California’s Fiscal Inferno, Part Deux! California Moves To Expand Zero-Down, Interest-Free Home Loan Program To Illegal Immigrants (As If California Home Prices Aren’t High Enough At +33% Under Biden)

California is in the clutches of a fiscal inferno!

California’s budget crisis is projected to expand more than previously thought and could hit a record deficit of $73 billion, according to a new report from the state’s nonpartisan Legislative Analyst’s Office (LAO). The LAO laid out the grim forecast in a Tuesday report that cautions that a $24 billion “erosion in revenues” corresponds to a $15 billion increase in the state’s budget problem. Due to this, the budget deficit, which last month was estimated to hit $58 billion, could now go as high as $73 billion.

Well, if a $73 billion dollar deficit isn’t bad enough, the California State Assembly took a giant step towards bankruptcy by … seriously … A controversial bill that would let illegal immigrants receive the same kind of homebuyer assistance as U.S. citizens has advanced in the California state legislature, drawing criticism from those who object to granting perks to people who break the law by entering the country illegally.

The measure, Assembly Bill 1840, was first introduced in mid-January, and after several amendments, it advanced last week to the Committee on Housing and Community Development, where it awaits further action.

Assembly Bill 1840 would change existing law to allow illegal immigrants to be eligible for the California Dream for All Fund, which provides interest-free loans for a down payment on a home for first-time buyers.

The bill was introduced by California Assemblyman Joaquin Arambula, a Democrat, who last month told GV Wire, a Fresno-based news outlet, that he “wanted to ensure that qualified first-time homebuyers include undocumented applicants.” (Note to Arambula: According to Redfin, there are no homes for $150,000 or less.

Last week, as the bill advanced to committee after amendments, Mr. Arambula told the Los Angeles Times that, historically, homeownership has been the main way people accumulate generational wealth in the United States.

“The social and economic benefits of homeownership should be available to everyone,” he said, arguing that it’s wrong to exclude people from the benefits of the California Dream for All Fund program just because they’re illegal immigrants.

Some lawmakers expressed opposition to the measure as it moves closer to becoming law.

“Assembly Bill 1840 is an insult to California citizens who are being left behind and priced out of homeownership. I’m all for helping first-time homebuyers, but give priority to those who are here in our state legally,” California Sen. Brian Dahle, a Republican, said in a post on X, formerly Twitter.

More Details

The California Dream for All Fund program, administered by the state’s Housing Finance Agency, provides loans for 20 percent of a home’s value but no greater than $150,000. (Good luck finding a house in Los Angeles for under $150,000!) Here is a home in Chico California for $55,000!

Qualifying homebuyers repay the loans when selling or transferring the property plus 20 percent of any appreciation in its value. Applicants who earn less than their county’s area median income get a slight break, having to pay 15 percent of the appreciation. If a home doesn’t appreciate in value, only the principal will be paid back, meaning the loan is technically interest-free.

To make matters worse, Los Angeles housing prices are up 33% under China Joe Biden and California Governor Gavin Newsom. NOW they want to drive housing into even more unaffordable territory with allowing illegal immigrants to buy a home with 100% loan-to-value (100% LTV and NO INTEREST!).

I did find a few homes in Los Angeles for under $150,000 on Redfin. Here is a $125,000 home in Van Nuys.

The proposed bill seeks to amend Section 51523 of the California Health and Safety Code to include a subsection that reads: “An applicant under the program shall not be disqualified solely based on the applicant’s immigration status.”

Mr. Arambula has defended the program, arguing in the interview with GV Wire last month that it won’t affect the state budget because the loans are supposed to be paid back with an appreciation fee.

Even though the net impact of the program on the state budget is technically neutral-to-positive, some critics argue that it sends the wrong message and effectively rewards illegal immigration.

“We have a huge housing crisis in California and anything we can do to get people into housing we should do. However, we should help our own first. This next generation of people growing up can’t afford a house. I’ve got two kids in their early 30s and most of their friends do not own houses,” San Diego County Supervisor Jim Desmond, a Republican, told NBC 7 San Diego.

Mr. Desmond has been a vocal critic of policies that he says create incentives for people to enter the country illegally.

“You incentivize illegal immigration by providing free healthcare, free unemployment benefits and tons of other freebies,” he wrote in a recent post on X, reacting to a post by California Gov. Gavin Newsom, a Democrat, who called on Congressional Republicans to back President Joe Biden’s border deal.

“It’s no wonder we are getting thousands of people by the day. This is on you as much as the Federal Government,” Mr. Desmond added.

Mr. Desmond said on March 3 that over 5,000 illegal immigrants had been released in San Diego County over the past 10 days.

“What’s striking about the people being dropped here by the Border Patrol is about 70 percent of them are single males,” he told Fox News.

While many of the new arrivals are being taken to the airport by local nongovernmental organizations to fly out to someplace else in the country, Mr. Desmond lamented that “in the meantime, our airport is now the new migrant shelter.”

His remarks come as the United States remains in the throes of an illegal immigration crisis of historic proportions, with some border patrol officials and others warning of a national security risk.

Military-Aged Men Crossing Border

The head of the Border Patrol union recently warned about the sharp rise in the number of military-aged Chinese men crossing the U.S.–Mexico border illegally.

National Border Patrol Council President Brandon Judd said in a recent interview on “Just the News, No Noise” TV program that he believes some of them may be spies working on behalf of China’s communist regime to infiltrate the United States.

“At best, they’re here for a better life,” Mr. Judd said. “At worst, they’re here to be part of the Chinese government to infiltrate our own country.”

*Buses drop off large groups of illegal immigrants in San Ysidro, Calif., on Feb. 29, 2024. (John Fredricks/The Epoch Times)*

His remarks came as U.S. Customs and Border Protection (CBP) released its latest data for January encounters with illegal immigrants who crossed the border into the United States.

Aside from showing that Border Patrol agents encountered a record number of illegal immigrants (242,587) in January 2024 compared to any previous January, the CPB numbers show an alarming trend in the number of military-aged Chinese nationals entering the country illegally.

Border Patrol agents encountered 5,717 single Chinese adults in January, more than twice the number of any other January on record, CBP data shows. In December 2023, that figure rose to a record of 7,581, while the total since January 2023 stands at 64,979.

Some analysts say that deteriorating economic conditions in China, along with human rights abuses and policies such as strict COVID-19 lockdowns, are likely driving the increase.

The San Diego Sector has seen a more than 500 percent jump in the number of Chinese nationals entering the country illegally, according to Jason Owens, the chief of the U.S. Border Patrol.

Banker’s Paradise? NEC’s Brainard Pushed to Change Biden Budget Forecast to Rosier View (For Lower Rates, More Optimistic Growth)

We are living in a banker’s paradise. Where a top administrative official pushes to change forecasts of the economy. Hey, it’s a Presidential election year and literally anything goes.

(Bloomberg) — Joe Biden’s top economic aide, Lael Brainard, successfully pressed to adjust a White House forecast in a way that resulted in a slightly rosier outlook in the president’s forthcoming budget plan, according to people familiar with the matter.

The disagreement was over forecasts for 10-year Treasury yields in the budget, a linchpin estimate that is intertwined with other measures, like debt service costs.

Forecasts in the president’s budget proposal — scheduled for release Monday — are typically set by Treasury Secretary Janet Yellen, Office of Management and Budget Director Shalanda Young and the chair of the Council of Economic Advisers, Jared Bernstein. The group is known in fiscal circles as the troika.

The “troika”? More like The Three Stooges.

An October meeting, however, included a fourth invited principal: Brainard, who directs the National Economic Council. Brainard at one point disagreed with Yellen, Young and Bernstein on the 10-year interest rate projections and predicted a slightly lower rate, the people said, speaking on condition of anonymity to detail the discussions.

The difference between the forecasts was modest and both were well within range of private-sector estimates, the people said. The exact scope of Brainard’s changes aren’t clear.

Brainard’s forecast painted a modestly better picture for Biden. A lower interest-rate forecast would have the effect of an improved overall outlook by offering more support for growth and suggesting less concern about inflation. It also would lower borrowing cost projections at a time of rising worries about the US deficit and debt.

Let’s see what the Troika have to say about the quits rate.

Here is a video of Bidenomics at work!

The Ides Of March! New York Community Bancorp Collapsing (Small Bank Delinquency Rate Hits 7.80%, Highest On Record!)

Yes, it is the Ides of March. No, not Nikki Haley trying to sabotage Donald Trump’s campaign after Nikki got clobbered in all but two state primaries. So in a sour grapes move, Haley didn’t endorse Trump. But the Ides of March refers to the stabbing of Julius Caesar (led by Brutus).

Once the darling of the small banking crisis comeback, New York Community Bancorp has crashed 45% to fresh 30 year lows after The Wall Street Journal reports the bank is seeking to raise equity capital in a bid to shore up confidence in the troubled regional lender.

According to people familiar with the matter, NYCB has dispatched bankers to gauge investors’ interest in buying stock in the company.

There’s no guarantee there will be a deal, or that one would succeed in addressing the bank’s challenges, which as of Wednesday morning had led to a roughly 80% decline in its stock price since January.

This is not a good picture for a bank… Would you hold your deposits there?

Last month, DiNello laid out a series of options the bank could explore to bolster its balance sheet, including selling assets from certain non-core businesses. The bank has also considered turning to newfangled financial instruments that would share the risks of those loans with outside investors, people familiar with the matter said.

As WSJ reports, finding takers for those assets, at least at prices that would make a deal worthwhile, has been challenging and U.S. officials have expressed reservations with banks pursuing credit-risk transfers that would shift the burden of potential losses to entities outside of the regulated banking system.

Finally, as a reminder, NYCB is not alone. The red line below shows ‘small banks’ are in trouble absent The Fed’s BTFP facility…

Oh, and this is fine…

The delinquency rate among large banks hits 3%, the highest in 11 years. The delinquency rate among small banks hits 7.80%, the highest on record.

And perhaps that’s why the broad regional bank index is also getting hit today…

Beware the Ides of March as RRP liquidity evaporates.

Think this is isolated? Please disburse. Nothing to see here!

Simply Unaffordable! Mortgage Demand Increased 13% From Last Week, But Still Down 8% From Last Year (Home Prices UP 33% Under Biden, Mortgage Rates UP 146%!)

Housing is simply unaffordable for millions of Americans. Home prices are up 33% under Biden’s Reign of Error, while mortgage rates are up 146% under Vacation Joe. Somehow I doubt if Biden will brag about home prices and mortgage rate in his State of the Union address.

On the mortgage side, the Market Composite Index, a measure of mortgage loan application volume, increased 9.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 12 percent compared with the previous week. The seasonally adjusted Purchase Index increased 11 percent from one week earlier. The unadjusted Purchase Index increased 13 percent compared with the previous week and was 8 percent lower than the same week one year ago.

The Refinance Index increased 8 percent from the previous week and was 2 percent lower than the same week one year ago.

ddd

ALT-Assets Counterattack! Gold Hits All-time High (Bitcoin Hits All-time High Too)

I love gold! And silver too!! And Bitcoin!!!

Let’s start with gold. Extending their run of the last few days, spot gold prices just exceeded their all-time highs, topping $2140 for the first time in history…

Source: Bloomberg

A longer view.

Source: Bloomberg

What is gold pricing in about future Fed action? Real rates dramatically negative? As Luke Gromen noted on X:

“When gold rises in your currency DESPITE positive real rates, the gold market is saying ‘Your government will have a debt spiral if real rates remain positive’.“

Source: Bloomberg

Bitcoin just hit $68,567.57, also an all-time high.

The Alt-Assets (gold, silver, Bitcoin) have counterattacked!!

Biden’s Runaway Train! Ukraine War, Border Invasion, Lawfare Campaign Against Trump, Too Large And Powerful Administrative State

Or as Bonnie Beecher almost sang in a Twilight Zone episode, “Come wander with China Joe Biden.” On The White House lawn. Or wander with The Federal Reserve!

The USA is a runaway train with a dead man (China Joe is about as dead as one can be) in the engineer’s seat. The conductor goes through the cars assuring the passengers that everything is fine. . . never mind the screeching wheels on the curves. . . or the blinding strobe effect of low sunlight passing through the trees out the window at a hundred and forty mph. . . or the bump that made half the stuff in the overhead luggage rack jump out. More than half the people on-board are at tachycardia levels of fright — some are screeching — but the other less than half just remain fixed on their phones and laptop screens. They can’t be bothered to look out the window…

Okay, that’s a metaphor.

But if you’re a citizen of our country and care about it, these are the matters you’d better pay attention to, because they are all going off the rails.

The war in Ukraine. We started it in 2014 to mess with Russia and Russia is going to finish it. Who knows what our real motives were. A resource grab? A desperate ploy to erase our national debt by creating a global fiasco? Sheer psychopathic hatred of this Putin fellow? We can’t bring ourselves to acknowledge the failure of this ill-conceived venture. Instead, our feckless allies in Europe are foolishly rattling their sabers, apparently forgetting that you don’t bring a sword to a nuclear missile fight.

Mr. Macron in France affects to offer up his army for slaughter on the blood-soaked plains of Ukraine, just as the Ukrainians offered up a half a million of their young men so that Victoria Nuland could feel good about herself. Mr. Macron is insane, but the society he presides over is collectively insane, so perhaps he represents them well. Similarly, Olaf Scholz in Germany, whose top generals were caught on a leaked recording last week discussing their plan to blow up the Kerch Bridge that connects Crimea to Russia. Do you understand that this would be a direct attack on Russia, an act of War by NATO? And what the obvious consequence would be?

The phantom government of “Joe Biden” is too weak and mindless to join any negotiation. Ukraine and Russia are up to some kind of cross-talk down in Riyadh with Prince MBS. Even Mr. Zelensky went down for a day, though video appears to show him coked-up, sniffling and snarfling, not a good sign. If ever there was a time to end this stupid conflict, it’s now, before the Russian election. After that, terms will only be more difficult for Ukraine, up to direct custodial supervision instead of remaining a nation. It was never any of our business (though the Biden family, BlackRock, and the CIA saw fabulous opportunity to profit there).

Next is the border. You saw last year how the blob elite greeted the transfer of illegal immigrants to their happy little island of Martha’s Vineyard. (They were not amused by Governor DeSantis’s prank, and off-loaded the mutts post-haste.) But that same smug demographic doesn’t care if hundreds of thousands are distributed to the big cities, which are now fiscally destabilized by them to an extreme, probably to bankruptcy.

Of course, that is not the main thing to worry about with what altogether amounts to millions of border-jumpers flooding our land. The main reason to worry is what the blob that invited them here intends for them to do, which, you may suspect, is to unleash mayhem in the streets, malls, stadiums, and upon our infrastructure just in time to derail the election — perhaps even to make war on us right in our homeland. The US government is paying for this whole operation, you understand, funneling our tax money to international cut-out orgs who set up the transfer camps in Panama, and buy the plane tickets for the mutts to cross the ocean, and coordinate with the Mexican cartels to shuttle this horde of mystery people among us to work their juju for the Democratic Party. The pissed-off-ness of the public has passed the red line on this.

A third FUBAR is the lawfare campaign of the Democratic Party and its regime in power against the citizens of this land. This folder includes overt and obvious political prosecutions by DA’s and AG’s who make election promises to “go after” individuals without such niceties as probable cause. It includes the gigantic new scaffold of inter-agency censorship and propaganda. It includes the psychopathic struggle sessions mandated by “diversity and inclusion” policy. It includes election-rigging directed by the likes of Marc Elias and Norm Eisen, getting states to fiddle laws on voter ID and mail-in ballots. It includes the political protection of rogue groups ranging from looter flash-mobs to Antifa anarchists who bust up things and people and burn buildings down. It includes state officials who peremptorily kick candidates off the ballot. It includes a nakedly biased judiciary, and especially the use of the DC federal district court to punish people extralegally, unjustly, extravagantly, and cruelly. In short, lawfare is the complete perversion of law, and we-the -people are entreated by reprobate officials such as Merrick Garland and Letitia James to accept it.

A fourth item on this list is the US economy which has been overwhelmed by maladministration of an overgrown monster bureaucracy, and the gross (perhaps fatal) mismanagement of the government’s money. The people of this land are not being allowed to do business, to find a livelihood, to transact fairly. “Joe Biden’s” shadow string-pullers are messing as badly with the oil and gas producers as they have messed with Ukraine. And they are doing it in pursuit of a laughable mirage: their “green new deal.”

John Podesta, the “clean energy czar” who replaced the Haircut-in-search-of-a-brain called John Kerry, sits on a $370-billion slush fund that can be used to just dole out to anyone and everyone a political patronage payoff, especially to janky “community” orgs and NGOs with fake agendas. This really just amounts to an asset-stripping operation that will leave the American people busted and with broken supply chains for everything. Instead of annual budgets, Congress raises the US debt ceiling by “continuing resolutions” to keep the government from shutting down. The national debt races to the $35-trillion mark. As interest rates on debt rise, our debt payments now exceed our military spending. You can be sure that our country will break down financially very soon.

The capper on today’s list is the nation’s health, the racketeering system we’ve set up to care for it, and the public health agencies of the government that enabled the Covid-19 operation to happen. The CDC continues to push vaccines that have killed millions of Americans and more millions around the world, and has probably compromised the well-being of millions more going forward. Corporate medicine — that is, your doctor, and your hospitals — is a sinking Titanic of grift and chaos. Try to get an appointment to even see a doctor for an emergency. Try to avoid being bankrupted by your treatment. Try to get out of a hospital alive. Yeah, it’s that bad.

The doctors have surrendered your trust in them with their lying and their bullshit. The current director of the CDC, Mandy Cohen and her predecessor, Rochelle Walensky, have knowingly presided over the mass killing and injuries imposed on the mRNA vaccinated. Hundreds of their deputies should be liable for prosecution, and so should many of the other prominent characters in the Covid Saga: Fauci, Birx, Collins, Baric, Bourla, Daszak, Califf, Woodcock, Hahn, and many more.

What are we going to do about any of this? Return to the metaphor. The runaway train is still picking up speed. You can’t just jump off at 150 mph. If you’re one of the passengers watching this in horror, maybe you can decouple your car, or get the conductor to do it by any means necessary. Let’s say that each car behind the engine of this train is a state of the United States. Let the engine up front with the dead man at the controls ride that runaway to its terrible conclusion. Cut loose the cars behind it to take care of themselves, to slow down, get a grip on their situation, and make plans to find a better engine to pull the train. Decouple. Cut loose. It’s the only way.

Too Much Debt! $1 Trillion In Federal Debt Every 100 Days (Bidenomics TOTALLY Dependent On Federal Spending And More Debt)

Too much debt! US politicians are spending too much money and borrowing too much. Unfortunately, that is what Biden and Bidenomics is all about: Federal targeted spending and loads of debt.

The arrival of the Covid pandemic provided the cover for these purveyors of propaganda and panic to run $3 trillion deficits and establish a new baseline of $1 trillion per year. The house of cards, built upon a crumbling foundation of debt comes crashing down when deficits are allowed to drop below $1 trillion. Running in place gets more expensive by the day.

Now it requires $1 trillion of new debt every 100 days to achieve nothing but remaining static economically. The regime media pundits and the cabal on Wall Street tell us the economy is doing great. No recession in sight. All is well. The dumbed down and distracted ignorant masses don’t realize all the reported “economic growth” is “created” by the government, enabled by The Fed, spending billions on their wars in Ukraine and the Middle East, funneling the money into the Military Industrial Complex corporations; paying for the transportation, feeding, and housing of the illegal invading hordes; hiring more government drones to harass the citizenry, and desperately trying to prop up a corrupt tottering empire in its final death throes.

Anyone with even the slightest mathematical acumen knows increasing the national debt at a rate of $1 trillion every 100 days is a death wish. Why would those pulling the strings behind the scenes of this acceleration towards the cliff of national suicide be doing so at this point in time? It’s almost as if the November elections are a deadline for them to complete their exit strategy plan.

I believe we are entering the Great Taking phase of this clown show.

They are purposely creating a global financial disaster in order to take everything you and I have. It sounds crazy, but so is adding $1 trillion of debt every 100 days.

The good news about the latest US GDP report? GDP grew by $334 billion. The bad news? Yellen and Treasury had to borrow $834 billion in debt to get there. That is a ratio of $2.5 of debt to get $1 of GDP. Only in Washington DC does math like that causes zero consternation.

Worst Monthly Spike of “Core Services” PCE Inflation in 22 Years (Will This Lead The Fed To Hike Rates?)

Well, this might keep The Fed talking heads up at night.

Over the past year or so, the Fed has been intensely discussing inflation in “core services,” which is where inflation had shifted to in 2022, from goods inflation which had spiked into mid-2022 but then cooled dramatically. So “core services” is where it’s at. Core services is where consumers spend the majority of their money. Core services are all services except energy services. Core services inflation has been behaving badly for months, and in January, it spiked out the wazoo.

The “core services” PCE price index spiked to 7.15% annualized in January from December, the worst month-to-month jump in 22 years (blue line), according to index data released today by the Bureau of Economic Analysis. Drivers of the spike were non-housing measures as well as housing inflation. More on each category in a moment.

The bad behavior of core services inflation that we have been lamenting since June – and which was confirmed earlier this month by the nasty surprise in the CPI – is why Fed governors have said this year in near unison that they’re in no hurry to cut rates, but have taken a wait-and-see approach. And now the concept of rate hikes is cropping up in their speeches again.

For example, Fed governor Michelle Bowman said in the speech yesterday, that she was “willing to raise the federal funds rate at a future meeting should the incoming data indicate that progress on inflation has stalled or reversed.”

Even year-over-year, core services inflation has now reversed and accelerated to 3.5%.

This reversal of fortune may be big enough to lead The Fed to raise rates.

Speaking of coping with inflation …

New York City Becomes Dollar Store For Commercial Real Estate (Canadian Fund Sells 29% Stake In Manhattan’s 360 Park Avenue South For $1)

First, online shopping has crushed retail commercial space. Second, crime is rampant in The Big Apple. A slowing economy is contributing to the malaise in commercial real estate (CRE).

According to Bloomberg, Canadian pension funds – which until recently had been among the world’s most prolific buyers of real estate, starting a revolution that inspired retirement plans around the globe to emulate them because, in the immortal words of Ben Bernanke, Canadian real estate prices never go down…

.. are finally realizing that gravity does exist . And so, the largest one among them is taking steps to limit its exposure to the most-beleaguered commercial property type — office buildings.

Canada Pension Plan Investment Board has recently done three deals at deeply discounted prices, selling its interests in a pair of Vancouver towers, and a business park in Southern California, but it was its Manhattan office tower redevelopment project that shocked the industry: the Canadian asset manager sold its stake for just $1. The worry now is that such firesales will set an example for other major investors seeking a way out of the turmoil too, forcing a wholesale crash in the Manhattan real estate market which until now had managed to avoid real price discovery.

Indeed, as Goldman wrote earlier this week, while office vacancy rates are expected to keep rising well into the next decade..

… the average price of many nonviable offices has fallen only 11% to $307/sqft since 2019 (left side of Exhibit 6). The bank goes on to note that in the hardest-hit cities, as many as 14-16% of offices may no longer be viable, and their average transaction prices have already declined by 15-35%. However, because of lack of liquidity in this market, these recent transaction prices have not yet started to reflect the current values of many existing offices. Goldman ominously concludes that “alternative valuation methods, like those that are based on repeat-sales and appraisal values, suggest that actual office values may be far lower than the average transaction price.” Well, a $1 dollar price would certainly confirm that actual office values are far, far lower (more in the full Goldman note available to professional subscribers).

And going back to the historic firesale, at the end of last year the Canadian fund sold its 29% stake in Manhattan’s 360 Park Avenue South for $1 to one of its partners, Boston Properties, which also agreed to assume CPPIB’s share of the project’s debt. The investors, along with Singapore sovereign wealth fund GIC Pte., bought the 20-story building in 2021 with plans to redevelop it into a modern workspace.

“It’s the opposite of a vote of confidence for office,” said John Kim, an analyst tracking real estate companies for BMO Capital Markets. “My question is, who could be next?”

As office building anxiety has swept the financial world, as the persistence of both remote work and higher borrowing costs undercuts the economic fundamentals that made the properties good investments in the first place, a wave of banks from New York to Tokyo recently conceded that loans they made against offices may never be fully repaid, sending their share prices plunging and prompting fears of a broader credit crunch.

But the real test will be what price office buildings actually trade for – especially once the hundreds of billions of loan backing the properties mature….

…. and until now there have been precious few examples since interest rates started rising. That’s why industry-watchers see such shocking liquidations like CPPIB’s as a very ominous sign for the market.

The Manhattan firesale isn’t the pension fund’s first sale: last month, CPPIB sold its 45% stake in Santa Monica Business Park, which the fund also owned with Boston Properties, for $38 million. That’s a discount of almost 75% to what CPPIB paid for its share of the property in 2018. The deal came just after the landlords signed a lease with social media company Snap that required they spend additional capital to improve the campus, Boston Properties Chief Executive Officer Owen Thomas said on a conference call.

Peter Ballon, CPPIB’s global head of real estate, declined to comment on the recent deals, but said the fund has continued to invest in office buildings, including a recently completed, 37-story tower in Vancouver.

“Selling is an integral part of our investment process,” Ballon said in an emailed statement. “We exit when the asset has maximized its value and we are able to redeploy proceeds into higher and better returns in other assets, sectors and markets, including office buildings.”

As Bloomberg notes, the pension fund isn’t actively backing away from offices, but it’s not looking to increase its office holdings either. And where a property requires additional investment, CPPIB might simply look to sell so it can put that cash somewhere it can get higher returns instead, said the person, who asked not to be identified discussing a private matter.

CPPIB’s C$590.8 billion ($436.9 billion) fund is one of the world’s largest pools of capital, and its C$41.4 billion portfolio of real estate — stretching from Stockholm to Bengaluru — includes almost every property type, from warehouses, to life sciences complexes, to apartment blocks.

While that scale would mitigate any potential losses from individual transactions, it also means even a small shift in CPPIB’s office appetite has the power to cause ripple effects in the market.

While the 360 Park liquidation may be shocking, it’s just the first of many: with hybrid work schedules set to depress demand for office space in the long term, and higher interest rates increasing the cost of the constant upgrades needed to attract and keep tenants, even the best office buildings may not be able to compete with investment opportunities elsewhere.

“To get even better returns in your office investment you’re going to have to modernize, you’re going to have to put a lot more money into that office,” said Matt Hershey, a partner at real estate capital advisory firm Hodes Weill & Associates. “Sometimes it’s better to just take your losses and reinvest in something that’s going to perform much better.”

US Pending Home Sales Disappoint In January, Falling -6.82% YoY

I feel like the economy is fixing to die. At least the housing and mortgage sectors.

Pending home sales puked in January, tumbling 4.9% MoM (vs +1.5% MoM exp). This was made worse by a large downward revision for December (from +8.3% MoM to +5.7% MoM)…

Source: Bloomberg

That was the biggest MoM decline since August and dragged the YoY sales decline to -6.82%, tumbling back near record lows…

Source: Bloomberg

Realtors gonna realtor…

“This combination of economic conditions is favorable for home buying,” Lawrence Yun, NAR’s chief economist, said in a statement.

“However, consumers are showing extra sensitivity to changes in mortgage rates in the current cycle, and that’s impacting home sales.”

WTF are you talking about Larry?

Earlier this week, a gauge of US mortgage applications for home purchases fell for a fifth week, nearing its lowest level since 1995.

Who could have seen that coming? As rates surged once again…

Source: Bloomberg

The pending-home sales report is a leading indicator of existing-home sales given houses typically go under contract a month or two before they’re sold.

The index of contract signings decreased 7.3% in the South, the nation’s biggest housing market.

Pending sales also fell 7.6% in the Midwest, but climbed 0.8% in the Northeast and 0.5% in the West.

“Southern states and those in the Rocky Mountain time zone experienced faster job growth compared to the rest of the country,” Yun said.

“As a result, long-term housing demand is increasing more significantly in these regions. However, the timing and number of purchases will largely depend on the prevailing mortgage rates and inventory availability.”

Overall sales are expected to increase 13% this year, according to NAR’s economic outlook, but as the chart above shows, unless rates start tumbling soon, that ain’t gonna happen.