Juggling Dynamite

In the fourth quarter of 2023, 7.7% of US auto loans transitioned to delinquency on an annualized basis (New York Fed data)—the highest rate in 13 years. The total annual cost of owning a new car, including expenses such as gas and insurance, climbed to $12,182 in 2023, up from $10,728 in 2022 (latest estimates from AAA). See The Cost of Car Ownership is Getting Painful.

At the same time, the second-largest global economy is stumbling under similar trends. The segment below starts with a focus on mounting stress for Chinese auto owners and broadens to larger themes: “…consumption is weak, and people have no money.”

Here is a direct video link.

A wave of new multifamily residential projects are coming online as migration slows and high mortgage rates weigh on housing demand. Add to the mix an insurance crisis, and a seller’s market is becoming a buyer’s one. See, In Southwest Florida, high home insurance rates are driving away would-be buyers:

Florida’s southwestern coast — long one of America’s fastest-growing regions — is losing some of its boomtown swagger as a home-insurance crisis and other soaring costs make homes unaffordable.

Homeowners from Sarasota south to Naples, known for its eight-figure waterfront mansions, are having a tougher time selling their properties, and the buildup in inventory has caused home prices to fall at some of the fastest rates in the nation. Realtors point to rising insurance costs that were exacerbated by Hurricane Ian in 2022, prompting some homeowners to list their homes for sale and would-be buyers to walk.

In the US inflation estimate for January, auto insurance premiums rose 20.6% year over year, while tenant and household insurance rose 6% annualized over just the last three months.

Across the developed world, insurers are exiting some areas and demanding higher premiums and deductibles in others; affordable insurance — often a condition of mortgage and vehicle debt — is getting harder to secure.

As individuals increasingly bear more and more financial risk, our ideas of what constitutes diversification and mitigation naturally change. At the same time, the companies and activities contributing to the chaos will be tapped to pay for the damage created via rising fees, taxes and damage awards. See The uninsurable world: what climate change is costing homeowners:

Last year saw a record-breaking number of natural catastrophes causing at least $1bn in insurance losses: 37 separate events, according to data from insurance broker Aon. That included 25 so-called severe convective storms, of which 21 were in the US. It is the growing weight of events such as storms and wildfires — and the broadening of the areas that are exposed to them — that is raising anxiety in the sector, and changing the way risk is viewed.