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Buyers Feel That They Can Take Advantage Of Sellers

It’s Friday desk clearing time for this blogger. “The Collier County construction company, Metro Home Builders Inc. filed for bankruptcy and has now stranded families in the middle of the building process. Chris and Silvia Ceron are one of the families caught in the middle of a build. ‘They were going to finish our home with the latest pull on our loan which was $45,000. The quotes we were getting ranged from $186,000 to $194,000,’ said Silvia Ceron. ‘Where are we going to come up with that extra money?'”

“There is some good news if you want prices to keep coming down. According to the Intermountain MLS, we saw continued drops in homes sold and median price for July. In Ada County, the number of homes sold dropped by 4.7% and the median price dropped by 8.5%. In Canyon County, we saw similar trends, with the number of homes sold dropping by 9.0% and the median price dropping by 8.3%. In Twin Falls County, despite the median price standing pat, the market is turning frigid. There’s a 31% drop in the number of homes sold month to month. We expected these numbers to climb for the summer real estate season. That is not the case.”

“The Central Texas housing market has continued its cooling trend, according to the new report from the Austin Board of Realtors. According to the July report, the City of Austin’s current median price for a home was $550,000, which was down 12% compared to last year.”

“Musician The Weeknd made a splash in 2019 when he paid $21 million for a 8,000-square-foot penthouse on the 18th floor of Emaar Properties’ Beverly West at 1200 Club View Drive in Westwood, according to property records. A pandemic and market slowdown later, The Weeknd, born Abel Tesfaye, has sold the penthouse for $19 million or $2,390 per square foot. The Weeknd’s transaction takes place shortly after another ultra luxe penthouse made news with a price cut. In July, a 13,000-square foot penthouse at Four Seasons Private Residences Los Angeles, located a few miles away from The Beverly West, announced a price cut to $37 million. Its original ask was $75 million.”

“Los Angeles rich are feeling the pinch: Its ultra-luxury housing market is subject to deep discounts, brokers say. In this year’s second quarter, median prices for luxury single-family homes fell more than 25% from the first quarter and are down more than 13% year over year, according to a report from Douglas Elliman. ‘This is how I’d sum it up,’ says Marc Noah, a broker with Sotheby’s International Realty Beverly Hills. ‘Buyers feel that they can take advantage of sellers because of where the market is.'”

“Savanna, one of the biggest office investors in New York City, prospered in the 2010s with funds that targeted distressed assets after the Financial Crisis. But its recent activity — including defaulting on debt, repeatedly extending loans and reducing its ownership stake within individual properties — indicate distress is increasing in Savanna’s own portfolio. ‘There’s probably a fair amount of buyer’s remorse at this point, across all the property types,’ Manus Clancy of Trepp said of the office market as a whole. ‘You expected values to stay high. That hasn’t been the case. We’ve seen values really fall.'”

“Many Canadian homebuyers waiting patiently for construction to finish on their pre-sale unit are being met with cancellation notices from developers. The building environment is souring — leaving some unhappy customers scrounging to get their deposit, or more, compensated. Two out of three builders tell CHBA that they’re building fewer units, while 22 per cent of developers have fully cancelled projects in recent months. In today’s market, many condo projects are coming to completion in a market where values are depressed — not elevated. ‘A purchaser might be lucky if the builder cancelled, because the value may have dropped below the original purchase price,’ says Bob Aaron, a Toronto-based real estate lawyer.”

“Doesn’t 2018 seem like another age? We were pre-Covid, part of the EU and you could get a 1.89 per cent fixed rate on your mortgage. I know because I did, to buy a three-bed semi just inside the Hertfordshire arc of the M25. Fast forward five years and the rate switch we were eventually offered by NatWest would see our monthly payments soar by £470. Adrian Anderson, director at mortgage broker Anderson Harris, says a scramble for ever-evaporating fixed deals caused ‘panic’ among borrowers. ‘With rates pulled at such short notice, my colleagues and I have been submitting applications until 11pm and over the weekend. It is a mentally challenging time as an advisor as it feels like we are constantly delivering disappointing news.'”

“Shahram Shaida, co-founder of homebuying platform Allbricks, says his own mortgage payments have doubled since late 2022. ‘I really feel for Brits who are looking to remortgage this year,’ he says. “Many fear losing their homes, with many forced to look at trying to get a second or third job. Homeowners feel like they’re being punished for something they haven’t done.'”

“Angry investors in trust products of a leading Chinese shadow bank have lodged complaint letters with regulators, pleading with the authorities to step in after the big Chinese trust firm missed payments on dozens of investment products. Zhongrong International Trust Co., which managed assets worth $108 billion at end-2022, has missed payments on dozens of products since late last month. ‘We hope to get the attention and the support of the state, to urge Zhongrong Trust to candidly respond to concerns of its clients,’ said the letter addressed to the NFRA and dated Thursday. ‘Every day, a large number of people gathered at business departments of Zhongrong Trust are praying for the firm can give an explanation to investors … investors are immersed in unlimited horror and fear every day.'”

“China’s gargantuan economy has come out of three years of ‘zero covid’ policies not with a roar, as many inside and outside the country had hoped, but with a whimper. The extent of the crisis was made clear Thursday when Evergrande Group, one of China’s largest property developers until it collapsed in 2021, filed for bankruptcy protection in New York. This came just days after Country Garden, one of China’s largest private real estate developers, revealed it owes more than $200 billion and is on the brink of default. Dozens of other developers have been unable to pay their bills.”

“Buying real estate became one of the main ways for China’s growing middle class to accumulate wealth and created an expectation that land and home values would continually increase. Because of this, developers required people to pay for a home in full before it had even been built, lending the system a ‘Ponzi-type element,’ said Logan Wright, director of China markets research at Rhodium Group.”

“In Penglai, on the coast of China’s Shandong province, work on a block of luxury apartment towers in a Country Garden development ground to a halt last week. In a now-familiar scene, blue notices appeared on the walls: The property developer, Country Garden, was no longer paying its bills. The construction company refused to keep building. Hundreds of home buyers were outraged. They’d already paid upward of $200,000 and had been expecting to move in by the end of June, said a real estate agent in Penglai who gave only his surname, Liu, to avoid attracting the ire of authorities. Instead, the home buyers were met with ‘delays, false advertising and corner cutting,’ said Liu — and were left wondering where their money had gone.”

“‘In the long run, the market is not going to come back to its golden age like 10 years ago, that age has simply gone,’ said Shitong Qiao, a Duke University law professor. ‘The Chinese government is not going to be truly committed to revive the real estate market — the ideal is to have a soft landing.'”

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This Post Has 126 Comments

  1. ‘in 2019 when he paid $21 million for a 8,000-square-foot penthouse on the 18th floor of Emaar Properties’ Beverly West at 1200 Club View Drive in Westwood…has sold the penthouse for $19 million’

    That’s a mighty a$$ pounding there Able. Looks like the minor respiratory illness has been wiped out.

  2. ‘I really feel for Brits who are looking to remortgage this year,’ he says. ‘Many fear losing their homes, with many forced to look at trying to get a second or third job. Homeowners feel like they’re being punished for something they haven’t done’

    Yer up to yer eyeballs in debt Shahram, so who done that?

    ‘many forced to look at trying to get a second or third job’

    That’s fine loanowners, but what ever you do, don’t start eating again.

  3. Economy.

    Biden’s reelection threatened by poor marks on the economy from voters of color (8/18/2023):

    “In a focus group last week, eight men of color who voted for President Joe Biden in 2020 were asked to describe their feelings about the economy.

    The answers were bleak.

    “Discouraged,” one said. “Pathetic,” complained another. “Pessimistic,” said a third.

    The signs of dissatisfaction with Democrats didn’t end there. Respondents were also asked about the rise in crime and border issues. Democrats got zeros across the board. Perhaps most troubling of all, some respondents indicated that they preferred the economy under former President Donald Trump.”

    Most troubling of all?

    ““Our economy is the lowest it’s been in god knows how long,” said a Hispanic respondent who lives in New Jersey. “We keep [sending] money to Ukraine and other countries rather than helping ourselves.”

    The responses underscored a harsh reality for the Biden campaign as it braces for what is expected to be a bruising reelection bid. The president has to sell his record on the economy — in which he has a credible case to make — and it simply isn’t resonating with voters of color who supported him in the first place. In fact, they don’t see much progress as having been made at all.”

    https://www.politico.com/news/2023/08/18/bidens-reelection-economy-voters-of-color-00111730

    A credible case? What a joke.

    1. A credible case? What a joke.

      $4 gas, $50K cars, and ever rising prices at the supermarket. Quite a case!

    2. I absolutely despise Biden….but this mess was set in motion before biden. Trump signed off on 5 trillion in ppp funds…I’ve friends buying yachts flying around in private jets that I know for a fact they received millions and didn’t need it. Also his tax break in 2018 should’ve never happened, he said the economy was doing great….you don’t give away stuff when you don’t need to….you save it for a rainy day. ..that rainy day happened in 2020. The Fed tried to raise the Fed fund rate in 2018….he said the Fed is stupid and they were after him… I can go on. Sleepy joe didn’t help….thats for sure. Dems like giving $hit away that’s to sure….so he’s just fue!ing the fire.

      1. Yep….they both suck. You need to hire they first guy who says he’s gonna let the whole thing burn to the ground….and mean it.

  4. ‘Every day, a large number of people gathered at business departments of Zhongrong Trust are praying for the firm can give an explanation to investors … investors are immersed in unlimited horror and fear every day’

    When these basket cases first stated this ponzi scheme, the globalist scum media rejoiced! China-ron has created a money river that will never run dry! Wall street rushed to securitize the worthless paper, we’re rich!

    You know what they say about too good to be true, don’t you? These stupid bashtards can’t even own land.

    1. Every day, a large number of people gathered at business departments of Zhongrong Trust are praying for the firm can give an explanation to investors …

      So my knowledge of theology is a bit hazy on this point, but I’m thinking maybe God might not be all that receptive to the caterwauling of burned housing speculators.

        1. Do they pray to God, or to ancestors?
          My friend and her daughter, both born and raised in China both went to bible studies in NC as did some of their Chinese friends.

  5. Income taxes.

    Linked from Antiwar dot com — Bill Kristol leads charge to make Republicans think ‘right’ on Ukraine (8/17/2023):

    “Notorious neoconservative Bill Kristol has just launched a $2 million campaign to prevent more Republicans from jumping off the forever war train and to remind them that true Republicans support Ukrainians by backing unfettered aid and weapons for the conflict.

    That is the clarion call promoted in this Washington Post story announcing “Republicans for Ukraine,” which is designed to provide “counter-programming” to the “populist” strain that has captured the base, particularly on foreign policy. It is the latest advocacy effort by Kristol’s group, Defending Democracy Together, which has been trying desperately to maintain the hawks’ grip on the GOP since Donald Trump began questioning it during his 2016 presidential campaign.

    “Supporting Ukraine is in the best interests of the United States and the best traditions of the Republican Party. Now is no time to give up the fight,” declares the Republicans for Ukraine website.

    https://responsiblestatecraft.org/2023/08/17/bill-kristol-leads-charge-to-make-republicans-think-right-on-ukraine/

    Remember, you’ll never be seen as anything more than cattle tax slaves to these globalists.

  6. ‘They were going to finish our home with the latest pull on our loan which was $45,000′

    Pull on yer loan? That’s gotta sting Silvia.

    ‘The quotes we were getting ranged from $186,000 to $194,000…Where are we going to come up with that extra money?’

    There’s some creative stuff on the internet these days Silvia.

  7. ‘Savanna, one of the biggest office investors in New York City, prospered in the 2010s with funds that targeted distressed assets after the Financial Crisis. But its recent activity — including defaulting on debt, repeatedly extending loans and reducing its ownership stake within individual properties — indicate distress is increasing in Savanna’s own portfolio. ‘There’s probably a fair amount of buyer’s remorse at this point, across all the property types’

    So the foreclosure vultures are going broke and walking away.

    1. But its recent activity — including defaulting on debt, repeatedly extending loans and reducing its ownership stake within individual properties — indicate distress is increasing in Savanna’s own portfolio.

      Die, speculator scum.

  10. Purchased by an investment company for 46K in 2020. From the realtor’s description: “Investment opportunity: This cottage is a 3-bedroom, 1-bath house. Renovations were put on hold”. Why would those savvy investors put their renovations on hold? Could it be they know the bubble has popped? I can’t tell that renovations were even started.

    https://www.zillow.com/homedetails/700-Frances-Dr-Pensacola-FL-32506/44673681_zpid/

    Date Event Price
    8/17/2023 Listed $120,000
    2/25/2020 Sold $46,000
    4/15/2005 Sold $47,000

    Wow, in the 15 years between 2005 and 2020, it increased in value by negative $1,000.

      1. I’m really good at complex spreadsheet models.

        When I started considering my retirement, naturally I put everything into a spreadsheet. I projected my savings to compound at 5% and once I retired would depend largely on taking the 5% as income. I could make little tweaks and see (so I imagined) what the impact would be after 20 years!

        What a joke that turned out to be, with the price of food and gas more than doubled and savings interest @ 0%.

      2. I’ve go 2 money market accounts with Discover bank….I believe they are 4.5% better then most banks. Hopefully it goes higher.

        1. I bank with Discover as well. They’ve been pretty aggressive at raising their savings rates over the past year+. I’ve been pleased.

  13. Homeowners feel like they’re being punished for something they haven’t done.’”

    No, they’re reaping the entirely foreseeable consequences of buying into the BoE’s insane housing bubble blown with a limitless gusher of “stimulus” funny money. These are not victims. They’re accessories along with the BoE to pricing the prudent & responsible out of decent housing.

  15. Zhongrong International Trust Co., which managed assets worth $108 billion at end-2022, has missed payments on dozens of products since late last month.

    Are the Chinese characters for “Zhongrong” and “schlonged” similar? Asking for 1.4B friends.

    1. Official census figures put the SF exodus at 17% since 2020 and the homeless figure is over 5% there now. This is a rare event in the US, I don’t think even Detroit fell this quickly. It is unprecedented in the modern era and is probably in the top 3 all time of cities it’s size or larger to drop like this. Even the biggest bears on this forum wouldn’t have predicted this rate of decline. It’s probably nothing that a few more progressive policies can’t fix, right?

      P.S. Those numbers are already stale and are probably a point or two worse by now.

  18. In 1948 a very good law was enacted called the Smith-Mundt Act (1948). It basically banned the use of domestic propaganda by Government.
    In 2012, in their typical sneaky way, Obama passed a law called H.R.4310, making it legal for Government to purposely lie, or use propaganda on US Citizens, by it own government.
    Obama negated the long standing law from 1948, for this licence to lie from the Government.
    And we wonder why fake news expanded to what we have now.
    And that got passed, along with Commie Obamacare.
    What a set up for Government power. The Government is allowed to be fraudulent to the people in the interest of what? National Security?National health?Insurrection by a political party? Alien information? Terrorists threats? Goverment push of Pharmacy? Gain of function on viruses? Lies on Military acts? What would be justified under this Goverment Right to be fraudulent.
    Can’t even understand how this law Obama passed even passes Constitutional
    scrunty, in that it violates Constitution and a number of amendments.
    How do you like the Government now?

    2. Obama passed a law

      Not that I disagree with your overall sentiment, but it’s a bit disingenuous to put it all on Obama. Perhaps he signed the bill into law, but congress (both houses) had to pass it. Hundreds more people deserve any blame.

  19. It almost seem as though a race to the exits is underway in the long-term Treasury bond space.

    Got bear steepening?

    1. Do you agree with Wall Street’s porcine beauticians that the Fed will soon cave on containing inflation in order to save risk asset HODLerz’ bacon?

      1. It’s punishment season.
        Jumping yields, slumping stocks may boost case for a Fed pause
        Howard Schneider
        Fri, Aug 18, 2023, 8:13 AM PDT·4 min
        FILE PHOTO: Traders react to Fed rate announcement on the floor of the NYSE in New York
        By Howard Schneider

        WASHINGTON (Reuters) – Rising Treasury bond yields and home mortgage rates may reduce support at the U.S. Federal Reserve for additional interest rate increases, the prospect of which have already been ebbing on the basis of weaker inflation.

        The Fed raised interest rates at its July meeting by a quarter of a percentage point, to a range of between 5.25% and 5.5%, a widely anticipated move investors have construed as the central bank’s last step in an aggressive 16-month rate hike campaign to slow inflation from 40-year highs.

        But bond yields since then have raced higher, with the interest rate on a 10-year U.S. Treasury security rising from around 3.86% the day of the Fed’s July 26 rate decision to as high as 4.32% on Thursday.

        Rates on a 30-year home mortgage in the U.S. rose to 7.09%, breaching the 7% level for the first time since November and marking a more than 20-year high.

        Stock markets – which can offer investors higher returns but also higher risk versus less volatile assets like Treasury bonds – have declined, with the S&P 500 reversing a five-month climb to fall about 2.6% since the Fed’s last meeting.

        Investors in contracts tied to the Fed’s benchmark interest rate added to bets that it will move no higher, a view shared by 99 of 110 economists polled by Reuters this week who also see the risk of a U.S. recession in decline.
        …
        https://sports.yahoo.com/jumping-yields-slumping-stocks-may-151326911.html

      2. Financial Times
        The QE retreat
        Investors brace for turbulence as Fed balance sheet shrinks by $1tn
        Central bank will continue shedding Treasuries at a time of significant US government borrowing
        The Fed aims to cut another $1.5tn from its balance sheet by mid-2025
        Kate Duguid and Nicholas Megaw in New York August 11 2023

        The Federal Reserve’s drive to shrink its swollen balance sheet is poised to hit $1tn this month, a significant milestone in the US central bank’s attempt to reverse years of easy pandemic-era monetary policy as investors warn further reductions threaten to shake financial markets.

        The US central bank bought trillions of dollars of government bonds and mortgage-backed securities to help stabilise the financial system during the early stages of the Covid-19 pandemic, but last spring started letting its holdings mature without replacing them.

        As of August 9, the Fed’s portfolio had shrunk by $0.98tn since the portfolio’s peak of $8.55tn in May last year, and analysis of weekly data suggests it is on track to pass $1tn before the end of the month.
        …

      3. Markets should brace for a turbulent few weeks as slow motion rate shock continues, DataTrek says
        Jennifer Sor
        Aug 17, 2023, 7:51 AM PDT
        Jerome Powell
        Federal Reserve Governor Jerome Powell delivers remarks during a conference at the Brookings Institution in Washington. Reuters/Carlos Barria

        – Stocks could be in for more Fed-induced turbulence, according to DataTrek research.

        – That’s partly because the Fed is unlikely to stop its quantitative tightening regime.

        – The Fed has reduced its balance sheet aggressively over the past year, which could weigh on stocks.
        …
        https://markets.businessinsider.com/news/bonds/stock-market-outlook-fed-put-quantitative-tightening-interest-rate-hikes-2023-8

      4. Do you agree with Wall Street’s porcine beauticians that the Fed will soon cave on containing inflation in order to save risk asset HODLerz’ bacon?
        I was traveling a few days ago and had on CNBC as I was getting ready. Cramer was UNBELIEVABLY Bullish and calling for more rate hikes as the economy was incredibly strong. Isn’t that a contra indicator??

    2. BONDS
      UAE offloaded $4bln US treasury bonds in June
      Saudi Arabia and Kuwait also sold US government debt last month
      Brinda Darasha, ZAWYA
      August 17, 2023

      The UAE offloaded $4 billion worth of US treasury bonds in June, making it the second consecutive month the country sold US government debt..

      Its holding fell to $65.2 billion from $69 billion in May 2023, the monthly report from the US Treasury showed.

      The OPEC member’s GCC neighbours Saudi Arabia and Kuwait also sold US treasury bonds last month.

      Saudi Arabia’s pile of US treasuries fell to $108 billion, as it jettisoned $3.2 billion worth of holdings.

      Kuwait shares of the US debt instrument fell to $40.6 billion in June from $41.4 billion in May.
      …
      https://www.zawya.com/en/markets/fixed-income/uae-offloaded-4bln-us-treasury-bonds-in-june-jxnvuinn

      1. The Tell
        Treasury market returns are negative again. Why this time for bonds looks different than 2022.
        Published: Aug. 17, 2023 at 8:05 p.m. ET
        By Joy Wiltermuth
        Yield on 10-year Treasury hits highest since November 2007

        Yearly returns in the Treasury market slipped into negative territory this week as the market sold off on signs that the Federal Reserve may need to keep rates high for a while to contain inflation.

        While negative returns might stir bad memories of last year’s shocking losses for bonds, stocks and nearly everything else, investors holding Treasury debt issued at 2023’s higher yields might want to sit back and take stock.
        …
        https://markets.businessinsider.com/news/bonds/stock-market-outlook-fed-put-quantitative-tightening-interest-rate-hikes-2023-8

    5. Does it seem like good news for the Main Street economy is catastrophic news on Wall Street?

      1. LIVE UPDATES
        Updated Fri, Aug 18 2023 11:40 AM EDT
        Stocks are little changed as the major averages head toward weekly losses: Live updates
        Hakyung Kim
        Sarah Min
        NEW YORK, NEW YORK – DECEMBER 15: Traders work on the floor of the New York Stock Exchange (NYSE) on December 15, 2022 in New York City. Stocks fell over 700 points as investors reacted to news that the Federal Reserve will continue to raise interest rates to fight back against inflation. (Photo by Spencer Platt/Getty Images)

        Stocks were flat Friday, building on this week’s losses, as Wall Street’s August struggles continue.

        The Dow Jones Industrial Average
        traded near the flatline. Meanwhile, the S&P 500 inched down 0.2%, and the Nasdaq Composite dropped 0.7%. All four of the major averages were on track for their fourth straight daily loss.

        Keysight Technologies shares lost more than 10% on the back of a disappointing earnings report. Deere and Estee Lauder also fell more than 3% after announcing their earnings. Meta shares continued their decline for the week, falling more than 2% Friday.

        The Dow is on pace for its worst week since March, lower by 2.6%. Meanwhile, the S&P 500 is headed for a third straight week of losses, a streak that hasn’t happened since February. The Nasdaq Composite is also set for a third consecutive losing week for the first time since December.

        “I feel like the markets are rethinking their optimism from July, where we had the soft landing narrative,” said Michelle Cluver, senior portfolio strategist at Global X ETFs.

        “Now it’s still seeing economic growth, but [there are] question marks coming up on how much higher interest rates need to go, and so the narrative this month has been on longer duration yields,” Culver added.
        …
        https://www.cnbc.com/2023/08/17/stock-market-today-live-updates.html

    6. Forbes
      Business
      Breaking
      Mortgage Rates Are Surging At Their Fastest Pace On Record—Here’s What That Could Mean
      Derek Saul
      Forbes Staff
      I cover breaking news with a focus on markets and sports business.
      Aug 17, 2023, 04:21pm EDT
      Topline
      Mortgage rates just touched their highest level since 2001, coinciding with still persistent fears about a recession and rising at a pace not seen since a 1980s downturn eerily similar to today. The
      U.S.-WASHINGTON, D.C.-HOUSING STARTS-DECLINE
      The housing market could “re-freeze” if rates hit [+]
      Xinhua News Agency via Getty Images
      Key Facts

      American homebuyers now face an average 30-year fixed mortgage rate of 7.09%, according to borrowing data released by federal mortgage servicer Freddie Mac.

      That’s a roughly 150% increase from the same week in 2021, when the average rate was 2.86%.

      That’s the fourth-largest two-year increase in 30-year mortgage rates according to Freddie Mac data dating back to 1971 analyzed by Forbes; the three largest increases came over the last year as well.

      At the onset of the last seven recessions, 30-year mortgage rates were an average of 11.6% higher than they were two years prior, comparing unfavorably to the average 1.1% two-year increase over the last 50 years.
      …
      https://www.forbes.com/sites/dereksaul/2023/08/17/mortgage-rates-are-surging-at-their-fastest-pace-on-record-heres-what-that-could-mean/?sh=6c62402869de

      1. “That’s the fourth-largest two-year increase in 30-year mortgage rates according to Freddie Mac data dating back to 1971 analyzed by Forbes; the three largest increases came over the last year as well.”

        Translation: You can stick a fork in the US housing market.

        1. Translation: You can stick a fork in the US housing market.

          What’s weird is transaction volume has essentially been cut in half in most markets, yet fools continue to pay nosebleed prices.

          2. The small group of buyers who are not currently priced out include those who can afford to take a risk of loss that would financially ruin a less wealthy buyer. Those reliant on current income to fund home purchases are mostly priced out, the exception being highly compensated corporate managers and successful entertainers. Trust fund babies and homeowners able to move a pile of accumulated equity from another market are among those still in the market.

      2. The mortgage rate situation brings to mind those old cartoons where Wile E. Coyote runs past the edge of a cliff and the Road Runner hands him an anvil, just before Coyote plummets to the desert floor below and leaves a giant CR8R where he lands.

        Fed = Road Runner

        Real estate investors = Wile E. Coyote

        1. Great analogy because every time Mr Coyote found himself off the cliff there was that unrealistic moment or two where he hung suspended defying the laws of physics. That’s where the housing market was a couple months ago.

    7. Axios Homepage
      6 hours ago – Economy & Business
      Benchmark Treasury yield hits 15-year high
      Kate Marino
      Data: FactSet; Chart: Axios Visuals

      The yield on the 10-year Treasury note soared to a 15-year high this week.

      Why it matters: That’s bad news for folks who want to take out a new mortgage — but it may also signal good news about the U.S. economy.

      Much of the movement has been driven by investors coming around to the narrative of a soft landing for the economy and a higher-for-longer rates environment, says Jim Caron, co-lead global portfolio manager at Morgan Stanley Investment Management.

      State of play: The 10-year yield, to which most U.S. mortgages and corporate borrowing is benchmarked, has climbed nearly a full percentage point since early May, to 4.3%.

      Yields go up as prices go down, which happens when more investors are selling than buying. So, what’s behind all the selling?

      Some context: Shorter-term Treasury bills have yielded over 5% for much of this year — significantly more than what you’d get paid to buy the 10-year.

      The reason to hold onto the lower-yielding 10-year instead, the thinking went, was that a recession was on its way and rates would all come down, Caron says. That would push prices of the 10-year notes higher, and investors would pocket the gains.
      …
      https://www.axios.com/2023/08/18/us10y-bond-us-treasury-yield-economy

    8. Financial Times
      US Treasury bonds
      Strong US economy forces investor rethink on interest rates
      Prospect of inflation staying higher for longer and poor summer liquidity drives surge in bond yields
      A montage of a US Treasury bond and a line graph
      Despite a fall on Friday, yields on benchmark US Treasuries were about 4.23%, 0.27 percentage points higher than at the start of the month
      Mary McDougall in London, Martin Arnold in Frankfurt, Kate Duguid in New York and Colby Smith in Washington 10 hours ago

      The strength of the US economy and the spectre of persistent price pressures have fuelled a big surge in borrowing costs on both sides of the Atlantic as investors rethink the trajectory for global interest rates.

      A global bond sell-off pushed benchmark US 10-year Treasury yields close to their highest level since 2007 this week, while equivalent UK gilt yields hit the highest since 2008 and 10-year French government bonds reached levels not seen since 2012.

      The rise in yields, which move inversely to prices, comes on the heels of a slew of data that suggests the US economy may be stronger than previously thought and, in turn, inflation may now take longer to moderate. That has prompted investors to push out their expectations for when central banks will be able to start cutting interest rates.

      The US Federal Reserve went as far as to warn that there was “significant upside risk to inflation” in its minutes published on Wednesday, even though some officials appeared more sceptical about the need for further rate rises.

      The moves have caught out some investors who were getting back into the bond market to lock in the yields on offer, believing that rates had peaked.

      “The narrative heading into the summer break was centred around the next big move was for lower rates, but markets seem to be caught wrongfooted here,” said Piet Haines Christiansen, director of fixed-income research at Danske Bank.

      “Yields everywhere are going up,” said Andres Sanchez Balcazar, head of global bonds at Pictet Asset Management. “Investors have been selling bonds recently with the view that central banks are not thinking about cuts as the labour market is tight and core inflation is sticky.”
      …

    9. Yahoo
      Bankrate
      It’s the end of an era for mortgage rates
      Jeff Ostrowski
      Fri, August 18, 2023 at 12:10 AM EDT·8 min read

      For two decades, American homeowners enjoyed historically cheap mortgages. Rates on home loans ranged from low to ridiculously low.

      Let’s take a trip down memory lane: From April 20, 2011, through Oct. 3, 2018, the average 30-year mortgage rate never topped 5 percent. After an eight-week period of mortgage rates barely above 5 percent in the fall of 2018, rates plunged again, falling below 3 percent during the depths of the pandemic. It wasn’t until April 2022 that they rose above 5 percent again. To put it another way, throughout an 11-year period, the typical mortgage rate ticked above 5 percent for all of two months.

      Now, though, amid an aggressive inflation-fighting policy from the central bank, rates have roared back. They hit 7.31 percent in Bankrate’s latest national survey of lenders — a 22-year high.

      The end of an era

      “The Federal Reserve has closed the door on the era of super-low interest rates over the past year and a half,” says George Ratiu, chief economist at Keeping Current Matters, a real estate data firm.

      That new reality has jolted the housing market: Home sales have fallen sharply since 2021, and homeowners, reluctant to give up their super-low locked-in mortgage rates, have staged a “seller’s strike.” Housing affordability has emerged as a persistent challenge.

      “The punchbowl of lower rates has been taken away,” says Mark Hamrick, Bankrate’s senior economic analyst. “That has inflicted a sobering environment on the housing market.”

      — Mark Hamrick, Bankrate senior economic analyst

      The last time U.S. mortgage rates topped 7.3 percent, in May 2001, the U.S. economy was in a very different place. The median home price was a quaint $156,000, according to the National Association of Home Builders/Wells Fargo affordability index, and the typical family income was a modest $52,500. Facebook didn’t yet exist, Big Tech was in its infancy and Alan Greenspan presided over the Federal Reserve as the revered master of financial markets.

      Now, more than two decades on, mortgage rates have again breached the 7.3 percent threshold. Much has changed in the meantime. The price of the typical U.S. home is nearly $400,000, and median family incomes are flirting with six figures. Big Tech drives the U.S. economy, and Greenspan’s reputation as a genius took a hit when the financial crisis of 2008 erupted.

      What kicked off the era of super-low rates?

      While today’s borrowers have been conditioned to consider low mortgage rates a birthright, the reality is that rates have, at times, been much higher than they are now. Mortgage rates topped 18 percent in 1981, the bad old days of stagflation, and they stayed stubbornly high throughout the 1980s.

      “There’s no doubt that we’ve been spoiled to some degree by record low or low interest rates over the years going back to the Great Financial Crisis,” Hamrick says. “The reality is that mortgage rates have settled into a range that’s more in line with modern history.”

      In May 2001, a mortgage rate above 7 percent seemed perfectly ordinary.
      …
      https://finance.yahoo.com/news/end-era-mortgage-rates-041002820.html

      1. “For two decades, American homeowners enjoyed historically cheap mortgages. Rates on home loans ranged from low to ridiculously low.”

        That is the fingerprint of a historic mania, which is currently ending.

  21. ZeroSludge (8/18/2023):

    “last month JPM boss Jamie Dimon predicted that American households would exhaust their pandemic savings around the end of this year, paving the way for a slump in consumer spending and an economic slowdown (yesterday we reported that according to refined estimates from the San Fran Fed, these excess savings would be depleted much sooner – by the end of Q3 (or in about a month and a half tops).

    Alas, today we come bearing bad news, because the same JPMorgan which one month ago expected excess savings would last until year-end (and keep consumption duly funded even as student loan repayments restart next month after a 3 year moratorium and slash discretionary spending by $16 billion per month) has made a major revision to its model and the bank now warns that the huge economic tailwind that was excess savings have now been exhausted from a 2021 high of $2.1tr …

    Needless to say, this means that the US consumer is now facing a spending cliff of epic proportions, because with excess savings now used up, and credit card usage just turning negative for the first time in years (as consumers realize that the happy days are over and the time to pay down credit card debt is here) …

    as well as the restart of student loan payments and a potential government shutdown on Sept 30, and all economic recovery bets are suddenly off just as it became hip and cool to predict that the US economy is cruising for an ultra smooth landing.”

    Fidelity’s SPAXX is paying me near 5% on cash now, I’m going majority cash.

      1. It’s going to become challenging for student debt HODLerz to keep up their meme stonk investing activities, once debt repayments and interest accrual resume within the next couple of months.

        1. Like was said yesterday; it takes a while to soak up 2 trillion dollars.
          Yes it will. I think we have at least a few more quarters of “strong consumer spending.”
          An increase in HELOCs will be responsible for some of that “strong”spending.

    3. True confession: I largely went to cash a few weeks back. Why argue with Uncle Warren and Michael Burry?

      2. Warren Buffett Selling $8 Billion Worth of Stock Raises Economy Crash Fears
        By Giulia Carbonaro On 8/16/23 at 12:20 PM EDT

        Warren Buffett’s firm Berkshire Hathaway sold a net $8 billion of stock between April and June in a move that suggests the U.S. economy is not out of the doldrums yet, despite consistently slower inflation.

        According to Berkshire Hathaway’s second-quarter earnings, released earlier this month, the company sold close to $13 billion worth of shares and bought less than $5 billion. The Nebraska-based investor’s company spent only $1.4 billion in buybacks—a modest sum for the stock market and much less than the $4 billion it spent in the first quarter.

        As Buffett is considered one of the greatest investors of all time and something of an oracle when it comes to the financial market, his moves and decisions are closely observed and analyzed.
        …
        Warren Buffett Selling $8 Billion Worth of Stock Raises Economy Crash Fears
        By Giulia Carbonaro On 8/16/23 at 12:20 PM EDT

        2. Best thing I like about Uncle Warren’s perspective: He lives far from New York City, and hence is free of the groupthink of Megabank, Inc and its minions.

      3. Stock market today: Wall Street limps toward the close of a third straight losing week
        STAN CHOE
        Updated Fri, 18 August 2023 at 9:08 am GMT-7·4-min read
        A person bikes past the New York Stock Exchange on Wednesday, June 29, 2022 in New York. Stocks shifted between gains and losses on Wall Street Wednesday, keeping the market on track for its fourth monthly loss this year.
        (AP Photo/Julia Nikhinson) (ASSOCIATED PRESS)

        NEW YORK (AP) — Wall Street is limping Friday toward the close of a third straight losing week.

        The S&P 500 was virtually unchanged in midday trading. The Dow Jones Industrial Average flipped from an early loss to a gain of 60 points, or 0.2%, to 34,535, as of noon Eastern time, and the Nasdaq composite was 0.3% lower. Each index remains down more than 2% for the week.

        August has been rough for the stock market, which has given back close to a third of the S&P 500’s torrid gains for the year’s first seven months. That’s in part because a swift rise in yields has forced investors to reconsider whether stocks got too expensive, particularly after critics warned the market rose too far, too quickly.
        …
        https://nz.news.yahoo.com/stock-market-today-asian-shares-063738336.html

  22. A Michigan home listed for $1 features a two-bedroom, and one-bathroom that requires a buyer to “unleash your inner DIY guru.”
    Zillow

    ‘World’s cheapest home’ with ‘avant-garde floor hole’ lists for $1 in Michigan

    By David Propper
    August 18, 2023

    A decrepit Michigan house was recently listed for only $1, though the agent behind the viral marketing campaign believes it will go for much more.

    “Introducing the ‘World’s Cheapest Home!’ in the heart of Pontiac, Michigan!” boasts the Zillow listing for 70 E. Ypsilanti Ave.

    “Priced at a mind-boggling $1 (yes, you read that right), this home is not just a house — it’s a ticket to the real estate adventure of a lifetime.”

    https://nypost.com/2023/08/18/michigan-house-listed-as-worlds-cheapest-home-with-avant-garde-floor-hole-lists-for-1-on-zillow/

  23. Homeowner arrested after trying to evict squatters from his own property: ‘Walked in on weapons, a prostitute, a bunch of dogs’

    By Mary K. Jacob
    August 16, 2023

    A homeowner stopped by to check on his suburban Atlanta property — only to be arrested for trespassing.

    Days after the departure of a previous tenant, Tim Arko pulled into the driveway of his house in desirable Decatur, where he suddenly encountered a stranger waving a gun in his face.

    “I just jumped the fence and ran. I didn’t know what else to do,” Arko told local channel WSB-TV.

    “I didn’t walk in on a family eating dinner. I walked in on weapons, a prostitute, a bunch of dogs in the back, my fence broken down,” he told a reporter.

    After dialing 911 to report the intrusion, Arko was astonished to find himself being arrested and taken into police custody.

    “They told the police that I was a home invader and that it was their home. And so I ended up being arrested and detained,” Arko said.

    Since then, Arko has been fighting to evict the alleged squatters in court.

    Six months later, they are still living in Arko’s home.

    Two people have died in the residence from overdoses during that time.

    Code enforcement has even cited Arko for not properly maintaining the house he legally can’t access.

    After lengthy court delays, an eviction order was finally signed.

    Arko still awaits marshals, however, to conduct the eviction.

    Arko said he has been informed by marshals that they are hoping for a September eviction.

    https://nypost.com/2023/08/16/homeowner-arrested-after-trying-to-evict-squatters-from-his-house/

    2. There is an eviction officer in Memphis who records his evictions and puts them on youtube. He does some of the worst hoarder dumps all the way up to fully furnished golf course mcmansions. He shows up with a locksmith and a moving crew. The one thing they all have in common is none of them ever see it coming and insist they have no idea why he is there. However, as their stuff begins to pile up on the curb they begin to recall certain details.

    1. The Motley Fool
      Hedge Fund Billionaire Ken Griffin Issues a Stark Warning About the Artificial Intelligence (AI) Hype Cycle. These 2 AI Stocks Are His Largest Holdings.
      By Danny Vena – Aug 15, 2023 at 5:17AM
      Key Points

      – The latest advancements in AI have lifted the market in 2023, sending some AI stocks soaring.

      – While some believe the technology is transformative, there’s also fear that AI has created a hype cycle, doing a disservice to investors.

      – Billionaire Ken Griffin believes the fervor has gone too far, but his largest positions are two AI stalwarts.
      …
      https://www.fool.com/investing/2023/08/15/hedge-fund-billionaire-ken-griffin-issues-a-stark/

  26. It’s been a fun time recently to watch the financial markets gyrate. Have a great weekend, and try not to eat too much popcorn!

  27. Can government intervention save China’s stock market from CR8Ring?

    It didn’t work for Japan in the 1990’s, but maybe it’s different in China?

    1. Financial Times
      Chinese business & finance
      China unveils capital market reforms to boost investor confidence
      Lower fees and longer trading hours part of plan to boost activity as policymakers’ concern over economy mounts
      The lacklustre returns on equities reflect a slowdown and lack of confidence in the broader Chinese economy
      Hudson Lockett and Cheng Leng in Hong Kong 6 hours ago

      China’s securities regulator has announced a package of market-friendly reforms to try to boost investment and trading after months of underwhelming economic growth that has hit stocks and bonds.

      The measures, which the China Securities Regulatory Commission said were designed to “boost capital market investor confidence”, indicate Beijing’s concern over the country’s economic and financial health after a weak rebound from strict pandemic curbs last year.

      The CSRC said on Friday that it was considering an extension to trading hours for the country’s stock and bond markets and vowed to cut transaction fees for brokers. It also said it would encourage share buybacks to help stabilise stock prices.
      …

    2. Bloomberg
      Economics
      China’s Housing Slump Is Much Worse Than Official Data Shows
      By Bloomberg News
      August 16, 2023 at 4:30 PM PDT

      – Property values show variance between agents, official data

      – Uncertainty over data could have implications for policy

      Judging by China’s official statistics, the nation’s housing market has been remarkably resilient in the face of tepid economic growth and record defaults by developers.

      New-home prices have slipped just 2.4% from a high in August 2021, government figures show, while those for existing homes have dropped 6%.
      …
      https://www.bloomberg.com/news/articles/2023-08-16/china-s-housing-slump-is-much-worse-than-official-data-shows#xj4y7vzkg

    3. The Business Standard
      Friday August 18, 2023
      China’s hidden financial dangers erupt with shadow bank crisis
      Bloomberg Special
      18 August, 2023, 06:30 pm
      Last modified: 18 August, 2023, 06:44 pm

      – Missed trust payments spark protests, forces restructuring

      – Trust woes adds to weak economy, deepening housing slump

      Only a week ago, Zhongzhi Enterprise Group Co attracted little notice within China and was almost unheard of everywhere else.

      Now, the secretive shadow banking giant has become the latest symbol of financial fragility in an US$18 trillion (RM83.6 trillion) economy where confidence among investors, businesses and consumers is rapidly dwindling.

      The privately owned manager of more than one trillion yuan (RM640 billion) and its trust-company affiliates are under intense scrutiny after halting payments to thousands of customers. Underlining its importance, regulators have formed a task force as they seek to prevent contagion. Behind the scenes the firm has hired KPMG to carry out what is likely to be a protracted restructuring process. Potential asset sales threaten to weigh on broader markets.
      …
      https://www.tbsnews.net/bloomberg-special/chinas-hidden-financial-dangers-erupt-shadow-bank-crisis-684542

    4. Humpty Dumpty sat on a wall
      By Mother Goose

      Humpty Dumpty sat on a wall,
      Humpty Dumpty had a great fall;
      All the king’s horses and all the king’s men
      Couldn’t put Humpty together again.

  28. China Evergrand filed bankruptcy yesterday in NY. I don’t know much about international business, But I would have thought they would file bankruptcy in china not in New York.I’m sure there are lot of Bond holders here and maybe that’s the reason.I hope they lose their rear end.

    1. My guess is they need to file bankruptcy in NYC for protection against creditors based there.

      This suggests Wall Street investors in Evergrande just got stiffed. We’ll see how well they can hide the financial losses in the coming months. To my recollection, it took quite a while for the damage from the subprime implosion, which started CR8Ring in December 2006, to show up in the financials of Bear Stearns, Lehman Brothers, Washington Mutual, etc. during the 2007-2009 financial crisis.

      “You only find out who is swimming naked when the tide goes out.”

      — Warren Buffett

    1. Sequoia Capital is a CCP front. Vivek Ramasmarmy/Ramaswampy founded and derives his wealth from Roivant Sciences.

      https://www.weforum.org/people/michael-ortiz (emphasis added):
      Michael Ortiz is Senior Policy Director at Sequoia Capital, where he works with investors, founders and companies on emerging tech policy and regulatory issues. He previously served as Head of Public Affairs at Roivant Sciences, a unicorn parent company of biotechnology and technology subsidiaries. From 2020-2021, Michael participated on the Biden-Harris Presidential Transition Team, where he served as a member of the National Security Council Agency Review Team and led the confirmation teams of the Director of the Central Intelligence Agency and the Deputy Secretary of Defense. During the Obama Administration, he held senior positions at the White House, National Security Council (NSC), and Department of State. Michael served as Deputy Counterterrorism Coordinator at the U.S. Department of State and Senior Advisor to the National Security Advisor at the White House. Earlier in his career, Michael worked on President Obama’s top legislative initiatives at the White House and the NSC. He also served on the Obama-Biden Presidential Transition Team, and was an aide to Senate Majority Leader Harry Reid and Senator Barack Obama. Michael is a member of the Council on Foreign Relations, the Stanford in Washington National Advisory Council, Stanford’s Haas Center for Public Service National Advisory Board, the Atlantic Council’s Counterterrorism Study Group, and the Stanford Associates. He has participated in the Aspen Institute Socrates Program and the Milken Institute Associates program. Michael graduated with honors from Stanford University.

      Roivant Sciences’ investors notably include Softbank Capital (Masayoshi Son) and Palantir Technologies (Peter Thiel) and Sequoia Capital China.

      I’m sure Vivek will follow through on his campaign promise to decouple from China. 🙄

      1. Sequoia Capital’s split-off of China business spurred by Sino-U.S. rift (emphasis added):

        Sequoia is one of the world’s leading VCs. Established in 1972, its past U.S. investments have included leading companies like Apple, Google, Cisco, Oracle and Nvidia. More recently, it supported room sharing and rentals giant Airbnb from the company’s beginnings. Its assets total $35.1 billion, according to Crunchbase.

        Sequoia is known for its early entry into the Chinese market in 2005, where it has continued to expand investments since. Portfolio companies have included Alibaba, TikTok parent ByteDance and e-commerce giant JD.com. Its China business has also invested in Japanese startups.

        Shen and others used funds from U.S. investors to successfully grow the China division with a localized approach, reflecting something of a honeymoon era of U.S. investment in Chinese tech companies.

        Between 2010 and 2021, investment in Chinese startups from U.S. VCs and other funds approached a total of $60 billion, peaking in 2018 with an annual total of $20 billion, according to U.S. research firm Rhodium Group.

        But growing acrimony between the two countries’ governments has seen the honeymoon era come to an end.

  32. ‘There’s probably a fair amount of buyer’s remorse at this point, across all the property types,’ Manus Clancy of Trepp said of the office market as a whole. ‘You expected values to stay high. That hasn’t been the case. We’ve seen values really fall’

    Manus, are you talking to that mouse in yer pocket again?

  33. ‘In today’s market, many condo projects are coming to completion in a market where values are depressed — not elevated. ‘A purchaser might be lucky if the builder cancelled, because the value may have dropped below the original purchase price’

    This pre-construction airbox flipping was a big bag of poo years ago and still doesn’t get recognized for what it is: skin of yer pants speculation.

    1. I came upon this post as I was having a conversation with my youngest daughter about living a debt free life… 🙂

  35. ‘Buying real estate became one of the main ways for China’s growing middle class to accumulate wealth and created an expectation that land and home values would continually increase. Because of this, developers required people to pay for a home in full before it had even been built, lending the system a ‘Ponzi-type element’

    Well, that’s a nice summary Logan. So how many shacks are we talking about here, a few thousand like California?

  39. “The Central Texas housing market has continued its cooling trend, according to the new report from the Austin Board of Realtors. According to the July report, the City of Austin’s current median price for a home was $550,000, which was down 12% compared to last year.”

    Going a lot lower. Those 2.5% mortgages are worthless when all your wealth is wrapped in your home and you see its value dropping monthly. Like Vegas, it’s all fun and games when you’re winning. Not so much when the tables turn. Many are now stuck waiting for their luck to turn. Many more will cash their chips to downsize or rent and walk away before they end up giving all their winnings back.

    1. “Going a lot lower. Those 2.5% mortgages are worthless when all your wealth is wrapped in your home and you see its value dropping monthly.”

      How easy is it to take out home equity loans when valuations are falling and rates have rocketed up?

      1. Millennials Lost 18% in Home Equity This Year — Here’s Why Borrowing Against Your House Can Be Dangerous
        5 min Read
        August 17, 2023
        By David Nadelle
        Shot of a young couple looking stressed while working on their finances at home.
        PeopleImages / Getty Images/iStockphoto

        According to data from Redfin, the total worth of homes in the U.S. set a record of $46.8 trillion in June, besting the previous high of $46.6 trillion set a year earlier as low inventory boosted house values.

        Millennials gained more total value of their homes year-over-year in June (2.9%) than any other generation and now own $5 trillion in real estate, per the Redfin estimate. In doing so, they passed the silent generation (those born 1925 to 1945) in property wealth ($4.7 trillion), but still trail far behind Generation X’s and baby boomers’ totals of $13.4 trillion and $18 trillion, respectively.

        As members of the silent generation age and subsequently move into retirement residences or pass away, they lose home value. On the other hand, millennials buy more homes every year. As Redfin noted, millennials make up the largest portion of home buyers at this juncture, and have purchased around 60% of houses purchased with mortgages “over the last several years.”

        However, while the Gen Y demographic gained total home value, it lost 18% in home equity this year. This figure can be compared to home equity numbers attached to the silent generation (-11.4%), Generation X (-0.7%) and baby boomers (0%), according to the data.
        …
        One explanation for this decrease is the higher likelihood of millennials drawing on their home equity, per Redfin Economics research lead Chen Zhao. Zhao noted that many millennials have taken the potentially risky approach of borrowing against the equity their homes gained during the pandemic to pay off pricey home renovations, as well as credit card and student loan debt.
        …
        The Dangers of Borrowing Against Your Home

        According to Black Knight’s August 2023 Mortgage Report, the average mortgage holder has some $199,000 in available equity. Tapping too much of it can cause a downward turn in finances, which can take a significant emotional toll on you and your family.
        …
        Risk of Foreclosure

        When you borrow against your house, you are essentially using your home as collateral. If you are unable to make the required payments on the loan or line of credit, you risk the lender taking ownership of your home.

        Increased Debt

        Borrowing against your house for short-term expenses like vacations or luxury purchases can lead to long-term financial difficulties and add to your debt load. If you’re not careful, you might find yourself owing more than the value of your home, making it difficult to sell or refinance if needed. It’s important to use these funds wisely and consider whether the expense is worth jeopardizing your home.

        Interest Costs

        Home equity loans and HELOCs come with interest rates. If the interest rates are high or increase over time, you might end up paying significantly more than you initially borrowed. Additionally, many HELOCs have variable interest rates that can fluctuate with market conditions. This can lead to unpredictable changes in your monthly payments, making it difficult to budget.

        Lack of Equity and Flexibility

        By borrowing against your home, you might deplete your equity, which is the difference between the value of your home and the remaining mortgage balance. This could impact your ability to access financing in the future or hinder your plans for upgrading or relocating. If you encounter unexpected financial challenges, you might not have the flexibility to sell your home and downsize or move to a more affordable location, since your equity could be tied up in the borrowed amount.

        Fees and Costs

        Borrowing against your house often involves closing costs, appraisal fees, and other expenses. These costs can add up and diminish the benefits of the loan. According to Money, your HELOC might also include a prepayment penalty if you pay off the line of credit before the term ends.
        …
        . .
        https://www.gobankingrates.com/loans/home-equity/millennials-lost-home-equity-this-year-why-borrowing-against-your-house-can-be-dangerous/

        1. “According to data from Redfin, the total worth of homes in the U.S. set a record of $46.8 trillion in June, besting the previous high of $46.6 trillion set a year earlier as low inventory boosted house values.”

          Steadily ginned-up since the seventies due to the middle-east.

      2. Business
        Home equity loans searches hit record high as economy squeezes owners: analysis
        by Adam Barnes – 07/27/23 12:01 PM ET

        High prices in the real estate market and the larger economy are leading homeowners to look for ways to leverage their home’s equity.

        An analysis of Google searches for “heloc,” a home equity line of credit, reached an all-time high, up 305 percent as of July 2023, according to a study from the real estate platform RubyHome. Searches were highest in Hawaii, Utah and Colorado.

        A home equity line of credit allows owners to borrow against the equity they have built in their homes, and they can use the money to cover larger expenses, such as a new roof or car payments.

        The uptick in search interest occurred amid the rate hiking cycle from the Federal Reserve that has trickled into the housing market and sent mortgage rates soaring. This is keeping potential sellers anchored to their homes instead of risking a higher mortgage rate when buying a new home.

        “Homeowners that bought a few years ago, at lower prices and at lower interest rates, can feel trapped. If they’ve considered buying a new home, they’ve looked around at today’s higher home prices and also know they can never replace the historically low interest rate they have now,” RubyHome CEO Tony Mariotti said in a statement.
        …
        https://thehill.com/business/4122890-home-equity-loans-searches-record-high-as-economy-squeezes-owners-analysis/

      3. Mortgage-Matters
        Home Equity Lines of Credit (HELOCs) can be risky
        Pros and cons of HELOCs
        April Dunn – Jul 22, 2023 / 11:00 am | Story: 438032
        Photo: Contributed

        Home Equity Lines of Credit (HELOCs) have become increasingly popular among Canadian homeowners, providing flexible access to funds using the equity built up in their properties.

        It is very important to understand the pros and cons of HELOCs, particularly in light of high interest rates and the fact that they are demand loans that can be called by the bank at any time.

        Pros of Home Equity Lines of Credit

        1. Flexible Access to Funds: One of the primary advantages of a HELOC is its flexibility. Borrowers can access funds on an as-needed basis, making it an excellent option for ongoing expenses like home renovations, education costs, or unexpected emergencies. This flexibility allows homeowners to use funds when required and pay interest only on the amount they use.

        2. Lower Interest Rates Compared to Other Credit Options: Despite the potential for higher interest rates compared to traditional mortgages, HELOCs often offer lower rates than other unsecured credit options like credit cards or personal loans. For homeowners with a strong credit history and substantial home equity, a HELOC can be an attractive alternative for borrowing funds at a lower cost.

        3. Revolving Credit: A HELOC is a revolving line of credit, similar to a credit card. Once the borrowed amount is repaid, the available credit is replenished.

        Cons of Home Equity Lines of Credit

        1. Variable Interest Rates: HELOCs typically have variable interest rates tied to the prime lending rate, which can fluctuate with changes in the economy. While this means the interest rate could be lower during periods of economic growth, it also exposes borrowers to the risk of higher interest rates during economic downturns. The average rate today on a HELOC is 7.70% (Prime +.50%).

        2. Risk of Over-Borrowing: The accessibility of funds through a HELOC can lead some homeowners to over-borrow, using their home equity for non-essential expenses. This behavior can lead to increased debt and financial strain, particularly if interest rates rise significantly.

        3. Rising Interest Rates: With a HELOC, homeowners may face increased financial pressure when interest rates rise. As the interest portion of the monthly payment increases, borrowers might find it challenging to keep up with the rising costs.
        …
        https://www.castanet.net/news/Mortgage-Matters/438032/Home-Equity-Lines-of-Credit-HELOCs-can-be-risky

  40. Why stock investors are suddenly so scared
    By Nicole Goodkind, CNN
    Published 12:34 PM EDT, Fri August 18, 2023
    Stocks are suddenly in a rut.
    Michael M. Santiago/Getty Images

    New York CNN —

    Many investors are running a sizable profit this year – the S&P 500 is about 14% higher in 2023. But market losses have been piling up over the past month, particularly on growing fears of contagion from an economic slowdown in China. Inflation, Russia’s war in Ukraine and weakness in America’s banks also have Wall Street spooked.

    The Nasdaq has dropped by 7.7% in August and the S&P 500 is down nearly 5% this month. On Thursday, the Dow closed lower than its 50-day moving average, a key threshold that investors often interpret as a bearish signal. The index is down 3% this month.

    The CNN Business Fear & Greed Index, which looks at seven indicators of market sentiment, is showing signs of fear on Friday for the first time since March. That’s a big change from just one month ago, when the index was in “extreme greed” territory.

    So what’s going on?
    …
    https://www.cnn.com/2023/08/18/investing/fear-and-greed-investors/index.html

  41. The Wall Street Journal
    Last Updated: Aug. 17, 2023 at 5:58 PM EDT
    Live Coverage Feed
    1 day ago
    Bond Selloff Led by Longer-Term Treasurys
    By Sam Goldfarb, Reporter

    The bear steepening keeps going.

    One feature of the recent climb in U.S. Treasury yields is that yields on longer-term bonds are rising more than shorter-term ones, a trend known as a bear steepening based on how it would change a normal, upward-sloping yield curve.
    …

    1. Aug 17, 2023
      BofA’s Warning of a ‘5% World’ Sinks in With Yields Pushing Higher
      Michael Mackenzie and Liz Capo McCormick, Bloomberg News

      (Bloomberg) — All around the world, bond traders are finally coming to the realization that the rock-bottom yields of recent history might be gone for good.

      The surprisingly resilient US economy, ballooning debt and deficits, and escalating concerns that the Federal Reserve will hold interest rates high are driving yields on the longest-dated Treasuries back to the highest levels in over a decade.

      That’s prompted a rethink of what “normal” in the Treasury market will look like. At Bank of America Corp., strategists are warning investors to brace for the return of the “5% world” that prevailed before the global financial crisis ushered in a long era of near-zero US rates. And BlackRock Inc. and Pacific Investment Management Co. say inflation could remain stubbornly above the Fed’s target, leaving room for long-term yields to push even higher.

      “There is a remarkable repricing higher in longer-term rates,” said Jean Boivin, a former Bank of Canada official who now heads the BlackRock Investment Institute.

      “The market is coming more to the view that there is going to be long-term inflation pressures despite recent progress,” he said. “Macro uncertainty is going to remain the story for the next few years, and that requires greater compensation to own long-dated bonds.”
      …
      https://www.bnnbloomberg.ca/bofa-s-warning-of-a-5-world-sinks-in-with-yields-pushing-higher-1.1960425

  42. China’s economic model is ‘washed up on the beach’ and it’s not going to bounce back, veteran investor says
    Phil Rosen
    Aug 17, 2023, 11:47 AM PDT
    China Xi Jinping
    Lintao Zhang/Getty

    – Veteran investor David Roche told CNBC that China’s economic model is “washed up on the beach.”

    – He doesn’t anticipate it to bounce back as it deals with deflation, slowing growth, and other economic snags.

    – He noted that China’s economy has a “huge number of legacy holes in it.”
    …
    https://www.businessinsider.com/china-economy-deflation-population-markets-investor-roche-growth-xi-finance-2023-8

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