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Will we start 2022 with all-time lows in housing inventory?

Housing inventory has collapsed to all-time lows this year. Lack of inventory continues to be one of the biggest risks to the housing market.
The post Will we start 2022 with all-time lows in housing inventory? appeared first on HousingWire.



My biggest concern for housing in the years 2020-2024 was that if the demographic push in demand picks up and total home sales get over 6.2 million, we could be at risk of housing inventory falling to such low levels that I would have to categorize this housing market as unhealthy. 2020 and 2021 easily each have over 6.2 million new and existing home sales combined.

This type of sales growth — which couldn’t happen from 2008-2019, as I have often stated — is coming with a hefty price tag. We can see that inventory falling to such low levels has created unhealthy home-price growth in both 2020 and 2021. While the rate of growth of home prices is cooling off (the S&P CoreLogic Case-Shiller Home Price Index typically lags), it’s still at a very unhealthy level for me. This is all about housing inventory collapsing to all-time lows in 2020-2021.

While I didn’t believe we could start 2022 at a new all-time low for housing inventory, this can’t be ruled out any longer. I honestly believed this would not be the case in 2022, but I am getting nervous. A few months ago, I wrote that falling inventory was one of the biggest risks to the housing market.

The seasonality of inventory has always been very evident, especially after 2014. Inventory fades in the fall and winter and picks up in summer and spring. Since 2014, inventory levels have fallen while purchase application data has risen. Not even 5% mortgage rates in 2018 budged this data line too much. Going into 2021, it didn’t look great for the inventory levels, and we paid the price with highly unhealthy home-price growth as demand was simply too strong.

As I have recently noted in a previous article, while everyone focused on iBuyers, who don’t even make up 1% of total home sales, the MBA purchase application data has had a nice run for the last 13 weeks. The year-over-year data has shown double-digit better trends while still being negative year over year. This explains the better existing and pending home sales data as this data line looks out 30-90 days.

A lot of housing bears didn’t make COVID-19 adjustments to the purchase application data and truly believed housing was crashing because of the negative year-over-year data trends. This was a terrible rookie mistake and if you know anyone who was pushing this, my best advice is to run away from that hot mess.

In the midst of seasonality factors and as demand has picked up, I can say that 2021 has outperformed my expectations. Now we must consider the possibility that total housing inventory levels might start from a fresh all-time low going into spring of 2022. The next few existing home sales reports will be critical as we are in the period when inventory really falls due to seasonality. I had been hoping that this wouldn’t be the case, that inventory couldn’t break to new all-time lows. While we have solid and stable demand, we aren’t experiencing the credit boom action from 2002-2005. However, it is good enough to drive inventory lower again, and we need to rethink this problem. So, let’s bring some reality into this discussion.

Forbearance hasn’t supplied the market with a vast amount of inventory.

One thing has been very evident in 2021: The premise that forbearance was going to crash the housing market has been just as flawed as the people that assumed COVID-19 was going to hit housing in 2020. Those of you who have followed my work on HousingWire know that I created the term forbearance crash bros in 2020 because the professional grifting of doomsday housing calls went into overdrive that year. Once they realized their dream of housing was not collapsing, they moved the goal post to 2021. They have moved the goal post so much over the last 10 years that it’s not even in the stadium anymore, which is why I call this idea “the lost decade.”

Getting ahead of this flawed premise, I wrote a series of articles that point out that this isn’t the credit bubble of 2002-2005, and the loans post-2010 were good. So, naturally, when the jobs came, people would get off forbearance independently.

We have gone from near 5 million loans in forbearance to finally breaking under 1 million recently. In one of the most significant economic victories against the radical bearish American crew, this was just beautiful to watch the people of this country come out on top.

From Black Knight

Now, this doesn’t mean everyone gets off the forbearance program. We have had people on forbearance already sell their homes and move onto the next stage of their life in a new home. However, the fears of 10 million to 15 million homes going into forbearance and the concerns of an economic depression due to COVID-19 were wildly overblown in March and April 2020. America came back strong, and we left this crew in the dust.

Still, I believe we will see more inventory come onto the market as we are winding down the last 994,000 loans in forbearance. Will it be enough to prevent housing inventory from getting to new all-time lows? Only time will tell over the next few months. I am still in the camp that we won’t break to all-time lows, but my premise is being challenged with the recent pick-up in demand

Higher mortgage rates haven’t materialized as expected

Back in the summer of 2020, I believed that if mortgage rates could get over 3.75%, the days on the market would grow, which I think even to this day would be the most welcome healthy event for housing. For this unique five-year period in housing, I believed as long as the cumulative price growth was just 23% on a nominal basis, we would be OK, and housing affordability wouldn’t get hit too hard since wages are constantly growing each year.

Well, If home prices end 2021 with 13% total growth, this means my five-year growth model has been reached in just two years. My concern for 2021 was very noticeable in many interviews early in the year because my 10-year yield forecast peaks at 1.94%, which means mortgage rates at best can only reach 3.375% – 3.625%. Higher rates would create more days on the market, which I would love to see. However, it’s not happening.

Even with the hottest economic and inflation rate of growth in decades, the 10-year yield hasn’t been close to even testing my high-level range, and I am not in the camp that rates are a sure lock to go higher in 2022. Can you feel the stress? I am now thinking about lower rates and starting 2022 with all-time lows in housing inventory.

Panic selling Is a marketing gimmick

As I have said many times, the housing crash bears are simply very good professional grifters: the amount of bull they have produced for 10 years is worthy of legendary status. Recently, I have noticed a few people bring up the notion of panic selling.

This idea is that American citizens who are financially sound, have great cash flow, a vast amount of nested equity built-in, and live in a nice home will all of a sudden sell their homes at a major discount to the market bid in an attempt to get out at any cost. Really? I mean if they didn’t do that during the first two months of COVID-19, you think in a booming economy with rates under 4% that this is a possibility?

Part of the major problem with housing is that American households who own homes are in great financial shape. They have a fixed low debt cost and their wages have been rising for many years.

Their cash flow is so great that their FICO score is off the charts. Remember that housing tenure from 1985-2007 was running at five years and then from 2008-2021 it’s well over 10 years. So the American homeowner is in much better shape than anyone gives them credit for. You can clearly see why I am worried about housing inventory levels during the years 2020-2024 as demand has picked up so much.

Recently, I wrote an article saying Americans’ mortgage debt is great again. This is also a downside to the housing inventory story as forced selling or the notion that these Americans are panic stock traders getting a margin call at 12:05 PM so they need to sell at any price is just silly. Panic selling is different than distress selling when you’re in a foreclosure or short sale. Knowing the difference is the key.

As you can see below, foreclosures and bankruptcy were rising into the 2008 recession from 2005-2008, then the great financial recession occurred.

With only a few months left before the spring selling season, it’s critical to keep an eye out on total inventory levels. The seasonality impact is currently in full force, but we can only hope it doesn’t break to all-time lows before the reversal of seasonality happens in 2022 and inventory increases again. 

I am hoping and rooting for inventory levels to break above 1.52 million at some point — that has been my target level for some time to break away from this unhealthy housing market and create more balance. Historically speaking, that is a low total housing inventory level, however, total inventory between 1.52 million and 1.93 million will make this a B&B housing market: boring and balanced. However, as you can see, it’s not looking great currently and the clock is ticking for spring 2022.

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Easyjet share price down 3% as pandemic losses hit £2.2 billion

The EasyJet share price shed over 3% today to give up a chunk of…
The post Easyjet share price down 3% as pandemic losses hit £2.2 billion first appeared on Trading and Investment News.



The EasyJet share price shed over 3% today to give up a chunk of the gains the budget airline had made earlier in the week. The new slide came after it announced a £213 loss for the last quarter of the year covering the Christmas period, taking losses for the Covid-19 pandemic period to £2.2 billion. The airline also told investors it is still burning through £150 million in cash every month as it struggles to build capacity back up.

The short-haul airline that makes most of its income shuttling holidaymakers and business travellers around Europe said it is still only operating at around half of its pre-pandemic capacity. However, it is hopeful that pent-up demand and an end to travel restrictions mean it will return to pre-pandemic levels by summer and enjoy much brisker trade than of late over the Easter and spring period.

easy jet plc

But before then the airline company will again have to absorb deep losses over the current quarter, which is traditionally its weakest of the year. Even a strong summer period, think most analysts, will be insufficient to see the company return to profit this year. EasyJet’s value is still less than half of what it was in February 2020 before the coronavirus-induced market sell-off that hit later that month and saw markets dive into March before starting to recover. The share prices of rival budget airlines Ryanair and WizzAir have recovered much more strongly in comparison to EasyJet’s and are now close to their pre-pandemic levels. There have been concerns around whether EasyJet could survive the pandemic but investors contributed £1.2 billion last autumn to bolster its balance sheet.

The EasyJet share price is closing the week at around £6.15 compared to over £15 before the pandemic. However, there is now hope the worst may be behind the airline and it can begin its, potentially long, journey back to health. Chief executive John Lundgren attempted to soften the announcement of another hefty loss with a bullish statement on where things go from here for his company:

“Booking volumes jumped in the UK following the welcome reduction of travel restrictions announced on January 5, which have been sustained and given a further boost from the UK government’s decision this week to remove all testing requirements.”

“We believe testing for travel across our network should soon become a thing of the past. We see a strong summer ahead, with pent-up demand that will see easyJet returning to near-2019 levels of capacity, with UK beach and leisure routes performing particularly well.”

For now, however, forward guidance for the immediate quarter remains cautious with the company admitting it has fallen short of its expectations to be at 80% capacity by this quarter, sitting at just 67%. However, with most analysts confident the company will eventually return to strength, and profit in the 2022-23 financial year, EasyJet shares could offer a good buying opportunity at current levels.

The post Easyjet share price down 3% as pandemic losses hit £2.2 billion first appeared on Trading and Investment News.

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Authoritarian Madness: The Slippery Slope From Lockdowns To Concentration Camps

Authoritarian Madness: The Slippery Slope From Lockdowns To Concentration Camps

Authored by John W. Whitehead & Nisha Whitehead via The Rutherford Institute,

“All the Dachaus must remain standing. The Dachaus, the Belsens, the Buchenwal



Authoritarian Madness: The Slippery Slope From Lockdowns To Concentration Camps

Authored by John W. Whitehead & Nisha Whitehead via The Rutherford Institute,

“All the Dachaus must remain standing. The Dachaus, the Belsens, the Buchenwald, the Auschwitzes—all of them. They must remain standing because they are a monument to a moment in time when some men decided to turn the Earth into a graveyard. Into it they shoveled all of their reason, their logic, their knowledge, but worst of all, their conscience. And the moment we forget this, the moment we cease to be haunted by its remembrance, then we become the gravediggers.”

- Rod Serling, Deaths-Head Revisited

In the politically charged, polarizing tug-of-war that is the debate over COVID-19, we find ourselves buffeted by fear over a viral pandemic that continues to wreak havoc with lives and the economy, threats of vaccine mandates and financial penalties for noncompliance, and discord over how to legislate the public good without sacrificing individual liberty.

The discord is getting more discordant by the day.

Just recently, for instance, the Salt Lake Tribune Editorial Board suggested that government officials should mandate mass vaccinations and deploy the National Guard “to ensure that people without proof of vaccination would not be allowed, well, anywhere.”

In other words, lock up the unvaccinated and use the military to determine who gets to be “free.”

These tactics have been used before.

This is why significant numbers of people are worried: because this is the slippery slope that starts with well-meaning intentions for the greater good and ends with tyrannical abuses no one should tolerate.

For a glimpse at what the future might look like if such a policy were to be enforced, look beyond America’s borders.

In Italy, the unvaccinated are banned from restaurants, bars and public transportation, and could face suspensions from work and monthly fines. Similarly, France will ban the unvaccinated from most public venues.

In Austria, anyone who has not complied with the vaccine mandate could face fines up to $4100. Police will be authorized to carry out routine checks and demand proof of vaccination, with penalties of as much as $685 for failure to do so.

In China, which has adopted a zero tolerance, “zero COVID” strategy, whole cities—some with populations in the tens of millions—are being forced into home lockdowns for weeks on end, resulting in mass shortages of food and household supplies. Reports have surfaced of residents “trading cigarettes for cabbage, dishwashing liquid for apples and sanitary pads for a small pile of vegetables. One resident traded a Nintendo Switch console for a packet of instant noodles and two steamed buns.”

For those unfortunate enough to contract COVID-19, China has constructed “quarantine camps” throughout the country: massive complexes boasting thousands of small, metal boxes containing little more than a bed and a toilet. Detainees—including children, pregnant women and the elderly— were reportedly ordered to leave their homes in the middle of the night, transported to the quarantine camps in buses and held in isolation.

If this last scenario sounds chillingly familiar, it should.

Eighty years ago, another authoritarian regime established more than 44,000 quarantine camps for those perceived as “enemies of the state”: racially inferior, politically unacceptable or simply noncompliant.

While the majority of those imprisoned in the Nazi concentration camps, forced labor camps, incarceration sites and ghettos were Jews, there were also Polish nationals, gypsies, Russians, political dissidents, resistance fighters, Jehovah’s Witnesses, and homosexuals.

Culturally, we have become so fixated on the mass murders of Jewish prisoners by the Nazis that we overlook the fact that the purpose of these concentration camps were initially intended to “incarcerate and intimidate the leaders of political, social, and cultural movements that the Nazis perceived to be a threat to the survival of the regime.”

As the U.S. Holocaust Memorial Museum explains:

“Most prisoners in the early concentration camps were political prisoners—German Communists, Socialists, Social Democrats—as well as Roma (Gypsies), Jehovah's Witnesses, homosexuals, and persons accused of ‘asocial’ or socially deviant behavior. Many of these sites were called concentration camps. The term concentration camp refers to a camp in which people are detained or confined, usually under harsh conditions and without regard to legal norms of arrest and imprisonment that are acceptable in a constitutional democracy.”

How do you get from there to here, from Auschwitz concentration camps to COVID quarantine centers?

Connect the dots.

You don’t have to be unvaccinated or a conspiracy theorist or even anti-government to be worried about what lies ahead. You just have to recognize the truth in the warning: power corrupts, and absolute power corrupts absolutely.

This is not about COVID-19. Nor is it about politics, populist movements, or any particular country.

This is about what happens when good, generally decent people—distracted by manufactured crises, polarizing politics, and fighting that divides the populace into warring “us vs. them” camps—fail to take note of the looming danger that threatens to wipe freedom from the map and place us all in chains.

It’s about what happens when any government is empowered to adopt a comply-or-suffer-the-consequences mindset that is enforced through mandates, lockdowns, penalties, detention centers, martial law, and a disregard for the rights of the individual.

The slippery slope begins in just this way, with propaganda campaigns about the public good being more important than individual liberty, and it ends with lockdowns and concentration camps.

The danger signs are everywhere.

Claudio Ronco, a 66-year-old Orthodox Jew and a specialist in 18th-century music, recognizes the signs. Because of his decision to remain unvaccinated, Ronco is trapped inside his house, unable to move about in public without a digital vaccination card. He can no longer board a plane, check into a hotel, eat at a restaurant or get a coffee at a bar. He has been ostracized by friends, shut out of public life, and will soon face monthly fines for insisting on his right to bodily integrity and individual freedom.

For all intents and purposes, Ronco has become an undesirable in the eyes of the government, forced into isolation so he doesn’t risk contaminating the rest of the populace.

This is the slippery slope: a government empowered to restrict movements, limit individual liberty, and isolate “undesirables” to prevent the spread of a disease is a government that has the power to lockdown a country, label whole segments of the population a danger to national security, and force those undesirables—a.k.a. extremists, dissidents, troublemakers, etc.—into isolation so they don’t contaminate the rest of the populace.

The world has been down this road before, too.

Others have ignored the warning signs. We cannot afford to do so.

As historian Milton Mayer recounts in his seminal book on Hitler’s rise to power, They Thought They Were Free:

“Most of us did not want to think about fundamental things and never had. There was no need to. Nazism gave us some dreadful, fundamental things to think about—we were decent people‑—and kept us so busy with continuous changes and 'crises' and so fascinated, yes, fascinated, by the machinations of the 'national enemies', without and within, that we had no time to think about these dreadful things that were growing, little by little, all around us.”

The German people chose to ignore the truth and believe the lie.

They were not oblivious to the horrors taking place around them. As historian Robert Gellately points out, “[A]nyone in Nazi Germany who wanted to find out about the Gestapo, the concentration camps, and the campaigns of discrimination and persecutions need only read the newspapers.”

The warning signs were there, blinking incessantly like large neon signs.

“Still,” Gellately writes, “the vast majority voted in favor of Nazism, and in spite of what they could read in the press and hear by word of mouth about the secret police, the concentration camps, official anti-Semitism, and so on. . . . [T]here is no getting away from the fact that at that moment, ‘the vast majority of the German people backed him.’”

Half a century later, the wife of a prominent German historian, neither of whom were members of the Nazi party, opined: “[O]n the whole, everyone felt well. . . . And there were certainly eighty percent who lived productively and positively throughout the time. . . . We also had good years. We had wonderful years.”

In other words, as long as their creature comforts remained undiminished, as long as their bank accounts remained flush, as long as they weren’t being locked up, locked down, discriminated against, persecuted, starved, beaten, shot, stripped, jailed or killed, life was good.

Life is good in America, too, as long as you’re able to keep cocooning yourself in political fantasies that depict a world in which your party is always right and everyone else is wrong, while distracting yourself with bread-and-circus entertainment that bears no resemblance to reality.

Indeed, life in America may be good for the privileged few who aren’t being locked up, locked down, discriminated against, persecuted, starved, beaten, shot, stripped, jailed or killed, but it’s getting worse by the day for the rest of us.

Which brings me back to the present crisis: COVID-19 is not the Holocaust, and those who advocate vaccine mandates, lockdowns and quarantine camps are not Hitler, but this still has the makings of a slippery slope.

The means do not justify the ends: we must find other ways of fighting a pandemic without resorting to mandates and lockdowns and concentration camps. To do otherwise is to lay the groundwork for another authoritarian monster to rise up and wreak havoc.

If we do not want to repeat the past, then we must learn from past mistakes.

January 27 marks Remembrance Day, the anniversary of the liberation of Auschwitz-Birkenau, a day for remembering those who died at the hands of Hitler’s henchmen and those who survived the horrors of the Nazi concentration camps.

Yet remembering is not enough. We can do better. We must do better.

As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, the world is teetering on the edge of authoritarian madness.

All it will take is one solid push for tyranny to prevail.

Tyler Durden Fri, 01/28/2022 - 23:40

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Eli Lilly says FDA could deny expanded use of arthritis drug for eczema

Eli Lilly said on Jan. 28 the company expects the U.S. Food and Drug Administration to decline the approval of expanded use of the rheumatoid arthritis drug Olumiant as a treatment for adults with moderate-to-severe eczema.



Eli Lilly says FDA could deny expanded use of arthritis drug for eczema

(Reuters) – Eli Lilly and Co (LLY.N) said on Friday it expects the U.S. Food and Drug Administration to decline the approval of expanded use of its rheumatoid arthritis drug as a treatment for adults with moderate-to-severe eczema.

“At this point, the company does not have alignment with the FDA on the indicated population,” the drugmaker said.

Olumiant, discovered by Incyte Corp (INCY.O) and licensed to Lilly, belongs to a class of drugs called JAK inhibitors, which came under regulatory scrutiny after Pfizer’s (PFE.N) arthritis drug Xeljanz showed an increased risk of serious heart-related problems and cancer in a February trial. read more

The path to approval for the drug has been arduous, with the FDA extending its review timeline repeatedly.

AbbVie’s (ABBV.N) rival eczema drug, Rinvoq, also faced similar regulatory hurdles before being finally approved by the FDA earlier this month, as well as Pfizer’s Cibinqo. read more

“While not specified by the company, we wonder if the FDA may be looking to limit the use of the product (Olumiant) to an even smaller subset of patients than what Rinvoq and Cibinqo were approved for,” Mizuho analyst Vamil Divan said in a client note.

An Eli Lilly and Company pharmaceutical manufacturing plant is pictured at 50 ImClone Drive in Branchburg, New Jersey, March 5, 2021. REUTERS/Mike Segar/File Photo

Lilly also said it has decided to discontinue its program for testing use of Olumiant in autoimmune disease lupus, based on early results from two late-stage trials.

The decision would adversely affect Lilly which continues to bet on upcoming regulatory decisions on the drug for treating COVID-19 for certain hospitalized patients and severe alopecia areata, a type of hair loss.

In the United States, the drug is already authorized for emergency use in hospitalized adults with COVID-19 and children aged two or older requiring supplemental oxygen or mechanical ventilation. Lilly awaits Olumiant’s full approval in certain hospitalized COVID-19 patients, with an anticipated regulatory action in the second quarter.

Reporting by Manojna Maddipatla in Bengaluru; Editing by Krishna Chandra Eluri and Shinjini Ganguli

Our Standards: The Thomson Reuters Trust Principles.

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