A New Paradigm For Economic Prosperity
It’s Friday desk clearing time for this blogger. “Southern Oregon continues to give mixed signals on economic growth in the wake of the Great Recession. The number of jobs and workforce are in decline. Guy Tauer, a regional economist for Oregon’s Employment Department, suggests Jackson County construction outstripped demand prior to the recession, making for a bigger hole to emerge. ‘We overbuilt during the boom years, outpacing Oregon in terms of permits and construction employment,’ Tauer said. ‘In-migration, which fuels our population growth, has slowed. There’s an excess in available properties, rather than a demand to spur additional building.’”
“In many Milwaukee neighborhoods, the homes have a colorful but troubling name attached to them. ‘Zombie’ properties. Housing advocates say a zombie property is generally defined as one that is in foreclosure but hasn’t been resolved for more than three years. ‘These things keep rotting in our neighborhoods,’ says Art Dahlberg, commissioner of the city’s Department of Neighborhood Services. ‘I say to banks, ‘Help us understand why you don’t take responsibility for the property. And if you do not foreclose, why do you start the process at all?’ I’ve never gotten a satisfactory answer.’”
“Full recovery continued to elude the Philadelphia region’s residential real estate market in the first quarter of this year, as the value of a typical home fell 4.9 percent from the last three months of 2013. University of Pennsylvania economist Kevin Gillen said that with the latest decline, average house prices in the region were ‘barely above the post-bubble bottom they hit two years ago.’ Price declines were spread almost uniformly across the region, Gillen said, with nearly every county experiencing some price deflation.”
“‘That 4.9 percent decline is a seasonally adjusted number,’ he said, ’so it actually masks just how severely depressive this winter was. If you look at just median or average house prices, the quarterly decline was much larger.’”
“Mortgage broker Wendy Kircheck spoke at the Chamber of Commerce gathering about housing trends in Calabasas. The market recently doubledipped, but is recovering. The median price for homes sold in the city from February to May was $859,500, down a whopping 27 percent compared to the previous quarter, Kirchik said. But the drop had come on the heels of a 26 percent uptick during the previous five years. She said 78 percent of Calabasas homes are owner-occupied, which is contrary to the belief that landlords are snapping up homes in the city for use as rentals. She also said, ‘Many people think there’s a lot of cash buyers, but 85 percent (of the owner-occupied homes) still have mortgages.’”
“One leading Ottawa broker isn’t convinced the city’s condo market will heat up, despite optimistic reports from the Canada Mortgage and Housing Corporation. ‘I don’t think we’ll see it heat up – we’re seeing that the prices of condos have gone down five to 10 per cent,’ broker Sam Himyary. ‘Most condo buyers purchase them for investment purposes. For example if you buy a $300,000 condo with 20 per cent down, after the condo fees and taxes, the rent will barely cover your mortgage.’”
“Resale prices of completed non-landed private homes continued to fall last month, the Singapore Residential Price Index flash estimates showed, as sellers cut prices to keep pace with discounts for new homes, with the sharpest declines seen in non-central areas. ‘With developers giving discounts on new homes to move sales, resale sellers are under pressure to match such moves in price cutting to compete for the same pool of buyers,’ said Ms Anne Tong, chief executive officer of HSR International Realtors. ‘The drop in private resale prices is (also) due to an oversupply of units.’”
“Mainland developers are facing fresh roadblocks in their rush to reduce inventory by offering hefty price cuts as several local governments have set a cap on such discounts at 15-20 percent of a flat’s original price. Prices of new flats in Hangzhou can be reduced by up to 15 percent, China Times reported. Further reductions would nullify any transaction, the report said. A similar rule prevails in Dongguan, where buyers recently complained of not being able to sign online contracts after buying homes carrying a 20 percent discount. ‘Such rules limiting price hikes and cuts exist in almost all mainland cities,’ an official said.”
“The rule was intended to avoid volatility in property prices that might result in social unrest. ‘We can hardly achieve good sales without slashing prices to a larger extent as the market lacks confidence in the property market. If government hinders us from cutting prices freely, our days will be harder,’ a person in charge of the marketing department of a listed developer said.”
“Strangled by regulation and high prices, weak French housing investment is proving a major drag on the euro zone’s second-biggest economy. Bank of France Governor Christian Noyer has pointed out that housebuilding is falling short even though France ploughs more public money into the sector than any other developed country through a range of measures to encourage home ownership. ‘It’s a valid question whether these policies have only led to higher prices rather than construction,’ said Gardner.”
“Longer-dated mortgages have allowed French households to borrow more. Bank of France data shows household debt has risen to a record 84.8 percent of gross disposable income. Economics professor and real estate expert Michel Mouillart sees few options left for the sector short of allowing smaller deposit payments than the 20-25 percent usually required. ‘If we want to revive construction without using more debt or more public aid, all you have to do is make the French rich,’ Mouillart quipped.”
“We are living in an Orwellian economy where image is everything. Housing inflation in key hotspots is labelled a purely supply side issue by the Government despite the lack of credible data showing what is actually happening in these markets. The Government has a remarkable reluctance to collect such data. An Orwellian economy is reliant on the absence of truth.”
“The bulk of middle New Zealand has seen their perceived personal wealth rise largely as a result of housing inflation rather than increases in their earnings. Unless New Zealand has discovered a new paradigm for economic prosperity this is not sustainable. No country has ever become rich through house price inflation although before the global financial crisis many deceived themselves this was possible. What this Government appreciates is that if people are feeling wealthier they tend to vote for the status quo.”
“Surveys show an enduring desire to own one’s home. But the love is not what it was. So customer demand continues, Jane Zavisca, a University of Arizona sociologist, told me, ‘but not homeownership at all costs.’ ‘Young people who’ve seen others’ lives ruined by the pain of foreclosure seem especially wary of taking on a mortgage, according to Zavisca. The idea of a home as a means of saving for retirement — as something one could sell in hard times — persists. It is a financial asset, Zavisca said, ‘but not in the sense that the average individual should be making a living buying and selling real estate.’”
“What amazes me is that more Americans aren’t seething over one of the biggest con jobs ever perpetrated on an unsuspecting public. The housing bubble was a product of public policy. The Fed under Alan Greenspan kept interest rates low to keep the speculative frenzy going. Financial deregulation let lenders push snake-infested mortgage contracts onto the shoulders of ordinary people.”
“When the bubble splattered, ordinary people were left bankrupt, foreclosed upon and devastated both financially and psychologically. If Americans are less than enthusiastic about real estate, who can blame them?”
