Trouble ahead for the housing market

CHRIS J RATCLIFFE/AFP/Getty Images

Our good friend John Rubino over at DollarCollapse.com just released an analysis titled US Housing Bubble Enters Stage Two: Suddenly Motivated Sellers.

He reminds us that housing bubbles follow a predictable progression:

  • Stage One: Mania -- Prices rise at an accelerating rate as factors like excess central bank liquidity/loose credit/hot foreign money drive a virtuous bidding cycle well above sustainably afforable levels.
  • Stage Two: Peak -- Increasingly jittery owners attempt to sell out before the party ends. Supply jumps as prices stagnate.
  • Stage Three: Bust -- As inventory builds, sellers start having to lower prices. This begins a vicious cycle: buyers go on strike not wanting to catch a falling knife, causing sellers to drop prices further.

Rubino cites recent statistics that may indicate the US national housing market is finally entering Stage Two after a rip-roaring decade of recovery since the bursting of the 2007 housing bubble:

  • The supply of homes for sale during the "all important" spring market rose at 3x last year's rate;
  • 30 of America's 100 largest cities now have more inventory than they did a year ago, and
  • Mortgage applications for new homes dropped 9% YoY.

Taken together, these suggest that residential housing supply is increasing as sales slow, exactly what you'd expect to see in the transition from Stage One to Stage Two.

If that's indeed what's happening, Rubino warns the following comes next:

Stage Two's deluge of supply sets the table for US housing bubble Stage Three by soaking up the remaining demand and changing the tenor of the market. Deals get done at the asking price instead of way above, then at a little below, then a lot below. Instead of being snapped up the day they're listed, houses begin to languish on the market for weeks, then months. Would-be sellers, who have already mentally cashed their monster peak-bubble-price checks, start to panic. They cut their asking prices preemptively, trying to get ahead of the decline, which causes “comps" to plunge, forcing subsequent sellers to cut even further.
Sales volumes contract, mortgage bankers and realtors get laid off. Then the last year's (in retrospect) really crappy mortgages start defaulting, the mortgage-backed bonds that contain their paper plunge in price, et voila, we're back in 2008.

Rubino's article is timely, as we've lately been seeing a proliferation of signs that the global boom in housing is suddenly cooling. I've also recently encountered similar evidence that the housing market in my own pocket of Northern California is weakening, and I'm curious to learn if other PeakProsperity.com readers are seeing the same in their hometowns.

The Global Housing Bubble

Housing, as they accurately say, is local. Conditions differ from region to region, making generalizations of the overall market difficult.

That said, the tsunami of $trillions printed by the world's central banking cartel since 2008 clearly found its way into the housing market.

The world real estate market is HUGE, over $200 trillion. That dwarfs the global debt and equity markets. So it's no surprise the central authorities did all they could to reverse the losses the GFC created for property owners.

As a result, many of the most popular locations to live are now clearly in bubble territory when it comes to home prices:

UBS map of global housing bubbles

The chart above displays the most bubblicious major cities around the world in red. But it's important to note that the merely 'overvalued' markets denoted in yellow, and even some of the green 'fair-valued' ones, are still wildly-unaffordable for the average resident.

For example, in "yellow" San Francisco, where the median home now costs $1.6 million, prices are well-above the excesses seen during the previous housing bubble:

And in 'fair-valued' New York City, the median household must spend 65% of its annual income on housing alone.

Is it any wonder that 70% of millennials who don't yet own a home fear they'll never be able to afford one?

Signs Galore Of Topping Markets

At the end of a speculative bubble, it's the assets that are most overvalued that correct first and correct hardest.

So we would expect that as the highest-priced real estate markets fare from here, the general real estate market will follow.

When we take a closer look at what's currently going on with the red-hot real estate markets noted in the chart above, we indeed see evidence supportive of Rubino's claim that the decade-long Stage One mania may now be ending.

Here's a spate of recent headlines about these cities:

Sure looks like Rubino's predicted Stage Two symptoms of rising supply and stagnating prices.

Local Signs, Too

As mentioned, I live in Northern California, quite close to Santa Rosa.

Things here aren't as nuts as they are in San Franscico; but it's still a moderately-affluent region with lots of second homes. It's one of the semi-frothy areas I'd expect to see cooling off in first should there be a downwards turn in macroeconomic conditions.

Located less than an hour north of San Francisco, residential housing prices here have roughly increased 2x over the past six years as the Bay Area has boomed. Supply has been in chronic shortage, exacerbated by the loss of thousands of structures burned during last October's destructive Tubbs fire.

But recently, for the first time in many years, realtors here are beginning to talk of a softening they're seeing in the local housing market.

Median sale prices dropped from May to June, which is counter to previous years. And several towns are seeing year-over-year declines in median price -- something unheard of over the past 7 years.

Meanwhile, the days-on-market ratio for properties is beginning to creep up.

Of the greatest concern to the realtors in my area: bidding wars are no longer happening. Houses are selling either at or below asking prices now. That's a *big* development in a market where houses have routinely sold for $50-100K+ above the listing price.

In a similar vein, I'm hearing evidence of the softening rents down in San Franscico and the East Bay (Oakland/Berkeley). Wolf Richter has done a good job chronicalling the substantial volume of newly-constructed units that have recently hit the market threatening to depress rents, and I've heard from a multi-family unit owner down there how landlords in the area are now finding their rents ~$500 too high for the market to bear.

This is all early and anecdotal data. It's too little at this point to claim definitively that my local housing market has entered Stage Two.

But I'm curious to hear from other PeakProsperity.com readers. What are you observing in your local markets? Are you seeing similar signs of concern?

Please share any insights you have in the Comments section below. Collectively, we may be able to add clarity, in one direction or another, to Rubino's hypothesis.

Prepping For Stage Two

Whatever the timing, Stage Two is an inevitability for today's ridiculously-overpriced real estate markets. It's not a matter of if it (as well as Stage Three) arrives, but when.

Given the data above, I think Rubino is correct in his assessment. Or at least, correct enough that prudent action is warranted today.

This makes even greater sense when considered along with the current trends of rising interest rates and quantitative tightening. Remember, home prices and interest rates have a mathematically inverse relationship: as rates go up, home prices must go down (all else being equal). And as central banks start withdrawing in earnest the excess liquidity that inflated property values to their current nose-bleed heights, expect further downward pressure on prices.

To drive the urgeny home even harder, we haven't even yet talked about the damage an economic recession and/or a painful correction in the financial markets would wreak on the real estate market. With the current expansion cycle the second-longest on record and our all-time-high markets looking increasingly vulnerable, it seems very unlikely we'll avoid at least one of those crises in the near to mid-future.

Here are worthwhile steps we recommend at this point:

  • Consider selling: If you're a homeowner and are not committed to remaining in your property for the next decade+, do some scenario planning. If prices fell 20%, how much of a financial and emotional impact would that have on you? If you have substantial equity gains in your home, Stage Two is the time to protect them. If you have little equity right now, make sure you're fully aware of the repercussions you'll face should you find yourself underwater on your property. What will your options be should you lose your job in the next recession? Whether to hold, or sell now and rent, is a weighty decision; and the rationale differs for each household -- so we strongly recommend making it with the guidance of your professional financial advisor.
  • Raise cash: The vicious cycle that begins as Stage Two transitions into Stage Three is deflationary. Lower prices beget lower prices. During this period, cash is king. By sitting on it, your purchasing power increases the farther home prices drop. And when the dust settles, you'll be positioned to take advantage of the resulting values in the real estate market. We've written at length about the wisdom of this strategy given current market conditions, as well as how, while waiting for lower prices, you can get 30x the return on your cash savings than your bank is willing to pay you, with lower risk. Our recent report on the topic is a must-read.
  • Educate yourself: Yes, real estate is overpriced in a number of markets. But it has been and will remain one of the best ways available to the non-elites to amass income and tangible wealth. And as mentioned, when the next Stage 3 brings prices down, there will be value to be had -- potentially extreme value. If you aren't already an experienced real estate investor, now is the time to educate yourself; so that you'll be positioned to take informed action when the time to buy arises. Our recent podcast interview on Real Estate Investing 101 is a good place to start.

In Part 2: The Case For Starting To Build A (Small) Short Position, we conduct a similar analysis into the overvaluation and growing vulnerability of the financial markets (which are highly likely to correct much faster, sooner and more violently than the housing market), including the details on a recent short position we've started building.

The tranquil "free ride" the financial and housing markets have had for nearly a decade are ending. The string of easy gains with little effort are over now that the central bank money spigots are turning off at the same time the "greater fools" pocketbooks are tapping out.

For a brief time, prices will waiver, as investors remain in denial and refuse to sell at lower prices. But soon that denial will turn to panic, and prices will plummet.

Make sure you're positioned prudently before then.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

This week on the Glenn Beck Podcast, Glenn spoke with Vox co-founder Matthew Yglesias about his new book, "One Billion Americans: The Case for Thinking Bigger."

Matthew and Glenn agree that, while conservatives and liberals may disagree on a lot, we're not as far apart as some make it seem. If we truly want America to continue doing great things, we must spend less time fighting amongst ourselves.

Watch a clip from the full interview with Matthew Yglesias below:


Find the full podcast on Glenn's YouTube channel or on Blaze Media's podcast network.

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'A convenient boogeyman for misinformation artists': Why is the New York Times defending George Soros?

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On the "Glenn Beck Radio Program" Tuesday, Glenn discussed the details of a recent New York Times article that claims left-wing billionaire financier George Soros "has become a convenient boogeyman for misinformation artists who have falsely claimed that he funds spontaneous Black Lives Matter protests as well as antifa, the decentralized and largely online, far-left activist network that opposes President Trump."

The Times article followed last week's bizarre Fox News segment in which former House Speaker Newt Gingrich appeared to be censored for criticizing Soros (read more here). The article also labeled Glenn a "conspiracy theorist" for his tweet supporting Gingrich.

Watch the video clip below for details:


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The former ambassador to Russia under the Obama Administration, Michael McFaul, came up with "7 Pillars of Color Revolution," a list of seven steps needed to incite the type of revolution used to upend Eastern European countries like Ukraine and Georgia in the past two decades. On his TV special this week, Glenn Beck broke down the seven steps and showed how they're happening right now in America.

Here are McFaul's seven steps:

1. Semi-autocratic regime (not fully autocratic) – provides opportunity to call incumbent leader "fascist"

2. Appearance of unpopular president or incumbent leader

3. United and organized opposition – Antifa, BLM

4. Effective system to convince the public (well before the election) of voter fraud

5. Compliant media to push voter fraud narrative

6. Political opposition organization able to mobilize "thousands to millions in the streets"

7. Division among military and police


Glenn explained each "pillar," offering examples and evidence of how the Obama administration laid out the plan for an Eastern European style revolution in order to completely upend the American system.

Last month, McFaul made a obvious attempt to downplay his "color revolutions" plan with the following tweet:

Two weeks later, he appeared to celebrate step seven of his plan in this now-deleted tweet:



As Glenn explains in this clip, the Obama administration's "7 Pillars of Color Revolution" are all playing out – just weeks before President Donald Trump takes on Democratic candidate Joe Biden in the November election.

Watch the video clip below to hear more from Glenn:


Watch the full special "CIVIL WAR: The Way America Could End in 2020" here.

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Modern eugenics: Will Christians fight this deadly movement?

Photo by Olga Kononenko on Unsplash

Last month, without much fanfare, a new research paper disclosed that 94 percent of Belgian physicians support the killing of new-born babies after birth if they are diagnosed with a disability.

A shocking revelation indeed that did not receive the attention it demanded. Consider this along with parents who believe that if their unborn babies are pre-diagnosed with a disability, they would choose to abort their child. Upwards of 70 percent of mothers whose children are given a prenatal disability diagnosis, such as Down Syndrome, abort to avoid the possibility of being burdened with caring for a disabled child.

This disdain for the disabled hits close to home for me. In 1997, my family received a letter from Michael Schiavo, the husband of my sister, Terri Schiavo, informing us that he intended to petition a court to withdraw Terri's feeding tube.

For those who do not remember, in 1990, at the age of 26, Terri experienced a still-unexplained collapse while at home with Michael, who subsequently became her legal guardian. Terri required only love and care, food and water via feeding tube since she had difficulty swallowing as a result of her brain injury. Nonetheless, Michael's petition was successful, and Terri's life was intentionally ended in 2005 by depriving her of food and water, causing her to die from dehydration and starvation. It took almost two excruciating weeks.

Prior to my sister's predicament, the biases that existed towards persons with disabilities had been invisible to me. Since then, I have come to learn the dark history of deadly discrimination towards persons with disabilities.

Indeed, some 20 years prior to Germany's T4 eugenics movement, where upwards of 200,000 German citizens were targeted and killed because of their physical or mental disability, the United States was experiencing its own eugenics movement.

U.S. Supreme Court Justice Clarence Thomas documented some of this history in his concurring opinion in Box v. Planned Parenthood of Indiana and Kentucky, Inc., Justice Thomas describes how eugenics became part of the academic curriculum being taught in upwards of 400 American universities and colleges.

It was not solely race that was the target of the U.S. eugenics movement. Eugenicists also targeted the institutionalized due to incurable illness, the physically and cognitively disabled, the elderly, and those with medical dependency.

In 1973, the U.S. Supreme Court handed down Roe v. Wade, which wiped out pro-life laws in nearly every state and opened the floodgates to abortion throughout the entirety of pregnancy. Since then, 60 million children have been killed. Abortion as we know it today has become a vehicle for a modern-day eugenics program.

Since the Catholic Church was established, the Truth of Christ was the greatest shield against these types of attacks on the human person and the best weapon in the fight for equality and justice. Tragically, however, for several decades, the Church has been infiltrated by modernist clergy, creating disorder and confusion among the laity, perverting the teachings of the Church and pushing a reckless supposed “social justice" agenda.

My family witnessed this firsthand during Terri's case. Church teaching is clear: it is our moral obligation to provide care for the cognitively disabled like Terri. However, Bishop Robert Lynch, who was the bishop of the Diocese of St. Petersburg, Florida, during Terri's case, offered no support and was derelict in his duties during the fight for Terri's life.

Bishop Lynch had an obligation to use his position to protect Terri from the people trying to kill her and to uphold Church teaching. Indeed, it was not only the silence of Bishop Lynch but that of the United States Conference of Catholic Bishops (USCCB), which also remained silent despite my family's pleas for help, that contributed to Terri being needlessly starved and dehydrated to death.

My family's experience, sadly, has turned out to be more of the rule than the exception. Consider what happened to Michael Hickson. Hickson was a 36-year-old, brain-injured person admitted to a Texas hospital after contracting COVID-19. Incredibly—and against the wishes of Michael's wife—the hospital decided not to treat Michael because they arbitrarily decided that his “quality of life" was “unacceptably low" due to his pre-existing disability. Michael died within a week once the decision not to treat him was imposed upon him despite the efforts of his wife to obtain basic care for her husband.

During my sister's case and our advocacy work with patients and their families, it would have been helpful to have a unified voice coming from our clergy consistently supporting the lives of our medically vulnerable. We desperately need to see faithful Catholic pastoral witness that confounds the expectations of the elite by pointing to Jesus Christ and the moral law.

A Church that appears more concerned with baptizing the latest social and political movements is a Church that may appear to be “relevant," but one that may also find itself swallowed up by the preoccupations of our time.

As Catholics, we know all too well the reluctance of priests to preach on issues of abortion, euthanasia, assisted suicide, and other pro-life issues. We have heard that the Church cannot risk becoming too political.

At the same time, some within the Church are now openly supporting Black Lives Matter, an organization that openly declares itself hostile to the family, to moral norms as taught by the Church, and whose founders embrace the deadly ideology of Marxism.

For example, Bishop Mark J. Seitz of El Paso, Texas, knelt in prayer with a cardboard sign asserting his support for this ideology.

Recently, during an online liturgy of the mass, Fr. Kenneth Boller at The Church of St. Francis Xavier in New York, led the congregation with what appears to sound like questions affirming the BLM agenda. Moreover, while reading these questions, pictures of George Floyd, Breonna Taylor, and Ahmaud Arbery, assumed victims of racial injustice, were placed on the altar of St. Francis Xavier Church, a place typically reserved for Saints of the Catholic Church.

Contrast these two stories with what happened in the Diocese of Lafayette, Indiana, where Rev. Theodore Rothrock of St. Elizabeth Seton Church fell victim to the ire of Bishop Timothy Doherty. Fr. Rothrock used strong language in his weekly church bulletin criticizing the Black Lives Matter movement and its organizers. Consequently, Bishop Doherty suspended Fr. Rothrock from public ministry.

In 1972, Pope Pius VI said, “The smoke of Satan has entered the temple of God." It seems that too many of our clergy today are enjoying the smell.

I encourage all who are concerned about the human right to life and about Christ-centered reforms in our culture and our Church to raise your voices for pastoral leadership in every area of our shared lives as Christian people.

Bobby Schindler is a Senior Fellow with Americans United for Life, Associate Scholar at the Charlotte Lozier Institute, and President of the Terri Schiavo Life & Hope Network.