Amid The Rubble Of Collapsed Empires And Oceans Of Souring Debt
A report from the Stamford Advocate. “In pockets of Connecticut from Riverside in Greenwich to Deep River, house hunters are finding larger numbers of new listings hit the market in the first 10 weeks of 2024, compared to a year ago. But this spring’s biggest turnaround may turn out to be the southeastern corner of Connecticut, where the housing market in Mystic and nearby towns has raced out front of many communities statewide. In both January and February, New London County saw its highest ‘inventory’ of houses for sale since early 2021, calculated by Berkshire Hathaway HomeServices New England Properties. Hartford County also hit a high mark for inventories in February. In Greenwich, new listings are up by nearly half across Cos Cob and Riverside, while holding steady in Old Greenwich. North Stamford listings are up 40 percent, and in the city’s Springdale neighborhood are at five times their level of a year ago.”
“In East Lyme, Waterford, properties are hitting the market at 30 percent or more above the pace of a year ago, Griswold and Ledyard are seeing similar levels of activity. Stonington and Montville are topping last year’s listings totals by smaller margins. North Stonington has likewise seen a surge, with listings tripling there in the first two months of this year, and the average bid 12 percent above seller’s final asking prices. A year earlier in North Stonington, the handful of sellers that accepted offers were getting settled for 5 percent below what they sought on average. As of mid-March, Mystic listings ranged from prefabricated homes in the Fair Acres Circle development just north of Interstate 95, which have undergone price cuts since hitting the market last fall.”
From Realtor.com. “A 3,600-acre ranch in Ojai, CA, has resurfaced on the market—with an astonishing 50% price reduction. But even with the discount, it’s still the week’s most expensive home on Realtor.com®. When it initially landed on the market in 2021 with a $100 million price tag, it was America’s largest and priciest listing. Now available for ‘only’ $50 million, this house is an example of aspirational pricing coming back down to earth.”
Santa Monica Daily Press. “Neil Shekhter, who was once the city’s most prolific and controversial developer, has lost control over another three local properties as part of an ongoing inability to repay bank loans. According to The Real Deal, Shekhter recently lost ownership of 1007 Lincoln Boulevard, 1038 10th Street and 1516 Stanford Street to Bank of Southern California as part of foreclosure proceedings. The transfer of property is a result of a lawsuit filed by Bank of Southern California over a $16.2M loan covering the three parcels which according to the bank has never been repaid. The bank is also making a fraud allegation, claiming the defendants lied on their loan application and that the bank would have never made the initial loan had they known the truth.”
“Outside Santa Monica, Shekhter has lost about half of his total holdings or about 1,000 total housing units. About 20% of those were sold to other companies but the bulk were transferred to various investors to avoid foreclosure and wipe out about a billion dollars worth of debt. Despite the resolution of those cases, others persist. As recently as last month, a court ruled against him in a $3M case with another lender, Preferred Bank.”
The Orange County Register. “The last time California ranked 51st for job growth before 2023 was the year Bill Clinton was sworn in as president, Beanie Babies were introduced, the first ‘Jurassic Park’ hit the big screen, and Whitney Houston’s ‘I Will Always Love You’ was No. 1 on the charts. Yes, 1993 was a long time ago. Some California industries are in reverse gear. State jobs stats show noteworthy job cuts in the movie business, off 25% – major strikes all but shut production; at temp agencies, off 14% – drops common when hiring slows; lending, off 9% – rising rates slashed borrowing; and at warehouses, off 5% – online shopping has cooled. But tumbling to the bottom of the hiring rankings isn’t California’s style. Remember 1993? When a California house cost $190,000, L.A.’s Metro subway opened, and the first PDF documents were created.”
The Columbia Daily Tribune. “A pair of Iowa developers has filed for bankruptcy in federal court, leaving the future of homes and properties in three states — including those yet to be constructed in Columbia — uncertain as court records show creditors are owed millions of dollars, including for luxury vehicle purchases. Jeffrey and Tina Ewing, husband and wife developers from Pella, Iowa, filed for Chapter 11 bankruptcy in federal court on March 5. Their real estate business Vintage Cooperatives builds homes and independent living communities for people who are 55-years-old and older in Iowa, including in Altoona, Ames, Ankeny, Bettendorf, Coralville, Des Moines, Indianola, Iowa City, Johnston and Pella. Properties then are managed by a locally elected member board.”
“It also has communities under construction or planned in Cedar Rapids, Dubuque, Iowa City, North Liberty and Waukee, as well as Columbia and Liberty, Missouri and Sioux Falls, South Dakota. The Waukee community’s floor plans include two- and three-bedroom homes. As of September 2023, five homes had been sold, according to Vintage Cooperative’s website. A Register photographer observed work continuing at the site on the afternoon of March 13, though none of the homes appeared to be completely finished. In February 2024, a West Burlington construction contractor, Bi-State Contracting, filed a lawsuit in Des Moines County alleging that Jeffrey Ewing and his companies failed to make progress on or provide evidence of financing for two Vintage Cooperative communities in Cedar Rapids and Iowa City — which left Ewing in default on promissory notes with the construction contractor. Vintage Cooperatives’ websites for the projects showed on March 13 that none of the 35 planned homes at the Cedar Rapids development had been sold as of September 2023.”
The Real Deal on Texas. “A distressed apartment property on San Antonio’s North Side, formerly owned by embattled multifamily syndicator GVA, sold at auction recently. An LLC with ties to LoanCore Capital, the lender that foreclosed on the property in November, paid $21.3 million for the 285-unit Solara complex, at 11710 Parliament Street, the Austin Business Journal reported. The price, equating to roughly $74,700 per unit, marks a roughly 21 percent discount from its appraised value of $27 million, according to Bexar County tax records. GVA, which has a portfolio of roughly 30,000 units, is grappling with distressed assets across the Texas Triangle and beyond. The firm, led by principal Alan Stalcup, failed to make its November and December mortgage payments for the 328-unit Bella Madera apartments in northwest San Antonio.”
“Two of the firm’s Austin properties — Falls on Bull Creek and Park at Walnut Creek — went into foreclosure in December after defaulting on nearly $125 million in loans. GVA also faces foreclosure on the 264-unit Retreat at Stafford apartment complex in Houston, after falling delinquent on a $288 million loan. The firm’s problems deepened in January, when it missed payments on a $145 million loan tied to three Sun Belt assets, leading to foreclosure filings for two of them.”
Soo Today in Canada. “A corporation linked to the insolvent out-of-town landlords who amassed a $144-million debt load after buying up hundreds of northern Ontario houses is now scrambling to sell off properties here in Sault Ste. Marie. Zack Files Real Estate — named after the sci-fi television series starring SID Developments founder Robert ‘Robby’ Clark — recently placed four properties on the real estate market at a combined price tag of $5.98 million. As previously reported by SooToday, 134 Gore Street was overrun by squatters and without running water for weeks during the summer of 2022 due to people entering the building and stripping it of its copper piping.”
“The real estate fire sale in Sault Ste. Marie comes just weeks after the landlords behind 11 insolvent corporations — including Butt, along with Ryan Molony and Dylan Suitor — filed for protection from creditors in the Ontario Superior Court of Justice, claiming they owe more than $144 million in unpaid loans and have less than $100,000 in the bank. Seven of those now-insolvent corporations collectively own 201 rental properties in the Sault, 79 of which sit vacant.”
Blog TO in Canada. “A home in Ontario sold at a staggering loss just a few months after being re-listed shows how frequently prices across the province’s real estate market tend to fluctuate. The sprawling 23-acre property in question, located at 76 Ridge Road West in Grimsby, overlooks the GTA skyline. The 16,000-square-foot mansion was originally sold for $5,850,000 in June 2023. Just one month later, the property was put back on the market for a mind-boggling $5,950,000, but was terminated shortly after. In February 2024, the house was re-listed at the same price, however, the winning offer came in at just $4.94 million, which is roughly $900,000 less than what the property sold for just a few months earlier and approximately $1 million less what it was listed for.”
The Globe and Mail in Canada. “Fifteen years ago, Barbara Tate was lucky enough to inherit some money from her parents. She spread the money around some mutual funds and kept her eye on an intriguing private investment fund that advertised in one of her community newspapers. Founded in the 1960s, Romspen Investment Corp. had blossomed into one of Canada’s largest non-bank lenders, often underwriting short-term commercial mortgages. Encouraged, Ms. Tate rolled the dice and put in $50,000. It turned out to be a rock-solid investment. In early 2023, however, Ms. Tate got quite a shock. Retired and in need of a new car, she hoped to pay for one by cashing out her investment. Yet when she called Romspen, she was told that wouldn’t be possible. The company had frozen redemptions on its $2.8-billion fund two months earlier.”
“Ms. Tate scoured the internet looking for more information, hoping there’d be a Facebook page or some other forum where investors had weighed in, but came up short. ‘I couldn’t find anything,’ she says. ‘I felt very much alone.’ With cash flow getting tight, Romspen cut the fund’s distribution multiple times. Ms. Tate now receives about $100 each month, roughly half of what a guaranteed investment certificate pays at current market rates. And she still can’t get her money out. No one can.”
From Bloomberg. “Bankruptcies, bad loans and slumping values. There has been no end to the symbols of Europe’s property woes over the past year. In Cannes this week, it was a lack of yachts. At Europe’s biggest real estate conference, the number of sponsored boats was just a fraction of previous years, when ultra-low interest rates meant big returns and even bigger parties on the Riviera. This week, the mood at MIPIM was more somber, held in the shadow of a market rout after borrowing costs surged. Still, amid the rubble of collapsed empires and oceans of souring debt, the eternally optimistic dealmakers in attendance showed some defiance. Many insisted they see the seeds of recovery in slower construction.”
“Take Germany’s beleaguered office market, where the six largest insolvent developers boast 48 projects in total that would have spanned about 1 million square meters (11 million square feet). Colliers International data show two-thirds of that has since been halted or abandoned. Shares of Vonovia SE, Germany’s largest landlord with about 546,000 apartments, plunged almost 11% on Friday. It saw the value of its portfolio plunge by more than €10.7 billion last year, pushing its relative indebtedness above its target range.”
News.com.au in Australia. “There are growing signs the strong start to the year for Sydney auctions may not last and the city may transition away from a seller’s market to one that’s more balanced. Close to 900 Sydney homes were scheduled to go under the hammer this week but results were more varied than in previous weeks when auction clearance rates were close to 75 per cent – the mark of a strong market for sellers. Full results from this week won’t be available until mid-next week, but agents revealed that an increase in listings was beginning to spread buyers across more properties. This was easing competition at auction.”
“Damien Cooley, director of auction house Cooleys, said it was too early to call whether there had been a sustained shift in auction conditions. He added that vendors with unrealistic expectations were getting punished. ‘A common trend we’re seeing is agents often relisting in a few weeks with a revised price guide if the original one was a bit ahead of the market,’ Mr Cooley said. A unit on Levey St in Wolli Creek passed in at auction after failing to attract even a single bid. In Coogee and Pagewood, houses passed in on a vendor bids. There were plenty more properties that passed in.”
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You will own nothing.
‘But tumbling to the bottom of the hiring rankings isn’t California’s style’
The sun don’t shine on the same dog’s ass all the time. – Catfish Hunter
https://www.brainyquote.com/quotes/catfish_hunter_402822
‘He added that vendors with unrealistic expectations were getting punished. ‘A common trend we’re seeing is agents often relisting in a few weeks with a revised price guide if the original one was a bit ahead of the market,’ Mr Cooley said. A unit on Levey St in Wolli Creek passed in at auction after failing to attract even a single bid. In Coogee and Pagewood, houses passed in on a vendor bids. There were plenty more properties that passed in’
I’ve seen this play out in Aust-a many times. So red hot, wa just happened? It’s died in the arse mate.
‘Their real estate business Vintage Cooperatives builds homes and independent living communities for people who are 55-years-old and older in Iowa, including in Altoona, Ames, Ankeny, Bettendorf, Coralville, Des Moines, Indianola, Iowa City, Johnston and Pella. Properties then are managed by a locally elected member board’
‘It also has communities under construction or planned in Cedar Rapids, Dubuque, Iowa City, North Liberty and Waukee, as well as Columbia and Liberty, Missouri and Sioux Falls, South Dakota’
This story broke last week and appears to much more widespread than originally reported.
‘The bank is also making a fraud allegation, claiming the defendants lied on their loan application and that the bank would have never made the initial loan had they known the truth’
The details of this are in the article. Senator running deer heap angry.
‘Outside Santa Monica, Shekhter has lost about half of his total holdings or about 1,000 total housing units. About 20% of those were sold to other companies but the bulk were transferred to various investors to avoid foreclosure and wipe out about a billion dollars worth of debt’
These days some FB losing 1000 airboxes is not unusual out there.
“Outside Santa Monica, Shekhter has lost about half of his total holdings or about 1,000 total housing units.”
Cockroach Theory suggests there most likely are many more Shekhters out there who gobbled up investment properties by the thousands to capture capital gains from a rapidly inflating real estate price bubble. All of this gobbling up of single family investment homes left Mom and Pop unable to afford buying or renting a place to live in.
When these mini moguls dump their HODLings, large affordability improvements may ensue.
‘GVA, which has a portfolio of roughly 30,000 units, is grappling with distressed assets across the Texas Triangle and beyond’
This is THE holy grail of investments.
‘In Greenwich, new listings are up by nearly half across Cos Cob and Riverside, while holding steady in Old Greenwich. North Stamford listings are up 40 percent, and in the city’s Springdale neighborhood are at five times their level of a year ago’
Wa happened to my shortage Connecticut?
‘As previously reported by SooToday, 134 Gore Street was overrun by squatters and without running water for weeks during the summer of 2022 due to people entering the building and stripping it of its copper piping’
That’s like Arizona in 2008.
‘The real estate fire sale in Sault Ste. Marie comes just weeks after the landlords behind 11 insolvent corporations — including Butt, along with Ryan Molony and Dylan Suitor — filed for protection from creditors in the Ontario Superior Court of Justice, claiming they owe more than $144 million in unpaid loans and have less than $100,000 in the bank. Seven of those now-insolvent corporations collectively own 201 rental properties in the Sault, 79 of which sit vacant’
Fire sale?
Is this the week the Fed will carry out its first of six to seven rate reductions in 2024?
The Fed May Break the Market Next Week
By CHRIS JOHNSON, Quantitative Specialist, Money Morning • March 15, 2024
I know, what about the Federal Reserve? We talked about this in Wednesday’s email, but I figured that I should take an extra minute or two of our time to give some detail.
SO, Jerome Powell and his band of merry Fed Governors will get together next Wednesday to announce their decision on interest rates.
Will the Fed lower interest rates like so many consumers want?
The answer is “NO.”
This week’s “warm” inflation reads all but locked the decision, at least in my mind. Hell, there are now some economists rolling out their takes that the Fed may increase interest rates.
They could be right over the next few months if we see a trend in the inflation data revealing that inflation is coming back.
For now, don’t expect the Fed to do anything with rates next week, but the Fed meeting is far from a risk-free event. As a matter of fact, Jerome Powell has often done more damage with his words during the press conference than the Fed’s decision on rates.
Here’s what you want to watch – or listen – for next week…
A change to the “higher for longer.”
Wall Street is caught-up on subtle changes to language. Listen for anything that is a stronger derivation of the now famous “higher for longer” to give the real story on where rates are going.
Listen for talk about the liquidity in banks.
This has turned into a warm button for the markets recently as one or two banks have disclosed waning capital. I think any mention will be to calm any fears that may remain from last March’s banking debacle.
The real “data” is in the Fed Funds futures.
This tool shows that the futures market is pricing in the first rate cut on June 12, and even that is a 50/50 proposition. This means all hope – which the market was floating on just a few months ago – of a rate cut has been taken out of the market.
Bottom Line
Next Wednesday’s Fed meeting provides more risk than reward for the market.
…
https://moneymorning.com/2024/03/15/the-fed-may-break-the-market-next-week/
It’s pretty interesting how mortgage raes are dropping rapidly even as bond traders lose faith in a March rate reduction by the Fed.
What gives?
LPersonal Finance
Published March 15, 2024 11:50am EDT
Mortgage rates continue to drop as spring brings more inventory: Freddie Mac
Sellers can get $7,700 more, on average, when listing in the spring
By Christopher Murray
Sponsored by Credible – which is majority owned by Fox Corporation. Credible is solely responsible for the services it provides.
Mortgage interest rates on the 15-year and 30-year mortgages are down from last week, Freddie Mac reported.
“The 30-year fixed-rate mortgage decreased again this week, with declines totaling almost a quarter of a percent in two weeks’ time,” Freddie Mac Chief Economist Sam Khater said.
For 30-year, fixed-rate mortgages, the average interest rate was 6.74% this week, a decent drop from last week when rates averaged 6.88%. Rates aren’t down quite as much as last year when they were 6.6%, on average.
Additionally, 15-year mortgages averaged 6.16%, down slightly from last week when they averaged 6.22%. These mortgages also aren’t as low as last year when they averaged 5.9%.
…
https://www.foxbusiness.com/personal-finance/mortgage-rates-drop-spring-inventory
Markets
Treasuries Slump as Traders Push Fed Rate-Cut Bets Out to July
– 10-year yields are on track for biggest weekly rise this year
– Biggest risk next week is Fed signals fewer cuts in 2024: BMO
Fed Still On Track to Cut Rates in June: BofA’s Cabana
By Carter Johnson
March 15, 2024 at 7:54 AM PDT
Updated on March 15, 2024 at 10:56 AM PDT
US Treasuries declined, leaving 10-year notes on track for their worst week this year, as traders increasingly dialed back bets on the pace and scope of monetary easing expected from the Federal Reserve this year.
Traders in interest-rate swaps pushed bets on the timing of the full first, quarter-point rate cut from the Fed to the central bank’s July meeting. Yields rose on the day on most maturities, leaving both two- and 10-year rates more than 20 basis points higher on the week. For the 10-year, it’s the biggest weekly leap since October.
…
https://www.bloomberg.com/news/articles/2024-03-15/treasuries-slump-as-traders-push-fed-rate-cut-bets-out-to-july
Beware the Ides of March.
DOW 30 -0.49%
S&P 500 -0.65%
NASDAQ 100 -1.15%
S&P 500 is ‘bizarrely overvalued’ and could crash 49% as recession sets in, elite strategist says
Theron Mohamed
Mar 15, 2024, 5:42 AM PDT
Stock market crash recession graph
Yuichiro Chino/Getty Images
– The S&P 500 may crash 49% when valuations normalize and a recession hits, Paul Dietrich said.
– B. Riley Wealth’s chief strategist flagged market and economic indicators that were flashing red.
– Dietrich titled his latest commentary “The Stock Market Bubble Is About to Burst — Look Out!”
…
https://markets.businessinsider.com/news/stocks/stock-market-outlook-dietrich-riley-spx-bubble-crash-recession-economy-2024-3
Dang. I was so hoping that stocks would continue to skyrocket higher indefinitely, thereby channeling most available investment funds into listed companies with their large staffs of lobbyists, accountants, lawyers, HR people, and other unproductive bureaucrats, and starving small and local businesses of capital.
Markets | The Trader
How the Federal Reserve Could Throw Stocks for a Loop
The market didn’t freak out over this week’s worrisome inflation reports. But all bets are off if the Fed dashes hopes of interest-rate cuts next week.
By Jacob Sonenshine
March 15, 2024 12:57 pm ET
…
https://www.barrons.com/amp/articles/stocks-federal-reserve-rates-fomc-af3497b6
Financial Times
FT-Booth Survey US interest rates
Fed will have to keep rates high for longer than markets anticipate, say economists
FT-Chicago Booth poll suggests bank will make two or fewer cuts this year, with the first between July and September
A ‘For Sale’ sign outside a house in Crockett, California
The Biden administration wants high mortgage rates to come down ahead of the November election
Claire Jones in Washington and Eva Xiao in London an hour ago
The Federal Reserve will be forced to hold interest rates at a high level for longer than markets and central bankers anticipate, according to academic economists polled by the Financial Times.
More than two-thirds of those surveyed in the FT-Chicago Booth poll think the Fed will make two or fewer cuts this year as it struggles to complete the “last mile” of its battle with inflation. The most popular response for the timing of the first cut was split between July and September.
That is a later start than expected in financial markets, where traders expect three cuts this year, with the first quarter-point reduction coming in June or July. The Fed’s current forecast, which is due to be updated on Wednesday, also sees three cuts in 2024.
The Chicago Booth survey suggests investors may be forced to rein in further bets on easing from the Fed, which is expected to hold rates at the current 23-year high of 5.25 to 5.5 per cent on Wednesday.
“The Fed really wants to cut rates. All of the body language is about cutting. But the data is going to make it harder for them to do it,” said Jason Furman, an economist at Harvard University, who was one of 38 respondents polled this month. “I expect the last mile of inflation to prove quite stubborn.”
…
interesting:
With some exceptions, the city has the legal right to pre-empt the sale of a building, buy the property and convert it to public housing.
https://dnyuz.com/2024/03/17/how-does-paris-stay-paris-by-pouring-billions-into-public-housing/
From the Globe and Mail piece re Canada: “Retired and in need of a new car, she hoped to pay for one by cashing out her investment. Yet when she called Romspen, she was told that wouldn’t be possible. The company had frozen redemptions on its $2.8-billion fund two months earlier.“
I hate it when that happens!
R u underwater on the investment car you bought during the pandemic?
Lifestyle
Car values are plummeting so now a lot of people are underwater on their car loans
Cars keep costing more, and dealers keep paying less
By Steve DaSilva / Jalopnik
Published Friday 9:20PM
Every year, the price of a new car ticks ever upwards. Loans get longer, yet monthly payments are always on the rise, leading to an epidemic of folks underwater on their loans. Now, there’s a new complicating factor: Used car prices are falling, meaning folks are getting less for their over-leveraged trade than ever.
A new report from Edmunds looked at used car prices compared with trades that have negative equity and found that a drop in the former has led to a steep rise in the latter. According to the report, this isn’t even unexpected — it’s a natural progression from the lockdown-era used car boom. From Edmunds:
“A storm is brewing in the used market as incentives and inventory continue to trickle back into the new vehicle market,” said Ivan Drury, Edmunds’ director of insights. “With demand for near-new vehicles on the decline, used car values are depreciating similarly to the way they did before the pandemic, and negative equity is rearing its ugly head.”
“During the last few years, consumers could jump into new car loans and their trade-ins were shielded from negative equity because some dealers, desperate for used inventory, were willing to pay near original purchase prices,” said Drury. “These days, consumers need to be more careful — especially if they’re trading in newer vehicles — because near-new cars are being hit the hardest by depreciation.”
As the floor falls out from under the used car market, new car buyers are going to end up more and more in over their head on loans. But while some may take this as bad news for new-car buyers and good news for people looking for deals, Edmunds says things are bad for bargain-hunters, too:
Although a downturn in used values is negatively affecting a growing share of new car owners, Edmunds analysts note that there’s a bright spot for car shoppers with bigger budgets. In an analysis of ATPs of 0- to 3-year-old vehicles compared to ATPs for new vehicles, Edmunds data reveals that luxury large cars offered an average discount of $48,111 — the greatest dollar savings across all vehicle segments — with new vehicles going for $118,309 compared to $70,198 for used. Large mainstream SUVs also offered a notable average discount of $19,966, with new vehicles going for $76,131 compared to $56,164 for used.
“If you want to save big on used versus new, you still have to be willing to spend big,” said Joseph Yoon, Edmunds’ consumer insights analyst. “Unfortunately, the most price-sensitive consumers seeking affordable transportation will have a much harder time finding discounts because the supply of older used vehicles is still pretty restricted.”
…
https://qz.com/car-values-loans-underwater-1851341320
My neighbor rear ended a truck that abruptly stopped to make a left turn. She had the license plate on the passenger side floor, and the plastic parts up front were buckled and scratched, but still in place. The bill for repairs was nearly $12k as the adaptive cruise control, parking sensors, led side markers, etc., were all replaced in addition to the plastic body parts. Yikes! No wonder full coverage is so f*ing expensive these days.
Is the relitter monopoly history?
Discourse Real Estate
The end of the Realtor monopoly
What a massive new legal settlement means for the future of homebuying
Chelsea Jia Feng/BI
James Rodriguez
Mar 17, 2024, 2:57 AM PDT
Things are about to get weird for homebuyers and sellers.
I wrote late last year that 2024 would mark the beginning of a great experiment in real estate that would upend the way homebuyers and sellers pay their agents. Well, the experiment officially got underway Friday when the National Association of Realtors agreed to a $418 million settlement to bring to an end a series of class-action lawsuits over agent commissions.
The settlement came after a yearslong battle in which hundreds of thousands of sellers claimed that they were forced into paying unfairly high commissions to real-estate agents. In addition to the monetary penalties, the agreement could enable more buyers and sellers to start negotiating those commissions, which for decades have hovered between 5% and 6% of the sale price. The deal could also push more buyers to forgo hiring an agent or work out an alternate payment structure.
These changes, spread out over millions of transactions a year, have the chance to reshape the housing market. Some industry observers have predicted that the new commission rules could lead to a drop in both home prices and commissions. Buyers could even save as much as $30 billion every year, a recent working paper from the Federal Reserve Bank of Richmond estimated. But there’s also the possibility that the Department of Justice decides this settlement doesn’t go far enough, which could set up a showdown between the NAR and the DOJ. In other words, while the real-estate revolution is underway, this thing is far from over.
To grasp the scope of the settlement, it helps to understand how agents are paid. In most home sales, the seller uses a chunk of the final sale price to pay out the agents on both sides of the transaction. When a seller lists their home on the multiple-listings service — a database of local homes for sale where agents go to find homes to show clients — they advertise how much they’re willing to pay the buyer’s agent. For decades, sellers have generally offered buyers’ agents 2% to 3% of the final sale price, even though they can technically offer as little as $0. That’s because sellers fear that if they offer less than the industry standard, buyers’ agents will direct their clients away from their homes, a practice called “steering.” Don’t offer the standard rate; don’t get seen. To fix this issue, the plaintiffs in the lawsuits and the Department of Justice have pushed for a practice called “decoupling,” in which buyers and sellers just pay their agents separately. They argue that this would eliminate steering and push down commissions, saving people money and perhaps forcing many subpar agents out of the industry. A lot of agents are already barely scraping by — if their earnings fall, they might decide to exit the business altogether.
The newly announced settlement doesn’t go quite that far. While sellers will no longer be required to say how much they’re offering a buyer’s agent when they list their homes on the MLS, they’re not expressly prohibited from offering that compensation somewhere else — it just can’t be anywhere on the MLS. There will likely be “a thousand work-arounds,” Bret Weinstein, the founder and CEO of the Denver brokerage Guide Real Estate, told me. A buyer’s agent could just call up the seller’s agent and ask what commission they’ll get, or the listing agent could advertise the commission tied to the home on their website. In theory, a seller might still offer compensation to a buyer’s agent because they want to get as many offers as possible on their home. If you’re a seller and you don’t offer anything, then any buyer who wants your home will have to pay their agent out of pocket, and a lot of cash-strapped buyers simply can’t do that. In some cases, sellers might still feel pressured to offer the going rate, so the agent’s commission could end up looking pretty much the same as it does today.
On the other hand, we’re likely to see both sellers and buyers negotiating on commissions in ways they simply haven’t before. If sellers are in a desirable market, they might start offering less commission to buyers’ agents, or none at all. On a $1 million home, a seller may save $30,000 if they don’t promise anything to the agent on the other side of the deal. This would force buyers’ agents to get more creative. They could work for a flat fee or cut their commission rate to attract price-sensitive clients. Some might offer varying levels of service for different prices — the white-glove treatment still goes for 3%, but just setting up a few showings is a cheaper rate. Other buyers might choose not to hire an agent at all or just get a lawyer to review contracts and make sure the transaction doesn’t go off the rails.
As for home prices, I’m not convinced they’ll actually drop as a result of this settlement. It’s hard to imagine a seller shaving 3% off their listing price just because they’re not offering a commission to the buyer’s agent, especially if a comparable house down the street is selling for a similar amount. Sales have slowed down with higher mortgage rates, but the seller still has the upper hand in most parts of the country.
…
https://www.businessinsider.com/national-association-realtors-lawsuit-settlement-housing-market-homebuying-agents-commissions-2024-3
With people leaving San Diego in droves, shouldn’t we expect more homes on the market for rent or for sale?
Business
Tens of thousands of residents moved out of San Diego County last year — almost double the number a year earlier
San Diego skyline in March.
Amid escalating housing costs, tens of thousands of residents left San Diego County between 2022 and 2023 — a level not seen in nearly three decades, with the exception of the first year of the pandemic.
(Nelvin C. Cepeda/The San Diego Union-Tribune)
New Census Bureau data reveal that a combination of births and immigrants moving into the county over the last year wasn’t enough to make up for the unexpectedly high exodus of residents who left the county between 2022 and 2023.
By Lori Weisberg, Phillip Molnar
March 14, 2024 5 AM PT
Against the backdrop of soaring housing costs in the last year, tens of thousands of San Diego County residents decided to take a big leap. They left.
New estimates released Thursday by the U.S. Census Bureau reveal that close to 31,000 more people moved out of the county than moved in between July of 2022 and July of 2023 — almost double what it was a year earlier. With the exception of the first year of the pandemic, when the net outflow exceeded 33,000, that volume of people exiting the county hasn’t been seen in nearly three decades.
The net effect was a slight dip in San Diego County’s overall population last year— just a year after the region had returned to population growth following a COVID-19-fueled decline. As of July, the county’s population was estimated to be 3.27 million, down by nearly 7,100 from 2022.
Were it not for the unexpectedly huge outflow of locals, San Diego might have had a shot at a modest increase in population. The county’s natural growth — the number of births outpacing deaths — approached 13,000 between 2022 and 2023. And, in a departure from years past, international migration jumped to nearly 10,800. But together, those two growth components weren’t enough to overcome the wave of people leaving the county.
The last time San Diego County saw a comparable exodus of residents was in the early 1990s, when the region was mired in a deep recession and the jobless rate had surged to nearly 8 percent.
…
https://www.sandiegouniontribune.com/business/story/2024-03-14/tens-of-thousands-of-residents-moved-out-of-san-diego-county-last-year-almost-double-the-number-a-year-earlier
New estimates released Thursday by the U.S. Census Bureau reveal that close to 31,000 more people moved out of the county than moved in between July of 2022 and July of 2023
Does that number include all the Nuevos Americanos?
Fox Business
Published March 1, 2024 6:00am EST
Leaving ‘hotel California’: Business owners torn over exodus share stories of ‘how bad’ things really are
67% of California employers want to move their HQ out of Golden State, RedBalloon reports
By Kristen Altus FOXBusiness
California’s businesses share the same “headache,” being personally torn between closing their doors or moving to other states over high crime and taxes.
“I have considered moving to a different state,” Flavio Carvalho, an attorney and law firm founder in the San Francisco Bay area, told Fox News Digital. “I don’t agree with the direction California is going, and I hate the fact that I am forced to support it through my taxes.”
“We have wanted to move for at least the last three to four years,” Bulletproof Pet Products CEO and CFO Cherie Falwell also said. “Especially since Biden has been president. Things were already expensive here. Now they are so expensive we can hardly afford to do business. However, moving is expensive, and with interest rates on homes, it is difficult to move.”
“We are L.A., California natives, and have never lived or worked anywhere else,” Trish Aquino, who owns a digital marketing business with her husband Brandon, weighed in. “It was our financial strife, prospecting struggles and concern for our children’s futures that made us finally consider a move to Frisco, Texas.”
More than 86% of business owners in California say that crime has increased in their area, while 67% from the same survey claimed to be considering moving their headquarters out of the Golden State, according to the latest numbers from RedBalloon and PublicSq.’s Freedom Economy Index.
Leaving California
The national survey includes 80,000 business owners, with 10% of those respondents being based in California, RedBalloon CEO Andrew Crapuchettes noted.
“Employers we’ve been talking to have been planning a move or thinking about a move since 2020,” Crapuchettes told Digital. “And what’s happening is, in the last couple of years, every time Gavin Newsom does a new stupid thing, it makes it a lot easier for them to make that decision.”
“[It’s a] headache,” the CEO continued. “They are dealing with regulation, they’re dealing with taxes, they’re dealing with crime… They’re still generating economic activity, but this invisible groundswell of businesses [are] planning on leaving the state, and that’s because of those bad policies.”
…
https://www.foxbusiness.com/media/leaving-hotel-california-business-owners-torn-exodus-share-stories-how-bad-things-really-are
Erin go Bragh
“In Europe things are getting unpredictable. It is literally more risky to challenge illegal immigration, than to immigrate illegally,”
Watch: Author Arrested By Swiss Police For Speaking Out Against Mass Migration
by Jamie White
March 17th 2024, 12:28 pm
“Today the police in the Kanton of Aargau, Switzerland stormed a speech, turned off the electricity, handcuffed me and performed a push back. I am not allowed to enter Aargau for 2 months. The reason? I presented my book about #remigration. The police claimed that this presentation was a danger to Swiss security and public order,” Sellner wrote on X, where he included a video of the incident.
“According to the police, it was the first push back like this in 10 years, while 50,000 Illegals entered the country in 2023!”
https://www.infowars.com/posts/watch-author-arrested-by-swiss-police-for-speaking-out-against-mass-migration
Globalists gonna globe.
What stood out to me was the idiots running with their phones held up to get the video.
: Truck Plows into Crowd During Illegal Los Angeles ‘Street Takeover’
OLIVIA RONDEAU
17 Mar 2024
Another illegal “street takeover” in California became disastrous when a driver lost control of a pickup truck while attempting stunts and plowed into a crowd of onlookers.
The chaotic incident took place on Friday night at one of Los Angeles’s notoriously unruly intersections, known as a hub for such criminal activities, the Daily Mail reported.
Daily Loud
@DailyLoud
Mar 16, 2024
·
A Truck ran into a crowd of people at a street takeover on live-stream
https://x.com/DailyLoud/status/1769047850623615352?s=20
Ouch!!
I’m hoping my friend Debt Is Slavery sees this.
40-year-old homeowner says economy doesn’t add up: ‘I’m making the most money I’ve ever made, and I’m still living paycheck to paycheck’
BY CLAIRE BALLENTINE, ELIZA RONALDS-HANNON AND BLOOMBERG
March 15, 2024 at 9:30 AM EDT
Nikki Cimino, a 40-year-old recruiter living in Denver, said she finally saved up enough to buy a condo last year, but missed out on the ultra-low interest rates that had made homeownership more affordable in the early days of the pandemic. Her 5.25% interest rate pushed her monthly payments to $1,650. After a divorce in 2020, she’s shouldering $4,000 in credit card debt.
“I’m making the most money I’ve ever made, and I’m still living paycheck to paycheck,” she said. “There’s this wild disconnect between what people are experiencing and what economists are experiencing.”
https://fortune.com/2024/03/15/why-economy-bad-making-most-money-ever-living-by-paycheck/
Poor poor Nikki. Went deeply into debt for instant gratification. Did the math supposedly with no room for error. Then came the error.
“Poor poor Nikki. Went deeply into debt…”
Girlz gotta out dress their friends, ya know!
Paul Krugman would like to have a word…
Krugman needs a degree from Pol Pot University.
‘When it initially landed on the market in 2021 with a $100 million price tag, it was America’s largest and priciest listing. Now available for ‘only’ $50 million, this house is an example of aspirational pricing coming back down to earth’
Or it could be an example of a bubble popping.
When will the 50% off sales reach the lower rungs of the housing market?
The marginal deals collapse first.
A fish rots from the head…or so I’ve heard.
What I recall from the Bay Area residential real estate CR8R of the twenty-oughts is that the high end initially shut down, as the wealthy opted for less expensive homes rather than go out on a limb to overpay tens of millions for a home at peak bubble pricing.
By 2007 or so, the low end of the market started to follow the high end down the CR8R.
“What I recall from the Bay Area residential real estate CR8R —snip— the wealthy opted for less expensive homes…”
IIRC the wealthy were the first to “jingle mail” their keys.
I was so hoping that stocks would continue to skyrocket higher indefinitely,
Agreed, in fact IIRC during the GFC the DQ on our $million + properties was something like 13% at the high. Of course, many of these were 2nd homes.
From the Columbia article:
The Ewings estimated they owed between 100 and 199 creditors. Some of the top creditors — 15 banks, credit card companies and credit unions — are together owed more than $1.9 million.
Much of that debt was issued for “operating capital” but the Ewings also owe more than $372,000 for a motor home, more than $52,000 for a GMC pickup truck, more than $71,000 for two luxury SUVs — a Land Rover and a Lincoln — more than $34,000 for a Polaris off-road utility vehicle and more than $36,000 for a tiny home.
Yesterday in Dayton:
“Former President Trump emphasized during the Ohio rally that “Laken’s killer is an illegal alien criminal”
“He should never have been in our country, and he would never have been in our country under the Trump policy,” the former president said. “Joe Biden cares more about protecting the FEELINGS of illegal alien criminals than he cares about protecting the LIVES of innocent American citizens.”
“Not one more American life should be lost to migrant crime. When I am President of the United States, I will demand JUSTICE FOR LAKEN,” he added. “On Day One of my administration, I will terminate every Open Border policy of the Biden administration, and we will begin the largest domestic deportation operation in American History.”
Sounds about right. And FJB!
“And FJB!”
Second that!
Milton Friedman – The Great Depression Myth
LibertyPen
13 years ago
Milton Friedman explodes the myth that the Great Depression was produced by a failure of private enterprise.
https://www.youtube.com/watch?v=dgyQsIGLt_w
9:17.
Bitcoin $68,300
Profit takers will bitterly regret their meager gains. Bitterly 🙁
Those of you who did not buy into the Bitcoin ETF’s will be living in one bedroom apartments, Hondas, or tents, probably forever…
I missed out on Pets.com too.
I missed out on the Beanie Babies…until someone eventually gave me one for free.
Unlike bitcoin, at least you can enjoy staring at your Beanie Baby. I am not sure what the intrinsic value of bitcoin is…contemplating the wonders of the blockchain technology, perhaps? But I don’t have to own any bitcoin to appreciate the marvels of blockchain technology.
Pure Deception: Joe Biden Doubles Down on ‘Bloodbath’ Hoax, Claims Trump ‘Wants Another January 6’
by Jamie White
March 17th 2024, 4:40 pm
Joe Biden doubled down on the mainstream media’s misrepresentation of former President Donald Trump’s “bloodbath” remarks about the auto industry despite it being quickly and decisively debunked on social media.
Biden claimed Trump’s remark that the auto industry will suffer a “bloodbath” if he’s not elected was actually a call for “another January 6.”
“It’s clear this guy wants another January 6. But the American people are going to give him another resounding electoral defeat this November,” Biden wrote on X Sunday.
Other Democrats, including former House Speaker Nancy Pelosi, piled on the media’s deceptive headlines earlier in the day saying Trump wants to wage violence against his political enemies.
Fortunately, the media’s false talking point was quickly nuked on social media.
“We’re going to put a 100% tariff on every single car that comes across the line, and you’re not going to be able to sell those cars if I get elected,” Trump said at a rally in Ohio Saturday.
“Now, if I don’t get elected, it’s going to be a bloodbath for the whole — that’s going to be the least of it, it’s going to be a bloodbath for the country, that’ll be the least of it,” he added.
The larger question is, why is Biden doubling down on a clear and demonstrably provable lie?
https://www.infowars.com/posts/pure-deception-joe-biden-doubles-down-on-bloodbath-hoax-claims-trump-wants-another-january-6/
The larger question is, why is Biden doubling down on a clear and demonstrably provable lie?
Because a lot of chumps will fall for it?
on the mainstream media’s misrepresentation of former President Donald Trump’s “bloodbath”
I was listening to CNN at my neighbors house and one of the CNN guests was explaining that the Bloodbath was totally taken out of context and bloodbath, in business, is a commonly used term especially related to the stock market.
Are you a rate dater who is confident you will soon be able to refinance your supersized mortgage at 2021 rates?
Financial Times
House & Home
What is causing the growing divide in the US property market?
While most homebuyers are still hobbled by high mortgage rates, sales of luxury homes are surging
Hugo Cox March 14 2024
In late February, Edmond Franco and Jeremy Gregg bought a new multimillion-dollar condo apartment in Midtown Manhattan, going over their original budget by more than 50 per cent.
“Yes, it’s much more than we planned to spend,” says Franco, who works as a financial adviser, but he considers the home to be one “we will never find again” — a good long-term investment.
“My instinct is that this is an inflection point for property in New York: US economic growth is very good; unemployment is low; the stock market is up,” he says. “The city feels as vital as it has ever been: we wanted to be ahead of the curve; we didn’t want to get into a bidding war.”
Three thousand miles away in San Francisco, a home purchase has never felt further away for Michelle and her husband. The couple, who work in tech, were both laid off last summer. Michelle’s husband is still unemployed and Michelle worries that her new job is not secure.
When their lease expires in June, they plan to cut their rent by a third by moving from their three-bedroom flat in Oakland, on the east side of San Francisco Bay, to a smaller home.
“There is no way we will be extending ourselves with a purchase at the moment. Mortgage rates are too high and so are prices, and with our sector as it is, there is no safety net. It’s hard not to be pessimistic,” says Michelle, who declined to give her surname.
In the US right now, it’s a tale of two housing markets.
For the majority, grappling with high mortgage rates, the market is stuck in a rut. In January, the annualised rate of second-hand home sales hit 4mn, 38 per cent lower than in January 2022, according to the National Association of Realtors.
But at the top end of the market, sales are surging: in January, sales of second-hand homes above $1mn were 27 per cent higher than a year earlier, with many buyers benefiting from the 34 per cent rise in the S&P 500 stock market index over the past year.
“This time last year almost everyone was predicting a recession and buyers were more cautious, [saying] ‘Maybe I don’t need that second home’”, reflects Chen Zhao, head of economic research at Redfin, a US property portal. “Now with this sense [the economy] has achieved a soft landing, there’s been a sentiment bounce in the luxury market.”
Nina Bhela and her husband have certainly felt it. The couple, who live near San Francisco, were ready to buy a second home early last year, but it was not until December that they completed a purchase, buying an apartment in the Residences on Yerba Buena Island, just over the Bay Bridge.
“Last year, mortgage rates were really climbing, interest rates were going up, there were these fears about the economy,” she says. Now the atmosphere has changed. “People are travelling, the restaurants are full. I mix with a lot of very affluent individuals and they are feeling comfortable.” The way she sees it, she can always refinance when mortgage rates fall, “but there won’t be another chance to get a unit like this.”
…
Financial Times
US Treasury bonds
Bond vigilantes snooze as Treasury market shrugs off vast US borrowing
Yields have fallen in recent months despite warnings over rising deficit
The US Treasury: the quantity of Treasuries outstanding is set to rise by $1.7tn this year, according to Goldman Sachs.
Kate Duguid in New York
March 15 2024
When hedge fund billionaire Ken Griffin told an industry conference this week that the US bond market was due some discipline, he was voicing the concerns of many investors about the impact of the government’s huge spending and debt issuance plans.
US government spending “is out of control”, he told the Futures Industry Association’s gathering in Florida. “And unfortunately, when the sovereign market starts to put the hammer down in terms of discipline, that can be pretty brutal.”
But while there may be good reasons for so-called bond vigilantes — hedge funds and other traders that punish free-spending nations by betting against their debt or simply refusing to buy it — to turn their attention to the Treasury market, analysts say they have so far failed to materialise.
After a brief flare-up of vigilantism in autumn last year, bond investors have redoubled their focus on the primary driver of fixed income markets: the path of interest rates. While the supply of new Treasuries has been big, so has demand, as investors in the US and beyond try to lock in relatively high yields ahead of an anticipated cycle of interest rate cuts.
“The whole fear over supply and bond vigilantes is a load of rubbish,” said Bob Michele, chief investment officer and head of the global fixed income, currency & commodities group at JPMorgan Asset Management. “I’m not seeing any evidence of it whatsoever.”
“For the last six months at least, clients have been coming to us asking ‘Where do I get into the bond market? When do I get into the bond market.’ Everyone has money to put into bonds,” Michele added.
The yield on the 10-year Treasury has fallen from a peak of 5 per cent in October to 4.3 per cent, reflecting higher bond prices. Inflows into US bond funds in the first week of March reached the highest level since 2021, according to EPFR data.
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Markets Roundup
The latest news & analysis
LIVE UPDATES | CONCLUDED
Stock Market News, March 14, 2024: S&P 500 Closes Lower After More Hot Inflation Data
Yield on the 10-year Treasury note climbs; Microsoft sets new record
Last Updated:
March 14, 2024 at 6:20 PM EDT
Live Coverage Feed
3 days ago
Rising Treasury Yields Reflect Fed Meeting Uncertainty
By Sam Goldfarb, Reporter
Bond investors think a lot about what the Federal Reserve will do with interest rates.
It’s a fine distinction, but they also think a lot about what the Fed will signal it might do with interest rates.
According to analysts, Treasury yields have climbed a lot this week—toward the top of their 2024 range—in part because investors are concerned that recent hotter-than-expected inflation data could change the Fed’s messaging coming out of its policy meeting next week.
In particular, some say, there is a greater risk that the Fed’s so-called dot plot could show that the median official now thinks that there will be only two rate cuts this year, down from the three cuts forecasted in December.
“When you’re just considering probable outcomes and probability weight what could happen, in general I’d say a more hawkish tone from the Fed has gotten more likely,” said Zach Griffiths, a senior strategist at the research firm CreditSights.
Griffiths added that he personally still thinks that the median forecast will remain three cuts.
…
https://www.wsj.com/livecoverage/stock-market-today-dow-jones-03-14-2024/card/rising-treasury-yields-reflect-fed-meeting-uncertainty-xaPa5yPBsFmyMnFAlGL9
Whether the Fed cuts rates seven times or just twice in 2024 makes no difference to today’s stock traders. The US stock market always goes up, no matter what.
Essays about rumors about thoughts about signals.
Has China FINALLY put its residential property market worries behind it for good?!
China’s Real-Estate Market Just Set a Record—but Not a Good One
Sales are up, but homeowners are being forced to slash prices
By Cao Li
Updated March 15, 2024 2:18 am ET
China’s property crisis is expected to worsen as new home sales plummet and indebted developers struggle to find funds to complete projects. WSJ’s Jonathan Cheng traveled to an abandoned ‘ghost town’ to see the challenge China’s real-estate slump poses for the government.
Photo: Antoine Morel for The Wall Street Journal
China’s real-estate market set an unwelcome record last month.
The price of secondhand homes in the country’s most developed cities fell 6.3% in February compared to the same month last year. That was the worst year-on-year decline since the government started releasing data in 2011. It was part of a widespread drop in prices across the country, as China’s painful real-estate slump shows no signs of losing steam.
The yearslong property slowdown has dealt huge damage to the economy, reducing business for construction companies and other firms that thrived during the property boom, hitting confidence among nervous homeowners, and exacerbating the debt burden facing local governments which for years relied on land sales as their major source of revenue.
Beijing has taken steps to address the property funk, including pushing banks to lend more to strained developers and making it easier for people to buy houses. But the latest decline could encourage the government to go further, said Zhaopeng Xing, a senior China strategist at ANZ.
“This could pave the way for a move to completely remove purchase restrictions,” he said.
The drop in secondhand home prices comes when sales are rising, showing that homeowners now accept the need to lower prices to get deals done. The number of secondhand homes sold in eight major cities rose 96% in February compared with the same month last year, according to a report from Shanghai E-House Real Estate Research Institute. The sales volume was the highest in 20 months, the report says.
“If price reductions are needed to enable transactions, it indicates that market sentiment is still quite pessimistic, making it difficult to support a sustained rebound in transactions,” said Li Yujia, chief researcher with the Guangdong Housing Policy Research Center, a government-linked think tank.
Crisis of confidence
China’s real-estate market boomed for years, encouraging developers to load up on debt and leading to bouts of speculation that made government officials uncomfortable. But Beijing’s attempt to slow the market around three years ago led to an abrupt shift, partly because nervous lenders cut developers off rather than risk the government’s ire.
The clampdown fueled a wave of defaults by Chinese property developers, many of whom had sold bonds to international investors. State-backed developer China Vanke
was downgraded by Moody’s Rating this week and has become the latest to face scrutiny from investors. Country Garden, once the country’s largest developer by sales, missed a bond payment on Tuesday. Home sales at some of China’s largest developers continue to fall drastically.
…
https://www.wsj.com/world/china/chinese-home-prices-decline-but-at-steady-pace-e2cb94f8