The Carnival Came To An Ugly End
The Calgary Herald reports from Canada. “Calgary’s resale housing market lost close to $3.5 billion in MLS sales in 2015, according to data released Monday by the Calgary Real Estate Board. CREB’s chief economist Ann-Marie Lurie said the ratio of sales to inventory will ultimately impact house prices. ‘When we start hitting above four (months of supply) is when we start to see what we call really buyer’s market conditions,’ said Lurie. CREB said the inventory level was at the highest December level recorded since 2008. Inventory levels were notably up in both the apartment and attached sectors, which neared the highest December total on record.”
“There were only 878 MLS sales in the city in December, which was down by 18.2 per cent from December 2014. ‘December showed that buyers in this market are continuing to be much more cautious as the impact of further oil price declines weighs on their confidence,’ said CREB’s president Corinne Lyall. ‘What we found as well is that sellers weren’t clamouring to take their homes off the market. Many of them kept them on. So we had higher inventory levels than we’ve probably seen since 2008 in December.’”
The Times of Israel. “Jerusalem municipality is set to double property taxes on homes whose owners live abroad, in a bid to reduce the number of so-called ‘ghost apartments’ in the city. Jerusalem’s real estate market is notoriously expensive, with housing prices continuing to rise faster than average incomes. One cause for the rising costs are thousands of foreign residents who purchase homes in the city, but spend only brief periods in the apartments on visits.”
“‘The addition of thousands of ghost apartments to the market will dramatically increase the supply of apartments available for rent by young people, and will lower rent prices in the city,’ said Jerusalem Mayor Nir Barkat.”
The Sydney Morning Herald in Australia. “Major banks have lopped tens of thousands of dollars off how much they are prepared to lend home buyers, according to new figures that highlight the toughening in mortgage lending standards. A couple with combined income of $120,000 purchasing an investment property can now borrow up to $80,000 less from a major bank than they could a year ago, calculations from mortgage broker Homeloanexperts.com.au found.”
“In recent months, these tougher policies are thought to be a key reason for a sharp slowdown in the housing market, which has resulted in lower auction clearance rates and a dip in prices in Sydney and Melbourne. Mortgage broker Christina Parnham, said the reduction was mainly because banks were requiring that prospective borrowers be tested against how they would cope with higher interest rates. ‘You’re going to have to be able to service the loan at about 7.5 to 8 per cent,’ she says.”
“At the same time, banks have adopted more conservative assumptions about how much money customers will need to live on. Now they are being forced to use more sophisticated indexes for measuring how much people need, and these are generally tougher. Some banks are also taking a closer look at individuals’ specific circumstances to determine their spending patterns, after the corporate watchdog said many banks were wrongly assessing customers’ living expenses. These tougher credit standards from banks caused the value of new housing investor lending to drop 20 per cent in the September quarter, and the share of loans going to investors was the lowest in two years.”
The Phnom Pen Post in Cambodia. “The construction and real estate industry is huge and growing at a breakneck speed, as towering cranes and high-rise buildings emerge across Phnom Penh. With a flood of foreign investment over the course of the last two years, the World Bank has announced that construction is Cambodia’s most dynamic engine of growth. ‘These luxury units are more like investment vehicles for wealthy locals and long-term foreign residents, [who hope] of reselling them in two to three years at a significant gain,’ said Saraboth Ea, managing director of Maxem Property. ‘In the short to medium term, there will be an oversupply of these units and we suggest people reduce their investment in these types of units until we have a clearer picture of the market in 2018.’”
The Malaysia Chronicle. “Malaysia’s property market which has been on a steady decline since 2014 is expected to continue its downward trend this year, industry experts said. ‘Property speculators who have bought into high end condominiums in hope of flipping it for profit will be suffering this year because there are no demands for their properties and there is a glut of such properties,’ said Real Estate and Housing Developers Association (Rehda) Penang branch chairman Datuk Jerry Chan, referring to condominiums that are priced between RM600,000 and RM900,000. He predicted a better renters’ market as the speculators, who are unable to sell, will be forced to rent out the premises at lower rates to cover the instalments for the properties.”
The South China Morning Post. “Construction on the Venice Impression in Anyang, Henan province, started in 2009 during China’s boom days and hopes for the project were high. The mall would be not only the largest in the region, it would give those living in the inland Chinese city a taste of luxury. At least, that was the vision. Today the project appears little more than a complex skeleton of cement and steel. ‘It’s over, it’s over,’ said Wang Teng, who said he had lent about 300,000 yuan (HK$357,000), his life savings, to the developer in 2010 for a promised annual interest rate of 18 per cent. ‘Money invested here is all washed away.’”
“He is just one of the 200,000 creditors to Chaoyue Group, a developer and local coal-property conglomerate. Chaoyue’s boss was arrested in November on criminal charges of ‘illegal fund-raising,’ leaving an estimated unpaid debt of 4 billion yuan, local media reported. The Venice Impression is just one of several ‘rotten-tail’ projects in Anyang, and Anyang is just one of hundreds, if not thousands, of Chinese cities and towns with an oversupply of property.”
“Back when money was easily available and China’s economic boom seemed unstoppable, local residents rushed into such schemes in search of high returns. The unlucky ones found themselves involved in developments that were little more than Ponzi schemes. ‘It was like smoking opium,’ said Li Jianjun, a taxi driver in Anyang. ‘You put down 100,000 yuan at Chaoyue or Zhenyuan, and you took 2,000 yuan a month in interest payments – nobody wanted to work.’”
“Zhenyuan was another private company based in Anyang that has since been toppled by its unpaid debts. The carnival came to an ugly end. By the end of 2011, many schemes had collapsed, forcing angry investors to protest on the streets. Billions of yuan evaporated. ‘It’s just wrong to expect [your] money [will come back],’ said Zhang, who was stood at the gate of another unfinished project in Anyang. He was unwilling to give his full name. ‘People were just thinking too much about money – a man just needs one bed to sleep on and three meals a day.’”
The News Paper on Singapore. “He took out loans and mortgaged his three-bedroom condominium unit to invest in property overseas, thinking that he could get rich quick. But Mr Lim ended up over $600,000 in debt and with a $400,000 mortgage when the overseas developer went missing in 2011. Two years ago, Mr Lim approached Credit Counselling Singapore, which helps people with debt problems. They helped him negotiate a monthly payment plan of $8,000 to creditors for a term of seven years to pay off his debt.”
“Mr Lim is also servicing a mortgage of about $2,200 at an interest rate of around 1.8 per cent. Mr Lim’s family of four live on a tight budget and an increase in mortgage rates is the last thing they need. But following the United States’ Federal Reserve’s decision to raise interest rates last month, home loan and mortgage rates in Singapore are also set to rise. ‘I hope the increase (in interest rates) is not steep, one per cent a year is still all right and we can stomach that,’ said Mr Lim. ‘But if it’s three per cent… I will probably have to ask my children to chip in more.’”
“His youngest child will complete her university education this year and he hopes that she, too, will be able to help out financially when she enters the workforce. He said: ‘I’m their father, I will feel bad asking them (to contribute more money) for this mistake. Our budget is very tight and we’re already stretched to the limit. We have already cut down to the bare bones, no restaurants, less entertainment and less shopping.’”
San Clemente, CA Housing Market Craters; Prices Plunge 9% YoY
http://www.zillow.com/marin-county-ca/home-values/
“Construction on the Venice Impression in Anyang, Henan province, started in 2009 during China’s boom days and hopes for the project were high. The mall would be not only the largest in the region, it would give those living in the inland Chinese city a taste of luxury. At least, that was the vision. Today the project appears little more than a complex skeleton of cement and steel. ‘It’s over, it’s over,’ said Wang Teng, who said he had lent about 300,000 yuan (HK$357,000), his life savings, to the developer in 2010 for a promised annual interest rate of 18 per cent. ‘Money invested here is all washed away.’”
Is this situation whatsoever representative of China’s transition from a construction-based to a consumer-led economy?
Eighteen percent returns are nice, but are difficult to achieve and unlikely to be sustained.
Yes, there is a lot of weird events, like “….when the overseas developer went missing in 2011.”
I notice a lot of people go “missing” when they owe big money and cannot pay.
“it’s over,’ said Wang…he had lent about 300,000 yuan…all washed away.’”
His life savings of $50,000.
“…just one of the 200,000 creditors to…one of several ‘rotten-tail’ projects in Anyang, and Anyang is just one of hundreds, if not thousands, of Chinese cities and towns with an oversupply of property.”
“…one bed to sleep on and three meals a day”
That is how $10 or $20 Trillion goes poof, and hundreds of millions of hopeful soon to be rich sink back to three slops and a flop.
What are wages in Singapore?
This guy has over $10,000/month just in debt payments…
——————-
The News Paper on Singapore. “He took out loans and mortgaged his three-bedroom condominium unit to invest in property overseas, thinking that he could get rich quick. But Mr Lim ended up over $600,000 in debt and with a $400,000 mortgage when the overseas developer went missing in 2011. Two years ago, Mr Lim approached Credit Counselling Singapore, which helps people with debt problems. They helped him negotiate a monthly payment plan of $8,000 to creditors for a term of seven years to pay off his debt.”
“Mr Lim is also servicing a mortgage of about $2,200 at an interest rate of around 1.8 per cent.
From what I have heard, if you are an individual contributor they are fairly low. Gotta be a manager to live well.
don’t dis Singapore
2.2% unemployment during a crisis
we have much to learn from them.
“Two years ago, Mr Lim approached Credit Counselling Singapore… They helped him negotiate a monthly payment plan of $8,000 to creditors for a term of seven years to pay off his debt.”
Bankruptcy is not easy in Singapore.
“But those unable to pay the amount in full can still be discharged from bankruptcy. First-timers will be eligible for discharge after seven years, and repeat cases, after nine years.”
“Another change is that those who fail to pay the target contribution in full prior to their discharge will have their records retained permanently on a register that can be accessed by the public.”
http://www.channelnewsasia.com/news/business/singapore/changes-to-bankruptcy/1840304.html
Mr. Lim will not be making this kind of mistake ever again., nor will his children.
Palins to make $$ on resale homes
HA will be pissed
Remember……. I can ask $50k for my 10 year old Chevy pickup but where is the buyer at that price?
So it is with any depreciating asset like houses.
see , u r already pissed
how can you not make $ on anything purchased in 2011?
You have a beef with the data my friend.
Housing Demand Plummets To 20 Year Low
http://1.bp.blogspot.com/-0q8fIAsczFk/VUANHEhSbnI/AAAAAAAAjRs/oANwXOUviGw/s1600/MBAApr292015.PNG
Mafia is mad that “he” can’t make money in ice covered Buffalo, NY.
Your mileage may vary.
Data Lola data…
Bellevue, WA Housing Prices Crater 6% YoY
http://www.zillow.com/bellevue-wa-98006/home-values/
‘these tougher policies are thought to be a key reason for a sharp slowdown in the housing market, which has resulted in lower auction clearance rates and a dip in prices in Sydney and Melbourne. Mortgage broker Christina Parnham, said the reduction was mainly because banks were requiring that prospective borrowers be tested against how they would cope with higher interest rates. ‘You’re going to have to be able to service the loan at about 7.5 to 8 per cent,’ she says.”
‘At the same time, banks have adopted more conservative assumptions about how much money customers will need to live on.’
Credit is easy when the lenders think they can’t lose. Then they pull the rug.
“Credit is easy when the lenders think they can’t lose. Then they pull the rug.”
Yes!
“Credit is easy” = suck ‘em in.
“Pull the rug” = spring the trap.
Bahahahahahahahahahahahahahaha
at the beginning of a storm which might turn the umbrella inside out, demands that you do not open it, but stay indoors.
That sounds like a description of conservative underwriting—e.g. the CCC’s!
When’s the last time that we saw bankers engaging in _that_??!?
‘You’re going to have to be able to service the loan at about 7.5 to 8 per cent,’ she says.
Gotta love adjustable rate mortgages…
I had a title once; Adjustable Means Up
‘Billions of yuan evaporated. ‘It’s just wrong to expect [your] money [will come back],’ said Zhang, who was stood at the gate of another unfinished project in Anyang. He was unwilling to give his full name. ‘People were just thinking too much about money’
‘It was like smoking opium,’ said Li Jianjun, a taxi driver in Anyang. ‘You put down 100,000 yuan at Chaoyue or Zhenyuan, and you took 2,000 yuan a month in interest payments – nobody wanted to work.’
Wait, Li. You drive a taxi? Don’t you know you are on the cutting edge of the greatest technological revolution of the age? Pretty soon, you’ll never have to work another day in your life! Set yourself up with some silli valley con-men, I mean hipsters, and they’ll tell you how it works.
“….Pretty soon, you’ll never have to work another day in your life!”
or…..Pretty soon taxis will drive themselves and you will no longer have a job and may never work another day in your life!
“We have already cut down to the bare bones, no restaurants, less entertainment and less shopping.’”
Mr. Lin, I regret to inform you that you haven’t “cut down to the bare bones” IMHO. Wake me up when it’s “no restaurants, NO entertainment and NO shopping”. Better yet, after you cut back to 1 or 2 meals per day, and start selling off your children as indentured servants.
Neil, please pass the popcorn…
This was posted in the bits bucket today:
“What’s China talking about:
My Chinese relatives report that, as of today, that the gossip going around Chinese social media is that big changes are coming to China this year. The changes are not political, but economic and include:
“changes in inventory” (i.e. major downsizing of inventory)
“changes to state enterprises” (more downsizing)
“changes to business” (yep, more downsizing)
My in-laws were asking once a month to transfer money out of China. Then it was every week (after Summer devaluation). Since December, it is every other day.
Also, on Chinese social media: a quote from Deng Xiaoping saying that is Capital countries can have a stock market then Socialist countries can have a stock market. Oh, he also said (in case it causes problems) they can always shut it down…a reference to Monday’s circuit breaker trips.
That’s the latest for now.”
‘Since December, it is every other day’
Ben Jones: your response yesterday below -
“Comment by Ben Jones
2016-01-04 14:23:12
Las Vegas - shadow inventory-palloza. Man, it has been one thing after another for my video plans. Something keeps popping up. I was going this past weekend and bam, my cat gets sick, needing round the clock care for 3 days. I’ll get back to it ASAP. I really like doing these videos. It’s fun, new and a completely different media.
Other places on my mind; Miami, I’m late on that. Houston, Alberta, North Dakota. Southern California; I read yesterday there’s a bit of a glut in Inland Empire new housing.”
My vote right now would be for Houston first then North Dakota. It would be revealing to see what the oil mess has done to these two locales.
Knowing that Ben monitors and ‘owns’ this site I would ask…..Anyone else care to vote on Ben’s next big adventure?
Dallas, NYC, Boston, Miami, SF
I would like to see North Dakota also. If you have the ability to visit a really remote locale, how about Fort McMurray?
Let me know if you come back to Tampa. There will be a beer waiting for you.
Thanks. I have a feeling a spring tour of Alberta would be epic. Probably break it up into more than one video. I could drive through North Dakota on the same trip. Revisit Colorado on the way back maybe.
You might dip into Eastern Montana when covering the Bakken. Then there are the folks from Western Montana who went to the Bakken for work that paid big bucks per sé. Some made it out before before a demise of the oil industry there or themselves. Many did not and for some it wasn’t just going back to lesser paying work. A friend’s son-in-law suffered permanent brain damage in a small company truck driven by fellow worker versus someone else’s large machinery. The company they worked for had all sorts of outs on covering their workers bills and no obligation for the long term; probably in the small print of whatever contracts were signed. Boom and bust commodity states.
For Vegas I am seeing developers of new housing tracks printing blank spaces on pricing sheets so they can write in the numbers. Is this a sign of increasing prices or going the other way I dont know but the word from the folks at the models are things are still selling.
Doral, FL Housing Market Craters; Prices Plummet 7% YoY
http://www.zillow.com/doral-fl/home-values/
I wonder if any of the workers at the Cambodia construction sites are digging up bones, or undiscovered mass graves. Why don’t developers convert Tuol Sleng into condos, while they’re at it? It’s all good! Here’s more ridiculousness from that article:
___________________________/
“In terms of returns, ‘they are betting on either a high long-term rental yield or capital gain on sale,’ he said. ‘In either case, they may end up disappointed. There are insufficient tenants at these sorts of rental levels to soak this upcoming supply up.’
Therein lies the biggest challenge for Phnom Penh’s condominium market: banking on demand from a renter market that does not currently exist.
Likewise, a secondary investor market to sell the condominiums on doesn’t exist yet either.”
Hmmmm…….
Who is telling the truth here?
Given all this distorted data coming from the bean counters at the gubmit makes me wonder if we are in that inevitable Joe Pesci moment where he just blurts - uh, uh, uh, uh while shuffling his hands.
http://www.zerohedge.com/news/2016-01-04/us-government-discovers-10-years-errors-construction-spending-data-slamming-gdp
http://www.calculatedriskblog.com/2016/01/construction-spending-decreased-04-in.html
With tens of millions of excess, empty and defaulted houses, does it really matter at this point?
I just hate being lied to.
Then ignore the MSM.
‘Apple Inc. fell after Japan’s Nikkei Asian Review reported the U.S. company would reduce the output of its latest iPhones by about 30 percent in the first quarter of 2016. Shares of the world’s most valuable company dropped 2.8 percent to $102.42 at 12:17 p.m. in New York. They declined 4.6 percent in 2016.’
‘Apple had initially told parts suppliers to keep production of the iPhone 6s and 6s Plus models for the January-March period at the same level as for their predecessors iPhone 6 and 6 Plus a year earlier, the Nikkei reported. But inventories of the the new models, which debuted in September, have piled up at retailers in developed markets like China and Europe amid lackluster sales while an increase in the dollar against emerging markets currencies has made the phone more expensive in those countries, the magazine said.’
http://finance.yahoo.com/news/apple-falls-nikkei-report-sees-175950733.html
They bet it all on China. Remember what the UHS said about the bay area; “if you ask me about our real estate, you are asking me to predict the stock market.”
If iPhone sales drop by 30 % or even 3 % the stock would crater and the margins would disappear. It don’t add up.
Isn’t it a SEC requirement for companies to make this kind of information public ASAP?
Having said all that I am sticking with AMDA and HH both are penny stocks but look primed for a few hundred % bump in the short term.
crAPPle is nothing more than a penny stock in reality.
Just curious. What makes you think HH is gonna jump a few hundred percent?
Companies revenues increasing nicely and the company claims they will be profitable in 2016.
Reason for depressed stock price is “cashless warrants” company has given option to shareholder of date 12/24/2015 to buy .6 share for each share they owned 12/24/15 at 9 cents. Current share price is 7 cents but current shareholders will lose a lot more if cashless warrants are exercised by warrants holders.
Look at revenue growth company is turning around and listen to last CC. Q4 should have good revenue numbers.
Thanks. I’ll check ‘em out.
$5 a square foot annual tax! A 1000 sq ft apartment would have a $5000 tax bill. And wages in Israel aren’t all that.