The Housing Bubble

It’s Friday desk clearing time for this blogger. “Housing prices in the Flagstaff area continued to climb in 2017, sticking with a five-year trend of increasing median home sales prices. Realtor Stephen Brighton said Flagstaff is ‘basically at the top’ of the housing market again, noting the median price in 2017 was only $4,000 lower than in 2006, at the height of the housing bubble. Tammara Prager, the president of the Northern Arizona Association of Realtors, sad the high demand and low supply creates ‘a seller’s market below $450,000.’ However, for those who can afford to buy, housing values continue to climb, making it a good time to invest in a home, Brighton said. ‘People want to know the market is going up,’ he said.”

“Echoing shades of Reno’s bubble years, the Biggest Little City saw the largest spike in the country for homeowners borrowing against the equity of their house. The Reno metro area saw an 80 percent increase in home equity line of credit or HELOC originations during the third quarter of 2017, according to ATTOM Data Solutions. The numbers don’t come as a surprise, said Cory Henderson, a loan officer at Reno-based Mann Mortgage. ‘What’s pushed it is the appreciation of the last two years,’ Henderson said. ‘The market is not nearly as underwater as it was three years ago and all that untapped equity is being accessed by homeowners, which is a trend that will continue this year.’”

“The San Diego County median home price finished the year at one of its highest points. ‘People hear that housing prices are going up and they want to jump in before it gets out of hand even more,’ said Alan Gin, economist at University of San Diego.”

“There were 484 newly built homes sold in December, above the monthly average of 251 sales throughout 2017. The median for a newly built home was $606,250, down from a high of $792,250 in June.”

“There is optimism coming from some involved with economic development. With a larger-than-normal year for housing starts, and some see some positive momentum for Newton. If there is one negative, it could be a short-term oversupply of housing and commercial space. ‘I think we are on the verge of good things and some good times,’ said Ron Harder, a long-time real estate developer in Newton. ‘I think there will be a glut of places for a while. … But it is a chicken or an egg. Do you build first, or when people need them. If jobs appear, the house will be there.’”

“Julianne C. Ward, a real estate agent in Greenwich, speculated that homebuyers are more at ease with today’s market and with themselves. ‘People are more comfortable purchasing a home now, versus last year,’ she said. ‘People have money to spend — of course, they always had it, but now they have a little more. They are also confident in the economy, and prices are going down.’”

“Peter Hastings, principal at Hastings Real Estate in Wilton, noted that the luxury market is not without lingering difficulties. ‘There are too many houses in the luxury market,’ he said.”

“The housing market in Calgary this year will likely look much like it did in 2017, according to a forecast by the Calgary Real Estate Board. CREB’s 2018 forecast says stricter lending criteria introduced this year by Ottawa, coupled with slightly higher interest rates, should put downward pressure on prices. Ann-Marie Lurie, CREB’s chief economist, says that while Calgary is officially out of the economic downturn, the housing market continues to face challenges.”

“‘So even though sales activity increased last year, there was still just too much supply,’ she said, noting the condo market in particular has a glut of inventory.”

“London is becoming a ‘buyer’s market’ for househunters, according to Hometrack, as it revealed sellers are having to accept larger discounts for their properties. Analysis found that the gap between asking and achieved prices in the capital has increased from 0.5pc in 2014, when annual house price growth was as high as 20pc, to an average of 4pc today as demand has weakened. In some areas of central London, buyers are snapping up property with a 10pc discount from the asking price. This is also the case in Oxford, Cambridge and Aberdeen.”

“New figures show that housing prices in Norway are actually only falling significantly in Oslo, where they’d soared with double-digit increases. ‘The revised accounting method shows a stronger upturn in prices in Oslo through 2015 and 2016 and that they peaked earlier than what’s been reported. The peak didn’t come in April but in February of last year, according to the new numbers, and the downturn after that has been a bit steeper,’ said economist Øystein Børsum at Swedbank.”

“Egypt’s government plans to pour tens of thousands of new housing units onto the market in each of the next few years, but it’s not clear how easily the country can absorb them. Because of years of restrictions on sending cash abroad, Egyptians have been snapping up apartments and villas in new desert developments, confident that housing prices have nowhere to go but up. This rush to buy real estate has created a vast pool of housing, but it is unclear who will want to buy or rent them when their owners decide they want to cash in on their investments. Row upon row of houses now stand empty.”

“Measured in U.S. dollars, housing prices in Egypt dropped substantially after the government devalued the currency by half in November 2016. Wael Ziada, head of investment company Zilla Capital, estimates that prices have fallen to about $800 per square metre from $1,000 before the devaluation. ‘This is something companies will never tell you. They will not go below their headline prices,’ said Ziada. ‘What they may do is allow for a smaller down payment and a longer period so that the effective price will go down.’”

“Rents in Oman are expected to fall again in 2018, according to property experts, following the announcement of new visa rules that ban expat workers from specific professions, coupled with an oversupply of properties. Cluttons showed that rents in the country hit an all-time low in 2017. The Cluttons report shows that the market fell by 25 percent on average in 2017, but in some parts of the region around the capital, Muscat dropping more that 50 percent.”

“A report by Knight Frank shows Nairobi’s prime residential market has witnessed a price correction in recent years, as vendors adjust their price expectations. This is following a period of unprecedented growth from 2010 to 2012 when annual price growth exceeded 30 per cent annually. ‘New construction of prime residential properties is continuing apace in Nairobi and the abundance of supply ensures availability for those seeking bargains,’ Knight Frank Kenya managing director Ben Woodhams said.”

“Mass housing units are standing empty because there are no customers to take them up. Sophia Shaningwa, who is the Minister of Urban and Rural Development, made these revelations at a ground-breaking ceremony for the construction of 200 houses in Oshakati. ‘Today, as I am speaking, I am still stuck with houses that I cannot get customers for. I want those houses gone as in yesterday already, but if there are no customers there is nothing that I can do,’ said Shaningwa.”

“‘That is where our market is. And we are not going to fool ourselves that our market is of people with [the ability to spend] over N$500,000 to millions [on a house]. The people simply don’t have money,’ said Shaningwa.”

“China has been rife with investment frauds in the decades since its economic reopening led to a boom. But online versions have the potential to reach more people in a country with more than 700 million internet users, many of whom now conduct most of their financial transactions on smartphones. Investors in online products are often drawn by promises of high rates of return. Just four months ago, a Beijing court handed down a lifetime prison sentence to the founder of a $US9 billion online lending platform called Ezubao that authorities now say had been a Ponzi scheme.”

“Last summer, Chinese police arrested the head of Fanya Metals Exchange, which offered investment products promising double-digit returns, after it lost $US6 billion of investor money. One month later, investors in a company called Shanxinhui lost billions of dollars and many hundreds of protesters took to the streets. Kimi Wang, who watched the protests in Nanjing from a nearby government building, said he had deposited about $USUS79,000 into Qianbao. All of it, he said, was gone.”

“Many investors in Qianbao were told that the more money they put in, the higher the returns would be. Wang borrowed from an online cash lender and friends in order to add to his investment. It was the equivalent of seven or eight years of income for Wang, who does odd jobs like drive for the ride-sharing company Didi Chuxing. The damage, he said, is widespread. ‘Every Nanjing local has a relative or friend that used Qianbao,’ he said.”

“Sydney’s year-on-year house price growth has stalled to a 15-month low as a triple whammy of lending restrictions, increased building supply and first-home buyer concessions sparked price falls in pockets of the city. The lower north shore has gone from a vendor’s market to one where buyers wield more power, according to Belle Property real estate agent in Lindfield Geoff Dean. ‘When the market was booming and going [from] strength to strength, people were panic buying without giving it a thought,’ Mr Dean said.”

“Sydney home prices look set to fall for the fifth consecutive month as the current market downturn gathers momentum. Much of the recent slowdown has been the result of bank restrictions on loans to investors, particularly interest-only loans and those involving deposits at less than 20 per cent of the property’s value. The market wasn’t about to crash and was instead moving through a controlled slowdown that would only impact recent buyers, said CoreLogic head of research Tim Lawless. ‘Only the people that bought around the middle of last year or later will have seen a fairly subtle decline in the values of their property,’ Mr Lawless said.”

“The ringleader of a group that tried to rip off more than $20 million linked to pricey properties on Fort Lauderdale’s Las Olas Isles and Miami Beach was sentenced Wednesday to 15 years in federal prison. Marco Laureti, 46, of Sunny Isles Beach, also owes more than $8.3 million worth of restitution to the affected banks for his role in the crime. Laureti’s two days of testimony in his defense during his trial were ‘a festival of lies,’ prosecutor Randy Katz told the judge, urging him to give Laureti extra time for lying on the witness stand.”

“The former mortgage broker and real estate agent headed up a sophisticated fraud that involved filing fraudulent mortgage applications and closing statements, using straw buyers to purchase properties and paying kickbacks to people who helped them commit the crimes. The fraud centered mostly on multi-million dollar condominiums at 45 Hendricks Isle in Fort Lauderdale, as well as Laureti’s $6.9 million home and other properties in Miami-Dade County and Palm Harbor, north of St. Petersburg. The defense said Laureti did not intentionally commit fraud and had planned to make a lot of money by selling the properties and repaying the bank loans.”