The Greater Depression of the 2020s: Implications For Real Estate

REAL ESTATE NEWS (Los Anglees, CA) — In a world awash with financial jargon and complex economic theories, it can be challenging for the average person to decode the happenings within our economic landscape. A recent video from RJ Talks titled “Bank of America: Strong Sign Federal Reserve is Done as Revisions PLOW Toward Hard Landing Recession” has brought some of these complexities to light, notably discussing the market imbalances, employment data shifts, and Federal Reserve actions. This blog post aims to unravel these complexities and explore the ominous idea of the Greater Depression of the 2020s.

August Jobs Data: A Grim Milestone

The video starts with a revelation that the August jobs data was not just disappointing but seemed to indicate a significant shift. Unemployment rates have spiked, surprising many who have been following the steadily recovering job market post virus hysteria. Such a substantial change in employment data is alarming, not just for the average American worker but also for the Federal Reserve. It seems that what the Federal Reserve had been cautiously monitoring for over a year just occurred.

The Federal Reserve’s Unlikely Balancing Act

The Federal Reserve has been walking a tightrope for a while now, maintaining a balance between interest rates, inflation, and unemployment. Jerome Powell, the Federal Reserve chairman, expressed that the Central Bank was closely watching for the unemployment rate to normalize around 4%. This is easier said than done, as unemployment rates can quickly escalate and lead to severe consequences like stalling the labor market. The Fed had been employing a “higher for longer” strategy, tightening monetary conditions until they saw the unemployment rate break upward, which has finally happened. This shift triggers a reconsideration of the Federal Reserve’s approach to monetary policy.

Real Rates and Economic Squeeze

One crucial point raised in the video is the ‘real rate’ or the actual interest rate that matters when considered against inflation. This real rate currently sits at over 2%, a figure that historically leads to an economic downturn or ‘hard landing.’ This tightening of financial conditions is already taking its toll on small and medium-sized businesses, who are described as being “six feet under, gasping for air.”

Quantitative Tightening: Uncharted Waters

The Federal Reserve is currently in a phase of Quantitative Tightening (QT), which aims to undo some of the actions taken during the phase of Quantitative Easing (QE) initiated during previous crises. QT involves vacuuming up the extra money that had been pumped into the economy, a strategy that has never been employed before in the history of the Federal Reserve. Given how QE led to significant economic and market implications, the impacts of QT are still uncertain but potentially significant.

Bank of America’s Warnings and the Future Outlook

The video discussed a note from Michael Hartnett, Chief Investment Strategist at Bank of America Global Research, which stated that a significant indicator—the job openings to unemployed ratio—had reached its lowest level since September 2021. This is considered a strong sign that the Fed’s current monetary cycle could be coming to an end. Hartnett also notes that never in U.S. history have Treasury returns fallen three years in a row, marking yet another unprecedented economic situation.

Navigating Uncertainty: Investor Strategies for Q4

The video ends with advice for investors to be ultra-conservative as the year moves towards its final quarter. It suggests that the time might be ripe for investors to move into money market accounts, which are still paying risk-free five percent yields and offer liquidity in case of a massive sell-off.

A Greater Depression?

The term “Greater Depression of the 2020s” is heavy with implications. While some believe it’s too soon to predict if the current economic signals will indeed lead to a depression surpassing that of the 1930s, the stock, employment and GDP statistics indicate that it already began in 2020. The depression has been covered-up, papered over with federal helicopter money, leading to uncontrolled inflation, then higher interest rates.

Fewer Transactions Due to Higher Interest Rates

When interest rates rise, the cost of borrowing increases, which directly impacts the affordability of mortgages. This discourages new buyers from entering the market and can also deter existing homeowners from selling their current homes to upgrade. Why? Because they may also face higher interest rates when they look for a new mortgage.

In essence, higher interest rates can lead to a decline in the overall number of real estate transactions. This stagnation can have a ripple effect through the broader economy, affecting everything from home construction to consumer spending.

Uncontrolled Inflation Keeps Prices High

On the flip side, high and uncontrolled inflation can create a situation where the nominal prices of homes remain high or even increase. This phenomenon occurs even as the market softens, i.e., as the number of willing buyers decreases due to the inflated prices and higher interest rates. In this scenario, the “sticker price” of the home remains high due to inflation, but the intrinsic value may not necessarily follow suit.

Moreover, it’s important to note that while the nominal price of a property may increase with inflation, this doesn’t mean the “real” value of the property has increased when adjusted for inflation. Owners may find that when they sell, the buying power of the money they receive is not as strong as they had anticipated, which can be a harsh reality check.

The Complex Dance: Real Estate in an Inflationary, High-Interest-Rate Environment

Thus, we find ourselves in a delicate balance. On one hand, fewer transactions occur due to higher interest rates, contributing to market stagnation. On the other, high inflation keeps the “sticker price” of properties elevated, creating a disconnect between price and value.

Both of these factors can lead to increased market volatility and uncertainty. For participants in the real estate market—whether they are buyers, sellers, or investors—this can be a challenging landscape to navigate.

This duality adds another layer of complexity to the real estate market and underscores the importance of a nuanced understanding when making property-related decisions during times of inflationary pressure and rising interest rates.

A recent article raises multiple points about the role of the Federal Reserve, particularly its Chair Jerome Powell, in the current inflationary environment. It questions Powell’s account of the inflationary forces at play and suggests that the actions of the Federal Reserve and the U.S. Government are to blame for the rise in prices. Here are some of the key arguments presented in the article:

  1. Blame Misplacement: The author argues that Powell is blaming external factors like the Russia-Ukraine war and volatile global conditions for inflation. The argument is that this is an incorrect or misleading assessment.
  2. Inflation Cause: The article references Milton Friedman’s statement that “corporations don’t cause inflation; governments create inflation by printing money.” It suggests that government policies, including fiscal stimulus and pandemic-related interventions, are the real causes of inflation.
  3. Incorrect Targeting: The article contends that if Powell and the Federal Reserve do not correctly identify the causes of inflation, they run the risk of taking either too much or too little action, which could exacerbate economic conditions.
  4. War With Ukraine: The article specifically disputes the notion that the Russia-Ukraine conflict is a significant driver of inflation, arguing that oil prices were already on the rise due to other factors.
  5. Monetary Policy Risks: The article suggests that the Fed is in a tricky situation; if they tighten too much, they risk slowing down the economy, but if they don’t tighten enough, inflation could get out of control.
  6. Future Risks: The article ends by warning that if Powell genuinely believes that inflation is due to factors other than government and Fed actions, he could end up being “the architect of the next recession.”

Concerns About the Federal Reserve and Jerome Powell’s Excuses

  1. Complex Causes of Inflation: Inflation usually has multiple causes, and it’s often a mix of supply and demand factors, monetary policy, and sometimes even external events like wars or natural disasters. Saying that it’s solely the fault of the government or the Fed may sound like an oversimplification, yet it is the Fed’s responsibility to print the correct amount of money to allow liquidity without causing inflation.
  2. Political Neutrality: Central banks aim to remain politically neutral and base decisions on data and economic indicators. If Powell is avoiding blaming any particular administration, it might be in line with this principle.
  3. Forward Guidance: The Federal Reserve uses “forward guidance” as a tool to manage expectations about future monetary policy. The statements Powell makes are carefully calibrated to influence market behavior and should be understood in this context. Powell has been very wrong before, when he incorrectly labeled long-term inflation “transitory”.
  4. Timing and Lags: Monetary policy acts with a lag on the economy. Mistakes in monetary policy are often only visible in hindsight. This is certainly true for Powell, as he has made some monumental mistakes.
  5. Public Sentiment: Managing public and market expectations is a significant part of central banking. Statements may be crafted not just to convey factual assessments but to influence behavior in a way that’s conducive to economic stability and bank profits.
  6. Historical Precedents: There have been instances in history where monetary policy missteps have led to economic downturns.
  7. Policy Response: Both monetary and fiscal policy play roles in combating inflation. If inflation is deemed to be more structural, then fiscal policies may be better suited to address it, but this generally falls outside the remit of the Fed.

The debate about the causes of inflation and the appropriate policy response is complex and involves multiple factors. However, the article presents a critique of the Federal Reserve’s current stance and highlights the risks associated with not correctly identifying the underlying causes of inflation. While we hope that AI will benevolently save us from economic despair, most consumers and business owners are concerned that a hard landing is inevitable, when rising unemployment makes QE and worsening inflation inevitable. October is frequently a month of historic stock market crashes.

The landscape we navigate is riddled with both known and unknown variables, making the path forward fraught with uncertainty. In such times, knowledge is power, and understanding the various economic indicators and Federal Reserve actions can arm us with the tools needed to face any future economic storm. Whether or not we are on the brink of a Greater Depression is a question that only time will answer. Our research indicates that Jawbone Jerome still does not have a handle on inflation, as the Greater Depression of the 2020s grows increasingly undeniable. Being prepared can make all the difference.

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Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Broker DRE 01889449. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Text and photos created or modified by artificial intelligence. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.

August 2023 Downtown L.A. Real Estate Market Report

Trends and Analysis

REAL ESTATE NEWS (Los Angeles, CA) — Understanding the current market trends, including home values, rental rates, and inventory levels, is crucial for making informed decisions. The real estate market is always in flux, subject to a myriad of influences ranging from economic conditions to consumer sentiment. For investors, brokers, and homebuyers alike, understanding these market dynamics can be critical to making informed decisions. Here, we compare and contrast real estate market reports from August 2022 and August 2023 to identify key trends and shifts. This report is based on local real estate professional Multiple Listing Service data from Downtown Los Angeles and nearby lofty neighborhoods TheMLS areas 23, 42 and 1375.


Overview of Key Metrics: August 2022

Sold Properties

  • Number of Sold Properties: 57
  • Sold Price Range: $360,000 – $5,500,000
  • Average Sold Price: $872,473
  • Average Price per Sq. Ft.: $738.17
  • Average Lot Size (LSZ): 86,967.79 Sq. Ft.
  • Average SP%LP (Sold Price as a percentage of List Price): 96.67%

Overview of Key Metrics: August 2023

Sold Properties

  • Number of Sold Properties: 25
  • Sold Price Range: $278,500 – $4,202,500
  • Average Sold Price: $684,692
  • Average Price per Sq. Ft.: $669.83
  • Average Lot Size (LSZ): 60,222.38 Sq. Ft.
  • Average SP%LP (Sold Price as a percentage of List Price): 99.70%

Comparative Analysis

Volume of Transactions

One of the most noticeable differences is the volume of transactions. In August 2022, there were 57 sold listings, whereas in August 2023, the number decreased to 25. This represents a significant contraction in the market’s activity level, which may suggest lower demand or supply constraints.

Price Metrics

  • Average Sold Price: The average sold price decreased from $872,473 in 2022 to $684,692 in 2023. This decrease of approximately 21% suggests that property values may be declining.
  • Price Per Square Foot: The average price per square foot also showed a decrease, from $738.17 in 2022 to $669.83 in 2023, indicative of less competitive pricing.

Lot Size Metrics

The average lot size also showed a decline from 86,967.79 Sq. Ft. in 2022 to 60,222.38 Sq. Ft. in 2023. This reduction could be due to a shift in market preference toward smaller properties or a decrease in available larger lots.

Efficiency of Sales

Interestingly, despite the market appearing to cool off in terms of price and volume, the Sold Price as a percentage of the List Price increased from 96.67% to 99.70%. This may indicate that the properties are being priced more accurately in the current market, resulting in sales that closely match the listing price.

Days on Market (DOM) and % of List Price

In both years, properties sold more quickly as the DOM decreased. The percentage of the list price received on sold properties was higher in almost all categories in 2023 compared to 2022, suggesting that sellers are getting closer to their asking price.


Comparative Analysis of Key Financial Metrics Between August 2022 and August 2023

When comparing the two periods, several financial metrics stand out as particularly indicative of market trends. Below, we examine the total sales dollars, total sales transactions, and average and median sold prices for the real estate market in August 2022 and August 2023.

Total Sales Dollars

August 2022:

  • Total Sales Dollars: $49,731,000

August 2023:

  • Total Sales Dollars: $17,117,302

Comparison: There’s a drastic decrease in the total sales dollars between the two periods. The 2023 figure is approximately 34.4% of the 2022 figure, showing a significant contraction in total sales revenue. This could be indicative of a weakening market, reduced demand, or perhaps fewer high-end property transactions.


Total Sales Transactions

August 2022:

  • Total Sales Transactions: 57

August 2023:

  • Total Sales Transactions: 25

Comparison: The number of total sales transactions also saw a substantial decrease, from 57 in 2022 to 25 in 2023. This represents a decline of about 56%. This drop in sales transactions aligns with the decrease in total sales dollars and could indicate a less active market.


Average Sold Price

August 2022:

  • Average Sold Price: $872,473

August 2023:

  • Average Sold Price: $684,692

Comparison: The average sold price decreased from $872,473 in 2022 to $684,692 in 2023. This represents a decrease of approximately 21.5%. This could be due to a variety of factors, including reduced consumer purchasing power or a shift in the types of properties being sold (e.g., smaller homes, less luxurious features).


Median Sold Price

August 2022:

  • Median Sold Price: $630,000

August 2023:

  • Median Sold Price: $470,000

Comparison: The median sold price dropped from $630,000 in 2022 to $470,000 in 2023, showing a decrease of about 25.4%. The sharper decline in the median price compared to the average price suggests that the middle segment of the market might be experiencing a more significant slowdown.


The data suggests that the real estate market experienced a contraction between August 2022 and August 2023. Notably, there are fewer transactions and lower average and median sales prices in 2023 compared to 2022. These changes may signify a variety of economic and market factors, including potential economic downturns, shifts in buyer behavior, or external variables such as interest rates and regulations.

The comparative analysis reveals a market undergoing shifts. While the volume of transactions and average prices have decreased, the efficiency of sales in terms of SP%LP has improved, suggesting better pricing strategies by sellers. These shifts can have various interpretations, from an economic downturn affecting purchasing power to changes in consumer preferences. For any stakeholder in the real estate market, staying updated with such data and trends is crucial for making informed decisions.

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LOFT & CONDO LISTINGS DOWNTOWN LA [MAP]

  Lofts For Sale     Map Homes For Sale Los Angeles

SEARCH LOFTS FOR SALE Affordable | PopularLuxury
Browse by   Building   |   Neighborhood   |   Size   |   Bedrooms   |   Pets   |   Parking

Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Broker DRE 01889449. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Text and photos created or modified by artificial intelligence. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.