It’s Tulipomania All Over Again
It’s Friday desk clearing time for this blogger. “Erica Luna’s commute eats almost four hours out of her workday, and means no messing around with the snooze button at 4 a.m. She’s a San Francisco Bay area exurbanite, one of the legions trading convenience for a mortgage on the fringes of the most expensive U.S. housing market. Erica and her husband, Jesse Moncayo, paid $435,000 for a Lennar Corp. three-bedroom within walking distance of a new school. ‘You have to go to the valley to see the prices go down,’ Moncayo, 34, said on the train home from his job. ‘Even if there’s another housing crash, we have good enough jobs that we can wait it out.’”
“Sonoma County’s median home sale price hit $550,000 in June, as tight supplies and ongoing demand have helped increase the median for four straight years. And correct pricing has become more important today than two years ago when buyers sharply bid up the values of properties. Stephen Liebling, manager of the Coldwell Banker office in Sebastopol, said he is cautioning sellers against setting the price too high for their homes. ‘They really need to be priced at or below market to generate interest, even with the constrained inventory,’ he said.”
“Several agents and brokers said they’ve been surprised this year to see some homes garner offers for far more than the expected value, while other properties with seemingly fair prices failed to draw a single bidder. ‘It is a strange pricing market,’ said Trish McCall, an agent with Keller Williams in Santa Rosa.”
“Triangle home sales picked up in the second quarter, surging 22 percent in June alone, as buyers jockeyed for a dwindling supply of listings. One thing that isn’t going away despite the hot market is the payment of financial concessions by sellers. Financial concessions, such as paying a buyer’s closing costs, were paid on 65 percent of all the existing homes that sold in the second quarter, up from 48 percent during the same period last year. Stacey Anfindsen, a Cary appraiser, said the continuing payment of concessions remains one of the most baffling aspects of the local housing recovery.”
“‘With a two-month supply of housing, it’s economically illogical that somebody should have to incentivize someone to buy something when there’s a shortage of something,’ he said.”
“The lower Hudson Valley’s residential real estate market continues to show good health and ’sustainability’ through the first half of 2015, according to the Hudson Gateway Association of Realtors. At Houlihan Lawrence, a leading brokerage in the luxury homes market, brokers have seen a 21 percent jump in Westchester’s inventory of homes priced at more than $2 million. Pending sales in the luxury market have declined 8 percent, Houlihan Lawrence reported. Brothers Stephen Meyers, CEO of Houlihan Lawrence and Chris Meyers, said demand from buyers is especially weak in the $4 million-plus segment of the market. ‘There is plenty of competition, and buyers have a wide selection to choose from,’ they wrote. ‘It may be time for sellers to re-think the value proposition offered by their property.’”
“Fluctuations in the prices of all three major housing types across Saskatoon are no cause for alarm, according to a Royal LePage broker. ‘On the heels of several years where we saw appreciation greater than the level of income, we’re finally seeing some flattening of prices,’ said Norm Fisher, owner at Royal LePage Vidorra. ‘We typically have been seeing four per cent increases on average over the last five or six years. That’s just not happening (now).’”
“According to Fipe-Zap, for the thirteenth month in a row rental prices across Brazil rose well below the inflation rate, and in June rental rates actually went down. It is the first time this has happened since 2008 when the Fipe-Zap index was created, marking a turn-around from the rampant increases seen in the real estate boom years of 2009-2014. Rio de Janeiro had the largest decrease of 4.65 percent in listing prices, and when adding inflation to that it means property owners looking for rental income will not enjoy the same profit margins they became accustomed to. For renters, the trend means housing is becoming more affordable.”
“Rents for homes in prime areas of Dubai fell in the second quarter of this year as residents sought out more affordable property. Residential sale prices also dropped by 2 per cent on the previous quarter, mirroring a similar decline in the first three months of the year. Again, the biggest drops in value were in prime areas. Asteco’s managing director John Stevens said that with many more units due to be handed over ‘the 2 per cent quarter-on-quarter decline is not going to be a temporary blip, with more pressure on owners to review their selling price still to come.’ Asteco also said there was an emerging trend by a ‘limited number of purchasers’ offloading off-plan properties at a discount as they get close to completion and final payments become due.”
“A survey of 120 developers in Delhi and National Capital Region has revealed some scary facts about one of the most sought after residential property markets in the country. Demand for properties in Delhi-NCR region has fallen by 30-35 per cent over the last year. The ticket price of 3-bedroom, 2-bedroom and single-room flats has corrected by 30 per cent in Noida, 25 per cent in Gurgaon and 15 per cent in some key areas of Delhi. There are no takers for 1.70 lakh flats in key markets of Delhi, Noida and Gurgaon. New launches have dropped by 30-35 per cent because property developers are hard-pressed for cash.”
“‘The sentiment in the housing market is really at a low key,’ said DS Rawat, secretary general of Assocham. ‘One of the issues afflicting the sentiment is the high level of debt with the real estate developers and their poor valuations in the stock markets, limiting their avenues for repair of the balance sheets.’”
“Sydney recorded its lowest clearance rate of the year at 80 per cent on the weekend, according to Domain’s latest auction data, which is the first sign of a slowing market. ‘Over the last six weeks we have seen five drops and the trend is clearly down,’ Domain’s senior economist Andrew Wilson said. ‘Not only is the clearance rate falling, it’s starting to converge with the rates we had the same time last year. If we see the trend continue we may see the clearance rate fall below where they were a year ago and that would be a very interesting reflection of where we are in the market.’”
“In official housing lending figures, investors showed themselves to be the key borrowers for homes purchases. Australia’s biggest wholesale mortgage broker AFG reports a large decline in investor property loans over the month of May giving the clearest signal yet that Sydney’s housing market is starting to cool.”
“The roller-coaster ride of the Chinese stock markets in the past 13 months reveals the snowballing effect of the actions of disparate players. Wharton emeritus management professor Marshall Meyer, a long-time China expert, says that ‘the theory that the market was pumped up to help SOEs to reduce their debt is plausible.’ ‘Someone has called this the world’s biggest debt-to-equity swap,’ says Meyer. ‘But it went out of control. The government thought this would be a clever way out of the debt problem, which remains huge.’”
“As for bubbles, it was ‘Tulipomania all over again’ in the Chinese stock markets, says Meyer, referring to the 1600s Dutch speculative bubble of investors chasing up prices of tulip bulbs before they crashed. In China, the government’s conviction that stock values should be higher was the chief driver. ‘Against all reason, everyone was pumping stocks in China because the government advised them to buy stocks,’ he adds.”
Hey Bink, this is an example of what I was talking about the other day:
‘‘With a two-month supply of housing, it’s economically illogical that somebody should have to incentivize someone to buy something when there’s a shortage of something,’ he said.’
I’ve been coming across these really low ‘days on market’ situations where the sellers are giving ground.
Here’s another:
‘It’s been a busy six weeks for sales of higher-dollar properties recorded on Palm Beach. Sales were up 7.1 percent over a year ago,” said analyst Jonathan Miller of Miller Samuel, who prepared the second-quarter report. “But the (amount of) single-family and condo inventory was the lowest of any quarter in the last three years.”
‘The lack of listings, he added, is not unique to Palm Beach: “We’re seeing the same thing in many housing markets across the country.”
‘Miller noted another trend: “When you looked at single-family and condo sales, you saw a cool down at the top of the market. There’s been a downshift, not in sales volume but in what was actually sold. Single-family square footage (sold) fell 8.5 percent, and condo square footage fell 6 percent.”
‘The phrase “Home Sweet Home” is leaving a bitter taste in the mouths of potential home buyers. There’s too high of a demand, with a small supply. While there’s no way to quantify the number of people in the market for a home, the president of the Santa Cruz Association of Realtors has an idea.’
“My gut feeling is there’s probably six times as many buyers as their are houses to buy,” Randy Turnquist said.’
‘While it looks like sellers are getting the better end of the deal, it’s not entirely a seller’s market. A quick look at several homes found some for sale for over a month now. The asking price of one home in particular dropped by $50,000.’
Its less illogical if the concessions are for things that cannot be borrowed (like buyer’s closing costs).
I haven’t bought a lot of homes, but my recollection is that closing costs came out of my pocket, and were not part of the loan.
Paying the buyer’s closing costs is akin to an even lower down payment. And the seller is smart to do so. In a world where buyers are constrained by their down payment, offering to pay $1 in closing costs leaves another $1 for the down payment, and $33 on the offering price (if they can qualify).
Also curious is that with the supposed shortages, and prices rising, single family housing starts aren’t surging like apartment construction. Why not?
low DOM- could it the old relisting trick, so the DOM is reset? I’m see that in my neighborhood. Some MLS have rules, but that doesn’t always mean the rules are followed.
My neighbor is asking 575k getting all lowballs one example a offer of 515k and want all appliances included.
Zillow has it at ~545k
zillow uses a weird algorithm for the predictions
they can’t let go of 2006
show fl up 7% for the yr
Lake Oswego, OR Housing Prices Fall 5%
http://www.zillow.com/lake-oswego-or/home-values/
‘A rise in sales of foreclosed homes in subsidized housing estates is likely, the Hong Kong Economic Journal reported. Some speculators illegally pledged their residential properties, without paying the land premium to the Housing Authority, for mortgages to fund their investments in stocks during the market rally earlier this year.’
‘They may have to give up the flats if they sold their holdings at a loss during the subsequent crash. One of them was even remortgaged five times in 2013 for a combined HK$4 million (US$520,000) in loans from three different financial firms.’
‘Some of the loan agreements carry an annual interest rate of up to 36 percent, so the homeowner may have to pay as much as HK$36,000 a month in interest alone, the report said.’
‘Ricacorp Mortgage Agency Ltd. managing director Wong Wing-yan said some homeowners remortgaged their properties to bet on the stock market during the rally in April, and that might result in more foreclosures amid the market slump.’
‘Singapore - Developers sold 42 per cent fewer private homes or 375 in June, down from 643 in May and taking the tally for the first half of the year to 3,496 - a drop of almost 21 per cent from a year ago.’
‘Some market watchers are coming around to the view that a much-anticipated removal of cooling measures may not materialise any time soon in the absence of hard evidence of a significant, broad-based price correction.’
‘ERA Realty key executive officer Eugene Lim predicts that the year would end with developers selling 1,500-1,600 units. This would be similar to last year’s 1,578. “The EC market is saturated, with so many new launches coming up as well as most existing projects on the market still not fully sold.”
‘Colliers International director Chia Siew Chuin said: “While buyers will return to the market if project units are rightly priced, by and large, homebuyers also generally expect prices to continue to soften further. Some buyers are reticent to make a purchase now, when home prices could foreseeably be lower in 6-12 months’ time.”
don’t be dissing Singapore
#1 for biz
When O visited prising he should have offered a caning option
very economical
If there is a place that is utterly dependent on global trade, it’s Singapore. When trade slows, they hurt, and right now its best customers are broke, broke, broke.
no welfare or unemp ins
so they work every day, same as the 1998 panic
chop chop
so they work every day, same as the 1998 panic
chop chop
Kind of hard to work when there is no work.
What Singapore actually does during tough times is to send its contingent workforce back to Malaysia or wherever they came from. So no “chop chop”. More like “deport deport”
and right now its best customers are broke, broke, broke ??
Or maybe just tired of buying garbage…..
Garbage? You mean depreciating assets like houses?
Or maybe just tired of buying garbage…..
The thing about Singapore is that unlike 20 years ago, they don’t make all that much there anymore, simply because they can’t compete with China. So now it’s more of a trade hub, and yes, when Americans and Europeans buy fewer Asian goods, Singapore suffers. In many ways Singapore is just as dependent on China as Australia, Canada and Brazil. If China crashes, it’s gonna take Singapore down with it.
‘Australia’s infamous housing shortage is at risk of quickly turning into a housing glut with our residential construction boom set to undermine price growth over the next couple of years. With population growth slowing and apartment buildings approved at a record rate — it is only a matter of time before capital growth begins to ease.’
‘Building approvals have increased by 18.5 per cent over the past year on a trend basis and, adjusted for population growth, it sits at around its highest level since 2000. This has been spurred on by unprecedented activity in the higher-density units segment, with high-rises sprouting up all over Melbourne and Sydney.’
‘The residential construction boom is significant by historical standards. We are building properties at the fastest rate since 2000. The underlying dynamics point to weaker price growth — or alternatively an outright price decline — over the next couple of years. Population growth continues to moderate, with net migration easing, while construction remains elevated.’
‘Investors are banking on a housing shortage propping up prices but that may be misguided. Supply is now increasing more quickly than demand; perhaps more importantly though there is mounting evidence that demand has eased (An ominous sign for the property market, July 10).’
‘As a result, unprecedented construction activity, particularly in Melbourne and Sydney, should put downward pressure on dwelling prices over the next couple of years. Investors would be wise to take account of these dynamics if they intend to enter an already overheated property sector.’
‘The NCR residential market is stuck with an estimated inventory of 1,70,000 units while another 90,000 dwelling units under-construction are likely to be delayed for hand-over, reveals a recent survey by industry body Assocham.’
“A large inventory is piling up despite prices correcting by over 20 per cent in the last one year, while there is a huge fall in the new projects being launched by developers who are hard-pressed for cash,” the paper noted with concern.’
‘One of the issues afflicting the sentiment is the high level of debt with the real estate developers and their poor valuations in the stock markets, limiting their avenues for repair of the balance sheets. “Somehow, it reflects in the timely delivery of the projects, coupled with the problems created by high interest costs despite some course correction by the Reserve Bank of India (RBI)”, the paper pointed out.’
‘The NCR residential market still has an estimated 1,67,000 units of unsold inventory which is approximately 30% of the units under construction, adds the survey.’
‘As per the survey, there are nearly 8.5 million workers engaged in building and other construction activities in India.’
‘Average housing prices remained stable in national capital region (NCR) during the year as compared with the previous period, according to Assocham latest survey. The increase in inventory level is because of the falling demand and sales in the sector as genuine buyers are deterred.’
‘With prices on the rise and a surplus of condo inventory, sales have begun to slow in Miami compared to the frenetic pace of last year.
Douglas Elliman’s quarterly report on South Florida’s markets shows that a bevy of new condo inventory has slowed mainland Miami’s absorption rate during the second quarter of 2015. At its current rate, it would take 8.7 months for the city’s stock to sell out, compared to 6.7 months during the second quarter of 2014, according to the data.’
‘The median price of a condo has grown by almost 15 percent to $218,250, compared to the second quarter of last year. This is especially evident in neighborhoods like Coral Gables and Coconut Grove, which both saw the median sale prices rise in excess of 10 percent.’
‘Jonathan Miller, author of the report, told The Real Deal that the data could be attributed to the plethora of new development that’s introducing more condos to the market. Newer inventory fetches higher prices, and there are now roughly 2,000 more active condo listings than in 2014.’
“The way I’d characterize the market now is going from frantic to brisk,” he said.’
‘Miami Beach actually fared worse than the mainland. Sales volume has fallen 11 percent compared to last year, and the absorption rate for single-family homes and condos combined has grown to 10.8 months, versus 8.3 months last year.’
‘Another interesting trend is the condos and houses sold are getting smaller. The average square foot per unit was down 2.5 percent and 9.8 percent for condos and homes, respectively. This is exaggerated in the luxury market — the top 10 percent price bracket. The average size of a luxury condo was 2,405 square feet, down 9.4 percent, and for a home it was 6,455 square feet, down 16.4 percent.’
‘Miller chalked this up to seasonal activity. “The way I see it is that home sales come in waves,” he told TRD.’
‘And in Fort Lauderdale, the housing market showed weakness compared to its condos. The median price of a condo unit rose 18 percent to $303,500, compared to the second quarter of 2014, while home prices have fallen a few thousand dollars each quarter to $290,000.’
‘Residents are excited as new luxury condos are expected to rise in Miami’s Little Havana neighborhood, on Calle Ocho. 7News has the first look at the new changes to Little Havana. Crews are still working on the two-tower project, but it’s expected to feature 320 units, with some selling for up to $549,000.’
‘Business owners in the area are thrilled the historical street is getting a modern twist. “The difference now is we get tourists all day long,” said Batlle. “We get the locals coming out when the locals never came out here.”
From the comments:
‘The last time I went to calle 8 I hardly saw Cubans, there were mainly south americans , calle ocho looked very bad alot of criminal activity, I witnessed people buying drugs right there on 8 st in front of everybody’
‘1/2 MILLION DOLLARS for a condo with the exclusive view of El Presidente supermarket from your balcony and the drug pusher just a few feet away.’
‘I find it hilarious that down here, in this southern most swamp, people consider “luxury” a pigeon coop that has a washer and dryer in unit. But I guess that if you come from the 3rd world, a flushing toilet is a luxury to y’all.’
There are many parts of Latin America where indoor plumbing is a luxury, but the condos aren’t going to be marketed to those people.
It seems like every historic or unique urban area around the world is being defaced by luxury condo towers. We’d put one at Gettysburg if we could.
Just recently I heard about some development in that area, can’t remember if it was like a mall or housing.
a box of air is best
>condos beating homes?
Condos are lower maintenance than houses, which makes them appealing to absentee owners who only occupy them a few weeks a year. They pay their HOA and can forget about it.
Condos are lower maintenance than houses ??
They require the same maintenance its just different in that you get economies of scale and you have no responsibility for management of the services…
Built correctly and managed properly, condo’s or townhome developments are much cheaper to maintain vs a single family residence…Much Cheaper….
Conversely, poor construction or mismanagement or worse (Both) makes them a nightmare…
Houses, condos any structure are depreciating assets that cost you money every day you own them.
They require the same maintenance its just different in that you get economies of scale and you have no responsibility for management of the services…
And that is why well heeled absentee owners like them. They don’t have to deal with hiring people to take care of their property while they are away. They pay the HOA automatically every month and don’t think about it. I knew people in Mexico who did this.
“Well heeled” people don’t waste money on depreciating assets like houses and condos. They lease them.
‘Residential sales in drought-stricken Pathum Thani may face a slowdown in the second half of the year as people are worried about a water shortage. This has exacerbated the province’s high mortgage loan rejection rate, warns a developer.’
‘Pathum Thani’s housing loan rejection rate ranks the highest at over 40% because it has the highest number of non-performing loans, according to commercial bank data, said Mr Pawarun.’
‘The largest market segment is townhouses priced 2-3 million baht a unit. Competition is stiff as there are a large number of small and medium-sized non-listed developers.’
‘Amid the sluggish economy, single houses priced 10 million baht and above face slower demand than other segments as buyers consider market sentiment when purchasing a new unit, he said. “Upper-end buyers usually get updates faster than lower-end buyers. They also buy a new unit when they want since they already have a house,” said Mr Pawarun. “Demand in this segment has slowed since late last year.”
‘Shen Yuan is taking on one of China’s biggest arms dealers—over a school. As WSJ’s Esther Fung reports: The 33-year-old saleswoman bought her three-bedroom apartment last year for 1.89 million yuan ($304,200) believing its developer would build an international school as well as a movie theater, an ice-skating rink and a host of other amenities nearby.’
‘The developer didn’t, citing the slowing economy and lack of demand. So on a recent weekend, Ms. Shen joined more than 30 other home buyers in a demonstration in front of the development, Poly Jordan International.’
“I felt the promised facilities nearby would be great. I didn’t think that Poly as a state-owned company would lie to us,” said Ms. Shen.’
Don’t make too big a fuss Shen, you’ll end up “detained.”
‘At home, among other businesses, it sells houses—and that points to a challenge for the Chinese economy. Too many state-owned companies are active in real estate.’
‘Besides Poly Group, many of China’s largest state-owned enterprises have sizable real-estate arms, including grain trader Cofco Corp., train builder China Railway Group and food-and-energy conglomerate China Resources National Corp. According to an estimate from Standard & Poor’s, more than one-third of the profits of central government-backed enterprises in 2013-2014 came from real estate.’
‘China’s property slump is taking a broad toll on overall economic growth because the market and related industries account for about one-quarter of the country’s economy. Fitch Ratings in May said debt secured by property now makes up 40% of total loans of the banks it rates.’
‘As the slump in property deepened last year, companies overseen by Sasac sold $14 billion in real-estate assets, more than double the $4.9 billion recorded in the four years from 2010 through 2013, according to data from Dealogic. But some of the stake sales were to their subsidiaries, according to stock-exchange filings from the firms’ listed arms.’
‘Poly Group doesn’t disclose financial results. Its Poly Property Group Co. arm, in which it owns a 47.4% stake, reported that in 2014, net profit attributable to owners fell by two thirds to 929.4 million Hong Kong dollars (US$120 million). It sold 2.35 million square meters of property in 2014, missing its target of 2.65 million square meters.’
‘Poly Jordan isn’t the only Poly project where home buyers are upset. In August last year, homeowners of its Joffre County residential project in Hangzhou, a city near Shanghai, staged a protest complaining of shoddy construction and smaller-than-expected amount of green space in the compound. Poly denied their claims at that time and said that the homeowners were unreasonable, according to local press.’
‘Poly Jordan is the residential component of a mixed-used property project in Yuyao, in China’s Zhejiang province. A visit there showed that the 13 residential towers holding more than 1,000 apartments have already been built, but the nearby space, for the shops, library, ice-skating rink and school, remained a construction site, with no signs of work commencing.’
‘A makeshift fence, decorated with billboard-sized posters extolling Poly’s prowess as a home builder with images of explosions and army tanks, surrounded the retail area. Construction workers idled inside.’
‘Zhou Beifeng, Poly Jordan’s sales manager, said the retail portion had been placed on hold because of China’s economic slowdown. “Other retail projects nearby are struggling with lack of takeup,” he said. “If you open a mall, the mall will be dead.”
‘The homeowners said they wouldn’t have purchased the properties if they had known the other amenities wouldn’t arrive. “I would have not forked out so much money for the apartment if not for the shops, the library and the school they had promised us,” said 42-year-old Zheng Zhixin.’
“When selling the homes, [Poly’s sales staff] treated us like emperors, but now they treat us like ants,” said Ms. Shen, who said she agreed in 2012 to pay 13,500 yuan per square meter for a 140 square-meter apartment, while nearby projects without the amenities were priced at about 6,000 yuan per meter.’
It just gets worse and worse for you Dan.
Chinese Arms Dealer Stuck in Real-Estate Quagmire
‘the retail portion had been placed on hold because of China’s economic slowdown. “Other retail projects nearby are struggling with lack of takeup,” he said. “If you open a mall, the mall will be dead.”
No, now Zhou, Dan assures us you do things different over there. You build the mall you promised this lady and shoppers will move from the countryside and buy your crap.
I do not see anything that suggests China is not growing at 7%. I see an article that questions the ethics of one developer. I do not even see all the facts in the story. Is the developer saying it will never build the facilities or just it will not build them until enough units sell. The contract might even allow that without a breach. However, it does not you have a breach of contract which happens all the time in every country and the proper response is to sue.
Coming soon to your favorite ghost town:
BEIJING, July 17 (Xinhua) — Beijing closed or relocated 185 firms in the first half of 2015 in a battle against pollution, local authorities said Friday.
The capital city is expected to shut down or move 300 polluting companies by the end of this year, according to a meeting held Friday to discuss the city’s economic situation in the first half of 2015.
In order to curb “urban ills,” including congestion and air pollution, Beijing has also shut down 60 low-end wholesale markets and upgraded another ten markets to alleviate congestion, according to information released at the meeting.
More than 8,500 booths in wholesale markets are expected to be relocated by the end of the year.
Relocating non-core functions from Beijing has become a priority in the coordinated development of Beijing and Tianjin municipalities and Hebei Province.
“I do not see anything that suggests China is not growing at 7%”
Not the trillions vaporized just a few days ago?
Ok Mr Magoo.
“I do not see anything that suggests China is not growing at 7%.”
“It is difficult to get a man to understand something when his salary depends on him not understanding it.” —Upton Sinclaire
Cue the square dancers!
‘Labor Day weekend was a frantic time in Shenzhen as residents and buyers from Hong Kong snapped up property on the back of government incentives.’
‘Jiang Yuanyuan, 30, a media professional from Guangzhou, and her husband spent months studying the Shenzhen housing market. The newlyweds had been renting in the city but decided the time was right to get on the property ladder.’
‘After looking a various apartments, they finally bought a 103 square meter flat in Futian for about 3.4 million yuan ($548,228). “Prices in Shenzhen have been climbing for the past few months,” Jiang said. “I was worried that if we didn’t buy now, the price would rise to a level totally out of our reach.”
‘Yan Jian, a Shenzhen-based banker, also took the plunge－for a second time. He paid off his mortgage last year on an 88 square meter apartment in the Bao’an district, which he bought in 2008. He has since splashed out on a second apartment. “The new one is an investment,” Yan said. “I will be able to rent it out at roughly 3,000 yuan per month.”
‘Back in March, the central bank introduced new mortgage requirements, which allowed second-time buyers to put down as little as 30 percent on a second home if they paid off the mortgage on their first property. “I only needed 300,000 yuan for a down payment on a 32 square meter unit that cost about 1 million yuan,” Yan said. “I also took advantage of the extra discounts offered to those using public housing funds.”
‘After looking a various apartments, they finally bought a 103 square meter flat in Futian for about 3.4 million yuan ($548,228).
$500 a square foot in Shenzhen. I can only imagine what the price is in Hong Kong.
‘Developers are clamoring to build residential projects in downtown Houston, but some projects have been delayed amid a slowdown in the multifamily market. Nine projects — totaling 2,729 units — are under construction and nine others representing 2,458 units are planned, according to Central Houston’s second-quarter report.’
‘Three of the projects — Trammell Crow’s project near Discovery Green, Alexan Downtown and Marlowe — were expected to break ground in the second quarter, but seem to be delayed, according to Central Houston’s report.’
‘With the city’s gaming, retail, and tourism sectors all heading south, local real estate agencies say the property market is also affected; shops in tourism areas are affected most with both sale prices and rentals down.’
‘Amid the ongoing downturn of the gaming industry, the city’s street-level shops, especially those located in tourism areas, recorded significant double-digit drops in their sale prices and rental during the first half of this year, local realtors Centaline (Macau) Property Agency Ltd. and Jones Lang LaSalle (JLL) Macau both said yesterday.’
‘Associate director of Retail of JLL Macau, Oliver Tong, said during a press briefing by the agency yesterday that overall shop rentals had experienced a decline of 5.8 per cent in the first half compared to the end of 2014. However, owners of street-level shops might have even seen the rental of their shops slumping by 30 per cent during the six months.’
‘In fact, the drop in the rental of the city’s street-level shops is most apparent in those located in the central and NAPE districts.
According to data provided by Centaline in another press briefing yesterday, the average leasing price for street-level shops in the central area were slashed 45 per cent year-on-year to MOP206.5 per square foot during the first half of this year vis-a-vis MOP300 per square foot one year ago.’
‘In addition, the west part of NAPE near the casinos also saw rental decline on average 15 per cent year-on-year, or 30 per cent as compared to its hike period, the senior regional sales director of Centaline, Roy Ho Siu Hang, said.’
‘Meanwhile, Centaline data also indicates that shop values in the central area have plunged by more than a half, or 51 per cent, year-on-year, to MOP41,092 per square foot during the six months from MOP84,000 per square foot one year ago.’
‘The total number of transactions for street-level shops totalled 350 during the period. Despite describing the number as the worst since the financial tsunami of 2008, Mr. Ho said that the market had become more active from the second quarter, during which transaction reached 250 - as shop landlords reluctantly lowered sale prices after realising the recovery of the gaming industry will not materialise soon.’
“The property market has not yet found support for the transaction of offices. As such, both sales prices and rental of offices may decline continuously,” Mr. Ho said.’
‘According to Mr. Wong, the investment return for high-end and mass-to-medium residential units was 1.9 per cent and 2 per cent during the six months, up 0.03 percentage points and 0.1 percentage points year-on-year, respectively. Predicting housing prices in the second half, he claimed prices may still have room to decrease by no more than 5 per cent during the rest of the year.’
“Taking into account the abundant new residential supply in the first half, we expect to see a mild consolidation in both residential sales and leasing markets during the second half of 2015,” Mr. Wong said.’
‘The JLL residential head said that the rental of the mass and medium residential market had decreased by 5.5 per cent during the first half as compared to the end of 2014 due to the new supply of housing in the sector.’
‘In addition, the rental of high-end residential units had plunged 11.7 per cent year-on-year during the first half, following the junkets’ disposal of their luxury housings.’
‘Nearly a third of California’s households “struggle each month to meet basic needs,” largely because of the state’s high cost of living, a new study by United Ways of California concludes.’
‘The study relies on what the organization calls a “real cost measure” that goes well beyond the Census Bureau’s official poverty measure, which dates back to the early 1960s and pegs California’s rate at just half of what the United Ways study found.’
‘The organization’s methodology is, however, similar in thrust to an alternative poverty measure that includes all forms of income and is adjusted for the cost of living. By that measure, nearly a quarter of California’s 39 million residents are living in poverty.
The United Ways study is centered on a household budget “composed of costs all families much address, such as food, housing, transportation, child care, out-of-pocket health expenses and taxes.” While overall, by that method, 31 percent of California’s families “lack income adequate to meet their basic needs,” the rates vary widely by ethnic group and locale.’
‘Over half of Latino families fall under the United Ways poverty measure, as well as 40 percent of black families. White families (20 percent) and Asian-American households 28 percent) are better off.’
‘Geographically, poverty rates range from as high as 80 percent in inner city Los Angeles to as low as 9 percent in suburban Contra Costa County.’
You should see the money the “private” non-profit social work companies make in CA off the gov helping the poor.
“California Most Impoverish State In The US”
http://en.wikipedia.org/wiki/List_of_U.S._states_by_poverty_rate
‘Nevada was one of the states hardest hit in 2008, when the housing market tanked and business growth on the Strip came to a screeching halt. While home prices and sales are on the rise, and unemployment rates going down, one might conclude things are starting to finally pick up.’
‘But not so fast, according to a new report out of Washington. The Economic Innovation Group, a bipartisan policy group, found that 33 percent of Nevada’s population lives in economically distressed communities – the highest percent in the country.’
‘Of the top 25 most distressed zip codes in Nevada, more than half were in Las Vegas and North Las Vegas.’
‘On the surface at least, China’s economy grew at a respectable 7 percent in the second quarter, beating expectations and right on track for the government’s annual growth target.’
‘But look under the bonnet and China’s economy may actually be growing much slower. ‘If the deflator is understated and nominal GDP growth is not, real GDP growth will be reported as higher than it really is,” Mark Williams, Chief Asia economist at Capital Economics in London, who formerly advised the U.K. Treasury on China, said in a note.’
‘In other words, China isn’t netting out the changes in import prices when measuring overall price changes in the economy. “We still believe there’s a problem,” Williams said in the note. “Accordingly, as in Q1, we think that real GDP is being overestimated by one-to-two percentage points.”
I wonder what the results would be if we took out the useless empty city deflator or bullet train to nowhere?
‘Four rate cuts from the Peoples’ Bank of China (PBoC) since late last year and the freeing up credit by easing banks’ capital requirements helped land the GDP number right on the government’s target.’
‘The stock market collapse happened too late to be reflected in the June quarter figures yet, in many ways, it is a reminder that the number churned out by Government statisticians may not be an accurate reflection of what’s actually going on.’
‘Research director at the Beijing-based J Capital Research Anne Stevenson-Yang said the collapse has exposed the potential overstatement of the Chinese economy and pointed to its reliance on debt.’
“The stock market expansion is the most naked expression yet of the way in which Chinese authorities have created money in order to suspend in air the edifice of debt that is the economy, even as real spending, real production, total factor productivity, and the quality of life for Chinese citizens spiral into decline,” Ms Stevenson-Yang wrote in a recent note to clients.’
“The roughly 24 trillion yuan - $US3.8 trillion ($5.2 trillion) - added to the value of traded shares over the last year did not come from new value created by the companies, which have seen earnings decline, most of the money was created from thin air.”
‘Ms Stevenson-Yang said the government panic on display with the A-share market crash was primarily due to the threat of a major financial crisis, not collapsing share valuations. “The emergency measures implemented throughout last week may forestall, but will not prevent it - in fact, they might speed its arrival,” she warned.’
‘Credit Suisse’s chief regional economist in China, Dong Tao, also noted that the sharp rise and fall of the equity markets now posed real systemic risks that could feed into the real economy. The heart of the problem is the debt-fuelled binge that has blown up the Chinese equity bubble.’
‘According to Credit Suisse estimates, securities companies now have 3.7 trillion Yuan - $US600 billion ($798 billion) - in margin positions outstanding, roughly four times higher than at the start of the year.’
‘However, even this figure may be very conservative given the opaque and unregulated nature of over-the-counter margin lending. “On top of the forced liquidation of umbrella trust funds, which has pushed the market toward a self-fulfilling downward spiral, we now fear a chain reaction,” said Mr Tao.’
‘Companies and investors have been mortgaging their shares to leverage up in the stock markets, while home-owners have been putting up their houses as collateral as well. “It looks like further forced selling is on the way,” Mr Tao warned. “Worse, structured products were wide spreading, creating hidden risks that potentially could deliver unpleasant surprises.”
‘Ms Stevenson-Yang has argued the government’s dramatic intervention last week is producing higher levels of debt by encouraging brokers to extend margin loan maturities, while the PBoC is standing behind the China Securities Finance Corporation with unlimited liquidity.
“To maintain the fiction of high share values underpinning margin loans, a large fraction of shares have been suspended and new channels opened to help brokers shore up their battered equity positions,” Ms Stevenson-Yang said.’
“As a result, A-shares are likely to become one more dead asset with collateral value but no liquidity, just like property. As with functionally bankrupt developers, then, the emerging unpayable stock market debts will join the ever-swelling class of Chinese assets that float on the market like those bloated hog carcasses found drifting down the Yangtze some time ago when farmers apparently had not wanted to take responsibility for the diseased, and worthless, herd.”
“But the suspended shares can only stay suspended forever if they are actually removed from the market, which could hardly be helpful for China’s wish to be perceived as continuing reform toward ‘letting markets decide’ and hardly an inducement for new investment.”
‘As Anne Stevenson-Yang pointed out, a consequence could be less willingness on the part of Chinese companies and households to put their money in the latest government recommended asset class.
“Asset bubbles are critical to the appearance of growth, and China’s ability to continue attracting external capital depends on being able to report superior growth,” Ms Stevenson-Yang noted. “Once the bubbles can no longer be maintained, the question of how big the Chinese market really is will be front and centre in the conference rooms of portfolio investors around the world.”
‘Ms Stevenson-Yang said China’s vaunted infrastructure projects may be viewed poorly in this light. “The highly touted plans for One Belt One Road, the New Silk Road, the Asian Infrastructure Investment Bank, Mega Cities, and Chinese-sponsored pipelines and railroads criss-crossing every continent and tunnelling under every sea will seem less like ambitious plans to ascend the geopolitical power ladder and more like wild dreams of a face-seeking leadership with little but an empty toolkit and even emptier pockets,” she concluded.’
Wow she opened a big ol’ can of crow for you there Dan, Bon Appétit!
This is so good I have to repeat it!
‘wild dreams of a face-seeking leadership with little but an empty toolkit and even emptier pockets’
Once Hills gets Ole Bubba back in office we won’t have a face seeking leadership, but instead a tail seeking leadership.
Thinking more on it though, I guess I prefer leadership so massively distracted by scandal that they can’t gt anything done. Their getting things done always seems to be getting things done that screw the working people. Cut government to the bone.
Think about this; they don’t want to be embarrassed? They should be ashamed! Every dumbbell that had anything to do with this bubble should be run out of the government. What do they do? Arrest short sellers. Hello, shorts provide liquidity to the market! Like one guy said recently, “we have people in control of the markets that don’t know how markets work.”
Like one guy said recently, “we have people in control of the markets that don’t know how markets work.”
Well, duh! They were trained as Communists at the Mao Little Red Book Academy. I don’t think any of them went to Oxford or Harvard.
“I don’t think any of them went to Oxford or Harvard.”
I’d take the opposite side of that bet.
From the Asian Development Bank:
Key quote:
China’s GDP grew by 7 percent year-on-year in the second quarter, higher than previous market estimate of 6.8 percent.
Jurgen Conrad, head of the economics unit, PRC resident mission of the ADB, told a news conference in Beijing that he did not see any reason to mistrust the figures.
‘wild dreams of a face-seeking leadership with little but an empty toolkit and even emptier pockets’
Sound like the typical US homeowner. MT Pockets.
It is the people betting against the 7% growth that are eating the crow. More confirmation that China will hit that target occurs every day. Just look at the bits thread to see another.
But here is the key:
http://www.global-rates.com/interest-rates/central-banks/central-banks.aspx
China’s rate of inflation and our rate is about the same but notice the huge difference between the two in central bank interest rates. All China has to do when it thinks the economy is not meeting its 7% target is cut interest rates and it helps the stock market too. Some day it may run out of ammunition but not this year.
If you bother to open the link, you will find that the Chinese central bank is charging 4.85% on its loans while the Fed is charging .25%. Guess who has the ammunition to maintain any growth target?
I’d guess the U.S., since our stock market didn’t just drop by 30%, which would tend to limit near-term policy options. Plus our central bank has offered forward guidance to tighten, is presumably already priced into shares.
The quarterly spectacle of China meeting the 7% GDP growth number is starting to resemble the charade of Enron consistently beating analyst estimates, or Madoff delivering 12% annual returns. This whole thing is likely to blow sky-high, and in fact already may be doing so.
You did not have the World Bank and the IMF confirming the estimates in either case you cited.
True, but were those agencies allowed unfettered access to undoctored data, and to travel freely around the country? Were they allowed to talk to whomever they wanted, rather than solely with carefully-selected Party representatives? I don’t know the answers to those questions, but I can guess what they are. Did any of the people involved in the confirmation process even speak Mandarin?
And no matter what, I’ve learned to substantially devalue any official certifications and pronouncements, whether they come from public or private entities. This is the golden age of the conflict of interest. And of poor leadership. For anyone at either of those agencies to go on record and say that China didn’t grow at 7% would be the equivalent of the child saying that the emperor has no clothes.
As I said above all China needs to do if it is not hitting its target is to cut interest rates. Due to the impact on commodities it has more reasons to low ball its growth than lie about it and inflate the numbers. It is not like they are running for reelection with the people getting to vote on an alternative.
For anyone at either of those agencies to go on record and say that China didn’t grow at 7% would be the equivalent of the child saying that the emperor has no clothes.
They did it with Argentina and they called it out for its phony inflation numbers. However, if a country has a reasonable methodology for calculating GDP and a record of using the methodology for decades consistently, they will not challenge the numbers. The bet was a 7% growth the way China has always calculated it growth. There just seem to be a lot of people that want to calculate China’s growth in a manner that would wipe out all growth in this country’s statistics in order to disprove my prediction. Nobody has even presented an article that suggests China is calculating its GDP differently. Moreover, when a bubble houses get bulldozed in the inland empire, the work of the bulldozer gets counted in our GDP, we do not subtract the previous built houses from our GDP since it turned out they were not useful
With GDP growth down 45 percent and falling, commodity prices collapsing, housing prices collapsing, what’s not to like?
Let’s not leave out our friends up north:
‘How Canada’s economy went from boom to recession so fast’
‘An in-depth look at the perfect storm that pushed Canada into recession’
‘Two hours before the street racing movie Fast and Furious 7 was released in China in April, Tang Wentian, a 21-year-old man, wrecked his Lamborghini driving the streets of central Beijing at speeds of up to 179 km/h. Locals were enraged at what they thought were spoiled, second-generation rich kids at play, but the parents of the man came forward saying they weren’t wealthy at all. And their son didn’t even have a job. Rather, he bought the luxury vehicle with money he made speculating on stocks.’
‘Today it’s the Chinese stock market itself that’s a mangled wreck. In a country that does everything big, close to US$3 trillion of wealth has been obliterated in a matter of weeks.’
‘The stock market rout quickly spread to commodities, accelerating declines that had already been hammering resource-producing countries, like Canada. Copper, widely viewed as a gauge of global economic health because of its use in so many industries, plunged to a six-year low, while at one point the price of iron ore fell 11 per cent in a single day, leading one analyst to note that the price of steel in China—of which iron ore is a key ingredient—was “cheaper per tonne than cabbage.”
‘But the crash has done something else: it has laid bare serious problems with the narrative of China’s growth miracle, and the health of resource countries that increasingly depend on it…And it’s flashed warning signs about what’s in store for Canada as China continues to slump.’
‘As if Canadians needed more reasons to be worried. The collapse in oil prices that began more than a year ago, and has resumed of late, snuffed out Alberta’s energy boom more quickly and deeply than anyone expected.’
‘While Canadian consumers have so far helped offset the damage by their seemingly unending willingness to borrow and spend, the resulting debt that households have piled on now represents an economic risk in its own right—particularly if job and wage growth weaken. Moreover, much of that borrowed cash has been sunk into real estate, a relatively non-productive sector of the economy, resulting in home prices that are as much as 63 per cent overvalued, according to Deutsche Bank.’
‘No wonder some believe Canada is tiptoeing around the edge of the abyss. “You have a resource economy that’s been blown apart sitting on top of a housing bubble,” says Marc Cohodes, a well-known Wall Street short seller who’s betting against Canadian mortgage lenders. “That’s a toxic mix.”
‘Earlier this month, federal Finance Minister Joe Oliver told reporters the economy “was not in a recession,” while Prime Minister Stephen Harper later blamed any slowdown on overseas events beyond Canada’s control, declining to elaborate on just how Canada allowed itself to become so exposed in the first place.’
‘In Fort McMurray, Alta., once hailed as the epicentre of Canada’s economic engine, evidence of the oil bust is everywhere. Restaurant tables sit empty, apartment vacancies are climbing and the local airport is no longer packed with workers flying in and out of the tiny community. Meanwhile, the unemployment rate has more than doubled to 8.6 per cent as dozens of massive oil sands projects are shelved by operators.’
‘As for those waiting for the good times to return (meaning the US$80-per-barrel oil price that many oil sands projects need to be economically viable), Goldman Sachs commodities head Jeff Currie has some bad news—the world is stuck in a “negative feedback loop,” he told Bloomberg, in which the strengthening U.S. dollar relative to the rest of the world has reduced the costs of production in several emerging markets, encouraging producers to continue pumping and adding to the glut. Some U.S. oil companies are also taking advantage of cheap credit to drill new shale wells to be exploited with hydraulic fracturing, or “fracking”—the phenomenon that helped contribute to the world’s over-supply problem in the first place. “I would argue we’re in a slump that could take five or 10 years” to reverse, Currie warned.’
‘For Canada, the current economic predicament would have seemed unimaginable just a few years ago. It was only in 2006 that Prime Minister Harper described the country as an emerging energy superpower, and economists gushed about the commodities-driven “supercycle.” The rhetoric was driven mostly by a rapidly industrializing China and its insatiable demand for raw materials—a phenomenon that was supposed to buoy Canada for generations to come.’
‘These days, however, the China chatter is more likely to centre on the country’s massive debt bubble and empty factories, which, in turn, have led to falling prices and idle workers. There’s already been a property crash in China that the government rushed to fix. But patching up the stock market proved much more difficult for Beijing’s technocrats to remedy—and that, more than anything, is what should have Canadians worried.’
‘Another threat lies in the mindset of consumers themselves. If Canadians suddenly begin to worry that they’ve borrowed too much, there could be a cooling of the market that picks up speed as homeowners race to limit their exposure. “It just starts to happen,” says Cohodes. “No one’s going to tap you on the shoulder and say, ‘Hey, the housing market is coming unglued.’ ”
Got bubble?
http://www.latimes.com/business/realestate/commercial/la-fi-re-office-sale-3rd-street-20150619-story.html
End result…
California Has Highest Percentage Of Welfare Recipients In The US
http://www.utsandiego.com/news/2012/jul/28/welfare-capital-of-the-us/
Residents of Malibu are not effected. Their workers take the bus.
So much for championing the cause for the poor. Typical Lieberal.
‘Tulipomania all over again’
It’s also déjà vu all over again.
Expert: San Diego’s Housing Bubble Poised to Burst
Posted by Alexander Nguyen on July 15, 2015 in Business | 753 Views
Some parts of San Diego’s real estate market are entering bubble territory and could pop in the next recession, University of San Diego real estate expert Norm Miller said Wednesday.
The trend in San Diego and a few other cities where the market is being driven by high valuations of tech stocks counters what’s happening around the country, which is far from being in a bubble, said Miller, the Hahn Chairman of Real Estate Finance in the School of Business Administration’s Burnham-Moores Center for Real Estate.
In research conducted along with a Hawaii-based consulting firm, Miller found that Denver, Miami and Portland, Oregon, plus Bay Area cities like San Francisco, Oakland, Berkeley and San Rafael, are also showing signs of being in a bubble.
“When the next recession hits, prices could decline in the ‘San’ markets, including San Francisco, San Rafael and San Diego,” Miller said. “Less a real estate bubble, this is more of a ‘tech bubble’ that will affect some real estate markets when the stock prices dip significantly.”
…
In research conducted along with a Hawaii-based consulting firm, Miller found that Denver, Miami and Portland, Oregon, plus Bay Area cities like San Francisco, Oakland, Berkeley and San Rafael, are also showing signs of being in a bubble.
A coworker is closing on a house today. I told him a few weeks ago that Denver is in a bubble, but did he listen to me? Nope.
And I still get eye rolls at the lunch table when I mention the local bubble.
Same old story. Doubtful.
It’s a global bubble. And it’s coming apart at the seams.
Hmmm…
I wonder if I could talk my (single) sister into selling her Governor’s Mansion-area condo and renting until after the next crash? Probably not, but it’s an entertaining thought…
Tech jobs are drying up in the bay area… it’s on.