Who Could Have Thought The Market Would Change So Fast?
A report from the Wall Street Journal on Florida. “Ivan Rodriguez leapt at the chance to buy a unit at the Cricket Club, an exclusive bay-front condominium in North Miami. In 2019, he liquidated his 401(k) retirement account to purchase a nearly 1,500-square-foot unit with water views for $190,000. But the condo board recently proposed a nearly $30 million special assessment for repairs, including roof replacement and facade waterproofing. It would amount to more than $134,000 per unit owner. Rodriguez, 76, didn’t have the money. So he reluctantly put his two-bedroom condo up for sale, joining dozens of others in the building who are doing the same. After originally listing his unit for $350,000, he kept marking it down until finally it sold for $110,000 last month, or 42% less than what he paid for it. ‘These units are practically being given away,’ said Sari Papir, a retired real-estate agent who has lived in the Cricket Club with her partner since 2018. ‘Even if we found a buyer, what could we buy with the pennies we’d receive for our unit?'”
“In a number of these buildings, prices are beginning to plummet. While units built less than 30 years ago are selling for about 38% more today than they did in 2020, units 30 years or older are now going for almost 12% less than they did back then, according to a data analysis by brokerage ISG World. Owners are struggling to find all-cash buyers because mortgage lenders are increasingly unwilling to take on the risk associated with these units. ‘It’s not the buyers that aren’t qualifying,’ said Craig Studnicky, chief executive at ISG World. ‘It’s the buildings that aren’t qualifying.'”
Yahoo Finance. “The frenzied homebuying days in Austin, Texas, that saw some buyers offer six figures over asking price are gone. The Texas capital, where the average home price soared by $170,000 during the COVID pandemic, is now seeing major price corrections. ‘We mirrored what happened across the country: We saw a lot of demand, which drove up prices really quickly,’ Kent Redding, president of the Austin Board of Realtors, told Yahoo Finance. ‘But that [housing boom] was outside the norm. It was a blip on the map.’ For instance, just 15 miles north of Austin, Round Rock saw average listing prices climb to a peak of $497,000 in 2022, falling to $399,000 in February. Despite that softening, they remain above the 2020 median listing price point of $259,500.”
“Andrew Vallejo, Redfin agent based in Austin, said he put up eight homes for sale in the last two weeks, but only three received offers the first weekend. Two or three potential buyers visited, and only one made a good offer on each. ‘Then the others where there was no traffic at all,’ Vallejo said. ‘And they’re all priced competitively to market, so it’s very much hit or miss where if you find the perfect buyer that happens to like your home, that could be great. But also, we could end up sitting for 45 or 60 days and have to have a price adjustment. It’s unpredictable.'”
Big Island Now in Hawaii. “Six years have passed since three families purchased their first homes on Kaua‘i – and began an ordeal they claim has yet to end. They and eight other households are now suing their neighborhood’s developer, Fortune 500 company, D.R. Horton, in a bid to resolve their troubles. ‘It’s like a nightmare that we haven’t woken up from because it just keeps going,’ said Lani Saiki. Christie Volkmer and her husband, Marc, also moved to Kaua‘i to raise a child. They were elated when their number was drawn in a lottery granting the option to buy a property in the Ho‘oluana development.”
“However, the Volkmers’ finances have also been consumed by their attempts to free themselves from the black slime. They would even leave to escape the problem but are trapped in their own home. ‘We literally cannot move,’ said Marc. ‘We’d have to fix it out-of-pocket before we could sell it and then possibly not be able to recuperate anything.'”
From Moneywise. “Many Americans have been ditching California and New York for Texas and Florida to save money. But even there, they’re struggling with housing and cost of living prices. Angel De La Rosa recently went viral for his video about how Americans are losing money — no matter where they live in the country. De La Rosa, who lives in Mexico but appears to also hold U.S. citizenship, argues that people make less money in his home country, but also spend less than Americans. ‘Americans are so broke and they don’t even realize it,’ he says. De La Rosa argues that the U.S. holds people hostage in the shackles of debt, while that’s not the case in Mexico since most residents own their homes and cars outright. According to OECD data, this is somewhat true.”
“Mexico has the lowest household debt of all its 36 countries, whereas the U.S. is firmly in the middle, at 19th lowest household debt. De La Rosa also adds that most Americans can’t cover an unexpected $500 expense. And here he’s right again, a 2023 survey found that a whopping 67% of employees couldn’t afford an unexpected $400 expense. ‘Living paycheck to paycheck your whole life and being in debt your whole life should be considered poverty, but it’s not,’ De La Rosa says. ‘At least here in Mexico, we own our things. We own our houses. We own our cars. We’re not in debt.'”
The Real Deal. “Real estate executives are admitting that multifamily borrowers are starting to see trouble — and that presents opportunity for some. ‘Multifamily now is in the crosshairs,’ Barry Sternlicht, who runs Starwood Capital Group, said at the Milken Institute’s annual conference in Los Angeles. Sternlicht is projecting a ‘huge distress cycle,’ thanks to pressures facing regional banks, he said on a panel discussing global real estate. ‘This is really a balance sheet crisis,’ he said. ‘The Fed is very aware that it has a teetering regional banking system that loads about $700 billion, that are real estate loans [originated] in a low interest rate environment, and the small borrowers are going to have a hard time refinancing. We’ve gotten calls: ‘How can you help, can you take over banks’ assets?’ They’re trying to arrange recaps before they fail,’ Sternlicht added.”
Blog TO in Canada. “Condo sales numbers in and around Toronto have taken a drastic tumble so far this year, and now that the market is starting to lean towards buyers who can choose from thousands more homes available, sellers are growing uneasy, even desperate — especially developers. Some companies have gone as far as indefinitely deferring entire complexes that were already underway, while a few in-progress communities are going into receivership, with those behind them unable to attract enough buyers to fund their completion. In this landscape of still-high interest rates and market inactivity, many individual owners are having to sell for less than their asking price, or even at a loss. And, local project leads are trying all sorts of tricks to lure people to buy pre-construction condos.”
“One firm, Camrost Felcorp, launched a ‘Mortgage Madness’ campaign in March through which it offered to cover an entire two years of mortgage bills for anyone who bought a unit (under $1 million) in three of its forthcoming buildings in the GTA. Others, like Verge Condos, are reducing the minimum down payment amount, while still others are advertising free (or cheap) parking, rental guarantees, or other incentives — some of which you have to sign up for more information to find out. It is reminiscent of the rental discounts and perks that landlords were extending during the pandemic when so many people vacated the city, and demand and prices plummeted.”
Echo News in the UK. “A desperate man says he has been ‘living in limbo for 20 years’ on an unfinished Basildon estate which is described as ‘looking like a warzone.’ Colin Parkins, 65, who lives on the Basildon Craylands estate purchased a ground floor maisonette two years before Swan Housing announced a £250million regeneration of the estate in 2006. The ambitious project to raze the estate to the ground and build 1,310 new homes was initially a success but the project was later left abandoned and unfinished. Mr Parkins says he is facing a ‘nightmare’ as he and other residents have been left in limbo about whether their homes will be bought out and demolished or left.”
“He claims he is unable to sell his property and does not want to spend money repairing his home if it will be demolished. He said: ‘It is a nightmare; my hands are completely tied now. It is limbo, and I cannot escape it. I had a sale fall through years ago when the buyer found out about the regeneration plans. I will look for other places to live but will I ever be able to sell this property?’ Mr Parkins bought his property as part of the right to buy scheme for £38,000 and has recently been forced to fork out £6,000 on urgent bathroom repairs. He said: ‘We don’t want to spend any more and what I want is for everyone affected, which I estimate at 43 homeowners, brought together and told if we can move on. I am 65. I cannot get another mortgage.'”
Domain News in Australia. “Property owners in mortgage-belt Sydney suburbs are feeling the financial strain, and have the highest rates of distressed sales across the city. Thirteen interest rate rises in the past two years are taking their toll and some owners are choosing to sell their homes or investment properties before their lender forces their hand. In the Blacktown area, distressed listings reached 13.2 per cent of total property listings in April, Domain figures show, a sharp rise from 8.7 per cent a year earlier. Distressed listings are high in the Parramatta region at 8.3 per cent, and are at least 7 per cent of all listings in the Merrylands/Guildford, Richmond/Windsor and Fairfield areas.”
“In Blacktown, Harcourts Unlimited managing director Andrew Chrysanthou said he has seen a lot more investors putting their properties on the market as there may not be as much benefit in owning them compared to when interest rates were low. ‘If it is not positively geared, and they are out of pocket by $2000, $4000, they can carry it for a while,’ he said. ‘[But] because of land tax, because of interest rate rises – some properties are not worth holding.'”
The Hindu on India. “Officials of the Cyberabad Economic Offences Wing on Friday busted a real estate fraud in Sadasivpet of Sangareddy by nabbing Obili Papannagari Rama Chandra Reddy, the proprietor of Obili Housing for defrauding 50 victims of approximately ₹10-₹15 crore. Efforts are underway to trace and nab other members of the racket. Rama Chandra along with V.B Gupta, Managing Director of Prathista Properties and other marketing agents were selling a pre-launch offer on unregistered open plots under the name of ‘Highway Paradise’. ‘The racket enticed people by declaring they were developing land in 200 acres and launching the project in Venkatapuram village within a span of three years. After collecting the deposits from many investors, they went incommunicado,’ the officials explained.”
Vietnam Express. “Despite offering a discount on her 63-square-meter apartment in Hanoi, Van has been unable to sell it because the market for old apartments has nosedived. Van and her husband first wanted to sell their two-bedroom unit in Hoang Mai District’s Linh Dam urban area in early March when the market was booming. But believing that prices will continue to rise, the couple decided to wait for their five-year-old apartment to appreciate further. They finally listed it in early April for VND3.05 billion (US$119,800), nearly double their purchase price of VND1.6 billion.”
“Van asked several brokers to advertise her property and received nearly 20 calls from interested people in just the first week. Many of them negotiated with her, trying to lower the price, but she refused, confident that old apartments were scarce and in high demand. Then interest in her apartment waned, and her brokers suggested reducing the asking price by VND200-300 million to attract buyers. Van relented and lowered the price to VND2.95 billion last week, but she has only seen three potential buyers since and no takers. She said: ‘My husband regrets not selling a month earlier when old apartments were quickly selling out. Who could have thought the market would change so fast?'”
“Trung Duc of Ha Dong District listed his 74-square-apartment on To Huu Street for VND3.3 billion, nearly twice its purchase price, three weeks ago. The price was low given the limited apartment supply and that an identical unit on the same floor sold for VND3.4 billion two months earlier. He has hired three brokers, but has been unable to sell it. Le Vuong, a broker in Nam Tu Liem District, said the demand for old apartments has been declining over the last month. He used to take a dozen people a week on apartment tours in early March, and most would seal the deal after just one or two visits for fear that prices would rise further. But since mid-April most units he has been trying to sell have received very little attention. ‘A few people make inquiries, but most lose interest as soon as they hear the prices,’ he said.”
“Pham Duc Toan, CEO of property firm EZ Property, said the short-lived surge in transactions and prices in the Hanoi apartment market was due to prices being inflated. Apartment prices are susceptible to being inflated by speculators due to their low supply in recent years, he said. Now that more buyers have become aware of the bubble and overcome their ‘fear of missing out,’ the segment is gradually becoming inactive, he noted.”
From CNBC. “A group of around 1,500 homebuyers in the Chinese city of Tianjin, near Beijing, have yet to see — let alone move into to — the apartments they said they paid for about eight years ago. As is common in China, the apartment complex in Tianjin sold the units before they were completed. The promise was that they would be ready by 2019, but the majority are still unfinished, according to five of the homebuyers, who spoke to CNBC via telephone but requested anonymity out of fear of retaliation. The buyers are a mix of people who paid in full upfront but also in smaller installments. Their concerns are just one example of the wider challenges that persist in pockets of China’s property sector.”
“Following early efforts to recoup their money or to garner information about their property purchases, a few buyers said police visited their homes, sometimes in the middle of the night. ‘I feel like I’ve been tricked this whole time,’ one buyer said in Mandarin, translated by CNBC. ‘My only request is that I can return the house and get my money back,’ the buyer said. ‘Even if I am able to get the house, I will feel bad.'”
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HBB warning to readers: cnbc is globalist scum media that peddles conspiracy theories, election lies and mis, mal and dis-informations.
+1
The New York Times Denounces Cancel Culture… After Fueling Cancel Culture For Years (gee, what changed?)
https://twitter.com/zerohedge/status/1789845555251659013
It would amount to more than $134,000 per unit owner. Rodriguez, 76, didn’t have the money. So he reluctantly put his two-bedroom condo up for sale, joining dozens of others in the building who are doing the same. After originally listing his unit for $350,000, he kept marking it down until finally it sold for $110,000 last month, or 42% less than what he paid for it.
Florida is finished
Another Monday, yet another [out of control] R/E holding costs story.
On the bright side, he didn’t get a quadruple HO insurance bill like Suze Orman did with her Florida beachfront. [See last weeks HBB for details]
Bottom line, if the HOA doesn’t bleed you dry, the Insurance-Industrial-Complex will.
There must be a massive amount of graft involved in these inspections and repair estimates. $30M for a building with 225 units? How much would it cost to build new?
“…$30M for a building with 225 units? How much would it cost to build new?…”
Was thinking pretty much along the same lines. These numbers don’t past the smoke test.
With the incredible shoddy construction [by unvetted, unskilled labor] that is so pervasive these days, a complete tear down and rebuild by a reputable contractor that actually knows his craft may actually be doing everyone a favor.
Pretty much every single HOA/condo association sits and blows off it’s reserves for years. Nobody wants to pay more, even though you should be paying 1/20th of a roof, 1/30th of a parking lot, 1/10th of painting, etc every year.
So every once in a while something big comes up and WHAM “oh look there aren’t any reserves, we have to do a special assessment pay up”. Now the new florida laws are FORCING condo associations/HOA’s to look at this stuff and pay up instead of blowing it off and kicking the can to future owners.
This guy (and all of them) should have checked the reserves, checked the costs put away, etc. Condo associations deserve every single thing that is happening to them. They thought they would walk away without having to pay their fair share of the yearly depreciation, they just didn’t sell out soon enough.
as someone always says “die speculator scum”
‘This guy (and all of them) should have checked the reserves, checked the costs put away, etc. Condo associations deserve every single thing that is happening to them. They thought they would walk away without having to pay their fair share of the yearly depreciation, they just didn’t sell out soon enough’
Like most things involving the mania and greed, everybody knew it all along, have known it, any dam fool could have seen it.
they just didn’t sell out soon enough.
Or die soon enough
‘In 2019, he liquidated his 401(k) retirement account to purchase a nearly 1,500-square-foot unit with water views for $190,000. But the condo board recently proposed a nearly $30 million special assessment for repairs, including roof replacement and facade waterproofing. It would amount to more than $134,000 per unit owner. Rodriguez, 76, didn’t have the money. So he reluctantly put his two-bedroom condo up for sale, joining dozens of others in the building who are doing the same. After originally listing his unit for $350,000, he kept marking it down until finally it sold for $110,000 last month, or 42% less than what he paid for it. ‘These units are practically being given away’
Gotdamit Sari, I’ve been telling you guys not to do that and there you go, screwing up the comps! So what if Ivan got schlonged? Hold the line Sari!!
‘If it is not positively geared, and they are out of pocket by $2000, $4000, they can carry it for a while,’ he said. ‘[But] because of land tax, because of interest rate rises – some properties are not worth holding’
This is the 1,001st installment in ‘Australia is red hotcakes! Except for those poor bashtards over there’.
some properties are not worth holding’
In other words they have a negative value
‘The Fed is very aware that it has a teetering regional banking system that loads about $700 billion, that are real estate loans [originated] in a low interest rate environment, and the small borrowers are going to have a hard time refinancing. We’ve gotten calls: ‘How can you help, can you take over banks’ assets?’ They’re trying to arrange recaps before they fail’
Senator running deer heap angry Barry.
The median mortgage payment in the USA reached $2,894 per month May 2024. That is a new record. Heckova job, “Zimbabwe Ben” Bernanke, Yellen the Felon, & BlackRock Jay.
https://twitter.com/WallStreetSilv/status/1789964811020665248
“…median mortgage payment :: $2,894 per month…”
That’s a lotta tips even for the topless drive thru coffee shop!
After originally listing his unit for $350,000, he kept marking it down until finally it sold for $110,000 last month, or 42% less than what he paid for it.
Even applying my Common Core maff skills, I can’t see how this is building generational wealth.
‘It’s not the buyers that aren’t qualifying,’ said Craig Studnicky, chief executive at ISG World. ‘It’s the buildings that aren’t qualifying.’”
Gosh, I sure hope the epic wipeout of Yellen Bux “value” doesn’t create systemic risks to the financial system.
She said: ‘My husband regrets not selling a month earlier when old apartments were quickly selling out. Who could have thought the market would change so fast?’”
So not only did this greedhead cling to her delusional wish price, but now she blames hubby? ZERO accountability for most of these greedy entitled harpies that are now going to end up chasing the market down.
‘A few people make inquiries, but most lose interest as soon as they hear the prices,’ he said.”
Get to sawin’ and slashin’ like you mean it, greedheads, if you want to divest yourselves of your alligators.
‘I feel like I’ve been tricked this whole time,’ one buyer said in Mandarin, translated by CNBC. ‘My only request is that I can return the house and get my money back,’ the buyer said. ‘Even if I am able to get the house, I will feel bad.’”
That seems like a perfectly reasonable request, and I’m sure the CCP cadres will move heaven and earth to see that you & your fellow skybox speculators are made whole on your losses.
You cannot buy finished apartments in China — everything is pre-sold. That is how it works in that country. It is not America; there is not a large used market, and because property taxes are 0 RMB there is zero incentive to ever sell.
Sure there are speculators in China, but there are also normal people who want to build a family and have their own home. You do not know this person’s circumstances, if they are a speculator, etc.
Never forget. Never forgive.
https://twitter.com/WallStreetSilv/status/1789698865404240138
Heckova job, RBA.
https://twitter.com/WallStreetSilv/status/1789956330410639655
Once more and more folks figure this out then you’ll really see the house prices drop
I thought the illegals were suppose to make up the difference?
Faced with declining enrollment and tight campus budgets, school leaders across Denver Public Schools have laid off more than 900 teachers since 2022
Over the same period, school leaders cut just 16 assistant principals, district data obtained under the Colorado Open Records Act
https://denvergazette.com/news/education/denver-teachers-bear-brunt-layoffs-declining-enrollment/article_731af726-0bb7-11ef-8602-63ebfcc31fc1.html
DPS schools have been overstaffed for a long time, which pops the “teacher shortage” narrative.
You will own nothing.
The black slime in Hanamāʻulu is an interesting story. They are all lawyered up but I wonder why none of them have tried shock disinfecting their plumbing system with a gallon of common bleach, like shocking a pool. If the whole town doesn’t have the problem, it’s not the treatment plant’s fault.
The view is worth the slime!
This is fine.
https://twitter.com/WallStreetSilv/status/1790019168021979472
Year after year, Los Angeles County has seen devastating losses on its streets as homeless people bedding down in tents, under tarps and on sidewalks died of drug overdoses at soaring rates.
Now a newly released report shows that the death rate from overdoses stopped rising among unhoused people in the county in 2022 — the year L.A. County was stepping up its efforts to save lives.
Public health officials welcomed the news as a glint of hope, but cautioned it is too soon to say if the numbers are headed for a lasting downturn. They pointed to a county push to dramatically ramp up the distribution of naloxone — a medicine that bystanders can use to stop opioid overdoses — as a likely factor.
In their report, county officials touted a “near doubling” that year in the reported number of overdoses that were thwarted with naloxone, based on figures provided by a county program. The lifesaving medicine is commonly sold as a nasal spray under the brand name Narcan.
“The county really does deserve some serious kudos for pumping out a great deal of naloxone into exactly the right places,” which means getting it into the hands of people at high risk of witnessing or experiencing an overdose, said Peter Davidson, an associate professor in the department of medicine at UC San Diego.
In addition, Davidson said that Angelenos who use drugs may have taken other steps to reduce their risk of overdose, such as smoking drugs instead of injecting them, or making sure they are not using drugs alone.
When fentanyl hits a drug market, “initially people are caught by surprise, and things go very badly,” Davidson said. Then “they sort of adjust to the fact that the drugs now look different and change their practices.”
https://www.msn.com/en-us/news/other/deadly-overdoses-stopped-surging-among-l-a-county-homeless-people-narcan-could-be-why/ar-BB1m73t6
‘When fentanyl hits a drug market, “initially people are caught by surprise, and things go very badly,” Davidson said. Then “they sort of adjust to the fact that the drugs now look different and change their practices.”’
A friend’s son who was working in LA passed away during the pandemic under mysterious circumstances. We attended the memorial service under the impression it was a suicide. Later I heard through a colleague who is close friends with the kid’s mom that he attended a party where he consumed cocaine which was secretly laced with fentanyl. That turned out to be his last party.
I’ve mentioned before I’m a lifelong libertarian who believes in drug decriminalization, even hard drugs. Back in the war on drugs period, this has a hard debate to have. Some of the things presented as positives were the drug supply would be regulated and safe. OD’s would drop to near nothing. And the bad guys distributing it would be out of a job. What do we have now? Nobody know what the heck is in anything. People OD so regularly we’re putting out narcan vending machines. The cartels are still bringing it all in, now with fentanyl, and making more money and committing as many murders or more than before these areas decriminalized it. Every aspect of what should have been a plus has gone bonkers wrong.
A corrupt people cannot be saved from itself.
Related article.
NPR — Counterfeit fentanyl pills are becoming a lot more common in law enforcement seizures (5/13/2024):
“Last year, more than 115 million pills containing illicit fentanyl were seized by law enforcement, compared to over 71 million in 2022, according to the study published Monday in the International Journal of Drug Policy. The study found that the number of pills seized last year was 2,300 times greater than the roughly 50,000 seized in 2017.
The counterfeit pills are made to look like legit prescription opioid medications — like oxycodone or benzodiazepines — but are often far deadlier.
Public health officials have been warning about the presence of fentanyl, a potent synthetic opioid, in the illicit drug supply for more than a decade. The new report highlights the rising threat of cheap and highly potent counterfeit pills, especially in the western U.S.”
https://www.npr.org/2024/05/13/1250791924/fentanyl-opioid-counterfeit-pills-law-enforcement-seizures-study
115 million pills is that a lot?
Open borders have consequences.
Voting for open borders has consequences. When you vote for open borders and you find your kid dead from an overdose, you’re getting what you voted for.
Sorry about the dead kid, but at least there’s no more mean tweets now.
Whoever is making and distributing this — Mexico and China? — clearly are not interested in hooking long-term customers for a steady profit. They are out to KILL, no question. Revenge for the Opium Wars?
For all we know it’s our own gooberment that is behind it. They don’t seem to give a rat’s patootie about the deaths.
Revenge for the Opium Wars?
When the Imperialism Japanese colonized Manchuria (Northeast China) during the 1930s-40s, they wanted to wipe out the local population and replace them with Japanese. The land there is fantastic farmland and rich in resources.
The Japanese used hard drugs to kill the population in a controlled fashion. If you start mass executions you run the risk of rebellion, but if you slowly bleed a population that is zonked on drugs it just takes patience.
What is two decades when it comes to colonization and control?
Who in his right mind consumes opioids that are illegally obtained knowing this is happening?
Yeah, I’ve heard people become addicted to them and don’t care where how they obtain them.
Always has been.
Troubled regional lender New York Community Bancorp (NYCB) is trying to show investors that it is getting a better handle on the risks embedded in its massive loan book.
One option: Shift some of those risks to private equity firms or Wall Street money managers.
“We are right at the doorstep of deciding whether we’re going to move forward” on such an arrangement, Joseph Otting, NYCB CEO, told analysts earlier this month.
The potential transaction for NYCB is what’s known as a credit risk transfer — and it’s quickly becoming one of the hottest ways for banks to alleviate their regulatory burdens, protect against future losses, and navigate through a challenging period for the industry.
These transfers also highlight the rising importance of private equity firms, hedge funds, and other giant asset-management firms as they push deeper into the world of private credit.
There are still industry observers who say these deals show some resemblance to the credit default swaps that created so many problems during the 2008 financial crisis.
“It gives us shivers,” said banking analyst Glenn Schorr during a recent Blackstone earnings call. “It reminds us about 16 years ago.”
https://www.msn.com/en-us/money/savingandinvesting/private-equity-is-helping-banks-shed-some-of-their-risks/ar-BB1mfYMb
To some elite financiers who gathered in Los Angeles for the Milken Institute conference, a debt binge in private markets is reminding them of the go-go days of risk-taking before the 2008 financial crisis.
In the halls of the Beverly Hilton and at meetings around town last week, I spoke with more than a dozen investors, bankers and fund managers involved in the booming $1.7 trillion private credit market, where investment funds lend private equity portfolio businesses and other companies money. Many of the financiers worried about the consequences of debt piling up in that market, which operates mostly out of sight of regulators.
Of particular concern to them were loans to private equity funds against portfolio companies that are already leveraged, lending that’s grown rapidly as a higher-for-longer interest rate environment stymies the ability of such firms to sell assets.
In many cases, the money is being raised to pay investors in these funds, such as pensions and endowments, dividends to meet demands for payouts, the financiers said. That also enables the fund managers to ask investors for new money, generating more fee income. In some cases, the money is being used to prop up struggling portfolio companies or to invest in them for growth, and to fund new acquisitions.
“Now that we’ve had a real hiatus in their ability to exit a lot of these (portfolio companies), they’ve had cash flow difficulties,” said David Hunt, CEO of Prudential Financial’s $1.3 trillion asset manager PGIM, referring to private equity firms. “And in order to deal with that, they have now been adding leverage to the fund level. So, they’ve got leverage on leverage.”
“They’re trying to get liquidity everywhere they can, and we’re not participating,” Hunt said, pointing to the market for loans to private equity funds as the place to look for “something to go creak in the night.”
https://www.msn.com/en-gb/money/other/in-the-market-financiers-fret-over-leverage-on-leverage-in-private-credit/ar-BB1mieOR
“To some elite financiers who gathered in Los Angeles for the Milken Institute conference, a debt binge in private markets is reminding them of the go-go days of risk-taking before the 2008 financial crisis.”
It’s reminding me of the 1980s debt binge in junk bonds that got Michael Milken into hot water.
“So, they’ve got leverage on leverage.”
Wasn’t that the situation back in 1929, the year of the Great Crash on Wall Street?
“This sucker could go down” — George W. Bush
“After originally listing his unit for $350,000, he kept marking it down until finally it sold for $110,000 last month, or 42% less than what he paid for it. ‘These units are practically being given away,’…”
With so many folks adopting the financially self destructive decision to put all of their eggs into the purchase of an overpriced single family residence, it is inevitable that many will get burned.
‘These units are practically being given away…Even if we found a buyer, what could we buy with the pennies we’d receive for our unit?’
I know Sari, it’s tough. But it was still way cheaper than renting!
‘For instance, just 15 miles north of Austin, Round Rock saw average listing prices climb to a peak of $497,000 in 2022, falling to $399,000 in February. Despite that softening, they remain above the 2020 median listing price point of $259,500’
It’s 15 miles in yer self driving flying taxi, but an hour in yer car. It’s a good thing everybody put 25% down Jerry!
Our first home in Round Rock cost $104k. It last listed for $354k during the pandemic. People are stupid.
‘They were elated when their number was drawn in a lottery granting the option to buy a property in the Ho‘oluana development…However, the Volkmers’ finances have also been consumed by their attempts to free themselves from the black slime. They would even leave to escape the problem but are trapped in their own home. ‘We literally cannot move,’ said Marc. ‘We’d have to fix it out-of-pocket before we could sell it and then possibly not be able to recuperate anything’
Christie, Marc:
Ennio Morricone – the ecstasy of gold
theItalyWiki
13 years ago
Ennio Morricone conducting his own composition, “The Ecstasy of Gold” from the film, “The Good, the Bad and the Ugly”.
https://www.youtube.com/watch?v=rKFpaCMRWgU
3:45.
‘Living paycheck to paycheck your whole life and being in debt your whole life should be considered poverty, but it’s not,’ De La Rosa says. ‘At least here in Mexico, we own our things. We own our houses. We own our cars. We’re not in debt’
How the mighty have fallen.
People do finance cars and houses in Mexico. And most of the working classes rent their shacks. It’s why they come here.
Living paycheck to paycheck your whole life and being in debt your whole life should be considered poverty,
My thoughts exactly. Saw a WSJ video on 55+ homelessness this morning. Something like 30% of the homeless are boomers. If FL continues to get worse, which I think it will, I would expect that number to increase.
‘Camrost Felcorp, launched a ‘Mortgage Madness’ campaign in March through which it offered to cover an entire two years of mortgage bills for anyone who bought a unit (under $1 million) in three of its forthcoming buildings in the GTA’
Another a$$ pounding fer previous buyers.
‘He claims he is unable to sell his property and does not want to spend money repairing his home if it will be demolished. He said: ‘It is a nightmare; my hands are completely tied now. It is limbo, and I cannot escape it. I had a sale fall through years ago when the buyer found out about the regeneration plans. I will look for other places to live but will I ever be able to sell this property?’
Magic 8 ball says No Colin.
‘Van relented and lowered the price to VND2.95 billion last week, but she has only seen three potential buyers since and no takers. She said: ‘My husband regrets not selling a month earlier when old apartments were quickly selling out. Who could have thought the market would change so fast?’
Well no Van. Had you been reading the HBB you would have known yer sh$thole country’s shacks and airboxes have been sinking like a turd in a well for well over a year.
‘I feel like I’ve been tricked this whole time…My only request is that I can return the house and get my money back,’ the buyer said. ‘Even if I am able to get the house, I will feel bad’
You don’t feel it today buyer. And maybe you won’t feel it tomorrow or the day after. But you are a winnah!
“Cricket Club, an exclusive bay-front condominium in North Miami”
And nothing but a club of crickets now certainly no buyers.
“Cricket Club, an exclusive bay-front condominium in North Miami”
Exclusive at $190,000 for a 2 bedroom? I don’t think so.
Tucker Carlson
@TuckerCarlson
Ep. 105 Few people know Justin Trudeau better than his own brother. Here’s what he says about him.
May 12, 2024
·
https://x.com/TuckerCarlson/status/1789686975458341301
Subprime is dead…or is it?
Business / Economy
Mortgage companies could intensify the next recession, US officials warn
By Matt Egan, CNN
Updated 7:29 PM EDT, Mon May 13, 2024
David Ryder/Bloomberg/Getty Images
Nonbank mortgage providers like Rocket Mortgage could make the next recession worse, federal regulators warn.
New York CNN —
US officials worry the next recession could be intensified by a cascading series of failures in the mortgage industry caused by crashing home prices, frozen financial markets and soaring delinquencies.
The US Financial Stability Oversight Council, a SWAT team of financial regulators formed after the 2008 crisis, sounded the alarm on Friday about an increasingly influential corner of the industry that has largely escaped scrutiny: nonbank mortgage companies.
Unlike traditional banks, nonbank mortgage companies are heavily exposed to swings in the mortgage market, depend on funding that can dry up during times of stress and don’t have stable deposits to rely on as a safety net. And, unlike banks, these companies are lightly regulated at the national level.
FSOC warned that these unique vulnerabilities risk a domino effect in a future crisis where multiple mortgage companies fail, borrowers are locked out of the mortgage market and the federal government is left holding the bag.
“Put simply, the vulnerabilities of nonbank mortgage companies can amplify shocks in the mortgage market and undermine financial stability,” Treasury Secretary Janet Yellen, who chairs FSOC, said in the report.
…
https://amp.cnn.com/cnn/2024/05/13/economy/mortgage-company-risk-regulation-fsoc
LOPINION
REVIEW & OUTLOOK
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Janet Yellen’s New Too-Big-To-Fail Firms
Treasury says non-bank mortgage servicers are systemically important.
By The Editorial Board
May 13, 2024 5:29 pm ET
Surprise, surprise, too-big government is creating more too-big-to-fail financial firms. Biden Administration regulators on Friday teed up mortgage companies for designation as systemically important institutions like giant banks.
“Vulnerabilities of nonbank mortgage companies can amplify shocks in the mortgage market and undermine financial stability,” Treasury Secretary Janet Yellen declared. A new report by the Financial Stability Oversight Council (FSOC) finds “their specialized business model means they are especially susceptible to macroeconomic fluctuations in the housing market.”
The Dodd-Frank Act established FSOC to monitor and manage risks to the financial system, and progressives want to grab more control over non-banks. Regulators are using the risks they created to justify putting non-bank mortgage servicers under their thumb—and available for taxpayer bailouts.
According to FSOC, non-banks originate two-thirds of mortgages and service 54% of balances, up from 39% and 4% respectively in 2008. After the financial panic, the report says “banks pulled back from mortgage origination and servicing in part due to heightened regulation and sensitivity to the cost and uncertainty associated with delinquent mortgages.”
…
https://www.wsj.com/articles/yellens-new-too-big-to-fail-firms-mortgage-housing-market-43c47f35