A report from WKRN in Tennessee. “‘The Hermitage market inventory has doubled in the past 12 months,’ Bobby Hill with Crye-Leike Realtors said. ‘What we’re seeing right now is push back in our marketplace from the buyer base toward sellers who are getting overzealous with their asking price,’ said realtor Jeff Checko.”
From Market Watch. “Since the low reached in the winter, inventory has risen roughly 16%, according to Ian Shepherdson, chief economist at Pantheon Macroeconomics. At the same time, price appreciation has slowed. ‘These trends are likely to continue, as sellers realize that the window for cashing-in at the best prices appears to be closing,’ Shepherdson wrote.”
The Havasu News in Arizona. “With local home values skyrocketing, the big question is how long the rapid rise will last. Will it end with a bubble burst? That’s unlikely locally or in many other places in the country owing to a need for an estimated two to five million new homes. The Lake Havasu City market might lose some air from its balloon, though, as investor interest in short-term vacation rentals ebbs from its almost hysterical growth.”
“The investor presence is large, estimated at up to a third of the buyers in the past 20 months. With interest money cheap, they’ve been able to bid up home prices. Lake Havasu City home prices jumped by about 27 percent to right at $450,000 in the year ending in July, according to the Lake Havasu Association of Realtors. A lot was driven by demand from Californian seeking escape form that state’s pandemic restrictions while they enjoyed generous unemployment benefits.”
The La Jolla Light in California. “San Diego County’s median home price dropped for the second month in a row in August, to $725,000, as competition slowed — but experts said not to expect a crash, or a big slowdown, anytime soon. The median is down from a peak of $749,750 in June. The San Diego area isn’t alone, with price gains slowing across Southern California.”
“Competition for homes might have been affected by slightly more homes for sale in August. There were around 3,500 homes on the market to start 2021, which led to strong competition and offers over asking price. Home inventory has been climbing recently, with 4,429 homes listed for sale from Aug. 2 to Aug. 29. Samantha O’Brien, a real estate agent with PorchLight, said she has noticed more homes on the market and reduced competition. She competed with only one other offer for an $890,000 townhouse in August, which she said would have had 10 to 12 offers in May and June.”
“‘It doesn’t feel as intense as it was a few months ago when there were multiple offers and insanity,’ she said.”
The Bay Area Newsgroup on California. “Two big residential projects launched by a fraud-linked and bankrupt Bay Area developer face major construction roadblocks before they can be completed, court papers show. The residential complexes that are hobbled by the problems created by Silicon Sage Builders and the company’s chief executive Sanjeev Acharya are The Almaden, a 91-unit residential complex in San Jose; and Savant at Irvington, a 93-unit residential project on Osgood Road in Fremont.”
“The San Jose and Fremont residential complexes are among the numerous Bay Area properties that were originally proposed or developed by Acharya and Silicon Sage Builders. The Securities and Exchange Commission has accused Acharya and Silicon Sage of fraud. Silicon Sage has been shoved into court-ordered receivership. The uncertainties and delays that loom over the San Jose and Fremont housing developments also create a forbidding prospect for Silicon Sage’s investors and creditors who hope the proceeds from selling the projects will create funds to repay them after Acharya’s real estate empire crumbled beneath a mountain of debts.”
“Adding to the financial woes for both projects, which were originally developed as for-sale condominium complexes: Acharya and Silicon Sage purported to sell some of the condominiums to buyers, but those transactions were not, in reality, unit sales at Osgood Fremont and Almaden San Jose, according to court documents. ‘Both Osgood and Almaden entered into arrangements that were labeled as purchase agreements but that the receiver believes are better characterized as disguised loans,’ the court papers stated.”
The Chicago Tribune in Illinois. “Former race car driver and race team owner Bobby Rahal on Monday sold his seven-bedroom, 7,000-square-foot mansion in Lincoln Park for $3.9 million. Rahal took a loss on the Lincoln Park mansion, which he purchased for $3.99 million in 2014.”
“Rahal first listed the mansion for $5 million in 2018 and then cut his asking price to $4.95 million in 2019. He then took it off the market before relisting it in April for $4.6 million. He made one final price cut to $4.48 million in May. The mansion had a $53,798 property tax bill in the 2020 tax year.”
From Newsweek. “‘The Chinese government’s done a good job managing their economy over a long period of time, and people’s incomes are going up,’ Brooking Institution’s David Dollar Newsweek. ‘If they can manage this well then people will be happy, as a lot of household wealth is tied up in housing. So, if the government can prevent a bubble that collapses, then that just leaves people in a good position. On the other hand, if they mismanage it, then it starts undermining this story of their competence.’”
“‘People see buying an apartment as a sign of their progress,’ Dollar said. ‘Since most people have their wealth in their household, you’re going to have a lot of unhappy people if there’s a significant downturn in prices.’”
From The Street. “Evergrande’s main mainland operating business, Hengda Real Estate, said in a statement that it would make the US$35.6 million coupon payment on its Shenzhen-traded September 2025 bond when it comes due on Thursday. Nevertheless, Fitch estimates it owes US$129 million in coupon payments on its offshore high-yield bonds due this month, and there has been no word on whether it will make those payments.”
“Trading in Evergrande’s onshore bonds is halted, first at Hengda’s request, and now takes place only through negotiated transactions. The company reportedly missed payments to two banks on Monday, and it owes an enormous US$300 billion in total, which would amount to 1.8% of China’s entire economy. I was discussing the situation with a hedge fund manager friend of mine. He says equity investors are likely to be wiped out and holders of the company’s high-yield offshore bonds also likely need to have their heads examined.”
From Forbes. “Everyone seems to be talking about the Lehman Moment again this week. While there is a debate around whether Evergrande is a Lehman Moment or not, that misses the crux of the problem (Lehman never was a ‘moment’ at least by any standard definition of ‘moment’). The Lehman bankruptcy was an important event (maybe even a seminal event) during the Great Financial Crisis, but it was not a ‘moment.’”
“I cannot understand why the nation has embraced this concept of the Lehman Moment taking into account all the important events that occurred during the Financial Crisis (and leading up to it). Maybe because it has the beauty of pinning the blame on a now non-existent Wall Street firm?”
“It is always nice to have a scapegoat, a single moment in time, or a person that you can blame, especially when that person or entity isn’t well regarded. Lehman seems to fit the bill well, much better than blaming it on individuals taking out NINJA loans (No Income No Job Application). Maybe we don’t want to blame any other number of actors that failed before or after Lehman for their mistakes because they hit too close to home (i.e., maybe we as a nation would have to shoulder more blame).”
“Maybe too many of the surviving actors don’t want to be associated with their part in the crisis, so they too like to pin it on Lehman. It is probably too difficult to go back in time and argue that some policies from D.C. may have contributed to the problem (worth thinking about in an era where D.C. seems to ‘know’ what we need better than we do). There are a lot of reasons why the Lehman Moment has caught on, but I just don’t think they are accurate. I never saw one single report explaining why Lehman going bankrupt or not would have affected the price of homes in Las Vegas.”
“I believe that had Lehman been ‘saved,’ the problems we faced would still have come to fruition, but we just would have taken a more circuitous route. In other words, an inexorable chain of events had been started before Lehman and would have continued regardless of saving Lehman or not. Fighting the Lehman Moment is a re-occurring theme for me and is a cause I want to focus on again, because I think relying on the Lehman Moment as a crutch leads to bad decision making.”