Buyers Attitudes Are Changing Dramatically
The Union Tribune reports from California. “Most San Diegans can’t afford to buy a home in San Diego. But that doesn’t mean local home sellers are out of options. The San Diego branch of Pacific Sotheby’s International Realty is working with a Carlsbad website that specializes in fishing for the world’s best buyer: Affluent Chinese who pay in cash, make deals happen quickly and are increasingly motivated to move their money out of the world’s most-populous country. San Diego State University finance lecturer Seth Kaplowitz said Chinese buyers are putting their money in the United States and other nations because it is a ‘hard asset’ — not due to high housing prices back home.”
“‘It provides them a place to run to when they want to escape, and they get the equity,’ Kaplowitz said. ‘Asian people, in general, are long-term people. Unless they flip it because they become more Americanized, they are going to hold on to that asset forever.’”
The Mail Tribune in Oregon. “The relentless flow of newcomers from the Golden State continues to feed Jackson County’s real estate market. A nearly 20-percent jump over the past three months in residential transactions propelled the median price for existing homes to $225,000, or 9.8 percent higher than it was a year ago, according to figures compiled by the Southern Oregon MLS. ‘My understanding is that the market is still solid down there right now,’ said Jacqui Robbins, principal broker at Finish Line Real Estate in Medford. ‘If it’s going well in Southern California, they’re still coming to Southern Oregon.’”
The Wall Street Journal. “Every day for the past six months Brian Christopher closely observed a swooning loonie. Mr. Christopher is a Canadian, who was trying to buy a home in Los Angeles, and facing a sharply depreciating Canadian dollar. ‘I’ve just watched it get worse and worse,’ he says.”
“Some Canadians continue to wait to see if the Canadian dollar will strengthen before they buy a home, says David Ivkovic, a Canadian by birth who is a realtor with Keller Williams Realty in Studio City, Calif. ‘Others just suffer the loss,’ he says.”
“As for Mr. Christopher, he finally bit the bullet and bought a Los Angeles home, despite his fears about the swooning loonie. Mr. Christopher, an actor, and his husband Marco Bianchi, a tech executive, closed on a three-bedroom house with a nice view in Baldwin Hills for about $995,000 in October. Of the loonie, he says, ‘We were hoping until the last minute it would go back up.’”
The M Report. “A recent survey from Redfin showed that home sellers are losing a bit of their ground in the housing market in the fourth quarter of 2015, therefore placing the advantage in the hands of buyers. The survey, which questioned 900 Redfin agents all over the nation in November, showed that only 6.3 percent indicated that sellers had all the power in the housing market in the fourth quarter, a huge drop from 35.5 percent in the first quarter 2015. ‘You wouldn’t know that the balance of power in the market is shifting by just looking at prices and inventory,’ said Jordan Clarke, Redfin San Diego agent. ‘However, buyers’ attitudes are changing dramatically. There are more bidding wars now than there were this time last year, but more homes aren’t selling for above asking price. Once the price gets too high buyers just walk away.’”
“Only 58 percent of Redfin agents noted that now is a good time to sell a home, the lowest number in three years. ‘Sellers tend to look backward, while buyers mostly look ahead,’ said Nela Richardson, Redfin Chief Economist. ‘As a result, more than a quarter of home sellers had to drop their prices in October. However, seller expectations will eventually come down to what buyers are demanding. It’s still a good time to sell, but just may not be as lucrative as many sellers hope.’”
The Tioga Tribune in North Dakota. “An incomplete occupancy survey conducted by the City of Tioga showed apartments are about 68 percent full. Advertised rates show rents have fallen somewhat since last year, but they remain well above national averages. Among the largest of the complexes in Tioga is the Olson Apartments and Olson Duplexes. Stacy Vejtasa, who manages the complexes, said they’ve been hovering around 60 to 65 percent full since the slowdown in the oil industry began last year. ‘We definitely have a lot of availability, which begs the question why are man camps still open?’ Vejtasa said.”
The Houston Chronicle in Texas. “Houston’s luxury housing market is losing some of its luster, a new report from Redfin shows. Luxury home prices here were down 7 percent in the third quarter, compared to a year earlier. The average high-end home price was $1.35 million, according to the report, which defines the luxury market as the top 5 percent of home sales.”
“Nationwide, luxury home prices fell 2.2 percent over last year. It was the first decline since 2012. Redfin said the dip could be attributed to a fewer international buyers or a larger supply of properties for sale. Scottsdale, Ariz., and Boca Raton, Fla., saw the biggest dip in luxury property values with 15 percent declines.”
“‘High-end buyers are usually not weighed down by rates, mortgages or competition from other buyers, but they do look for deals,’ Redfin’s chief economist Nela Richardson, said. ‘The luxury market was the first to recover from the housing downturn, and now it’s a bellwether of slowing price growth for the rest of the market. Sales at the top end of the market continue to soar, but prices are downshifting.’”
“The San Diego branch of Pacific Sotheby’s International Realty is working with a Carlsbad website that specializes in fishing for the world’s best buyer: Affluent Chinese who pay in cash, make deals happen quickly and are increasingly motivated to move their money out of the world’s most-populous country. San Diego State University finance lecturer Seth Kaplowitz said Chinese buyers are putting their money in the United States and other nations because it is a ‘hard asset’ — not due to high housing prices back home.”
Any chance Trump might propose to put a stop to the all-cash Chinese real estate money laundering activity, in the interest of improving housing affordability for Americans? (I’m assuming that the remaining candidates would have no interest in this issue. )
It’s a convenient narrative but we already know its dumb.borrowed.money.
LOL…..+1B…..yes with a B.
Locals should welcome the inflow of China money (or any kind of money) because the inflow of money what make economies work.
Here’s a place that could sure use an in flow of money.
Once upon a time this place enjoyed a steady inflow of money. Then … something happened.
https://www.google.com/search?q=bodie+ca&biw=1360&bih=643&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjnot-z987JAhVD5WMKHZj0DqgQ_AUIBygC
You’ve posted that before, but I can’t agree that San Diego, Vancouver and Melbourne are the equivalent of Bodie, California in any way. The mine near Bodie created wealth, and then the mine played out.
If looted and corrupt Chinese money stops coming to San Diego to be laundered by purchasing single-family houses for cash, the city isn’t going to become a ghost town.
Exactly.
Watch the economy accelerate as the credit bubble collapses and prices fall to dramatically lower and more affordable levels.
My point is not that these places will go the route of Bodie, my point is that these places depend of the influx of money.
People piss and moan about what outside money that flows in does to their economy but they will really do some pissing and moaning if it ever stops.
Story time (told to me when I was a young slick-sleeved E1 in the military):
A small town was a military town and the residents and merchants of the town relentlessly complained to the base commander about just what pains-in-the-asses the military guys were, so the base commander decided to pay these pains-in-the-asses in two-dollar bills.
Immediately after payday the town was flooded with two-dollar bills, which sent a message to the towns folks that, hey,- much of their bread-and-butter depended on these pains-in-the-asses spending their money there.
No, these places depend on having something to sell.
It could be tourism experiences, Qualcomm, biotech, etc.
And yes, it could also be housing.
However, if you follow the money, it may not be as much as you think.
If a Chinese national buys a home in San Diego from a homebuilder, that money in large part goes to the local trades that build homes. That’s is a meaningful influx of money.
However, if they buy an existing home in San Diego, that money will often NOT stay in San Diego. Many people who sell their homes are moving, and taking that money with them.
BTW, what the Chinese money does in reality is distort the market–it has made housing become an investment (subject to price changes based on sentiment), and not shelter (subject to price changes based on actual supply and demand).
Does it not matter from where the influx of money comes? Or whether it was earned honestly, or was created or stolen or lent into existence, or was the product of slave labor, or of some ridiculous IPO where a workable business plan is irrelevant?
The fact that much of the developed world is competing ardently for an influx of dirty foreign money is repellent to me. It’s as much a political failure as an economic one.
IMHO, what matters is whether the money comes from people who intend to occupy the home and live there.
If all the money comes from people buying and not occupying, it effectively is a false market signal (prices go to high, supply can/will grow too fast for the actual population, etc.), which leads to imbalances and trouble.
What matters is if they can afford it.
If you have to borrow for 15 or 30 years, you can’t afford it nor is it affordable.
Here’s an example of a place where the locals get to enjoy a very - VERY - hefty inflow of money for just a couple of weeks a year - enough money inflow during these couple of weeks to allow things to keep on running for all the rest of the year.
https://www.google.com/search?q=sturgis&biw=1360&bih=643&source=lnms&tbm=isch&sa=X&ved=0ahUKEwiNhvSi-c7JAhVY9mMKHYw-CKAQ_AUIBygC&dpr=1
….eeking by on $20k/yr is no way to live.
If Trump stops the Chinese from buying the USA, he gets my vote.
“Affluent Chinese who pay in cash…”
Get this San Diego trash out of here!
‘Asian people, in general, are long-term people. Unless they flip it because they become more Americanized, they are going to hold on to that asset forever.’
I’m expecting lots of Chinese investors in American residential real estate to quickly become more Americanized at the point of Echo Bubble deflation.
No culture values holding onto a deflating asset. That’s for sure.
What about the numerous Chinese ghost cities? You know the amount of money to maintain those has to be sky high because they were built with sub par material.
I am sorry to say but it makes sense for Chinese to buy RE abroad.
The Loonie is going back to $1.60 to one US dollar. The best thing a Canadian can do is buy US real estate. When the exchange rate gets to $1.60, I’m going on a nice long Canadian vacation tour!
“a nice long Canadian vacation tour”
I’ve been dollar cost averaging for a long time.
‘I’m going on a nice long Canadian vacation’
Take a coat.
And a tuque, fer shur, eh?
July - Fishing in BC sounds fun. Count me in! As a renter, i can leave for weeks, no house sitter needed.
Grapevine, TX Housing Craters; Prices Plunge 8% YoY As Housing Demand Craters To 20 Year Low
http://www.movoto.com/grapevine-tx/market-trends/
“Glencore CDS Are Soaring Again As Default Risk Rises Above 50%”
http://www.zerohedge.com/news/2015-12-09/glencore-cds-are-soaring-again-default-risk-rises-above-50
Hundreds of billions in borrowed money promises imploding for depreciating assets like cars, houses and consumables. The fact is borrowed money wouldn’t be necessary if prices weren’t fixed and rigged at grossly inflated levels.
As a resident of San Diego, I cannot wait for a market correction. Sooner is better than later!
I have my sights on some nice high-rise condos downtown, but if things get bad enough, I wouldn’t mind an SFR in Carmel Valley as well.
I have plenty of colleagues who put down $200K or more for their homes, but I think it’s all going to end in tears.
Crater please!!
I watched some San Diego condos drop in value in 2009-2011, but it did not seem they went down that much. PB, what did you see?
If the economy craters to the point they are giving away homes in the Carmel Valley, we will all have more challenges than getting new shelter. I don’t think we want to pray for that event!
The long term historical price of $25-$35/sq foot for resale housing isn’t giving anything away Jingle_Fraud.
Praying doesn’t enter into it.
the more it drops the more the Chinese will out bid you.
bears always find a reason to be too scared to buy.
What chinese Lib?
US Housing Demand Collapses To 20 Year Low
http://4.bp.blogspot.com/-qRBemWyulY0/VNGrDCBXzOI/AAAAAAAAiMA/jdA2RQkiNDc/s1600/MBAFeb42014.PNG
San Diego, CA Housing Craters; Prices Fall 11% YoY
http://www.zillow.com/bay-ho-san-diego-ca/home-values/
Dania Beach, FL Housing Prices Crater 13% YoY
http://www.zillow.com/dania-beach-fl/home-values/
‘Here’s what U.S. state and city pension funds are getting this year for the hundreds of millions of dollars in fees they’re forking over to hedge funds: almost nothing. The low returns are dealing a setback to governments that boosted exposure to hedge funds, seeking windfalls to help close a $1.4 trillion shortfall that’s facing public-employee retirement systems nationwide. The investment funds have underperformed stocks since 2008.’
Is $1.4 trillion a lot? Maybe Janet will produce a windfall.
city pension funds are getting this year ??
They just turn to their money printing machine to get more revenue…My water, sewer and garbage fees have doubled in just a few short years…And they have other tricks also…$25. to have electricity turned off…$25. to have it turned on…Bundle the services…In other words, you can’t just have electricity or water turned on…You must have garbage collection also even if you don’t need it…And although the growth we have seen here in the valley has likely helped budgets they spend with reckless abandon thinking that the good days will never end…35 year old fireman friend here makes $160,000.+ per year
This fact further explains why California is the most impoverished state in the US.
gov unions are much scarrier than al kady or isis
gov workers get paid and
you pay- retire at 75% of pay age 55 here in N VA
Retire and starve as a result of fixed, rigged grossly inflated prices.
‘If it’s going well in Southern California, they’re still coming to Southern Oregon.’” ?
I have family in Southern Oregon…They tell me things have improved greatly and that there are a lot California relocations…Two of my youngest sons friends both of which I know quite well are relocating to Southern Oregon…They are married one has 2 children and they have saved enough money to buy a home with very little if any borrowing and quoting from them; “Have a Life”…
I don’t blame them…Prices here are horrific for anyone without the means ($$) or jobs or more likely both…Staying here through your 30’s and then into your 40’s and feeling like you are no farther ahead is not the way to live no matter how attractive it may be to live in this valley…
Prices are no less ‘horrific’ in OR.
Throwing away a lifetime of earnings on a depreciating asset at these grossly inflated prices doesn’t constitute “having a life”. Quite the opposite.
no jobs in southern OR. And the few they have pay very little.
This exodus from CA is cyclical.
Prepare for more of the same and more good economic news; Falling prices to dramatically lower and more affordable levels accelerating the economy.
“The China Commodities Dump Continues—-Mill, Smelter And Refinery Exports Surge”
http://davidstockmanscontracorner.com/the-china-commodities-dump-continues-mill-smelter-and-refinery-exports-surge/
‘The airline industry has its eyes on Southwest Airlines share price Wednesday morning, following Tuesday’s 9% decline. The precipitous fall came after Southwest said fourth-quarter revenue per available seat mile “will be approximately flat to down 1%.” Prior guidance was that RASM would be up 1%.’
‘Wolfe Research analyst Hunter Keay said people may have forgotten that lower fuel prices invariably lead to lower ticket prices. Last week, Delta said its November RASM increase 1.5% and its December RASM will be at the “high end” of guidance toward a drop between 2.5% and 4.5%. Keay said that helped to set up “a risky, euphoric entry into 2016.” Additionally, he said, Southwest may have assumed that “heavy discounting would abate around the peak holiday season but that appears not to be the case.”
“It’s silly to lower fuel assumptions in models and not lower revenue estimates too,” Keay wrote. “Didn’t we all learn this lesson already?”
I’ve been asking that same question for a while Hunter. Stock prices real high with no earnings, houses flipping to flippers. The Chinese make a mess of their housing bubble, and they head out around the world to repeat it.
Labor Force Participation Rate Plummets To 37 Year Low; Jobless Population At Record High
http://data.bls.gov/timeseries/LNS11300000
Addendum;
“America Summarized In One Headline: “Better Living Through Layoffs”
http://www.zerohedge.com/news/2015-12-09/america-summarized-one-headline-better-living-through-layoffs
Here we are. The end result of massively inflated prices by way of rigged and fixed efforts by your government. End result? The smallest labor force in 37 years.
Thanks for nothing Obama.
You gotta love the comment by the ND apartment manager:
‘We definitely have a lot of availability, which begs the question why are man camps still open?’ Vejtasa said.”
She’s ticked off that some workers don’t want to live in her overpriced apartments, LOL! Darnit local government, you gotta MAKE them move in here by banning those “man camps.”
The one thing that I find hilarious is the way that these local governments (Williston, ND for example) are trying to force transient workers to live in expensive, permanent housing. Oh, how that is backfiring on them right now. They thought that through the stroke of a pen, they could avoid the boom and bust plight of every other town whose existence is tied to resource extraction.
At those vacancy rates, these new apartments will be in default soon (Hi Mel!) and the new owners will lower the rents - morer.
I like Redfin’s business model of commission sharing with the buyer. which the traditional R E Industrial Complex hates. I also like the non-hand holding Redfin Agents due. They treat people like an adult. They assist, and don’t lead. You pick the selection of homes to view, not the game playing, and favors returned. A friend used them and was really happy.
Prelude of Hammer to Fall……
http://www.housingwire.com/articles/35789-san-francisco-federal-credit-union-unveils-zero-down-jumbo-mortgages
With no mortgage insurance either. This should end well.
“‘We studied the problem and realized that there was no reason our credit union couldn’t offer up to 100% financing without requiring PMI,’ Stapp added.”
No reason, no reason at all.
Bahahahahahahahahahahahahahahahaha
I love this blog.
‘The survey, which questioned 900 Redfin agents all over the nation in November, showed that only 6.3 percent indicated that sellers had all the power in the housing market in the fourth quarter, a huge drop from 35.5 percent in the first quarter 2015. ‘You wouldn’t know that the balance of power in the market is shifting by just looking at prices and inventory’
‘more than a quarter of home sellers had to drop their prices in October.’
Here at the HBB, this isn’t news. The 20 mile filter:
6,353 nearby properties found San Diego, CA Real Estate and Homes for Sale
http://www.realtor.com/realestateandhomes-search/San-Diego_CA/type-single-family-home,multi-family-home,condo,co-op,townhouse,undefined-condo?ml=4
2,141 nearby properties found San Diego, CA Price Reduced Homes for Sale
http://www.realtor.com/realestateandhomes-search/San-Diego_CA/type-single-family-home,multi-family-home,condo,co-op,townhouse,undefined-condo/show-price-reduced?ml=4
we cab save HA time and Ben money-there are no positive markets
anywhere, anymore
Falling housing prices is positive.
Wellesley, MA Housing Craters; Prices Plummet 7% YoY
http://www.movoto.com/wellesley-ma/market-trends/
‘Hedges will continue to expire, exposing oil producers to the cruel realities of the bear market. Somewhere around one-fifth of U.S. oil production was hedged at $80 to $85 per barrel in 2015. Half of those hedges will expire in 2016, and the hedge price will fall much lower. In one illustrative example of the power of hedging, Bloomberg highlighted in November the Mexican government’s astute decision last year to hedge 228 million barrels at $76.40 per barrel for 2015, bringing it a windfall of nearly $6 billion this year because market prices traded at almost half that price. But it won’t be able to do that again in 2016. A few months ago Mexico was only able to lock in 2016 oil at $49 per barrel.’
‘Third, access to finance will only become tighter. Lenders to the energy sector are getting burned — the value of high-yield energy debt has collapsed amid speculation that a wave of defaults could be coming. Lenders were lenient in the most recent round of credit redeterminations, but as the Wall Street Journal notes, the “deep losses on bonds from junk-rated U.S. energy and mining firms are rattling even seasoned investors.”
Janet? Janet?
Bueller?
My big question Ben, is what will happen as the hedges burn off?
Up till now, producers who had hedges in place were pumping as much as they could in order to sell at prices higher than market.
Once those hedges go away, what happens? Will the owners of the wells still pump as much oil? Will some (not all) creditors foreclose on the wells, and pump less waiting for higher prices?
If you follow the $, it seems like there was a perverse incentive for at least 20% of US producers to keep producing at a high level despite the supply glut.
Some would argue that they need to pump even more to attempt to string out the creditors and keep the lights on.
We won’t have to wait long to find out what happens…
‘that they need to pump even more to attempt to string out the creditors and keep the lights on’
And this is what OPEC is doing too. Dry cleaner effect.
‘Investors will need to closely watch the China steel market in the months and years ahead, as mining giants Rio Tinto and BHP Billiton have both taken the position the peak in the Chinese market won’t come until the middle of the next decade, when steel production climbs to around 1 billion tons, or possibly a little higher.’
‘China Metallurgical Industry Planning and Research Institute, the government forecaster, says demand for steel production won’t rebound in 2016. Final results for 2015 Chinese steel consumption is expected to drop for the first time since 1995, said the agency.’
‘If the conclusion and estimates from the agency are accurate, it’s another negative catalyst in a commodity segment already under duress, with current prices for iron ore at a record low of approximately $40 a ton.’
http://seekingalpha.com/article/3745236-bhp-billiton-rio-tinto-refuse-to-accept-that-chinese-steel-has-peaked
Affluent Chinese who pay in cash, make deals happen quickly and are increasingly motivated to move their money out of the world’s most-populous country.
USA - we are for sale with your fake cash.
Selling treasuries to anyone interested in buying them is nothing new Lib.
turn your head when you eat a taco
Rapidly depreciating houses Liberace…. rapidly depreciating houses.
Los Angeles, CA Housing Prices Crater 9% YoY
http://www.zillow.com/westchester-los-angeles-ca/home-values/
Chinese paying cash? Nothing new there.
In some areas on Long Island, it’s Indians and Bangladeshi who’re moving to the neighborhood in droves, paying cash for $1m houses.
Meanwhile, the local kids are moving to North Carolina, for jobs and more affordable housing.
it’s all dumb.borrowed.money. my friend.
And remember… housing demand is at 20 year lows.
Meanwhile, the local kids are moving to North Carolina, for jobs and more affordable housing.
I’ve heard that. South Carolina, too. The new boat people.
“Credit Card Data Reveals First Core Retail Sales Decline Since The Recession”
http://www.zerohedge.com/news/2015-12-09/credit-card-data-reveals-first-core-retail-sales-decline-recession
The well done run dry. The US public is up to their eyeballs in debt.
“We were hoping until the last minute it would go back up.”
And it did not. So you bought the house.
This blog helps affirm the Basic Laws of Human Stupidity every single day.
http://www.cantrip.org/stupidity.html
“It’s Official: San Francisco Housing Market Is In A Bubble” (in other words, it’s too late. You’re screwed.)
http://www.bizjournals.com/sanfrancisco/blog/real-estate/2015/12/san-francisco-housing-market-zillow-bubble-zg.html
It’s a long way to the bottom for housing prices irrespective of location.