February 6, 2015

The Ripples Are Spreading

It’s Friday desk clearing time for this blogger. “On Florida’s tony Fisher Island, two new luxury condominium towers are going in. The first just topped off, and its penthouse is under contract for $35 million to a Russian buyer. But just across the bay in Miami, where luxury condos sell for half the price of Fisher Island, it is a very different story. ‘Unfortunately what we’re finding in the last year is all our key buying powers, whether they come from Argentina, Venezuela, Colombia, Brazil, Russia, all their currencies are falling against the dollar. So suddenly the foreign buyer who saved us the last go around are still present, but they’re not as prevalent as they had been,’ said Peter Zalewski, founder of Condo Vultures.”

“And yet construction surges ahead: 325 new towers are proposed in South Florida, with just more than 41,200 units, according to Zalewski. Of that, roughly 13,000 are in the planning stage, another 15,000 are approved and trying to sell, and the remaining 13,000 to 14,000 are under construction or recently completed.”

“The Flathead Valley can expect to see a year of slow economic growth in 2015, according to forecasts presented at Montana West Economic Development’s annual economic forecast. A number of factors could impact the area’s economy, including the falling Canadian dollar impacting tourism and real estate, said Brad Eldridge, executive director of institutional research at Flathead Valley Community College. Tourism in the Flathead supported more than 6,000 jobs in 2014. The falling Canadian dollar not only could create a decline in the number of people crossing the border, it could also impact the construction industry as people look to purchase second homes.”

“Barbra Bennett, private appraisal consultant, presented a look at real estate trends in the Flathead. Both Columbia Falls and Kalispell saw an increase in the number of home sales during 2014, but sales in Whitefish dipped below 2013 levels. Bennett pointed out that the median price for homes in Whitefish is 54 percent higher than in 2014. ‘Sellers’ expectations are not in line with what buyers can afford or are willing to pay,’ Bennett said.”

“Weld County will shoulder the brunt of any cutbacks the state sees from the oil and gas industry during the current slide in oil prices, according to Wells Fargo. Denver also could see an impact because it serves as a hub for the energy business of surrounding states. ‘Oil and gas have large multiplier effects on a region and have certainly helped push transportation and utilities and retail employment higher, as well as fuel residential and commercial construction,’ the report stated. ‘A decline in oil production and related employment will also have an adverse effect on the booming housing market and the consumer-driven industries that have cropped up to support the rapidly growing incomes in the area.’”

“Oil industry busts and Estevan aren’t strangers, and as the effects of declining oil prices settle on the region. Estevan’s housing market is showing signs of the oil market’s slump, too. Century 21 Border Real Estate Service broker Lynn Chipley said housing prices are on the decline, buyers are taking longer to make a decision and are negotiating more. Rents are also down by about 25 per cent, she said, and vacancy rates have shot to about 12.5 per cent in October from about 1.5 a year prior. ‘People are wondering, ‘Have we hit the new normal?’ said Chipley.”

“The five-storey building in Tena on the east of Nairobi, Kenya’s capital, despite being finished close to four months, is yet to be fully occupied, with nearly half of the units remaining empty. The scenario is replicated in many other suburbs across Nairobi as property developers face a tenant crisis. Rise in construction of apartments as landlords search for higher yields has led to housing glut in some estates in the capital. ‘It is increasingly becoming difficult to get tenants in several suburbs in the capital. Property developers have constructed beautiful houses but some remain empty months after they were completed,’ said Antony Kuyo, a real estate agent in Nairobi.”

“The ripples are spreading. The slowdown in VIP gaming is now exacting a toll on property prices and investment. For this year, the local unit of Hong Kong’s Ricacorp Properties Ltd. says it does not anticipate strong investment sentiment for Macau’s high-end homes. ‘Most of buyers now, or until the first quarter, will be end-users,’ managing director Jane Liu Zee Ka remarked. ‘But then, in the second quarter we’re expecting some new projects [high-end unfinished flats] coming in, [but] I don’t think the price call will be too aggressive when these projects are launched.’”

“Record-breaking price levels of these high-end homes went as high as HK$193,680 per square metre in late March last year. But the average price of this type of off-plan sale decreased from HK$150,194 in the first half of last year to HK$98,308 in the second half. News emerged in the final quarter of last year that property agents here had noted a cooling down in property investment sentiment with cases of VIP gaming promoters offloading their luxury flats at discounted prices.”

“This is what an economic hangover looks like. More offices lie empty in Perth, Australia, than at any time since 1996, while the number of homeowners seeking to offload properties has surged 45 percent from a year ago. ‘There’s a couple of reasons for that — one is panic,’ said Creagh Ferdinands, an associate at Harcourts real estate agents in the Perth suburb of Joondalup, who’s seeing more properties than usual flooding the local market. ‘People are thinking it’s going to be a massive slowdown.’”

“‘Supply is creeping up across the state,’ said Gary Hicks, a director at real estate agency Ross & Galloway in Melville. Home rents ‘have dropped 10 to 15 percent over the last six to 12 months.’”

“Former Reserve Bank Governor and politician, Don Brash says the pressing problem of housing affordability in parts of the country represent a failure of policy. Speaking on Radio New Zealand, Dr Brash said housing is now outrageously expensive relative to incomes, with Auckland prices six times the median income. ‘It causes an enormous amount of the social difficulty we’ve got, the poverty in Auckland is very largely related to the fact that people are spending an inordinate amount of their income to try and get a roof over their head.’”

“A lack of decent housing and educational opportunities were symptoms of a wider inequality and the issue was only now getting a proper hearing, he said. ‘If we live in a society where we can’t afford homes if we’re poor, and then we are replicating that poverty in our educational performance we’ve essentially locked out a huge chunk of people.’”

“U.S. central bankers risk inflating another asset-price bubble if they keep interest rates too low as unemployment falls, said St. Louis Fed President James Bullard. Bullard, despite his wariness, said didn’t see any evidence of an obvious bubble at the moment. ‘I don’t think there’s anything on the scale of the housing bubble or the Internet bubble right now. The only candidate is bonds, government debt and other kinds of debt,’ he said.”

“‘I’m not counting that, I guess, because that’s us,’ he said, referring to the Fed’s own-bond buying campaign that more than quadrupled its balance sheet to $4.5 trillion.”

“The last two times unemployment dove below economists’ estimates of full employment was in the late 1990s and in the mid-2000s. The first occasion became associated with very high valuations in technology stocks, and the second coincided with strongly rising home prices. Both episodes ended with the bubbles bursting and the U.S. economy in recession, Bullard noted, with the real-estate bust spiraling into a global financial crisis. ‘The wisdom of going forward here and really pushing hard on this, given the recent history is, I think, one of the elephants in the room about American monetary policy,’ he said.”

“Being foreclosed on and needing help doesn’t mean you have to move under a bridge tomorrow, but do call a Realtor and ask to be shown the best bridges. What’s the process of foreclosure? Phone calls and letters. Remind them that they must comply with the Fair Debt Collection Practices Act. And then, when you are taking a dip in your new refinanced pool and a stranger hands you papers called ‘Summons,’ you’re being foreclosed upon and even if you work it out you are going to have some fees to deal with.”

“Don’t be ashamed to ask your kids for help and parents, don’t help the kids. Make sure you know about the NM Home Loan Protection Act. If you can’t come up with a plan then eventually the Sheriff comes and tells you to move. If you have no place to go, and especially if you are caring for children or the elderly, ask the Judge about your situation. Bottom line is a man’s home is not his castle if he has a mortgage or reverse mortgage.”

Bits Bucket for February 6, 2015

Post off-topic ideas, links, and Craigslist finds here.