The Past Two Years Was Not Reality
The Bismark Tribune reports from North Dakota. “Members of the Bismarck-Mandan Board of Realtors say the community’s housing market is less frantic than it was two years ago. Previously, Kristin Oban, president of the Bismarck-Mandan Board of Realtors, may have called clients in the morning when a home came on the market. By noon, there were usually three to five offers on the house and many times the offers were higher than the listing price. She said sellers are still getting 99 percent of their listing price but multiple-offer situations are back to a normal pace. For homes in the higher price range, $400,000 or more, Oban said sales prices have not been as high as they previously were. ‘It may not be the news sellers want to hear, but it is good for our market,’ she said.”
The Teton Valley News in Idaho. “After a public hearing, the Teton County Planning and Zoning Commission voted unanimously to give approval for a new 26-lot subdivision in the northern part of Teton County. Randy Blough of Harmony Designs, who designed Cutthroat Creek, said he realizes that the county still has many empty subdivisions left over from the housing boom. ‘We acknowledge there are many vacant lots, there’s no doubt about that,’ he said. ‘If a lot of those subdivisions were designed in this type of way, [the county] wouldn’t be in the [situation] we’re in now.’”
From Miami Today in Florida. “Miami-Dade County is home to a growing number of condominiums, most of which are held by absentee owners. Of the nearly 352,000 condominium units in the county, 37%, or 130,000, had a homestead exemption, according to the Miami-Dade Property Appraiser’s 2014 preliminary tax rolls released mid-year.”
“‘A condo is effectively a big lock box in the sky. That’s really what they are,’ said Peter Zalewski, principal of real estate consultancy CraneSpotters. ‘If I am from Latin America and I bring $100,000 and put it in a lock box. I am not making anything. I’m actually losing because of inflation. So instead of taking money [to the bank], these Latin American investors are saying, ‘I could just put it in a condo, make a very small return and hope that once I put this money out and re-sell, I make money.’”
From Bloomberg. “Manhattan real estate agent Lisa Gustin listed a four-bedroom Tribeca loft for $7.45 million in October, expecting a quick sale. Instead, she cut the price this month by $550,000. ‘I thought for sure a foreign buyer would come in,’ said Gustin, who is still marketing the 3,800-square-foot (353-square-meter) apartmen. ‘So many new condos are coming up right now. They’ve been building them for the past few years and now they’re really hurting the resales.’”
“On the Los Angeles MLS, there were 3,198 homes with asking prices greater than $2 million at the end of 2014, up 17 percent from a year earlier, according to Partners Trust, a Beverly Hills, California-based brokerage. The number of homes priced at more than $5 million, including new and existing properties, jumped 27 percent to 546. ‘They’re shooting themselves in the foot,’ said Roger Perry, a broker-associate with Rodeo Realty in Beverly Hills. ‘Everyone’s trying to get a piece of that luxury pie.’”
“The luxury sales frenzy since 2012 was caused by a limited inventory after the global property rout all but shut down construction for almost three years, according to Leonard Steinberg, president of brokerage Urban Compass. Now that buyers have more options, deals will progress at a more ‘normal’ speed — about two to four years to sell out a building, he said. ‘Some people will get a little panicky because things are not selling as fast,’ Steinberg said. ‘But what we experienced over the past two years was not reality. That was a moment in a century.’”
The Australian. “Residential real estate agents could be forgiven for upgrading their BMWs or putting a new-model Porsche Cayenne Turbo on order after the year they’ve had. However, mining towns fared far worse, prices in the Queensland resources outpost of Mackay taking hits of nearly 38 per cent in the September quarter. Western Australia’s resources regions also suffered. There is a growing belief that there could be a cooling in the residential property market.”
“Melbourne-based buyers’ advocate David Morrell believes illegal foreign investment has driven up prices. He says, this will be a year of ‘price compression.’ The market has hit its top and is on the way down. Prices are cooling in the prestige sector and this tends to filter down to cheaper property. ‘The top end is the first to fly and it is the first to fall. You could almost pick it — after Melbourne Cup weekend it has cooled right off,’’ he says. ‘We’d be walking into places with $3m to spend and come out spending in the twos. It’s all about confidence. In the last three weeks before Christmas, it was buyers’ nirvana. My clients aren’t saying they don’t want to buy property this year, but they are saying that they aren’t going to pay high prices. Prices will really get put under the pump.’”
From AFP via Yahoo. “China’s property market is no longer ‘red hot but deep cold.’ elites gathered at the Davos forum heard Wednesday, as fears grow that a real estate slump could accentuate slowing growth in the giant Asian economy. ‘China’s urbanisation-led growth is almost coming to an end. Very little money is going into buying new land and building new buildings because so many buildings have been built,’ said Zhang Xin, chief executive and co-founder of real estate giant SOHO China. ‘Real estate has moved from red hot to deep cold. This is the cold, cold sector of the economy. No money wants to go into real estate,’ Zhang said.”
“Randy Blough of Harmony Designs, who designed Cutthroat Creek, said he realizes that the county still has many empty subdivisions left over from the housing boom.”
How many ghost subdivisions dot the U.S. landscape? There must be ststitical records of this.
“Very little money is going into buying new land and building new buildings because so many buildings have been built”
Not expecting a commodities recovery any time soon…
What percent of the Chinese economy is real estate? And could the deep freeze in that sector possibly have implications for the price of oil?
‘The slowdown of the world’s second-largest economy is far from over. In the next two to three years, China’s growth performance is almost certain to deteriorate because of the overhang of its real estate bubble, massive manufacturing overcapacity, and the lack of new growth engines. The challenge for Beijing is that these problems are all connected with each other and piecemeal solutions no longer work.’
‘Take, for example, China’s real estate bubble. Even with last year’s 4.5% drop in housing prices, the first in two decades, the unraveling of the overbuilt real estate sector has hardly begun. More than 60 million empty apartments await buyers, and the residential housing market is essentially comatose.’
Awaiting AlbqDan’s ten posts to follow with repeated assurances the high IQ Chinese central planners have it all contained.
America is the #2 economy now…
…and of course it’s all Barak HuSSSSSSSSAIN Obama’s fault.
America is the #2 economy now…
If you believe China’s numbers. Once they stop building ghost cities and they crater they won’t even be #3.
Q. How many billions of dollars did it cost to make China’s ghost cities?
Q.How many of the empty apartments in those ghost cities were bought by ordinary Chinese citizens as investments?
Q. What are those empty apartments worth now?
A. Hundreds. Most of them. Zero.
http://www.dailymail.co.uk/news/article-1339536/Ghost-towns-China-Satellite-images-cities-lying-completely-deserted.html
http://edition.cnn.com/videos/world/2015/01/19/pkg-ripley-china-ghost-cities.cnn
Having a setback after such long running expansion wouldn’t be quite as bad if it weren’t all balled up in $25Trillion of debt. That’s going to leave a mark the size of the equator.
“…and the lack of new growth engines.”
This is impossible and ridiculous for Albuquerque has assured us the new growth engine is baked into the cake. Soon we will all be switching to Chinese software.
Rinux?
Here’s another question, for Davos attendees. What percentage of the Chinese economy is based on fraud and corruption? I read a number of years ago that, in Mexico, corruption added an estimated 10% to the cost of goods and services, and often was required to ensure that public services were performed. People routinely would pay a bribe to the garbage man, for example, to guarantee trash pick-up.
“China’s property market is no longer ‘red hot but deep cold.’ elites gathered at the Davos forum heard Wednesday, as fears grow that a real estate slump could accentuate slowing growth in the giant Asian economy.”
Wow! What a surprise!
And these guys had to fly all the way to Switzerland in order to learn this?
What I gather from these guys, these “elites”, is there is no Absolute Truth until the Less-Than-Absolute Truth is anointed by somebody - a prominent somebody.
It’s only after this Truth is anointed that it becomes Absolute. You can kick this Truth around on message boards and elsewhere but, in this case, this Truth has to make its way to Davos in order to become anointed as Absolute.
Both interesting and amusing, IMO.
Let’s step back a bit. I read yesterday that there were 3 million empty units in China. But these other guys say 60 M. I distinctly remember there are 3 M units without power in Beijing alone. Somebody is in for a surprise.
And we have these people in Miami. Boy, aren’t we special? Rich people will buy our very expensive condos and let them sit there. It’s a safe deposit box. (The newest way to describe speculation). If you pay attention, it more than implied these air boxes will sell for even more! Just let them age a bit. But if there is ever the slightest notion that they won’t fetch more, the whole thing breaks down.
I’ve been doing this for years, and we still have to put up the idea that idle real estate is OK. It’s better than OK, it’s a sign of strength! And that it’s rich people; double whammy powerful. After all, they’re savvy, or they wouldn’t be rich! It’s everywhere; New York, London, Dubai, Istanbul, Vancouver, Melbourne.
And then:
‘We’d be walking into places with $3m to spend and come out spending in the twos. It’s all about confidence’
Do governmentarians believe in objective reality? Or is it only their own personal versions of reality they believe?
we’re all governmentarians now”
only way to gain relief lp.org
Time for academic egg heads to wake up to the Chinese economic meltdown?
And these guys had to fly all the way to Switzerland in order to learn this?’
Davos is the Academy awards for rich people
They are all f….ing charlatans and philistines!!!
1700 jets to davos to ponder globuLL warming
It’s the same way in every religion. The elite are not bound by the same guidelines they impose on everyone else.
‘Why falling prices are actually a really bad thing’
I’ve heard cutting off your nose makes you more attractive.
I have my latest grocery receipt in front of me. At the bottom it says, “You Saved $x.xx with our New Low Prices.”
You a##holes! You’re killing the economy!
^
Having more dollars than you know what to throw at next is positively good for the econ.
1921 usa and 1998 asia
= rapid growth
stir it like EU, Japan and it stinks
copper $2.56= the keynesbridge led to nowhere
free collitch,yo
out
Don’t blame Keynes for the unending QE problems. Keynes wouldn’t agree with it. He wrote during the Depression: “Rising output and rising incomes will suffer a setback sooner or later if the quantity of money is rigidly fixed. Some people seem to infer from this that output and income can be raised by increasing the quantity of money. But this is like trying to get fat by buying a larger belt. In the United States today your belt is plenty big enough for your belly. It is a most misleading thing to stress the quantity of money, which is only a limiting factor, rather than the volume of expenditure, which is the operative factor.”
‘Don’t blame Keynes for the unending QE problems’
You know what Keynes would have said about QE? The people will never fall for it. As a matter of fact, I’d say any economist 15-20 years ago would have said that. This is how far down the rabbit hole we’ve gone.
Keynes would say there’s an excess of supply and a shortage of demand. Increase taxes on the top, increase government spending on projects that result in jobs and good wages for the working class. Increasing aggregate demand primes the pump. But he also says when the recovery occurs, to pull back on government spending. He did not believe in perpetual deficits.
“shortage of demand”
Even a moron knows not to invoke a string of stupid words like that.
‘Why Europe’s €60b monthly bond-buying plan will save their economy’
This is how it works in the US. Bernanke/Yellen create money and buy government bonds. Then they give the interest back to the government. Like one poster said the other day, the more you borrow, the more you make. Such a scheme might have been considered ludicrous in less serious times. But this is a crisis. Stock markets are at all time lows. Unemployment is off the chart. Corporate profits have evaporated. Oh, this isn’t happening. Note how a crisis “tool” has become common.
I shall dub this miracle, Ouroboro-nomics.
What if the headline said, “The European central bank is taking 60 billion euro’s a month out of the private economy and putting it in a black hole.” The pension funds will just have to gamble on shale bonds that yield 6%.
Interesting how EU QE gets announced three days before Greek elections, no?
“Ouroboro-nomics”
What’s the conceptual distinction between this and an animal trying to survive by eating and drinking its own waste?
“Cutthroat Creek” How ironic!!! That could describe almost any overpriced subdivision!!
‘Algeria’s minister of energy says the country could boost oil production to compensate for the dramatic drop in oil prices.’
http://finance.yahoo.com/news/algeria-boost-oil-production-face-172711729.html
I think someone around here owes us an explanation:
Oil futures dropped under $47 a barrel Thursday after a weekly supply report showed an increase in crude inventories that was four times larger than Wall Street expected, sending U.S. crude stockpiles to their highest in eight decades.
The U.S. Energy Information Administration said crude inventories rose by 10.1 million barrels on the week ended Jan. 16. Analysts polled by Platts had expected an increase of 2.5 million barrels.
Moreover, at 387.9 million barrels, U.S. crude oil inventories “are at the highest level for this time of the year in at least the last 80 years,” the EIA said in the report.
http://www.marketwatch.com/story/oil-prices-slightly-lower-as-markets-get-set-for-ecb-decision-2015-01-22?siteid=yhoof2
good thing we have 20? gov agencies worrying about energy
I’m having a hard time believing that we had the capacity to hold that much oil that long ago. That’s 1935, pre-war.
Maybe, possibly, manipulatively, we have more reserve per person, or per state or some abstract, but to have this many actual gallons held in 1935 [or my bad math] is not close to believable.
I’m possibly wrong, but that’s a lot of storage tanks.
Don’t worry Dan, it’s only money. You can make it up in volume.
‘For homes in the higher price range, $400,000 or more, Oban said sales prices have not been as high as they previously were. ‘It may not be the news sellers want to hear, but it is good for our market,’
400k, in North Dakota.
ND, TX and CA. The land of overflowing crude and millions of excess empty and defaulted houses.
January 9, 2015
‘The world is swimming in oil, now that rigs in the U.S. are pumping at levels not seen in decades. A side effect of that oil glut? Storing the stuff is getting a little difficult. Now, some trading firms are sending their oil out to sea, hiring supertankers to store supplies until prices come back up, Reuters reports.’
‘Some of these supertankers have huge capacities. The T1 Oceana Ultra Large Crude Carrier can hold up to 3 million barrels of oil, Reuters reports. It’s one of the largest ships in the world. Other tankers can hold 2 million barrels.’
‘Oil and fuel stockpiles rose to record highs last week, according to government data. In the U.S., levels of crude oil, refined fuels and other kinds of petroleum hit 1.149 billion barrels. That doesn’t count the emergency supplies in the U.S. Strategic Petroleum Reserve.’
‘The ocean isn’t the only place to store oil, to be sure. Oil is also stored at facilities in Cushing, Oklahoma, coming in through pipelines from Colorado, North Dakota and Canada. Supply levels are inching up there and are expected to go higher this year, The Wall Street Journal reports. The commodity is also stored in smaller amounts in tanks around the country.’
http://www.cbsnews.com/news/where-to-store-excess-oil-at-sea/
Storing an oil glut at sea seems expensive and risky. Isn’t it cheaper and safer to store it on land?
If it’s not stupid and dangerous, nobody’s interested.
‘Limited economic growth potential and the slow pace of recovery of the global economy is only easing the pain in the global shipping industry to some degree. While the industry continues to suffer from oversupply in the freight market, the International Monetary Fund (IMF) now projects the demand side to be even less accommodative than previously assessed.’
‘Chief Shipping Analyst at BIMCO, Peter Sand, says: “The downward adjustment was expected, but it hits hard nonetheless. The global shipping industry needs much stronger support from the demand side to gradually improve the situation of too many ships chasing too few cargoes.”
‘As falling oil prices hurt Algeria’s financial equilibrium, the government is trying to reassure nervous citizens that social programmes will remain intact.’
‘Prime Minister Abdelmalek Sellal has been lashing out in recent speeches at those who do not share his optimism, accusing them of “cultivating alarmism” and “trying to sap the Algerian people’s morale”.
“Algeria has money!” he insisted a few weeks ago.’
Just took a look at my retirement income finance site and saw this…..KB home - price per share near half what it was a year ago is now near 12.00 per share where it was near 16.00 per share at the beginning of this month. Hmmm….me thinks that 2015 ain’t looking good for the production builders as stocks provide forward guidance for several months out. They anticipate the future as well as react to the present.
To wit - this as well……
“BUZZ-U.S. homebuilders: Sentiment dips in January
Reuters 1/20/2015 10:20 AM ET
Print Article
** Shares of U.S. homebuilders dip after sentiment falls modestly in January, two brokerages cut price targets
** NAHB/Wells Fargo Housing Market index falls to 57 from revised 58 in December; economists polled by Reuters forecast reading of 58
** Credit Suisse cuts price targets on D.R. Horton Inc , KB Home, PulteGroup Inc and Toll Brothers Inc
** “We are reducing our order (estimates) to incorporate meaningful slowing in Texas/oil-impacted markets with partial offsets elsewhere,” Credit Suisse analysts write in note
** Buckingham Research also cuts targets on D.R. Horton and Toll Brothers
** D.R. Horton shares down 4.3 pct at $22.74, Toll Brothers down 2.9 pct at $32.94
** Lennar Corp shares down 3.4 pct at $41.76, PulteGroup down 4.6 pct at $20.57, KB Home down 4.2 pct at $11.98″
Sheer insanity here in my market in LA - the most ridiculously-priced apartments have been going “sale pending” at a lightening pace over the last week. Four condos I was watching all went into contract within a couple of hours of each other yesterday, whereas nothing was moving in the weeks before.
It’s pure conjecture, but I’m wondering if this isn’t some kind of flight to safety for USD-denominated assets. All these properties went into contract between the time the Swiss unpegged, the ECB leaked QE, and the Euro dropped to 12 year lows. All are well under $1mil, very rentable apartments = USD-denominated income.
Anyone notice something similar in your markets in the last week?
Anyone notice something similar in your markets in the last week?
Can’t say that I have, but I live in podunky flyover.
“It’s pure conjecture, but I’m wondering if this isn’t some kind of flight to safety for USD-denominated assets.”
Flight to safety doesn’t mean buying something you can’t give away. OTOH, a corrupt Chinese official may need an E&E place in the states.
‘Oil prices have been sinking for months. And while that’s good news for most Americans, what happens to towns like Williston, N.D., that have built an entire economy around the oil industry?’
“They said things aren’t good, that oil prices are low, and they aren’t going to be drilling as many wells,” said John Roberts, who was recently laid off as a crew van driver for Schlumberger. “They gave me 24 hours to leave my house.”
‘Roberts, who was given housing by the company, is now staying on his friend’s couch. All his belongings are packed in his car. He’s not leaving Williston though, and is looking for a new job so he can continue sending money back to his wife and four kids in Liberia.’
“My prediction is we’re down to 50 rigs by June,” said Jim Arthaud, CEO of MBI Energy Services, based in nearby Belfield, N.D. “I’d say we’ll lose 20,000 jobs by June,” said Arthaud.’
‘That’s a big number for an area with a relatively small population. It could also be scary for a region that’s been growing so rapidly over the last few years, and building infrastructure to handle the boom.’
‘Private developers are adding housing units by the thousands, and the city has borrowed money to build a new high school, events center and hospital.’
And an indoor lazy river.
What happens to towns like Williston? Bust. I repeat my prediction that western North Dakota largely will be ghost towns by 2025. Or at least diminished to its 1990 state.
There’s already a very good website with photographs of North Dakota ghost towns, many of which peaked in population around 1920.
http://www.ghostsofnorthdakota.com/
‘Real estate investors are investing in riskier properties while accepting lower returns and longer periods of illiquidity or lockup periods, said speakers Wednesday at IMN’s 12th Annual Winter Forum on Real Estate Opportunity & Private Fund Investing Conference in Laguna Beach, Calif.’
‘Paul Fuhrman, principal at real estate money management firm Colony Capital, said that investors in the U.S. should bring down their return expectations. As a result, Colony executives are actively investing in debt. “We are shifting to a Europe focus,” Mr. Fuhrman said. “Seventy-seven percent of our deal flow is out of Europe.”
‘Investors are already giving second thoughts to investing in Dallas and Houston where a large part of the local economy is from the oil industry, Ms. Hourihan said. In the long-term, energy companies would stop spending and start cutting jobs, which would negatively impact the housing that has been built near areas that were booming from shale exploration such as North and South Dakota, said panelist Stephen Sotoloff, principal at real estate money management firm Walton Street Capital.’
‘And there are signs of possible trouble ahead. Ms. Hourihan and Mr. Sotoloff said giving investors pause is the amount of investment capital pouring into value-added real estate. This is especially the case since the line between value-added and opportunistic has blurred, Mr. Sotoloff said.’
Go USA