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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Don’t know if people care enough to talk about it again, but here is a link to a list of articles on the Washington Post - a lot of them are about the sequester announcements of various agencies, including what number of furlough days, etc. A lot of the recent ones seem to be from Customs and Border Patrol.
http://www.washingtonpost.com/blogs/federal-eye/
Club Fed
Free workouts for furloughed feds
Posted by Josh Hicks on March 14, 2013 at 2:21 pm
A health and fitness club in Virginia plans to offer free workouts for furloughed federal workers from Arlington and Alexandria, according to an article by In the Loop columnist Al Kamen.
The Energy Club said in a recent announcement that federal employees and contractors only need to bring their furlough papers and government IDs to take advantage of free use of its facilities on the days they’re furloughed.
The organization will also offer a special government rate after the furloughs are finished for everyone who takes the club up on its “Don’t Furlough your Fitness!” offer.
…
‘takes the club up on its “Don’t Furlough your Fitness!” offer.’
Our place has a Fitness Protection Program.
Pay for Obama, Congress safe from cuts
By Kathleen Miller
Bloomberg News
Thu, 02/28/2013 - 3:10pm
WASHINGTON — While hundreds of thousands of U.S. government employees may be furloughed due to federal spending cuts, President Obama and members of Congress won’t need to worry about their paychecks.
The across-the-board reductions set to begin Friday might eventually close air-traffic control towers, reduce the number of nutrition vouchers for low-income children and lead to unpaid leave at the Pentagon and other agencies.
The cuts, known as sequestration, will have no impact on the president, U.S. lawmakers and other top government officials. It is especially ironic that Congress, which has the power to avert the reductions, has nothing to lose in the negotiations, said Dan Gordon, former head of federal procurement in the Obama administration.
…
I don’t know if TSA is one of the furloughed federal agencies, but I advise anyone flying anywhere to get to the airport at least a half hour earlier than what you would have before March 1. I almost missed a flight last weekend due to arriving at the airport at my accustomed time.
And I just flew (post March 1st) and didn’t experience any additional delays. There were still the usual TSA agents milling about, some looking at screens, some not.
There are many times that I “almost missed” a flight by arriving at my usual time, but for whatever reason hitting longer lines.
You have a good point. In fact, I had no trouble with security on the return trip…
I don’t think the furloughs have actually started yet. I think they kick in come April because there needed to be a certain notice period that didn’t start until a little before March 1, when the knew it was really happening. 30 days, 45 days, something like that.
You’re right, Bigguy — 30 day notice requirement for furloughs…so I guess my super-long TSA line was merely a warmup for what’s to come.
America’s Debt Challenge
Federal worker pay freeze likely to be extended
By Jennifer Liberto
@CNNMoney March 15, 2013: 6:36 AM ET
Federal workers are facing another extension on a two-year pay freeze, as lawmakers consider a measure to prevent a federal shutdown on March 27.
WASHINGTON (CNNMoney)
Federal government workers just can’t catch a break.
It’s looking pretty likely that the two-year pay freeze — that was expiring at the end of this month — is going to be extended again through Dec. 31.
Workers had been hoping to see a small bump in their pay by 0.5% next month, as ordered by President Obama last August.
But the Senate this week started debating a bipartisan deal that would fund government through the end of September. The deal would keep in place a freeze on federal workers’ cost-of-living increases by another 9 months.
Maryland Democrat Sen. Barbara Mikulski, who helped put together the deal, called the pay freeze “necessary” to stop a government shutdown come March 27, when current funding runs out.
“Shutting down the government would make a tough situation even worse for federal employees,” Mikulski said on the Senate floor on Wednesday.
…
Speaking of Washington, does anyone want to suggest a tentative date for a May meet-up in the DC area? Anyone coming in from out of town?
Week of May 6 (but plans are not firm and likely to not happen)…
What date(s) exactly?
No travel plans in place yet, but if I make it to DC this year, that will be the week…
I’ll probably be hiking in Shenandoah NP that exact day. I’d be into seeing some of you if I could get over to DC, but probably will lose so much time transiting that it might be no go for me, uggh.
Hopefully Pimp Watch and oxide can meet up.
In our shop the Feds are getting 22 furlough days starting in April. There has been zero impact on contractors as of yet.
Posted at 04:44 PM ET, 03/15/2013
National Weather Service cutting back on hiring, spending
By Jason Samenow
The National Weather Service, feeling the pressure of the challenging budget environment, is already cutting back on staffing and spending, a move that could compromise our nation’s preparedness for severe weather critics say.
On Thursday, NWS director Louis Uccellini instituted a mandatory spending freeze that applies to the hiring of management and management travel and training.
“Due to our budget uncertainties, we need to keep spending levels to a minimum,” begins a memo dated March 14 from Uccellini, which applies only to non-bargaining unit employees, mostly management.
The spending freeze on management is official, but of greater concern to the NWS’ labor union, the NWS Employees Organization (NWSEO), is what it’s calling an unofficial and unallowable freeze on NWS staff hiring: namely forecasters.
On March 13, NWSEO filed a grievance alleging NWS has failed to fill at least 21 lead forecaster vacancies.
“The failure to recruit and/or fill these 21 (and possibly other) vacancies is a continuing violation of the agreement negotiated between the parties … which establish five lead forecast positions at every Forecast office,” says the grievance, penned by Dan Sobien, NWSEO president.
Two of the lead forecaster vacancies are at the National Weather Service Forecast Office in Sterling, Va. which serves the Washington, D.C. and Baltimore regions. Susan Buchanan, a spokesperson for the National Weather Service, said interviews for the Sterling positions will begin next week.
Buchanan stressed there is no forecaster hiring freeze.
“Though the process is taking slightly longer than NOAA’s goal to hire within 80 days of the application deadline, the lead forecaster applications are actively being processed by NOAA’s Workforce Management Office,” Buchanan said. “We understand and share concerns that long-term vacancies are not in the best interest of the agency and its mission.”
Sobien said the forecaster vacancies are just the tip of the iceberg, and that there about 200 unfilled staff positions within the NWS.
“It’s phenomenal,” Sobien said. “The vacancy rate which was 3 percent just two years ago is up to 9 percent.”
…
Is U.S. dollar inflation about to take flight?
March 15, 2013, 8:52 a.m. EDT
Inflation highest in more than three years
By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) — Led by an expected surge in gasoline prices, consumer prices rose in February at the fastest pace in more than three years, according to data reported Friday by the U.S. Department of Labor.
U.S. consumer prices rose 0.7% in February for the largest gain since June 2009. Gasoline prices rose 9.1%, also making the largest jump since June 2009, and accounted for almost three-fourths of February’s gain in the consumer price index.
Meanwhile, prices for food rose 0.1% in February. The core CPI, which excludes volatile categories of food and energy, rose 0.2%.
Analysts polled by MarketWatch had expected the overall CPI to increase 0.6%, and for the core reading to increase 0.2%. See economic calendar.
Despite the CPI’s large jump in February, longer-term trends remain within the Federal Reserve’s target. The overall CPI and the core reading increased 2% over the 12 months that ended in February.
Economists expect that today’s data should continue to support the Fed’s accommodative policy stance.
Looking forward, analysts expect monthly inflation to moderate as some of February’s surge in gasoline prices is reversed this month. In the most recent weekly data, average per-gallon gas prices across the U.S. fell five cents to $3.71.
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Bulletin Dow win streak at risk as U.S. stocks move mildly lower ahead of confidence data
March 15, 2013, 9:36 a.m. EDT
U.S. stocks mildly lower ahead of confidence data
NEW YORK (MarketWatch) — U.S. stocks retreated Friday, with the S&P 500 index (SPX -0.19%) backing off after coming within 2 points of its record close, as investors braced for a report on consumer sentiment. The Dow Jones Industrial Average (DJIA -0.24%) fell 32.75 points, or 0.2%, to 14,506.39. The S&P 500 was off 3.78 points, or 0.2%, at 1,559.45. The Nasdaq Composite (COMP -0.14%) shed nearly 1.5 points to 3,257.50.
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For almost everyone outside of the 1%, the USA is in an endless, stagflationary depression. Welcome to the recoveryless recovery. The future belongs to Lucky Ducky
Should we take comfort in expert assurances to not worry about a potential stock market crash?
If there is no need to worry about a stock market drop, then why is this fellow whistling so loudly as he strolls past the graveyard?
Don’t worry about a stock market drop
ANATOLE KALETSKY, Reuters
March 15, 2013 1:40pm
A feeling of vertigo may seem natural as Wall Street approaches a record and stock markets around the world climb to their highest levels since 2007.
With the Standard & Poor’s 500-stock index now only 0.5 percent away from its 2007 high of 1,565 and with the Dow Jones industrial average scaling new peaks almost daily, what will investors expect to see when they reach the mountaintop? The mountaineering analogy suggests, at best, a long descent and, at worst, a precipitous drop. But how literally should we take such metaphors?
Bearish analysts often claim that stock market peaks have always been followed by sharp falls, citing as evidence the record high of October 2007, which was quickly followed by a 57 percent collapse in 2008-09. They add that the previous peak, in March 2000, was followed by a 37 percent plunge and that last major high before that, in August 1987, preceded the biggest-ever market crash, in October 1987. These precedents, along with the even more vertiginous peaks of 1989 in Japan and 1929 on Wall Street, certainly sound scary, but they are meaningless.
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The Stock Market Is a Debt-Fueled Bubble: Steve Keen
By Lauren Lyster | Daily Ticker – Wed, Mar 13, 2013 8:19 AM EDT
Stocks fell into the red ahead of the closing bell Tuesday and while the S&P 500 (^GSPC) went on to end its seven-day streak of gains, the Dow Jones Industrial Average (DJI) still managed to eke out its sixth straight day of posting an all-time record high.
To point out the very obvious, it’s not likely to continue forever. But according to economist and author of the book Debunking Economics, Steve Keen, it stands to get much, much worse in the next one to two years.
Keen tells The Daily Ticker the U.S. stock market is a giant bubble. But the key factor inflating it may not be what you think, according to the economist (i.e. he’s not pointing fingers at the Fed…at least not directly).
…
Are you adequately hedged against a bond bubble collapse?
ft.com > Comment > Letters
March 13, 2013 9:52 pm
Bond bubble will end in as much pain as housing bubble
From Mr Robert M. Sussman.
Sir, Ben Bernanke is no more the maestro than Alan Greenspan: the only difference is that the latter created a bubble in housing and the former a bubble in the bond market (“Bernanke: a good engineer who knows his own limits”, Edward Luce, March 11). Both Fed chairmen have kept real interest rates below zero, which by definition creates a bubble in asset prices and misallocation of resources. Mr Bernanke can point to the ebullient level of stock prices and Mr Greenspan could have cited the boom in housing prices and construction.
The point is that the current bond bubble will end in as much pain as the housing bubble. Neither chairman has been willing to allow free markets to operate to avoid short-term pain. As a result, the ultimate outcome of their actions has been and will be considerably worse.
Robert M. Sussman, Paradise Valley, AZ, US
In a real world Mr Sussman would be right but we live in a bizarro world. If Newton were alive today, he would not have discovered gravity.
So let me understand this correctly.
Stocks are poised for a fall.
The bond bubble is poised to painfully pop.
The Precious isn’t moving much.
Cash is being eaten up by the price hikes in ‘needs.’
Treasuries are at the whim of Congress and/or the Chinese.
Real estate is a risky proprosition at best.
WTF is the retail investor supposed to do?
Start a business that provides something useful instead of expecting free money simply because you have money?
What are you talking about? Our whole system is based on free money because you have money.
You make it sound like I have millions and I’m looking for tax breaks or leveraged buyouts. Nah. I’m just a regular middle-class person looking for a retirement that doesn’t involve cat food and a box.
WTF is the retail investor supposed to do?
My cache of 7.62×39 is up 150% in just the past four months.
WTF is the retail investor supposed to do?
Put cash under the mattress and then every year, add 8-10% to make some interest.
Point of information: Paradise Valley is one of the wealthiest communities in the state of Arizona. I wouldn’t be surprised to learn that this guy intends to profit from a bond bubble burst. If one happens.
GET OUT NOW BEFORE INFLATION FEARS GRIP WALL STREET WITH PANIC!!!!!!
2/13/2013 @ 3:50PM |9,822 views
Inflation Fears and Facts
The Fed’s QE-infinity policy has raised concerns of an impending inflation spike. To know whether such fears are warranted, it’s important to understand what inflation is and what it is not.
What is inflation?
As Milton Friedman said, “Inflation is, always and everywhere, a monetary phenomenon.” But what does that mean, really—a monetary phenomenon?
To have inflation, you must have an excess of money supply. But not just excess money supply—that money supply must be circulating in the economy, chasing overall prices on average higher.
…
Sorry to say, it might be too late, as the headline U.S. stock market indexes appear to already have caught a whiff of inflation and turned tail...
The Global DOW is also dropping like a rock on the first hint of U.S. inflation.
It’s beginning to feel like 1974 all over again!!!!!
PPT arrived at 10am saved the day!
Wake me up when we emerge from this cycle’s autorepeat.
Despite completely obvious intervention to kick the headline U.S. stock indexes back up at 10am, Mr Market is still tanking…
that money supply must be circulating in the economy
that money supply must be circulating in the economy
that money supply must be circulating in the economy
that money supply must be circulating in the economy
that money supply must be circulating in the economy
But it’s not.
True or false: If only there were enough workers in lenders’ mortgage departments to process all the applications, the housing bubble could fully reflate to its pre-2007 level of effervescence.
There Is One Crucial Obstacle To The Housing Recovery
Mamta Badkar | Mar. 14, 2013, 7:56 PM
Housing analysts have been turning extremely bullish and a few expect home prices to rise 8 percent this year.
Paul Diggle at Capital Economics is one of them. But the housing recovery still has some hurdles it needs to clear.
“Capacity constraints in lenders’ mortgage departments are one of the few remaining bottlenecks in the housing recovery and one of the factors contributing to the marginal role being played by mortgage- dependent buyers,” he writes.
While some people focus on the slow rise in residential construction employment, Diggle pays more attention to the slow pace of job growth in the real estate credit sector.
Between 2005 - 2009, employment in the real estate credit sector fell by 45 percent, while mortgage applications fell 75 percent. Since then however, mortgage applications have “almost doubled”, according to Diggle, while job growth in the real estate credit sector has only increased by seven percent.
Admittedly real estate credit workers tend to have a smaller role in the economy than home construction workers, but this is key to the capacity constraints among mortgage lenders, which in turn is impacting the housing recovery.
The number of mortgage applications being processed by each employee is close to a record high. And the time taken to process a loan is also at “historically high” levels.
“Lenders’ need to manage the level of mortgage applications given their constrained processing capacity is one explanation for why mortgage rates are at record highs relative to MBS yields and credit scoring criteria are very strict. All of this has helped contribute to the marginal role being played by mortgage-dependent buyers in the housing recovery.
“Either way, the bottom line is that an easing in capacity constraints is a necessary precondition to mortgage buyers playing a fuller role in the housing recovery.”
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I’m going to say false.
In the bubbliest of places (inland), prices fell 50-60%. For them to get back to bubble territory, they would need to rise by 100%, not just 8%…do you get 10 years of 7% annual home price growth in these places? Not without much stronger wage growth (ie. a sure sign of inflation).
I’d love to hear you talk more about how the upcoming budget cuts in the US government is going to affect the housing market, and particularly the SouthEast….also, the new Pope
A little comic relief for the blog. It’s in French, but you’ll get the idea:
http://vimeo.com/61275290
Paper never dies!
The entire digital universe exist only as electrical pulse with zero latency except for….. Punch cards!
A fine metaphor for the Ides of March, palmy. Let us all beware!
Recommended viewing for members of the 0.1% class who are interested in a future run for president:
“American Winter”: Documenting the downturn
A Portland protest in “American Winter.”
Interview by Kai Ryssdal
Marketplace for Friday, March 15, 2013
Last winter, filmmakers and brothers Joe and Harry Gantz decided to document the lives of eight families in Portland, Ore., living outside of the middle class during this economic downturn.
The filmmakers found their families by teaming up with the nonprofit social services organization 211 in Portland, monitoring and recording calls from families in need of social services. The film, “American Winter,” turned out to be a very vivid snapshot of what life was like for many formerly middle-class families. Families that, amid the deepest valley of the economic downturn, were having trouble keeping it all together.
Harry Gantz said that a lot of the parents featured in the documentary tried to shield their kids from seeing the family struggle.
“But of course, the children can’t be shielded from the water being turned off,” he said. “So it affects them in deep, emotional ways, and has long-term impact on them in terms of their education, their self-worth — all the things that parents worry about their kids having.”
“This stress is what these families deal with every day, all day, and it filters down to the kids,” said Joe Gantz. “And it really makes the quality of life really diminished.”
In making the film, the brothers spent a lot of intimate time with the families — in- and outside of their homes. The filmmakers said the families let them in because it was a way of showing the rest of the world what they were going through.
“I think a lot of these families feel like the world doesn’t care about them,” said Harry Gantz. “It’s a full-time job not only to work, but also to navigate the social service system.”
“We made the film because we felt that there was this economic discussion going on at every level, but it wasn’t taking into consideration what was happening with real families all across this country,” said Joe Gantz. “And we felt that if people could see how families were struggling, it would be easier to kind of connect with what’s really going on in this country right now.”
“American Winter” airs on HBO on Monday, March 18 at 9 p.m.
Where is nhz when you need a comment on the Dutch housing crash?
Dutch mortgage rates are higher than in surrounding countries
Friday 15 February 2013
Mortgage rates in the Netherlands are around one percentage point higher than in surrounding countries, according to the government’s macro-economic think-tank CPB.
The organisation bases its claims on figures from the European central bank. It carried out the research on behalf of housing minister Stef Blok.
One explaination for the difference is the lack of competition in the Dutch market, the CPB said. Apart from market leader Rabobank, the other three big Dutch mortgage providers are entirely or partly in state hands.
In addition, pension funds and foreign providers have tended to avoid the Dutch housing market, which they regard as inflated.
Competition
MPs have told ministers to come up with a plan to boost competition between Dutch banks before the summer.
The CPB says Dutch house prices have declined by 20% since 2008 but would be 5% higher than they currently are if mortgage rates reflected European trends.
Home-owners would currently pay at least 3.8% interest, fixed for five years, on a traditional repayment mortgage with a government guarantee.
The U.S. isn’t the only housing market on the planet where renting is cheaper.
A housing bubble’s worst enemy:
Well-educated, rational buyers who are willing to rent if buying doesn’t pencil out.
Crisis bodes grim for Dutch housing markets
Souce:Xinhua
Publish By Jane B. Hatcher
Updated 16/03/2013 4:57 am in Business
by Christien van den Brink
THE HAGUE, Mar. 15 — The happily married young couple Petra and Bert live in a suburban area of the fourth biggest city of the Netherlands, Utrecht.
Bert has just signed a long term contract at the ministry of Infrastructure, while Petra holds a part time job. They would be in the perfect position to buy their dream house, and yet, they rent it.
“Jobwise, it is really difficult to predict where we will be in 3, 4 years. We could be sent to other regions by our employers. Or we could even lose our job. This makes it hard to chose a location for our future house. We don’t want to commit to something until we are more financially stable,” Petra said.
Petra and Bert are not the only ones who have opted for renting in the Netherlands. According to figures published by CBS on Friday, 2.9 million dwellings of the 7.1 million households are rented apartments and houses.
Due to a growing incertainty at the job market, flexibility has become the main argument for renting. Renting offers the ability to pick up and leave if you have to take a job in an other region of the Netherlands.
“The reality is, sometimes renting makes more sense. If you do try to sell your home during an economic crisis, you’re at risk for losing money. Besides, when you rent, you don’t have to pay interest or property taxes to the bank,” said Brounen, a professor of real estate economy.
Due to the economic crisis, real estate prices have fallen sharply, meaning that now would be the best moment to buy a house. But it is not as easy as it seems.
Young, well-educated professionals like Petra and Bert are facing difficulties in obtaining a good mortgage at the bank. In 2013, the maximum mortgage that average income families can borrow is 5 percent less than previous years.
“This means that you will spend 30 percent more on monthly costs. Young professionals will now think twice before they buy,” Brounen said.
And because people from all incomes face difficulties in obtaining a mortgage, many house owners cannot sell their property.
Karin Kooijman has been trying to sell her house nearby a natural park, well-located in the heart of the Netherlands since 2009.
“We have even lowered the price with 40.000 euros to 350.000 euros, even though we spent 368.000 euros in the house. But we still we haven’t found anyone interested,” Kooijman said.
…
In addition, Petra and Bert likely pedal their way around town rather than hitch themselves to an automobile loan.
Do your taxes yet ? why does the government makes it so complicated ? As an engineer maybe I should make all government smart phones really complicated so you would have to hire me to use them.
“Reporting OID. You must prepare a Form 1099-OID for each person who is a holder of record of the obligation if the OID includible in the holder’s gross income is at least $10.”
Don’t know where this came from on my taxes but it imported in and turbo tax needs a value. I can’t find any record of it on any 1099-DIV. I assume its some CD discount and is an error I don’t recall any discounts on any CD’s. at .25% anual rate what kind of discount would one get with a 1 year 10K CD ? 25 bucks I think
Would it be more accurate to describe Spain’s housing market as deflating like a souffle, collapsing like a popped balloon, or flattening like a pancake?
Dwelling mortgages in Spain decrease by 14.4 pct in October
Souce:Xinhua
Publish By Thomas Whittle
Updated 28/12/2012 4:41 pm in World
MADRID, Dec. 27 — The number of mortgages on dwellings fell by 14.4 percent in October 2012 in comparison with the same month of 2011 reaching 19,105 mortgages, the Spanish National Institute of Statistics (INE) reported on Thursday.
The number of mortgages on dwellings in October that meant a 14.4 percent decrease, which implied 30 months of consecutive declines.
On a monthly basis, from September to October, the number of mortgages on dwellings decreased by 9.9 percent, which is the biggest variation since 2009, said the INE.
On the other hand, from January to October 2012 the number of mortgages on dwellings declined by 33.2 percent in comparison with the same period of 2011. The loaned capital fell by 38.8 percent and average value of mortgages decreased by 8.4 percent.
The average amount of mortgages reached in October 100,665 euros (133,603 U.S. dollars), which is a 4.9 percent less than in the same month of 2011. From September, on a monthly basis, there was a 1.7 percent decrease.
The INE said in October 31,405 mortgages of rustic and urban buildings have been registered, which meant a 19.8 percent decrease in comparison with the same month of 2011.
This data published on Thursday meant 30 consecutive months of declines in the number of mortgages and the total figure of mortgages on dwellings is the lowest one since 2003.
However, the fall is more moderated that the one experienced in September and August, 32.2 percent and 28.5 percent respectively.
This data reflect the economic situation of Spain whose mortgage market is very affected by the crisis due to the lack of solvency in the banking sector among other reasons.
The domestic demand is very low because of reduced salaries, unemployment and the increase from 4 percent to 10 percent on sales tax when buying a new house, a measure that will come into effect in January 2013.
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Property woes add to bad week for Hang Seng
Hang Seng Index ends down 0.4pc for day, off 2.4pc for week
Friday, 15 March, 2013 [Updated: 22:44]
Hong Kong and China shares ended their worst week in three on a tepid note on Friday, dragged down by Chinese property developers after official media reported that new curbs on the housing market will be strictly enforced.
The Hang Seng Index closed down 0.4 per cent on the day at 22,533.1, while the China Enterprises Index of the top Chinese listings in Hong Kong shed 0.7 per cent. This week, they slipped 2.4 and 4 per cent respectively.
In the mainland, the CSI300 of the leading Shanghai and Shenzhen A-share listings ended up 0.2 per cent on Friday while the Shanghai Composite Index gained 0.4 per cent. But for the week, they fell 2.6 and 1.7 per cent respectively, testing their lowest levels in two months.
Shanghai’s trading volume on Friday was above its average in the last 20 days, for the first time in more than a week. Turnover in Hong Kong was the heaviest since Feb. 4.
“I doubt there will be much downside from here, so if you are a bit light on your positions, this may be a good time to buy into beaten-down counters with a clearer growth or earnings potential,” said Larry Jiang, chief investment strategist at Guotai Junan International Securities.
…
A 280% spike in home sales last week shows why China is worried about its housing market
Langi Chiang and Nick Edwards, Reuters | 13/03/12 7:58 AM ET
People crowd into the Nanjing Municipal Real Estate Trading Centre to sell their second-hand houses before a tax policy change last week in Nanjing, China. Pre-owned home sales in Beijing soared 280% year-on-year in the week of March 2-8, according to local government data, and were up 141% on the previous week.
BEIJING — China’s home price inflation may be steeper than official data suggest, with a near quadrupling of home sales in the capital last week after the government unveiled tax plans to curb speculation, a sign that investors have giant gains to lock in.
Pre-owned home sales in Beijing soared 280% year-on-year in the week of March 2-8, according to local government data, and were up 141% on the previous week.
The government announced on March 1 plans to introduce a 20% capital gains tax and higher downpayments for second-time home buyers to dampen expectations of more price rises.
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Take a photo tour of China’s ghost cities
‘It’s like walking into a forest of skyscrapers, but they’re all empty’
China housing more better.
With as many as 64 million vacant apartments in China, the nightmare scenario could be like America’s housing crash but worse.
Bubblicious appreciation rates normally don’t asymptote down to a 2% growth rate, but rather tend to immediately transform into a hard landing and crash.
Maybe it’s different up there in the Great White North, eh?
Top Business Stories
Home prices to gain ‘measly’ 2% a year over next decade
Michael Babad
The Globe and Mail
Published Monday, Mar. 11 2013, 10:14 AM EDT
Last updated Monday, Mar. 11 2013, 3:56 PM EDT
Real estate gains to match inflation
Toronto-Dominion Bank economists expect what amounts to a lost decade in house price appreciation.
Over the next 10 years, Craig Alexander, Derek Burleton and Sonya Gulati project, price gains in residential real estate will average a “measly” 2 per cent a year. Based on other forecasts, that will simply track the rate of inflation.
Canada’s housing market has been a source of angst for many, for industry players who have watched it cool over the past half-year, and for policy makers who are trying to engineer a soft landing and believe they have done so.
The market has cooled significantly since Finance Minister Jim Flaherty brought in his fourth round of mortgage restrictions last summer, and credit growth has slowed. So much so that last week, the Bank of Canada removed from its policy announcement a warning that it could hike interest rates to stop borrowers who have push their debt to record levels.
Sales have slumped, but prices have generally held up, though the picture is different across the country.
Just to be clear, most observers expect a soft landing, rather than a U.S.-style crash. But, according to TD, don’t bet on prices appreciating to any great extent.
“The housing market is prone to cyclical ups and downs, and Canada is expected to embark on a gradual, modest, downward adjustment over the next three years,” the TD economists said.
“A string of lacklustre performances will mean that the annual rate of return for real estate in nominal terms will be roughly 2 per cent over the next decade,” they said in their report.
“In other words, real estate gains are set to match the pace of inflation.”
…
“In other words, real estate gains are set to match the pace of inflation.”
Not until after prices correct.
It seems like we haven’t run out of bear food just yet. In fact, I’m quite concerned about weight gain potential at this point…