On A Road To Bubble Country
It’s Friday desk clearing time for this blogger. “Metro Denver, like many large metropolitan areas around the country, has seen home prices steadily rise in recent months, but wages haven’t kept pace. Linda Philpott, chairwoman of the Aurora Association of Realtors board of directors, said sellers are seeing multiple offers on their homes and those offers are coming in quickly. ‘Buyers who are interested in a property have to make a decision and put in an offer right away,’ she said. ‘Or they won’t have a chance to get a property.’”
“Stanislaus County prices dipped a bit last month to a median of $180,000. ‘There has been a shift in the local real estate market,’ confirmed Chad Costa, co-owner of Re/Max Executive realty in Modesto. ‘We went from significant month-over-month increases from the beginning of the year to a much-needed plateau in just the last month or two. We are moving out of a depressed market, and the last thing we need is to see price increases exceeding the average income,’ he explained. ‘History has proven that what goes up must go down, especially when the increases are not in line with income and unemployment.’”
“Angie Domichel Nelden, a Salt Lake-based real estate agent, said the hectic pace of home sales over the summer is clearly easing back. The Realtor recently listed two homes and when no calls came in after a day or so, she actually checked the listings to make sure there wasn’t a mistake. ‘You can just feel it,’ said Nelden. ‘It’s taking a little bit longer now.’”
“Kim Casaday, president of home financing for Zions Bank in Utah and Idaho, said historically low interest rates reached last spring helped to inflate home price increases in the summer months. ‘You had so many people out buying homes,’ she said, ‘it almost created kind of an unnatural bubble.’”
“Monthly gains in home prices are slowing down. That’s OK, says Chase Private Client Chief Economist Anthony Chan. ‘The numbers were, in fact, too robust to begin with,’ Chan said. ‘I don’t think Portland should want 13 percent year-over-year and neither should the nation want 12.8 percent. That’s on a road to bubble country.’”
“A friend of mine, a high-income executive, and her husband, also on a good income, want to buy a bigger home on Sydney’s north shore. When they see Chinese buyers turn up, their hearts sink. It usually means doom. ‘When we encounter more than one Chinese buyer interested in a house, we know we are not going to get it,’ she said. ‘We get priced out.’”
“A Sydney property developer who is working with Chinese investors told me that if Chinese stopped buying in areas that are popular with Chinese home buyers, the value of these local markets would fall by about 25 per cent. These local bubbles are having a ripple effect, pushing buyers into other areas of the Sydney market. The same is happening in parts of Melbourne.”
“The property bubbles in China’s third- and fourth-tier cities are bursting, according to Li Wei, director of the State Council’s Development Research Center. With inadequate demand and blind investment, the property market in quite a few third- and fourth-tier cities is seeing greater supply than demand, resulting in a property price slump. Given their edge in attracting migrants and industry clusters, the bubble existing in first-tier cities might burst later, but the risks involved cannot not be overlooked.”
“When the bubble bursts, some cities will become ‘ghost towns,’ and financial revenue will drop sharply, according to a source within the property sector. A lot of residents were also expected to dump their houses on the property market and banks could seize property that had lost value, impacting the financial system and resulting in a series of chain reactions.”
“The Construction and Planning Agency (CPA) said yesterday that the number of vacant housing units in 2012 had increased by 50,000 over the previous year. The agency said that more than 863,000 housing units had recorded less than 60 kilowatt hours of electrical use per month in 2012, which suggests that the units in question are largely unused or vacant. The newly announced figure accounts for 10.6 percent of all housing units in the nation. The Ministry of Finance said that there are more than 600,000 people who own more than three housing units.”
“Comparing realty data with data acquired from the Taiwan Power Company, the CPA explained that the term ‘minimally used housing unit’ refers to units that record less than 60 kilowatt hours of power a month. According to the Directorate-General of Budget Accounting and Statistics, the island had a total of 1.56 million unoccupied housing units in 2011, substantially higher than the CPA’s 813,000 minimally used housing units recorded in the same year. The agency also announced the figures for new housing units and housing units less than 5 years old ready to be sold. As of the fourth quarter of 2012, there were 30,123 such units in total, signifying an increase of 1,200 from last year, the CPA said.”
“About a quarter of Canadians spend too much on housing costs, Statistics Canada says. How can you tell if you’re house poor, aside from the fact that your bank account is hemorrhaging funds? To answer that question, dig deep, and we’re talking in your soul, not your piggy bank. ‘Your first sign is that you are beginning to resent your house,’ says certified financial planner Scott E. Plaskett, CEO of Etobicoke’s Ironshield Financial Planning. ‘You don’t look at it with the sense of pride you did when you first bought. You now see it as the thing that is standing in your way of other financial goals.’”
“Regional foreclosures rose by 26 percent in the third quarter, compared to the same period in 2012. Home repossessions, property auction warnings and mortgage default notifications in the Scranton/Wilkes-Barre metro area advanced for the third straight quarter, according RealtyTrac. ‘It’s the unemployment issue and underemployment still playing a pretty big factor’ in rising foreclosures, said Jesse Ergott, executive director of a nonprofit budget counseling agency based in Scranton. ‘It’s simple mathematics. People aren’t bringing in enough to pay those bills and something has to go.’”
“Sales of repossessed homes at sheriff auctions in Lackawanna County totaled 209 through September, down from 435 in the year-earlier period. The Lackawanna County decrease could be misleading, said Michelle Valvano, who manages sales of bank-owned real estate for Classic Properties in Clarks Summit. There are 117 properties on the list for a Lackawanna County sheriff sale on Tuesday, she said. ‘There’s no way foreclosures are slowing down,’ Valvano said. ‘People are just walking away’ from their homes.”
“Starting Friday, New Castle County plans to reduce a fee builders pay before breaking ground on a home from $12,782 to $9,815 for single family dwellings. Leann Ferguson, of Middletown, is skeptical of whether the fee changes will benefit residents dealing with a sluggish economy overall. The housing market below the canal suffers from a glut of supply, and adding new homes might hurt the value of existing homes, she said.”
“‘Who is going to buy all these homes? We have empty houses already,’ said Ferguson, the former vice president of a civic group called Southern New Castle County Alliance. ‘We need more demand. It sounds good to give incentives to get development back in the game, but you can’t realistically say it’s a good idea without looking at the whole picture. And the whole picture is bleak.’”
