Historical Highs Set For A Multiyear Decline
It’s Friday desk clearing time for this blogger. “According to the Reno/Sparks Association of Realtors Market Report from October, the economic forecast at the residential level is strong for Nevada. ‘From where I stand, we have been recovering now since 2012.’ said Joe Salcedo of Sparks Real Estate’s Chase International. ‘If you bought a piece of property in 2012 you should have a lot of equity. I think the future in Sparks is bright, with government programs that entice buyers to buy … and builders are still building all over the city, which is a great sign. If you really are thinking of buying, you should do it now or else you could be priced out.’”
“Northern Virginia’s housing market followed a national pickup in activity in December, with sales up 10.6 percent from a year ago. And there is now more for potential buyers in the Northern Virginia market to look at, with active listings up 29 percent from a year ago. ‘Our market was swimming along at a record clip until June of 2014. After June, the market came to a grinding halt,’ says Nicholas Lagos, broker-owner of Century 21 Gawen Realty Properties. ‘Properties stayed on the market longer, buyers were less frequent [and] pickier about properties when they saw them.’”
“Southern California’s housing market fizzled in 2014 with sales falling 9 percent from a year earlier and price gains narrowing, CoreLogic DataQuick said. The full year median increased 10.8 percent from 2013 to $410,000. The double-digit year-over-year gain was attributed to larger price increases at the beginning of 2014, said Andrew LePage, data analyst for CoreLogic DataQuick. ‘Prices in a lot of areas have flattened out in the last five months,’ he said.”
“The market showed its sluggish hand early last year. ‘We knew by the time we got to the middle of the year it was going to be a disappointing year with respect to sales, with respect to prices and with respect to new home construction, and all of that played out both locally and nationally,’ said Robert Kleinhenz, chief economist at the Kyser Center for Economic Research at the Los Angeles County Economic Development Corp.”
“Lennar added to the homebuilding gloom Thursday as it became the latest company to warn on lower margins amid rising costs and bigger promotions. Sales incentives also rose to $23,100 per home, or 6.6% of home sales revenue, from $20,600, or 6.3%. ‘Margins in the last two years, especially with Lennar, have appreciated substantially to levels that are at or near historical highs,’ said Jim Krapfel, an equity analyst at Morningstar. He now sees margins set for a ‘multiyear decline to a more normalized level.’ Oil’s collapse is hurting some energy-producing regions. Lennar saw a pullback in upscale home sales in Houston and expects ‘further reconciliation.’”
“There’s a glut of homes on the market in Fort McMurray, which is bad news as oil patch layoffs start to hit. On Tuesday, Suncor announced plans to axe 1,000 jobs as it delays expansion plans at one of its oil-sands projects. While the cuts don’t involve any unionized jobs—yet—Ken Smith, president of Unifor Local 707A, which represents 4,000 Suncor employees, summed up the mood: ‘One thousand jobs, that’s pretty darn significant for any employer,’ Smith said from his office in Fort McMurray. ‘This is not a good omen for Fort McMurray as a whole. We’re going to have rough times ahead. There’s going to be people in limbo. It puts everything up in the air.’”
“Or, as another Fort Mac resident, Debbie March, told the Globe and Mail: ‘It’s like the place has gone dead.’”
“Estate agents expect house prices in London to drop by as much as 5pc this year with the cost of larger family homes falling the most. The report from the Royal Institute of Chartered Surveyors (RICS) has shown that demand for new homes in the capital has continued to weaken, with 45pc more RICS members reporting a decline in new buyer enquiries in December compared with November. ‘There will be a very cautious start to 2015 in the central London property market,’ said one estate agent from Jackson Stops & Staff in Chelsea. ‘Vendors appear reluctant to market their properties in the expectation of having to take significantly lower offers.’”
“Many property market participants remain in denial about the housing oversupply situation. It should be clear by now that the residential property segment is heavily oversupplied. Singapore’s population was about 5.4 million at the end of last June. Taken together, it means that if we simply allowed the current residential projects in the pipeline to be completed, we can already accommodate a population of 6.7 million. And if we take into account the current vacancy of 23,375 private residential and EC units (as at end-September last year), we can just about accommodate the 6.9 million planned for 2030.”
“Sales of properties in regional Western Australia have fallen away sharply with more than one-fifth being sold at a loss. CoreLogic RP Data’s latest report for the September quarter of 2014 showed regional WA had the highest loss rate at 22.5 per cent, with Queensland just behind at 22 per cent and Tasmania at 20 per cent. The company’s senior research analyst Cameron Kusher said a downturn in the mining boom was partly to blame for the poor performance in regional WA and Queensland. ‘Those towns linked directly to the mining and resources sector have slowed very quickly, sales volumes have fallen away sharply, and prices have dropped extremely quickly over the last 12 or 18 months,’ he said.”
“While WA’s capital city Perth enjoyed a relatively low loss rate of 6 per cent in the quarter, Mr Kusher said it would likely become one of the worst performing cities in the country, due to slowing capital growth and easing rental markets. ‘My view would be that over the coming quarter you’ll see that proportion of loss-making sales in Perth start to escalate as well,’ he said. ‘I do think that there’ll be some growing weakness right across Western Australia over the next 12 months.’”
“As creditors circled troubled Chinese property developer Kaisa Group, it’s business as usual at the company’s sales office and housing projects in the southern city of Shenzhen. Nor was there evidence that the company, which could become the first Chinese property company to default on its offshore debt, was slowing down construction work after the sudden departure of a string of senior executives and a missed coupon payment on one of its bonds.”
“The company’s customers though, are starting to worry. People who had bought flats at Kaisa City Plaza called on authorities to protect them in the event the company defaults on its debts and can’t complete the development. ‘We urge the government to protect the rights of the home buyers,’ read rows of blue banners held up by dozens of protesters in the marble lobby of the development. ‘Xi (Jinping), hurting the innocent is infringing upon our bottom line,’ another banner read.”
“One buyer, Fang Shangxiang, said he had pumped 600,000 yuan ($96,863) of his life savings into a 30 percent deposit on a two million yuan flat at the Yuefeng Garden project, one of the developments where sales have been blocked. ‘I don’t think the firm will go bankrupt but there may be a long delay before we get it,’ he said on a visit to Kaisa’s sales office. ‘I thought it wasn’t a bad company. I didn’t expect this to happen … I hope the (Shenzhen) government will do something to protect me and my family.’”
“President Obama’s recent visit to Arizona outlined his decision to spur homeownership by slashing mortgage insurance costs. But housing already enjoys unique benefits. Perhaps this one isn’t needed. You also can question whether such an action should be taken considering that the FHA insurance fund, while improving financially, still backs a lot of poor-quality loans and doesn’t have a sufficient cushion as it is, critics say. And there’s a bigger question: Is another White House initiative needed to enhance the affordability of an asset class that already has been helped by enormous economic tailwinds and receives uniquely good tax treatment?”
“It doesn’t seem likely that $900 a year is going to make that much of a difference in helping people afford an investment that runs a minimum $12,000 to $15,000 a year — once you add up all those homeownership costs including mortgage payments, property taxes, insurance, repairs, utilities, HOA fees, upkeep and more. If all the current goodies aren’t enough to get first-time buyers through the door, maybe they’re not quite ready to own.”
‘To the editor: For working-class people in America’s most unaffordable rental market, raising the minimum wage helps, as will plans to upgrade public transportation. But housing prices growing four times faster than income levels since 2000 is clearly not a case of demand chasing supply. Population has only increased by 5%. (”L.A. has a serious housing crisis and it’s time for city officials to do something about it,” Editorial, Jan. 11).’
‘Expecting the city to resolve the problem by expanding affordable housing diverts attention from its root cause.’
‘The financial bubble last decade that pushed prices beyond affordability involved banks, credit rating agencies, federal regulators and legislators who neglected to protect the public. After the bubble burst, prices declined, providing needed relief.’
‘But in recent years, with the Federal Reserve’s quantitative easing, cash-laden firms and investors have poured billions into buying properties, restoring the same unaffordable price conditions seen in 2007.’
Eugene Mullaly, San Diego
“restoring the same unaffordable price conditions…”
That sounds rather harsh. Why not simply call it a “recovery”?
Mullaly is probably the tree hugging protestor objecting to new housing development. If you want affordable housing, there is one solution: build houses. Everything else just flapping your lips and pushing on ropes.
With 25 million excess empty and defaulted houses, 4.4 million of which are in CA, there isn’t much need to build more Jingle_Fraud.
“Or, as another Fort Mac resident, Debbie March, told the Globe and Mail: ‘It’s like the place has gone dead.’”
Dead? Did somebody say dead?
If JOBS disappear then a place tends to go dead. Funny how that happens.
Go here for an extreme example:
https://www.google.com/search?q=bodie+ca&biw=1813&bih=857&source=lnms&tbm=isch&sa=X&ei=Bv24VM63L4XboATnzYHoAw&ved=0CAcQ_AUoAg&dpr=0.75
‘It’s time to make it easier to borrow money for a home, Housing Secretary Julian Castro said this afternoon in a speech to the National Press Club.’
“Some believe that a few years ago it was too easy to get a home loan,” said Castro, the former San Antonio mayor appointed nearly six months ago to lead the U.S. Department of Housing and Urban Development. “The fact is, in 2014, it’s too hard.”
‘The easy access to home loans in the 2000s has been widely cited as a key cause of the 2008 financial crisis, which began as a foreclosure crisis. Lending standards by banks and by the federal government were raised significantly in the years after the crisis.’
‘Now, banks should loosen those restrictions, Castro said. “It’s time to remove the stigma of promoting home ownership,” he said. “Some have suggested this is a return to the mania of what went before. It’s not. The answer isn’t to deny responsible Americans home ownership.”
“Some believe”? Are you kidding me? This isn’t a belief, like the tooth fairy or the Sasquatch, it’s a fact you dumb bureaucrat. They were called liar loans and NINJA loans.
We’ve had a long stretch of hideous political leadership and it shows no signs of ending anytime soon.
“It’s time to make it easier to borrow money for a home, Housing Secretary Julian Castro said this afternoon in a speech to the National Press Club.”
This fugg’n brown socialista is another enemy of the republic.
+1.
“The company’s senior research analyst Cameron Kusher said a downturn in the mining boom was partly to blame for the poor performance in regional WA and Queensland. ‘Those towns linked directly to the mining and resources sector have slowed very quickly, sales volumes have fallen away sharply, and prices have dropped extremely quickly over the last 12 or 18 months,’ he said.”
So, just how far can prices drop because of a downturn of a mining boom?
Hey, here’s a clue:
https://www.google.com/search?q=bodie+ca&biw=1813&bih=857&source=lnms&tbm=isch&sa=X&ei=gf64VJ0mkuegBOj2gOAD&sqi=2&ved=0CAcQ_AUoAg&dpr=0.75
Looks like the set of The Pale Rider.
Actually it is not far from where “Paint the Town Red” took place.
We should see some big inflation before we hit the economic disaster. When will the economic collapse occur? Should be in our lifetimes. We may get a good dose of the inflation part of the disaster soon.
This spring, we should get some good inflation in housing. With mortgage rates dropping like a rock, some intense bidding wars will occur on decent properties. But, these gains will be short lived.
Eventually, when the economy collapses from excessive debt, everything will be up in the air. Will the government grab property? Will it even matter? Who knows.
In-flation? In-flation? With gas prices having fallen like a rock. With house prices falling already in many areas across the country? With new home builders openly saying their profits have slipped, they are discounting houses and this is a multi-year trend? With rates of appreciation at least shrinking almost everywhere? With massive layoffs in the oil industry on the horizon? With the collapse of real estate in oil country? With Hoaxide openly talking about grocery prices having fallen?
What a maroon.
He just talked to a Realtor.
Meanwhile back on planet earth;
Arlington, VA Sale Prices Sink 4% YoY As Housing Demand Sinks To 20 Year Low
http://www.zillow.com/arlington-va-22207/home-values/
You just won this thread.
Economy
EU Consumer Prices Fall for First Time on Record
Sixteen Member Nations Saw the Numbers Drop in December; Oil’s Drop May Continue the Decline
Sales posters at a department store in Berlin. The decline in prices across the Continent heightens the risk of a deflationary spiral, but most central bankers say that is unlikely. Associated Press
By Paul Hannon
Updated Jan. 16, 2015 4:50 p.m. ET
Europe edged closer to deflation in December, as consumer prices across the European Union fell for the first time since records began in 1997.
The data released by the EU’s statistics agency add to fears that Europe could face a period of deflation, after separate data this month showed that consumer prices in the eurozone, comprising countries that use the euro as their currency, fell for the first time in more than five years.
Eurostat on Friday said consumer prices in the 28-nation bloc fell 0.1% in December from a year earlier, and confirmed last week’s data that showed prices in the eurozone were 0.2% lower in December than in the year before, as measured in the 18 countries that were using the euro in late 2013. Lithuania adopted the euro this month.
Sixteen EU members experienced an annual decline in consumer prices in December, up from just four in November. And with oil prices tumbling, inflation rates around the Continent appear likely to decline further in coming months.
Among many economists and central bankers, there is a widespread belief that falling prices by themselves don’t constitute deflation. For that chronic condition to take root, consumers and businesses have to cut back on spending because they expect prices to fall further, with the outcome being declines in output and employment that push prices even lower.
The decline in prices across the Continent as 2014 ended heightens the risk that Europe may slide into such a deflationary spiral, although most central bankers say that is unlikely.
To minimize the risk of deflation, central bankers appear ready to provide more stimulus.
“This possibility is sufficiently dangerous for everyone to worry about it,” said Benoît Coeuré, a member of the European Central Bank’s executive board, in an interview with French daily Libération.
The ECB has said it would reassess its existing stimulus policies, which include cheap bank loans and purchases of asset-backed securities and covered bonds, early this year, and decide whether to do more to ensure that annual inflation moves up and closer to its target of just below 2%.
Other central banks across Europe face similar challenges. Sweden’s Riksbank has listed a range of options it would consider if the outlook for inflation were to continue to worsen, including asset buying, lending to banks, a negative main interest rate and currency market interventions.
The National Bank of Poland said Wednesday it remains open to the possibility of a cut in its key interest rate provided the current period of deflation continues and economic growth slows, as it showed growing concern over the level of the consumer-price index for the first time in the past few months.
Whether the current period of declining prices becomes a more damaging episode of deflation will depend in part on how long it lasts. Economists at Barclays on Friday predicted that prices in the eurozone will be below their year-earlier levels during the first half of this year.
…
Well, the government has already grabbed property.
U.S. Fed plans to refrain from MBS operations
NEW YORK Wed Dec 24, 2014 12:45pm EST
(Reuters) - The U.S. Federal Reserve does not plan to conduct agency mortgage-backed securities operations between Wednesday and Jan. 2, 2015, the central bank said in a statement on the New York Fed website on Wednesday.
The central bank said it aims to buy a maximum of $10.80 billion in agency MBS in the Dec. 26, 2014 to Jan. 13, 2015 period.
During that time, it will purchase the reinvestment amount through more frequent operations that occurred between Dec. 11 to Dec. 23 and from Jan. 5 to Jan. 13, 2015.
…
The central bank said it aims to buy a maximum of $10.80 billion in agency MBS in the Dec. 26, 2014 to Jan. 13, 2015 period.
I’m confused—I thought they announced the end of QE back in Oct 2014.
If they are still buying, rather than letting those positions slowly wind down, aren’t they still technically engaging in QE?
Only a fully nationalized mortgage finance market could support these real estate price levels.
Sounds like QE3 MBS purchases continues, despite official claims to have ended it.
+infinity, PB.
“Ended” apparently means still buying roughly $1B/day (some days, $2B/day) of crap-shack-backed MBS.
Up is down, and down is up.
Which serves to make the price correction all the more extreme.
Look out below.
“Sounds like QE3 MBS purchases continues, despite official claims to have ended it.”
It’s like the middle-east, no U.S. troops there, but private contractors operate several airfields near the Iranian border.
No war in Peshawar, Pakistan, either.
“If you really are thinking of buying, you should do it now or else you could be priced out.’”
The worst lie and trick these crooks have perpetrated is talking about this concept of “priced out” as if it were some kind of normal phenomenon. Is this what is supposed to happen in a non-bubble market, people being priced out? As long as you hear those two words, we are in a bubble.
Just heard this from a builder the other day out there in Region VIII.
Another blogger in my question of the builder’s motivation on being priced out said in a simple phrase - builders are full of sh*T!!!
And so it begins…
MA Sale Prices Dive 9% YoY Statewide; Boston Metro Craters 17% As Price Declinces Accelerate Nationally
http://www.zillow.com/ma/home-values/
Homebuilder Files Bankruptcy As Housing Price Correction Resumes
http://www.rrstar.com/article/20150113/News/150119797
“When things take a downturn, developers tend to be on the hook for most of their liabilities,” Clisham said. “It’s bleaker for them than principals in other companies.”
Developers are typically reckless dreamers, IMHO. They always manage to be tapping the cutest ‘lil thangs, driving the fanciest cars and throwing the lavish parties. But they never seem to last, never retire at the top of their game; nope, gotta go down in flames owing everyone.
But they never seem to last, never retire at the top of their game; nope, gotta go down in flames owing everyone.
Sounds a bit like a Ponzi, when you put it that way…
“Is another White House initiative needed to enhance the affordability of an asset class that already has been helped by enormous economic tailwinds and receives uniquely good tax treatment?”
But hey, cmon out and criticize Bush you sycophants. They pump the price up by a hundred grand over the last three years but now want to make thing affordable by offering UP TO $900 a year. On this one I am very willing to say Thanks Obama*
*cut farm subsidies, and other welfare giveaways to Warren Buffet and the rest.
Here’s something else from that article that I think is a blatant lie:
“No wonder average mortgage payments now consume just 12 percent of typical household income, well below the long-term average of 20 percent and the 1980s peak around 37 percent, reports JPMorgan Asset Management.”
How is that possible? Just 12 percent? After a runup in prices over the last 15 years never before seen in history? Who knows the source and the reality of this claim? JFraud? You fancy yourself a stat boi.
How is that possible? Just 12 percent?
Depends on how many bought their home before the bubble. But 12% does seem suspiciously low.
I pay 14%. I pay more in taxes than mortgage payments.
Wages flat taxes up no wonder economy is flat.
I am at 19%, but my income fluctuates a lot, so I use a10-yr average. The ratio dropped 2% when we refinanced in 2012. The 3.25% rate really made the principal reduction a large portion of the payment, so if you take that out, the ratio goes down to about 16%.
What a comical statistic, but that’s what happens when mathematics is abused in support of a preordained conclusion. How about giving us the median rather than the average?
Actually, Rental Watch has the gift of understanding stats and creating crystal clear analysis. Perhaps he can review the “12%” claim and provide some comments. I too find it spurious. Where is it quoted? Do you have a link? It probably has to do with low rates, which we all know can be a fleeting phenomenon.
Are rising home values a basic right in China?
The Chinese think they are. The question is will they grab the pitchforks when the government doesn’t “protect” them from falling prices.
2015 Begins The Decade Of Municipal Bankruptcies
http://www.bondbuyer.com/news/markets-buy-side/why-so-many-big-bankruptcies-1069539-1.html
This is your cue.
Illinois will fall hard.
‘Mark Zuckerberg has established a foothold in Dolores Heights; those hoping to land homes are competing against a well-heeled field. The new condos coming onto the market are almost exclusively aimed at the luxury market — and, adds, Carlisle, 30 to 50 percent of these condo buyers “are not even using it as their primary residence. You have inventory coming on the market, but it’s not even going to residents.”
‘In a sign that an overheated rental market may be cooling down, apartment rents rose only slightly for the Bay Area during the past quarter and even dropped a bit in Santa Clara, San Mateo and San Francisco counties, according to a report Thursday from market research firm RealFacts.’
“Rents are beginning to level off,” said Ron Stern, owner of San Jose-based Bay Rentals, which helps apartment seekers throughout the Bay Area. “We’ve started noticing just this month that landlords are realizing there’s a limit to what they can get for a property. It used to be about finding quality for the tenant, now it’s all about price. So if there’s a unit $200 less than the one they’re looking at, even if it’s not as nice and doesn’t have amenities like a pool, they’ll take that one instead.”
Falling rental rates all over the place yet nobody notices?
BS
These places are like sailboats. A relative of mine bought one, and either sailed or worked on it almost every day until he sold it ten years later. But when I went to the marina and asked him how many of the sailboats just sat there, he said most of them.
True on the sailboats sitting…though a fair number in many marinas have liveboard owners and even if this is against the rules it is often tolerated as it is good for security. Bought a sailboat and tried it myself back in the ’90’s however it was not for me, but had friends that loved it. At that time my slip on San Francisco’s Marina Green was only $110/mo. and that included water and electricity (the slip rights came with the boat, otherwise there is a VERY long waiting list there)
Seattle, WA Asking Prices Slashed 17% As Sellers Compete For Shrinking Pool Of Buyers
http://www.zillow.com/seattle-wa-98199/home-values/
“National Housing Losses Loom”
http://reversemortgagedaily.com/2014/12/01/national-housing-losses-loom-as-home-price-recovery-tapers/
Starting with;
San Diego, CA Sale Prices Plunge 10% YoY As Housing Price Correction Gets Underway
http://www.zillow.com/san-diego-ca-92130/home-values/
“North Dakota’s Oil Production Rises to New Record”
http://www.wsj.com/articles/north-dakotas-oil-production-rises-to-new-record-1421275623
Let’s get these grossly inflated prices down to affordable levels.
Remember….Falling prices of all items is positively bullish, good for the economy and your wallets best friend.
You think November’s numbers are meaningful? As I said yesterday, I predicted the imminent plunge in rigs in early December, a handful of rigs were idled in October and November, but after I had posted, the rig count fell more in one week than it had fallen in several months. The impact of the reduced drilling will only start to show up next week and the big impact will increase every month, by May production will be falling everywhere and not going up by a million barrels per year as was predicted just several months ago.
Let’s get back to falling prices shall we? Because remember….Falling prices are positively bullish, good for the economy and your wallets best friend.
New York, NY Sale Prices Turn Negative On Year; Down 3% YoY On Looming Inventory
http://www.zillow.com/new-york-ny/home-values/
The least productive rigs are the ones that are being shut down. Any one that can is chugging out as much oil as they can just to maintain cash flow. This is going to go on for a lot longer than many people think.
As far as I can remember dan, you haven’t predicted squat. Parroting what we had already read people from the industry or watching the industry writing. After the fact. Lame.
I predicted $80 a barrel by the end of 2015, weeks before anyone in the MSM or anywhere else predicted that number.
You were very wrong.
We won’t know that until the end of 2015, will we?
He’ll gradually backpedal and change his story over the course of 2015 if it turns out oil is not able to mount a return to the $80/bbl level by year-end.
Here is my prediction:
1) Barring Fed panic and invocation of QE4, it ain’t gonna happen.
2) In case of QE4, all bets are off.
No, he hasn’t predicted anything he claims. Unfortunately for him, this blog is archived so his BS is easily discredited.
‘We’ve known about the U.S. energy boom for years, long before oil prices started falling. And it wasn’t long ago that most people argued our oil boom would not lower gas prices.’
‘Before June, it was widely reasoned that since oil was traded on global markets, and demand from growing economies like China was ramping up, the U.S. oil boom wouldn’t lead to lower gas prices. These arguments made sense, and were reasonable at the time.’
‘But today we’re making the exact opposite argument. And just as confidently as before. Why is it so easy to breathlessly claim that falling oil prices are obviously due to the U.S. energy boom — as if we knew that all along — when so many people made the opposite argument six months ago?’
‘Hindsight bias the ability to think you’ve believed something all along — like our oil boom pushing down gas prices — when in reality you thought something different in the past. It’s also called the “I Knew It All Along” fallacy.’
‘In his book Thinking, Fast and Slow, psychologist Daniel Kahneman writes: “A general limitation of the human mind is its imperfect ability to reconstruct past states of knowledge, or beliefs that have changed. Once you adopt a new view of the world (or of any part of it), you immediately lose much of your ability to recall what you used to believe before your mind changed.”
‘We did this during the financial crisis in 2008. It seems so obvious that housing was a bubble in 2006 and that the banking system would crumble when the bill came due. Everyone realizes it in hindsight. But a pretty common view before 2007 was that, even if housing was a bubble, its unwinding would be contained to subprime mortgages. Most who were later heralded for predicting the financial crisis were right for the wrong reason — they foresaw a collapsing dollar and rising interest rates sparking the financial crisis, which is the opposite of what actually occurred.’
“But a pretty common view before 2007 was that, even if housing was a bubble, its unwinding would be contained to subprime mortgages.”
Who said back in 2007 that subprime would be contained to $200 bn?
Who said back in 2007 that subprime would be contained to $200 bn?
Oooo, oooo, ooooooo!!! I know this one!
“Rent in DC Has Fallen More Than in Almost Every Other U.S. City”
http://dcinno.streetwise.co/2014/12/11/why-dc-rent-is-falling/
*Why pay massively inflated prices for a house when prices and rents are falling? Rent for half the monthly cost and then buy later for 65% less.
‘Some Chinese property stocks and bonds were slammed Thursday as fears mounted that more trouble could be in store for the industry after a developer this month became one of the country’s first to default on offshore debt.’
‘Two of the worst-hit companies were Shanghai-based Glorious Property Holdings Ltd. , whose shares in Hong Kong plummeted as much as 35%, and Shenzhen-based Fantasia Holdings Group Co. , whose stock fell by as much as 16%. Stocks of other privately owned property companies also fell around 4% to 5%.’
‘The tumble is a blow to foreign investors who had favored these companies because of their rapid growth, but are now finding them hit not just by a slowing economy but also by worries they could be targets of possible government investigations into corruption.’
‘China’s property sector has a reputation for troubling business practices, including having questionable off-balance-sheet financing and bribing government officials to obtain desirable plots of land. This, in addition to a property-market downturn and an economic slowdown, has put smaller developers in a precarious position.’
“There is no clarity to the situation and there’s this constant stream of [bad] news,” said Binay Chandgothia, a portfolio manager at Principal Global Investors, which has $326 billion in assets under management.’
“Yes, the general financing condition seems to be easing,” he said, referring to the Chinese government’s efforts to inject money into the financial system and loosen its grip over the housing market. “But of course it’s been overshadowed by what’s been coming out in terms of all these news.”
Binay Chandgothia bin gone look for new job soon betcha betcha.
‘Lennar Corp, the second-largest U.S. homebuilder by the number of homes sold, said it expects 2015 margins to be squeezed as falling oil prices hurt demand in Houston, a city heavily dependent on the energy sector.’
‘Houston accounted for about 12 percent of Lennar’s homebuilding revenue in 2013. The first oil industry layoffs have already been announced in Houston, with realtors there predicting a decline of up to 12 percent in home sales this year.’
“We’re well positioned (in Houston) but we’re smart enough to know that as oil moves down, there may be some job loss, primarily more on the higher end, and it could impact pricing,” a company executive said on a conference call.’
‘Over 119,000 citizens have failed to get home loans because of high land prices in the Kingdom, Housing Minister Shuwaish Al-Dhuwaihi revealed at a recent Shoura Council meeting, where he also had to defend the ministry against accusations of incompetence and corruption.’
‘Al-Dhuwaihi said land prices increased tenfold recently, which resulted in citizens not qualifying for loans. “It is an issue we cannot deny,” he was quoted as saying at the meeting by a local publication.’
They aren’t making any more desert in Saudi Arabia.
All the desireable sand dunes have already been taken.
‘Proof the property market has gone mad: It’s now more expensive to live in Wollongong than NEW YORK - with Australian house prices now overvalued 49 per cent’
‘A new Deutsche Bank study has found that housing in Wollongong is more expensive than in the Big Apple. The sprawling New South Wales beachside town with a population around 300,000 has joined the ranks of Sydney, Melbourne and London in having pricier homes than America’s biggest city.’
‘The study of global house prices, spearheaded by Deutsche Bank chief economist Peter Hooper, found homes in those cities were more expensive than those Toronto, Washington D.C and Miami. The median house price in the city’s CBD is $619,500, while in West Wollongong the median price sits just short of $500,000.’
‘The market in the region is still ‘really strong’, Belle Property real estate agent Nicole Kay told Daily Mail Australia - even in spite of lingering sluggishness from the Christmas period. “There’s certainly a lot of investors coming out of the area, investors locally, (looking for) close-to-the-beach apartments.”
London’s homes are worth as much as Brazil’s economy
http://money.cnn.com/2015/01/13/real_estate/london-real-estate-brazil/index.html
Nope, no bubble to see here. Move along, folks, keep moving.
‘Nevada still had the nation’s fifth highest foreclosure rate last year despite a substantial decrease from 2013, real estate analytics company RealtyTrac reported’
‘Filings, which included default notices, notices of pending trustee sales and repossessions by lenders, impacted one of every 76 residential units statewide. Nevada was surpassed only by Florida, New Jersey, Maryland and Illinois, with the national average at one filing per 118 housing units.’
‘The state experienced a 194 percent increase in default notices in December compared to the same month a year earlier. That was the nation’s third sharpest increase behind only Massachusetts and New Jersey.’
“The December surge in foreclosure starts is not a cause for concern, as it comes from a previously existing supply of distressed properties,” said Andres Carbacho-Burgos, senior economist at Moody’s Analytics, which analyzes RealtyTrac data to forecast foreclosure trends.’
‘He observed that Nevada “still has a substantial pool of seriously delinquent mortgages relative to the years before the housing crisis.”
‘Foreclosures in L.A. County jumped significantly in December. It’s likely that the December increase was part of an annual year-end trend that occurs as banks look to clear their inventory of distressed properties, said Chris Pollinger, senior vice president of sales at First Team Real Estate in Irvine, who covers the Southern California market.’
“You have some of these spikes toward the end of the year. What we’re seeing is that as prices go up, banks can justify dealing with their hardest cases, the ones they wouldn’t push two years ago,” he said.’
Another crop of shadow inventory has been sown.
“Foreclosures in L.A. County jumped significantly in December, but despite the month-over-month increase, last year’s foreclosure rate was down from 2013, according to a report released Thursday.
One in every 1,212 homes was in foreclosure in December, up 44 percent from November but down nearly 12 percent from the same month last year, according to RealtyTrac, an Irvine real estate data firm.
For the year, there was an 18 percent drop in foreclosures countywide to 25,608 units, down from 31,405 in 2013.”
Corelogic released their National Foreclosure Report earlier this week for NOVEMBER (yes, I know it’s a month before the data from this article). However, in the Los Angeles region, Corelogic notes the serious delinquency rate (the seeds from which foreclosures are sown) at 2.3%. This compares favorably to the US as a whole (which is at 4.0%).
4.4 million excess empty and defaulted houses in CA can’t be hidden.
” the serious delinquency rate (the seeds from which foreclosures are sown)…”
Let’s consider delinquencies the bloom. The seeds are the purchases made at too high a price. The new crop is in the ground, even if it hasn’t germinated yet.
‘Keep Your Home California, a state-managed program, has expanded a program that helps low- and moderate-income homeowners who are eligible for jobless benefits qualify for the Mortgage Unemployment Assistance Program.’
‘The qualifying homeowner who is collecting unemployment benefits from the state can now collect up to $54,000 over 18 months. Before, assistance was capped at $36,000 over 12 months.’
‘Tia Boatman Patterson, executive director of California Housing Finance Agency, said eligibility terms were extended because many California homeowners are struggling, despite an improving economy.’
‘In mid-2014, she said 17,000 homes were in pre-foreclosure and 1.3 million people were collecting unemployment benefits from the Employment Development Department.’
Just another foreclosure moratorium that will ultimately fail.
How many of these foreclosure moratorium-like scams are there in CA?
Just another foreclosure moratorium that will ultimately fail.
Doesn’t sound like it is failing at all; the goal is to funnel money to the banks while misleading voters into thinking that the goal is to help them. Sounds like it is succeeding.
‘Tia Boatman Patterson, executive director of California Housing Finance Agency, said eligibility terms were extended because many California homeowners are struggling, despite an improving economy.’
That is it - tells it all - improving economy but needing more help - can you say low wage, temp job?
Cali is a basket case - should be taken out of its misery.
CaliUSA is a basket case - should be taken out of its misery.Fixed it.
Well…. CA is an apple rotting from the inside out among a barrel of old apples.
Cali is a basket case - should be taken out of its misery.’
I have a bet that the rest of the country will follow Cali’s example.
A few very rich and a bunch of stressed out workers and unemployed beggars.
“A few very rich and a bunch of stressed out workers and unemployed beggars.”
Sometimes they’re one in the same. Check out Zillow’s foreclosure and pre-foreclosure maps for Beverly Hills, Bel Air, WeHo. There are quite a few multi-million dollar houses that have been delinquent for years to the tune of hundreds of thousands of dollars.
I, too, can default on a seven-figure loan - where’s my free mansion?
‘An Anne Arundel County councilman is standing by his comments that people shouldn’t live in his jurisdiction if they can’t afford it. Councilman John Grasso says people seeking government assistance are “freeloaders” who often use their children “as a crutch to describe laziness.”
‘Grasso spoke Thursday with The Capital following a Monday council meeting during which he said he had no sympathy for people who had testified about how they’ve benefited from affordable housing. Looking at one resident, he said: “My heart doesn’t go out to you — it just doesn’t.”
‘At the meeting, the council passed a measure limiting where affordable housing can go in the county. Grasso says those seeking assistance need to work harder, save their money, and if they can’t afford to live in the county, they shouldn’t.’
It’s long overdue that municipalities take a harder line of freeloaders and deadbeats who want to sponge off the county services at taxpayer expense.
The very rich pass laws that make the middle class pay for freeloaders because it makes them uneasy to see them when they go shopping.
Interesting attitude. Grasso wouldn’t likely want to pay the people who do menial things to keep his life comfy six figures, so as they could actually live there.
‘River Islands at Lathrop is on pace to build nearly 400 homes this year. Thirty families have moved into new homes as if the end of 2014 as the first residents of the planned community of 10,800 homes.’
‘Cambay Group in July projected 90 homes would be built or started in 2013 with 250 homes breaking ground in 2015. Then in 2016 the target is for 500 homes with production expected to continue at that level in subsequent years.’
‘If the pace continues, home building will exceed earlier projections. “The interest is incredible,” Cambay Project Manager Susan Dell’Osso said in reference to traffic at model homes and the visitor’s center.’
‘That means River Islands by itself could eclipse Manteca as the fastest growing city in San Joaquin County when it comes to new homes being built. Manteca has been leading the county with an average of 300 housing units a year since 2008. There are a lot of draws for the 4,800-acre planned community.’
River Islands = the new Mountain House?
Yikes! That entire article is well worth reading, the plans for the Lathrop community are downright Orwellian, especially the security cameras on all 4 bridges and throughout…though there may be a fair amount of crime with Stockton, Lodi, and Modesto nearby.
“License plate scanners will be placed at all four bridges that ultimately will serve as the only access to River islands to alert authorities of stolen vehicles. Security will be further enhanced by other cameras throughout the 4,800-acre planned community will monitor a stolen vehicle’s progress along streets as officers respond.”
Creditors looking for their collateral, i.e., the car with overdue payments will be easy to locate. Facial recognition software is an easy upgrade too; just raise the association dues. Oh yeah, I want to BORROW to live in that prison. NOT!
‘Bonds of Fantasia Holdings Group Co., a developer based in China’s southern city of Shenzhen, plunged to record lows after authorities stopped processing transaction agreements for four apartments.’
‘The declines came before Fantasia said in a Hong Kong stock exchange filing yesterday evening that it had sold the apartments in 2012 and 2013, the blockage had nothing to do with the company and that operations are normal.’
‘Shenzhen developers have come under scrutiny after Kaisa Group Holdings Ltd. had several projects frozen and last week missed a coupon payment on $500 million of its dollar bonds. It’s inching toward becoming the first Chinese developer to default in the dollar bond market. Kaisa is also being investigated about links to a senior Shenzhen official who’s under probe, two people familiar with the matter said this week.’
“We find the explanation for the locked units slightly confusing as it’s not clear to us why the units, if sold, would continue to be on the website,” Charles Macgregor, the head of Asia high-yield research at Lucror Analytics, a Singapore-based independent credit researcher, wrote in a note’
‘China Overseas Land & Investment Ltd. led property stocks lower in Hong Kong after authorities in the southern city of Shenzhen blocked unit sales by the company and other developers.’
‘More than 2,800 apartments developed by China Overseas Land, along with homes by other homebuilders including China Merchants Property Development Co. in Shenzhen, would not be allowed for sale, the local land bureau said on its website, without citing a reason. China Overseas Land said all the blocked units have been sold and the move won’t affect its business or finances, according to a company statement.’
“Risk aversion among investors has increased noticeably,” Alan Jin, Hong Kong-based analyst at Mizuho Securities Co., said by phone. “When people don’t know what actually happened, they always fear something bigger may be coming.”
“In the past, developers may have had projects blocked because they owed money to lenders or banks,” said Andy Lee, chief executive for Southern China at realtor Centaline Property Agency Ltd. “But now the restrictions seem to be targeting specific developers rather than projects, which is quite rare. Everyone is looking at this government website, talking about who’s next, but it’s all guessing.”
“All the blocked units had been sold.”
Why block the sale of units that have already been sold? I wonder if the developers are selling units multiple times in order to make as much money as they can before they skip town?
Probably “sold” to an off-balance-sheet entity controlled by the same company. See? “Sold.”
Off-topic, but when in college, I attended a screening of Disney’s “Fantasia.” I think everyone was stoned except me.
Here’s another one, about new super-luxury development in Miami Beach, parts of which already flood at high tide. There is so much stupid described and quoted in this article, from public officials, real estate people, developers, architects and buyers that I can hardly begin to summarize it. Did it look like this on the Titanic?
“’The biggest investors in the world, the smartest minds in the world… they’re all buying,’ Levine said. ‘They believe Miami Beach has a tremendous future, and they put their money where their mouth is.’
…
“The Thompson Miami Beach, formerly an apartment building, booked its first guests this month during Art Basel, the festival that annually attracts thousands of big-spending revelers. Mattel hosted a Barbie-themed party at the new hotel — one of five to open this year — where Paris Hilton, dressed as Barbie, spun dance hits behind a pink DJ booth. Miley Cyrus was photographed biting a Barbie’s head.
No one complained about sunny day flooding, which appeared, predictably, at high tide, Thompson’s managing director Brett Orlando said. ‘They were having a good time partying.’”
http://tinyurl.com/mcpyt76
more to look at- that’s good ,right?
“Northern Virginia’s housing market followed a national pickup in activity in December, with sales up 10.6 percent from a year ago. And there is now more for potential buyers in the Northern Virginia market to look at, with active listings up 29 percent from a year ago.
‘Something odd is happening in the government bond market: Interest rates are pricing in a debt-deflation cataclysm.’
‘How else can you explain the fact that the yield on the U.S. 30-year bond hit a record low of 2.4 percent on Wednesday? Or that Japanese and German 10-year yields are plumbing record lows? Or that five-year yields of bonds issued by Eurozone safe havens Finland, Germany and Switzerland are in outright negative territory?’
‘For the U.S. 30-year yield, current levels have dropped below the lows set during the 2008 financial panic and 2012 pre-QE3 slowdown. And this is down from the post-recession high of 4.85 percent set in 2010 and a recent high of nearly 4 percent set in late 2013.’
‘But the bond market’s fear is corroborated by the epic breakdown in industrial commodities, with crude oil down nearly 60 percent from its summertime highs as copper smashes down to mid-2009 levels. It’s corroborated by a drop in market-derived inflation expectations, which by my rough measure shown above of the iShares Treasury Inflation-Protected Securities Bond Fund (TIP) vs. the iShares 20+ Year Treasury Bond Fund (TLT), has returned to the panic lows following the collapse of Lehman Brothers.’
‘And it’s also now being corroborated by weakness in specifically affected areas of the stock market, such as energy and materials stocks, as well as the companies that service those industries.’
‘For all the influence of the global central banks in this business cycle, with the Federal Reserve alone taking its monetary base from $800 billion to north of $4 trillion while holding short-term interest rates near zero percent since 2008, the bond market still operates according to the concepts of basic macroeconomics.’
‘And it’s warning that we’re in trouble. The problem is threefold: The evidence is building that the global economy is slowing, led by weakness in Asia and Europe. The JPMorgan Global Manufacturing PMI, which measures factory activity, last month dropped to its lowest level since August 2013. Activity is declining outright on a month-over-month basis in China, Greece, Austria, Italy and France. ‘
‘This comes as the developed world governments, reacting to the blowup of private sector debts (mostly real estate), recession and the risk to the financial system in 2008-2009, have piled on public debt. China is in the mix here too, with local government and private credit exploding higher, fueling fixed-asset investment bubbles, overcapacity and now an unresolved bad debt problem that we got a quick taste of in early 2014. In Italy, the government debt-to-GDP ratio has grown from 104 percent in 2008 to 133 percent, with no signs of slowing.’
‘All this is occurring at a time of low global inflation, tipping into outright deflation in some areas. Prices at Chinese factory gates have been dropping for months. The Eurozone is expected to have fallen into outright deflation in December. Capital Economics expects consumer price deflation in the United States for January.’
‘Boiling it all down, these market moves are due to Chinese factory overcapacity, Japanese exchange rate mercantilism and Eurozone fiscal austerity. They’ve been accelerated by the collapse in energy prices, which looks set to continue.’
‘The combination of all three trends forms a potent economic poison that has ensnared Japan for decades: A debt-deflation depression.’
‘It’s a self-reinforcing cycle whereby economic weakness pushes up budget deficits (as tax revenues drop and spending on things like food stamps rise) and creates deflation amid a lack of demand and an excess of supply. The combination causes public debts to balloon. Efforts to raise taxes and cut spending to contain rising debt levels only tighten the trap.’
‘The debt-deflation spiral raises the real, inflation-adjusted cost of debt as household and businesses try to pay off fixed obligations amid falling wages and revenues. Asset values are pulled lower. And the crisis deepens.’
“Now what, Ms. Yellen you jackass?”
‘amid a lack of demand and an excess of supply.’
http://goo.gl/hblrFN
‘I can Name That Tune in 4 notes, Tom!’
This is a good point
“Here’s the ugly reality — ending QE did not result in those yields beginning to recover. Why not? The obvious answer is that there was never any real demand behind the faux “prosperity” that QE allegedly brought. That is, this supposed economic “benefit” was all smoke and mirrors!”
It accomplished its real aim the .01% got back all the money they lost in the stock market and then added on another 50%. I said it at the time QE first started that Obama would concentrate more wealth at the top than Bush.
“expects consumer price deflation in the United States for January…They’ve been accelerated by the collapse in energy prices, which looks set to continue.”
Next up, negative feedback loops. Expansion caused higher energy consumption. Higher energy price caused calls for “alternatives”. Alternatives were created using ever more conventional energy, thereby causing prices to skyrocket.
Stick a fork in the expensive alternatives. Energy demand will collapse further when they are shelved.
We do so love an irony.
‘How else can you explain the fact that the yield on the U.S. 30-year bond hit a record low of 2.4 percent on Wednesday? Or that Japanese and German 10-year yields are plumbing record lows? ‘
I think central bank liquidity injections work to infuse cash for large institutions and the 1%. However, with employment weak and wages stagnant, the trickle down isn’t trickling. Large volumes of cash sit on the balance sheets at the top. They are reluctant to invest in capital production because they see little demand for more products. All that cash has to go somewhere so they buy bonds.
The solution is a wealth tax to fund infrastructure projects. This will trigger hiring, orders for durables and commodities, higher wages, etc. As revenues and profit margins expand, the wealthy get wealthier despite the wealth tax. A constructive feedback loop.
‘Something odd is happening in the government bond market: Interest rates are pricing in a debt-deflation cataclysm.’
It seems like the MSM has greatly overblown these deflation concerns, perhaps in response to the central bankers’ favorite hobgoblin.
Is anyone who posts or reads here seeing a shard of evidence for occurrence of the much-feared ‘debt-deflation cataclsym’.
’seeing a shard of evidence for occurrence of the much-feared ‘debt-deflation cataclsym’
Like a lot of economics, instead of looking at things in a system of markets and inputs and buyers sellers, we have been reduced to myths. How else do terms like hobgoblins make its way into the conversation? Or cataclysm? Are falling prices that dramatic? Don’t prices go up and down all the time?
In the movie The Adventures of Baron Munchausen, the cast would occasionally slip into playing a game. It would come over them like a drug, and they would obsess and forget about the real world for a time, even as one character would plead for their withdrawal. When I was a kid we often devised games to spent the long summers. One I remember was a little town market. Each of us would make something and sell it. You know, stuff with sticks or mud. And the basis for exchange was magnolia leaves from the great tree in our front yard. It was all very interesting, but then someone discovered they could go pick more leaves at will and the game broke down into irrelevance.
Here’s one shard of evidence that odd things are happening; an artificial construct is removed, and billions of currency units rush into the hands of a central bank that is charging you a negative interest rate for deposits. Now why on Earth would you pay someone to use your money? And why did anyone believe in this “peg” to begin with?
I’ll throw this out there; what if what is happening is a natural as as the sun coming up. No fantastic theories or horrifying disasters. You can’t print wealth. When you do print money, it will distort and pass here to there. But it will eventually go away; from thin air to thin air. When it does, the prices of things may change, and probably to the downside. Consider that some may see this perfectly natural occurrence as bad. Evil even, ugly like a monster under a child’s bed. But if you look, there is no monster there. It’s just air, like it was before you looked. You feel relieved.
The idea of “spending” time made me think of this song:
Well the smart money’s on Harlow and the moon is in the street
And the shadow boys are breaking all the laws
And you’re east of East Saint Louis and the wind is making speeches
And the rain sounds like a round of applause
And Napoleon is weeping in a carnival saloon
His invisible fiancee’s in the mirror
And the band is going home, it’s raining hammers, it’s raining nails
And it’s true there’s nothing left for him down here
And it’s time time time, and it’s time time time
And it’s time time time that you love
And it’s time time time
And they all pretend they’re orphans and their memory’s like a train
You can see it getting smaller as it pulls away
And the things you can’t remember tell the things you can’t forget
That history puts a saint in every dream
Well she said she’d stick around until the bandages came off
But these mama’s boys just don’t know when to quit
And Mathilda asks the sailors “Are those dreams or are those prayers?”
So close your eyes, son, and this won’t hurt a bit
Oh it’s time time time, and it’s time time time
And it’s time time time that you love
And it’s time time time
Well things are pretty lousy for a calendar girl
The boys just dive right off the cars and splash into the street
And when they’re on a roll she pulls a razor from her boot
And a thousand pigeons fall around her feet
So put a candle in the window and a kiss upon his lips
As the dish outside the window fills with rain
Just like a stranger with the weeds in your heart
And pay the fiddler off ’til I come back again
Oh it’s time time time, and it’s time time time
And it’s time time time that you love
And it’s time time time
And it’s time time time, and it’s time time time
And it’s time time time that you love
And it’s time time time
“Are falling prices that dramatic? Don’t prices go up and down all the time?”
Problems seem to arise when official policies create a one-sided bias in the direction of price movements. Imagine if a government agency in charge of ocean movements decided that the level of water on the beach had to steadily increase forever, or else the planet would be doomed. So they create some kind of ginormous water transport system that makes the water level on shore steadily rise. Where would this policy lead?
Soon the houses near the shore would all be underwater. And then, not long afterwards, gravity would pull the water back out to sea, leaving a bunch of naked swimmers high and dry on the beach.
I know dynamic properties of money and water aren’t exactly the same, but in both cases, there is a fundamental equilibrium principle involved. Policies designed to continually push the system farther out of equilibrium seem predestined to eventually collapse.
“And the basis for exchange was magnolia leaves from the great tree in our front yard. It was all very interesting, but then someone discovered they could go pick more leaves at will and the game broke down into irrelevance.”
That observation has serious implications for the future of uncontrolled cryptocurrencies.
“Here’s one shard of evidence that odd things are happening; an artificial construct is removed, and billions of currency units rush into the hands of a central bank that is charging you a negative interest rate for deposits.”
That’s what I don’t get. Wouldn’t it be cheaper to just hang on to your cash, than to pay for the pleasure of lending it out?
Perhaps there is an exchange rate angle to the story which I am missing, as in the lenders expect the value of the Swiss franc to appreciate relative to the currency they exchanged to loan money at negative interest rates?
Too bad the .01% forgot they cannot support the economy themselves
Oh, but they can. Just wait until they start to shed assets at fire-sale prices. There will be plenty of stimulus at that point, much like the energy release when an avalanche flows down a mountainside.
For China, Even Good Numbers Don’t Add Up
“Those who believe China can somehow grow its way out of this problem are fooling themselves.”
“The math simply doesn’t work out. Even if China could somehow return to the heady days of 10 percent-plus GDP growth, its debt mountain would by then be nearly unmanageable. “We’ve got the biggest debt bubble that the world has ever seen and credit is continuing to grow twice as fast” as output, Charlene Chu, a former Fitch Ratings analyst, told Bloomberg Television earlier this week. Those who believe China can somehow grow its way out of this problem are fooling themselves. “Mathematically, that’s impossible when something is twice as big as something else and growing twice as fast,” as Chu noted.”
“Xi’s government still hasn’t shown the stomach necessary to bring China’s debt problems out into the open and deal with them. Even one of the first defaults on an offshore bond by a Chinese developer last week ended happily. Kaisa Group missed a $23 million interest payment, but quickly received a waiver from HSBC.”
“Chu, who’s now with Autonomous Research in Hong Kong, put Chinese bank assets at around $28 trillion the end of 2014, a huge increase from $9 trillion in 2008. As any 12-step program participant can attest, sobriety requires first admitting the magnitude of one’s problem — and publicly.”
http://www.bloombergview.com/articles/2015-01-14/for-china-export-numbers-dont-solve-debt-problem
“Chu, who’s now with Autonomous Research in Hong Kong, put Chinese bank assets at around $28 trillion the end of 2014, a huge increase from $9 trillion in 2008.”
Makes the Fed’s $4.5 trillion balance sheet expansion pale in comparison.
What would our bank asset number be if all the “member bank’s” assets were tallied up?
My nephew was asking me the other day about whistling, I told him when times are good you will hear it in many places. So he said the logical, I DON’T HEAR IT ANYWHERE UNCLE, I said Paul you answered your own question.
Cheer up. Falling prices to dramatically lower and more affordable levels is positively bullish, good for the economy and your wallets best friend.
‘China’s new home prices fell in December for the fourth straight month and are expected to continue heading lower this year, pointing to a persistent property downturn that is increasingly dragging on the broader economy.’
‘Average new home prices across China fell 4.3 percent last month compared with year-ago levels, a faster decline than the 3.7 percent drop seen in November, according to Reuters.’
‘Chinese developers will launch more housing projects in 2015 as they strive to meet sales targets and boost market share – at the risk of adding to already-bloated inventories, a survey conducted by Reuters showed on Wednesday.’
“Inventories are high. We can’t raise prices until after the market digests them,” said the chief executive officer of a developer based in southern Guangdong province. “The sales went up but prices didn’t – it won’t be easy for us to raise prices.”
These guys are idiots:
‘Chinese developers will launch more housing projects’
It’s a lot worse up here than anyone can imagine. The oil price drop has thrown all governments into a panic. Talk of electricity “green” rates, read 3 or 4 times on peak as well as carbon taxes, gas is cheap, let’s nail ‘em. But the reality is Canadians are total credit junkies and now they’re getting scared. They’re broke and up to their eyeballs as you can see.
http://www.greaterfool.ca/wp-content/uploads/2015/01/LOC-DEBT.png?8f4c78
http://www.greaterfool.ca/wp-content/uploads/2015/01/LOC-DEBT.png
“The oil price drop has thrown all governments into a panic.”
Canada R-E-A-L-L-Y depends on their oil revenue.
What about Venezuela, Russia, Iraq, Iran, Saudi Arabia, etc etc etc?
At the Canadian article in the post, there is a photo of what 800k gets you in Fort McMurray. These guys are so screwed.
http://www.fortmcmurrayrealestate.com/
$1+m for the pleasure of living on Tundra Drive — sez it all!
MLS® #: FM0044763
157 Tundra Drv
Fort McMurray, AB T9H 5A4
$1,795,000
“What about Venezuela, Russia, Iraq, Iran, Saudi Arabia, etc etc etc?”
Sorry, I was being NIMBY.
Canada Oh Canada?