December 6, 2013

The Lessons We Could Have, Should Have Learned

It’s Friday desk clearing time for this blogger. “The U.S. housing market appears to be cooling off and that’s not a bad thing, according to Zillow CEO Spencer Rascoff. ‘The fact that the housing market is starting to slow down’ means the recovery is sustainable, he says. ‘We had bounced too far off the bottom too quickly and so this slowdown is okay. There were a lot of buyers that were sitting on the sideline waiting for the media to tell people that home values have bottomed. We’ve now declared that.’”

“The student housing market near the University of Minnesota remains stable with historically low vacancy rates, but developers and real estate experts agree its future is a mystery. ‘When you talk to realtors, they’re saying we’re seeing one of the best markets we’ve seen in years,’ said Minneapolis City Assessor Patrick Todd. ‘There’s nothing for me to say, ‘Boy, the market has peaked.’ But Todd says this was the case right before the housing bubble popped in 2005. ‘Everybody knew the market was just on fire,’ he said. ‘But, no one knew: When will we hit that point where one more building is just too many more buildings?’”

“Los Feliz agent Judy Oroshnik said the recent housing market was ‘reminiscent of the bubble in the mid-2000s in our immediate market area’ but noted there’s still a great response on available homes. ‘We’re in a special area being on the East side and not everything is going out over asking price,’ she said. Realtor Brad Keyes admits the market ‘is slowing down a little bit. It takes the seller and buyer a little time to catch up with what’s really going on. Everyone is still thinking real estate is still super, super hot, so people are overpricing homes.’”

“Nine years after spending millions to build their dream home in Franklin Lakes, Kevin and Cheri Schmidt lost it recently to foreclosure. The couple put their house on the market in January 2012. They asked $4.5 million, then cut the price to just under $4 million. But there were no offers. They say the market for luxury homes was dead. ‘Anything over $2 million, that market disappeared,’ Kevin Schmidt said. ‘The $3-, $4-, $5-million market doesn’t exist right now.’”

“Kevin Schmidt thinks the bank believed the couple actually had the money to make their loan payments; he says they didn’t. ‘I don’t think the bank truly believed I didn’t have a million dollars lying around,’ he said. ‘They’d ask, ‘Where’s the money?’”

“Job losses are growing in the real estate sector, the second largest employer in India after agriculture, as poor sales and squeezed cashflows force developers to cut down the workforce. ‘The new recruitments have completely stopped. If the sentiments do not improve in the next four-five months, the situation will worsen to that of the market crash of 2008, where 30% of the work force lost jobs,’ said Lalit Kumar Jain, managing director of Kumar Urban Development Ltd.”

“An Epoch Times reporter on the ground confirmed the results of a recent survey: that a ‘mortgage shortage’ is spreading from first-tier cities like Beijing, Tianjin, Shanghai, Guangzhou, and Shenzhen to second- and third-tier cities. In 17 of the 32 key markets, banks are either slowing down mortgage lending or have stopped altogether. The rate for first time buyer has increased, and the banks’ screening processes for granting loans have become increasingly stricter. In addition, the time it takes to approve the loan has lengthened significantly.”

“‘Almost every reasonable person, including Chinese bankers, thinks there is a bubble in China’s real estate market, and investing in it carries an increasingly high risk,’ wrote Jason Ma, a commentator on China’s economy for the New York-based New Tang Dynasty Television.”

“As stricter home loan rules weaken demand, the volume of HDB flats being sold below their appraisal value has also increased, media reports said. As such, sellers have been forced to adjust their expectations. For instance, Assistant Manager Raymond Koh asked for a cash-over-valuation (COV) of S$20,000 for his second floor five-room flat in Punggol earlier this year. When he found no buyers, Kho lowered his COV to ‘S$10,000, then S$5,000, then zero,’ he said. After which, ‘I started going negative.’ Currently his nine-year-old flat is priced S$20,000 below valuation. ‘Any lower and I might as well continue living here,’ said Kho.”

“I take a detour down Frankie’s road on the way to Sainsbury’s and that’s when I see it: a clipped little tree in a slate-coloured pot. I’ve seen trees like this before. Years ago they spread through Islington like a virulent rash. The moment they started appearing near my old flat in Stoke Newington, I knew it was all over. Shortly afterwards we moved out to the suburbs. Just when I thought I could relax … now they’re here, like harbingers of doom. Because these trees mean property developers.”

“‘What’s going on over there?’ I ask Frankie when she opens the door. ‘Oh, yeah. Guess how much it’s on the market for?’ ‘No. I can’t bear it. Just tell me.’ ‘Six-fifty.’ ‘Piss off.’ Only last year, houses on this road were selling for less than 500k. Frankie bought hers four years ago for 350. I heard a rumour that the average house price in our area has gone up by 40 per cent this year.”

“I glance into the buggy and notice Moe has opened his eyes. I pop his dummy back in and he drifts peacefully off again. It is, I realise with grim satisfaction, the perfect analogy: house prices are nothing but a great big dummy, administered by our great leaders to keep us all quiet. And we are just sucking it up.”

“Last month at an International Monetary Fund conference, former Obama economic advisor Lawrence Summers harshly criticized outgoing Federal Reserve Board Chairman Ben Bernanke for comments he made this summer. Bernanke had raised the possibility of tapering the Fed’s purchase of treasury bonds, which would cause interest rates to rise. With the economy facing a prolonged slump, Summers argued, Bernanke should not even have talked about raising interest rates.”

“Whether deliberately or not, Bernanke’s taper talk stemmed the growth of an incipient housing bubble. Summers obviously believes that Bernanke acted wrongly. So what is Summers’ recipe to prevent the growth of a bubble? If there is no answer to that question, then Summers’ critics have been right to identify him as someone who deliberately promotes bubbles as a way to counter stagnation. Many economists remember that Summers was Treasury Secretary as the stock bubble reached its peak in 2000 and later derided those who raised concerns about the housing bubble.”

“Whatever his past role, if Summers is to preserve his credibility on this issue, he and his defenders must come up with a course of action that would rein in bubbles without sinking the economy.”

“There is no cheaper, quicker route — for politicians or citizens — to instant prosperity than a loan that requires little in the way of capital or commitment. The more voters who take out loans to buy homes in a rising market, the quicker and cheaper their sense of well-bring — and the consumer spending that goes with it.”

“In London last month, many homeowners made more on the increased value of their homes than they will take home as pay in a single year. Meanwhile, in the United States, no party wants to be the one accused of slowing an equally tentative recovery. If consumers start spending and then taking on more debt, if house prices boost their sense of well being, even those with the battle scars of the last crisis can’t be relied upon to stop them.”

“One of the lessons we could have, should have learned from the banking crisis was that it wasn’t just a banking crisis nor even just an economic crisis. It also revealed deep and troubling flaws in our politics. If politicians buy votes with cheap debt and consumers are willing to be bought, no bank in the world will be given a mandate to stop them. What president or prime minister was prepared to tell people — before it was too late — that the good times had to stop, or at least slow down?”

“It’s easy, comfortable and convenient to blame bankers for the woes of the last few years — and they aren’t without blame. But governments and the consumers who vote for them have to recognize that stoking the housing market is not the same as reviving the economy. Rather the opposite: Leaning on house prices to create a sense of illusion of prosperity merely postpones the moment at which we confront the systemic challenges of an economy that hasn’t yet found real growth.”

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Comment by Whac-A-Bubble™
2013-12-06 05:15:55

“‘The fact that the housing market is starting to slow down’ means the recovery is sustainable, he says.”

I suppose there is a fine line between sustainable recovery and renewed leg down?

Comment by Strawberrypicker
2013-12-06 06:21:58

Permanently highish plateau or permanently high Stealtors?

Comment by Janet Felon
2013-12-07 18:47:25

As long as I hold foreclosure MBS’s on my balance sheet indefinitely, with investors carrying the market, a permanently high plateau will be achieved. Suckas.

Comment by Whac-A-Bubble™
2013-12-06 05:18:39

“Leaning on house prices to create a sense of illusion of prosperity merely postpones the moment at which we confront the systemic challenges of an economy that hasn’t yet found real growth.”

So long as you can liberate some equity this time of year to buy yourself a case of wind or fund a Black Friday shopping spree at Wal-mart, why does it even matter?

Comment by Whac-A-Bubble™
2013-12-06 05:19:46

wind wine (need coffee!)

Comment by Lesser Fool
2013-12-06 11:07:10

“case of wind”

Is that like phantom equity?

Comment by Bill, just South of Irvine
2013-12-06 19:18:00

I will liberate stock gains in January. It will certainly buy me a case of wine!

Comment by Housing Analyst
2013-12-06 06:27:31

“There were a lot of buyers that were sitting on the sideline waiting for the media to tell people that home values have bottomed. We’ve now declared that.’”

I declare myself Emperor too.

In spite of this “declaration”, housing prices are still falling and current asking prices of resale housing are 40% higher than reproduction costs (lot, labor, materials and profit).

Comment by Mr. Bitcoin
2013-12-06 06:32:50

“I declare my self Emperor too.”

I declare myself to be a currency.

Amazingly, others also think that I am a currency.

Comment by Whac-A-Bubble™
2013-12-06 06:40:39

We need a referee to decide on that.


Comment by Mr. Bitcoin
2013-12-06 06:52:35

I am experiencing an identity crisis. My self-worth is being questioned.

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Comment by Ben Jones
2013-12-06 06:56:35

‘a lot of buyers that were sitting on the sideline waiting for the media to tell people that home values have bottomed’

Considering that net household formation is dropping, his assessment of the media’s sway over the public is suspect.

But what I thought really interesting; does Zillow think of itself as the media? I thought they were electronic cheerleaders for the REIC.

Comment by Whac-A-Bubble™
2013-12-06 08:16:56

“I thought they were electronic cheerleaders for the REIC.”

Bought and paid for by the REIC, but they have to pretend to be the MSM in order to legitimize their message.

Comment by Whac-A-Bubble™
2013-12-06 06:41:39

“…harbingers of doom… property developers.”

Well d’oh…

Comment by Ben Jones
2013-12-06 06:52:27

‘Taiwan’s Minister of finance Chang Sheng-ford warned on Wednesday that Taipei’s property prices are extremely expensive, in what appears to be a property bubble, prompting the ministry to revise its taxation principles in order to curb speculation.’

‘The ratio of home prices to incomes averaged 12.4 in Taipei, much higher than the international standard of 5, said Yang Chin-long, deputy governor of the central bank.’

‘Property developer Raimon Land recently presented its latest assessment of the country’s two most active condominium markets, Bangkok and Pattaya. Market-wide in Pattaya, the average selling price is now at 71,357 baht per square metre, an increase of 21.2% year-on-year…Within the next three years, nearly 25,000 units are expected to be completed in Pattaya, a large percentage of which will be one-bedroom units measuring less than 40 square metres.’

“My concern is that today only 48% of the newly launched units have actually been sold,” commented Mr. Dervillé. “The good thing is that the demand is there, but the challenge is that there are too many projects in the pipeline.”

‘Supply of Residential Land Hits Record High’

‘China supplied 136,000 hectares of land for residential development in Q1-Q3 2013, the highest level ever during the same period of a year, the Ministry of Land and Resources said.’

‘The land area supplied for residential development rose 31.3% in Q1-Q3 from the same period of last year.’

Comment by Blue Skye
2013-12-06 12:02:57

“home prices to incomes averaged 12.4 in Taipei, much higher than the international standard of 5…”


It’s a bubble even by bubble standards.

It would probably take a century to pay that loan off…or a life insurance policy.

Comment by Ben Jones
2013-12-06 12:12:00

‘the international standard of 5′

Yeah, that’s baloney. Almost twice the historical standard.

Comment by Ben Jones
2013-12-06 06:58:05

‘I started going negative.’ Currently his nine-year-old flat is priced S$20,000 below valuation. ‘Any lower and I might as well continue living here’

For God’s sake don’t give it away!

Comment by Bad Andy
2013-12-06 08:17:48

He’s got this F-ing thing and it’s F-ing golden. You can’t expect him to just give it away can you?

Comment by Strawberrypicker
2013-12-06 07:09:22

I like the story about the rich people in New Jersey who say they can’t afford to pay on their multimillion dollar home. Very sympathetic couple. From the article, here is the caption of the photo showing them standing in front of their mansion:

“Kevin and Cheri Schmidt used their $5 million windfall from an invention to build a home in Franklin Lakes.”

Comment by Ben Jones
2013-12-06 07:10:47

I think they tried their hand at condo development.

Comment by azdude02
2013-12-06 07:41:14

Didn’t condos start booming towards the peak of the last bubble?

Comment by Whac-A-Bubble™
2013-12-06 08:20:18

Oh yeah. Did you somehow miss June Fletcher’s Summer 2005 story about chasing FL condo investments in the tailwinds of hurricanes?

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Comment by Ben Jones
2013-12-06 08:56:15

Check this out:

‘Selling the sky’

‘Money, cars, condominiums – it all adds up to the same thing all over the world: the extinction of simple lives lived close to the ground. the end’

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Comment by snake charmer
2013-12-06 10:25:15

Comically cynical piece. In a related vein, I heard an enthusiastic radio ad this week for a free real estate seminar here in Tampa, to be put on by the Flip That House host, on the subject of flipping houses.

There have been times where I was tempted to attend one of these just to report on the surreality of the experience. I would have to ingest a few beverages beforehand, otherwise I’d go crazy.

Comment by oxide
2013-12-06 07:54:06

These Joisey folks are definitely a model of chutpah.

Basically, they had a $5 million windfall, built the house cash, and then borrowed against the paid-off house to do some speculation in 2007. Of course it went bad.

The Schmidts have sued Lakeland, saying that the bank engaged in “predatory” lending by refusing to modify the loan and by giving the Schmidts the loans in the first place, because the suit says they did not have the “financial capability or income strength to make payments.”

“They say” that the bank promised a re-fi, yet Kevin the developer and inventor evidently didn’t think to get this promise, worth tens of thousands of dollars, in writing?

They “say” that it’s the banks fault for giving them the loan. The bank should have refused the loan because they didn’t have the “income strength.” That’s laughable on two counts. It doesn’t matter if the bank vets you or not. You sign, you’re on the hook. And why would the bank care about income if the Schmidts had offered up a paid-off house for collateral?

Comment by Tarara Boomdea
2013-12-06 16:31:07

These Joisey folks are definitely a model of chutpah.

You’re obviously a shiksa (like myself.) I hate to kvetch, but it’s spelled chutzpah.

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Comment by Ben Jones
2013-12-06 07:09:32

‘To the Editor: Re “Backlash by the Bay: Tech Riches Alter a City” (front page, Nov. 25):

“It was with both sadness and great nostalgia that I reviewed the details of the changing face of my beloved San Francisco. Fellow teachers at a high school south of San Francisco in the early ’90s lived in affordable, comfortable neighborhoods like the Castro and Mission districts.”

“My city-dwelling co-workers car-pooled to work and met on Fridays in their neighborhood pubs. Their lives in San Francisco afforded them the perfect counterpoint to time spent as teachers in suburbia.”

“Call me retro, but to think that hard-working, dedicated young teachers can no longer afford to live in San Francisco brings great sadness, not for me as a retired teacher but for the city we all loved. - C.E.”

“The anger of the people in San Francisco rings true. I live in Park Slope, Brooklyn. The emotions of San Franciscans absolutely mirror mine and those of what’s left of my neighbors. When we moved onto the block where we still live, we were told, “You can’t live there.”

“Thirty-five years later, we’re still here. My children are being told “you can’t live there,” but for different reasons. We were seen as “pioneers,” moving into dangerous territory. My children, all with advanced degrees, productive spouses and professional jobs, can’t live here because they can’t afford it.”

“After 35 years of building a community and living comfortably in the house we renovated, I am saddened by the advice of many who say we should sell our house and get rich. It almost seems like yet another “you can’t live there.”

“Your article nearly brought me to tears. I have never before felt such helplessness in the face of social injustice. Our country has become one in which the bottom line is all that counts, and whatever must be done to increase profits is considered moral.”

“Good luck, San Fran. Hope that you do better than we have. - C.N.”

‘in the early ’90s lived in affordable, comfortable neighborhoods’

So did the Bay Area have nice weather in the early 90’s? I wonder what’s changed so much since then?

Comment by Strawberrypicker
2013-12-06 07:13:33

The Bay Area changing from one type of elitism to another!

If you ain’t rich and have school age kids it is a horrible place to live. Work yourself to death and never see your kids. Then what is the point of the private schools, your kids grew up raised by absent parents always working and turned out a mess.

Oil City is the new black.

Comment by In Colorado
2013-12-06 09:15:19

hen what is the point of the private schools, your kids grew up raised by absent parents always working and turned out a mess.

I have a young and still childless Indian colleague in the bay area. He and his wife are planning on sending the future kids off to boarding schools in India while they continue to work and collect their figure paychecks in Silly Valley.

Comment by snake charmer
2013-12-06 08:13:43

I’ve read several things recently that make a similar point — many desireable cities, or middle-class neighborhoods in those cities, have become no-go for families and young people, not because of crime, but because it’s too expensive to live there, even on 2 or 3 times the median income. And there are fewer people making multiples of the median income all the time. I doubt the Fed, or anyone else involved in the bubble and its attempted reflation, ever considered this possibility.

Comment by MacBeth
2013-12-06 08:27:31

Sure they considered it.

And it didn’t matter.

Their focus was to preserve the wealth, not generate new wealth. And it remains thus.

If the opposite was true, the middle class would be expanding five years after a crash. Instead, it’s shrinking.

This is what the NeoCon-Progressive Party wants. Their policies and behaviors prove it.

Comment by AmazingRuss
2013-12-06 12:38:45

The endgame is a nation of permanent debt slaves.

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Comment by rms
2013-12-07 01:03:20

“This is what the NeoCon-Progressive Party wants. Their policies and behaviors prove it.”

+1 And they’re never going to stop either. Any sort of regulatory attempts to correct this situation will be met with graft and corruption since the judicial system is stacked with them too. And don’t expect transparency from “real journalists” either.

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Comment by Housing Analyst
2013-12-07 07:51:39

Afterall, statism requires full control of all two political parties. That way they have full control of all three branches.

Comment by MacBeth
2013-12-06 08:19:55

See the parallel? As Dollar Stores continue to spring up across the Bay Area, so will the angst over having too much money.

Their impenetrable LIFESTYLE cocoons are becoming penetrable. No longer are they going to be able to keep THEM out.

Liberal elitists are such weirdoes.

Comment by Ben Jones
2013-12-06 07:33:30

I see this kind of time frame regularly:

‘An Illinois woman says she broke her foot while walking around a Collinsville house that was for sale. Fuentes claims the house had been vacant for at least two years before a “For Sale” sign was put up, prompting her to walk around the property on Jan. 31.’

‘According to the complaint, the house went into foreclosure in September 2010 and ownership was eventually taken over by the United States Secretary of Housing and Urban Development.’

When I first got into property preservation, it was a big deal to meet HUD timelines, because they were interested in get their houses sold right away. Not any more.

There was also a serious effort made to keep houses from freezing, securing, etc, back then. This was done even if we had to go in pre-foreclosure and do the work. Now years go by and no one knows if the house is occupied or not or by whom.

Comment by MacBeth
2013-12-06 08:14:48

Bailouts = Nobody gives a sh@t whether a home is occupied or not.

Except maybe the neighbors and local governments…but, heh, they aren’t part of the grand Washington, DC, plan. So screw ‘em.

Meanwhile, folks in San Francisco are beginning to b@tch about how their own wealth is destroying their lives. Egad! What to do, what to do. Go to a free, taxpayer-provided concert on the lawn, perhaps? Maybe bring a bottle of whine?

Too bad all that hand wringy-ness isn’t all the rage in Washington, DC.

Comment by Steve W
2013-12-06 08:40:17

Interesting tidbit, Madison County in Illinois (where Collinsville is, just outside of St. Louis) is one of the lawsuit magnets of the country. Very friendly to plaintiffs. It handles 25% of all of the asbestos claims in the nation…

Comment by AmazingRuss
2013-12-06 16:57:23

When HUD ends up with these, do they pay anything or are they free? If free, this maintenance plan creates copper for the crackhead strippers, jobs to tear them down, jobs to put up new ones, taxes collected on all the labor and the sale.

Comment by Housing Analyst
2013-12-06 08:11:35

Think about it…..The Fed is buying a half TRILLION in mortgages every year.

They are making the market. Nobody else. And when they stop, you’ll know it.

Comment by azdude02
2013-12-06 09:23:36

what will make them stop? there just not going to stop for the sake of pleasing some naysayers.

Comment by Housing Analyst
2013-12-06 09:34:45

$hitHouse Poet,

They’ve driven housing demand down to 16 year lows.

What were you saying?

Comment by Ben Jones
2013-12-06 09:51:08

‘what will make them stop’

If prices are higher than what equilibrium requires, supply will increase until it causes prices to fall. They can buy all the mortgages they want, it can’t keep prices higher than they should be.

Comment by Blue Skye
2013-12-06 12:13:29

I suspect the Fed does not care about the price of houses. I further suspect that their motivation is to mask the ongoing failure of the banking system. Why should they care if these crappy mortgages they soak up never get paid off…the banks are making profits like we were still in a massive credit expansion.

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Comment by Neuromance
2013-12-06 19:39:08

• The personal computer industry thinks everyone should buy PCs which will then improve the economy.

• Car sellers think everyone should buy cars which will then improve the economy.

• The banking industry thinks everyone should take on debt which will then improve the economy.

However, only one of those industries is driving economic policy today.

Comment by Housing Analyst
2013-12-06 08:15:10

Do you really think your house is worth more than it cost to build new? Of course it isn’t. It’s worth something less than that, typically 65% of the reproduction cost (lot, material, labor, profit) which is roughly $55-$60/sqft.

Thus the typical used 2000 sq ft house is worth $40/sqft or $80,000.

Comment by Blue Skye
2013-12-06 12:15:55

And that with the cost of building materials grossly inflated by the misallocations of the housing bubble. And that with millions too many houses already built.

Comment by Jingle Male
2013-12-06 15:37:22

$80,000…..that might get you the building permit in CA. HA, Ha, ha, HO, Ho, ho….Merry Christmas….

Comment by Housing Analyst
2013-12-06 15:38:47

Leave it to Jingleballs to lie about the cost of a building permit.

Comment by snake charmer
2013-12-06 08:15:37

“[H]ouse prices are nothing but a great big dummy, administered by our great leaders to keep us all quiet. And we are just sucking it up.”

Correct. Stock prices too.

Comment by Ben Jones
2013-12-06 08:39:06

In New Zealand.

‘A four-bedroom Meadowbank home bought for $973,000 in May was sold for $162,000 more three months later despite no renovations - a feat the agent puts down to the hired furniture he used to stage it.’

‘The only touch-ups to the property between the sales were a lick of paint to some rooms and a tidy-up of the gardens.’

‘A Chinese couple bought 7 Beere Place for $973,000, but put it back on the market two weeks later with an asking price of $1.180 million. They sold it in August for $1.135 million - $235,000 above CV - to a New Zealand couple with two children who intended to use it as a family home.’

‘The home had been owned for 31 years by an elderly couple who bought it for $31,500.’

‘But an Auckland woman who looked through the property said it was “unloved” and needed a lot of work. It still had its three original 1970s bathrooms, original kitchen, cracked tiles, dripping taps, a leak next to the pool, old and dirty net curtains and a damp smell downstairs. “You had the juxtaposition of the nice home-staged bed with all the lovely linen, and then these cruddy old dirty curtains with holes in them.”

‘She was shocked to hear how much the house had sold for. “It was just about falling down, it was in such a bad state, it was ridiculous.”

Comment by Ben Jones
2013-12-06 09:22:10

‘The mainland’s property trust sector will probably suffer more defaults in the next two years as thousands of small developers will be squeezed out by intensifying competition amid policy tightening by the government, industry analysts said. Media reports last month swirled around Sichuan Trust taking small developer Jindu Real Estate to court in Zhejiang province, demanding 121 million yuan (HK$153 million) after the developer failed to repay the debt when it came due in March.’

‘New China Trust also resorted to a court case against another developer, Shandong Torch Real Estate, for the same reason. Chinese trust firms, with combined assets under management of more than 10 trillion yuan, have been raising record amounts of funds to help finance property firms in recent years. They provide vital lifelines for many mainland developers, particularly the private and small ones that are not on Chinese banks’ lending lists.’

‘In this year’s third quarter alone, trust firms issued 167.5 billion yuan worth of funds on behalf of developers, up 97 per cent from the same period a year earlier, according to data from the China Trustee Association.’

‘And coupon rates have also gradually crept up since the second half, to about 10 per cent now, in the face of tighter bank lending to the property sector.’

Comment by Doom
2013-12-06 10:03:55

Look, if anybody buys property based on India or China then you deserve to live poor all your life. China is the all time smoke and mirror country, India is basically a third world country disguise as a Western Euorpe life style?

Buy the USA dream, it is still much better bet then any nation on earth, If we go down the world goes with us, if India or China go down, it is a headline story but the US and the world surives it.

Why you ask easy, we are the natural resource country, God knows, the world knows, the resources of America are unquestion, we have so much oil we could make the middle east broke tommorow, but we are a compassionate bunch, the world has to survive. Besides we always stock pile for a rainy day ie world war.

Our military unmatched, the world wants to make sure America doesn’t fall to dictatorship, so they know where there bread is buttered, thus they share intelligence every minute to protect their interest , we stay safe and healthy, they sigh relief everyday.

Sure Great Britian thinks China or India is the next America???

Wake up folks, America’s only enemy is mother nature, a cataclysmic event of Epic magnitude would bring us down, then the world could have the spoils.

Comment by Housing Analyst
2013-12-06 10:25:51

Why pay current inflated prices for a depreciating asset like a house?

Comment by Ben Jones
2013-12-06 11:59:52

‘America’s only enemy is mother nature, a cataclysmic event of Epic magnitude would bring us down, then the world could have the spoils’

Well then, what does that have to do with the housing bubble?

Comment by tresho
2013-12-07 17:10:34

We have met the enemy, ourselves.

Comment by Housing Analyst
2013-12-06 10:33:01

This is an accurate illustration where current housing prices are.

Comment by Puggs
2013-12-06 11:56:08

Is that graph just for 2013? Does the mean originate from 1997?

Comment by Housing Analyst
2013-12-06 17:39:28

1997 is correct.

Comment by oxide
2013-12-07 18:54:39

Yes, and that mean in 1997 is based on an average interest rate of 7.6%. Yeah, seven point six percent. A $200K house in 1997 would cost $300K today and still have the same PITI. NOT accounting for inflation.

Look, if you yahoos are going to argue that rising interest rates will drop house prices, then you must also accept that dropping interest rates will raise house prices. Those 1997 prices would have risen ONLY because interest rates dropped but kept a similar PITI, not because of a bubble or a wage rise or even inflation.

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Comment by Housing Analyst
2013-12-07 19:22:57

Houses weren’t $200k in 1997.

And what are you yammering about interest rates?

My God do you think before you post?

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