We never seem to learn. Over a decade ago, our leaders created the biggest housing bubble of all time, and when it finally burst the entire globe experienced great financial pain. So did they learn from their mistakes and fix the system?
No, instead they just created an even bigger housing bubble. Now that housing bubble is beginning to burst, and that is going to have very serious implications for all of us.
One thing that we learned during the Great Recession is that home values really matter.
When home values get low enough, many borrowers simply decide to walk away from their mortgages, and so the fact that U.S. home values have plummeted by 108.4 billion dollars should deeply alarm all of us…
Homeowners are sitting on a negative equity timebomb after losing $108.4 billion on their property values this year, experts say.
The average borrower saw their home equity plummet by $5,400 in the first quarter of 2023 compared to last year – with households in Washington, California and Utah worst affected.
The west coast is being hit particularly hard. For example, home values in Washington state have dropped by an average of more than $74,000 over the past year…
The cooling housing market is stripping more equity from homeowners in Washington than in any other state in the country.
On average over the last year, Washington homeowners lost about $74,300 in equity, a measure of the difference between how much a home is worth and how much the owner owes on the mortgage, according to the real estate data company CoreLogic. That 18% decline marked the largest drop in the country from the first quarter of last year to the first quarter of 2023.
Some homeowners in Washington state that bought their homes at the peak of the market now have mortgages that are underwater.
And according to an expert that was interviewed by the Daily Mail, this is starting to happen in certain areas all over the nation…
Zackary Smigel, founder of Real Estate License Wizard, told DailyMail.com: ‘The decline in property values across the US is posing significant challenges to homeowners – and it’s becoming a bigger issue in the real estate sector.
‘We are indeed witnessing some worrying signs of negative equity, especially in certain regions.’
The good news is that this is not happening everywhere.
So many people have been relocating to Florida that home prices have actually gone up substantially in that state. If you want to get an idea of what has been happening where you live, you can check out this map.
Moving forward, I think that home prices will not move uniformly.
In major cities and in blue states, I believe that home prices will tend to fall. In rural areas and in red states, I believe that home prices will be more stable.
Meanwhile, many commercial real estate loans all over the U.S. are already deeply underwater, and we are starting to see delinquency rates rise at a startling pace.
If you doubt this, just check out these numbers which come from Wolf Richter…
After blowing through the pandemic with no more than a squiggle, the delinquency rate of Commercial Mortgage-Backed Securities (CMBS) backed by office properties jumped to 4.5% by loan balance in June, up from 1.6% just six months ago in December 2022, according to Trepp, which tracks and analyses CMBS.
Office mortgages that had been packaged into CMBS went through a horrendous default cycle following the Financial Crisis, with the delinquency rate topping out at over 10% in 2012/2013.
But this current six-month 2.9-percentage-point spike from 1.6% to 4.5% is the fastest six-month spike in Trepp’s data going back to 2000.
We are still in the early chapters of this crisis, but it is definitely eerily similar to what we witnessed in 2008.
Corporate bankruptcies are also surging.
In fact, it is being reported that they were up 93 percent during the first six months of this year compared to the same time period of time in 2022…
In the first six months of 2023, there were 340 corporate bankruptcies, topping every other comparable span in 13 years, according to S&P Global Market Intelligence. This is up 93 percent from the same time a year ago and higher than in 2020, when there was a spike during the early days of the coronavirus pandemic.
When we keep getting numbers like this, I honestly don’t know how anyone can claim that the U.S. economy is moving in the right direction. There are so many signs of trouble all around us. For example, the number of searches for “pawn shop near me” just soared to an all-time record high…
Cash-strapped Americans are panic-searching “pawn shop near me.” The search trend spiked to a record high at the start of July and is an ominous sign the consumer might be pawning items or selling things that were possibly bought during the Covid boom to raise quick money amid the worst inflation storm in a generation.
Needless to say, people don’t pawn their possessions when they are doing well.
Searches for the phrase “is dumpster diving illegal” also just reached an all-time record high.
All over the nation, people are literally rummaging through dumpsters behind grocery stores because food has become so oppressively expensive. But don’t worry. Joe Biden says that everything is going to be okay.
If you have been following my articles on a regular basis, nothing that I have shared in this piece should come as a surprise to you. It was clear way in advance that the economy was heading into enormous trouble, and the long-term outlook is exceedingly bleak.
But that doesn’t mean that you should crawl into a corner and cry like a baby because things are going to get so bad. It is when times are the darkest that the greatest courage is needed.
You were born for such a time as this, and you can make a difference even in the midst of all the chaos that is starting to erupt all around us.
Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.
Article cross-posted from The Economic Collapse Blog.
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.
Apparently the current administration does not know what they are doing otherwise if we would still have the last admin running the show instead of stealing elections we would not be in the picadilly we are in.
I wrote comments over a year ago when the FED started to raise interest rates, that what is happening is exactly what happened in the collapse of 08. Back then both the gas price and home mortgage interest rates went up simultaneously, leaving those with TOXIC loans to have to make a bad decision on just where their monies were to go, and gas won out because they needed to get to work in their car. Thus they stopped making their monthly mortgage payments, by the tens of thousands and the collapse commenced.
Oddly enough many of the mortgage houses could not figure out what loans belonged to whom as the paper chace became bogged in litigation and down-right incompetence when they tried to repossess those homes.
You’re a little slow on the uptake Michael. I’m surprised you didn’t see this coming.
“We never seem to learn.”
Thanks for the fslse narrative spinning, Snyder! No wonder you never have any comments sections on your web sites!!!
Housing costs in Seattle [inexplicably] rose by 20%! While wages remained frozen or dropped —- yeah, yeah, yeah, dramatic increases in minimum wage but little effect with the assault on small business and so many closed due to the state lockdowns perpetrated by Gov. Xi Inslee!
The faux pundits blame it on high tech workers skewing things — but with all the tech layoffs that could hardly be the case —- but they NEVER remark on all those FOREIGN R.E. buyers whose identities are kept well hidden by Gary Locke’s firm he’s a partner with, DAVIS WRIGHT TREMAINE (same firm which represents Flannery Associates LLC in California, buying up all the land surrounding Travis AFB?!?!)!
Sure sounds like the CCP, or Chinese Communist Party, but then what do I know —– I just deal in tje facts!
The values in many places blew UP artificially during Covid and wfh. Now they are adjusting BACK in quite a few places. Please Show the difference against the PRECOVID values for better accuracy vs alarmism
And this is ONLY the beginning.