September 10, 2018

The Shift Turned Booming Areas Into The Weakest Markets

A report from the Daily Telegraph in Australia. “Home prices in Sydney’s up-market suburbs have gone into free fall over the past year as house hunters trade waterfront and inner city locations for cheaper homes further west. The buyer shift has turned once booming affluent areas into the city’s weakest housing markets. Sales figures showed median prices in waterfront and premium inner city suburbs sank by more than $200,000 in the year to July. This was well above the $50,000 drop in Harbour City prices as a whole.”

“The biggest decrease was in exclusive north shore suburb of Hunters Hill, where the median apartment price tumbled 22.5 per cent, according to the CoreLogic data. The fall was equivalent to $276,150 and brought the median down from last year’s $1.23 million to the current $951,850.”

“House prices in the Rocks dropped by $390,000 (19.9 per cent), while further west the drop in peninsula suburb Balmain East was $251,519 (16.2 per cent). Empower Wealth buyer’s agent Bryce Holdaway told The Daily Telegraph before the launch of Property Buyer Expo 2018 on the weekend that buyers were often reining in their budgets. ‘The banks have changed their policies so buyers need to check their pre-approval for a loan is still relevant and they can actually afford what they intend to buy,’ he said.”

The Herald Sun. “Melbourne’s market has cooled from the red-hot conditions of recent years. Advantage Property Consulting director Frank Valentic said it was more of a buyers’ market, with some houses attracting one or two bidders that would likely have had four or five a year ago. The three-bedroom house at 2 Benson St, Surrey Hills, sold to a solitary bidder for $1.6 million after interest from other groups who didn’t bid and passing in at $1.48 million.”

“‘Just showing how much the market has changed, that probably would have had about 4-5 bidders a year ago and we probably would have seen a price around that $1.7-$1.8 million mark, so it’s definitely changed to be more of a buyers’ market,’ Mr Valentic said.”

The Gladstone Observer. “Gladstone’s property market has faced challenges in the past few years. REIQ chief executive officer Antonia Mercorella said the annual median house price dropped by 6.8 per cent, to $275,000 and unit prices fell by 33.3 per cent, to $170,000. ‘It is possible that high numbers of mortgagee-in-possession sales are keeping prices low,’ she said.”

“Ms Mercorella said the REIQ had lobbied the Government for the first-home buyers grant to be broadened to existing properties in regional Queensland, which she thought would definitely give those markets a much needed boost, but there had been no success to date. ‘It’s outrageous that the Government is funding additional housing supply in areas of the state that are already oversupplied, through this grant,’ she said.”

The Sydney Morning Herald. “Australian households and the financial system are over exposed to an economic shock with the country’s debt levels rocketing to the top of global standings, the Reserve Bank has warned. The central bank has told markets that it was ‘closely’ monitoring Australia’s elevated debt levels.”

“‘The Australian banking system is potentially very exposed to a decline in credit quality of outstanding mortgages,’ said RBA assistant governor Michelle Bullock. ‘And since all of the banks have very similar balance sheet structures, a problem for one is likely a problem for all.’”

“New figures show that Australia’s debt-to-income ratio more than doubled to 160 per cent from the 1990s to the mid-2000s. Since 2013, that spiked to 190 per cent, taking the economy from a debt ratio lower than two-thirds of advanced economies to the top quarter. The spiral has been fuelled by a galloping property market driven by Australia’s obsession with home ownership and property investment, which has only started cooling in the past year.”

“‘Australians borrow not only to finance their own homes but also to invest in housing as an asset, this is different to many other countries where a significant proportion of the rental stock is owned by corporations or cooperatives,’ Ms Bullock told an Ai Group lunch in Albury.”

“The RBA warned an economic shock could leave households struggling to meet repayments. ‘If they have little savings, they might need to reduce consumption in order to meet loan repayments or, more extreme, sell their houses or default on their loans,’ said Ms Bullock. ‘This could have adverse effects on the real economy in the form of lower economic growth, higher unemployment and falling house prices, which could, in turn, amplify the negative shock.’”

RSS feed


Comment by Ben Jones
2018-09-10 17:13:53

‘unit prices fell by 33.3 per cent, to $170,000. ‘It is possible that high numbers of mortgagee-in-possession sales are keeping prices low’

Mortgagee sales are Australian for foreclosure.

Keep in mind Gladstone has been getting its a$$ kicked for years. These mining towns used to have dumps selling for California prices.

Comment by Professor 🐻
2018-09-11 05:09:20

Probably still way overpriced, but the pace of correction is quite impressive.

Comment by Albuquerquedan
2018-09-11 08:36:41

It is amazing that high electricity prices are mentioned in the high debt article. It is a country with abundant coal and NG and should have very low electricity prices. However it decided to export its NG and coal and use wind and solar. The MSM always tells us how competitive those sources are with fossil fuels. However areas with high use of them always seem to have high electricity prices. Is it possible that the MSM is not telling us the whole truth? I am shocked?

Comment by Mortgage Watch
2018-09-10 17:18:32

Houston, TX Housing Prices Crater 20% YOY As Global Oil Glut Thrashes Oil States

*Select price from dropdown menu on first chart

Comment by Ben Jones
2018-09-10 17:39:57

‘The buyer shift has turned once booming affluent areas into the city’s weakest housing markets’

Here’s a article idea for you media types out there: this exact same phenomenon has occurred in Miami Beach, Manhattan, Toronto and Vancouver. The super lux condos in the first two, the detached houses in the last two. Both segments were the most expensive in their cities and fell first, faster and further than the rest of the market so far.

Happened in London too. Why? It has to be speculation. No one really needs a $3 million house. They buy those to gamble.

Comment by BlackSwandive
2018-09-10 17:59:14

“No one really needs a $3 million house. They buy those to gamble.”

I just don’t get the housing speculation mindset. When you factor in maintenance and repair, taxes, the massive outlay of cash, interest payments if there’s a mortgage and the illiquid nature of a house it seems like a massive burden.

Comment by Professor 🐻
2018-09-11 05:13:32

It only really made sense on the presumption that you could ride up the wave of price appreciation until it crested, then offload before it crashed. You could think of it as tsunami surfing.

Comment by Carl Morris
2018-09-11 08:50:24

offload before it crashed

I think in Australia in particular a lot of people thought it could never crash, maybe even more so than the USA before 2008. I remember how we would always hear that housing had never gone down significantly since the depression or something like that. Haven’t the Australians had something like 30 straight years with no downturns? No wonder they levered up so much.

(Comments wont nest below this level)
Comment by Albuquerquedan
2018-09-11 09:37:03

Yes, they rode China’s expansion.

Comment by Apartment 401
2018-09-10 17:46:53

Repost of an anecdotal for the HBB (thanks, Ben): I got rear ended today in a hit and run in Denver at the intersection of Evans and Broadway.

I called the Denver City Council office and left a message for them that I’m not gonna even bother calling the police, because they voted to make Denver a “sanctuary city” and that this was just an example of the lawlessness that results from that (I live in Arapahoe County, not in Denver, a few blocks south of the Denver City/County line).

And related to housing, I will be out of metro Denver within 5 years. They can keep their sh*thole sanctuary city.

Comment by BlackSwandive
2018-09-10 18:01:36

Sorry to hear it. Hopefully you drive something older so it’s not as depressing as if you had something nice and new. I’ve had to swerve out of the way of people crossing the center line of the undivided highway lately. I think they’re on their cell phone - or high on opiates or something.

Comment by Apartment 401
2018-09-10 21:31:23

My work truck is a ‘99 with 228K miles on it.

This is the HBB. I’m not some how-much-a-month loser who needs to buy GAP insurance.

Comment by Albuquerquedan
2018-09-11 06:37:24

Glad you are ok. Albuquerque is also a sanctuary city. One of the reasons I live close to but not in it. It is only New Mexico’s politics which are holding it back. It could and should be booming like Utah, the weather is even better and there are similar outdoor possibilities.

(Comments wont nest below this level)
Comment by Anonymous
2018-09-10 18:30:47

I had a similar experience in Albuquerque last September.

Minor collision with a car that ran a stop sign. The other driver did stick around a little while, though his adult male passenger hopped out and walked away. I ran around and took several pics of the scene and vehicles. Which turned out to be a good thing. The other driver, who looked hispanic and had a pronounced accent, never showed me a license or proof of insurance, nor did he show any interest in looking at mine.

I called the cops and when he realized what I was doing, he got in the car and drove off. One of my pics showed the plate on that car. The driver also appeared in some of them. The vehicle was insured but the registered owner claimed it was being driven without permission so that insurance company wouldn’t pay out. Everything went under my collision policy. (I live in NV and uninsured motorist coverage here only covers bodily injury.)

My insurance company sent it out to collections. Ultimately, I got back around $150 vs. my $500 deductible. I have no idea if anything happened to the (likely) unlicensed driver.

Comment by Professor 🐻
2018-09-11 05:16:14

Good idea on the photo.

Comment by oxide
2018-09-11 05:30:04

It surprises me that insurance companies aren’t on record as opposing giving drivers’ licenses to illegals. It must cost them a fortune.

I’m waiting for the hordes to start spot-and-taking the Millenials stuff, or even more, their social security numbers. Maybe then they’ll wake up from woke.

Comment by Albuquerquedan
2018-09-11 06:55:39

“Wake up from woke”. Well done Oxide.

(Comments wont nest below this level)
Comment by Albuquerquedan
2018-09-11 10:46:51

BTW be safe Oxide this weekend. The storm track seems to be inching north.

(Comments wont nest below this level)
Comment by Boo Randy
2018-09-10 18:52:14

Sorry to hear it, Apt 401. The people who are bearing the costs of the mass influx of illegals have no representation whatsoever in either our state or national governments.

Comment by OneAgainstMany
2018-09-10 21:24:19

Man, that is a total bummer 401. Real sorry to hear about that. Those types of things are the worst.

Comment by Apartment 401
2018-09-10 21:27:15

I’m glad that I don’t (and never will) pay property taxes in the City/County of Denver.

Eagle County keeps sounding better and better every day.

Comment by jeff
2018-09-11 02:28:47

Being the victim of two hit and runs (I ran the second one down myself because the police weren’t interested in that one either) in the Sanctuary States of America I feel your pain.

It sure does leave an undocumented taste in your mouth.

Comment by BubblevilleCA
2018-09-10 18:03:31

All these “cooling and softening” remarks from these realturds just makes me laugh. Yo Frank, go get yourself some good winter clothes, warm up them potatoes and shove em in your pockets, it’s gonna get real cold for your paycheck real soon

Comment by Boo Randy
2018-09-10 18:56:35

“New figures show that Australia’s debt-to-income ratio more than doubled to 160 per cent from the 1990s to the mid-2000s. Since 2013, that spiked to 190 per cent, taking the economy from a debt ratio lower than two-thirds of advanced economies to the top quarter.

I can only shake my head when I read things like this. Where were the people who were supposed to be looking out for the integrity of the financial system?

Comment by Albuquerquedan
2018-09-11 08:39:02

Living large on their share of the bubble profits, as they move in and out of government.

Comment by Boo Randy
2018-09-10 19:25:00

Comment from an Australian poster: “RBA blew the mother of all bubbles….and now they worry !!!!!!”

No kidding.

Comment by Boo Randy
2018-09-10 19:31:20

If you go to the “most respected” comments, the posters are blasting the banksters and policymakers for creating dangerously unstable bubbles and promoting speculation and mass immigration to the detriment of the financially prudent and responsible. Sound familiar? The posters are under no illusion as to what’s coming, and are mad as hell about it, but are pretty much helpless to do anything but brace for impact.

Comment by Albuquerquedan
2018-09-11 07:01:04

Mass immigration and bubbles, they are closely linked. It is not a bug, it is a design feature. Until people in the developed world understand that and vote according their standard of living and quality of life will continue to decline.

Comment by Mortgage Watch
2018-09-10 19:33:15

Santa Monica, CA Housing Prices Crater 19% YOY As 2010-2016 Subprime Mortgages Fail

Comment by drumminj
2018-09-10 20:03:49

More new visitors to the blog, so taking another opportunity to let folks know about the Joshua Tree Extension, a browser add-on making it easier to track posts/comments over time on this blog, ignoring posts from specific users, and other ease-of-use features. (It’s closing in on 100 users now!)

Chrome version
Firefox version

As always, if you use/enjoy the extension, please send funds Ben’s way to keep this place open!

Comment by Anonymous
2018-09-11 08:48:45

The JT extension is awesome!

Comment by DirtyLawyer
2018-09-10 20:48:35

“September Happy fall! Home sales have peaked for the year and inventory is growing in the Boise area, but supply levels remain extremely low. Home prices should still be on the rise, just not as fast.

It’s still a great time to sell a home near Boise, but buyers will see more choices and slightly more bargaining power this fall.”

Can you imagine buyers’ bargaining power in a year from now?

As an aside: Drove by two new construction houses today. Identical houses on a split lot. Each 3bed/2.5 ba, 1700SF. Both listed now at $419k, one orig listed in April 2018 for $449k. That has been on the market for 145 days, the other 33 days, and started at $425k. They sit on a street that dead ends into an unfenced shopping center.

The kicker is the massively huge/ugly cell phone tower (surrounded by a cyclone fence with all the warning/danger signs) that sits about 30yds from the side of the house that has been on market 145 days. Ouch.

Wonder how far they will cut prices to sell.

Comment by azdude
2018-09-11 04:52:57

slash your price people!

Comment by oxide
2018-09-11 06:53:03

Is the cell tower new? It’s not on google street view.

Even without a cell tower, that area is ugly as F. A piece of blight in an already poor neighborhood, in what is basically a flyover town with few if any 6-figure jobs. 3000 sq ft lot. No basement. Surrounded by brown dirt hills. What are you getting for $400K+?

The shady neighborhood nearby, just west of N. Harrison, is much more pleasant. But where do they get off zestimating $315K+ for a 2/1 shack? Even DC isn’t this bad.

Comment by Mafia Blocks
2018-09-11 07:19:09

“What are you getting for $400K+?”

A rapidly depreciating asset at a grossly inflated price…. Just like all DebtDonkeys who signed up for a mortgage in the last 18 years.

Comment by DirtyLawyer
2018-09-11 08:54:53

I can’t tell when it went up. I think the houses were built on a split of a large piece of land that still has an old shed/garage type structure and some sort of depot yard for a commercial business.

My guess is the owner of the large plot of land sold a small portion to the person who put up the two houses, and also is leasing the space for the cell phone tower, all the while keeping the depot yard usable for their business or renting to to someone else to use.

Yes folks, Boise market is nuts right now. I’ve seen figures that household incomes are roughly $55k-70k here. Yet, many homes are $500k+…

Comment by rms
2018-09-11 09:40:19

“Yes folks, Boise market is nuts right now. I’ve seen figures that household incomes are roughly $55k-70k here. Yet, many homes are $500k+…”

Nobody is stupid enough to underwrite this risk except the government.

(Comments wont nest below this level)
Comment by rms
2018-09-11 08:16:09

Most of the people in that dusty neighborhood are likely on disability or welfare… no annual block party there. I can’t imagine anyone willing to plop-down $400k+ to be on N16th street.

Comment by Tikitaka
2018-09-11 11:55:37

Lolz.. 3K price drop… yeah right. As if it was a car/truck. They need to start dropping price by 30K… and not 3-5K… greedheads

Comment by Mortgage Watch
2018-09-11 04:13:27

Portland, OR Housing Prices Crater 14% YOY As Ripped-Off Homeowners Deliberately Default On Mortgages

*Select price from dropdown menu on first chart

Comment by Professor 🐻
2018-09-11 05:26:01

Oh no, not another leg down in the emerging markets. How low can they go!? It isn’t even the ice cold October stock market selling season yet.

The Financial Times
US-China trade dispute
HK stock market enters bear territory amid EM sell-off
Hang Seng index down more than 20% from its January high at Tuesday’s close
an hour ago

Comment by azdude
2018-09-11 05:54:43

hogs get slaughtered!

If you havent locked in profits at this point you deserve to lose them.

Comment by Albuquerquedan
2018-09-11 07:09:46

The Dow is only 3 percent off its record high. Small business confidence is at a record high so the recovery is not just Wallstreet it is mainstreet. Objectively, it is clear who is winning the trade war with China and that is with the globalists actively trying to undermine Trump. MAGA.

Comment by Albuquerquedan
2018-09-11 08:16:20

Australia avoided a recession for decades due to China’s growth. It is no coincidence that the housing bubble deflating has accelerated after Trump put tariffs on steel and Aluminum.

Comment by azdude
2018-09-11 06:12:36

how come when you rent from the bank you are put on a pedestal?

Comment by Professor Bear
2018-09-11 07:22:46

Borrowers are a banker’s best friend, even after default, as then the bank gets to collect the collateral value and keep the value of the forfeited principle repayments. How good can it get?

Comment by Professor Bear
2018-09-11 07:17:14

The Financial Times
Global financial crisis
Why so little has changed since the financial crash
Martin Wolf on the power of vested interests in today’s rent-extracting economy
Martin Wolf September 3, 2018

“Here I am back again in the Treasury . . . but with one great difference. In 1918 most people’s only idea was to get back to pre-1914. No one today feels like that about 1939. That will make an enormous difference when we get down to it.” John Maynard Keynes wrote this in 1942. It did make a difference. After the Great Depression and a second world war, people wanted change. They got it. France calls what followed les trentes glorieuses.

The stagflation of the 1970s brought a counter-revolution: the 1980s saw a radical change of ideas on the role of the state and markets, the goals of macroeconomic policy and the job of central banks. Again, the aim was a fundamental transformation.

So what happened after the global financial crisis? Have politicians and policymakers tried to get us back to the past or go into a different future? The answer is clear: it is the former.

Comment by Boo Randy
2018-09-11 07:43:34

“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

–John Maynard Keynes (ideological guiding light to the Federal Reserve bankers)

Comment by Albuquerquedan
2018-09-11 08:04:22

it is not that simple. Obama failed because he tried to change the wrong things. He did not try to end globalism he expanded it. He did not limit the power of big banks he chocked their competition by subjecting smaller banks to expensive regulations. He increased regulations in many areas which could be considered a change but it crippled small businesses. He ballooned the national debt and financed it through the federal reserve. This also benefited the .1 percent and the banks. Quite frankly Obama made it easy for the next president to succeed just do the opposite of what he did and the economy improves.

Comment by Mortgage Watch
2018-09-11 08:18:48

94,785,000 Not in Labor Force; At 62.9%, Labor Force Participation Stuck Near 38-Year Low As US Housing Market Craters

Comment by Albuquerquedan
2018-09-11 08:47:41

Welcome to Groundhog Day. Thanks to Mortgage Watch you have access to a September 1, 2017 story. Let’s just ignore the record level of small business confidence which is a leading indicator and read old stories that might support our beliefs. No confirmation bias with MW, HA and any other moniker he uses.

Comment by Anonymous
2018-09-11 10:30:34

Great feature of the JT extension: the ability to ignore users. ;-)

Name (required)
E-mail (required - never shown publicly)
Your Comment (smaller size | larger size)
You may use <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong> in your comment.

Trackback responses to this post