thehousingbubble@gmail.com
Blog

Rent Seeking And Moral Hazard

A report from WPBF. “The clock is ticking for Florida condominium owners who now have to come up with reserve funds to pay for potential repairs. John Cadden, managing principal for the Condominium Advisory Group, explained the options available to condo owners. ‘People are going to have to pay up,’ Cadden said. ‘Get a loan from a bank if your community is in pretty good standing to fund part of the reserves and help you through it.'”

KRNV Reno. “A vacancy tax could be in South Lake Tahoe’s future, depending on how residents vote on an initiative this coming election. But some property owners fear an additional tax will make it so they can no longer rent out and even own the properties at all. ‘My father-in-law and mother-in-law built the cabin 50 years ago, and then we — my wife and I — bought it from them about five years ago, and we’re both teachers. We know that we had to Airbnb the house,’ local homeowner Steve Eastman said.”

The San Antonio Current. “Texas isn’t immune to the pressure that higher interest rates have put on the housing market, according to a new study from Agent Advice. Using figures from Zillow, the new report found that 61.3% of homes sold in Texas during recent months moved for less than their market value. Texas ranked as the state with the seventh-highest number of home sales below market value. Florida took the top spot, with nearly 70% of homes selling for less than they’re worth, according to the study. The study may not surprise folks who procrastinate at work by scrolling through Zillow. Lately, the site seems to be littered with homes boasting price cuts and reductions.”

“Indeed, the median price of single-family homes in the Alamo City dropped 2% between April 2023 and April of this year, hitting $310,000, according to the most recent market report from the San Antonio Board of Realtors. One home on San Antonio’s North Side is even under contract for $100,000 less than its original listing price, according to Zillow. Those bleak conditions seem to contradict the optimistic view of local realtor Megan Pelley, who earlier this month told the Express-News that she foresees a ‘really good’ year ahead for real estate.”

The Vallejo Sun in California. “The Vallejo City Council took the first step Tuesday to amend the city’s budget to accommodate a $6.15 million bailout of a partially built North Vallejo supportive housing project after city staff requested emergency funding from the city’s new sales tax revenue. The 47-unit supportive housing project on Broadway street — intended for Vallejo residents who are chronically homeless or for persons with severe mental disabilities — is 70% complete, but construction on the project has been stalled since September of 2023 due to financial problems. Contractors have since filed mechanics’ liens against the property and additional costs due to the work stoppage ballooned the project’s price tag from $22 million to $26.6 million.”

“The city is now up against looming grant funding deadlines that require the supportive housing facility to open and begin offering services by December. If it doesn’t meet that deadline, the city may have to pay back a significant portion of the $20 million in grant funds that have already been spent on the project. ‘We are now in a reality situation where we either solve the problem or it gets much more expensive,’ Mayor Robert McConnell said after referring to the project as a ‘financial catastrophe.'”

Business Insider. “The country’s steepest rent declines are happening in metro areas across the Sun Belt as pandemic-era demand spikes subside, Redfin reported Friday. Leading the regional trend is Austin, Texas, where rent fell 6.6% on an annual basis last month. Runner-ups included Nashville, Tennessee, Jacksonville, Miami, and San Diego. ‘The Sun Belt has built a ton of new apartments in recent years, partly to meet the surge in demand brought on by the flood of people who moved in during the pandemic housing boom,’ Redfin Senior Economist Sheharyar Bokhari said in the report. ‘But the boom is over, and now property owners are struggling to fill vacancies, which is causing rents to fall.'”

Market Watch. “Some economists believe consumers have hit their spending limit. Savings are down, pandemic-era government stimulus is gone and lots of lower and middle-income families are maxing out on credit. Now they have to get by just on their weekly paychecks. ‘Many of our members are one blown transmission away from financial crisis,’ said Robert Frick, corporate economist at Navy Federal Credit Union.”

Fox News. “A man working in the car industry, claiming to make three-times the minimum wage, went on a rant about the economy, saying how young people can’t afford the same lifestyle their parents and grandparents had. ‘The American dream is dead, it is over, gone and forgotten,’ TikToker Nicholas Sumners said. ‘Can somebody explain to me in crayon-eating terms why I make over three-times the federal minimum wage and I cannot afford to live? It is embarrassing to say that it is a struggle to survive right now, but I know so many people are struggling,’ he said, juxtaposing this with how his grandparents bought a house for $3,000. ‘Yes, I understand inflation and all of the bulls— they have been pulling with the [Federal Reserve], why are we allowing it? Why? Then I clock out of my shift, I am tired, I have to go home, and I check the news, another 60-f—ing billion to a country nobody can point out on a map!'”

“‘When my parents were my age, they both made less than half of what I make, and they lived alone, I cannot afford to live anywhere alone! A one-bedroom apartment? $1,800. Two-bedroom apartment? $2,200. Who the f— can afford that?,’ he said. ‘What are we doing?” he asked. “Where has the plot gone? We have lost it folks, we have f—ing lost it.'”

The Record. “If you’re a New Jersey suburbanite, you’re probably familiar with the seemingly ubiquitous collection of office parks dotting the landscape. They’re everywhere — but since the COVID-19 pandemic and shift to work-from-home, many of them sit nearly empty. Some have become ghost towns. ‘Our suburban office inventory is overbuilt and under-demolished,’ said economist James Hughes, dean emeritus of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University.”

The Globe and Mail. “For many Canadians, the Victoria Day long weekend is the first one of the year when they drive to the cottage. It’s time to flip on the utilities, drag out the kayaks and clean off the dock. But the state of Canadian cottage ownership is changing. For people already financially stretched on their primary properties, buying or maintaining a cottage is further out of reach than ever before. That pressure has led many to see their cottages in a new light: a potential source of revenue, a liability or even a full-time home.”

“In 2021, average cottage prices jumped 27 per cent nationally, and gained another 10 per cent in 2022, according to Royal LePage. But that spree didn’t last long. By 2023, as Canadians were feeling the double blow of high inflation and soaring interest rates, cottage property markets started to show cracks. In regions such as Peterborough and the Kawarthas in Ontario, year-over-year listing prices dropped by 31 per cent in the first quarter of 2023, from an average of $1.2-million to just over $850,000. Cottage listing prices across the country started to slide, and average listing times dragged longer.”

“Prefabricated cottage builders Michael and Paula Ronneseth sells affordable build-it-yourself cottage kits that go for $30,000 to $90,000, and ships them across Canada and the United States. Mr. Ronneseth says orders have slowed to a trickle as interest rates have crept up, and as jurisdictions nearby have favoured issuing permits for full-time residences rather than recreational properties in light of the housing shortage. ‘People are no longer buying recreational properties at all – that has completely dried up,’ he said. ‘Our business has definitely taken a hit.'”

Yorkshire Live in the UK. “A couple fear their dream of retiring in their £150,000 second home will be shattered due to ‘punishing’ new tax rules that could see their tax bill double. Fiona Wilson, 66, and her husband David, 68, bought their seaside property in Whitby, 14 years ago as a rental opportunity. The property was an addition to their main home in Potto, North Yorkshire, which they bought for £205,000 in 1999. However, after retiring, they decided to make the Whitby property their second home, looking forward to frequent coastal trips. Now, they face a ‘punitive’ tax increase that could cost them thousands or force them to sell the three-bedroom property.”

“They were shocked to learn that the annual tax of £1,800 is set to nearly double to £4,000 by April 2025. This increase is due to North Yorkshire Council’s introduction of a ‘second home premium’ charge of 100%, as part of the Levelling Up Act (2023). Faced with this steep rise, Fiona is contemplating selling the property. She said: ‘It’s going to cost an awful lot of money to keep the two homes.'”

Sahara Reporters. “Ayo Turton, a US-based attorney has accused a retired Nigerian police officer of swindling investors, including himself through a multi-billion-naira fraud, and demanded accountability and justice. Turton accused Mr Aderemi Adeoye, a former Commissioner of Police in Anambra State of diverting funds under Alpha Trust Investment Club (ATIC), described as a supposed cooperative society. Turton said, ‘He collected money running into hundreds of millions of Naira with this promise. Like a typical Ponzi operator, he paid them for the first month to attract more victims, but he has since stopped paying. Neither the interests promised nor the capital that he took has been paid back as of the time of authoring this article.'”

“‘It is going to be three years now that some of our members have put their hard-earned money, some retirement money, and some loans into the slot machine called Remi Adeoye personal venture with no returns. One of our members who took home equity loan and gave it to Adeoye on the promise of 10% monthly ROI may become homeless soon in the cold winters of Europe.'”

The Independent in Singapore. “Condo rental prices dipped in April 2024, marking a nine month decline since July 2023, according to 99.co and SRX. This downward trend comes after a brief respite in March. Mr Luqman Hakim, Chief Data & Analytics Officer at 99.co, noted that this is due to the surplus supply in the market, with approximately 50 condos having obtained their Temporary Occupation Permit (TOP) since 2023 and another 20 expected to TOP in 2024. He noted, ‘The effect of this surplus supply might continue to suppress Condo rental prices in the near future.'”

From CNBC. “Chinese authorities on Friday pledged new support for state-owned enterprises to enable them to buy unsold apartments, in an effort that could help developers get more funding to finish construction on pre-sold properties. Developers ‘that must go bankrupt should go bankrupt, while those that need to be restructured should be restructured,’ Dong Jianguo, deputy head of the Ministry of Housing and Urban-Rural Development, told reporters in Mandarin, translated by CNBC. He said homebuyers’ interests and rights should be prioritized, and those that violate the law should be punished.”

“Among the challenges the recent measures face, said Zhu Ning, a professor of finance at Tsinghua University and author of the book ‘China’s Guaranteed Bubble,’ pointed out that local governments still have limited fiscal resources, which constrains the amount they can buy. ‘There can be quite some rent seeking and moral hazard in determining what to buy and what to pass,’ he added. Rent seeking refers to when someone seeks to make more money without creating more value. ‘Unless potential home buyers sense some serious change of housing prices going up, the current housing price is still too expensive for household income or rent yield,’ he said. ‘However, I am not sure whether the government is willing to go as far as to engineer another big run-up in housing prices.'”

Related Posts

How Much Have Home Prices Declined?

https://www.youtube.com/watch?v=TWUw5ypPq6A https://www.youtube.com/watch?v=cB7fcyDUpM8 https://www.youtube.com/watch?v=UfTWr9_lQyU https://www.youtube.com/watch?v=Vyi0hDSe7Bo https://www.youtube.com/watch?v=d7hrKQDr-TY

The Deja Vu Is Redolent

A weekend topic starting with Reuters. "Lampooned by fiscal hawks as belief in a 'magic…

This Post Has 77 Comments

  1. ‘the new report found that 61.3% of homes sold in Texas during recent months moved for less than their market value. Texas ranked as the state with the seventh-highest number of home sales below market value. Florida took the top spot, with nearly 70% of homes selling for less than they’re worth’

    ‘Many of our members are one blown transmission away from financial crisis’

    Sound lending!

    1. “home sales below market value”

      Realtor babble.

      And sadly, most loan owners buy into this language, because they are NPC’s lacking critical thinking skills.

      What the shack sells for *IS* market value you knuckle dragging window lickers.

  2. ‘Our suburban office inventory is overbuilt and under-demolished’

    The phrase is ‘we’re not overbuilt, just under demolished’ Jim. I stole that from some guy in Calgary.

  4. Seeing a bunch of “bought during pandemic” inventory come on the market this week. Looking at the history and the price they purchased at, most are listed at a price that will just cover the realtor commish. Assuming they sell at that price, which I highly doubt, with the holding costs of the last several years that’s a mighty schlonging.

    1. I sold acreage with no house last December at a loss. Not a large loss, but still a painful loss.

  5. Demands?

    Russia Today — Zelensky details Ukraine’s weapons demands (5/18/2024):

    “Ukraine requires more air defense systems and warplanes from its Western backers in order to achieve parity with Russia, Ukrainian President Vladimir Zelensky has said.

    Moscow has the upper hand in the battle for the skies, Zelensky acknowledged during an interview with AFP on Friday.

    “I believe that today, we have about 25% of what we need to defend Ukraine. I’m talking about air defense,” he said.

    As for warplanes, Kiev should be provided with between 120 to 130 modern aircraft, “so that Russia does not have air superiority,” the Ukrainian leader stated.

    “In total, we need this fleet of F-16s in the number I am talking about, in order to have parity,” he added.

    https://www.rt.com/russia/597814-zelensky-ukraine-patriot-f16/

    U.S. taxpayers, why are you on the hook for the billions of dollars stolen from you and given to this swarthy, greasy manlet playing dress up in his phony olive green uniform?

    Ukraine isn’t even a real country, it’s a money laundering economic zone.

    1. There was talk that Zelensky was to have fled the country by now. Looks like the comedy hasn’t quite ended yet.

      1. “fled the country”

        He’s not ready to, yet. He needs a half a trillion from U.S. taxpayers first, which considering our Congress is controlled by America Last traitors, he will get.

    2. “Ukraine isn’t even a real country, it’s a money laundering economic zone.”

      How can we be sure if they have even made all their payments to Biden Inc. ?

    1. I bought some last @ $15. It was a favor for a family member who needed $$$. Don’t understand why people want to buy at market highs.

  7. ‘People are going to have to pay up,’ Cadden said. ‘Get a loan from a bank if your community is in pretty good standing to fund part of the reserves and help you through it.’”

    Gosh, I hope this doesn’t monkey-wrench a bunch of Boomers’ retirement plans.

  8. “A vacancy tax could be in South Lake Tahoe’s future, depending on how residents vote on an initiative this coming election.

    A vacancy tax should be in every community’s future to fight back against the housing speculator scum. Houses are for shelter, not turning into speculative asset bubbles.

    1. Yes, because government does such a great job of spending tax money productively and efficiently.

  9. 3 times min. wage is $22, which should itself be the min. wage …..In upstate SC they have signs out to hire shifts at $11 ,for the food joints, factories pay about $16. after the 60 day break-in , no wonder all the young people are into drugs, with that kind of pay for their time….
    Somethings got to change , though it’s not looking hopeful,

    1. “factories pay about $16”

      Thanks, NAFTA.

      Another “bipartisan” success story. Ross Perot was right back in 1992, but nobody listened.

  10. “The Vallejo City Council took the first step Tuesday to amend the city’s budget to accommodate a $6.15 million bailout of a partially built North Vallejo supportive housing project after city staff requested emergency funding from the city’s new sales tax revenue.

    At what point will we see taxpayer revolts against these “Compassion, Inc.” patronage & graft rackets?

    1. Some of the largest Section 8 ghetto apartment complexes I’ve ever seen were in Vallejo, CA. I’d drive through their parking lots at 0300-hrs, and they resembled an open-air drug dealing and teenaged prostitution bazaar.

          1. I was a repo man, i.e., I was there for their cars.
            RepoMan!! kudos to you. My stepson did that in DC for a while but I could never do that

  11. ‘We are now in a reality situation where we either solve the problem or it gets much more expensive,’ Mayor Robert McConnell said after referring to the project as a ‘financial catastrophe.’”

    Now extrapolate said “reality situation” over every American municipality, and the magnitude of the inevitable financial reckoning day comes into view.

  12. With a mass exodus of people and companies from California underway, is it safe to say that investors have supplanted end users as the driver of housing prices?

    1. California Exodus: Population Drops Below 39 Million

      Never mind the 40 million that demographers predicted the Golden State would reach by 2018. The state’s population dipped below 39 million to 38.965 million last July, according to Census data released in March, the lowest since 2015.

      2 minute read
      April 11, 2024, 7:00 AM PDT
      By Irvin Dawid
      Aerial view of Oakland, California with bay in background
      Sundry Photography / Oakland, California

      Projections are just that. Case in point – California population.

      “Forty million people will live in California by the end of 2018 and 50 million by 2048, the state Department of Finance said in estimates released Tuesday,” reported The Mercury News on May 8, 2012.

      And then there’s reality.

      “The U.S. Census Bureau reported in March that California’s population as of last July had dropped to an estimated 38,965,000,” wrote George Skelton, Capitol Journal columnist for the Los Angeles Times on April 8. “That’s down by 75,400 in a year — and 573,000 below California’s peak of 39.5 million in 2020.”
      …
      https://www.planetizen.com/news/2024/04/128338-california-exodus-population-drops-below-39-million

      1. “…and 50 million by 2048…”

        Seems like they’d need to develop additional power and water resources to support another 10 million consumers.

    2. 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.”
      …
      https://www.foxbusiness.com/media/leaving-hotel-california-business-owners-torn-exodus-share-stories-how-bad-things-really-are

      1. “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.”

        Turn around Flavio…take one for the team!

    3. California continues to lead in US unemployment rate
      18-05-2024 11:45 AM
      California continues to lead in US unemployment rate

      SACRAMENTO: The state of California continues to lead the United States in the number of job losses since the start of this year, reported Xinhua, quoting a report by California’s Employment Development Department on Friday.

      The unemployment rate in California, home to around 40 million residents, remained unchanged at 5.3 per cent in April for the third consecutive month, maintaining the highest level in the country.
      …
      https://thesun.my/world/california-continues-to-lead-in-us-unemployment-rate-HB12465736#google_vignette

      1. “…home to around 40 million residents,…”

        Try under 39 million…

        ‘The state’s population dipped below 39 million to 38.965 million last July, according to Census data released in March, the lowest since 2015.’

        1. The state’s population dipped below 39 million to 38.965 million last July

          So it’s probably approaching 38M

          2. “Leaving California: The Untold Story” is a feature-length documentary that portrays the multifaceted challenges of living in the Golden State, causing an unprecedented mass exodus.

            Siyamak Khorrami, host of the show “California Insider” and editor of The Epoch Times: Southern California, guides the viewers through compelling narratives and diverse voices, exploring the untold perspective of Californians as they grapple with the heart-wrenching decision of parting ways with their beloved state.
            …
            https://leavingcamovie.com/

          4. Exactly! Who lives and works here that doesn’t regularly think about leaving?

            In my experience, people that bought decades ago and pay a pittance in property taxes thanks to Prop 13.

          5. These numbers are misleading, they aren’t accounting for the massive influx of invaders which is happening on a constant basis. For instance, most of the Chinese invaders all want to live in the bay area. The mix is changing a lot faster than the numbers show. One thing I find remarkable is that pretty much all dissent against this madness has disappeared in CA. The overwhelming majority of people in CA seem to think this is great while their cities are collapsing around them. Is it the fluoride? What makes such a successful place suicide itself like this?

    4. California’s lagging economy hinders efforts to close state budget deficit
      Avatar photo by Dan Walters
      May 17, 2024
      Construction workers on site of a tiny homes village in Goshen on June 2, 2023. Poverty rose to 14% among construction workers this spring. Photo by Larry Valenzuela, CalMatters/CatchLight Local
      This story is part of California Voices, a commentary forum aiming to broaden our understanding of the state and spotlight Californians directly impacted by policy or its absence. Learn more here.

      As Gov. Gavin Newsom and state legislators spend the next few weeks fashioning a state budget that’s plagued by a multibillion-dollar deficit, they can’t count on a booming economy to make their task easier.

      California’s recovery from the devastating economic impacts of the COVID-19 pandemic has been sluggish at best, trailing what’s happening in the nation as a whole and in the state’s archrivals, such as Texas and Florida.

      According to Employment Development Department data, there are 200,000 fewer Californians in the labor force – those employed or seeking employment – than there were in February 2020, just before the pandemic exploded. There are 500,000 fewer employed, and 200,000 more unemployed.

      While California’s unemployment rate of 5.3% in March was just a third of what it was at the height of the pandemic-induced recession, it was still the highest of any state, markedly higher than the national rate of 3.9% and nearly two percentage points higher than it was before the pandemic.
      …
      https://calmatters.org/commentary/2024/05/california-sluggish-economy-budget-deficit/

    5. Home sales
      California News
      California home prices just reached a new record high
      Real estate agents arrive at a brokers tour showing a house for sale in San Rafael, California. (Photo by Justin Sullivan/Getty Images)
      by: Marc Sternfield
      Posted: May 17, 2024 / 04:49 PM PDT
      Updated: May 17, 2024 / 04:49 PM

      Home prices in California reached a new record high in April as sales increased despite elevated mortgage rates and the state’s seemingly insurmountable housing shortage.

      The median price of a single-family home climbed to $904,210 last month, nearly 6% higher than March and 11% above April 2023, according to data released on Friday by the California Association of Realtors.

      Home sales also increased month over month and year over year by low single-digits.
      …
      https://ktla.com/news/california/california-home-prices-just-reached-a-new-record-high/

      1. As of February, the Fed had added another $416 billion to its balance sheet. It isn’t that shacks are appreciating; it’s that the dollar continues to lose value.

      2. In my part of the West that is not the story. Even the most optimistic housing bulls are going “uh-oh”.

    2. It is amazing how fast Ookland is collapsing, I expected this process to take a lot longer. The antique light poles around the lake downtown are disappearing too. At this rate the city is going to go dark soon although to be fair, it’s been getting a little too dark there for a while now.

    3. The commies of Oakland are being forced to replace stop lights with stop signs due to rampant copper theft.

      Now that is both funny and sad! unbelievable.

  14. The basic agenda is for a power grab from Mega Monopoly Corporations, Rich Elite , etc in a facism partnership with global Governments to create a One World dictorship.
    These Powers want to control or own all resources and separate the masses from owning anything. Everything is being rigged to accomplish their end game agenda.
    John Kerry implied that you just can’t stop them because they are the unstoppable “market forces.”
    And they are into genocide and depopulation and trans humanism, surveillance with a control grid, forced vaccines, forced fake food and bugs , forced everything.
    Can you imagine how these fraudulent creeps are acting like they are saving the world from Panademics and doomsday Climate Change.
    They have already captured the med system, food systems, school institutions, media , governments and their agencies, you just name it.
    Just a tear down of current systems so they can implement their 2030 UN Sustainable Earth agenda. Its anti humanity and its a big scam fraud.
    Just so obivious now.

    1. BRICS: China Dumps The Largest US Treasuries in History
      Vinod Dsouza
      May 17, 2024
      chinese yuan euro currency brics
      Source: Gina Sanders / Fotolia via Wodicka

      BRICS member China dumped a record number of US treasuries and agency debt bonds worth a staggering $53.3 billion. Historically, this is the largest sell-off initiated by China ever recorded and occurred during the first quarter of 2024. The sell-off data comes at a time when the US dollar fell to its one-month low at 104.20.

      China and other BRICS countries have been offloading US treasuries worth billions since 2022. The Communist country has a record of dumping the highest in the last two years. The development indicates that BRICS and other developing countries want to move away from owning US assets in their reserves.
      …
      https://watcher.guru/news/brics-china-dumps-the-largest-us-treasuries-in-history

          1. Who is willing to buy a staggering $53.3 billion of long dated, low yield Treasuries, Powell?

    2. Waning Fed rate cut bets boost US Treasury yield forecasts: Reuters poll
      By Sarupya Ganguly
      May 14, 20245:24 AM PDTUpdated 4 days ago
      The U.S Treasury building in Washington
      A view shows a bronze seal beside a door at the U.S. Treasury building in Washington, U.S., January 20, 2023. REUTERS/Kevin Lamarque/File Photo

      BENGALURU, May 14 (Reuters) – Bond strategists upgraded their U.S. Treasury yield forecasts for coming months to their highest since at least November amid sticky inflation and greater conviction in financial markets of fewer Federal Reserve rate cuts this year, a Reuters poll found.
      After hitting a cycle peak of 5.02% in October 2023, the benchmark U.S. 10-year Treasury yield plummeted over 110 basis points by year-end as traders rapidly priced in nearly 150 basis points of Fed interest rate cuts in 2024.

      Persistent inflation and strong U.S. economic data have forced markets to dramatically delay those rate cut bets and slash 2024 rate cut pricing to roughly 50 basis points.

      Ten-year yields, which move inversely to price, have surged roughly 70 basis points from a recent low of 3.78% in late December back to 4.48% currently.
      But asked whether 10-year yields would revisit their cycle high in the coming three months, a near-90% majority of fixed income strategists in a May 7-14 Reuters poll, 23 of 27, said that was unlikely.

      However, for three consecutive monthly surveys prior to the 10-year yield hitting its cycle-peak last year, a similar group of forecasters said they believed it had already peaked.
      …
      https://www.reuters.com/markets/rates-bonds/waning-fed-rate-cut-bets-boost-us-treasury-yield-forecasts-2024-05-14/

    3. Markets
      Mortgage Rates Continue Higher For 2nd Straight Day
      By: Matthew Graham
      Fri, May 17 2024, 3:11 PM

      Mortgage rates have had a great month of May so far with almost every day being a winner up until yesterday and today. Even then, the 2 day losing streak began from the lowest levels in just over 5 weeks. Perhaps more importantly, apart from the past 2 days, today’s rates would still be the lowest in more than a month.

      In other words, rates have pulled back only slightly after a solid winning streak. Granted, you could take an even longer term view and say rates only managed the winning streak because they were at their highest levels in more than 5 months by the end of April, but nobody likes a party pooper.

      The fact is that everything is almost always relative when it comes to assessing whether rates are doing well or not. In the biggest picture, little has changed. Rates are close enough to the highest levels in decades, but they still have a chance to look back at October 2023 as being the long-term high.
      …
      https://www.mortgagenewsdaily.com/markets/mortgage-rates-05172024

    4. Economy
      Buckle up America: Powell says interest rates will likely stay higher for longer as inflation stubbornly refuses to come down
      Ayelet Sheffey and Madison Hoff
      May 16, 2024, 7:46 AM PDT
      Jerome Powell
      Kent Nishimura/Getty Images

      – Fed Chair Jerome Powell said that he expects interest rates to stay higher for longer.

      – He said his confidence that inflation will slow “is not as high as it was.”

      – Still, the slowing job market is a sign that the economy is moving in the right direction.
      …
      https://www.businessinsider.com/interest-rates-staying-higher-for-longer-no-cuts-powell-inflation-2024-5

      1. as inflation stubbornly refuses to come down

        They make it sound as if it was capricious. It is nothing of the sort, it is because of the current regime’s fiscal policies. They are borrowing a fresh new trillion every 100 days. Until that stops, inflation will remain “stubborn”

    1. as the Fed keeps rates high

      Are they really all that high? I recall when you could get about 12% on a CD

        1. Stated in a better way, If the debt reaches infinty, then the cost to service that debt is also infinate, unless the interest rate is zero.

          Hey, maybe that is Powells genious plan.

  18. Bill Melugin
    @BillMelugin_

    NEW: Per new CBP data through April, at least 434,800 migrants have flown directly into the US and have been paroled into the country via the Biden administration’s controversial CHNV mass parole program. This includes:

    184,600 Haitians
    101,200 Venezuelans
    91,100 Cubans
    75,700 Nicaraguans

    These are not included in the southern border numbers.
    5:53 PM · May 16, 2024
    ·
    https://x.com/BillMelugin_/status/1791225369019765083

  19. Bill Melugin
    @BillMelugin_

    NEW: Per new CBP data through April, at least 434,800 migrants have flown directly into the US and have been paroled into the country via the Biden administration’s controversial CHNV mass parole program. This includes:

    184,600 Haitians
    101,200 Venezuelans
    91,100 Cubans
    75,700 Nicaraguans

    These are not included in the southern border numbers.
    5:53 PM · May 16, 2024
    ·
    https://x.com/BillMelugin_/status/1791225369019765083

  20. End Wokeness
    @EndWokeness

    BREAKING: District Attorney Kim Foxx of Chicago introduces draft policy that will dramatically reduce prosecutions from discoveries made during traffic stops.

    If iIIegal guns, drugs or stolen property is discovered during a search of a car then prosecutors would not pursue the case.

    Foxx says that charges from traffic stops disproportionately impact black people.

    The exception to this policy is if the stop DIRECTLY resulted from a public-safety incident.. normal violations (registration violations, headlights, signal lights, etc) WOULDN’T be counted as a threat.

    8:19 AM · May 17, 2024

    https://x.com/EndWokeness/status/1791443349833945468

  21. ‘some property owners fear an additional tax will make it so they can no longer rent out and even own the properties at all. ‘My father-in-law and mother-in-law built the cabin 50 years ago, and then we — my wife and I — bought it from them about five years ago, and we’re both teachers. We know that we had to Airbnb the house’

    So Steve has a whopping second mortgage, likely guberment backed, that won’t be paid if they can’t STR. That’s some sound lending right there.

  22. ‘The Sun Belt has built a ton of new apartments in recent years, partly to meet the surge in demand brought on by the flood of people who moved in during the pandemic housing boom…But the boom is over, and now property owners are struggling to fill vacancies, which is causing rents to fall’

    This is classic bubble action. Well done redfin, keep this up and we might let you hold a sharp pencil!

  23. ‘They were shocked to learn that the annual tax of £1,800 is set to nearly double to £4,000 by April 2025. This increase is due to North Yorkshire Council’s introduction of a ‘second home premium’ charge of 100%, as part of the Levelling Up Act (2023). Faced with this steep rise, Fiona is contemplating selling the property. She said: ‘It’s going to cost an awful lot of money to keep the two homes’

    You can’t stumble at every adversity Fiona if yer gonna be a winnah!

  24. ‘It is going to be three years now that some of our members have put their hard-earned money, some retirement money, and some loans into the slot machine called Remi Adeoye personal venture with no returns. One of our members who took home equity loan and gave it to Adeoye on the promise of 10% monthly ROI may become homeless soon in the cold winters of Europe’

    That may be Turton, but they can always sell. Probably walk away and buy their dream shack, cash.

  25. Developers ‘that must go bankrupt should go bankrupt, while those that need to be restructured should be restructured’…He said homebuyers’ interests and rights should be prioritized, and those that violate the law should be punished’

    You guys have been saying that for 15 years Dong.

    ‘Unless potential home buyers sense some serious change of housing prices going up, the current housing price is still too expensive for household income or rent yield,’ he said. ‘However, I am not sure whether the government is willing to go as far as to engineer another big run-up in housing prices’

    Look Zhu, Xitler threw you bread crumbs this week OK? We are witnessing the biggest real estate collapse in human history. No, nothing can stop it. People will talk about this for a long time.

  27. Do you worry a large market correction that nobody could have foreseen is looming?

    1. Yahoo
      Defensive Stocks to Consider Amid Jamie Dimon’s Concern for a Large Market Correction
      Shaun Pruitt
      Fri, May 17, 2024 at 1:07 PM PDT·2 min

      Often asked for his economic opinion and outlook, JPMorgan Chase JPM CEO Jamie Dimon alluded to concerns of a broader economic slowdown and the possibility of a large stock market correction while speaking with Bloomberg on Thursday.

      Pointing out that inflation has come in hotter than expected in every month so far this year except for April’s CPI data, Dimon’s worries centered around the notion that stocks are high and whenever there is anticipation of a soft-landing things can go wrong.

      Dimon compared suggestive inflationary and geopolitical risk with large corrections/recessions in which there were plenty of signs but they were still not expected in the preceding year such as the stock market crash in 1974 and 1982 (Black Monday) along with the more recent housing market collapse in 2008 that sparked a larger financial crisis.

      These scenarios are certainly food for thought with the benchmark S&P 500 hitting fresh record highs this week and making stocks that can sustain during an eventual correction more appealing.

      Defensive Stocks to Consider

      Walmart WMT: Historically known for weathering economic downturns and market volatility, Walmart’s stability and reliance makes its stock a top choice during corrections. The omnichannel giant’s diversification into e-commerce has only increased its operating efficiency with Walmart releasing its Q1 results on Thursday and posting 6% sales growth while adjusted operating profit spiked 13%.
      …
      https://finance.yahoo.com/news/defensive-stocks-consider-amid-jamie-200700224.html

      1. “…and 1982 (Black Monday) …”

        Nice try, but it was in 1987. I was working in financial services, which offered a front row seat to coworkers watching their stock market HODLings lose 20% in one day.

    2. Yahoo
      MarketWatch
      Homes are overvalued in much of the U.S. — with these 5 states leading the list
      Aarthi Swaminathan
      Tue, May 14, 2024 at 7:44 AM PDT·3 min read
      The most overvalued housing market in America is in Memphis, Tenn., according to Fitch Ratings.
      The most overvalued housing market in America is in Memphis, Tenn., according to Fitch Ratings.
      – Getty Images/iStockphoto

      Homes in 90% of major metropolitan areas in the U.S. are overvalued, with the sharpest increases recorded in Southern states, according to a new report.

      The states with the biggest increase of homes being sold at prices over the long-term average were Tennessee, Arkansas and South Carolina, according to a report by Fitch Ratings, which looked at prices in the fourth quarter of 2023.
      …
      https://finance.yahoo.com/news/homes-overvalued-much-u-5-181300039.html

    3. Economy
      People are raiding their savings and racking up debt, paving the way for economic pain, expert warns
      Theron Mohamed
      May 15, 2024, 3:37 AM PDT
      Stock image of someone taking US dollars out of a wallet.
      Getty Images

      – People are spending almost every dollar they have to keep up with rising prices and interest costs.

      – They’re cutting back wherever they can, paving the way for an economic slump, Stephanie Pomboy said.

      – She warned of dire implications for pension funds, banks, real estate groups, and other businesses.
      …
      https://www.businessinsider.com/economy-pomboy-consumer-spending-savings-debt-inflation-interest-rates-recession-2024-5

    4. Money Printer To A Game Of Monopoly As Goldman Warns Next President Faces A “Fiscal Constraint”
      Caleb Naysmith
      Fri, May 17, 2024, 7:00 AM PDT3 min read

      In This Article:
      Elon Musk Compares The Fed’s Money Printer To A Game Of Monopoly As Goldman Warns Next President Faces A “Fiscal Constraint”
      Elon Musk Compares The Fed’s Money Printer To A Game Of Monopoly As Goldman Warns Next President Faces A “Fiscal Constraint”
      Elon Musk had another post go viral on his platform, X, with this one eliciting more laughs than controversy.

      Taking a screenshot from the rule page of the game of Monopoly, about how “the bank never goes bankrupt” as the “banker may also issue ‘new’ money,” Elon Musk reposted it with the added caption “how the Federal Reserve works.”

      Don’t Miss:

      Startup behind ‘the #1 free contractor app’ grows 162% YoY, opens its doors for investors at a $100 minimum.

      Invest in time-tested solution that aims to solve this $600 billion women’s health problem at 80 cents per share.

      Referring to the seemingly limitless amount of money the Federal Reserve can add to the circulating money supply, Musk added to a growing chorus of concern regarding the fiscal deficit.

      Even Berkshire Hathaway’s (NYSE:BRK) Warren Buffett recently commented on the Federal Reserve’s predicament, saying “Jerome Powell is not only a great human being, but a very wise man. But he doesn’t control fiscal policy. Every now and then, he sends out a disguised plea, saying please pay attention to this.”

      Whether the next administration in Washington will finally listen to him and make efforts to curtail the out-of-control fiscal spending remains to be seen, but Goldman Sachs (NYSE:GS) points out there might not be much of a choice.

      Trending: Invest like a millionaire. Exclusive opportunity to invest in Epic Games $17 billion gaming empire.

      Financial focused X account, ZeroHedge, cited Goldman’s remark that “President Biden and former President Trump propose substantially different fiscal agendas, but they both face the same constraint: there is not nearly as much scope for fiscal expansion as either had at the start of their time in office.”
      …

Comments are closed.