Source.

A few weeks ago I talked about real estate, margin loans, and Elon Musk. I wasn't entirely convinced by a WSBer's assertion that we were headed for another real estate meltdown, though I think a market and real estate pullback is long overdue. Nothing has kerploded, but there's another chapter in this saga. (Fair warning: this post has plenty of other people's crude language and usernames.)

It started with a link from this daily discussion comment:

WeedToken

Panic setting in to the housing market. People are panicking because they expect multiple offers and instead are getting ZERO.

OP: Looking to sell my Austin house

Someone looked up the Zillow posting but it wasn't verified by OP.

Valuable-Question935

This is my first time selling a home and we are going on the market next week. We took out a HELOC on our home a month ago and it appraised for $800K per the bank. Our realtor is recommending we list at $800K, but our next door neighbor who sells new homes for Brookfield said that's way too low... Our home is a 2016 build and has a lot of upgrades and we obviously want to make sure we are not leaving money on the table, but I also know that if we overprice it our home could sit on the market which I'm worried could make it look like there's something wrong with it. I checked Zillow for our zip code 78738 and there really are not many comps because most homes in our zip are $1M or more. How do we know whose advice to take about list price to make sure we don't leave money on the table but also don't over list and scare away potential buyers?

Whew, okay the 800k HELOC on a bubble-priced home sounds a bit 2008ey, though how much can you spend in a month. One of the comments:

Bluedevil2k13

Bee caves area? That house will sit forever if you price too high, imo. Too far out of the inner city. The California transplants prefer Travisso if they're going to live outside city limits

Okay so some of this is "blah blah Austin" talk, but it's funny to see that the hated California transplants are the cornerstone of the Austin/Portland/Seattle/Boulder real estate markets.

/u/Ockronic Rates have been skyrocketing the last 3 months. You're not going to get as high of a price now as you would have earlier this year. People simply can't afford to spend that much anymore.

/u/mailman_bites_dog Lol how do you people still say this shit when all data says otherwise The Austin market is continuing to rise along with rates. There's still way more buyers than homes listed for sale and most homes are still being sold waiving most contingencies and with appraisal gaps. Especially at the 800-1M range.

/u/Valuable-Question935 I know people keep saying that but my realtor and neighbor who sells homes both say that they have not seen any softening in Austin. I do want to sell quickly though because I do think what happens in the future is still an unknown so I'd rather get it sold quickly.

I'm not so sure about /u/mailman_bites_dog or OP's realtor. But we can always check the stats:

From FRED: The months' supply indicates how long the current for-sale inventory would last given the current sales rate if no additional new houses were built.

Anyway, nbd, OP is looking to sell a home at a precarious time for the market. Fast forward a week...

OP: No offers yet, what do?

Valuable-Question935

We listed our house on the market last week on Wednesday night. It's priced well (confirmed from buyers agents too) and is a 2017 build with lots of upgrades and my agent thought we would easily have 3-8 offers in hand by today... Well, we don't even have 1... and our realtor said she never would have predicted that and hasn't had any listing not have a single offer after the first weekend since early 2019. Obviously that's not what we want to hear and we are pretty concerned. No other comps in our zip code 78738 they were listed last week have any offers either though and everything is still showing as active so we didn't lose out to any other houses in our area. I'm not sure if this coming weekend will be any better or not. I think there's a chance anyone moving to Austin may use the holiday weekend to shop but I think a lot of people will be out of town so I'm concerned we may be in the same boat come next Monday. We are closing on our new house in Denver on June 1 so we really hope to sell our house in Austin soon but I'm concerned if it sits we may just get low offers.

To the comments...

/u/Bluedevil2k13 Dude I literally told you this would happen lol smh.. no one is rushing to pay that price for bee caves Ps - nice house though. Some Californian will swoop in eventually

/u/BidenMolestsKids head up ass, now reality has run him and his former barista "agent" over like a peterbilt.

/u/Valuable-Question935 The other comps in our sub that just closed last week went pending in 5 days, and both closed at $900K so it's not like there never were buyers here.

/u/DocWhiskyMed The stock market got wrecked the last 2 weeks, they were under contract prob a month ago. Times are changing...

/u/BidenMolestsKids it was changing 6 months ago, I knew rates were going to take off and there would be a spring flood of properties because everyone thinks that is the busiest home buying season so they want to list in spring...I decided to beat them to the punch and sold in January for a 123% gain, now that house wouldn't be looked at if you took 50k off.

/u/FA1294 The houses selling now went into contract 45-50 days ago. They also probably had a locked rate. Your house will probably initiate the downward price decline in your area.

While calling OP's realtor a "former barista" is snark, laypeople getting into real estate is yet another 2008ism. And it's not so much about whether a barista is qualified to buy and sell real estate but rather the inevitable post-gold rush cliff.

Regardless, lots of fingers pointed at the market though there's no mention of margin loans. Maybe margin calls on property won't be the mechanism of our undoing. Then again, this is just one story and one group of commenters.

/u/ExoticHalibut The interest rate and overall macro environment has changed too quickly and drastically for comps that went under contract a month plus ago to be useful. Those buyers can't afford a $900k house at today's rates.

/u/rifaplax21 This is literally me. My price target for a home dropped from $900k to the mid $700's seemingly overnight.

/u/fir_meit I agree. I think there was a tipping point some time in the last week or two that dramatically shifted buyers' ability to afford these prices and their willingness to take on big debt, big payments, and risk. Demand seems to be dropping all over and that makes sense considering the rates and general economic environment. We listed this weekend, at a price that factored in the changing environment and got one offer, which we were damn lucky to get.

It's Reddit and it's a sub for amateurs, but since I went down the rabbit hole I'm going to consider these datapoints.

DocWhiskyMed

My thinking is Austin's home appreciation was mostly due to tech taking over the town, it was accelerated by the pandemic which the entire US also felt. Like you said, stock market especially tech sector got hit very heavy the past month. Layoffs, hiring freezes , and ceos talking about being lean and cutting the fat . Austin's high home prices were for these tech employees who are now like you said are reassessing with their wallets.

Certainly Austin is a special market that may not be reflective of the situation at the national level. Then again:

Icy_Mouse3201

Yes prices are stumbling in my neighborhood in San Diego. A property has been on the market for 3 weeks and has lowered it's price by $40k. People aren't interested in high prices. You missed the window. Lower your price. I studied economics in college. The entire point of rates rising is to cool the market and lower the prices. Monthly costs literally increase by $1k after a 1-2 point increase and people are approved based on whayntjeh can afford per month, therefore costs have to decrease to meet the demand... No need to get offended or convince yourself rates don't affect costs?

Of course, interest rates could be a compounding issue that may thrust us closer to that death spiral discussed in my early-May post.

/u/rickygervaistwin Just hang tight- your realtor knows far more than actual buyers! As you stated "our realtor said she never would have predicted" not getting a single offer.

/u/Valuable-Question935 I can't tell if you're being sarcastic or not.

/u/rickygervaistwin Let me clear up any confusion for you- enjoy your price drops.

/u/regallll lol

Source.

I was originally skeptical about Elon's bid for Twitter. Then it got kind of real. Then the wheels fell off. I won't try to recap all of the twists and turns, but TSLA has been drilling and that might impact Musk's margin loan. He might just qualify to be a WSB mod.

VPNApe

I honestly can't believe Elon was retarded enough to make an unsolicited bid for Twitter at such a high price when it all depended on his insanely overvalued company staying overvalued in a bear market. This is more than WSB level retarded. I have nothing against Elon, but I would really love him to go broke on this deal just to drive home the point that you should never go full retard on margin.

		Bye bye shares		Anonymous
Me	Going 100% into options? Better get Anonymous tested for monke pox.
		Nah I just sold some of my grants lol
	I want to sell a naked call on zm.
		Lol
		Isn't that what chaturbate is for
	Hahaha.
	I didn't say I want to do a naked zoom call.
		Why not?		Cattle
Me	Haha side hustle adult chat.
	Simba grindset.
	Exactly, some zoomer thing I heard.
		https://knowyourmeme.com/memes/sigma-males
		TIL
	Ohhh sigma male.
		people these days. fucking nerds		Cattle
		translation: 1/3 of developers are idiots
Me	1/3 of developers jump on the next buzzword as quickly as possible. Also 1/3 of developers are web developers. Curious.
		1/3 of developers sigma grinding assembly
	Last third Mufasa grinding C++ and JaBa.
		doing the hut's dirty work
	Poor guy lost both his rancor and sarlaac pit in the space of a week.
	And his favorite trophy.
		and his slave leia		Cattle
		and pleasure barge
		shit luck
Me	For tax purposes it is a work barge.
		I think it's more than 1/3 are web		Anonymous
		Anyways they're the first to go in the Web 3.0 culling
		throw em in a sack and chuck it in the river		Cattle
		same way i get rid of the kittens in my neighborhood

We got the ball rolling on astroturf for the veranda. I just need to patch the stucco wall and probably throw some linseed oil on the wood. Next up will be other railings so I'm looking at redwood planks.

Interest has not waned for walks in Connie's backpack.

I try out a new kid carrier, do some data entry, and slay my first Elden Ring dragon.


I mostly stick to video game and ETF reviews, but this baby backpack is worth a shout out. It's something we probably wouldn't own were it not for Connie, so I'm glad she's so outdoorsy. Here's why I like it more than the stroller:

• It's less work than pushing a stroller.
• It can obviously go more places than something with wheels.
• It seems like it'll travel a lot better.
• Dani likes stroller walks but sometimes gets restless. So far, walks in the pack have been one of her favorite activities. They're up there with her laundry basket flying car.

Source. Yeah it's basically like this.

I'm not going to pretend I've done a model comparison or anything. But since CS did her homework, here's what she had to say:

Connie

Omg! Take a look at how happy Dani is going on a backpack ride! So cute. Aw, reminds me of my kiddos. I miss the baby stage! We tried out all the other kid backpack carriers at REI, the Osprey, Dueter, Kelty, etc. The kid test was to put them in it, and see if they would cry. Haha. They cried on all of them, except for this one! This was the only backpack that the kids were happy to go into. And it's a plus not to have the kick stand. That adds extra bulk and clunk. So glad to see you guys enjoying it! Dani reconfirms this is the best carrier. Haha. Now go get some baby hiking in!

Alt text for all, eventually

Me	Last year I started using alt text for images, but hadn't propagated that to thumbnails or the slideshow pages found by clicking the '[+]' next to each month. Thumbnails and slideshow images now have alt text.

Well, slideshow pages *support* alt text. I have twenty years of unlabeled images that *could* be labeled. After adding alt text to a few months worth of images I decided to (a) stick with it and (b) code up a GUI to make it not a text editor + file browser + web browser workflow.


Pretty ugly, pretty spartan (lmao callback). But it does what it needs to:

• Finds posts/months with the old gallery format.
• Prompts me to enter an RSS feed description (also a new feature in need of retrofit).
• Presents each thumbnail/gallery image item in sequence.
• Takes alt text input.
• Shows the markup substitutions in real time.
• Dumps the updated files to a list for batch upload.

This all came together pretty quickly thanks to having a static web site and a code base to manage it. It does entire months at a time, so I can chip away at the backlog while having intermediate results.

Post preview and lists

2014.02.13 Mahalopoints Ty invited me out to Oahu in 2014. The fun started as soon as I got off the plane; we drove straight to the north shore to catch the Pipeline Pro. I hung out in Honolulu with the grad students and somehow got roped into judging a local science faire. Then I hopped over to Kauai to hike the incredible Kalalau trail on the Na Pali coast.

While looking at my lists metapage, I found myself quite bothered by the (earmuffs, Jon) Excel-like table listing links. So I created a new markup element for showing a thumbnail, title, and summary of another post. It's usable in any post (e.g. above), though a simple hyperlink does the job in most cases.

Landing page

While I was figuring out why my kilroy/index.html file was getting written to /index.html, I created a minimal landing page.


J and I meandered back to the early-game swamps and took on Agheel (pictured below, above is Decaying Ekzykes who we ran away from). Also I swapped out my gear for Royal Remains. I'm not sure if it's better or worse for a dex-samurai, but it looks intimidating.

I ever tell you about the time my buddy Keith drowned in the Tunnel of Love? You wouldn't think it would happen cause the water's so shallow, but that's how he gets you, man: Over confidence. Keith was with his lady at the time and he was yelling for her to save him but she didn't wanna get wet--

?

Investing, video gaming, internetting, parenting, learning - the usual.

dbgtboi

Market Summary So Far Fed in November: "We are going to crash markets by ending QE in March and starting QT shortly after" Investors: "You can't time markets! Just DCA through it and you're good" Fed: "No, I am literally telling you, you can time markets easily, I am going to start crashing them in March" Investors: "LALALALA I CAN'T HEAR YOU. NO MARKET TIMING, DCA. LALALALA" Fed: "Jesus Fukken Christ what a bunch of morons"

Pretty much this. For all of the wary investing I've been doing - from moving my 401k to bonds in 2017 to holding way too much UVXY while actively investing in 2021 - I still got caught out more than I'd like in this recent pullback. The way it goes: TSM loses 10% within the week (my CSP/CC expiration) and so I hold as it slides lower. Now I'm either taking a bigger loss or joining DCA gang.

I'm not too worried, but the key will be having enough dry powder to buy the upswing.

/u/WallstBetsFan I'm literally depressed about this shit. What should i do?

/u/Bonbon676790 Reassess your risk tolerance, hedge better, quit gambling, see a therapist, call your mom, hit a bootycall, go for a walk, eat a healthy meal, get a full 8 hours, drink enough water, or just pretend you’re okay and shove the feeling down deep in your guts, making you die slightly faster.

If I do a June report card this year, it'll be totally misleading by factoring in unrealized losses.

kshot

Plane market is absolutely fucked now too... no inventory, inflation.

I should have gotten into aircraft. Ah yes, and one more quote in memorium:

Franklin Antonio

Don't make a big deal out of this. It is very simple math. As an engineer, you understand the math better than most financial type folks.

We've moved up to mid-sized monsters but dragons are still a "hell nah".

Last month I described my "Elden Ring moment". I think this was J's:

Unfolding the map

Source.

Mine and J's journey around the Lands Between in a word: meandering.

Mechanically, it's nice to have that freedom of nonlinearity enabled by easy, unlimited fast travel. That said, having this freedom of movement might do a disservice to the game's immersiveness and contiguity. Referring again to the Zelda series, Ocarina was amazing because you'd unlock a new area and explore it to exhaustion (which in 1998 was far less exhausting). Then you'd hop back on Epona and neither-fast-nor-slow travel back to town.

In contrast, I find myself wandering into one area, running through a dungeon, then warping back somewhere else entirely. This playstyle also differs from the linear-but-backtrackable soulslike games I've played, Bloodborne and Nioh.

To Elden Ring's credit, it follows the Fallout model of not gating areas by equipment or abilities, letting the player explore and inevitably be obliterated by overleveled enemies. But it would feel more Souls/Ocarina-ey to not be able to fast travel away - except for maybe to a central starting point.

"Why not just play through like you feel like you should?" Glad you asked. For co-op, you can't summon an ally into an area whose main boss you beat. So you can't Leroy Jenkins the castle and then mop up/explore later on, unless you want to walk back from somewhere else. So as you progress through major objectives, the explorability ceiling continuously slides down on the player (and his co-op buddy).

Of course, now that I've written that, nothing sounds more soulslike than a ceiling lowering irreversibly on the player. Poor choice of analogies, but the argument remains.



Danielle's favorite things? Collecting berries and rocks, her wolf, her bear, and...


The Chris Ferrie series of impossible-to-say-unpretentiously "[Physics/rocket science/information theory/etc.] for Babies" series. The books are kind of cute and Dani frequently asks to read them. Meanwhile Daddy is doing similar studies:

Dating&lunar rocks&formula&one.

A few months back I listed a few referrers, including, "those sites that crawl the web for images and attach autogenerated text to them in hopes of getting page rank and clicks." Above is another fine example of a machine learning fail that links to this site.

I've idly clicked through a few more indieblog.page links and this comic completely applies. Don't at me, Rob.

I'm escaping to the one place that hasn't been corrupted by capitalism, space!

?

Sprite rip credits: Lotos, Jacob Turbo, Deathbringer, Solink, ShadeDBZ, cl.exe, roket, Jermungandr, Ville10, and Mister Mike.

I was thinking about doing a post of some of my favorite sprites of all time (Kirov reporting) but went down a rabbit hole and didn't return in time.


After calling Rob out for spamming me with Hacker News links about blogging that he hadn't read, he sent a bunch more (that I added as comments to the original post). Here are some of the highlights.

Indieweb = jedi, everybody else = sith

Cheapskate's Guide

I feel I do a fairly good job of keeping my ego disengaged from the process. I realize that whether people like what I write or hate it has absolutely nothing to do with my worth as a human being. Yet, receiving comments and emails from readers who say they enjoy my website and understand its value feels good.

Okay, first thing's first, <3 Rob for caring. You've always been a lovable jackass.

Cheapskate's Guide

When an individual creates a personal website, he is bucking the entire system of the commercial web that fights ferociously to keep personal websites buried where no one will ever see them. The bullets of the Internet are everything corporations do to keep personal websites from attracting attention. They are thousands of articles telling Internet users that everywhere outside corporate walled gardens is unsafe. They are search engines providing only tiny numbers of search results for personal websites, even when their owners write articles the way the search engine companies want, design their websites the way the search engine companies want, and refrain from posting links to other websites the search engine companies don't like.

Regarding search engines, I wouldn't necessarily ascribe to malice that which can be explained by incompetence. The indieweb is just the smallest crab in the barrel and search engines are too incompetent/fiscally demotivated to solve the (not especially hard) problem.

Cheapskate's Guide

Usually, one of my articles rises briefly above the noise on the Internet only because a kind reader posts a link on the right social media platform. That is how most new readers discover my website. When this occurs, large numbers come. Their attention peaks for a day or two and then gradually fades over the next few days until the usual traffic pattern has resumed. Perhaps a very few become regular readers, but keeping track of websites and checking occasionally for new content is hard for most.

Fair, Web 2.0 largely sidestepped the entire issue of search engines ignoring grassroots content by keeping everything (viral) in the walled garden until it spills over into the mainstream. On aggregators and social media platforms, the visibility of (theoretically) good content snowballs on its own merits, regardless of author. But these platforms have some unfortunate side effects and are now overrun with sock puppets and astroturfers. At least they at least proved that the success of good content can be democratized.

So where do we go from here? Web 3.0? The metaverse?

Cheapskate and other indie bloggers seem optimistic that the war will be won as the masses tire of algorithmically-curated content. From the above link, I got to this (not so) big list of blogs, meandered here and clicked through to find the parable of the internet as a dark forest.

The Ideaspace

When we look out into space, the theory goes, we're struck by its silence. It seems like we're the only ones here. Imagine a dark forest at night. It's deathly quiet. Nothing moves. Nothing stirs. This could lead one to assume that the forest is devoid of life. But of course it's not. The dark forest is full of life. It's quiet, because night is when the predators come out. To survive, the animals stay quiet. This is also what the internet is becoming: a dark forest. In response to the ads, the tracking, the trolling, the hype, and other predatory behaviors, we're retreating to our dark forests of the internet, and away from the mainstream. Newsletters and podcasts are growing areas of activity. As are other dark forests, like Slack channels, private Instagrams, invite-only message boards, text groups... are all spaces where depressurized conversation is possible because of their non-indexed, non-optimized, and non-gamified environments. The cultures of those spaces have more in common with the physical world than the internet.

Perhaps there's reason for optimism. Perhaps I just stumbled on two raccoons talking in the dark forest and figured they represented the whole establishment. How the hell should I know, this place is dark.

There's authenticity and good reads if you can suffer through all the javascript cookbooks

Source. What is more authentic than foodposting?

You know what's better than a php recipe? An actual food recipe. And while the picture/link above isn't a recipe but some expatblog from a restaurant, it's both real (tasty-looking) content and not Node nonsense.

James Van Dyne

One thing I like about buying jeans in the Japan is that you can get them cut to length at the store. Part of this may be an inventory thing: it's cheaper to offer fewer longer sizes and tailor them.

Damn, that sounds awesome and worth a trip.

Switching gears from personal experiences to audience-tailored writings...

Source.

The Dork Web

This issue is about one of the greatest science fiction stories ever written and the quests to adapt it. Dune is a story with inpenetrable depth, cursed never to be properly retold. This issue is about the story behind the story of Dune.

Shut up and take my click. I'm not even that much of a Dune fan.

Takewaways/how to indieweb

Cheapskate's Guide

My greatest joy in running my website comes from producing something of value to other people.

Whether it's a restaurant recommendation or a coding how-to or a reference to somewhere else on the webby web, wanting to improve people's lives is as noble a cause as any.

But the quandary of the blogger returns to the challenge of being discovered. Being one voice of many is one thing, on the modern web bloggers contend with human voices and many, many synthetic ones.

Returning to Cheapskate's war of good and evil, search engines love inauthentic information sources. How does the indieweb overcome? Well, Cheapskate and Ideaspace are optimistic about the organic re-emergence of webrings and social media links.

Some of my top search links, per Google.

For kilroy, the hits have come from providing obscure/specific information, like "how do I beat the seventh boss in Shield Quest X?". Content like how to make a clever airlock in Barotrauma doesn't cast an especially wide net, but almost certainly checks the box of publishing "something of value (read: interest) to people".

And while Google probably indexes many thousands of diatribes about the state of the internet, it's more likely to elevate a how-to article with an OBD error code or photos of an uncommon experience or content from an exact time and place.

Well, maybe the technology isn't quite there yet for searching by a specific date and location. Lol.

And I'm already going to write self-serving how-tos for myself five years from now. I'm already going to man-scrapbook about the delightful handcuff incident with the lolbaters Barotrauma submarine crew (phrasing). I'm already going to want to write something that's meant to be read even if it never gets read. The only extra work is making it searchable, and that's a fun and easy programming project.

(Switching to second person) How do you provide something of value and maybe elevate your site from obscurity?

The unflattering way to say it? Use fringe content as bait. You'll catch someone panicsearching how to beat boss seven in Shield Quest X. If your site is good they may keep SQX on pause to check out your Dragon Wrangler VII post or your list of best eateries in Walla Walla. And at that point, your site just has to be good.

And by good I mean two things:

1. You're like a newspaper columnist or that cool guy who people love to get beers with; you always provide engaging conversation.
2. Your site presents its other content well. Simple stuff: don't spam people, don't starve them, present additional content contextually.

I added RSS. If you're not familiar, from the user perspective it's a browser feature (or extension) that shows you the latest from blogs and news sites you subscribe to. Sort of like Twitter. From the content creator perspective, it's an xml file that's like a site map but focused on content updates.


(Obivious bracket substitution)

And since I already generate site maps with each post, pumping out an RSS file wasn't a heavy lift.


A few things that J and I have done since last time:

• Enjoyed the view from the ruin-strewn precipice.
• Confronted the "boat guy" Tibia Mariner when we were reasonably over-leveled.
• Crept through a town with significantly more hanging corpses than normal.
• Talked to jars in the village with talking jars.
• Met a giant turtle in a pope hat.

Reaper? A label created by the Protheans to give voice to their destruction. In the end, what they chose to call us is irrelevant. We simply... are.

?

In this post: construction, code, and catching falling knives.


The door is done. The cinder block is in place. I probably need to take care of the wall before getting turf put in.


But even more important is protecting what's been done. I power washed and hit everything with deck sealer.

Source.

Using the paint sprayer for that structure was a must. Happily, the sealer is clear and didn't make the connector hardware look all funky. On the other hand, the wood still looks rigid and dry where I was hoping for a nice, UV-blocking lamination. I'm not entirely certain any wood-protecting products can stand the SD sun, that certainly was the case with the pre-Trex deck.


The project left me with more than a few pieces of 1x6 and 2x2. Since the pumphouse wall was just plywood, I nailed the wood pieces on, shiplap-style. It looks good and recoups $345 of redwood that would otherwise be scrap.

Source. Sobel edge filter on one of those canonical graphics processing images.

I haven't written any graphics processing code lately but I found some neat stuff on github. The projects I looked at are largely paths I've already gone down, but it's nice to see what other coders are doing.

Bresenham vector rasterizer

Example code, click through for the whole thing:


Source.

A clean graphics library

From the author: This library collects various image processing algorithms and provides simple access to them. All algorithms are implemented in Java and runs without any other dependencies. Some algorithms are pretty standard and others maybe do you know from Photoshop. Github link.

A library with a gui

Source. From the author: This is the source code of Pixelitor - an advanced Java image editor with layers, layer masks, text layers, 110+ image filters and color adjustments, multiple undo etc. Github link.

Okay so why did the lead image include Margot Robbie taking a bubble bath? First off, go watch The Big Short. Okay, now that you did, I don't have to tell you that Margot Robbie in a bubble bath is how the film explains subprime mortgages.

Borrowing against your port

I was reading a WSB doompost about the (supposed) next subprime meltdown. I wasn't convinced, but I found the discussion and related material to be educational. The main theme of the post: investments secured by a stock portfolio. You might have seen this:

Yahoo Finance

The Bloomberg index estimates that [Elon Musk has] already borrowed about $20 billion against his shares, leaving about $35 billion remaining that he could theoretically take out against the two holdings.

Elon borrows against Tesla and SpaceX shares to maintain his voting control while paying very little in taxes. See also: the recent "wealth tax" political football. Sort of a tangent but in defense of the Elizabeth Warren camp:

University of Southern California

[Professor Ed] McCaffery came up with "Buy, borrow, die" in the mid-1990s to help students understand how the wealthy avoid paying taxes. "The public thinks the rich get away with paying no taxes because they have expensive lawyers and accountants that regular people can't get who are working their magic," McCaffery said. "That's not the case. The rich aren't paying taxes because of perfectly legal reasons." Here's how: Buy: An asset that will increase in value without producing income. Borrow: Money to live off based on this appreciating asset. Die: Avoid the 20% capital gains tax for selling an asset by holding the asset until death, when the asset can be sold off tax free by children or spouses.

Borrowing like a 1%er

I think the most specific term for this is "margin borrowing". There are a few similar concepts that are important to be wary of when looking at data:

• "Margin debt" is often reported as an statistic measuring the aggregate health of investment portfolios. As I understand it, this value has historically been dominated by margin investing rather than margin loans/lines of credit.
• "Personal line of credit" also might describe borrowing against your equity holdings, but the traditional PLCs have used property or vehicles to secure the debt.
• "Asset-backed loan" is like a PLOC for a business and may or may not use investments as collateral. Of course, these days closely-held corporations used for tax avoidance aren't uncommon.

But how common are margin loans/lines of credit for people with a net worth in the mere 6-7 digits? If it's just Elon and Bezos, there really isn't a need to break out the dancing bears video.

To the doompost

As you might imagine, the post starts with a callback to 2008 because all WSBers worship The Big Short and MJB.

catbulliesdog

There is not a repeat of the 2008 sub-prime debacle with NINJA (No Income, No Job, no Assets) loans. What is new - and whenever you get a financial crisis it's always, ALWAYS driven in large part by a "new" type of financial instrument (read debt) - is the sheer number of homes being bought up by with cash, and it's inferred these are all institutions and foreigners. For example, about $90 billion in US real estate was bought by foreigners in 2021. Wall Street however, blew that away, hitting as high as 1-in-7 of all homes and 1-in-2 of all apartments. Now, people look at that record institutional/foreigner buying and think it's the explanation, but the truth is, even with those crazy numbers, 6-in-7 homes and 1-in-2 apartments are still being bought by regular people, often with, again, "cash". These purchases are frequently referred to as "cash buys" because the buyer just pays the seller cash. However, they don't actually have piles of cash lying around in freighters to pay for this stuff. They take out loans. Specifically, they take out loans on their equity assets.

If you know anyone buying or selling a house, you know that everyone's offering cash and/or 5-10% above asking. If these loans are secured by an investment portfolio rather than the house itself, it helps explain this phenomenon.

/u/Oddestmix Someone clarify if I understand this correctly: he is saying that people are leveraging their portfolios to make "cash" deals? When equities go down and margin is called, people will have to liquidate the homes to cover margin?

/u/filstolealan Most "cash" purchases by richer folks in the DC area are actually being structured as loans against brokerage accounts. Never seen it until covid. now its pretty standard

/u/champ999 How does this work, you go to the bank and say "here's my vanguard account with 5 million, give me a loan for a 2 million dollar house"? And since you have assets they give you a low interest rate since it's safe? I guess I don't understand how to a seller it's cash that way as opposed to a traditional home loan.

/u/Overhaul2977 It is governed under Regulation U. The most a bank can loan is for 50% of the stock?s value. If the value falls, the person who took out the loan needs to cure the shortfall or the stocks are sold to help cure it. The borrower is still on the hook for any shortfall. It is the primary cause for the crash of 1929, but the 50% limit did not exist back then so the damage should not be nearly as pronounced today. These are also on the Fed?s radar. You?re required to register with the Fed if you make margin loans using securities as collateral.

I looked up some stats, last year all-cash home purchases were around 30%. Since 2000, this number that has fluctuated between 21% (cough, 2006) and 34% 2012. So the cash purchase phenomenon isn't unheard of, but similar to a time when home values had collapsed and lenders were extremely wary.

It should be said, of course, that median price per square foot has almost doubled since 2000, meaning the cash purchase is a heavier lift than in 2012. The question I haven't found an answer to: how many of these cash purchases are secured by a margin loan? There's certainly a risk that a market pullback would trigger a series of margin calls on the "new finiancial instrument" used to obtain these overpriced properties.

Burry to Xi

catbulliesdog

So basically, we've got loans on inflated assets fueling loans on other inflated assets. This is feedback loop that goes parabolic.. then crashes, hard.

WSB has a steady trickle of doomposts that hit #1 on the front page. They always warn of global financial disaster caused by a *hand wave* positive feedback loop implied by their text wall. Perhaps on purpose, these posts often pivot from the mechanism of catastrophe to something more concrete but less dire. To whit:

catbulliesdog

But the coming death spiral of equity/asset sales isn't the only giant elephant in the room everyone is ignoring. I'm talking of course, about Evergrande in specific and Chinese property bonds in general.

I'm not sure developer defaults in China will matter if margin borrowing "goes parabolic". I won't fault OP for stream of consciousness, but it's important to recognize that the margin-secured real estate catastrophe argument kind of just ends.

But let's talk Evergrande

Source.

Evergrande has been defaulting for a few months now, what's new there? If OP is throwing shit at the wall, this could be what sticks.

catbulliesdog

Evergrande hasn't made hundreds of millions of dollars of interest payment on bonds since September. A couple weeks ago they failed to pay the principal payment on a maturing bond to the tune of $2.1 Billion. So, you'd think that means their debt is junk and they've defaulted, right? Not so fast. Let's check what the big 3 ratings agencies have to say about it: Fitch: RD - Restricted Default S&P: SD - Selective Default Moody's: Caa1- Rated as Poor Quality and Very High Credit Risk The reason Wall Street can survive a hit to something like AMZN and the indexes is that they're hedged to the balls for stuff like that. Know what they're not hedged for? Chinese property bonds universally going to zero.

Cue the Big Short scene where Steve Carell's character has a chat with Standard and Poor's. I don't really know enough about ratings to say whether OP is correctly outraged or if "selective default" is a finance way of saying "gtfo". I'm committed the Big Short theme so I kinda got to leave this in even if I have nothing interesting to say about it.

"Know what they're not hedged for? Chinese property bonds universally going to zero." Big, if tru.

Evergrande unwinding the global economy would require a lot of Wall Street incompetence and Beijing complacence to be catastrophic, but with some stats I could see some impact to whoever has significant exposure to Chinese property developers.

Zillow

OP then meanders back to the US real estate bubble to talk about a different kind of all-cash buyer:

catbulliesdog

We actually got a brief preview of what this is going to look like thanks to the wild incompetence and greed at Zillow - Z. Their stock crashed 40% in five days when it was revealed they'd bought too many houses they couldn't rent or flip and had to sell them at a loss. And that was just a couple of neighborhoods in Arizona. When this hits nationwide, it's going to be exponentially worse.

The share price thing is a bit of a red herring - Zillow's share price should take a major hit for the company's unsuccessful adventure in home flipping. $Z is not a proxy for the US economy. But I think this is an important case study that relates back to whether or not the margin loan phenomenon will trigger default dominos. In the Zillow case, they offloaded their inventory and survived. There was ample demand to prevent the feedback loop from going positive.

What will happen if margin-secured homeowners start getting margin called because of a market pullback? Their first safety net is that 50% rule and having diverse investments. Their second safety net is simply taking out a mortgage. Their third is selling. The market and home values would have to suddenly tank for other market pressures to not prevent this from "going parabolic".

What about the Zillows and Black Rocks? Maybe insignificant? As OP says, "6-in-7 homes and 1-in-2 apartments are still being bought by regular people, often with, again, 'cash'".

Source. Will this subprime meltdown comic see new life? We certainly have a lot more zero-dot-line houses these days.

Conclusion

Anyway, while I'm not sure this will be the next financial crisis, I could totally picture Margot Robbie in a bubble bath five years from now explaining what margin borrowing is.