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The Home Buyers
(Mises)—As reported by ZeroHedge recently, the NAR U.S. Pending Home Sales Index dropped 2.1 percent MoM in May, down 6.6 percent YoY.
To put these numbers into perspective, the current index is at 70.8, or 70.8 percent of the contract activity in the base year 2001. This is lower than any point during the 2008 financial crisis; even lower than 2020, when lockdowns brought markets to a screeching halt. This is the lowest level of contract activity in my lifetime.
The position of new home buyers in 2024 is unprecedented. Not only are prices at record highs, but the new generation of prospective home buyers can’t remember a time without cheap mortgages. During the steep decline in pending sales between 2005 and 2007, the average 30-year fixed rate mortgage only increased by about one percent. Since January of 2021, the average 30-year fixed rate has increased by 4.21 percent.
The Retail Investors
News is trickling out into the press that the investors are offloading non-traded Real Estate Investment Trusts (REITS) , and the demand for withdrawals is causing a significant cash shortage for major players link Blackstone and Starwood.
Last January, InvestmentNews ran a piece on the REIT situation, which included an interview from an anonymous executive.
“What’s going to happen over the next couple of years when commercial mortgages come due, and who will pick up the pieces?” asked a senior industry executive, who asked not to be identified. “Where will they get their refinancing, and where will the REITs and real estate investors go to get their leverage?
“Right now, the firms that hold a bunch of those loans are the regional banks,” the executive said. “And those smaller banks can’t do it, especially after what happened last year. They won’t be able to refinance.”
I discussed the endemic problems in regional banks in a recent article, but this unnamed executive raises another good point: even if the managers can pay disbursements, how are they going to refinance? Any new real estate investments are going to be negatively leveraged for the foreseeable future.
What’s Next for Real Estate?
We’ve covered home buyers and retail investors, but what about big institutional investors? I suspect private equity real estate (PERE) funds are in a similar position to nontraded REITS. For those not in the know, REITS are trusts while PERE funds are usually limited partnerships with owner-managers (General Partners or GPs for short) and non-managing limited liability owners (Limited Partners or LPs for short). At the end of the fund’s life, the owner-managers are supposed to sell off the assets and pay out the proceeds to the LPs.
Managers have some leeway over ending funds, depending on how the terms were negotiated in the partnership agreement. Some agreements funds allow managers, acting in good faith, to hold on to properties a bit longer than the fund’s intended lifespan to increase returns.
There was plenty of time for managers to get ambitious during Covid, when rates were low, real estate values were soaring, and investors were fire hosing money into PERE funds. It was, no doubt, very tempting to hold properties a bit longer than expected and keep collecting management fees. But what about now when rates are high and the market’s gears are full of sand? Will there be buyers willing to eagerly snatch up these properties at the current cost of borrowing?
Since these are private funds, we don’t get access to the limited partner advisory committee meetings, but any whiff in the press of legal disputes over fund payouts and clawback provisions will be a sure indication that something is amiss.
Angel Reese Slammed After Bragging About COVID Vaccinations – ‘Waiting for the Next One to Come Out’
by Western Journal
When young people say dumb things, those who know better tend to err on the side of grace. After all, let them make their mistakes. On the other hand, when those young people emerge as athletic stars and then build a platform from which to spew nonsense in a way…
Sylvester Stallone Survived an Abortion: “I Was Brought Into the World by Accident”
by Life Site News
Sylvester Stallone, known for his roles in Creed and Rocky, opened up about surviving an abortion attempt. His daughters, Sophia and Sistine Stallone, host the Unwaxed Podcast. They interviewed their father about his new Netflix documentary, “Sly.” During the episode, they discussed Stallone’s childhood, something that is addressed in the…
‘What the F***’: Joe Rogan Destroys NYT Headline Warning About Dangers of Constitution
by Daily Wire
Podcaster Joe Rogan absolutely destroyed a recent New York Times headline that warned about the dangers of the U.S. Constitution, suggesting that there’s no amount of “gaslighting” the news organization could do to make him see their side. During “The Joe Rogan Experience” podcast, Rogan and his guest evolutionary biologist,…
What Do They Know? Russia Increases Daily Gold Purchases by 700%
by Sponsored Post
In a significant move, Russia’s Finance Ministry has announced plans to allocate 8.2 billion rubles ($92 million) each day for gold and foreign currency purchases until October 4, the nation’s Finance Minister announced. “The amount of funds allocated for purchases of foreign currency and gold totals 172.9 billion rubles,” the…
CNN Data Guru Says Trump Will Win if He “Outperforms His Current Polls by Just a Single Point”
by Jason Cohen, Daily Caller News Foundation
(DCNF)—CNN senior data reporter Harry Enten said on Friday that former President Donald Trump will win the November election if he can slightly surpass his current poll projections. Vice President Kamala Harris is leading Trump by just 0.2% in the top seven battleground states, according to the RealClearPolling average. Enten,…
New Jobs Report Shows Millions of Americans Lost Jobs to ‘Foreign-Born’ Workers, F/T Work Yields to P/T
by Red State
Trying to nail down Joe Biden or Kamala Harris on the number of jobs they’ve “created” — the government does not create jobs; it can create economic conditions that can lead to job creation or job losses — during the last disastrous three-and-a-half years is like trying to nail Jell-O…
Putin Avoids ‘Kursk Trap’ as His Troops Poised to Take Pokrovsk
by SHTF Plan
President Putin has continued to downplay Ukraine’s major Kursk invasion, which has resulted in Russian territory occupied by Kiev forces, and has instead maintained that capturing and holding all the Donbas in eastern Ukraine remains the goal. “We have to deal with these thugs who made it into Russia,” he…
Leaked Army Advisory Warns of Migrant Gang Violence in Major Cities
by The National Pulse
A threat advisory issued by the U.S. Army to Department of Defense (DOD) personnel across the country warns the Venezuelan gang Tren de Aragua (TdA) has established a significant foothold in multiple American cities and poses a serious danger to local, state, and federal law enforcement. The document—designated as Controlled…
Are You Ready for the Big Steal … Again?
by Richard Blakley, WND
(WND)—The 2020 election was a mess. Only the gullible and self-deceived believe Joe Biden legally obtained more votes than any presidential candidate in U.S. history. If this were true, Democrats would have beaten their drums concerning this “historic” vote, like the pig in the old Valleydale Sausage commercials, but even…
YouTube Uses DOJ Allegations to Justify Axing Tenet Media’s Channel Without Due Process
by The Federalist
The widely used video platform YouTube removed Tenet Media and related channels from its services on Thursday after the Justice Department accused the company of partaking in a secret Russian influence operation. The revelation comes days after the Biden Department of Justice (DOJ) announced the seizure of nearly three dozen…
Has Anyone Noticed That We Know More About Yesterday’s School Shooter Than Crooks?
by Hot Air
The mainstream media has already done a deep dive into the bizarre details of the perpetrator of yesterday’s school shooting, and we have gotten more media availabilities from law enforcement on the events than we have yet gotten from July 13th’s attack on Donald Trump and the three other victims…
Strong Dad Engagement Programs Are Funding the Fight for Fatherhood to Save the Fatherless
by Caldron Pool
“The men the world is raising are not the men the world needs.” No man is born an expert on fatherhood. Good fathers are taught through blunt advice, wise counsel, observation, experience, and their environment. This is why responsible fatherhood programs are saving lives, and why we should be talking…
Ex-CNN Analyst Says Commiela Harris “Has More Riding On” the Debate Than Trump, She’ll Be “More Nervous”
by Jason Cohen, Daily Caller News Foundation
(DCNF)—Former CNN political analyst Chris Cilizza said Friday he believes that the upcoming presidential debate holds more significance for Vice President Kamala Harris than it does for former President Donald Trump. Trump and Harris are slated to compete in their only scheduled presidential debate on ABC News on Tuesday. Cillizza…
