A High-Flying Market Has Caught A Serious Chill
A report from the Canadian Mortgage Broker News. “A major Canadian Bank believes the housing boom in one of Canada’s most bullish markets will start to cool this year — but to what degree? ‘While the GTA housing market has shown few signs of slowing this year, one thing remains certain: Housing booms don’t last forever,’ TD Bank wrote in a special report, entitled GTA Housing Boom Masks Growing Structural Challenges. ‘The million-dollar questions are: When and to what extent will the downswing take place? TD Economics’ baseline GTA housing forecast is a tale of headwinds and tailwinds, with the former likely to win out and cool the market beginning in 2015.’”
“The condo market is expected to lead the way toward a correction, with 60,000 new units expected to be built in the next few years. TD estimates that the market will be oversupplied by 25,000 units. ‘The impact of increased supply of condo rental units is expected to only partially offset by rising rental demand,’ the report states. ‘In this environment, the cost of condos will likely exceed what an investor can earn on the rent.’”
The Star Phoenix. “It could be a buyer’s market in 2015 for those looking to purchase a house. ‘We have a year ahead of us where there is going to be a lot of selection for buyers and demand is going to soften somewhat,’ says Norm Fisher, broker/owner of Royal LePage Vidorra in Saskatoon. ‘Through 2014 inventories were higher than they have been for five years. (And) we come into 2015 even higher. Our inventory is about 25 per cent above the five-year average.’”
“Fisher doesn’t see Saskatoon as having a housing bubble ready to burst. ‘The definition of a bubble would be rapid increases (in prices) over a short period of time followed by a burst,’ he said. ‘It has been five years since we have really seen rapid increases in our market.’”
The Canadian Press. “The Calgary housing market is cooling fast. The number of homes trading hands has plunged 37 per cent compared to the first two weeks of January 2014, while the number of active listings surged 64 per percent. ‘Calgary’s high-flying housing market has caught a serious chill,’ Sal Guatieri, senior economist at Bank of Montreal, said. The price drop ‘is likely the start of a correction,’ the economist said.”
“Until very recently, Calgary’s housing market was the top performing in the country alongside Toronto and Vancouver. Plunging oil prices have worked quickly to cool things down, however. ‘More pain lies ahead,’ Guatieri said of the Alberta real estate market, noting pending sales in the province’s biggest city are also down 53 per cent year over year. ‘Ouch.’”
From CTV News. “The oil boomtown of Fort McMurray, Alta., is trying to keep its spirits up as crude prices drop. Many of the city’s 76,000 people work in the oil sands. And with crude prices plummeting from more than $100 a barrel in June to less than $50 now, residents are nervous about what the future holds. ‘Everybody’s scared for their jobs,’ said Michael Provencher, a haul truck driver with a private contractor hired by the big oil companies in Fort Mac. ‘For right now, we were told we’re okay. But in a month from now, we don’t know.’”
“McMurray Gospel Assembly Pastor Robert Parmenter, who has lived in the community for 31 years, says the community has been through this boom-and-bust cycle before. In the past, Parmenter even saw people walk away from their homes and turn them over to the bank when times got tough. ‘There is a few people selling right now before it gets worse, not thinking that it’s going to come back up,’ said Parmenter.”
“Although Fort Mac hasn’t reached that point yet, already-high house prices are said to be dipping. For instance, a 1,400-square foot house listed at $739,000 — an average price for the city — has dropped from an original listing price of $759,000 last summer.”
From The Tyee. “Low-Rent Mansion Living? In Vancouver? Really? Yes, really. Groups of frustrated renters are snapping up urban acreages, and spend less on housing than the rest of us. Erik Paulsson and his roommates pay an average of just $750 a month, substantially below the average $1,000-plus one-bedroom rent in the city. But they’ve managed to drive costs down by moving into an abode that is anything but ‘humble.’ Their 7,500-square-foot, six-bedroom Spanish-style mansion, built in 1931 and nestled on nearly an acre of land overlooking the Fraser River, is valued at $5,063,000, according to municipal records.”
“As Paulsson prepares a French press of coffee, for perspective I note that the laundry room adjoining his kitchen is roughly the size of my own bachelor apartment. ‘There’s lots of big houses, including mansions, for rent,’ he explains. This one happens to be a big property bought by an overseas Chinese development corporation. ‘I don’t know if they’re waiting to flip it, sell it or develop it.’”
“‘You have the whole phenomenon of absentee landlords and offshore owners,’ explains roommate Jeet-Kei Leung. ‘Which has led to all these large homes being left empty… They’re empty because they’re hard to rent.’”
‘As I read the numbers on the sign, I had to rub my eyes. That can’t say 86 cents a litre, can it? I breathed a warm vapour onto my glasses, wiped the lenses clean and looked again. Yep, 86 cents a litre.’
‘I pulled into the gas station and poured a bath of liquefied dinosaur matter (that’s why it’s called fossil fuel) into my tank. After remitting payment to the chief car-wash offeror at the cash register, I asked if this was going to last.’
“I think prices will go lower still,” answered the attendant, not altogether enthusiastically.’
‘There was a pause. “What are you doing?” he asked me.’
“The dance from “Footloose,” I answered, completing a spin.’
“Please, sir, in the name of decency and for the sake of my digestive organs,” the attendant groaned. I persisted. “Prithee,” he added, “by the red sports jacket and black bow tie of Kevin Bacon, bestill your twerking hips.”
‘I don’t think it was just my “Footloose” that got to him. The guy waiting behind me was wheeling around like Cab Calloway. By the ATM, a woman did the pony, making that lasso motion with her arm over her head, as she sang “Love Shack”.
‘I chimed in, to the tune of “Hotel California”, “We haven’t had those prices here since 1999.”
‘The attendant, trying to restore perspective, began to explain the negative effects on the Canadian economy of low gas prices. He produced a stock market bar chart and tabulation of projected tax revenue depletion, weighted for inflation, deflation, stagflation and wind chill.’
“Have you seen this?” he asked, playing a video clip on his smart phone. It was entitled “Alberta — Requiem for a Lament.” The opening showed a boardroom full of baleful Calgary oil executives, in pinstriped suits and bolo ties, weeping like The Trojan Women. Then the video panned over the tarsands. Horrible. Production had stopped, and wildlife was reclaiming it as habitat — spotted owls, whooping cranes, pine martens, white rhinos.’
‘The video cut back to the oil executives, now in lobster bibs, eating king crab and throwing the emptied shells over their shoulders like Friar Tuck in Rocket Robin Hood, but still crying pitifully, as though watching “Terms of Endearment”. “Too … much … supply,” they gasped. “Prices … in … free fall. Waiter, more Chablis!”
“Those poor men,” I said.’
‘Oversupply indeed. Everyone’s into oil. Even my daughters were doing a little fracking in the back yard until the bottom fell out. On the smart phone screen now was a Fort McMurray fast food worker. “I was pulling down $60 an hour at We Dig Chicken; I had steer horns mounted on the grille of my Lexus. Now, no future. I’m going back to Cornerbrook to wait for the cod stocks to return to the Grand Banks.”
“Tunderin’ fish sticks,” I exclaimed. “Dat’s some terrible bad.”
‘I guess it’s selfish and short-sighted to be enjoying low gas prices. They could prove cataclysmic. It just illustrates the dialectic nature of reality. Good and bad, like all other opposites, are knotted together, one forever turning into the other.’
That can’t say 86 cents a litre, can it?
So Canadians are still paying over $3 a gallon? That must be a lot of tax.
I saw it for 76 cents (just after I filled up at 90 !
Cornerbrook, Sydney, Summerside, St. John, Bathurst, Dartmouth, Rimouski, Ft. St. John, Thunder Bay, Renfrew, Port Alberni, Campbell River, and everthing in between will shortly suffer heavy unemployment if that oil price doesn’t return to sanity ($80) and $300,000 houses will become much less. Possibly back to what they should be in the first place.
You see, when our industry was shipped offshore, our citizens went to work in the tar sands, forestry, and mining. When Japan stopped building our forestry couldn’t sell anything - including paper. 80% unemployment in those forestry communities. Then China stopped buying minerals - and the Vancouver stock exchange has almost gone broke.
Now the tar sands - a place that employs about 250,000 people from across Canada and pays them well. Some projects are finished and will need staff to operate them - first jobs go to Albertans - the rest will go home (about 200,000 before this is over).
Oh, Cornerbrook is having a hard time with da Cod. A wonderful place with an excellent ski hill and fantastic harbour. Their people, like all Newfies, would give you the shirt off their backs and so politely you would think you had done something nice for them.
We did - back around 1910 we sent them four Moose. Now they have 5,000 of them in their area alone (not including Gross Moren).
Instead of Cod they will be eating Moose Burgers over at Rocky Harbour before this is over.
Vancouver Islanders will continue to eat the best Salmon in the world - while they watch their hopes for their Massive oil reserves remain under the water; lost with the Valdez spill.
Herring Chokers (New Brunswickers), Bluenosers (Nova Scotians), Islanders (PEI) or (Cape Bretoners) will all go back to their lobster, scallops, salmon, mussels, halibut, haddock, a bit of cod - and in the end be better off for it.
Frogs (Quebecers) will all go back to drinking wine with their escargot and have a great time skiing, snowmobiling, hockey, while they develop their massive hydro assets.
Ontario. ?
‘Every month, Quebec judges and regulatory agencies issue dozens of rulings that, without making headlines, set the ground rules for how business is conducted in Quebec.’
‘Here are a few of the offbeat and/or consequential rulings returned in recent weeks: A co-property buyer who felt her real-estate agent was remiss for not disclosing that the unit sold months earlier for much less failed to obtain compensation from him in Quebec Court.’
‘The buyer, Dimitra Panagopoulou, paid $169,000 for a condo in Brossard in 2010 that had sold six months earlier for $119,000. Subsequent evaluations from three sources estimated its market value between $125,000 and $148,000 around the time of purchase.’
‘Panagopoulou sought $7,000 in small-claims court from her real-estate agent, Alexandre Patricio, saying he hadn’t given her a clear portrait and she overpaid.’
‘Patricio said the previous price did not reflect the value at the time of the purchase because the previous owner had acquired it from a family member and then significantly renovated it. He also said he told the buyer the previous selling price, though she denied it.’
‘Quebec Court Judge Claude Laporte sided with Patricio, saying there was no proof he knew or should have known that the price his client paid was exaggeratedor that it even was exaggerated. Nor was Panagopoulou obligated to buy the property, he said, dismissing the claim.’
“a 1,400-square foot house listed at $739,000 — an average price for the city”
Exsqueeze me? A Baking Powder?
#Timber!
What happens to all those places like Phoenix where Canadians are heavily invested when Canada RE and Oil go bust? How were the investment properties bought by these Canadians? Heloc or second loans from Canadian banks?
This could create an interesting situation: The house in Canada is mortgaged to the hilt while the house in Phoenix was paid in cash (from the Canadian HELOC).
So what do they do if they lose their jobs and can’t service the Canadian mortgages anymore? Do they bail for Phoenix (assuming they can get a work permit)? Do they sell the Phoenix house and try to live off the cash while they look for a new job in Canada?
‘ODESSA - For years, West Texas has been booming with job opportunities as the oil prices continued to skyrocket. Now, workers are being laid off and hiring freezes have been put in place, but it’s also prompted a big question–how is it going to affect the housing market?’
“The hope is that we will, with the slow down of production, catch up with the surplus of oil that’s caused the price to fall and if we catch up to that soon enough, we may not actually see that much of a drop in housing,” Wayne Dunson, the 2014 president of the Odessa Board of Realtors, said.’
‘He says that may not be a bad thing, as it could bring in new buyers who couldn’t afford the prices before. “If we had a full on bust, say like we did with the last recession, there was a definite loss of value but that was because there were a lot of people that lost jobs, and it wasn’t necessarily inventory as it was people had to just walk away from their homes because they couldn’t pay their mortgage,” Dunson explained.’
“Fortunately for us, oil always takes off again and so it really didn’t last long and we didn’t suffer that bad the last time so hopefully we can pull out from this one pretty fast too,” Dunson said.’
Smooth Goldilocks landing … In Texas real estate? Ahahahahahahaha
“Fortunately for us, oil always takes off again and so it really didn’t last long and we didn’t suffer that bad the last time so hopefully we can pull out from this one pretty fast too,” Dunson said.’
Oil did bounce back quickly last time. Whether that happens again this time remains to be seen.
‘Arguably the hottest real estate market in Canada, Calgary has seen a massive build out on the back of unprecedented energy sector growth. Now, as the price of crude collapses causing producers to pull back on budgets and cut thousands of jobs in the region, buyers and sellers in Calgary are left to anxiously wait for the inevitable impact. So how is the new low price environment for oil impacting the market today?’
‘Parai is well aware of oil’s dramatic declines and those that have lost jobs because of it. But she says demand for housing is still strong, and if anything, people are getting back to their senses when it comes to buying a house.’
“People are more reasonable after all those crazy years. There are not going to suddenly spend $100,000 too much on a house. That happened back in 2006. They are realizing that there isn’t an unlimited end to how high the market can go up,” she said.’
‘Demand isn’t where it was last year according to Parai, a sign that much of the energy sector’s impact has yet to be felt. But for now, she feels things are becoming more balanced. “There’s enough for sale. There are enough buyers at the moment, but we don’t know what the next few months will bring. There is some uncertainty,” she said.’
http://www.homefinder.ca/homes-for-sale/47714-waterloo-kitchener-area-real-estate
How about the photo for this one:
http://www.homefinder.ca/listings/3357417-158-nith-river-way-ayr-ontario-pt149901668
Some high prices here.
http://www.century21.ca/borderrealestateservice/Search/borderrealestateservice
Love the picture of the house up in flames - that seems very appropriate for what is about to happen in the oil patch.
‘Laid off retail workers, including more than 17,000 hit by Target’s decision to pull out of Canada, face grim job prospects as they dust off their resumes and start looking for work, according to labour experts. “I suspect they are feeling some anger and some very genuine fear,” said Brock University labour expert Kendra Coulter, noting that many retail sector staff work only part-time hours. “Many of them will not be eligible for employment insurance and are facing a very scary future.”
‘Workers affected by Target’s exodus from Canada are likely to struggle to pay the bills while they look for their next job, MacEwen said. “These are minimum wage jobs, and a lot of Canadians in that position are living paycheque to paycheque and can’t really go six months without regular pay,” she said.’
‘Target is not the only retailer to close stores and lay off workers in Canada recently. Clothing retailer Mexx declared bankruptcy last month and will be closing all of its stores, including 170 in Canada. The company employs 2,800 people worldwide. Meanwhile, Sony plans to close its 14 remaining Canadian locations, a move that will affect 90 employees.’
‘The retail cuts come as the broader economy also faces challenges including cuts in the oilpatch.’
Yet they remain secure in the belief that their ordinary little houses in the middle of nowhere are worth half a million.
The bubble allowed many things that never should have been. Canadians hated the Target stores. Zellers, which Target took over, was much better, and fired all the staff. Target prices were too high and their stock too low. Worse, they didn’t carry what the US stores carried. They had coffee shops, but they were Starbauchs. For people earning minimum wage!
‘Laredo Petroleum Inc. is closing its Dallas office and laying off about 20 percent of its work force due to plummeting oil and natural gas prices. “While it is a necessary step due to the substantial drop in commodity prices and the resultant reduction in the company’s drilling activities, we do not take such actions lightly,” Laredo spokesman Ron Hagood told The Oklahoman in an email. “Laredo recognizes that its employees are its greatest asset and is providing assistance in a difficult situation.”
‘Laredo is the first of Oklahoma’s publicly traded oil producers to announce it is cutting staff because of lower oil prices, which have dropped nearly $60 a barrel since June. Laredo already has slashed its 2015 budget nearly in half because of lower commodity prices.’
‘The company had planned to spend $1 billion on capital this year, but cut that figure to $525 million last month.’
Laredo recognizes that its employees are its greatest
assetliability‘Advanced economies like the U.S. and the U.K. might be experiencing a promising uptick in their economies but a clutch of new figures have highlighted the danger of the inequality of unemployment around the world.’
‘The World Economic Forum (WEF) - meeting in Davos, Switzerland this week - has a soul aim of “improving the state of the world.” In a new discussion paper Monday, the group underlined its belief that rising income inequality was damaging future economic well-being and said there had been little in the way of concrete policy guidance to combat the problem. Also on Monday, international development charity Oxfam warned that wealth inequality is “rising fast” and estimated that the combined wealth of the world’s richest 1 percent could overtake that of the remaining 99 percent by 2016.’
‘Meanwhile, global unemployment is set to rise in the next five years, according to a new report from the International Labour Organization’
‘Despite vast expansion of its balance sheet, economists like Claus Vistesen, the chief euro zone economist at Pantheon Macroeconomics, believe it’ll take some time for the results to show in full. He told CNBC via telephone that quantitative easing (QE) in the euro zone would have a “glacial” lag on unemployment which could only truly manifest itself in years to come.’
‘UNI Global’s Jennings lambasted the current austerity measures in the euro zone and said that Europe was currently like a car that was “stuck in neutral.”
“Working people did not cause this financial crisis, they were the victims, they paid for it,” Philip Jennings, the general secretary of labor union UNI Global, told CNBC at Davos.’
Boo-hoo, you’re all victims, waaa!
Stop waiting for some government/central bank cheese to float down the river. And if you think these guys with their $2,000 shoes in Davos give a crap about you, you deserve the a$$-pounding that’s to come.
A real debt-donkey pounding.
As I noted yesterday - charlatans and Philistines.
And the mis-spelling (soul) is just so…appropriate. The writer needs to learn context and get off the spell check - soul = sole.
‘If you’re a married couple feeling the financial stress of the recent economic downturn, you’re certainly not alone. January is one of the busiest months for divorces, and with money as one of the key issues, falling oil prices are aiding in marriages falling apart as well.’
‘Nancy Lentz with Calgary’s Law Boutique said they will likely see an increase in divorces, depending on what happens wiht the economy, but they’re already seeing effects.’
“It does speak to the increase we’ve seen in clients in our office this month and we’ll probalby see that carry forward in the coming months as well,” she said. “We have seen that in the clients that we’ve seen come and speak to us this month and they’ve been noting financial pressures from before late last year building up and then the news about the economy for 2015 adds to that stress certainly.”
‘Canadian energy transportation and storage company Inter Pipeline plans to spend C$400 million on its capital program in 2015, less than a third of last year’s budget, the company said on Tuesday.’
‘The company, which operates the largest pipeline gathering system in Alberta’s oil sands, said the 2015 capital program will be lower than in recent years as Inter Pipeline completes construction work on a C$3 billion expansion of its Cold Lake and Polaris systems. Last year Inter Pipeline announced a capital spending budget of C$1.3 billion.’
‘The company joins dozens of other Canadian oil and natural gas producers and oilfield services companies that have slashed capital budgets in response to tumbling benchmark crude prices, which have more than halved since June 2014.’
Ohhh dear:
‘Harold Gerstel, who works behind a metal security cage at his cash-for-jewelry shop in Toronto’s Lawrence Manor neighborhood, has found another way to make money: arranging mortgages.’
‘Gerstel, who promises a mortgage in five business days in daytime commercials, said he serves borrowers with low-income, little documentation and a record of late payments. Since 2011, he has sourced hundreds of mortgages with lightly regulated nonbank lenders.’
“We arrange mortgages for the average Joe,” Gerstel said over a blaring television in his shop, which is furnished with weathered black leather couches.’
‘Canadians are taking on record debt to buy homes even as the government has enacted lending restrictions. The restrictions are driving borrowers to nonbank lenders, which are rapidly expanding to meet demand, said Benjamin Tal, the Canadian Imperial Bank of Commerce deputy chief economist. Home loans from shadow lenders are growing about 25 percent annually, he said.’
‘Entrepreneur Tugs Smith turned to a nonbank lender after Royal Bank of Canada rejected her for a mortgage. Smith said she didn’t want to go through the hassle of having her income verified by a third party, such as an accountant, as the new rules require.’
“We didn’t fit into the cookie-cutter formula that the banks have laid out,” Smith, a 33-year-old mother of four, said from her office in Oshawa, Ontario, where she runs an outsourcing business with her husband Adrian.’
‘Smith said Xceed Mortgage Corp. had no qualms giving her a mortgage for a larger home for her expanding family. Her three-year C$380,000 loan came with a 5 percent interest rate, about double the average comparable rate at one of the big five banks.’
‘Matrix Mortgage, the brokerage, helped Smith get her loan. Allen said business at Matrix has almost doubled each year since operations began in 2008. Matrix agents field calls from its second-floor office in north Toronto from customers who see their advertisements that say: “Bad credit? No credit? Mortgage approved.”
Wait - THREE YEAR loan?
Is that standard practice in Canada? I mean I’ve heard of bridge loans and so on, but this woman sounds like she has no intention of switching over to a standard bank mortgage. So what exactly is she planning to do at the end of 3 years?
Flip the house?
starts hit new high-talk about get er done
flat to down here in 22151 central soviet
I still see a lot of new home building projects in the Southeast Valley of Phoenix in the “flattening dirt” phase of construction. Any chance that construction stops on these projects before they get built?
Queen Creek Real Estate 1,490 results.
http://www.zillow.com/queen-creek-az/
Boy, a lot of these say “new homes.”
Shillow - heading your way in late Feb for a visit with an old friend - we plan to drive around a bit and see the landscape with my own eyeballs - I think you are right - flat earth and then nothing.
Another commodity driven bubble:
‘According to a report in April 2012 by Capital Economics, residential property prices in São Paulo had doubled within five years, while prices in Rio had tripled. Since then they have continued to climb with prices in São Paulo now tripled since 2008, while prices in Rio have almost quadrupled. A nation-wide price series began in mid-2010 and shows that prices at a national level have increased by seventy percent in just four years.’
‘Shearing says, “We still find the sharp rise in prices difficult to justify against economic fundamentals. For a start, prices have risen far faster than incomes – whereas GDP per capita has risen by sixty [percent] since 2008, house prices in Sao Paulo have tripled.”
“What’s more, although the spread of mortgage finance would justify a rise in prices, other emerging markets have seen similar increases in mortgage lending to Brazil, but house price gains have been far more modest. Finally, house prices seem expensive relative to rents. […] Based on a range of indicators, in 2014 we estimated that at a national level Brazilian housing could be overvalued by around 30-50 percent.”
The banks in Brazil will remember why they didn’t lend people money to buy houses.
And another:
‘Malaysia is not facing an economic crisis, with the economy remaining strong despite a global slowdown and the drop in crude oil prices. Prime Minister Datuk Seri Najib Tun Razak said he did not foresee any retrenchments, fewer jobs or income drops for workers here.’
‘However, he conceded that the slowdown could result in a lower rate of new jobs emerging in the marketplace. “This does not mean we are facing a crisis, the number of workers will increase but at a slower rate,” he said.’
‘Najib also said Malaysia’s economic fundamentals were strong enough to withstand the challenges caused by the drop in crude oil prices, which was the reason behind the budget revisions.’
‘Investors quickly expressed their disappointment at Razak’s revised budget, sending the Malaysian ringgit to a fresh six-year low against the greenback on Tuesday.’
‘On the bright side, Razak announced that Petronas ‘ dividends will be based on last year’s crude prices, easing concerns over a drastic decline in payouts from the state-owned oil giant, analysts say.’
‘The company alone makes up more than half of Malaysia’s government revenue and markets were rattled last month after Petronas warned that payments to the government would be 37 percent lower in 2015.’
“A steep decline in Petronas’ dividends is unlikely,” ANZ said, noting that last year’s prices averaged around $97 a barrel for Brent crude.’
And Indonesia has a real estate bubble:
‘Indonesian coal miners say the government should cut this year’s production target by at least 12 per cent to boost global prices that have fallen to the lowest in almost eight years.’
‘The world’s largest exporter of power-station coal should reduce output by at least 50 million tonnes this year and keep exports at a maximum of 300 million tonnes, Bob Kamandanu, the chairman of the Indonesia Coal Mining Association, said in an interview on January 19. Indonesia plans to produce 425 million tonnes of coal this year and targets exports of 333 million tonnes, R. Sukhyar, a director general with the Ministry of Energy and Mineral Resources said January 6.’
‘Thermal coal, used to generate electricity, has tumbled more than half since 2011 amid supply additions and slowing demand in China, the biggest commodities consumer. Coal at Australia’s Newcastle port, an Asian benchmark price, dropped to US$58.60 (RM212.36) a tonne in the week ended January 16, the lowest level since June 2007, according to data from IHS McCloskey.’
“If we want to change the situation, volume must definitely be reduced and it’s the government’s job to control it,” Kamandanu said. “If this didn’t happen, it may take two years for prices to improve.”
Help us government. Make the price go up!
in the 1998 Asian crisis they kept working
no free phone
chop chop
in the 1998 Asian crisis they kept working
The ones who still had jobs did, the laid off …not so much. But yeah, no free phone.
Must read on Brazil and central america - leaderless.
http://www.miamiherald.com/news/local/news-columns-blogs/andres-oppenheimer/article5232387.html
‘According to an announcement from the Banks Association of Turkey Risk Center, bounced checks reached 1 million in 2014, at a value of TL 8.2 billion. While this marks an alarming 10% increase in value since 2013, the figure overshadows the quantity of bounced checks, which had decreased by 8%.’
‘The overstretched investments in construction on real estate is viewed as the main reason for the situation. The highest figure of increase in unpaid bank notes was observed in Van province, in East Turkey, where the first 11 months of 2014 registered TL 280 million, up from TL 56 million in 2013. One of the key factors were the high number of factories closing in the province.’
‘In Gaziantep province, South East Turkey, the number of unpaid checks increased by 66% from TL 115 million to TL 191 million in the first 11 months of 2014. The number of unpaid checks increased by 11.90% from 11,542 to 12,916. Gaziantep was followed by a 60% increase in unpaid checks in Bilecik in the West, a 56% increase in Kilis in the Southeast and a 54% increase in Gümüşhane, up north.’
‘Turkey’s major metropolises reflect similar findings. In Ankara the figure jumped from approximately TL 898 million to TL 1.8 billion. The increase in İstanbul and İzmir registered at 10.32% and 8.96% respectively.’
‘Specifically concerning East Turkey, numerous Syrian migrants who have acquired flats but been unable to pay, has also factored in to the increasing figures.’
‘In spite of the fact that the Turkish construction sector has a surplus of luxury housing, lower income groups are failing to own affordable homes, a recent report released by the Housing Developers and Investors Association (KONUTDER) has revealed.’
‘KONUTDER’s report examining the supply and demand in the home production sector in Turkey based on different price levels states that there is a yearly demand in Turkey for 72,000 homes to be built at a cost of at most TL 1,263 per square meter, however, the supply of homes in that price range is lacking. Though yearly demand for houses which are priced at between TL 1,263 and TL 2,074 per square meter is 48,000, the amount of homes built for this price level stands at 10,767 units.’
‘The report shows that 63,363 homes are built in Turkey in a year to be sold at between TL 2,075 and TL3,000 per square meter, despite there only being a demand for 8,000 units in that range. Likewise, 32,445 homes priced between TL 3,000 and T L5,000 per square meter are constructed per year while the volume of the demand for those is the same, 8,000.’
‘The report also shows that the sector has a yearly excess supply of 24,000 units in İstanbul alone, most of which are luxury homes.’
“between TL 1,263 and TL 2,074 per square meter is 48,000, the amount of homes built for this price level stands at 10,767 units”
Sounds pretty familiar, people want $50/ft2 homes and builders are flooding the market with $200/ft2 homes.
Crater
‘Copper futures fell for the second straight day as output rose to a record in China and Goldman Sachs Group Inc. said a weak property market in the Asian country will damp metal demand. Output surged to a record 7.96 million metric tons last year as smelting capacity expanded, government data showed on Wednesday. There’s a high risk prices in 12 months will be below Goldman’s forecast of $6,000 a metric ton, the bank said in a report. China is the world’s biggest consumer of industrial metal.’
“Copper production rising in China at a time when demand is declining makes the market very nervous,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said.’
‘Through Tuesday, the price slumped 22 percent in the past 12 months on concern that a cooling Chinese economy will erode consumption. Inventories monitored by the LME have jumped 24 percent this month to the highest since May.’
“production rising in China at a time when demand is declining…”
Like a giant locomotive headed for end of track with the throttle lashed forward.
Dollar spiking at work
‘Israel’s central bank said on Wednesday the main risk to the stability of the country’s financial system was the exposure of banks and households to a potential slump in house prices, which have nearly doubled since 2007.’
“The financial system is exposed to the risk of a sharp decline in home prices, which could result from a domestic or external shock that leads to a sharp and rapid increase in interest rates or from a recession that negatively impacts on borrowers’ income,” the report said. “Either scenario, or some combination of both, is liable to make it more difficult for households and contractors to meet their obligations and thus would negatively impact on banks’ capital ratios.”
‘While there was a slowdown in the housing market in the second and third quarters of 2014 due to expectations the government would change value added tax rules, demand for home loans had increased again by the end of the year when new elections were called and the plan was shelved, the report said.’
‘The central bank said the financial system was also exposed to the underpricing of risks in the corporate bond market against the background of low interest rates in Israel and abroad.’
‘Chinese fiscal revenue growth is set to hit its lowest level in more than three decades this year, Deutsche Bank warned, which is likely to add more downward pressure on a slowing economy.’
“We forecast the growth of total government revenue will slow to 1 percent in 2015 from 4 percent in 2014 and 19 percent on average from 2009 to 2013,” the bank said in a recent report, stating that 2015’s pace of growth will be the slowest since 1981. It also predicts growth of local government revenue will drop to -2 percent this year from 2 percent in 2014.’
“We believe this is the most important risk to the economy and one that is not well recognized in the market,” the bank added.’
‘ The slump in land sales, which make up 23 percent of national government revenue, is to blame for the fiscal crisis, according to the report. Land auctions plunged 55 percent in the third-quarter and averaged a decline of 40 percent across 300 cities all of last year, according to Deutsche Bank.’
“The reality is that the land market started to cool down sharply in March 2014, but from a fiscal revenue perspective in annual terms, land sales remained positive until Q3 2014. We believe the fiscal shock to local government revenue only started in Q4,” Deutsche Bank said.’
‘The dominance of local government financing vehicles (LGFVs) in land markets is exacerbating China’s fiscal slide, experts warned. LGFVs are “notorious funding platforms that helped pay for China’s post-2008 housing and infrastructure construction boom and whose borrowing accounts for the majority of China’s nearly 18 trillion yuan ($2.9 trillion) in outstanding local government debt,” according to a note from global intelligence firm Stratfor last week.’
‘ As local governments account for nearly 90 percent of China’s total government expenditures, Stratfor noted, so the debt burdens of LGFVs have a direct impact on China’s fiscal situation.’
“The rise of LGFV land purchases underscores the urgency of fiscal reforms in China. As long as local governments remain heavily dependent on land sales as sources of revenue, and as long as local governments are responsible for the vast majority of government expenditures in China, they will continue to seek - and find - means of making those sales and generating that revenue, however unsustainable,” Stratfor said.’
“the fiscal shock to local government revenue…”
That seems rather harsh. Couldn’t you just call it “slightly less growth as the economy rebalances to a high tech consumer driven model”?
But Obaamo just said everything is going great!!! Huh?
how many stampers ? 99ers , free phoners?
if things are good turn off the welfare tap
Clinton ditched the welfare model years ago.
And Obama reinstated it by waiving the work requirements for many programs by executive action.
doan be workin me,yo
I’m taking so-solligy at CC
http://dailysignal.com/2012/08/15/obama-administration-already-tossed-the-food-stamp-work-requirement/
Kudlow’s podcast from last Saturday - interview with Willison on the housing bust and the culprits exposed in it - start at about minute 80 - well worth a listen……
http://www.stationcaster.com/player_skinned.php?s=1251&c=6381&f=3870613