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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.”
Coffee the Christian way: Promised Grounds
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?
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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.
Confirmed: The Haitian Invaders Are Eating Geese in Ohio
by Townhall
Springfield, Ohio, is now on the frontlines of the immigration wars. The city, awash with tens of thousands of Haitian migrants, has become the center of national attention after stories of pets, geese, and ducks. It’s triggered liberals to no end, with CNN hosts and Rep. Eric Swalwell (D-CA) blowing…
“I Was Duped by the Media”: Bishop Apologizes for Closing Churches During Covid
by Caldron Pool
“I was duped by the media hype and should have been stronger.” A US Catholic Bishop has apologized for closing churches during COVID, admitting he was “duped by the media.” Bishop Joseph Strickland of Tyler, Texas, made the admission on X (formerly Twitter) earlier this week, in response to a…
Another Top NYC Official With Ties to NYPD, Eric Adams Accused of Chinese Spying
by Headline USA
A little over a week after a former top aide to New York Gov. Kathy Hochul was arrested for spying on behalf of the Chinese Communist Party, another New York government employee was found to have close ties to the CCP. Lin Gui’an, the assistant director of the New York…
Late-Term Abortion: 5 Facts Harris, Liberal Media Want to Conceal
by Melanie Israel, DeVos Center
(Daily Signal)—Predictably, the issue of abortion was one of the first to come up during Tuesday night’s presidential debate on ABC. And predictably, both the moderators and Vice President Kamala Harris wouldn’t let pesky facts get in the way of their shared agenda. Harris refused to identify a single limit on abortion…
Faith-Driven Gold IRA Company Reveals Three Secrets About Americans’ Retirement
by Sponsored Post
The precious metals industry has developed a rough reputation over the last couple of years, especially as it pertains to retirement accounts. With all of the angst many Americans are feeling about the economy, gold companies have pounced on the opportunity to take advantage of people’s fears. One company stands…
Father of Boy Killed by Haitian in Springfield Says He Wishes Son ‘Was Killed by 60-Year-Old White Man’
by Daily Wire
The father of an 11-year-old boy who was killed by a Haitian immigrant in Springfield, Ohio, said during a city commission meeting on Tuesday that he wishes his son was instead killed by an “old white man.” Aiden Clark was killed in August 2023, when a Haitian immigrant, Hermanio Joseph,…
LA Times Reporter Reveals ‘Climate Anxiety’ and Calls to ‘Fix Individualism’ to Save the Planet
by Free Beacon
The Los Angeles Times published a sprawling essay Wednesday written by environmental reporter Rosanna Xia, who expressed overwhelming grief about the prospect of climate change and called to “fix individualism” and “reimagine” society’s “systems” to address climate change. “How do you cope? I feel the sorrow, the quiet plea for…
DOJ Immigration Attorney: Biden Has Authority to End Illegal Immigration, but Democrat Megadonors Control Border Agenda
by The Gateway Pundit
Christian Cooper, a Special Assistant on Immigration Litigation U.S. Attorney’s Office of the Department of Justice said on undercover video: Joe Biden has the authority to end illegal immigration but Democrat megadonors control the immigration agenda. “We’re Completely Controlled by Special Interests Above,” Christian Cooper said. Per Project Veritas: President…
Iran Wants China-Led BRICS to Create a New World ‘Security Structure’
by Breitbart
Ali Akbar Ahmadian, secretary-general of the Supreme National Security Council (SNSC) of Iran, on Wednesday called for the China-dominated BRICS economic group to create “a new security structure in the international arena to help the order and security of the future world.” Speaking at a BRICS forum in St. Petersburg,…
Chemtrails Are No Longer a “Conspiracy Theory” as Globalists Openly Call It an Essential Part of Their Battle Against “Climate Change”
by S.D. Wells, Natural News
(Natural News)—The Communist-Democrat politicians in Washington DC and their globalist cohorts are engaged in a multi-faceted agenda rooted in profound deceit. Using extreme censorship of anyone who questions their agenda, they’ve (literally) gotten away with murder using schemes, plots and propaganda to further their goals of obtaining complete control of…
Crowd Backs Trump as He Comes Face-to-Face with Kamala Harris at 9/11 Memorial
by Western Journal
As dignitaries gathered for this year’s Ground Zero memorial service to honor those killed in the 9/11 attacks and remind American of the cost of terrorism, one man stood out for the New York City crowd. “Donald!” voices in the crowd began calling as former President Donald Trump was spotted…
Judge Dismisses Georgia Election Official’s Plea for Protection to Do Her Job After Dem Lawfare Threats
by The Federalist
A Georgia judge dismissed a plea from a Fulton County election official who asked the court to confirm she is not obligated to rubber-stamp election results after Democrats threatened her with criminal charges. Fulton County Board of Registration and Elections (FCBRE) member Julie Adams filed a suit in May seeking…
“Our Town Is a Time Bomb” – Springfield Locals on the Haitian Crisis Destroying Their City
by Infowars
Turning Point USA’s “Frontlines” journalists hit the streets of Springfield, Ohio, to learn more about the story taking the nation by storm and causing Americans to debate the illegal immigration emergency. 20,000 Haitian “migrants” have flooded the small town of around 58,000 people since the Biden-Harris administration started flying them…
Russia Says It Could “Combine” With China if They Faced a Threat
by End Times Headlines
Russia said on Wednesday that its partnership with China was not aimed against third countries but the two powers could “combine potential” if faced with a threat from the United States. “I would like to remind you that Moscow and Beijing will respond to ‘double containment’ by the United States…
Comrade Kamala Embraced Fossil Fuels on the Debate Stage, but What Does Her Record Say?
by NIck Pope, Daily Caller News Foundation
(DCNF)—Vice President Kamala Harris purported to be in favor of fossil fuels on the debate stage on Tuesday night, but several of her talking points lacked key context or were contradicted by her record in the Biden administration. The vice president reiterated on the debate stage that she no longer…
Time Magazine Forced to Make Huge Retraction After Spewing Debate Lie
by Trending Politics
Time Magazine has been forced to issue a public retraction following the publication of a highly contentious statement mischaracterizing a claim made by former President Donald Trump during Tuesday night’s debate with Vice President Kamala Harris. The statement, which accused Trump of fabricating an assertion about Harris supporting taxpayer-funded transgender…
