It Will Be Hard To Get The Goldilocks Adjustment
Bloomberg reports on Vietnam. “Just six years ago, when Indochina Land sold condominiums in a Hanoi high-rise, buyers hauled sacks filled with dong, accompanied by policemen, to finalize their home purchases, says Tony Diep, managing director of investment firm Indochina Capital. Indochina Land is the real estate division of Indochina Capital Corp. ‘You’d have stacks and stacks of cash sitting on the conference room table and three money-counting machines going at the same time,’ he said. ‘Mortgages are much more popular now and easy to get.’”
“The rapid popularity of mortgages, coupled with ample home inventories, is raising concerns about credit risks and whether it increases the risk of a bubble. ‘The next real estate bubble is coming,’ said Diep. ‘I’m seeing a speculative fervor with long lines at showrooms, and prices are climbing higher than they should be. Many people aren’t buying to live in these units.’”
The Malaysian Star. “The slowdown in the current property sector has seen transactions, be it primary or secondary, winding down within the Klang Valley this year. Johor-based KGV International Property Consultants (M) Sdn Bhd director Samuel Tan Wee Cheng says there has been an oversupply of high-rise properties. ‘Prices of landed properties are too high for the younger generation. Serviced apartments of about 900 sq ft, priced at RM500 (S$167) per sq ft or thereabouts are still within their means.’”
“Landserve (Johor) Sdn Bhd executive director Wee Soon Chit concurs that high-rise residential sub-sector in Johor has been affected this year. ‘Concern about an oversupply situation as well as occupancy issues have seriously impacted demand for this sector. The presence of giant developers from China like R&F Properties, Greenland and Country Gardens developing huge waterfront projects certainly have also caused concerns. It is a buyer’s market now and some of the developers are said to be willing to give up to 20 per cent price discount - especially on the high-end products.’”
3 News on New Zealand. “There are more signs Auckland’s housing market is cooling down, and there are fewer houses selling at auction. Valuer QV says it’s happening city-wide. ‘Some reports are down from around regularly 85 percent of properties at auction selling across Auckland, now possibly under 50 percent and as low as 30 percent selling,’ says QV national spokesperson Andrea Rush.”
“Naveen and Reeny Monteeiro got no bids on their west Auckland home last week. ‘We were actually told that there would at least be a couple of bidders, but you know at the last minute, they actually changed their minds,’ says Mr Monteeiro.”
Reuters on Australia. “Australia is attempting to let the air out of a housing bubble without also deflating a vital source of economic growth or stressing a deeply-indebted household sector. It’s a balancing act few others have pulled off and there is scant room for error as the country is already struggling with the aftermath of a once-in-a-century mining boom. Adding to the stakes are record levels of household debt.”
“The Reserve Bank of Australia (RBA) has made clear its reluctance to cut interest rates again for fear of overheating the market. But neither do they want home prices to fall in a way that would stress over-leveraged owners and potentially deal a damaging blow to the economy. ‘This leaves a sense that it will be hard to get the goldilocks adjustment the RBA would like, which stabilizes risks without snuffing out the growth contribution from housing,’ said Ben Jarman, an economist at JPMorgan.”
Domain News on Australia. “When David Martin sold a house within 48 hours of it being listed and posted a picture of the pleased seller on Facebook it generated a lot of agent envy. Two days to sell the house in Butler, in Perth’s northern suburbs, is a lot faster than the usual turnaround of seven weeks. The slow sales generally, are the result of the gradual downturn in the real estate market over the past 18 months according to Domain State Manager WA Jeroen van de Peppel. ‘There are 16,000 properties on market now compared to 12,000 18 months ago; so there’s more to choose from,’ he said. ‘It is a buyers’ market out there and I don’t think sellers are attuned to that yet. They have to understand that it’s not as good as it was.’”
“Van de Peppel urged sellers to go to market via auction, open-to-offers or an end-date sales. ‘As soon as put a price you are going to limit the number of people showing interest; leaving the price off may generate more interest than putting on an unrealistic price,’ he said.”
The Nikkei Asian Review on China. “China as a whole is facing an economic slowdown, but things are worse in the country’s northeastern corner, where a high reliance on natural resources has turned into a vulnerability. A large banner hanging down a side of a building tells passersby that condo prices have been slashed by 100,000 yuan ($15,630). Sales began last year on this block of 13 condominium buildings on the outskirts of Dalian, Liaoning Province. There are residents, but the development has a certain emptiness to it; more than 90% of the 440 units are unsold.”
“‘We only have a handful of residents here,’ a security guard at the property said, almost in a conspiratorial whisper.”
The Calgary Herald in Canada. “Calgary Real Estate Board chief economist Ann-Marie Lurie says several signs pointed to conditions favouring the buyer in November. Among them was a sales to new listings ratio of 0.58, which is a 27 per cent dip from a year ago, and supply extending to four months’ worth. ‘The apartment sector has been there for some time,’ says Lurie of elevated supply. ‘This the first time we have seen the entire city push above four months, which is really what we would say is that buyer’s market area.’”
“Inventory on homes of all kinds was 5,316 in November, which is 31 per cent higher than the same month a year ago. ‘Earlier in the year there was a pullback in listings, enough that it helped keep the market fairly balanced,’ Lurie says. ‘Now we’re not seeing the same pull-off.’”
The Associated Press. “The Canadian dollar, also known as the loonie, this year has dropped to its lowest level against the U.S. dollar in more than a decade. The loonie has slid 25 percent against the U.S. dollar in the past three years and now is worth, in the ballpark, of 75 cents. Canadians have slowed down making inquiries about Brendan and Valerie Wyck’s three-bedroom luxury condo in Fort Myers, which they rent out by the month at a cost of $110 a night, although inquiries from the United States and other countries haven’t diminished, said Brendan Wyck, who lives in a Toronto suburb and purchased the condo four years ago.”
“The Wycks also take a financial hit when they have to exchange dollars to pay for their homeowners’ association fees. ‘It gives one pause, but because we bought with the long term in mind, we’re biting the bullet and grinning and bearing it until the Canadian dollar comes back,’ Wyck said.”
“…..executive director Wee Soon Chit concurs…..”
I concur Yoo Soon Chit too. That’s what happens in a housing bubble!
Dang…you beat me to the punch line…
Same Chit, different country.
“China as a whole is facing an economic slowdown, …
Sales began last year on this block of 13 condominium buildings on the outskirts of Dalian, Liaoning Province. There are residents, but the development has a certain emptiness to it; more than 90% of the 440 units are unsold.”
Simple solution to move unsold inventory:
Reduce the price…ALOT!
EVERY. TIME.
“Just six years ago, when Indochina Land sold condominiums in a Hanoi high-rise, buyers hauled sacks filled with dong, accompanied by policemen, to finalize their home purchases, says Tony Diep, managing director of investment firm Indochina Capital. Indochina Land is the real estate division of Indochina Capital Corp. ‘You’d have stacks and stacks of cash sitting on the conference room table and three money-counting machines going at the same time,’ he said.”
I recall during a visit at nearly the same time how thrilling it was to instantly become a millionaire in dong for a day at the low cost of a $60 currency conversion. 200,000 dong was the price of a fine French dinner at a restaurant.
Did they not have anything like a bank check six years ago?
millionaire in dong for a day
no thanks
Keep your dongs away from me
uncharacteristic of you Liberace.
“The Wycks also take a financial hit…….”
They have no common sense. Buy a condo 2,500 miles away? Rent it short term? Pay expenses billed in US$ using a currency backed by natural resources?
Why would they wait for anything, especially a loonie “recovery”? Take your profit due to currency markets and get back to Canada ya’ loonies.
“They have no common sense” = An important market-driving force.
Buffett: “When you combine ignorance and leverage, you get some pretty interesting results.”
“The Reserve Bank of Australia (RBA) has made clear its reluctance to cut interest rates again for fear of overheating the market. But neither do they want home prices to fall in a way that would stress over-leveraged owners and potentially deal a damaging blow to the economy. ‘This leaves a sense that it will be hard to get the goldilocks adjustment the RBA would like, which stabilizes risks without snuffing out the growth contribution from housing,’ said Ben Jarman, an economist at JPMorgan.”
If this was a value-driven market then this would not be a problem because Econ 101 says that in such a market lowering the price will increase demand - just ask Macys.
But this is not a value-driven market, instead it is a price-driven market - or, more accurately, it is a price-rise-driven market - take away the price rise and you will take away the force that drives the market. And if you take away the force that drives the market in a price-rise-driven market then you should expect prices to decline, and these price declines will further erode the driving force that powers the price-rise driven market.
These guys should understand this but for some reason the don’t.
The Reserve Bank of Australia (RBA) has made clear its reluctance to cut interest rates again for fear of overheating the market. But neither do they want home prices to fall in a way that would stress over-leveraged owners and potentially deal a damaging blow to the economy
Gotta love how everyone is playing “interest rate” chicken.
I’m starting to smell a rat. Look at how the language has changed. All these Federal Reserve people talking up a rate hike, but it seems to be the worst possible time. It will blow up the emerging markets. It will hammer China and all the related commodity countries. A year and a half ago, the IMF head was practically begging the Fed to raise rates. Now she’s begging them not to. All these corporations have used each month to borrow like crazy. Emerging markets loaded up on US$ denominated debt. And now here comes Yellen with a two by four?
I always try to figure out what these people are up to, without relying on the public line. I come back to this; what does the Fed really want? To stay in power. After the blow up a few years ago, sure Greenspan was discredited, but off he goes and the Fed gets even more power. It’s entirely possible they knew it was going to go kablooey all along and allowed it to get really dangerous. So they could pull the rug and make use of the crisis to absorb more power. If we get a really bad scenario, is it hard to imagine politicians crying, “Oh save us Janet, save us central bankers!”
My own tinfoil hat theory is that the global powers that be (GPTB) are engineering the greatest coup ever conceived in the history of the world. The various crises (economic, terrorism, climate change, food supply, potable water, mass immigration, etc.) are all part of this grand plan to consolidate power.
They have to create problems that are so massive that no one nation or regional power can solve them, necessitating the transfer of power to larger, global entities (UN). Right now, the multitude of various central banks are doing their bidding, but at some point, they will no longer be necessary when the new global bank (and associated universal global currency) takes over.
On a global scale, any major economy is TBTF because it takes down all the other major economies. So that will be part of the rationale used for some of the “solutions.”
One thing is certain: we live in interesting times!
That’s interesting. I have a weird feeling about how these Fed people are pushing a rate hike like it’s just gotta happen pronto! Yesterday I saw one of them said, we should have done it in September. What’s the rush now, 7 years later? We got these wars, commodity collapse, stocks looking spooked. China just gets worse every day.
what hubris the governmentarians have
Australia is attempting to let the air out of a housing bubble without also deflating a vital source of economic growth”
market rules folks
“housing bubble … vital source of economic growth”.
Also a vital container of wealth, as in equity equals wealth.
Unless that price results in collapsing demand which is the case in the current environment.
Remember…… I can ask $50k for my 10 year old Chevy truck but where is the buyer at that price? So it is with housing in the US.
“Unless that price results in collapsing demand which is the case in the current environment.”
Hence the struggle by the PTB to keep prices high. Destroy prices and you destroy wealth.
Voters do not like to see their wealth being destroyed right before their eyes and thus the elected public servants (har har) know this and respond accordingly.
Inflate prices and you destroy demand.
End result? Zero equity.
r e t a r d e d logic.
zero.liberace.
Housing. The loss leader of the US middle class citizen.
This is the kind of crash everyone benefits from.
“Crude Crashes To $36″
http://www.zerohedge.com/news/2015-12-08/crude-crashes-36-handle-down-15-opec
This is the kind of crash everyone benefits from.
Remember…. Falling prices of all items accelerates the economy like nothing else and raises everyones standard of living.
“…time to catch a falling knife (again), or fold on all those ‘recovery’ bets?”
Well struck!
Tens of millions of defaulted subprime auto loans?
“Credit Card Debt Barely Rises In October As Both Student And Auto Loans Surpass $1 Trillion”
http://www.zerohedge.com/news/2015-12-07/credit-card-debt-barely-rises-october-both-student-and-auto-loans-surpass-1-trillion
The Last Great Gasp!
Interesting comments over there too.
Vienna, VA Housing Craters; Prices Plunge 21% YoY
http://www.movoto.com/vienna-va/market-trends/
‘Concerns over the global mining industry grew Tuesday after London-based Anglo American said it will shed 85,000 employees — or 63 percent of its workforce — in a radical restructuring meant to cope with tumbling commodity prices. Shares in the company and several of its rivals plunged as the industry struggles with a drop in demand for metals and fuels, particularly in China, as global economic growth falters.’
‘Other mining companies are also facing challenging times as China’s economic growth slows to below 7 percent a year from double digits in recent years. China accounts for as much as 40 percent to 50 percent of global commodity demand, according to consultants PwC.’
Bernanke the Courageous may have been a little premature with his book.
The book could always be republished with a new title.
“NEW YORK - Fund giant PIMCO has named former heads of two of the world’s biggest central banks to its advisory board, tapping Former Federal Reserve Chairman Ben Bernanke and former European Central Bank President Jean-Claude Trichet.
Bernanke, who already served as a senior adviser to PIMCO, will lead the board…”
http://www.cbsnews.com/news/pimco-picks-ben-bernanke-to-lead-its-board/
PIMCO’s salary is better than main street.
‘Naveen and Reeny Monteeiro got no bids on their west Auckland home last week. ‘We were actually told that there would at least be a couple of bidders, but you know at the last minute, they actually changed their minds’
IIRC, it was only last summer that Auckland house prices were reported to be rising several hundred NZ pesos, per day!
‘It’s been a rollercoaster year for real estate with the market going into a frenzy of higher and higher prices driven by cashed-up foreign buyers, high immigration, strong local demand, a lack of housing, and low interest rates (which are set to go even lower). Then the market spluttered, lurched and wheezed as a bundle of measures at home and in China caused the market to stall.’
‘The Chinese Government turned the screws on its banking sector, putting it on notice that its hitherto laissez faire attitude to clients moving illegal amounts of cash out of the country needed to end — or else. On top of that the Chinese stock market suffered a mini meltdown that ate into people’s life savings.’
‘Meanwhile, the New Zealand Government and Reserve Bank put a raft of measures in place to put the squeeze on property investors and foreign buyers. Most of these came into force on October 1, and caused a flurry of activity with apparent ’sky’s the limit’ bidding at auctions across Auckland and the regions during September.’
‘As we head into the height of the summer season, a period that typically sees the most properties listed for sale, a bundle of buyers are sitting on their hands. It means sellers, perhaps for the first time this year, are on the back foot. It is now a buyers’ market. Which may lead to some disappointment among those who still think they are living in September.’
What’s the commute time from Auckland to say, New Jersey? Oh really? Well, never mind then.
‘David Martin sold a house within 48 hours of it being listed’
The photo of this goober has him in his bare feet. Klassy with a K.
‘After three years of solid price growth, home values in Sydney are now falling, data shows. The slowdown after the boom conditions should not come as a surprise, with auction clearance rates in November dropping to their lowest level since 2010, Domain Group senior economist Andrew Wilson said.’
““There is no doubt that the key trend in the stronger markets is a decline,” Dr Wilson said, pointing to the direct correlation between falling clearance rates and subdued price growth. “The future will be much more subdued than what we’ve become used to over the past two years.”
Well, it shouldn’t come as a surprise Andy, but it’s funny how these bubbles have a way of doing it.
It doesn’t surprise me that he’s barefoot outside his just-sold house. Parts of Australia are pretty casual that way, a lot like Florida, where shorts and flip flops are acceptable attire in all but the most formal restaurants.
New Zealand is more British in terms of dress; a friend of mine lived in Auckland for eight months, and regularly was refused entrance to bars, in part because he was wearing tennis shoes, known as “sand shoes” in the local parlance.
I don’t find a picture of the goober in the link.
It’s the link in the post above, not the one in the comments.
He’s a UHS, not the owner of the house. And he has Barnie Rubble feet.
LMAO. You’re right! And a Barney Fife occupation.
And he has Barnie Rubble feet.
“Hey Fred! I just sold a house! Betty, Bam Bam and I can eat tonight!”
Easy on the eyes waif at the end of that clip.
“Chain Store Sales Collapse Following Already Disappointing Black Friday”
http://www.zerohedge.com/news/2015-12-08/chain-store-sales-collapse-following-already-disappointing-black-friday
All these retail chains are hyper-levered on their brick a mortar locations. I’m glad I didn’t invest in that mortgage paper.
‘It’s difficult to overstate how important the housing sector has become to Canada’s economy. But that economic strength is at risk of becoming a liability if Canada’s hot real estate market rapidly cools.’
‘Canada’s housing sector is a “bedrock of the Canadian economy,” according to a recent report by TD Bank. It’s responsible for between 20-to-30 percent of total economic activity in some years and accounts for about 11 percent of total Canadian job growth, says the report.’
‘More and more Canadians are relying on the housing sector for their livelihood, with over 900,000 employed in home construction, renovation or repair, according to the Canadian Home Builders’ Association. Together they earn more than $50 billion in wages.’
“Residential housing is seven percent of GDP which is higher than it was in the U.S. and it’s been there for several years,” says Hilliard MacBeth, author of ‘When the Bubble Bursts: Surviving the Canadian Real Estate Crash.’
‘One of the biggest risks to the housing market is a rise in unemployment. Job loss can make it difficult for homeowners to keep current on their mortgage payments and force them to sell. And with so many Canadians employed directly or indirectly by the housing sector, some worry a hit to the construction industry will send dangerous ripple effects through Canada’s economy.’
The level of willful blindness that it took to give rise to this state of affairs is stupefying. And compared to the U.S., Canada is supposed to be the more sober nation. Perhaps it was that national identity which led Canadians to believe their experience would be different.
But on the plus side, I’m entertained when someone named “MacBeth” is so foresighted. Is this a dagger which I see before me?
‘Macau’s gaming promoters, who loan money to Chinese high-rollers for gambling in the city’s struggling casinos, increasingly find themselves in a new line of business: debt collection. The so-called junket operators, who use personal connections to lure high-stakes players to the city’s baccarat tables, are collecting only 20 percent to 30 percent of their debts, said Kwok Chi-chung, president of Macau’s Association of Gaming & Entertainment Promoters. In 2013, 70 percent of loans were repaid promptly, he said.’
‘That was before China introduced curbs on illicit money flows and began a campaign against corruption that deterred VIP players, setting Macau’s casino industry on an 18-month-long downward spiral. High-rollers’ wagers have plummeted at least 70 percent to about HKD200 billion (USD25.8 billion) a month since 2013, according to Kwok, reflecting a plunge in VIP numbers and a diminishing junket cash pool from which they can borrow.’
‘“It’s very difficult for junkets to collect debt in China,” Tong said, estimating that as much as 50 percent of all credits to high-rollers are not fully paid when they’re due, and collection often requires “a lot of patience, begging and hassle.”
‘To cut their losses, junkets are now trying to come up with creative solutions, including packaging bad debts and distressed assets and selling them to third-party financial investors at a discount, he said. The problem resonates across Macau, the only place where casinos are legal in China. With 36 the licensed gambling halls, the former Portuguese colony supported a gaming industry about five times larger than the Las Vegas Strip in the first 10 months of the year.’
‘Junket operators may have themselves to blame for their debts. In previous years, some of them extended gaming credit to less credit-worthy players, Vitaly Umansky, a gaming analyst with Sanford C. Bernstein wrote in a Nov 24 report. That created a bubble that’s now burst.’
“If there’s still much debt uncollected, the liquidity will be too tight for some junkets to survive and we’ll see more closures,” Kwok said. “Macau won’t return to the heyday.”
I doubt this conclusion appeared in Mr. Umansky’s report, but this all sounds like organized crime. Loaning money to “less credit-worthy players” whose intention is to launder money, unpaid debts, distressed assets sold to “third-party investors” at a discount.
And just in general, a bubble in gambling loans? How much more manic can you get?
“World’s Fifth Largest Miner Announces Massive Layoffs, Suspends Dividend, Sells 60% Of Portfolio”
http://www.zerohedge.com/news/2015-12-08/worlds-fifth-largest-miner-announces-massive-layoffs-suspends-dividend-sells-60-port
Just like consumers and LoanOwners under the crushing weight of massive debt on rapidly depreciating assets, they’re liquidating for whatever it will fetch.
“the crushing weight of massive debt on rapidly depreciating assets”
A theme to be considered painfully obvious for a whole generation.
—————————————————————————-
Greeley, CO 9 14 +5
ATT IN Colorado !
milken ranks greeley as nirvana
“Credit Market Crashes Through 2011 Wides, ‘Triple-Hooks’ Worst Since July 2009″
http://www.zerohedge.com/news/2015-12-08/credit-market-crashes-through-2011-wides-triple-hooks-worst-july-2009
Cratering global demand working its way through Wall St
Morgan Stanley’s Holiday Present To 1,200 Of Its Best-Paid Employees: Pink Slips
http://www.zerohedge.com/news/2015-12-08/morgan-stanleys-holiday-present-1200-its-best-paid-employees-pink-slips
sure hope hitlery beats up on wall st
only 350,000 bankers have lost jobs so far
DID YOU PARENTS HAVE A MORT AFTER AGE 55?
http://www.fool.com/investing/general/2015/03/23/heres-the-average-americans-mortgage-payment-by-ag.aspx
also dept of AGg and Vet s getting 0 down loans?
“Imagine no payments - now imagine immeasurable freedom.”
Fer Schur!!!!
$300,000, 25 years left on a mortgage while reading ZeroHedge would put just about any debt donkey into crater rhage today.
In order to live the simple life, I’ve had to give up many of the things most people consider essentials:
Monthly statements
Monthly P&I payments
Budget juggling
Riding lawn mower
Escrow account
PMI
Fear
Living the K.I.S.S. life is lost on the average American.
To bad. Because it’s pretty easy.
ZeroHedge is for the unemployed or city college kid living at home when not paying Call of Duty on the Xbox.
And obviously sacked with 100K worth of school debt…
Hollywood Hills, CA Housing Craters; Prices Collapse 24% YoY
http://www.zillow.com/hollywood-hills-los-angeles-ca/home-values/
More losses for you Lolas. More falling prices to dramatically lower and more affordable levels boosting the economy for the rest of us.
“Trannies Trounced - Plunge Most Since Black Monday”
http://www.zerohedge.com/news/2015-12-08/trannies-trounced-plunge-most-black-monday
All the tranny news… from Mafia.