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Like Many People, We Borrowed Based On The Idea That The Smartest People Were Making Those Decisions

A report from WPTV. “With the influx of people moving to South Florida and the Treasure Coast, real estate experts said don’t expect to see much of a correction in the market. But there is a glimmer of hope in the rental market. ‘As we start going into [the tourist] season, 2023-2024 season, we’re seeing a lot of landlords, who have had their homes on Airbnb, reach out to us to market their homes for an annual rental,’ said real estate agent Holly Meyer Lucas ‘to try to find a tenant who is not an Airbnb-type tenant, so more of a local. As these landlords don’t see those prices that they are used to seeing in 2020 and 2021, them moving inventory into the traditional rental space versus being on Airbnb, I think it’s gonna stabilize a little bit.'”

From WINK News. “Homes not built on time and homeowners finding problems floor to ceiling once they get inside: That’s what customers of one southwest Florida builder say they’re dealing with, and they want to warn others about their experience. Jenn Grube moved to the North Port area excited to build her own dream home after raising a family. The Grubes chose Zwiercan Homes, saying they loved the company’s models, and with a timeline of 12 to 18 months, they hoped for a quick and easy process. ‘We didn’t want the hassle of buying a used home, and somebody else’s problems,’ Grube explains. ‘Well, we bought a lot more than that. Because nothing was right.'”

“Dr. Kandi Norrell and her husband are still waiting to move into their home, built by Zwiercan. The Norrells say Zwiercan tried to hit her with a 128 thousand dollar overage just a couple of weeks before move-in day. And when the Norrells asked for documents to explain the extra cost, Zwiercan couldn’t produce the paperwork. ‘What are we going to end up with and when are we ever going to finish,’ Norrell wondered. ‘It goes from joy to frustration to anger. If nothing else, I don’t want anyone else to be taken like this. I want justice.'”

KEYE in Texas. “Austin home buyers are finally catching a break after a competitive few years in the housing market. While prices are still high, competition isn’t as steep– with some properties selling under list price. The days of cutthroat bidding wars and making offers on houses sight unseen are over — at least for now– thanks to more homes on the market, stable prices, and less competition from other buyers. In May 2023 median home prices were down more than $80,000 compared to the year before. In May 2022 the median home price was $550,000 but in May 2023 it was $467,500.”

The Orange County Register. “The median sales price for an existing California single-family house was $836,110 in May. That’s down 6.4% from a revised all-time high of $893,200 in May 2022. Prices fell in 42 of the 53 counties tracked. Ponder the state’s 10 most populous counties, ranking but their year-long price dips …Alameda: $1.26 million median for May – off 17% in a year even after a 15% three-month rally. Sales down 27% in the year. Contra Costa: $888,000 – off 11% (17% rebound) with sales down 28%. Santa Clara: $1,788,000 – off 7% (19% rebound) with sales down 15%. Sacramento: $535,000 – off 7% (7% rebound) with sales down 20%. Los Angeles: $744,770 – off 7% (2.5% rebound) with sales down 21%. San Bernardino: $455,000 – off 7% (after a 2.5% drop past three months) with sales down 23%.”

The Real Deal. “Tides Equities is feeling the brute force of rising interest rates. The firm’s co-founders, Sean Kia and Ryan Andrade, have told investors to expect capital calls — injections of equity from limited partners — to help boost the portfolio, according to a copy of an investor letter from Tides Equities obtained by The Real Deal. The Los Angeles-based investment firm became one of the most aggressive multifamily buyers in 2021 and 2022, scooping up more than $6.5 billion worth of apartments across Sun Belt markets, some of which saw double-digit rent growth during that period.”

“But those acquisitions were almost all made using floating-rate loans in a period of low interest rates. ‘Properties that had previously been positively cash flowing’ during renovation periods ‘suddenly became strapped for cash, as the operating revenues increasingly went towards the rapidly rising mortgage payments,’ Tides said in its letter. ‘Many properties entered negative cash flow territory.'”

“At nine properties — in Mesa, Arizona; Las Vegas; and Fort Worth, Austin and Lewisville, Texas — Tides’ reported debt service coverage ratio is less than 1, meaning the firm is not yielding enough income to meet debt payments.”

From Bisnow. “A tall wall of hard-to-refinance debt in the formerly high-flying and still in-demand multifamily sector is coming in October and November. In October alone, well over $4B in commercial mortgage-backed securities loans associated with multifamily properties will come due, and November’s total will be nearly $4B, multifamily investor Gray Capital reports, citing CoStar data. Those totals don’t count non-CMBS loans, so the actual total will be even higher than those figures.”

“The fourth-quarter 2023 wall is the legacy of a peak in multifamily investment sales that happened exactly two years earlier. Interest rates were still historically low then, while demand for apartments, and the rents they commanded, were headed for the sky. A lot of buyers were inspired by fear of missing out, Gray said. ‘It’s a complete financial quagmire,’ Gray said. ‘Demand for housing is surprisingly strong now, but the financial realities of how these assets were financed just ahead of a sudden and rapid rise in interest rates has created this situation.'”

From Mises.org. “The local paper’s headline posed the question, Do renters have the upper hand in Las Vegas right now?’ ‘[The apartment project] offered us two weeks of no rent to get us moved in on the timeline we wanted, said a renter who was also given passes to the Life Is Beautiful music festival as part of the deal. ‘They also throw resident events every month providing food and entertainment,’ she added. Las Vegas Review-Journal business reporter Patrick Blennerhassett reports deals like this are not uncommon. Websites for Las Vegas apartment projects indicate apartment owners ‘are doling out a multitude of perks.'”

“Evidence of this surge is visible all over Las Vegas with dozens of large multifamily units in various stages of construction. But Vegas is not an anomaly. The Wall Street Journal reports that more than 950,000 multifamily units are under construction, three times the number for apartment construction twenty years ago. Wall Street Journal’s Will Parker writes that Sunbelt cities are the most exposed. When covid-19 vaccines came out, demand for multifamily housing surged and rents increased 25 percent. But now, that growth has disappeared. Parker identifies Phoenix, Atlanta, and Las Vegas as markets where rents are falling.”

From CTV News. “Gerald Comeau has been leading a one man protest in front of Royal Bank of Canada (RBC) headquarters in downtown Toronto for the past six months. Despite working two jobs, Comeau told CTV News Toronto he comes down almost every day to protest with a sign, chanting: ‘Shame on me, for trusting RBC.’ Comeau claims he paid a $30,000 penalty to break his five year fixed mortgage in April 2021, so he could sign up for another five year mortgage that had a rate of two per cent. But he said when interest rates started going up, so did his monthly mortgage payments.”

“‘I got a call from the bank that said, ‘Oh, Mr. Comeau your rates have gone up four times already.’ I said, ‘No, you’ve got the wrong guy. I broke my mortgage last year, which cost me $30,000 and I got a fixed mortgage,’ Comeau said. That’s when the bank told Comeau the contract he signed was for a variable rate mortgage. ‘Two months I was telling them what I wanted and why I wanted it and they said, ‘Too bad, you should have read it before you signed it,’ he said. ‘Now, I pay $1,100 a month more for this and that’s on top of the $30,000 I paid to break the mortgage.'”

From The I in the UK. “Insufficient stress testing could have left mortgage holders exposed to rising interest rates, experts have told i. Lenders were not required to factor inflation into their affordability checks for mortgages meaning that some borrowers could struggle to make repayments as interest rates rise on top of the cost of essentials. The average interest rate for a two-year fixed rate mortgage has hit 6 per cent and Britain is currently experiencing the highest core inflation rate for three decades – 8.7 per cent – for longer than was expected, while essentials such as food have an even higher inflation rate of 18.4 per cent.”

“While many mortgage lenders will have stress tested their customers’ ability to repay loans at 6 or 7 per cent, they may not have factored in their ability to repay mortgages against the backdrop of such high living costs, experts say. Last year, the Bank of England scrapped the mortgage market affordability test which forced banks to be sure that mortgage borrowers could afford a three-percentage point rise in interest rates before they could be approved for a home loan.”

“‘There will be some people for whom this testing wasn’t sufficient in the current climate, we don’t know how many people will be adversely affected by rising rates yet,’ added Richard Donnell , executive director of the property listing website Zoopla.. ‘Affordability testing seemed draconian at the time and priced many young people out of home ownership. But, with mortgage rates rising toward 6% and rise in the costs of living some people are now questioning whether it went far enough. The Bank of England clearly needed a better crystal ball in 2015.'”

ABC News in Australia. “In September, Amber Daines and her partner will get a big shock. Their mortgage repayments will be up by about $3,000 a month after they roll off fixed mortgages in the coming months. ‘We took out the [new] loan with the idea [that] we would at least have three years to try and get some of that principal down before interest rates would change,’ she said.”

“She was also comforted by the reassuring words of Reserve Bank governor Philip Lowe (at the end of 2020 and through most of 2021) — that rates were unlikely to rise until 2024. Despite his assurances about rates staying low, the RBA ended up lifting rates at its most aggressive pace on record. She questions the messages that regulators and policymakers give people that encourage them to take on too much debt. Amid the escalating rise in housing, grocery, electricity and other costs, Ms Daines is thinking of selling one of her properties.”

“The couple have two mortgages – one is a mostly fixed (80 per cent), partly variable (20 per cent) rate on their home in NSW’s central coast, which they purchased for just under $1 million in July 2021. The other is an interest-only loan on their original home in Gladesville in the Lower North Shore of Sydney – where they were living before the move to the central coast, but which is still mortgaged. They are renting that out, but she says the rent is not going to cover the mortgage and they may be forced to sell it. ‘That’s a pretty big deal — that was never the plan,’ she says.”

“Ms Daines says while the RBA can not predict events like the war in Ukraine and other factors that lead to a spike in inflation, it is ‘disappointing’ that the RBA gave the wrong message to the Australian people. ‘Like many people, we borrowed based on the idea that [it] looked like the smartest people [were] making those decisions about the economy.'”

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This Post Has 51 Comments

  1. ‘They are renting that out, but she says the rent is not going to cover the mortgage and they may be forced to sell it. ‘That’s a pretty big deal — that was never the plan,’ she says’

    Saw this coming years ago.

    ‘Like many people, we borrowed based on the idea that [it] looked like the smartest people [were] making those decisions about the economy’

    Phil broke it off in yer a$$ Amber.

    1. ‘That’s a pretty big deal — that was never the plan,’ she says’

      “Everybody has a plan until they get punched in the face.” — Mike Tyson

    2. ‘Like many people, we borrowed based on the idea that [it] looked like the smartest people [were] making those decisions about the economy’

      How can so many lemmings following the same dumb strategy of leveraging up to buy property and become a part-time landlord possibly be considered smart?

    3. a LOT of people (esp in US) kept their old house when they bought their new house in 2020/21/22 cuz why not interest rates were free. That’s a LOT of shadow inventory just sitting there. When things get tight they don’t have 1 house to downsize, they have 2 or 3.

      slowly at first, then all at once.

  2. ‘A lot of buyers were inspired by fear of missing out, Gray said. ‘It’s a complete financial quagmire’

    FOMO strikes again.

    1. BOHICA time, FOMO peak buyers. If you must squeal, please squeal in time with all the other FBs.

  3. As these landlords don’t see those prices that they are used to seeing in 2020 and 2021, them moving inventory into the traditional rental space versus being on Airbnb, I think it’s gonna stabilize a little bit.’”

    Die, speculator scum.

  4. ‘What are we going to end up with and when are we ever going to finish,’ Norrell wondered. ‘It goes from joy to frustration to anger. If nothing else, I don’t want anyone else to be taken like this. I want justice.’”

    Gosh, I’m trying to conjure up some vicarious frustration and anger over this situation, but as a renter, I seem stuck on joy over not finding myself deep in debt for a shoddily-constructed, insanely overpriced shack.

  5. ‘Two months I was telling them what I wanted and why I wanted it and they said, ‘Too bad, you should have read it before you signed it,’ he said. ‘Now, I pay $1,100 a month more for this and that’s on top of the $30,000 I paid to break the mortgage.’”

    Try reading for comprehension next time, Sparky.

  8. more proof of a housing bubble that should have never happened

    Until the tenant leaves, the buyer would be operating at a loss. The current rent, well below market rate for the neighborhood, doesn’t even cover the building’s monthly common charges.

    ——and the kids can take over the lease if they live there at least 2 years as a permanent resident all your addresses match this one you vote in NYC ,must prove you live here like a job, it would help to sell any other residences as you know the landlord will sue you……the best 401K the grand kids can have……but then you bought the apartment with this encumbrance many decades ago for far less than market value then

    https://www.crainsnewyork.com/residential-real-estate/4m-greenwich-village-condo-has-rent-stabilized-tenant-who-can-stay-forever

  9. “In September, Amber Daines and her partner will get a big shock. Their mortgage repayments will be up by about $3,000 a month after they roll off fixed mortgages in the coming months. ‘
    “Now that’s funny right there I don’t care who you are. That there is funny.” Larry The cable guy

    1. There’s no regime change coming. The population consists of incels and old people. They’ll send off the incels to fight a war or colonize the west coast of the US before there’s an uprising to cause regime change. It would take some serious external factors like famine, prolonged war, economic collapse and trillions in us weaponry in the hands of ‘rebels’ to overthrow the CCP. A black swan that none of us will see in our lifetime. Mao was a disaster of epic proportions and yet the party maintained control. It took the Roman Empire 200 years of inflation and barbarian invasions to finally collapse. CCP ain’t going nowhere in my lifetime. I hope I’m wrong but probably not.

  11. “In September, Amber Daines and her partner will get a big shock. Their mortgage repayments will be up by about $3,000 a month after they roll off fixed mortgages in the coming months. ‘

    It would take a heart of stone to read these FB tales of woe and not laugh.

  13. Donated blood yesterday, and run into a former co-workers wife there in the waiting area. She and another woman were gushing about Biden and the great job his administration is doing. I thought about making it a round table with a few counter-points, but after listening for a couple of minutes I decided it would be futile.

    2. I gave up engaging the CNN MSM Useful Idiot crowd not long after the stolen election.

    3. She and another woman were gushing about Biden and the great job his administration is doing

      I’m afraid to ask, but what is it they think the administration is doing a good job of, exactly?

      1. “I’m afraid to ask, but what is it they think the administration is doing a good job of, exactly?”

        Student loan forgiveness, and college expenses as one of them has a daughter in high school. “It should be free like Europe,” said one. I chimed in that they test their students, sort them out in high school, i.e., only qualified students are admitted to University, and they don’t have fake programs where everyone get a trophy. I could see that I just rained on their parade, so I stopped right there; small town.

          1. “Courtesy of higher taxes.”

            That point didn’t cross my mind. My wife got sorted out for vocational school, i.e., “no Uni for you,” so there’s that.

    4. She and another woman were gushing about Biden and the great job his administration is doing

      I’m afraid to ask, but what is it they think the administration is doing a good job of, exactly?

    5. They live in a different world, they don’t see the Biden falling down videos, they have no idea about hunter bidens laptop or don’t believe it, they don’t understand how bad bidenomics is. I read the democrat twitter and it’s some warped world where nothing makes any sense and anyone who disagrees with them is a not-see. They accuse of republicans of being this way but we generally dislike our politicians and we assume they are traitorous RINOs. Democrats generally believe and like their politicians which is insane. Democrats like in some carefully constructed world of make believe. I saw one legacy blue check account the other day with hundreds of 1000s of followers still pushing that the there was no evidence of a lab leak of Covid, and that it was xenophobic to suggest so. Even facui knew it was a lab leak early on and did his best to cover it up but the blue checks live In an alternate reality. They quite literally can’t handle the truth.

      2. The blue check changed completely under Elon. Blue Check used to be a sort of Good Housekeeping Seal of Approval. Now it’s just a monthly verification service available to everyone, similar to antivirus or credit monitoring. I like the new system.

    1. Who is drinking bud light these days? Really who? No one. How can sales be down only 25% when there is a nationwide campaign to boycott and the shelves are full at the store and no one is buying it at the bars? Bars aren’t even putting it on tap anymore. That 25% figure is fake and must be a seasonally adjusted number or represent wholesale figures and not actual sales. I’ll admit I don’t know the methodology but it just doesn’t make any sense to me that 75% of bud light drinkers are still drinking bud light. It makes no sense. How can they be maintaining 75% of their sales with three full months of a constant barrage negative news? All news is fake these days, that we know, and I suspect the 25% drop off is fake too and is probably a lot more than that.

      1. How can sales be down only 25% when there is a nationwide campaign to boycott and the shelves are full at the store and no one is buying it at the bars?
        Was in a bar in Ohio rrecently and heard a guy order a small picture of Bud Lite. He was with 2 male friends.
        I was In a bar in North Carolina the other day and a guy at the bar was sitting there drinking bud Lite 16 OZ cans. In his defense there were on specials as was Miller lite and Yuengling. None had blue hair. The boycott ain’t universal and I believe Bud light was the only “lite” beer on tap at the Ohio Bar.

  15. Yer mistake was to trust the bankers!

    “‘I got a call from the bank that said, ‘Oh, Mr. Comeau your rates have gone up four times already.’ I said, ‘No, you’ve got the wrong guy. I broke my mortgage last year, which cost me $30,000 and I got a fixed mortgage,’ Comeau said. That’s when the bank told Comeau the contract he signed was for a variable rate mortgage. ‘Two months I was telling them what I wanted and why I wanted it and they said, ‘Too bad, you should have read it before you signed it,’ he said. ‘Now, I pay $1,100 a month more for this and that’s on top of the $30,000 I paid to break the mortgage.’”

    1. First you shear ’em, then you shave ’em, then you scalp ’em. Are we having fun yet in this global banker orgy?

    2. anyone who signs financial documents esp for 10’s of 1000’s of dollars without reading them

      well I don’t feel sorry for ya.

  17. ‘What are we going to end up with and when are we ever going to finish…It goes from joy to frustration to anger’

    It’s hard to say for sure, but yer somewhere between denial and bargaining Kandi.

    ‘I got a call from the bank that said, ‘Oh, Mr. Comeau your rates have gone up four times already.’ I said, ‘No, you’ve got the wrong guy’

    Denial <- Gerry you are here.

  18. A Realtor and Joe Biden are Trustworthy, Loyal, Helpful, Friendly, Courteous, Kind, Obedient, Cheerful, Thrifty, Brave, Clean, and Reverent.

    Oops that’s a Boy Scout.

    Realtors and the installed POTUS are Liars.

  20. How did you lose yer shack mate?

    The Bank of England clearly needed a better crystal ball in 2015.

  21. “But there is a glimmer of hope in the rental market. ‘As we start going into [the tourist] season, 2023-2024 season, we’re seeing a lot of landlords, who have had their homes on Airbnb”

    What do you see Suzanne?

    Lanlords! Landlords as far as the eye can see.

    I see Landlords!

    “Suzanne Researched This”

    https://youtu.be/20n-cD8ERgs

  23. High Court struck down affirmative action in regards to University admissions.
    They predict riots in the street this weekend in protest to the ruling.
    My reaction is who ever said you didnt have to qualify for higher education. Who ever said that you didn’t have to have the means to afford it.

    2. They predict riots in the street this weekend in protest to the ruling.

      Yes siree Bob, them Chinese American hoodlums are going to be trashing China Towns all across America! Justice Jackson said that Affirmative Action resulted in everybody assuming that black and brown skin people got into professional and prestige positions because of their skin color, not because they were qualified!

      Without Affirmative Action, how will unqualified “underrepresented minorities” become doctors, lawyers, engineers, Supreme Court Justices, WH Press Secretaries–how will the truly unqualified “underrepresented people” get those jobs???? When will the inequalities END?!

  24. How else can you do it other than the highest scores on testing get in. Otherwise if you based it on color, the highest score individuals are discriminated against.
    The 14th amendment , Civil Rights laws, Constitution did not assure equity, just that all colors can’t be discriminated against.
    Should you get a loan you don’t really qualify for?
    .
    Everything is qualifying in one way shape or form. You even have to qualify to drive a car.

    1. Another point. We all remember Hollywood Elite that were arrested for cheating in getting their unqualified kids in upper crust Universities.
      They paid or bribed parties when their kids didnt qualify. So, if we base admission on color, as opposed to highest test scores, , or based on bribery, or any other grounds other than qualifying , than it wouldn’t be fair….

    2. Today’s Supreme Court decision is a direct attack on Black people. No Black person will be able to succeed in a merit-based system which is exactly why affirmative-action based programs were needed. Today’s decision is a TRAVESTY!!!
      https://www.americanthinker.com/blog/2023/06/scotus_hands_down_decision_on_affirmative_action_and_alleged_biden_hire_announces_no_black_person_willsucceed_in_a_meritbased_system.html

      Let’s just cut to the chase. This Democrat, Erica Marsh, believes that blacks will never succeed without Affirmative Action. It’s all about keeping them on the plantation.

      1. No Black person will be able to succeed in a merit-based system

        Well, isn’t that racist.

      2. Guess we’ll have to keep an eye peeled for strategically placed pallets of bricks in the larger cities.

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