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It’s Not A Profit Center Any Longer, This Is A Loss Maker

A report from the Ahwatukee Foothills News in Arizona. “The Valley housing market is steadily becoming more favorable to buyers as it enters the final quarter of 2023, according to a leading analyst of the local real estate scene. ‘We can also see that the market is becoming more favorable to buyers at an accelerating rate,’ the Cromford Report said. The Cromford Report singled out Maricopa, Mesa and Gilbert as three of the five weakest sellers markets. The report also suggested that days a home is on the market offer no reliable indicator of whether the market favors buyers or sellers. ‘The market stopped improving back in June and is getting increasingly difficult as inventory starts to build and demand withers in the face of affordability pressures,’ it said.”

“‘In the last 20 years, the average days on market can be seen to respond to market changes, but it is usually two to four months behind the times. This makes it worse than useless. It is positively misleading,’ the Cromford Report said. Conceding it still shows periodically a chart about days on the market because ‘so many people are familiar with the measure and want to know what it is, it flatly dismissed its value.’ ‘But we attach no credibility to any signals that it might send out. All the signals are out of date by the time they are received.'”

The American Statesman in Texas. “More than two dozen real estate projects being built by embattled Austin developer StoryBuilt are up for sale. The 28 commercial and residential properties in Austin, Dallas, Denver and Seattle are now on the market in a receiver sale by A&G Real Estate Partners and Onyx Asset Advisors. The properties owned by StoryBuilt and its joint venture partners span 17 projects in Austin, five in Seattle, three in Dallas and three in Denver. They are for sale in their entirety or separately. On July 31, StoryBuilt said it had agreed to enter a voluntary receivership as it addressed deep financial issues. A receivership is a court-appointed tool that can assist creditors in recovering funds in default and can help troubled companies avoid bankruptcy.”

“The receivership came after a previous letter StoryBuilt sent to shareholders announcing a major reorganization, which included the departure of top executives and furloughing most of its staff. In the weeks that followed, the firm laid off dozens of employees, many of whom are now seeking back pay and other financial compensation from StoryBuilt. In the letter, StoryBuilt co-founder and former CEO Anthony Siela said: ‘As you are aware, StoryBuilt has recently struggled with focused growth, reporting/financial controls and liquidity. This has materially affected our performance as a business and our partners.'”

The Aspen Daily News in Colorado. “In recent months I’ve been starting to see an increase in inventory for raw land in the non-luxury market sector and areas west of Glenwood Springs. Anyone who purchased land in the last few years that did not pay cash typically got a two- to five-year loan with a balloon payment that has come due or is coming due soon. They’re faced with a situation where they can either pay off the loan or refinance, except that rates have more than doubled since they bought their land, and they may not have enough cash to pay off their loan. If they do refinance, they’re holding onto vacant land that has no way to generate income and pay for itself. On top of that, the cost to build is too high and the completed home value if they build will likely be worth less than what it costs them to build the home (at the moment). Unless they refinance and take on much higher payments for land that is not income producing, they are likely considering selling.”

“With interest rates being high, we may see an increase in distressed sellers for raw land. For example, there are currently 31 total listings for single family lots in Lakota Canyon Ranch, a golf community in New Castle. There were 19 of these lots listed in Lakota in January. Of the 31 currently listed, only two are under contract and their average asking price is $87,000. We’re starting to see more price reductions on these lots. Out of the sellers that already sold in 2023, they came down an average of 8% from their original list price to be able to sell. Even with higher interest rates, the two lots currently under contract have both come down on average 26% to be able to find a buyer. It’s important to remember we just came out of our busiest selling season and Lakota Canyon Ranch still has 50% more inventory of vacant land than they did in January. Prices peaked in 2022, but now we’re seeing more and more price reductions in these types of markets in order to sell.”

“Now that we have higher inventory of raw land west of Glenwood that continues to grow, it will likely drive prices down further as long as interest rates and building costs remain high. Let me put it this way: You can get a kick-ass lot on a golf course in New Castle for under $100,000 right now. How long do you think that is that is going to last? While it’s not a luxury market, it’s still a wonderful community that is an hour from Aspen.”

From Go Banking Rates. “Here are four U.S. cities you should avoid if you’re searching for your next place to call home this fall. Pasadena Hills, Florida: The housing market in Pasadena Hills is very competitive, with homes selling after an average of only 18 days on the market. However, prices are already starting to go down. The median sale price of a home in Pasadena Hills is $374,000, down 15.5% since last year, per Redfin.”

NBC 7 in California. “Like most metropolitan areas across the United States, San Diego is vulnerable to the impact of higher interest rates. The higher interest rates are causing a reduction in real estate transactions. In the meantime, there are opportunities, according to many Realtors. ‘Right now, it actually might be a good idea to get your foot in the door, literally,’ Realtor Destiny Roxas told NBC 7. ‘I say that because many sellers are aware of what’s happening in the market, they know that interest rates are high so therefore some of them are willing to give concessions to help incentivize buyers.'”

The Real Deal on New York. “Gary Barnett is letting go of a development site in Midtown. His Extell Development has agreed to sell 1710 Broadway, at the southeast corner of West 54th Street, for $173 million, records show. In 2017, Extell paid $268 million for it.”

From Market Place. “Unsurprisingly, higher rates are hitting banks’ loan businesses. In fact, as interest rates have risen over the last 18 months, the market for mortgages has pretty much collapsed. ‘It’s just simply unaffordable to get a loan,’ said Susan Wachter, a professor of real estate and finance at the Wharton School of the University of Pennsylvania. She points out the collapse has already affected banks’ balance sheets. ‘For many banks, this has been historically a profit center,’ she said. ‘But it’s not a profit center any longer. This is a loss maker.'”

“Wachter said banks have reacted by cutting staff. But the collapse is even more painful at non-bank lenders, which actually issue the majority of mortgages. ‘They’re all fighting over a smaller pie,’ said Ben Elliott, a consumer financials analyst for Bloomberg Intelligence. ‘So what you’ve seen in the industry is relatively large-scale layoffs.’ Merrill J. Reynolds, a banking industry consultant based in Texas, said banks he works with are seeing less demand and borrowers are having a harder time making payments. ‘We’re starting to see delinquencies starting to pick up,’ Reynolds said. ‘And I think they’re going to continue to grow over the next six, 12, 18 months.'”

The Globe and Mail. “The recent surge in the yields of long-term bonds has pushed borrowing costs to levels not seen since before the 2008 financial crisis, squeezing homeowners, businesses and governments and reducing the odds of a soft landing for the Canadian economy.The payment shocks implied by today’s bond market pricing could act as a significant drag on the Canadian economy, James Orlando, senior economist at Toronto-Dominion Bank, explained in an interview. ‘If you’re spending more money on just paying your housing bills, what are you going to do? Where are you going to cut?’ he said.”

“Real estate activity is cooling rapidly as mortgage rates rise. Home sales have become much less frequent in major markets such as Toronto and Vancouver in recent months, and prices have started to fall. Mr. Orlando said this could feed through into home construction. ‘We know there’s a huge pipeline of needed housing … but when house prices are going down, it’s hard to incentivize building,’ he said.”

I News in the UK. “When I called Sandy Thomas to discuss her mortgage, she was crying about her burnt toast. It was her last piece of bread and she can’t afford petrol to get to the closest food bank for more. In the past year her interest-only mortgage on her three-bedroom home in The Wirral has tripled to £1,030 leaving her with nothing to spare. She has downsized her car and spent the money left behind after the death of her mother. She has run out of savings and is now having to cash in her pension early and sell beloved items, simply to pay the bills.”

“Thomas, 61, has worked since she was 15 and since 1990 has been a family support worker for the local authority. She’s never missed a payment on the mortgage she’s held for 27 years but now she’s reached breaking point and is going to lose her home. ‘I’ve got nothing left,’ she says. ‘I can’t even buy a winter coat, I can’t afford to put petrol in my car, I can’t afford Christmas or birthday presents for my granddaughter.'”

“In 1996, Thomas took out a repayment mortgage with GE Mortgages on the home she raised her two daughters in. Then in 2008 she was forced to switch to an interest-only mortgage. ‘We had two little children and it was wiping out the whole of my wage. I reduced the payments.’ Her payments were reduced to £367 per month, which she was paying for 14 years, up until 2022. In the last year, after 14 successive Bank of England rate rises, her monthly rate reached £1,030. In August she was paying a rate of 7.4 per cent, up from the base rate of 5.25 per cent. But she is still only paying off the interest – not the loan itself.”

“Due to her age, Thomas only has four years left before she owes £161,000 – the same that she owed in 2008. After visiting charities, contacting her local MP and still receiving no help, Thomas is desperate and has considered reaching out to high-profile celebrities for a loan. ‘I’ve been in this house 27 years, I’ll be homeless,’ she says. ‘There’s no support for working families that can’t access benefits.'”

The Wall Street Journal. “Chinese property giant Country Garden failed to make an international debt payment after its apartment sales plunged in September, succumbing to a liquidity crisis that worsened over the past few months. The 31-year-old developer said it wasn’t able to repay a $60 million loan denominated in Hong Kong dollars that was due. Country Garden said it also doesn’t expect to meet all its U.S. dollar bond and other offshore debt obligations when they come due, or within grace periods—effectively saying that it expects to default. The company has hired financial advisers and plans to hold talks with its offshore creditors.”

“Country Garden said its sales have come under ‘remarkable pressure,’ which worsened its problems. The developer’s contracted sales in the first three quarters of this year dropped 44% from a year earlier to the equivalent of about $21 billion. The drop was particularly steep in September, when Country Garden’s sales plummeted 81% to just $846 million, it said in a regulatory filing. On Monday, some of Evergrande’s international creditors expressed dismay at the recent cancellation of the developer’s $35 billion offshore debt-restructuring deal, and warned that it could lead to an ‘uncontrollable collapse’ of the group and potentially catastrophic effects.”

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This Post Has 72 Comments

  1. ‘‘We can also see that the market is becoming more favorable to buyers at an accelerating rate’

    The perpetual cheerleaders at Cromwell are sad pandas now. Wa happened to my red hotness Tina?

    1. Cratering markets are even more favorable for those who wait patiently on the sidelines for the cratering to bottom out.

  2. I love a good uncontrollable collapse in the morning!

    ‘Gary Barnett is letting go of a development site in Midtown. His Extell Development has agreed to sell 1710 Broadway, at the southeast corner of West 54th Street, for $173 million, records show. In 2017, Extell paid $268 million for it’

    That’s a mighty a$$ pounding there Gary, but I suppose yer used to it after all these years.

  3. In the letter, StoryBuilt co-founder and former CEO Anthony Siela said: ‘As you are aware, StoryBuilt has recently struggled with focused growth, reporting/financial controls and liquidity. This has materially affected our performance as a business and our partners.’”

    That’s a lot of words to say: “We’re f*cked.”

  4. many sellers are aware of what’s happening in the market, they know that interest rates are high so therefore some of them are willing to give concessions to help incentivize buyers

    I don’t want gimmicky concessions. I want deep price cuts, like -10% per +1% interest rate.

  5. Let me put it this way: You can get a kick-ass lot on a golf course in New Castle for under $100,000 right now.

    Living in the impact area of errant golf balls isn’t really a selling point in my book.

  8. “In 1996, Thomas took out a repayment mortgage with GE Mortgages on the home she raised her two daughters in. Then in 2008 she was forced to switch to an interest-only mortgage.

    These victim chronicles usually gloss over a litany of poor choices by FBs.

  9. Clutch those pearls harder.

    Washington Post — How to avoid falling for misinformation, fake AI images on social media (published 5/22/2023, but for some reason the Post features this on the front page of their website now):

    “How do you know what to trust, what not to share and what to flag to tech companies? Here are some basic tools everyone should use when consuming breaking news online.

    Think about who would benefit from spreading confusing information during a news event, and brush up on specific narratives going around. During elections, for example, experts say to look out for conflicting information and conspiracy theories, baseless accusations and unfounded concerns about voter fraud that may benefit one political party or candidate.

    Look at who is sharing the information. If it’s from friends or family members, don’t trust the posts unless they are personally on the ground or a confirmed expert. If it’s a stranger or organization, remember that a verified check mark or being well-known does not make an account trustworthy.

    Doing mini background checks on every random Twitter account is extremely time-consuming, especially with new content coming from so many places simultaneously. Instead, trust the professionals.

    Use a dedicated news tool such as Apple News, Google News or Yahoo News, which choose established sources and have some built-in moderation. On social media, make or find lists of vetted experts and outlets to follow specifically for news about the topic you’re following.”

    https://archive.ph/mXcoN

    Why is the Post promoting this article now?

    RFK Jr. announcing his independent candidacy. Ukraine is losing the war, badly. The big push of the climate hoax has failed. And most importantly, the imminence of the “election year variant” of CCP Flu to steal another election.

    1. During elections, for example, experts say to look out for conflicting information and conspiracy theories, baseless accusations and unfounded concerns about voter fraud that may benefit one political party or candidate.

      Oh, like the Russia collusion hoax.

  10. On Monday, some of Evergrande’s international creditors expressed dismay at the recent cancellation of the developer’s $35 billion offshore debt-restructuring deal, and warned that it could lead to an ‘uncontrollable collapse’ of the group and potentially catastrophic effects.”

    Catastrophic effects for offshore private equity locusts who engaged in speculative malinvestment with their Yellen Bux stimulus? Boo f*cking hoo.

  13. “You can get a kick-ass lot on a golf course in New Castle for under $100,000 right now. How long do you think that is that is going to last?”

    It won’t last long….because soon they’ll be under $50,000. How’s that for kick-ass? And I think it’s a hilarious attempt to keep the FOMO spirit going in a cratering market.

    1. ‘You can get a kick-ass lot on a golf course in New Castle for under $100,000 right now. How long do you think that is that is going to last?…It won’t last long…because soon they’ll be under $50,000. How’s that for kick-ass?’

      That’s the spirit!

    2. YELLEN: OZEMPIC WILL HELP THE CLIMATE BY MAKING PEOPLE SMALLER THAN CATS

      Giving everyone Ozempic ain’t gonna work. Can’t get it. My friend, a diabetic, was on the 1 mg once a week and now can’t get it. May not be available until next year. Now at 0.5MG and they are tough to get. Gotta believe all the “weight lost” using Ozempic may be going back on very soon.

  14. “We know there’s a huge pipeline of needed housing … but when house prices are going down, it’s hard to incentivize building,’ he said”

    Once the speculators start dumping their investment properties that pipeline is gonna be plenty full.

    1. You read an article like that and it helps you appreciate the Fed is responsible for insane home prices. The only way we got here is through ZIRP and QE….period. Here we sit at rates that are at what we would call relatively low in historical terms and you get this hand wringing and pleading to please stop. Which is to say they’re begging the Fed to prop up home prices at a level of unattainable affordability.

      1. ‘The only way we got here is through ZIRP and QE’

        Those are transmitted into the market by loan guaranty/MBS slicer and dicer entities. Largely Fannie Freddie Ginnie FHA VA USDA with the help of wall street.

      2. Sorry….forgot to mention the biggie. Trillions in COVID stimi money that all went to the wrong places.

    2. And to all you housing bulls, if he housing market is so healthy then why are you strapping on the knee pads and unzipping JP’s fly?

  16. Yahoo
    Business Insider
    China’s economy is so uncertain that the wealthy are turning to an underground network to secretly move cash out of the country
    Phil Rosen
    Mon, October 9, 2023 at 7:17 PM PDT·3 min read
    Wealthy Chinese often send money to Hong Kong, where capital flows are less tightly controlled.Sean Pavone/Shutterstock

    – Some wealthy citizens in China are turning to underground money handlers to move cash, Bloomberg reported.

    – Moving money through these quasi-banking systems is risky and can result in jail time.

    – Some Chinese underground banks settle transfers using funds generated by criminal groups, the report said.

    China’s economy has endured broad headwinds over recent months stemming from its troubled property sector and the lack of post-pandemic rebound. According to a Bloomberg report on Sunday, wealthy Chinese citizens have been finding unusual, sometimes illegal ways to move money overseas to keep their cash safe amid the uncertainty.

    Funds can move through an informal, underground banking system known as “hawala,” the Bloomberg report said, which isn’t regulated and is largely contingent on faith. Advisers to the rich have reported a surge in demand for backup options like these as Beijing tries to gain control over the financial tumult in the country.

    Wealthy and middle class families feel the need to keep money outside of China, either for the sake of diversifying or to build a nest egg for future immigration.

    Yet, per Bloomberg, opportunities to move cash without breaking any rules are limited, and individuals can typically wire no more than $50,000 a year overseas, and emigrating only offers a one-time chance to move money.

    “These agencies have sprouted to meet soaring demand,” Joel Gallo, an adjunct professor of finance at New York University Shanghai, told Bloomberg. “They act as quasi-banking firms, yet operate without the scrutiny of one and adroitly engage in regulatory arbitrage by standing in a gray zone.”
    …
    https://finance.yahoo.com/news/chinas-economy-uncertain-wealthy-turning-021751853.html

  18. A reader sent these in:

    Long overdue for my boy @StealthQE4

    https://twitter.com/account_blown/status/1710057459358786033

    In September, homes for sales on http://Realtor.com rose from 669,173 to 701,816. August to September inventory shift by year 🏡👇
    2023: +32.6K
    2022: +4.7K
    2021: +3.5K
    2020: -30.2K
    2019: -10.4K
    2018: +16.3K
    2017: -16.7K

    https://twitter.com/NewsLambert/status/1710040857309503749

    “A $500,000 30-year mortgage would have cost $1,972 per month at the 2.8% mortgage rate that was available in early 2021. Today, with a 7.9% rate, that payment would be $3,488 — a 77% increase.”

    https://twitter.com/PaulSkallas/status/1710968672951447561

    Canada’s 2007 moment is rapidly approaching. Societal meltdown.

    https://twitter.com/DonMiami3/status/1710819050484277365

    Robert Shiller said sales might fall when mortgage rates fall! When rates were increasing some people bought worried that rates would go up even more but when people start expecting mortgage rates to fall, there’s no more hurry to buy?

    https://twitter.com/JohnWake/status/1710812123490918623

    Of course you think this spring will be hot. You’re a realtor. You just got done a NAR press release, Yun probably, you’re gonna be convinced of that thru next month when you get to Logan M. He’ll keep you hyped until next year when you finally give up & create an only fans.

    https://twitter.com/NipseyHoussle/status/1628377559351140353

    “Showings last week stopped with the interest rate jump. They will adjust again but it always takes time” @msconniegrace
    tells me “The biggest market change is the availability of seller financing. Huge increase” she says. She’s a real estate agent based in Salt Lake City 🏡

    https://twitter.com/NewsLambert/status/1710782730953199867

    I’m definitely seeing more open house signs when driving around town. Some quick thoughts. It’s not that there are so many active listings, but it takes longer to sell today compared to 2021 when half the market sold in less than one week. So, naturally there are going to be more signs. We are actually missing at least 2,000 active listings on any given day in the Sacramento region from the normal trend. All that said, one thing to watch as mortgage rates spike is a change in active listings. We could see the pile of actives increase if we start to see fewer pending contracts.

    https://twitter.com/SacAppraiser/status/1710773906838372623

    This new guideline change is big because the minimum down-payment for 3 and 4 unit properties was changed from 20% to 5%. This creates a larger buyer pool for 3 and 4-unit properties. FHA was not an option because the self-sufficiency rule ruled out most properties in HCOL.

    https://twitter.com/GCiams/status/1710765381592252731

    Such a beautiful coincidence that once the eviction moratorium was lifted, each of our ~50 tenants started paying rent on the 1st again. A miracle, really.

    https://twitter.com/BarryRoland19/status/1710755760475697262

    So funny. They’ve been reporting on “new listings” and ignoring growing active inventory for months. Suddenly we see an abrupt, historical, unseasonal, explosion in new listings and they decide this is the week to focus on active listings 😆

    https://twitter.com/NipseyHoussle/status/1710723842606272928

    14/ Still, the one bit EVERYONE missed: nearly every major Airbnb market is flooded with far too much inventory, including all of its top-10 US markets. “Hosts need to keep costs down” when a) rates are lower than ever & b) many hosts have only raised them bc THEIR costs are up??

    https://twitter.com/kirker/status/1710721782628368870

    DFW rents are now negative y/y, when I get my lease renewal and see the increase, I’ma tell them to f@ck off and move to one of the many apartments offering much lower rates.

    https://twitter.com/goldenkazeburny/status/1710706552858919330

    My income from real estate brokerage is down 50% this year but I’ve made a bunch of friends with anonymous people on X so take that world.

    https://twitter.com/DDrolapas/status/1710337135436599583

    Backdrop for housing looks eerily familiar to sharp slowdown we saw this same time last year when rates jumped. The move in 2022 was 5% to 7% Aug-Oct, and it slowed everything quickly, including prices. This time around we’re jumping from 6.75% to ~8% in roughly same time period.

    https://twitter.com/RickPalaciosJr/status/1710291775590457712

    Past 3 months after this illegal AirBNB was identified in Vancouver… even gave the city the address of the house… and guess what, listing still up and operating…I mean if the city wants me to do enforcement too, just give me the authority… @CityofVancouver

    https://twitter.com/mortimer_1/status/1710810148309192945

    I ask every realtor & mortgage broker – if not leverage IN SOME FORM – what explains the bigger disconnect between income & cost of housing vs the last housing bubble?

    https://twitter.com/DiMartinoBooth/status/1711162987560464775

    They’re admitting that the FED destabilized the MBS market by purchasing MBS. The entire market has been propped up since 09…destroying natural demand for MBS. Now there’s no one else to buy the MBS and rates have to go through the roof to bring that market back. Whether the FED sells or not.

    https://twitter.com/damonpace/status/1711475369625165940

    So today I got a letter from Flagstar Bank(my mortgage servicer) that my payment is going up by $900. Apparently estimating escrow is so hard now that they’ve underestimated and found a shortage of $6k so that 6k now has to be spread out over the next 12 months thus my payment going up by 500. The other 400 increase is coming from an explosion in PMI costs. Luckily i can handle this but how are the poors going to handle a change like this?

    https://twitter.com/sunny051488/status/1711487587331010967

    I reached back out to this Ohio homebuilder. “October has been a ghost town. September was very busy but that’s when we run our annual promotion. We were paying 3 points towards financing for homes that can close this year plus some $ off the house”

    https://twitter.com/NewsLambert/status/1711473857498866032

    So not only sexual harassment, but embezzlement and political extortion.

    https://twitter.com/GRomePow/status/1711470486671262067

    2023 California=1991 Japan (generational peaks). Took Japan 22 years to go all-in on QE to “save” it’s housing market…Federal Reserve has already gone all-in on QE just as California begins its generational decline in population/employees against rising housing units…not sure what will save California?

    https://twitter.com/Econimica/status/1711452903066788320

    The real estate market is so hot that the National Association of Realtors is begging for Powell to turn the ponzi scheme back on.

    https://twitter.com/GRomePow/status/1711449135357059201

    The absolute nerve of them to make these requests in the name of “affordability”!

    https://twitter.com/ObserverCmdx/status/1711490628184629526

    My continued takeaways – The real estate industry faces a massive recession (in early stages), Fed should continue MBS roll off, the Fed should hike another 25bps. This industry and these people are destroying the future of America.

    https://twitter.com/DonMiami3/status/1711435863899725909

    So interesting that these trade groups had no “profound concern” when rates were kept at historically low levels for almost a decade. One would have thought they would have also been “profoundly concerned” that monopoly money would lead to affordability issues, etc.

    https://twitter.com/esquireforfire/status/1711438462162002207

    Where I live, old east Dallas, there seems to be a house or two on every block for sale. None of them are moving. I am following a few on Zillow. Not one has been on the market for under 40 days. Some have been on over 100 days.

    https://twitter.com/JonMartInlo/status/1711433278660526528

    Chicago’s largest commercial building sales list reflects plummeting value for office properties

    https://twitter.com/danjmcnamara/status/1711430319620989364

    Overall Leasing Demand Turns Negative ⁦@CoStarGroup. Property Markets Give Back 26 Million Square Feet, Add 151 Million Square Feet of New Supply

    https://twitter.com/danjmcnamara/status/1711430553558249536

    This building just south of Frisco in North Dallas is completely empty. I have actually never seen a single person in it. Not a single floor is rented.

    https://twitter.com/JonMartInlo/status/1711373100145602667

    Surging Mortgage Rates vs. Plummeting Home Sales

    https://twitter.com/Barchart/status/1711424037388230745

    “It’s not a credit bubble. Home prices increased 60% because I’m smart and invested in an essential!” Oh, cool. Is that why DeLorean prices doubled over that period too?

    https://twitter.com/StephenPunwasi/status/1711429424917143599

    Only in Toronto would its former police chief be tapped for *drum roll* real estate development advice. 🤣 … and only in 🇨🇦 could a gov pay $171k for that advice, have no record of any advice, and zero consequences for anyone.

    https://twitter.com/StephenPunwasi/status/1711101075330379877

    Toronto had the most inventory of any September, and the units sold vacant are rising sharply. Tiff single-handedly solved the inventory shortage he caused. A hero, really.

    https://twitter.com/StephenPunwasi/status/1710026048035783065

    BofA and Moynihan better hope those MBS perform…(The number below includes long dated treasuries AND MBS, no clue on the split)

    https://twitter.com/ShlomoChopp/status/1711375234236866807

    2 Reports That Tell Us Nothing But BAD NEWS

    First: US & Canada reports more jobs than expected in both countries. Second: TRREB, the biggest Real Estate Board in Canada reports September lowest home sales since 1996. BTW TTREB Board population has grown massively since 1996.

    https://twitter.com/ronmortgageguy/status/1710290292975210792

    It means house prices will drop in Southwestern Ontario because Listings continue to rise. There are anecdotal stores of new Listings with no showings, showings with no interest from Buyers, and no Offers at all on many homes. Dead Market = Falling Prices. NOT every house.

    https://twitter.com/ronmortgageguy/status/1710290300327911684

    Winter Is Coming For Canadian Real Estate. NOT Everywhere: Calgary set a sales record last month. But in BC & Ontario things are looking bleak. The simple answer is High Mortgage Rates & Batsh$t Crazy House Prices don’t go together. Real Estate is headed down

    https://twitter.com/ronmortgageguy/status/1709561228459462779

    Joe, you went into politics in 1970, two years out of law school. When did you have time to be a capitalist?

    https://twitter.com/RudyHavenstein/status/1711129086658228727

    YELLEN: OZEMPIC WILL HELP THE CLIMATE BY MAKING PEOPLE SMALLER THAN CATS – CNN

    https://twitter.com/RudyHavenstein/status/1710782262030352828

    Since the Fed’s peak (so far) holdings of MBS hit $2.74T in April 2022, they’ve “run off” $242B, about 8%, over 16 months. In just TWO months in 2020 they monetized $500B. At that time, Case-Shiller home prices were up near 5% YOY, on their way to 22%. They owned $0 MBS in 2008.

    https://twitter.com/RudyHavenstein/status/1697653760670261587

    “A racket is best described as something that is not what it seems to the majority of people. Only a small inside group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes.”

    https://twitter.com/RudyHavenstein/status/1711442824640565633

    State and local government current tax receipts are falling off a cliff. Back to 2019 levels and falling fast 🚨🚨🚨

    Thus despite the “strong” non-farm payrolls report, the underlying well being of the American consumer and their ability to support over 70% of the economy has to be called into question.

    The ultimate outcome will be a increase in defaults, be it on homes, auto loans, or credit cards unless inflation is tamed (unlikely) or economic growth surges with wages to offset the impact of stubbornly higher rates of inflation.

    These are signs of an economy falling into recession, not recovering from a pandemic and continuing strong sustainable growth. The layoff data does not lie and it is beginning to indicate the same headwinds.

    https://twitter.com/WallStreetSilv/status/1711462126995292394

    Leading economic indicators divided by lagging indicators has been falling for nearly 2 years. All of the prior 8 times this series tanked like this, the US had a recession. This is the 9th time. Why would this be any different?

    https://twitter.com/JeffWeniger/status/1711405469988790554

    U.S. Mortgage Rates jump to 8.09%, the highest level in more than 23 years

    https://twitter.com/Barchart/status/1711549011801281018

    Another runner-up for chart of the week. It took a full year for homebuilder stocks to understand “higher for longer”.

    https://twitter.com/SuburbanDrone/status/1710313313081381267

    China’s EV maker Weltmeister files for bankruptcy in Shanghai

    https://twitter.com/MacroEdgeRes/status/1711610073158762498

    *MCDERMOTT INTERNATIONAL HOLDINGS B.V. FILES FOR CH.15 IN TEXAS

    https://twitter.com/DiMartinoBooth/status/1711607500523397187

    Chinese property developer [Country Garden] prioritizing domestic holders over offshore debt (just as we SuSpECtEd 🧐)

    https://twitter.com/Will_DeCotiis/status/1711588899166748796

    This fudu misses auction nights and bidding wars so bad that he’s still glitching for them in 2023. I offer you 700K for this sh$tbox. Toodles. 💋

    https://twitter.com/ManyBeenRinsed/status/1711584253635407896

    In the last 12 months, self storage rents are down 20% and cap rates have expanded 100-150 basis points. Self storage bros are now onto industrial as they can’t underwrite anything else!

    https://twitter.com/livemas23/status/1711497500908044361

    So much funniness here. First, there is and has been no uncertainty regarding the Fed’s rate path. They’ve very clearly overcommunicated. It’s just that stockies and realtors haven’t been listening. Second, these clowns are crying for a bailout already but I didn’t hear anyone offering up any of the record post-COVID profits the industry made.

    https://twitter.com/RJRCapital/status/1711471325976424946

    Home sells for 1.1M … homes in area were 1.8M during frenzy … comps now f@cked in area. Expect more of this moving forward. All U need is a panicked over-leveraged Balchitter Singh 2 sell 4 a major loss & neighbouring homes gone toodles. Cycle is viscous moving forward.

    https://twitter.com/ManyBeenRinsed/status/1711554233886003213

    1. ‘This new guideline change is big because the minimum down-payment for 3 and 4 unit properties was changed from 20% to 5%. This creates a larger buyer pool for 3 and 4-unit properties’

      Every time there’s crater, the GSE’s dive into subprime even more.

      ‘McDermott International, Ltd is a global provider of engineering and construction solutions to the energy industry. Operating in over 54 countries, McDermott has more than 40,000 employees, as well as a diversified fleet of speciality marine construction vessels and fabrication facilities around the world. Incorporated in Bermuda,[2] It is headquartered in the Energy Corridor area of Houston, Texas’

      https://en.m.wikipedia.org/wiki/McDermott_International

      1. “Every time there’s crater, the GSE’s dive into subprime even more.”

        While denying the same and insisting that it’s different this time…

      2. Good luck getting any multi-unit to pencil right now with 5% down. Rates for non owner occupied with that down and perfect credit have got to be north of 9%. With today’s prices that don’t work.

    2. Once again, thank you Reader!

      “The real estate market is so hot that the National Association of Realtors is begging for Powell to turn the ponzi scheme back on”

      Same as what I commented on above, although my comment was a bit more crass. And who’s going to write a letter for millions who are absolutely screwed? Hold your course J.P. Seriously, I have to believe that even Jerome got a chuckle out that letter and promptly wiped his a$$ with it.

      1. “My realtor just told me they wrote a letter to the Fed. So I’m sure everything will be okay….” 🤣🤣🤣

  19. Are you worried the day when stock and long-term Treasury bond prices decouple may soon arrive?

    If this prosoect concerns you, watch out for any signs of an incipient recession.

    1. Stock market likely to see 12% retreat ahead of recession, says trader who called ’87 crash
      Published: Oct. 10, 2023 at 11:37 a.m. ET
      By William Watts
      comments
      ‘I like bitcoin and I like gold right here’
      Paul Tudor Jones Bloomberg

      ‘The stock market, typically, right before recession declines about 12%.That’s probably going to happen at some point from some level.’
      — Paul Tudor Jones, founder and CIO, Tudor Investment Corp.

      That’s famed hedge-fund manager Paul Tudor Jones in an interview with CNBC Tuesday morning, explaining why he’s not enthusiastic about U.S. stocks and other risky assets as he awaits a recession induced by the Federal Reserve’s aggressive monetary tightening.

      Jones said it’s difficult to be positive on equities amid what he described as “the most threatening and challenging geopolitical environment that I’ve ever seen,” which is occurring “at the same time the United States is at its weakest fiscal position since World War II. It’s a really difficult time.”

      A 2023 rally in U.S. stocks has stalled, with the S&P 500 index SPX pulling back 5.5% from a 2023 high set on July 31, leaving the large-cap benchmark up 12.9% for the year to date through Monday’s close. The Dow Jones Industrial Average DJIA is up just 1.4% so far this year.

      Jones is widely credited with predicting, and profiting, from the stock-market crash on Oct. 19, 1987, which saw the Dow lose nearly 23% of its value, marking the largest one-day percentage decline for the blue-chip benchmark in its history.

      So what does Jones like?

      “I would love gold and bitcoin, together,” he said.

      “I think [bitcoin and gold] probably take on a larger percentage of your portfolio than historically they would because we’re going to go through a challenging political time here in the United States and…we’ve obviously got a geopolitical situation” in Israel and Ukraine, Jones said.

      Bitcoin was off 0.8% near $27,380 Tuesday morning and has rallied around 65% so far in 2023. Gold GC00, 0.43% has retreated from a high above $2,000 an ounce earlier this year, slumping below $1,850 last week as Treasury yields marched higher and the dollar strengthened.

      A pullback in U.S. bond yields has seen gold bounce 1.4% this week, trading recently near $1,871 an ounce.

      Large, speculative short positions in gold will provide fuel for a rally as a recession takes hold, the investor said.
      …

      1. Just for the record, count me skeptical. Gold and bitcoin are both non-income bearing assets whose capital gains are driven by rose as inflation hedges when the Fed is running a loose monetary regime.

        Now that the Fed has tightened rates to stamp out inflation, I am totally missing the case for HODLing inflation hedges, beyond John Tudor Jones’ personal testimony, which I find arrogant and unpersuasive.

          1. AKA what everyone who anticipated sky-high future inflation has already bid up to prices out of reach for those engaged in traditional fundamental uses (farming, owner-occupied residences, income-producing rental properties, etc.)…

            If the Fed succeeds in containing inflation to lower levels than the inflation hedgers anticipated, those bubbly valuations may not hold up very well. Ponzi finance works out great until it collapses.

        2. The Fed has no intention of stamping out inflation. That would require raising bank reserve requirements (currently at zero) and a real reduction in the money supply.

          1. Not sure if those items are necessary, or if higher for longer rates will suffice. Time will tell.

            I agree that if the Fed abandoned their commitment to contain inflation, bitcoin and gold would do well and longterm Treasury bonds would tank further. There is a historical precedent for this scenario, in the latter half of the 1970s.

          2. no intention of stamping out inflation

            Cascading defaults on debt that the Fed cannot prevent will do the trick.

    2. Treasury Secretary Janet Yellen tries to calm markets amid historic US bond collapse
      Aruni Soni Oct 9, 2023, 12:11 PM PDT
      Treasury Secretary Janet Yellen.
      Chip Somodevilla/Getty Images

      – Treasury Secretary Janet Yellen tried to calm markets amid a massive US bond rout.

      – She told the Financial Times she sees no “evidence of market dysfunction” after the spike in yields.

      – Last week’s jobs data was “impressive” but not a sign of an overheating labor market, Yellen added.
      …
      https://finance.yahoo.com/news/treasury-secretary-janet-yellen-tries-031132348.html

      1. She sounds a lot like Paulson leading up to the last crash. But it can’t be…..because it’s different this time. 😂

        1. IIRC, he was heavily invested in Treasury bonds when interest rates CR8Red at year-end 2008. While clearly very stressful for him, I think serendipity worked in favor of his personal potfolio value.

  20. So she made 27 years of payments, mostly interest only, Probably a good bit cheaper then renting would have been ….Honey ,you’ve had your run of good now, it’s over …..

  21. During Wall-to-Wall Media Coverage of Israel-Hamas Conflict…

    Biden gave ‘voluntary interview’ to special counsel investigating his handling of classified docs

    ByJustin Gomez , Lucien Bruggeman, and Mike Levine
    October 9, 2023, 9:30 PM

    President Joe Biden has been interviewed by the independent prosecutor’s team investigating his handling of classified documents while out of office, the White House said Monday night.

    https://abcnews.go.com/Politics/biden-gave-voluntary-interview-special-counsel-investigating-handling/story?id=103846667

    1. by Kelen McBreen
      October 10th 2023, 2:07 pm

      Michael Hayden, a former CIA & NSA Director, posted to the social media site X over the weekend to call for the death of Alabama GOP Senator Tommy Tuberville.

      One X user had asked if Tuberville should be removed from the Senate Armed Services Committee for blocking Biden administration military nominations, and Hayden replied, “How about the human race?”

  23. More Areas & Regions Enter Buyer’s Markets, 2023 Canadian Real Estate Market
    Jon Flynn Broker of Record, Flynn Real Estate Inc.
    10 minutes ago

    This week I look at the data from Ottawa, Montreal, Quebec, Vancouver, Edmonton, Nova Scotia, Moncton, and many other places and report on the stats from September. I also compare population growth to real estate prices and sales and the results are not what you’d expect.

    https://www.youtube.com/watch?v=gmk1XoTuGic

    7:39.

  25. ‘If they do refinance, they’re holding onto vacant land that has no way to generate income and pay for itself. On top of that, the cost to build is too high and the completed home value if they build will likely be worth less than what it costs them to build the home (at the moment)’

    Why Mister, you’ve got yerself a pickle.

  26. ‘Due to her age, Thomas only has four years left before she owes £161,000 – the same that she owed in 2008’

    Sound lending!

  27. ‘If you’re spending more money on just paying your housing bills, what are you going to do? Where are you going to cut?’

    I don’t know Jim, but there dam sure better be NO eating!

  28. ‘I Listened To The Other Side’: RFK Jr. Admits He Changed His Opinion On An Open Border
    Forbes Breaking News
    1 day ago

    At an event on Monday, RFK Jr.announced his candidacy for President of the United States as an independent candidate. At the rally, he spoke about his opinions on border security.

    https://www.youtube.com/watch?v=I9T4OOEazIY

    2:44.

    1. Money
      Mortgages
      Mortgage Rates on Oct. 9, 2023 Continue to Climb for Homebuyers
      If you’re shopping for a home loan, your mortgage payments are affected by interest rate hikes.
      Written by Katherine Watt
      Updated Oct. 09, 2023
      5 min read

      A variety of important mortgage rates went higher over the last seven days. The average interest rates for both 15-year fixed and 30-year fixed mortgage rates both crept higher. We also saw an inflation in the average rate of 5/1 adjustable-rate mortgages.

      In March 2022, the Federal Reserve stepped in to combat surging inflation by hiking its key interest rate. Mortgage rates, which are not set by the central bank but are indirectly influenced by rate hikes, increased alongside.

      After hiking interest rates 11 times since March 2022, the Federal Reserve opted to skip another increase during its September meeting. However, the Fed hasn’t ruled out the possibility of additional increases if inflation doesn’t continue to moderate.

      While inflation has dropped from its record highs, it’s still above target. That means the Fed could continue to raise rates as it sees fit to increase the cost of borrowing and slow down the economy.

      Progress on inflation and other key economic indicators may ease some of the upward pressure on mortgage rates. But if future inflation data comes in hotter than expected and the Fed chooses to hike rates further, mortgage rates could keep going up in 2023.
      …
      30-year fixed-rate mortgages

      The average interest rate for a standard 30-year fixed mortgage is 7.93%, which is a growth of 19 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30-year fixed mortgage will often have a greater interest rate than a 15-year fixed rate mortgage — but also a lower monthly payment. You won’t be able to pay off your house as quickly and you’ll pay more interest over time, but a 30-year fixed mortgage is a good option if you’re looking to minimize your monthly payment.
      …
      https://www.cnet.com/personal-finance/mortgages/current-mortgage-rates-for-oct-9-2023/

  30. “Are you ready for 8% 30-year mortgages?”

    Hell, I got a 14% 30-year mortgage in 1984.

    But it was adjustable, did nothing but adjust down every year until I sold the place in 2005. I now have a 4% mortgage on what little I owe on my current shack, so I’m ready for 8% 30-year mortgages and beyond.

    I’m not going anywhere anyway.

    1. We once had an 8% mortgage, which didn’t seem half bad on a $130,000 place.

      Now that any home worth owning in our area is priced north of $1 million, it’s a different story, even after accounting for inflation.

      1. north of $1 million

        $1M gets you roughly 1500sf east of I-15. And we don’t have attics or basements.

        1. And we don’t have attics or basements.

          To be clear: west of I-15 doesn’t have attics or basements either.

    1. Barron’s
      Stocks Have Ample Reasons to Fall. Why They’re Taking Off Instead.
      By Nicholas Jasinski
      Updated Oct 10, 2023, 6:05 pm EDT / Original Oct 10, 2023, 2:37 pm EDT

      Stocks are rising despite a stack of reasons to fall: war in the Middle East, confounding economic data, and a House of Representatives without a speaker. Thank a decline in bond yields driven by less-hawkish comments from Federal Reserve officials, plus investors seeking safety in Treasuries.
      …
      https://www.barrons.com/articles/stock-market-fed-bonds-treasury-yield-855a542c

      1. “…plus investors seeking safety in Treasuries.”

        If investors are dumping risk assets like stocks in order to buy Treasurys, doesn’t it seem like stocks normally would fall?

        I am missing something…

    2. MarketWatch
      U.S. Treasurys have likely reached a bottom. But stocks have not, technical analyst says.
      Provided by Dow Jones
      Oct 9, 2023 9:24 AM PDT
      By Frances Yue

      U.S. Treasurys have likely already reached a bottom, while stocks have more room to fall, according to Jonathan Krinsky, chief market technician at BTIG.

      Bonds have shown signs of a washout with the iShares 20+ Year Treasury Bond ETF, which tracks the performance of long-term Treasurys, saw the heaviest volume last week in its history, Krinsky wrote in a Sunday note. “Back-to-back record volume weeks for TLT culminating with one of the highest volume days on record on Friday. If this isn’t capitulation, we don’t know what is,” Krinsky wrote.

      Long-term Treasury yields have recently climbed to over-a-decade highs, with the 30-year Treasury yield rising over 5% on Friday to its highest level since 2007, according to Dow Jones market data. The U.S. Treasury market is closed on Monday for Columbus Day and Indigenous Peoples Day.

      “We continue to believe we are entering a period where the bond/stock correlation will flip and we will see rates fall with stocks,” noted Krinsky.
      …
      https://www.morningstar.com/news/marketwatch/20231009197/us-treasurys-have-likely-reached-a-bottom-but-stocks-have-not-technical-analyst-says

    3. The Financial Times
      Opinion Markets Insight
      The bond vigilantes are back
      Markets are challenging Janet Yellen’s policies by raising bond yields to levels that threaten to create a debt crunch
      Edward Yardeni
      US Treasury secretary Janet Yellen should be concerned that the bond vigilantes will disrupt Joe Biden’s plans
      Edward Yardeni
      October 4 2023
      The writer is president and chief investment strategist at Yardeni Research

      I graduated from Yale University’s PhD programme in economics six years after Janet Yellen did so in 1971. We both studied under Nobel laureate Professor James Tobin. Nevertheless, she is a liberal and I am a conservative when it comes to economic policymaking. I coined the phrase “bond vigilantes” four decades ago. Now, as the US Treasury secretary, Yellen should be very worried that the vigilantes will upend the best-laid plans of her boss, president Joe Biden, which she wholeheartedly endorsed and promoted.

      I first wrote about the bond vigilantes on July 27 1983 as follows: “So if the fiscal and monetary authorities won’t regulate the economy, the bond investors will. The economy will be run by vigilantes in the credit markets.”
      …

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