Shithole Chicago commie mayor Brandon Johnson drives out the wealthy and property prices down

 From Bloomberg here:

The historic Gold Coast, featuring 100-year-old mansions, opulent condos and designer boutiques, has lost some of its most illustrious residents and appeal in recent years as the city’s high taxes and crime encouraged the wealthy to relocate. Those staying in Chicago are opting for more modern homes in trendier areas, leaving Gold Coast properties sitting on the market for months.

Now a plan to boost taxes on the sale of homes of $1 million or more could further depress deals in the neighborhood, whose residents include the billionaire Illinois Governor J.B. Pritzker. Known as the “mansion tax,” the measure will be on the ballot during the Illinois primary on Tuesday. ...

It’s unclear what impact the tax will have on property prices and whether it will generate the revenue that the mayor’s office expects. Los Angeles passed a similar measure increasing transfer taxes for properties over $5 million in 2022, but the measure only generated $142 million, a tiny fraction of the over $900 million it was expected to bring in. ...

The Gold Coast currently has 113 homes on the market at $1 million or more, according to Zillow. Only Streeterville, directly south of the Gold Coast and along the famous Michigan Avenue shopping strip, has more.

In the broader area of the Near North Side, which includes the Gold Coast and Streeterville, homes over $1 million have spent an average 123 days on the market, almost double the average in the rest of the city, according to Chicago Association of Realtors data collected from 2021 to 2023.

Push

 Eroding bluffs could send California homes tumbling into the ocean. What can be done?

Peter Thiel is so mistaken about homeownership in his interview with John Gray

 Peter Thiel says "To unshackle ourselves economically, one should start by attacking the extraordinarily distorted real estate market", but never once mentions how the prime culprits of the distortion were and are all Federal.

These were the commoditization of housing by the so-called Taxpayer Relief Act of 1997 under Clinton and Gingrich, followed by Federal Reserve interest rate suppression under Obama after the collapse of the ensuing housing bubble it caused, re-inflating that bubble.

To Thiel "interest rates went steadily down", as if by the influence of some mysterious force. What could it be? He is not i n t e r e s t e d.

Nor does he mention a third Federal culprit, how the demand side for housing was and is distorted by 15% of the population swelling with foreign born in the UK and the US as a direct result of legally admitting millions of immigrants since 1990 in the US and since 1994 in the UK.

These are the legacies of the Bushes, Bill Clinton, John Major, and Tony Blair, now augmented by deliberate non-enforcement of the border in America by the likes of Obama and Biden, turbo-charging the demand side for housing, and prices with it, by flooding the country with illegal aliens.

Thiel observes that culturally "We became too risk-averse, too bureaucratic, too reliant on peer review in the sciences" somehow, but doesn't connect this to the aging demographics, even though he is aware of it. Not re-inflating the prices of homes of Baby Boomers would have been political suicide. He fancies this is now "over", but misses that the heirs of all this property are voters too.

This is not over.

Thiel is essentially a radical, as was Ronald Reagan and also Margaret Thatcher. He completely misses how the libertarian impulse to deregulate under Reagan and Thatcher led in a straight line to the housing catastrophe we all live with these many years later. His libertarianism is myopic.

John Gray: "The difference is that this Truss wing of the Conservative Party wants to go back to Thatcher because they see that as a radical moment and they want to repeat the radical moments. But radical moments are very hard to keep repeating."

Peter Thiel: "They’re hard to repeat by doing the same thing. It was a one-time move to deregulate and lower taxes and then it’s not clear that doing it the second time does much good. ... The Reagan and Thatcher administrations ... allowed more companies to be acquired, more M&A activity to happen. It was a somewhat brutal but very powerful reorganization of society that was possible and in fact the right thing to do in the 1980s."

Incessant headlines about deep American discontent tell us we don't particularly like this now reorganized society. The new world order means your kid is saddled with horrible college debt, can't find a decent job, has to live at home with you, can't buy a house, can't get married, can't have children. 

But Thiel is still dreaming the pipe dream of "exponential growth" to solve these problems. He hopes technology will come to the rescue in the form of remote work:

"Is there some way to reopen a frontier in real estate? The possibility where I think the jury is very out, though it doesn’t look that promising in 2023, would be remote work. Could the internet be a way that people are not stuck in these cities? And that would reset all these real estate values tremendously because even in a rather densely populated country like England, there is plenty of space if you’re not forced to be within the green belt of London itself. And in the United States even more so."

The interview is here.  

Housing affordability drops for a third straight year, now the most unaffordable on record in 2022, surpassing the 2021 record

 

The prices people must pay for tiny homes are so sad

 

40-year-old pays $1,600/month to live in a tiny home by the beach—it’s smaller than a parking spot

 

I live in a backyard ‘tiny home on wheels’ for $725 a month—here’s why I’m ...

 

 

The median monthly mortgage payment in the U.S. is $1,100, based on the most recent American Housing Survey data provided by the U.S. Census Bureau.

Young Americans are too ignorant to blame the correct government entity for housing unaffordability for some reason

 . . . young Americans condemn their municipal and state governments for the current housing affordability problem.

More.

LOL, National Review reports AOC expels protesters at her own townhall in Queens, characteristically buried on the Friday night of the summer's first big holiday weekend to minimize such things

 

‘American Citizens before Migrants’: Protesters Heckle AOC at NYC Town Hall

Brittany BernsteinMay 27, 2023 11:06 AM

Representative Alexandria Ocasio-Cortez (D., N.Y.) speaks at a U.S. House Financial Services Committee hearing on Capitol Hill in Washington, D.C., December 13, 2022. (Sarah Silbiger/Reuters)none

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Protesters booed and heckled Representative Alexandria Ocasio-Cortez at a town hall she held in Queens, N.Y., on Friday night.

A man holding small American flags approached the progressive “Squad” member and shouted, “American citizens before migrants.”

“Where are you on the migrant issue? You’re a piece of s***,” he added.

Ocasio-Cortez said, “OK,” as the man was escorted off.

New York governor Kathy Hochul (D.) declared a state of emergency in New York after the expiration of Title 42 earlier this month. The state has roughly 60,000 asylum seekers relying on social services. New York City has gotten so overwhelmed with the influx of migrants that the city has begun sending them to the suburbs. Hochul said she is “looking at all state assets to help ameliorate the problem that is at a crisis level here in the City of New York,” which could includes housing migrants at SUNY campuses, closed psychiatric centers, large parks and parking lots.

Protesters at the town hall held signs concerning a number of issues: “America First. Vetted legal migrants only,” “Stop funding Ukraine,” “AOC: An Obvious Criminal,” and “AOC: Stop pushing drag queen story hour,”

More protesters came forward throughout the evening, including a woman who was critical of Ocasio-Cortez’s support for U.S. funding in Ukraine. The New York Democrat voted to send $40 billion in military and humanitarian aid to Ukraine last year.

“Stop funding this war, there’s a lot of communities that need help and need that money,” another woman said as she was removed from the event.

Ocasio-Cortez was met with both boos and cheers from the crowd when she suggested the Biden administration should abolish the debt limit, as a June 5 debt default deadline looms.

“$100 billion for Ukraine that you voted for!” one man shouted in response to Ocasio-Cortez’s comments on the debt ceiling.

The progressive lawmaker said earlier this week that the “stakes of a default cannot be understated.”

“The chaos that would ensue and the impact on people’s everyday lives would likely be immediate and it is one of the reasons why we need to take default off the table,” she said.

Send a tip to the news team at NR.

 

 

The Dingbat meant overstated, not understated.

Owner-occupied housing levels are still a long way off from those reached pre-Great Recession

 

LOL WaPo, stroking Gen Z for not driving cars because of "significant effects on carbon emissions"

Here:

If Gen Zers continue to eschew driving, it could have significant effects on the country’s carbon emissions. Transportation is the largest source of CO2 emissions in the United States. There are roughly 66 million members of Gen Z living in the United States. If each one drove just 10 percent less than the national average — that is, driving 972 miles less every year — that would save 25.6 million metric tons of carbon dioxide from spewing into the atmosphere. That’s the equivalent to the annual emissions of more than six coal-fired power plants. 

Six!

Oooh. Sounds like a lot.

 

 

Housing has never been more unaffordable than under Joe Biden and the Democrats

 

Distressed debt reaches $271 billion after five straight weeks of growth

 Growing Pile of Distressed Debt Signals Coming US Default Wave

(Bloomberg) -- A heap of distressed debt is expanding in the US corporate bond market and investors worry that a burst of defaults will follow. The amount of dollar-denominated bonds and loans trading at levels indicating distress is the largest since September 2020, reaching $271.3 billion last week after five straight weeks of growth, according to data compiled by Bloomberg. ... the supply of distressed debt is still a fraction of the almost $1 trillion peak level in 2020 . . ..     

With long-term Treasury investments down 32% year to date, and long-term investment grade down 30%, you can imagine what's happening downstream and behind the scenes.

Bloomberg cites Carnival Corp. as an example, which had to pay 6% for loans in 2021 but is paying 10.75% now. That's 79% more expensive for Carnival.

Have you tried to buy a house?

A 30-yr fixed rate mortgage would have cost you on average 3.14% one year ago. Today it'll cost you 7.08%, an increase of over 125%.

US home price plunge is ‘just beginning’ as housing market rapidly cools: economist

Do you own stocks?

You are still down over 18% year to date despite the 7% rebound in October.

 

The recent stock market rally can be rightly viewed as part of an orderly selling process which has been underway all year. The March high failed the January high, and the August high failed the March high. The current rally is unlikely to succeed the August high. It has to be remembered this is all occurring in the context of a rising interest rate environment, which is negative for stocks, housing, and bonds.

Bull market advocates, who have stocks to sell to you, don't forget, have persistently ignored the distorting effects of Fed interest rate suppression. In fact, they've counted on that suppression. They call it the Fed Put. They laugh at these puny Fed rate hikes, and make gazillions off the inflation trade. Now they're ignoring the unwind, too, which is affecting all debt. Stocks are debts, too, don't forget. Up or down, they make money off the direction. The bull market cheerleaders are worse than used car salesmen.

October 31 marks the end of the fiscal year for investment companies, who have dividends to distribute by calendar year's end to avoid taxation as registered investment companies. In an already down year, they have had a huge incentive to finish the fiscal year on as strong a note as possible. That may account for the strong October for stocks.

Normally the investment companies would be selling their losers by October 31 for tax-loss harvesting purposes. If that's happening you wouldn't know it from the monthly view of the S&P 500 in October. The DOW and the Russell 2000 were up even more. Even the NASDAQ is up in October.

But the S&P 500 low of the year did occur on October 12 at 3577, ringed by heavy selling on Sep 30 and Oct 14, after which it has been elevator up. That was probably the tax-loss harvesting for fiscal 2022.

In any event rising interest rates remain negative for the bond market, the housing market, and for stocks. The consequences of massive debt repricing are only just beginning to be felt. Stocks will hold out the longest because they can. First the bonds, then the housing, then the stocks. The rest of us are just collateral damage.

The expected 0.75 point Fed interest rate decision is Wednesday, November 2, less than one week before the election. Don't expect the Fed to do more than this, even though they damn well ought.   

Sunday morning comedy from CNBC

 

There are only 4 U.S. cities where the average American can afford a starter home

 

Detroit, Tulsa, Memphis, and Oklahoma City

 

Pack the bags, honey! We're moving! 

US homes were at least 84% overvalued in 2021

 Rounding out the Unholy Trinity of Big Ticket Asset Inflation, Housing joins Stocks and Bonds in similar overvaluation territory in 2021 at about 84%.

In Feb 2012 when housing bottomed after The Great Financial Crisis, a previous inflation-adjusted Case-Shiller home price index chart no longer updated for present years showed that prices had fallen into the top range of US house prices which had prevailed throughout the post-war from the 1950s to the late 1990s. Mind you, the top range of those inflation-adjusted prices.

Thanks to Democrats and Republicans, including Bill Clinton and Newt Gingrich, the American Dream, the nest of the American future, was turned into a mere commodity in the late 1990s, to be churned in the markets for profit.

Long-suppressed long term interest rates have conspired with commoditization to produce valuations which have exploded, making houses unaffordable as nests, which is why your kid is still living in your basement.

The chart below shows the nominal price figures, on an average annual basis through 2021. The blow-off tops in 2022 are even worse (the index topped 308 in June), and are not shown because the year ain't over, and prices are falling.

At an average index level of 260 in 2021, prices were inflated from 141 in 2012 by about 84%, not far below the overvaluation of stocks and bonds at 90% and higher.

 

 

 

 

Housing in America in 2021 has never been more unaffordable

Median household income in 2021 bought just 17.8% of the median sales price of houses sold.

 

Institutional investors have bought up 20% of mobile home parks and jacked up the rents on the low income residents, devouring widows' houses

 The plight of residents at Ridgeview is playing out nationwide as institutional investors, led by private equity firms and real estate investment trusts and sometimes funded by pension funds, swoop in to buy mobile home parks. Critics contend mortgage giants Fannie Mae and Freddie Mac are fueling the problem by backing a growing number of investor loans. ...

Driven by some of the strongest returns in real estate, investors have shaken up a once-sleepy sector that’s home to more than 22 million mostly low-income Americans in 43,000 communities. Many aggressively promote the parks as ensuring a steady return — by repeatedly raising rent. ...

George McCarthy, president and CEO of the Lincoln Institute of Land Policy, said about a fifth of mobile home parks, or around 800,000, have been purchased in the past eight years by institutional investors.

He was among those singling out Fannie Mae and Freddie Mac for guaranteeing the loans as part of a what the lending giants bill as expanding affordable housing. Since 2014, the Lincoln Institute estimates Freddie Mac alone provided $9.6 billion in financing for the purchase of more than 950 communities across 44 states. ...

Soon after investors started buying up parks in 2015, the complaints of double-digit rent increases followed.

More.

CNBC story blames capitalism's law of supply and demand for inflation: 92 million millennials caused it, not Federal Reserve interference with interest rates and mortgages

... too many people with too much money chasing too few goods ... millennials are still making up the largest chunk of the homebuyer market by generation ... 

More.

Meanwhile, this housing bubble dwarfs the last one, and we're supposed to blame millennials for it.

Sounds like a repeat of the excuse for the last one: greedy Baby Boomers.

Just forget about Zero Interest Rate Policy artificially driving down borrowing costs for over a decade, and forget about the crappy low-yielding $2.7 trillion in MBS still on the Fed Balance Sheet nobody wants, because millennials are to blame!

The chutzpah.

I wonder from which of the three houses he's owned since 2016 Bernie the greedy government bureaucrat issued this statement yesterday calling for punishment which will do nothing for consumers at the pump

 

This story blames climate change for homeless deaths, never once mentions the families who abandon them and the role played by drug abuse in their homelessness

 Sweltering streets: Hundreds of homeless die in extreme heat

 

One family, which presumably lived in a home where they presumably wrote the obituary and where the woman could have stayed temporarily, blames "the system" for the death of their homeless sister:

 

When a 62-year-old mentally ill woman named Shawna Wright died last summer in a hot alley in Salt Lake City, her death only became known when her family published an obituary saying the system failed to protect her during the hottest July on record, when temperatures reached the triple digits.

Her sister, Tricia Wright, said making it easier for homeless people to get permanent housing would go a long way toward protecting them from extreme summertime temperatures.

“We always thought she was tough, that she could get through it,” Tricia Wright said of her sister. “But no one is tough enough for that kind of heat.”

 

Housing market conditions update, now vs. then

 Housing market conditions, now vs. then:

Average borrower FICO score today: 751

In 2010: 699

Underwater today: virtually none (2.5% with less than 10% equity)

In 2011: more than 1 in 4 underwater (25% plus)

Today: 2.5 million ARMs (8% of mortgages)

In 2007: 13.1 million ARMs (36% of mortgages)

Facing resets today: 1.4 million ARMs (56%)

In 2007: 10 million (76%)

Mortgage delinquencies today: 2.1%

In 2010: 11.3%

 

Housing remains as unaffordable as ever. The cost of the median new one is up a whopping 45% in April 2022 vs. April 2020, to $450,600. 

More:

Here’s why this housing downturn is nothing like the last one

Housing predator Blackstone says housing affordability is comparable to the 2007 housing bubble, but it isn't

Here:

Blackstone’s Joe Zidle calls homes almost as unaffordable as the 2007 peak. Yet, he believes a crash is unlikely due to a major difference: Most owners aren’t using their homes like an ATM.

That's a total smokescreen. Look! Over there! A deer!

Peak unaffordability was actually in 2014, when Blackstone was buying up all the inventory individual homebuyers couldn't afford.

Housing was actually more affordable during the 2007 housing bubble than it is today. The read then was 20.5 but in January 2022 it's more like 17.3, much worse. People who are paying these high prices are nuts. If it all blows up again you can bet firms like Blackstone will be waiting in the wings to acquire bargains you have to sell at a loss.

Meanwhile Blackstone today remains a huge buyer of commercial and multifamily rental real estate, especially student housing:

80 percent of the firm’s real estate holdings are in sectors with shorter-length leases that will allow Blackstone to benefit from rising rents . . ..