Taking A Hit Because Of The Housing Bubble
The Independent reports from the UK. “With its forest of cranes and mushrooming show apartments, Battersea remains outwardly the buzzing epicentre of the property boom that has turned London into Britain’s very own Monaco. But if the rumblings from within a circle of brokers and investors involved in the redevelopment of the south London former power station and the surrounding Nine Elms area are anything to go by, the legions of foreign investors credited - and blamed in equal measure - for driving the capital’s decade-long luxury property boom may finally be getting cold feet. Sime Darby, one of the major stakeholders in the redevelopment acknowledged a ’softening of interest’ in buyers from Malaysia and elsewhere in southeast Asia who had previously been responsible for the spending splurge.”
“With one estate agent recording a 10 per cent drop in the value of luxury homes in Battersea and its environs in the year to June, experts blamed the cooling of ardour for buying up London’s high-end penthouses on the strengthening of the pound in recent months and economic volatility in the home markets of investors. Among those hardest hit are Russian buyers. Online estate agent eMoov said it had recorded a three per cent drop in demand for housing worth £2m or more in a single month in May. Demand has fallen since May in some 60 per cent of ‘prime’ London boroughs, such as Westminster or Kensington and Chelsea.”
“Founder Russell Quirk said: ‘I don’t think that there are many who will shed a tear for the well-heeled, sharp suited Mayfair type property predators. They have long crawled along the golden streets of prime central London, yet it seems that the tide has turned. What comes up must come down and we are now starting to see a rebalancing with other parts of the country.’”
From Shanghai Daily in China. “As Shanghai emerges from a long housing slump, real estate agencies are mushrooming across the city and workers are being sucked into the industry by the prospect of big salaries and commissions. A second-year college student, Hou Yuan, said he is thinking of becoming a real estate agent when he graduates. ‘I won’t say it’s a dream job, but the income is attractive,’ he said. ‘It’s not easy nowadays to find decent work.’”
One News Now in New Zealand. “International credit rating agency, Standard and Poor’s, has downgraded the stand-alone credit profiles of ANZ, BNZ, ASB and Westpac New Zealand because of what the agency says is the increased risks they and other lending institutions face from Auckland’s hot property market. Labour’s finance spokesman, Grant Robertson, says, ‘the out of control Auckland housing market is now threatening the banking sector, with Standard & Poor’s downgrading the credit rating of our banks out of fear of the bubble bursting. For years, the Government has been warned of a bubble and done nothing. Now, just when our economy is suffering the impact of the collapse in dairy prices, our banking sector takes a hit because of the housing bubble.’”
The Australian Financial Review. “Property prices in mining heartland of the Bowen Basin - which rode the wave of the coal boom - have fallen off a cliff, burning investors who believed China’s thirst for Australian resources would never end. The median value of a home in Morbanah, about 200 kilometres west of Mackay, have fallen 66 per cent in the past three years, from $751,989 to $251,933, according to CoreLogic RP Data. Properties that used to receive rents of $3,000 to $4,000 a week during the boom, are now only getting $220 a week, leaving investors struggling to pay their mortgages. Many have gone under.”
“Moranbah Real Estate owner Bella Exposito, who has been in the real estate game for 28 years, said 99 per cent of the properties she sold in Moranbah were snapped by investors from across Australia, including Sydney and Melbourne, as well as as far away as Hong Kong, Singapore and the United Kingdom. ‘But I haven’t seen one investor since the boom. I think they were being unrealistic thinking the boom was going to last forever,’ she said.”
The Calgary Herald in Canada. “The precipitous decline in oil prices from a year ago has pummelled the housing market in Fort McMurray this year with MLS sales so far in 2015 down nearly 50 per cent from 2014 levels. In comparison, Calgary has seen a 27.3 per cent decline.”
“‘The numbers just released on the Fort McMurray market are 100 per cent reflective of the downturn — not in production in the oilsands, but in the exploration and development of new oilsands projects,’ said Don Campbell, senior analyst with the Real Estate Investment Network. ‘This is also being reflected in the rental market in Fort McMurray, where vacancies have skyrocketed in the last six months. The market– both rental and resale, will begin to feel even more pain in the November to February quarter coming up.’”
Business in Vancouver. “Fears of a housing bubble. The Shanghai stock market crash. Disappointing economic data on exports and plunging auto sales. And now this. A few years ago, China’s move to devalue its currency would likely have been seen as a positive development. ‘The big issue is the signal that it sends about the weak Chinese economy, and that is bad news for Canada in terms of export of commodities and raw materials to China,’ said Michael Devereux, a professor at the University of British Columbia’s Vancouver School of Economics.”
“‘Demand for pretty much everything that’s imported into China is likely to slow,’ said Sherry Cooper, chief economist for Dominion Lending, ‘which is why commodity prices have fallen once again and, most importantly for Canada, oil prices are down.’”
“‘There’s a huge excess of construction in China,’ Devereux said. ‘They have all these empty houses, empty cities, they had this gigantic stock market bubble which has gone into reverse, and they’ve only prevented a complete collapse of the stock market by shutting down trade in a bunch of major listed corporations. With the fall in the local stock market, you’ve had a really big fall in domestic consumption. The only way China can continue to grow long term is if they get their households and private citizens spending more, but now it looks like they’re cutting back dramatically.’”
‘Has the Auckland housing market turned? I went to a neighbourhood auction yesterday. Solid large 1950s’ house on 1,000 square metres of land, sunny section, view over city from front of house, handy to train and to the expanding New Lynn retail and commercial hub.’
‘There was only one bidder, ethnically Asian but not Chinese, most likely buying the property as a family home. The sale went through by negotiation at below the reserve price, and probably a full $100,000 less than the vendor and spectators were anticipating. (It sold for less than the average asking price identified in Auckland housing market ‘continues to go mad’ last month in the NZ Herald.) I noticed only two Chinese-looking people in attendance, both attending just like regular kiwis, spectators rather than bidders. A few months ago, a similarly specified property at Hobsonville Point sold for well over a million dollars.’
‘The signs are there. Indeed Bill English has picked up on them. See Auckland house median drops $20k, and Bill English: Auckland property prices may fall. English notes that housing markets in similarly affected overseas cities have slowed recently, and that Auckland can be expected to follow that pattern.) So far the statistics show that the already grossly inflated central suburbs are leading the slowdown, and that the former Waitakere City has experienced a 29% increase in prices. My story above suggests that the slowing market may have spread to Waitakere City, at least for the kinds of properties – simple freehold title, lots of land – that are clearly most attractive to speculative buyers.’
my county is now flat
if the gov goons raise taxes by 3% or more that should clip off 1% in prices
since they are lefty SJW and inviting the FSA to encamp it a deal
‘Property developers put up more residential units for sale in the second quarter of the year but sold fewer units compared to a year ago, according to property consulting firm Colliers International.
‘In the second quarter, property developers launched 54 percent more residential units compared to a year ago, bringing year-on-year expansion in six-month residential inventory to 13 percent, Colliers Philippines director for research and advisory services Julius Guevara said in a briefing.’
‘But Guevara noted that take-up of units offered under the pre-selling activities of property developers had been slowing down. In the second quarter, residential units take-up in the metropolis fell by 38 percent year-on-year. For the first semester, the decline was 23 percent.’
Everything sure does seem to be slowing down. Who could have expected so many booms to turn?
“Property prices in mining heartland of the Bowen Basin - which rode the wave of the coal boom - have fallen off a cliff, burning investors who believed China’s thirst for Australian resources would never end.”
Rule number one of bubbles: Inevitably the good times eventually end in a crash that nobody could have foreseen.
‘Tens of thousands of Australians are pocketing extra cash by renting out their house or spare room on home-sharing websites, but much of the money is changing hands in a regulatory twilight zone.’
‘Government regulation is lagging way behind the booming sharing economy, leaving many householders unsure of the rules or operating on a “don’t ask, don’t tell” basis.’
‘When it comes to ordinary homeowners, she said many were genuinely unaware of their insurance liability. “They are actually inviting guests in on a commercial basis and their insurance often doesn’t cover that,” she said.’
‘The Airbnb website encourages hosts to review their insurance policy but does not require them to have public liability insurance. “We probably should have it, but we don’t,” Ms Marshall said. “That would be really complicated if we had to do that. If everything became complicated and changed, I think we would look at selling the house and having a holiday.”
‘It’s a mystery. Where have all the houses gone? One minute, we were knee-deep in ghost estates. The next minute, families are sleeping in city parks and hospital emergency departments because they have no homes to go to. It’s like when the banks went broke and nobody seemed to know quite where the actual bank notes had gone. Billions of euros had simply vanished into thin air.’
‘Ireland has its own Bermuda Triangle and homes are the latest to disappear into it. Four years ago, there were 289,451 vacant dwellings in Ireland, according to the 2011 census. They accounted for 14.5% of the country’s entire housing stock. Of those properties, only 59,000 were holiday homes. The remaining 230,056 were vacant houses, flats and apartments.’
“‘Demand for pretty much everything that’s imported into China is likely to slow,’ said Sherry Cooper, chief economist for Dominion Lending, ‘which is why commodity prices have fallen once again and, most importantly for Canada, oil prices are down.’”
If demand for everything China imports is merely ‘likely’ to slow, then it sounds like the drop in commodities prices thus far may have just been the warmup. And the Fed hss yet to initiate liftoff.
Is it possible the commodities crash has yet to start the first inning?
Clear the decks!
Investors cut EM, commodity holdings to record lows
Jenny Cosgrave
Tue, 18 Aug ‘15 | 8:30 AM ETCNBC.com
Fund managers cut their exposure to both commodities and emerging market equities to record lows this month, as oil and metals seem unable to shrug off price weakness and China recession fears mount, new research shows.
The number of investors pulling out of commodities has increased, with “aggressive” underweights to the sector hitting a record high, according to the Bank of American Merrill Lynch.
An investor stands in front of an electronic board showing stock information in Fuyang, China, July 27, 2015.
Reuters
Fund managers with general underweights to the commodity sector also hit levels not seen for around 20 months. An anti-commodities stance was also evident with moves out of energy and material stocks while defensive weightings were increased, the bank said.
Similarly, the rally in the U.S. dollar, concerns on the timing of a U.S. Federal Reserve interest rate rise and China growth and currency worries have pushed managers to cut their exposure to emerging market equities, also to a fresh record low.
BofA ML polled 202 fund managers at the start of August with a total of $574 billion of assets under management.
“In terms of long-term investment in China, investors should not make the mistake of assuming there is some cohesive plan in Beijing - there is not. The question is whether to take official comments at face value,” said managing partner of Cerno Capital, James Spence.
China shares down 6.1%, lead Asia lower on yuan fears
“The Peoples Bank of China (PBoC) has been somewhat trapped by its own logic. By referencing offshore rates they have adequate tree and weaker fixes in the world before changing their minds on the third day,” he said.
China’s benchmark Shanghai Composite index closed down 6.1 percent, at its lowest level since August 7 on Tuesday. Among China’s other indexes, the blue-chip CSI300 and the smaller Shenzhen Composite plummeted 6.2 and 6.6 percent, respectively. This latest slide in Chinese stocks sparked fears that the PBoC could devalue its currency against the U.S. dollar further.
Around a third of the investors surveyed by the bank were underweight EM stocks, more than during the China debt scare in March of last year and up from levels seen during collapse of Lehman brothers in 2008. At the same time, some two out of three asset managers reckon a Chinese recession is the number one “tail risk” to global markets.
“Investors are sending a clear message that they are positioned for lower growth in China and emerging markets,” said Michael Hartnett, chief investment strategist at BofA Merrill Lynch Global Research.
…
“In terms of long-term investment in China, investors should not make the mistake of assuming there is some cohesive plan in Beijing - there is not. The question is whether to take official comments at face value,” said managing partner of Cerno Capital, James Spence.
___________________________/
Thank you, James Spence. Let’s also not make the mistake of thinking there is some cohesive plan in this country, because the Fed, too, is making things up as it goes along, and issuing official comments that shouldn’t be taken at face value.
Is it possible the commodities crash has yet to start the first inning?”
Anythings possible but I would guess this is closer to capitulation
There is gross overcapacity in everything worldwide and demand has still not slipped down to prebubble levels. This is just getting started.
Two days in Sugar Land for a project meeting. Projects at the major engineering firms are drying up and the layoffs are quietly proceeding.
I think about that every time I hear about a new project with retail space. We have enough retail space. We lead the world in retail space.
And Amazon’s objective is to eliminate the need for most retail space . . . hmmmm . . .
They are rolling out Webvan 2.0 right now:
http://www.geekwire.com/2015/amazon-set-to-launch-new-amazon-flex-package-pickup-service-in-seattle-area-with-prime-now/
Sugar Land Tx is a focal point for petrochemical process plant projects, not for retail malls. Sorry for not explaining.
‘A real estate executive who specializes in selling properties to Chinese investors says Vancouver is often seen as a cheap deal, despite local perceptions that prices are astronomically high.’
‘Dan Scarrow moved to Shanghai in February to open a new office for Macdonald Realty targeting Chinese clients who want to invest in Vancouver’s real estate market. He says over the last six months the low Canadian dollar has given Chinese investors much more purchasing power in Canada.’
“They now see it as a good time to maybe take the plunge,” says Scarrow, who is in Vancouver to speak about the real estate market and the impact of foreign investment.’
“The purchasing power of the RMB (Chinese Yuan) has increased by 25 per cent in the last six months to a year, not just against the Canadian dollar but against a lot of other currencies, except for U.S dollars,” said the second generation Chinese-Canadian, whose mother is the president and majority owner of Macdonald Realty.’
“People that were considering the U.S. or Canada, now there is no real consideration [of U.S. properties] any more.”
He’ll be serving a prison sentence within 5 years.
For treason.
“They now see it as a good time to maybe take the plunge,”
Just before prices plunge?
“They now see it as a good time to maybe take the plunge,”
Before the anti-corruption police catch up to them and their looted money?
Which is another reason why buyers may prefer the US over Canada.
And so will you.
A widely followed inflation gauge-though not the Fed ’s favorite one-showed that outside of rising rents, there was little price pressure in the marketplace. The consumer price index rose just 0.1 percent in July. Even excluding food and energy prices, the CPI was only up the same 0.1 percent.
Rising rents. Because of corporations buying up foreclosures and sticking it to renters ?
It’s almost every day now:
‘The regulator for U.S. housing finance giants Fannie Mae and Freddie Mac told the two firms on Wednesday to provide more support to low-income Americans taking out mortgages and refinancing home loans. The Federal Housing Finance Agency released goals for the two government-controlled firms for 2015-2017 that would advance agency chief Mel Watt’s aim to widen access to housing credit.’
‘Boosting support for low-income borrowers, however, could stir controversy in the U.S. Congress. Many Republican lawmakers think Fannie Mae and Freddie Mac contributed to the housing bubble and 2007-2009 financial crisis with policies aimed at supporting mortgage access for the poor. ‘
http://finance.yahoo.com/news/u-housing-regulator-targets-more-170838480.html
‘Interest-only mortgages got a bad reputation in the aftermath of the housing bust, but they’ve managed to stick around as an option for homebuyers who can meet stricter lending guidelines enacted by the government in recent years.’
‘The loans can lower monthly mortgage payments by letting borrowers put off paying the principal on their loan for several years. When the interest-only period ends, the borrower’s monthly payment spikes as they begin to pay a combination of principal and interest until the loan is paid off.’
‘That monthly payment shock, often accompanied by a higher interest rate on adjustable-rate interest-only loans, is what got many borrowers in trouble a decade ago.’
‘At least one lender is looking to expand access to interest-only loans to a broader range of homebuyers, not just the affluent buyers who typically take advantage of such loans. Last month, United Wholesale Mortgage began making interest-only home loans through its network of mortgage brokers. The loan program covers mortgages as low as $250,000. That’s just above the U.S. median home price of $236,400, but well below the recent median price in Southern California of $426,000.’
http://abcnews.go.com/Business/wireStory/key-factors-interest-mortgages-33187606
Altisource is getting crushed:
Altisource Asset Management Corporation (AAMC) -NYSE MKT
46.52 Down 13.49(22.48%) 2:25PM EDT
It opened at 93 two days ago:
http://finance.yahoo.com/echarts?s=AAMC+Interactive#{%22range%22:%225d%22,%22allowChartStacking%22:true}
52wk Range: 46.52 - 767.11
Now that’s a haircut!
wow- good find
maybe even the msm will notice
Haymarket, VA Housing Prices Crater 10%
http://www.zillow.com/haymarket-va/home-values/
‘The real estate firm Trulia found that permitting activity for apartment complexes has surged well above the historical average in many markets. In the New York City metro area, building permits for multi-family complexes is an astounding 423 percent higher than the 24-year average. The increase is 295 percent in Boston, 138 percent in Philadelphia, 161 percent in Los Angeles, 102 percent in San Francisco and 114 percent in Houston.’
http://www.news-journal.com/news/2015/aug/18/single-family-houses-fuel-gains/
‘Last month we had pretty good news from the Commerce Department: Privately owned housing starts in June were up 9.8% from May. More supply for the intense demand! More confirmation of the unabated upward trajectory of the new-home market! Right?’
“We need these increases,” said Jonathan Smoke, chief economist at realtor.com®. “An increasing level of new construction is the primary way that the housing market will find balance in this surging demand but tight supply environment. Both home prices and rents are rising at well above normal levels, and that market signal is exactly what builders and developers need to find confidence to start new construction.”
“The last time that NAHB’s Housing Market Index, the leading measure of homebuilder sentiment, was as high as yesterday’s reported number for August was in November 2005,” said Smoke.’
‘Said Smoke, “We expect new construction to continue to post gradual gains throughout the year.” Will it cause home prices to steady? In markets from Seattle to Connecticut we’ve seen prices slow or decline.”
http://www.realtor.com/news/trends/new-residential-construction-july-2015/
“In markets from Seattle to Connecticut we’ve seen prices slow or decline.””
Seattle, WA Housing Prices Fall 15%
http://www.zillow.com/ballard-seattle-wa/home-values/
Tustin, CA Housing Prices Fall 7% YoY
http://www.zillow.com/tustin-ca-92780/home-values/
“‘They have all these empty houses, empty cities, they had this gigantic stock market bubble which has gone into reverse, and they’ve only prevented a complete collapse of the stock market by shutting down trade in a bunch of major listed corporations. With the fall in the local stock market, you’ve had a really big fall in domestic consumption. The only way China can continue to grow long term is if they get their households and private citizens spending more, but now it looks like they’re cutting back dramatically.’”
Gahhh where is ADAN? I need guidance… *sob*
I should stay the course right? Double down with a 2nd Ordos apartment?
Join my brother in law going all in on the stock market??
HELP ME.
It’s the Wang and Wong show!