Where Investors Played A Bigger Role
A report from the Toronto Star in Canada. “There are fledgling signs of recovery in the Toronto region’s real estate market. But those have come too late for homebuyers like Abid Mirza and his fiancée, Sapna Singh, who bought a pre-construction home in Barrie at the height of the market in February 2017. They think that their house, not yet finished, is now worth about $100,000 less than the $639,900 they agreed to pay. Mirza, a PhD student who works in communications and is the signatory on the home, said it will likely take years to recover the home’s value and, in the meantime, their financing costs have risen.”
“To make matters worse, delays in construction — their builder, Colony Park Homes, had originally offered a closing date of Sept. 11, 2017, that was then extended to April 10, 2018, and is now set for Aug. 8 — have also prompted them to twice delay their wedding. A real estate agent and former reporter, Singh said she and Mirza were aware there was risk in the housing market but she wasn’t prepared for the speed and severity of the market’s rise and fall in the past two years.”
“‘We saved up a down payment. We’re first-time buyers,’ she said. ‘I would never have expected all of that was happening at the same time.’”
“It’s not clear how many consumers are in Mirza and Singh’s situation. But the fallout on resale homes from the extraordinary last two years was significant, according to a study published earlier this year by Toronto realtor and analyst John Pasalis. He found 988 homeowners lost $136 million in less than five months when the Toronto-area housing bubble burst.”
“‘The thing that took us back was not the fact that the price went down but the unwillingness of the builder to work with us,’ said Mirza. ‘House prices go up and down — that’s normal. But when the market was good, they said, ‘We have you, we’ll take care of you.’ Now they don’t want to help.’”
The Calgary Sun in Canada. “Sales in Calgary’s top-tier housing market (homes priced at $1 million-plus) in the first half of 2018 are up from the last half of 2017, but are down when compared to the first half of 2017. Single-family and attached homes showed sales declines, while the condo market recorded increases.”
“‘The reality is that sales in the first half of the year are down compared to the same time last year — inventory is on the rise and we’re seeing motivated sellers willing to adjust prices to match buyers’ market conditions. Rising interest rates and tighter mortgage guidelines will only continue to test the Calgary market in the months ahead,’ says Mary-Ann Mears, managing broker, Sotheby’s International Realty Canada in Calgary.”
From Domain News in Australia. “Suburbs in Sydney’s inner west have borne the brunt of the city’s steepest annual drop in property prices since the Global Financial Crisis. While Sydney’s median house price fell by 4.5 per cent year-on-year, a handful of suburbs in the inner west saw prices decline at double the rate, according to Domain Group data. Petersham was the worst hit with prices falling 15.2 per cent, the greatest decline for any suburb across Sydney.”
“Earlwood, Balmain, Annandale and Russell Lea followed suit, each recording a drop in house prices between 7 and 8 per cent. Sans Souci in the south had the second-largest drop in prices across Sydney, with the median falling 13.9 per cent to $1.205 million. ‘I think it reflects a combination of those areas being among the most popular. During the boom they were the key beneficiaries,’ said Dr Shane Oliver, AMP Capital’s chief economist. ‘That’s where investors played a bigger role in the boom times, therefore those areas have become more vulnerable when the market has turned down again.’”
“Malcolm Lewis and his wife bought their family home in nearby Randwick at the peak last year. But they aren’t phased by the potential loss in value as they’re hoping to hold onto their family home beyond 2020, when prices are predicted to rise again. ‘We weren’t really concerned about whether the property market would go up or down,’ Mr Lewis said. ‘The Sydney property market has had a stellar run, people shouldn’t be alarmed if a little bit of air comes out of the market. Over the longer term I could not imagine this area (Randwick) would significantly underperform in the market in any way.’”
From Oregon Business. “According to the American Community Survey there are appoximately 352,000 rental units in the Portland metro area. The census Housing Vacancy survey estimates a 4.8% vacancy rate for the metro area during the second quarter of 2018. Combining these figures would imply roughly 16,000-17,000 vacant units, said Chris Salviati, housing economist for the rental site ApartmentList.”
“The community survey rental stock estimates are based on 2016 data and do not take into account new apartment construction over the past year and a half. Another disclaimer: The vacancy rate may include apartments that have been rented to a tenant who has yet to move in.”
“In a city grappling with affordable housing and homelessness crises, the big question is whether vacancy rates, which everyone agrees are rising, will continue to exert downward pressure on rents. Portland rents have already fallen 2.2% in the past year.”
I’m now searching the wires multiple times a day and will start posting important news as soon as I can.
‘based on 2016 data and do not take into account new apartment construction over the past year and a half’
Which is a lot. 16k empty apartments. Some shortage.
‘Another disclaimer: The vacancy rate may include apartments that have been rented to a tenant who has yet to move in’
I do that all the time. Pay the rent, maybe travel around a few months, drop by and leave a suitcase.
‘The thing that took us back was not the fact that the price went down but the unwillingness of the builder to work with us,’ said Mirza. ‘House prices go up and down — that’s normal. But when the market was good, they said, ‘We have you, we’ll take care of you.’ Now they don’t want to help.’
Well, it was cheaper than renting Abid. Oh, it isn’t finished yet. Never mind.
$639,000 to a PHD student???
Who would lend the money. Maybe to an MD/DO in last year of residency but a PHD working in communications? I don’t understand.
(Yes I know that is Canadian dollars but it still seems silly.
North Palm Beach, FL Housing Prices Crater 7% YOY As Housing Correction Accelerates
https://www.movoto.com/north-palm-beach-fl/market-trends/
Toronto: Homeowners Discover They Owe $100,000 More Than Their House Fetches
https://www.thespec.com/news-story/8769816-first-time-homebuyers-in-barrie-squeezed-by-falling-property-values/
When did PhD students start buying houses? I thought they shared an apartment and ate ramen. I guess I’m behind the times.
BTW, the only thing that’s a bigger racket than RE is the wedding industry. So they are suckers 2x over.
“It’s not clear how many consumers are in Mirza and Singh’s situation.”
It’s clear that the number of unmarried PhD students who paid over $600,000 for an unfinished house at the peak, only to soon find themselves $100,000 underwater, on a house they can’t even live in because it is still unfinished, is vanishingly small.
What was their lender thinking?
“What was their lender thinking?”
Lucrative fees? A trip to Maui? Lap dances?
That is quite a read there… tossing around financial numbers in the thousands like it’s nothing. One should exercise extreme caution when dealing with effeminate types in suits with manicured hands.
keep in mind that Barrie is not Toronto. It is 2 hours from downtown Toronto — and is the informal start of cottage country.
This is nuts, a stupid decision, or something else is up
I was going to say the same thing. I google map and it was like 117 KM from Toronto and in the middle of nowhere. From the article, the prices basically double from 2016. Again, who is going to drive that far and still have to pay that price!
Subprime Lenders Created A Second Housing Bubble: “Rents have been falling”
https://seekingalpha.com/article/4189254-irresponsible-mortgage-lenders-created-second-housing-bubble
US Housing Crash: “The Premium For Homes By Water Is Falling”
https://finance-commerce.com/2018/07/the-premium-for-homes-by-water-is-falling/
Why is it again that houses by the water command a premium?
providencejournal.com
Breaking
8:18 PM
Wildfires barrel toward Northern California lake towns
By Marcio Jose Sanchez and Sudhim Thanawala / The Associated Press
Posted at 10:18 PM
Updated Jul 30, 2018 at 10:23 PM
LAKEPORT, Calif. — A pair of wildfires that prompted evacuation orders for nearly 20,000 people barreled Monday toward small lake towns in Northern California, and authorities faced questions about how quickly they warned residents about the largest and deadliest blaze burning in the state.
Ed Bledsoe told CBS News he did not receive any warning to evacuate his home in the city of Redding before the flames came through last week and killed his wife, Melody, and his great-grandchildren, 5-year-old James Roberts and 4-year-old Emily Roberts.
“If I’d have any kind of warning, I’d have never, ever left my family in that house,” Bledsoe said.
Shasta County Sheriff Tom Bosenko told the network there’s an investigation into whether the Bledsoe home received a warning call or a knock on the door. The sheriff cited evidence that door-to-door notifications were made in the area. Bosenko did not return a message from The Associated Press on Monday.
The dispute came as authorities on Sunday ordered evacuations around twin fires in Mendocino and Lake counties, including from the 4,700-resident town of Lakeport, a popular destination for bass anglers and boaters on the shores of Clear Lake, about 120 miles (195 kilometers) north of San Francisco. The blazes have destroyed six homes and threaten 10,000 others. So far, the flames have blackened 87 square miles (225 square kilometers), with minimal containment.
…
You can jump in the lake to escape the roaring wildfire?
If I’d had any kind of warning…
Don’t they watch the local news? Or look at the sky occasionally? And what about the kids/grandkids who dropped off the children at great-grammaw’s house? Were they ALL waiting for a knock on the door?
Eventually these wildfires will have to stop for the simple reason that there will be nothing left to burn.
Thank goodness for prophets of doom to help prevent irrational exuberance from Gettysburg out of hand!
This ‘prophet of doom’ predicts stock market will plunge more than 50%
By Sue Chang
Published: July 30, 2018 5:37 p.m. ET
Hussman sees Nasdaq sinking 57%, Dow tumbling 69%
Getty Images/iStockphoto
Look out below!
John Hussman, president of Hussman Investment Trust, describes himself as an economist, a philanthropist, and a “realist optimist often viewed as a prophet of doom” on his Twitter profile. That last bit may be the one investors care about on Monday as the stock market shows signs of unraveling on the back of the tech sector’s stumble.
Hussman’s claim to fame includes forecasting the market collapses of 2000 and 2007-2008. Since then, however, he’s also become known as a permabear for his repeated calls for sharp stock market declines and his oft-repeated mantra of “overbought, overvalued, overbullish” as the bull market continues into its ninth year by some measures.
…
getting (my phone thought Gettysburg was a good metaphor, I guess)
This would be interesting to see happen:
https://www.cnbc.com/2018/07/30/apple-and-fang-could-lose-a-third-of-value-market-watcher-warns.html
‘We weren’t really concerned about whether the property market would go up or down…Over the longer term I could not imagine this area (Randwick) would significantly underperform in the market in any way.’
I think you are concerned about making money Malcolm. And you just got schlonged.
More from that same story… ““Malcolm Lewis and his wife bought their family home in nearby Randwick at the peak last year. But they aren’t phased by the potential loss in value as they’re hoping to hold onto their family home beyond 2020, when prices are predicted to rise again.”
I hope we can get a follow-up in two years.
Malcolm needs to keep up with the news…
https://www.news.com.au/finance/markets/australian-markets/fall-in-housing-prices-will-be-quite-a-bit-larger-than-expected/news-story/cc4105c96076fb9822df39a16b04392d
“Fall in housing prices will be ‘quite a bit larger than expected’
HOUSE prices are continuing to fall, and the experts who confidently forecast that things were going to pick up again are suddenly backflipping.”
Natalie Wolfe
June 7, 2018 11:50am
‘I could not imagine this area (Randwick) would significantly underperform in the market in any way.’
He could be 100% correct, yet lose a bundle if the market as a whole significantly underperformed recent mania experience.
‘We weren’t really concerned about whether the property market would go up or down,’ Mr Lewis said. ‘The Sydney property market has had a stellar run, people shouldn’t be alarmed if a little bit of air comes out of the market.
This clown has absolutely no inkling of what’s barreling down on him and his “investment.”
“In a city grappling with affordable housing and homelessness crises, the big question is whether vacancy rates, which everyone agrees are rising, will continue to exert downward pressure on rents.
A big question for who? It’s a pretty simple equation: a glut of housing = tumbling rents. Add in the real potential for a crash of the global financial system, and the picture is even more dire for the bagholders who bought into the most insane asset bubble in human history.
Sorry, greedheads, but the party’s over. Price your shacks accordingly, because it’s all downhill from here.
http://www.dailymail.co.uk/money/mortgageshome/article-5951377/Rightmove-Sellers-price-realistically-properties-sold-summer.html
Like the stars in the night sky the U.K. is dead, but you you can still see the light.
When Forbes starts warning of a housing bubble crash, you know it’s already well underway.
https://www.forbes.com/sites/jordanlulich/2018/07/28/red-flags-that-indicate-a-real-estate-market-crash/#60fceaba6792
Family formation is dwindling these days with foodie dates and/or tinder dating being so easy with social media. The gig is over as demographers might put it. Phat dead bedroom starfishing wives in their twenties with tens of thousands in victim studies student loan debt wanting homes that cost half a million or more? Cucks aren’t that plentiful.
I had to look up “starfishing.” Not sure about cucks, but sugar daddies aren’t plentiful either. That one woman in San Diego needed 3 sugies to take home $60K/year in San Diego. With zero job security.
I had to look up “starfishing.”
Haha… the married mortgage slave’s reward.
Barons called the last two, not early but about on time. What is it saying now.
When Forbes starts warning of a housing bubble crash, you know it’s already well underway.
That’s one of the top things I’ve learned on this site over the years. By the time it’s reported it’s history. The smart money is already out. Yet at the same time it’s possible to be way early, too. It’s a complicated dance if your whole business model is strip mining the resources of the masses. Producing something of value is pretty simple in comparison. But not as lucrative.
‘Sans Souci in the south had the second-largest drop in prices across Sydney, with the median falling 13.9 per cent to $1.205 million.
Too painful to mention the actual number?
‘I think it reflects a combination of those areas being among the most popular. During the boom they were the key beneficiaries…That’s where investors played a bigger role in the boom times, therefore those areas have become more vulnerable when the market has turned down again.’
I suppose popular is one way to put it. But the whole idea isn’t new here and makes sense. What cities in the US are down the most? Manhattan and Miami Beach. What do they have in common? Lots of speculators, most of whom don’t even live there.
‘That’s where investors played a bigger role in the boom times, therefore those areas have become more vulnerable when the market has turned down again.’
That could just as well describe San Diego. I wonder why we are so far lagging the correction, given the leadership role we played last time around.
You can describe many major US cities in this way. I just moved from SoCal to NoCal this year. Living in Mitipitas near the Great Mall. So much constructions going on there. They are building luxury apartments and condos like crazy. If anyone needs a on the ground observer for Silicon Valley, just let me know.
I just moved away from there earlier this year…up in Folsom now. I miss the cooler weather in the summer and being closer to the Pacific but otherwise I’m enjoying things farther away from there. I was always kind of impressed that a mall that looked like it should be dying was doing so well.
Based on my math, the original price was 1.39 Millions. Basically like 1.4.
Ouch!
The hits keep coming for Vancouver flippers and FBs.
https://wolfstreet.com/2018/07/30/vancouver-condo-bubble-takes-new-hit-murky-condo-flippers-targeted-in-pre-sale-tax-hunt/
“The ultra-costly San Francisco Bay Area is not a harbinger for the nation as a whole…
While renting may outweigh buying in San Jose and San Francisco, it is unlikely that renting will tip the scales nationally anytime soon,…”
CLICK!
Is The Financial Benefit of Homeownership Shrinking?
Homeownership makes good financial sense—at least in a lot of cases. However, the recent relentless rise of home prices and flat or falling rents is beginning to threaten the financial benefits of owning in some markets, according to Trulia.
Comparing the cost of renting versus owning in the 100 largest U.S. metros, Trulia found the savings for owners is shrinking in every market. That said, only two markets have crossed the line to where renting actually makes more financial sense than owning.
“For as long as we have run this report, renting has never been a better deal than buying,” wrote Cheryl Young, Senior Economist on Trulia.com. “But this summer, driven by epic home price appreciation and lifeless rents, renting tips the scales over buying in San Jose and San Francisco.”
In San Jose, home values have skyrocketed, increasing 29 percent over the year while rents remained stable. In San Francisco, home values climbed 14.2 percent over the year while rents declined 3.0 percent, according to Trulia.
Young was insistent that “The ultra-costly San Francisco Bay Area is not a harbinger for the nation as a whole.”
“While renting may outweigh buying in San Jose and San Francisco, it is unlikely that renting will tip the scales nationally anytime soon,” she said.
…
““For as long as we have run this report, renting has never been a better deal than buying,” wrote Cheryl Young, Senior Economist on Trulia.com”
I’m confident Cheryl is providing a 100% objective evaluation of this topic.
Do I even need to type “/sarc” after that?
Developers in Hong Kong are rushing to offload their “luxury” shacks at reduced prices before a new vacancy tax kicks in. Of course, “reduced prices” means the speculators who paid full price are now newly-minted FBs.
https://www.scmp.com/business/article/2157549/prices-luxury-homes-new-territories-expected-dip-developers-rush-offload
Is it unduly pessimistic of me to find this analysis compelling?
The Chinese have a credit bubble that is now deflating, but creating a credit bubble was not the goal of the Chinese government. This is technically true, but they are still at fault.
Over the past 20 years, the Chinese economy has grown from $1 trillion in gross domestic product (GDP) at the time of the Asian crisis (1998) to the present $12 trillion, the second largest in the world. The real goal of the Chinese government has been to extend their economic expansion into perpetuity, which is impossible to do. They have tried to control the lending activities of state-owned banks and thus force-fed credit any time the economy has shown signs of weakness.
One notable peak in the force-feeding of credit came after the failure of Lehman Brothers in 2008-2009. At the time, the People’s Bank of China again re-pegged the yuan which had been allowed to slowly appreciate before the Lehman failure. You can see that in the flattening of the yuan exchange rate for about two years until 2010, as well as the surge of yuan loan growth after the Lehman failure (see chart).
Chinese recession
Unfortunately, such lending activities have resulted in misallocation of capital and the present credit bubble, demonstrating itself in the construction of empty cities and the overall slowdown of the Chinese economy as it matures under a heavy debt load. The present long-in-the-making trade confrontation is likely to make matters quite a bit worse for the Chinese economy as a mainland recession is overdue.
I am not sure if a further yuan devaluation will fully negate the impact of the Trump tariffs, if they go into effect later in July and August, but I am sure that a massive yuan devaluation similar to the one that happened in 1993 will be a deflationary event for the global economy, at which point not even the Fed’s quantitative tightening will be able to stop the 10-year Treasury yield from declining.
In the case this turns out to be a real trade war, buy U.S. Treasury zero-coupon bonds, because the 10-year yield is likely headed to 1% or lower.
…
they need to forgive their debt slaves and prevent a recession.
Don’t let Bitcoin volatility scare you. There has never been a more exciting time to buy!
PS CCN is imitation fake news.
Bitcoin Analysis
July 31, 2018 06:09
Bitcoin Drops to $7,800 But Rebounds Instantly to $8,150, Tokens Suffer
On July 31, the price of bitcoin fell by 4 percent, from $8,150 to $7,800, as both major cryptocurrencies and small market cap tokens plummeted in value.
Within hours after its 4 percent drop, the price of bitcoin rebounded from $7,800 to $8,150, demonstrating an instantaneous recovery from its relatively large drop. However, other major digital assets and tokens failed to recover, falling by large margins against both bitcoin and the USD.
https://www.ccn.com/bitcoin-drops-to-7800-but-rebounds-instantly-to-8150-tokens-suffer/
So much for the dead cat bounce in Bitcoin. C-R-A-T-E-R!
https://www.marketwatch.com/investing/cryptocurrency/btcusd
Slightly off-topic
The Chinese investor had found Montgomery Alabama.
Driving I85 from Atlanta, as I entered Montgomery county AL. I noticed a billboard with a young Asian man in a suit. The billboard was totally in Chinese (1) with the exception of 3 words in English, Real Estate Expert. I like Montgomery and my girl friend loved living there, but if the Chinese investor has found Montgomery, they have to be almost everywhere in the US.
1) I am assuming the language was Chinese but I guess it could have been Korean or Japanese.
Not off-topic. But I hope these investors are just that: investors who would bail if the market cr8ers. Not sure I want flyover to fill up with mini-colonies of visa-overstays and birth tourists.
In order to keep the goldilocks recovery intact and prevent recessions should the banks just forgive debt if debt slaves can prove they have an economic hardship?
Lol.
I think what Mr. Banker means is that you misspoke. You meant the government should forgive debt slaves and make the banks whole…right?
Looks like the last of the Greater Fools signed on the dotted line. They’ll be the first cautionary tales of Housing Bubble Bust 2.0.
https://www.marketwatch.com/story/home-price-growth-eases-again-case-shiller-reports-2018-07-31
when your masters cut off the credit you have a recession, its that simple.
DeBt=MonEY
“…cut off the credit…”
The cost of credit is going up, not being cut-off.
someone true its basically cut off to folks with bad debt slave scores.
Bitcoin crashing again. Can’t wait to see all these bubbles bursting one after the other.
https://www.marketwatch.com/investing/cryptocurrency/btcusd
There’s that “affordability” word again.
https://www.zerohedge.com/news/2018-07-31/us-home-price-appreciation-slowest-january-affordability-issues-loom
so how is trickle down economics working for you peons?
Since the rich own most of the assets they have really enjoyed a nice run thanks to the QE money printing.
The rich watch their stocks go up from the couch and then they get some free money to hire you to do some work for them?
Someone has to shine the floors of Elysium.
is this another bear trap where the big banks and broker dealers talk down the market and throw in some doom in gloom to suck more short sellers in?
I don’t know about this particular blip. But hasn’t the entire economy been managed as one big bear trap for quite a while now?
positive newzzzzz
America’s 10 Fastest-Growing Suburbs
These on-the-rise ‘burbs aren’t sleepy at all. Here’s what sets them apart.
https://patch.com/us/across-america/america-s-10-fastest-growing-suburbs
Westminster CO Housing Prices Crater 15% YOY As Real Estate Industry Angrily Denies Correction
https://www.movoto.com/westminster-co/market-trends/