Opening Comments

I heard from an NFT fund manager who felt the data I cited from the WSJ and Forbes was one-sided and suggested I should quote from more different sources. I never thought I would hear that the WSJ and Forbes were not reliable sources on financial data. It does not change my view on art NFTs. I will not participate. They very well could become the next big thing, but not with my money. I continue to buy real art to hang on the walls in my real home. I will leave the NFT art and Metaverse real estate to everyone else. I do know that many believe there will be NFT art sales will dwarf traditional art in the next 10-15 years. It might, but I will be buying my favorite artists at discounts if that is the case. Given I correct mistakes, here is a link with charts which suggests the drop off I cited is not showing as steeply as it did the WSJ and Forbes links in my piece. This link is to a report which refutes the data from the WSJ and Forbes.

Jack flew with a friend to Memphis, Tennessee on Monday for a golf lesson. The round trip flight was $1,100. I do not believe I have ever spent over $1,000 for flights on the east coast in my entire life and have done so twice in the last month. If travelling, book early, it is going to be an expensive summer for vacations.

It is May 12th and the heat has been turned on. It was 91 the other day. I will tell you that Florida through May is doable. June is uncomfortable, but manageable. July, August, September and October are just horrific. Hot, humid, hurricanes, rain… If you move to Florida, do what you can to escape.

I had some doctors appointments (back issues) and meeting friends in Palm Beach, so the send is early and some of the #s were prior to the close, but are outlined in the charts. I am sure I missed something. SO MUCH GOING ON! Sorry for typos.

• Picture of the Day-Shot Sage Blue Marilyn

• Philadelphia Freedom

• Quick Bites

  • Markets

  • Crypto Crash

  • Day Trader Losses

  • Credit Markets

  • Inflation

  • Power Grid Concerns

  • Hypocrisy DeSantis/AOC/Jewish Museum

  • Twitter/Trump Ban Will End With Musk

• Other Headlines

• Virus/Vaccine

• Real Estate

  • My General Comments

  • Another Hedge Fund to South Florida

  • Florida Rents

  • Mortgage Refinances Plummet

Picture of the Day

I watched most of the Christie’s Auction on Monday night. The sales were strong on lower priced pieces (generally above the estimates), but not as impressive on the important artwork. I wrote the report about my father in law and his run in with Warhol in the 1970s and it was about the famous Blue Marilyn Monroe. He could have bought it for $100k or less in the mid 1970s. The 1962 piece just sold for $170mm (hammer price, but $195mm with buyer’s premium), under the estimate of $200mm. I was surprised it did not go for more than $200mm or even $300mm. It is that special. Famed art dealer Larry Gaggosian bought the Marilyn. I suspect he was fronting for a large collector, but do not know for certain. For perspective, 1962's "White Marilyn" sold for $41 million in New York in 2014. The White painting is inferior to the Blue by a mile in my opinion. It is not close, but judge for yourself below. Warhol painted these soon after Monroe's 1962 death by barbiturate overdose; it's part of a series of five portraits of Monroe he painted which became known as the "Shot" series. The nickname was born when a visitor to Warhol's "Factory" studio in Manhattan fired a gun at them, piercing the portraits which were later repaired. Of note, I read an email from a collector site which suggested the Asian art collector community was largely absent. Couple this with the broader market volatility and $11 trillion in stock losses and crypto winter and it could explain the weaker than expected sales at the high end. We know many large hedge fund managers are down sharply and the headline about spending almost $200mm on a piece of art would not sit well with investors.

Philadelphia Freedom

I happen to be a big fan of Elton John and although this piece has nothing to do with the song, Philadelphia Freedom (1975), it has to do with freedom and independence and how it has changed over time for teens. I felt the song title went along with freedom and independence given the Liberty Bell/Philly connection. Tradition tells of a chime that changed the world on July 8, 1776, with the Liberty Bell ringing out from the tower of Independence Hall summoning the citizens of Philadelphia to hear the first public reading of the Declaration of Independence by Colonel John Nixon.

When I was a teenager, everything was about having a car and being “free.” Free to drive to school (no bus). Free to go to the beach to surf. Free to go see your friends without having mom take you and free to get a job or go out on a date. Going to the movies or an arcade was a big deal 35 years ago. The pièce de résistance was mall time. Going to the mall in the 80s was super cool and a place to get some clothes and meet friends and have lunch at the super fancy Food Court. I have not been to a movie or major mall in years. Can anyone guess the 1980s movie from this food court picture? Does the character Jeff Spicoli help?

I turned 16 on November 25th, 1985 and took my driving test that day. I actually saved up for a car and bought it just before I turned 16. It was torture having a car in front of my townhouse and not being able to drive it alone. It was a 1980 brown Toyota Celica stick shift which I paid $3,000 for and overpaid by approximately $2,800. The thing was a complete lemon. I did not have a mechanic look at it with me, given I knew everything (all teens do) and the seller took advantage of an idiot 15.9 year old. The trunk leaked so badly in the rain that I had to bucket out the water. It was a complete disaster. Had I not been so stupid, maybe I would have looked at the trunk prior to buying it and would have realized it was leaking. What happens in South Florida when water gets into a car in the heat of the summer? Did you say mold and mildew? My car smelled like death. However, the ugly, smelly, brown Toyota gave me the ability to be independent and I did not care that it was a piece of crap. Could I have possibly picked an uglier car and color? No matter, it gave me the freedom I so badly desired, even though it required heavy air freshener and open windows to handle the smell.

Thanks to my sister, Debbie, teaching me how to drive a stick shift, I started delivering pizza and valet parking cars which changed my life. It gave me the ability to earn real money to not be reliant on my mother and gave me more confidence. You are far cooler to the girls when you have a car and some cash to take them out on a proper date. Nothing screams confidence like an early bird dinner at TGI Fridays or Bennigan’s and the $4.99 meals. Tuesday’s had 10 cent chicken wings at Landlubbers in Cooper City and you could be sure I was there in my sweet ride buying those wings for my lady friend. I sure knew how to impress. Some things never change.

Within 9 months, I saved enough for me to trade in the lemon for a newer and cooler car. It was a silver 1985 Toyota Corolla hatchback with 8,000 miles for $6k. I also learned that when you over pay for a car, you get smoked on the trade-in. I learned the valuable lesson about depreciation. 

Today, I find more kids are not as anxious to get a license and a car the minute the turn 16. Is it because of the independence of a smart phone, social media, car services and the have less need for in-person interaction. Does a car no longer represent the “freedom” it once did, while the teens can connect with more people and go to more “places” on smart phones? Does the phone give kids access to a world that is currently cooler than the mall? When the Metaverse takes off, what then? My daughter had a friend over and they were sending each other some sort of messages sitting together on the couch. I lost it. LOOK AT EACH OTHER AND HAVE A CONVERSATION!

My son turned 15, and thought he would want his learner’s permit ASAP. He never mentioned it, so I left it alone. He took his test just a couple months prior to his 16th birthday. Oops! The rule in Florida is you need to have your permit for one year prior to getting your official driver’s license. I am not sure if Jack knew, but I don’t think it would have changed his desire to take the test earlier. He can “chat up” his friends on Instagram, Snapchat, Twitter… He can Facetime, text or Direct Message (DM), play a video game…. Regardless of whether or not we think those connections are quality or not, this is what they know. Teens have Uber or Lyft too which offers freedom not available in the Stone Age when I grew up.

When I was a kid and wanted to speak with a friend or a girl on the phone, inevitably, my mother would pick up the land line and say something embarrassing. “Eric, time for bed… Eric, take out the garbage. Eric, you need to take a shower and wash your hair…” Nothing kills a teenage boy’s mojo like mom embarrassing you in front of a potential girlfriend. I did not have my first cell phone until I was 27 years old in 1997, for perspective.

I am not here to pass judgement on pushing a kid to drive. I am just here to tell you motivations are different and I think technology, our willingness as parents to coddle and the ease of getting by without a car today all play a part. What do you think?

I still believe if I were turning 16 tomorrow, I would be 1st in line at the DMV to take my test. However, this time, I would opt for a cooler car in a better color and would open up the trunk to check for water. Oh to be a moronic 16-year-old. Seems like yesterday, but my physical ailments remind me that it was almost 40 years ago.

Quick Bites

• I spoke with some folks in the equity markets and the theme was consistent. Panic, crowded longs hit hard and crowded shorts rallying. The GS basket was down over 5% Monday, easily under-performing the broader market. More chatter on some major funds down 30-50% YTD. I just don’t know how you recover from that in this tape. Even fund managers who have small (net) exposures are losing on long and short positions. To show how far we have fallen, look at Amazon, clearly one of the few stock market darlings. It has given back 100% of its pandemic gains and is off more than 44% from the highs from July 13th 2021 when it hit $3,773. It is trading at $2,107. I had a friend run equity market cap data for me. The Bloomberg Developed Market Large and Mid-Cap Index was $71.5 trillion on 12/31/21 in the early afternoon today it is $58.2 trillion today for loss of $13.3 trillion. This does not include the trillions in losses in fixed income products or crypto curriences/NFTs in recent months which would bring the total losses higher by trillions.

• Today markets were volatile again with an am rally only to sell off post the inflation data which exceeded expectations. Couple this with the move in crypto (below) and it was a rough day. I bought technology stocks (small size) on the dip this afternoon for the first time in a long time. This is despite the fact that Apple fell 5%+ today and broke through $150, a key resistance level and is -20% YTD. How the VIX (measure of market volatility) is largely at 32.5 unchanged is beyond me. I had inserted the chart in the last piece and people liked it. It is updated. NOT ONE stock is up and I added a few more. Of note, as of the close today, ALL the FANG stocks are effectively in correction (-20% or more). Ranked from worst to best performers relative to all-time highs.

• Stocks fell on Wednesday, stepping back earlier gains as investors continued to digest the latest U.S. inflation data. The Dow fell 327 points to 31,834, or 1.0%. The S&P 500 slipped 1.7% to 3,935 and the Nasdaq dropped 3.2% to close at 11,364. Tech shares struggled on Wednesday, tempering gains for the Nasdaq. YTD, Dow -12.4%, S&P -17.4%, and Nasdaq-27.3%. Market feels horrible and would have thought S&P down more YTD, but energy has clearly helped. There are now some very beaten up names which warrant attention. Do your homework as opportunities are being presented. I would love to see a flush. A limit down circuit breaker day in the next week would make me go in heavier. Meta, Apple, Salesforce and Microsoft fell 4.5%, 5.2%, 3.5% and 3.3%, respectively, as investors continued their movement out of growth areas. Information technology and consumer discretionary sectors fell more than 3%, dragging down the S&P 500. Disney and Rivian released after the close and both rallied, but I did not have time to digest the data. Beyond Meat shares were -24% after the close on disappointing earnings. Nasdaq- 11%+ over 5 days. The 10-Year Treasury yield fell 7bps to 2.92%. Oil rallied 5% to 105 and natural gas was +4% to 7.6.

• Crypto has been obliterated on every front from big to small currencies under pressure. I bought a portfolio 5 months ago and at one point, it was +20%+ and now it is -57% from the starting price. It is across the board carnage from big to small currencies (link to live prices). Dogecoin fell 27% this am, for example. In more troubling news, stablecoin, UST, which is mean to be pegged to the dollar fell below 30 cents, with its sister token, Luna, falling 95% in a week. Maybe it should be called volatile-coin, not stablecoin. I imagine, this will bring regulators to the table as people were investors were wiped out and there is fear in the stablecoin market today. I believe this is a big deal for the crytpo markets and likely the worst event in the crytpo industry to date. For perspective, at peak Terra (Luna token) was $40bn ($80bn fully diluted). In another example of the pain, Coinbase revenue dropped 27% from last year and significantly missed earnings estimates. The stock fell 12% Tuesday and another 26% Wednesday, and the stock is -79% YTD. My long term view on the asset class has not changed drastically, but a combination of correlation to equities, volatility, and the breaking of the stablecoin peg push out my timing by quite a bit and give a good reason for concern. I lost a majority of my Terra/UST Stablecoin investment. Thankfully, I sized my crypto appropriately (1.5% of Net Worth) as I had discussed extensively. Total market cap for currencies was $2.8 trillion in November 2021 and it is $1.3 trillion today. I will be adding to select positions, but I am not ready yet.

  

• JPMorgan’s Kolanovic says the globe is not headed toward a recession and is very bullish energy stocks. “The past week’s sell-off appears overdone, and driven to a large extent by technical flows, fear, and poor market liquidity, rather than fundamental developments,” said Marko Kolanovic, JPMorgan’s top strategist. He has made some very good calls in the past. Another well-known strategist is Peter Oppenheimer. He suggests the rout in global equity markets that erased $11 trillion since the end of March may be reaching a floor for now as battered valuations, particularly among tech stocks, attract dip buyers. “Equities are starting to look attractive for medium-to-longer term buyers,” he told Bloomberg Television on Tuesday. While the downside risks still lurk, “all of that really is absorbed into the market already.” Also of note, David Tepper covered his Nasdaq short and thinks the “selling could be ending.”

• I thought this Bloomberg article entitled, “Day Trader Army Loses All the Money It Made in Meme-Stock Era,” was interesting. I was asked to speak to a large group of college students on the Reddit craze on 2/16/21 and was very vocal that fundamentals matter and although things can stay elevated, they will eventually find their level. I let them know, I would not participate in these stocks at inflated level and shorting was too hard with high borrow costs. It’s ending as fast as it began for retail day traders, whose crowd-sourced daring was the pre-eminent story of pandemic equities. Nursing losses in 2022 that are worse than the rest of the market’s, amateur investors who jumped in when the lockdown began have now given back all of their once-prodigious gains, according to an estimate by Morgan Stanley. In 2022, when about $9 trillion has been erased from the value of U.S. equities, the day-trader army has held relatively firm, at least in terms of positioning, which contrasts with professional money managers who have been retreating. Hedge funds, for instance, have been cutting risk for months, sending their equity exposure to a two-year low, data compiled by Morgan Stanely’s prime broker unit show. These charts as of last week and do not account for this week’s volatility. These violent moves and net worth destruction across equities and bond, crypto markets are north of $10 trillion. This will impact consumer spending and sentiment.

• A quick note on credit markets. The investment grade (IG) bond market has an average price of $93.8 and 78.9% of the index trades below 100, while 9.3% trades under a price of $80. The average yield is now 4.7% for IG bonds. IG bonds are highly rated and deemed safer, but riskier than government bonds. The move in rates is largely driving the sell-off, but can lead to opportunities. The High Yield (non-investment grade) market is now down 9.2% YTD. The average price is down to $90 and the yield is up to 7.8% for the JPM US HY index. Today, 37.9% of the HY market trades below 90 (2nd chart), relative to 2.2% at 12/31/21. I will just suggest that credit is finally starting to look interesting again and personally, I am going to be taking some of my cash and investing it into the IG and muni bond markets. Thanks to the JPM credit research team for sharing. Readers, be sure to call your brokers and start asking about cash alternatives with yield which can help you generate more income without taking crazy risk.

  

  

• High Yield Bonds trading below $90. Not the sharp increase from below 5% to almost 35% since 12/31/21. The chart above must be a week or so newer data.

  

• I started calling for inflation to peak by end of summer in reports from a few months ago. I believe that was a bit of a contrarian call. However, I modified that due to Ukraine invasion and China shutdown and worried inflation would persist longer. Now that the markets have been roiled, rates are higher, housing is showing cracks, layoffs are coming in tech and Wall Street, I again believe we are approaching peak inflation levels (wrote this Monday am). Also contributing to my view is tough comps meaning that we are no longer comparing the data to the 2020 lockdown lows. Today, CPI came out Wednesday am at 8.3%, higher than expectations sending stocks lower. However, April’s data of +8.3% is slightly better than March data of +8.5%. Core CPI, which excludes food and energy, also was higher than expected, rising 6.2%. Interestingly AAA US average gas prices are at an all-time high of $4.4 for regular unleaded and $5.6 for Diesel as of 5/11/22. One article I saw suggested major trucking firms are preparing for “Imminent Diesel Shortages” on the east coast.

  

  

  • This article discusses China levels given the lockdowns and thought this chart was interesting. Although Chinese inflation is expected to tick up a bit more when fresh data is released this week, most economists believe it won’t surpass the government’s full-year target of around 3% in 2022.

    

• From California to Texas to Indiana, electric-grid operators are warning that power-generating capacity is struggling to keep up with demand, a gap that could lead to rolling blackouts during heat waves or other peak periods as soon as this year. California’s grid operator said Friday that it anticipates a shortfall in supplies this summer, especially if extreme heat, wildfires or delays in bringing new power sources online exacerbate the constraints. The Midcontinent Independent System Operator, or MISO, which oversees a large regional grid spanning much of the Midwest, said late last month that capacity shortages may force it to take emergency measures to meet summer demand and flagged the risk of outages. The risk of electricity shortages is rising throughout the U.S. as traditional power plants are being retired more quickly than they can be replaced by renewable energy and battery storage. Power grids are feeling the strain as the U.S. makes a historic transition from conventional power plants fueled by coal and natural gas to cleaner forms of energy such as wind and solar power, and aging nuclear plants are slated for retirement in many parts of the country. I am all for cleaner energy solutions, but retiring traditional plants prior to having an alternative is a moronic idea. I continue to suggest we will be reliant on fossil fuels for longer than people would like. It is bad policy to retire these working plants prior to alternatives being viable.

• I hate hypocrisy. In a Wall Street Journal piece, Elliott Abrams and Eric Cohen, respectively chairman and CEO of Tikvah and co-chairmen of the Jewish Leadership Conference, reveal that Manhattan’s Museum of Jewish Heritage canceled a planned JLC event because Florida Gov. Ron DeSantis was an invited speaker. The museum staff said that Mr. DeSantis didn’t ‘align with the museum’s values and its message of inclusivity.’ Either dis-invite the governor, or event was unwelcome,” the museum staff said. Mind you, DeSantis has been incredibly welcome to the Jewish community in Florida. However, the Jewish Museum hosted Alexandria Ocasio-Cortez despite her public hatred of Israel and support of Palestine. Remember, she cried when the US funded the Iron Dome rocket protection program for Israel as she was opposed to it. I do not agree with all of Governor DeSantis’ policies. However, I believe he has been a supporter of Jews and agree that we should not teach kids gender identity or sexual orientation to 5-year-old children. The museum should not have cancelled the event due to DeSantis while supporting AOC. Remember, I am not a religious person and neither of my kids received a Bar/Bat Mitzvah. In an unrelated matter, over 100 visibly Jewish passengers were barred from a Lufthansa flight. I will never fly this airline in my life and hope you make the same decision. In the video, a German airline supervisor can be seen saying all Jews not allowed on flight because a Jewish couple had not worn masks; ‘Jewish people who were the mess, who made the problems.’ The Lufthansa apology is even worse.

  

AOC Crying over the US support of Israel for the Iron Dome

• With respect to Musk/Twitter, I am worried about the deal going through. TWTR is trading at a 16% discount to the takeout price, so the market believes the deal is in question as well. The comps have been hit hard and Musk was already overpaying at $44bn. There is only a $1bn break-up fee. Musk said he would reverse Trump’s Twitter ban and Jack Dorsey effectively agreed. Again, I just want consistency. I do not care if you ban Trump if you keep the rules constant for all parties. I don’t hear anything from Twitter about Mayor Lori Lightfoot’s “call to arms.” Khameni has a Twitter account. The Kremlin has one. Louis Farrakhan has one too. Ilhan Omar had some controversial tweets about Jews and no consequences. Ban them all or don’t.

Other Headlines

• Goldman Sachs is shrinking its SPAC business amid regulatory crackdown and market turmoil

  

• Tech’s latest IPOs are getting demolished, with Robinhood, Rivian, UiPath down over 70% from offer price

• A.I. lender Upstart shares plummet more than 50% after company cuts full-year revenue forecast

  

• Novogratz Sees ‘More Damage to Be Done’ After Crypto Rout

  • Billionaire expects next few quarters to be choppy, difficult

  • Galaxy Digital posts first-quarter loss amid crypto price drop

• Grayscale tells SEC that turning biggest bitcoin fund into ETF will unlock $8 billion for investors

  • The discount was why I bought in and it has not worked out. This would be a great outcome and ease some of the pain!

• Scorched Stock Traders Starting to See Hard Landing in Soft Data

  • Analysts have cut 2022 estimates for two weeks in a row

  • Interesting chart below on “weak demand” mentions

• Fed will need to hike rates significantly higher than expectations to control inflation

  • Interesting video of an interview from the director of Fixed Income at Richard Bernstein Advisors. Feels Fed is well behind curve. 3 minute video.

• Household debt nears $16 trillion despite rising rates and inflation

• NYC could face ‘long-term decline’ of workers returning to offices over crime: advocate

• South Seattle store owner plans to leave after latest smash-and-grab: 'It's getting worse'

• Chicago shooting: 1 dead, 4 injured in Chicago neighborhood where 'hostile crowd' fought off police performing first aid, officials say

• Electric-car charging stations are becoming more common, but there's still one huge problem: Tons of them don't work

  • A study of CA’s Bay Area found that only 72.5% of chargers were operational despite the fact that CA has by far the most EVs of any state.

• Office of anti-abortion organization in Wisconsin targeted in arson attack, police say

  

• Alabama fugitive officer and inmate caught after Indiana chase

  • This link shows the video as recorded with lots of vulgarities and clearly folks with Southern accents at the scene in Evansville, Indiana.

• 'Sextortionists' are increasingly targeting young men for money. The outcome can be deadly.

  • Scary article about cons posing as young women to get men and boys to send explicit photos and then use the pictures for blackmail or “sextortion.” Some victims take their own lives.

• Avoiding social media for just one week significantly boosts well-being, cuts depression

• Finland is just days away from applying for NATO membership

  • Neighboring Sweden has also been reviewing its stance in the aftermath of Russia’s aggression in Ukraine.

• Downed Russian fighter jets are being found with basic GPS 'taped to the dashboards,' UK defense minister says

  • I had this vision of the Russian Army which was strong and so technologically advanced. I am surprised that this war has lasted so long. and airplanes have duct tape on the dash.

• ‘Cancer-stricken’ Putin watches military parade with BLANKET over his legs as rumors swirl around tyrant’s health

  • I have a good degree of confidence Putin is not well and called this in late February. However, I am not certain his ailment. Many suggest thyroid cancer.

Virus/Vaccine

• Cases continue to grow, but the pace of growth is slowing and was +49% from the prior two weeks. Hospitalizations and ICUs grew at +20% and +12% respectively. Now deaths are growing, but at +2%. All regions in the US are seeing case growth, and the following states have case growth in excess of 100% from the prior two-week period. From worst to best: Missouri, Mississippi, Maine, Utah, Georgia, Hawaii, South Dakota, Iowa, Louisiana, Wyoming.

  

Real Estate

• I believe the wealth destruction taking place in recent months will more materially impact the real estate markets, especially with the overlay of higher rates. I am seeing more homes stay on the market longer, fewer bidding wars, less “no contingency” offers and more price reductions. However, if you have a stunning new build on North Bay Road in Miami on the water, you can sell it in a hurry at a big price. This CNBC article shows that inventories are showing signs of improvement with smaller year over year declines. I expect fringe markets to be hit hardest. Location matters.

  • I was at a fun Cinco de Mayo party last Friday when I heard a $30mm offer was turned down on a home I had mentioned. It was the one where a double lot was sold for $9.4mm and two homes were built in its place. One home was asking $35mm and believe (not confirmed) $30mm was turned down. I would have thought that was a fully priced offer today.

• Hedge fund Aurelius Capital Management has moved its headquarters to South Florida from New York, joining the wave of finance firms that have either relocated or expanded to the Sunshine State during the pandemic.  Aurelius now lists its address as 3825 PGA Blvd. in Palm Beach Gardens, according to filings with the U.S. SEC. I believe the founder bought Dick Fuld’s house on Jupiter Island last year. Finance and technology companies are increasingly setting up offices in South Florida, drawn to its sunny weather and lower taxes. Elliott Management Corp. and Goldman Sachs Group Inc. have signed leases for offices in West Palm Beach. Izzy Englander’s Millennium Management has added outposts in West Palm and Miami, while Dan Sundheim’s D1 Capital Partners opened a Miami office last year.  I continue to believe more legitimate financial firms will open offices in South Florida. I am hearing some big rumors, but I am yet to confirm them about substantial firms buying land to build offices between Miami and Palm Beach. I will continue to caution that the infrastructure was not built for so many wealthy, full-time residents. Schools, doctors, restaurants, housing, golf clubs… are all in short supply down here now.

• South Florida is the most overvalued rental market in the U.S. with renters paying 22% more than they should, according to a new study from two universities in the state. The average rental price in the area that includes Miami and Fort Lauderdale is $2,832, but should be closer to $2,326, according to researchers from Florida Atlantic University and Florida Gulf Coast University. They used past leasing data to model prices and rank the 25 markets in the country with the biggest premiums. Ten of the top 25 markets were in Florida amid a flood of new residents. Fort Myers renters were paying 18% more than they should, while Tampa had an average 17% premium, the study found.

• The Mortgage Refi Boom Is Running Out

  • Lenders issued $859 billion in mortgages in the first quarter, down 25% from a year ago

• I won’t name the projects, but I am hearing that some of the new planned golf courses and communities from Jupiter to Hobe Sound are running into permitting issues. I have heard this in a few spots. It will be interesting to see what progress is made in coming months, but as I understand it, there will be at the best some delays and at worst, projects scaled back. Separately, I spoke with an owner of a home in the community, Delaire, in South/Central Delray. Historically, it has been a retirement community with an average age well into the 60s. Pre-pandemic, a nice house was $1mm and now it is $2mm+. There are 6 homes for sale out of a total of 324 homes. Prior to COVID, it was nearly impossible to sell a house in the community and dozens were for sale. Today, some young families live there and the average age in the community is down sharply. They have 27 holes of golf (well manicured), tennis and some pretty darn good food.

• I have written about the Royal Palm Community in Boca Raton. It is the highest end community in the area. When I bought in 2017, there were 71 homes for sale, with an average price of $4.9mm. Today, there are 12 for sale (a few are under construction and a couple need to be torn down). Of the 12 homes, the average ask is $16.5mm and there are tear downs on the list which would bring the average price up. Here is a link to all the homes. I feel the prices are getting out of control. I am dying to sell my house. I just have no idea where I would go, but at these prices, I would love to monetize. Some of the houses listed really look beautiful. I am just shocked at the price points, especially given where they were pre-pandemic. I would think the market will start pushing back at these levels. One home is asking $3k/foot. Unheard of for these parts and not on the intracoastal, but a canal. Each house has the link to it below for those interested. Of note, the $35mm home sold for $9.4mm 12/20, was split into two lots and ONE is asking $35mm. The other is yet to be listed, but was told the ask will be high $20s. Insanity.

  Royal Palm Homes for Sale

  $35,000,000 On a small canal-Nice house. New

  $27,000,000 New. Intracoastal

  $24,500,000 Small canal. 2020 House.

  $17,995,000 Golf Course Lot. New

  $17,500,000 Small golf lot. New

  $11,950,000 Built in 1996. Small Canal.

  $11,577,000 Built in 2020. Busy street.

  $9,570,000 New build. HORRIBLE location.

  $8,995,000 Built in 1970! Teardown. Double Lot

  $8,775,000 Built in 2017. Decent house.

  $8,250,000 Built in 2006. On course.

  $16,464,720 Average Asking Price

• A mansion along the Intracoastal Waterway in Palm Beach sold for $36.5 million, a 46% gain from its last trade about six months ago. An $11.5mm profit in 6 months ain’t bad, but it the norm for high-end R/E from Palm Beach to Miami. The lot is 0.61-acres at 625 Crest Road. The buyer is a Delaware-registered company, so it’s not clear who manages it. This was an off-market deal. A house in Miami is asking $170mm. The insanity is all around us on the high end. I think the house is ugly.

  

• Home affordability is nearly the worst on record as mortgage rates spike

• Homes Fetch Million-Dollar Bids Over Asking in Crazed California

  • Soaring wealth and a persistent housing shortage are deepening an affordability crisis, yet prices keep soaring. Some crazy examples in the article. Why you would live in CA is beyond me.