Talk Irvine

General => Economy & Finance => Topic started by: eyephone on October 13, 2014, 02:11:13 PM

Title: Global Recession?
Post by: eyephone on October 13, 2014, 02:11:13 PM
Are we heading to a global recession? (Fear of disease/war, dollar too strong, elections, real estate slowing, stock market sell off, Europe economy weak, HK protest)
Title: Re: Global Recession?
Post by: The California Court Company on October 13, 2014, 02:59:53 PM
dooms day scenario

1. ISIS grows much stronger, gaining weapons of mass destruction, even nuclear
2. Ukraine crisis resurfaces, a region war imminent
3. Ebola gets out of control as it spreads out in North America, Europe and Asia
4. HK protest catches fire in other China provinces; civil unrest everywhere in China
5. Military coup in North Korea; Korea penisula conflict imminent
6. Stock market correction and real estate slow down
7. Global warming causing droughts and food price spikes
8. Other natural disasters. The big one in California, Tsunamis in Asia, etc
Title: Re: Global Recession?
Post by: irvinehomeowner on October 13, 2014, 03:03:22 PM
You forgot:

ALL Irvine Home Prices Drop 40%
Title: Re: Global Recession?
Post by: The California Court Company on October 13, 2014, 04:31:45 PM
OK.
and 10. Zombie Apocalypse. Patient zero is Qwerty, bitten by his mutated dog having too much TCE in its system.
Title: Re: Global Recession?
Post by: eyephone on October 13, 2014, 07:07:23 PM
Add global deflation fears.
Title: Re: Global Recession?
Post by: lnc on October 13, 2014, 08:35:32 PM
Add global deflation fears.

Well, if you don't have anything, you have nothing to fear, there's nothing to deflate. ;)

Actually, deflation might not be a bad thing.
Quote
Deflation is actually a good thing, because in a deflation prices drop and money becomes more valuable, so deflation encourages people to save money. Deflation rewards the prudent saver and punishes the profligate borrower. The way a society, like an individual, becomes wealthy is by producing more than it consumes. In other words, by saving, not borrowing. And during a deflation, when money becomes more valuable, everybody wants money. They want to save. Whereas during an inflation, you want to get rid of the money. You want to consume. You want to spend. But you don’t become wealthy by spending and consuming; you become wealthy by producing and saving.

Lower prices increase demand; they do not reduce or delay it. That’s why more and more people own flat-screen TVs, cellular telephones, and laptop computers: the prices of these goods have fallen, and people with lower incomes can afford them. And there are more low-income people than high-income people.
http://www.forbes.com/sites/jonmatonis/2012/12/23/fear-not-deflation/
Title: Re: Global Recession?
Post by: aquabliss on October 13, 2014, 09:18:51 PM
Save your cash people!  Turtles and Shady at $300k by year end.
Title: Re: Global Recession?
Post by: momopi on October 14, 2014, 12:34:29 PM
Day 1:  Major earthquake hits LA region, knocks out California aquaduct, water pumps, and cause great many aging water pipes to break.  Freeways, roads, bridges, rail, etc. are damaged disrupting transportation.  Wide-area utility service outage.  Hospitals are overwhelmed with injured.

Day 2:  Supermarket shelves are emptied.  FEMA and other emergency services are overwhelmed with their limited resources.  Local law enforcement agencies go AWOL as police officers return home to attend to their families.  Transporation system breaks down and delivery of groceries, medicine, petrol, and other necessirites are severely restricted.

Day 3:  Looting breaks out across the Greater Los Angeles Area.  Refugees flood into neighboring cities/countries.  Armed survivalists and preppers flee into the mountains, only to find the guy next to them is armed with bigger guns.


Week 2:  Refugees who are dumb enough to be evacuated to FEMA camps find living conditions far worse than the Superdome after Katrina, with overcrowding, limited resources, frequent riots over distribution of food and water, inadequate sanitation, with sh*t and trash littered across the landscape.  Refugees drinking unfiltered water from the Los Angels and San Gabriel rivers & park lakes fall ill to dysentery.


p.s.  this is my 666th post.
Title: Re: Global Recession?
Post by: irvinehomeowner on October 14, 2014, 12:38:56 PM
Refugees drinking unfiltered water from the Los Angels and San Gabriel rivers & park lakes fall ill to dysentery die and return as zombies.
No apocalypse is complete without the zeds.
Title: Re: Global Recession?
Post by: Irvinecommuter on October 14, 2014, 12:47:56 PM
Whatever...trying to refinance, need more people to buy US Treasuries
Title: Re: Global Recession?
Post by: eyephone on October 14, 2014, 01:40:46 PM
@Inc - previously you said, "deflation might not be a bad thing." I think it's the opposite.

"Prices go down, what’s not to like?

Yet the cold economic reality means that when prices fall people stop spending, hoping things will get even cheaper. In response, businesses cut production and lay off workers. That means even less demand, and prices drop further.

By then, your economy’s in a vicious downward spiral.

Making things worse, those falling prices bring declining wages and worsening debt burdens.

Anybody who doubts how bad it could get should look back to the last time the United States caught a serious dose of deflation, from 1929-33. They called that the Great Depression."

Source: http://mobile.news.com.au/finance/economy/why-deflation-is-so-terrifying-for-europe/story-e6frflo9-1227063772773
Title: Re: Global Recession?
Post by: lnc on October 14, 2014, 01:45:14 PM
Whatever...trying to refinance, need more people to buy US Treasuries

Or maybe just more QE.

http://www.marketwatch.com/story/feds-williams-says-qe-could-be-needed-if-economy-slides-2014-10-14
Title: Re: Global Recession?
Post by: irvinehomeowner on October 14, 2014, 01:50:09 PM
@eyephone:

Deflation is not a Depression.

It's been shown that the Gub will pull out all the stops to prevent a downward spiral.

Regardless... I don't think we'll ever get to 1929 unless something catastrophic happens... like Zs, WWIII, a big flood or asteroids.
Title: Re: Global Recession?
Post by: eyephone on October 14, 2014, 01:59:06 PM
@eyephone:

Deflation is not a Depression.

It's been shown that the Gub will pull out all the stops to prevent a downward spiral.

Regardless... I don't think we'll ever get to 1929 unless something catastrophic happens... like Zs, WWIII, a big flood or asteroids.

"Japan has languished in a deflationary cycle pretty much since the late 1990s, its once-booming economy reduced to “lost decades” of stagnation. The country now lays claim to the world’s highest debt — over 1 quadrillion yen ($9 trillion) — more than twice the size of its total economic output.

Europe is now teetering on the edge.

Seventy-four per cent of global investors expressed fears the euro zone was slipping into deflation, according to a recent Bloomberg poll.

Nobel Prize-winning economist Paul Krugman says Europe’s economy is performing worse now than in the 1930s.

It’s not just the economics that are starting to resemble those dark times, he warned, looking to the rise of a new nationalism that threatens to undermine the post-WWII order — when Europe’s former enemies came together in what became the European Union."

http://mobile.news.com.au/finance/economy/why-deflation-is-so-terrifying-for-europe/story-e6frflo9-1227063772773


Title: Re: Global Recession?
Post by: irvinehomeowner on October 14, 2014, 02:02:44 PM
But this is 'Merica. :)
Title: Re: Global Recession?
Post by: lnc on October 14, 2014, 02:16:15 PM
@Inc - previously you said, "deflation might not be a bad thing." I think it's the opposite.

Agree with you that deflation is bad for the overall economy.
 
The article I posted just provides a different view to look at things.  If you can maintain same level of income while everything else become cheaper, than its kind of like getting a raise and it's a chance to get ahead.   Your hard earn dollar can go farther and you can keep more of it. 

If one can just maintain same level of income during the deflation period, everything will be just fine.
Title: Re: Global Recession?
Post by: eyephone on October 14, 2014, 02:20:59 PM
Refugees drinking unfiltered water from the Los Angels and San Gabriel rivers & park lakes fall ill to dysentery die and return as zombies.
No apocalypse is complete without the zeds.

Pentagon document lays out zombie battle plan

"From responses to natural disasters to a catastrophic attack on the homeland, the U.S. military has a plan of action ready to go if either incident occurs.

It has also devised an elaborate plan should a zombie apocalypse befall the country, according to a Defense Department document obtained by CNN.

In an unclassified document titled "CONOP 8888," officials from U.S. Strategic Command used the specter of a planet-wide attack by the walking dead as a training template for how to plan for real-life, large-scale operations, emergencies and catastrophes"

Source:
http://www.cnn.com/2014/05/16/politics/pentagon-zombie-apocalypse/
Title: Re: Global Recession?
Post by: Liar Loan on March 22, 2022, 10:44:25 AM
Remind me again... What happened to Irvine home prices in 1991?

Dallas Fed: Recession Is Unavoidable Without Russian Oil

The global economy likely won’t be able to avoid a recession without a resumption of Russian energy exports this year, according to a study by Federal Reserve Bank of Dallas economists.

“If the bulk of Russian energy exports is off the market for the remainder of 2022, a global economic downturn seems unavoidable,” economists Lutz Kilian and Michael Plante wrote in an article posted by the Dallas Fed Tuesday. “This slowdown could be more protracted than that in 1991.”

The authors drew a parallel to the 1991 global recession, set off by Iraq’s invasion of Kuwait in the year prior that caused an oil-supply shock.


(https://assets.bwbx.io/images/users/iqjWHBFdfxIU/i2tpcfgJQveY/v2/pidjEfPlU1QWZop3vfGKsrX.ke8XuWirGYh1PKgEw44kE/1550x-1.png)

https://www.bloomberg.com/news/articles/2022-03-22/recession-unavoidable-without-russian-oil-dallas-fed-study-says
Title: Re: Global Recession?
Post by: USCTrojanCPA on March 22, 2022, 10:25:30 PM
Remind me again... What happened to Irvine home prices in 1991?

Dallas Fed: Recession Is Unavoidable Without Russian Oil

The global economy likely won’t be able to avoid a recession without a resumption of Russian energy exports this year, according to a study by Federal Reserve Bank of Dallas economists.

“If the bulk of Russian energy exports is off the market for the remainder of 2022, a global economic downturn seems unavoidable,” economists Lutz Kilian and Michael Plante wrote in an article posted by the Dallas Fed Tuesday. “This slowdown could be more protracted than that in 1991.”

The authors drew a parallel to the 1991 global recession, set off by Iraq’s invasion of Kuwait in the year prior that caused an oil-supply shock.


(https://assets.bwbx.io/images/users/iqjWHBFdfxIU/i2tpcfgJQveY/v2/pidjEfPlU1QWZop3vfGKsrX.ke8XuWirGYh1PKgEw44kE/1550x-1.png)

https://www.bloomberg.com/news/articles/2022-03-22/recession-unavoidable-without-russian-oil-dallas-fed-study-says

Different world, but I'll say this...if Irvine goes down in price then all other cities around it will see bigger price declines just like we saw back in 2008-2010.
Title: Re: Global Recession?
Post by: OCtoSV on March 23, 2022, 08:26:31 AM
way different job market for OC now than 91 - still a land of mid market companies but more engineering and professional jobs. I don't see Irvine impacted nearly as much as the surrounding south OC communities.
Title: Re: Global Recession?
Post by: daedalus on March 23, 2022, 10:54:25 AM
In 1991 we hadn't yet invented pergraniteel.
Title: Re: Global Recession?
Post by: Liar Loan on March 23, 2022, 11:11:02 AM
Different world, but I'll say this...if Irvine goes down in price then all other cities around it will see bigger price declines just like we saw back in 2008-2010.

That's quite possible, but only because Irvine has gone up more slowly than those other areas since bottoming out in 2010.  On the other hand, subprime / alt-A / excessive home ATM withdrawal will not be the catalysts this time, so it's perhaps not wise to assume things will behave just as they did 15 years ago.

The current conditions have similarities to both the 1980's downturn (out of control inflation and drastic Fed action) and the 1990's downturn (large supply of new homes in the pipeline, spike in oil prices, and reduced Congressional spending on the horizon).

The last time interest rates spiked this rapidly, Orange County went bankrupt (1994).  What unforeseen blow-ups await us this time?
Title: Re: Global Recession?
Post by: sleepy5136 on March 23, 2022, 11:21:28 AM
Even if it's a 30% correction, it's only wiping out the gains we've seen in the last 1 yr? Maybe 1.5-2 yrs? NBD honestly. Only people that will be impacted are ones that bought recently or have adjustable rate mortgages which is a significant amount of FCB with those no income checked loans in Irvine.
Title: Re: Global Recession?
Post by: Ready2Downsize on March 23, 2022, 02:17:22 PM
Different world, but I'll say this...if Irvine goes down in price then all other cities around it will see bigger price declines just like we saw back in 2008-2010.

That's quite possible, but only because Irvine has gone up more slowly than those other areas since bottoming out in 2010.  On the other hand, subprime / alt-A / excessive home ATM withdrawal will not be the catalysts this time, so it's perhaps not wise to assume things will behave just as they did 15 years ago.

The current conditions have similarities to both the 1980's downturn (out of control inflation and drastic Fed action) and the 1990's downturn (large supply of new homes in the pipeline, spike in oil prices, and reduced Congressional spending on the horizon).

The last time interest rates spiked this rapidly, Orange County went bankrupt (1994).  What unforeseen blow-ups await us this time?

That could happen, but when the OC went BK, Greenie promptly lowered rates and housing went up up up. The OC didn't follow for some time, even dropping in 1994 because of the BK but went up as things improved.

If it were me and I was looking for a house to buy, I would prefer Irvine over outlying cities and I'm sure others would too. I'm not looking to buy in California though so there's that.

Liar Loan, you could be right but for now I just don't see the inventory build up in Irvine. When a small build up happens (maybe a dozen houses which is really very small) it quickly moves back down with houses being bought up.

I don't really see days on market rising either.

Housing demand for the most part is really a local event. What exactly is it you see in Irvine to cause you to think it's going to roll over soon?
Title: Re: Global Recession?
Post by: CalBears96 on March 23, 2022, 02:31:56 PM
Housing demand for the most part is really a local event. What exactly is it you see in Irvine to cause you to think it's going to roll over soon?

He hasn't seen anything. He just refuses to admit he's wrong. Simple as that.
Title: Re: Global Recession?
Post by: Ready2Downsize on March 23, 2022, 02:40:48 PM
Housing demand for the most part is really a local event. What exactly is it you see in Irvine to cause you to think it's going to roll over soon?

He hasn't seen anything. He just refuses to admit he's wrong. Simple as that.

But he keeps posting so he must think there is something to back this up.

I like to see opposing views so I don't end up keep drinking kool aid and become too steadfast in my own views. I did that in 2000 and regretted it bigly.

But I have to have something to back those views up to make me see there is something there. Right now, I don't see it at all.

Mortgage rates going up is not enough of an issue for me. We had that in the 70s and housing just went up with rates. We had higher rates in the 80s and housing went up. We just got adjustable rate loans. We had rising rates in the 90s too and again we just got adjustable loans.

There should be SOMETHING that we can put a finger on like rising inventories, increasing days on market, comparable homes selling for lower price per square foot, builders not raising prices or throwing in upgrades on spec homes. SOMETHING. I just don't see anything myself, so Liar Loan, point it out if you have something specific to this area please.
Title: Re: Global Recession?
Post by: sleepy5136 on March 23, 2022, 03:16:58 PM
Housing demand for the most part is really a local event. What exactly is it you see in Irvine to cause you to think it's going to roll over soon?

He hasn't seen anything. He just refuses to admit he's wrong. Simple as that.

But he keeps posting so he must think there is something to back this up.

I like to see opposing views so I don't end up keep drinking kool aid and become too steadfast in my own views. I did that in 2000 and regretted it bigly.

But I have to have something to back those views up to make me see there is something there. Right now, I don't see it at all.

Mortgage rates going up is not enough of an issue for me. We had that in the 70s and housing just went up with rates. We had higher rates in the 80s and housing went up. We just got adjustable rate loans. We had rising rates in the 90s too and again we just got adjustable loans.

There should be SOMETHING that we can put a finger on like rising inventories, increasing days on market, comparable homes selling for lower price per square foot, builders not raising prices or throwing in upgrades on spec homes. SOMETHING. I just don't see anything myself, so Liar Loan, point it out if you have something specific to this area please.
I'm not sure how FCB was back in the 80s and 90s in Irvine. But I would think that it's now significantly higher and a bunch of them have adjustable loans. If interest rates hit 6-7%, that will definitely test the limits of these adjustable loan owners and what they will do to keep their house.
Title: Re: Global Recession?
Post by: Ready2Downsize on March 23, 2022, 04:28:59 PM
Housing demand for the most part is really a local event. What exactly is it you see in Irvine to cause you to think it's going to roll over soon?

He hasn't seen anything. He just refuses to admit he's wrong. Simple as that.

But he keeps posting so he must think there is something to back this up.

I like to see opposing views so I don't end up keep drinking kool aid and become too steadfast in my own views. I did that in 2000 and regretted it bigly.

But I have to have something to back those views up to make me see there is something there. Right now, I don't see it at all.

Mortgage rates going up is not enough of an issue for me. We had that in the 70s and housing just went up with rates. We had higher rates in the 80s and housing went up. We just got adjustable rate loans. We had rising rates in the 90s too and again we just got adjustable loans.

There should be SOMETHING that we can put a finger on like rising inventories, increasing days on market, comparable homes selling for lower price per square foot, builders not raising prices or throwing in upgrades on spec homes. SOMETHING. I just don't see anything myself, so Liar Loan, point it out if you have something specific to this area please.
I'm not sure how FCB was back in the 80s and 90s in Irvine. But I would think that it's now significantly higher and a bunch of them have adjustable loans. If interest rates hit 6-7%, that will definitely test the limits of these adjustable loan owners and what they will do to keep their house.

How do you know they still have those adjustable loans?
Title: Re: Global Recession?
Post by: sleepy5136 on March 23, 2022, 05:20:41 PM
Housing demand for the most part is really a local event. What exactly is it you see in Irvine to cause you to think it's going to roll over soon?

He hasn't seen anything. He just refuses to admit he's wrong. Simple as that.

But he keeps posting so he must think there is something to back this up.

I like to see opposing views so I don't end up keep drinking kool aid and become too steadfast in my own views. I did that in 2000 and regretted it bigly.

But I have to have something to back those views up to make me see there is something there. Right now, I don't see it at all.

Mortgage rates going up is not enough of an issue for me. We had that in the 70s and housing just went up with rates. We had higher rates in the 80s and housing went up. We just got adjustable rate loans. We had rising rates in the 90s too and again we just got adjustable loans.

There should be SOMETHING that we can put a finger on like rising inventories, increasing days on market, comparable homes selling for lower price per square foot, builders not raising prices or throwing in upgrades on spec homes. SOMETHING. I just don't see anything myself, so Liar Loan, point it out if you have something specific to this area please.
I'm not sure how FCB was back in the 80s and 90s in Irvine. But I would think that it's now significantly higher and a bunch of them have adjustable loans. If interest rates hit 6-7%, that will definitely test the limits of these adjustable loan owners and what they will do to keep their house.

How do you know they still have those adjustable loans?
I have access to check the owner & loan info. So you'll see the loan details and when the mortgage is expected to be fully paid off. Most are expected to be paid off at year 2040+.
Title: Re: Global Recession?
Post by: Ready2Downsize on March 23, 2022, 05:27:11 PM
What if they HAD a mortgage but paid it off in full and have no new mortgage?
Title: Re: Global Recession?
Post by: sleepy5136 on March 23, 2022, 05:29:20 PM
What if they HAD a mortgage but paid it off in full and have no new mortgage?
That's a possibility. But what are the odds that all the FCBs with adjustable rate loans are all able to pay off their mortgages? I mean, they got a mortgage for a reason...
Title: Re: Global Recession?
Post by: Ready2Downsize on March 23, 2022, 05:41:12 PM
What if they HAD a mortgage but paid it off in full and have no new mortgage?
That's a possibility. But what are the odds that all the FCBs with adjustable rate loans are all able to pay off their mortgages? I mean, they got a mortgage for a reason...

Maybe they used the money for something (like a margin loan) and then paid it off.

What are the odds they all have adjustable rate mortgages and weren't smart enough to see rates going up and do something about those mortgages?

I'm buying two houses in AZ for cash (one is supposed to sit in while the other is being built to make sure the market doesn't turn here in California leaving me stuck with a house I don't want. I'm not worried about selling it because it's gone up alot while it's being built). Realtor says do you want to put a mortgage on it after it closes? I can give u the names of some lenders. I say what? I haven't had a mortgage in 15 years. Why would I want a mortgage now? She says well money is so cheap (before rates were going up), lots of cash buyers do that and then pay it off after a while and use it to buy stocks, another house or other "stuff".

Maybe they sold whatever they bought and paid off that mortgage and now own the place free and clear with their profits from whatever they used the money for.
Title: Re: Global Recession?
Post by: USCTrojanCPA on March 23, 2022, 05:44:28 PM
Housing demand for the most part is really a local event. What exactly is it you see in Irvine to cause you to think it's going to roll over soon?

He hasn't seen anything. He just refuses to admit he's wrong. Simple as that.

But he keeps posting so he must think there is something to back this up.

I like to see opposing views so I don't end up keep drinking kool aid and become too steadfast in my own views. I did that in 2000 and regretted it bigly.

But I have to have something to back those views up to make me see there is something there. Right now, I don't see it at all.

Mortgage rates going up is not enough of an issue for me. We had that in the 70s and housing just went up with rates. We had higher rates in the 80s and housing went up. We just got adjustable rate loans. We had rising rates in the 90s too and again we just got adjustable loans.

There should be SOMETHING that we can put a finger on like rising inventories, increasing days on market, comparable homes selling for lower price per square foot, builders not raising prices or throwing in upgrades on spec homes. SOMETHING. I just don't see anything myself, so Liar Loan, point it out if you have something specific to this area please.

I keep telling everyone, watch inventory levels as the tell of where pricing is going.  Even with these higher rates, inventory levels are still very low (about 1/2 month of inventory in Irvine).  A neutral market is where we have around 3 months of inventory so inventory levels would have to increase 5-6x of where inventory is today for that to happen.  It's all a supply/demand issue but the fact is that demand is still outpacing supply.  I have seen lower open house traffic and less # of offers on my listings but pricing is still strong because the top buyers are strong and motivated.
Title: Re: Global Recession?
Post by: USCTrojanCPA on March 23, 2022, 05:47:08 PM
What if they HAD a mortgage but paid it off in full and have no new mortgage?
That's a possibility. But what are the odds that all the FCBs with adjustable rate loans are all able to pay off their mortgages? I mean, they got a mortgage for a reason...

Those buyers bring over big chunks of cash over each month under the limit that China has imposed, I've seen plenty of their bank statements to know the drill.  They'll move all the month over in time and then use them to pay off the asset based loan (usually 50% LTV).  There's basically zero risk of those properties being foreclosed or become a forced sale.
Title: Re: Global Recession?
Post by: Ready2Downsize on March 23, 2022, 05:57:36 PM
Housing demand for the most part is really a local event. What exactly is it you see in Irvine to cause you to think it's going to roll over soon?

He hasn't seen anything. He just refuses to admit he's wrong. Simple as that.

But he keeps posting so he must think there is something to back this up.

I like to see opposing views so I don't end up keep drinking kool aid and become too steadfast in my own views. I did that in 2000 and regretted it bigly.

But I have to have something to back those views up to make me see there is something there. Right now, I don't see it at all.

Mortgage rates going up is not enough of an issue for me. We had that in the 70s and housing just went up with rates. We had higher rates in the 80s and housing went up. We just got adjustable rate loans. We had rising rates in the 90s too and again we just got adjustable loans.

There should be SOMETHING that we can put a finger on like rising inventories, increasing days on market, comparable homes selling for lower price per square foot, builders not raising prices or throwing in upgrades on spec homes. SOMETHING. I just don't see anything myself, so Liar Loan, point it out if you have something specific to this area please.

I keep telling everyone, watch inventory levels as the tell of where pricing is going.  Even with these higher rates, inventory levels are still very low (about 1/2 month of inventory in Irvine).  A neutral market is where we have around 3 months of inventory so inventory levels would have to increase 5-6x of where inventory is today for that to happen.  It's all a supply/demand issue but the fact is that demand is still outpacing supply.  I have seen lower open house traffic and less # of offers on my listings but pricing is still strong because the top buyers are strong and motivated.

Irvine would practically have to turn on a dime to do that. IMO, it isn't going to happen because where are the people selling going to go? We'd have to get second homes being sold because if it is primary residences those people must be going somewhere else which means they are buying another property. They could be like me and going out of state but there aren't enough of us to make a tiny dent in Irvine's market.
Title: Re: Global Recession?
Post by: USCTrojanCPA on March 23, 2022, 06:29:57 PM
Housing demand for the most part is really a local event. What exactly is it you see in Irvine to cause you to think it's going to roll over soon?

He hasn't seen anything. He just refuses to admit he's wrong. Simple as that.

But he keeps posting so he must think there is something to back this up.

I like to see opposing views so I don't end up keep drinking kool aid and become too steadfast in my own views. I did that in 2000 and regretted it bigly.

But I have to have something to back those views up to make me see there is something there. Right now, I don't see it at all.

Mortgage rates going up is not enough of an issue for me. We had that in the 70s and housing just went up with rates. We had higher rates in the 80s and housing went up. We just got adjustable rate loans. We had rising rates in the 90s too and again we just got adjustable loans.

There should be SOMETHING that we can put a finger on like rising inventories, increasing days on market, comparable homes selling for lower price per square foot, builders not raising prices or throwing in upgrades on spec homes. SOMETHING. I just don't see anything myself, so Liar Loan, point it out if you have something specific to this area please.

I keep telling everyone, watch inventory levels as the tell of where pricing is going.  Even with these higher rates, inventory levels are still very low (about 1/2 month of inventory in Irvine).  A neutral market is where we have around 3 months of inventory so inventory levels would have to increase 5-6x of where inventory is today for that to happen.  It's all a supply/demand issue but the fact is that demand is still outpacing supply.  I have seen lower open house traffic and less # of offers on my listings but pricing is still strong because the top buyers are strong and motivated.

Irvine would practically have to turn on a dime to do that. IMO, it isn't going to happen because where are the people selling going to go? We'd have to get second homes being sold because if it is primary residences those people must be going somewhere else which means they are buying another property. They could be like me and going out of state but there aren't enough of us to make a tiny dent in Irvine's market.

Exactly, most of my Irvine sellers are move-up Irvine buyers.  Of all my listings in 2020 through today, I can count the number of buyers relocating out of the area but I've had more move-up buyers who came into Irvine from other cities of the homes (including homes that I've listed for sale). 
Title: Re: Global Recession?
Post by: irvinehomeowner on March 23, 2022, 06:40:51 PM
But he keeps posting so he must think there is something to back this up.

He's actually just trolling because he's still hurt from his improper analysis of the 2006 drop in regards to what fared better than Irvine.

He claimed that the beach cities were the safe havens but then when we looked at the numbers, Newport Beach and the like all dropped lower and faster and recovered slower than Irvine.

So he keeps saying Irvine is due for a drop hoping it will come true but mostly because he just likes to poke the Irvine owners because he's jelly.

He thought he had us with this latest "drop/pain/slump" in 2018 but that was nothing compared to what prices are at now (which he did not predict). So all he can say is, "Well... OC performed better".

But despite our disagreements, I highly respect his opinions, he just can't admit when some are wrong... but I get it... most people are like that. I thought back in 2008, prices were going to drop more, but they didn't (at least for 3CWG homes I was looking at). Oh well.
Title: Re: Global Recession?
Post by: sleepy5136 on March 23, 2022, 08:45:53 PM
What if they HAD a mortgage but paid it off in full and have no new mortgage?
That's a possibility. But what are the odds that all the FCBs with adjustable rate loans are all able to pay off their mortgages? I mean, they got a mortgage for a reason...

Maybe they used the money for something (like a margin loan) and then paid it off.

What are the odds they all have adjustable rate mortgages and weren't smart enough to see rates going up and do something about those mortgages?

I'm buying two houses in AZ for cash (one is supposed to sit in while the other is being built to make sure the market doesn't turn here in California leaving me stuck with a house I don't want. I'm not worried about selling it because it's gone up alot while it's being built). Realtor says do you want to put a mortgage on it after it closes? I can give u the names of some lenders. I say what? I haven't had a mortgage in 15 years. Why would I want a mortgage now? She says well money is so cheap (before rates were going up), lots of cash buyers do that and then pay it off after a while and use it to buy stocks, another house or other "stuff".

Maybe they sold whatever they bought and paid off that mortgage and now own the place free and clear with their profits from whatever they used the money for.
A lot of FCB do not report their income here so they cannot get mortgage rates to their favor. Like USC said, they probably bring in enough each month from their country that is below the limit. Again, I am not saying it will lead it a crash. However, I do think it's a risk. How much risk, I don't know.

You're over here asking for a second point of view but you keep rejecting it. So idk what you want.
Title: Re: Global Recession?
Post by: USCTrojanCPA on March 23, 2022, 08:59:27 PM
What if they HAD a mortgage but paid it off in full and have no new mortgage?
That's a possibility. But what are the odds that all the FCBs with adjustable rate loans are all able to pay off their mortgages? I mean, they got a mortgage for a reason...

Maybe they used the money for something (like a margin loan) and then paid it off.

What are the odds they all have adjustable rate mortgages and weren't smart enough to see rates going up and do something about those mortgages?

I'm buying two houses in AZ for cash (one is supposed to sit in while the other is being built to make sure the market doesn't turn here in California leaving me stuck with a house I don't want. I'm not worried about selling it because it's gone up alot while it's being built). Realtor says do you want to put a mortgage on it after it closes? I can give u the names of some lenders. I say what? I haven't had a mortgage in 15 years. Why would I want a mortgage now? She says well money is so cheap (before rates were going up), lots of cash buyers do that and then pay it off after a while and use it to buy stocks, another house or other "stuff".

Maybe they sold whatever they bought and paid off that mortgage and now own the place free and clear with their profits from whatever they used the money for.
A lot of FCB do not report their income here so they cannot get mortgage rates to their favor. Like USC said, they probably bring in enough each month from their country that is below the limit. Again, I am not saying it will lead it a crash. However, I do think it's a risk. How much risk, I don't know.

You're over here asking for a second point of view but you keep rejecting it. So idk what you want.

I'm not saying there's no risk but I think the risk fairly minimal.  The big risk in my mind is if most all employers mandate that their workers come back into the office full time...will that lead to an exodus of LA/Bay Area buyers who will look to cash in their gains because they need to move back closer to their offices?
Title: Re: Global Recession?
Post by: OCtoSV on March 24, 2022, 08:18:11 AM
Google buses are back on the road and the freeways are packed up here - strong message among the larger companies of get back to the office or roll the dice on your future
Title: Re: Global Recession?
Post by: paydawg on March 24, 2022, 09:30:25 AM
Google buses are back on the road and the freeways are packed up here - strong message among the larger companies of get back to the office or roll the dice on your future

I doubt 'full time in the office' is in our future.  I work for a large old-school, but very prominent Fortune 500 company that never wanted to adopt WFH, but now they're starting to assess their workforce's preferences and will most likely adopt a hybrid model. 
Title: Re: Global Recession?
Post by: OCtoSV on March 24, 2022, 09:51:16 AM
hybrid for sure but even hybrid makes it tough to get to the office in the Bay area when you moved to Irvine.
Title: Re: Global Recession?
Post by: zubs on March 24, 2022, 10:02:50 AM
My large customer keeps pushing back their return to office date.
Last week I went to their office to drop off samples, and there were only 10 cars in the parking lot built for 300.

I ask them when they are going back, and it's always next month!
Title: Re: Global Recession?
Post by: momopi on March 24, 2022, 10:21:12 AM
I'm not sure how FCB was back in the 80s and 90s in Irvine. But I would think that it's now significantly higher and a bunch of them have adjustable loans. If interest rates hit 6-7%, that will definitely test the limits of these adjustable loan owners and what they will do to keep their house.

Back then there were many Taiwanese buyers in Irvine, with the father returning to TW to work & leaving wife and kids here.  Many did not qualify for a loan in the US, so they took out loans on properties back in TW and used the cash to buy in US.  So even if the property was purchased with cash here, it doesn't mean there isn't a loan elsewhere.
Title: Re: Global Recession?
Post by: sleepy5136 on March 24, 2022, 10:29:30 AM
I'm not sure how FCB was back in the 80s and 90s in Irvine. But I would think that it's now significantly higher and a bunch of them have adjustable loans. If interest rates hit 6-7%, that will definitely test the limits of these adjustable loan owners and what they will do to keep their house.

Back then there were many Taiwanese buyers in Irvine, with the father returning to TW to work & leaving wife and kids here.  Many did not qualify for a loan in the US, so they took out loans on properties back in TW and used the cash to buy in US.  So even if the property was purchased with cash here, it doesn't mean there isn't a loan elsewhere.
Interesting. I know Hong Kong loans do not have a concept of 30 yr fixed interest rate. It's actually adjustable. I would think Taiwan and Mainland China are the same. In which case, that's quite concerning. But who knows? They might just have a boat load of cash and decided to take a loan to leverage.
Title: Re: Global Recession?
Post by: morekaos on March 24, 2022, 10:48:00 AM
I re-iterate...

As I have noted before...China is going through something similar to Japans collapse in the 90's. 

Meanwhile In China, All Hell Is Breaking Loose

1.  China on brink of biggest Covid-19 crisis since Wuhan as cases surge
2. Chinese stocks are crashing
3. Chinese bonds are crashing
4. China's property sector is (still) crashing
5. China Credit Collapses
6. Didi crashes
7. ESG blues
8. China Doubles Yuan Trading Band for Ruble
9. Foreigners dump Chinese bonds in record amounts
10. GDP on verge of contraction

https://www.zerohedge.com/markets/meanwhile-china-all-hell-breaking-loose

Title: Re: Global Recession?
Post by: Ready2Downsize on March 24, 2022, 11:18:19 AM
What if they HAD a mortgage but paid it off in full and have no new mortgage?
That's a possibility. But what are the odds that all the FCBs with adjustable rate loans are all able to pay off their mortgages? I mean, they got a mortgage for a reason...

Maybe they used the money for something (like a margin loan) and then paid it off.

What are the odds they all have adjustable rate mortgages and weren't smart enough to see rates going up and do something about those mortgages?

I'm buying two houses in AZ for cash (one is supposed to sit in while the other is being built to make sure the market doesn't turn here in California leaving me stuck with a house I don't want. I'm not worried about selling it because it's gone up alot while it's being built). Realtor says do you want to put a mortgage on it after it closes? I can give u the names of some lenders. I say what? I haven't had a mortgage in 15 years. Why would I want a mortgage now? She says well money is so cheap (before rates were going up), lots of cash buyers do that and then pay it off after a while and use it to buy stocks, another house or other "stuff".

Maybe they sold whatever they bought and paid off that mortgage and now own the place free and clear with their profits from whatever they used the money for.
A lot of FCB do not report their income here so they cannot get mortgage rates to their favor. Like USC said, they probably bring in enough each month from their country that is below the limit. Again, I am not saying it will lead it a crash. However, I do think it's a risk. How much risk, I don't know.

You're over here asking for a second point of view but you keep rejecting it. So idk what you want.

I'm asking why Liar Loan thinks things are on the edge of a cliff in Irvine.

You are thinking FCB will all be facing foreclosure as rates rise and I'm asking how u know they have those loans still because you are basing the crash on FCB causing it. But you don't know they have those loans still and Martin says they have been paying them down substantially. That is exactly how I paid off my house after such a short period of time, except my money came from real jobs, and stock options in the U.S.

It seems like I still have nothing to show me there is a reason to think things are about to turn out badly.

Maybe in a few months there will be a massive increase in listings and days on market but there sure isn't right now and it isn't likely to come from builders because there just isn't enough building going on right now in Irvine. Resales mean people must be going elsewhere or selling second homes/rentals but where are they going? Out of state maybe.

Imo, there is going to be a real issue with trying to get people out of their low interest homes in the coming years, similar to trying to get old people to move out of their houses to increase supply. Of course that has not worked out all that well because where are they going to go with higher rates? They could move to a smaller house but most don't really seem to want to do that. There are some who move out of state but that isn't going to be nearly enough supply for those who want to buy.

I might look like I'm stuck on my opinion but far from it. I think California is going in the wrong direction but I don't see housing going down in Irvine in the near term.
Title: Re: Global Recession?
Post by: Liar Loan on March 24, 2022, 11:26:55 AM
I'm not sure how FCB was back in the 80s and 90s in Irvine. But I would think that it's now significantly higher and a bunch of them have adjustable loans. If interest rates hit 6-7%, that will definitely test the limits of these adjustable loan owners and what they will do to keep their house.

Back then there were many Taiwanese buyers in Irvine, with the father returning to TW to work & leaving wife and kids here.  Many did not qualify for a loan in the US, so they took out loans on properties back in TW and used the cash to buy in US.  So even if the property was purchased with cash here, it doesn't mean there isn't a loan elsewhere.

This is an astute observation.  Many "cash" buyers are simply borrowing from other sources.  I have done this myself when buying investment properties.

There should be SOMETHING that we can put a finger on like rising inventories, increasing days on market, comparable homes selling for lower price per square foot, builders not raising prices or throwing in upgrades on spec homes. SOMETHING. I just don't see anything myself, so Liar Loan, point it out if you have something specific to this area please.

These are all run-of-the-mill stats that any realtor can dig up for you, or you can find on Redfin/Zillow probably.  I'm more interested in the macro picture.  The rapid inflation in asset prices since March 2020 is a nationwide / worldwide phenomenon, affecting every asset class you can think of with wildly out of whack valuation measures, so I'm expecting hard times all around.  There won't be many safe havens, but there will be some.

Traditional diversification and geographic diversification will not be enough to protect people.  Irvine is not bullet proof like many on this forum believed it was prior to 2018 when I helped cure them of that illusory thinking, and buying at the peak of both a real estate cycle and an interest rate cycle seems doubly unwise and incredibly suicidal, but I get owning a dream home is a highly emotional thing.  Some people will lose boatloads of money and rationalize after the fact, as some on this thread have already started doing.

I've admitted being wrong in the past, such as buying in 2006, but it's hard for this crowd because I've been more correct about Irvine than they have.

BTW, Arizona is an even worse bubble market than Irvine.  It's the archetypal sunbelt boom/bust market and it will crash at a higher multiple to whatever percent Irvine crashes at.  I would not want to own two homes there.
Title: Re: Global Recession?
Post by: USCTrojanCPA on March 24, 2022, 11:49:25 AM
LL, I respect your opinions and analysis and for going against the majority.  I've told you this before....I WANT MORE INVENTORY!  My buyers still keep getting outbid on their offers.  We currently have about 150 active listings in Irvine which is about 1/2 month of inventory which is a super strong seller market.  Has the market slowed down?  Yes, I'm seeing 1/2 of much open house traffic and offers on my listings but they are still going way over list and over closed comps.  To get back to a more balanced market we need around 3 months of inventory which means about 800-900 homes which is a 5-6 fold increase in inventory.  You either have to have way more listings come onto the market or buyers have to pull back in a massive way.  I'm just not seeing it.
Title: Re: Global Recession?
Post by: zubs on March 24, 2022, 11:52:16 AM
LL is saying when the bottom comes, it comes quickly.
Your 150 available Irvine homes jumps to 1,000 available Irvine homes in 1 month.

As a real estate board, we should discuss how this can happen.  Black Swan event.
Title: Re: Global Recession?
Post by: USCTrojanCPA on March 24, 2022, 12:16:43 PM
LL is saying when the bottom comes, it comes quickly.
Your 150 available Irvine homes jumps to 1,000 available Irvine homes in 1 month.

As a real estate board, we should discuss how this can happen.  Black Swan event.

Keep in mind 3 months of inventory is a neutral market, not one that has declining prices. We'd need 1,500+ homes on the market for prices to meaningfully decrease.
Title: Re: Global Recession?
Post by: morekaos on March 24, 2022, 12:17:19 PM
LL is saying when the bottom comes, it comes quickly.
Your 150 available Irvine homes jumps to 1,000 available Irvine homes in 1 month.

As a real estate board, we should discuss how this can happen.  Black Swan event.

China collapses. Like Japan did in the '90s then limps along for a decade. ;D ;D >:D
Title: Re: Global Recession?
Post by: momopi on March 24, 2022, 12:48:24 PM
I'm not sure how FCB was back in the 80s and 90s in Irvine. But I would think that it's now significantly higher and a bunch of them have adjustable loans. If interest rates hit 6-7%, that will definitely test the limits of these adjustable loan owners and what they will do to keep their house.

Back then there were many Taiwanese buyers in Irvine, with the father returning to TW to work & leaving wife and kids here.  Many did not qualify for a loan in the US, so they took out loans on properties back in TW and used the cash to buy in US.  So even if the property was purchased with cash here, it doesn't mean there isn't a loan elsewhere.
Interesting. I know Hong Kong loans do not have a concept of 30 yr fixed interest rate. It's actually adjustable. I would think Taiwan and Mainland China are the same. In which case, that's quite concerning. But who knows? They might just have a boat load of cash and decided to take a loan to leverage.

The mortgage interest rate in TW is low (1.31-1.4%) so I think most banks would rather offer adjustable rate loans.  I have not looked at real estate in TW since 2007 so someone else with more updated knowledge can probably comment better.

https://mortgage.591.com.tw/
Title: Re: Global Recession?
Post by: irvinehomeowner on March 24, 2022, 02:03:45 PM
LL is saying when the bottom comes, it comes quickly.
Your 150 available Irvine homes jumps to 1,000 available Irvine homes in 1 month.

As a real estate board, we should discuss how this can happen.  Black Swan event.

Keep in mind 3 months of inventory is a neutral market, not one that has declining prices. We'd need 1,500+ homes on the market for prices to meaningfully decrease.

Scale in Irvine has changed.

I remember when it was 700 listings that was considered troublesome... there is a post somewhere here in the IHB archives or TI about that.

I predict the black swan event will be everyone follows morekaos to Texas,
Title: Re: Global Recession?
Post by: zovall on March 24, 2022, 02:05:17 PM
I'm more interested in the macro picture.

What would you recommend the play is over the next few years? For those that have levered up, for those that haven't, for those own assets, for those that don't?

I've enjoyed some of these videos from Ray Dalio. Curious to get your thoughts..
Title: Re: Global Recession?
Post by: USCTrojanCPA on March 24, 2022, 02:31:28 PM
I'm more interested in the macro picture.

What would you recommend the play is over the next few years? For those that have levered up, for those that haven't, for those own assets, for those that don't?

I've enjoyed some of these videos from Ray Dalio. Curious to get your thoughts..

Pretty simple, in an inflationary environment you want to own real assets and real estate falls into that category.
Title: Re: Global Recession?
Post by: Compressed-Village on March 24, 2022, 03:47:11 PM
LL is saying when the bottom comes, it comes quickly.
Your 150 available Irvine homes jumps to 1,000 available Irvine homes in 1 month.

As a real estate board, we should discuss how this can happen. Black Swan event.

At this point, its no longer Black Swan, its escalation upon escalation on both side. The West and NATO and United State vs Russia. Both are ramping up their rhetoric. Peace is no longer in the discussion. This will lead to a dark, dark chapter in history if we survive.

Please watch and share. We are on a very fragil path. Can you imagine if earth have no human life? Standing here and I've been following very closely with what's going on in Ukrain, Putin will not stand down, and if he goes down, he will take as many citizens, people, man, women and children with him.


We are a pale blue dot.

Title: Re: Global Recession?
Post by: Liar Loan on March 25, 2022, 11:31:00 AM
I'm more interested in the macro picture.

What would you recommend the play is over the next few years? For those that have levered up, for those that haven't, for those own assets, for those that don't?

I've enjoyed some of these videos from Ray Dalio. Curious to get your thoughts..

Pretty simple, in an inflationary environment you want to own real assets and real estate falls into that category.

Anything requiring leverage would not be my asset of choice right now.  Real estate has tanked in the face of aggressive rate increases by the Fed historically, with the only recent exception being 1994 when RE prices were already depressed.

I'm heavy on gold, something I haven't owned at all since 2012 when awgee reamed me on this board by telling me how sorry I'd be that I'd sold.  (I wonder what institution he's living in these days?)  Even though higher rates tend to hurt gold, it's also resilient in the face of uncertainty, which I view as a positive when both stocks and bonds are taking hits during a time of potential war.  If downward pressure really takes hold in stocks, I may switch to aggressively shorting the stock indexes.  A lot of people are also looking at TIPS (Treasury Inflation-Protected Securities) for preservation of capital.  But whatever course you choose, playing defense would be my advice.
Title: Re: Global Recession?
Post by: Ready2Downsize on March 25, 2022, 12:06:57 PM
I'm not sure how FCB was back in the 80s and 90s in Irvine. But I would think that it's now significantly higher and a bunch of them have adjustable loans. If interest rates hit 6-7%, that will definitely test the limits of these adjustable loan owners and what they will do to keep their house.

Back then there were many Taiwanese buyers in Irvine, with the father returning to TW to work & leaving wife and kids here.  Many did not qualify for a loan in the US, so they took out loans on properties back in TW and used the cash to buy in US.  So even if the property was purchased with cash here, it doesn't mean there isn't a loan elsewhere.

This is an astute observation.  Many "cash" buyers are simply borrowing from other sources.  I have done this myself when buying investment properties.

There should be SOMETHING that we can put a finger on like rising inventories, increasing days on market, comparable homes selling for lower price per square foot, builders not raising prices or throwing in upgrades on spec homes. SOMETHING. I just don't see anything myself, so Liar Loan, point it out if you have something specific to this area please.

These are all run-of-the-mill stats that any realtor can dig up for you, or you can find on Redfin/Zillow probably.  I'm more interested in the macro picture.  The rapid inflation in asset prices since March 2020 is a nationwide / worldwide phenomenon, affecting every asset class you can think of with wildly out of whack valuation measures, so I'm expecting hard times all around.  There won't be many safe havens, but there will be some.

Traditional diversification and geographic diversification will not be enough to protect people.  Irvine is not bullet proof like many on this forum believed it was prior to 2018 when I helped cure them of that illusory thinking, and buying at the peak of both a real estate cycle and an interest rate cycle seems doubly unwise and incredibly suicidal, but I get owning a dream home is a highly emotional thing.  Some people will lose boatloads of money and rationalize after the fact, as some on this thread have already started doing.

I've admitted being wrong in the past, such as buying in 2006, but it's hard for this crowd because I've been more correct about Irvine than they have.

BTW, Arizona is an even worse bubble market than Irvine.  It's the archetypal sunbelt boom/bust market and it will crash at a higher multiple to whatever percent Irvine crashes at.  I would not want to own two homes there.

Ok, so you are looking at what should rationally happen then and I am looking at what I see right now. I look at redfin and the listings in Irvine area (and the area I am moving to in AZ and other areas around there) are stable. It "looks" balanced to me but imo the only reason for that is the inventory of available homes for sale is too low. There are more buyers than that low inventory. If we saw twice as many homes (or the builders were building more homes especially in the lower price ranges, maybe we would see a leveling off or even prices dropping but how is that going to happen without many more houses? If a doubling in inventory is enough to cause prices to stabilize, then having a "normal sized inventory according to Martin) is going to really be a problem for Irvine prices, imo but we cannot know that till we have more inventory.

We could get more inventory if there were less buyers or more sellers. Higher rates will encourage those who might have wanted to move local to just keep what they have, reducing the available inventory. It could lead to a bad enough recession that jobs would be lost reducing demand (and perhaps prying second homes out of people's hands) but then the FED is going to quit raising rates, imo. You could see people moving back to their old hoods if they have to return to work, but they'll have to buy more expensive with higher rates and maybe they will just find another job local.

There are just so many moving parts here that it's really impossible to tell what will happen because things have gone up and that is why I just look at what is happening right now.

As for AZ, that is another ball game out there and housing demand/pricing is local. How else can you explain the prices in Scottsdale and Paradise Valley have been so high for so many years while other areas have been so cheap? You can say well Scottsdale should never have been that high but it was. Everything has gone up, like here. People have moved from pricier areas to cheaper areas, like here, driving up the cheaper areas too. But AZ population is rising. There are plenty of old people there but plenty retire there from other states to replace the ones who die and there is household formation going on in AZ from all the young people who have moved there for J O B S. LOTS and lots of jobs. Sure housing has gone up alot. The area where I am moving now has base pricing for new SINGLE story homes about where I bought my TWO story Legacy home 6+ years ago but if you want a two story home you can get a brand new 3300 sq foot 4 bedroom, 3 car garage on a pool sized lot for under $600K, $115 HOA, $3600 per year property tax and low home insurance and you can do even better with resales. You should see the building going on there! It looks like it did when I moved to the OC, before the 405 and 55 were around, before South Coast Plaza, before UC Irvine opened. It's not just houses, it's retail, factories, offices. My parents moved to FV then from Santa Barbara where my dad lost his job because the one place that employed an engineer closed and my mom cried for days about how there was NOTHING here but stupid strawberry fields.

I do think there is going to come a time when it's going to be a good time to buy a house because prices will be lower but from where? Will it be here or higher than here and what interest rate will non cash buyers have to pay? I don't know but I do think we're in for 10-20 years of real pain down the road.

Title: Re: Global Recession?
Post by: Liar Loan on March 25, 2022, 12:27:09 PM
This tidbit caught my eye this morning:

In Phoenix, 32% of single-family purchases in January were by investors with fewer than 10 properties, up from 28% a year earlier, according to data from John Burns Real Estate Consulting. By comparison, large investor purchases accounted for 12% of transactions.


https://www.bloomberg.com/news/articles/2022-03-25/real-estate-investing-homeowners-use-cash-out-refis-to-buy-rentals

So 44% of all single-family homes in Phoenix are purchased by investors.  A lot of this is funded by cheap cash-out refi's on other properties they own in other parts of the country (the point of the article).  If investor demand dries up due to a combination of higher mortgage costs and renters missing payments due to nationwide job losses, it's going to have an outsized effect on the Phoenix market.  This cycle has played out repeatedly, which is why Phoenix is more of a boom/bust market.
Title: Re: Global Recession?
Post by: Ready2Downsize on March 25, 2022, 01:23:12 PM
This tidbit caught my eye this morning:

In Phoenix, 32% of single-family purchases in January were by investors with fewer than 10 properties, up from 28% a year earlier, according to data from John Burns Real Estate Consulting. By comparison, large investor purchases accounted for 12% of transactions.


https://www.bloomberg.com/news/articles/2022-03-25/real-estate-investing-homeowners-use-cash-out-refis-to-buy-rentals

So 44% of all single-family homes in Phoenix are purchased by investors.  A lot of this is funded by cheap cash-out refi's on other properties they own in other parts of the country (the point of the article).  If investor demand dries up due to a combination of higher mortgage costs and renters missing payments due to nationwide job losses, it's going to have an outsized effect on the Phoenix market.  This cycle has played out repeatedly, which is why Phoenix is more of a boom/bust market.

Phoenix has been boom and bust because they didn't have job growth. They have that now.

Alot of those investor homes were bought up by companies that rent out homes and it was cheaper to buy a house than to rent it when rents were rising. Now that rents are higher and rates are higher, they will just hand onto them. These are BIG companies that rent homes nationwide. It's like saying well the Irvine company has all these places they rent out and when rates rise they are going to have to SELL baby!

Maricopa is the fourth largest county in the country and there is a big difference between downtown phoenix and the area that is included in Phoenix metro. It's like saying Orange County is made up of Santa Ana, Garbage Grove, Anacrime there so Irvine must be overpriced and is headed for a cliff!

During the pandemic, The OC lost population (small amount) along with San Diego, Los Angeles and the Bay area. Maricopa county population went up by 1.7% and it has been going up for years. Phoenix/Chandler/Mesa went up over 2% and indeed the growth in Arizona is not in Phoenix. Phoenix is a lower income area that is built out. The newer areas are growing supported by jobs coming to the state. I know it's weird to think that companies are actually building new factories and offices when you're used to companies reducing their footprint in your state but it does still happen.

If Irvine population went up that much in one year, it would be 6000 new residents. If only 25% of those wanted to buy a house and you used 2000 of the residents as your household assuming some are single, couples and families that would be an additional 500 houses that would have to be built. That is in addition to what is already in demand from household formation and young people entering the market. Good thing the OC didn't see a population jump like that. Imagine the supply/demand ratio!
Title: Re: Global Recession?
Post by: daedalus on March 25, 2022, 05:09:12 PM
Pretty simple, in an inflationary environment you want to own real assets and real estate falls into that category.

Does toilet paper count? 
Title: Re: Global Recession?
Post by: Liar Loan on April 26, 2022, 09:37:28 AM
If the Fed funds rate reaches 6%, how high would mortgage rates end up going?  Job losses + the highest mortgage rates in a generation will not end well for the housing market.

Deutsche Bank Sees 5%-6% Fed Target Rate and Deep U.S. Recession

The Federal Reserve is likely to need to engage in the most aggressive monetary tightening since the 1980s to tamp down an inflation rate at a four-decade high, which will lead to a deep U.S. recession next year, Deutsche Bank AG economists warned.

“We assume conservatively that a Fed funds rate moving well into the 5% to 6% range will be sufficient to do the job this time,” the authors including David Folkerts-Landau, group chief economist and head of research, wrote in a report Tuesday. “This is partly because the monetary-tightening process will be bolstered by Fed balance-sheet reduction, which our U.S. economics team estimates will be equivalent to a couple additional 25 basis-point rate hikes.”

This monetary tightening and the financial upheaval that accompanies it “will push the economy into a significant recession by late next year,” Folkerts-Landau said, adding Deutsche sees the unemployment ultimately rising “several percentage points.”


https://www.bloomberg.com/news/articles/2022-04-26/deutsche-bank-sees-5-6-fed-target-rate-and-deep-u-s-recession
Title: Re: Global Recession?
Post by: Liar Loan on April 27, 2022, 10:43:48 AM
Why would home builders be so worried?  Maybe because there are the largest number of homes under construction since 1973?

Looming 'housing recession' has builders appeal to Biden administration

As mortgage rates and home prices reach record highs, the National Association of Home Builders is now calling on the White House to take action.

"We are very concerned that we will have a housing recession, and that this unsustainable, undesirable fact that right now the average American can't afford the average house will continue to get worse," Jerry Howard, chief executive officer of the National Association of Home Builders told FOX Business."We will have a real and unsolvable housing crisis if we don't get on top of it soon."

The letter, signed by over 10,000 homebuilders...


https://www.foxbusiness.com/economy/homebuilders-calling-on-biden-administration-housing-recession-inflation-real-estate

(https://cdn.substack.com/image/fetch/f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fbd390375-a015-4ebe-9593-8fde202a763a_1021x646.png)
Title: Re: Global Recession?
Post by: Liar Loan on April 28, 2022, 09:33:41 AM
Ruh Roh Shaggy!  US exports are tanking leading to a decline in GDP.

U.S. Economy Posts Surprise Contraction, Belying Solid Consumer Picture

The U.S. economy shrank for the first time since 2020, reflecting an import surge tied to solid consumer demand.

While the surprise contraction adds to political headaches for President Joe Biden, it’s unlikely to dissuade the Federal Reserve from hiking interest rates aggressively to combat inflation.

Gross domestic product fell at a 1.4% annualized rate in the first quarter following a 6.9% pace at the end of last year, the Commerce Department’s preliminary estimate showed Thursday. The median projection in a Bloomberg survey of economists called for a 1% increase.


https://www.bloomberg.com/news/articles/2022-04-28/u-s-economy-contracted-in-first-quarter-on-surge-in-trade-gap


Title: Re: Global Recession?
Post by: Liar Loan on May 06, 2022, 12:15:32 PM
More Retailers Say They Can’t Pay Rent, Even As Shoppers Keep Shopping

Consumer spending is expected to rise this year, but retailers aren't out of the woods yet. Many are still struggling with rents, which have been rising with inflation.

Thirty-four percent of small retail businesses couldn’t make rent in April, up 6 percentage points from February, Retail Dive reports, citing survey data from Alignable. Retailers pointed to inflation, gas prices, supply chain issues, labor shortages and reduced revenues as compounding their financial woes.


https://www.bisnow.com/national/news/retail/retail-spending-to-outpace-inflation-this-year-nrf-predicts-112902
Title: Re: Global Recession?
Post by: Liar Loan on May 24, 2022, 12:08:00 PM
This is the canary in the coal mine.  Get ready for a spike in FHA mortgage defaults.

More Subprime Borrowers Are Missing Loan Payments
Borrowers with limited or troubled credit histories are defaulting on credit cards, car loans and personal loans

The share of subprime credit cards and personal loans that are at least 60 days late is rising faster than normal, according to credit-reporting firm Equifax Inc. In March, those delinquencies rose month over month for the eighth time in a row, nearing their prepandemic levels.

https://www.wsj.com/articles/more-subprime-borrowers-are-missing-loan-payments-11652952602
Title: Re: Global Recession?
Post by: OCtoSV on May 24, 2022, 01:01:22 PM
today's $1.6M detached Irvine condos will be $1M in a year
Title: Re: Global Recession?
Post by: Liar Loan on May 24, 2022, 03:13:59 PM
today's $1.6M detached Irvine condos will be $1M in a year

It will be interesting to see how this plays out.  The house two doors down from mine is listed at 60% higher than we paid in March 2020, even though our house is 800 sq ft bigger, but not as updated.  Assuming the same down payment amount we used, their monthly P&I payment would be 150% higher than ours based on current rates.  I just can't imagine somebody paying that much for a house given what they were going for only a couple years ago.  I think many people still don't acknowledge how distorted this current housing market is because they are either blinded by greed or by fear of missing out.
Title: Re: Global Recession?
Post by: sleepy5136 on May 24, 2022, 03:55:42 PM
today's $1.6M detached Irvine condos will be $1M in a year

It will be interesting to see how this plays out.  The house two doors down from mine is listed at 60% higher than we paid in March 2020, even though our house is 800 sq ft bigger, but not as updated.  Assuming the same down payment amount we used, their monthly P&I payment would be 150% higher than ours based on current rates.  I just can't imagine somebody paying that much for a house given what they were going for only a couple years ago.  I think many people still don't acknowledge how distorted this current housing market is because they are either blinded by greed or by fear of missing out.
the numbers and graphs that you posted recently are saying otherwise.
Title: Re: Global Recession?
Post by: OCtoSV on May 24, 2022, 04:03:55 PM
today's $1.6M detached Irvine condos will be $1M in a year

It will be interesting to see how this plays out.  The house two doors down from mine is listed at 60% higher than we paid in March 2020, even though our house is 800 sq ft bigger, but not as updated.  Assuming the same down payment amount we used, their monthly P&I payment would be 150% higher than ours based on current rates.  I just can't imagine somebody paying that much for a house given what they were going for only a couple years ago.  I think many people still don't acknowledge how distorted this current housing market is because they are either blinded by greed or by fear of missing out.
the numbers and graphs that you posted recently are saying otherwise.

I've put a stake in the ground with my prediction. Oh and 7% 30 yr mortgage rate then too. USC, CalBruin, IHO - anyone care to put your prediction on the record?
Title: Re: Global Recession?
Post by: CalBears96 on May 24, 2022, 04:14:18 PM
today's $1.6M detached Irvine condos will be $1M in a year

Since you asked for my prediction, I'll say today's $1.6M detached Irvine condo will be $1.3M-$1.4M in a year. I think we're reaching the peak soon, then flatten out and will probably drop 20%. It could take a year or two for the 20% to happen.
Title: Re: Global Recession?
Post by: irvinehomeowner on May 24, 2022, 05:10:04 PM
I predict Liar Loan will say he predicted whatever will happen.
Title: Re: Global Recession?
Post by: Compressed-Village on May 24, 2022, 05:12:25 PM
today's $1.6M detached Irvine condos will be $1M in a year

I will take a wager on this with you, since you are very confident of the out come?

You can layout the details and the amount and I could add to your proprositions.

What do you say?
Title: Re: Global Recession?
Post by: USCTrojanCPA on May 25, 2022, 08:25:06 PM
If the Fed funds rate reaches 6%, how high would mortgage rates end up going?  Job losses + the highest mortgage rates in a generation will not end well for the housing market.

Deutsche Bank Sees 5%-6% Fed Target Rate and Deep U.S. Recession

The Federal Reserve is likely to need to engage in the most aggressive monetary tightening since the 1980s to tamp down an inflation rate at a four-decade high, which will lead to a deep U.S. recession next year, Deutsche Bank AG economists warned.

“We assume conservatively that a Fed funds rate moving well into the 5% to 6% range will be sufficient to do the job this time,” the authors including David Folkerts-Landau, group chief economist and head of research, wrote in a report Tuesday. “This is partly because the monetary-tightening process will be bolstered by Fed balance-sheet reduction, which our U.S. economics team estimates will be equivalent to a couple additional 25 basis-point rate hikes.”

This monetary tightening and the financial upheaval that accompanies it “will push the economy into a significant recession by late next year,” Folkerts-Landau said, adding Deutsche sees the unemployment ultimately rising “several percentage points.”


https://www.bloomberg.com/news/articles/2022-04-26/deutsche-bank-sees-5-6-fed-target-rate-and-deep-u-s-recession

They'd be below 6% and the 10/30 bond rates would be lower than the Fed Funds Rate because the yield curve would be inverted because we'd be in a recession at that point.
Title: Re: Global Recession?
Post by: USCTrojanCPA on May 25, 2022, 08:30:10 PM
today's $1.6M detached Irvine condos will be $1M in a year

Since you asked for my prediction, I'll say today's $1.6M detached Irvine condo will be $1.3M-$1.4M in a year. I think we're reaching the peak soon, then flatten out and will probably drop 20%. It could take a year or two for the 20% to happen.

We'll need to see inventory levels go materially above 3 months on inventory to see those kind of price declines and we are still right around 1 month of inventory as we speak in Irvine.  I think we'll see more like what we saw in late 2018 with single digit price declines.  That being said, 10/30 bond yield have rolled and are down by 30+ bps from the peak. 
Title: Re: Global Recession?
Post by: someguy on May 25, 2022, 10:25:16 PM
If the Fed funds rate reaches 6%, how high would mortgage rates end up going?  Job losses + the highest mortgage rates in a generation will not end well for the housing market.

Deutsche Bank Sees 5%-6% Fed Target Rate and Deep U.S. Recession

The Federal Reserve is likely to need to engage in the most aggressive monetary tightening since the 1980s to tamp down an inflation rate at a four-decade high, which will lead to a deep U.S. recession next year, Deutsche Bank AG economists warned.

“We assume conservatively that a Fed funds rate moving well into the 5% to 6% range will be sufficient to do the job this time,” the authors including David Folkerts-Landau, group chief economist and head of research, wrote in a report Tuesday. “This is partly because the monetary-tightening process will be bolstered by Fed balance-sheet reduction, which our U.S. economics team estimates will be equivalent to a couple additional 25 basis-point rate hikes.”

This monetary tightening and the financial upheaval that accompanies it “will push the economy into a significant recession by late next year,” Folkerts-Landau said, adding Deutsche sees the unemployment ultimately rising “several percentage points.”


https://www.bloomberg.com/news/articles/2022-04-26/deutsche-bank-sees-5-6-fed-target-rate-and-deep-u-s-recession

They'd be below 6% and the 10/30 bond rates would be lower than the Fed Funds Rate because the yield curve would be inverted because we'd be in a recession at that point.

The Fed plans to begin Quantitative Tightening on 6/1/22 (though they've been saying QT since Oct 2021) allowing up to $95B of treasuries and MBSs to roll off the balance sheet monthly.  Of the approximately $9T on their balance sheet roughly $3.5T is MBS.  That should have an impact on the longer end of the yield curve.

They stopped growing their balance sheet in recent months (https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm (https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm))

The Fed has made it clear they want asset prices lower, inflation under control, and are wiling to tolerate an increase in unemployment from today's levels. The only tool they have is to manipulate demand via yield curve control.  The Fed will get their way imho, unless there's an external shock (i.e. expanded war, financial crisis).  They're essentially going to manufacture a recession.  It's just a matter of how "soft-ish" of a recession we get and when + how quickly they reverse course.
Title: Re: Global Recession?
Post by: OCtoSV on May 26, 2022, 09:07:19 AM
I feel for real estate this will be similar to the late 80s/early 90s crash in SoCal given the dy/dx of the unemployment rate and mortgage rates. Remote workers are already starting to whine on LinkedIn about pressure to come to the office. How do you get to Cupertino weekly if you're living in OC? That gets expensive quick.

June 1 2023 is the date for my $1M/7% prediction. Happy to buy a round at Houstons for anyone that wants to show up if I lose - always looking for an excuse to come home.
Title: Re: Global Recession?
Post by: morekaos on May 26, 2022, 09:18:52 AM
I'm on your side OC...we hit 5.5% just a little while back and 7% is just a hop skip and a jump from there. With the Fed rhetoric like this...its not out of the question.

Powell says the Fed will not hesitate to keep raising rates until inflation comes down

Fed Chair Jerome Powell said he will back interest rate increases until prices start falling back toward a healthy level.
“If that involves moving past broadly understood levels of neutral we won’t hesitate to do that,” the central bank leader told the Wall Street Journal

https://www.cnbc.com/2022/05/17/powell-says-the-fed-will-not-hesitate-to-keep-raising-rates-until-inflation-comes-down.html
Title: Re: Global Recession?
Post by: Compressed-Village on May 26, 2022, 10:15:59 AM
I feel for real estate this will be similar to the late 80s/early 90s crash in SoCal given the dy/dx of the unemployment rate and mortgage rates. Remote workers are already starting to whine on LinkedIn about pressure to come to the office. How do you get to Cupertino weekly if you're living in OC? That gets expensive quick.

June 1 2023 is the date for my $1M/7% prediction. Happy to buy a round at Houstons for anyone that wants to show up if I lose - always looking for an excuse to come home.

Quote from: OCtoSV on May 24, 2022, 01:01:22 PM
today's $1.6M detached Irvine condos will be $1M in a year

So I want to make sure that I have this correct. In Irvine Condo with 1.6 will drop to 1 million at about 1 year from now with 7% mortgage rate correct?



Title: Re: Global Recession?
Post by: zubs on May 26, 2022, 10:16:56 AM
It's been more than a decade, but are we finally becoming a bear blog again?  sure feels like it.
I was promised a recession back in 2018.


Who's going to play contrarian as we morph back into a bear?
Title: Re: Global Recession?
Post by: Liar Loan on May 26, 2022, 10:44:32 AM
I feel for real estate this will be similar to the late 80s/early 90s crash in SoCal given the dy/dx of the unemployment rate and mortgage rates. Remote workers are already starting to whine on LinkedIn about pressure to come to the office. How do you get to Cupertino weekly if you're living in OC? That gets expensive quick.

June 1 2023 is the date for my $1M/7% prediction. Happy to buy a round at Houstons for anyone that wants to show up if I lose - always looking for an excuse to come home.

I don't think a housing bust will play out that quickly.  Real estate moves much more slowly than stocks and typically doesn't bottom out until 2-3 years after the recession that caused the bust has ended. 

By that time there will be some demographic headwinds working against housing with Boomers starting to sell en masse, and the wave of Millenials hitting home-buying age having already peaked.
Title: Re: Global Recession?
Post by: USCTrojanCPA on May 26, 2022, 12:07:59 PM
I feel for real estate this will be similar to the late 80s/early 90s crash in SoCal given the dy/dx of the unemployment rate and mortgage rates. Remote workers are already starting to whine on LinkedIn about pressure to come to the office. How do you get to Cupertino weekly if you're living in OC? That gets expensive quick.

June 1 2023 is the date for my $1M/7% prediction. Happy to buy a round at Houstons for anyone that wants to show up if I lose - always looking for an excuse to come home.

I don't think a housing bust will play out that quickly.  Real estate moves much more slowly than stocks and typically doesn't bottom out until 2-3 years after the recession that caused the bust has ended. 

By that time there will be some demographic headwinds working against housing with Boomers starting to sell en masse, and the wave of Millenials hitting home-buying age having already peaked.

Do you recall what housing did in the post dot.com bubble recession?  Hint, prices didn't go down much at all.  You'll need significant job losses to result in material housing price reductions because the cost side to build a home are sticky.
Title: Re: Global Recession?
Post by: OCtoSV on May 26, 2022, 12:32:54 PM
To be clear, my price call is for the $1.6M condo to get crammed down to $1M as rates hit 7%. The $1.6M older Irvine resale SFR will get hit less. The $1.6M condo is a product for areas like Bronxville NY, close in to Manhattan job centers where the SFRs are much more expensive, almost all of them resale. The Irvine $1.6M condo is a luxury consumer product that will get whacked as OC employment gets hit in the coming recession.
Title: Re: Global Recession?
Post by: Liar Loan on May 26, 2022, 12:58:37 PM
I feel for real estate this will be similar to the late 80s/early 90s crash in SoCal given the dy/dx of the unemployment rate and mortgage rates. Remote workers are already starting to whine on LinkedIn about pressure to come to the office. How do you get to Cupertino weekly if you're living in OC? That gets expensive quick.

June 1 2023 is the date for my $1M/7% prediction. Happy to buy a round at Houstons for anyone that wants to show up if I lose - always looking for an excuse to come home.

I don't think a housing bust will play out that quickly.  Real estate moves much more slowly than stocks and typically doesn't bottom out until 2-3 years after the recession that caused the bust has ended. 

By that time there will be some demographic headwinds working against housing with Boomers starting to sell en masse, and the wave of Millenials hitting home-buying age having already peaked.

Do you recall what housing did in the post dot.com bubble recession?  Hint, prices didn't go down much at all.  You'll need significant job losses to result in material housing price reductions because the cost side to build a home are sticky.

Yes, but I don't see any reason to believe this downturn will mimic that one.  The Fed dropped rates from 6.5% in 2000 to 0.97% in 2003, which saved housing and ultimately led to the '07 bubble.  This time the Fed is moving in the opposite direction going from 0.0% (not including the effect of QE) to the highest rate since at least the Great Recession, and their hands are tied because inflation has gotten out of control.
Title: Re: Global Recession?
Post by: USCTrojanCPA on May 26, 2022, 01:32:41 PM
I feel for real estate this will be similar to the late 80s/early 90s crash in SoCal given the dy/dx of the unemployment rate and mortgage rates. Remote workers are already starting to whine on LinkedIn about pressure to come to the office. How do you get to Cupertino weekly if you're living in OC? That gets expensive quick.

June 1 2023 is the date for my $1M/7% prediction. Happy to buy a round at Houstons for anyone that wants to show up if I lose - always looking for an excuse to come home.

I don't think a housing bust will play out that quickly.  Real estate moves much more slowly than stocks and typically doesn't bottom out until 2-3 years after the recession that caused the bust has ended. 

By that time there will be some demographic headwinds working against housing with Boomers starting to sell en masse, and the wave of Millenials hitting home-buying age having already peaked.

Do you recall what housing did in the post dot.com bubble recession?  Hint, prices didn't go down much at all.  You'll need significant job losses to result in material housing price reductions because the cost side to build a home are sticky.

Yes, but I don't see any reason to believe this downturn will mimic that one.  The Fed dropped rates from 6.5% in 2000 to 0.97% in 2003, which saved housing and ultimately led to the '07 bubble.  This time the Fed is moving in the opposite direction going from 0.0% (not including the effect of QE) to the highest rate since at least the Great Recession, and their hands are tied because inflation has gotten out of control.

Fair point but employment and the job market will be key going forward.  Rates are actually coming down as bond investors are already pricing in an economic slowdown which will obviously result in lower inflation.
Title: Re: Global Recession?
Post by: Liar Loan on May 26, 2022, 02:17:15 PM
I feel for real estate this will be similar to the late 80s/early 90s crash in SoCal given the dy/dx of the unemployment rate and mortgage rates. Remote workers are already starting to whine on LinkedIn about pressure to come to the office. How do you get to Cupertino weekly if you're living in OC? That gets expensive quick.

June 1 2023 is the date for my $1M/7% prediction. Happy to buy a round at Houstons for anyone that wants to show up if I lose - always looking for an excuse to come home.

I don't think a housing bust will play out that quickly.  Real estate moves much more slowly than stocks and typically doesn't bottom out until 2-3 years after the recession that caused the bust has ended. 

By that time there will be some demographic headwinds working against housing with Boomers starting to sell en masse, and the wave of Millenials hitting home-buying age having already peaked.

Do you recall what housing did in the post dot.com bubble recession?  Hint, prices didn't go down much at all.  You'll need significant job losses to result in material housing price reductions because the cost side to build a home are sticky.

Yes, but I don't see any reason to believe this downturn will mimic that one.  The Fed dropped rates from 6.5% in 2000 to 0.97% in 2003, which saved housing and ultimately led to the '07 bubble.  This time the Fed is moving in the opposite direction going from 0.0% (not including the effect of QE) to the highest rate since at least the Great Recession, and their hands are tied because inflation has gotten out of control.

Fair point but employment and the job market will be key going forward.  Rates are actually coming down as bond investors are already pricing in an economic slowdown which will obviously result in lower inflation.

Another follow up point is that housing wasn't particularly overvalued in 2000.  It had just crawled it's way out of the 90's downturn and regained the prior peak achieved in 1991 (at least in OC).  The current housing market has surpassed the 2007 bubble peak by quite a bit in nearly every metro.
Title: Re: Global Recession?
Post by: The California Court Company on May 26, 2022, 02:48:19 PM
too bad there is a limit on how many characters we can have in the signature.
Please look at my signature for the prediction made by IndieDev many years ago. QH now trades at least 10X of that prediction.

To be clear, my price call is for the $1.6M condo to get crammed down to $1M as rates hit 7%. The $1.6M older Irvine resale SFR will get hit less. The $1.6M condo is a product for areas like Bronxville NY, close in to Manhattan job centers where the SFRs are much more expensive, almost all of them resale. The Irvine $1.6M condo is a luxury consumer product that will get whacked as OC employment gets hit in the coming recession.
Title: Re: Global Recession?
Post by: OCtoSV on May 26, 2022, 04:36:57 PM
oh please CCC - what was the Fed up to when you made your sig? Not selling $95B/month off their balance sheet, and the JPY wasn't at 130 with higher rates in JP suppressing demand for Treasuries. China factories were running full steam powering US corp profits. Inflation was non-existent.

I really do hope I'm wrong, but I just call 'em like I see 'em through the lens of a small amount of knowledge about the global financial markets and the Fed.
Title: Re: Global Recession?
Post by: morekaos on June 01, 2022, 08:24:37 AM
China...

Asia-Pacific stocks mixed as private survey shows China’s factory activity contracted in May

China’s Caixin/Markit manufacturing Purchasing Managers’ Index for May came in at 48.1 on Wednesday, an improvement over April’s reading of 46 but still remaining below the 50-level mark that separates expansion from contraction.

https://www.cnbc.com/2022/06/01/asia-markets-china-economy-australia-gdp-data-currencies-oil.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

China faces a nearly $1 trillion funding gap. It will need more debt to fill it.

The Chinese government faces a growing shortfall of cash, analysts say, as they predict an increase of debt to fill the gap.
The analysts did not share specific figures on how much additional debt might be needed. But they pointed to growing pressure on growth that would require more support from debt.
Nomura estimates a funding gap of about 6 trillion yuan ($895.52 billion) — roughly 2.5 trillion yuan in decreased revenue due to tax refunds and weaker economic production, and another 3.5 trillion yuan of lost land sales revenue.

https://www.cnbc.com/2022/05/31/china-faces-a-nearly-1-trillion-funding-gap-it-will-need-more-debt-to-fill-it.html?&qsearchterm=china%20funding%20gap
Title: Re: Global Recession?
Post by: Liar Loan on June 10, 2022, 10:23:32 AM
U.S. consumer sentiment plunges to RECORD LOW in June, UMich survey

The University of Michigan’s gauge of consumer sentiment fell sharply to a record low reading of 50.2, down from a May reading of 58.4. Economists polled by the Wall Street Journal had expected an June reading of 59.

The level is comparable to the low point reached in the middle of the 1980 recession, U Mich said.


https://www.msn.com/en-us/money/markets/us-consumer-sentiment-plunges-to-record-low-in-june-umich-survey/
Title: Re: Global Recession?
Post by: Liar Loan on June 13, 2022, 11:45:56 AM
Consumer Sentiment is at the lowest ever recorded since they started collecting data in 1952
The prior low was at the end of the Carter presidency.

(https://preview.redd.it/qz2rd8eq7u491.jpg?width=960&crop=smart&auto=webp&s=0771b103d17cb4f2f966f5d4a0c941c3080739af)
Title: Re: Global Recession?
Post by: morekaos on June 21, 2022, 02:03:50 PM
China is collapsing and you would never know it.....

There’s a run on Chinese banks and it’s being ignored by the world

In the anatomy of an economic crisis, a bank run is the point of no return.

Bank runs occur when people scramble to withdraw cash from banks in fear of collapse. In the worst cases, banks’ liquid cash reserves are exhausted, not everyone gets their money and the bank defaults.

It’s a grim scenario which, fortunately, has occurred rarely in history.

The most significant bank runs in the United States took place during the 1930’s Great Depression. More recently, there were runs on numerous U.S. banks during the Financial Crisis in 2008.

In Asia, bank runs have also been rare. A run on Japanese banks in 1927 led to the collapse of dozens of institutions across the country. There was a banking crisis in Myanmar in 2003 which the country has never really fully recovered from.

But perhaps since the Great Depression, none has been as significant compared to what is seemingly unfolding in China right now.

https://www.asiamarkets.com/chinese-banks-run/
Title: Re: Global Recession?
Post by: morekaos on June 21, 2022, 02:09:11 PM
So thats why they did that.... ;D ;D >:D

China’s bank run victims planned to protest. Then their Covid health codes turned red

Liu, a 39-year-old tech worker in Beijing, arrived in the central city of Zhengzhou on Sunday with all the boxes ticked to travel under China’s stringent Covid restrictions.

He had tested negative for Covid-19 the day before; his hotel had confirmed he could be checked in; and the health code on his phone app was green — meaning he had not been exposed to people or places deemed risks and was therefore free to travel.


But when Liu scanned a local QR code to exit the Zhengzhou train station, his health code came back red — a nightmare for any traveler in China, where freedom of movement is strictly dictated by a color-code system imposed by the government to control the spread of the virus.

Anyone with a red code — usually assigned to people infected with Covid or deemed by authorities to be at high risk of infection — immediately becomes persona non grata. They are banned from all public venues and transport, and are often subject to weeks of government quarantine.

https://kvia.com/news/2022/06/15/chinas-bank-run-victims-planned-to-protest-then-their-health-covid-codes-turned-red/
Title: Re: Global Recession?
Post by: Liar Loan on June 23, 2022, 01:14:06 PM
The Atlanta Fed is forecasting 0% GDP growth in Q2, down from a high of 2.5% forecast last month.

(https://www.atlantafed.org/-/media/images/cqer/research/gdpnow/gdpnow-forecast-evolution.gif?h=496&w=650&la=en)
Title: Re: Global Recession?
Post by: Liar Loan on July 01, 2022, 04:40:37 PM
Well, the new estimate is -2.1% GDP growth, down from 0% when I posted a week ago.  Yikes!

(https://www.atlantafed.org/-/media/images/cqer/research/gdpnow/gdpnow-forecast-evolution.gif?h=507&w=650&la=en)
Title: Re: Global Recession?
Post by: Liar Loan on July 11, 2022, 12:47:49 PM
Struggling consumers will prioritize paying mortgages over auto & credit card debt.

Car Repos Are Exploding. That’s a Bad Omen.

Lucky Lopez is a car dealer who has been in the business for about 20 years. In recent meetings with bankers, where he bids on repossessed vehicles before they go to auction, he has noticed some common characteristics of the defaulted loans. Most of the loans on recently repossessed cars originated during 2020 and 2021, whereas origination dates are normally scattered because people fall on hard times at different times; loan-to-value ratios, or the amount financed relative to the value of the vehicle, are around 140%, versus a more normal 80%; and many of the loans were extended to buyers who had temporary pops in income during the pandemic. Those monthly incomes fell—sometimes by half—as pandemic stimulus programs stopped, and now they look even worse on an inflation-adjusted basis and as the prices of basics in particular are climbing.

“The idea that the economy is strong? Anyone who is actually doing business sees things are not strong,” says Lopez. “We had a housing bubble in 2008, and now we have an auto bubble.”


https://www.barrons.com/articles/recession-cars-bank-repos-51657316562
Title: Re: Global Recession?
Post by: morekaos on July 12, 2022, 08:00:35 AM
Things are not going well here and no one is looking...

China crushes mass protest by bank depositors demanding their life savings back

Hong Kong (CNN)Chinese authorities on Sunday violently dispersed a peaceful protest by hundreds of depositors, who sought in vain to demand their life savings back from banks that have run into a deepening cash crisis.

Since April, four rural banks in China's central Henan province have frozen millions of dollars worth of deposits, threatening the livelihoods of hundreds of thousands of customers in an economy already battered by draconian Covid lockdowns.
Anguished depositors have staged several demonstrations in the city of Zhengzhou, the provincial capital of Henan, over the past two months, but their demands have invariably fallen on deaf ears.
On Sunday, more than 1,000 depositors from across China gathered outside the Zhengzhou branch of the country's central bank, the People's Bank of China, to launch their largest protest yet, more than half a dozen protesters told CNN.

https://www.cnn.com/2022/07/10/china/china-henan-bank-depositors-protest-mic-intl-hnk/index.html
Title: Re: Global Recession?
Post by: Liar Loan on July 20, 2022, 12:48:43 PM
Unlike the early stages of the 2008 recession, homebuilders are not drinking the Kool-aid this time.

We're Heading Into a Housing Recession: National Association of Home Builders' CEO

Title: Re: Global Recession?
Post by: Liar Loan on July 22, 2022, 09:31:19 AM
A leading indicator of financial hardship to come...

AT&T shares fall after company says later payments, higher spending are hurting cash flow

AT&T said customers have been paying their bills about two days later than they did the same time last year. That alone affected about $1 billion in quarterly cash flow, the company said.

“There’s clearly some dynamics in the economy. We have customers that are stretching out their payments a little bit,” AT&T CEO John Stankey told CNBC. “We expect that they’re going to continue to pay their bills, but they’re taking longer to do it. That’s not atypical in an economic cycle.”[/size]

https://www.cnbc.com/2022/07/21/att-shares-fall-after-company-says-overdue-bills-higher-spending-are-hurting-cash-flow.html
Title: Re: Global Recession?
Post by: sleepy5136 on August 05, 2022, 03:16:43 PM
Unemployement rate: 3.5%
Jobs added: 528k vs 250k expected. jobs lost in pandemic are fully recovered.
wages: up 5.2% vs 9% inflation rate

Employment will be the key indicator going forward to see where inflation goes. As long as people are employed, they will be able to stomach the price increases and demand for things like travel. Pushing prices potentially higher. Which is why I don't see inflation cooling down just yet. Expect Fed to raise more and interest rates to go up.
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