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The Equity That I’ve Worked So Hard For Has Vanished In A Day

A report from the Wall Street Journal on Florida. “James and Laura Molinari left Chicago for a two-story stucco home in this city’s historic Flamingo Park neighborhood. The four-bedroom house was a short bridge away from Palm Beach island and walking distance to downtown West Palm Beach. ‘The for-sale signs are going up left and right,’ James said of the neighborhood. The renewal for his home insurance arrived. The new rate for the year starting in September was around $121,000—more than seven times what the Molinaris said they paid last year, and more than 13 times what they paid when the family moved to Florida in 2019.”

“While they found a better rate from another insurer, at about $33,000 it is still nearly double what they paid last year. The family this month listed the home for sale with an asking price of nearly $3.5 million after determining that insurance costs made staying there too expensive. Others in Flamingo Park told The Wall Street Journal they are drawing the same conclusion. Some premiums have increased by about nine times what they were last year, according to Oscar Seikaly, chief executive of NSI Insurance Group, who said he has handled insurance premiums that cost as much as $600,000 a year for multimillion-dollar homes. ‘When you have a home that’s one million dollars or less, your insurance premium becomes higher than your mortgage,’ he said.”

“Scott Smith, 51, moved to the neighborhood from Atlanta three years ago. His insurance doubled to around $14,000 this year. When he first moved to Florida, he was surprised to learn that his insurer in Atlanta didn’t operate in the state. If he is unable to bring down his premium this year, he says he will probably have to sell. ‘This is robbery,’ he said, adding that he paid only about $2,000 in insurance for a $2 million home in Atlanta. ‘Between taxes and home insurance, it is more than what we pay in our mortgage.'”

The Real Deal on New York. “Nine years ago, Annie Leibovitz probably couldn’t picture selling her Upper West Side duplex for significantly less than she paid for it. The famed photographer put her co-op on the market for $8.6 million, the New York Times reported. Leibovitz purchased the unit at the Brentmore at 88 Central Park West for $11.3 million in 2014. The pad overlooks Central Park, a motivator when Leibovitz first saw the apartment a decade ago. Leibovitz updated the apartment after purchasing it, though many pre-war details remain. Monthly maintenance for the unit is $10,307. The co-op’s discount from nine years ago adds to recent evidence that the city’s storied co-ops are losing some of their luster. Trophy co-ops are either languishing on the market or selling for pennies on the dollar as wealthy buyers flock to condos with their fresher amenities and less restrictive entry requirements.”

ABC 7 Los Angeles in California. “A Carson couple is facing foreclosure because of what’s known as a ‘zombie loan.’ That term refers to a second mortgage that seemed to have been forgiven or written off – until years later when a collector reaches out about the unknown, but supposedly unpaid, debt. Such confusion over mortgages has led to a surprise massive bill that Adaina Brown and her husband can’t pay. Brown says they are living in what was supposed to be her dream home. Now she’s worried she might lose it. ‘It kind of just broke my heart. I told my husband I can’t take another thing,’ says Brown.”

“She and her husband bought the house in 2007. They needed a first and second mortgage. When the housing market crashed she says the mortgages were transferred several times to new companies. She says her original lender eventually charged off the second loan. But then it showed up with a new company. ‘Ultimately the goal is to keep it but I don’t have $200,000 to keep this house. I don’t have money for a lawyer. And I don’t want a foreclosure on my record either you know, so it’s just like we’re in a lose-lose situation,’ says Brown.”

The Denton Record Chronicle in Texas. “New cycle highs for mortgage rates continue to eat into demand for real estate. As mortgage rates pushed above 7.5% last month, home sales and prices moved lower. Closed sales in the city of Denton fell 10% year-over-year. Pending contracts slid by 20%. Median home prices in Denton slid 5.9% from a year ago. Average prices fell 4.2%. With a more seasonal pattern back in play, median prices in Denton are nearly $40,000 lower than the bubble peak experienced in the summer of 2022.”

“Major incentives from homebuilders put downward pressure on prices for the better part of the year. New home builders continued to pull in an outsized portion of sales. Builders have been finding buyers by spending anywhere from 5% to 9% of the sale price to make the payments work. That includes major rate buy-downs and other incentives. The North Texas market has experienced a steady trend of softening new construction prices since the summer of last year. A brief bump early in the year didn’t last long after mortgage rates continued to rise. The softening market has also forced many existing homeowners to come to grips with what they are really selling.”

The Texas Standard. “Major Texas cities like Houston, Dallas and Austin rank among the top places in the U.S. when it comes to office vacancies, according to reporting by Konrad Putzier. He’s a reporter with the Wall Street Journal. Texas Standard: According to your reporting, Houston, Dallas and Austin all had about 25% of their available office space empty. How does that compare with other cities and why so much empty space in Texas? Konrad Putzier: So Texas actually has the highest leasing vacancy rates in the country, and they’re by some measure worse than San Francisco, worse than New York, which is surprising.’what you have is the sort of mix where remote work is still impacting cities in Texas, even if they’re doing relatively well. There’s still remote work as an issue. And on top of that, you have this oversupply, this glut of office buildings. And you take those two things together and you have a lot of leasing vacancies.”

From Bloomberg. “A joint venture tied to a Pacific Investment Management Co. fund surrendered a portfolio of 20 hotels with a $240 million mortgage. The properties, located in cities including San Antonio and Carmel, Indiana, were forfeited in a deal that closed in September, according to commentary filed this week by the loan’s servicer. The Pimco portfolio, valued at $326 million when the debt was originated in 2017, was cut 16% to $272.8 million in a December appraisal. Wall Street investors including Blackstone Inc. and Brookfield Asset Management Ltd. have defaulted on money-losing properties rather than continue to pay the debt on them.”

“For hotels, rising operating and capital improvement costs have cut into income. Ashford Hospitality Trust Inc. said in July that it would likely return 19 hotels to lenders, while Park Hotels & Resorts Inc. stopped making payments on two San Francisco properties. Pimco defaulted on a portfolio of office buildings with $1.7 billion of debt earlier this year but continues to negotiate with lenders ‘as to the best path forward to maximize recovery,’ according to a commentary on the commercial mortgage-backed security. Pimco has also been raising money for a new commercial real estate debt fund that seeks to take advantage of market distress as $2 trillion of existing commercial real estate loans are set to mature within five years, according to a presentation to the Pennsylvania Public School Employees’ Retirement System.”

CTV News in Canada. “Steve Nguyen runs two Airbnb units in a downtown Victoria apartment building. He says he’s still reeling from the news he soon won’t be able to operate it as a short-term rental — since he doesn’t live there. ‘This news is a huge, huge shock,’ he said Tuesday. ‘The equity that I’ve worked so hard for in these units has vanished in a day.’ Nguyen says he makes enough by renting out his unit on Airbnb to cover its mortgage — even with interest rates spiking — but because the unit is so small (less than 400 square feet), it’s not attractive for long-term rentals, and wouldn’t fetch enough to cover his mortgage, which is more than $3,000 a month. ‘You cannot make the numbers work – you’re better off putting your money in a GIC.'”

“He says, as a result, he’s forced to sell the loft unit, but plans to list it for $150,000 less than he bought it for a year ago — its value walloped because in a matter of months, it will no longer be useable in most cases as an Airbnb. ‘The revenue stream dictates the value,’ he said, noting that revenue stream will soon dry up for short-term rentals – which had been earning him between $80 and $225 per night. Paul Nursey with Destination Greater Victoria, says the city’s tourism industry supports the new short-term rental rules. ‘People own two, four, six, 20, 40, 60 units — and that takes away from housing for our residents—including for our workers,’ said Nursey.”

The Vancouver Sun in Canada. “Many Airbnb operators and property managers say the B.C. NDP government’s proposed crackdown on short-term rentals will kill their business or wipe out their retirement investment. ‘I just hope my investment doesn’t come crashing down on me,’ said Debra Sheets, who operates an Airbnb in the Janion building, which overlooks the Johnson Street Bridge in downtown Victoria. Sheets, whose principal residence is in a rental home in James Bay, purchased the 250-square-foot unit in 2017 with the intent of renting it on Airbnb to fund her retirement. Sheets estimates 90 out of the 120 microlofts in the Janion building are short-term rentals. She said the tiny studio apartments aren’t well-suited to long-term rentals. ‘I don’t have deep pockets,’ said the 66-year-old, who recently retired as a professor at the University of Victoria’s school of nursing. ‘It’s going to be quite a hardship.'”

“Laura Klein, owner of a Victoria-based property management company called Co-Hosts, said the proposed legislation will wipe out her business, which employs 20 people. The company has 65 units in its portfolio, the majority of which are short-term rentals and several of which are located in the Janion. In the last 24 hours, she’s been inundated with calls from her clients, all of whom would be impacted by the proposed rules that would come into effect May 1. ‘It’s total panic,’ she said. ‘It’s just absolutely financially devastating to them.'”

ABC New in Australia. “Residents in the mining hub of Mount Isa are taking stock after Glencore announced it would close its Mount Isa copper mine in 2025. At least 1,200 employees will be impacted directly by the closure of one of the biggest copper operations in the country and many more are expected to feel the blow to an economy which has been sustained by the copper mine for 60 years. Home owners had been lighting up the phones at local real estate agent City & Country Realty, concerned about a decline in the property market should mass numbers of residents and businesses affected by the closure leave the town, owner John Tully said.”

“‘People are definitely panicking but our message to our clients is one of calm until this decision is a little more planned out and we know more details … panic is not the right way to go,’ he said.”

From Reuters. “A Country Garden $15 million coupon payment deadline has expired without word of payment, fuelling expectations that China’s biggest private property developer has defaulted on its offshore debt as the nation’s real estate woes deepen. Non-payment would trigger cross defaults in other Country Garden bonds as is standard in bond contracts. The company has almost $11 billion of offshore bonds and a default would set the stage for one of China’s biggest corporate debt restructurings.”

“One bondholder of the tranche in question, who declined to be identified discussing confidential information, said he had not received payment on the coupon as a 30-day grace period ended. Its dollar bonds are currently worth about 6 cents compared with 70 cents at the start of the year, according to LSEG data, and bondholders say they expect the debt to be restructured. ‘We are ready to walk away with some losses, but just hope the restructuring process could be efficient and less painful when compared to other companies like Evergrande,’ said a U.S. asset manager who holds Country Garden’s dollar bonds and declined to be identified.”

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This Post Has 120 Comments

  1. ‘The for-sale signs are going up left and right,’ James said of the neighborhood.

    “It’s just a gully.” — Dissembling UHSs

  2. ‘If he is unable to bring down his premium this year, he says he will probably have to sell. ‘This is robbery,’ he said, adding that he paid only about $2,000 in insurance for a $2 million home in Atlanta. ‘Between taxes and home insurance, it is more than what we pay in our mortgage’

    If yer serious about selling Scott, I wouldn’t mention that last part.

    1. it is more than what we pay in our mortgage’

      Near the end of the GFC (2011-2012) I remember looking at properties in the Chicago area and the property taxes were higher than the mortgage.
      Hopefully this whole housing situation get “interesting” real soon.

      1. In most Chicago suburbs, nearly 60-66% of your property tax bill goes to the local school district. My bill just jumped from $7800 to $10,500. Them IL teachers need they $100k a year pensions with 3% COLA

        1. Hold my beer, friend. 7 years ago our property taxes went from $8600 to $12,900 on a $360,000 house in Elgin. Took us a year to sell.

    2. “…Between taxes and home insurance, it is more than what we pay in our mortgage…”

      Yet another example of holding costs run amok.

      Never mind, move along, nothing to see here, the HBB and readers have posted warnings about ever rising holding costs for over a decade…

          1. If insurance rates of houses go up, then landlords will simply pass the cost down to the renters of those houses, or apartments. At least in Florida.

          2. ‘landlords will simply pass the cost down to the renters’

            If you’d done a little rental management you’d know that’s not true. Anyway, these WPB FB’s want to sell, not rent.

          3. If insurance rates of houses go up, then landlords will simply pass the cost down to the renters of those houses, or apartments.

            Tapped-out debt donkeys who are being ravaged by inflation far higher than our Soviet-style CPI stats say it is will then move to cheaper digs, or back into their old bedroom if need be. The delta between what tenants can or will bear & landlord carrying costs only gets wider from here. Be afraid, wanna-be RE moguls – be very afraid.

          4. You don’t just simply pass the cost down. It might work in areas with a tight rental market, but those areas are diminishing rapidly. But with where we’re headed with rental inventory, if landlords pass anything down they’re gonna get a fat middle finger from their tenants. One of my buddies just got a notice of increase and I told him to tell them to go pound sand. Guess what? No increase. Landlords are no longer in the driver seat. Look around. Concessions everywhere. All the new stuff coming on the market has first three months free. So every cost increase for landlords from here on out is a trip to schlongville. And that’s why you have experts who know what they’re talking about saying inventory is gonna explode. Once these increases become too much to bear all these tight margin landlords are gonna tap out and sell. Let’s revisit this by next Spring and see who’s right.

    3. ‘If he is unable to bring down his premium this year, he says he will probably have to sell. ‘This is robbery,’ he said,”

      He could always pay off his house and self insure for windstorm, that’s the only insurance that is high my brother did that this year and his regular homeowners minus the windstorm was peanuts.

      In fact I have lived within 3 miles of the beach in Northern Palm Beach County since 1982 and never had enough windstorm damage to go over a $2000.00 deductible much less what they have now and that’s with 3 direct hits from Jean, Frances and Wilma. Now they were Cat 2 storms and the second half of Wilma may have hit 3 but you need a direct hit from a Cat 4 or 5 for the wind insurance to pay off anyway.

      Unless you are one of the people that hire a lawyer and sue for a new roof after a storm with a 55 mph wind throws some shingles off your 25 year-old roof which has become as much if not more of a problem for the insurance companies than the hurricanes themselves.

  3. ‘She and her husband bought the house in 2007. They needed a first and second mortgage. When the housing market crashed she says the mortgages were transferred several times to new companies. She says her original lender eventually charged off the second loan. But then it showed up with a new company. ‘Ultimately the goal is to keep it but I don’t have $200,000 to keep this house. I don’t have money for a lawyer. And I don’t want a foreclosure on my record either you know, so it’s just like we’re in a lose-lose situation’

    Well it was cheaper than renting Adaina.

    1. How do you get a second mortgage of $200K? Either that $200K is the 20% down payment on a million-dollar house, or the interest on that second mortgage accrued without payment for decades.

      1. I used to write second mortgages of that amount quite frequently if the equity is there. Usually they’re HELOC’s. You’ll see them a lot with bigger contractors. They need to have a certain amount of capital available to bid in jobs over a certain amount. A HELOC can do he trick. The idea is to never use use it. But guess what happens when times get slow? That HELOC gets tapped to the max. Quite a few contractors lost their homes this way in the last bust. And guess where we’re headed now?

      2. Likely missing from the sorry was the foreclosure deficiency judgment she walked away from 10-15 years ago. The debt buyers are starting to enforce these things now that they are late into their 15-20 lifespan before they expire. Now she’s got a new life and some money and a house and then debt buyer wants their money back.

  4. The family this month listed the home for sale with an asking price of nearly $3.5 million after determining that insurance costs made staying there too expensive.

    Good luck getting a knife catcher to jump on that grenade.

    1. “…Good luck getting a knife catcher to jump on that grenade….”

      In some locals, house prices could go to zero, but a large fraction of the population still couldn’t afford holding costs. South Orange County (Ca) is an example.

  5. “With a more seasonal pattern back in play, median prices in Denton are nearly $40,000 lower than the bubble peak experienced in the summer of 2022.”

    Keep your powder dry for now. We have seen in previous real estate busts that it took more than five years for prices to bottom out. Don’t try to use leverage to catch yourself a falling knife.

    2. We have seen in previous real estate busts that it took more than five years for prices to bottom out

      Meanwhile half a decade of your life passes you by.

      1. And you’re paying rent the entire time. Waiting is OK for people under the age of 35 or so, but after that, time really does start running out. I waited until I was almost 41, and I had to step up my payments so that I could pay off the dwelling by retirement.

      2. half a decade of your life passes you by

        By that measure, how much more if you give in and pay 2X, 3X, 4X with a debt pledge?

        BTW, how is your homestead coming along?

        1. BTW, how is your homestead coming along?

          ‘Slowly’ would be the best way to describe it. House isn’t quite done yet, but the property has come a long way. Hopefully we’ll be done in a few more weeks (though we thought that months ago!). We’re right at a year into the build at this point :/

          Thanks for asking!

  6. ‘Nine years ago, Annie Leibovitz probably couldn’t picture selling her Upper West Side duplex for significantly less than she paid for it. The famed photographer put her co-op on the market for $8.6 million, the New York Times reported. Leibovitz purchased the unit at the Brentmore at 88 Central Park West for $11.3 million in 2014…Leibovitz updated the apartment after purchasing it…The co-op’s discount from nine years ago adds to recent evidence that the city’s storied co-ops are losing some of their luster. Trophy co-ops are either languishing on the market or selling for pennies on the dollar’

    DONG!

    1. I guess if you don’t like AirBnB, you would like co-ops, as co-ops generally don’t allow short-term rentals, and sometimes they don’t allow subleasing at all.

      1. I’ve was blogging about short term rentals before these airbnb con artists stopped throwing their paper routes. I don’t have a problem with them. Hotels for instance. But illegal STRs are a disaster and in these cases IMO a direct result of the housing bubble. They eventually blow up and go away, always do.

  7. ‘Its dollar bonds are currently worth about 6 cents compared with 70 cents at the start of the year, according to LSEG data, and bondholders say they expect the debt to be restructured. ‘We are ready to walk away with some losses, but just hope the restructuring process could be efficient and less painful when compared to other companies like Evergrande’

    Bargaining: <- you are here U.S. asset manager.

  8. ‘A joint venture tied to a Pacific Investment Management Co. fund surrendered a portfolio of 20 hotels with a $240 million mortgage. The properties, located in cities including San Antonio and Carmel, Indiana, were forfeited in a deal that closed in September, according to commentary filed this week by the loan’s servicer’

    So just like that, yer giving it away Pimco?

    ‘Pimco has also been raising money for a new commercial real estate debt fund that seeks to take advantage of market distress as $2 trillion of existing commercial real estate loans are set to mature within five years, according to a presentation to the Pennsylvania Public School Employees’ Retirement System’

    That’s the spirit, fook yer lenders AND get on the vulture band wagon!

  9. ‘Ultimately the goal is to keep it but I don’t have $200,000 to keep this house. I don’t have money for a lawyer. And I don’t want a foreclosure on my record either you know, so it’s just like we’re in a lose-lose situation,’ says Brown.”

    Who knew that poor choices have consequences, Adaina.

  10. ‘‘People own two, four, six, 20, 40, 60 units — and that takes away from housing for our residents—including for our workers’

    This is not an exaggeration:

    ‘A recent McGill study from a team led by Dr. Wachsmuth, a Canada Research Chair in urban governance, indicated that about 16,000 of the 28,000 units on short-term rental in B.C. appear to be whole homes being rented out repeatedly for short stays only – turning them into what one provincial document called mini-hotels.’

    ‘About 10 per cent of the hosts take in 50 per cent of the revenue, the study found. In Vancouver, there is one operator with 123 listings, while 42 per cent of Victoria listings are owned by someone who lives outside the city.’

    https://www.theglobeandmail.com/canada/article-bc-plans-strict-new-short-term-rental-rules-requiring-hosts-to/

    2. I had an Airbnb in a country in Europe in a very popular tourist destination. I recently got a letter from the city to stop short term rentals. I don’t have a problem with it because Airbnb is a scam and I own the house outright and didn’t buy it needing Airbnb income. Airbnb hosts are operating as hotels in residential areas without permits. But it generates a lot of taxable revenue so it’s gone on a lot longer than it should have. What I do have a problem with is the punitive laws with respect to property owners and long terms tenants. If I lease my property to a long term tenant and the tenant decides to not pay the rent and destroy the place, it could take years to evict the tenant. The financial risk of long term tenants is untenable. At least, if an Airbnb guest damages my property, they are gone in a few days.

      1. At least, if an Airbnb guest damages my property, they are gone in a few days.

        Wasn’t there a story recently about a woman who is squatting in an AirBnB?

    3. Friends of my family in that country built their dream retirement home in an idyllic location and decided to rent it out until they retired. Shortly before their retirement, the tenant stopped paying rent and refused to leave and, 18 months after they retired and planned to move into the house, they were still in the courts trying to get the tenant evicted.

  11. “Steve Nguyen runs two Airbnb units in a downtown Victoria apartment building. He says he’s still reeling from the news he soon won’t be able to operate it as a short-term rental — since he doesn’t live there. ‘This news is a huge, huge shock,’ he said Tuesday. ‘The equity that I’ve worked so hard for in these units has vanished in a day.’

    Cry me a river, speculator scum. The sooner you go out of business, the sooner speculative excesses can be flushed from the housing markets, and residential neighborhoods won’t have to bear the vibrancy STRs bring into their ‘hoods.

  13. This insurance issue is the real deal. The bloom is surely off the Florida rose. I think people who moved there are going to really second guess that decision

    1. I’ve posted articles saying 70-80% of insurance payouts in the US are in Florida. Some stupid named storm no one will remember just did $6 billion of damage. There was a rain not that long ago that dropped 26 inches in a day. What do they do? Continue to throw up airbox towers steps from the ocean. These condos are fatally flawed as no one wants to pony up the dues to fix them for decade after decade. It’s a cluster fook, has been all along. But yer not shoveling snow!

    2. When you base one’s decision on romanticizing where one lives, among other things, bad things tend to happen.

  14. WHY DOES FAUCI NEED SO MUCH SECURITY?

    I added the ending clip from an unrelated video I just spotted on Faux News. They fit together nicely. Btw the comments are wide open on the Fauci vid if you need some fun.

    https://www.bitchute.com/video/lmzuxZx0Xejj/

    2:21.

    Here’s the video and comments:

    https://www.youtube.com/watch?v=iBLzikHRL8c

    It’s a hard life being a career criminal. No words of comfort for all of the families members of people around the world who have been devastated by his actions over the last forty years.

    You know you are a beloved healer when you need to be surrounded by armed men to stop the public getting justice on you.

    If he told the truth he wouldn’t need security.

    Surely a man to admire and make a national hero out of. Thousands of tortured beagle puppies cannot be wrong.

    There’s always a threat when you spend your career playing with deadly viruses.

    Poor thing’s, while people’s loved one’s died scared and alone and tossed into the dirt, with no funerals just for their pockets to get lined.

    I wish this is how they end up living their lives in FEAR all the time.

    God will judge this serial killer harshly for the lies and suffering he caused.

    The guy who invented covid is trying to make us feel bad lol.

    May the traitors suffer for their actions. Punishment must be done.

    There’s not a place on the planet where he will ever be safe.

    I hope he gets put in the slammer…after a fair trial of course. He either lied to Congress about Gain of Function research funding or he’s negligent in providing no oversight of the Nonprofit the NIH gave a grant to.

    Almost like the world reverse Uno’d this guy and now he’s on lockdown.

    The crooks in media that conspired with the criminals in government, big tech and big pharma need to be held legally accountable for this crime against humanity.

    Imagine, the American Josef Mengele can’t take a walk without being harassed. I’m shocked to my core!

    Most wives know when their husband is a puppy kicker, but clueless when they slaughter thousands of the poor dogs. You deserve to feel the way you do, own it.

    Both him and gates deserve to live in fear.

    His wife is the HEAD OF BIOETHICS AT THE NIH. She doesn’t have any ethical concerns about mandating and bribing and coercing an injection that has only been tested for a few months on a few thousand people? EVERYTHING that they have done goes against basic medical ethics of informed consent and the principles outlined in Nuremburg. Ethics is supposed to be her job. But instead she has been silent on the largest uncontrolled unethical medical experiment in human history. She should be in maximum security prison as well for the rest of her life.

    Now he’s tasting his own medicine of living in fear, just like he made millions of people live in fear for almost 3 yrs! I have zero sympathy for him.

    People weren’t dropping until we were forced to take his injections.

    My otherwise healthy dad died after he go the “vaccine”. He didn’t have any security. Miss my dad so much.

    Eventually there will be a father that lost his child to this crap, that will render any amount of security useless.

    She sounds exactly like Ceausescu’s wife chiding the people from the balcony.

    Let destruction come upon him at unawares;
    and let his net that he hath hid catch himself:
    into that very destruction let him fall. Psalm 35:8

  15. Was talking to my sister-in-law last night and she mentioned she received an email from a realtor that she hadn’t worked with in over ten years. It was a long letter entitled “This Is Not a Bubble”, with all the usual arguments that are easily debunked. The letter ended with saying there’s never been a better time to buy. The reason I mention it is this reeks of desperation. I asked my sis if she’d received anything before from this realtor and she hadn’t. These folks are freaking out.

    1. She should reply and ask why then did NAR join the NAHB and MBA in a letter to Jerome Powell begging him to stop raising interest rates.

    2. Realtor acquaintance of mine on Facebook posted a question the other day to see what the responses were. Asked if people thought prices were going to crash or not (in Montgomery County PA area). Most said, “No way, just stay flat until rates come back down.” Ok… The realtor said that area didn’t crash in the 2008 bubble…”prices just came down 3-4%”. That’s totally false information. I sat that bubble out in that area and waited for drops. By my estimation, prices came down between 15-20% in that area. So misleading. So much denial.

      2. Out West most places it was 50% and more by the time it bottomed. Sold my primary at the time in early ‘05 for 505K. It would later sell for 265K. Bought my first post bust foreclosure for 175K. The owner who was foreclosed on bought it for just under 400K. And for a long time the “it’s just a gully” crowd kept playing their tune.

      3. And I would hope their were at least a few comments that asked “What are you basing that assumption on?” Because the hard facts and data are on the doom-and-gloomers side. And “it’s different this time” isn’t hard data unless you can back it up. Someone here used the ‘ol “wish in one hand and sh#t in the other” line the other day. Spot on.

        1. I asked where they came up with that and just got a word soup response. Either doesn’t understand it themselves, or is purposely misleading.

          1. I’ve been telling my friends to listen to both sides. Weigh the arguments on both sides of the issue. Look at the historical evidence both sides present (or don’t present). Then stand back, take a hard look and decide where the scent of truth lies. The answer overwhelming points to one side.

  17. Antiwar (10/17/2023):

    “Rep. Michael McCaul (R-TX), chair of the House Foreign Affairs Committee, told CNN on Monday that he was drawing up an authorization for the use of military force (AUMF) against Hamas, Hezbollah, and other groups in the region if the Gaza war escalates.

    “I hope I never have to mark this bill up. But we have a situation in the Middle East that’s growing day by day with intensity and if Hezbollah gets involved, Iran has already threatened if Gaza is, you know, if Israel goes, you know, if IDF (Israel Defense Forces) goes into Gaza that they’re gonna come out,” McCaul said.

    When asked if the White House requested the authorization, McCaul wouldn’t say. “I don’t want to confirm that. It’s just that there is concern that — we, I’m currently, we’re currently drafting one in the event it’s necessary,” he said.

    https://news.antiwar.com/2023/10/17/mccaul-preparing-authorization-of-military-force-if-gaza-war-escalates/

  18. Crap on a stick – not sure if confirmed – but wow. Or perhaps they are some sort of short side bet – or are building up a vulture fund.

    From GRDecter on Twitter:


    BREAKING: Goldman Sachs has marked down or impaired office holdings down by 50%.

    The CFO Denis Coleman just said this on their Q3 earnings call.

    Probably nothing.

    Coleman: That’s right. The firm either marked or impaired office holdings by 50%. Thats quite significant, he said

    1. Also in the twitter thread – JPM protected themselves in the First Republic takeover. I guess FDIC, Fed and Treasury will take the losses on our behalf.


      In the First Republic deal, J.P. Morgan carved out terms that protected them against Residential and Commercial Mortgage Backed Securities falling in value by as much as 80%.

  20. Can’t Withdraw Any Money! Banks Face Rush, Evergrande’s Crisis May Trigger Financial Meltdown
    China Observer
    2 hours ago

    Since October 8th, a bank run has erupted at the Bank of Cangzhou in Hebei Province. Numerous online videos show long lines of people waiting to withdraw money at various branches of the Bank of Cangzhou. Not only were the bank lobbies packed with people, but long queues also formed outside on the streets, with some waiting even late into the night. To prevent a full-blown bank run, the Bank of Cangzhou implemented a ticketing system, allowing only 20 withdrawals per day at some branches. Simultaneously, some people attempted to make transfers through their online accounts, but online transfers were temporarily suspended.

    The bank run at Bank of Cangzhou was sparked by a recent online circulation of a list of “Evergrande’s Bank Loan Debt Details”, which claimed that Evergrande owed Bank of Cangzhou 3.4 billion yuan.

    https://www.youtube.com/watch?v=WogsBHGM9Oo

    18 minutes.

    2. What does a bank run even mean in the electronic printing press money era? It’s not like the bank has a vault full of paper money waiting to be distributed to whomever lines up outside.

    1. “…9% mortgage rates right around the corner….”

      Just Wow.

      Just a few weeks ago I though 8% would be pushing it.

      Is 10% un-possible?

      1. I think 10% is very possible. And I think a double digit mortgage number would just put the real freak in the market. I got into the mortgage biz in ‘98. Never saw double digits unless it was hard money deals.

        1. 10% is very possible.

          Some of us have seen high double digits.

          In my recollection the economy then wasn’t anywhere near as fragile as it is now.

  22. Bank of America warned consumers they would be pushed to the ‘point of pain’—and CEO Brian Moynihan says we’ve now reached that point

    https://finance.yahoo.com/news/bank-america-warned-consumers-pushed-105605526.html

    It’s a message now echoing in every corner of Wall Street: consumers have finally run out of steam.

    It’s an eventuality Bank of America has predicted since March, when analysts warned that the Fed would push consumers to the “point of pain” in order to tame inflation.

    And now according to Bank of America’s CEO, Brian Moynihan, that time has come.

    Speaking to CNBC’s ‘Squawk on the Street’, Moynihan said the way consumers are acting is consistent with a “low growth, low inflation economy” which the U.S. saw from 2016 to 2019.

    In a given year, Bank of America customers spend $4 trillion dollars—be it using a debit or credit card, writing a check, confirming a bank transfer, or taking cash out to spend.

    From 2021 to 2022 that spend grew by 10%, Moynihan said, and began dropping to 9% in Q1 2023.

    Now that growth figure has dropped to 4.5%, he added, signaling consumers are either too nervous to spend the money they have, or have less in their pandemic-boosted savings accounts to sustain their spending levels.

    “That is the same of September and October,” Moynihan continued. “That growth rate … is consistent to where we were in ’16, ’17, ’18, ’19 which was a low growth, low inflation economy.”

    “Consumers’ activity has slowed down … it’s slowed by half, and that means the consumer is being slowed down by the interest rate environment and all the stuff going on.”

    Lower income homes are impacted more

    Moynihan went on to support an observation made by Citigroup CEO Jane Fraser, who said “cracks” are beginning to show in consumer spending, particularly by lower-end consumers.

    Fraser said that while Citi’s data shows consumer spending is still “good” and is in positive figures, the growth has begun to “come off,” explaining to CNBC that in September numbers, “the softening of the growth in demand, is…evident.”

    Savings are down for lower-end consumers, Fraser added: “They’re very low at the moment and I think some of the excess savings from the COVID years are close to depletion.”

    Moynihan said that Bank of America has found similar trends. He said median income households have lower account balances and are spending down their pandemic war chests.

    Higher income households have similarly moved their money out of checking accounts, but have instead moved their fortunes into investments.

    “You’re seeing that deterioration of positive balances and consumers in those medium income households down a little bit,” Moynihan said. “That means they’re spending some money in excess of what they bring in. So that means the economy has slowed down, consistent with a low growth, low inflation economy.”

    Is the Fed’s plan working?

    If the so-called ‘YOLO spenders’ (you only live once) have indeed run dry and the economy is inching back, as Moynihan says, to low growth—then has the Fed’s plan really paid off?

    The first priority of the Fed was to tackle inflation—which has indeed come down. In September 2023, inflation sat at 3.7%, down from 8.3% a year prior.

    Economists seem largely satisfied by this effort—though many have warned the most difficult part of bringing inflation down lies ahead.

    Treasury secretary Janet Yellen remarked inflation is being “really well-behaved” while Wharton professor Jeremy Siegel believes rates will hold steady in November.

    In his weekly Wisdom Tree commentary, Professor Siegel observed there is still a great deal of economic uncertainty—not least tensions in the Middle East.

    Despite this, Professor Siegel wrote: “We’re poised for a year-end rally in equities and a good year for 2024.”

    1. It’s an eventuality Bank of America has predicted since March, when analysts warned that the Fed would push consumers to the “point of pain” in order to tame inflation.

      What has pushed consumers to the “point of pain” is the cost of living crisis, not attempts to rein in the CPI.

    2. Despite this, Professor Siegel wrote: “We’re poised for a year-end rally in equities and a good year for 2024.”

      Looks to me like the border collies for the Wall Street-Federal Reserve Looting Syndicate are trying to herd the last of the retail investor muppets into the rigged casino where they can be fleeced at will.

    3. Treasury secretary Janet Yellen remarked inflation is being “really well-behaved” while Wharton professor Jeremy Siegel believes rates will hold steady in November.

      Goldman’s helmet-haired hobbit Yellen the Felon raked in $7M in speaking fees from banks bailed out by the Fed & taxpayers. Inflation hits her rather less hard than the working stiffs who don’t rake in bribes for services rendered during their “public service.”

      1. Goldman’s helmet-haired hobbit Yellen the Felon raked in $7M in speaking fees from banks bailed out by the Fed & taxpayers.

        You’d think she could afford a better stylist

    4. that is the biggest load of nonsense today. (which is a lot considering MSM)

      low growth high inflation economy more like it. Why do all these “geniuses” forget about stagflation? Cuz inflation is still running rampant and there’s little chance of it getting under control given our government printing like Zimbabwe.

    5. “Is the Fed’s plan working?

      So far, so good.

      “Despite this, Professor Siegel wrote…”

      A stopped clock is right twice a day.

      And since the stock market always goes up, a stopped-clock equity bull is right 24/7.

    1. And that means if you’ve got average credit and little down it’s more like 8.5%. And builders are now going to be buying down just to get into the 7% range. Back when I was doing it 1 point usually bought you about .25 to .375 down on the rate. Max buy downs on conforming were about 3 points. 3 points got you roughly 1% down on the rate. Buying down just to get to get into the 7% range ain’t a good look.

  24. (CAUTION: This post is not housing related.)

    It’s Cold: Germany Fires Up Reserve Coal Plant

    Germany has fired up a refurbished coal unit to help meet energy needs as the region’s first cold spell takes hold.

    https://wattsupwiththat.com/2023/10/18/its-cold-germany-fires-up-reserve-coal-because/

    The success of the Energiewende on full display.

    Last year’s historic energy crisis forced Germany to temporarily increase its reliance on the dirty fuel after supplies of Russian pipeline gas were shut off. While that poses a setback for the government’s plans to curb harmful emissions, it’s part of its strategy to contain price increases for consumers during the heating season.

    https://www.bloomberg.com/news/articles/2023-10-16/germany-fires-up-reserve-coal-plant-in-winter-s-first-cold-snap#xj4y7vzkg
    Now this part is really funny.

    Economy minister Robert Habeck said in an interview with German broadcaster ARD last week that the government will not need to reactivate old reserve plants in the winter of 2024-2025.

    https://www.bloomberg.com/news/articles/2023-10-16/germany-fires-up-reserve-coal-plant-in-winter-s-first-cold-snap#xj4y7vzkg

  25. Ben Jones post on Dr Fauci above.

    The level of evil of Dr Fauci and guys like Bill Gates and any of their cohorts is just beyond belief, its so bad.
    IMHO, it was deliberate, it was pre-planned, and its the most outragous crime I have ever witnessed.
    These are fu-king monsters. Im so upset that so far they are evading
    Justice.

      1. Fauci and his wife are scared enough to need a black SUV full of bodyguards to follow them on their neighborhood walks.

        Maybe Larry Ellison can rent them a shanty on his private Hawaiian island.

      1. Every journalist, and every literal who on Twitter who ever made a public statement supporting lockdowns, business closures, school closures, and vaccine mandates is guilty of participating in a medical genocide.

        Hang them ALL ☠️

  27. “but because the unit is so small (less than 400 square feet),”
    ” …purchased the 250-square-foot unit in 2017 with the intent of renting it on Airbnb to fund her retirement.”

    How is this different from the “condotel” silliness from 2007? If anything, the condotel is less hassle.

    And btw, it still puzzles me how buying a property will fund a retirement, even if you’re counting on appreciation.

  30. MarketWatch
    Markets
    Selloff in Treasurys gains momentum in late afternoon, pushing 3-month through 30-year yields either further above or toward 5%
    Published: Oct. 17, 2023 at 2:38 p.m. ET
    By Vivien Lou Chen

    Tuesday’s selloff in U.S. government debt picked up steam in the late afternoon, sending most Treasury yields either further above or toward 5%. The jump in market-implied rates was led by 3- through 7-year yields, which each rose by 17 basis points, according to FactSet data. The benchmark 10-year rate was up 14.4 basis points at 4.853% after September’s stronger-than-expected retail sales report, and is on pace for its largest one-day jump since at least Sept. 21. Two- and 10-year yields are both heading for their highest closing levels in 16 to 17 years.
    …

    1. Updated Wed, Oct 18 2023 4:42 PM EDT
      Dow closes more than 300 points lower as 10-year Treasury yield soars to another 16-year high: Live updates
      Alex Harring
      Samantha Subin

      Stocks dropped Wednesday as earnings season gained steam and Treasury yields climbed to multiyear highs.

      The Dow Jones Industrial Average
      slipped 332.57 points, or 0.98%, to finish at 33,665.08. The S&P 500 slid 1.34% to 4,314.60, while the Nasdaq Composite dropped 1.62% to 13,314.30. None of the three major indexes traded in positive territory at any point during the session.

      The 10-year Treasury yield
      climbed on Wednesday, breaking above 4.9% for the first time since 2007. Meanwhile, the average rate on the popular 30-year fixed mortgage rate just hit 8%, the highest level since 2000.
      …
      https://www.cnbc.com/2023/10/17/stock-market-today-live-updates.html

    2. DOW 30 -0.98%
      S&P 500 -1.34%
      NASDAQ 100 -1.41%

      ‘Bond King’ Jeffrey Gundlach says buy long-dated Treasurys, with prices set to rebound going into a recession
      Filip De Mott Oct 18, 2023, 11:14 AM PDT
      Jeffrey Gundlach co-founder and Chief Executive Officer and Chief Investment Officer of DoubleLine speaks at the 16th annual Sohn Investment Conference in New York May 25, 2011. REUTERS/Jessica Rinaldi

      – Jeffrey Gundlach says long-duration Treasurys will make a good short-term trade in a recession.

      – He expects a downturn to hit in the first half of 2024, which will push bond prices back up.

      – Gundlach also sees agency mortgage securities and commercial mortgage bonds as attractive.
      …
      https://markets.businessinsider.com/news/bonds/bond-king-jeffrey-gundlach-treasury-prices-market-rebound-recession-mbs-2023-10

      1. “Gundlach also sees agency mortgage securities and commercial mortgage bonds as attractive.”

        Wouldn’t this strategy run the risk that mortgage debtors will refinance at a lower rate?

  31. ‘So Texas actually has the highest leasing vacancy rates in the country, and they’re by some measure worse than San Francisco, worse than New York, which is surprising.’what you have is the sort of mix where remote work is still impacting cities in Texas, even if they’re doing relatively well. There’s still remote work as an issue. And on top of that, you have this oversupply, this glut of office buildings. And you take those two things together and you have a lot of leasing vacancies’

    That’s why you make the big bucks Konrad.

  32. ‘purchased the 250-square-foot unit in 2017 with the intent of renting it on Airbnb to fund her retirement. Sheets estimates 90 out of the 120 microlofts in the Janion building are short-term rentals. She said the tiny studio apartments aren’t well-suited to long-term rentals. ‘I don’t have deep pockets…It’s going to be quite a hardship’

    This is a good example why I think STR’s are a by product/whatever you want to call it part of the housing bubble. It was conceived as a STR, nothing else would work. Really stupid people said hell yeah, and they are fooked. We’ve checking all the boxes.

    1. The Hill — Poll finds support for exploring alternatives to democracy, using violence to stop opponents (10/18/2023):

      “A new poll found that American voters have a mutual mistrust of the other side and are open to exploring alternatives to democracy, and that a share of both Democrat and Republican voters believe it is acceptable to use violence to stop the opposing party from achieving its goals.

      A majority of voters that support President Biden or former President Trump believe that electing officials from the opposing party in 2024 would create lasting harm in the United States, according to poll results released Wednesday by the University of Virginia Center for Politics.”

      https://thehill.com/homenews/campaign/4262455-poll-americans-trump-biden-voters-support-alternatives-to-democracy-violence-stop-opponents/

      Maybe have a place to go outside of the city when Go Time kicks off?

      1. Ironically, it’s often the rural areas that suffer the most during unrest. The Great Fear in revolutionary France was peasants killing each other. The rural landowning Kulaks were killed by the millions by the Bolsheviks and Mao moved his city dwellers to farming communes. Don’t forget, our regimes enemies most live outside major cities. They’re going to bring that unrest to you. That’s why there no way to avoid what’s coming. It’ll affect everyone no matter where they are. The only way is through.

    1. LIVE UPDATES
      Updated Thu, Oct 19 20233:09 AM EDT
      Stock futures edge lower as traders look ahead to key Fed Chair Powell speech: Live updates
      Brian Evans
      A trader works on the floor of the New York Stock Exchange.
      Peter Kramer | CNBC

      Stock futures edged lower on Thursday morning.

      Futures tied to the Dow Jones Industrial Average slipped 35 points, or 0.10%. Nasdaq 100 futures and S&P 500 futures dipped 0.10%.

      In after-hours trading, electric vehicle juggernaut Tesla slid 4% after the company missed expectations on earnings and revenue in the third quarter. Tesla posted adjusted earnings of 66 cents per share on revenue of $23.35 billion, while analysts polled by LSEG anticipated earnings of 73 cents per share on revenue of $24.1 billion.
      …
      During Wednesday’s regular trading, stocks sold off sharply as Treasury yields surged to multiyear highs. The yield on the 10-year Treasury topped 4.9%, touching its highest level in 16 years. In turn, the S&P 500
      tumbled 1.3%, while the 30-stock Dow shed more than 330 points, or 0.98%. The Nasdaq Composite was the underperformer, off 1.6%.

      Interest rates will be back in focus Thursday as traders look ahead to a key speech at noon ET from Federal Reserve Chair Jerome Powell. Even as inflation numbers have been showing signs of improvement, Treasury yields’ continued climb is raising questions on how the central bank may proceed on monetary policy.

      Other economic data on deck include weekly jobless claims and existing home sales for September.
      …
      https://www.cnbc.com/2023/10/18/stock-market-today-live-updates.html

      1. The Motley Fool
        More Than a Half-Century of Treasury Yield-Curve Data Offers an Ominous Warning to Wall Street
        By Sean Williams – Oct 19, 2023 at 5:21AM
        Key Points

        – The yield curve typically slopes up and to the right, with longer-dated bonds sporting higher yields than short-term Treasury bills.

        – A historic yield-curve inversion may spell trouble for the U.S. economy and stocks as a whole.

        – More than a century of available total-returns data suggests long-term investors are well positioned for future gains.

        – Motley Fool Issues Rare “All In” Buy Alert
        …
        https://www.fool.com/investing/2023/10/19/half-century-yield-curve-data-warning-wall-street/

    3. The Economist
      Finance and economics | Buttonwood
      Investors should treat analysis of bond yields with caution
      The exercise is more like reading tea leaves than scientific endeavour
      An illustration of tea leaves in the shape of a question mark at the bottom of a tea cup.
      image: Satoshi Kambayashi
      Oct 12th 2023

      It was james carville, an American political strategist, who said, in an oft-repeated turn of phrase, that if he was reincarnated he would like to return as the bond market, owing to its ability to intimidate everyone. Your columnist would be more specific: he would come back as the yield curve. If the bond market is a frightening force, the yield curve is the apex of the terror. Whichever way it shifts, it seems to cause disturbance.

      When the yield curve inverted last October, with yields on long-term bonds falling below those on short-term ones, analysts agonised about the signal being sent. After all, inverted curves are often followed by recessions. But now the curve seems to be disinverting rapidly. The widely watched 10-2 spread, which measures the difference between ten- and two-year bond yields, has narrowed markedly. In July two-year yields were as much as 1.1 percentage points above their ten-year equivalents, the biggest gap in 40 years. They have since drawn much closer together, with only 0.3 of a point between the two yields.
      …

      1. “The exercise is more like reading tea leaves than scientific endeavour”

        Sounds much like reading articles in The Economist…

    4. MarketWatch
      Home
      Markets
      Market Extra
      U.S. Treasury bond rout deepens as popular fixed-income ETFs touch decade-plus lows
      Published: Oct. 18, 2023 at 2:38 p.m. ET
      By Isabel Wang

      The iShares 20+ Year Treasury Bond ETF continued to decline on Wednesday, dropping to another round of 16-year lows as U.S. Treasurys saw renewed selling.

      The iShares 20+ Year Treasury Bond ETF TLT, the market’s largest bond fund and a bellwether for other bond ETFs, was falling nearly 1% on Wednesday, on track to settle at the lowest level since July 9, 2007, according to Dow Jones Market Data.
      …

      1. Jeremy Siegel says Treasurys crashed because everyone forgot they’re a bad inflation hedge while stocks ‘do beautifully’
        Filip De Mott
        October 17, 2023, 6:53 pm
        jeremy siegel
        Steve Marcus/Reuters

        Bond yields have surged as investors realize the asset is a bad inflation hedge, Jeremy Siegel told CNBC.

        Instead, stocks are a much better hedge and will perform “beautifully” against inflation, he added.

        “Bonds are great hedges against geopolitical risk, against financial crises, but they’re very bad against inflation.”
        …
        https://finance.yahoo.com/news/jeremy-siegel-says-treasurys-crashed-015304750.html

        1. stocks are a much better hedge and will perform “beautifully”

          Stocks of bankrupt debt riddled companies are so so beautiful.

    6. Any thoughts on how soon irrational exuberance in tech stock valuations will give way to rational repricing?

      1. Yahoo Finance
        Surging bond yields are the stock market’s biggest problem right now
        Jared Blikre
        Thu, October 19, 2023 at 3:00 AM PDT·3 min read
        In this article:

        Treasury yields continued their march higher on Wednesday, with the 10-year Treasury reaching 4.9% for the first time since 2007 in a move that sent stocks lower.

        And while market history suggests stocks should rally into year-end, the continued sell-off in bonds is threatening to destabilize what’s so far been a strong year for equity markets.

        As investors sell bonds, prices fall and yields rise. And as this year’s sell-off in the bond market deepens, the approach towards a big, round number like 5% for the 10-year yields can serve as a psychological magnet for investors, much the same way Dow 30,000 offered a gravitational pull for investors back in 2020.

        But it’s not so much the absolute level that shakes markets as it is the speed of the change in prices and rates.

        That’s because bonds are expected to be the boring, stable part of a portfolio that doesn’t move much. After all, Treasury bills, notes, and bonds are considered “risk free.”

        Except a lack of worry the US government will pay you back isn’t the same as expecting the value of these securities to hold steady over time. A lesson investors are relearning during the Federal Reserve’s rate-hiking cycle.

        Moreover, this move in the Treasury market comes as the stock market’s rally remains hyper-focused on a few key stocks known now as the “Magnificent Seven.”

        In a note on Wednesday, Torsten Sløk, chief economist at Apollo, noted the price-to-earnings (P/E) ratio for the S&P 493 — which excludes Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) — has been steady at around 19 all year. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)

        For this smaller group of stocks, however, their collective P/E has risen more than 50%, to 45 from 29. In other words, investors aren’t actually more excited about the prospects for most companies, just for a few.

        “What is particularly remarkable is that the ongoing overvaluation of tech stocks has happened during a year when long-term interest rates have increased significantly,” Sløk wrote. “Remember, tech companies have cash flows far out in the future, which should be more negatively impacted by increases in the discount rate.”
        …
        https://finance.yahoo.com/news/surging-bond-yields-are-the-stock-markets-biggest-problem-right-now-100022916.html

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