Money Can Change Spending Habits
It’s Friday desk clearing time for this blogger. “As the Bay Area’s hot housing market shows early signs of cooling, an anticipated surge in the number of homes put up for sale this month raises the question of whether the region will experience a buyer’s market for the first time in years. ‘Preliminary indications are that this may be a very big new-listing month, even for September,’ according to Paragon Real Estate Group’s latest market report. ‘If this is true, and especially if it marks the beginning of a trend of more listings coming on the market, that could cool the ferociously competitive, low-inventory, ’seller’s market’ of recent years.’”
“Paragon goes on to say, ‘if buyers are more hesitant due to recent financial-market volatility, that would also cool the market.’ That point echoes another star of ‘Million Dollar Listing’ S.F., Justin Fichelson, who sees stock market turbulence creating shock waves through the housing market, given the region’s reliance on the booming tech sector.”
“Renters are losing faith that they will be able to buy a home in the next year, a worrying sign that the housing market won’t get a boost from new buyers anytime soon, according to Zillow. Renters’ confidence is especially weak in strong markets, such as San Francisco and Denver. In general, confidence in the housing market is starting to wane as price growth has slowed across the country. ‘I think the fact that overall the market is slowing down always scares people a little bit when they read the headline,’ said Svenja Gudell, chief economist at Zillow.”
“Home sales in Connecticut in July registered their strongest monthly gains since August 2007, but prices paid again dipped, according to Warren Group. Demand is not yet strong enough to keep inventory levels in check, giving buyers a big array of choices and, thus, an upper hand in price negotiations. Donald L. Klepper-Smith, an economist at DataCore Partners Inc. in New Haven, said he doesn’t see significant gains in prices this year or even next. ‘The best thing we can hope for is that median prices stabilize,’ Klepper-Smith said.”
“Connecticut’s tepid income gains, compared with those of other states, the aging of the state’s population, and rising state and local taxes are having a longer-term effect on the housing market’s recovery, now in its fourth year, economists say. Lingering foreclosure sales might be driving down median prices.”
“CBS12 is investigating a house in a residential neighborhood near West Palm Beach, with grass and weeds knee-high and worse. Les Klein, who’s back yard abuts the property in question, said the parcel has been vacant since going into foreclosure seven years ago. The past three years, said Klein, it’s been overgrown much like it is now. The property is not only an eyesore. It’s so neglected, a colony of bees has moved in. ‘That’s not good,’ said Klein. ‘I don’t even know what kind of bees they are. I hope they’re not African bees.’”
“The oil industry isn’t like most businesses. Work can go away overnight. Which is what happened at oilfield services and rental company NewKota in Gillette, Wyoming. Mark Zaback, a banker who moved to Wyoming in 1982 to work in savings and loans, remembers those tough times, like customers who would raid their children’s savings just to make the payroll tax for their businesses. ‘I didn’t know if the bank I was with was going to survive,’ Zaback said. ‘I remember thinking I might have to go bartend. I think you just go into survival mode.’”
“NewKota recently laid off almost all of its employees, but Jordan Couch, a 22-year-old cowboy from Idaho, was one of the few who stayed on. But the company didn’t have any work for him for a few months, so he wasn’t getting paid. By the time work picked up, Couch was already two months behind on truck payments and was almost evicted from his apartment. One of the problems, he explained, is that oilfield money can change spending habits. ‘So you’re going to the bar and it turns into $500 a night because you’re drunk buying Patrón for everybody sitting at the bar,’ Couch said with a laugh.”
“Weakening economic conditions have led to a slowdown in new housing starts for the Saskatoon region. The Saskatoon Region Association of Realtors said elevated inventory had turned the housing market into a buyer’s market, with sales down in almost every price range. ‘In response to weakening economic conditions and elevated supply levels this year, builders have eased the pace of new construction,’ said Lai Sing Louie, CMHC’s regional economist for the Prairies.”
“Poor demand in the housing sector has started taking a toll on the already weak steel sector. The steel-rolling mills of Wada in Maharashtra are a telltale sign of that. The Wada steel hub is not alone in facing the brunt of a flagging demand. Yogesh Mandhani, president, Steel Re-rollers Association of Maharashtra, says nearly half the rolling mills in Maharashtra have shut shop in the last one year. The other half are struggling to operate at 50% capacity. ‘The main reason is the lack of demand—infrastructure has not picked up and housing demand is also going down,’ Mandhani said.”
“Growth in rents across Australia’s capitals has hit a record low, squeezing property investors who are already contending with decreasing returns and rising borrowing costs. The 0.7 per cent rise in rental rates over the past year is the slowest rate of rental growth on record, based on data that goes back as far as December 1995, according to CoreLogic analyst Cameron Kusher. ‘The reasons behind this lacklustre result for the rental market can be attributed to the extent of the current construction boom across the capital cities and slowing population growth,’ he said. ‘Added to this is the surge in investor participation in the housing market, which is contributing to weaker rental growth by adding to the rental stock.’”
“‘We believe that there is a high and rising likelihood of a Chinese, EM (emerging market) and global recession scenario playing out,’ said Willem Buiter, chief economist at Citigroup. Speaking on CNBC’s Squawk on the Street, he was more blunt: ‘This is a a classic recession scenario,’ adding that the Chinese economy has recently experienced excess capacity, excessive leverage in the corporate sector and two booms, bubbles and busts in housing and stock markets.”
“A 25-acre Mediterranean compound with its own vineyard that set a record for the most expensive home listed in the U.S. just took a $46 million price chop. Real estate developer and owner Jeff Greene put the Beverly Hills estate on the market in November 2014 at $195 million. Now he’s ‘very motivated’ to sell, according to a press release. Greene, a Florida resident whose net worth has been estimated at $3 billion, bought the home as a fixer-upper out of bankruptcy proceedings from the previous owners in 2007, reportedly paying $35 million, Forbes reported. He then spent more than $50 million building and enhancing it.”
