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You’re Thinking You’re Buying An Investment And To Sell At A Loss Is Heartbreaking

It’s Friday desk clearing time for this blogger. “‘Perhaps there could be some recovery taking place, but the last couple of data releases are implying no,’ said Lawrence Yun, the NAR’s chief economist. ‘Things are slumping down again.'”

“The 10-year Treasury yield surged to 4.46% in morning trading Thursday, up from 4.40% late Wednesday and from 0.50% three years ago. It’s now near its highest level since 2007. ‘It’s possible mortgage rates may go up to 8% in the short run,’ Yun said.”

“Las Vegas has the fourth highest home foreclosure rate in the country, according to ATTOM. I spoke with an associate professor of real estate at UNLV and a resident who’s witnessed the impact firsthand. ‘This stuff is killing us here in Las Vegas, which used to be the place where everyone wanted to move to cause it was affordable,’ said North Las Vegas resident Orlando Cotton. He says he is paying significantly more to keep a roof over his head, and he is not alone. ‘Were you surprised when your neighbor’s home went into foreclosure?’ I asked. ‘Yes, I was, and she just couldn’t afford to keep it after her parents passed away,’ he said. Cotton says he has seen more foreclosures in his neighborhood.”

“‘Can you agree with what they are finding?’ I asked the Director and Associate Professor of real estate at UNLV, Shawn McCoy. He is monitoring foreclosures in the valley regularly. ‘Consumer savings that was piled up during the COVID economy through massive injections of capital from the feds, a lot of that consumer savings that homeowners used is expiring,’ he said.”

“McCoy says they use a map to identify hotspots throughout the valley that may have more foreclosures. ‘Up here in the north part of town, we are seeing a lot of red,’ McCoy told me. ‘In the northwest and north part of town, income levels are lower than many, and I think most would agree it is going to hit or bind homeowners at lower income levels first,’ he answered. Cottons says he agrees with McCoy’s findings and says the people in his area struggle. ‘You can’t afford it,’ Cotton said. ‘The bottom line is you can’t afford to pay $2,500 to $3,000.'”

“New numbers show home sales on the Wasatch Front plunging to a nine-year low and prices also dropping in many areas of the state, triggered by rate hikes that top economists say have abruptly snuffed out a 10-year run of booming real estate markets as of late least year. With the slowdown, Salt Lake County’s median price on a single-family home dipped to $582,500 as of the end of June, off 7% from a year before — when, according to the Salt Lake Board of Realtors, it stood at $623,138. Compared roughly to this time last year, Tooele County’s single-family home prices are down overall by at least 9%. Utah County has seen a 7% drop, Weber County is 6% lower and Davis County is also down by 5%.”

“The median price of a detached home in Marin has fallen to $1.51 million, a year-over-year decline of 11%, according to new data from the county assessor’s office. The data are based on market activity for August. For condominiums and townhomes, the median price fell to $794,000 last month, down 9% from $875,000 the previous August. The median home price in Marin hit $2.12 million in April 2022 before beginning its descent.”

“For two years, the Turkish property investor thought he had purchased a renovated rowhome in the Park Heights area that had tenants who were paying rent. He’d received 20 months of such payments. Then, five months ago, the money stopped. Property Invest USA, the Miami-based company that facilitated the transaction — along with nearly 300 others across Baltimore to buyers in Turkey and Central America — was being evasive under questioning, he said. So the 34-year-old investor, a commercial airline pilot, decided on a recent layover in Washington to make the trek to Baltimore and take a look at the property for the first time since he bought it in June 2021. ‘Yeah, here we are,’ he said, standing on the sidewalk looking at a front lawn that hadn’t been mowed in ages. ‘It’s obvious there’s no tenant.'”

“He says he did not know that on the day of his closing, Property Invest USA paid $53,000 to acquire the property, and would sell it to him for twice the amount in what’s called a ‘double closing.’ Now it was time for the pilot to see what he paid for. A local Realtor he had contacted prior to arrival, Nick Pfisterer, led the way up to the front door. ‘I’ve seen some bad houses, and this looks like it hasn’t been touched in years,’ said Pfisterer. ‘Even if it was renovated, pardon my language, it’s a shit job.’ Standing on the porch of his home waiting for a locksmith that never arrived, the pilot wondered if he’d been naïve to invest in property 5,000 miles from home. A group of other pilots had recommended it. ‘This is United States. If something bad happens, I can go to court. The United States works efficiently. I thought that,’ he said.”

“A recent report by Rates.ca suggests variable rate mortgage holders have paid thousands more in interest since rate hikes by the Bank of Canada began. ‘It’s not exactly what they bargained for. You know, they’re paying a lot more now,’ said Rates.ca mortgage and real estate expert Victor Tran. ‘Lots of regret in the market as well. You know, maybe they should have went for the fixed rate when that option was given to them.'”

“IT worker John Palmiero, from Buckinghamshire, and his wife have an interest-only tracker mortgage on their north London flat. A year ago they paid just over £200 a month – now it costs them more than £1,200 a month. Mr Palmiero, 61, said: ‘For the flat in question, we chose an interest-only mortgage and having experienced very high interest rates in the past, we planned for the worst case scenario – which we are now in – so we have a break even to a small loss each month on the flat.’ Mr Palmiero and his wife own three flat sas well as their family home. Mr Palmiero said: ‘Over the past 20 years we have diligently saved and accumulated four jointly owned (husband and wife) buy-to-let flats that we planned to use for independence in our retirement.'”

“Mr Palmiero said he felt ‘trapped’ and ‘let down’ by the Government, whose response to the building safety crisis following Grenfell he believes has been ‘ill-thought through.’ Mr Palmiero said: ‘The damage is done now. Another quarter of a per cent increase is going to take £1,300 or something we’re just going to have to suck it up, right, as we have up until now. What I’m focused on is the fact that it looks like this is the end of interest rate increases and because we are on a tracker mortgage, when they start to come back down, which they must, then we will see the benefits of that very quickly. So we’re not quite as upset about it. We were at one point, my wife was really upset about it. We’re trying to figure out how do we how do we live our retirement now knowing that our plan was to sell a flat in order to fund our retirement but as it is we’re going to have to figure out how to fund it.'”

“When Ella Keniz spent her life savings on an apartment in Sydney’s inner west, she didn’t imagine that almost $100,000 would be wiped away in just a few years. ‘It’s devastating, really,’ Ms Keniz said. ‘You’re thinking you’re buying an investment and you’re going to do well down the track, and to sell at a loss is heartbreaking.’ The 48-year-old office administrator bought a two-bedroom apartment in Homebush in 2018 for $760,000, but sold it in July this year for $670,000. ‘You think to yourself, ‘how much longer do I wait?’ and prices could even go down so it’s hard to know how much longer to hold on for,’ Ms Keniz said.”

“David Pisano, principal agent at LJ Hooker Strathfield, said sellers like Ms Keniz, who bought in the peak of the market were deciding to cut their losses. He said that’s particularly pronounced in areas like Homebush where more construction is underway. Mr Pisano said owners are worried their values will fall further when those new units are complete, and want to get out now. ‘A lot of people bought off the plan in 2016-2017 for probably $730,000-$750,000, and are selling them now for $650,000-$680,000 for second-hand stock, but that’s mainly due to the oversupply there. I think it’s just more people deciding that it’s not going to increase, and they might as well get out now and make a loss rather than hold on and continue to make a loss.'”

“An accountant in northeast China deposited her life savings and received a letter guaranteeing her investment in a trust firm. Workers at a state-owned utility pooled money from friends and relatives believing that their investments were backed by the government. A man sank $140,000 into an account that he was told would make a 10.1 percent annual return. They are among the hundreds of thousands of Chinese investors confronting a distressing reality: Their investments with Zhongzhi Enterprise Group, a financial giant managing $140 billion in assets, and its trust banking arm, Zhongrong, might be at risk. Starting in July, companies affiliated with Zhongzhi missed dozens of payments to investors. They have offered no timetable for when people will be paid, fueling concerns that one of China’s largest so-called shadow banks may be near collapse.”

“In a brief statement last week, Zhongrong said some investment products were ‘unable to be paid on schedule’ because of ‘multiple internal and external factors.’ It did not mention whether investors would get their money. Zhongzhi has not made any public statements about its finances, and it did not respond to an email seeking comment. The accountant in northeast China said she had invested $1.5 million into two Zhongrong trust products. ‘It’s like my heart is bleeding every day,’ Ms. Wang said, sobbing on the phone. She had planned to buy a home for her child in Beijing with the money she had invested. After Zhongrong missed its payments, angry investors gathered outside its Beijing headquarters, demanding that the company ‘pay back the money.'”

“Logan Wright, director of China markets research at Rhodium Group, said China used to embrace bailouts, because faith in a government backstop allowed credit to flow for a fast-growing economy. But as China’s debts ballooned, the government changed course. ‘That strategy is now coming to an end,’ he said.”

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It’s All Over

A report from the Wall Street Journal on New York. "Property investors have spent billions…

This Post Has 90 Comments

  1. ‘Things are slumping down again…It’s possible mortgage rates may go up to 8% in the short run’

    Yeah Larry, the rate daters are fooked.

    1. mortgage rates may go up to 8% in the short run

      That’ll be a shocker to those who believed and parroted his “rates will settle back into the mid-5s by summer.”

  2. “The median price of a detached home in Marin has fallen to $1.51 million, a year-over-year decline of 11%, according to new data from the county assessor’s office. The data are based on market activity for August. For condominiums and townhomes, the median price fell to $794,000 last month, down 9% from $875,000 the previous August. The median home price in Marin hit $2.12 million in April 2022 before beginning its descent’

    That’s a lot more than 11%.

    1. April 2022 $2.12 million
      August 2023 $1.51 million

      16 months loss is $610,000

      Percentage loss (so far) is
      610/2120 = 28.8%

      Annualized rate of loss is
      1-(1.51/2.12)^(12/16) = 22.5%

  3. ‘This is United States. If something bad happens, I can go to court. The United States works efficiently. I thought that’

    This article is a hoot. They were pretty efficient in taking yer money.

    1. “This is United States.”

      It sure is, which means that information is NOT hard to find. How long does it take to do a google search on “Baltimore?” Or some walking around on Google Maps? Or heck, just look the place up on Zillow? Or looking up the rental lease? Surely some of this has to be public. Then again, they all think that the US streets are paved with gold and everyone is all honest and happy.

  4. ‘The damage is done now. Another quarter of a per cent increase is going to take £1,300 or something we’re just going to have to suck it up, right, as we have up until now…We’re trying to figure out how do we how do we live our retirement now knowing that our plan was to sell a flat in order to fund our retirement but as it is we’re going to have to figure out how to fund it’

    20 or 30 years without eating should fix yer mess John, that’s you and the wife.

  5. Biden Names Obama Crony Penny Pritzker to Lead Ukraine’s Economic Recovery

    JOEL B. POLLAK
    22 Sep 2023

    Sullivan, a major proponent of the “Russia collusion” hoax against President Donald Trump, told reporters that Biden, meeting with Ukrainian President Volodymr Zelensky at the White House for the sixth time on Thursday, would “introduce a special representative for Ukraine’s economic recovery, Penny Pritzker, who will focus on engaging the private sector, partner countries, and Ukrainian counterparts to generate international investment in Ukraine and work with Ukraine to make the reforms necessary to improve Ukraine’s business climate.”

    Pritzker, a close Chicago associate of former President Barack Obama and heiress to the Hyatt hotel fortune, was passed up for a cabinet post after the 2008 election due to her involvement in a subprime mortgage collapse at Superior Bank, which failed in 2001. That was considered a political liability in an administration that promised voters it would fix the mess on Wall Street that had led to a massive recession and ushered Obama into office.

    Four years later, when memories of the Wall Street financial collapse had faded somewhat, Pritzker was nominated to be Secretary of Commerce.

    In that role, her signature achievement was giving away American control of Internet domain names. Pritzker was also actively involved in Ukraine, where her family is originally from.

    It was under her department that the infamous billion-dollar loan guarantees were announced — the money that then-Vice President Biden threatened to withdraw unless Ukraine fired a prosecutor investigating Hunter Biden’s company, Burisma.

    https://www.breitbart.com/national-security/2023/09/22/biden-names-obama-crony-penny-pritzker-to-lead-ukraines-economic-recovery/

  6. ‘A lot of people bought off the plan in 2016-2017 for probably $730,000-$750,000, and are selling them now for $650,000-$680,000 for second-hand stock, but that’s mainly due to the oversupply there’

    WA?

    ‘I think it’s just more people deciding that it’s not going to increase, and they might as well get out now and make a loss rather than hold on and continue to make a loss’

    So just like that Dave, yer giving it away.

  7. ‘It’s like my heart is bleeding every day,’ Ms. Wang said, sobbing on the phone. She had planned to buy a home for her child in Beijing with the money she had invested. After Zhongrong missed its payments, angry investors gathered outside its Beijing headquarters, demanding that the company ‘pay back the money’

    Open the gates!

    How did you lose yer shack Wang?

    That strategy is now coming to an end.

    1. What a joke.

      TX Governor Abbott just declared that Texas is under INVASION by the Mexican cartels.

      Invasion, it’s a criminal invasion.

      The Great Replacement is real. Kill off all the white poors with fentanyl, replace them with the illiterate 3rd world who will be docile slaves beholden to government handouts.

      1. “Texas Governor Greg Abbott has declared an “invasion” at the southern border, attributing it to the Mexican drug cartels. This declaration comes as Governor Abbott takes a firm stance against the escalating security crisis and the influx of criminal activities from across the border.

        “I officially declared an invasion at our border because of Biden’s policies. We deployed the Texas National Guard, DPS & local law enforcement. We are building a border wall, razor wire & marine barriers. We are also repelling migrants,” Governor Abbott announced in a post on Thursday.

        “Texas will continue to install more razor wire and fortify the border against illegal crossings. We will not back down,” said Abbott in another X post after the Biden regime cut the razor wires installed.

        On Wednesday, the Biden regime cut the razor wires installed, “opening the floodgates to illegal immigrants.”

        According to data from the U.S. Customs and Border Protection (CBP), the number of illegal immigrants apprehended at the U.S.-Mexico border has surged since President Joe Biden took office on January 20, 2021. In fiscal year 2021, CBP apprehended 1.73 million people at the southwest border, the highest number since 2006. Even more alarmingly, in fiscal year 2022, CBP apprehended 2.38 million people at the southwest border, marking the highest number since 1993. For the year 2023, CBP apprehended 1.97 million so far.”

        https://www.thegatewaypundit.com/2023/09/governor-greg-abbott-officially-declares-invasion-southern-border/

    1. Stock Market Today
      Dow Jones Bounces After Market Sell-Off; Cathie Wood Loads Up On AI Stock Palantir
      SCOTT LEHTONEN 09:34 AM ET 09/22/2023

      The Dow Jones Industrial Average bounced Friday after Thursday’s stock market sell-off. Cathie Wood’s Ark Invest ETFs loaded up on Palantir stock, while biotech Seagen surged on positive trial results.
      …
      https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-bounce-stock-market-sell-off-cathie-wood-buys-palantir-stock/

    2. Financial Times
      Federal Reserve
      Federal Reserve hardens commitment to ‘higher for longer’ interest rates
      New projections and remarks from chair Jay Powell signal no near-term relief from elevated borrowing costs
      Jay Powell, chair of the Federal Reserve, hinted that a higher-for-longer approach was warranted because estimates of the so-called ‘neutral’ interest rate could be higher than thought
      Colby Smith in Washington
      September 20 2023

      For months, Jay Powell has tried to scotch hopes that the Federal Reserve will perform an abrupt about-face when it reaches the apex of its historic rate-rising campaign.

      The US central bank chair on Wednesday hammered home the point in a press conference after the Fed decided to hold its benchmark rate steady at a 22-year high. His remarks, which were buttressed by a new set of economic projections, sent a clear message: any relief from high borrowing costs will be neither swift nor generous.

      The projections, which also include a “dot plot” of individual interest rate estimates, showed that after one more increase this year — lifting the federal funds rate to between 5.5 per cent and 5.75 per cent — most officials see a much slower path of rate cuts in 2024 and 2025. Despite the Fed keeping monetary policy tight, they predicted economic growth would remain relatively robust and the unemployment rate would not rise materially.
      …

    3. Central Banking
      Higher Interest Rates Not Just for Longer, but Maybe Forever
      Rate projections suggest many Fed officials see a rising ‘neutral rate’
      By Greg Ip
      Updated Sept. 21, 2023 12:02 am ET
      Federal Reserve Chair Jerome Powell said Wednesday that the central bank will leave its benchmark interest rate unchanged, the second time this year the Fed opted against raising rates. Photo: Chip Somodevilla/Getty Images

      On Wednesday, Federal Reserve officials surprised markets by signaling interest rates won’t fall as much as previously planned.
      …
      https://www.wsj.com/economy/central-banking/higher-interest-rates-not-just-for-longer-but-maybe-forever-d5891964

    4. Yahoo
      Reuters
      TREASURIES-10-year yields fall from 16-year highs
      Karen Brettell
      Fri, September 22, 2023 at 6:55 AM PDT·2 min read
      By Karen Brettell NEW YORK, Sept 22

      (Reuters) – Benchmark 10-year U.S. Treasury yields eased from 16-year highs on Friday after a dramatic jump this week led by more hawkish Federal Reserve rate guidance, with investors now waiting on key economic releases for further clues on rate moves. Yields jumped after the Fed on Wednesday forecast fewer rate cuts in 2024 than it previously expected and said it may hike rates this year one more time as it battles to bring inflation closer to its 2% annual target. The projections appeared to reflect confidence in a still strong economy.

      The Fed nearing the end of its tightening cycle is also boosting growth expectations. “With the Fed out of the way, no longer actively putting the brakes on the economy, long term yields clearly could rise,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia. The Fed is “effectively clearing the decks for organic economic data to matter once more, that really puts the onus on economic activity over the course of the next 6 months for so,” LeBas added.

      Benchmark 10-year note yields reached 4.508% earlier on Friday, the highest since November 2007, before falling back to 4.478%. Interest rate sensitive two-year yields fell to 5.125%, after hitting 5.202% on Thursday, the highest since July 2006.

      The inversion in the yield curve between two-year and 10-year notes was last at minus 65 basis points.
      …
      https://finance.yahoo.com/news/treasuries-10-yields-fall-16-135525192.html

      1. “Veteran economist David Rosenberg has warned for years that the US economy is on thin ice. Late last summer it appeared as if his oft-repeated bearish prediction had finally come true.”

        I don’t know if it qualifies as a fairy tale, but ‘The Boy who Cried Wolf’ seems germaine. IIRC, after the towns’ people learn to ignore the boy’s oft-repeated warnings, the SHTF when a real wolf shows up.

        Also, there is a big difference between being a liar and being right, but early.

        https://www.storyarts.org/library/aesops/stories/boy.html

    6. The bond market’s notorious indicator is correctly signaling a coming recession, and the Fed has made a major mistake, the economist who coined the inverted yield curve says
      Jennifer Sor
      Sep 21, 2023, 12:21 PM PDT
      jerome powell
      The curve, which measures the spread between the 3-month and 10-year Treasury yields, has correctly predicted every recession since 1968. Jacquelyn Martin/AP

      – The bond market’s notorious recession gauge is likely correct, according to Campbell Harvey.

      – The Duke professor popularized the 3-10 Treasury spread as a recession indicator in 1995.

      – The gauge has never flashed a false positive – and it’s likely saying the Fed made a big mistake, Harvey said.

      The inverted yield curve is still correctly signaling a recession even as optimism grows for a soft landing …

      Campbell Harvey, the Duke University finance professor who coined the inverted yield curve as an indicator of a coming downturn in 1995, doubled down on the accuracy of his famed recession gauge in an interview with CNBC on Thursday. The curve, which measures the difference between the 3-month and 10-year Treasury yields, has correctly predicted every recession since 1968.

      Though some market forecasters have warmed up to the idea of a soft landing, the closely watched recession gauge is still likely correct, Harvey said, even though a downturn hasn’t yet struck.

      That’s because the yield curve inversion typically lags behind the start of the recession, with the average wait time over the past four recessions being 13 months from the start of the inversion. The curve officially inverted on October 26 last year, Fed data shows, meaning the recession signal is just a few days shy of the 11-month milestone. If history is any guide, that would put the start date of a potential recession sometime in December or January, Harvey said.
      …
      https://markets.businessinsider.com/news/bonds/recession-inflation-us-economy-outlook-inverted-yield-curve-fed-rates-2023-9

      1. “That’s because the yield curve inversion typically lags behind the start of the recession, with the average wait time over the past four recessions being 13 months from the start of the inversion.”

        They got it backwards. A correct statement is:

        ‘That’s because the start of the recession typically lags behind the onset of a yield curve inversion, with the average wait time over the past four recessions being 13 months from the start of the inversion.’

      1. Dow slides 100 points on Friday, S&P 500 and Nasdaq post worst weeks since March after Fed update: Live updates
        Alex Harring
        Yun Li

        U.S. stocks retreated on Friday, concluding what has been a tough week for the market.

        The Dow Jones Industrial Average
        slid 106.58 points, or 0.31%, to close at 33,963.84. The S&P 500 shed 0.23% to 4,320.06. The Nasdaq Composite slipped 0.09% to 13,211.81.
        …
        https://www.cnbc.com/2023/09/21/stock-market-today-live-updates.html

    8. Stock Market Today: Stocks Lose Steam as Fed Hangover Lingers
      Stocks attempted to bounce back from recent Fed-induced losses Friday, but struggled to stay higher through the close.
      By Karee Venema
      published 4 hours ago

      Stocks spent most of the day in positive territory Friday as Treasury yields retreated. The major indexes lost steam, however, as investors continued to fret about higher-for-longer interest rates and took in new developments on the United Auto Workers (UAW) strike.

      At the close, the Dow Jones Industrial Average was down 0.3% at 33,963, while the S&P 500 (-0.2% at 4,320) and the Nasdaq Composite (-0.1% at 13,211) were also modestly lower. All three indexes ended Friday with substantial weekly losses as concern over the Federal Reserve’s future monetary plans sent Treasury yields to a nearly two-decade high.

      Specifically, while the Fed on Wednesday kept interest rates unchanged, it left open the door to another quarter-point rate hike this year and indicated it will keep rates higher for longer in order to bring down inflation.

      Earlier today, Boston Fed President Susan Collins and Fed Governor Michelle Bowman both signaled support for tighter monetary policy to combat still-too-high inflation.

      However, Douglas Porter, chief economist, at BMO Economics isn’t too worried about more rate hikes. “There’s plenty more economic data to go before the next meeting, and new risks are emerging for the growth outlook,” Porter says. “Overall, we believe short-term rates are now restrictive enough to do the job, and the pronounced back-up in long-term yields adds another layer of tightening.”
      …
      https://www.kiplinger.com/investing/stocks/stock-market-today-stocks-lose-steam-as-fed-hangover-lingers

      1. “Stocks attempted to bounce back from recent Fed-induced losses Friday, but struggled to stay higher through the close.”

        Translation: CR8R

          1. A 48% drop in stock valuations might incidentally make housing far more affordable, as Wall Street investors who are licking their wounds would be less inclined to reinvest their stock market gains in single family housing.

    9. Financial Times
      Currencies
      US dollar hits six-month high as markets accept new interest rate regime
      Stocks and bonds weaken after Federal Reserve signals rate cuts will take place only gradually
      US Twenty dollar bills
      The dollar has climbed 6% against a basket of other currencies since mid-July
      Mary McDougall and Katie Martin in London yesterday

      The dollar climbed to a six-month high on Friday at the end of a week when US stock and bond markets weakened and investors prepared for a prolonged period of high interest rates.

      The currency hit its highest levels against the euro, the pound and the yen since at least March after the Federal Reserve set out plans to cut interest rates — now at a 22-year high — much more slowly than economists had thought.

      US government bond prices fell, sending yields to their highest levels in 16 years, while the S&P 500 benchmark index of blue-chip US stocks suffered one of its deepest weekly declines of the year.

      “Markets have taken the Federal Reserve quite negatively,” said James Briggs, a portfolio manager at Janus Henderson Investors. “Higher for longer is clearly entrenched and the conviction is that we are in a new regime.”

      The Fed’s decision to keep rates on hold this week and to signal its resolve to reduce them only slowly throughout next year and in 2025 was followed by the Bank of England, which also stressed the importance of maintaining high rates.

      The European Central Bank raised its own benchmark rates to an all-time high this month.

      Recent slides in US and eurozone bond prices come after months of sell-offs in global fixed-income markets, largely because of higher benchmark interest rates and higher inflation.

      Some market participants warn the chilling effect of an extended period of high interest rates also makes equity markets more fragile, because of the impact of higher borrowing costs on the broader economy.

      “It’s an unstable situation,” said Joseph Davis, global chief economist at Vanguard, who argued inflation has historically usually been vanquished at the cost of lower growth. “There have been hardly any examples ever of inflation coming down with hardly any trade-offs,” he said.
      …

    10. Investors pulled $19 billion from stocks in the last week, the highest outflow all year amid surging bond yields and Fed jitters
      Jennifer Sor
      Sep 22, 2023, 9:03 AM PDT

      – Investors pulled $19 billion from the stock market over the last week, Bank of America said.

      – It’s the highest outflow all year, coming amid surging bond yields and uncertainty around interest rates.

      – BofA warned that higher for longer rates threaten to pop the market bubble in the first half of 2024.

      Investor outflows from stocks were the highest they’ve been all year in the last week, as markets mull the possibility that interest rates could remain elevated for longer than expected, according to Bank of America.

      Stocks saw $18.96 billion of outflows over the past week, Bank of America data shows, the largest weekly outflow recorded since December 2022.

      The outflows were capped by the Fed’s policy meeting this week, where chief central banker Jerome Powell warned that the Fed could take interest rates higher for longer than markets have been expecting.

      Bond yields surged shortly after Powell’s remarks, with the 10-year Treasury yield touching 4.49%, its highest level since 2007. Meanwhile, the two-year Treasury yield jumped to its highest level since 2006.
      …
      https://markets.businessinsider.com/news/stocks/stock-market-recession-fed-rates-bank-of-america-investor-outflows-2023-9

  11. A reader sent these in:

    Here are today’s @TreppWire
    headlines:

    NYC Office Behind 2019 SASB Loan Goes 30 Days Delinquent
    Top Tenant Behind 2019 SASB Loan to Close
    Indianapolis Office Loan Sent to Special Servicing Ahead of October Maturity Date
    Value of Texas Office Behind 2014 Deal Reduced Again
    Denver Office Misses Balloon Date – Note Sent to Special Servicing
    Value of Massachusetts Mall Lowered, Remains Above Loan Balance
    Extension Requested for Big PA Office/Industrial Loan
    New Jersey Mall Asset Resolved With Bigger-Than-Expected Loss

    https://twitter.com/ShlomoChopp/status/1703747531325296798

    The beatings will continue until no one shows up at the open houses. In 4 of the last 5 Fed tightening cycles, Homebuyer Traffic bottomed out many months or years after the Fed finished hiking. I suspect buyer traffic will wither further, deep into 2024, perhaps 2025.

    https://twitter.com/JeffWeniger/status/1703888627808215047

    The National Association of Homebuilders (NAHB) Homebuyer Traffic index fell again, so now we have deterioration in both August and September. This is critical because New Home Sales data is only current through July. It looks like it will start falling now.

    https://twitter.com/JeffWeniger/status/1703855321121239076

    In the lol series

    https://twitter.com/INArteCarloDoss/status/1704466512906489880

    Housing starts plunge in Aug, led by apartments down 26% M/M, down 41% in 3 months, now lowest level since summer ’20; more units are being completed than started – current employment in the industry in unsustainable…

    https://twitter.com/RealEJAntoni/status/1704136461937717648

    The big spike in housing permits will likely come back down soon as homebuilder sentiment tanked in the latest report:

    https://twitter.com/RealEJAntoni/status/1704136463158296649

    JUST IN: According to Apollo, a new default cycle has already started and default rates are skyrocketing. Default rates on all US corporate bonds have nearly tripled from their lows of ~1% in 2021. Since the Fed started raising rates, the default rate on all US corporate bonds is up to 3%. On speculative grade bonds, default rates have gone from 1.5% to 5% in just over a year. If the Fed can avoid a recession here, it would be incredible.

    https://twitter.com/KobeissiLetter/status/1704468334056525970

    Make no mistake: job openings of 8.83 million is a big number. However, sometimes job market changes and rate of change are more important than levels. Fact: there are 2.66 million fewer job postings than there were 18 months ago. The chart fits like the S&P is going to…

    https://twitter.com/JeffWeniger/status/1704243716536332625

    JPOW just rang the bell for the equity party.

    https://twitter.com/INArteCarloDoss/status/1704594965689430489

    If I get this wrong, it won’t be the first time. That is for sure. Nevertheless, though the Fed may be stopping here at 5.50%, I have every reason to believe we will witness an exacerbation of the restrictive lending responses in the Senior Loan Officer Survey well into 2024. History says a recession is due.

    https://twitter.com/JeffWeniger/status/1704592140821512520

    I think Justin Trudeau is literally the only person on the planet using this alphabet soup of Woke. The 2S stands for “two spirit” whatever that is. Maybe it is a Canadian thing. Anyone else know what Justin is talking about and where this came from? I can’t keep up with the latest from them.

    https://twitter.com/WallStreetSilv/status/1704869995518329279

    1. “though the Fed may be stopping here at 5.50%, I have every reason to believe we will witness an exacerbation of the restrictive lending responses in the Senior Loan Officer Survey well into 2024.”

      Yep. Rate hikes ended June 29 2006. Loan officer surveys didn’t even begin to show tightening on e.g. prime loans until Q4 2007. Rates don’t matter if you don’t even care whether the borrower can pay.

      https://www.federalreserve.gov/boarddocs/SnLoanSurvey/200708/table1.htm
      Credit standards on mortgage loans that your bank categorizes as prime residential mortgages have:
      Tightened considerably 0%
      Tightened somewhat 14.3%
      Remained basically unchanged 85.7%

      https://www.federalreserve.gov/boarddocs/SnLoanSurvey/200711/table1.htm
      Credit standards on mortgage loans that your bank categorizes as prime residential mortgages have:
      Tightened considerably 4.1%
      Tightened somewhat 36.7%
      Remained basically unchanged 59.2%

      https://www.federalreserve.gov/boarddocs/SnLoanSurvey/200801/table1.htm
      Credit standards on mortgage loans that your bank categorizes as prime residential mortgages have:
      Tightened considerably 3.8%
      Tightened somewhat 49.1%
      Remained basically unchanged 47.2%

    2. The responses to JeffWeniger’s tweets about the housing bubble are a study in delusion. Every excuse you can think of for why there’s no bubble and it’s perfectly reasonable to need a $130K income for a starter home. Not even 20 years since the last one and they’re utterly oblivious.

    2. Easy to virtue signal when you don’t think you’ll ever have to make good on your promises. She and other slike her were expecting the invaders to stay in the southwest, or at least not act on her promise of welcome to New York.

  13. ‘Go to Hell’: Brave EU Politician Delivers Damning Message to the Global Tyrants
    MEP Anderson took no prisoners in her latest warning to the globalitarian elite.

    https://vigilantnews.com/post/go-to-hell-brave-eu-politician-delivers-damning-message-to-the-global-tyrants

    Member of the European Parliament Christine Anderson has been an unyielding opponent to Klaus Schwab’s ‘Great Reset’ Agenda. Known best for her famous smackdown on Justin Trudeau, MEP Anderson has established herself as one of the few politicians left who represent the interests of the European people.

    September 13 was no different as MEP Anderson took no prisoners in her latest warning to the globalitarian elite. Before the European Parliament, in a session specifically focused on the COVID-19 response and the World Health Organization, MEP Anderson ended the meeting with a powerful statement.

    “We just need to find a way to wake the people up. Because the point is simply this: it comes down to a choice. It’s either freedom, democracy, and the rule of law — or enslavement.

    “There is no such thing in between. There is no such thing as a little freedom, a little democracy, a little rule of law, just as there is no such thing as a little enslavement. So that’s the choice. It comes down to – it’s either the globalitarian misanthropists or the people. It comes down to – it’s either us or them. And that’s, I think, what this really is all about.

    “Now, when my colleagues and I were elected to this parliament, there was no question about it. We were on the side of the people because the people actually pay us to act in their best interests. That’s our job. And once again, I will say to every single elected representative around the world, to every single member in every elected government around the world, if you do not unequivocally stand with the people and serve in their best interests, act in their best interests, you have no place in any parliament or in any government. You belong behind bars. You may even rot in hell for all I care at this point because that’s exactly what you deserve if you sell out the people.

    “Now, I would like to make a promise to the people, and I’m pretty sure I can speak or speak on behalf of my colleagues. We will continue to stand with you, the people. We will continue to fight for freedom, democracy, and the rule of law. We will not shut up, and we will not stop going after those despicable globalitarian misanthropists.

    “But we would also like to have you make a promise to us. You may have heard it’s all coming back. The first country is already starting [to talk about] mask mandates in Israel. They’re already imposing it. I’ve heard of a few universities in the United States. They’re already bringing it all back. And I would really like for you, the people, to not go along. Simply say no! They want you to wear a mask; say no. They want you to put in another mRNA shot; say no. They want to impose a curfew on you; say no. That’s really all you have to do.

    “And it might not be or might sound a little hard, but it’s actually not that hard. Because once you have made it clear to them that you will no longer go along, once you’ve let them know, they cannot scare you anymore. Because as long as you are afraid of what they might do if you don’t comply, they have power over you. Take the power away from them! Simply say no. Once you do that, they don’t have power over you anymore. You will feel so free. Simply say no.

    “And considering what we’ve heard today, and considering what we’ve seen in the last three years. Considering what we know they want to implement, heck, you might even be well within your right to tell them to screw themselves and go to hell! That’s where they belong. What will you get out of that? I can tell you. Once you’ve done that, once you’ve told them to just go to hell, they no longer have power over you. You will have an incredible feeling — kind of like a sensation of freedom will swap through your body. I promise you will feel so relieved.

    “And this is the state of mind that I would ask all of you to get to. Simply don’t let them grind you down anymore. You are worth it. You are deserving of just standing up for yourselves. And tell them all to go to hell. Thank you very much.”

  14. Just a few notes on that 100 million $$$ plane that disappeared over SC for 2 days last week ……The marines are stonewalling ,but the local media ,notes that it was a high ranking 47 year old pilot with”Decades of experience ‘, that ejected from the plane…..It is noted ,that that particular edition of 100 M $$$$ plane the marines have is a self ejecting one, that if a sensor says so, he or she’s whooshed up and out…..

    3. I haven’t heard anything about the plane story for a while — isn’t the pilot still alive? Have they asked him anything?

  15. “You can’t afford it,’ Cotton said. ‘The bottom line is you can’t afford to pay $2,500 to $3,000.’”

    Today in most West a starter home is gonna put you at about $4000 PI/TI with 10% down. Based on what is historically considered healthy DTI (32/40….32% housing/40% total debt) you should make $130000 per household. The median household income across most of the region is in the neighborhood $75000. This only ends one way. Affordability is everything! When people ask me why I’m convinced there’s a crash coming there are many arguments to choose from. But the affordability factor should be enough. It’s simple math. But folks don’t get it. I was talking to a friend yesterday. Single mom, 3 kids. She’s struggling to pay her $2300 rent. Yet she convinced she’s got to buy a house now in an area where the cheapest homes are 450k. When I try to explain to her that it doesn’t matter what housing is doing, that she simply can’t afford it, she looks at me like she confused. Most people today are financial idiots.

    1. The desert cities barely made sense when they were cheap. At these prices the whole thing looks like a slow motion train wreck to me.

    2. The house on my block — the one that closed (not pending: closed) within three weeks of listing — is still up for rent with a rate of just under $3000/mo after a small reduction. IMO the reason is obvious: this house has no basement. A good chunk of my mini-barrio affords the house payment by sub-renting to a second family in the basement. No basement –> no subrental –> can’t afford rent. Still no takers.

  16. Rates Stay High. Will People Sell?
    Angry Mortgage Podcast
    5 hours ago

    It’s been 18 months since the Bank Of Canada started their ultra aggressive Rate Hikes and historically by this point some kind of cracks begin to appear in Canada’s Economy and it finally looks like that is happening: Here’s a story about a mortgage that starts to become unmanageable and what happens next.

    https://www.youtube.com/watch?v=gVD7nBieXSs

    6:38.

  17. The last 3 or 4 houses that have closed in my area (middle of nowhere US, small town, approx 100 homes “for sale not under contract” (up from about 50 in late spring) all make me think the real estate industry is lying. (I know, shocker right)

    One closes at 189k and says -4.9% from listing price of 199k. But that was only the LAST listing price. The house started months ago at 239k. That’s about 26% down from listing not 4.9%.

    Also at least 3 foreclosures (relatively nice houses) have popped on the realtor listings in the last 2 weeks. Talking to a neighbor he said usually takes about 6-9 months from people not paying to homes finally hitting the MLS thru the bank. So I said “late spring then there’s going to be a bunch”. He looked at me like a light bulb went on over his head.

    1. Will we be hearing stories of non payers dodging foreclosure and eviction for years, just like last time?

  18. ‘In the northwest and north part of town, income levels are lower than many, and I think most would agree it is going to hit or bind homeowners at lower income levels first’

    We’ll see how sound the lending was soon enough.

    1. Canadians are really confused about what causes prices to increase, and who is looking out for them (or not).

  20. ‘It’s not exactly what they bargained for. You know, they’re paying a lot more now…Lots of regret in the market as well. You know, maybe they should have went for the fixed rate when that option was given to them’

    via GIPHY

  21. ‘What I’m focused on is the fact that it looks like this is the end of interest rate increases and because we are on a tracker mortgage, when they start to come back down, which they must, then we will see the benefits of that very quickly. So we’re not quite as upset about it. We were at one point, my wife was really upset about it’

    Denial <- John you are here.

    2. We were at one point, my wife was really upset about it

      Is she hot? Because if she is, I may throw her a bone or two after she leaves you, broke guy. I have no debt and big old wads of cash. Strictly a rental, of course….

  22. ‘The 48-year-old office administrator bought a two-bedroom apartment in Homebush in 2018 for $760,000, but sold it in July this year for $670,000. ‘You think to yourself, ‘how much longer do I wait?’ and prices could even go down so it’s hard to know how much longer to hold on for’

    Ella, you and I both know you were sticking expensive food into yer pie hole multiple times a day, year after year. This will define you Ella, will you be a winnah!?

    3. Any discussion of Brand that doesn’t address his Freemason tattoos and his relationship with a member of British aristocracy, Jemima Goldsmith Khan, is superficial at best.

      1. Pure and simple: he bit the hand that fed him. Conservatives latching on to him as another bastion of free speech are being duped.

          3. Excellent point. Why should he be allowed to speak?

            The epitome of discourse on this subject. Nuance is completely lost.

          4. I should not have insinuated that. Rather to point to that odd law of the universe, that if we want free speech ourselves, it needs to be free speech for everyone.

    1. Yahoo Finance
      Benzinga
      Powell ‘Is Willing To Inflict That Pain’: Jim Cramer Says The Fed Won’t Stop Raising Rates Until Prices Come Down — Even If There Are Layoffs
      Jing Pan
      September 22, 2023, 11:06 am

      The U.S. Federal Reserve has implemented 11 interest rate hikes in the last 18 months. While the Fed decided to leave its benchmark interest rates unchanged at its latest meeting, CNBC’s Jim Cramer does not believe that the central bank is done with hawkish moves.

      “Labor’s still tight, housing’s tight, mortgage rates are high … they’ve doubled and it hasn’t affected housing at all. We have 3.8% unemployment, inflation rate close to 4% — the Fed’s targeting 2%,” Cramer said during Wednesday’s “Mad Money” segment.

      “They’ve already tightened so much without seriously damaging the economy, what’s another 50 basis points?”

      Cramer explained that while Fed Chair Jerome Powell would like to bring price levels down without negatively impacting the labor market, it doesn’t mean he’ll be lenient in combating inflation.

      “Here’s what Powell wants: He would love to see prices come down without lots of layoffs. But if they don’t, he’ll raise rates until the prices come down, even if there are a lot of layoffs,” he said. “He’s willing to inflict that pain because he knows that long term, the damage done by inflation is far worse than anything else that could happen right now.”

      According to the dot plot projections accompanying the Fed’s latest interest rate announcement, 12 of 19 officials at the Fed see one more rate hike this year,

      When asked in the news conference whether interest rates have reached sufficiently restrictive levels, Powell replied that the Fed would like to see more progress in curbing inflation.

      “We want to see convincing evidence, really, that we have reached the appropriate level, and we’re seeing progress, and we welcome that,” he said. “But we need to see more progress before we’ll be willing to reach that conclusion.”
      …
      https://finance.yahoo.com/news/powell-willing-inflict-pain-jim-180658848.html

    1. German housing prices at record low
      Residential property prices fell by 9.9% year-on-year, the steepest decline since the start of data collection in 2000, the federal statistics office said on Friday.
      By Reuters
      Published on 22/09/2023 – 15:23
      Residential property prices in Germany have fallen by their steepest decline since data collection began in 2000, with larger cities seeing harsher drops.

      German housing prices fell by the most since records began in the second quarter as high interest rates and rising materials costs took their toll on the property market in Europe’s largest economy, according to government data.
      …
      https://www.euronews.com/2023/09/22/german-housing-prices-at-record-low

    1. Peter Coy
      Opinion
      The Fed Drove Up Mortgage Rates. Why Doesn’t That Count as Inflation?
      Sept. 22, 2023
      An illustration depicting an orange-tinted ranch house sprouting a blue-tinted plant. Above appears the blue-tinted outline of a giant person bending down to cut the plant with a garden knife to cut the plant.
      Credit…Illustration by Sam Whitney/The New York Times; images by CSA Images/Getty Images
      By Peter Coy
      Opinion Writer
      You’re reading the Peter Coy newsletter, for Times subscribers only. A veteran business and economics columnist unpacks the biggest headlines. Get it with a Times subscription.

      People tend to be surprised, and sometimes upset, when they find out that interest expenses aren’t included in the Consumer Price Index. It seems only natural that if people are paying more interest because rates have gone up, it should be reflected in the official measure of inflation.
      …
      https://www.nytimes.com/2023/09/22/opinion/inflation-interest-rates-cpi.html

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