The World Is A Strange Place Now
Some housing bubble news from around the world. The Telegraph, “Standard and Poor’s said the housing slump is deepening across large swathes of the eurozone. French declines are ‘gaining momentum’ as the economy buckles. France’s price-to-income ratio rose to a record 180pc of historic levels during the bubble, one of the most stretched levels seen anywhere in the OECD bloc. The property market began to roll over last year, prompting warnings by the French consultants PrimeView that values could tumble by as much as 40pc before excesses are purged.”
“S&P said the deep crisis in the Netherlands would grind on. Dutch home prices will slide another 6.5pc by late next year, bringing the accumulated fall to more than 23pc. Dutch unemployment surged to 8.1pc in March from 5.9pc a year ago. Over 25pc of Dutch mortgages are now ‘onder water’ - as they say in Holland.”
“S&P said Italy, Portugal and Ireland will all see further falls this year but the chief worry is Spain, where a vast glut of unsold property has yet to hit the market. Germany is marching to an entirely different tune from the rest of the eurozone. S&P said prices rose 3.5pc last year, and will rise 3pc this year and again in 2014.”
USA Today on Germany. “Berlin’s property values have jumped 30% to 50% in the past three years, and doubled in the past eight. Greeks, Spaniards and Italians — anxious over the financial future of their cash-strapped economies at home — poured in to buy. ‘Many buyers were feeling so insecure that they would try and buy apartments blindly, without having seen them,’ recalled Ruth Stirati, head of a real estate firm in Berlin that specializes in catering to Italian buyers.”
From Wales Online. “Concerns are growing that measures to kick-start the housing market could lead to the kind of price bubble that burst before the start of the recession. Spokesman for the Royal Institution of Chartered Surveyors (Rics) in Wales Tony Filice says he has seen multiple buyers making bids above and beyond asking prices in an increasingly heated first-time buyer market in Cardiff. Mr Filice said: ‘If you look at the sequence, the Chancellor announced his budget on March 21 and we were high and flying with 95% mortgages. That’s the concern [that we’re heading for a new price bubble].’”
From Irish Central. “Up to 200 ghost estates around Ireland may be demolished under new plans by the Housing Minister. The Evening Herald reports there are around 1,100 unfinished developments around the country since the property bubble burst in 2008. The Labour TD for Limerick City told the newspaper that the majority of the country’s ghost estates ‘can be finished and have to be finished. But in ghost estates where nobody is living but there are still half-built houses, probably the best resolution is to demolish them.’”
From Arabian Business. “According to Deutsche Bank, average property prices in the emirate rose for the sixteenth consecutive month in March. This has led to concerns that Dubai could be entering into a new real estate bubble, similar to the one whose bursting in 2008 led to a collapse in prices of up to 60 percent. For some investors, all of these developments are eerily familiar. Taimur Rana, did not consider himself a serious investor when in 2005 he purchased four properties at the Dubai Lagoon development. The properties he bought were scheduled for delivery in 2007, but he is still waiting more than six years later. He has so far paid AED850,000 — more than 40 percent — in instalments. ‘Nothing is going on. Not a single guy is working on it,’ he claims. ‘We don’t know where that money is going.’”
The Wall Street Journal. “Newland International Properties Corp. on asked a Manhattan bankruptcy judge ‘to limit public access’ to the licensing and other agreements that enable the developer to use the Trump name for the 2.8-acre tower overlooking the Pacific Ocean on Panama City’s Punta Pacifica Peninsula. The developer defaulted on its bond debt in November 2011 as a result of real-estate woes brought on by the global economic downturn. Trump Ocean Club opened in 2011 and features 630 condo units and 369 hotel condo units.”
The Vancouver Sun in Canada. “Vancouver’s real estate market in the next 15 years will actually be two separate markets financed by one chequebook, real estate marketer and ‘condo king’ Bob Rennie told an audience in Vancouver. The purchases will be financed by the baby boomers, who will be selling their fully-paid-for single-family homes, Rennie predicted.”
“Just 4.9 per cent of Metro Vancouver residents make more than $100,000 a year, while 65 per cent earn less than $55,000 a year. Rennie said they’re getting those down payments from their parents and grandparents. ‘The feds, Flaherty and the banks have a really hard time understanding the Vancouver real estate market,’ Rennie said. ‘They’re asking how does a $50,000-a-year income find a $75,000 down payment.’”
The New Zealand Herald. “Househunters are continuing to scramble for property - undeterred by Government promises that property prices will fall in the next three years. Yesterday, young couple Alejo Ramirez and Maria Moran were viewing an Avondale townhouse which promised ‘perfect affordable entry’ at $399,000 and were not prepared to wait for any cooling in the market.”
“‘Our budget is $400,000 and it is impossible to find anything. Three years ago, this house would have been up for $270,000. We were looking to buy two years ago and we’re kicking ourselves we didn’t buy because the houses are so much more expensive so we feel we better buy now because we know it’s going to keep climbing,’ Moran said.”
The Age in Australia. “Melbourne apartment developers are resorting to giveaways of free marina berths, $40,000 furniture packages and stamp duty rebates of up to $45,000 to attract off-the-plan buyers in an increasingly flooded market. Buyers advocate Chris Koren said buyers should be aware that such rebates and giveaways are factored into the end sale price. He said developers were trying to keep prices artificially high despite the competition.”
”’There are so many apartments being built now that the only way developers can offer a point of difference is to offer inducements,’ Mr Koren said. ‘What they don’t like to do is reduce the price because then they have to do it for everyone.”’
Macau Business Daily. “Chief Executive Fernando Chui Sai On has again asked the public to ’stay calm’ before buying homes. ‘The market is overheated and the [home] prices are too high,’ he said, adding there is a growing asset bubble in the estate sector. Mr Chui said more residents planned to buy homes as investment vehicles against inflation and making use of low interest rates. ‘But do they have to hurry up in buying homes when there is a supply of about 30,000 private housing units in the future?’ he questioned.”
The Economic Observer in China. ” For various reasons, many of the Wenjiang’s homes remain empty. In 2008, 29-year-old Zhang Chenguang noticed housing prices were relatively low in Wenjiang, he decided to endure the long commute to work every day and buy a 90-square-meter apartment there. After five years, Zhang certainly isn’t in want of peace and quiet. ‘Even during holidays you hardly see any people on the residential block,’ he said. ‘Only one-third of the apartments have lights on at night.’”
“The large number of empty houses isn’t as big of a danger as the underlying problem, which is that the city has come to over-rely on the real estate industry. As much as 80 percent of its fiscal revenue comes from selling land. ‘Now Wenjiang is really worried,’ a local official said.”
China Economic Review. “Credit can be like steroids for developing countries. But as Francis Cheung, head of China and Hong Kong strategy at brokerage CLSA, points out, China has become addicted to debt to fuel growth. More than half of China’s total debt was added in the past four years, the bulk of which came from shadow banking and bonds. The country’s debt level sits at roughly 205% of GDP as of 2012.”
“‘Since 2009, we just kept on adding more debt. In the first quarter, social financing increased 58% year-on-year’ he said. ‘And the [GDP] growth wasn’t growing. So for investors who are shrewder, they’re saying, ‘Hey, we’re adding more debt but we aren’t seeing more growth. What’s happening here?’ For the more widely read public, they’re saying, ‘Hey, there’s been some big downgrades on China’s debt from Moody’s and Fitch’ because the debt is higher than they anticipated. You keep running harder to stay still now.’”
“‘The world is a strange place now: Adding debt is not a bad thing. Printing money is not a bad thing. Can you keep it going? Yeah, you can print money now. So you can keep it going. In fact, China is not printing money, all this hot money is coming into the country. It is the one place not printing money. China isn’t a rich country. I think that could go to 250% by 2015. At 250% [debt to GDP ratio], you’re actually pushing US kind of levels. I see it as a big anchor [weighing down the country].’”
‘According to statistics from the China Iron and Steel Association, the stockpile of five major varieties of steel in 22 cities reached 155.65 million tons in March - a historic high and a 22.9 percent increase from February. But there wasn’t nearly as much demand in the market as expected. “Steel factories’ and steel trading companies’ optimism relied on the promise of urbanization,” Ge Xin said. “But once the five new rules [regulating real estate] were launched, that confidence was destroyed and the market went downhill.”
‘Moreover, almost every province put forward plans for developing large cities. Hunan, for instance, made plans to construct six “big cities” and six “very big cities” by 2015. Even some small and medium-sized cities have put forward plans for becoming mega-cities or international metropolises. “To a large degree, this enhanced some investors’ optimism about the economic recovery’s momentum,” the source from Shougang Changzhi Iron & Steel said. However, much of that optimism was killed when Premier Li Keqiang said in mid-January that new urbanization must follow the path of low-energy use and ecological conservation.’
‘The latest data from the China Iron and Steel Association show that the profit margin across the domestic steel industry dropped to 0.9 percent, delivering collective industry profits of 2.5 billion yuan ($406 million) for the quarter. Xue Heping, an expert with the association, said the profit level was too small for an industry with total assets worth 4.3 trillion yuan. Over the past year, China’s major steel companies - which account for 80 percent of the country’s total output – 阿have recorded overall profits of 1.58 billion yuan, a 98.22 percent year-on-year drop, according to the association.’
‘Every four days a new international-brand hotel is built in China, according to a report by the China Tourist Hotel Association. One of the factors driving this growth in the number of 5-star hotels is the central government’s efforts to rein in soaring housing prices in many Chinese cities. Strict policies that put limits on the kind of housing projects that can be developed are pushing many local governments to consider developing commercial property projects instead.’
‘Most hotels are losing money, but profits can be made off other areas aside from the hotels,’ a Shanghai based developer told the EO.’
‘Indian homebuilders, facing the highest borrowing costs in two years, are enticing homebuyers to help finance projects as they work to revive sales and cut debt. Developers are looking to counter a slowdown in volumes through these schemes, said Bhaskar Chakraborty, a Mumbai- based analyst. Affordability in Mumbai is the most adverse across major metros, with apartment-sale registrations in the city languishing at a three-year low.’
‘The stock of unsold homes at new residential projects climbed to a record in the quarter ended 31 December, as rising prices crimped affordability in the nation’s biggest cities, according to Pankaj Kapoor, founder of property research company Liases Foras Real Estate Rating & Research Pvt. Total unsold inventory of residential stock in the six major cities tracked by Liases Foras climbed to 100 million square feet (9.3 million square meters), the highest since 2009.’
The gross waste of precious natural resources is absolutely sickening.
This Dubai story is very interesting:
‘It is a Saturday morning and in the shade of the Burj Khalifa there is screaming and shouting. Police have been called in to keep a lid on an angry mob as tempers fray and people shove each other out of the way in a bid to get to the front. There are probably few cities in the world where a property launch can incite minor social disorder, but this is exactly what happened when Dubai’s Emaar started sales at one development in April.’
‘Worries about another bubble have been confounded by the activities of some investors, who have been seen advertising properties online at a mark-up of as much as 30 percent, only hours after making the original purchase. “We should be seeing [price] growth, but the flipping mentality appears to be coming back,” Green adds.’
OK, the boom is on in Dubai, right? But what about this:
‘Rana is not convinced that even this target can be met though, with construction on its 55 or so towers apparently having come to a halt. ‘Nothing is going on. Not a single guy is working on it,’ he claims. ‘What they have right now is six or seven buildings [constructed] to the sixth or seventh floor. If they’re launching new projects, can’t they look at the projects that have already been launched six or seven years ago? What are they doing on that?’ Rana says. ‘Even a new buyer who comes into the market is going to think ‘why haven’t the previous projects been completed?’
‘One man who bought into this dream was Irishman Kenny Timmons. In 2007 he agreed to purchase an apartment on Thailand island’s luxury Jasmine Gardens project for more than AED2m. As of today work has yet to start on the development, despite Timmons having handed over half of the agreed price in the time since. ‘They staged payments up to 50 percent and work never started on the island,’ Timmons claims. ‘About a year-and-a-half ago RERA (Dubai Real Estate Regulatory Authority) wrote to me and told me that the project was cancelled.’
‘Timmons has so far managed to secure a refund of 20 percent of what he handed over to developer Jasmine Gardens Limited, but is still seeking repayment of a further AED850,000 that he says he is owed…Timmons says the last offer he received was 20 percent of the amount he is owed, which he has turned down, or full repayment in 2015. ‘I can’t take that offer because there is no guarantee, this company could be liquidated in 2015.’
‘Timmons says that his experience with Jasmine Gardens has tainted his view of the emirate overall. ‘Never in a million years [would I invest again],’ he says.’
IMO we have to be very careful about what we are being told. Remember the condo sales team faking Chinese “investors” for the press in Canada recently? If the market’s so hot, why would that be needed?
In order to get in on hot housing markets, amateur investors are buying up homes and taking risky measures — like tapping their retirement accounts — to fund the deals.
“We’re seeing many people cash out 401(k)s or IRAs because they want to take advantage of the market,” said Sean Galaris of financial services firm LM Funding, based in New York and Miami. “This new scenario involves people losing significant personal funds since they are financing real estate through retirement accounts, savings and life insurance.”
Galaris should know. His company buys delinquent fee accounts from condo associations and collects the debts. Many of the condo owners he collects from either resort to tapping their 401(k)s or IRAs when they come up short or have already used up those funds to buy the property in the first place.
Lori McDermott, an insurance broker from West Seneca, N.Y., took out a $50,000 loan against her 401(k) for a downpayment on a home in Sarasota, Fla., last December. A short sale, McDermott got the place for $225,000 — a steal considering the seller owed $465,000 on the mortgage.
But still, it’s a risk. If McDermott loses her job or quits, then any unpaid part of the loan will be subject to income tax and possibly a 10% early withdrawal penalty.
“The decision to take money from your 401(k) is not for everyone,” said McDermott. At the age of 48, she has already had five arterial stents implanted. “Having heart disease put me in a position where I was scrambling for life insurance,” she said. ” I looked elsewhere to create a legacy: real estate.”
I looked this one up. The Sarasota County Property Appraiser has no record of anyone by that name, but the next county north, Manatee County, does. A Lori McDermott bought in Ellenton for $205,000 on December 19, 2012.
I took a virtual visit to the property, 5811 30th Court E., via Google Maps. In my opinion, a standard house on a standard cul-de-sac in a standard subdivision west of I-75 is not worth taking a loan against your retirement account for (nor is it a legacy and nor is it a “steal” for that price), but I invite HBB readers to make their own call.
I meant east of I-75. On the Suncoast from Bradenton to Naples, the highway often is the dividing line between old Florida and sprawl Florida.
““We should be seeing [price] growth, but the flipping mentality appears to be coming back,” Green adds.’”
Coming back? It never left.
Exactly.
Buying an empty lot in the desert…what could go wrong?
NZ has the perfect recipe for housing inflation (property speculation, bubble); low property taxes(less than 1%), no capital gains tax and low int. rates (low for NZ anyway). With the National party, in charge, little will be done to curb this. Property tax increases are not needed because gov’t salaries are low, compared to private wages. They probably will never insitute a capital gains tax. If they raise int. rates it will hurt int’l commerce, which is their bread and butter.
Their situation is a conservative’s utopia, but could be a recipe for disaster.
“‘Our budget is $400,000 and it is impossible to find anything. Three years ago, this house would have been up for $270,000. We were looking to buy two years ago and we’re kicking ourselves we didn’t buy because the houses are so much more expensive so we feel we better buy now because we know it’s going to keep climbing,’ Moran said.”
That’s $325K USD. By global standards houses in the USA are “cheap”, which just goes to show the global reach of the bubble, even in countries with anemic economies and low average wages like New Zealand
http://www.stats.govt.nz/browse_for_stats/income-and-work/Income/NZIncomeSurvey_HOTPJun12qtr.aspx
Low average wages? Try again.
Median hourly wage in NZ is NZD20.50
In the US, median hourly wage for 2012 was $15.71 which translates to right around $20.50 NZ dollars. If NZ is a low wage country, so is the USA.
Gov’t jobs (teachers, cops,nurses) are low paid in relation to private sector jobs. In general NZ wages are higher than the US. Minimum wage is $12/hr. The cost of living is higher, mostly because goods and services are higher. When you pay $9/gal for gasoline or $60,000 for a VW passat, paying a nurse or teacher 50,000/yr is not a lot of money, especially when the kid behind the bakery counter is earning a minimum of $24,000/yr.
I know a few folks who thought of emigrating to Kiwi land and their observations match yours: the cost of living there is sky high. What this means is that the NZ dollar is overvalued and that when you factor that in that real wages are indeed lower.
But even if they weren’t lower, their median housing prices are higher than ours.
Right, and their house prices are sky high because of speculation and the speculative market there is lucrative because of the reasons I mentioned.
How much does medical insurance cost them?
Low average wages? Try again.
I looked at your link and the first think I saw was this:
median weekly income from all sources – up 1.8 percent from $550 to $560
median weekly income for those receiving income from wages and salaries – up $6 (0.7 percent) to $806
What this tells me is that there is some serious underemployment there. If you can get a salaried job the pay is decent. If you can get a job.
I will give the Kiwis credit for one thing, their wages, unlike ours, have been steadily rising, even if their cost of living is horrid. Especially their housing. $40k median income, while entry level housing costs $400K, that is 10X. They are in mega bubble land. We complain about 5x ratios as being bad.
But it’s like I say: The whole world has been brainwashed into believing that housing is supposed to be unaffordable.
Their superannuation (social security) is very low compared to ours. That also brings the median income (from all sources) down. 10x income holy sh#t !!
First off, $400K is median price nationally, NOT an entry level home.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10881303
“The national median price rose an annual 8.1 per cent to $400,000, the first time it’s broken the $400,000 mark. About 90 per cent of the increase in the median price has come from Auckland and Canterbury over the past year.”
Second, $40K is median ***PER PERSON*** income, not household. That means a “median” couple is making $80K a year. So your 10X ratio is really 5X. And it’s less than than because taxes, both income and property are lower in NZ than in the US. Pick 100 $400K homes at random in the US and I’ll bet 75 of them are bought by households making less than $80K a year.
See the last paragraph.
I believe close to half of all NZer’s live in Auckland and surrounding suburbs. What’s your point, Smithers? Are you saying there is not a housing bubble in NZ?
“France’s price-to-income ratio rose to a record 180pc of historic levels during the bubble, one of the most stretched levels seen anywhere in the OECD bloc.”
Sounds about like San Diego. Current home sale prices are around $500K, just like they were back in 2006, but incomes have declined since then — the median is down to only $64K per household. We make considerably more than that, and can barely afford to rent here. I can’t imagine how the “typical” San Diego homeowner household can afford to pay their mortgage plus all the other high living costs associated with The World’s Finest City.
I can’t imagine how the “typical” San Diego homeowner household can afford to pay their mortgage plus all the other high living costs associated with The World’s Finest City.
I suspect that most of them bought when housing was much cheaper, like in the mid 90’s. Few could afford to buy at today’s prices.
Whac, your census chart shows median county home value of $455,000, but Zillow’s record of actual home sales shows a current median of $377,000, which is way below the December ‘05 high of $502,000. I know it’s Zillow, but this chart is actual sales, not Zestimates.
http://www.zillow.com/local-info/CA-San-Diego-County-home-value/r_2841/#metric=mt%3D19%26dt%3D1%26tp%3D6%26rt%3D6%26r%3D2841%26el%3D0
I’m all the way across the country, so you know better than I do, but are you sure the actual sale prices are back to where they were, or just the mania?
My perceptions are admittedly biased by where we live, which is Rancho Bernardo, in North County San Diego. This is basically second-tier housing behind the premier North County Coastal communities of Del Mar, La Jolla, Rancho Santa Fe, Solano Beach and Carmel Valley. If you look for it, you will find a nice back-of-the-envelope housing market comparison in yesterday’s Bits Bucket between inland areas of North County San Diego (Rancho Bernardo, Rancho Penasquitos, Poway, Sabre Springs and Scripps Ranch) versus the above-listed coastal (or near-coastal, in the case of Rancho Santa Fe) communities. As you move from our area towards the coast, the percentage of homes selling for north of $1m steeply increases.
The upshot is that you will not find single-family homes listed for south of $500K in any of these ten communities, and to find cheaper housing in San Diego County, you have to accept some combination of older, more dilapidated housing, longer commutes, higher crime or inferior public school education.
GS/PB is correct.
Homes in our neighborhood (similar socio-economic demographics as PB’s) are often listed at or above peak bubble prices…and they are selling!
“…that enable the developer to use the Trump name for the 2.8-acre tower overlooking the Pacific Ocean on Panama City’s Punta Pacifica Peninsula. The developer defaulted on its bond debt in November 2011 as a result of real-estate woes brought on by the global economic downturn.”
Does anyone have the dirt on how many premier properties graced by the Trump name have gone into foreclosure?
‘The developer defaulted on its bond debt in November 2011…Trump Ocean Club opened in 2011′
They defaulted the same year they opened.
Check this out, titled Oh no, not him again:
‘Two words, endless meanings. Donald Trump. Hmmm. Difficult to say it without even choking on my coffee as I write this. Dorn….allll..terumm…oh no, I just can’t manage it. Look, I can’t bring myself to say that name any more, so let’s just refer to him as “The Joker”. And The Joker is back in Dubai. What’s he doing? Last week, Damac announced the biggest project in its entire history.’
‘Akoya by Damac is a 29 million sq ft master development that will include a spa, boutique hotels and international schools from kindergarten to secondary, as well as ‘globally-recognised’ retail brands, leisure and entertainment offerings and a sports complex. And, of course, a golf course. Or — as it will now be known — the Trump International Golf Club, which will include a 30,000 sq ft state-of-the-art club house and luxurious Trump Spa & Wellness Centre.’
‘Now, I know what you’re thinking…that I have made a terrible mistake. This grand project was actually announced in 2008. How could I be so lazy and post a five-year-old story again? Well maybe you are getting confused with the Trump International Hotel & Tower Dubai. Remember that? Launched at star-studded gala events in Los Angeles and New York in 2008, The Joker told us this $2.9bn project was going to be a spectacular 62-storey building on the Palm Jumeirah. At one point the project’s penthouse became the most expensive property in Dubai with one buyer offering AED11,100 ($3,022) a sq ft, or almost AED110m.’
“We really want to make this the tremendous success that we know it’s going to be. I love doing one [project], making it really great and then we do the next one,” The Joker said at the time.’
‘The project was, of course, quietly canned, and the planned site is now a kiddies park (and a pretty good one I should add). What happened to any investor who believed The Joker would deliver this project, and paid AED11,100 a square foot for an apartment, I have no idea.’
When Romney snuggled up to this scum bag, that was one of the several reasons I decided not to vote for him.
Others include picking Glenn Hubbard as his top economist and having a private meeting with Jamie Dimon.
I watched Hubbard on “Inside Job” and felt certain it was a career-ender. But it did not diminish him in the least.
Hubbard is a scum of the highest order.
‘When Romney snuggled up to this scum bag’
To this day, if Trump says we should bomb some country it gets picked up by the mainstream media. Remember when he announced he might run for president and he was instantly called a ‘front-runner’?
I don’t know what this says about our politics. But I’m sure Kim Kardashian could announce a senate run and there would be a horde of media covering it, asking her what she thought of US/Russian relations.
“Remember when he announced he might run for president and he was instantly called a ‘front-runner’?”
I remember when the RNC showed what a bunch of asshats they are by parading a field of clowns and jokers before the American public on national teevee during the debates.
I think of golf courses on the Arabian peninsula and think, “that’s foolish.” But the world is determined to make me the fool.
On another subject, do citizens of Dubai exist? I get the sense that Dubai is a bunch of sheiks who chose the right marketing firm and slave labor contrator. I have predicted that, by 2025, there will be no such thing as Dubai, but hey, at this rate I might be buying there in 2025, using borrowed funds of course. That year, just as every year, it will be time to buy!
“On another subject, do citizens of Dubai exist?”
Cat Stevens lives in an apartment there, does that count?
‘Stevens remains married to Ali, with whom he has five children. The family resides in London.’
http://www.biography.com/people/cat-stevens-16548027?page=3
OK, I looked it up. From Wikipedia:
As of 2005, 17% of the population of the emirate was made up of Arab UAE nationals, with the rest comprising expatriates. Approximately 85% of the expatriate population (and 71% of the emirate’s total population) was Asian, chiefly Indian (51%) and Pakistani (16%); other significant groups include Bangladeshis (9%) and Filipinos (3%) and a sizeable community of Somalis numbering around 30,000, as well as other communities of various nationalities. … In addition, 16% of the population (or 288,000 persons) living in collective labour accommodation were not identified by ethnicity or nationality, but were thought to be primarily Asian.
…
The native Emiratis are outnumbered in their own country at a ratio of 11 to 1. They now make up only 9% of the population whereas foreigners make up 91% of the remaining population.
I saw Planet of the Apes, I know how this ends.
I see that bit about the Panama property named after Donald Trump and smile. As I wrote a few years ago in this space, I lived in Panama for a number of years, about five minutes away from where this garish moron reservoir has been erected. “Whoever said less is more never had more … Central America’s next architectural icon.” Like a 21st century Tikal, only with Trump as the god, developers and realtors as the priests, and us as the ritual human sacrifice.
http://www.trumphotelcollection.com/panama/
I used to be able to discern my old apartment building, easily, whenever I looked at an aerial photograph of my barrio. Now it’s obscured by at least fifty skyscrapers, although I know it’s still standing because I’ve seen real estate listings for units. I’m tempted to visit to find out whether people actually live there, or if instead it has been converted into a community of investments.
The Vancouver market went nuts when the Chinese from Hong Kong starting moving there in the 80s and 90s. Then it continued it’s craziness when the Mainland Chinese started buying “just in case” real estate there in the 90s and 00s.
I have friend from Vancouver, his parents made a fortune from their house where he grew up. Sold it for about 5X what they paid for it to a - you guessed it - Chinese buyer. Then his parents bought a small condo with cash and put the rest of the money in the bank. And last year his parents retired and sold that condo for some ridiculous among of profit too, took the money and moved to interior BC, which while it isn’t cheap, it’s practically free compared to Vancouver. That’s a a growing retirement area for Canadians, especially Vancouverites.
Can this keep going on? Who knows. There’s 1.3 billion Chinese out there. People have been predicting the just around the corner crash of the Vancouver real estate bubble for 30+ years.
“…been predicting…30+ years.”
Guess what? IT’S FINALLY HAPPENING NOW!
And here I thought China was totally not in debt, since it’s the roaring tiger and the hidden dragon and such.
“China isn’t a rich country. I think that could go to 250% by 2015. At 250% [debt to GDP ratio], you’re actually pushing US kind of levels.”
Is China’s debt-to-GDP ratio better or worse than the US level?
And given the topsy-turvy state of the global economy, is it better for your country’s version of this ratio to be higher or lower?
Economic Beat | SATURDAY, MAY 18, 2013
U.S. Debt Pollyannas Due for Rude Awakening
By GENE EPSTEIN | MORE ARTICLES BY AUTHOR
CBO’s most plausible projection puts national debt at 83% of GDP by 2023. A look at the mythology of Medicare-fee cuts and tax-break expirations.
Bad news for debt-deniers: Despite media coverage to the contrary, the updated 10-year projections of the Congressional Budget Office, released on Tuesday, confirm that the long-term debt crisis faced by the federal government is as much a threat as ever. If the CBO updates are interpreted by Washington as an excuse to postpone painful budget cuts, it means only that the cuts will be all the more painful later.
The CBO’s updated projections fully reflect the recent windfalls that will reduce the red ink. And yet, according to the agency’s most plausible projection—its so-called “alternative fiscal scenario”—debt as a share of nominal gross domestic product will soar from 75% this year to 83% by 2023, “the largest share since 1948,” as the agency points out.
President Barack Obama has unveiled a plan to reduce the debt/GDP ratio to 72.3% by that year; the Democratic-dominated Senate has targeted the ratio by 2023 at 70.4%; and the Republican-dominated House would reduce it to 54.8%. Even assuming the president’s higher target holds sway, if 83% is a plausible risk, the latest CBO report should be setting off alarm bells in Washington and in the media, not inducing complacency.
Just how the report could have that perverse effect is a tale worth telling.
…
…”Can this keep going on? Who knows. There’s 1.3 billion Chinese out there. People have been predicting the just around the corner crash of the Vancouver real estate bubble for 30+ years.”
Of course it will go on! And on and on and on until we are all RICH beyond our wildest dreams! Because everyone knows that ALL Chinese citizens have both the freedom AND economic wherewithal to emmigrate to Canada and purchase anything they want- because all Chinese are incredibly wealthy! Sshhhh! Its a secret! And when all of them establish themselves in their luxurious new palacial homes in Canada, these new citizens will vote to rename their new country, ‘Chinada’. Won’t it be just GRAND to live in Chinada and trade houses with one-another like they were Beanie Babies? Oh, I can’t wait!
By the way, I have a couple of good friends who also live in Vancouver. They say that it is an over-hyped shithole overrun with prostitutes and drug addicts.
‘it is an over-hyped shithole overrun with prostitutes and drug addicts’
Once I was eating lunch in a “hip” part of Austin TX. A couple in the booth behind me shot up some drugs after they finished eating.
Anyhoo, about Vancouver:
‘Sales of multifamily homes in Metro Vancouver in the first three months of this year fell by nearly half those sold in the same period last year, Colliers International reported Thursday. ‘It is true that investment demand has been more moderate of late,’ said Scott Brown, senior vice-president, Colliers’ residential group. ‘This moderation is, however, partly due to lack of supply as few new launches were conducted in markets investors tend to favour such as Vancouver Downtown and Burnaby.’
Once I was eating lunch in a “hip” part of Austin TX. A couple in the booth behind me shot up some drugs after they finished eating.
A couple of times while driving down the freeway I’ve seen Neil and Bob, but I’ve never seen something like this.
Prostitution is legal in Canada.
“Once I was eating lunch in a “hip” part of Austin TX. A couple in the booth behind me shot up some drugs after they finished eating.”
Are you sure they were not diabetics? I suspect there were visual or verbal cues that led you to believe it was illegal drugs. A diabetic would probably have tested before injecting insulin.
I visited once and liked it, but the neighborhood immediately east of downtown, around the Chinese garden, was a skid row, at least as of 2001.
Probably all completely ‘gentrified’ now. All been snapped-up and everyone is a millionaire. No crime, no poverty, no strife, no junkies pissing in your doorway or bums breaking into your car to sleep at night. Awesome. 800 square feet of Paradise. Snap it up while you can, boys… Snap it up.
Except that all those Chinese don’t actually want to “live” in Canada. They just want the foreign passport:
http://blogs.vancouversun.com/2013/05/18/hong-kong-immigrants-streaming-out-of-canada/
If (or when) something eventually happens in China and they all want to come back to Canada, I hope the government imposes restrictions and conditions on their return.
“By the way, I have a couple of good friends who also live in Vancouver. They say that it is an over-hyped shithole overrun with prostitutes and drug addicts.”
That can be said about pretty much any big city in the world.
And of course not all Chinese are rich. But they don’t all have to be. Only a few thousand need to keep buying condos in Vancouver every year to keep this game going. If just 1/1000 of 1% of Chinese buy a condo in Vancouver every year, this thing can go on for another 100 years easy.
Like I said before, people have been predicting the demise of Vancouver real estate for 30+ years. And yet here we are all these years later and a 2 bedroom condo goes for $1M.
“If just 1/1000 of 1% of Chinese buy a condo in Vancouver every year, this thing can go on for another 100 years easy.”
Dream on, troll boy. All bubbles eventually collapse due to reaching an unsustainable combination of price level and price appreciation rate. Vancouver decidedly is NOT different.
Has House Price Deflation Begun in Canada?
Edward Harrison
May 17th, 2013
Yesterday, the Teranet-National Bank National Composite House Price Index for Canada was released. It showed that 12-month home price inflation in Canada was down to 2.0%, the lowest level since November 2009. And given the huge amount of talk in Canada about a potential housing bubble, there is a worry that this is the beginning of a housing bust.
You can see from the chart provided by the house price index that there actually was a housing bust in Canada during the global financial crisis with year-on-year declines reaching 6%. What has separated Canada from other markets where there has been talk of a housing bubble is that Canada was able to reverse this trend and bring the year-on-year change to near record highs in 2010. SInce 2011 however, the pace of house price inflation has ebbed and the talk is now about renewed declines.
The talk of a bust is in part due to the soft numbers coming out of two principal bubble markets in Toronto and Vancouver. In Toronto, there has been massive condo overbuilding in the city center and especially along the Lake Ontario coast on Lake Shore Boulevard and Queens Quay where condos are now replacing former docklands. Anyone who has taken the Gardiner Expressway between western Toronto where and the city center in the last 5-7 years knows what I am talking about. There is a massive array of cranes building condos everywhere as this is “one of the largest waterfront revitalization projects ever undertaken in the world“. However, now sales of condos are plummeting in Toronto and condo leases are rising as owners are forced to become landlords. House prices in Toronto are still appreciating.
In Vancouver, house prices have been falling for some time now as are house transactions. According to the House Price Index, the year-on-year decline in prices is only 1.5%, however – though the decline is greater according to other measures. But this April marked the ninth consecutive month of price declines at a time when the Canadian economy is growing. That tells you that this market decline has not been precipitated by a decline in the broader economy as much as a combination of economic and internal market forces. Vancouver looks to have reached a top. Nearby Victoria is the only other major market that has falling prices nationally with prices now down 3.3% in the past year.
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