September 13, 2015

Money Can Change Spending Habits

It’s Friday desk clearing time for this blogger. “As the Bay Area’s hot housing market shows early signs of cooling, an anticipated surge in the number of homes put up for sale this month raises the question of whether the region will experience a buyer’s market for the first time in years. ‘Preliminary indications are that this may be a very big new-listing month, even for September,’ according to Paragon Real Estate Group’s latest market report. ‘If this is true, and especially if it marks the beginning of a trend of more listings coming on the market, that could cool the ferociously competitive, low-inventory, ’seller’s market’ of recent years.’”

“Paragon goes on to say, ‘if buyers are more hesitant due to recent financial-market volatility, that would also cool the market.’ That point echoes another star of ‘Million Dollar Listing’ S.F., Justin Fichelson, who sees stock market turbulence creating shock waves through the housing market, given the region’s reliance on the booming tech sector.”

“Renters are losing faith that they will be able to buy a home in the next year, a worrying sign that the housing market won’t get a boost from new buyers anytime soon, according to Zillow. Renters’ confidence is especially weak in strong markets, such as San Francisco and Denver. In general, confidence in the housing market is starting to wane as price growth has slowed across the country. ‘I think the fact that overall the market is slowing down always scares people a little bit when they read the headline,’ said Svenja Gudell, chief economist at Zillow.”

“Home sales in Connecticut in July registered their strongest monthly gains since August 2007, but prices paid again dipped, according to Warren Group. Demand is not yet strong enough to keep inventory levels in check, giving buyers a big array of choices and, thus, an upper hand in price negotiations. Donald L. Klepper-Smith, an economist at DataCore Partners Inc. in New Haven, said he doesn’t see significant gains in prices this year or even next. ‘The best thing we can hope for is that median prices stabilize,’ Klepper-Smith said.”

“Connecticut’s tepid income gains, compared with those of other states, the aging of the state’s population, and rising state and local taxes are having a longer-term effect on the housing market’s recovery, now in its fourth year, economists say. Lingering foreclosure sales might be driving down median prices.”

“CBS12 is investigating a house in a residential neighborhood near West Palm Beach, with grass and weeds knee-high and worse. Les Klein, who’s back yard abuts the property in question, said the parcel has been vacant since going into foreclosure seven years ago. The past three years, said Klein, it’s been overgrown much like it is now. The property is not only an eyesore. It’s so neglected, a colony of bees has moved in. ‘That’s not good,’ said Klein. ‘I don’t even know what kind of bees they are. I hope they’re not African bees.’”

“The oil industry isn’t like most businesses. Work can go away overnight. Which is what happened at oilfield services and rental company NewKota in Gillette, Wyoming. Mark Zaback, a banker who moved to Wyoming in 1982 to work in savings and loans, remembers those tough times, like customers who would raid their children’s savings just to make the payroll tax for their businesses. ‘I didn’t know if the bank I was with was going to survive,’ Zaback said. ‘I remember thinking I might have to go bartend. I think you just go into survival mode.’”

“NewKota recently laid off almost all of its employees, but Jordan Couch, a 22-year-old cowboy from Idaho, was one of the few who stayed on. But the company didn’t have any work for him for a few months, so he wasn’t getting paid. By the time work picked up, Couch was already two months behind on truck payments and was almost evicted from his apartment. One of the problems, he explained, is that oilfield money can change spending habits. ‘So you’re going to the bar and it turns into $500 a night because you’re drunk buying Patrón for everybody sitting at the bar,’ Couch said with a laugh.”

“Weakening economic conditions have led to a slowdown in new housing starts for the Saskatoon region. The Saskatoon Region Association of Realtors said elevated inventory had turned the housing market into a buyer’s market, with sales down in almost every price range. ‘In response to weakening economic conditions and elevated supply levels this year, builders have eased the pace of new construction,’ said Lai Sing Louie, CMHC’s regional economist for the Prairies.”

“Poor demand in the housing sector has started taking a toll on the already weak steel sector. The steel-rolling mills of Wada in Maharashtra are a telltale sign of that. The Wada steel hub is not alone in facing the brunt of a flagging demand. Yogesh Mandhani, president, Steel Re-rollers Association of Maharashtra, says nearly half the rolling mills in Maharashtra have shut shop in the last one year. The other half are struggling to operate at 50% capacity. ‘The main reason is the lack of demand—infrastructure has not picked up and housing demand is also going down,’ Mandhani said.”

“Growth in rents across Australia’s capitals has hit a record low, squeezing property investors who are already contending with ­decreasing returns and rising borrowing costs. The 0.7 per cent rise in rental rates over the past year is the slowest rate of rental growth on record, based on data that goes back as far as December 1995, according to CoreLogic analyst Cameron Kusher. ‘The reasons behind this lacklustre result for the rental market can be attributed to the extent of the current construction boom across the capital cities and slowing population growth,’ he said. ‘Added to this is the surge in investor participation in the housing market, which is contributing to weaker rental growth by adding to the rental stock.’”

“‘We believe that there is a high and rising likelihood of a Chinese, EM (emerging market) and global recession scenario playing out,’ said Willem Buiter, chief economist at Citigroup. Speaking on CNBC’s Squawk on the Street, he was more blunt: ‘This is a a classic recession scenario,’ adding that the Chinese economy has recently experienced excess capacity, excessive leverage in the corporate sector and two booms, bubbles and busts in housing and stock markets.”

“A 25-acre Mediterranean compound with its own vineyard that set a record for the most expensive home listed in the U.S. just took a $46 million price chop. Real estate developer and owner Jeff Greene put the Beverly Hills estate on the market in November 2014 at $195 million. Now he’s ‘very motivated’ to sell, according to a press release. Greene, a Florida resident whose net worth has been estimated at $3 billion, bought the home as a fixer-upper out of bankruptcy proceedings from the previous owners in 2007, reportedly paying $35 million, Forbes reported. He then spent more than $50 million building and enhancing it.”

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Comment by Ben Jones
2015-09-11 04:31:08

‘Auckland house prices were up $125,950 on last year - or $345 a day - according to sales data out from the Real Estate Institute. The city’s median sale price rose from $614,050 last August to $740,000 last month and prices were up $5000 since July.’

‘The figures from REINZ come as the Reserve Bank cut official interest rates to 2.75 per cent, and banks followed suit, cutting their floating mortgage rates. Most economists expect the Reserve to now retain an easing bias, with some tipping the rate to drop to 2 per cent by early next year.’

‘Labour’s finance spokesman Grant Robertson said the decision to cut the OCR - despite the “out-of-control” Auckland housing market - showed the Reserve Bank was “doing all the heavy lifting”.

“Graeme Wheeler knows the economy is drifting. That’s why he’s cutting the OCR, despite knowing that risks adding to Auckland’s out-of-control housing market, which he describes as worrying.”

‘Robertson said Finance Minister Bill English was ignoring the warning signs, while others such as the Reserve Bank had turned to Plan B. “Graeme Wheeler isn’t a lone voice on this. Bank economists are ringing alarm bells and the Treasury has been sending briefing notes warning the Finance Minister the downside Budget scenario on the economy is turning into reality.’

“Plunging dairy prices, exports falling, regional economies already going into recession and a housing market that threatens banking stability are big issues that are happening right now…it’s for the Finance Minister to deal with them.”

Comment by taxpayers
2015-09-11 07:13:57

wow, NZ they have dairy ?
that explains the boom

Comment by Ben Jones
2015-09-11 04:35:10

‘Chinese creditors voiced doubts over a provincial government’s plan to settle a multi-billion yuan debt crisis created by a technically-insolvent, province-backed guarantee company that has stopped honouring the corporate loans it once backed.’

‘Many of those borrowers are in danger of default, creating a potential 32 billion yuan ($5 billion) liability for Hebei Financing from the loan guarantees it now holds. Hebei Financing, which halted operations in January, holds registered capital of 4.2 billion yuan.’

‘Lenders, which consist of scores of banks, trust companies, asset management firms and fund managers, face huge losses and have been appealing to the Hebei government to bail them out.’

‘Eleven creditors wrote a letter earlier this year to petition the province’s Communist Party secretary and the governor to act in order to “prevent the crisis from triggering a public panic”.

‘The plan posted on the website beseeched borrowers to act urgently to raise money. “Corporate borrowers need to actively save themselves, raising funds by every means they can,” it said.’

‘The trust company executive said financial institutions had been asked not to “illegally gather a crowd and create disturbance” at the meetings with the Hebei government. But, she said here clients were angered by the plan and wanted to go to Hebei Financing to get their money back.’

“If we bring investors to legally protect our rights, would that be illegal?” the executive said.’

Comment by Jingle Male
2015-09-11 08:29:15

Deja vu all over again. AIG, derivatives…..that will teach the Chinese to steal our intellectual property… failed economic models!

Comment by Ben Jones
2015-09-11 04:38:20

‘Barcelona city council has acted on its promise to fine banks with empty houses on their books, charging several banks €60,000 in total over 12 homes that have been empty for more than two years.’

‘In recent years, more than 100 municipalities across Spain have approved motions to levy fines on banks with empty homes on their books…The fines were touted as a solution to bridge two distinct realities in Spain: the 3.4m homes that lie vacant – amounting to a third of all empty homes across Europe – and the 95 homes a day seized by Spanish authorities last year after residents defaulted on their mortgage payments. ‘

Comment by In Colorado
2015-09-13 08:47:27

What are they trying to accomplish?

Stop foreclosures?
Force the banks to fire sale the properties?
Force the banks to rent them out, thus lowering rents?

Comment by Ben Jones
2015-09-11 04:43:17

‘Last month, median price of a home sold in the D.C. region was $411,000, down 1 percent compared with August 2014, according to data provided by RealEstate Business Intelligence. It was the first year-over-year decrease in 14 months.’

‘Overall home prices in the area have essentially been flat since February. Two Maryland counties – Montgomery and Frederick – are seeing median price declines. Montgomery County’s median price last month was $400,000, down 3.6 percent compared with August 2014. Frederick County’s median price last month was $265,000, down 8.6 percent year-over-year.’

‘Inventory continues to rise in the region. There were 12,329 homes on the market last month, including 5,796 new listings. Total listings were up 10.3 percent compared with August 2014, and new listings were at their highest level for August since 2008. Fairfax County has the most homes for sale with 4,391, down 1.2 percent from last month but up 15.7 percent from August 2014. Properties are taking longer to sell than a year ago.’

Comment by Sean
2015-09-11 06:55:11

I’ve noticed the new listing coming in my section of Montgomery County are priced below what is currently on the market. The funny thing is when you read the listing remarks, then “Click for previous remarks” they are night and day:

Today: “Seller wants offers!! 5K Closing credit! Possible short sale”

click for previous remarks

March 2015 “As is, offers to be reviewed in seven days. Not a short sale”

Comment by taxpayers
2015-09-11 07:15:22

fairfax has quick turnover w prices going nowhere
until more sequester action and dod cuts
then BAM !

Comment by Ethan in Northern VA
2015-09-11 13:07:30

Townhouse across the street:

Some sucker bought @ 580K in 2005, sold for 34% or less a year or two later. Recently listed for $498K, bought a year or two prior for $480K or so. It said home sale pending late last month then removed from market today on Zillow. Not sure what is up, the real estate sign is gone as of this morning but the post is still there.

Originally built in 2002 and sold for $320K or so. There is a million of them in the area, they’re everywhere, but the newer ones are farther away from the jobs of course.

Comment by Mafia Blocks
2015-09-11 17:56:27

Rent it for half the monthly cost of buying it.

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Comment by Ben Jones
2015-09-11 04:46:57

‘A sharp recovery in home prices over the past few years has given homeowners considerably more equity to tap, about $825 billion collectively, according to Black Knight Financial Services.’

‘This is nearly 2 1/2 times the home equity that existed just four years ago. Black Knight analysts estimate that about 37 million borrowers have “tappable” home equity; that is, using a limit of 20 percent equity most lenders now require in the home, they have some equity beyond that which they could take out. More than one-third of that equity is in California alone.’

‘While many of those borrowers lost their homes to foreclosure, there are millions more who still have these loans and are now in for a new payment shock.’

‘Nearly half of all existing HELOCs that were originated between 2005 and 2007, before the housing crash, are coming up on the end of their draw periods. These borrowers will have to begin paying principal in addition to interest, which is an average of about $250 more per month, according to Black Knight.’

“While equity positions are improving, 29 percent of those facing resets still have less than 10 percent equity in their homes, making refinancing their way out of payment shocks problematic,” said Graboske. New delinquencies on loans originated in 2005 are already up 44 percent year over year. “This remains a situation that bears close watching,” he added.’

Comment by Rental Watch
2015-09-11 08:51:23

I encourage people to actually look at the report. They have good charts and graphs that show a bit of history in conjunction with the recent trends.

Comment by Mafia Blocks
2015-09-11 09:13:52

The problem with their research is it excludes all the foreclosures, defaults and delinquencies hung up because of foreclosure moratoriums in effect in every state.

Comment by Ben Jones
2015-09-11 09:22:20

What’s interesting is they haven’t finished seizing the last bunch of houses and they are figuring how many can be “tapped” now.

Comment by Ben Jones
2015-09-11 05:07:19

‘Many people moved here with hopes and dreams of finding a high-paying job in a trendy market with the ability to live near the outdoorsy lifestyle. And now, some of them are regretting it — deeply. That’s particularly true of younger millennial workers new to the housing market.’

“One of the big reasons why I moved back to Idaho after 3 years in Denver. Tough to make your money go far in Denver.” — Dayton Robison, CPA’

“We moved to Denver four years ago at my wife’s request. Now even she is tired of the traffic, crowds, high density housing, lack of infrastructure innovation and the expense of living here.” — Robert Buss, PSP’

Comment by In Colorado
2015-09-11 07:15:35

Denver has a way of chewing people up and spitting them out.

Comment by taxpayers
2015-09-11 08:49:22

back from UK?
hope u didn’t need their free health care while visiting.

Comment by Anonymous
2015-09-11 10:17:52

It ain’t free if you’re visiting…

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Comment by In Colorado
2015-09-13 09:01:52

Yeah, I’m back.

I’ll tell you one thing, they don’t look up to us over there; not that I would care to live there.

I did spend most of my time in Corwall. While there were many tourists from the continent I rarely heard an American accent while in Cornwall. So it was an “off the beaten path” experience. Visited places like St. Ives, Penzance, St. Michael’s Mount, etc.

I also observed something that most of us here already know: European cars are junk. We got stuck one day in a monster traffic jam on the M5 on the way to Bristol. I saw at least 20 breakdowns, allegedly from overheating (in 65F weather) and these cars were not beaters. Also learned that when a car hits 100K miles over there it’s considered “throw away”.

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Comment by rms
2015-09-11 20:22:37

Those facebook peeps don’t have a clue… trying to swallow that free market load. The Vietnam draft was a better young adult issue.

Comment by rms
2015-09-11 21:23:19

“Andrea Kalmanovitz: What conditions must take place in order for the housing market to move more toward a balanced market? Can you share insights on what you see happening in Denver’s real estate that may be moving us in this direction?”

Static wages and rising prices really mean increased risk, i.e., higher interest rates, but interest rates are at historic lows; what gives?

Get the government out of the mortgage guarantee business, e.g., let market forces set the price.

Comment by Ben Jones
2015-09-11 05:13:44

‘China’s once blazing Internet industry has shown signs of cooling down this year as some prominent tech companies have announced plans to cut back on hiring or lay off employees. Private investment has also gotten harder to come by. But experts say it is difficult to say for certain whether the bubble has burst.’

‘University seniors who dream of going to work for e-commerce giant Alibaba Group Holding next year are waking up to an unpleasant reality. The company announced on September 1 that it had decided to cut back on hiring university graduates from the class of 2016 due to what it called a “talent strategic adjustment.”

‘On two WeChat groups for new graduates who have applied at the company, not one of 100-plus members has received a final offer, according to one member who refused to disclose his name. “Many of the members of the two groups are from first-tier universities, so it is strange that nobody has received an offer,” he told the Global Times. “I have heard some inside information that Alibaba has reduced its external recruitment target.”

‘He said it is understandable that Alibaba has decided to cut back on hiring considering its slowing revenue growth and declining stock price. It’s a sign of the times for technology companies. “The Internet industry doesn’t seem to be as promising as it was several years ago,” he said.’

‘On September 1, Liu -Shuang, CEO of Beijing-based Phoenix New Media, which runs the Web portal, announced the company would lay off some of its workforce due to the recent plunge of its stock price on the New York Stock Exchange. The company’s stock fell below $5 per share on September 4, down by more than 50 percent from its IPO price of $11 a share in May 2011.’

‘China’s Internet companies have also been having trouble raising money from private equity and venture capital firms.

From the first quarter to the second quarter of 2015, this kind of funding plunged 50.36 percent to $3.78 billion.’

‘Some analysts and investors see figures like these as signs that China’s Internet stock bubble has been punctured. Lou Tao, vice president at E-House (China) Holdings, a real estate company that has invested in the Internet companies, refused to discuss the industry’s prospects. He told the Global Times on Monday that the topic was a sensitive issue.’

‘Lin Caiyi, chief economist at Guotai Junan Securities, has deep misgivings about the industry. On her personal WeChat account on September 2, she cautioned Internet entrepreneurs to proceed carefully because the industry was in the midst of a downturn.’

‘Money is another problem. Chen Yu, a partner at Shanghai-based Harmonia Capital Group, said at an Internet forum on August 16 that more Internet companies focused on finance will die in the future as it becomes more and more difficult for them to raise money due to stricter government supervision.’

‘In Chen’s view, the fast developing industry may have stepped into winter.’

Comment by Ben Jones
2015-09-11 05:52:47

‘China’s once blazing Internet industry has shown signs of cooling down’

‘money can change spending habits. ‘So you’re going to the bar and it turns into $500 a night because you’re drunk buying Patrón for everybody sitting at the bar,’ Couch said’

Comment by The Selfish Hoarder
2015-09-11 13:06:55

I remember a dinner / wine tab split between me and my friend (and his girlfriend and his twin brother) in a year I made $190k. I paid half. Guess I did not do the math right. It should have been 25%. My half was $400.

Comment by Blue Skye
2015-09-11 06:20:02 China style.

Comment by Anonymous
2015-09-11 10:22:21

“…talent strategic adjustment.” LOL, that’s a new way of saying hiring slowdown/layoffs.

Comment by Ben Jones
2015-09-11 05:16:55

‘The Albuquerque metro area has stayed user-friendly to renters and home buyers, bucking a growing trend around the country of housing markets getting tight and pricey due to lack of new construction, according to a National Association of Realtors report.’

‘The metro’s slow pace of housing construction dovetails with its slow pace of job creation, resulting in a housing market with an adequate supply relative to demand. Such a balance of supply and demand is becoming more and more rare.’

‘Roughly two-thirds of the 146 metros covered in the report have either reached or are moving toward “persistent housing shortages and unhealthy price growth,” the association says.’

Comment by Ben Jones
2015-09-11 05:19:43

‘With a condo glut looming, some major developers are starting to look to upwardly mobile Cambodians as their customer base.’

‘Several projects are on the way to Phnom Penh and Siem Reap intended to absorb affluent Cambodians and, increasingly, those who have made it to the middle class. The developers are bucking the trend of high-rise condos by building boreys of flats and town houses only one to two floors high. Under Cambodian law, foreigners cannot own the bottom two floors.’

‘Experts disagree just how many Cambodians are able to afford properties. Nay Sambo, head of the credit information unit at Acleda Bank, said that the local homeowner market is growing slowly. He added that prices are going up at such a rate that it will take incomes a long time to catch up. Lawrance Liang, chairman at Cathay United Bank, agreed that a large number of younger Cambodians have a hard time finding affordable housing because of the focus on the upper market.’

‘But Chrek Soknim, CEO of Century 21 Mekong, said that housing supply should be adequate over the next few years. He said that growing access to loans is helping people overcome financial difficulties.’

‘Phnom Penh Commercial Bank administrator Suo Samrong said that despite rising prices, people still have the ability to buy. “By the time a building is finished, most of the flats have been sold out,” he said.’

‘He posited that the increased value of mortgage lending in the country is the result of more competition among banks, rather than due to rising purchasing power.’

Comment by taxpayers
2015-09-11 05:43:14

upwardly mobile Cambodians

pol pot has an idea

Comment by Ben Jones
2015-09-11 05:24:34

‘On a quiet street around the corner from West Seneca West Senior High School, a fight has begun between Assemblyman Michael Kearns and national banks who have left homes vacant and in incomplete foreclosure status.’

‘In his effort, Kearns has found unanimous support from the West Seneca Town Board and members of the Distressed Properties Task Force and the Western New York Law Center.’

“I believe that as a community and all across New York State, we are tired of sitting, and waiting, and watching as the banks balance their books at the expense of our neighborhoods,” said Kate Lockhart, data commission chairwoman of the Distressed Properties Task Force and paralegal at the Western New York Law Center.’

‘For the home at 35 Jasmine, the borrower took out the last mortgage with CitiFinancial in July 2006, defaulting on the loan in December 2008. The first notice of pending action was filed with CitiFinancial as the plaintiff in October 2010. Since then, the foreclosure has been canceled, two additional notices of pending action were filed, and in 2013, CitiFinancial transferred the loan to Christiana Trust.’

“This is a property on a beautiful street in a beautiful neighborhood that could have been foreclosed on because it was vacant several years ago, auctioned off, and another family could have been here contributing to the neighborhood and the life here in West Seneca,” Lockhart said.’

‘Town Supervisor Sheila Meegan said abandoned homes are a burden on the town budget. “Besides the banks doing this to a particular family, they’re doing it to a whole community, and the responsibility for the safety and the maintenance comes back to the town. Those are costs that we are incurring as a town, which we shouldn’t be paying, for the bank’s lack of responsibility and their negligence,” she said.’

‘West Seneca has approximately 90 abandoned buildings, according to Councilman Eugene Hart. He said the buildings are damaging to neighborhoods, especially those near the Buffalo city line. “The taxpayer is the one that’s going to foot the bill. Why should we be subsidizing the banks?” Kearns said.’

Comment by Ben Jones
2015-09-11 05:30:02

‘The number of permits to build apartments in the Omaha area has dropped by more than half. Developers and bankers say the local apartment market remains strong but faces headwinds.’

‘Jerry Reimer of Urban Village is in the midst of constructing complexes in west Omaha and in midtown. He said he doesn’t feel a retreat from apartment-building. “If you ask me when it’s going to stop, well, I don’t see that on the horizon right now,” said Reimer, who is in the latter phase of a 193-unit complex in the Elkhorn area, and in the early stages of a new 178-unit apartment in midtown.’

‘James Maenner of CB Richard Ellis/Mega says outside investors are eyeing Omaha, too. He said he played host to a meeting a few weeks ago for a national builder interested in Omaha as a place to build large-scale apartment projects. The developer’s board of directors came to check out the local market.’

‘Maenner’s take on the permit decline: “There might be a bit of a wait-and-see going on” after two high-performing years.’

‘NuStyle Development alone since 2011 has added about 800 downtown apartments to the market that way. Because those weren’t technically brand new construction, they aren’t reflected in building permits, a city planner said. Neither, for example, is NuStyle’s latest renovation project that’s transforming run-down rental units into a more contemporary market-rate apartment building.’

‘Todd Heistand, NuStyle’s co-founder, said he’s never stayed as busy in his nearly 30 years in the housing industry. “It just keeps going,” he said.’

Comment by Ben Jones
2015-09-11 05:44:59

‘Consumer prices in China hit their highest level this year while deflation risks in industrial production loomed larger, signaling a need for continued easing policies.’

‘The price of China’s favorite meat is one of the most important factors the NBS considers when formulating the CPI. Pork prices climbed sharply by 19.6% year on year in August.’

‘The producer price index (PPI), a measure of costs for goods at the factory gate, fell 5.9% year on year in August, widening from the 5.4% drop seen a month earlier, NBS data showed. The August reading slumped to its lowest level since the end of 2009, marking a 42nd straight month of decline.’

‘For the first eight months, PPI averaged a 4.9% year-on-year drop. On a monthly basis, the index fell 0.8% in August. NBS statistician Yu Qiumei attributed the PPI contraction mainly to dropping prices of industrial products and decreasing costs for oil and natural gas production.’

“Domestic demand remained sluggish, and commodity prices were on the decline. China still faces grim deflation risk and more easing polices are needed,” noted Qu Hongbin, chief China economist at HSBC.’

‘A combination of deflation risks and a slowing economy has troubled China as it tries to re-tool its economy for slower but more sustainable growth based on more sophisticated industries. Foreign trade in August dropped 9.7% year on year to 2.04 trillion yuan (US$320.8 billion). Exports fell 6.1% year on year to 1.2 trillion yuan while imports slumped 14.3% to 836.1 billion yuan, official data showed Tuesday.’

‘Facing lingering downward risks, authorities have ramped up efforts to prop up the economy. China’s central bank has cut the reserve requirement ratio (RRR) of banks four times in nearly seven months and cut interest rates five times in nearly nine months.’

‘China’s banking and housing regulators slashed down payment requirements for second home purchases using housing provident funds to 20% from 30% at the end of August, provided the buyers have paid off the mortgages on their first home, to step up recovery of the property sector.’

‘Liu Ligang, chief economist for the Greater China region at ANZ Bank, said further policy easing is needed to stave off the risk of a vicious cycle of slower growth and deflation.’


‘ts lowest level since the end of 2009, marking a 42nd straight month of decline’

Comment by Ben Jones
Comment by palmetto
2015-09-13 06:18:08

And people complain about Donald Trump?? Sheesh.

Capitalism, communism, socialism, fascism, bah humbug. Elitism exists no matter what ism is in fashion.

Comment by In Colorado
2015-09-13 09:04:07

Some animals will always be more equal than others.

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Comment by Blue Skye
2015-09-11 06:25:47

Ironically, more easing will in the end result in more deflation.

Comment by Ben Jones
2015-09-11 05:51:26

‘City Hall is set to start giving discounts on development charges to spur economic activity. Kuala Lumpur mayor Datuk Mohd Amin Nordin Abd Aziz said it was a new incentive for developers to continue developing the city despite the slow economy.;

“The falling ringgit is a good time to buy properties. So, we at City Hall will also give fast approval for development orders,” he said at the launch of Property Insight Guide To Investing 2015/2016 coffee table book in Kuala Lumpur last week.’

‘Real Estate and Housing Developers Association Malaysia (Rehda) Kuala Lumpur chairman Tan Ching Meng said the association appreciated any help during the current economic climate. “Times are tough. We are in the industry that creates job opportunities. So, if we continue to develop, it will be good for the people too,” he said.’

‘Property Insight managing director KK Chua said their first coffee table book featured analysis of 45 projects in the country. “What sets us apart from other property guides is our analysis. Other books merely have editorial write-ups. Besides that, we have also dedicated six pages for tips on securing property financing as it is the biggest challenge faced by investors.”

‘Chua said they started working on the book in January and many of the projects featured in it had been completed or were nearing completion “About 30% of the featured properties are still available,” he said.’

Comment by Ben Jones
2015-09-11 06:13:40

‘Resource prices are famously cyclical and this is not this first time that we’ve experienced the transition from a world in which oil prices are high, to one where oil prices are much lower than they used to be. The previous episode occurred in 30 years ago, and it served as the inspiration for a bumper sticker that was popular in Alberta: “Please God, give us another oil boom, we promise not to piss it away this time.”

‘Those prayers were eventually answered. The price of oil went from $20 a barrel in 2002 to $100 in 2007 and — after some large swings before and during the global financial crisis of 2008-09 — it stayed near $100 until June 2014. Since then, the price of oil has fallen by half and analysts give slim odds to the prospect of seeing a significant and sustained increase in the near future. The boom has come and gone, and it’s time to take stock. God kept His side of the bargain; did we keep ours?’

‘By the end of the resource boom, incomes were about six per cent higher than what they would have been if GDI had continued to track GDP. According to my back-of-the-envelope calculations, this works out to a resource bonus of about $4,000 per capita. This premium has since been reduced to $2,500 and is likely to continue to fall. If you add up these increases from the beginning of the boom in 2002, it works out to a total windfall of about $1.3 trillion (in real 2014 dollars). What happened to all that money? Was it frittered away?’

‘To be sure, much of that increase in assets and in net worth is due to increased holdings (and/or valuations) of housing assets and are vulnerable to a potential fall in housing prices.’

‘The end of the resource boom is a negative development, but at least we’re better off now than we would have been if it had never happened; the gains were largely saved and not frittered away. And a good thing, too. God would have been very disappointed in us.’

Comment by Anonymous
2015-09-11 10:29:52

Umm, if all the gains were invested in housing, the value of which is going to decline, then I’d argue it WAS or will be frittered away!

Comment by Ben Jones
2015-09-11 06:20:01

‘The conventional economic wisdom is that the ongoing U.S. recovery is so well established by now that it can weather China’s slowdown and the emerging market slide that decline has set into motion. Even as word came out last week that Canada, America’s largest trading partner, had slipped into recession — joining a growing list of countries contending with a slowing China — investors still had faith in fortress America. Few are suggesting the U.S. is also in danger of entering a tailspin.’

‘But at least one veteran forecaster dismisses this sanguine view, bluntly predicting that the U.S. will tumble back into recession next year. David Levy, chairman of the independent Jerome Levy Forecasting Center, said analysts need to keep in mind that emerging markets now account for more than 50 percent of global GDP.’

”What we will see is that for the first time in modern history, the U.S. economy will be pulled into recession by external forces,” he told CBS MoneyWatch.’

‘Levy’s publication has had a pretty good track record on predicting downturns. Before the 2008 financial meltdown, Levy forecast that the U.S. housing market was about to implode. Back in 1929, his grandfather, a physicist turned economist, saw the 1929 stock market crash coming.’

‘Levy warned that investors are underestimating the amount of debt on the balance sheets of local and regional Chinese governments that the central government has already extended to keep people working. “There’s still this assumption that these local governments can service this debt, and it is increasingly evident they can’t,” Levy said.’

“There will be a flight to quality with a broad-based asset deflation.” Levy said. “And this will be the first time since the World War II that central banks won’t have room to cut interest rates.”

‘Since the Great Recession, corporate debt originating from developing countries has spiked to $1.1 trillion from $411 billion at the end of 2009 as emerging markets loaded up on cheap debt.’

‘In June, World Bank President Jim Yong Kim issued a report warning that a strong U.S. dollar, low commodity prices and a Federal Reserve rate hike would prompt investors to abandon emerging markets. If that happens, it also raises the question of what the impact on the U.S. economy would be.’

Comment by scdave
2015-09-11 08:22:42

issued a report warning that a strong U.S. dollar, low commodity prices and a Federal Reserve rate hike would prompt investors to abandon emerging markets. If that happens, it also raises the question of what the impact on the U.S. economy would be.’ ??

Yep…Thats the conundrum that the FED finds itself in…The futures players are saying only a 30% chance for September…My instincts tell me they are going to pull the trigger but offer long term dovish forward language regarding the next hike…

At the end of the day, if a tiny 25 basis point increase off of historical lows turns everything upside down then it was likely going to happen anyway…

Comment by Blue Skye
2015-09-11 10:30:53

What is going to turn things “upside down” is Deflation. Banks will cut way back on lending regardless of the Fed Funds Rate.

Comment by scdave
2015-09-11 13:03:54

Banks will cut way back on lending regardless of the Fed Funds Rate ??

And do what with the money ?? They will choke on their own liquidity…They can’t survive on 2% returns…

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Comment by I remain strong but face headwinds
2015-09-11 15:23:07

-nod- SCDave, a bank that can’t survive will surely find a way to survive.

its Friday.

Comment by rms
2015-09-11 22:07:26

The house always wins.

Comment by Ben Jones
2015-09-11 07:09:17

‘This week, the Justice Department felt the need to write a memo to staff instructing them to indict individuals when they commit crimes, seemingly something implied by their job titles. It doesn’t say as much about the current Justice Department regime under Loretta Lynch as it does about the former one under Eric Holder.’

‘No major Wall Street executive went to jail for the illegal actions that precipitated the financial crisis, despite a mountain of documentary evidence of fraud. Corporations and their employees got away with what amounted to slaps on the wrist. And Holder, after presiding over this, joined the head of his Justice Department criminal division and several top deputies at Covington & Burling, a white-collar defense firm that represents most major banks.’

‘You can draw a direct line from this failure back to the “Holder memo,” written when he served as a deputy in the Clinton Justice Department. That memo created the “collateral consequences” policy, arguing that prosecutors who seek criminal cases against large companies should take into account innocent victims who may get hurt. It laid out a host of alternative remedies, such as fines and deferred prosecution agreements.’

‘This eventually gave prosecutors a way to shrink from complex cases, to talk themselves into not wasting the effort.’

‘The idea that prosecutors have to be told to prosecute again is an utter indictment of the Holder era. What was holding them back before? It’s also worth noting that this change in direction, only applicable to future cases, comes after nearly all of the statutes of limitations for crisis-era misconduct have passed. After the foxes have left the henhouse, DoJ decides it’s time to find some foxes. If this realization causes you to break something, then we have that in common.’

Comment by BearCat
2015-09-11 10:14:31

So when are they going to prosecute the chief people at Fannie and Freddie? And their political enablers?

I think it’ll be when they prosecute the EPA dudes responsible for dumping 3,000,000 gallons of toxic waste.

Comment by Senior Housing Analyst
2015-09-11 09:07:01

Pacific Beach, CA Housing Prices Crater 14% YoY; Mortgage Delinquencies Bloom

Comment by Senior Housing Analyst
2015-09-11 09:17:53

Alexandria, VA Housing Prices Sink 8% YoY

Comment by BearCat
2015-09-11 10:17:10

I’d say Mr. Green is about to learn what all homeowners should already now: when you upgrade a house, you don’t get your money back when you sell, although his math is still a bit faulty ($35M + $50M != $195M); a more realistic selling price would be $50M, but if I had to guess, I’d say if he has to sell now, he’ll sell for <$35M

Comment by Ben Jones
2015-09-11 12:12:14

Oh dear…

2,993 properties found Denver, CO Real Estate and Homes for Sale,condo-townhome-row-home-co-op,multi-family-home,mfd-mobile-home

1,051 properties found Denver, CO Price Reduced Homes for Sale,condo-townhome-row-home-co-op,multi-family-home,mfd-mobile-home/show-price-reduced

This reminds me; median prices are a lagging indicator. Prices can fall for months and months before the median heads down.

Comment by taxpayers
2015-09-11 13:18:13

2005 was the peak here,but its reported as 2006
Transaction times slow way down as the market stalls
Denver was the #2 nirvana after san Fran

Comment by Ben Jones
2015-09-11 12:16:31

As we discovered in yesterdays post, Houston has been in the tank since January but the UHS are just now getting around to telling the sheep. Oh and lo, had you been reading here you would have known that long ago:

12,574 properties found Houston, TX Real Estate and Homes for Sale,condo-townhome-row-home-co-op,multi-family-home,mfd-mobile-home

3,858 properties found Houston, TX Price Reduced Homes for Sale,condo-townhome-row-home-co-op,multi-family-home,mfd-mobile-home/show-price-reduced

IIRC the last time I ran this check a couple weeks ago there were only 10,000 houses for sale in Houston.

Comment by scdave
2015-09-11 14:13:43

Thats a significant increase in just a few weeks…

Comment by Bluto
2015-09-11 21:47:09

Another bottom of the barrel flip 50 miles north of S.F., 825 sq. ft. between a very busy road and within arms length of the US 101 freeway sound wall, $325K. Street view shows the place once had Spanish style tiles that gave it minimal charm but the flippers removed them…

Comment by rms
2015-09-11 22:22:21

“1 Story Detached, 2 bedrooms, 1 bathroom, 844 sq ft, 0.08 acres, 83 years old, only $324,950″

Queue the taxpayers to guarantee this mortgage.

Comment by AmazingRuss
2015-09-13 18:14:24

Looking at those photos, I can almost hear the barking of the neighbor’s dogs.

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