“These are trades that, three years ago, would have far surpassed anyone’s imagination.”
Home prices hit a slick $1,000,000, while soaring office rents blow up enterprises with real business models. It’s crazy. It’s powered by hot money from around the world. Then comes the moment when the hot money evaporates.
‘Hours Worked’ plunged in the second quarter at a rate last seen during the middle of the Great Recession, a terrible harbinger of GDP.
Buyers from China are the most prolific, spending 72% more than a year ago! On expensive homes. They benefit from the devaluation of the dollar – according to the NAR – and are desperate to get their money out of China.
FICO: “That doesn’t feel like a healthy, sustainable growth situation.” Lenders fret “about the risk in mortgages” as consumers return to “reckless borrowing.”
The smart money had a goal, which it now reached via the “multiplier effect” by which a small number of sales can have extreme consequences in price for the rest.
It always starts with a toxic mix: Home sales plunged and inventories jumped in May. The housing market is buckling under its own inflated weight.
“Recently, the billionaire venture capitalist Vinod Khosla went hunting for one-bedroom apartments in San Francisco….” And then he opened his mouth.
When the home-sales curve kinked south last fall, soothsayers had some handy reasons. And it would be temporary. Month after month, they came up with new reasons. Now they’ve used up all the good ones, but sales are still tanking.
This is precisely what shouldn’t have happened but was destined to happen: as prices are soaring, only luxury home sales are growing … 1% of the market! Something has to give.