There’s A Crater Under Every Bubble
Its Friday desk clearing time for this blogger. “With a dire housing crunch squeezing out full-time residents, the Point Reyes Station Village Association and the Community Land Trust of West Marin held a forum to assess the damage and discuss solutions. Startling facts and anecdotes were on hand to illustrate the impacts of a rapidly depleting housing stock, which has tumbled as record-breaking crowds of visitors to West Marin’s natural attractions shack up in vacation rentals. In Marshall, less than a third of the houses are occupied full-time, according to resident and dairy rancher Albert Straus. He slammed county officials for not enforcing zoning rules for Marshall, where zoning is not meant to encourage people ‘to make profits from short-term rentals and business out of permanent residences,’ he said.”
“Land trusts need money to purchase homes dedicated to low-income housing in perpetuity. Rachel Ginis, a panelist and founder of the Corte Madera-based housing nonprofit Lilypad Homes, suggested that money could come from broadening the county’s transient occupancy tax—which levies a monthly fee on registered vacation-rental operators—to include more casual AirBnB-style rentals. ‘People have a bad habit of buying second, third and fourth homes,’ said Ms. Ginis. ‘If they can afford those homes, they can afford a vacancy tax.’”
“Is Airbnb a casual home-sharing service or a commercial rental business posing serious competition for South Florida hotels? Several Miami Beach residents, too, have spoken out against Airbnb. ‘It is so pervasive,’ said Philip Berry, the board president of a 25-unit condo building south of Lincoln Road. ‘I can point out at least 20 buildings in a secure four-block area where this is occurring.’”
“China’s efforts to stem capital flowing out of the country so its economy, and currency, stabilize, may dampen the fast-and-furious pace of investment in U.S. real estate. But as a new report from the Asia Society and Rosen Consulting Group predicts, China’s controls on this capital outflow only stand to temporarily slow — and will hardly stop — the tide of cash streaming to U.S. real estate.”
“The rich are buying homes and luxury apartments, but they’re also investing in funds and partnerships that are buying into commercial projects. There are also uncounted smaller real estate investment projects funded by individuals who pool investors together to buy, say, a handful of budget hotels or several apartment units in a high-rise. ‘That’s going on way below the radar of what can be specifically tracked down and quantified and also from what most people see going on,’ says Arthur Margon, partner at Rosen Consulting Group and an author of the report.”
“Half of central Melbourne’s new apartments are being built and bought by off-shore investors, as the city grapples with what one development industry figure has labelled an ‘unprecedented level of supply.’ And he warned that a slowdown in the property market meant it was harder to sell apartments, and tougher for developers to get a final settlement out of buyers. It has led a prominent housing academic to question whether the city’s apartment boom was being driven by investors who needed a high-end product to park money rather than addressing housing affordability.”
“Melbourne University housing expert Kate Shaw said these investors were ‘generating enormous upward pressure on prices.’ ‘Much of the increase in central city housing supply is high-end investment product – not housing that meets local demand,’ Dr Shaw, an urban geographer, said. ‘How much of this investment stock is fully occupied? Most research suggests very little.’ Dr Shaw said new inner city apartments were failing simultaneously on three fronts: they were not making housing more affordable, not meeting local housing needs, and not curbing urban sprawl. ‘So why exactly are we building them?’ she asked.”
“Standing nearly 600ft high and boasting 50 storeys, it is hard to miss 1 St George Wharf. There are only eight buildings taller in the whole of Britain. It’s the country’s tallest residential skyscraper. There can be no doubt this huge cylindrical edifice is a symbol of how Britain is changing — and, in particular, how successive governments have been far keener to embrace foreign millions than to worry about the interests of their own citizens.”
“Yesterday it was reported in the Guardian newspaper that almost two-thirds of the tower’s 214 apartments are owned by foreigners, and furthermore, by foreigners who seldom bother to live in them. Indeed, these apartments, which have been sold from £600,000 to a staggering £51 million, cannot really be considered homes. They are, above all, investment opportunities for the world’s super-rich, towering over a city which has a notorious shortage of affordable housing. And — surprise, surprise — what also emerged yesterday is that a quarter of the apartments have been bought by companies registered in offshore tax havens.”
“For St George Wharf, the statistics are damning. No fewer than 62 per cent of the 210 apartments where the title deeds are available are believed to be in foreign ownership. Out of a total of 214, no one is registered to vote in the UK in 184 of them.”
“It is a sign of the times that some of my local estate agents don’t look like estate agents. There are no pictures of houses in the windows. Instead, there are arrangements of twigs and some desks. Presumably, one goes into them just to hang out and chat about buying a house in this gallery-type environment. No one needs, I suppose, to see any images. House buying is an abstract concept for so many these days.”
“The air of unreality about these hip house floggers is entirely fitting. House prices are unreal. Ridiculous. Every day there are stories about the insanity of our current housing crisis, but it goes on and on. We laugh at images of what are basically cupboards for sale or rent. We cry or sigh with identification at the tales of young folk who can never really leave home. Except that some are not so young. Fortysomethings are having to move back in with their parents after marital bust-ups or because they no longer manage their own housing costs, the so-called ‘doomerang generation.”
“What does it now mean to be an adult if the old markers of adulthood become out of reach? Levels of home ownership are in decline. We now have a fully fledged caste system delineated by property. This is happening in the US, too. Wages for under-30s are going down.”
“Factors such as delinquencies from the long-struggling oil sector and emerging evidence of weakness in overheated housing markets are placing the Canadian economy at significant risk of a major downturn, according to an analysis. In particular, bad debts from the energy sector and increased competition from online counterparts are forcing Canadian banks to downsize and even retreat altogether from at-risk markets.”
“Writing for CBC News, Don Pittis noted that while the Bank of Canada’s interest rates are still showing an optimistic view of the economy’s prospects, signs of eventual trouble are gradually popping up. ‘The painful bankruptcy of Canadian home builder Urbancorp and pressure for governments to intervene in what many are calling an affordability crisis have some commentators worried that Canadian real estate is at a peak,’ Pittis explained. ‘Despite evidence that real estate is a major driver of jobs and the economy, ominous warnings are easy to dismiss because they have been offered so often. This time, however, we have real evidence that markets outside Vancouver and Toronto have begun to weaken,’ he added.”
“Most worryingly, BoC Governor Stephen Poloz himself said that Canadian real estate is not all that it seems, Pittis noted. ‘There’s a crater under every bubble,’ the analysis quoted the BoC Governor as saying.”
“While artisans prefer Ubud in Bali’s central foothills, serious surfers turn to ‘the Bukit’ to find the waves. Here on Bali’s southern tip, cliffside homes overlooking the ocean go for $3 million to $8 million. It’s only minutes from some of the island’s most famous surfing spots. While prices have been rising steadily since 2004, the real-estate market is in the midst of a correction, as fewer properties have sold since the speculative market rush that ended in 2014, says Eugene Shivnan, a local real-estate agent at Exotiq Property. Upscale homes start at $500,000, though smaller condos can be purchased for around $200,000.”
“Currently on the market for $5.5 million: a cliffside, six-bedroom property that overlooks the Indian Ocean and includes an infinity-edge pool, a large living and dining room and marble floors. ‘Now it’s become a buyers’ market and there are too many listings,’ says Neil Power, owner of real-estate firm Xclusive Property.”
“Leasing activity in Dubai’s residential market tailed off towards the end of the first quarter as landlords proved more willing to negotiate on rents to keep existing tenants in place, according to a report from Asteco Property Consultants. At Jumeirah Lakes Towers, for instance, rents declined by 6 per cent quarter-on-quarter and 12 per cent year-on-year by the end of March. Asteco said that luxury apartments have proven hardest to let and remain vacant for longest, despite significant year-on-year rental declines.”
“Meanwhile, sale prices for apartments remain 5 per cent lower year-on-year, with luxury units experiencing the steepest declines – Jumeirah Beach Residences properties are 18 per cent cheaper than in the first quarter of last year, while Palm Jumeirah homes have fallen in value by 11 per cent and Dubai Marina by 10 per cent.”
“‘People are being more budget-conscious,’ said Julia Knibbs, the UAE associate director of research and consultancy at Asteco. ‘Landlords are realising how important it is to retain tenants rather than risk having a vacant unit and then later having to reduce the rent anyway.’”
