Not A Market For Speculation And Overpricing
The Globe and Mail reports from Canada. “Real estate buyers in Toronto appear to be treading more cautiously into the fall market – especially compared with the excessive bidding that took place in the city last spring. Chander Chaddah, a real estate agent with Sutton Group-Associates Brokerage Inc., listed two houses recently; one sold on offer night and the other didn’t. The one that didn’t sell is a three-storey semi-detached house, which has an asking price of $1,249,900, is the type of large, renovated family home that often attracts a crowd of bidders, he says. ‘The offer date came and went,’ he says, adding that several other houses in the same area remained on the market after the official deadline for bids.”
“Diana Petramala, an economist with Toronto-Dominion Bank, says some of the momentum has come out of the Bank of Canada’s interest rate cuts, which fuelled so much of the buying in the spring. ‘There’s little left in the form of a driver for housing demand,’ Ms. Petramala says.”
The Langley Advance. “The craze for housing in Langley began this summer with bidding wars for houses, and it wound down with people camping out for more than a week to catch coveted condos. Most of the people there were hoping to snag a condo for themselves, or for a family member. But others were there as paid placeholders. Calvin Adams had just moved to the Lower Mainland from Prince George when he spotted an ad on Craigslist looking for someone to sit in line for $200 a day for four days to secure a spot. ‘They don’t line up for anything up there, especially not a condo,’ said Adams.”
The Global News. “Home sales in Saskatoon were sluggish during September, according to the Saskatoon Region Association of Realtors (SRAR). Sales were off 16 per cent compared to a year ago and are down 12 per cent for the year. SRAR CEO Jason Yochim was optimistic, but he offered a word of caution. ‘This is not a market for speculation and overpricing.’”
“The drop in sales compared to listings has tilted the landscape from a balanced to a buyer’s market, making it more challenging for sellers to see offers close to their asking price. Inventory levels remain elevated, with just over 2,000 properties available. Many are new homes and condo units and Yochim expects to ’see vacant condo units hit the rental market.’”
The Calgary Herald. “Calgary MLS residential sales fell well below five-and 10-year averages through September. CREB president Corinne Lyall said while inventory levels are elevated, the number of properties on the market remains well below the highs of the previous economic downturn in 2008/09. ‘There is no question that we have seen a shift in our local housing market conditions, but it needs to be put in perspective,’ she said.”
“The average number of days it is taking to sell homes has risen from 31 last year to 40 this year. Ann-Marie Lurie, CREB’s chief economist, said a sales to new listings ratio of 50 per cent implies that for every 10 new listings five are being sold.”
The Edmonton Sun. “House sales are trending down in Edmonton but it’s not a complete horror story — more of a Goldilocks tale. Geneva Tetreault, chair of the Realtors Association of Edmonton, said those looking to downsize from larger homes, as well as growing young families in need of more space than a condo, have looked to the mid-level homes and have found a relative glut of choices.”
“‘In the boom, when we saw a lot of new construction, we saw a lot of that style of home being built and since then we’ve seen that continue. So those homes are now becoming available for resale as well,’ said Tetreault.”
“For Canadians who already own property in the U.S. Sunbelt, their accommodation expenses are fixed, but many other related expenditures are not. Steve and Liz McQuaid (they’ve asked for pseudonyms, not wanting to advertise that their Southwestern Ontario home sits empty for months each year) are reminded of this when they pay their Florida condo fees each quarter. ‘It takes more and more Canadian money to pay the U.S. fee,’ says Mr. McQuaid.”
“The United States is already seeing a decline in the number of houses sold to international buyers. According to the 2015 Profile of Home Buying Activity of International Clients report, published by the U.S. National Association of Realtors, there has been a 10-per-cent decline in homes sold between 2014 and 2015. Seventy-five per cent of Realtors reported to the NAR that the strong U.S. dollar has had an impact on their sales numbers.”
‘Calgary has weathered tough economic times — and there may be more ahead — but an annual survey of citizens released Tuesday shows many people are facing the challenges with a degree of optimism. Although the overall measure is unchanged, low oil prices and the resulting loss of thousands of jobs in the oilpatch and the industries that depend on it have created a some unease: 69 per cent of 1,819 Calgarians who responded to this year’s survey described themselves as happy — a decrease from 87 per cent of respondents last year.’
“There is an anxiety right now. We all know people who can’t find housing. We all know people who are losing their jobs,” said Kerry Longpre, vice-president of communications at the Calgary Foundation.’
‘Indeed, long-standing issues like affordable housing are looming as large as ever in the minds of Calgarians: survey respondents dropped the city’s grade for living standards to C+, down from a B- last year.’
‘Newcomers lured to the city when the economy was booming helped create a tight rental market in recent years, combined with a dwindling supply as property owners converted a large number of properties to condominiums.’
‘While the economic slowdown appears to have helped ease the rental crunch on the one hand — the vacancy rate climbed 2.64 per cent in the past year — on the other hand, people are worried about being able to afford basics like food and shelter: 26 per cent of respondents identified improving the availability of rental housing as a priority. At the same time, 49 per cent of Albertans say they would struggle financially if their paycheque were delayed by a week.’
A week?
“A week?”
So, that Canadian is totally screwed even if the paycheck isn’t delayed. With the Loonie falling and prices of necessities rising, living hand to mouth is going to hurt.
‘Nearly one in six Canadians would be overburdened by a C$500 ($382.03) increase in their monthly mortgage payments should interest rates rise, a survey showed on Tuesday, highlighting concerns about whether homeowners have taken on too much debt.’
‘A survey released by Bank of Montreal’s Wealth Institute found 16 percent of Canadians said they would not be able to afford such an increase in their mortgage under a higher interest rate scenario. Twenty-seven percent said they would need to review their budgets to afford the higher payments, while 26 percent said they would feel concerned but could probably handle it.’
‘Just 9 percent of those polled said they could easily handle the higher cost.’
http://in.reuters.com/article/2015/10/06/canada-economy-housing-idINL1N1261FD20151006
“The United States is already seeing a decline in the number of houses sold to international buyers. According to the 2015 Profile of Home Buying Activity of International Clients report, published by the U.S. National Association of Realtors, there has been a 10-per-cent decline in homes sold between 2014 and 2015. Seventy-five per cent of Realtors reported to the NAR that the strong U.S. dollar has had an impact on their sales numbers.”
The strong dollar is merely the tip of the iceberg. What about the effect of the Chinese stock market crash on Chinese households’ investment portfolios, or of the commodities crash on the Canadian economy? Certainly these factors work to limit the number of foreigners buying U.S. residential real estate.
It’s all circular, as in feedback loops.
China Containerized Freight Index Down 30% From Early 2013
http://davidstockmanscontracorner.com/chart-of-the-day-china-containerized-freight-index-down-30-from-early-2013/
Why China Is on an L.A. Spending Spree: “It’s Just Monopoly Money to Them”
“$20,000 on drinks is a plain night on the town,” says one local restaurateur, as big-time Chinese money pours into Los Angeles, consuming everything from wine to diamonds to watches to cars to prime real estate (in one case, 25,000 square feet for a teenage college student).’
‘ In 2014, a full 20 percent of the city’s $8 billion in real estate sales was purchased by Chinese buyers. Showing no signs of slowing down, this injection of Chinese capital and influence can be felt at every level of L.A.’s culture of consumption.’
“They’ll buy high-end watches in threes and fours,” says Korosh Soltani, owner of Rodeo Drive jewelry store David Orgell, of his Chinese clientele, who’ll typically drop $200,000 on gifts in a single shopping spree. (Soltani has so many Chinese customers, he asks companies like Corum and Baume & Mercier to send him watches bearing the Mandarin logos they are more familiar with.)’
“We just had a Chinese family come in looking for the finest, most vivid canary yellow diamond you can have. Fortunately I had one,” says Beverly Hills jeweler Martin Katz of a recent engagement ring purchase. “It was a seven-figure-priced stone in the six-carat range.”
“They arrive with this endless stream of money without working or earning it. It’s just Monopoly money to them,” says Gotham Dream Cars’ Rob Ferretti of Chinese customers who come to him in search of an exotic ride. They lease cars like the $397,000 Maybach 57S for $2,200 a day. Color-wise, “They love these light blues,” Ferretti says. They’re even particular about the car’s VIN number: They like when it has as many eights in it as possible.
“Eight in Chinese rhymes with the word for prosperity. It’s extremely significant,” explains architect Anthony Poon of Beverly Hills-based Poon Design Inc. The Chinese fixation on the number can verge on the obsessive: One client, whose husband is a major film director, wanted Poon to design her an 8,888-square-foot home, while another Chinese developer working on a luxury community in Pacific Palisades insists that it have eight estates.’
‘If their kids are attending UCLA, parents will think nothing of spending $1 million to $3 million or more on a Westwood pied-a-terre instead of putting their children up in dorms. “The wealth and lack of reference point can be staggering,” marvels Poon, before sharing an anecdote about the family who purchased a 25,000-square-foot home in the Hollywood Hills for their teenage son. On the ultra-high-end market — mansions that cost $50 million and above — Umansky estimates that about 25 percent of sales are made to Chinese, a figure he says is climbing due to ongoing “political and financial uncertainty in China.”
‘Online-to-offline, is the hottest buzzword in China’s Internet industry. Miss Fresh is a perfect example of the feverish O2O market. It’s only a half year old. But its service of providing fresh food like milk and fruit on the WeChat store has already expanded to 10 cities.’
‘Still, this promising start-up has felt a drop in temperature. “We can feel that the investors are tightening their grip on their pockets. But we’ve prepared enough to go through the winter after having completed the A round of financing. We hope to better balance our financial targets by better management,” said Yao Weihua, chief marketing officer, missfrsh.cn.’
‘In September, a long list of dead O2O companies across 16 sectors has been growing on the Internet. In the food sector alone, over 17 companies have fallen.’
‘Liu Qiangdong, CEO of J-D-dot-com, China’s second largest e-commerce website, recently bashed China’s Internet mania in a speech. He said “Right now there are over 50 companies each valued over 1 billion dollars on the private equity market. I believe that this maniac industry will go wrong.”
Alibaba and the 40 thieves has lost about 50% of its “miracle” so far.
There was an excellent piece last week on China’s hated rich kids, referred to as “fuerdai.” A sample:
As portrayed in the local press, fuerdai are to China what Paris Hilton was to the U.S. a decade ago, only less tasteful. Every few months there’s a fuerdai scandal, whether it’s a photo of a woman about to set fire to a pile of 100-yuan ($16) notes; members of the much derided Sports Car Club posing beside their Lamborghinis; or someone pulling a gun during a street race. In 2013 reports of a fuerdai sex party at the beach resort of Sanya provoked a nationwide finger-wag. Two prominent rich kids got into a public arms race over who had the bigger stash: The widely despised socialite Guo Meimei posted photos online of herself with 5 million yuan worth of casino chips; her rival responded with a screen shot of his bank statement, which appeared to contain 3.7 billion yuan. (Guo was sentenced to five years in prison for running a gambling den.) Recently, the son of Wang Jianlin, a real estate mogul and the richest man in China, trolled the nation by posting a photo of his dog wearing two gold Apple Watches, one on each forepaw. Fuerdai outrages occasionally feature government intrigue, such as a 2012 Ferrari crash in Beijing involving two young women and the son of a high-level official, all of whom were at least partially naked when they were thrown from the car. The man’s father, a top aide to then-president Hu Jintao, was later arrested and charged with corruption.
http://tinyurl.com/qxlabbq
The thing is, only people who feel they are bulletproof flaunt wealth and misbehave publicly like this. And any time you feel you are bulletproof, of course, is precisely when you are most vulnerable.
I remember the “Super Sweet 16″ series on MTV, featuring million-dollar birthday parties thrown for unbelievably pampered teenagers. One father showed off a huge diamond-encrusted watch and bragged to the camera about how much it cost. My wife and I were watching and we speculated openly on how long he would be able to walk around in Bogota wearing something like that.
One of the videos posted on youtube of a member of the Qatari Royal Family driving recklessly in Beverly Hills. Blowing stop signs at high speed in a residential neighborhood.
LaFerrari Reckless Driving & Breaks Down In Beverly Hills! Damaged and Smoking!
My ex in Kuwait told me about the teenagers driving BMWs and Mercedes Benz cars, all with the latest smart phone technology. This was in the 90s so they had pagers. I guess this was before texting.
Kuwait is still rich in oil.
Poon design? Really? No thoughts of a business name change?
Don’t rub Poon the Wong way!
“The wealth and lack of reference point can be staggering,”
Old story things might be changing now.
Jesus. More comedy from that article. Where do you even begin?
___________________________/
“When it comes to design, feng shui — the ancient philosophy of living in harmony with your surroundings — is a top priority among Chinese buyers, with architects scrambling to accommodate its highly specific criteria. According to Poon, a contained foyer is preferable to an open-plan entryway (it helps retain life force, or chi); floor plans must be simple, with no awkward or cramped spaces; furniture should be placed away from doors and be round, not rectangular; sloping backyards are a no-no (again, to avoid chi loss); and, says Umansky, ‘you don’t want the staircase facing the front door because it’s the money and fortune flowing out.’”
Anthony Poon and his cast of housing goons.
PB - I figured you would notice that comment.
Sales values up in CA with less buyers !
more of a Goldilocks tale. Geneva Tetreault,
w oil at $46 you’ll see food riots in CAnaDuh soon
Don’t be a drama queen.
Remember…. falling prices of all items to dramatically lower and more affordable levels is positively bullish and good for the economy.
‘Newfoundland’s offshore oil industry has been somewhat insulated from the shock of plunging oil prices over the last 16 months, but the long tail of job losses and cancelled contracts so clearly evident in Alberta is beginning to show, especially as the province’s “turnaround workers” come home for good.’
‘For years, thousands of Newfoundlanders commuted back and forth to Alberta’s oil patch, working three or four weeks at a time and bringing home plump paycheques. Many of them aren’t going back this fall.’
‘In places like Bonavista, a pretty outport 300 kilometres from St. John’s, a new truck parked near the harbour displays Alberta plates. Construction had been brisk on big new homes, but housing starts across the province have now fallen by 17 per cent. Bonavista’s longtime mayor, Betty Fitzgerald, is worried about what’s to come.’
“When you’ve got good money coming in, you spend more, and you enjoy life more,” she said. “When you look around you see people with new quads, new side by sides, new trucks, new cars, new homes. Their kids are getting all they need. Then all the sudden if there are layoffs, all those things are no longer there and it’s going to be very, very hard on the families.”
From the comments:
‘Unfortunately there are far too many Alberta workers who are mortgaged to the hilt and spent every cent they made. I suggest that similar things will happen when the mega-projects start to wind down. Too many workers are treating their work situation like they struck the lottery yet many will only get 4 or 5 years work out of it. The smart ones could set themselves up comfortably but too many want to live like rockstars and you just know when the layoffs come that they won’t be able to make all the payments.’
‘Unfortunately, I see many who have not saved for a rainy day which most of us could see coming. Large homes, large trucks, multiple new vehicles, recreational vehicles, boats, pools, expensive clothing and just generally living large without any consideration of saving for a downturn will put many in a precarious financial position. Some will lose it all and others will come close to losing it all. Some marriages will fail due to money issues. And then there will be those with recreational drug habits which they can no longer afford due to the disappearance of the big paycheques, who will now have to beg borrow or steal to get their nose candy fix. It’s going to be a rough ride for some make no mistake!’
“What goes up must come down”..When you’re up there, you should save all you can, to use when you come back down.’
‘Save? Who saves anymore? Isn’t being a good consumer and spending beyond your means what we are trained to do these days? Unfortunately a lot of these young men who were making more money than they knew what to do with will end up with nothing.’
‘I recently returned to NL after many years of living in BC. The number of people here with big homes, expensive trucks/cars all the quads, boats etc…would have you think that most people are really rich.
NO that’s not really the case…it’s the banks and lenders who are making the money off these misguided saps, who thought the money tree would forever grow. Now when the banks come a calling are we suppose to feel sorry for people who did not have the common sense to look to the future and save accordingly.’
Nose candy? Side by sides? (I had to look that up. Those are really expensive). Sounds like it isn’t all trailer park boys up there. For years Canadians have been warned about debt. I guess those $500,000 trailers weren’t such a good idea.
134 Erindale Road, Fort McMurray, AB New
$569,900
Single Family
5 Bedrooms
2 Bathrooms
134 Erindale Road
Fort McMurray, AB, T9H 4N5
INVESTORS ALERT or FIRST TIME HOME BUYERS… Great starter home with mortgage helper. Located centrally in the heart of Thickwood, close to all main amenities.
http://www.remax.ca/ab/fort-mcmurray-real-estate/na-134-erindale-road-na-wp_id127551144-lst/
$899,900
201 Pickles Crescent, Fort McMurray, AB, T9K 2T7
AMAZING PRICE ON THIS ACREAGE IN THE CITY! LAND, RV PARKING PLUS,2 GARAGES. Custom 2storey situated on a 11,344 sq ft lot with an attached double heated garage and a 26×32 shop with 8ft doors and infloor heat and a triple car driveway. All this and only a few blocks schools,parks and more. After the exterior of this home impresses you with the features already mentioned along with the gorgeous landscaping, fully fenced yard, gazebo, and firepit, you will then fall in love with the interior. The CHEF’S DREAM KITCHEN featuring 42″ Stainless Steel Thermador built in fridge, 48″ Thermador industrial gas range and Professional wall range hood and Granite counter tops. Main level also features hardwood floors, large living room with Gas fireplace, and main floor laundry room. Upstairs you have a huge master bedroom and WI closet and ensuite and a Fireplace. The fully developed basement features 2 large bedrooms,infloor heat & large family room.
http://www.remax.ca/ab/fort-mcmurray-real-estate/na-201-pickles-crescent-na-wp_id127428021-lst/
Really tired of these idiots who make big bucks and then blow it on the newest Ford F450 Super Duty, a new boat, etc.
SAVE YOUR DAMN MONEY, you idiots, and live beneath your means!
Unfortunately, it’s people like this who put the entire global economy at systemic risk with their reckless financial decisions. When SHTF, these are the ones who declare bankruptcy and wreak havoc on everyone else.
and pols are ready to “forgive” their debt
= fck over taxpayers
next up LA majors w 5 yr degrees
But the velocity of money makes things go round? Savers hurt the economy!
“Steve and Liz McQuaid (they’ve asked for pseudonyms, not wanting to advertise that their Southwestern Ontario home sits empty for months each year) are reminded of this when they pay their Florida condo fees each quarter. ‘It takes more and more Canadian money to pay the U.S. fee,’ says Mr. McQuaid.”
________________________________/
Who could have predicted that? Currency fluctuations? My goodness.
The condo was supposed to pay them.
I’m reminded of the Eastern Europeans who took out mortgage loans in Swiss francs, at the urging of banks and financial advisers. It’s amazing how often these maneuvers blow up in your face:
___________________________________/
Katarzyna Szczerbowska, a 43-year-old writer, said she was advised by a financial consultant when she bought a two-story apartment in 2008.
“The adviser said Swiss francs were the best option because the interest rates were lower and the currency rates were stable,” she said.
“Everybody around me advised me to take a mortgage in Swiss francs,” she added. “Everybody else was doing the same thing.”
http://tinyurl.com/offexzj
Oil workers blowing all of their money is not surprising to me at all…
I remember a couple of years ago I was in Minot, ND and all around me were 20/30 year old guys driving $50k dollar trucks. As a 30 something former engineer/current airline pilot with no debt, it’s far more vehicle than I would be comfortable making payments on, yet here these guys with presumably a low education were spending money like it’s nothing.
‘The offer date came and went,’ he says, adding that several other houses in the same area remained on the market after the official deadline for bids’
We’ll see if it sticks. Prices have been zooming up for a long time. I hope nobody over-paid. Or over-borrowed.
Most of those oil workers had families and their paychecks were deposited into their bank accounts back home. When they first started working out west they paid their bills up to date, then paid their mortgages off. Then additions, new driveways, etc.
Of course the big pick up trucks - and most were financed -
Newfies will be okay because of their elephant oil find just announced plus their ongoing offshore fields. Maybe not all.
Bluenosers have the ship building program, herring chokers have significant gas finds, spuds - well they have spuds.
‘The future for natural gas liquefaction (LNG) is not as bright as many had hoped as demand in China begins to slow and an excess of LNG prepares to come on the market, says CIBC’s Head of Commodities Strategy Katherine Spector. A “double whammy of surplus global LNG supply and lower oil prices” has led the bank to lower its North American LNG export expectations to 5.5-6.5 billion cubic feet per day (bcf/d), down from what CIBC admits was an optimistic 12 bcf/d by 2022.’
‘Both in the U.S. and the OECD, demand growth has become sluggish, while renewables continue to take up an increasingly large portion of the pie, and cheap coal challenges gas in growing markets, Spector said. “Growth in U.S. industrial demand for gas may yet be a bright spot, but is unlikely to match the shortfall in power generation demand for gas relative to initial expectations,” she added.’
‘Despite demand around the world looking lower than many had hoped for, the real issue for LNG may be the overabundance of supply. From now to 2022, there is approximately 245 bcm/year of liquefaction capacity that is likely to come online around the world, and an additional 300 bcm/year that has been either approved or proposed.’
“The bottom line, though,” said Spector, “is that even a conservative projection of future LNG supply against a high-end estimate of future LNG trade volumes points to an LNG surplus that will grow through at least 2018, and may or may not moderate thereafter depending on how many approved projects start construction in the next two years.”
http://www.oilandgas360.com/cibc-revises-aggressive-lng-export-assumption-to-6-5-bcfd-but-headwinds-are-no-problem-for-the-u-s/
‘Edmonton should offer incentives to building owners to ease a looming oversupply of downtown office vacancy, says a major developer. Three office towers now under construction will start a “race to the bottom” when they open as older buildings compete for tenants, said George Schluessel, CEO of Calgary-based Procura Real Estate Services.’
“There is going to be a surplus, a glut, of two to 2-1/2 million square feet, depending on who you talk to, of office space downtown,” Schluessel said. “The fallout is going to be the disparity between some of these brand new buildings like the City of Edmonton, Stantec and Enbridge (towers) with high-paying rents and everything else is going to be at the bottom of the barrel.”
‘Schluessel wants the city to offer a program encouraging the repurposing of Class-B and C buildings into uses such as multi-family residential. Such a plan would maintain property values while adding needed rental housing, he said.’
“It’s in the city’s own interest to do this because if our buildings’ office space go down to $100 a foot or less, and I’ve seen them as low as $10 a foot, the city’s property tax base is going to shrivel to nothing and the (capitalization) rates on their existing new buildings are also going to fall.”
“The city is going to be spiralling into a lower and lower tax base on their office market in the downtown and it will probably never recover or it’s going to take decades.”
http://edmontonjournal.com/business/commercial-real-estate/incentives-would-clear-looming-glut-of-edmonton-downtown-office-space-developer
Southlake, TX Housing Prices Plunge 12% YoY; Prices Declines Ramp As Economy Slows
http://www.zillow.com/market-report/time-series/47783/southlake-tx.xls?m=19