The Main Problem Is The Price
It’s Friday desk clearing time for this blogger. “Booming housing markets in emerging Asia have pushed global residential property prices to a new peak, according to a repor. Consultancy Knight Frank’s global house price index rose 4.6 per cent over the 12 months to the end of September, taking it 4pc higher than its previous peak in the second quarter of 2008. ‘The index’s strong performance has been assisted not just by headline grabbing price rises in Dubai, China and Hong Kong, but also in a number of emerging markets,’ said Kate Everett-Allen, associate at the London-based property consultancy.”
“‘Beirut is a market where it doesn’t matter what you seem to do, the Lebanese will always find a way to survive, thrive and increase,’ said Ian Albert, regional director of consultancy Colliers International. Prices in the city have ‘basically doubled’ over the last ten years, Albert says. Robert Lee, CEO of Manana-based developer Bahrain Bay, believes that while the city’s housing market is unsuitable for the ‘fainthearted,’ property investors could see considerable returns, if they are prepared to wait for regional stability to improve. ‘Some people made a truckful of money when they bought real estate in Kuwait, during the invasion. If you can see through the smoke and make a gut investment, I think you’ll do really well,’ he added.”
“Zhong Jian and his wife are willing to pay double the going rate for a tiny home in a Beijing neighbourhood so their 18-month-old daughter will be eligible to attend a top primary school nearby. Zhong, a 32-year old electronics salesman, said he was ready to pay two million yuan ($328,200) for a tiny home with one room the size of about four king-size beds, in a shabby alleyway. The home, which doesn’t even have a bathroom, sits in a rundown Chinese-style courtyard with other small homes. But the owner still wanted more, so Zhong had to say no.”
“‘I feel very tired and helpless,’ said the weary father. ‘It’s a lot of pressure.’”
“Housing prices must go down to unfreeze the prolonged real estate slump in Ho Chi Minh City, according to local analysts. If the halted projects, which measure an estimated 7,253 hectares in total, are priced at an average of VND5 million per square meter, then investment capital stuck in the industry amounts to VND362.65 trillion ($17.2 billion).”
‘A senior official from the HCMC People’s Committee, who asked not to be named, said there have been no effective solutions to the huge inventory, which he called an ‘extremely serious’ consequence of a red-hot property bubble that burst.”
“Home sales in India slowed this year and unsold inventory with builders has increased. Soaring prices in recent years has led a growing middle class to turn to real estate as a means of generating wealth. Unsold inventory of development properties aimed at that new type of buyer is now a cause for concern, say analysts. The main problem, in a country where almost one-quarter of the population earns less than 50 cents a day, is the price. A 2,000 sq.ft (185.8 sq.metre) apartment in the posh South Mumbai neighbourhood of Malabar Hill costs more than $2 million. That is not far from the average three-bedroom unit in Manhattan, New York City, which costs around $2.6 million.”
“Statewide, Florida has had 11 consecutive months of increased foreclosure auction notices from a year earlier. As the pool of auction properties has increased, the type of buyer purchasing them has also begun to shift, said Daren Blomquist, VP of RealtyTrac. The large investment groups feel they’re doing their homework before they purchase properties but they are more interested in meeting a quota than in ensuring that each house they purchase is of high quality. At the end of the day, he added, they can take a few bad ones here and there.”
“But the fact that longtime local investors are backing away from auctions should be a red flag to the equity firms and institutional buyers that they may be purchasing foreclosed properties at too high of a price, Blomquist said. ‘It’s pretty interesting when you talk to the local guys who have been at this a while,’ he said. ‘They are backing away from the auctions because prices are getting too high.’”
“The maximum Federal Housing Administration-conforming loan limit for homebuyers in Riverside and San Bernardino counties will fall 29 percent from $500,000 to $355,350, a reduction of $144,650. ‘Ninety-nine percent of these buyers use FHA for a reason,’ said Brad Yzermans, a broker with Caliber Home Loans in Temecula, such as a bankruptcy, foreclosure, former short sale or lack of down payment. ‘Essentially, this is shutting out people who are trying to get back on their feet.’”
“If Arizona’s anti-immigrant image persists, it could impede high-wage job creation, population growth and the real estate recovery. Local economist Elliott Pollack said slow population growth is one of the culprits behind Arizona’s lackluster jobs recovery and new residents are needed to spur the housing rebound. ‘The problem is you need people to fill houses,’ said Pollack.”
“Brenda Clarke, a single mother of three on Long Island, New York, said looters at the foreclosed home next door stoked her deepest fears about getting evicted. Scavengers grabbed clothing, toys and furniture that were tossed to the curb by the sheriff’s department last month while the neighbors living in the home were at work. Clarke, who’s been fighting to keep her Islip home for the past five years, begged them to stop.”
“Clarke, whose 15-year-old son began sleeping with a baseball bat after watching the eviction next door, said she feels that she’s living on ‘borrowed time’ as foreclosure looms. ‘I felt like I was defending my own house,’ she said. ‘They’re coming here too. It’s just a matter of time.’”
“‘This logjam has broken and cases that were backed up are going to sale,’ said Michael Hanley, senior housing attorney for a non-profit law firm. ‘The hurt is still coming. We are nowhere near the end, no matter what you hear about national trends and the stabilization of the housing market.’”
“Paul Solman recently sat down with Yale University economist Robert Shiller. Shiller: ‘Back in 2005, during our housing boom, I did a search on the Federal Reserve board website — research papers for ‘bubble’ — ‘housing bubble.’ And I found it was hard — this is our own Federal Reserve — hardly ever mentioned in their research papers. But I found one paper that mentioned that we might be in a housing bubble. So I called the economist up and I said, ‘You’re at the Federal Reserve board. You had worries about the housing bubble. Why didn’t you go for it and say strongly we might be in a housing bubble?’ And he kind of hemmed and hawed and didn’t seem to want to answer me.’”
“‘I had a sense that — and it’s obvious, right? You’re working as an economist at the Federal Reserve board, you can’t say that, I mean, because it would be attributed to your higher-ups; you’re part of an organization. And the Fed chairman is so careful about everything. The Fed chairman is not going to say ‘housing bubble.’ So you down below, lower on the totem pole, are sure not going to say it. So this is what the psychologist Irving Janis called ‘groupthink,’ and he called it ’self-censorship.’ I don’t think the Federal Reserve board censored this economist, but he knows that he’s part of an organization that’s part of our country’s animal spirits. It’s managing the level of our confidence. So he’s just going to keep these doubts to himself.’”
