Locusts, Hot Money And Vacant Houses
It’s Friday desk clearing time for this blogger. “Builders are putting up new homes in 33 different communities in the Boulder Valley, said Veronica Precella, chief executive of the Boulder Area Realtor Association. Anthem Highlands homes ranging from 1,900 square feet to 3,200 square are expected to sell for $300,000 to $550,000, said Robyn Asbury, director of sales at Richmond American. The Candelas neighborhood going up in Arvada will feature 4,800-square-foot homes in the $600,000 to $800,000 range, Asbury said. Calmante homes are expected to sell in the ‘low 500s’. Overlook town homes are expected to sell for the ‘high 300s to the low 400s,’ said aul Gortzig, director of sales. ‘We want to price (Calmante and Overlook) in line with what the market is asking for,’ Gortzig said.”
“‘Our homebuyers are finding slim inventories,’ Precella said. ‘Now we’re going to add 20,000 houses to the market.’”
“The supply of homes for sale in the San Fernando Valley increased 21.3 percent from a year earlier in October, but the bump in inventory did little to move the market, the Southland Regional Association of Realtors said. Last month, sales of previously owned houses fell 18 percent to 521 properties, from 635 a year earlier. Sales rose 3.4 percent from 504 in September. The median house price increased 22.4 percent, to $465,000 from $380,000 a year ago, and fell 10.6 percent from $520,000 in October.”
“‘Buyers must accept that deep discount prices are gone, and sellers who ask too high a price will see diminished activity and possibly no multiple offers,’ said Jim Link, the association’s CEO.”
“Across Portland, hundreds of homes—one expert says it could be as many as 1,000—sit vacant in foreclosure limbo. In many cases, the absentee lender doesn’t maintain them, the city isn’t monitoring them, and squatters are moving in. It’s a strange problem to plague a city where vacancy rates are at all-time lows and home prices are soaring. ‘We identified early on that this was going to be the fallout from a massive foreclosure crisis,’ says Angela Martin, executive director of Economic Fairness Oregon. ‘The city wouldn’t have to police it if the owners were taking responsibility. But that hasn’t happened.’”
“Real estate agents say the big cash investors who took over the Las Vegas housing market last year are now leaving. ‘They made their money and right now they’re dumping their product right now, and that is why there is more inventory available,’ Omar Lopez with Cosmopolitan Real Estate said. ‘Now with the inventory going higher, we’re going to see builders offering great incentives.’”
“Julia Lau, a leading Vancouver real estate agent, told me this year that 80 per cent of buyers were mainlanders. Compared to Hong Kong, roiled by talk of locusts and Chinese hot money, there’s been little backlash or even discussion about this phenomenon in Vancouver. Dr David Ley, a geographer at the University of British Columbia, said Chinese migration was ‘undoubtedly’ a driving force at the top end of the market in premier districts. Ley said he was surprised there had been no ‘political pushback’ against the effect that various Canadian immigration schemes had had on Vancouver’s property market.”
“For instance, under the popular investor-class scheme, visas are granted to foreign millionaires prepared to loan C$800,000 to a provincial Canadian government interest-free for five years. Such schemes have attracted 36,892 rich immigrants to British Columbia over the past eight years, of whom 66 per cent were mainland Chinese. With Hongkongers and Taiwanese included, the proportion from China rose to 81 per cent. Nearly all of these millionaire households have settled in Metro Vancouver. The investor visa scheme is so popular that the government last year froze new applications to deal with a backlog.”
“Chinese interest in Australian residential property is booming, with chief executive of McGrath Estate Agents John McGrath describing it as the biggest surge from an offshore market in his 30 years in real estate. ‘In some suburbs 90 per cent of new product will sell to Chinese buyers,’ he said.”
“The most infamous example of absentee owners is the £1.2 billion One Hyde Park development, which was dubbed ‘London’s Mary Celeste’ after it emerged only three of its 85 apartments were used as full-time homes. Shadow housing spokesman Emma Reynolds said too many homes were becoming money-making schemes for rich foreigners who have no intention of living in London. ‘Ideally we would like to stop altogether people using London homes as piggy banks for the world’s wealthy,’ she said. ‘There is a housing crisis in London yet there are about 50,000 empty homes.’”
“While politicians glibly talk about housing the people of New Zealand in new, cheap and cheerful residences that won’t tear bank accounts to shreds, the key thing that’s easy to overlook is the attitude of the construction industry itself. Therefore the latest Ministry of Business, Innovation and Employment (MBIE) report on the construction sector provides some thought-provoking reading.”
“‘Twice as much income for the same amount of work’. In fact one said ‘I never accept any commission for a house under a million dollars.’ Then there is the ‘chief executive of a building firm’ who said that their main driver was providing return for shareholders ‘and we don’t build low cost, affordable homes because they are unprofitable.’ Then there’s another architect: ‘Why would a builder who does three houses a year build a couple of low cost houses? Spend equal amount of time at it…There could be a profit, a modest profit. But it’s too modest and too risky.’”
“Mumbai’s residential property market is in ‘dire circumstances,’ says Knight Frank. The unsold stock of homes in Mumbai has reached 130,000 units and developers have been delaying new launches to focus on selling the existing inventory. To that end, developers have been reducing prices by up to 25 per cent, particularly in the premium segment, it says. ‘Widely believed to be in the midst of an asset price bubble, the cash-strapped Indian real estate landscape today is rife with escalating unsold inventory levels,’ the report said.”
“Norway is moving closer to easing mortgage lending standards as the nation’s deflating property market prompts concern among lawmakers that existing regulations are too tight. Real estate prices, which have doubled over the past decade and touched a record high this year, are now dropping faster than the central bank had predicted. ‘It’s a rather hard landing,’ said Erik Bruce, senior economist at Nordea.”
“Last week, Janet Yellen was asked at her confirmation hearing if the Fed’s unprecedented run of accommodative monetary policies might be leading to a bubble in asset prices. Yellen would do well to acknowledge that the Fed’s current policies may not be working as well as they should. In the immediate aftermath of the financial crisis, quantitative easing made sense as an emergency measure. The emergency is over now, but the practice continues. The most obvious beneficiaries of the Fed’s policies are those who own stocks and other assets: among them, the one per cent of Americans who received ninety-five per cent of the income gains between 2009 and 2012. Despite Yellen’s opinion, there are signs that an asset bubble may indeed be forming: rising home prices, stocks, and subprime car loans among them.”
“Thomas Hoenig, the former head of the Kansas City Fed, who had long voted against interest-rate cuts, explained the current challenge succinctly in the film ‘Money For Nothing: Inside the Federal Reserve’: ‘The United States has consumed more than it’s produced, systematically, for at least a decade. What country, in history, ask yourself, can do that indefinitely, forever?’”
