There May Be More Blood On The Housing Street
A report from Gulf Business. “Dubai Land Department has issued a decision to seize the land, real estate and escrow funds registered to developer Schon Properties to safeguard the rights of investors. The decision was made to allow the Public Prosecutor’s Office and the Dubai Courts time to complete legal procedures against the real estate group, Dubai Media Office said. ‘The step is aimed at protecting the rights of investors in light of Schon Properties’ actions of exploiting investors by refraining from depositing their money in escrow (guarantee) account,’ a DLD statement read.”
“Dubai’s real estate market has seen residential sales prices and rents slump over the last two years. Data from listings site Bayut showed rental rates down up to 15 per cent in some areas from the second half of last year to the end of the first half of 2018. Sales prices were also down up to 8.8 per cent in some areas during the same period, according to the company. Credit ratings agency S&P said in a February report that it expected Dubai’s real estate slump to continue for another two years.”
From Graphic Online on Ghana. “In an ironic twist of facts, Ghana is currently experiencing a housing glut, but many citizens cannot afford decent housing. ‘Currently, there is just 60 per cent occupancy of upper tenants,’ the Executive Secretary of Ghana Real Estate Developers Association, Mr Samuel David Kofi Amegayibor, told the Daily Graphic recently.”
“Affirming that there was a glut in housing, he said some people were buying housing properties because they saw them as worth investing in, but sales had slowed down because ‘you wouldn’t want to buy properties people don’t want to occupy due to their high cost.’ Building high end dwellings is not a misplaced priority, Mr Amegayibor surmises, but believes ‘it is a bit unfortunate or disturbing to note that while there is a huge demand for housing and the developers have also tried to put some houses on the market they are unable to sell. That tells you that there is a bit of mismatch as to what is required and what is supplied.’”
“‘Because they put them in investments, maybe they made so much from rentals and those who used mortgage to buy were able to pay back but now the trend is changing a bit. Most of the houses that people bought some time back, they claim they have not been rented for sometimes a year or so – they have bought those houses and they are still empty and so the investment option is also becoming difficult,’ he added.”
“He said if the buyer used a loan facility to buy the apartment it meant he or she would be paying interest while the house or apartment remained empty.”
The Hindustan Times in India. “This has been a monsoon of discount offers for residents of Mumbai and Delhi. Every day, a barrage of messages, emails and media advertisements assail us, from desperate real estate firms. A housing slowdown has been around for some time but now there are visible signs of panic. But buyers, particularly in north India, are just not interested. Sellers, having patiently waited it out so far, are now beginning to throw in the towel. An equilibrium will be reached eventually, but before that there may be more blood on the housing street.”
“Buyers aren’t foolish and they can see the pile of unsold houses and signs of desperation from sellers. Prices have corrected about 10-20% in most north Indian cities but people are prepared to play the waiting game. The reality is that total costs of properties in metro cities are still way too overpriced. In Mumbai, the average cost of owning an apartment is eight times a family’s annual income. In Gurugram, it is five times. This is exorbitant. In this game of blink between buyer and seller, the buyer has the upper hand now.”
From Korea Joongang Daily. “A year has passed since the Moon Jae-in administration tightened real-estate regulations on Aug. 2, 2017, with the aim of curbing speculation in the market. One year later, the country’s housing market is more polarized than before, with apartment prices in Seoul refusing to drop while the market in other regions stagnates. Apartment prices in areas such as Ulsan, Pohang in North Gyeongsang and Geoje, South Gyeongsang, tumbled in the past year, with Geoje prices dropping by 14 percent.”
“‘Some regional [housing] markets look to have fallen into a recession due to the difficulties with their economies and oversupply [of apartments],’ said Kim Hyun-mi, the country’s land minister. ‘We need policies that can revive the regional economies or control the apartment supply.’”
“The Ministry of Economy and Finance revealed a tax reform scheme last month that included an increase to the so-called comprehensive real estate tax that puts a greater burden on owners of multiple homes. ‘The real estate market has already shown some reaction to the measure,’ said Kim Se-ryeon, a real estate analyst at SK Securities. ‘While the overall index has not fallen, the rise in housing prices in three districts in Gangnam - which hold up the index - has shown deceleration, and a fall in the overall index seems inevitable.’”
From 2GB in Australia. “Melbourne now holds the nation’s worst performing housing market, overtaking Sydney. Property prices in Victoria’s capital fell over the past quarter by 1.8 per cent, whereas Sydney only experienced a 1.1 per cent decline. The situation isn’t much better for the nation as a whole, with national house prices falling at the fastest rate in six years.”
“‘A lot of people, 12 months ago, were concerned with a property bubble in Australia,’ Ross Greenwood says. ‘It now, clearly, has been popped.’”
From Domain News. “Sydney and Melbourne property price falls could have a long way to go before bottoming out, with a ‘fear-of-missing’ out mentality in the market becoming a ‘fear-of-not-getting-out’ anxiety. ‘We are not there yet, but FOMO (fear of missing out) risks becoming FONGO (fear of not getting out) for some investors,’ wrote AMP Capital chief economist Shane Oliver.”
From Live Wire Markets on Australia. “A phrase consistently heard in the current property market is ‘I wish the media would stop talking the market down.’ Is the media being made a scapegoat for the market’s cyclical fluctuations and corrections which often result in people not achieving the sales results they’d hoped for?”
“Now that property prices are declining, we often hear people blaming the media, the banks, neighbours for selling cheap or buyers for being lowballers. People don’t like to acknowledge that they may have overpaid for a property, made an unfortunate investment decision or just had to sell before any growth is realised. In fact, right across the Sydney market many sellers are grappling with the concept that they will be selling their property for less than what they paid for it several years ago.”
“The Inner West has felt this market shift harder than most other regions and premier areas like Balmain have seen prices decline by around 9% year to date. Add another 5% drop through 2017 and you’re starting to see a pretty reasonable price adjustment in an area where many properties sell in excess of $2-3m. The concerning thing for those looking to sell is that the auction clearance rate across Sydney is at 50%. This highlights that we’re well and truly in a buyers’ market and that many sellers’ expectations haven’t adjusted enough to this new environment.”
From the last link:
‘Perhaps it’s time to look at the market from a different perspective. Rather than worrying that prices have declined and you‘ve lost money that never really existed, it’s better to focus on the changeover costs of moving from one property to another, which have actually improved in this environment.’
‘you‘ve lost money that never really existed’
Something for you shack gamblers to remember.
But that’s my retirement?!?
‘right across the Sydney market many sellers are grappling with the concept that they will be selling their property for less than what they paid for it several years ago’
Several years: let that sink in.
‘you‘ve lost money that never really existed’
I remember that one. Also, “those prices weren’t real. It was an illusion.” Etc. There sure are a bunch of these situations blowing up at the same time. Canadian investment in the US RE fell more than Chinese in percentage terms, over 40%.
What’s going to keep US prices propped up, now that the wealthy all-cash Canadian and Chinese investors are out of the game?
I’ve received money that appeared out of thin air….and now I am retired.
…. And not a believer in sight.
Allen, TX Housing Prices Crater 11% YOY As Dallas Area Housing Recovery Begins
https://www.movoto.com/allen-tx/market-trends/
Centreville, VA Housing Prices Crater 7% YOY As Fairfax County Meets the 2018 Housing Crash
https://www.movoto.com/centreville-va/market-trends/
Realtors are liars.
‘Prices have corrected about 10-20% in most north Indian cities but people are prepared to play the waiting game. The reality is that total costs of properties in metro cities are still way too overpriced. In Mumbai, the average cost of owning an apartment is eight times a family’s annual income. In Gurugram, it is five times’
Pretty amazing. How can this be? There was a time years back, when Mumbai had the most expensive residential real estate in the world by square foot. It was higher than Hong Kong, London, Manhattan, everything.
Somethings going on there that’s preventing these markets from flushing out obviously money losing projects.
‘Now that property prices are declining, we often hear people blaming the media, the banks, neighbours for selling cheap or buyers for being lowballers. People don’t like to acknowledge that they may have overpaid for a property, made an unfortunate investment decision or just had to sell before any growth is realised. In fact, right across the Sydney market many sellers are grappling with the concept that they will be selling their property for less than what they paid for it several years ago’
https://grief.com/the-five-stages-of-grief/
“Ghana is currently experiencing a housing glut, but many citizens cannot afford decent housing.”
Ghana?! Is there a country in the world that isn’t suffering from a speculation-driven housing bubble of some sort?
It’s actually a fascinating article. I was going to make it a weekend topic but too much news was coming out. The data is all there: prices, etc. The main guy explores why the developers can’t build housing that people can afford.
It’s the price of the land. That’s the root of the bubble. Because if land was affordable, structures couldn’t command bubble pricing.
I had some fun google-mapping around Accra, the capitol city of Ghana. Yet another sh!thole country. Overall it seemed a little better than Lagos, but still not a fun place to live.
‘it is a bit unfortunate or disturbing to note that while there is a huge demand for housing and the developers have also tried to put some houses on the market they are unable to sell. That tells you that there is a bit of mismatch as to what is required and what is supplied.’
OR…that there’s simply a mismatch in seller expectations and what people can actually afford to pay. The housing itself might be perfectly suited to what people need.
It’s not the wrong product, it’s the wrong price. The entry level houses are priced for high income people, and the high income houses are priced for the super wealthy.
“A phrase consistently heard in the current property market is ‘I wish the media would stop talking the market down.’”
In Sydney, the weather is nice. They can’t blame hurricanes, blizzards, etc. for fluctuations in the housing market. So they have to find another scapegoat. The media is as good a scapegoat as any.
Apparently this is preferable to simply acknowledging reality.
To be fair, it can get absolutely sweltering hot in the summer, although its winter now so no excuse. Perhaps blame the koalas - maybe they thought globull warming would kill off the gum trees, forcing them to have to buy condos!
Theres a whole list of creatures to blame down under:
1) Koalas
2) Crocs. Angry, angry crocs.
3) Wombats. What are they anyway?
4) Dingos. Although technically, they reduce the need for housing.
5) Magpies. Those cheeky sods. Remember Heckle and Jeckle?
The list is endless.
When someone says critters and Australia, all I can think about are the creepy crawlies, of which 96% appear to be fatally poisonous.
Off-topic: Facebook, Apple, Spotify all banned Alex Jones and InfoWars today.
Is this gonna un-rape all those women that Bill Clinton raped?
On-topic: housing is wobbly (i.e. circling the drain) here in Denver but business has never been better. All this sh*tty multi-family housing built during the boom is going to need an incalculable number of billable hours of post-warranty work to fix all their hack electrical work, LOLZ.
Apartment 401, you are going to be set as an electrician for a while. In Salt Lake City, there is an extreme shortage. The airport expansion poached all the electricians and there is an extreme bidding war for talent. Builders, solar installers, and everyone is fighting for electricians. Good time to have experience in the trades.
Every day, a barrage of messages, emails and media advertisements assail us, from desperate real estate firms. A housing slowdown has been around for some time but now there are visible signs of panic.
Oh, you ain’t seen nothing yet.
“Melbourne now holds the nation’s worst performing housing market, overtaking Sydney. Property prices in Victoria’s capital fell over the past quarter by 1.8 per cent, whereas Sydney only experienced a 1.1 per cent decline. The situation isn’t much better for the nation as a whole, with national house prices falling at the fastest rate in six years.”
Escalator up, broken elevator down. Fry, speculators, fry.
A lifetime of greed, fecklessness, and self-absorption catching up to the Boomers? Maybe there is a God.
https://www.zerohedge.com/news/2018-08-06/their-wealth-has-vanished-baby-boomers-filing-bankruptcy-droves
Camarillo, CA Housing Prices Crater 9% YOY As Imploding China Economy Scorches West Coast Housing Market
https://www.movoto.com/camarillo-ca/market-trends/
Days on Market = 33
$/SF up!
If only you weren’t a broken mortgage watch….not even right twice a day.
Housing my friend.
Santa Monica, CA Housing Prices Crater 20% YOY As The Bottom Falls Out Of CA Housing Market
https://www.movoto.com/santa-monica-ca/market-trends/
What better way to exacerbate the financial carnage that’s going to be wreaked by the implosion of Housing Bubble 2.0, than to further ease lending standards?
https://www.zerohedge.com/news/2018-08-06/banks-ease-lending-standards-just-loan-bubble-shows-first-signs-popping
Chinese investment in US real estate cratering as the US belatedly starts considering the security ramifications of selling shacks to Chinese embezzlers and money launderers. The NAR will not be pleased.
https://www.scmp.com/property/article/2158531/tighter-us-rules-foreign-investment-have-knock-effect-mainlanders-seeking
David Ji, head of research and consultancy for Greater China at Knight Frank, said investment by mainland Chinese in US real estate fell to US$6 billion last year from US$16 billion in 2016.
“This year we hardly saw any deals or investments over US$100 million, and especially none in New York in the amount of US$200 million to US$300 million,” Ji said.
New York, traditionally the top US investment destination for mainland Chinese property buyers, attracted US$2.7 billion in property investment from China during 2017, down from US$7 billiaon in 2016.
Meanwhile, according to Real Capital Analytics and Cushman & Wakefield, mainland Chinese investments in the US totalled US$81 million in the second quarter, representing a 93 per cent drop for the first six months compared to a year earlier.
Oh dear….
February 8, 2017
“New York City is still the No. 1 destination for foreign capital in the world, according to this year’s AFIRE rankings, but it is no longer an environment in which foreign money — particularly from China — will buy anything in the market at any price. This year, China has clamped down on outbound foreign investment, and firms caught flouting the new laws will be punished harshly, China First Capital CEO Peter Fuhrman said. While most New Yorkers in commercial real estate are aware of the capital slowdown, Fuhrman said they are probably not taking it seriously enough.”
“‘I have the perception that the full weight and severity of these capital controls hadn’t been fully felt here,’ Fuhrman said. ‘It’d be fair to say that the Chinese central government dropped a financial bomb on its businesses.’”
“One of the Chinese government’s chief concerns when instituting the investment restrictions, Fuhrman said, is over outbound investors getting fleeced while paying record-breaking prices. ‘A concern of Chinese regulators is their investors have been really bad buyers,’ Fuhrman said. ‘This can sadly be seen more and more in the larger real estate deals they have done. What they are extremely concerned about is just about every acquisition the Chinese have made, is they have overpaid severely and foolishly, and that has spurred a loss of a lot of Chinese sovereign wealth.’”
http://thehousingbubbleblog.com/?p=9989
Seattle. LA. Bay Area…look out below. The Chinese have been pumping these markets to extreme levels
Surely other foreign buyers will step in from…well…er…Yemen? Ghana? Albania?
Both my son and daughter rent from Chinese Nationals who purchased propertues in San Francisco. We calculate they get a 2% return on their money.
they need a wall of worry and bads news to keep u in the game.
The big public pension funds haven’t been getting their predicted 8% returns since the financial crisis. It’s just a matter of time before the courts agree on the boilerplate language to allow them to shortchange their beneficiaries.
It seems counterintuitive, but rate normalization could go a long way to fix the problem, as resulting increases to future expected returns could shrink pension liability by a considerable degree. Baby Boomer die off and reduced US life expectancy should also help fix the pension funding shortfall.
Jul 19, 2018,1:12 pm
‘Diseases Of Despair’ Contribute To Declining U.S. Life Expectancy
Joshua Cohen
Contributor
Healthcare
According to preliminary data from the Centers for Disease Control and Prevention (CDC) 2017 will likely mark the third straight year of decline in U.S. life expectancy. It’s not all bad news, however, as cancer deaths are declining. Nonetheless, deaths from other major causes, including heart and lung diseases, stroke, Alzheimer’s, diabetes, and suicides have been rising. And, deaths from unintentional injuries, including drug overdoses, are soaring.
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A lot of you are boots on the ground for housing. But as a med-surg RN, I feel like I have a pretty good insight into the health of the segment of the population. This 3rd year of decreasing life expectancy for the US is not surprise. I would wager it runs 3 more years and then goes sideways for a bit.
Yes. This year social security was suppose to begin drawing down the trust fund but with the stronger recent economic growth and rising interest rates we just might avoid it. No one talks about the fact that the Obama appointed Fed by practicing financial repression not only created bubbles it lowered interest paid to the social security trust fund.
Mattress firms and real estate scams? Who else was in on these rackets?
https://wolfstreet.com/2018/08/06/mattress-firm-considers-bankruptcy-to-get-out-of-its-real-estate-scams/
Mattress Firm stores are numerous, some are just a block apart, and never any customers. Has looked like a racket for quite a while.
I’m trying to figure out if this is the original Boston Chicken model of showing growth on paper to get more money from people wanting to get in, or whether it’s a front for some kind of money laundering on a national scale?
I noticed it when I moved to Folsom…there are two of them across the parking lot from each other and neither is busy…but I hadn’t really thought about it in detail before.
Wait a minute…maybe a scam to support/drive up commercial real estate prices in certain spots? By opening as many stores as necessary to make the rental rates and vacancy rates look as good as possible before selling?
I’m trying to figure out if this is the original Boston Chicken model of showing growth on paper to get more money from people wanting to get in, or whether it’s a front for some kind of money laundering on a national scale?
Ever since I watched Breaking Bad I’ve wondered about how many mom and pop joints were in reality just fronts for money laundering for drugs. El pollo hermanos is probably a good example of some real life businesses that are just fronts.
Twice in one day Ben?!
Bend, OR Housing Prices Crater 5% YOY As Housing Gamblers Get Stuck With Empty Houses
https://www.movoto.com/bend-or/market-trends/
Should I move to Parma, OH?
What about Boise, ID?
Seems quite livable. I haven’t been there in the winter, though. I once met up there with the poster who called himself DennisN, a California refugee who settled there. Nice guy; don’t know if he still posts under a different name.
Hmmmm, I’ll have to consider it.
The Financial Times
Martin Sandbu
The devastating cost of central banks’ caution
Timidity on monetary policy since 2008 has been as costly as the financial crisis
an hour ago
Warren Buffett’s growing cash pile and the big read-in for investors
By Barbara Kollmeyer
Published: Aug 7, 2018 1:47 a.m. ET
Watch out when the ‘ultimate contrarians’ are sitting on the sidelines, says AJ Bell investment director
Getty Images
Warren Buffett pictured Oct. 2015
The latest results from Berkshire Hathaway Inc. show that the Oracle of Omaha has plenty of cash sloshing around.
And that could be a warning sign for a bull market that’s pushing ever higher, as well as clear evidence that Berkshire (BRK.A, +2.34% BRK.B, +2.91%) Chairman Warren Buffett is having a tough time putting the conglomerate’s money to work, according to Russ Mould, investment director at AJ Bell, which provides online investment platforms and stockbrokerage services.
“Yet another increase in the total cash pile at his Berkshire Hathaway, to $129.6 billion, despite $12 billion in net new investments in traded securities in the second quarter (mainly Apple AAPL, +0.52%), suggests that master investor Warren Buffett is still having difficulty in finding value in U.S. — and perhaps global — stocks,” Mould said in a note to clients on Monday.
…
A$k Bank$.of.America$ what they think of Uncle Warren$ pile$ of Ca$h.@.the.ready$
Burning books.
https://www.wnd.com/2018/08/facebook-google-join-apple-in-banning-alex-jones/
Two Cents
Why Higher Rent Can Be a Good Investment
Alicia Adamczyk
Thursday 4:00pm
Owning a home has been part of the American Dream for decades. It was a sign of attaining a certain level of wealth, and the stability that comes with it. And for many, it was a great investment.
But the realization of that dream is more an aberration now. As housing costs rise to unattainable levels across the country, an increasing number of people under the age of 40 have to come to terms with the fact that they’ll never own a home at all. Instead, they continue to rent well past the time their parents were home owners, spending more than half of their monthly incomes on a place they’ll never own. And while that’s used as an (appropriate) example of the decaying state of the average American’s finances, a new working paper from the National Bureau of Economic Research argues that, actually, renting is a good investment in its own right.
…
” …renting is a good investment in its own right.”
Bug$: “Eh, could bee Doc!”
“Never fear! …Underwater/Underdog is here to the re$cue!!”
THE WALL STREET JOURNAL
Freddie Mac to lower financing co$ts for landlord$ who cap rent rise$
By Laura Kusisto | Published: Aug 7, 2018
Program acts similar to rent control, which has been gaining traction in many parts of the country
“Maybe there’s a way we can help change incentives,” said David Brickman, an executive vice president at Freddie Mac FMCC, -0.03% and head of its multifamily division. “We can provide an economic basis for private, profit-oriented developers to pursue a strategy where they didn’t raise rents by quite as much.”
The program, which is set to be announced Tuesday and begin immediately, will be available all over the country. Brickman said he hopes hundreds of properties will take advantage of it.
“…an increasing number of people under the age of 40 have to come to terms with the fact that they’ll never own a home at all.”
There was once a time when dad had the stucco 3br/1ba paid-off by the time he reached forty years of age.
“Think of your rent as an investment gain in your and your children’s future opportunities, rather than a loss because you’ll never own the property.”
My wife used to teach in the highest income zip code in UT. There was a Latino family we knew who could never have afforded to purchase a house in that area, but forked over a relatively huge sum in rent so their children could get access to the schools in the area. It struck me as a pretty reasonable decision as I knew the caliber of school and students that the children of this family were associating with. The rent for the small apartment was probably less than 1 year of private school, and the family had 3 kids in the public school system.
LMAO… bagholders make the financial world spin around…
The Financial Times
US News
Property sector
Property website operator Zillow to offer mortgages
Move to issue loans and a lower profit forecast send shares sharply lower after-hours
Why is it again that everyone wants to live in California?
California fires 2018 map: Where is Mendocino complex? Where are the California wildfire?
The Mendocino Complex Fire has charred more than 283,000 acres, making it the largest blaze in California’s history. Where is Mendocino complex fire? Where are the California wildfire?
By Amalie Henden
08:31, Tue, Aug 7, 2018 |
UPDATED: 11:01, Tue, Aug 7, 2018
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Somehow the MSM still retrospectively manages to shrink the Fed’s $4+ trillion bailout down to slightly over $800 bn. What gives?
Ten Years After the Crash, We Are Still Living in the World It Brutally Remade
08/05/2018 9:00 pm
Sometimes you don’t know how deep the hole is until you try to fill it. In 2009, staring down what looked to anyone with a calculator like the biggest financial crisis since 1929, the federal government poured $830 billion into the economy — a spending stimulus bigger, by some measures, than the entire New Deal — and the country barely noticed.
It registered the crisis, though. The generation that came of age in the Great Depression was indelibly shaped by that experience of deprivation, even though what followed was what Henry Luce famously called, in 1941, “the American Century.” He meant the 20th, and, to judge from our present politics, at least — “Make America Great Again” on one side of the aisle; on the other, the suspicion that the president is a political suicide bomber, destroying the pillars of government — he probably wouldn’t have made the same declaration about the 21st. A decade now after the beginning of what has come to be called the Great Recession, and almost as long since economic growth began to tick upward and unemployment downward, the cultural and psychological imprint left by the financial crisis looks as profound as the ones left by the calamity that struck our grandparents. All the more when you look beyond the narrow economic data: at a new radical politics on both left and right; at a strident, ideological pop culture obsessed with various apocalypses; at an internet powered by envy, strife, and endless entrepreneurial hustle; at opiates and suicides and low birthrates; and at the resentment, racial and gendered and otherwise, by those who felt especially left behind. Here, we cast a look back, and tried to take a seismic reading of the financial earthquake and its aftershocks, including those that still jolt us today.
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“In 2017, women had nearly 500,000 fewer babies than in 2007, although there were 7 percent more women of prime childbearing age.”
This won’t be good Toll Brothers’ bottom line down the road.
Geoffrey the giraffe was the canary in the coal mine.
Yves Smith
Founder, naked capitalism
She really serves it straight-up, brief and to the point!
The Chinese are doing so well in their trade war with the U.S that their leader has felt the need to ban a Winnie the Poo movie due to people laughing about the comparison between him and Winnie. That is weakness. The century will belong to either the US or China. If we follow Tump’s policy we may still retain the dominant role in the world. MAGA
Seems childish…
China BANS Winnie the Pooh movie over meme mocking President Xi
CHINA has banned the new Winnie the Pooh movie from its cinemas over a meme mocking President Xi Jinping.
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