August 16, 2013

Warnings Of A ‘New’ Housing Bubble May Be Off The Mark

It’s Friday desk clearing time for this blogger. “Florida Realtors released second-quarter sales figures Thursday showing the Bradenton-North Port-Sarasota metro area is seeing a growing trend toward a seller’s market. James Adkins, broker-associate with Adkins Florida Group, remains positive there will not be a large dive. ‘As long as people keep their heads cool, we’ll be fine,’ Adkins said. ‘We live in a perpetual real estate bubble from crest to trough.’”

“Homeowners and home losers who still feel the sting of this last boom-and-bust housing cycle can’t help but express some degree of trepidation over the rapid ascent in home prices throughout 2013. Trulia chief economist Jed Kolko’s latest report debunks any view that prices are pushing the nation and the Inland region into the bubble zone. Out of 100 of the country’s largest markets, two counties that contributed to the last boom-to-bust – Orange and Los Angeles — had prices swell overvalue by more than 10 percent: Year-over-year asking prices there rose more than 21 percent from July 2012.”

“‘Even though in the past year, the U.S. and the Inland Empire has seen big price increases, those increases are coming from a low-level,’ Kolko said.”

“The Northwest Multiple Listing Service reported last week that King County house prices are up 15 percent, and in Pierce County 16 percent, over the past year. Though today’s prices have not reached their 2007 peaks, bubblelike behavior is occurring in a growing number of neighborhoods. Real, sustainable reconomic growth depends on investments in technology, science, infrastructure, education and other areas that support national competitiveness and job creation.”

“A steady increase in the value of homes based on real growth is in everyone’s best interest. Another housing bubble is not.”

“Step right up, people, welcome to the House Flipping for Untold Fortunes seminar and cash bar. Not a single person on one of those flip shows on reality TV has lost a dime, even in Vegas, where there are still more houses than pawned items on the market. If those bumpkins make twenty grand per shack flip, that’s a lousy month.”

“Question on the first row. You want to know, since flipping houses is such an easy way to make a lot of money, why we would tell you how to do it instead of flip more houses ourselves? It’s why people sell football tout services instead of simply betting on the games themselves. We want to help mankind.”

“Our revolutionary concept is called, ‘Flip It to a Flipper.’ Thanks for coming and please pay the man on the way out.”

“The Canadian Home Builders Association – Lethbridge Region is saying that the market is strengthened by younger buyers and a diverse southern Alberta economy. One Lethbirdge home builder is selling condos in the $170,000 range and throwing in a semester of tuition, worth $4,000. The target market? Students. The money usually coming from parents, at least as a co-signer on a mortgage. The CHBA believes the investment is more than financial. ‘It’s giving their children the opportunity to learn what it’s like to be a homeowner, so when they’re ready, they’re knowledgable,’ said CHBA’s Angie Zuba.”

“Even John McGrath, Sydney’s most prominent real estate spruiker, is concerned the nascent real estate boom spurred by low interest rates is at risk of overheating. ‘I haven’t seen it this hot since the last real estate boom,’ he told a mortgage brokers conference in Sydney. ‘If there is pressure to keep growing at this level – which I don’t suspect we will – quarter after quarter after quarter, we’d probably end up in trouble because we just can’t grow this rapidly.’”

“With all the vertical building projects rising in Metro Manila, and even in other major cities in the county, you’d wonder if all of these would be put to good use. Not only are there new residential condominiums being pre-sold to overseas Filipinos and young starting families, buildings for business processing offices (or call centers) and incentivized cyber parks are mushrooming right and left. With new projects still being unveiled every month, you’d wonder next if there would be any end in sight to this invigorated building optimism.”

“The Philippines itself is no stranger to asset bubbles. In the 80s when golf club shares were so much in vogue that everyone with spare cash went on a buying spree hoping to cash in on promised escalation of real estate prices adjoining the golf clubs. Up till today, many of our countrymen are still waiting for the value of some golf shares that they had bought three decades ago to rise to some decent level, hoping that they can sell them, definitely at losses that are best not calculated for sanity’s sake.”

“According to the auditing results in 2012, there are 12,900 vacant houses in East China’s Shandong Province, 11,500 in South China’s Guangdong Province, and 23,000 in Southwest China’s Yunnan Province. Considering the high housing prices and limited coverage of affordable housing projects, the unpopularity of affordable housing is unexpected, the report said.”

“Any politician suffering a little in the polls knows he or she needs only to tickle the public’s home-buying erogenous zones. At the last Budget, George Osborne reached for the home ownership Viagra when he announced – to widespread surprise – a package of measures under the banner Help to Buy. A glance at the latest data on the average house price-to-earnings ratio for first-time buyers reveals. It is on the way up again and now stands at 4.4:1.”

“The problem is that momentum, once created, is hard to rein in. Buying a house should never feel like buying a tin of baked beans. Memories are short and when it comes to housing the British like nothing better than getting the deal done, measuring up for the curtains and worrying about the consequences at a much later date.”

“There’s been no shortage of headlines warning the UK faces another runaway rise in house prices, brought on by government incentives to boost home-buying. But warnings of a ‘new’ housing bubble may be off the mark, says Danny Gabay, director of Fathom Financial Consulting. ‘I don’t think that phrase (new housing bubble) is very helpful. If I was a civilian rather than a pointy-head, I would get quite exasperated with the media – they’re either in permanent bust or boom. There’s no middle state. So we’re not concerned about a new housing bubble, we’re concerned about the fact we never worked off the last one before they began to re-inflate it.’”

“The point is that they trebled between 1997 and 2007. They then experienced a significant fall until the Bank of England and the Treasury’s connivance stopped the process, and then, like Wile E. Coyote in the Roadrunner cartoons, have remained suspended in thin air held aloft by quantitative easing.”

“We’re in the process of working off the debt that we’ve accumulated on the back of house prices, and they’ve stopped that. And in fact they’ve stopped that to the extent of encouraging and subsidising – directly using taxpayers’ money – people to take on even more (debt), against exactly the same asset.”

“We’ve stopped any attempt at any of the repair work that is essential for this economy to be able to heal properly.”

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