A Warning To Investors
It’s Friday desk clearing time for this blogger. “The real estate market in Downtown Sarasota is rising… literally, with 18-story high rises of luxury condos, affordable for the wealthy. Units run from $800,000 to $2 million on average, with the penthouse topping $3 million. So far, 43 of 141 residences have already sold. Seven of 20 planned projects, totaling $352 million are underway. ‘This year, as we move into 2015, will be the story of luxury. It’s luxury buyers driving the year to year growth,’ says Drayton Saunders, President of Michael Saunders & Company, a licensed real estate broker. ‘I don’t think we are overbuilding or building too fast. We’re catching up to the demand that’s very deep in Florida, particularly in Sarasota.’”
“The average sales price of a home in central Ohio for the first eight months of 2014 was $184,587 - the highest on record and almost three percent higher than at the peak of the housing boom in 2005. ‘Central Ohio is leading the way in home price recovery,’ Columbus REALTORS 2014 President Milt Lustnauer said. ‘In fact, average sale prices in the months of March, April, May, June, July as well as August of this year mark record highs for each of those months.’”
“With the 3,226 homes and condos listed for sale in August, inventory reached its highest level yet in 2014 (9,658). The 2,518 central Ohio homes and condos sold in August 2014 was 11.2 percent lower than the previous year. ‘Buyers should realize that this still an excellent time to purchase a home,’ Lustnauer said. “Prices are only going to rise and rates are still low.’”
“Boston-area home values declined 0.9 percent between June and July on a seasonally adjusted basis, according to the S&P/Case-Shiller Home Price Indices. The indices track repeat home sales around the United States, and for its July report, the indices found ‘a significant slowdown in price increases’ nationwide.”
“Leading local realtors and economists say despite lower mortgage rates and higher home values people are still living in fear that the housing crisis could happen again and destroy their finances. Recent Las Vegas transplant Cathleen Plonske found her dream home. ‘Beautifully decorated, the kitchen was just amazing, double ovens,’ Plonske said. However, she quickly realized her family couldn’t afford it. ‘The houses that we were looking at buying, it was just way too expensive,’ Plonske said.”
“As freshmen arrive at UC Santa Cruz for the fall, for some returning students excitement has turned to panic, unable to find a place to live before classes begin. That doesn’t surprise Bill Brooks, who hasn’t built any rentals since he opened the 54-unit Branciforte Commons apartments in 2005. ‘There is no new supply,’ he said. ‘You can’t get enough rent to cover the mortgage on new construction.’”
“Why are so many young people on the streets of Hong Kong, risking clashes with local police and a Chinese government that has a history of brutal crackdowns? Part of the answer lies with protesters such as Ka-Chai Kwok, 25. A recent college graduate, Kwok said she had few job prospects. Hong Kong rents are so high that she lives with her parents, sleeping on a couch. ‘The housing policy of Hong Kong needs to be changed,’ she said. ‘It’s crazy to live like this. You have no control over your life. You can’t even have sex.’”
“Taiwan activist held a press conference lashing out against real estate companies for reaping huge profits while paying low taxes, all the while blocking real estate tax reform. Huang Yi-chung, the president of Taiwan Adequate Housing Association, pointed out that housing is a necessity. While a price increase of NT$5 for coffee or instant noodles was sufficient to raise Fair Trade Commission’s concern, the commission appeared unmoved about local housing prices that have gone up by threefold. It shows that the government is more eager to protect the interests of large construction firms than the general public, Huang said.”
“When the real estate bubble busted in Japan, local housing prices were 400 times that of the rent. Today, housing prices in Taiwan are between 800 to 1,000 times the rent, pointing to an even greater bubble looming.”
“High house prices have prompted almost a quarter of first-home buyers to give up, a report has claimed. It comes as RP Data yesterday revealed that despite the value of a median-priced Melbourne house falling almost $6000 (1 per cent) to $590,000 in September, values were $35,000 (6 per cent) above their previous peak set in 2010. RP Data research head Tim Lawless said the market trend in Melbourne was still positive, but a surprise reduction in property values in September was a warning to investors.”
“‘The rate of growth is still very strong in trend terms, but has started to slow down,’ Mr Lawless said. ‘Absolutely it’s a little bit of a warning sign. For investors looking around the different markets the two most popular, Sydney and Melbourne, are the most mature in their cycle.’ His concerns follow a Reserve Bank warning that heightened investor activity could raise the risk of a price correction.”
“What is happening in Kfar Shmaryahu? Anyone passing through this exclusive town on the coast north of Tel Aviv will run into quite a number of ‘For Sale’ and ‘For Rent’ signs. The Yad2 Internet real estate listing site is also filled with properties for sale in Kfar Shmaryahu, while the number of deals closed there is continually falling. From the beginning of 2014 until just before Rosh Hashanah last week, not one single-family home was sold in the community.”
“‘Placing signs in front of the houses is the last thing homeowners are interested in, for social and business reasons,’ said an agent who works in the community. ‘The signs indicate that these properties have been on the market for at least a few months. At first they tried to sell them quietly, in other words by word of mouth. After that, they advertised on overseas websites and then they worked with [real estate] agents. Only afterwards, when everything else had failed, did they decide to put up the signs.’”
“The 16th Geneva Reports on the World Economy, released this week by the Centre for Economic Policy Research’s International Center for Monetary and Banking Studies, makes grim reading. The main takeaways are: firstly, we’ve not made progress in deleveraging despite all the happy talk to the contrary; secondly, high debt levels are constraining growth; and thirdly, the interaction of the first two is ‘poisonous.’ World total debt, not including financial companies, has risen since the crisis, from 176 percent of GDP in 2008 to 212 percent in 2013.”
“Up to the last crisis, in 2008, borrowing in developed markets was driving global leverage, and arguably global growth. The baton has been passed. ‘Since then emerging markets (especially China) have been the driving force of the process,’ according to the report. ‘This sets up the risk that they could be at the epicenter of the next crisis.’”
Prices and inventory at record highs and “prices are only going to go up”?
Thieving lying Realtors in Ohio are hopelessly clueless idiots too I see. I thought they might be less so in the heart land.
Realtwhores only know how to lie and besides most are so stupid, they just parrot back whatever they heard some other real estate idiot say.
“World total debt, not including financial companies, has risen since the crisis, from 176 percent of GDP in 2008 to 212 percent in 2013.”
Try to avoid getting caught out of your seat dancing the next time the music stops playing.
You could be handcuff yourself to a seat, but governments are still going to remove you from it so that dancing financiers can sit back down. The world is ritually committed to a single inflexible economic policy that already is diseased. It reminds me of the vulnerabilities presented by monoculture farming; if your one crop succumbs to blight, what’s going to sustain you?
Hungary- Pol-Argt-Portugal- all stole private savings
A pittance compared to what the banking clan is doing.
“Up to the last crisis, in 2008, borrowing in developed markets was driving global leverage, and arguably global growth. The baton has been passed. ‘Since then emerging markets (especially China) have been the driving force of the process,’ according to the report. ‘This sets up the risk that they could be at the epicenter of the next crisis.’”
Whatever happened to the troll team that made it a personal life mission of attacking any post regarding the incipient banking crisis in China?
‘Some local governments in China have begun cutting expenditure on non-essential investments, while seeking new financial sources by using reserve funds and selling local government assets to ease financial pressure, Beijing-based Economic Information Daily reports.’
‘Against the backdrop of the government loosening its grip on the property sector and in view of current economic stagnation, financial departments of some local governments are resorting to extreme measures such as cooking their books to inflate revenue.’
‘Financial departments usually cook their books by purposefully altering financial accounts to show high revenue if they find that their revenue targets are set too high at the beginning of a year and cannot be achieved by year end.’
‘They may provide funds to subsidize enterprises and then reimburse the money through tax payments by these enterprises, which amounts to falsifying financial information by inflating spending and revenue.’
‘A financial official in a city in northern China told the newspaper that falsifying financial records is a long-standing practice and that it is getting worse. Last year, 15% of the city’s recorded revenue was a result of these practices. In some county governments, up to 30% of their recorded revenue was generated this way.’
‘According to the paper, more than 95% of 70 large and medium-sized cities in China reported a month-on-month decline in property prices in August.’
‘China Wants to Know Why Foreigners Are Fleeing Beijing ‘
Because they can’t breathe?
Grow or Lie doesn’t look too promising.
That’s a turn of phrase that works well in other contexts. Channeling the New Hampshire license plate, the new motto of the global economy could be “live free or lie.”
The next motto will be, “Live for free and die.”
As long as it’s not “Live for free or kill”
“…selling local government assets to ease financial pressure, Beijing-based Economic Information Daily reports.”
Taking a page out of the City of Detroit’s playbook?
‘They may provide funds to subsidize enterprises and then reimburse the money through tax payments by these enterprises, which amounts to falsifying financial information by inflating spending and revenue.’
If it works in the U.S., why wouldn’t it work in China?
“Up to the last crisis, in 2008, borrowing in developed markets was driving global leverage, and arguably global growth. The baton has been passed. ‘Since then emerging markets (especially China) have been the driving force of the process…”
“emerging markets” is a euphemism for poor countries. China is an extremely poor country, and the whole world has been feeding off of their borrowing frenzy. There is no other last resort for the debt mania when this blows up.
What about EU QE? Or a Fed-funded QE4? Wouldn’t those be potential last resorts?
We’ve already been at those resorts and partied hard until the place was trashed. The people have reached debt exhaustion and QE just makes the price of food go up. QE all you want, the debts can’t be paid already.
Nothing is stopping QE4. It is coming after the elections and pen amnesty, early next year when panic sets in that this sucker is going down again.
Food is ridiculously cheap and the price is easily controlled or manipulated. If debt doesn’t have to be paid back ever, is it really debt?
“QE all you want, the debts can’t be paid already.”
So long as the music keeps playing, why does that matter?
But without another QE, the music has stopped for the flippers and house sellers. They either need to feed the alligator or take a loss.
House near me went off the market in July at $275K and just came back on, now at $269K. At least three months of foregone rent. Why? Why not just rent it out if you can? Why not just wait it out? That new listing tells me all I need to know about this sucker going down.
“China is an extremely poor country, and the whole world has been feeding off of their borrowing frenzy.”
Their curious blend of poverty and arrogance will work out badly for many.
It’s the subprime Godzilla of our generation.
“It’s the subprime Godzilla of our generation.”
+1 Are they ready to tune their AM radios?
‘In about a month, Ed Clark, the CEO of TD Bank, will retire. He’s had an impressive run. As the one-time head of Canada Trust, Clark engineered what was essentially a reverse takeover of the much larger Toronto-Dominion Bank after it bought Canada Trust in 2000. And, under his watch, TD recently catapulted past the Royal Bank of Canada to become the largest financial institution in the country by total assets, which, as of last quarter, stood at a staggering $922 billion. So the man knows banking. And, this being Canada, where a handful of Goliaths dominate the industry, thanks to government-decreed oligopoly, he’s acutely familiar with the unseemly tango bankers and politicians are forever locked into.’
‘Which is why it was so informative when Clark voiced concerns recently about the fragility of household finances in light of ultra-low interest rates and the easy access to mortgage credit. “Where these issues have been dealt with successfully is governments who lay out a framework for an industry,” he told the Canadian Press last week. Individual banks, he said, aren’t able to “change the world . . . It’s not possible in a competitive capital system.”
‘To paraphrase Clark, it’s cutthroat out there, and no bank can afford to lose any lending business to rivals, even if those rivals take undue risks by issuing loans to people who can’t really afford them. As such, it’s necessary for government to tighten lending rules to keep the industry from rocketing out of control.’
‘Or, to distill Clark’s message further still: Stop us before we hurt ourselves.’
‘It’s a measure of the insanity gripping Canada’s real-estate-obsessed, household-debt-driven economy that it’s come to this: bankers asking government to impose restraint on banks. Just as telling, though, has been the response from government, namely Finance Minister Joe Oliver, who, ultimately, holds the levers over any further tightening, and who thinks everything is just peachy. “We’re looking at things,” he said this week, “but we’re not going to be doing anything dramatic. We don’t see the need for it.”
‘It’s a measure of the insanity gripping Canada’s real-estate-obsessed, household-debt-driven economy
This unprecedented level of debt will result in an unprecedented and unimaginable outcome for those who are indebted.
‘And, under his watch, TD recently catapulted past the Royal Bank of Canada to become the largest financial institution in the country by total assets, which, as of last quarter, stood at a staggering $922 billion.’
That is my bank. Branches all over the area, not unlike Dunkin’ Donuts. Their stock has been dropping lately though.
“…not unlike
Dunkin’ DonutsTim Horton’s>”FIFY
‘The volume of property sales across Taiwan slumped in August, government statistics showed Wednesday, continuing a trend that has lasted for much of the year because of government measures to crack down on property speculation. It was the second-lowest total for any month this year, according to Ministry of the Interior figures. The August figures brought property transaction volume to 216,553 units for the first eight months of the year, the lowest for the January-August period in 11 years.’
That’s why we have 40 million people on food assistance I suppose.
“Food is ridiculously cheap…”
From a production standpoint. To all those on food assistance it is super cheap = free.
Janet knew the 5.9 number was coming and is moving the goal posts
mcjobs
“…moving the goal posts…”
That’s a Fed prerogative.
when did the fed become the gods head
they’ll be hunted down like SADam in the end
Hmm…Waterfront can be anything. I would prefer a one story single unit villa with its own private beach on Siesta Key. IIRC, the south part of the key (south of the resorts and the public parking area) are more secluded.
I’d be curious to know what prices in the rest of the county look like. I have relatives who have a second house east of I-75 in the kind of gated community that seems like heaven to a Midwestern retiree but that Floridians know is a dime a dozen. A lot of southwest Florida was horribly disfigured by the bubble.
E of rt75 is probably 2003 pricing still
drain build,repeat
“The 16th Geneva Reports on the World Economy, released this week by the Centre for Economic Policy Research’s International Center for Monetary and Banking Studies, makes grim reading. The main takeaways are: firstly, we’ve not made progress in deleveraging despite all the happy talk to the contrary; secondly, high debt levels are constraining growth; and thirdly, the interaction of the first two is ‘poisonous.’ World total debt, not including financial companies, has risen since the crisis, from 176 percent of GDP in 2008 to 212 percent in 2013.”
BUT US Unemployment is now 5.9% - Party on!!
Forget China - come on over to Chicago to get a taste of collectivism!!!
And Rahm and the rest of his loonies are wondering why the folks are vacating.
http://www.chicagobusiness.com/article/20141001/BLOGS02/141009999/real-chicago-home-property-taxes-climb-50-percent-in-five-years#
The poor don’t have any money to pay taxes.
The rich can pay people to develop strategies to avoid taxes.
So the people between these two extremes end up being the cash cows.
And the ones with the biggest bulls-eyes on their backs are those who can’t pack up and move readily. And who can’t con/bribe their way into tax breaks/rebates because they are “job creators”.
AKA….residential homeowners.
That, and by writing a blizzard of traffic/parking tickets.
‘The latest national housing price index released this week by First National Bank reveals the shocking rate at which house prices in Namibia are climbing, put Windhoek as the city where property prices increase faster than any other place in the world apart from Dubai. Reflecting house price movements for June the index recorded a 29% year-on-year increase and show that in 2014 the price increase trend has accelerated significantly compared to movement over the last seven years.’
‘Global house prices continued to trend upwards for 41 of the 55 countries. Dubai tops the annual rankings for the fifth consecutive quarter, recording annual price growth of 24%. Namibia slots into second place with annual price growth of 16% …despite numerous government interventions to increase new housing supply in the world’s second-least populated country.’
‘Even more frightening is the calculation that at a median price of N$774 000 per house, only Namibian households that earn at least N$23,000 per month can afford an average property in the capital. It translates to almost three times the average household income for urban households in the country. “Based on our calculations, the income requirement for the lower price segment came in at N$15 000 per month. Less than 10% of the households in the country can afford a property in the lower price segment,” the economist said.’
‘Only 61 stands were mortgaged during June with prices averaging N$140,000 for a 410-square-metre plot. Despite being more than in May, the lack of available land definitely contributed to the increase in land prices to N$340 per square metre. The effect is even more evident in the central areas where only 12 stands were mortgaged at an average price of N$640 per square metre, up 53% from the prices charged last year.’
like NYC w a chip on their shoulder
Boston-area home values declined 0.9 percent between June and July on a seasonally adjusted basis
no one ever moves back to New England
no one ever moves back to New England
I was one that did, in 1978 moved to western CT to finish post grad training, while there lived in a housing unit subsidized by the feds somehow. The subsidy was necessary, otherwise there would have been no trainees due to the local high cost of regular housing. Near the end of my time, I moved my stuff out a week before the lease expired, sent it back to OH, and slept on my camping equipment in the empty unit until the last minute.
While I was there, one of my instructors resigned his position, moved to western NC (”Mayberry”, he called it), and bought a house for cash, using just a portion of what he had been saving for a mortgage down payment in Fairfield County CT, which, no matter how large it was, turned out to never be enough.
One place people always return to after moving away is Santa Fe, NM.
“You can’t even have sex.”
Sounds like the perfect synergy for two Republican constituencies………the Bible-thumpers and the oligarchs.
Now all they have to do is open the immigration floodgates.
“When the real estate bubble busted in Japan, local housing prices were 400 times that of the rent. Today, housing prices in Taiwan are between 800 to 1,000 times the rent, pointing to an even greater bubble looming.”
par used to be 120 x rent
before bernak/yellen
I bought in 1997 partly based on that figure (price <= 10 years rent) and that worked out well (sold in 2007 thanks in part to this blog). That number still makes a lot of sense to me, prices were at about that level in 2011/2012 and I tried to buy again but it was basically hopeless thanks to legions of 100% cash flippers and speculators. When (not if) Bubble 2.0 pops may try to but again if prices drop to 10 years rent but am renting more or less happily in the meantime, buying makes no sense for me at current prices
I cant believe congress is getting away with not debating or voting on the new war until after the election?
CAN WE PLEASE VOTE THEM ALL OUT AND START FRESH?
Can’t. The sheople are convinced the staged four beheadings on the other side of the world are a severe danger to all our way of life so let’s print another $trillion for another war and let’s remove more civil liberties in America.
And don’t forget Ebola!
Those dead Africans, all of them imaginary
Those dead Africans, all of them imaginary
It’s not the dead Africans that are imaginary; the hobgoblin is that it would spread out of control here—it won’t.
A big part of the reason it is spreading is cultural in nature: distrust of doctors and hospitals. Sick people fleeing quarantine does not help contain an outbreak.
Another hobgoblin is that the Ebola outbreak represents a relatively significant source of human mortality in Africa. Here are some statistics to put matters into perspective:
1. Ebola death toll in Africa thus far: 3,439
2. Daily number of children in Africa dying of malaria: Circa 3,000
3. Number of deaths in the Somalia famine between October 2010 and April 2012: 258,000
If the Ebola death toll tops 200,000, I will retract my point, which is that its impact is relatively minor compared to other causes of mortality on the African continent. However, the horrific nature of the disease makes it a convenient political hobgoblin.
What’s eating Generation’s X’s wealth?
By Danielle Paquette September 19 Follow @dpaqreport
Diana Elliott, Research Manager,Economic Mobility Project at The Pew Charitable Trusts, and one of the authors of a new report on Generation X’s finances.
Last year, we did a study that looked at retirement security across generations. Gen Xers — those born between 1965 and 1980 — were hit particularly hard by the recession, we found.
They lost 45-percent of their wealth.
It was clear Gen Xers experienced hard times. They were just starting to hit their prime working years, were just starting to buy homes… They’re in their 30s and 40s today.
So, we became interested in how Gen Xers as a group compared to, specifically, their own parents. We found that three-fourths of Gen Xers have more household income than their parents did at the same age.
But only one-third had more wealth — which includes property, savings, etc.
URL in my name
“What’s eating Generation’s X’s wealth?”
McDonald’s restaurant tabs?
“This has implications for the future. If Gen Xers are still paying their own student loan debt, it’s unclear if they can save enough money for their children’s educations.”
+1 Brilliant deduction; a PHD Economist?
US Home Prices Are Rolling Over (in one Chart)
Read more at http://investmentwatchblog.com/us-home-prices-are-rolling-over-in-one-chart/#ZmS2K48VkFjH21vE.99
Uh-huh.
And when the hangover sets in, the next hair-of-the-dog cure begins.
Spring to early fall has been evident, sales of homes across the board have been as weak as a person who has a prolong flu.
Sentiment among buyers, they still can’t get over 2005′ 2006′ craziness and then the crash (depression really) that followed.
2014 has seen a world in turmoil, flat wages, higher home prices despite a sharp downturn in activity?
Nothing makes sense to the buying public, who can blame them, denial of disaster real estate recovery, denial of poor overall jobs recovery, denial that a recession can’t happen again, only fuels folks to stay on the sidelines and watch the madness.
Denial that housing prices are cratering, denial that current housing prices are 250% higher than long term trend, denial that current housing prices are double construction costs (lot, labor, material and profit)…
Lots of denial out there isn’t there?
Michael Allison, This Ain’t Rocket Science
Deep value, special situations, growth
The Golden Years For China’s Economic Growth Have Come And Gone - Part One
Oct. 5, 2014 2:48 PM ET
Summary
* China’s best years are behind.
* China’s official GDP figures do not fit reality.
* The level of over supply and malinvestment in the residential real estate market is a serious problem.
…
Where’s Albuquerque Dan to tell us how everything is coming up roses in China?!
Things are going so well in China’s economy that propaganda effort is no longer necessary to prove it.
Market Pulse
World Bank cuts growth forecasts for China, developing East Asia
Published: Oct 6, 2014 12:25 a.m. ET
By Michael Kitchen
Asia editor
LOS ANGELES (MarketWatch) — The World Bank on Monday cut its economic-growth forecast for China, citing measures to reform the economy and tackle pollution, among other issues. The multinational lender trimmed Chinese growth for this year to 7.4%, down from a previous forecast of 7.6% and putting it below Beijing’s target of “around 7.5%.” For next year, it cut growth to 7.2%, down from 7.5%. Last year, Chinese gross domestic product rose 7.7%. “Measures to contain local government debt, curb shadow banking, and tackle excess capacity, high energy demand, and high pollution will reduce investment and manufacturing output,” Reuters quoted the report as saying. The World Bank also cut its overall economic growth forecast for developing East Asia to 6.8% from 7.1%.