Debt, Prices, And A Self-Augmenting Spiral
It’s Friday desk clearing time for this blogger. “San Jose and San Francisco lead the nation in house flipping, according to Trulia, but the best days for making a profit may be over as price gains slow. Glenn Polf of Diversified Ventures Group in San Ramon said his group bought a house in East Oakland at auction but only broke even on the resale. ‘We overpaid. That’s what happens when you don’t get deals for a while. You get a little bit more aggressive. We were more optimistic than we should have been,’ he said.”
“‘The buyers are paying such a premium for houses, it doesn’t make sense for flippers,’ said Alisha Karandikar of CSR Real Estate Services in San Jose. ‘The acquisition costs are so high, that one little tweak in the market and they are going to lose their shirts,’ she said.”
“The Related Group is pacing itself in this new development boom so it doesn’t flood the market with too much supply – a strategy it’s employing in Miami’s wealthy Brickell area. ‘The way Related programs all its condo development is we don’t want to flood the market with too much product at once,’ said Arden Karson, Related’s project manager for Brickell Heights. ‘We are strategic in how we release inventory. It allows us to go to market with a lot of pent up demand.’”
“According to Cranespotters, about 6,400 condos are scheduled to be completed east of Interstate 95 in South Florida this year, followed by 6,700 units in 2016 and 5,000 in 2017. That’s assuming all of those projects move forward as scheduled. Related is once again the largest developer in this round of building.”
“Robb Miller and Curt Gunsbury received final approval this week to build 30 upscale condominiums in a new glass-and-concrete building in the heart of the Minneapolis Warehouse District. Final prices haven’t been set but are expected to range from $900,000 to $3 million for units with private elevators, terraces and recessed balconies. Since the 2007 housing crash, downtown developers have been focused on building thousands of high-end rental apartments. There’s growing concern, however, that too many apartments are hitting the market at the same, and some say there’s pent-up demand among those who want to buy.”
“‘I think the market is ripe for new construction,’ said B.J. LaVelle, a sales agent with the Downtown Resource Group in the North Loop.”
“A combination of plunging oil prices and falling interest rates risks pushing Norway’s housing market beyond its breaking point, the financial regulator said. ‘Lower interest rates and strong competition in the mortgage lending market could contribute to continued rapid growth in debt and house prices,’ Morten Baltzersen, head of Norway’s Financial Supervisory Authority, said. That could drive the housing market into a ’self-augmenting spiral,’ he said.”
“I read a stat in the FT yesterday that absolutely blew my mind. There are now 54,000 homes planned or under construction ‘in the priciest areas of the capital.’ Most will cost ‘close to or above the £1m mark’ and most are two-bed flats. Here’s the mind-blowing bit: in the same areas last year, just 3,900 homes were sold for more than £1m. That would put potential supply at almost 14 times annual demand. Welcome to the train crash about to happen that is high-end, new-build property in London.”
“So who’s buying? Well, as Charlie Ellingworth of Property Vision puts it, many new builds are marketed at ‘unsophisticated’ foreign investors. Sorry if I’ve seemed a bit London-centric, but this is really no different to the pre-2008 buy-to-let bubbles we saw in Manchester, Birmingham and Leeds. For the most part, those ‘trendy’ city centre tower block flats weren’t bought by locals, but from investors elsewhere in the UK. The same happened in Dubai, Spain and even parts of the US. Locals weren’t buying, foreign investors were. They didn’t have the ‘sophisticated’ knowledge that locals do – so they bought the BS. And when the crash came, they paid the price.”
“With more residential units to be completed in the next two years, the rental scene has become a ‘tenants’ market,’ said experts. Horizon Real Estates’ key executive officer Lena Low said that, while nine in 10 of rental inquiries she received used to be for two-year leases, half are now asking for one-year leases instead. ‘They say prices may go further south. Or maybe they can upgrade to a bigger place for the same price. They are very shrewd,’ said Ms Low.”
“The softer rental market is also attracting more Singaporeans, said agents. ‘When the resale market started to decline (in 2013), some sold off their place before prices crashed further,’ said DWG agent Felix Mui. ‘They want to purchase a new home, but opt to rent first and monitor the market as resale prices are falling.’”
“Investors dominated at Ray White’s mega-auction. Ray White Surfers Paradise Group chief executive Andrew Bell said investors dominated this year with a strong showing from Melbourne and Sydney buyers. The buyers of a two-bedroom unit in the Soul building at Surfers Paradise got an absolute bargain, purchasing the apartment for $905,000, $795,000 less than it last sold for in 2012. ‘Selling close to 60 properties in the space of six hours is a big statement for the state of the local property market,’ he said.”
“A little over a year ago, a Chinese credit agency downgraded a government-owned financing company in this dusty industrial city. Default—nearly unheard-of in China on government bonds—was a possibility, it said. But during discussions with lenders, city officials made sure Wuhan Urban Construction Investment & Development Corp. could keep borrowing. Roughly 8,000 local-government-financing firms across China are responsible for the rapid development of cities but also the glut of housing, industrial parks and other projects economists and officials say threaten China’s economic health.”
“Roughly 8,000 local-government-financing firms across China are responsible for the rapid development of cities but also the glut of housing, industrial parks and other projects economists and officials say threaten China’s economic health. ‘If you’re building projects that can’t cover their cost, you’re spending money on keeping them going,’ says Fraser Howie, co-author of ‘Red Capitalism,’ a study of China’s financial system. ‘Some hospital somewhere isn’t being built; some small company isn’t getting money.’”
“Early in 2014, China’s premier and central-bank officials made clear that Beijing might allow some defaults, to chasten lenders and reduce credit growth. But as China’s economic growth fell below Beijing’s 7.5% target, willingness to allow defaults evaporated, say Chinese officials and economists. ‘It’s the Japan syndrome,’ says Fred Hu, chairman of Primavera Capital, a Beijing private-equity firm. ‘You keep pushing off problems. That creates a crisis, but a slow-motion crisis.’”
“Central bankers are increasingly viewed as wizards capable of rescuing countries from the doldrums by printing money to manage interest rates and control currencies. But the monetary magic is unleashing unintended consequences on the global economy, financial markets and ordinary people. The action by the Swiss central bank, which came in mid-January, was one of the biggest surprises.”
“Many Poles who took out loans were the first in their family to do so. Katarzyna Szczerbowska said she was advised by a financial consultant when she bought a two-story apartment in 2008. She says she is now so far behind on her payments, and feels so trapped by her accumulating debts, that she has contemplated suicide. Because Poland also had a housing bubble that collapsed during the crisis, many who borrowed in francs are now underwater. ‘Everybody kept saying that the crisis in the States was very local — nobody knew why — but it was the U.S. that had problems,’ Ms. Szczerbowska said. ‘People had to be idiots to think the crisis wouldn’t spread. Unfortunately, I was the idiot.’”
“Massachusetts has among the lowest poverty rates, highest educational attainment, and best access to health care in the country. But high housing costs continue to hurt economic opportunity in the state, which has one of the lowest rates of homeownership in the nation. The report by the Corporation for Enterprise Development, ranked Massachusetts 48th of 50 states in housing affordability, with only California and Hawaii having higher housing costs. Median home values of $327,200 in Massachusetts were nearly five times higher than the state’s median income of about $66,768.”
“‘The lack of affordability is keeping people from being homeowners,’ said Jennifer Medina, a research contributor to the report. ‘It’s also putting many homeowners at risk of being delinquent on their mortgage loans.’”
“Margaret Miley, executive director of Midas, said even in areas where Massachusetts scored better than the nation as a whole, the data painted a troubling picture. For example, about 47 percent of Massachusetts consumers had subprime credit scores, or below 700, making them ineligible for credit card and home loans at favorable interest rates. For many, Miley added, subprime credit can affect job prospects, as some employers conduct credit checks on prospective employees.”
“Miley added that 35 percent of poor households in the state have less than three months of savings. ‘It’s surprising in such a high-income state,’ she said, ‘that people are that fragile.’”
‘The Northern Territory’s last operating iron ore mine has ground to a halt, wrapping up what has been a disastrous six months for the sector in the Top End.’
‘Ray Wooldridge has lived in the mining town of Pine Creek since 1991 and has seen plenty of ups and downs. He said the mothballing of Territory Iron’s Frances Creek project has hit the town hard. “If you take a workforce of 300 people out of a town of about 600, it has a dramatic effect,” he said. “Most of the people [who worked at the mine] have gone, there’s been fire sales and those who had housing or were renting have sold up and moved on. There’s quite a few empty houses in town now.”
“If you take a workforce of 300 people out of a town of about 600, it has a dramatic effect,” he said. “Most of the people [who worked at the mine] have gone, there’s been fire sales and those who had housing or were renting have sold up and moved on. There’s quite a few empty houses in town now.”
“If you take a workforce of 300 people out of a town of about 600″ … you will eventually end up with this:
https://www.google.com/search?q=bodie&biw=1813&bih=857&source=lnms&tbm=isch&sa=X&ei=p4PLVJjuDMHvoATCyICoAg&ved=0CAYQ_AUoAQ&dpr=0.75
“There’s quite a few empty houses in town now.”
Stay tuned, there’s more to come.
Bodie was a town of 10,000.
… and then … something happened.
Poof!
Hammered by a devastating commodities crash?
‘The price of an upmarket London home fell by more than 4pc in the last three months of 2014 as political uncertainty and stamp duty rises collided. Central London homes priced around the £4m mark, deemed to be the threshold for luxury, were hit hardest by George Osborne’s stamp duty overhaul, falling by 4.2pc in Q4 and 1.3pc over course of 2014, according to Savills.’
“It will take time for the effect of the stamp duty changes on prices to become clear, early signs are that the additional cost is predominantly being borne by sellers through price adjustments at a level similar to the extra stamp duty,” said Lucian Cook, head of UK residential research at Savills. “Prices were easing before the Autumn Statement, so for the very top end of the market the stamp duty rise coincided with some of the froth coming off pricing earlier in the quarter.”
‘An immense number of non-landed condominium units are standing empty across the island. Latest data from the Urban Redevelopment Authority (URA) showed that 24,062 completed private condo units stood empty across Singapore in the fourth quarter, up from 21,569 empty units in the third quarter.’
‘A total of 308,814 units are available islandwide as of the fourth quarter, up 2.1% from 302,510 units in the third quarter. “As the bulk of new completions are in the non-landed segment, its vacancy rate rose sharply from 8.2 per cent in 3Q14 to 9.1 per cent in the fourth quarter. If it trends towards 10 per cent, it would reach the high vacancies recorded during the 2004/05 period when rents were depressed,” JLL stated in a report.’
“The increased supply of completed units is exacerbating the softening in the leasing market, with the rental index falling by 1 per cent in 4Q14 and by 3 per cent for the whole year. Rents in CCR have fallen by 3.7 per cent in 2014, more than the other segments as the higher rents in CCR become less affordable to tenants with tighter housing budgets,” the report added.’
non-landed condominium units
F-ing floating boxes of air.
(altho, in Singapore there aren’t many options.)
FFBOAs? Oxy coined a new term! Yeah!
Youre it Jingle_Fraud.
‘Here are a few of the top bad behaviors the real estate agents we surveyed say they’ve witnessed, all of which breach the ethical code of the National Association of Realtors.’
“I sometimes steer clients toward houses that will bring me a higher commission, rather than the best house for them.”
“You can’t believe everything I say about myself in my marketing material.”
“I might persuade a client to sell a home for less than it’s worth.” This one seems counterintuitive, but “some companies push their people to sell, sell, sell, so they’ll try to make sales quickly, even if it means they make less in commissions,” says Gianni Rosa, a Boston-area real estate agent.’
“The school system isn’t as good as I say it is.”
“I might encourage buyers to make an offer that is too high.”
“I sometimes reveal information about the lowest price a seller will take or a potential buyer’s top price.”
“I might not disclose problems with the neighborhood to potential buyers.”
‘Sales commissions at the estate agents Foxtons slid by more than a quarter at the end of last year in the latest sign that the capital’s runaway housing market is rapidly cooling.’
‘The agency warned of a fall in annual profits in October after a slowdown in the London market since August, but the speed of the decline surprised the City. The chain charges sales commission of 2.5% with its average sale price put at £545,000 last year.’
‘Central London faces a glut of expensive new homes, with about 54,000 being built or planned, according to research from Property Vision, Lonres and Dataloft. Most of them will be priced around £1m but in the areas where the developments are sited just 3,900 homes worth more than £1m were sold last year, the study said.’
realtors are liars
“I might not disclose problems with the neighborhood to potential buyers.”
Because they could get sued - as that could be racist!
all of which breach the ethical code of the National Association of Realtors ??
Ease of entry into the business is a big part of the problem IMO…If I were to look for a Realtor here are a few things that I would be looking for and asking the agent to demonstrate it;
Have you been a full time agent for at least the past 10 years…
How many transactions have you done in the past three years…
Are you a buyers agent or a listing agent…In which one is the majority of your business…
What type of continuing education have you done with certifications that they were completed…
What depth of knowledge do you have in residential construction or the ability to interpret inspection reports and disclosures that may effect the property
Do you have any infractions with your local association or your state board
If I engage with you, will I be mostly communicating directly with you or will I be dealing with a team member of yours…
I suspect I could think of a bit more but lets leave it there…Personally, I would be looking for an agent that did not do a lot of volume and did not have a “team”…I would want the personal attention and focus from the agent…
The NAR has an ethical code? I don’t know if this ever was a totally honest industry, but just in general, we’ve managed to monetize trust and sell it off, which only can happen once.
My favorite was from 2007-08, when my wife and I were looking for a house to rent. A local realty firm had rental listings, but the realtor, rather than focusing on the place we wanted to look at, took us to another house that he happened to own. It was available! What a coincidence.
I have been an agent in Long Beach, CA for over 25 years and I can confirm there is no code of ethics. It’s a sale at any cost. Agents will steal your buyers by offering kickbacks , make their listings imposible to show, have a sign up weeks before it’s on the mls. If it’s not a dirty deal it’s not a good deal. the agents with “Teams” are the worse.
Hey toast, you were at the Pasadena meet up years ago, right? If so, it’s really great seeing you here! I still have your card. Did you see the guy outside of LA got the Joshua tree treatment from DR Horton in yesterdays post? Anyway, we’ll have to have another get together.
“I might encourage buyers to make an offer that is too high.”
Most Realtors are sociopaths who were too stupid to rise to power in politics or the corporate world. Not a problem though as the NAR provides the perfect home for these parasites who prey on their hosts with a kind of animal cunning.
Real estate agents are paid a percentage of the sale price. Thus, their interests are aligned with the seller, not the buyer. So, the concept of the “buyer’s agent” in any form, is highly deceptive. None of the agents have an interest in a lower price.
I look at it as “tag-teaming” a buyer.
I don’t quite agree with you there. A real estate agent actually has an interest in a price on which the buyer and seller can agree. If he gets there by convincing the seller to come down or the buyer to go up matters less than that he closes a sale and earns a commission without spending too much of his time and energy in the process. (”Coffee is for closers.”)
‘The median sales price for all properties in the region rose 4.8 percent in the fourth quarter of 2014, but dropped in Fauquier, according to a release from the Greater Piedmont Area Association of Realtors.’
‘The median sold price for detached houses for Q4 was $349,450, representing a decrease of 0.4 percent compared to last quarter and a decrease of 5.3 percent from Q4 2013. There was a 9.8 percent year-over-year decrease in sales activity with 194 closed sales in Q4. There were 394 active listings at the end of the quarter, representing a 13.5 percent increase in supply compared to the same time last year.’
‘The Average Sold to Original List Price ratio of 93.3 percent was less than the 95.6 percent level of the preceding quarter, indicating an increase in the negotiating power of the buyer.’
‘The median sold price for attached/townhouse properties for Q4 was $226,250, representing a decrease of 9.5 percent compared to last quarter and a decrease of 0.8 percent from Q4 2013. There was a 47.4 percent year-over-year decrease in sales activity with 10 closed sales in Q4. There were 15 active listings at the end of the quarter, representing an 87.5 percent increase in supply compared to the same time last year.’
‘It was bound to happen. Home prices weren’t going to go up forever, and now three of the four major homebuilders that have made announcements in recent weeks have issued warnings that didn’t sit very well on Wall Street.’
‘Things are getting iffy, and it could get even worse. Both KB Home and Lennar warned two weeks ago of gross profit margins contracting, and that finds Wall Street pros shaving their profit projections. The same analysts that, on average, were holding out for a KB Home profit of $1.70 a share this year are now settling for $1.27 a share.’
‘New residential construction in this country rose to its highest level since 2007, with homebuilder confidence in January at its highest point in nearly a decade. Lost in the euphoria is the nugget that it’s not really the middle class that’s snapping up homes. Mortgage originations came out to roughly $1.12 trillion last year, according to the Mortgage Bankers Association. That’s 39 percent below 2013’s production, and the lowest tally since 1997. This means that cash buyers — primarily the wealthy and international investors — are the ones who have been driving the demand lately.’
‘When you factor in other emerging trends — including the popularity of renting versus buying, a glut of available homes, and median sale prices stabilizing — it’s a pretty risky time to snap up the homebuilders. The past few years were great, but clearly the market’s correcting now.’
‘It was bound to happen. Home prices weren’t going to go up forever, and now three of the four major homebuilders that have made announcements in recent weeks have issued warnings that didn’t sit very well on Wall Street.’
Announcement: Cr8tr!
‘I now wonder if, for three key reasons, this oil crash could be more painful for Alberta than 2008-09 was. First, while the oil price drop to date has been smaller than the drop in the lead-in to the Great Recession, I think the drop from expectations has been larger.’
‘Second, this time, we had no run-up of any importance before the fall, so corporate balance sheets and government budgets won’t have the luxury of a buffer.’
‘Finally, I think the nature of both the crash and the circumstances in Alberta’s oil sands sector before and during the crash should give us pause. Let me go through each in turn.’
‘Comerica Bank’s Texas Economic Activity Index dipped in November due to low oil prices, ending a seven straight months of gains. “We expect to see more evidence of the economic drag on Texas from lower oil prices in the months ahead,” said Robert A. Dye, chief economist for Dallas-based Comerica Bank. “We expect to see a significant reduction in oil field activity in 2015. This will lead to more layoffs in the energy sector … and reduced local demand for non-energy industries.”
‘Already, several large companies have announced nearly 20,000 combined layoffs in recent weeks. The latest was United States Steel Corp., which on Monday said it will lay off nearly 2,000 employees at three locations, including Lone Star in East Texas, because of the softer energy market.’
‘The index consists of eight seasonally adjusted components: nonfarm payroll employment, exports, hotel occupancy rates, continuing claims for unemployment insurance, housing starts, sales tax revenue, home prices and the Baker Hughes rotary rig count.’
‘When some 30,000 new condos are built in a county within two years, it begs the question if there are enough people to buy them. But residential agents and industry watchers say they have confidence the supply will eventually be absorbed.’
‘If there’s a shortage of prospective buyers, investment firms will probably purchase some of the condos and turn them into rentals, said Javier Gonzalez, broker with Re/Max Advance Realty. He anticipates buyers coming from petrol countries in trouble but, with the pound, euro and ruble dropping, said a number of people who already own condos might want to sell their properties because they need the money.’
‘A large number of people continue to move to Miami, said Cecilia Samaja, broker/agent for One Sotheby’s International Realty. “All my colleagues remark on how many Venezuelans and Brazilians are spending their money here at a rapid pace,” she said. “For the past five or six months, the market has been crazy and contracts are coming in at a rapid pace.”
‘However, Ms. Samaja said, no one can be sure whether all the condos coming online at once will sell quickly and well. “The real estate market is affected by whatever happens in the world,” she said, adding there are any number of events we can’t predict such as war, impact of severe weather disturbances or economic catastrophes.’
‘In Coral Gables, where she lives, Ms. Samaja said there won’t be any problems because there’s very little new inventory in the residential market. “Everything depends on location,” she said. “You may see some problems where there’s a lot of new product coming, like in Miami Beach, Brickell, downtown and Sunny Isles – the areas that are all being flooded at the same time.”
‘About 800 people move to Florida every day and Miami-Dade gets a fourth of that migration, said Ron Shuffield, president and CEO of EWM Realty International. If one takes 200 and multiplies it by 365, that’s 73,000 people arriving in the county annually. “We’re definitely growing people,” he said. “We may, however, need a few months to catch up with the delivery of the new inventory.”
‘Brickell, for example, has higher numbers for months of supply so Mr. Shuffield is watching that carefully. He said ZIP codes 33129, 33130 and 33131 have 1,632 apartments, condos and townhouses on the market right now. Mr. Shuffield predicted “values will level off until we catch up with the delivery of new units.”
How many people leave Miami-Dade annually? I should know this but don’t. What you do see forming are enclaves of people leaving troubled areas of Latin America. Osceola County and Orlando have had a huge influx of Puerto Ricans, and communities in extreme western Broward and Miami-Dade are increasingly Venezuelan. And I get that; if I had any assets in Venezuela, I would be expatriating them in a hurry, real estate bubble or not. You can lose half your money, or you can lose it all.
‘The buyers are paying such a premium for houses, it doesn’t make sense for flippers,’ said Alisha Karandikar of CSR Real Estate Services in San Jose. ‘The acquisition costs are so high, that one little tweak in the market and they are going to lose their shirts’
You don’t say. Funny how Tokyo was overbuilt. Now London, New York, Miami. It’s just a matter of time. But the surprise in their words is always priceless.
‘The buyers of a two-bedroom unit in the Soul building at Surfers Paradise got an absolute bargain, purchasing the apartment for $905,000, $795,000 less than it last sold for in 2012. ‘Selling close to 60 properties in the space of six hours is a big statement for the state of the local property market,’ he said.’
When you’re handing out a$$ poundings like that, it doesn’t take long.
‘Everybody kept saying that the crisis in the States was very local — nobody knew why — but it was the U.S. that had problems,’ Ms. Szczerbowska said. ‘People had to be idiots to think the crisis wouldn’t spread. Unfortunately, I was the idiot.’
I’ve been to Surfer’s Paradise; stupidly, much of the high-rise construction throws the beach into shade. Oops!
That brings up another point about dense high-rise construction: you may have a view now, which you paid handsomely for, but there’s no guarantee that you’ll have a view in five years.
Here is what I see:
Stock markets … DOWN
US Treasury … UP
Rest of Bond Market … FLAT or DOWN
Low end and middle class single family housing … DOWN
High end real estate … UP SLIGHT
In my opinion, only two places to invest … US Treasury or High end real estate. Everything else is a dud.
One more …
Commodities … DOWN
Precious Metals … Hard to tell
‘Shake Shake IPO is hot but can it match Chipotle?’
‘Growth-hungry investors are lining up for shares of burger chain Shake Shack Inc, whose initial public offering will be priced after the U.S. stock market closes on Thursday.’
‘Shake Shack debuts two months after Habit Restaurants, known for its charburgers, floated its shares. Habit’s shares have risen more than 80 percent from their IPO price since their debut on Nov. 20.’
‘Customers in Manhattan and Chicago often wait in long lines to get a taste of its rich milkshakes and hormone- and antibiotic-free burgers. The chain attracts a relatively affluent clientele, which spends roughly $30 for a meal for two - considerably more than diners spend at struggling fast-food giant McDonald’s. “It’s a cult,” said Bob Goldin, an executive vice president at consulting firm Technomic.’
‘Shake Shack’s challenge, Goldin and other experts said, is not to expand too quickly. Ubiquity, they said, often works against cult chains.’
With this country’s obvious trajectory, it surprises me that any “growth-hungry investor” would see those restaurants, or any business that caters to the affluent, as an opportunity.
Stock markets … DOWN ??
You mean heading down in the future ?? Because the market bounced off its all time high just a short time ago…
Low end and middle class single family housing … DOWN ??
Got to put a location on it if your trying to be accurate…Real estate and housing specific, has always and will always be priced in a local or regional way….Boise ID is a much different market than Miami…
All shilling is local.
‘The report by the Corporation for Enterprise Development, ranked Massachusetts 48th of 50 states in housing affordability, with only California and Hawaii having higher housing costs.’
California List Prices(/sqft) Sink 3% In 2014
http://www.zillow.com/ca/home-values/
With MA being a little further ahead in the process;
Massachussetts Sale Prices Dive 5% Statewide In 2014
http://www.zillow.com/ma/home-values/
New York State Rental Rates(list) Plunge 15% In 2014
http://www.zillow.com/ny/home-values/
“San Jose and San Francisco lead the nation in house flipping, according to Trulia, but the best days for making a profit may be over as price gains slow.
San Francisco List Prices Plunge 30% In 2014
http://www.zillow.com/ca/home-values/
I don’t see the 30% figure in the referenced link.
What I did see was that listing prices can be seasonal. Furthermore, it is a tactic to price a property low to generate interest and in turn have the would-be buyers compete with themselves.
You’re not looking.
Enjoy the price declines.
‘Even an expected pick up in the country’s economic growth in fiscal year 2016, wouldn’t be enough to prod the common man to buy is dream home due to persistently high prices of residential properties, rating agency, India ratings said.
Home prices are unlikely to correct from the current higher levels in 2015-2016 even as inventories are being piled up with investors pumping in money raised through debt and other hybrid instruments, India ratings, formerly known as Fitch India, said.’
‘Property consultant Knight Frank added to the gloom on Thursday when it pointed out in a report that residential launches and sales were at a three-year low during the December quarter across the six tier-I cities— NCR, Mumbai, Kolkata, Bangalore, Chennai and Hyderabad.’
‘As of September, the inventory levels in various cities in the country had hit an all-time high. According to this Firstpost article, Mumbai had the highest inventory of 50 months, followed by Gurgaon at 30 months, Hyderabad at 27 months, Bangalore at 22 months, Chennai at 20 months and Pune at 21 months.’
‘The increase in inventory level is because of the falling demand and sales in the sector as genuine buyers are deterred because of logic-defying high prices. For instance, in Mumbai a two-bedroom flat is priced anywhere above Rs 1.2 crore even in distant suburbs like Thane.’
‘If the companies continue to build on inventory levels it is likely to result in deterioration of their credit metrics further next year, the rate agency has warned, keeping a negative to stable outlook on the real estate sector for the next year. Their EBITDA margins could become stable during FY16, as commodity prices are likely to be under control. “However, some margin erosion may be seen due to overheads, if sales do not increase,” it said.’
‘Margins declined marginally during 2014 due to the companies’ inability to pass on increases in input prices to end-customers and falling sales. it said. Another concern is increased use of debt/hybrid instruments by investors, as this only shifts the funding gap to the redemption date with high funding costs.’
Portland, OR Sale Prices Plunge 17% YoY; Losses Accelerate Rapidly In Q4
http://www.zillow.com/portland-or-97210/home-values/
Median list price Y-o-Y. laughings out loud.
Southlake(Dallas), TX Sale Prices Plummet 16% In 2014
http://www.zillow.com/southlake-tx/home-values/
Where’s Colorado
better buy now
http://finance.yahoo.com/news/housing-market-where-arent-enough-161027563.html
And if one looks at the listings as I do on a regular basis out there in Region VIII - the quality of inventory available is ummm……in a word - pathetic for the price.
Denver Area Sale Prices Crater 15% YoY; Plunge 16% MoM
http://www.zillow.com/denver-co-80220/home-values/
why would even a journo risk being a laughing stock w a pump article on RE. At this point the direction is obvious.
“So who’s buying? Well, as Charlie Ellingworth of Property Vision puts it, many new builds are marketed at ‘unsophisticated’ foreign investors. Sorry if I’ve seemed a bit London-centric, but this is really no different to the pre-2008 buy-to-let bubbles we saw in Manchester, Birmingham and Leeds. For the most part, those ‘trendy’ city centre tower block flats weren’t bought by locals, but from investors elsewhere in the UK. The same happened in Dubai, Spain and even parts of the US. Locals weren’t buying, foreign investors were. They didn’t have the ‘sophisticated’ knowledge that locals do – so they bought the BS. And when the crash came, they paid the price.”
It’s really no different than the Coastal California bubble, RIGHT NOW.
“Roughly 8,000 local-government-financing firms across China are responsible for the rapid development of cities but also the glut of housing, industrial parks and other projects economists and officials say threaten China’s economic health. ‘If you’re building projects that can’t cover their cost, you’re spending money on keeping them going,’ says Fraser Howie, co-author of ‘Red Capitalism,’ a study of China’s financial system. ‘Some hospital somewhere isn’t being built; some small company isn’t getting money.’”
Looking on the bright side of the picture, those 8000 local government financing firms are helping China maintain 7.5% GDP growth in perpetuity.
Or is it 7.4%? Dan? Michael?
KEYYYYYYYYYYYYYYYYYRAAAAAAAAAAAAAAAAAAASH!
That’s the sound of housing prices crashing through 2010 price levels.
‘People had to be idiots to think the crisis wouldn’t spread. Unfortunately, I was the idiot.’”
If anybody should get a bailout, it should be her. The first shred of self awareness I’ve seen in this context. She learned her f**king lesson.
“\’ they are going to lose their shirts,’’
If you bought a house in the last 15 years, you already lost your shirt, pants, drawers and family jewels.
The thought of owning a $1+ million investment condo in the heart of the Minneapolis Warehouse District is enough to make me drool!
I totally agree about the flipping market. We keep trying to be more aggressive on deals because we just haven’t had one in a while. I think the secret to making it in these times is sticking to your guns and cutting overhead. The flip market has been real tough the past 8 months.
Dead in the water and tall tales.
For some reason, this came up in a current search this morning. The wizards of the intertubes must want it reposted:
‘29 Sep 2008 - 2:14 PM UPDATED 23 Aug 2013 - 11:52 AM’
‘US politicians face a pivotal vote today on a revised $US700 billion ($A845 billion) bailout plan for struggling Wall Street banks designed to stem a grave financial crisis and free up frozen credit markets. The rescue package, a compromise forged in high-stakes negotiations between rival party leaders in Congress and White House officials over the weekend, is due for a vote in the House of Representatives today with the US and global financial markets anxiously awaiting the outcome.’
‘The plan would mark the largest government economic intervention since the Great Depression of the 1930s, and is designed to shore up a troubled economy suffering from a burst US housing bubble that has ravaged the global banking system and dried up credit. The proposal grants the Treasury secretary authority to buy up toxic mortgage-related assets in troubled banks in hopes of easing the flow of credit and reviving the moribund housing market.’
‘President George W Bush praised the draft legislation, saying the rescue was needed “to help protect our economy against a system-wide breakdown”.
‘Democratic politicians portrayed the revised plan, that ran more than 100 pages, as much improved from the three-page version sent days earlier by the White House, saying it included stricter oversight and caps on executive pay packages.’
“Working in a bipartisan way, we sent a message to Wall Street. The party is over,” said House Speaker Nancy Pelosi. “The era of golden parachutes for high flying Wall Street operators is over. No longer will the US taxpayer bail out the recklessness of Wall Street.”
Report: Fed Committed $7.77 Trillion To Rescue Banks
November 28, 2011 1:08 PM ET
Eyder Peralta
Bloomberg ran quite a story, yesterday. It stems from a Freedom of Information Act Request that yielded the details of previously secret borrowing from the federal government to the biggest banks.
The bottom line, reports Bloomberg, by March of 2009, the Fed had committed $7.77 trillion “to rescuing the financial system, more than half the value of everything produced in the U.S. that year.” The lending began in August of 2007.
…
Was it $7,000 billion or $700 billion?
What’s a decimal place between friends…
If I make a trillion dollar overnight loan to a banker on Jan 1, and then roll it over every night until Dec 31st, have a committed $1T, or $365T?
I question the way this data was interpreted.
Are you suggesting they counted multiplier effects as though they were part of the initial bailout total?
‘The Anti-Eviction Mapping Project has documented the latest American Community Study (ACS) data visualizing the staggering number of homes that are unoccupied on a consistent basis in San Francisco, CA: Each dot represents 10 homes, arranged by census tract.’
‘2012 ACS data indicates there are 30,057 vacant homes in San Francisco. A common residents per unit calculation is 2.8 persons, meaning that the city of San Francisco has empty homes capable of housing more than 84,000 more people than it does.’
‘This data visualization dispels the myth that more housing development in San Francisco is necessary. We also must remember that this data exists within the greater subtext of mass evictions in this city.’
And we already know that’s understated.
What is happening with these “consistent” vacant units? Are they for rent? Are they in the foreclosure process? Who owns them?
My partner used to have an apartment in SF where he would spend some weekends (the way people “keep” an apartment in NY even if they live in Paris)…is that considered a “consistent” vacant unit?
If so, a large number of those units will never become available on the open market and are completely irrelevant if you are trying to determine overall supply for people who want to live in the city.
Far more interesting (I think) is the “zombie” foreclosure data. Where they count vacant homes that are in the foreclosure process. These will absolutely become available at some point to the general market once the foreclosure has been completed. A vacant vacation home in SF may never become available.
“Vacant” per the ACS includes:
For rent
Rented, not occupied
For sale only
Sold, not occupied
For seasonal, recreational, or occasional use
For migrant workers
Other vacant
You will never get this number to 0. To say that all of these can be made available for residents is to be expected from a no-growth, anti-eviction group.
And you’ll never hide 60,000 vacant houses in the city of San Francisco Rental_Fraud.
Backpedal some more.
San Francisco, CA List Prices Crater 14% YoY On Billowing Inventory
http://www.zillow.com/san-francisco-ca-94114/home-values/
Albuquerque: 3-year-old accidentally shoots father and pregnant woman in their hotel room. GSW victims hospitalized, 3 children and 2 pit bulls taken into custody.
And the 3-year-old had a gun because…?