Investors Are Trying To Recoup Their Money
It’s Friday desk clearing time for this blogger. “Shadow inventory. Mention the name in real estate circles, and you can almost feel the chill. And in many cases it typically causes reported data on housing inventory to understate the actual number of inventory in the market. ‘There is definitely a false sense of numbers in Cobb and throughout the country (about the extent of shadow inventory),’ said Judson Adamson, president and CEO of Atlanta Communities Real Estate Brokerage. ‘(There has been) irresponsibility in reporting the stats. The impact of institutional investors, both locally and nationally, is the single main reason the market has rebounded.’”
“‘Until a certain percentage of these renters turn into buyers, they (investor groups) will have a captive audience,’ Adamson said. ‘It would not be surprising to see a flood of investor-owned listings once a more lucrative opportunity presents itself. When something better comes along, they will start to liquidate. When the first one starts, the rest will follow.’”
“Experts say the median rental price for a single-family home in the Valley is up significantly over last year. ‘Be ready for some sticker shock,’ said Brenda Ryan, the designated broker for Arizona Premier Realty. Part of the reason the inventory is so low is because investors are now trying to recoup their money from buying up foreclosed properties when the housing market crashed. ‘During that time they had rental properties and now they’re selling because the market has improved,’ she said.”
“A wave of potential defaults on home equity lines of credit could start arriving in the next few years. Economists said that the threat is particularly pronounced in California, especially more affordable inland areas. A year before the housing meltdown, Richard Peterson took out a $167,000 credit line on his Huntington Beach condo. As of July 2016, his payment will rise to more than $1,100 a month from the $400 he is paying to cover just the interest. ‘They were just giving money out. It paid off my car and everything. We both now live on a fixed income and will not be able to make the payments,’ he said of himself and his girlfriend.”
“Shelly Burley considers herself something of an accidental landlord. She and her husband are now busy decorating their new home in suburban Baltimore. It is four times the size of the downtown row house in which they used to live, but which they now rent out. The Burleys owe about $30,000 more on the downtown home’s mortgage than the home is currently worth. ‘I bought in the height of the market in 2006,’ Burley said. ‘It really wasn’t worth it to take that $30,000 hit, when we could get someone to rent the property, have them pay down the mortgage and get to a place where we could either get out for the same price or eventually maybe make a profit off of it, if we rent long enough.’”
“Portland has seen African-American families forced out of North and Northeast Portland for decades as housing prices there have risen and neighborhoods undergo gentrification. Helen Murray, 77, and her husband, Nelson, 82, face foreclosure on their 1925 bungalow. The Murrays say they fell into debt over the years and in 2007 refinanced their house, taking out $310,000 to pay the debts and to live on the money. The loan allowed the Murrays to make extremely low payments of $1,138 a month on their mortgage for the first year. After that, the payments would grow by as much as 7.5 percent a year.”
“The overall result for the Murrays was a skyrocketing mortgage payment they could not keep up with: It’s now $2,183 a month. And the original $310,000 principal has ballooned to $335,449. ‘It’s a bad idea to have that type of thing,’ Nelson says of the mortgage. ‘There should be a warning.’”
“The left continues to push Mel Watt to do principal mods on loans held by Fannie Mae. Not sure it is going to happen, as it would undoubtedly trigger a wave of strategic defaults. Interesting that the couple mentioned in the article said they refinanced into a loan with ‘abusive’ terms. A Fannie Mae loan was abusive? Or was this part of the American Dream Commitment, where Fannie partnered with the big subprime players like Countrywide, Irwin, Doral, etc. and agreed to buy their loans for their own balance sheet. Anyway, it looks like Mel Watt is giving the affordable housing advocates the Heisman and running out the clock on principal mods.”
“Panic selling is expected to sweep Britain as homeowners try to cash in on record high house prices before the market starts to cool, new data finds. ‘In London [in particular], the trend of selling up from more central zones to get better value and more space in suburban or commuterbelt locations will also continue. Many recognise the significant arbitrage opportunity that now exists and want to maximise this opportunity to cash in,’ said Adam Challis, head of residential research at the property group JLL.”
“Housing prices in Tehran soared beginning in 2012. According to political analyst, Mohammad Ali Shabani, ‘real estate became the best way to protect your money.’ In one of the most exclusive neighborhoods in northern Tehran, this swanky home has sat empty without a buyer — half the other units in the six-floor block are empty, too. So are tens of thousands of other apartments throughout Tehran, all for sale but sitting vacant without buyers. ‘Right now we have a lot of apartments that are not sold and sitting empty because of high prices,’ says real estate agent Bahar Khalili.”
“One seller who had to face the new market reality was 43-year-old Janice Tan, who put her five-room Jurong West flat on the market in March. A deal was closed last month — but only after she and her husband lowered their price for the unit, which had previously been valued at SG$500,000 (US$401,052). ‘We actually went much lower, by about 8 percent,’ said the human resources executive. Given the current market, they believe they had little choice, she added. And that is precisely what property experts have been urging: for sellers to be more realistic in their expectations.”
“China’s weakening property market took its toll on the nation’s service sector, as a private gauge of service activity sank to a nine-year low. The Purchasing Managers Index for the service sector fell to 50 in July from 53.1 in June, the lowest reading since November 2005 when the survey began. Liu Xuezhi, a researcher with Bank of Communications Ltd, agreed that the sagging property market was the chief reason behind the weakening PMI data. ‘Exacerbated by lower credit support from the banks, China’s property market began a serious correction in the second quarter. Now, the impact on many related businesses has started to become apparent,’ he said.”
“Zillow released data that showed the age of a typical first-time home buyer is on the rise and is expected to continue that trend in the coming years. Zillow Chief Economist Stan Humphries said that it is dangerous to assume millennials don’t want to buy at all and cited Zillow data that showed some renters do want to buy soon.”
“But here’s why many of us won’t. I’m that 32-year-old non-homeowner they’re talking about. I rent a lovely house and have no intention of buying a house anytime soon. Here are a few good reasons: My husband bought a condo before we were married. We’ve been trying to get rid of it for more than three years. It’s been an insane back-and-forth with no promise of resolution. Why would I ever sign up for the possibility of that again?”
“Also – college loans. Almost everyone I know who is my age has huge college loan debt. That’s not something the generation before us had to deal with, but it’s not something to be dismissed as ‘just another reason millennials don’t buy houses.’ Aside from watching our friends – and in my case, my husband – deal with the fallout from the housing crisis, college loans are the No. 1 reason my friends and I aren’t buying houses. In some cases, college loan payments can be as much as a mortgage payments.”
“It’s why we haven’t put as much away for retirement as our parents had at our age and it’s why we don’t buy houses. I pay more per month toward my loan than I do in rent. And when the houses around me are selling for $500,000 to $1 million, I’ll just keep renting, thank you. As if I had a choice.”
People are smart …
“A year before the housing meltdown, Richard Peterson took out a $167,000 credit line on his Huntington Beach condo. As of July 2016, his payment will rise to more than $1,100 a month from the $400 he is paying to cover just the interest. ‘They were just giving money out. It paid off my car and everything. We both now live on a fixed income and will not be able to make the payments,’ he said of himself and his girlfriend.””
Bahahahahahahahahahahahahaha
Clone him!
Amy, are you out there? Bring me some more guys like this guy.
Hurry it up now, a cookie is waiting and the coffee is starting to get cold.
I like it where he says “there should be a warning.” I laughed out loud.
I love the Friday desk clearing posts. You just can make this stuff up!
can’t. You CAN’T make this stuff up!
When Pelosi’s Free Shit Army secures a Democrat supermajority, trust me, “victims” of their own irresponsibility will be rewarded with the involuntary generosity of the responsible and future generations of taxpayers. With the welfare queens on Wall Street being the biggest beneficiaries of public monies and the Fed continuing to rob the 99% through the stealth tax of currency debasement and resultant inflation.
I like it where he says “there should be a warning.” I laughed out loud.
Exactly. Any sort of mortgaging transaction in the United States is one of the best disclaimered, clarified and documented transaction you can make.
I’m so effin’ tired of people trying to steal money from a bank by using a re-fi. Kick ‘em the hell out en masse. You can’t get hat $310K back, so selling the property right out from under the elderly deadbeats is the only recourse. And I’d say it’s the MORAL recourse, since that elderly couple just tried to steal all that money. Look at the facts. Punish foolishness and deceit.
“The Murrays say they fell into debt over the years and in 2007 refinanced their house, taking out $310,000 to pay the debts and to live on the money. The loan allowed the Murrays to make extremely low payments of $1,138 a month on their mortgage for the first year. After that, the payments would grow by as much as 7.5 percent a year.”
“The overall result for the Murrays was a skyrocketing mortgage payment they could not keep up with: It’s now $2,183 a month. And the original $310,000 principal has ballooned to $335,449.”
And as for the punch line?
“‘It’s a bad idea to have that type of thing,’ Nelson says of the mortgage. ‘There should be a warning.’”
“There should be a warning.” Get it? That’s the punch line.
Bahahahahahahahahahahaha
The warning was written all over the papers he signed but nevertheless he signed them anyway.
People are smart.
“There should be a warning”.
You are right Mr. Banker, there was a warning. But I think they mean one that they can understand. With pictures like the ones on ladders or lawnmowers. They don’t really want someone else to protect them from their own stupidity, they just want someone else to be responsible afterwards.
I also like the phrase “they fell into debt”. As if it just happened naturally the way gravity causes all things to fall.
I agree that these people are victims of their own ignorance and should have taken more care in signing away their lives.
I wonder though, since this happens over and over again with detrimental macroeconomic effects, if it should be required by law for a table of the monthly payment amounts year-by-year over the course of the loan should be in a table in big bold print. Since we’ve heard so many of these stories in the last 10+ years, maybe this should be made part of standard loan contracts and particularly non-fixed-rate mortgages.
Don’t get me wrong - I’m not a big fan of legislation to fix people’s stupidity in general. History has shown that stupidity and greed are a sure recipe to eventual turmoil of some kind in society, and that legislation generally only makes things a lot worse. I just don’t want to see these stories any more because I end up paying for it through devalued currency and/or higher taxes.
‘I just don’t want to see these stories any more because I end up paying for it’
I’m not happy about it either. Wait until the bill for the HAMP/HARP loans comes due. I don’t know what more could have been done wrong to make a bad situation worse.
‘An Irvine mortgage company that pulled the plug on its higher-risk loans a year before the Great Recession has launched an array of rule-bending home loans nationwide — a sign of a thaw in tightfisted lending standards in place since the housing crash.’
‘Impac Mortgage Holdings Inc. is writing loans that fall outside certain limits set by home-finance giants Fannie Mae and Freddie Mac, as well as Consumer Financial Protection Bureau rules that discourage the reckless lending that fed the market meltdown and the recession. Impac may even have the regulators’ blessings.’
‘The consumer bureau’s director, Richard Cordray, has told lenders they have “little to fear” in exceeding his agency’s limits if they observe the central requirement imposed after the fiasco — determining that borrowers are able to pay back their loans.’
‘One of Impac’s four new programs, for instance, allows ordinary borrowers to devote up to 50% of their income to cover housing and other debts instead of the usual 43% cap. Others are aimed at people who can’t get conventional loans for special reasons, such as investors who own multiple homes, foreigners buying mansions with jumbo loans of up to $3 million and entrepreneurs with complicated finances.’
“The pent-up demand for loans like this is tremendous,” said Impac President William S. Ashmore, who noted that the company is the first to offer a wide array of such loans nationwide.’
It’s almost like the plan is to not let anyone emerge from housing unscathed - if the first bubble didn’t get them, the second will.
Wells Fargo, one of the stronger banks in 08, now the first to relax their lending/mortgage buying standards. This Irvine company, which at least stopped their dangerous lending before the crash instead of after, now back into subprime overdrive. It almost seems intentional, to punish the survivors until there’s no one left standing in the next crash.
‘One of Impac’s four new programs, for instance, allows ordinary borrowers to devote up to 50% of their income to cover housing and other debts instead of the usual 43% cap.’
The beauty of these relaxed lending standards is that they can allow housing prices to appreciate by another 16% (50%/43%-1) while keeping home ownership affordable for families who want to buy the most expensive home for which they can qualify to obtain a mortgage.
They are African American. They cannot be expected to take responsibility for their own actions.
Are you talking about the 50%-of-income housing cost peops?
Here is a hint to those who wonder if this is the only choice facing these folks: If they bought half as expensive a home, their mortgage could be 25%-of-income — well within traditional mortgage loan underwriting guidelines.
Why Uncle Sam is now interested to encourage home buyers to purchase houses which will require them to cough up 50% of their incomes to pay for them is way beyond my grasp.
The banksters’ K Street lobbyists who draft all substantive monetary policy documents for their captured congress critters couldn’t care less about quaint notions like the public interest. They want to lure in the unwary and then pick up assets for a song, with losses being transferred to taxpayers.
“They are African American. They cannot be expected to take responsibility for their own actions.”
Last sold: Dec 2002 for $165,000
http://www.zillow.com/homedetails/2747-NE-11th-Ave-Portland-OR-97212/53887124_zpid/
So,,,where did the pizz-away the money?
What could possibly explain a $62K (12.3%) drop in the Zestimate between February and June 2014?
they saw the hole in the roof??????????
“What could possibly explain a $62K (12.3%) drop in the Zestimate between February and June 2014?”
Reverse gentrification?
That’s a pretty fast reversal!
And besides that, I can cite an example (that of my parents’) where reverse gentrification has been underway for decades, yet the Zestimate on their home has increased by $7K (8%+) since this spring — for no reason! No comparable sale of any home in their entire zip code over the past year came within 30% of the current Zestimate. And we are talking about cookie-cutter identical homes built back in the 1950s.
Go figure!
“The Murrays say they fell into debt over the years and in 2007 refinanced their house, taking out $310,000 to pay the debts and to live on the money.”
Wow, $300k+ for a small moldy 1925 Portland bungalow?
Debt is like a pit. You just happen to fall in when you walk by. It’s never your fault, of course. Pits just jump out and swallow up hapless passersby. Happens all the time. Victims, all of them.
“Interesting that the couple mentioned in the article said they refinanced into a loan with ‘abusive’ terms.”
Bahahahahahahahahahahaha … “abusive terms” … bahahahahaha
Abusive terms? Abusive terms is the attraction!
Oh, the pain! Thank you sir, may I have another?
Bahahahahahahahahahahahahahahahahahahahahahaha
they refinanced into a loan with ‘abusive’ terms.”
Translation: It required them to pay the money back.
refi at age 70 and 75? that bama maff
“that bama maff”? I don’t get this. Obama math?
the war on banks won’t end well
property rights anyone?
Don’t quite get your drift on this post…
dodd frank is a slow moving disaster
all these bank fines- who gets the $$$$ ???
2. what did they do wrong ? they lent as_holes money
I think a few banks may broken some rules.
Nobody put guns to their heads to force them to lend to as_holes. (Did they!?)
I swear after reading some of these comments, you would think that African Americans and Hispanics were the only ones that lost their home from stupidity. I guess in the white world of the closet racist this is a true statement. In his world, whites that walked away from their homes was just a victim of circumstances. It is amazing that you geniuses can even get through life…..and by the way I told my wife in 2005 that the housing market would crash and YOU people would the blame the poor. I guess the poor were the ones purchased and foreclosed on those $500,000 dollars and up properties and definitely vacation’s homes on golf courses or beach fronts. Yes, those poor was living it up on the tax payer’s money.
“YOU people would the blame the poor.”
What people? It almost sounds like you are trying your hardest to make a racist statement.
I swear after reading some of the articles in the OP, you would think that African Americans and Hispanics deserve some sort of special help or consideration after losing their houses to stupidity.
Isn’t that pretty much the basis of US federal housing policy?
“…and by the way I told my wife in 2005 that the housing market would crash and YOU people would the blame the poor.”
+1 So you’ve heard of Clinton’s “Community Reinvestment Act?”
More like the banksters’ war on the 99% won’t end well - for the 99%.
“China’s weakening property market took its toll on the nation’s service sector, as a private gauge of service activity sank to a nine-year low. The Purchasing Managers Index for the service sector fell to 50 in July from 53.1 in June, the lowest reading since November 2005 when the survey began. Liu Xuezhi, a researcher with Bank of Communications Ltd, agreed that the sagging property market was the chief reason behind the weakening PMI data. ‘Exacerbated by lower credit support from the banks, China’s property market began a serious correction in the second quarter. Now, the impact on many related businesses has started to become apparent,’ he said.”
Sounds like the property slump is on the brink of dragging down the rest of the Chinese economic miracle.
A wild card with China could be revolutionary political change. It’s certainly a country that is not immune to such variations, and now we have an increasing population of people who have come in contact with wealth. If and when that wealth is reduced or taken away, they could get angry and resentful at the ruling party.
It’s certainly a country that is not immune to such variations, and now we have an increasing population of people who have come in contact with wealth. If and when that wealth is reduced or taken away, they could get angry and resentful at the ruling party.
Good point. That’s what happened to Brazil last summer, and wealth wasn’t even “taken away”. When people don’t have to worry about starving anymore, they start thinking about schools, decent housing, hospitals, better government etc..
Read up on the “ant tribes” of university-educated young people forced to live in virtual hives and eke out a subsistence living in soul-killing factory labor. I bet more than a few of them are reading Grampa’s copy of Mao’s Little Red Book and comparing his revolutionary ideals with the grotesque parody of a “People’s Republic” the current crony-capitalist PRC has become.
a few of them are reading Grampa’s copy of Mao’s Little Red Book
If a few of them talk to their grandparents about those “good old days” they will get a chance to compare their plight with that of their ancestors. One major meme in mainland China is that the Cultural Revolution was a mistake.
Letting the country be looted dry and turned into an ecological wasteland of pollution and malinvestment by the well-connected offspring of the original revolutionary cadres and party functionaries must be viewed as an even bigger mistake.
That can’t be true. PropagandaDan has already ruled it out. However, I don’t have copies of the 1,000+ comments that he has submitted on the topic, which means that I have not yet proven that he ever said that, so take it with a grain of salt.
“However, I don’t have copies of the 1,000+ comments that he has submitted on the topic,…”
It’s one thing to make thousands of insipid comments,
but quite another to take such enormous pride in them.
“My husband bought a condo before we were married. We’ve been trying to get rid of it for more than three years… Why would I ever sign up for the possibility of that again?”
Indeed.
+1. The nightmarish scenario of paying a grossly inflated price for a rapidly depreciating illiquid asset.
u lost your house and now you are disgruntled?
You’ll love this $hithouse Poet….
Arlington, VA Housing Prices Plummet 14%; Price Slashing Skyrockets 153% As Inventory Balloons 43%
Help fine tune it and we’ll take it to all the media outlets.
Here’s the link.
http://www.movoto.com/arlington-va/market-trends/
Please help and get the word out and post on CNBC, CNN, Bloomberg…
SHODDY CONTRACTOR
Your losses enrage you.
Austin, TX Housing Price Reductions Explode 190% As Housing Demand Collapses; Housing Inventory Skyrockets 65%
http://www.movoto.com/austin-tx/market-trends/
Falling housing prices is great news.
So here’s the deal. If you marry someone who already owns a condo, then you do not gain part-ownership in the asset. However, you DO help to pay the debt when it’s underwater. This is why one should avoid marrying an IDIOT WHO IS ALREADY ON THE WAY TO FINANCIAL RUIN.
Yeah, I learned that on my practice marriage. I corrected that with my permanent marriage. My spouse is an asset to the union this time. It makes a world of difference when you are both rowing in the same direction.
“They were just giving money out. It paid off my car and everything. We both now live on a fixed income and will not be able to make the payments,’ he said of himself and his girlfriend.”
That’s just rich! Who couldn’t look at the documents to see that the payment would almost triple when chickens finally did come home to roost?
no kidding! and not the first time I’ve heard someone claim that their car was paid off when the payoff money came from a HELOC or refi….when what they have actually done is take on a 10-30 year auto loan that they will be paying on long after the car is scrapped
You never hear anyone pay off their student loan with a Heloc….or the parents did for their kids……nope but buying brand new suv’s yup all the time.
They will not be paying it. The guy already so.
“already said so”
I think the girlfriend will be gone soon also.
“What do you mean we’re poor”
“I think the girlfriend will be gone soon also.”
+1 What’s this “we” nonsense?
“But here’s why many of us won’t. I’m that 32-year-old non-homeowner they’re talking about. I rent a lovely house and have no intention of buying a house anytime soon. Here are a few good reasons: My husband bought a condo before we were married. We’ve been trying to get rid of it for more than three years. It’s been an insane back-and-forth with no promise of resolution. Why would I ever sign up for the possibility of that again?”
Once you realize that real estate always goes up, you will be willing to sign again.
‘For sellers, the housing market in the five-county Greater Piedmont, including Culpeper, is the best it’s been in seven years with the median sales price soaring to $275K, a 12 percent second quarter increase year-over-year, according to new real estate data from the Greater Piedmont Area Association of Realtors.’
‘Considering that most folks are not earning more, he felt the rate of growth in housing prices would be hard to sustain. “And I think there is going to be repercussions,” Thornton said. “We’ve gotten ahead of ourselves so the market is going to have to take a step back and catch its breath. If we continue to see all the houses coming to market, people are going to have to start to be willing to reduce their expectations.”
‘The median sale price areawide - including Culpeper, Fauquier, Orange, Madison and Rappahannock counties - in the last quarter for all housing types is the highest it’s been since 2007, according to the GPAAR.’
Sellers better hope for that ‘permanent democrat supermajority’ I keep hearing reference to, in order to keep the greater DC gravy train a runnin’…
Republicans won’t make it stop.
Two wings of the same bird of prey.
‘Home buying sentiment eased again in Shanghai last week with a “wait-and-see” attitude dominating among potential buyers, according to a report. The purchases of new residential properties, excluding government-funded affordable housing, dropped 8.9 percent week over week to 183,700 square meters during the seven-day period ended Sunday, Shanghai Uwin Real Estate Information Services Co said in a report released today.’
‘On the supply side, 173,400 square meters of new houses were released to the market, up 20.9 percent from the previous week.’
“With the new home inventory at a high level and transactions remaining flat, more real estate developers may start to offer bigger discounts as early as this month. Usually September and October are the best months for property sales,” said Huang Zhijian, chief analyst at Uwin. “That will probably be the only effective way to boost home sales.”
‘As of today, the city’s new home inventory remained above 11.5 million square meters, which at the present pace of sales would take about 17 months for the market to digest.’
‘The average cost of a new home, meanwhile, rose 8.7 percent week on week to 26,504 yuan (US$4,275) per square meter, according to Uwin data.’
Might want to check those numbers again Uwin.
‘Amid a continuous effort to lift purchase restrictions, there is a gloomy outlook on China’s real estate industry as some cities see residential mortgage loan defaults, 21st Century Business Herald reported on Thursday.’
‘During the months of May and June, some homeowners in Hangzhou of Zhejiang province, Ningde of Fujian province and Xinqi and Wuxi of Jiangsu province, were sued by banks for defaulting on residential mortgage loans, said the report. In these cases, most of the homeowners claimed that they were unable to repay their loans.’
‘Shang Fulin, chairman of the China Banking Regulatory Commission, was quoted by the report saying there were defaults by developers and homeowners in some cities and some medium- and small-sized developers were facing strains in capital chains.’
‘Shang also warns credit risks in third and fourth-tier cities, according to the report.’
‘Foreclosures are starting to be reported in China. According to the 21st Century Business Herald, three cities have reported increases in the number of bank repos of Chinese properties. Has a foreclosure crisis begun in China?’
“Many Chinese are now looking abroad and buying up real estate outside of China,” says Joseph E. Meyer, publisher of the contrarian Straight Money Analysis newsletter. “But I think the Chinese are going to see in due time that real estate prices, including luxury properties in New York, can lose value. This will be a lesson in Chinese bear market real estate. It’s coming.”
‘Has a foreclosure crisis begun in China?’
Sum Ting Wong!
Ho Li Fuk. Wi Tu Lo!
‘India’s central bank governor, renowned for forecasting the 2008 financial meltdown, has warned that the world economy faces risk of another market crash as asset prices surge. Increasing global financial instability stems from investors chasing ever higher yields, Raghuram Rajan, a former International Monetary Fund chief economist, told the Central Banking Journal.’
“True, it (another financial sector crisis) may not happen if we can find a way to unwind everything steadily,” Rajan, who is famed for predicting the 2008 markets crash years in advance, said in the interview. “But it is a big hope and prayer,” said the Reserve Bank of India (RBI) governor, adding there is a risk of sudden price reversals and sharp spikes in financial volatility.’
“We are back to the 1930s, in a world of ‘competitive easing’,”, Rajan said, referring to ultra-low interest rate policies pursued by the US Federal Reserve, the Bank of Japan and the Bank of England in a bid to stimulate their economies and spur growth.’
“Back then, it was competitive devaluation (of currencies), but competitive easing could lead to competitive devaluation,” says Rajan. “If there were no consequences to competitive easing (to spurring economies), fine; but there are consequences,” he warned.’
“Back then, it was competitive devaluation (of currencies), but competitive easing could lead to competitive devaluation,” says Rajan. “If there were no consequences to competitive easing (to spurring economies), fine; …”
The policy back then was also referred to as Beggar Thy Neighbor.
‘Last year, a study by the Institute for Public Strategies found a strong connection between abandoned properties and crime in a half-mile area. The issue has prompted a coalition of organizations in San Bernardino - including Habitat for Humanity, Institute for Public Strategies, Neighborhood Housing Services of the Inland Empire, Hope through Housing and the San Bernardino County Housing Authority - to work together.’
‘One in 10 homes in the City of San Bernardino is vacant, compared to one in 14 for California, according to the 2010 US Census.’
There it is. Combined with the massive defaulted inventory with the debtors still occupying them results in 4.4 million excess empty and defaulted houses in California.
You are so ridiculous it is laughable. HA, HA. With the average of 2.3 people per house, you are saying there is enough housing in CA to take care of 10,120,000 people.
Clearly, you’ve never personally experienced the California property market. There are people standing in line to rent houses in the Sacramento foothills.
And we do business there 52 weeks a year J._Fraud. Deal with it.
your out of work arent you?
J._Fraud. lol.
‘In June, Macao, the only place in China where gambling is allowed, saw a monthly gross revenue drop in its gaming industry for the first time since 2009, according to data from Macao Gaming Inspection and Coordination Bureau. With the central government’s severe anti-corruption and anti-extravagant official spending campaign still ongoing, Macao’s monthly revenue growth had already started to slow down in March.’
‘Due to the campaign, a series of high-spending businesses nationwide, such as high-end restaurants, have struggled and made plans for change.’
‘Hua, a local gambling intermediary, said he has witnessed high-rollers bribe mainland officials at casinos. These wealthy gamblers usually gave gambling chips to officials, say, worth 10 million yuan ($1.6 million), and if the official won, he could take away the money and regard the money as a gift, he said, noting it is much better than giving bribes directly.’
‘Around 2.63 million tourists with Chinese passports stayed in Macao for transit in 2013, but 80 percent did not leave for overseas destinations afterward, Macao’s official data showed. The transit stay for tourists with Chinese passports was thus reduced from seven days to five days starting from July 1.’
‘However, it may not be an obstacle for VIP gamblers who usually have multiple passports, an anonymous casino intermediary said. A high-roller who often commutes between Beijing and Macao also said he can easily buy a passport of a small country to avoid the visa issue.’
‘Hang Seng Bank Ltd., the Hong Kong lender controlled by HSBC Holdings Plc, reported lower first-half profit because of an accounting change and reduced gains from property valuations.’
‘Net income for the January-June period dropped 54 percent to HK$8.47 billion ($1.1 billion), or HK$4.43 a share, from HK$18.47 billion, or HK$9.66 a year earlier, Hang Seng said in an exchange filing today.’
‘Risks ahead include any property-market slowdown in the city, according to Ronald Wan, chief China adviser at Asian Capital Holdings Ltd. “If the property market devalued or was seriously affected, the bank will be operating in a very difficult environment,” Wan said by phone in Hong Kong.’
‘Chief executive Rose Lee said the bank’s net interest margin may come under pressure in the second half of this year amid competition for deposits in Hong Kong and limited increases in interest rates for mortgages. In China, Hang Seng’s bad loans may worsen because of the nation’s economic slowdown and property-market decline, Lee said at a briefing in Hong Kong.’
‘A big urban-rural gap has most of the poor families living in the countryside, where only a few stable and rich families live, while most of the indulgence families live in cities, and fewer poor people live in urban areas, as well.’
‘The report says that real estate represents nearly 80 percent of urban family assets in China, and about 60 percent of the assets of rural households. Years’ worth of rapid inflation in housing prices lies behind this statistic. In the countryside, houses are often built by the farmers themselves, and land costs are much lower. Housing pressures for urban families generally are much heavier than for those in rural areas.’
‘Jiang Yulan, 38, ayi (domestic helper) from Anhui Province: “Although my husband and daughter are now working in Shanghai, it is impossible for us to buy any fixed assets here. We still rent a shabby and small apartment. I’m one day my husband and I will return to the countryside where we have our own house. Now I just pray that we stay healthy. We all understand that today a big disease could ruin a whole family.”
‘Peter Li, 33, financial consultant: “Now I only have one apartment where my family lives. I already sold out my two apartments two years ago. Frankly, I am not so confident in the economy. I believe that cash is king. You might not believe my words, but let’s just wait and see.”
The new Chinese mantra: “Cash is King!”
O.K., Cash is King!
I guess they get Ramsey over the back 40 pond.
??? What do you mean?
‘A big urban-rural gap has most of the poor families living in the countryside, where only a few stable and rich families live, while most of the indulgence families live in cities, and fewer poor people live in urban areas, as well.’
Not many country folks can afford to come up with the cash to compete with buyers of empty investment properties.
So much for the iron rice bowl that Chinese peasants and workers could once count on as a birthright.
That ideal is an “iron rice bowl”, not a “house”. There are no hints the “ant people” aren’t getting enough to eat.
‘Thirty years ago, Bruce Percelay bought a condominium on the wrong side of Beacon Hill, fixed it up, and made a profit. As a result, he was sold on real estate investment. Today, his firm, the Mount Vernon Company, has 1,460 apartments, most of them located in the rental hot spots of Cambridge, Brighton, Back Bay and the South End.’
‘Q: Do you think Boston is at risk of having a glut of high-end apartments? A: On a near time basis in the luxury market, I’m banking on it.’
Q: In terms of banking on it, you were reportedly asking an eye-popping $150 million for the buildings that make up the Green District. Have you found a buyer? A: Yes. …Just to clarify, I believe there will be an oversupply of luxury housing in downtown Boston when all the projects arrive in one wave. I do believe that growth will ultimately absorb them and it will not be a permanent condition.’
Thousand Oaks, CA Housing Prices Crater 6% As Shadow Inventory Grows; Demand Plunges Statewide
http://www.movoto.com/thousand-oaks-ca/market-trends/
‘Last year in this space I shared some findings from analysis of RealtyTrac foreclosure data showing that 75 percent of all loans in foreclosure at the time were originated between 2004 and 2008…The stubbornly high share of distressed sales is indicative of the continuing lingering effects of the bad loans originated during the loose lending heyday of 2004 to 2008. But those bad loans are lingering a little less this year compared to last, as one might expect. Loans originated during those years now account for 68 percent of all loans in foreclosure, down from 75 percent last year. So they are still the majority of distressed loans.’
‘One small cause for concern is a slight uptick in the foreclosure rates on 2014 vintage loans, which is especially concerning given that they were originated so recently and homeowners would have little time to fall into default. This recent uptick is certainly something to keep an eye on, especially with the chorus of cries for looser lending standards beginning to swell.’
“Slight uptick in the foreclosure rates on 2014 vintage loans”
HOW do you default on a 30-year loan that you’ve only had for 8 months or less??
But don’t worry: this can’t be a bubble because there’s no subprime anymore and lending this time around is totally sound.
Paso Robles, CA Housing Prices Plunge 5% YoY As Housing Demand Collapses Nationally
http://www.movoto.com/paso-robles-ca/market-trends/
Walnut Creek CA Housing Prices Plunge 12% YoY As Sellers Slash Prices In Hope For A Buyer; Housing Demand Craters
http://www.movoto.com/walnut-creek-ca/market-trends/
La Mesa, CA Housing Prices Dive 5% YoY; Inventory Balloons 100% As Housing Demand Across The State Craters
http://www.movoto.com/la-mesa-ca/market-trends/
Bellevue, WA Single Family Housing Prices Crater 10% YoY; Inventory Grows As Buyers Disapppear
http://www.movoto.com/bellevue-wa/market-trends/
Median $/Sqft $306/sqft $306/sqft $303/sqft 1%
huh? listing price doesn’t tell you much and Movoto has few data points
try zillow
Sure it does. And the important one is falling prices and skyrocketing inventory.
Dump that shack of yours …… If u can find a buyer.
Check out the new listings and the price reductions.
Hmmm… good point. I think I’ll revise the headline.
Bellevue, WA Housing Prices Crater 10% YoY; Inventory Balloons 129% As Price Slashing Skyrockets 149%
http://www.movoto.com/bellevue-wa/market-trends/
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.
your n a fantasy land buddy.
You got burned.
Housings Dead Cat Bounce Forecast From 2013
http://img266.imageshack.us/img266/8180/stagesbubble.png
And our forecast was quite accurate.
If you’re thinking your house is an investment or is going to magically not cost you a fortune, think again.
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.
“Get what you can get for your house today because it’s going to be much less tomorrow for decades to come.”
Correct
A housing recovery is falling housing prices to dramatically lower and more affordable levels by definition.
ha ha ha u still dont get it after 10 years.
Remember…. houses depreciate.
‘Chinese investors have overtaken Americans to become the biggest foreign buyers of property, bolstering demand for new projects. Ausin Group (Finance), a company that offers property and mortgage broking in Australia to Chinese buyers, expects to sell two-thirds more homes and to double the amount of loans it arranges for buyers as demand from mainland China surges.’
‘The company forecasts $1.5 billion in sales of new residential properties in the year ending June 30, compared with $900 million over the previous 12 months, said Ausin’s Sydney-based managing director, Joseph Zaja. The value of mortgages the company arranges through Australian banks is expected to climb to $500 million in the 2015 calendar year, he said.’
‘Ausin is benefiting from surging demand from China, where the housing market is faltering. Chinese purchasers overtook Americans to become the biggest buyers of real estate in Australia in the 12 months through June 2013, plowing $5.9 billion into commercial and residential property, a 42 per cent increase from the previous 12 months.’
“I don’t see the trend slowing down,” Zaja said. “It’s here to stay.”
‘Ausin sources projects from local developers, including Stockland and Mirvac, marketing them through its 11 offices in China, Zaja said. The average price of the properties Chinese buy in Australia is $630,000 according to the company.’
‘When Zaja and a partner based on the mainland, whom he declined to identify, first set up Ausin in 2009, banks would only finance developments where less than 30 per cent was sold to overseas buyers, he said. “Now, that’s up to 100 per cent in some cases,” he said.’
Change “Chinese investors” to “CCP (Chinese Communist Party) grifters and embezzlers” fleeing the coming wrath of the 99%. There, fixed it for you.
‘The excessive rise in housing prices in Istanbul despite a property boom concerns sector representatives, who warn against a real estate crisis that may spill over to other cities, a new Economic Outlook report released by the main opposition party has said.’
‘When looked at on an annual basis, Istanbul, Turkey’s most populous city that houses more than 14 million people, has had the highest real estate price surge. The housing prices in the city have jumped by 20.5 percent over the past year. The most remarkable price increase has been witnessed in Istanbul over the three-and-a-half year period as well, according to the report. While the housing prices in Turkey jumped to 155 from 100 over the period, the prices in Istanbul surged to 175 from 100. Inflation-adjusted (real) price increases, meanwhile, were 15 percent for the whole of Turkey and 28 percent for Istanbul.’
“It is well-known that there is a serious house surplus in Istanbul as sector representatives keep saying. The continuing increase of housing prices in real terms despite this is very concerning,” the report read.’
‘The reports argued that the figures suggest the prices in Istanbul are on the verge of rebalancing with the explosion of the real estate bubble in Istanbul. “It wouldn’t be a prophecy to say that a real estate crisis triggered by the burst of the housing bubble in Istanbul would spread to the whole of Turkey,” it stressed.’
‘The opposition Republican People’s Party (CHP) warned in a report last week that rising housing prices — which have jumped 20 percent in İstanbul in the past year alone — may spread throughout Turkey. The CHP’s 102nd Economic Outlook Report emphasizes that prices have continued to rise drastically despite a major housing surplus in İstanbul.’
‘Spurred by Prime Minister Recep Tayyip Erdoğan’s penchant for low interest rates, Turkey’s economic surges were largely credit-fueled, and private-sector loans have multiplied fourfold since 2008. Meanwhile, construction has boomed, particularly in the country’s largest cities. It presently accounts for around 20 percent of Turkey’s economy.’
‘While it may seem that Turkey’s construction market is showing no signs of slowing down, a variety of present conditions threaten to burst the housing bubble that largely fueled Turkey’s landmark economic achievements.’
“High interest rates, the devalued Turkish lira, the continuing presence of available homes, the end to the 1 percent VAT advantage, higher iron and cement prices, a slowdown in international markets, insufficient foreign investment and political instability are all signs that the housing bubble is about ready to burst,” wrote columnist Cengiz Aktar in this paper last month, adding that the total number of homes on the market — both new and previously owned — would reach 1 million by the year’s end.’
A million Syrian refugees might tend to prop up the Istanbul housing market. It might work for San Diego, too.
‘Whoever said “Build it and they’ll come” hasn’t visited Spain lately. The country is filled with abandoned construction sites and “for sale” signs after the bursting of the construction bubble in 2009.’
‘Spaniards built not just housing during the boom of the early 2000s but airports galore. Yet out of Spain’s 46 publicly managed airports, only 8 are making a profit.’
‘The rest are struggling to break even. About 20 of them have barely any passengers. Spaniards call them “ghost airports.”
Is an airport supposed to make a profit? Is a bus terminal supposed to make a profit? IMO an airport is a public utility that the public demands for the taxes they pay.
Clearly building an airport that isn’t needed (or a sea port, or a bridge to nowhere)is a wasteful use of resources, for which the responsible public officials should be held accountable. But I don’t think “profitability” is the issue.
I flew some last weekend. And the money flew out of my wallet. If an airport can’t turn a profit, they’d have to be horribly operated.
Spain sounds like they are currently living in China’s future. I can recall over a decade ago when I was a grad student hearing from a Spanish post-doc that the housing bubble in Spain was even worse than California’s.
With 50% youth unemployment, the political elites in Spain will inevitably try to distract attention from their own corruption and malfeasance to stick it to the British and other ex-pats, via high taxation, foolish enough to be caught owning illiquid assets in a socialist paradise.
http://wolfstreet.com/2014/08/09/how-government-masks-the-plight-of-spains-lost-generation/
“¡Que se jodan!” With these words (which roughly translate as “F**k them”), the Spanish Member of Parliament Andrea Fabra greeted her party leader Mariano Rajoy’s parliamentary announcement, in July 2012, of new cuts in unemployment benefits.
Unbeknownst to Fabra, all three of her words were caught on camera. In predictable fashion, the video went viral, sparking a wave of indignation as well as an online petition for her resignation. But Fabra, the proud daughter of a jailed former big shot of the governing People’s Party, refused to yield. She offered no public apology, instead dispatching a handwritten letter to the head of the chamber in which she lamented her “inappropriate” choice of words.
Now, two years on, Fabra’s inappropriate choice of words have taken on a chillingly prophetic edge. Granted, there can be no telling whether the target of her wrath was really the unemployed; or whether it was, as she claims, the main opposition party, the PSOE. Either way, she got what she wanted: the PSOE is, to her use her term, f**ked, as voters flee its sinking ship; and so, too, are Spain’s unemployed – all 4.4 million of them, 40% of whom now have no “official” source of income.
No surprise that “People’s Party” leader Mariano Rajoy is a “former” Goldman Sachs exec doing God’s work for the .1%.
‘The market for university-area apartments is shrinking— in physical boundaries, but not in inventory. Developers of the amenity-rich new buildings say they’re filling a niche, leading owners and managers of the existing apartments to adapt or perish.’
‘With the University of Arizona’s fall semester starting this month and about 3,200 beds in privately-developed apartment buildings delivered in the university submarket in just the last two years, UA students now have more choices than ever for housing.’
‘Bob Kaplan, a multifamily and investment sales specialist with Cushman & Wakefield | Picor, said the student housing sector on the whole has been strong for years and didn’t get hurt too badly by the recession. But buildings on what is now definitely the periphery are showing struggle, he said: Some underwent financial restructuring. One recently sold at only a nominal profit.’
“Properties that are very close to campus are doing well still. They’re not able to raise rent as much as they were in previous years but generally they’re doing well,” Kaplan said. “Properties that are further away are not as desirable a product (and) are having a bit more difficult time. And by further away I mean more than three-quarters of a mile.”
‘Allan Mendelsberg, also a multifamily and investment specialist with Cushman & Wakefield | Picor, said it’s too soon to know the true effect of the campus-area surge. However, his view is noticeably bearish. The Tucson apartment market as a whole is “very stale,” he said, with no rental growth in the last three quarters, although there has been absorption. The university submarket is hit or miss— some owners tell him they’re seeing no change while others are knocking as much as $75 to $100 off rents as the new school year approaches. Some are eager to sell before incurring more losses.’
‘Fort Lowell Road was, not that long ago, the northern edge of the student housing core. In the Fort Lowell and Campbell area, where there are strings of smaller, older complexes, it’s hard now to claim being a university property roughly two miles away. “Every one of the owners I’m talking to is getting hurt,” said Mendelsberg.’
‘Tallahassee may have finally hit its “student housing” peak. But it’s leaving non-students, and others with fewer options for where to live. Now some city officials say the glut of student housing could lead to a transformation of the city’s housing market.’
“I think we area overbuilt in the student housing market, especially if you’re located outside of the defined urban core,” said Will Butler, President of the company that developed the College Town business center.’
At least the apartment owners can rest easy knowing that their properties are being well cared for by the students. I lived next to a student rental my first year of grad school. One early morning I found myself in my boxers and a T-shirt winding my way through a party full of football players to find the gals who rented the place. The looks I got from the dazed behemoths I will never forget. I got so fed up the shenanigans that I called the owner and asked if the insurance company knew about the underage drinking and pitbulls on his property. It quieted down after that, but I moved my family away shortly thereafter to a “family” neighborhood.
“Richard Peterson took out a $167,000 credit line on his Huntington Beach condo. As of July 2016, his payment will rise to more than $1,100 a month from the $400 he is paying to cover just the interest. ‘They were just giving money out. It paid off my car and everything. We both now live on a fixed income and will not be able to make the payments,’ he said of himself and his girlfriend.”
Wow talk about backwards logic. You NEVER paid off anything by taking out a HELOC, can’t fix stupid in tits up Cali!
I wonder if you can fix it somewhere else.
you never hear anyone paying off a student loan with a Heloc………that would be great no student debt and a foreclosure/BK.
‘A new report released by the New Orleans Metropolitan Association of Realtors says home prices are still going up in the Metro area, even after the record-breaking increases the housing market saw last year. Yet, prices are soaring, the most, in neighborhoods you would not quite expect.’
‘In just the first half of the year, home prices in New Orleans East went up more than any other neighborhood in the city. Particularly near the new hospital, where prices jumped 14 percent. For a fixer upper, the price per square foot has gone up 47 percent from last year.’
“(There has been) irresponsibility in reporting the stats. The impact of institutional investors, both locally and nationally, is the single main reason the market has rebounded.’”
“‘Until a certain percentage of these renters turn into buyers, they (investor groups) will have a captive audience,’ Adamson said.”
In other words, government has given free money to these REITs to make sure no middle class person in any populated area will ever afford a home again.
If you can pull the computer nerds in silicon valley away from their MMOs long enough for them to realize this, it will turn the entire region, and the state of california, deep libertarian red.
It’s the worst of both worlds, and the little guys are going to hurt the most. You’d think they’d learned their lesson five years ago, but nope…
Don’t count on California changing its shade from deep blue (much less switch to red) as it is to try to fix things either. Between the unions and the vote pandering on single issues, these guys define the new Rome and play a mighty fine fiddle while they’re at it.
Republicans wouldn’t fix it.
Anyone who thinks either the Democrats or Republicans are anything but whores for the “monied interests” Thomas Jefferson warned about is a rank idiot. Message to the 99% from that preeminent political theorist George Carlin: It’s a big club and you ain’t in it. So don’t be delusional enough to think your pointless vote for D or R makes a bit of difference when it comes to governance.
https://www.youtube.com/watch?v=i5dBZDSSky0
‘Many watching this anti-corruption campaign unfold see it chiefly as a political fight between warring factions in the party. But Xi’s anti-corruption campaign has other purposes, including establishing himself as a political strongman and furthering reforms, says Deng Yuwen, a political analyst and former deputy editor of Study Times, the Central Party School’s authoritative journal.’
‘In his first 20 months in office, the number of officials investigated and disciplined by the party’s Central Commission for Discipline Inspection, headed by Wang Qishan, have numbered in the hundreds of thousands, and claimed the scalps of at least 36 figure of vice-ministerial rank or higher. It has touched on every provincial government and powerful state-owned monopolies; in oil and gas, the financial sector, education, healthcare and the media.’
‘Xi has also moved to clean out the military, expelling former vice-chairman Xu Caihou, who stands accused of accepting bribes in return for promotions through the army ranks.’
‘Some liberal-minded princelings have been left disillusioned by the collateral damage wrought by Xi’s accumulation of power, which has meant silencing dissent from intellectuals, rights activists, lawyers and journalists, as well as a hardening approach to unrest in Xinjiang.’
‘But absolute control is also seen as necessary to push through the economic reforms needed to prevent the Chinese economy from stalling.’
‘Willy Lam, a senior fellow at the Jamestown Foundation and a Chinese politics expert at the Chinese University of Hong Kong says that in his now-famous December 2012 internal talk on the factors behind the demise of the Soviet Union, Xi laid the blame on “traitors” such as Mikhail Gorbachev, who in allowing greater freedom only accelerated the empire’s dissolution. “When the Soviet Party was about to collapse, there was not one person who was man enough to turn back the tide,” Xi is said to have told colleagues.’
‘Lam says Xi seems to “have fallen for a romanticised belief in ‘Great Man Theory’, or the non-Marxist view that history is made and unmade by a handful of geniuses’’.
“While Xi has impressed friends and foes alike with his super-confident, highly-charged style of leadership, the new number one has yet to demonstrate his ability to learn from the fiascos created by overconfident leaders in the party’s 93-year history,” Lam says’
“Even a former member of the [Politburo] standing committee has been brought down, who else is exempt? Lots of corrupt officials are feeling scared now,” says Lin Zhe, an anti-corruption expert at the Central Party School. “There will be more officials whose arrest will stun people. I am very confident of it.”
“36 scalps”
Is that 36 executions?
It’s all fun and games until somebody gets their head cut off!
That’s exactly the question that popped into my mind! Perhaps this reflects that I am currently taking an online French Revolution history course.
‘Politicians wanted upfront cash from a legal victory over Big Tobacco, and bankers happily obliged. The price? A handful of states promised to repay $64 billion on just $3 billion advanced.’
‘In part, the troubles in the tobacco bonds arise from the same kind of miscalculation that led to the housing bubble.’
‘China has issued an emergency decree ordering officials to halt the development of new cement and plate glass capacity, as it struggles to overcome entrenched local government resistance to halting wasteful investment in glutted industries.’
The statement, which was carried on the Ministry of Industry and Information Technology’s website ordered industrial regulatory departments around the country not to approve any new projects in the steel or plate glass sectors “for any reason”.
‘China’s State Council, the country’s cabinet, made a similar decree in October 2013, in which it mandated a freeze on cement and glass among other industries, but analysts have said that governments and government-connected firms have still tried to evade the freezes and even build new projects.’
“Total industrial capacity in cement and plate glass is still growing, but the industry-wide sales rate is in decline and accounts receivable are increasing,” the MIIT statement said.’
‘Critics of Chinese industrial policy have said that because Chinese officials’ career advancement is still largely tied to their ability to produce economic growth, they are still strongly incentivised to push through GDP-producing investment projects whether there is consumer end-demand for the products they produce or not.’
‘In addition, such projects can serve as channels for corruption and political patronage.’
‘The cement and glass industries depend heavily on the real estate sector and construction industries for sales.’
This is funny:
‘Cement and glass still are still producing profits on paper. The MIIT statement said the cement and glass sectors had seen profits grow by 52% and 24% respectively in the first half of 2014.’
‘Cement and glass still are still producing profits on paper. The MIIT statement said the cement and glass sectors had seen profits grow by 52% and 24% respectively in the first half of 2014.’
I’m guessing similar statistics provide the raw material for those 7.5% GDP growth figures which a certain poster touts here 24/7.
‘Other than shouting from the rooftops about a general glut and the current buyers’ market, property consultants are narrowing down to specifics bedeviling the condominium sector. Possibly the most glaring of issues, says Raine & Horne executive director Lim Lian Hong, is the high number of units of 2,000 sq ft and above and the dearth of takers, be it buyers or tenants.’
‘He says anything 2,000 sq ft and above is difficult to sell and rent. This is “particularly prevalent” in the Klang Valley.’
‘ Lim says developers are also discovering that their strategy of multiplying usage, which has seen the launch of mixed-use commercial units such as SoHos, SoFos, SoVos - essentially small offices, home offices - may not be as workable as initially thought.
“Developers thought that by multiplying usage – either for residential or office use – they could sell. But this has not been the case,” says Lim. “They are finding out that they cannot mix the two,” he says.’
‘Many of the issues in the high-rise residential market have resulted in saturation in the market. This has invariably led to the current consolidation facing this residential segment, says PPC International managing director Siders Sittampalam.’
‘He says the market saw a tremendous number of launches in 2011, “one too many for the market to absorb”. The amount of funds in circulation, coupled with the ease of lending, resulted in “every subsequent launch being priced higher than the next”, a phenomenon not seen in the 1980s, Sittampalam says.’
‘Because the physical supply was not there then, that false sense of “smooth sailing” prevalent in the 2011/12 period may reverse this year and next, Sittampalam adds. Come this year and next, many of these units will be ready for occupation and will be placed on the rental market, he says. The time may come when a reality check is inevitable.’
“Nobody questioned it then (in 2011) and the developers’ role was to sell,” he says.’
‘C H Williams Talhar & Wong’s Property Market 2014 says the supply of luxury condominiums had been rising at an average of 20% per year from 2008 to the end of 2013, representing one of the fastest-growing property segments in the period.’
‘In 2008, there were 10,674 units in prime areas in the Klang Valley. This rose to 26,816 units by the end of 2013, an increase of 151%. C H Williams says looking forward, the total supply will rise rapidly this year to 32,020 units, with the majority of them concentrated in KLCC, Mont’ Kiara, Ampang Hilir/U-Thant and Bangsar.’
‘Vacancy also rose from 26% in 2008 to 35% in 2012. With the increase in the net take-up in 2013, the vacancy rate fell to 32% in 2013.’
“Lim Lian Hong”
Brother of Sum Tim Hong?
‘Because the physical supply was not there then, that false sense of “smooth sailing” prevalent in the 2011/12 period may reverse this year and next, Sittampalam adds. Come this year and next, many of these units will be ready for occupation and will be placed on the rental market, he says. The time may come when a reality check is inevitable.’
This situation is building into an Austrian economist’s nightmare. Got popcorn?
‘The mind-boggling home prices of global finance capitals have so far hogged the headlines. But to really see the power that foreign direct investment can exert on a city’s skyline, you need to go to Miami. These apartments aren’t places to live, even a few months out of the year, or to rent. They are simply unusually shaped deposit boxes where several million dollars (or pesos, or rubles) can be left in security and secrecy.’
‘A study released last month by the Miami Downtown Development Authority found that 90 percent of demand for new condos in Brickell, Downtown and Edgewater — a 4.5 mile swath of waterfront neighborhoods across the bay from Miami Beach — is from foreign buyers. More than six in 10 pre-sale buyers come from Latin America.’
‘Most remarkably, for a major American downtown: Only one in 10 new apartments is purchased as a primary residence.’
‘Developers have begun to adopt a model of real estate finance more commonly found in credit-tight South America, in which a buyer pays half the cost of a unit before the building is even finished.’
‘As Ken Silverstein has shown in the Nation, this practice is conducive to corruption. “The real estate industry is more lightly regulated than financial institutions,” Silverstein writes,”
“Banks are required to file a Suspicious Activities Report (SAR) with the Treasury Department if they suspect a client is depositing or transferring corrupt money. Real estate agents and title insurers are exempt from that requirement—as are businesses that primarily sell luxury goods such as jewelry, yachts and private planes—which makes property an especially attractive vehicle to money launderers. Furthermore, bank tellers don’t receive a commission on the deposits they accept, so they are more likely to ask questions of a dubious customer than a real estate agent, who stands to make a huge commission on a multimillion-dollar luxury condo deal.”
‘These apartments aren’t places to live, even a few months out of the year, or to rent. They are simply unusually shaped deposit boxes where several million dollars (or pesos, or rubles) can be left in security and secrecy.’
Destroy confidence in currency as a store of value and this is what you get:
Massive wastage of natural resources and labor on constructing rapidly depreciating, unwanted, unneeded apartments all over the globe which merely exist to provide an inflation hedge.
And I note the situation is little different in Miami than it is in Chinese cities with regard to high rise apartments which serve no fundamentally useful purpose.
David Stockman (former Reagan budget director): The train wreck is coming.
http://davidstockmanscontracorner.com/david-stockman-interview-on-todays-turbulent-financial-markets-stay-out-of-harms-way/
Flush with free money from the Fed, Oligarch 1 buys a yacht from Oligarch 2 for a firesale price, only to discover he got ripped off. I’m sure there’s a way the taxpayers can make this right.
http://www.independent.co.uk/news/uk/home-news/a-36m-yacht-bought-as-seen-scuppers-telecoms-tycoon-9659437.html