The Housing Bubble

It’s Friday desk clearing time for this blogger. “Buying a house in the East Bay is not for the faint of heart. The sellers set a listing price, but everyone understands that it is more of an opening bid than an actual sales price. So, a guessing game ensues, and buyers understand they may need to bid at least 20% — or sometimes 25-50% — over that price. Daniel Winkler of the Winkler Real Estate Group, listed a house at 5738 Clover Dr. in Oakland for $1.595 million on March 21. The seller, a developer, did not get the price he wanted, so the house was re-listed on a transparent basis at $1.995 million on April 5. It sold a few weeks later for $1.94 million. ‘We didn’t get what we wanted, but we made a deal,’ Winkler said.”

“‘Transparent pricing can be misunderstood by the buyer population, because the price appears high and buyers are already conditioned to overbid,’ said Laura Arechiga, an agent with Coldwell Banker. How do I know if I overpaid for my house? That is one mystery beyond even Berkeleyside’s ability to answer.”

“Mortgage broker Samantha Brookes is trying to figure out how to get one of her clients out of a housing-fueled debt hole. The couple, a 59-year-old Toronto city worker and her husband, 58, have so much debt that they stopped making payments on the $410,000 mortgage for their suburban home. They wanted to refinance but regulations imposed last year will disqualify them. In a few weeks, they won’t even qualify for an uninsured loan at an alternative lender as more rules come into effect.”

“They opted for a third route: adding a second mortgage with an interest rate of 10.5 per cent to pay off their debt. Their salvation came from a private unregulated lender, a move many other Canadians are making as the government tries to rein in a home-price surge that’s driven household debt to a record. ‘People need solutions — it could be temporary, but at least they have a home over their head,’ Brookes said.”

“Sweden’s housing slump deepened last month as the market struggles to absorb a supply glut and households lose confidence. The slump in Stockholm apartment prices is even more dramatic, according to Valueguard. The monthly drop of 4.2 percent is the steepest since October 2008, while the annual decline of 6.0 percent is the largest since June 2009. Greater supply ‘has resulted in buyers having more to choose from and taking longer before buying,’ Hans Flink, head of sales and business development at Maklarstatistik, said in a statement. ‘The sellers are therefore starting to adjust their prices to the tougher competition.’”

“The cost of renting apartments and villas around Dubai fell at a much faster rate in recent months, according to a review by Phidar Advisory. Accommodation costs across properties in the emirate posted the biggest quarterly decline in October since the slowdown started in the middle of 2014. The decline continued to hit many communities, including popular areas like Downtown Dubai. ‘Rent declines are escalating, largely driven by the combination of weak job growth, new supply handovers and reduced housing budgets,’ Jesse Downs, managing director of Phidar Advisory, told Gulf News. There are still some landlords out there who are hesitating about lowering their asking prices. Downs said this is leading to ‘long void periods and lost income.’”

“‘In many cases, it’s more rational to reduce the rent and fill the unit. Landlords often think their units in popular areas are immune, but nothing is fully immune now,’ he said.”

“Nigeria’s real estate sector is still going through tough time. According to latest New Telegraph investigation, most streets in Lagos and Abuja’s high brows are still filled with huge number of vacant houses. Managing Director, Jetobless Properties Limited, Mr Toluwa Jekede, a property agent in Lagos, blamed huge empty houses on absence of institutional and corporate investors/ buyers, who he said left the country due to uncertainties in the nation economy.”

He said the vacant houses most especially in Ikoyi, Ikeja GRA, Lekki have refused to go despite reduction in rent to attract tenants. According to him, most of the properties in his care for more than two years have been vacant without anyone asking for them for occupation. ‘I have some vacant houses in Ogba, Adeniyi Jones, Opebi and Ikeja GRA. They are just emptied for two years now. Accommodation seekers do not even have the money to rent some of these houses unlike before when it was based on who came first,’ he said.”

“Sydney apartments, townhouses and semi-detached homes fell 1.4 per cent in value in the September quarter, their biggest loss in almost six years, as investor credit curbs tightened and larger volumes of apartments settled. House prices also turned negative in the NSW capital in the three month period, with values falling 1.3 per cent from June, confirming a slowdown in a market that has thrown the brakes on price growth compared with its buoyant start to the year.”

“‘They have completely turned 180 [degrees],’ said Dan Tussie, a real estate agent with Kirribilli-based Deborah Richardson Real Estate. ‘”It’s not from the lack of viewers or the lack of enquiry. It’s the attitude that’s changed. It’s pretty severe. The vendors are still in gagaland. They still think they can price [their properties at the level of] eight months ago and they can’t.’”

“The weaker-than-expected overall figures confirmed the end of Australia’s housing boom, Capital Economics chief economist Paul Dales said. Housing prices were likely to be ‘broadly stable,’ next year, but could turn negative and this would hit overall economic growth, he said. ‘More up-to-date indicators suggest that prices fell further in the fourth quarter and may even decline next year,’ Mr Dales said. ‘That could make 2018 a challenging year for the wider economy.’”