March 6, 2015

In A Sane World, Most People Would Want Cheaper Housing

It’s Friday desk clearing time for this blogger. “No one knows better than real estate insiders how money flooding in from mainland China is driving up prices in Vancouver, the second-most unaffordable city in the world. One top Vancouver real estate executive, who did not want to be named, said in 2011 it was estimated that for every $1-million spent on all types of real estate in Vancouver, $300,000 could be attributed to demand from China. The executive said that people in his business generally don’t want the public to understand the magnitude of offshore investment, and certainly don’t want city hall to do anything about it.”

“‘I own a business, I drive a German sedan, I wear a handmade suit made in Italy, and I drink good wine,’ he said. ‘The people I hang out with, these guys want every flood gate wide open. If we cut off the buyer source they lose commissions. There is a huge stake for a lot of local people in keeping this thing going.’”

“The Federal Government will consider laying criminal charges against one of China’s richest men after finding that his company had illegally bought the harbourside mansion Villa Del Mare last year for $39 million. Treasurer Joe Hockey gave the company owned by 55-year-old Hong Kong property developer Hui Ka Yan, 90 days to sell the Point Piper mansion or face having it repossessed. The divestment order is the first legal notice handed out in six years under foreign investment rules governing residential property. But Treasurer Joe Hockey warned there were more to come.”

“‘I made this order following advice from the Australian Government Solicitor that the purchase breached the Act,’ Mr Hockey said. ‘Under Australia’s foreign investment policy, foreign investment should increase Australia’s housing stock. Non-resident foreign nationals cannot buy established dwellings as homes or investments.’”

“Billboards in Chinese at Lisbon’s international airport peddling luxury properties leave little doubt about who is buying real estate in Portugal. The haste with which some Chinese buyers have acquired their piece of Portugal has left them feeling cheated once they realize they might have struck better deals. Hua Guiping flew from Shanghai to Lisbon in 2013. In less than a week after her arrival, she agreed to buy a home for 500,000 euros. ‘While none of the houses that I visited pleased me, the seller insisted the price was very low and that in two years it would rise to one million euros,’ Hua said. ‘I agreed to buy the house and returned to China feeling happy because I thought I had made an excellent deal.’”

“A few months later, while browsing the Internet, Hua learned that some of the homes in the same resort were on sale online for less than half the price she had paid. ‘I saw that houses in the same area were valued at 210,000 euros to 250,000 euros while my home was sold for more than twice that value,’ said Hua. ‘I’m truly upset by all this.’”

A new study in Florida confirms the latest chatter from real-estate watchers: Miami’s sizzling downtown condo market is cooling down. Overseas investors, especially those from Latin America, have largely driven the new projects. But the DDA report concludes that the gush of foreign money into Miami is already slowing down. Between 2011 and 2015, purchasing power in major foreign markets plummeted against the dollar, including Argentina (down 51.9 percent), Brazil (down 37.6 percent) and Venezuela (down 31.8 percent).”

“‘The downturn isn’t going to affect someone from South America who can cut a check for $5 million,’ said William Hardin, the director of the Hollo School of Real Estate at Florida International University. ‘It’s the mid-tier investors who will face a problem. This will reduce the price points less wealthy investors can afford, and they do make up a significant chunk of the market.’”

“It used to be a struggle for Baltimore leaders to get developers to believe that people would want to live in the city. Now apartment builders have embraced the idea so enthusiastically that even some of its loudest champions think they might be going too far. The glut of new apartments has raised questions about whether the units will find renters, especially at the rates that owners of top-of-the-line buildings are asking.”

“‘In the last two years, obviously [building] exploded,’ said Pikesville developer Yonah Zahler. His Zahlco Development started putting together its first deal about three years ago and now owns more than 100 rental units in the city. ‘I knew this would happen,’ he said. ‘I knew these two years would be strong on the construction end. I wonder if demand will meet up.’”

“In 2014, Fauquier had a year-over-year pricing decrease of 2.5 percent, according to the Greater Piedmont Area Association of Realtors. Dawn Arruda, a RE/MAX agent in Warrenton, explained that when a market starts out early and strong, owners who are are the fence want to jump in and start selling. This created a market with too much inventory, said Arruda. By summer and fall, the market was over-saturated with too many houses and not enough buyers. ‘Everyone anticipated that 2014 would be the first year that we could hold down pricing,’ said Arruda. ‘By the fall, we had to lower prices to help move the houses.’”

“Homes sales in the San Fernando Valley sank to a record low in January as the market slump intensified in the face of rising prices and continued tight inventory. During January, sales of previously owned houses fell 12 percent from a year earlier to 307 units, the fewest for any month since record keeping began more than 30 years ago, said the Van Nuys-based Southland Regional Association of Realtors. And sales plunged 41 percent from 522 in December.”

“The median home price rose 5 percent from last year to $510,000 while declining $11,000 from December. It got as high as $543,000 last August and then started creeping down. January’s median price was the lowest since $515,000 last March. Economist William W. Roberts, director of the San Fernando Valley Economic Research Center at Cal State Northridge, said it is not time to panic over the slumping sales. ‘I don’t think it’s serious because prices are holding up. If the prices were falling then I would worry. That would be a concern,’ he said.”

“Milwaukee officials detailed new concerns that another looming wave of foreclosures could damage vulnerable neighborhoods still recovering from the last housing crisis. Aaron Szopinski, the city’s housing director, sounded the alarm that Mayor Tom Barrett and the city did not want a repeat of the years following the recession. ‘What we do know right now is not very good,’ Szopinski told members of the Common Council’s foreclosure and abandoned homes committee. ‘We do not want a sequel.’”

“Deputy City Attorney Danielle Bergner told committee members that much of the problem involving troubled properties is the lack of information. She detailed one case of an abandoned home in the 3500 block of N. 49th St., which she said had a complicated and convoluted story involving Bank of America and Nationstar. It took three years to get the home to a sheriff’s sale. ‘We don’t know who is controlling the mortgages of these properties,’ she said.”

“Orlando-area resident Mark Revord said he is living a nightmare, trapped next door to a so-called ‘zombie’ home. ‘Zombie’ homes are dilapidated wrecks languishing in foreclosure limbo, abandoned by owners and often ignored for years by the banks. Revord said his home was once valued at $250,000, but that the plummeted down to $68,000 during the housing crisis. He and his wife are now trying to re-finance, but they are worried about the zombie home next door. ‘The minute an appraiser wants to come out, that is going to be problem,’ he said, gesturing to the rundown home.”

“For now, he, and hundreds of thousands of other Americans, are stuck. ‘Something is not right,’ he said. ‘I would like a few answers and I think a lot of people in this country are in the same boat as I am.’”

“As a nation, we assume that anyone who owns their own home stands to benefit from higher property prices. That’s not only nonsense, it’s damaging nonsense. I’m a homeowner. Been one for five years now. Despite ostensibly being on the right side of the great property divide, I just won’t stop banging on about quite how badly my generation and those behind it have been shafted by Britain’s housing market.”

“The idea that anyone who owns their own home can only benefit from ever rising housing costs has a distinct whiff of Daily Express bullshit around it. The broken housing market is one of the biggest problems currently facing this country, deepening inequality, holding back the economy, costing the state a fortune in subsidies to buy to let landlords. Does expensive housing really benefit someone who owns a flat in, say, Luton, and is offered the job of a life time in Oxford? Or the couple with a baby on the way who can’t afford that second bedroom?”

“Politicians will quite naturally conclude that trying to make housing cheaper will be politically suicidal. If you ever wondered why George Osborne has pushed an economic plan calculated to keep house prices high, despite the fact that the collapse in ownership rates is a betrayal of everything his party is supposed to stand for, this is one very big reason why.”

“I own a flat. I still want cheaper housing. And in any sane world, most other people would, too. A ladder is meant to have more than one step.”

Bits Bucket for March 6, 2015

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