Creating Serial Speculative Booms To Sustain The Illusion Of Prosperity

A weeked topic starting with WINK in Florida. “Paul Beattie, owner of Beattie Development cannot build homes anymore. It’s not a permanent situation, but part of a settlement agreement with the state says he’d need to pay $300,000 before he could get a new license. Beattie is accused of taking money and not finishing dozens of homes. Court documents show he’s in debt for $11 million. ‘To finish my house, my wife and I are out $200,000,’ Jason Yoraway, the tipster and former Beattie customer said. Then the Beattie Development office in Cape Coral got raided. On Thursday, Beattie gave up all his licenses in a Department of Business and Professional Regulation settlement. ‘My first initial reaction was, yay. You know, it’s obviously great. We, you know, he finally kind of got something that was coming to him. But the other hand, I think it shows just how ineffective DBPR is. You know, we gotta ask who they are protecting here?’ said Stuart Owen, another former Beattie customer.”

Fox 13 Tampa Bay in Florida. “While Hurricanes Debbie, Helen and Milton cost billions, state leaders say we are also paying for storm damage that never occurred. Kim Ferris knows more about this than she ever cared to learn. ‘The nightmare started with a knock at the door,’ she said. “The man asked did you know we had a storm here? Mind if I check your roof for you? And I said sure.’ She said the man claimed she had roof damage from a tornado and hurricane, and that she could get a new roof paid for by her property insurance company. Kim said she then called two other roofers and neither found any storm damage, but that paper she signed came back to haunt her.”

“‘He said we have a contract. I said, what contract? I never got a copy or anything.’ She said she told him she was going with somebody else and was told she couldn’t. ‘He said, oh you can’t do that because we’re going sue you now for 33.5% of the insurance money, but I said I never put a claim in. And he said, we did.’ She said nearly $40,000 later she got a new roof. She paid the $1,000 deductible, while her insurance company, Citizens, paid the rest. Insurance may question a claim like that but decide it’s probably cheaper just to pay the claim than fight it in court. ‘In lieu of paying $70-$80K to litigate the claim, often times insurers will just write a $25,000 or $35,000 check just to get rid of it,’ said Jeff Brandes, a former Florida State Senator and President of Florida Policy Project.”

“Lawmakers, realtors, and home inspectors like Michael Bender say the problem starts with contractors who claim a roof is storm damaged when it really isn’t, and that source of the problem appears to have gone largely unaddressed. ‘I’m watching them canvas neighborhoods going door after door after door—then we come back three weeks later, and it’s bang, bang, bang, bang, putting roofs on everywhere,’ said home inspector Michael Bender.”

From Curbed. “No degree is required to become a real-estate agent — even a high-school diploma — and video tutorials to pass state exams are sold on Groupon ($86.40 in New York for a one-week course). ‘There are great brokers out there who are always a pleasure to work with, and others who you have to hope and pray for,’ said John Brandon, a broker at Archpoint Advisory, a boutique firm that markets its ability to hand-hold. And hope and prayer are all New Yorkers have: Of the 3,700 complaints made to the state about real-estate agents over the last four years, only 61 brokers and agents lost their licenses. The lack of scrutiny is a national problem, of course: Lexi Newman, a broker with Compass in Los Angeles, likes to tell clients that a sale ‘is only going to be as smooth as its weakest link, and sometimes that’s the agent on the other side.'”

“In Miami, where the agent Ivan Chorney has expertise in select developments, he’s lost listings to green agents a seller just happened to already know. ‘The brother, the friend, and a lot of times in Miami, it’s the pretty girl — that happens all the time. I can’t tell you how many times I should have gotten a listing and the seller said, ‘Actually, I’m going to hire a friend who lives an hour away,’ he said. Those agents can overprice homes, mess with marketing, or fail to book timely showings. ‘There are all these people who will take one of the biggest investments of their life and will go and give it to an amateur.'”

“At a recent Lower East Side listing, Michael Biryla, a broker who had been grinding for ten years in New York, met an eager buyer and an agent she introduced as her ‘bestie,’ a person with ‘no experience, no mentor, nothing,’ he said. He had no obligation to help her, share comps. So he didn’t. Though there were no other offers, he told her that she would need to waive all of her contingencies and come in over asking. ‘She did,’ he said. ‘I could smell blood in the water.'”

News for San Antonio in Texas. “New housing developments are sprouting up all around Bexar County and so are MUDs. That’s short for Municipal Utility Districts. MUDs can tax you and use a lot of water. As News 4 I-Team reporter Jaie Avila uncovered, a MUD can be approved through an election with as little as one vote. Sara Coger’s well went dry last year, and she had to pay hundreds of dollars to have water trucked to her home. Coger blames all the new housing developments tapping into the water supply. ‘These massive developments they want to just divide it up like it’s just like it’s in town and you can’t do that out here, and it’s running everything dry,’ Coger said.”

“We researched the results of the Canyon Ranch MUD election, from May of 2022. The MUD was approved by one vote. The only vote cast. According to court filings, prosecutors think that solitary vote came from someone who moved a trailer on to the empty land so they could cast the deciding ballot. The Comal County District Attorney’s office charged Christopher Williams and Kelly Leach with election fraud. According to court filings prosecutors claim Williams ‘unlawfully changed his address to vote’ in the election. The state alleges Leach, the developer of Canyon Ranch, ‘encouraged him to do so.'”

10 News in California. “San Diego County has spent $58.3 million on a homeless program over the past five years resulting in minimal success in finding those involved permanent homes, a Team 10 investigation has found. Team 10 found nearly one-fifth of the funding, or $11.2 million, went to Equus, an out-of-state contractor for San Diego County, that only helped 39% of the 2,400 participants find permanent homes. El Cajon, a conservative East County community, has been the epicenter of the regional homeless assistance program. On most nights, the city’s low-budget hotels house 103 of the 250 households involved in the program, records show. Mayor Bill Wells said the program has taxed the city’s police department with calls for drug overdoses, sex offenders and car thefts.”

“Team 10, through a public records request, obtained documents showing the county — through Equus — pays $140 a night or roughly $4,000 a month for Kelly Pickenpaugh, who has been in the program about a year and a half, to stay in low-cost hotels in El Cajon. The 60-year-old former businesswoman said she became homeless following a spinal cord injury and entered the program in late May 2023. ‘It’s unbelievable to me because of the rent being so much cheaper,’ Pickenpaugh said. ‘And to say there’s no housing, there’s all kind of housing out there. All kinds of apartments for rent.'”

NPR on Colorado. “Denver’s homeless population hit an all-time high in 2024 but there is actually no shortage of available housing units, according to a new report. Omar Ocampo, researcher at the Institute for Policy Studies and the report’s co-author, said much of the housing built over the past two decades is not homes for people. Those units, many of which remain vacant, are being used by hedge funds and the wealthy as a safe and profitable place to park large sums of untaxed wealth. ‘We have seen, over the past decade or so, a boom in luxury real estate,’ Ocampo observed. ‘Basically, the only people who can afford it are people who are ultrahigh net worth, or at the top of the income distribution.'”

From Nexstar. “The median price of a new home these days is about $426,000, according to U.S. Census Bureau data. Looking back at 1980, the median new home cost more like $68,000. One figure that measures affordability for buyers, house price-to-income ratio, has nearly doubled since 1980, MoneyGeek reports. ‘Price-to-income ratios that low were the norm across much of the country in prior decades. Indeed, fully two-thirds of large markets had price-to-income ratios below 3.0 as recently as 2000,’ wrote researchers Alexander Hermann and Peyton Whitney, summarizing their work. Now, the only remaining major metro area with a ratio below 3 is Syracuse, New York. In 1980, people in South Dakota were spending the biggest chunk of their paychecks on housing. Now, it’s Californians forking over the most.”

Columbia School of Professional Studies. “For cautious watchers of the housing market, familiar patterns in the data have raised cause for concern. Should we be worried about another housing bubble crash? Experts say probably not. The panelists referenced the Dodd-Frank Wall Street Reform and Consumer Protection Act and other precautions taken by lending financial institutions to ensure that they are dealing with reputable borrowers, which significantly decrease the likelihood of widespread defaults and crashes. Pratik Gupta, managing director at Bank of America Securities, added that servicers these days are more proactive to ensure borrowers have alternative payment options if faced with a major credit event such as a job loss or medical issue. This ‘solutions era-based time we live in,’ he added, ‘means foreclosures are a lot less [frequent], and that has an impact of reducing supply during time”s of distress’ like recessions.”

From The Hill. “It has been nearly 14 years since Federal Reserve Chairman Ben Bernanke told Congress that the Fed’s emergency quantitative-easing policy, of which the most radical part was buying mortgage-backed securities, was ‘temporary’ and would be ‘reversed.’ The Fed made huge mortgage-backed securities purchases. The purchases pushed mortgage interest rates to artificially low levels, stoked the second great house price bubble of the 21st century and made houses unaffordable for many. In addition, these mortgage-backed securities investments unintentionally caused massive Fed losses. They are costing the Fed and taxpayers billions of dollars a month and will for years to come, as there is no practical way for the Fed to reverse its very large, deeply underwater mortgage-backed securities investment.”

“The Fed created a giant, loss-making mortgage-backed securities portfolio. It currently owns $2.3 trillion in mortgage-backed securities mostly bought at the top of the market when mortgage yields were artificially low. Today, these mortgage-backed securities are worth far less than the Fed paid for them. The June 30 Fed financial statement shows an unrealized market value loss of $423 billion on the Fed’s mortgage-backed securities investments. This loss is nearly 10 times the Fed’s financial statement reported capital of $43 billion.”

Business in Vancouver in Canada. “A B.C. Realtor has agreed to hand in their licence and pay the B.C. Financial Services Authority (BCFSA) $5,000 after admitting to buying a $2.18-million property with falsified income documents. Jin Luo, a former real estate agent with Green Team Realty Inc. while licensed with City Realty Ltd. (RE/MAX City Realty), signed a consent order proposal on Oct. 1 after admitting professional misconduct. The order states how Luo submitted a mortgage application in December 2015 in relation to his purchase of a Vancouver property, for which he represented himself as the buyer. However, Luo did so with falsified income and savings information via the services of former sub-mortgage broker Jay Kanth Chaudhary.”

“Chaudhary has since acknowledged that he provided unregistered mortgage services and that he altered documents in order to obtain mortgage financing for his clients, the order notes. Luo was investigated in May 2019 for his home purchase. The order states how Luo bought the $2.18-million property by falsely indicating he had a savings account balance of $850,000 and an annual income of $256,961; Chaudhary falsified a TD savings account statement and CRA documents for Luo’s application, which was submitted by a registered mortgage broker. A similar scenario played out for the mortgage refinancing of the second property, the order indicates.”

“Chaudhary, between 2009 and 2018, allegedly arranged over half a billion dollars in mortgage loans with lenders based on falsified income records as an unregistered, so-called ‘shadow’ broker. For Chaudhary’s part, it is unclear what consequences he may face. Chaudhary was issued a cease-and-desist order by BCFSA in 2018. Chaudhary was summoned to the Cullen Commission of Inquiry into Money Laundering in February 2021, where he admitted he systemically falsified mortgage applications. Chaudhary gave testimony under guidance from his criminal defence lawyer Joel Wyshall, who told the commission Chaudhary ‘is the subject of an ongoing investigation and there is a search warrant being executed on him and the CRA is investigating, and that manner is in charge approval.’ To date, no charges appear in the province’s criminal court registry.”

The Canadian Press. “During the pandemic, Michael Ross Albert grappled with a familiar kind of stress for many Torontonians: the uphill battle of trying to buy a home in the city. With the average home price in the Greater Toronto Area expected to climb to $1.19 million by year’s end — a six per cent increase from 2023, per a new report by Royal LePage — Albert knows his experience resonates, given that home ownership feels out of reach for many. So he’s channeled some of this real-estate tension into ‘The Bidding War,’ a biting new comedy premiering Tuesday at Toronto’s Crow’s Theatre.”

“The play takes on Toronto’s housing crisis with a story set during a frantic, one-day bidding war over the city’s last affordable home. As the clock runs out, the fight for ownership devolves into chaos, laying bare the lengths to which people will go in their anxious quest for a foothold in the market. Cast member Aurora Browne says ‘The Bidding War’ ultimately shows how self-serving those working in Toronto’s real estate market can be. ‘Toronto is definitely a playground for people who are interested in their own profit,’ she says.”

“Like Albert, Director Paolo Santalucia became a homeowner during the pandemic. He says he felt rushed to buy a house during a time when prices were down. ‘I just remember the bloodlust that rose in that period of talking to my partner and saying, ‘Whatever we need to do, we’ve got to do it because we’ve got two weeks to make the biggest financial decision of our lives.'”

New Indian Express. “Central bankers are rarely out of the media. When not changing rates or announcing new infusions, they are jawboning markets and pontificating on economic conditions. This prominence is recent. The rulebook expanded after the 2001 dot-com problems and the 2007/8 financial crisis. The staple was interest rates. When they approached zero, central banks innovated with negative rates and implemented quantitative easing (QE), purchasing securities, government bonds, but later including mortgage-backed securities, corporate bonds and shares, using newly created reserves.”

“An analysis of these policies is unflattering. The real effect was on asset markets. As values reflect future cash flows discounted back to the present, an upward shift in prices was natural. Near zero rates meant the adjustment was exaggerated. Asset prices became detached from intrinsic values, creating the constant spectre of financial instability. Rising prices for financial assets favoured high-income, wealthy cohorts exacerbating inequality.”

“History will not be kind to central bankers fixated on financial economy and who created serial speculative booms to sustain the illusion of prosperity. It will also be critical of governments unwilling to address weaknesses, who deflected shifting hard policymaking to independent, unelected and largely unaccountable central banks.”