their Portfolios: Why Asset Managers Own the World

      The economy runs on narratives.

      Those supportive of the status quo offer narratives – stories, essentially – about the benefits of existing arrangements. If those narratives are widely believed, the status quo typically endures. Changing the economy requires successfully changing the narrative.

      Consider a narrative at the heart of one of the most striking economic developments of recent decades: the rise of “alternative” investment, an umbrella term for investments other than the traditional mainstream asset classes of cash and publicly-listed stocks and bonds. These alternative assets include private equity, hedge funds, venture capital, real estate, and infrastructure.

      Through the 1970s, major U.S. investors such as pension plans held almost no investment in alternatives. Half a century later, the picture is radically different. The largest university endowments (those with over $1 billion under management), for example, now allocate 64 percent of capital to alternatives.

      Such a dramatic shift couldn’t have occurred and persisted without a strong supporting story. After all, the shift into alternative assets has at times faced considerable headwinds from critics: managers of private-equity funds, for example, have been widely attacked for themselves profiteering while asset-stripping the companies they take over. How then have those that have led the charge into alternatives fended off such criticisms and thereby legitimated what they do?

      The pivotal narrative has been that investment in alternatives benefits ordinary, lower-to-middle class workers. The following statement is a prototypical example. “To the extent our funds perform well,” Blackstone, the world’s leading manager of alternative investment funds, explains each year in its annual report, “we can support a better retirement for tens of millions of pensioners, including teachers, nurses and firefighters.”

      The narrative is not that alternatives always perform well, or indeed better than traditional asset classes. Nor is it that alternatives investment benefits only ordinary workers. Yet it is the latter that Blackstone and its peers invariably highlight. When, for example, skeptics question why the trustees of pension schemes persevere with high allocations of retirement savings to alternatives funds such as those managed by Blackstone, they are told that reducing such allocations will hurt ordinary workers most. And so the status quo persists.

      This narrative is profoundly misleading, however. To say this is not to suggest that ordinary workers do not benefit when the funds in which their retirement savings are invested perform well. It is to argue rather that the benefits accruing to such workers are minor, both in relative terms (most benefits are captured elsewhere) and absolute terms. Thus, to center and highlight specifically ordinary workers among the cast of beneficiaries is to grossly distort reality. A consideration of three key aspects of the business of alternatives investment, which is dominated by asset managers like Carlyle, Apollo, Blackstone, and many others, clearly undermines this disingenuous narrative.
      …
      Consider what Blackstone and the like invest in when they invest in “alternatives.” Notably, one of the fastest-growing areas of this business is housing investment, specifically in the rental market. But if funds that invest in housing perform well, it is largely because they have been able to raise rents. And who lives in such rental housing? Generally, ordinary workers. Thus, where there is gain, there is also pain; the latter begets the former.

      In 2018, Ro Khanna, a Democrat Representative in California who was evidently conversant with Blackstone’s rhetoric, spoke pointedly to the Faustian bargain that workers–usually unwittingly–often make with firms like Blackstone when their savings are invested by them. “In my district”, Khanna said, “teachers, firefighters, and nurses often can’t afford a place to live.” Blackstone happened at that time to be a major investor in Californian rental housing (where rents were rising fast), and a dogged opponent of efforts to strengthen the state’s rent controls.

      In other words, the third critical point is that if a private equity firm does deliver strong investment returns to investors, ordinary workers themselves have often paid the price – if not in the form of higher housing rents, then for instance through higher usage charges on energy, transportation and water and sewage infrastructures, which like real estate have become an increasingly popular class of investment for asset managers’ alternatives funds in recent decades.
      …
      https://time.com/6289431/private-equity-costs/

      …

      1. Does it seem ironic that California state politicians, who blab endlessly about the housing crisis, contribute to unaffordable housing and homelessness by turning a blind eye to the University of California’s residential real estate investing partnership with Blackstone?

        1. The Blackstone investment: A non-neutral explainer
          Lee Xuan
          Senior Staff
          APRIL 22, 2023

          In a feature essay published last month about the aftermath of last fall’s academic workers strike, I brushed aside the implications of a $4.5 billion investment that University of California Investments, or UC Investments, recently made in Blackstone. The piece itself already seemed to bite off more than it could chew — as evidenced by its hefty 2,600 words — and I thought the full Blackstone story best saved for another day.

          Today is that day.
          …
          The investment

          On Jan. 3, 2023, the university invested $4 billion in the Blackstone Real Estate Income Trust, Inc., or BREIT. Three weeks later, it announced the investment of an additional $500 million, bringing the total investment up to a whopping $4.5 billion.

          Blackstone is, in the firm’s own words, “the world’s largest alternative asset manager.” That means that they work to “serve institutional and individual investors by building strong businesses that deliver lasting value.”

          In plain English, Blackstone is an investment firm — asset management is simply the practice of pooling resources from many people in order to grow them more quickly. Blackstone manages $975 billion in alternative assets, which exist in opposition to conventional assets such as stocks and bonds, and which include things like venture capital, art and antiques, hedge funds and real estate. BREIT is a real estate trust investment firm owned by Blackstone Inc. — that is to say, albeit legally being a separate company, it is essentially Blackstone’s real estate investment arm.

          Blackstone manages $975 billion in alternative assets, which exist in opposition to conventional assets such as stocks and bonds, and which include things like venture capital, art and antiques, hedge funds and real estate.

          Therefore, UC Investments’ $4.5 billion investment in BREIT means that Blackstone will use the money in real estate investment that will hopefully yield higher returns than the university could otherwise obtain. While the size of this sum is newsworthy, it is also pertinent to note that this investment is nothing new: The university has been a Blackstone investor for more than 15 years.

          What does the investment mean for housing markets?

          Investing in firms such as Blackstone is, perhaps, not inherently bad. Real estate is profitable — if the amount we pay in rent is any indication — and the university should grow its money with the financial instruments available, especially if it uses that wealth to further its goals of education and public service.

          However, concerns arise when one considers Blackstone’s alleged practices in the housing market. In 2019, the United Nations accused Blackstone of engaging in predatory practices in housing markets, including artificially inflating rents, executing “aggressive evictions” and intentionally shrinking the supply of affordable housing in order to further drive up prices.

          In response, Blackstone expressed that it was “surprised and disappointed” by these allegations. However, in a promotional pamphlet for BREIT, the firm blatantly cites growing market rents as one of “today’s performance drivers” and limited housing supply as one of their “medium-term tailwinds,” touting 10% yearly rent hikes and a decrease in new housing supply of up to 40% as things to be celebrated or even company achievements.

          In places such as Berkeley, where the university claims to be battling the housing shortage in good faith and as a good neighbor, investing in a firm that sees housing shortages as good for business seems counterintuitive. Although the ills of American housing markets run deep and, arguably, run deeper than companies such as Blackstone, they are certainly exacerbated by actively predatory business practices. For the university to claim that it is committed to solving the housing crisis while putting billions of dollars into a firm that seems to worsen it seems disingenuous at best.

          For the university to claim that it is committed to solving the housing crisis while putting billions of dollars into a firm that seems to worsen it seems disingenuous at best.

          Owing to these concerns, the Council of UC Faculty Associations, among other unions, has demanded that the university divest from its $4.5 billion in Blackstone holdings, along with an additional $2 billion that it had previously invested in the firm. Last week, community members once again called for divestment at a rally for AFSCME 3299, a union on campus protecting service, technical patient care and skilled crafts workers.

          What does the investment mean for Blackstone?

          In researching the Blackstone investment, one also comes across a second interesting point — that, at the time of the university’s investment, BREIT appeared to be struggling.

          In November last year, BREIT investors began asking to pull their money out of the fund. When withdrawals totaled more than 5% of BREIT’s net asset value, the fund began blocking these redemption requests. This persisted into January, in which investors attempted to withdraw $5.3 billion from the fund. Of this amount, BREIT approved $1.3 billion.

          It was against this backdrop that the university put $4 billion into BREIT, with the firm promising to use $1 billion of its own money to ensure that the university would turn a profit.

          Blackstone’s Head of Real Estate Americas, Nadeem Meghji, described this inflow of capital as “changing the narrative” around BREIT — and, indeed, things seemed to improve in February, with withdrawals slowing as investor confidence seemed to recover slightly.

          However, following the collapse of Silicon Valley Bank last month, withdrawal requests have once again surged, growing by 15% to $4.5 billion. BREIT found itself having to restrict withdrawals for the fifth consecutive month. Having to stop investors from pulling their funds is certainly a bad omen for an investment firm, raising possible questions about how wise it was for the University to sink $4 billion into BREIT — and then $500 million more.

          It bears restating here that the university made this investment at the same time as it claimed to struggle to fund better contracts for striking graduate student workers. While they have explained that the use of funds is restricted by certain rules, the question remains: Who decides that the university has money to gamble on Blackstone, hoping that the investment will pay for pensions, but that it doesn’t have the resources to pay its graduate students enough to escape rent burden?

          What has the university said about all this?

          Nonetheless, at the time of the investment, Chief Investment Officer of UC Investments, Jagdeep Singh Bachher, stated in a press release that he expected this to be a good investment in the spirit of “the UC Investments Way.”

          When I reached out to the UC Office of the President some weeks ago asking about Blackstone’s alleged predatory practices, spokesperson Ryan King said in an email, “On your questions related to Blackstone, we have reached out to the UC Investments office, which is an independent entity that reports to the University of California Board of Regents. They do not have a comment to provide at this time.”
          …
          https://dailycal.org/2023/04/22/the-blackstone-investment-a-non-neutral-explainer

          1. ‘In response, Blackstone expressed that it was “surprised and disappointed” by these allegations.’

            I’m shocked, shocked, to find that gambling is going on in here.

            — Louis, Casablanca

        2. Yahoo
          Benzinga
          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

        3. “…by turning a blind eye to the University of California’s residential real estate investing partnership with Blackstone?…”

          Add their shear size, it seems to me that Blackstone, Blackrock and similar entities are becoming the new shadow government(s).

          1. I am having a hard time containing my fascination with the marriage made in Hell between Californias’s ultraliberal politicians and Blackstone’s residential real estate investing team.

          4. “Add their shear size, it seems to me that Blackstone, Blackrock and similar entities are becoming the new shadow government(s).”

            It is much more than this. They are both run by people with a specific ethnic agenda. When discussing blackstone and universities it is helpful to know that they also swallowed up Follett the big university bookstore chain. They immediately started firing white people and made specific policies to replace them with ‘diversity.’ They also started pushing lots of mandatory special training initiatives like learning spanish and they now control the flow of information to the students of all of those universities. Why would they do these things and why does an REIT need a bookstore chain? (They did it through a subsidiary owned by the founder.) Make no mistake, these two companies have a very serious agenda and at some point we will be forced to reckon with them. I will cheer the day they are burned to the ground. They are evil scum masquerading as investment advisers.

          5. “The World is a Corporation”

            There’s the globalist no war, no poverty promise.

          6. Agreed. Unfortunately the folks handing over community infrastructure to the private sector are our local politicians (BTW, the easiest ones to vote out of office).
            When your tolls, water, and sewer keep going up blame your local politician for voting to hand local control over for a fast buck.

        4. CRE is CR8Ring.

          I hope the entombed BREIT investors enjoy the view from the bottom of the CR8R.

          1. Financial Times
            Commercial property
            Financial storm bears down on US commercial real estate
            Long-awaiting reckoning arrives as building loans come due at time of scarcer credit
            The Manhattan, New York, skyline
            The values of office buildings in New York City are estimated to have dropped by $76bn from their most recent sales prices
            Joshua Oliver and Joshua Chaffin in New York 2 hours ago

            The 20-storey tower at 529 Fifth Avenue stands out from the other buildings around Grand Central Station for the surreal pink designs of an Alice in Wonderland-inspired art exhibit installed to fill vacant retail space on its ground floor.

            It is also remarkable as one among a small number of towers that have recently changed hands, giving a clue as to the value of Manhattan’s older offices now that the commercial real estate sector has emerged from a historic era of ultra-cheap money.

            Silverstein Properties sold the building three months ago for $105mn. In price per-square-foot terms, that was even less than a plot of land across the street commanded in 2015.

            “In New York, buildings are selling for less than the value of the land they sit on,” said Will Silverman, managing director at Eastdil Secured, a real estate investment bank. “We are seeing prices lower than they have been in 20 years in absolute dollar terms.”

            A long-anticipated reckoning is under way in the US commercial property industry, with the results playing out at 529 Fifth and other addresses. Sharply rising rates, a regional banking crisis that curtailed credit and a trend towards remote work are all wreaking havoc. Older office buildings have borne the brunt of the downturn, but other real estate categories have not been spared.
            Bar chart of Q1 2023 showing US CRE foreclosures by property type

            The results are evident in mounting strain around the country — from New York developers handing back obsolete office buildings to lenders, to foreclosures on heavily indebted apartment complexes in Houston and defaults on hotels and shopping malls in San Francisco. Banks, under scrutiny from regulators and investors, are now beginning to offload even performing property loans at a loss.

            “I am not sure people have come to terms with how long the storm will hover and how much damage it will do,” said Scott Rechler, president of RXR, one of New York’s largest developers, likening the situation to a hurricane making landfall. “As for multifamily and other [commercial real estate], I believe that the markets are underestimating its potential severity.”
            …

          2. How much has Cathie Wood lost by now on risk asset HODLings that stopped continuously going up?

          3. Cathie Wood Wonders What’s The Next Shoe To Drop, As Ark Invest Founder Blames Fed For Regional Banking, Commercial Real Estate Crises
            by Shanthi Rexaline, Benzinga Editor
            June 24, 2023 3:23 PM | 3 min read
            Zinger Key Points

            – The central bank has cumulatively raised rates by 4.75% to 5% in a year’s span, and the fed fund rate is at a 16-year high of 5% to 5.25%.

            – Wood blamed the banking crisis and the commercial real estate collapse on the rate hikes.

            The Federal Reserve hit the pause button at the June meeting and signaled that more rate hikes could be around the corner, but at least one analyst believes that the central bank may have overreacted.

            What Happened: Ark Invest founder and money manager Cathie Wood took to Twitter on Friday to comment on the Fed’s move.

            Wood shared a chart of the rate moves since early 1971 to show that the Fed’s current tightening cycle has been more severe than the past cycles, including the one between1980 and 1981 that crushed inflation.

            “So far, unprecedented Fed tightening has broken the regional banks and commercial real estate. What will deflation destroy next?” she said.

            While the Fed has noted that inflation has stubbornly remained above its target, Wood has in the past sounded her view that the central bank is relying on lagging indicators. She has argued that the prices of several commodities have dropped significantly from their pandemic highs.
            …
            https://www.benzinga.com/analyst-ratings/analyst-color/23/06/32997235/cathie-wood-wonders-whats-the-next-shoe-to-drop-as-ark-invest-founder-blames-fed-fo

    1. Related article (6/19/2023):

      “Public health bureaucrats and politicians and the media were dishonest about the real risks of Covid, far overstating them for most people. They pushed lockdowns and school closures that did serious mental health damage.

      Then, in their rush to undo the crisis they’d caused, they endorsed mRNA “vaccines” that had been rushed through development and testing.

      When those shots began failing months after their initial rollout, the public health mandarins refused to admit the truth and instead doubled down. By late 2021, they were pushing for repeated dosing within three or four months, a brazen and dangerous strategy.”

      https://alexberenson.substack.com/p/the-mrna-fanatics-are-nervous

      Read the results of the Cleveland Clinic study for yourself. They’re not “vaccines” they don’t work and they’re probably going to kill you.

      1. I’ll never forget NY Governor Cumo returning nursing home residents recovering from COVID back to the nursing home environment rather than use the hospital ship that president Trump ordered into NY harbor expressly for COVID recovery care because he didn’t want any positive benefit going to Trump.

        1. He murdered thousands. And liberals are just fine with that. Orange Rage is a severe mental illness.

  8. How is Putin’s war working out for him? Is it just about over by now, considering what a cake walk the Ukraine invasion was supposed to be, according to the best Russian authorities on cakewalks?

        2. How Biden is trying to clean up his comments about Russia and Ukraine

          January 20, 20225:50 PM ET

          “I think what you’re going to see is that Russia will be held accountable if it invades. And it depends on what it does. It’s one thing if it’s a minor incursion and then we end up having a fight about what to do and not do.”

          Kamala Harris circles back to Ukraine remark altered by White House

          by Daniel Chaitin
          March 15, 2022

          “When I was in Poland, I met with U.S. and Polish service members, thanking them for standing with our NATO allies for freedom, peace, and security,” Harris said. “The United States stands firmly with the Ukrainian people in defense of the NATO alliance.”

          That last sentence repeats a comment Harris made in a speech to Democrats over the weekend but lacks the addition, made by the White House in the official transcript, separating Ukrainian people, who do not live in a NATO country, and the NATO alliance: “I will say what I know we all say, and I will say over and over again: The United States stands firmly with the Ukrainian people [and] in defense of the NATO Alliance.”

          https://www.washingtonexaminer.com/news/white-house/kamala-harris-circles-back-to-ukraine-remark-altered-by-white-house

          ‘As Long As It Takes’: Biden on Funding Ukraine Amidst Russia War

          Published By: Rohit
          Last Updated: JUNE 09, 2023,

          https://www.news18.com/world/biden-confident-us-will-fund-ukraine-russia-war-8035087.html

          1. We can blame Dubya and his pompous crusade mentality for initially deciding to break the neutrality agreements regarding the former Soviet satellite countries.

          2. The CIA’s Intervention in Afghanistan
            Interview with Zbigniew Brzezinski,
            President Jimmy Carter’s National Security Adviser

            Le Nouvel Observateur, Paris, 15-21 January 1998
            Posted at globalresearch.ca 15 October 2001

            Question: The former director of the CIA, Robert Gates, stated in his memoirs [“From the Shadows”], that American intelligence services began to aid the Mujahadeen in Afghanistan 6 months before the Soviet intervention. In this period you were the national security adviser to President Carter. You therefore played a role in this affair. Is that correct?

            Brzezinski: Yes. According to the official version of history, CIA aid to the Mujahadeen began during 1980, that is to say, after the Soviet army invaded Afghanistan, 24 Dec 1979. But the reality, secretly guarded until now, is completely otherwise Indeed, it was July 3, 1979 that President Carter signed the first directive for secret aid to the opponents of the pro-Soviet regime in Kabul. And that very day, I wrote a note to the president in which I explained to him that in my opinion this aid was going to induce a Soviet military intervention.

            Q: Despite this risk, you were an advocate of this covert action. But perhaps you yourself desired this Soviet entry into war and looked to provoke it?

            B: It isn’t quite that. We didn’t push the Russians to intervene, but we knowingly increased the probability that they would.

            Q: When the Soviets justified their intervention by asserting that they intended to fight against a secret involvement of the United States in Afghanistan, people didn’t believe them. However, there was a basis of truth. You don’t regret anything today?

            B: Regret what? That secret operation was an excellent idea. It had the effect of drawing the Russians into the Afghan trap and you want me to regret it? The day that the Soviets officially crossed the border, I wrote to President Carter. We now have the opportunity of giving to the USSR its Vietnam war. Indeed, for almost 10 years, Moscow had to carry on a war unsupportable by the government, a conflict that brought about the demoralization and finally the breakup of the Soviet empire.

            Q: And neither do you regret having supported the Islamic fundamentalism, having given arms and advice to future terrorists?

            B: What is most important to the history of the world? The Taliban or the collapse of the Soviet empire? Some stirred-up Moslems or the liberation of Central Europe and the end of the cold war?

            Q: Some stirred-up Moslems? But it has been said and repeated Islamic fundamentalism represents a world menace today.

            B: Nonsense! It is said that the West had a global policy in regard to Islam. That is stupid. There isn’t a global Islam. Look at Islam in a rational manner and without demagoguery or emotion. It is the leading religion of the world with 1.5 billion followers. But what is there in common among Saudi Arabian fundamentalism, moderate Morocco, Pakistan militarism, Egyptian pro-Western or Central Asian secularism? Nothing more than what unites the Christian countries.

            Translated from the French by Bill Blum

            The URL of this article is:
            http://www.globalresearch.ca/articles/BRZ110A.html

  9. The times of the consumer buying an asset that they cannot monetize are over.’”

    Die, speculator scum.

    1. “As demand grows, a whole industry supporting the growing short-term rental market has begun to sprout.”

      When this gig’s profits begin to wane they’ll cajole the public pension systems to buy them.

    1. “25 straight months of negative REAL wage growth”

      Brought to you by an unelected administration that (direct quote) told us inflation was a “high class problem” whatever that means.

      Emphasis on the word MISERY, misery, deprivation, and hunger. And they’re doing all of this on purpose.

  11. ‘Those people who chose to take advantage of programs where they could not pay their mortgages and put the payments on the back end of the loan are now faced with homes whose prices are leveling out and they find themselves underwater.

    No one could’ve seen it coming…no one.

  15. Real estate professionals have doubts about the effectiveness of office-to-residential conversions as the answer to the city’s problems.

    How many bathing facilities do offices have? What’s the ratio of toilets per person? Re-plumbing ain’t cheap.

    1. And who wants these pugnacious drug-addled homeless scum residing downtown among the office towers?

  21. ‘We’re at a point in the housing market where we just haven’t been building housing for a long time, so there’s just no adequate supply.’

    US housing and sub-prime crisis
    Buying a home in the US is expensive – and that isn’t changing anytime soon
    Even if there are fewer home buyers and prices have been falling slightly, they’re still much higher than pre-pandemic and for many, more unaffordable than ever
    Lauren Aratani
    Sat 24 Jun 2023 06.00 EDT
    Last modified on Sat 24 Jun 2023 06.15 EDT

    After an intense two-year buying frenzy during the pandemic, the once-hot US housing market has started to cool.

    The US Federal Reserve set interest rates to its highest level in over a decade, and mortgage rates are sitting well above 6% for a 30-year fixed rate. The effect on the housing market has already started to show: the National Association of Realtors reports existing home sales in May were down 20% compared with a year earlier. And the median home sales price in May was $419,103, according to real estate company Redfin, a 3.1% drop compared to last year.

    But even if there are fewer home buyers on the market and prices have been falling slightly, home prices are still much higher than before the pandemic, and that is unlikely to change anytime soon. In January 2020, the median home price was $290,499 – almost 45% less than what the median home price was in May 2023.

    This is good for existing homeowners, who have seen the value of their homes soar during the pandemic. The S&P CoreLogic Case-Schiller index, which tracks home values across 20 cities, shows that even though home values reached a peak in June 2022, they were worth at least 35% more in March 2023 compared with three years prior.

    Yet for many buyers, high housing prices have made homes more unaffordable than ever.

    Harvard’s Joint Center for Housing Studies in its annual State of the Nation’s Housing report released 21 June estimates that 2.4 million potential homebuyers have been priced out of buying a home with rising costs. Last year, just as mortgage rates were starting to rise, buying a home in a typical metro area required an annual income of at least $67,000. This year, with high mortgage rates, it requires an annual income of $86,000.
    …
    https://www.theguardian.com/business/2023/jun/24/us-housing-market-home-prices-expensive

    1. Add in the U.S. supporting the 1973 Yom Kippur war with weapons, and the OPEC oil embargo was the proverbial cherry on top.

      1. Cue the video of the dad beating the sh!t out of the perv stalking his daughter.

  24. Hunter Biden & AG Garland Hobnob at Same State Dinner After Sweetheart Deal Announced

    by Jamie White
    June 24th 2023

    Attorney General Merrick Garland and Hunter Biden were both seen attending a state dinner on Friday night in the wake of the Justice Department slapping him with watered-down tax and gun charges.

    The White House dinner had a 400-person guest list, including Joe Biden’s brother James, who was also involved in Joe and Hunter’s foreign business dealings detailed in Hunter’s Laptop from Hell.

    https://www.infowars.com/posts/hunter-biden-ag-garland-hobnob-at-same-state-dinner-after-sweetheart-deal-announced/

    Collin Rugg
    @CollinRugg

    Hunter Biden and Merrick Garland attended the same state dinner last night just hours after the Department of Justice was accused of a massive cover up involving Hunter’s tax fraud case.

    They are laughing at you.

    They think you are stupid.

    They are in one big elite club with… Show more

    https://twitter.com/CollinRugg/status/1672287239915835392?s=20

    1. Yahoo
      Moneywise
      Super-rich Americans are giving up on the stock market, hold record levels of cash — here’s why and what they’re plowing their wealth into
      Vishesh Raisinghani
      Sat, June 24, 2023 at 6:00 AM PDT·3 min read

      Across the country, America’s super-rich have reduced their exposure to the stock market by the most dramatic margin in years, according to recent data from the Capgemini Research Institute.

      High net worth individuals — defined by Capgemini as those with $1 million or more in investable assets — held over 34% of their portfolios in cash as of January 2023. That’s the highest level since at least 2002. It’s also significantly higher than the 24% cash exposure these investors had last year.

      Ultra-high net worth individuals and billionaires seem to be following a similar pattern. Warren Buffett’s Berkshire Hathaway, for instance, added $2 billion to its cash reserve in the most recent quarter, bringing its cash balance to $130 billion.
      …
      https://finance.yahoo.com/news/super-rich-americans-giving-stock-130000070.html

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