In The Throes Of A Real Estate Glut
It’s Friday desk clearing time for this blogger. “The number of people packing up and moving out of the Bay Area just hit its highest level in more than a decade. Joint Venture Silicon Valley’s own study of the out-migration says workers are moving due to a number of factors. But topping the list is the high cost of housing. Carole Dabak spent 40 years living in San Jose and now she’s part of the mass exodus that is showing no signs of slowing down. She plans to sell her home for about $1 million, buy a much larger place near Nashville for less than half that and retire. ‘I loved it here when I first got here. I really loved it here. But it’s just not the same,’ Dabak said.”
“Analytics.Miami launches the first annual State of the Market report for Miami condos and a special report tracking Miami condo inventory. The findings are dire. Owners serious about selling are accepting 20% - 30% discounts off of their asking prices. Most neighborhoods have 100+ months of condo inventory at price points past $3M. To put this in perspective, In December 2017, Miami’s prestigious South of 5th neighborhood had 128 active condo listings past $3M and only one sale. In the previous month, there were zero sales past $3M, leaving the neighborhood with 128 months of condo inventory past $3M.”
“The inventory situation is almost twice as bad as it was during the last crash, and 2017 closed off with a record high number of active listings.”
“While it would be highly inaccurate to say that housing is getting more affordable, it’s not wrong to point out that housing prices—namely detached housing prices—have dropped quite a bit month-over-month in Mississauga and surrounding areas. Zoocasa says that average prices for all categories (meaning detached, semi-detached, town and condo home types) declined by six per cent from $675,656 in December 2017 to $631,672 in January 2018. Year-over-year, prices are down by nine per cent from $700,369 in January 2017 to $631,672 in January 2018.”
“‘It’s important not to let year-over-year figures skew how we look at market conditions. We know that sales are down from 2017’s abnormally high first quarter levels,’ says Lauren Haw, Zoocasa CEO. ‘Sales are in-line with the the hot 2016 market - when we saw headlines about the ‘continuous overheating’ market, when the average home price in Mississauga was $545,174 in January 2016 versus $631,672 now.’”
“A retired couple’s ‘nest egg’ flat has become a ‘noose around their neck’ due to nothing more than its method of construction. Jimmy and Ruth Hill purchased the three-bedroom council premises back in 2005. The aim was always to sell it on, however, and last year they attempted to do just that. To their horror they discovered the block of flats is classed as a non-traditional construction, mainstream banks and money lenders were not prepared to give potential buyers loans – despite the fact the Halifax gave the Hills a mortgage for it back in 2005.”
“The flat currently has an asking price of £55,000, but one firm the couple contacted in their desperation only offered them £20,000 to take it off their hands. Jimmy (65) said: ‘We have spent a lot of money and effort on this flat and that was soul destroying to get an offer like that for something we have worked so hard on.’”
“Housing prices slid again during the first month of the new year, sliding 2.2 percent in January on a national average. Real estate brokers’ association Eiendom Norge called it the weakest January in 10 years. Sales and prices often pick up after the Christmas holidays, but not this year. Average prices were down, fully 9.4 percent in the Oslo area, from last January.”
“Home sales and housing starts by Swedish property developers tumbled at the end of 2017 amid the biggest drop in prices since 2008. After years of booming prices, fueled by a shortage of housing and low interest rates, Swedish home prices dropped 7.8 percent in the three months through December after an increase in construction pushed supply too high at a time when households started becoming more pessimistic about the outlook for the market. High-end apartments in Stockholm have been particularly hard hit.”
“All over Nairobi, bright red - To Let signs are draped alongside gleaming new skyscrapers laying evidence to a city in the throes of a real estate glut. This is leading to significant losses and at the same time eroding the overall values of the prime assets raising questions on whether the property crash Kenyans have been warned about severally in the past is finally nigh. ‘What you will see is prices flattening and rents reducing over time as some developers might panic,’ said Sakina Hassanali at Hass Consult.”
“Sales of apartments in Jakarta are showing signs of bottoming out, Jones Lang LaSalle reported. In total, developers in Jakarta sold 4,610 apartments last year, down from 5,450 units in 2016 and far below the heyday of 2014 when 17,000 apartments were sold in just a year. Developers built 13,000 new apartments last year, bringing up the total number of apartments in the capital city to 138,000 by the end of 2017, but around 37 percent of those have remained unsold.”
“Condominium prices will fall this year as more than a dozen large projects come online, adding thousands of new units to a market beginning to show signs of oversupply, according to CBRE Cambodia. Ann Sothida, director of CBRE Cambodia, said condominium prices remained stable in 2017 despite the doubling of supply, but with a surge of new units expected in the coming months prices for affordable and mid-range condominiums could start to weaken. Sear Rithy, chairman of WorldBridge Land said it was too soon to say whether condo prices and rentals will fall in 2018. ‘Most condos are purchased by Chinese investors, which has little relevance on the [state of the] local market,’ he said.”
“Japanese real estate financing retreated 5.2% in 2017, the first drop in six years, with banks slowing lending for apartment construction amid higher vacancy rates. The boom in construction financing had been driven by 2015 changes to Japan’s inheritance tax law. But ‘the spike in apartment construction for tax purposes isn’t backed by demand,’ noted Yasunari Ueno of Mizuho Securities.”
“A rapid-fire release of apartments across pockets of Sydney has seen suburbs in the city’s west and south west bear the biggest brunt of price declines. Over the three months to December, prices in Canterbury Bankstown fell 4.4 per cent. The price of apartments over the quarter also declined in Sydney’s south west (3.7 per cent), south (2.1 per cent) and west (1.9 per cent), according to the latest Domain House Price Report.”
“‘Canterbury Bankstown has been hardest hit. It’s seen three quarters of consecutive decline’ said Dr Powell. ‘The majority of apartment markets across the Sydney regions have recorded a quarterly decline,’ said Domain Group data scientist Nicola Powell. ‘It signifies that the days of double digit annual growth that it had back in 2015, which was astounding, are long gone.’”
