April 27, 2017

On A Quiet Day You Can Hear The Values Falling

A report from ABC News in Australia. “It’s two weeks from the federal budget, and the Government is under pressure to come up with a strategy to put the brakes on rising house prices. The Coalition has long argued that if more housing supply comes on to the market, record prices rises could be dampened. But there are different views on whether increased supply will help make housing more affordable, or if it will instead fuel more investment into an already overheated housing market. Lindsay David, of LF Economics, argues that if there really was a housing supply shortage, rents would also be skyrocketing, like they did in mining towns during the minerals boom.”

“‘When you’re in the pit of an irrational exuberance it doesn’t matter how many new dwellings you build,’ he said.”

From The Australian. “One of the biggest bull runs the Sydney housing market has seen is drawing to an end, with house prices falling this month as the crackdown by regulators starts to bite. CoreLogic head of research Tim Lawless said that recent restrictions from the banking regulator had pushed up home lending rates, taking the heat from investor enthusiasm. Sydney, in particular, had seen a wave of investors, so the impact of the regulator’s crackdown — most recently aimed at limiting interest-only loans — was likely to be more pronounced, Mr Lawless said.”

“‘It’s too early really to tell on the basis of one month’s figures, but if we are moving through the peak, it will be a moderate slowdown,’ he said.”

From The Newspaper. “Australians are racking up extreme levels of debt to buy homes that are among the world’s most expensive, a ticking time bomb that could wreck the economy if it is hit by a sudden shock, experts warn. The nation has a household debt-to-GDP ratio of 123 per cent, largely housing debt - second only to Switzerland, according to the Bank of International Settlements. Those levels exceed the US, Spain and Ireland before their property market crashes, global ratings agency Moody’s said in a report this month, warning Australians also held limited liquid assets.”

“‘Australians have borrowed up a storm and housing prices in this nation are now dangerously dumb,’ prominent Australian economist Chris Richardson said this month.”

The Courier Mail. “Melbourne-based developers arriving in Brisbane with plenty of cash and big plans to build high rise inner-city apartments have been commonplace over the past few years. While there are plenty still building high-rises there have also been plenty of plans dashed — or delayed — as Brisbane copes with an apparent apartment over supply. This time last year Melbourne-based Hamilton Corporation was spruiking two Fortitude Valley apartment projects.”

“They announced that 80 per cent of its Elixir apartment project was pre-sold while it also launched a 111-apartment project. A quick drive around by Business Confidential found the Robertson St site remained a big hole in the ground, while there is a big ‘For Lease’ sign on the Berwick St site which last year was up for sale.”

From Ten Eyewitness News. “Even though Sydney and Melbourne’s skyrocketing house prices have shown no immediate signs of letting up, it’s a different story on the west coast, now experts fear Perth could be the ‘Canary in the Coal Mine’ warning us all of the disaster just around the corner. The Western Australian capital enjoyed a high demand in property in 2007 and 2012, largely due to the mining boom which lead to a strong price growth.”

“However, home owners are now battling to pay over inflated mortgages with house prices declining at an alarming rate. Prices have dropped by double-digit percentages in some areas, with Mandurah in south Perth seeing some residents’ property prices fall by a remarkable 40 per cent in a decade. If you’re reading this from Sydney and Melbourne, consider it a warning. ‘There’s probably a lesson for Sydney and Melbourne today of perhaps what’s coming after the market turns,’ Perth property valuer Gavin Hegney told the ABC’s 7:30 program.”

“He pointed to the fact that West Australia was once considered ‘infallible’, considered to be booming on par with the other major cities. Unfortunately, that’s no longer the case. 35-year-old property owner Daniel Johnston also appeared on the 7:30 program, and told about how he purchased an investment in Mandurah for $580,000 in 2007… which is now worth only $350,000. He spoke about fears of losing his family home, as they struggle to keep up with the mortgage repayments. ‘We thought it might slow, the property price, but never expected the drop that Mandurah has had, It’s nearly halved,’ he told 7:30.”

From News.com.au. “Families in Western Australia are at breaking point, plagued with mounting debts they can’t pay off, as they face the reality of a collapsing economy. As properties decrease significantly in value and unemployment rates rise, many are now struggling to find jobs to make ends meet.Could this be the future of Melbourne and Sydney? Western Australia was once a booming product resources hub, with thousands moving to areas around Perth from interstate and overseas to work.”

“It had one of the strongest economies in the nation with housing prices on par and even higher than Sydney and Melbourne in the early 2000s. Fastforward to 2017 and WA now has the weakest economy in the country, with a high unemployment rate and a collapsing property market. Perth property valuer Gavin Hegney told ABC’s 7.30 program homes at the top end of Perth and on the urban fringe were decreasing in value and lessons could be learned from WA’s collapse. ‘Perth was booming, booming along and the east coast was on its knees,’ he said. ‘It’s the complete reverse today.

“Brad Wright was a project engineer working around WA, earning about $250,000 a year. Now he works as a security guard part-time while he tries to dig himself out of a dire financial position. He had two investment properties and a home in a luxurious suburb of Perth during the boom. He borrowed almost $1 million and said waiting for his loan approval was ‘as easy as buying an ice cream.’ ‘People have had their incomes slashed to 10, 20 per cent of what they were normally being paid and they have to meet enormous payments,’ he told 7.30.”

“He said the stress of trying to deal with the bank and find a solution to his troubles pushed him almost to the point of suicide. He said he didn’t know what he would do if he had to resort to selling the family home. ‘We will basically be kicked out on to the street with just the clothes we’re wearing and substantial debts,’ he said.”

“Lifeline financial counsellor Jenny Cecil said they were servicing a new group of clients — those struggling as a result of the economy collapsing. Many had been high income earners. She said a lot of clients were now using credit cards to maintain mortgage payments, electricity bills and council rates, making their financial positions even harder. In Mandurah, about an hour and a half from Perth, a home five minutes from the shopping centre and three minutes from the beach can be purchased for just $399,000.”

“There has been an 18 per cent drop in the price of properties in Mandurah in the last 10 years. What used to be an issue of an undersupply of housing in WA is now an issue of oversupply and both housing prices and rental prices have dropped dramatically. ‘They say in the top end of Perth on a quiet day you can hear the property values falling,’ Mr Hegney said. ‘And property values at the top end of the market have probably dropped 30 per cent from where they were at the peak of the market in 2009.’”

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Comment by Ben Jones
2017-04-27 11:08:23

‘In Mandurah, about an hour and a half from Perth, a home five minutes from the shopping centre and three minutes from the beach can be purchased for just $399,000′

What’s crazy about this is it’s still way too expensive.

‘The number of foreign investment applications for residential housing has fallen sharply. The government, and regulators, have recently deployed a series of measures aimed at cooling Australia’s booming property market. And authorities in China have been cracking down on the amount of money flowing out of the country.’

‘In a major pre-budget speech today, treasurer Scott Morrison revealed that the number of foreign investment applications for residential housing has fallen to an expected 15,000 this year from 40,000 last year.’

‘According to research by Credit Suisse, foreigners had been buying property at an annualised rate of $8 billion, equating to 25% of new supply in New South Wales and 16% in Victoria in the past 12 months.’

“We are already seeing signs the heat in our housing markets may be coming off, especially in the apartment market,” says Morrison. “Cooling foreign investor interest, due to tougher foreign investment rules implemented by our government and capital outflow restrictions in China, are already having an impact.”

‘China’s central bank late last year started vetting capital transfers abroad worth $US5 million or more. Previously, only transfers worth $US50 million were required to be reported to authorities. Those restrictions were tightened further at the beginning of this year with regulators stipulating that people could not purchase foreign exchange for overseas investment, including for buying houses.’

Comment by Ben Jones
2017-04-27 11:10:00

‘He had two investment properties and a home in a luxurious suburb of Perth during the boom.’

Chin up Brad: it was cheaper than renting.

Comment by In Colorado
2017-04-27 14:28:00

I guess they don’t have the option in Oz of walking away from their mortgage debt like it can be done in the US.

I remember when the previous bubble burst there were stories on this blog of unemployed Europeans who were being hounded by creditors after the foreclosure sale didn’t cover the balance on the mortgage. Lots of sob stories like “they say I still owe 100,000 Euros after the foreclosure. How am I supposed to pay that back?”

We will be hearing more of those this time around when the music stops.

The “property ladder” makes me think of those staircases in the moves that turn into slides.

Comment by aqius
2017-04-27 12:19:54

“spruiking” had to look that one up

Comment by Gordon Gekko
2017-04-27 12:59:13

NAR membership here in Florida is sky rocketing. Membership now exceeds 2006 peak. I find that stat bubblicious.

Comment by SW
2017-04-27 13:25:29

Gordon Gekko! Lol

Comment by taxpayer
2017-04-27 13:57:27

each realtor gets to sell one house a year ! or less

Comment by new attitude
2017-04-27 14:28:10

When you get pulled over in CA, the cop asks to see your Realtor License and make sure you have extra water bottles in your leased Yukon.

Comment by palmetto
2017-04-27 14:02:06

Heh-heh, speaking of Florida, just for grins and giggles, go to Zillow and enter a town in the Tampa Bay area. Then narrow it down to foreclosures and “pre-foreclosures”. Here’s a town called Wesley Chapel, check it out:


41 Foreclosed, 130 in pre-foreclosure. Egads.

Comment by Ol'Bubba
2017-04-27 18:47:08

Palmy - How long is the commute from Wesley Chapel to downtown Tampa or Westshore? If I recall correctly, Wesley Chapel may fall into the “drive until you qualify” exurb category.

Comment by palmetto
2017-04-28 05:00:14

It’s really a good hour these days, IMO, although the PR line is “just 40 minutes!” SR 54 is a nightmare.

Much of what is called “Wesley Chapel” is actually Zephyrhills, which has been associated with trailer parks, meth and white trash. Don’t get me wrong, parts of Zephyrhills are nice, it used to have a lot of agriculture. We looked at a nice little house up there years ago when we first moved to the area. Problem was, it was downwind of a dairy farm. El Stinkadoro.

Anyway, the realtors found out they could goose a rise in prices if they said a property was in Wesley Chapel as opposed to Zephyrhills. And I don’t know this for sure, but I think developers were actually able to get a zip code switch for their properties, so voila! Parts of what used to be Zephyrhills are now in Wesley Chapel. Yay! Mo’ money.

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Comment by oxide
2017-04-28 04:45:01

Palmy, it’s not just Florida,

College Park, MD: 29 for sale, 5 foreclosed, 36 pre-
Annandale, VA: 107 for sale, 0 foreclosed, 46 pre-foreclosure
Cary, NC: 364 for sale, 6 foreclosed, 49 pre-foreclosure
Cincinnati, OH: 1048 for sale, 232 foreclosed, 426 pre-foreclosure
Tomball, TX: 961 for sale, 1 foreclosed, 15 pre-foreclosure
Cedar Rapids, IA: 809 for sale, 21 foreclosure, 179 pre-foreclosure

So the egads are everywhere. I wonder what’s going on that people are missing payments. Job losses, chronic underemployment, HELOC loans resetting?

Comment by palmetto
2017-04-28 06:34:04

With the exception of Cincinnati and Cedar Rapids, Wesely Chapel is really quite a small area in comparison, as Ol’ Bubba points out, it’s just an exurb of Tampa. That’s a YUUGE number of pre-foreclosures for what the area is.

Or maybe not, Wesley Chapel is essentially a bubble area, one of those areas around Tampa Bay that was scavenged by developers and sold to people relocating from other parts of the country as a “good schools, good family” area. Sprawling, cookie cutter developments.

By comparison, the Carrollwood area, although smaller than Wesley Chapel, only has three foreclosures and six pre-foreclosures. It’s an older, more established area and for the most part, quite pleasant and closer to downtown Tampa. If I were moving, that’s where I’d live. I’d take a 1980s home over the crap in Wesley Chapel any day.

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Comment by oxide
2017-04-28 09:04:00

Googlemaps street view is amazing. Yup, you can definitely see the difference between Carrollwood and Wesely Chapel. Carrollwood is no-nonsense housing for regular people. Wesely Chapel has that early 2000’s fake luxury look to it. Housing for regular people who are stretching too far. And nearby Zephyrhill — wow, you weren’t kidding about trailer parks. I’ve never seen such a concentration.

Comment by rms
2017-04-28 12:38:04

“Carrollwood is no-nonsense housing for regular people. Wesely Chapel has that early 2000’s fake luxury look to it.”

I like the assessment… LOL.

Comment by Obongo
2017-04-27 13:20:20

Brad never belonged in that house in the first place.

Chin up Brad, maybe the new owners will let you and your family sleep in a van on the street out front

Comment by In Colorado
2017-04-27 14:34:46

That’s assuming anyone will buy it.

What I found interesting is how he went from a $250K “Project Engineer” job to a menial security guard job.

“People have had their incomes slashed to 10, 20 per cent of what they were normally being paid”

I’ll take “People who were grossly overpaid for $500, Alex”

Comment by Ben Jones
2017-04-27 14:44:19

Australians are kinda strange. In one of these articles they repeat the “we haven’t had a recession for 26 years” yet these people probably feel like they are in one. And this:

‘Perth was booming, booming along and the east coast was on its knees’

No recession?

Comment by junior_kai
2017-04-27 15:06:05

Have to laugh at the description of Perth as a “product resources hub”. WTF? Back in the day I worked for a company that had a subsidiary in Australia, and they presented some of their tech to us and the presenter mentioned that the Australian economic model is digging a hole and selling whatever they find to China.

Comment by Ben Jones
2017-04-27 15:35:03

WA in recession, Alberta and Brazil too, all because China broke down. Kinda makes you wonder about that red hot GDP someone around here keeps talking about.

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Comment by new attitude
2017-04-27 16:20:47

It is obvious, once the fake yuan stops being manipulated…. the fat lady sings.

smart money is out

Comment by JSandusky
2017-04-27 18:18:57

Smart money bought dumb expensive houses.

How smart could they have been?

Comment by Albuquerquedan
2017-04-28 08:21:00

WA in recession, Alberta and Brazil too, all because China broke down. Kinda makes you wonder about that red hot GDP someone around here keeps talking about.

China did not breakdown it just stopped growing at 10% per year. It was the miners that projected that level of growth to the moon and built mines accordingly, driving down the prices received for the commodities. However, if you look at every commodity the amount imported by China continues to increase year to year.

Comment by Albuquerquedan
2017-04-28 08:26:56

It was projections like this that were the problem, it is just like projections that housing prices could increase 7% per year indefinitely while wages increased 2%:


Comment by Albuquerquedan
2017-04-28 08:42:42

An example of why China loves lower commodity prices and has a big incentive to underestimate growth:


Comment by Carl Morris
2017-04-27 15:39:15

As someone who grew up in Wyoming I’m familiar with the concept of getting paid a lot to dig things out of the ground to sell elsewhere and then when demand goes away there is *nothing* comparable.

The interesting part of it is that they never want to move anywhere else and they’re never really prepared for the bust…but they usually have older generation family they can stay with who are, which probably helps explain why they don’t want to move. Easier to wait in place for the next boom and then they or their kids can go for broke again.

Comment by Karen
2017-04-27 15:10:40

“There has been an 18 per cent drop in the price of properties in Mandurah in the last 10 years.”

They contemplate suicide when house prices drop 18% (in 10 years!)

I thought Aussies were all tough, wrestling crocodiles in the outback with one hand and whatnot

Comment by Carl Morris
2017-04-27 15:41:21

Leverage works both ways. Probably caught a finger under a steamroller that’s at only 18% throttle. Does it matter?

Comment by Karen
2017-04-27 20:53:39

My car was worth 20% less as soon as I drove it off the lot. But I didn’t cry about it b/c I’m not a debtor/speculator.

Comment by Race Bannon
2017-04-27 20:57:58

Ahhh yes…. Depreciation. There’s nothing like inescapable depreciation to wreck a degenerate gamblers delusion.

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Comment by aNYCdj
2017-04-27 15:56:05

we are all in the wrong business……

I-Team: Same Hotel Room Costs $190 for Homeless, $145 for Everyone Else


Comment by 2banana
2017-04-27 17:56:22

Cleaning costs? Damage costs? Upset other customers costs?

A significant portion of the homeless have mental health issue or addiction issues or both.

Yeah, that is not the meme of the left or the MSM.

Comment by new attitude
2017-04-27 18:26:24

why can’t these crazy addicts just get jobs? when will the churches step up so taxpayers can fund cool stuff?

Comment by Blue Skye
2017-04-28 07:31:52

Paperwork and waiting for reimbursement?

Comment by redmondjp
2017-04-28 10:32:57

And somebody’s got to pay for that bedbug eradication too . . .

Comment by Senior Housing Analyst
Comment by Sacks of Dong
2017-04-27 15:58:35

“Families in Western Australia are at breaking point, plagued with mounting debts they can’t pay off, as they face the reality of a collapsing economy. As properties decrease significantly in value and unemployment rates rise, many are now struggling to find jobs to make ends meet.Could this be the future of Melbourne and Sydney? ”
“Fastforward to 2017 and WA now has the weakest economy in the country, with a high unemployment rate and a collapsing property market.”
Future? It’s the blooming present mate! 2017, strewth!

Comment by azdude
2017-04-27 16:37:29

I hate to spoil the doom and gloomer party but apparently home sales in the US are pretty robust.

Comment by Race Bannon
2017-04-27 16:51:58

Doom? Don’t be silly Az_donk and remember…. Nothing accelerates the economy like falling prices to dramatically lower and more affordable levels. Nothing.

Terrebone, OR Housing Prices Crater 9% YoY


Comment by azdude
2017-04-27 17:30:18

stop cherry picking! I made 1000 today working from home!

Comment by Race Bannon
2017-04-27 18:16:10

Your life is a demolition derby az_donk.

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Comment by Senior Housing Analyst
2017-04-27 17:01:36

Boulder, CO Housing Prices Crater 11% YoY


Comment by JSandusky
2017-04-27 17:25:30

Every mortgage is backed by gobmit.
Most student loans are backed by gobmint.
60% of health expenses are backed by gobmint.

How is USSA different from USSR?

Comment by Carl Morris
2017-04-27 17:43:54

They hate us for our freedom.

Comment by new attitude
2017-04-27 18:28:28

I heard they hate our Playboy Magazine.

Comment by Cynical Cynosure
2017-04-28 17:24:37


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Comment by 2banana
2017-04-27 17:52:10

Bigger and bigger government with more and regulations and higher and higher taxes can solve all problems…

Comment by rms
2017-04-28 23:19:36

“How is USSA different from USSR?”

Over there it’s man against man. Here it’s the other way around.

Comment by Rob
2017-04-27 20:26:56

In Canada the government tried to put a break on the housing market in Vancouver and Toronto which saw record increases. Things slowed down for a short time but are heating up again, when there’s demand there’s little that can be done to slow the rising prices.

Comment by shrlines
2017-04-28 02:10:40

I disagree - the government is doing its job by working to decrease demand in these risky situations. They just didn’t go far enough. They are too weak-willed.

When housing demand is global, irrational, and insatiable, you can’t simply build your way to meeting it with supply. Look at China for example. They keep building, prices stay high, yet there are entire empty cities! They have not done a good job of decreasing demand for housing though they have done an excellent job of increasing supply (yes China is complex so this doesn’t account for everything). Tobacco is an example of using policies, taxes and education to decrease demand for something. There is no supply problem with tobacco - but tobacco sales and smoking rates have plummeted in the US as people decided it wasn’t worth it.

Enough levers exist to decrease global demand for location specific housing if a city /country can agree it wants to prioritize affordable housing for locals as a public good and deprioritize housing as an investment, particularly for non-locals.

What vancouver and toronto are doing is a good start - but they have many more options they aren’t willing to use yet: eliminate foreign investor programs (buying citizenship), raise interest rates, limit immigration to over-burdened cities, tax empty property (Vancouver does), force disclosure of buyer information and require proof of funding sources (doing this a little bit in some places), tax second homes or investment property much higher than primary residence, limit number of properties corporations or individuals can buy in a certain area, make renting more attractive/speculating less so with controls on amount rent can be raise each year and tax rebates for renters, don’t allow non-citizens and non-residents to buy property period. The possibilities go on. The will to enact them isn’t there yet.

Comment by azdude
2017-04-28 04:35:31

making folks eat their losses might help this kind of speculation don’t you think?

Comment by taxpayer
2017-04-28 07:43:42

simply have gov stay the fck out of housing

now all overpriced

Comment by azdude
2017-04-28 08:00:17

makes sense to me

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Comment by palmetto
2017-04-28 05:06:22

Just for laughs, a festival for wealthy snowflakes descends into chaos:


LOL, you can’t make this stuff up. You can google it, too, for even more details.

“quick summary of Fyre Festival: Ja Rule and dozens of instagram models lured trust fund kids to an island and are now hunting them for sport”

heh. Woodstock was tame by comparison.

Comment by taxpayer
2017-04-28 06:43:35

free HC coming to CA
it’s a right !

Comment by palmetto
2017-04-28 05:08:31

Shutdown? Or no shutdown? Place your bets.

I’m going with shutdown.

Comment by oxide
2017-04-28 10:23:59

If there is one, it will probably be next week, not this week.

Comment by palmetto
2017-04-28 10:34:27

Yep, one week stopgap passed. But it’s coming.

Comment by taxpayer
2017-04-28 06:42:15

-0.49 (-4.52%)

I’m confused, all is extremely well !

Comment by azdude
2017-04-28 08:07:17


Comment by butters
2017-04-28 08:12:29

Soviets would marvel at our god-like ability to control and manipulate things.

Comment by azdude
2017-04-28 08:43:35

can it be said that short sellers have been manipulated to finance the recovery in stocks?

Comment by drumminj
2017-04-28 07:05:24

Hell has apparently frozen over and the re-written version of the JoshuaTree Extension was finally approved for Firefox (after 2.5 months!).

For those who have been using the old version, or switched to Chrome but prefer Firefox, you can now have all the bugfixes and updated functionality here:

JoshuaTree Extension for Firefox

and of course the Chrome version is available as well.

These now run exactly the same code between them, so can be kept in sync. Ignore lists for everyone!!!!

Comment by Karen
2017-04-28 08:26:38

God I love the ability to create ignore lists. Thank you for doing this.

Comment by rms
2017-04-28 23:36:46

I like the home page collapsed view of threads and the sliding animation. Schweet!

Comment by drumminj
2017-04-29 07:50:17

Glad to hear it! Let me know if you run into any issues with the new version.

Comment by azdude
2017-04-28 08:57:05

it is amazing how little fear of losing money there is out there in financial markets. It feels like there is no risk to people.

Comment by Albuquerquedan
Comment by azdude
2017-04-28 09:39:28

if people dont have jobs who is gonna buy their apples?

Comment by Albuquerquedan
2017-04-28 11:51:30

You think no one is going to make and service the robots? Better paying jobs for existing Americans and no need to bring people into the country that with be receiving the Earned Income Tax Credit and other benefits for the rest of their lives, it is nothing but a good development.

Comment by Burned Alive in Tucson
2017-04-28 13:53:58

Dunno ’bout you but the robot is going to be servicing me. Giggity.

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Comment by rms
2017-04-28 23:45:57

That gorgeous Nexus 6 is going to rip your nutz free and feed to ‘ya.

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