A Fascination With A Fiction
It’s Friday desk clearing time for this blogger. “Texas home prices are still out of whack with most big city markets overvalued, according to Fitch Ratings. Looking across the country, prices are most overvalued in Austin, by 20.6 percent, and Reno, Nev., 20.2 percent. Prices in San Antonio are 19.8 percent ahead of where they should be an Houston prices are 14.7 percent overinflated, according to Fitch. Texas residential real estate values are at an all-time high. And in North Texas, prices are growing at a percentage rate of almost three times long-term averages. ‘It is likely to take some time for prices to return to sustainable levels, though we’ve started to see a significant slowdown in growth, especially in Houston,’ said Stefan Hilts, one of the authors of the report.”
“Homebuilder John B. Kennelly is under siege on two fronts with a $38 million foreclosure judgment threatening to send his waterfront homes in Broward and Palm Beach counties to auction, plus a new foreclosure lawsuit over his Boynton Beach project. Builders are scoring loans again, but Kennelly can’t seem to find buyers. Resident Alan M. Hess described the condition of Estates of Boynton Waters in an email to the Business Journal in June: ‘The clubhouse is finished, but a disaster, as it is not maintained. The tennis courts are crumbling and can’t be used. There are 85 homesites; 58 are built and occupied. There are about 12 homes in various stages of constructions – unfinished and have been this way for 4-5 years, and about 8 vacant lots.’”
“That was fairly common at stalled home projects in 2009, but this is 2015 and South Florida is in a residential building frenzy.”
“Just because you paid below the asking price, doesn’t mean you got a deal. Sales prices in Soho and Nolita fell short of asking prices in the second quarter, according to a new Streeteasy report, though the cause is likely to be sellers’ inflated expectations. Asking prices in Nolita have jumped 26 percent year-over-year. Those in Soho rose 23 percent. Given those increases, sellers need not worry much about the 2 percent gap between asking and sales prices found in the report.”
“‘It could be that their strategy is aim high and bring it down only if necessary,’ Streeteasy data analyst Alan Lightfeldt told DNAinfo.”
“Low condominium sales and a slowing market brought developers behind the old Newfoundland Telephone building in St. John’s back to the drawing board last year, scrapping a plan for luxury condos in the derelict structure. Opting for rentals instead of condos is a trend seen in Halifax, according to Chris Janes, senior market analyst with the Canada Mortgage and Housing Corporation. The average price is about $260,000, and Janes said that’s a far cry from the average $400,000 condo in 2012.”
“One of the reasons why the market has slowed so drastically since the peak in condo sales three years ago is an oversaturated market, he said. ‘Builders started getting overzealous, I think, back in 2012,’ Janes said.”
“Guernsey’s housing market is slowing, with the lowest number of properties sold since 1999, according to government figures. The average price for local market houses fell for the second quarter running, down more than £30,000 on the same period in 2014. Rosemary Farish, who sold her house recently, said she carried out improvements on her home expecting it to go quickly but it took 18 months to sell.”
“She said: ‘The first time we reduced it by £20,000, then we reduced it by £40,000 and in the end to sell it we reduced it by £90,000. I felt a bit sick but we’ve got no grief as we brought at a time when house prices where nowhere like they are now and we were able to buy cheaper than expected. It is an incredibly slow market and the only people selling are those that know they have to drop the price.’”
“Property prices in Dubai Marina have dropped by as much as 18 per cent over the past three months, according to the classifieds website Dubizzle. The company’s second-quarter report shows that sale prices for a studio apartment fell by 18 per cent in the Marina to Dh900,000, while three-bed properties dropped in price by 14 per cent to Dh3.6 million. ‘Prices of properties for sale decreased across Dubai, with the exception of studios and two-bedroom apartments on the Palm Jumeirah increasing up to 6 per cent,’ said Ann Boothello, product marketing manager for dubizzle.”
“China’s massive anti-corruption crackdown is being felt in places like Australia as Beijing’s investigators seek the extradition of those the government says have fled with ill-gotten gains. But, back in China, questions are being asked about the real motivations for this campaign as well as the methods being used to interrogate officials who are deemed to be corrupt by the Communist Party. Outside a municipal government office block in downtown Nanjing, ABC’s Foreign Correspondent team came across a passionate demonstration. The protesters alleged their homes had been stolen by unscrupulous developers in collusion with corrupt local officials.”
“‘My house was demolished illegally,’ one woman told Foreign Correspondent. ‘It’s been six years and they haven’t paid me. Give me back my house. ‘They beat me. They detained me. What can I do?’ Stories like this can be heard right across China. In town after town; city after city, people say they have been forced from their homes and paid a tenth of what it would cost to buy a new flat in the area.”
“Australia’s ‘fascination‘ with real estate is leading us into trouble, putting households in ‘risky’ financial positions while starving other parts of the economy. That is the view of one of the most influential economic actors in the country. In a speech on Wednesday, Reserve Bank of Australia deputy governor Philip Lowe pointed to a trend that has wide and dangerous implications for Australia’s economic future. And it’s all based on the ballooning cost of real estate.”
“According to Mr Lowe, that nominal increase in value does not represent a meaningful increase in wealth. ‘Have we really become wealthier as a nation simply because the value of our land has increased?’ he asked, before answering his own question with a bit of sass. ‘The answer would clearly be yes if this increase was because we had discovered more land. To my knowledge, though, this has not happened.’”
“One of the main problems, said Mr Lowe, is that the increased money Australians are spending on housing has not been going into new housing stock, but into existing stock. In other words, land. ‘So our fascination with housing,’ said Mr Lowe, ‘is really, mostly, a fascination with land.’”
“Monash University economist Professor Jakob Madsen acknowledged that Australian households’ obsession with property is in part to blame, he said the banks must also share the blame. He said that in the good times – like the mining boom of the first decade or so of the 21st century – banks tend to lend too readily. ‘When there is a mining boom, there is a lot of money flowing into Australia, and it goes straight to the banks, and the banks don’t know what to do with it, so they lend it out.’”
“If the rise in the cost of houses is driven largely by credit, Professor Madsen said it ’smells a little bit of a bubble.’ ‘And if it’s a bubble, then it’s unproductive. It doesn’t say anything about the future. And so in that sense, the wealth is a fiction.’”
