Less Expensive Houses Are Not A Bad Thing
It’s Friday desk clearing time for this blogger. “Five years after a huge property crash devastated the Irish economy, a booming urban market where supply is scarce and competition fierce is raising concerns about a new bubble in the capital. ‘There’s an element of craziness creeping back into it where people are getting frantic,’ said Scott, a 37-year-old father of two young children, after wading through the crowds to view a four-bedroom, semi-detached house in leafy south county Dublin. ‘Friends of mine have bought and gotten into bidding wars. It feels like the olden days; it’s kind of wrong.’”
“While the metro Kansas City apartment market is hot, and prices, sales and construction of single-family homes have warmed to pre-recession levels, condominiums are still out in the cold when it comes to the recovery. And the condo market may get even chillier. No new projects are in the works, and Realtors and owners are struggling to sell existing condos. ‘It’s pretty simple,’ said Dan Farmer, a mortgage banker at Peoples Bank. ‘In 2008, when we went into the housing crisis it was the highest level of foreclosures in our history. A lot of the foreclosures were condos because people were speculating in condos. That enormous amount of defaults in condos all over the country, especially in Florida, Arizona and California, led to tighter guidelines by Freddie and Fannie.’”
“The value of the state’s property fell by 0.8%, or $3.6 billion, last year, continuing an unprecedented downward slide that has washed away tens of billions of dollars in Wisconsinites’ net worth over the past five years. The report by the Wisconsin Taxpayers Alliance shows that after years of increases, the value of Wisconsin’s homes, businesses, farmland and forests peaked at $514.4 billion in 2008 and then has fallen every year since, dropping by $47 billion in all.”
“When Rob and Anita Bolton decided to move from Roscoe to Arizona this past winter, they hoped reports of an improving housing market would keep them from having to take a major financial hit. It did. Sort of. The couple bought their house in 2007, right before the real estate bubble burst, bringing on the Great Recession and sending values plummeting. ‘Our Realtor told us we were looking at a considerable loss,’ Rob said. ‘It was good enough, but we still ended up having to write an $11,000 check.’”
“An increase in new home listings and housing inventory kept momentum moving forward in the Florence and Greater Pee Dee real estate markets in July despite falling median prices. Joey McMillan Jr. at Coldwell Banker Segars McMillan and Associates said the lower median sales price represents a supply that is at a price point that’s palatable for first-time homebuyers. ‘More, less expensive houses are not a bad thing, but the houses are less expensive and we’re seeing a lot of first-time homebuyers,’ McMillan said. ‘And seeing a lot of foreclosures come to market, selling at lower prices to fix up to sell or to live in, then six to 12 months later should sell for more so that will correct itself.’”
“A new report says housing sales in Corner Brook are down by 28 per cent this year compared to 2012. Canada Mortgage and Housing Corporation doesn’t usually give out statistics for that region. However, when Corner Brook-based real estate agent Ken Brown requested the data, it delivered. Brown said he sees many for-sale signs in the city — many of which bear stickers indicating a reduced price. ‘It shows that the market in past years have been inflated, certainly it does reflect what’s happening here economically, in the economy itself,’ Brown said.”
“Official mortgage lending data doesn’t capture the entire debt picture for China’s new homeowners. Excessively high housing prices are making it hard for most to cough up the required 30-40% down payment. As a result, banks becoming ‘very creative in helping consumers’ make mortgage down payments, says Junheng Li, head of research at JL Warren Capital. One increasingly common scheme involves an informal version of ‘reverse mortgages,’ which aren’t legal in China. When a prospective buyer can’t pay the down payment, banks allow the buyer’s parents to take out a loan using their home as collateral in order to generate the cash.”
“This has been going on for a while, she says, particularly in big cities. In other words, banks are exposing themselves to more risk than their balance sheets reflect. In using improvised reverse mortgages, banks are lending to a set of people deemed too risky by Chinese regulators. That’s pretty much the definition of ’sub-prime lending.’”
“The eight per cent rise in average Dublin house prices over the past 12 months revealed by the CSO last week needs to be taken with a very large pinch of salt. With the banks cutting back on mortgage lending yet again and only tiny numbers of properties changing hands, any sustained recovery in the housing market is still a long way off. Cash transactions now account for just under half of all purchases. These cash transactions are not being captured by the CSO figures. However, going on the evidence of auctions of repossessed properties where the majority of deals are for cash, it would appear that prices are down by 60 per cent or more rather than the 50 per cent indicated by the CSO data.”
“Doubts about the reliability of the CSO figures are only part of the problem. Even if every house was being purchased with the aid of a mortgage, a far bigger obstacle to gauging the true state of the housing market is the fact that transaction volumes, either with or without a mortgage, have virtually dried up. So no credit and tiny transaction volumes on the one hand, but an apparent price recovery, at least in the better Dublin suburbs, on the other.”
“Looking at the current situation, it’s hard not to be reminded of 18th Century Russian statesman Prince Grigory Potemkin, chief minister and sometime lover of Empress Catherine the Great. Whenever the Empress got it into her head to journey through her vast territories, Prince Potemkin would travel a few days ahead of her constructing ‘villages’ that were in reality no more than facades, populated by suspiciously well-dressed and fed ‘villagers’, thus ensuring Her Majesty a rapturous reception wherever she went.”
“While the Russians may have had Potemkin villages with an attractive facade concealing the poverty that lay behind, we in Ireland have a Potemkin property market.”
