August 18, 2017

FOMO Is Flipping The Other Way

It’s Friday desk clearing time for this blogger. “A Lake Tahoe housing shortage is leaving more residents in dire straits. Ironically, though, Tahoe has plenty of houses. They just sit vacant most of the year. More than half of Tahoe homes are vacation residences owned by people who live elsewhere. ‘We don’t need to build more, we just need to re-purpose the ones we have better,’ said Heidi Hill-Drum of the Tahoe Prosperity Center, a coalition working on the housing issue.”

“A $1.15 million townhouse has gone up for sale in North Vancouver, a property that has never been lived in since it was built in 2007. The listing is a stark reminder of Vancouver’s growing issue with vacant housing and housing affordability. According to analysis of Statistics Canada census data from 2016, there were 25,502 unoccupied or empty housing units in the City of Vancouver in 2016, representing a 15 per cent increase since 2011. Further, the number of ‘unoccupied’ units or properties, ‘occupied solely by foreign residents and/or temporary present residents on Census Day’ has risen to 8.2 per cent in 2016 from four per cent in 1986.”

“An overwhelming 26 percent of homes are empty in the French capital’s 1st, 2nd, 3rd and 4th arrondissements, a new report shows. The report by The Paris Urbanism Agency shows that a quarter of housing in these four central Paris arrondissements is vacant - amounting to 20,300 homes. This compares to an average of 15 percent empty homes across the rest of the capital. While the problem certainly isn’t new, it is getting worse, according to the report, with the number of vacant homes in these four areas experiencing a sharp increase.”

“NSW and Victoria are sitting on a glut of 100,000 underused houses, with more than 2000 six-bedroom homes across Sydney and Melbourne occupied by just one person, a Fairfax Media analysis has revealed. In NSW, Canterbury-Bankstown, Northern Beaches and Blacktown local government areas each have between 1400 to 2000 four-bedroom homes with just one person living in them, while in Victoria, there are more than 1000 in Monash, Whitehorse and Frankston, census figures show.”

“The apartments at Hannam The Hill in Hannam and the Signiel Residence in Jamsil are famously pricey and located in two of the most coveted neighborhoods in the country. But because of their sky-high prices, most of the rooms are vacant. According to a registry office at the Supreme Court, only 24 percent of apartments bigger than 240 square meters (2,600 square feet) at Hannam The Hill have been sold so far.”

“The situation is worse at the Signiel Residence, a set of luxury apartments located on the 42nd to 71st floors of the Lotte World Tower. Only seven out of 223 apartments have been sold. While Korea’s real estate market is facing an unprecedented boom these days, sales of luxury apartments are unexpectedly slow. ‘The two areas [Hannam and Jamsil] have been seen an excessive amount of homes being built in a similar time period,’ said Park Won-gab, a senior adviser for real estate at KB Kookmin Bank.”

“The Norwegian real estate market seems to have peaked as statistics from Eiendom Norge show declining prices for the third month in a row, falling 1.2% in July as compared to June. Oslo saw a particularly severe drop of 2.8%. ‘In recent months the housing market has seen a sharp decline in prices in Oslo, which has affected the statistics on a national level,’ said CEO of Eiendom Norge, Christian Vammervold Dreyer. He argues that the depressed prices are due to an oversaturation in supply, with no obvious end in sight.”

“Hundreds of homebuyers of Jaypee Infratech Group decided legal and political action after the private housing major in Noida teetered on the brink of insolvency. The people want their investment refunded amid growing fears that lawsuits will become ineffective if the company is declared insolvent. ‘Why should buyers who have invested their life savings suffer?’ said Vipin Kumar, a man who fears he will not get possession of his promised flat and lose his hard-earned money.”

“First-home buyers are being told now is the time to strike with cheeky offers on houses, to see if they can get a good deal from an over-stretched investor. ‘A lot of investors have over-extended themselves in the past three years and their hopes of new investors taking property off their hands at a tidy profit have been dashed,’ said Tony Alexander, BNZ’s chief economist.”

“He said, ‘Auckland is interesting in that there is now an over-supply of properties which can be intensified. The finance is not there to allow construction, and neither are the builders. So lots of investors are now sitting on potentially highly geared up properties they cannot get anyone to buy and develop. Some investors were getting worried, he said, that profit they had made on paper over the past couple of years could be disappearing fast. The fomo [fear of missing out] which drove them to gear up and buy any old piece of property last year and before is now working in the opposite direction. They are vulnerable as a mass to something. Some trigger.’”

“He said first-home buyers could ‘take advantage of their pain’ by taking their time, looking at a number of properties, and throwing in ‘low-ball offers in case you catch a truly panicked fish.’ ‘Alternatively, simply make an offer for what you think a place is really worth – and stick with it. Don’t let the agent work you. They know that at this point in the housing cycle the effort they need to put in is on the vendor – convincing them that the days of stupid prices have ended. Stick with your price and walk away if they won’t budge. If they spray, walk away!’”

“‘Currently my deepest interest is in the vibe of the market,’ Alexander said. ‘I’m looking at the language agents are using in their ads, trying to get a feel for if it is turning, trying to see how much fomo is flipping the other way - investors feeling they need to sell now before prices ease further. Those sort of emotive factors will become dominant this coming year and for a while will hide the underlying fundamental of supply growth remaining well short of demand growth.’”