A report from Fox 5 New York. “It’s news any seller would want to hear: offers on their home are pouring in, many above the asking price. ‘The offers are coming in before the homes are even on the market,’ Suzanne Colon at Douglas Elliman. said. ‘We could put a ‘coming soon’ and offers are coming in before people are seeing photos.’”
From Fauquier Now in Virginia. “Dawn Arruda, a real estate agent for RE/MAX Regency based in Warrenton, said that one client she worked with, Ashley Wang, put out eight offers on homes from January to February. But she was rejected every time because someone had outbid her and/or waived their inspections. Wang was finally ready to buy a home in December 2021, but after months of constant rejection she almost gave up because of how competitive the bidding wars for homes had become.”
“Eventually, Wang did purchase a home in Gainesville. But Arruda had to pitch the seller a ‘blind offer,’ meaning Wang would buy the house without ever having seen it. ‘[Wang] got the house for $525,000 but she didn’t have to get into a bidding war,’ Arruda said. And when we got to the house walkthrough, everything was perfect. She was so happy. She was in tears. She was just so thrilled about how the transaction went.’”
“‘But that’s what you have to do,’ she added. ‘You have to get that creative in a market like this.’ Wang noted that without her realtor and lender working together to waive items, such as the finance contingency, it may not have been possible to buy her home. Nonetheless, she said that if someone is serious about buying a home it’s not going to come without risk.”
“‘I think in order for you to be in this market, you almost have to have a sense of desperation or you just really like gambling,’ Wang said.”
From Bloomberg. “Los Angeles Mayor Eric Garcetti blamed high housing costs for the surge of people moving out of the second-largest U.S. city. LA County lost 160,000 residents during the 12 months through July 1, the biggest population drop of any U.S. county, according to a U.S. Census report released last week. That accounted for almost two-thirds of the declines in California. U.S. coastal cities saw the biggest decreases in residents during the pandemic. Aside from the cost of living, factors contributing to the urban exodus ranged from strict lockdown rules to high taxes and safety fears, including rising crime rates. A lower birth rate, slower foreign immigration and increased deaths also played a role.”
“‘You don’t have to be indigent, you don’t have to be homeless to feel that it costs a lot,’ Garcetti said during an interview. ‘If you ask me the question, what are the top three issues facing Los Angeles or California, I’d say in this order: housing, housing and housing.’”
From Lakeland Today in Canada. “Homebuyers in British Columbia will soon be protected by provincial regulations that include a cooling-off period that allows time to back out of a real estate agreement, the provincial finance minister says. Finance Minister Selina Robinson said she is aware of situations where homebuyers felt intense pressure to make a purchase and decided not to get a home inspection in order to secure the sale, with unfortunate results.”
“‘There have been, frankly, what I’ve heard are horror stories of people making purchases, the biggest financial decision of their lives, only to discover it needs hundreds of thousands of more dollars because it’s not livable and it needs significant work and they weren’t aware of that,’ said Robinson at a news conference.”
From CBC News in Canada. “Carolina Abramovich says the investment appealed to both her pocketbook and her conscience. The Vancouver biomedical scientist is one of 120 investors who gave unsecured loans of between $50,000 and $500,000 to the Epic Alliance group of companies in Saskatoon. ‘The story behind the company was great. Try to help investors with their investments while providing, you know, affordable housing in Saskatoon. I liked the fact that they were women and that they were promoting trades for women.’”
“The Epic Alliance group of companies shut down its operations at the end of January. Its investors and property partners learned of the collapse in a 16-minute Zoom call from the company’s founders, Rochelle Laflamme and Alisa Thompson. ‘Everything is gone. Everything is bankrupt, guys. It’s all gone,’ Laflamme said in the Jan. 19, 2022, video.”
The South China Morning Post. “Cash-strapped Sunac China Holdings’ shares tumbled by almost a fifth after the Chinese developer said it would delay publishing its 2021 results and suspend share trading. It follows a slew of mainland developers including China Evergrande Group and Kaisa Group that have said they are unable to meet the financial reporting deadline for 2021. The company’s mainland arm is facing ‘periodic liquidity difficulties in the near future’ and expects that it will not be able to raise sufficient funds to repay the two bonds by their due dates, according to a filing to the Shanghai Stock Exchange.”
From CNBC. “Bondholders are going to be in for some nasty surprises when they check their first-quarter statements in a couple of weeks. Because the losses are piling up. In aggregate, bonds are down about 7% over the past three months–one of the worst quarters they’ve experienced since the 1980s, using the ‘AGG’ bond ETF as a proxy. And yields are definitely not high enough to offset those losses, at less than half of one percent each quarter (AGG yields less than 2% per year).”
“Overnight, the yield on the 10-year U.S. Treasury jumped again, to almost 2.56%. ‘This month has now achieved accumulated Treasury losses to rank among the three worst in the last twenty years,’ wrote FHN Financial’s Jim Vogel in a note to clients this morning. And according to Natalliance, ‘government bonds are on pace for their worst year since 1949.’”
“It all reminds me of what famed investor Bill Miller warned us about several years ago–when people realize they can actually lose money in bonds, they panic. Going into the inflationary 1970s, he said, investors had done so well in bonds for so long they viewed them as essentially riskless, until it was too late. You could say we’re living through a similar period right now.”
“The irony, of course, is that people were warned–last cycle, for years and years, about a bond crash that never panned out. It’s exactly like the boy who cried wolf. Conceptually, the chorus that said the Fed’s massive quantitative easing and the government’s fiscal response to the financial crisis would ultimately cause inflation and crater bonds–well, it turns out they were right, but not then. It’s only now, when those forces collided in a much larger way in response to the pandemic, that we’re seeing it all play out.”
“And the public, like in the fairytale, learned to drown out those cries just at the very moment when the actual wolf showed up. Bill Smead, of Smead Capital Management, literally calls it ‘wolverine inflation.’ The market ‘has been in denial,’ he warned back in January ‘inflation is not a friendly puppy dog.’”