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Sky-High Mortgage Rates And Slipping Prices Have Turned What Seemed Like Surefire Investments Into Money Pits

A report from the San Francisco Chronicle in California. “In a historic trophy building overlooking breathtaking San Francisco views, 1360 Montgomery, Unit 12, is a penthouse condo for sale perched on Telegraph Hill. After a long stint on the market, it’s now for sale at $2 million — $999,999 less than its original list price. ‘In regards to the price adjustment, our objective is to figure out the market value for the current market conditions,’ said listing agent David Bartels of Everhome Realty. ‘Because the SF market has gotten so soft and seems to be getting softer, rather than chasing the market down with smaller price adjustments, I recommended a steep price adjustment to attract buyers and increase showings.'”

The Real Deal on Illinois. “A California real estate investor purchased a 268-unit apartment building in Streeterville at a steep discount. Irvine, Calif.-based Trinity Property Consultants bought the Seneca, a 17-story building at 200 East Chestnut Street for $55 million, according to a Cook County deed transfer. The building was sold by New York-based Vanbarton Group, a real estate investor that has holdings in residential, retail, office and hospitality properties. Vanbarton paid $74.9 million for the property in December 2014, marking a 26 percent decrease in the value of the property. The property traded hands for about $205,000 a unit, making it one of the best values a buyer has gotten for Chicago multifamily in premier Near North Side downtown submarkets in recent years.”

“In another recent loss in value on a Streeterville apartment complex, Miami-based Crescent Heights paid $173 million for the 400-unit apartment tower at 340 East North Water Street, handing the seller Invesco a big loss from its 2016 purchase of the asset for $240 million.”

From Florida Realtors. “Commercial real estate lenders are dusting off old playbooks to deal with a growing pipeline of bad loans. Earlier this month, Westfield made headlines when it confirmed that it was handing back the keys to the San Francisco Center, which backs about $560 million in CMBS (commercial backed securities) loans. It’s just one example of recent anecdotes of owners walking away from assets, but in many more cases lenders are hoping to get borrowers back to the bargaining table to work out solutions that don’t end in dreaded ‘jingle mail.'”

“‘There is a lot of talk about office, but people are going to be surprised about the disruption they see in sectors such as multifamily that people were not expecting,’ says Scott Larson, managing principal, Pangea Mortgage Capital in Chicago. In the past few years, there was some aggressive buying with business plans that would work only if a sponsor was able to precisely hit every piece of their projections. They may not have accounted for higher debt costs or softening fundamentals that some markets are experiencing, he adds.”

“One strategy for a distressed owner is to sell an asset before the loan matures. Ten-X is seeing potential deals of this type for its auction platform. However, the expected valuations aren’t always meeting an owner’s expectations. ‘You can’t bring a deal to our platform hoping for a miracle or a magic show,’ says Joseph Cuomo, a senior managing director at Ten-X. Ten-X also is getting calls from owners who have their lenders in tow. Rather than going through a lengthy workout or REO process, both sides have agreed to sell the asset and jointly cut their losses. ‘We’re seeing more of what I would call a lender-involved short sale,’ notes Cuomo. There is a recognition that the borrower has lost equity and the lender also is going to take a loss, but there is a willingness for both sides to come together to expedite a resolution, he adds.”

The Globe and Mail. “Real estate brokers say they are also seeing things slow down after a rush of sales in the spring. Paul Maranger, broker at Sotheby’s International Realty Canada, has seen an increase in listings in recent weeks, but he said overall supply is still thin. He said prospective buyers who were concerned about the health of the economy and the impact on their business put sales on hold. ‘I think you can only hold back in Toronto for a certain period of time. Then you have to move forward.’ He predicts some homeowners who have been struggling with higher interest rates and inflation may decide to sell, but he’s not expecting a flood of supply. ‘We’ll see anxiety sales,’ he said. ‘But we’re not going to see panicked sales with silly low prices.'”

The Daily Hive in Canada. “Sky-high mortgage rates and slipping condo prices in Toronto have turned what seemed like surefire investments into money pits, evidenced in a recent listing for a condo in one of the city’s most luxurious buildings. A condo purchased in 2021 for north of $2 million is now up for sale at less than two-thirds of that price. Located in the St. Regis Residences at Bay and Adelaide, this 47th-floor, two-bedroom, two-bathroom unit is currently listed for just over $1.5 million under Power of Sale, suggesting the owner may have bit off more than they could chew for an investment property.”

Landlord Today in the UK. “A prominent buying agent says nervous buyers are pre-emptively slashing asking prices before the housing market worsens. Jonathan Hopper, chief executive of Garrington Property Finders, says: ‘We’re starting to see a shift in pricing behaviour. As the summer slowdown approaches, some pragmatic sellers are recalibrating their aspirations by cutting prices pre-emptively to get ahead of the market, rather than slicing off thousands in response to a low offer. In some areas double-digit price reductions are now not uncommon, with regions that saw the frothiest excesses during the boom, as well as those with high levels of Help to Buy ownership, seeing some of the sharpest price falls. For many sellers this will be a bitter pill to swallow, albeit one that is preferable to the limbo of having their home sit unsold for months before they cut the price anyway.'”

The NL Times. “Housing prices in the Netherlands plunged by 8.9 percent from the peak of about 451,000 euros set in the second quarter of 2022. Now one year later, the sales price of an owner-occupied home averaged 410,000 euros, according to an analysis of the housing market by realtor association NVM. The decline is the sharpest ever measured by the organization, a spokesperson told newswire ANP. Existing home sales prices were down compared to a year ago regardless of the style of home. Apartment sales dropped by 9.4 percent to 342,000 euros. Terraced homes were sold for an average of 374,000 euros, down 7.1 percent in a year. Corner homes sold at 397,000 euros, down 8.4 percent. Semi-detached homes were valued at 438,000 euros, a fall of 9.8 percent. Fully detached houses were sold at 589,000 euros, an 11.1 percent fall.”

From News.com.au. “Experts polled in Finder.com.au’s monthly RBA Cash Rate Survey said more distressed sales was a looming risk for the market. It comes as a whopping 41 per cent of Aussie mortgagees surveyed in the comparison groups monthly Consumer Sentiment Tracker revealed that they struggled to pay their home loan in June. This was the highest proportion recorded since Finder began tracking the question in 2019. The finding came on the back of a data release from regulator APRA that showed mortgage defaults increased to $15 billion worth of home loans in March 2023.”

“Stella Huangfu from the University of Sydney told the Finder survey that investors may be vulnerable too. ‘Mortgage rates (are) typically 2-3 per cent higher than the RBA’s cash rate. At the moment the cash rate is 4.1 per cent, which means we are looking at mortgage rates between 6-7 per cent. For investors, rental income is not enough to cover such a high mortgage rate. I expect to see a significant increase on defaults of both investment loans and owner-occupied home loans very soon.'”

Newshub New Zealand. “A new report out by CoreLogic shows Aotearoa’s housing market downswing “continues to roll on” as the decline in property values accelerated in June. The report indicates the monthly decline in property prices was led by weaker figures in Auckland, down 3.0 percent for the month, with four out of six of Aotearoa’s main centres recording larger falls in June. CoreLogic says the decline takes the national annual rate of change 10.6 percent below the same time in 2022, from 10.2 percent in May. Aotearoa’s average house value remains $183,000 higher than before the COVID-19 pandemic in March 2020. But head of research Nick Goodall says the fall from the peak now exceeds $130,000. He said that shows just how strong the ‘pandemic-induced growth upswing’ was.”

The Phnom Penh Post. “The Real Estate Business and Pawnshop Regulator (RPR), a body under the Ministry of Economy and Finance, reported that from June 9-26, they received a total of 339 requests for intervention by people whose homes – either boreis or condos – had been seized or repossessed by developers when they failed to make the repayments that were due. Mao Pov, RPR’s head of license management and legal affairs department, told The Post on June 26 that 229 complaints were reported to his regulatory body, while the other 110 were reported to The Council for the Development of Cambodia. The push to resolve cases where homes have been confiscated follows a call from Prime Minister Hun Sen. Instead of moving straight to confiscation, Hun Sen encouraged developers to extend repayment periods.”

“‘This means no one would have to suffer the loss of their home, and the developers would not be disadvantaged. They would actually benefit, as they will be able to collect interest from their buyers for longer,’ he said.”

The South China Morning Post. “Hong Kong’s government has defied market expectations by announcing it will sell only two plots of residential land in the second quarter of the financial year – about half the number forecast by some analysts. Analysts suggested the surprisingly small offering of land in the second quarter may reflect the gloomy market conditions, though the government denied this was a factor in its decision. A rapid succession of interest rate increases has cast a long shadow over a growing property oversupply that is being exacerbated by newly built flats coming onto the market.”

“‘Developers’ bidding offers will be conservative,’ said Dave Ma, chief executive of Hong Kong Property Services. ‘There has likely not been much profit generated by home sales from construction sites bought in recent years. I believe they want a good price when bidding for land now. You would not buy at the price of two or three years ago, nobody wants to do loss-making business.'”

From Bloomberg. “Fresh signs emerged Wednesday that China is facing yet more challenges in its property debt crisis. Defaulted developer Shimao Group Holdings Ltd. failed to find a buyer for a $1.8 billion project at a forced auction, even at a heavy discount. Sino-Ocean Group Holding Ltd. saw its bonds tumble on news that the state-backed builder told some creditors it’s been working with two major shareholders on its debt load. The nation’s second-largest developer by sales, China Vanke Co., said last week that the home market is ‘worse than expected,’ joining a chorus of investors and analysts who have become bearish on the sector.”

“No buyers bid for Shimao’s land portfolio in Shenzhen, even though the asset was offered at a price 20% lower than its appraised value, according to results posted on online auction site JD.com. That will likely add hurdles to Shimao’s debt restructuring, Bloomberg Intelligence property analysts Kristy Hung and Lisa Zhou wrote in a note. The developer’s onshore commercial property unit purchased the land — spanning an area equivalent to 34 football fields — in 2017 for 24 billion yuan ($3.3 billion), a record in Shenzhen at the time.”

“Its original plan was to build a landmark complex with a 500-meter skyscraper, but the project ran into trouble last year after the company missed some payments on high-yield trust products used to fund the construction. Citic Trust Co., which manages the trust project, seized the asset and sued Shimao’s unit, according to the auction documents and Shimao’s company filing. Sino-Ocean bonds slumped further Wednesday, putting prices at just half their start-of-week levels. A 2 billion yuan onshore note due next month, the company’s next maturity, plunged 34.6% and saw trading suspended twice. A Sino-Ocean dollar bond due 2024 fell to a record low at about 15 cents.”

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This Post Has 132 Comments

  1. ‘No buyers bid for Shimao’s land portfolio in Shenzhen, even though the asset was offered at a price 20% lower than its appraised value…The developer’s onshore commercial property unit purchased the land — spanning an area equivalent to 34 football fields — in 2017 for 24 billion yuan ($3.3 billion), a record in Shenzhen at the time’

    See, a winnah! No bids on 34 football fields of land in Shenzhen, how the mighty have fallen.

    2. “…how the mighty have fallen.”

      Mighty is correct. Shenzhen is a major tech and finance center, and a shipping port city too.

    4. “No bids on 34 football fields of land in Shenzhen, how the mighty have fallen.”

      This problem is easily remedied: Simply eliminate the reserve price, and run a Dutch auction, where the offer price is systematically reduced until a bid is received. Easy-peasy!

  2. ‘In some areas double-digit price reductions are now not uncommon, with regions that saw the frothiest excesses during the boom, as well as those with high levels of Help to Buy ownership, seeing some of the sharpest price falls. For many sellers this will be a bitter pill to swallow, albeit one that is preferable to the limbo of having their home sit unsold for months before they cut the price anyway’

    That’s the spirit Jon, set em up for the a$$pounding to come!

    1. Re: double-digit price reductions are now not uncommon, with regions that saw the frothiest excesses during the boom

      Which gives lowering the boom an entirely new meaning . . .

      1. That doesn’t seem too surprising, given that mortgage rates are trending in the opposite direction from that predicted by the hopium addicts.

        Now may be the last good time to sell before rates go MUCH higher, to price in an inflation risk premium that reflects great uncertainty about the level and trajectory of future inflation.

        1. “Now may be the last good time to sell…”

          The term that ship has sailed comes to mind.

  3. “A prominent buying agent says nervous buyers are pre-emptively slashing asking prices before the housing market worsens.

    Gosh, I sure hope this doesn’t create a self-perpetuating doom loop as panicked FBs stampede for the exits.

  4. ‘Because the SF market has gotten so soft and seems to be getting softer, rather than chasing the market down with smaller price adjustments, I recommended a steep price adjustment to attract buyers and increase showings.’”

    Remember, kids, it’s the 2nd mouse that gets the cheese.

  5. ‘We’ll see anxiety sales,’ he said. ‘But we’re not going to see panicked sales with silly low prices.’”

    Realtors are liars. Remember, FBs: he who panics first, panics best.

    2. ‘We’ll see anxiety sales,’ he said. ‘But we’re not going to see panicked sales with silly low prices.’”

      Not much difference between anxiety and panic attack, it all comes down to how much pain is involved.

    1. “I will restore decency and honor to the White House.” — Joe Biden, September 6, 2020

  8. Trust The Science™

    Science Magazine — Rare link between coronavirus vaccines and Long Covid–like illness starts to gain acceptance (7/3/2023):

    “like all vaccines, those targeting the coronavirus can cause side effects in some people, including rare cases of abnormal blood clotting and heart inflammation. Another apparent complication, a debilitating suite of symptoms that resembles Long Covid, has been more elusive, its link to vaccination unclear and its diagnostic features ill-defined. But in recent months, what some call Long Vax has gained wider acceptance among doctors and scientists, and some are now working to better understand and treat its symptoms.

    “You see one or two patients and you wonder if it’s a coincidence,” says Anne Louise Oaklander, a neurologist and researcher at Harvard Medical School. “But by the time you’ve seen 10, 20,” she continues, trailing off. “Where there’s smoke, there’s fire.”

    Although more researchers are now taking Long Vax seriously, regulators in the United States and Europe say they have looked for, but have not found, a connection between COVID-19 vaccines and small fiber neuropathy or POTS. “We can’t rule out rare cases,” says Peter Marks, director of the U.S. Food and Drug Administration’s Center for Biologics Evaluation and Research, which oversees vaccines. “If a provider has somebody in front of them, they may want to take seriously the concept [of] a vaccine side effect,” he says. But Marks also worries about “the sensational headline” that could mislead the public, and he emphasizes that vaccine benefits far outweigh any risks.

    Researchers studying these complications also worry about undermining trust in COVID-19 vaccines. Harlan Krumholz, a cardiologist at Yale University, says concern that the antivaccine movement would seize on any research findings made him hesitant at first to dive in.”

    https://archive.ph/oT0aQ

    Mislead the public? Undermining trust? Hesitant?

    See also: the recent Cleveland Clinic study.

      1. Who would have thought that turning your body into a spike protein factory was a bad idea?

        1. When I first read (before they were available) how the mRNA jabs were supposed to work I was horrified. I knew at that moment that I didn’t want one.

    1. That sounds like a violation of Hunter’s plea deal that should result in prison time.

      1. They’ll never admit it was him (if it was).

        The new meme out there is that the FBI is good enough to track down everybody who even got close to the Capitol on J6 but can’t find who had coke in the White House.

          1. The sad thing is that Hunter may well have been the smartest man Joe knew. Aren’t there rumors that the family screwed him up, so to speak? He coulda been-a contenda.

          2. This shouldn’t have to be said, but anybody who becomes a crack head is a fooking idiot. Crack heads do crack head things, like take coke to the white house.

            ‘Missing’ Biden corruption case witness Dr. Gal Luft details allegations against president’s family
            New York Post
            Jul 6, 2023
            The “missing witness” from the Biden corruption investigation, Israeli professor Dr. Gal Luft, has laid out his bribery allegations against the president’s family in an extraordinary video filmed in an undisclosed location while he’s on the run.

            In the 14-minute recording, obtained exclusively by The Post, the fugitive former Israeli army officer claims he was arrested in Cyprus to stop him from testifying to the House Oversight Committee that the Biden family received payments from individuals with alleged ties to Chinese military intelligence and that they had an FBI mole who shared classified information with their benefactors from the China-controlled energy company CEFC.

            The self-proclaimed fall guy says he provided the incriminating evidence to six officials from the FBI and the Department of Justice in a secret meeting in Brussels in March 2019 — but alleges that it was covered up.

            “I, who volunteered to inform the US government about a potential security breach and about compromising information about a man vying to be the next president, am now being hunted by the very same people who I informed — and may have to live on the run for the rest of my life on the run …”

            “I’m not a Republican. I’m not a Democrat. I have no political motive or agenda … I did it out of deep concern that if the Bidens were to come to power, the country would be facing the same traumatic Russia collusion scandal — only this time with China. Sadly, because of the DOJ’s cover-up, this is exactly what happened …”

            https://www.youtube.com/watch?v=J-9a5L_MyKM

            14 minutes.

          3. This shouldn’t have to be said, but anybody who becomes a crack head is a fooking idiot.

            Truer words were never spoken. Crack is one of the dumbest drugs known to mankind. The high lasts like 15 minutes or something, so you have to continue to smoke it nonstop. Imagine how insidious such an addiction is. You become some fiend with a pipe hanging out of your mouth 24/7.

          4. This wasn’t an ‘oh that weekend in Vegas’ thing. He made a lifestyle out of it, in adulthood. Can any person not know that crack will ruin yer life and anyone around you?

          5. “This wasn’t an ‘oh that weekend in Vegas’ thing.”

            Yeah, Hunter is living in, “the now.” Smoking rocks, tapping his brother’s widow like a big dog, filming it, etc., a true cocksman without remorse. No boundaries, no problem!

          6. I’ve seen video snippets of Hunter on the White House balcony, for I think July 4. He was sort of wandering around and looking all sweaty. Yeah it was hot, but Joe and Jill and the Hunter wife/kids looked ok. Has anyone else seen it? Is that how a crack high looks?

          7. Has anyone else seen it?

            Jeff posted it. It looks like Hunter turns away from the kids and takes a hit behind Jill then brushes off his nose.

          8. Dan Bongino

            He would know as a former Secret Service agent. I wouldn’t be surprised if he has little birds chirping in his year.

      1. Besides being discharged from the U.S. Navy Reserve after testing positive for cocaine, Hunter has photos and videos of himself smoking a crack pipe but the coke in the WH can’t be his. 🙄

        1. the coke in the WH can’t be his.

          Be careful what you assume. The important thing is bribery of the President, not a dime bag dropped in the coat room. Distraction?

    1. get ready for the manitou springs realtors braying of
      “Your INSULTING MY SELLER w/that offer!”
      as they slink away to the embarrassing economy car parked around the corner after quickly gathering up all the “For Sale” sandwich signs.

      DAMN the ex for taking the Canyonero SUV as all the balloons fly around inside the Chevy Spark!
      I could afford the gas no matter what the judge sez.
      as long as the credit cards hold out.

      I PROMISE by almighty Julie Jalone that I will NEVER BE POOR AGAIN!

    2. The amazing thing is several of them are pending. Even that tear down shack looking thing

    3. What kind of jobs are there in Manitou Springs? Certainly not many of the $150K (or two $75K spouses) jobs you would need to buy, heat, and maintain a home like this. The area looks like a good location either for a ski condo or a bug-out hideaway, not big business.

  12. Biden is Appealing that First Amendment case where a Injunction was ordered by Court that has barred censorship activity between Government and Social Media Companies.
    Outlets like CNN are enraged at the Court ruling, claiming its overreach by a Judge, rather than overreach by Biden censoring protected speech.
    Biden as a Defendant, claims Government has right to censor speech in the interest of National Security and Public Health Policy, etc..
    The Court did not find the Defendants arguments convincing, or the case law convincing.

    1. Who is to say what is “misinformation?” Turns out that the public health policy itself was misinformation.

    2. I’ve heard alot about TDS. I’m curious if there is a similar condition called BDS?

      2. Yes, there is some definite BDS. I see a lot of it in the Fox News comment sections. Everything is B’s fault, or B’s conspiracy, or related to B.
        I’m sure there was ODS and BDS before that too. There always is.

        This First Amendment issue is *not* BDS.

  13. ‘the project ran into trouble last year after the company missed some payments on high-yield trust products used to fund the construction…A Sino-Ocean dollar bond due 2024 fell to a record low at about 15 cents’

    That’s some high yield alright.

    1. Financial Times
      US Treasury bonds
      US borrowing costs hit 16-year high as markets roiled by jobs data
      Two-year Treasury yield reaches highest level since 2007 amid expectations of further Fed rate rises
      A sign reading ‘We’re Hiring’ displayed in the window of a store in Washington, DC
      Employment in the US private sector increased by 497,000 last month, the biggest jump in more than a year, according to data from ADP
      Kate Duguid in New York and Mary McDougall in London an hour ago

      Investors sold stocks and bonds across the world on Thursday as US borrowing costs touched a 16-year high, following strong jobs figures that intensified expectations of further rate rises by the Federal Reserve.

      Europe’s Stoxx 600 index closed down 2.3 per cent, its biggest one-day drop since March, as the yield on the two-year US Treasury note — which tracks interest rate expectations — reached its highest level since 2007.

      The moves came after the US gained 497,000 private sector jobs last month — roughly double economists’ expectations and the biggest rise in more than a year — according to data from ADP Research Institute.

      “The global economy will break eventually, and the higher rates go, the bigger the cracks will be,” said Mike Riddell, a bond fund portfolio manager at Allianz.

      As the two-year US Treasury hit 5.12 per cent, the benchmark 10-year reached 4.08 per cent, with the sell-off by investors pushing up yields.
      …

      1. strong jobs figures

        The beginning of misunderstanding is calling things by their wrong names.

        True unemployment is at the same level as during the Great Depression. Strong jobs numbers indeed.

          2. Armed guards and anti theft one way gates at the entrance of every grocery store here.

            Almost sounds like a Denver getting what it voted for (79.55%) kind of problem.

            #BDS

          3. Denver getting what it voted for

            I wonder how long until King’s starts closing highly unprofitable stores in Dumver.

          4. My area is desperately trying to prevent theft and shoplifting before it becomes trendy. I don’t know if it will succeed. It seems more dependent on the area than on any preventative measures. In general, more rural –> less security.

        2. From what I’ve read/heard, the “strong” jobs numbers are sh!tty part-time jobs replacing good paying jobs that people need more than one of to make ends meet during this inflationary period. Go Bidenomics!

          1. Less people with full time jobs, if they’re of the age, since the Great Depression. The “jobs” numbers are a sham.

    2. Real Estate
      Mortgage rate soars to 7.22% after strong economic data
      Published Thu, Jul 6 2023 12:53 PM EDT
      Updated An Hour Ago
      Diana Olick

      Key Points

      – The average rate on the popular 30-year fixed mortgage hit 7.22%, according to Mortgage News Daily.

      – That’s the highest point since early November.

      – For a homebuyer taking out a $400,000 mortgage, the monthly payment of principal and interest rose to $2,720 from $2,637 in just a week.
      …
      https://www.cnbc.com/2023/07/06/mortgage-rate-soars-after-strong-economic-data.html

      1. “For a homebuyer who can only afford a monthly mortgage payment of $2,637, the purchase price he can finance dropped from $400,000 to $387,794 in just a week.”

        Fixed it!

    4. Yahoo
      Bloomberg
      UK Sells Government Bonds at Highest Yield Since 2007
      Alice Gledhill and James Hirai
      July 5, 2023 at 5:41 AM·1 min read

      (Bloomberg) — The UK sold £4 billion ($5.1 billion) of gilts at the highest yield in 16 years on Wednesday, underscoring the elevated returns governments must offer to lure investors after more than a year of interest-rate hikes.

      The yield on the 2025 notes was 5.668%, the loftiest average rate on bonds since a five-year placement in June 2007, according to data compiled by Bloomberg.

      There’s been a seismic shift higher in borrowing costs after one of the most aggressive rate-hiking cycles in history as central banks battle to get inflation under control. Price pressures have been particularly hard to temper in the UK, where the core measure remains above 7%, the fastest pace in more than 30 years.

      The Bank of England has unleashed nearly five percentage points of hikes since late 2021. Still, markets are pricing a one-in-two chance of a peak rate of 6.5% by March, implying bond yields will remain under pressure.
      …
      https://finance.yahoo.com/news/uk-sells-government-bonds-highest-124154632.html

      1. “Highest Yield Since 2007”

        Both the US and UK are reporting the highest bond yields since 2007, the year when the last housing bust gained steam. Interesting coincidence!

    5. Stock Market News, July 6, 2023: Indexes Close With Broad Losses, Bank Stocks Fall
      Government-bond yields rise; Investors await jobs data set for Friday
      July 6, 2023 at 6:01 PM EDT
      Live Coverage Feed
      Updated 11 hours ago
      Bond Selloff Ripples Overseas After Strong Jobs Data
      By Joe Wallace, Reporter

      The climb in U.S. government-bond yields spread to overseas markets, after strong employment data gave rise to concerns that central banks might have to raise interest rates higher than forecast to slow inflation.

      Yields on 10-year German bunds, the eurozone’s go-to safe asset, jumped to 2.631%, from 2.481% Wednesday. That’s the highest level since March.

      Yields on 10-year U.K. gilts rose to 4.654%, from 4.498%. They already blew past their highs for the year after data showed inflation is galloping at a faster pace in the U.K. than in other major economies.
      …
      https://www.wsj.com/livecoverage/stock-market-today-dow-jones-07-06-2023/card/bond-selloff-ripples-overseas-after-strong-jobs-data-67uJ6epLshFc6o6WeFvP

  15. ” Who is to say what is ” misinformation?””

    The Entities that are in collusion to take over the World. The Entities that want a Private Party partnership with Government, better known as Facism.
    Anything that disputes Klaus Schwabs Great narratives and Great Reset.
    Anything that disputes health policy /vaccines or Climate Change.. , or alledged racism, or transgender rights, or war analysis, or border invasion, or election integrity, or right to have a political view.

    Its misinformation to go against the Great Narrative, as defined by Klaus Schwab.

  16. We have an absolutely fantastic asset bubble going on right now, which is stubbornly persistent. There are still people grossly overpaying for all sorts of things – cars, houses, boats, etc. I would say I am shocked, but I am not. The $10 trillion dollars they printed has permanently distorted the prices of everything. I read an article a few days ago that said used car prices will never go back to what they were. We shall see.

    1. Increasing interest rates may greatly reduce the number of potential buyers, shrinking the bidder pool to wealthy people and fund managers who don’t need to borrow money in order to make offers or purchases

    2. More like 20 over the last 12 years, and this behavior got worse in the last 10 years or so, but they began with this more than 30 years ago. It will take a generation of pain for people to unlearn these bad habits.

    3. Not only are used cars expensive, but they are a crap value. The newest crop of used cars are not some well-treated leased luxury car just driven around town a little bit by some rich old guy. Nope, these things are deadbeat pandemic playthings, ridden hard and put away wet, 25K miles/year probably no maintenance, until it’s finally towed to a lot where it sits for another year or so while the dealers argue with the bank over who’s going to eat the loss. No way.

      1. yuppers, Oxide. Let’s not forget Uber, DoorDash, Lyft, etc. Driven into the ground.

      2. I thunk gasoline powered cars were all destined to be replaced by electric vehicles any day now. What makes them so highly valuable on the precipice of obsolescence?

  17. who thought this was a good idea? Texas Luxury Student Dorm Financed by Bonds Falls Deeper Into Distress

    Analysts at Moody’s Investors Service said last year that efforts to raise rent are “hampered” by the project’s isolated location on the south end of the College Station campus. The facility is about a 30 minute walk from Texas A&M’s main plaza at the center of campus.

    https://finance.yahoo.com/news/texas-luxury-student-dorm-financed-162621758.html

    1. I’ve been posting about the PPP student disaster since at least 2015:

      The project, known as Park West, has struggled despite fast-growing enrollment at the school. While the complex boasts volleyball courts, three resort-style pools and a clubhouse, it is located in an area that’s far away from restaurants and entertainment venues.

      An audit of the borrower by accounting firm Maxwell Locke & Ritter LLP last year said failure to refinance the debt or boost its revenue to meet the debt payments “could result in the company having to curtail or cease operations.”

      A Texas conduit agency sold over $360 million of municipal bonds for the project on behalf of the company in 2015, and most of that is still outstanding, according to data compiled by Bloomberg. The sole member of the LLC is National Campus and Community Development Corp., a nonprofit that finances student housing projects.

      Caroline Oakes, executive vice president at National Campus and Community Development, declined to comment.

      Analysts at Moody’s Investors Service said last year that efforts to raise rent are “hampered” by the project’s isolated location on the south end of the College Station campus. The facility is about a 30 minute walk from Texas A&M’s main plaza at the center of campus. Rent growth is expected to lag, the ratings company said.

      Servitas, which manages the 3,400-bed complex, says that the project was one of the largest public-private partnerships for student housing in the US.

      ‘the complex boasts volleyball courts, three resort-style pools and a clubhouse’

      Luxury of course. Which just means they paid a lot for the land and rents are high.

      ‘An audit of the borrower by accounting firm Maxwell Locke & Ritter LLP last year said failure to refinance the debt or boost its revenue to meet the debt payment’

      I’d bet tree fiddy refinancing is the only thing that got them to 2023.

      1. I remember 4 guys sharing a 1 bedroom apartment when I was in college. Sometimes it was 6 guys in a 1 bedroom. Now they have luxury apartments for students. No wonder these kids graduate with $200k in loans.

        1. 6 guys in a 1 bedroom

          That’s awful! Our six guys had two bedrooms with a common bathroom in between. That building is no longer standing.

  19. Even though I’m not a homeowner, I do enjoy the benefits of living by the beach paying half what a monthly mortgage payment would be for the equivalent house. (No maintenance costs too) I’m sure my neighbors consider me a deadbeat, but so what! Anyone that buys now with 20% down may need to wait 10 years to get that 20% back. What about missed appreciation? The only guarantee is that the 20% downpayment could be making 5% annually, so not a bad return!

    1. As of this April I’m completely cashed out of real estate. Our CD’s currently cover the rent on the place were in with more to spare. Why anyone sitting on cash right now would buy a house is pure insanity. Can’t wait to start rolling some of that money into 6% or more by the end of the year. Gotta love the FED!

    2. One might do better dollar cost averaging small sums spread through time into stocks, bonds, or even cryptocurrencies, than making one massive, highly leveraged gamble on a home purchase when prices are near a historic perch and poised to crash in the face of ever increasing mortgage rates.

      1. Does it even qualify as a gamble right now? Usually when you gamble there’s a chance of a positive return, even though the chances may be slim. RE no longer has even a slim chance.

        1. RE no longer has even a slim chance.

          The Fed could pivot as the economy continues to deteriorate, slam rates down to 0 again, and houses will get another big boost.

          You can’t teach an old dog new tricks.

          With that said, I’m laddering my down payment powder into Treasuries and CDs.

          1. The Fed could pivot as the economy continues to deteriorate, slam rates down to 0 again, and houses will get another big boost.

            And some people just want a place to live and build their life. You know, buying a house to live in..a home..rather than trying to time a financial market

          3. trying to time a financial market

            Cycles which appear can last longer than a person’s earning years. I’m quite happy having more resources for life than for a speculative investment.

          4. I’m quite happy having more resources for life than for a speculative investment.

            Sure, I’m with you. Just trying to call out that it’s not a speculative investment for everyone, and as has been much debated, even if the financial timing may not be optimal, one may just want to take control of their situation and move their life forward.

            Others may choose to wait for better timing, but that is also speculative.

  20. ‘For investors, rental income is not enough to cover such a high mortgage rate. I expect to see a significant increase on defaults of both investment loans and owner-occupied home loans very soon’

    That’s the spirit Stella! Keep up the good work.

    ‘The Real Estate Business and Pawnshop Regulator’

    It’s a good idea to lump them in like that.

  22. ‘One strategy for a distressed owner is to sell an asset before the loan matures. Ten-X is seeing potential deals of this type for its auction platform. However, the expected valuations aren’t always meeting an owner’s expectations. ‘You can’t bring a deal to our platform hoping for a miracle or a magic show’

    Costar bought Ten-X years ago just as they were a major pom-pom for commercial real estate.

    1. ‘You can’t bring a deal to our platform hoping for a miracle or a magic show’

      Prepare to be fooked.

  23. Note to self: You can enjoy life to the fullest without ever once traveling to the bottom of the ocean.

    1. A passenger on OceanGate’s sub questioned what would happen if they got lost since they were bolted inside. CEO Stockton Rush replied, ‘You’re dead anyway.’
      Natalie Musumeci
      Jul 6, 2023, 9:29 AM PDT
      A camera shows the interior of the Titan sub during a 2021 test dive with Stockton Rush, Brian Weed and Josh Gates inside.
      Courtesy of Brian Weed

      – Stockton Rush once made a “bizarre” comment about an emergency scenario, a former passenger said.

      – Brian Weed asked what would happen if they got lost in the sub since they were bolted inside.

      – “Well, you’re dead anyway,” Weed said Rush replied during a 2021 test dive on the Titan.

      A documentary cameraman who went on a test dive in OceanGate’s deep-sea Titan submersible said the company’s CEO and creator of vessel, Stockton Rush, made a “bizarre” comment when the passenger raised concerns about what would happen in an emergency.

      Brian Weed, a veteran camera operator, was working for the Discovery Channel’s “Expedition Unknown” TV show in May 2021 when he and his colleague boarded the Titan sub in Washington’s Puget Sound.

      Weed told Insider dive was supposed to be a “precursor” to a dive on the sub later that summer to the famed shipwreck site of the Titanic in the depths of the North Atlantic, where the TV crew had planned to film.

      Moments after Weed, the “Expedition Unknown” host Josh Gates, and Rush were locked in the sub with no way out except from the outside, Weed asked Rush what would happen if the vessel had to suddenly make an ascent in an emergency situation and was nowhere near its mothership.

      Weed told Insider that Rush said, “‘Well, there’s four or five days of oxygen on board, and I said, ‘What if they don’t find you?’ And he said, ‘Well, you’re dead anyway.'”

      The cameraman said he found Rush’s response “very strange.”
      …
      https://www.insider.com/oceangate-stockton-rush-titan-submersible-bolted-in-dead-anyway-2023-7

  24. Streeterville is the rich old person high rise neighborhood immediately north of the Loop business district. 5 years ago it would have been an amazing place to live: low crime, amenities everywhere, walk to the state’s best hospital for medical care, great restaurants, theater, walk to the park and beach, nothing is more than a cab ride away. Then came COVID and everything shutdown, followed by the summer of love which caused a HUGE uptick in crime. A lot of businesses went under, the theater never recovered, and crime is out of control – the old people make great prey for the vibrant criminality that fills every void in every major city. What a complete disaster, really.

  25. Have you succumbed to the desire to raid your retirement plan in order to quench your consumption demand?

    1. Yahoo
      Yahoo Finance
      Workers are still raiding their retirement savings at record rates
      Kerry Hannon
      Thu, July 6, 2023 at 2:09 PM PDT·5 min read

      The share of workers robbing from their future selves remains at an all-time high.

      Thirty-seven percent of workers have taken a loan, early withdrawal, and/or hardship withdrawal from their 401(k) or similar plan or IRA, according to a survey released Thursday by the nonprofit Transamerica Center for Retirement Studies (TCRS) in collaboration with the Transamerica Institute. That matches 2022’s level, which is also the highest level in the history of the survey.

      Those withdrawals underscore why many workers have a pessimistic outlook for their retirement as they grapple with a lack of emergency funds and stretched household budgets that have forced them to tap their nest eggs. The practice could become even more prevalent as new rules make it easier to do so.
      …
      https://finance.yahoo.com/news/workers-are-still-raiding-their-retirement-savings-at-record-rates-210945047.html

      1. “Thirty-seven percent of workers have taken a loan, early withdrawal, and/or hardship withdrawal”

        Bad for those who are still working and I would imagine the worst is yet to come.

        I know more than a few people who retired only to find how expensive it was just to pay taxes, insurance, food etc. and had to hit their rtirement funds early and hard or go back to work.

        1. I have recently worked with some nominally retired longtime former workers who figured out their savings don’t cut it against the backdrop of 4%+ inflation.

        2. just to pay taxes, insurance, food etc.

          Working on a budget for a few years before retirement isn’t actually hard to do.

          1. “Working on a budget for a few years before retirement isn’t actually hard to do.”

            And then property taxes go up, wind storm insurance doubles and trips to the grocery store and gas station cost a lot more to get a lot less since Brandon was installed.

            Anyway, these folks were not the kind of people who were saving for retirement at 25. It just made a bad situation worse for someone who figured they could get by with a paid off house and a Social Security check.

          2. had to hit their rtirement funds early and hard or go back to work.

            I took your comment to imply a sudden shock.

            I don’t think I’m special but I had made most of the changes and was living on the retirement budget for several years before the reality. I took the “what can go wrong” approach to most things. When gas prices went up, the 3,000 mile road trip became every other year. The stocking up trip to the city became once a month. When food prices went up I made some compromises but nothing drastic. Ribeye limited to once a week and more home canning. My grocery spending went up about 30% but it was in total less than 10% of my budget. Property taxes went up a couple hundred a year. There is no windstorm premium here. Bought the retirement pickup before the crazy prices. Insurance went down.

            One of the price increases that pissed me off was a big increase in trash removal. Now I play a game with them of taking months off the service while I’m “traveling”. No big deal. Paying much less. Layers of options.

            Social Security went up 8%, which put my budget in surplus. Might go up another 3% next year. I’m suddenly getting 4.5% on my savings, which is a huge surplus.

            I don’t think I’m in any danger of clerking at the hardware store any time soon. I also don’t understand anyone who has to panic a few days after retirement.

          3. “I’m suddenly getting 4.5% on my savings, which is a huge surplus.”

            I liked that too, it’s a nice change from 0.33% isn’t it. 🙂

            It sure seems like you have done well planning for retirement, my brother did as well, but I know there are a bunch who didn’t including a 70 year-old carpenter I know who has no hope of retiring.

            But then you look at all those people living on the street and figure there’s always somebody worse off.

          4. One of the price increases that pissed me off was a big increase in trash removal. Now I play a game with them of taking months off the service while I’m “traveling”.

            Our garbage service is tied to the taxpayer’s address within the city limits, i.e., it’s compulsory, because the city has a contract with the garbage company. So, if you’re a snowbird who is gone for the winter, you’ll still pay for the weekly garbage service.

          5. Bought the retirement pickup before the crazy prices.

            Social Security went up 8%, which put my budget in surplus.

            I’d argue these are two nice bonus happenings which not everyone is lucky enough to partake in.

            Not to say that you’re taking credit for them, or lording it over people. But it’s easy to overlook that the average worker hasn’t gotten an 8% raise, and not everyone was “lucky” enough to buy before the government response to COVID f’ed everything up.

            I am glad things are going well for you though. Obviously you’ve planned and made smart decisions along the way

          6. not everyone was “lucky”

            I have been lucky in many regards, and I’m thankful for it. There have been misfortunes that I try not to dwell on. As for the truck, my son was prepared to bring an old F150 back from the grave for me if I couldn’t manage anything more modern. That would have made me happy too.

            I only meant that one should have some layers of alternative options in mind when retiring, so as not to have to kneel down suddenly upon retirement.

  26. Speaking of sky-high mortgage rates, does it seem like they could go a lot higher from here before housing price inflation is contained?

    1. Elevated mortgage rates are leading to sharply higher monthly payments even as home prices ease
      FILE – A sign is seen near a home being remodeled, Wednesday, Oct. 12, 2022, in Towson, Md. Would-be homebuyers are willing to take on sharply higher mortgage payments, even as home prices have begun to pull back in 2023.
      (AP Photo/Julio Cortez, File)
      ASSOCIATED PRESS
      By ALEX VEIGA
      Published 11:29 AM PDT, July 6, 2023

      LOS ANGELES (AP) — Would-be homebuyers are willing to take on sharply higher mortgage payments, even as home prices have begun to pull back this year.

      The median monthly payment listed on applications for home purchase loans jumped 14.1% in May from a year earlier to an all-time high $2,165, according to the Mortgage Bankers Association. The May figure also represents a 2.5% increase from April.

      “Homebuyer affordability eroded further in May as prospective buyers continue to grapple with high interest rates and low housing inventory,” Edward Seiler, the MBA’s associate vice president of housing economics, said in a release last week.
      …
      https://apnews.com/article/mortgage-payment-home-loans-home-prices-affordability-d31e9074ac7a0ebf9950167344b55920

    2. Europe News
      Britain’s house prices are slumping as mortgage rates soar — and there could be worse to come
      Published Fri, Jul 7 2023 7:55 AM EDT
      Karen Gilchrist

      Key Points

      – Property prices slumped 2.6% in the year to June, their biggest decline since June 2011, according to mortgage lender Halifax’s latest price index released Friday.

      – Homeowners and would-be buyers have been beset by rising borrowing costs over the past year as the Bank of England has sought to get a handle on stubbornly high inflation.

      – The BOE raised interest rates for the 13th consecutive time in June, hiking by a surprise 50 basis points.
      …
      https://www.cnbc.com/2023/07/07/britains-house-prices-are-slumping-as-mortgage-rates-soar.html

    3. Yahoo Finance Canada
      Pressure on BoC to cut rates and avoid mortgage payment shock: Desjardins
      More homeowners are heading for payment shock upon renewal as rates stay higher for longer
      Michelle Zadikian
      Fri, 7 July 2023 at 5:01 am GMT-7·3-min read
      Residential area of Grande Prairie in Alberta, Canada

      A new report from Desjardins says the Bank of Canada will need to cut interest rates by more than the market is expecting by 2025 and 2026 to avoid serious payment issues for some variable-rate mortgage holders.

      It will largely be up to the Bank of Canada to help prevent serious payment shock for some variable-rate mortgage holders who will be renewing in the next couple of years, according to a new report from Desjardins.

      “In short, there will be pressure on the Bank of Canada to push rates to low levels in 2025 to prevent a subsector of mortgage holders from running into serious financial difficulties. That reinforces the importance of getting inflation under control soon,” Royce Mendes, managing director and head of macro strategy at Desjardins, said in a note to clients on Thursday.
      …
      https://uk.sports.yahoo.com/news/pressure-on-boc-to-cut-rates-and-avoid-mortgage-payment-shock-desjardins-120112173.html

    4. Mortgage rates reach their 2023 peak
      The 30-year fixed rate rose to 6.81% as of July 6, according to Freddie Mac
      July 6, 2023, 1:56 pm By Sarah Marx

      Mortgage rates jumped this week as investors grapple with persistent positive economic data and a hawkish Fed.

      The Freddie Mac’s Primary Mortgage Market Survey, which focuses on conventional and conforming loans with a 20% down payment, shows the 30-year fixed rate averaged 6.81% as of July 6, up significantly from last week’s 6.71%. By contrast, the 30-year was at 5.30% a year ago at this time.

      Other mortgage indexes also show rates rising.
      …
      https://www.housingwire.com/articles/mortgage-rates-reach-their-2023-peak/

    1. Millennials And Gen Z Moving Away From Stock Market Investment
      Sean Frank
      Forbes Councils Member
      Forbes Finance Council
      COUNCIL POST| Membership (fee-based)
      Jul 7, 2023, 07:15am EDT
      Managing Partner, Cloud Equity Group. New York based asset management firm focused on investments in tech-enabled business service providers.
      Multiracial family preparing meal together in kitchen with laptop on work surface

      Americans have been through a lot recently. We’ve experienced the fear, isolation and loss of more than 1 million friends and family members from Covid-19, the collapse of digital asset markets, the ravages of climate change, major tech layoffs, a deeply polarized electorate, and declining U.S. college enrollment rates—all coming at a time when the AI revolution, thanks to ChapGPT, could disrupt up to 300 million jobs globally.

      For those coming of age as investors in a volatile world, most view the U.S. stock market with great skepticism and mistrust. According to a recent Bank of America study, 75% of Americans between 21 and 42 years of age don’t think it’s possible to achieve above-average returns solely by investing in traditional stocks and bonds. That’s compared to 32% of investors over the age of 43 who believe the same. Eighty percent of young investors look to alternative investments, such as private equity, commodities, real estate and other tangible assets, and nearly 75% of Millennials, compared to 21% of older respondents, invest in sustainable products and ventures.

      This is no surprise, as Millennials and Gen Z were raised in a time of unrelenting technical and social change and find traditional institutions suspect, including Wall Street. Further, younger generations have lived through major market swings impacting the trust they put in the market to accumulate wealth. The tech bubble, the currency crisis, the Great Recession, Covid’s economic turmoil, the growing inequality between the uber-rich and everyone else, and concerns about social and environmental injustices are all experiences contributing to skepticism of the stock market’s ability to reliably provide amenable returns.

      Where are the younger generation of investors putting their money?

      • Real Estate: Millennials accounted for 43% of all home purchases in the U.S. in 2021. Good for them. Real estate is a tangible asset that can provide consistent and reliable returns over time. Whether you invest in residential or commercial real estate, you can rent out your properties, providing you with passive income. You may also see long-term gains through property appreciation. What’s more, investing in real estate acts as a protection against inflation. When the prices of goods and services are rising, home values and rents typically increase as well. Investment properties, then, help protect you financially when the costs of everything are skyrocketing.

      • Peer-To-Peer Lending: Peer-to-peer (P2P) lending platforms, such as enabling individuals to obtain loans directly from other individuals, cutting out the middleman. They connect borrowers with investors, providing an opportunity for investors to earn returns by lending money to individuals and businesses. Through P2P lending, it’s often possible to access a much higher rate of return than is currently available from other investments, such as deposit accounts or bonds. There’s a low barrier to entry because a P2P portfolio can be created with a limited amount of capital. A lender also has the agency to choose the level of risk they’re willing to accept by scrutinizing the profile of the buyers to whom they lend money.

      • Investment Crowdfunding: Investment crowdfunding (also called equity crowdfunding) occurs when investors pool their money together to fund a specific project, business or venture—like a startup, expanding business or even real estate. It allows businesses to more easily raise capital by allowing anyone to invest and can provide an opportunity for investors to support projects they believe in while also earning a return. Small and medium-sized businesses greatly benefit from investment crowdfunding because it allows them easier access to investor capital. These types of businesses are the backbone of the American economy, enabling investors in this space to feel good about their contributions.

      • Commodities: Commodities, such as gold, oil and agricultural products, are an asset class made up of raw materials used to make consumer goods. Investors often see commodities as a hedge against inflation and market volatility. This is because commodities are assets that are not usually directly correlated with each other—say, for instance, cattle and oil. When the value of one asset falls, it doesn’t affect the other. Investing in commodities can smooth volatility in a portfolio. Additionally, being an input of production, when inflation goes up, commodities follow the same trend, making them a good way to store value and protect against inflation. Commodities also are changing. With the advent of climate change, many investors seek to invest in clean energy or even potable water. As the Earth continues to warm, there may be a shortage of fresh water to drink and grow crops.

      • Collectibles: There’s nothing better than having the opportunity to invest in the things you love and cherish. Art, antiques, rare books, NFTs, vintage wines, watches, other jewelry and even baseball cards can provide opportunities for long-term gains as the value of these items appreciates over time. This is particularly good news for young, stock market-wary investors: Collectibles have a low correlation with traditional financial investments, making them a perfect place to preserve capital in volatile times.
      …
      https://www.forbes.com/sites/forbesfinancecouncil/2023/07/07/millennials-and-gen-z-moving-away-from-stock-market-investment/?sh=51c2e5f572b1

  28. PERSONAL FINANCE
    Published July 5, 2023 8:25am EDT
    Average American homeowner lost more than $5K in home equity: CoreLogic
    U.S. home borrowers saw the first annual losses in home equity since 2012
    By Javier Simon
    Sponsored by Credible – which is majority owned by Fox Corporation. Credible is solely responsible for the services it provides.

    The average U.S. mortgage borrower lost $5,400 in home equity year-over-year in the first quarter of 2023, according to the latest Homeowner Equity Report (HER) by CoreLogic. That was the first time home equity decreased annually since 2012.

    Homeowners with home loans, which represented 63% of all properties, saw home equity decrease by 0.7% year-over-year, CoreLogic reported. That accounts for a collective loss of $108.4 billion.

    Western states experienced the most significant year-over-year home equity losses, driven by recent regional price changes, CoreLogic said.

    Here are the Western states that posted the deepest combined home equity losses, CoreLogic reported.

    – Washington (-$74,300)
    – California (-$59,600)
    – Utah (-$37,700)

    “The equity losses in those states reflect decelerating home prices, with all three posting annual declines in February and March,” CoreLogic said in its report.
    …
    https://www.foxbusiness.com/personal-finance/home-equity-q1-2023-corelogic

    1. “That was the first time home equity decreased annually since 2012.”

      If they just recorded the first year-on-year losses, the more recent losses must have been huge to offset the preceding parabolic bubble blowiut top.

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