The Housing Bubble

It’s Friday desk clearing time for this blogger. “Four out of five properties dropped in value, according to the annual report released by Virginia Beach Assessor Jerry Banagan. Average home values here climbed nearly 75 percent in the five years leading up to the 2008 recession. Since then, the city’s average home value has fallen by roughly $66,000, down to about $266,100. ‘People keep asking me when it’s going to stop,’ Banagan said. ‘I can’t say. Not until we get rid of all these foreclosures.’”

“Across Palm Beach County and across South Florida, some people are going for years without paying their bills and, too often, it is their neighbors who are forced to pick up the tab. ‘If the banks would just push through these properties and put them on the market and get folks to purchase them,’ said Paul Massey is HOA president at Convention Center Townhomes in downtown West Palm Beach. ‘That’s all we’re asking.’”

“The foreclosures, the short sales, and those people who aren’t paying the HOA fees that they signed up for; Adam Sinclair has a long list of things that need fixing at Summit Run, a private 254-home development in suburban West Palm Beach. As a homeowners’ association board member, Sinclair wants all of it out of his neighborhood soon. ‘It can only get better,’ said Sinclair. ‘And if it doesn’t get better, than it’s not going to be good for anybody.’”

“Nearly 400 homeowners went to the James L. Knight Center in Miami on Wednesday, to meet with bank and mortgage companies about a federal program that will help those struggling to pay their mortgages. ‘The payment is too high,’ said homeowner Zepheniah Davis. ‘I want to lower the payment down.’”

“The City of Hutto is hoping the $25 billion settlement agreed upon Thursday will help reinvigorate the city’s real estate market. Sue Beridon’s trying to sell her house in Hutto and estimates more than half of the homes in her subdivision have been foreclosed upon, or forced into short sales. She said her home value has plummeted as much as $50,000. Beridon hopes some of her neighbors will benefit from the agreement. ‘There’s always, every weekend, U-Haul trucks moving people out, and a lot of people have lost their homes,’ Beridon said.”

“Dozens of clergy members and community activists rallied today outside the headquarters of Wells Fargo Bank in San Francisco in protest of what they say is rampant foreclosure abuse. ‘We’re calling for a freeze on foreclosures,’ said Geoff Nelson-Blake of the San Francisco Organizing Project, a coalition of religious and community groups that organized today’s action.”

“Wells Fargo spokesman Ruben Pulido said, ‘The unfortunate reality is that some customers are in homes they cannot afford, even with substantially reduced payments.’”

“As the pain of Spain’s property crash continues to hit people hard, regular protests are being staged as banks repossess the homes of those who cannot afford loans taken out when the economic outlook was more rosy. On the morning that the banks were due to take control of Ronale de la Cruz’s house, more than 150 people turned up to stop the eviction. Tatyana Roeva was one of the protesters who went to the house the night before the eviction. ‘Surely someone who enters into a mortgage has a duty to meet their payments?’ I ask her.”

“‘I don’t agree, because we were tricked. They created a property bubble and they gave mortgages to everyone. It was a fraud in every sense of the word.’”

“A recent online poll found that a ’surprising’ 41.4 per cent of Malaysians owned two or more properties. A large population of Malaysians are also interested in investment opportunities abroad in nations such as the UK, Singapore, Australia, and the US. Malaysians still believe that the local market will continue to grow despite doubts over the welfare of the global economy. Chief executive of iProperty, Shaun Di Gregario told reporters, ‘The majority of people are still confident that the property market will continue to grow… The love affair continues.’”

“Despite widespread concern of an oversupply in the condominium market, a property bubble remains impossible, says Suphin Mechuchep, managing director of the property consultant Jones Lang LaSalle Thailand. ‘Thai property prices are one-tenth those in Hong Kong and Singapore, while the Thai economy remains strong and people have cash on hand. Property purchases are a way to compete with inflation, especially if its an investment for rent.’”

“Condos on Phahon Yothin, Ratchadaphisek and Lat Phrao roads are 60,000 to 95,000 baht a square metre. The opening of CentralPlaza Grand Rama 9 and development of a new SET building on Rama IX Road makes that area ripe for more condominium growth. Ms Suphin said last year’s flooding was comparable to the 2004 tsunami that caused a property price decline for a period, but now prices in Phuket have more than doubled their pre-tsunami level.”

“She acknowledged the government should have a clear flood prevention plan with a quick response to support the market for low-rise properties.”

“Optimism surged in January only to be dragged down by the mid-winter blahs in February. That bump is typical of the roller-coaster ride Canadians have been on for a while now, says the VP of research firm TNS Canada. this anxiety is afflicting everyone from young job seekers to Bay Street veterans and nowhere is the dichotomy more pronounced than in Toronto’s real estate market.”

“One executive, who has been in the mortgage business for more than 30 years, tells me he and others at his firm are dumbfounded by the action in the market these days. He’s astonished partly because bidding wars have been so ferocious in Toronto and buyers are taking on such huge mortgages. Sure buyers are competing over relatively few listings but they are bidding jaw-dropping amounts over the asking price. ‘If it keeps going like this I’m just going to leave and become a dentist or something because it means I don’t understand the market at all,’ he quipped recently.”

“The builders of Aura, which is billed as Canada’s tallest condo tower, recently won permission to add three more storeys to the skyscraper. The three additional floors will mean approximately 50 more units are available for sale, bringing the total in the building to 985. Canderel’s vice-president of sales and marketing, Riz Dhanji, said said he’s convinced there remains a strong appetite among condo buyers for units at Aura and added, ‘I wish we could go beyond the 78 storeys we have today.’”

“Under a deal that goes to city council for approval March 5, Minto will pay $44 million in cash and build 800 spaces of underground Green P parking worth $32 million along with two condo towers on a key site in Yorkville. The city-owned Toronto Parking Authority received 10 offers for the site, which were shortlisted to three before Minto was chosen. ‘In a location like that, the land will always retain its value,’ said Councillor Peter Milczyn, chair of council’s planning and growth management committee. ‘Even if there’s a downturn in the market, you know you’ll eventually be able to sell very expensive condos in Yorkville.’”