Like The Locusts, Destroying Everything In The Fields
The Daily Breeze reports from California. “With income inequality growing at home and abroad, Manhattan Beach’s housing market is seeing record numbers of home-buyers paying in cash. More than 30 percent of homes that sold for more than $1 million this year were purchased without financing. Several South Bay real estate agents said that they have seen an increase in the number of foreign investors this year. Often parents with children at Southern California schools will buy a home as an investment, knowing they can flip the home for a profit in four years, said Realtor Steve Goddard.”
“International buyers accounted for $92 billion in home sales in the 12-month period that ended in March, up from $66 billion in 2010, according to the National Association of Realtors. ‘It’s basically a world market that these sorts of properties are trading in. It’s not a local market anymore,’ said Richard Green, director of the USC Lusk Center for Real Estate. ‘As expensive as Manhattan Beach is for us, compared to China, compared to Singapore, compared to Hong Kong, compared to London, it looks like a bargain.’”
The Globe and Mail in Canada. “Demand from wealthy migrants from mainland China such as Ms. Hong has helped make the Vancouver area the most expensive real estate market in Canada. The average price of a single-family detached home is $1.26-million, higher than any other Canadian city. ‘In my opinion, I think it’s good for the economy,’ says Qiqi Hong, noting that the number of Chinese residents on her street has soared in recent years and that the local businessman she bought her house from made a cool $1.5-million more than he originally paid. ‘In Vancouver, the house prices are perfect.’”
“The Vancouver housing market has been less kind to Brent VanderRose and his wife Amy, who are both nurses. A few years ago, Mr. VanderRose purchased an older one-bedroom, 643-square-foot condo in Vancouver’s Fairview neighbourhood for $385,000. He and his wife wanted to start a family there, but they could not afford a bigger place nearby. The VanderRoses finally decided on a $585,000 detached, three-bedroom home in the suburb of Surrey, but couldn’t sell their older condo before the move-in date. They rented out the new house at a $500-a-month loss. They finally sold the condo at a loss for $335,000. They are expecting another child, but say they are stopping at two – because of housing costs.”
The Daily Mail in the UK. “A stampede of Chinese and Russian investors is snapping up British homes aimed at families and first-time buyers. Michael Sacks, of Sequre Property Investment, said foreign investors buying homes above their real value were ‘corrupting the market.’ He said overseas investment had seen prices for two-bedroom apartments in Manchester go ‘through the roof.’ ‘We know that Chinese investment companies are securing entire developments and then selling them to investors overseas for significantly more than they are actually worth, 25 to 35 per cent more in some cases,’ he said.”
The Sydney Morning Herald. “Chinese investors are aggressively lifting their Australian residential and commercial real estate investment at a time when the Reserve Bank is warning bubbly property markets could be hit with a price correction. Melbourne’s skyline will blossom with another 42 new skyscrapers to cater for demand if the state government approves all current proposals over 25,000 square metres on its books when there are already fears of a big oversupply. China has been booming for a decade but is now showing signs of slowing. ‘Now in our own market, more or less, we have reached certain capacity,’ says Adrian Sum (who) controls the purse strings of one of China’s largest property developers.”
“Its housing is in oversupply. The number of apartments in Shanghai is expected to double next year to total 1.1 million square metres. One new project in Shanghai’s redevelopment precinct is the size of both Melbourne and Sydney’s CBDs put together, says Savills’ Hong Kong-based research director Simon Smith. As a result, house prices, which rose to record highs for five consecutive years, are now experiencing a sharp deceleration. ‘Their main hurdles are lack of expertise and capability, so they are just dipping a toe in the market. They want to get practice,’ Mr Smith says, and they can ‘afford to fail.’”
The Associated Press. “By road, the little apartments are nearly an hour from central Hong Kong and the protests that have swept through it. Twice that long if you take the subway. But the apartments are also affordable, at least in the way that any real estate can be affordable in one of the world’s most expensive cities. The cheapest sell for 2.9 million Hong Kong dollars, or about $375,000. They are slightly larger than the average American kitchen. Young couples are desperate to buy them.”
“So when student-led pro-democracy protests began roiling Hong Kong two weeks ago, realtors saw a reflection of something else: the frustrations of a generation increasingly unable to afford the lives their parents had. Wealthy tourists from mainland China are regularly dismissed here as loutish boors who cut in line, spit constantly and flaunt their newfound wealth with newfound arrogance. To the people of Hong Kong, the rich shoppers are ‘wong chung’ — locusts — who buy whatever they can. ‘They are like the locusts, destroying everything in the fields,’ said Chan, the protesting student.”
From Bloomberg. “Rating companies say the risk of defaults in China has risen as Premier Li Keqiang pares implicit guarantees for local-government financing vehicles. The State Council said Oct. 2 that the finance arms can no longer raise funds for local authorities, and that the governments have no obligation to repay debt that wasn’t raised to fund public projects. ‘The market is entering a new era,’ said Chen Jianheng, a Beijing-based fixed-income analyst at CICC. ‘The time when everybody bought LGFV bonds for high returns without considering credit risks are gone. For any sales in the future, investors will apply a different set of criteria.’”
Want China Times. “The country’s economic slowdown and a slump in coal prices is taking its toll on the coal-rich areas surrounding the northern Chinese cities and township of Ordos, Ningdong and Yulin, with coal-mining and trading businesses in the region beginning to terminate their coal-related operations and turning to other business sectors. The ‘Energy Delta,’ previously dubbed an economic miracle, has now been overshadowed by the drop in housing prices, population outflows and loan problems, reports the Guangzhou-based 21st Century Business Herald.”
“During the rapid growth era, private loans mushroomed and investments were made in the real-estate market, given that housing purchases are one of few channels for people wanting to manage wealth acquired from coal mining.”
“However, the slump in coal prices triggered a fall in housing prices, which then sparked disputes between land developers and housing buyers over losses caused by the housing price drops. People who had bought property when the price was high complained about the sudden price drops and are seeking refunds or compensation from local governments or developers, according to the report.”
“China…said Oct. 2 that the finance arms can no longer raise funds for local authorities, and that the governments have no obligation to repay debt that wasn’t raised to fund public projects.”
Now there will be some questions about where the money went.
From a January Bloomberg article:
“Regional governments set up more than 10,000 local financing units to fund construction projects after they were barred from directly issuing bonds under a 1994 budget law. Local-government debt swelled to 17.9 trillion yuan ($2.96 trillion) as of June, compared with 10.7 trillion yuan at the end of 2010, according to data compiled by the National Audit Office.”
http://www.bloomberg.com/news/2014-01-02/china-lgfv-sells-first-dollar-bond-as-yuan-borrowing-costs-rise.html
$3 Trillion in declared local government debt. Money borrowed for construction projects by local governments whose income stream is selling public land for development.
If Ms. Hong married Mr. Kong, she would be Hong Kong.
I think she would be Kong Hong.
Many women in China do not change their family name when they marry, but continue to use the name they were born with. Ms. Hong could also be called ‘Mr. Kong’s wife’ but not Mrs. Kong.
‘Taiwan’s Ministry of Finance (MoF) has asked eight state-owned banks to provide details of outstanding loans to Chinese companies as fears of defaults by privately-owned Chinese companies rise, banking sources said. The MoF, which is also the biggest shareholder of Taiwan’s state-owned banks, sent forms to banks on October 3, asking for a breakdown of outstanding amounts on syndicated and bilateral loans to Chinese companies, the sources said.’
‘Taiwan’s banks are among Asia’s largest lenders of syndicated loans and have lent heavily to private and state-owned Chinese companies in recent years. The move by Taiwan’s MoF follows similar moves by the Hong Kong Monetary Authority which stepped up its scrutiny of Hong Kong-based banks this year after their exposure to Chinese onshore companies soared in 2013.’
‘Taiwan’s MoF also requested information on the terms and conditions of security and repayment on the loans, the bankers said. “We are afraid there will be a ripple effect of loan defaults for Chinese companies. We are even cautious of lending to Chinese state-owned companies,” a banker with a Taiwanese state-owned bank said.’
‘Amid a faltering property market, China’s real estate billionaires already have plenty of troubles these days. But for Chen Zhuolin, who ranked No. 125 on the China Rich List as the founder of Agile Property Holdings, those troubles appear to have just gotten far worse.’
‘Chen,52, is now under the control of Chinese prosecutors. He has been required to stay at a “designated residence” since the evening of Sept 30 by the Kunming City People’s Procuratorate, Agile said in an Oct 10 filing to the Hong Kong Stock Exchange. The company said it is not aware of any other information related to Chen’s condition and it has not discovered any lost or misappropriation of funds.’
‘The announcement follows on the heels of an Oct.7 article on a Chinese website linking Agile to China’s former security czar Zhou Yongkang, who is now under a corruption probe. Agile said the report was groundless and untrue.’
‘The news is another blow to beleaguered Agile. On Friday, it scrapped plans for a 2.75 billion Hong Kong dollar ($ 348 million) rights issue, a sign of refinancing risks amid a nationwide property slump. Agile intended to use the cash from the sale of new shares to fund part of the repayment of its $475 million bank loan due in December 2014, according to Moody’s Investors Service.’
‘Agile’s debt leverage- namely its adjusted debt/capitalization- including perpetual debt reached 62.5% in the first half of 2014, Moody’s says.’
‘Britain’s most expensive homes got cheaper this year as more central London mansions and super-prime apartments sported “for sale” signs.’
‘The average value of homes sold for at least 10 million pounds ($16 million) in London’s most expensive neighborhoods was 2,757 pounds a square foot in the first eight months, according to broker Huntly Hooper Ltd. That was 7.4 percent lower than the record of 2,978 pounds set in 2013. Prices for other homes in the area known as prime central London increased.’
“Whilst there are record sales being achieved, buyers should not be swayed by headlines suggesting there is a boom in average pricing,” Huntly Hooper director Oliver Hooper said in the statement.’
‘Apartments in the top category fared the worst, with a 9 percent decline to an average of 3,565 pounds a square foot (38,370 pounds a square meter) compared with the average value last year. Super-prime house prices dropped 6.3 percent to 2,458 pounds a square foot. There were 66 transactions this year through August compared with 92 for all of last year.’
‘The mansion tax may still have an impact on the central London housing market, Charles Puxley, a Chelsea-based broker at Jackson-Stops & Staff said in an Oct. 9 Royal Institution of Chartered Surveyors residential market survey.’
‘Fewer new homes than normal were offered for sale in September “and there is notably very little activity at just over the 2-million-pound mark,” he said. “Mansion tax seems to be a real worry; it will decimate London prices.”
“2,757 pounds a square foot”
Sheesh, HA could build that home for less than 10% of the purchase price……..92% overvalued on the HA scale…..
‘Marriages, of course, get into trouble for all kinds of reasons, and rarely are they simple ones, but divorce lawyers and those in the real estate industry say that — whether we like to admit it or not — it’s an unavoidable reality that Canada’s red-hot real estate market is adding a thorny new dimension to marital strife. When a couple hits hard times, it’s awfully tough for either of them to ignore that other factor in their domestic arrangement — the value of their home.’
‘The average household in Vancouver, Toronto and Calgary owned $533,172 in real estate at the end 2013, according to Environics Analytics. That wealth is mostly due to the relentless rise in house prices, which have climbed 156% nationally in the past 15 years and 430% over the past 30 years.’
‘For couples who bought in long before the bubbling began — especially those Boomer couples who got in decades ago — all that home-equity wealth has created an escape hatch to get out and start a new life with a pile of cash. Yet, for others with still just a dent in their equity, splitting means getting tossed headfirst back into the unforgiving world of bidding wars and runaway prices. In some cases, the hard truths of urban real estate has them opting instead to stick it out in a flailing marriage, or trying to co-exist under the same roof long after divorce.’
“Sometimes you’ve got one person who might be looking at the financial situation — especially when [that] person has initiated the process,” says Jason. “I can’t tell you whether it was part of her thinking,” he says of his estranged wife. “But I know she got a head start thinking about this.”
During the tech stock bubble, I knew an executive at a publicly-traded company who was sitting on substantial stock-option wealth, once the options vested and he became able to exercise them. Unfortunately, he then became embroiled in a contested divorce, the kind where the spouses fight bitterly over small things.
In exchange for undisputed ownership of some other assets, he caved on the unvested stock options. It was the right choice, because shortly thereafter the options became worthless when the stock fell by more than 99% and NASDAQ delisted it.
“It was the right choice, because shortly thereafter the options became worthless when the stock fell by more than 99% and NASDAQ delisted it.”
He had her over a barrel on that one!
‘Supply is up and demand is down in the P.E.I. housing market, creating a buyers’ market where homes are slow to sell. Linda Mosher is one of the lucky people in the market looking for a new home, but only after suffering through the process of trying to sell hers.’
“It was on the market before it was actually sold for about 11 months, which was at least six months longer than we expected it might be,” said Mosher.’
‘Association president Wayne Ellis told CBC News more older Islanders are selling their homes and downsizing, and others are moving out west. “There’s lots of choice, and it’s a perfect buyers’ market right now,” said Ellis. “They want all the bells and whistles for the same money. Years ago, they’d buy something just to get into a house, and now they’re waiting.”
‘That puts Mosher in a happy position now that she’s sold her home. “The market is flooded right now. There’s all kinds of homes,” she said.’
“Ellis believes if interest rates rose slightly more people would rush to buy a house before rates rise even more.”
Bahahahahahahahaha … See? People are smart.
“But if mortgages stay cheap, and with lots to choose from, he does not believe market conditions will change any time soon.”
Make it more expensive and people will rush into buy.
Econ101 turned on its head.
‘Senator Elizabeth Warren, always outspoken on the tension between Main Street and Wall Street, took shots Sunday at a system she said is “rigged” against the little guy. In an interview in Salon, Warren, who has said she doesn’t plan to seek the 2016 presidential nomination, said fellow Democrats including President Obama have not done enough to help consumers.’
‘On President Obama: Warren praised Obama for the creation of the Consumer Financial Protection Bureau, a federal agency aimed at enforcing consumer protection laws. But she told Salon that “there has not been nearly enough change” in the wake of the U.S. financial crisis.’
“He picked his economic team and when the going got tough, his economic team picked Wall Street. …They protected Wall Street. Not families who were losing their homes. Not people who lost their jobs. Not young people who were struggling to get an education. And it happened over and over and over.”
‘On lobbyists: Banks spend millions on “armies of lobbyists and lawyers,” she told Salon, but there are few people at “the decision-making table” representing the concerns of everyday Americans. “And when that happens — not just once, not just twice, but thousands of times a week — the system just gradually tilts further and further.”
“‘On lobbyists: Banks spend millions on “armies of lobbyists and lawyers,” she told Salon, but there are few people at “the decision-making table” representing the concerns of everyday Americans. “And when that happens — not just once, not just twice, but thousands of times a week — the system just gradually tilts further and further.”
“… the system just gradually tilts further and further”.
This is the troubling part, this gradually tilting further and further nonsense. After all the millions of dollars that were spent buying up politicians bankers are stuck with a mere gradual tilting.
A wee bit disappointing.
“And when that happens — not just once, not just twice, but thousands of times a week — the system just gradually tilts further and further.” ?
Nice post Ben….
Warren better be careful- she might end up in a shallow grave somewhere if she continues talking like this.
If there’s one thing I’d like Obama to be remembered as, it’s Wall Street’s president. He ran on a platform of helping “Main Street” at the expense of Wall Street, then did the EXACT opposite.
‘his economic team picked Wall Street. …They protected Wall Street’
The old, “he got bad advice” routine.
Yeah, like it wasn’t Obama’s fault. What a bunch of tripe. The blame lays squarely upon his shoulders.
‘Christchurch has become one of the hottest housing investment markets in New Zealand, with almost half the city’s home sales now being made to landlords. Investors are surging into the property market, gazumping first-time buyers struggling to save deposits and find affordable homes.’
‘New property analyst CoreLink research shows 43 per cent of Christchurch homes are snapped up by investors.’
‘Investor Jenna Harris owns six units - mostly bought in the past year - in central Christchurch and Nelson. “There’s a lot of buying going on by investors. Most people seem to be doing it for the capital gain.”
Isn’t there still a lot of unrepaired earthquake damage in Christchurch? Not like that matters, of course.
http://tinyurl.com/mjauvfr
‘Investor Jenna Harris owns six units - mostly bought in the past year - in central Christchurch and Nelson.
What happens in Kiwiland if an “investor” defaults on loans because she’s underwater and can’t cover the monthly nut with the rent she collects?
‘Singapore’s listed developers and real-estate investment trusts face their heaviest burden of near-term maturities on record just as home prices drop.’
‘The 80 property companies on Singapore’s stock exchange reported a combined S$23.5 billion ($18.5 billion) of borrowings that have to be repaid within a year in their latest filings, Bloomberg-compiled data show. The looming debt wall comes as the vacancy rate for condominiums soared to the highest since 2006, pushing prices to the lowest in almost two years.’
‘Developers of residential homes are suffering not so much from lower selling prices than “collapsed” sales volumes, said Alan Cheong, a senior director of real-estate research at Savills in Singapore. Secondary home sales plunged to the lowest since 2003 in the first quarter, according to URA data, and as business slows, builders with less pre-sales money to finish projects have to rely on loans, boosting short-term borrowings, he said by phone Oct. 2.’
‘Despite the weaker demand, the number of new residential dwellings being built remains high. Units under construction reached a record in the second quarter of 2013 and some 65,270 apartments were in the pipeline as of June 30, URA data show.’
‘Developers on the island are changing their business models and reducing exposure to the local market, according to Singapore-based Tim Gibson, who helps run Henderson Global Investors Ltd.’s global property equities fund.’
“By buying Singapore developers now you’re really buying exposure outside of Singapore and into markets like China,” he said in an interview Oct. 8. It “doesn’t give you a huge amount of confidence that a turnaround in the residential market is coming anytime soon,” he added.’
Will financial historians identify this impulse as generating the first wave of Echo Bubble collapse? I guess time will tell.
‘House prices in London have fallen for the first time in nearly four years, and will continue to do so, according to a leading property market barometer. After the longest period of positive sentiment recorded by the Royal Institution of Chartered Surveyors (RICS), stretching back to January 2011, the industry body has finally reported a drop in values in the capital.’
“A growing sense of caution seems to have taken a particular toll on the London market where buyer demand contracted more significantly than elsewhere in September, falling for the fifth consecutive month,” the report read.’
‘Further out in Enfield, Essex, Keith Barnfield of estate agents, FRICS, said: “Activity is yet to pick up after the holidays. More properties are staying on the market for longer and offers are being made below asking price.”
‘When the central bank starts worrying about a potential housing bubble, it might be time to take stock of your finances - are you taking on too much debt? Reserve Bank figures show that the amount of Australian mortgage debt relative to incomes hit a record high in June.
Meanwhile, loans to property investors are growing at their fastest rate in seven years, creating an imbalance where new lending to investors is out of proportion to rental demand, the RBA says.’
‘Investor activity has played a big part in driving up house prices and the RBA is worried about what will happen if prices fall and people start struggling with repayments and declining wealth.’
‘In September 2008, a $400,000 loan would have cost an extra $1017 per month in repayments compared to today’s average, according to figures from Canstar. “It’s rather frightening to realise that just six years ago, average repayments on a $400,000 home loan would have been more than $1000 per month dearer than they are now,” Canstar research manager Mitchell Watson says. “I’m sure that’s a price increase that many households today would find hard to absorb into their monthly budget.”
‘Michelle Hutchison, from comparison website finder.com.au, is concerned borrowers are taking on too much risk, with the website having seen a spike in searches for interest-only home loans in the past year, as well as bigger loan sizes. “It’s a real concern to see borrowers taking on more risk because interest rates are at record lows and expected to rise next year, which means borrowers can find themselves in financial trouble if they take on more debt than they can afford,” Ms Hutchison says. “It will hit them twice as hard if they move from interest-only to principal and interest repayments.”
The Echo Bubble has become so ginormous, I can’t begin to fathom where it ends or how things go down from the point when it is clearly over.
I merely can say that we are not there yet.
Commodities rose threefold in the past decade on the China credit expansion. China seems to be running out of miracle juice. Fears of cascading defaults and former Ponzi heroes going to jail are in today’s news. Iron and coal are past peak and they are unbiased measures of global credit expansion. Ditto oil, gold, silver, corn, the Loonie and Brazil is flat on its face.
Unless you think a buy to rent mania in earthquake ravaged Queenschurch is going to propel the world into another superboom, buckle up.
Back when Bernanke kicked off his spree, it would be called “unprecedented” and “uncharted waters”. Not much else would be said, as if there were no downside. Now you see the same media acting like these central bankers are some sort of hero’s, when all they did was take the easy route. Anybody can sit around printing money, waiting for the day when they can collect $150k for a speech. Well it’s all unprecedented alright. But it’s not like history has never seen a downside to money printing.
Economics is about understanding human behavior. Then, influencing it (shaping, directing and controlling it) for optimal outcomes.
The only problem is, when destructive behavior is rewarded and protected, one gets more of that kind of behavior.
The amazing thing is, in a world of rising productivity, wealth and technology, that there could be a declining standard of living in the US.
Americans are accused of voting against their own interests. But for a long time, they voted for what they thought were their own interests. They’ve rightly rejected the French-style welfare-state model. But they have not yet rejected the “crony capitalist” model in which we find ourselves today.
The standard of living has been going down for a long time.
Most people don’t vote in the US. The ballot process has been so screwed up by the 2 party system, IMO it has turned voters off. I also think the PTB are fine with that. As long as the field is narrowed to their handful of acceptable candidates, even as people stay away in droves, it provides the illusion that we are choosing the elected. I think the main political problem in this country is the non-democratic 2 party system as it works today.
“Then, influencing it (shaping, directing and controlling it) for optimal outcomes.
The only problem is, when destructive behavior is rewarded and protected, one gets more of that kind of behavior.”
Glad to know there is at least one idealist left on the economics playing field. However, it doesn’t seem to me that U.S. economic policy over the past several decades has served these ideals very well, thanks to policies which seem designed to create moral hazard and to reward those who play along.
Ben Jones: Most people don’t vote in the US. The ballot process has been so screwed up by the 2 party system, IMO it has turned voters off. I also think the PTB are fine with that. As long as the field is narrowed to their handful of acceptable candidates, even as people stay away in droves, it provides the illusion that we are choosing the elected. I think the main political problem in this country is the non-democratic 2 party system as it works today.
Many despotic states have “ruling councils” which select candidates which are allowed to stand for election. Iran and Egypt are two which come to mind.
The US has a de facto ruling council set up by the Republican and Democratic parties, in the form of the primaries plus the influence of money in politics. Lawrence Lessig talked about it in a TEDD talk, well worth listening to, about 20 minutes long: http://www.ted.com/talks/lawrence_lessig_we_the_people_and_the_republic_we_must_reclaim.html
Most people don’t vote in the US. The ballot process has been so screwed up by the 2 party system, IMO it has turned voters off.
I guess you have never been to Philly or Chicago…
————————–
Ruman’s comments came as Philadelphia news outlets and election analysts have flagged the near-unanimity with which the Obama-Biden ticket swept pockets of the City of Brotherly Love. As the Philadelphia Inquirer first reported last week, six of Philadelphia’s 66 wards handed the president victory shares of 99 percent or better. In 20 of the wards, the Obama vote totals exceeded 97 percent.
On Monday, the Inquirer reported that in 59 of Philadelphia’s “divisions” — these are subsets of wards, wherein fewer than 1,000 people might be registered to vote — GOP nominee Mitt Romney failed to win even a single vote. Collectively, the votes for Obama across these divisions added up to 19,605, to Romney’s zero.
However, Barone noted that turnout rates in these areas was sometimes reported to have exceeded 90 percent, a level of enthusiasm that he said should arouse suspicion. “Philadelphia’s been a place that’s had some pretty irregular election procedures in the past,” he said.
Former U.S. Rep. Joe Sestak, a Democrat whose congressional district abutted Philadelphia, said he has seen firsthand the “machine” at work in the city’s politics, but he did not question the president’s vote totals.
In 10 of Chicago’s 50 wards, for example, the Obama-Biden ticket captured 98 percent of the vote or more. In six of those wards, the figure climbed to 99 percent.
http://www.foxnews.com/politics/2012/11/12/pa-officials-plan-no-probe-despite-extraordinary-turnout-totals-for-obama-in/
‘They are like the locusts, destroying everything in the fields,’
Sounds like our new neighbors. We need to shut the door at points to keep the cigarette smoke outside.
Your lot is too small. Do you smell their farts, too?
‘On a busy stretch of Sherman Way in Van Nuys, a red and black sign advertises a rare commodity in Los Angeles. “Single detached homes. From the $400s,” it reads.’
‘The 63 houses — “small lot” townhouses that sit less than six inches apart — are unusual in a region with few new houses selling for less than $500,000, and even fewer anywhere near Hollywood.’
Cigarette smoke covers up the fart smells…
‘Broke retirees drive Australian trailer-park boom’
‘Poverty ensnares 1-in-7 Australians even after decades of growth’
‘Queensland Dubbed An Extreme Buyer Market As Sydney Gets Congested’
‘Broke retirees drive Australian trailer-park boom’ ??
We have the growing problem here…I see it in the RV parks that I frequent…More & More full time residents as each year passes…And they are not “old & broke”…The age is is across all groups including many children…Pretty common to see the school bus pull up each morning…
“Broke retirees drive Australian trailer-park boom”
Aren’t insanely high house prices awesome?!
“The country’s economic slowdown and a slump in coal prices is taking its toll on the coal-rich areas surrounding the northern Chinese cities and township of Ordos, Ningdong and Yulin, with coal-mining and trading businesses in the region beginning to terminate their coal-related operations and turning to other business sectors. The ‘Energy Delta,’ previously dubbed an economic miracle, has now been overshadowed by the drop in housing prices, population outflows and loan problems, reports the Guangzhou-based 21st Century Business Herald.”
_______________________________/
Help me out here. Ordos is one of China’s ghost cities. And now it’s seeing population outflows?
I believe that only the “new” part of Ordos was a ghost town. I’m guessing that the outflow is from the “old” city.
“…Although only a few observers have noted the vested interest in error that accompanies speculative euphoria, it is, nonetheless, an extremely plausible phenomenon. Those involved with the speculation are experiencing an increase in wealth–getting rich or being further enriched. No one wishes to believe that this is fortuitous or undeserved; all wish to think that it is the result of their own superior insight or intuition. The very increase in values thus captures the thoughts and minds of those being rewarded. Speculation buys up, in a very practical way, the intelligence of those involved.
This is particularly true of the first group noted above–those who are convinced that values are going up permanently and indefinitely. But the errors of vanity of those who think they will beat the speculative game are also thus reinforced. As long as they are in, they have a strong pecuniary commitment to belief in the unique personal intelligence that tells them there will be yet more. ..Strongly reinforcing the vested interest in euphoria is the condemnation that the reputable public and financial opinion directs at those who express doubt or dissent. It is said that they are unable, because of defective imagination or other mental inadequacy, to grasp the new and rewarding circumstances that sustain and secure the increase in values…”
-John Kenneth Galbraith
A Short History of Financial Euphoria
Galbraith really nailed it, didn’t he? And this book was timely — I believe it came out in 1994, just before the tech stock bubble and housing bubble took the U.S. economy by storm.
Thanks for this repost. I had it cut and pasted and still forgot all about it.
‘According to the Reserve Bank of India’s (RBI) house price index (HPI), the index had been growing at an annual average rate of 20 per cent year-on-year in 2011-12 and 2012-13. However, the pace of growth in the average house prices slowed in 2013-14 at 12.7 per cent, plausibly reflecting a correction in trends on the back of subdued demand.’
‘In the last two years real estate residential prices have moderated by around 23 per cent in the country and by around 15 per cent in Mumbai, also know as the Mecca of real estate, said Ashutosh Limaye, associate director, Jones Lang LaSalle.’
‘New launches are being done at lower prices compared to the existing market prices, Limaye added. Limaye said problem is some developers are holding on to projects and not opting for a price reduction hoping for the market to revive. They want to obtain the same high profitability they have been enjoying all these years, which is resulting in inventory pile up.’
‘Pankaj Kapoor, chief executive officer, Liases Foras, said, at the moment there is around 7,64,000 units of unsold inventory as various stages of construction available in the top eight cities. There has already been price correction in the real estate sector on an average of 15-20 per cent in the last couple of years in certain pockets.’
‘Despite recent reports indicating a slowdown in demand for property in the Iskandar region, luxury condominiums by a Malaysian-Singaporean joint-venture company recorded a take-up rate of almost 80% at its recent weekend launch, the developer said in a press statement. All the units offer breathtaking views of the Johor Straits and selling prices range from RM900 to RM1,200 per sq ft.’
‘It was reported earlier this month that property experts had called on the authorities to spur economic activities in the Iskandar economic region by promoting jobs and migration to create demand for homes there, amid concerns of a looming housing glut. Singapore’s Todayonline had reported that several property launches by Chinese developers in the region over the past year had raised concerns of an oversupply of homes, which could hit rental yields.’
‘The news portal had further stated that this, coupled with a lack of clarity in the implementation of cooling measures, had led to fewer Singaporean investors – one of the biggest foreign house buyers – investing in Iskandar.’
‘In the fourth quarter of last year, property data from the Finance Ministry showed that 118,191 residential units were under construction in Johor, with another 168,371 units planned.’
‘The daily had noted that the scale of new supply dwarfed the number of transactions, referring to official data which showed a 6.8% drop in residential property sales in Johor to 8,493 units in the first quarter of this year, compared with the previous three months.’
‘A large number of new, ready-to-use residential buildings in and around the city are lying vacant despite increasing demand. The demand for housing, particularly in Doha and its near-suburbs far exceeds supply, fuelled mainly by a rising expatriate population.’
‘According to real estate market operators, the owners of these buildings want to let them only to companies and not to individuals and families.
And that is one of the additional factors pushing up rents as so many buildings lying vacant is mounting pressure on demand, according to real estate expert, Faisal Al Dosri. “It’s undoubtedly a negative phenomenon and adversely impacting the rental market,” Al Dosri told local Arabic daily Al Arab in comments published yesterday.’
‘The owners of new buildings prefer big companies to rent out flats. Moreover, they are waiting for the rents to rise.’
‘They don’t want problems like delayed rent payments and hassles like collecting rents from individual users. “Also, when you are striking a deal with a big company, it could be for longer periods, of up to three years, for instance, and the rents could be had in lump sum,” said Al Dosri.’
Check out the photo. At least a ghost city in the desert should have lower mold problems. If you leave the windows open, or run the AC. But that might get expensive.
Is anyone tracking how many newly-constructed, vacant, never-to-be-used housing units are going up around the globe as the Housing Bubble prepares for its final collapse stage?
I don’t think there’s an accurate way to even track them. Every city, every town, every state, every country has a MAMMOTH oversupply.
That picture has me ready to pack up and leave for Qatar.
“That picture has me ready to pack up and leave for Qatar.”
+1 Inspiring isn’t it?
from the article… “Then, there are greedy and illegal real estate brokers who remain on the prowl…”
Seems to be an oversupply of UHSP (used house sales people) in the world too.
“However, the slump in coal prices triggered a fall in housing prices, which then sparked disputes between land developers and housing buyers over losses caused by the housing price drops. People who had bought property when the price was high complained about the sudden price drops and are seeking refunds or compensation from local governments or developers, according to the report.”
You can’t expect to enjoy the benefits of unfettered free market capitalism without bearing the costs.