August 22, 2017

Speculators Who Bit Off More Than They Could Chew

A report from the Globe and Mail in Canada. “In the midtown Toronto areas of Leaside and Davisville, the real estate market has been bouncing between optimism and despair like a yo-yo. Patrick Rocca, a real estate agent with Bosley Real Estate Ltd., has concentrated much of his business on the tree-lined streets radiating out from Bayview and Eglinton Avenues. But even in those stalwart family neighbourhoods, real estate deals can be hard to put together these days, says Mr. Rocca, who has been shocked by the market’s swings. ‘You knew something was going to happen. It was mind-boggling. It was scary,’ he says of the market’s unfettered rise in the spring and the Ontario government’s moves to tame it. ‘I knew something was going to happen – I just didn’t know how quickly it was going to stop.’”

“A house that might have sold for $1.5-million in the fall of 2016 could have fetched $1.8-million in February. Now, it’s back to $1.5-million. ‘The sellers are still thinking March prices; the buyers are still thinking there’s downside.’”

“John Pasalis, president of Realosophy Realty Inc., says sales in the first half of August in the Greater Toronto Area fell 42 per cent from the same period last year. Again, the drop in freehold properties was more severe, with a 46-per-cent fall compared with a 34-per-cent decline for condos. Mr. Rocca is coaching sellers to be more clear-eyed by showing them the figures from recent sales. ‘They missed the boat. It’s been difficult. They should have sold in March, but they didn’t.’”

“Prices were escalating at an annual pace above 30 per cent before the Ontario government introduced policies designed to cool the market. One of those moves, a non-resident speculation tax, adds a 15-per-cent levy on real estate purchases by foreign buyers. ‘I think the foreign tax really hit our area,’ Mr. Rocca says. Mr. Rocca sold one house in February that had 11 competing buyers show up at the table. ‘Everyone was foreign,’ he says.”

The Daily Telegraph in Australia. “There are nascent signs Chinese foreign buyers have toned down their enthusiastic buying of Sydney property. Beijing has narrowed the window for capital outflows to Australia. At the same time, Australian banks have tightened lending criteria to mainland China investors due to APRA regulatory requirements, and in some cases won’t lend to foreign investors at all. This week Chinese local and international estate agents reported a sharp drop-off in sales over the last six weeks as new property taxes took effect after the NSW state budget.”

“Dr Nellie Liang, who was in Sydney recently to share her views on financial stability with the Reserve Bank of Australia, said a ‘trigger’ could be a reversal in international capital flows. ‘When you have the outsiders buying properties, if the outside money pulls out and prices fall, there’s innocent bystanders who took on debt and end up under water, which could lead to defaults,’ Dr Laing, a senior fellow at the Brookings Institution in Washington, said.”

“Twenty per cent moves in house prices isn’t crazy any more, Dr Laing even suggested. ‘China is such a big economy now, and they have links to other countries, including to Australia and Canada through the housing markets, that people need to be thinking about.’”

“Sydney has enjoyed a stellar run with Chinese purchases, but a 50 per cent sales outcome at last weekend’s major Sydney CBD off the plan offering was the lowest take-up in many years. And there are still record numbers of new apartments approved and likely to come onto the market. Hopefully the cooling trend in Chinese buying interest is more a pause rather than a conclusion.”

The Guardian in the UK. “China’s largest commercial property company has pulled out of a £470m purchase of Nine Elms Square in south-west London after pressure from regulators in Beijing over its overseas investments. A joint venture between St Modwen Properties and construction firm Vinci had exchanged contracts to sell the 4-hectare (10-acre) site, previously home to the New Covent Garden flower market, to Dalian Wanda’s Hong Kong division in June.”

“Beijing issued rules last Friday to limit overseas investment in property, hotels, entertainment, sports clubs and the film industry, and threatened to blacklist firms that violated those rules. This could put an end to Chinese firms’ recent spending spree in the UK. Chinese investors have spent a record £4bn on commercial property in the City of London and the West End so far this year, according to data from real estate firm CBRE.”

“The downturn in the London luxury housing market amid a glut of new properties coming on to the market made Nine Elms Square a risky investment for Wanda. It is still building the £700m One Nine Elms twin-tower complex nearby. The Malaysian developers of the nearby Battersea power station redevelopment have also been hit by the slump in sales at the top end of the market, and are scaling back plans for luxury homes.”

From Free Malaysia Today. “It is better for homeowners struggling to repay their housing loans to sell off their properties and avoid bankruptcy, says a property expert. Ernest Cheong said in doing so, a property owner avoids ending up with the bank foreclosing property if he defaults on payments and worse, declaring him bankrupt if outstanding loan amounts remain unpaid.”

“Commenting on recent remarks by a think tank that Malaysia’s property bubble was set to burst, Cheong said the situation was bleak for property speculators and genuine house buyers who overestimated their ability to afford properties worth more than RM800,000 between 2010 and 2015.”

“‘I believe those who purchased properties under RM500,000 will be okay. But for those who bought properties closer to the RM1 million mark, it might be a bit too late for them to get themselves out of a sticky situation. Say, for instance, you bought a RM800,000 condominium in 2014/2015, when the property market was at its peak. If you took a RM700,000 loan for 30 years, the monthly repayment is RM3,500 a month,’ he said.”

“To repay a RM3,500 loan a month, a person’s household income would need to surpass the RM10,000 mark at least. ‘But as we know, salaries haven’t increased at the same rate as the rising cost of living.’”

“He said speculators or home buyers who bit off more than they could chew a few years ago, should now look for an exit strategy, especially given that property prices are plummeting while the cost of living is increasing. ‘My advice is that if you feel you are unable to sustain your monthly housing loan repayments, try to sell it even if you end up making a loss, which is highly likely.’

“Cheong said since 2016, property prices have been dropping and on average, in the Klang Valley, property prices have dropped by around 30%. If you took a RM700,000 loan for a RM800,000 property, for the first three years, you’re only paying the interest. You still owe the bank the RM700,000 principal amount. So, if you can get an offer for RM800,000, you should consider yourself lucky given the drop in property prices.’”

“Cheong added that if a homeowner fell behind their loan repayments for three months, they’ll get a foreclosure notice from the bank. From that point on, if they try to sell their house themselves or if the bank forecloses it, it could take up to 18 months before the property is actually disposed of by auction.”

“‘You could even end up losing large amounts of money as you would have to pay various fees such as auctioneer’s fees and legal costs from the auction price which may be significantly lower than the market price. If you bit off more than you can chew, take this experience as a lesson. It’s okay to cut your losses and start again. There’s nothing wrong with selling your home and renting a house. It’s better than being declared bankrupt.’”

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Comment by Ben Jones
2017-08-22 06:30:51

I’ll be traveling on business the next 4 days and will post when I can.

‘Drone Shows Abandoned Mini-Paris In China’

‘it’s now a ghost town because nobody really ended up living there’

Remember crow breath? “Oh, this is just how Chinese build cities!”

Stupidest “investors” ever.

‘They missed the boat. It’s been difficult. They should have sold in March, but they didn’t’…Mr. Rocca sold one house in February that had 11 competing buyers show up at the table. ‘Everyone was foreign’

Comment by Professor 🐻
2017-08-22 07:35:01

Does anyone have a vague idea about how much newly constructed Chinese real estate over the past two decades was stillborn?

Comment by GuillotineRenovator
2017-08-22 09:37:27

I remember reading back in 1999 that China was building a city the size of Philadelphia every month. It’s now 2017, and it is still going on. In my opinion, it’s only possible because of currency manipulation. China has been printing and diluting their currency more than any other country on this planet.

Comment by Ben Jones
2017-08-22 06:46:40

July 24, 2017

‘Over the past decade, the Greater Heights has become among the priciest and most sought after neighborhoods in Houston.’

‘But even here, in the areas north of the Katy Freeway and inside Loop 610, where high-priced bungalows punctuate buzzy retail destinations, there are residential houses under foreclosure. Some of the bank-owned real estate among the Heights-area foreclosed houses are new constructions, built in 2016 and never lived in.’

Comment by 2banana
2017-08-22 07:12:46

There are still some places in the world that declaring bankruptcy has severe consequences.


If you bit off more than you can chew, take this experience as a lesson. It’s okay to cut your losses and start again. There’s nothing wrong with selling your home and renting a house. It’s better than being declared bankrupt.’

Comment by Professor 🐻
2017-08-22 07:55:00

‘My advice is that if you feel you are unable to sustain your monthly housing loan repayments, try to sell it even if you end up making a loss, which is highly likely.’

How can one qualify for future bailouts if they eat their losses up front?

Comment by Mafia Blocks
2017-08-22 07:22:03

Waialua, Hawaii Housing Prices Crater 12% YOY

Comment by aqius
2017-08-22 07:30:44

anarchy is fast approaching America. I will post no more.

it has been an honor & a pleasure.

good luck / godspeed


Comment by 2banana
2017-08-22 07:36:23

Could it be just entropy?

Comment by Professor 🐻
2017-08-22 07:38:32

Did something happen over the past 24 hours to suggest that the world as we know it is about to end?

Comment by Mr. Banker
2017-08-22 09:05:52

The Total ecclipse totally upset some people’s bodily essenses.

Comment by Young Deezy
2017-08-22 07:38:52

Uh…ok. I’m sure going dark on HBB will protect you from the rampaging hordes of EBT powered welfare mutants. Good luck out there

Comment by Mafia Blocks
2017-08-22 08:10:11

The blog owner mentioned drama queens yesterday.

Comment by butters
2017-08-22 09:06:27

Dont go dude. I like reading your comments.

Comment by scdave
2017-08-22 09:39:27

anarchy is fast approaching America ??

Anarchy ?? No but I don’t think its a reach to think we could see the National Guard involved in some hot spots…I think there is a small group of people in this country with a lot of hate, that are armed, that would rather die then compromise…We got a small taste of it in Charlottesville…

Comment by 2banana
2017-08-22 09:56:58

You keep reaching…


Veterans Plaza statue destroyed at Teague Park in Longview
News-Journal - 8/22/2017

A statue representing service members in Veterans Plaza at Teague Park in Longview has been destroyed.

Officials with the group who oversees the plaza later said the destroyed statue is not that of the Unknown Soldier, but that it represents every service member.

The veterans plaza, which was officially dedicated in November 2015, holds permanent markers for each American war since World War I.

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Comment by MightyMike
2017-08-22 10:14:29

There’s no indication that there was political motivation, if that’s what you’re implying. The story is also 3½ months old. Why did you put today’s date on it?

Comment by Obama Goons
2017-08-22 10:35:22

“think there is a small group of people in this country with a lot of hate, that are armed,”

Are you suggesting the Communist Sympathizers mean business?

Comment by MightyMike
2017-08-22 13:19:39

You must be some sort of Rip Van Winkle. That term hasn’t been used in half a century. You forgot that it got abbreviated to comsymp.

Comment by scdave
2017-08-22 16:03:17

the Communist Sympathizers mean business ??

Mean business or not they still end up dead.

Comment by oxide
2017-08-22 17:24:23

Banana, where did you get that article? It’s entirely possible that the media outlet itself fished out an old story just to take advantage of recent events to drum up eyeballs. That’s almost as newsworthy as the statues themselves.

Comment by Mafia Blocks
2017-08-22 17:32:38

Stay on topic comrades.

Agoura Hills, CA Housing Prices CRATER 17% YOY

Comment by 2banana
2017-08-22 07:33:00

We used to have these things called mobile homes and RVs…


Why It’s Becoming Cool to Live in Your Car – Or a 150-sq. ft. Apartment
The Christian Science Monitor | August 21, 2017 | Jessica Mendoza

High housing costs have prompted some in the middle and upper classes to rethink what they value – and be willing to give up the rest.

But at the end of the night Ms. Nelson always returns to Dora, the dusty Ford Explorer she calls home. In the back, where a row of seats should be, lies a foam mattress covered with fuzzy animal-print blankets. Nelson keeps a headlamp handy for when she wants to read before bed. Then, once she’s sure she won’t get ticketed or towed, she turns in for the night.

“I still strive to have some sort of routine,” says Nelson, who started living in her car about a year ago. “Would I rather spend $1,200 on an apartment that I’m probably not going to be at very much, or would I rather spend $1,200 a month on traveling?”

For some it means choosing tiny homes and “micro-apartments” – typically less than 350 square feet – for the chance to live affordably in vibrant neighborhoods. For others, like Nelson, it means hitting the road in a truck or van, communing with nature and like-minded people along the way. Proponents range in ages and backgrounds, but they all share a renewed thirst for alternatives to traditional lifestyles like single-family homes, long cherished as a symbol of the American dream.

They aren’t the only ones. Spending on experiences like food, travel, and recreation is up for all consumers, making up more than 20 percent of Americans’ consumption expenses in 2015. (In contrast, the share for spending on household goods and cars was in the single digits.) Baby-boomer parents, downsizing as they enter retirement, find that their grown children are uninterested in inheriting their hoards of Hummels and Thomas Kinkade paintings. The same “live with less” logic has begun to extend beyond stuff to the spaces these older adults occupy.

Today Henderson makes about $37,000 a year as an executive assistant to a bar owner and lives in the Bristol Hotel, a mixed-use apartment building in the heart of downtown Los Angeles. Her studio, which she shares with her small dog Olive, is 175 square feet – the equivalent of about four king-size beds. The walls are covered in framed artwork that Henderson collected from thrift shops and friends. An apartment-sized fridge and a fold-out couch are her largest possessions.

Tiny homes can range from about 100 to 300 square feet and cost between $25,000 to $100,000, give or take. Stephens and Parsons built theirs using reclaimed material for about $20,000, and it comes with a loft for a queen-sized bed, a compost toilet, walls that double as storage, and shelves that turn into tables. For those with more lavish tastes, vendors like Seattle Tiny Homes offer customizable houses – complete with a shower and a washer and dryer – for about $85,000.

People like freelance photographer Aidan Klimenko, who has been living off and on in vans and SUVs for three years, traversing the US and South America.

“The idea of working so hard to pay rent – which ultimately, that’s just money down the drain – is such a hard concept for me,” says Mr. Klimenko. Vanlife, he adds, “is access to the outdoors and it’s movement. I’m addicted to traveling. I’m addicted to being in new places and meeting new people and waking up outside.”
Small living isn’t that big a trend

Living mobile isn’t all grand adventures and scenic views, either. Van dwellers say they’ve had to contend with engine trouble, the cold and the heat, and unpleasant public restrooms. And Henderson in Los Angeles says she once lived in an affordable micro-housing development that had a pervasive drug-dealing problem.

Comment by oxide
2017-08-22 11:33:26

The only reason this is becoming “cool” is because it’s becoming necessary. We can’t stop it, so we rationalize it and even glorify it to make it bearable.

Notice how suddenly it’s okay for women to be extremely overweight, and “real women wear a 12″ and plus-size actresses and models are popping up everywhere, complete with new fashions for larger women? Same concept.

Comment by 2banana
2017-08-22 07:41:48

But, but - Confederate statues…


JUST STEAL. Seriously.
Market Ticker - 8/21/2017 - Karl Denninger

During the crash Fannie and Freddie were “nationalized” and bailed out. The public was told that the firms were on the verge of failure, and that said failure was inevitable.

Shareholders, in due course, sued — they didn’t believe it.

And now, it appears, the government lied.

It didn’t lie a little, it lied a lot. It turns out that it appears the government knew that the firms were on the edge of massive profitability and that they were in fact not insolvent.

So why did the government do it? They did it to steal the profits from the company — which means they stole the shareholder’s property to fund other things - including Obamacare.

Further, the beneficiaries of said theft are in fact lawmakers who are in office today in no small part due to the campaign contributions made by those who benefited from those funds and the firms who profited from Obamacare and other Obama administration initiatives, all of whom under the principles of civil law should be forced to disgorge every single penny of said benefit to compensate the victims. But they won’t be — and you know it — and again, the reason is that neither the politicians or judiciary fear any public backlash for their willful and intentional refusal to follow and enforce the law.

Comment by Professor 🐻
2017-08-22 07:43:28

“One of those moves, a non-resident speculation tax, adds a 15-per-cent levy on real estate purchases by foreign buyers.”

Has anyone considered a similar move to protect the interests of U.S. citizens who just want a place to live in against rampant speculation by foreign investor hordes?

Comment by butters
2017-08-22 09:01:24

Why would they do it in america?

Rethugs love money…any type of money. Rats just love future voters.

Comment by OneAgainstMany
2017-08-22 20:47:54

I think a good move by municipalities would be a property surtax on unoccupied properties. It strikes me as bad policy to have vastly unaffordable housing owned by out-of-state (or international) owners who are sitting on property, but not occupying it.

Comment by Professor 🐻
2017-08-22 07:47:42

‘When you have the outsiders buying properties, if the outside money pulls out and prices fall, there’s innocent bystanders who took on debt and end up under water, which could lead to defaults,’

Luckily it’s unpossible for something like this to happen in the U.S.

Comment by 2banana
2017-08-22 08:33:04

But, but…higher and higher housing prices are a good thing.

The obama legacy of Mel Watts told me so.

Comment by butters
2017-08-22 08:59:09

Why do you hate ownership society?

Comment by Lesser Fool
2017-08-22 09:42:28

Because not everyone is part of it.

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Comment by MightyMike
2017-08-22 09:56:19

Some people want to keep it that way.

Comment by oxide
2017-08-22 11:40:07

Why do you hate ownership society?

Because it’s not true ownership. True ownership society is paying off the mortgage and leaving the family homestead to your children. Presumably your kids find jobs in the same city and live mortgage-free their entire lives. But who pays off the mortgage anymore? We live in a refinancership society now.

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Comment by GuillotineRenovator
2017-08-22 13:00:24

That’s not ownership. See: Taxes.

Comment by oxide
2017-08-22 17:26:12

By your definition then, nobody owns anything. OK then, go live in the woods of Alaska on the sly so that you pay no taxes. Or go to a country that doesn’t levy any taxes. Good luck.

Comment by GuillotineRenovator
2017-08-22 18:49:07

Sure we do. Most of our possessions are never taxed again aside from the initial purchase, and some states don’t even have a sales tax. It just so happens that real estate is a heavily, heavily taxed burden.

Comment by OneAgainstMany
2017-08-22 20:51:53

Real estate is not taxed enough. Get rid of the mortgage interest deduction and Prop 13 in California and there would be a lot more affordable housing. Property tax is a constraint on asset price inflation. Government revenue has to come from somewhere. We should tax unused land though before we tax middle and lower income property tax owners.

Comment by Lesser Fool
2017-08-22 12:40:32

Why do you hate children?

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Comment by Carl Morris
2017-08-22 10:31:52

innocent bystanders

Really? Unsophisticated bagholders maybe. But I wouldn’t say “innocent”. They just wanted in on the action.

Comment by Mafia Blocks
2017-08-22 10:47:07

Case in point? Donk Craterton.

Comment by frankie
2017-08-22 09:03:25

Shares in doorstep lender Provident Financial plunged 66% on Tuesday after the firm issued its second profit warning in months.

It says it now expects to make losses of £80m to £120m as its debt collection rates have dropped to 57% compared with a previous rate of 90% in 2016.

Bradford-based Provident recently changed the way it collected its loans, replacing self-employed agents with “customer experience managers”………………………..

One former manager, Mike Thompson, said: “The previous Home Credit model, using local self-employed agents who were friends and relatives of the customers, ensures affordable appropriate borrowing.

“Drafting in customer experience managers working on phone apps has meant that the all-important relationship between agent and customer has been broken.”

Provident had already flagged up problems with its new system in June.

At the time, Provident said not enough of its self-employed debt collectors had applied to become employed by the company.

It had also been less effective at collecting money and selling new loans, and a greater number of agents than normal had left.

Always pleasant to see a CEO come a cropper after thinking they could replace their workforce with an app. Even more pleasant when it’s a subprime lender.

Comment by Karen
2017-08-22 10:31:37

I thought the millenials were all barflies who were going to save the luxury developments in the urban core.

Comment by 2banana
2017-08-22 10:41:53

Millennials say that until reality hits them in the face when they want to have a family.

And then they realize the insanity of living in the high tax, high crime, poor schools, union corruption, long term controlled democrat cities.

Walking home from the bar just doesn’t make up for it…

And as a PS - they then register republican.

Comment by Carl Morris
2017-08-22 11:45:42

And as a PS - they then register republican.

I doubt they switch right away. There seems to be a turning point right around when the first kid starts school and they decide their kid needs to be in a top rated school where nobody gets low test scores.

Comment by oxide
2017-08-22 11:44:45

The first wave of Millenials are now in their mid-30’s. No more vibrant city life for them! The second wave of Millenials are in their mid-20s and still living with Mom paying off student loans. The few that do move out have to live with a roomie — which automatically halves the number of units needed.

Comment by MightyMike
2017-08-22 13:14:33

The population of most American cities continues to grow. That growth is made up of people of all ages, from babies to the elderly.

Comment by Karen
2017-08-22 21:41:52

Jeez. Do any of you guys read this blog?

There never was a giant wave of rich millennials moving to urban areas wanting to rent luxxxxury apartments. Ben’s only posted about this 1,000 times.

Comment by Taxpayers
2017-08-22 13:32:22

with a 46-per-cent fall compared with a 34-per-cent decline for condoS
= condos get rented

Comment by Obama Goons
2017-08-22 14:40:30

#flake jeff flake

Comment by palmetto
2017-08-22 18:27:30

what’s the little cuck up to now? Sigh, I guess I’ll have to check.

Comment by GuillotineRenovator
2017-08-22 18:51:32


Comment by AbsoluteBeginner
Comment by Mafia Blocks
2017-08-22 17:40:27

Idaho City, ID Housing Prices CRATER 8% YOY

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