An Oversupply Of Almost Everything
Domain News reports from Australia. “The latest property snapshot for the Pilbara region in Western Australia’s north-west shows how big its real estate downturn is, with the mining mecca of Port Hedland’s average advertised house sale price the lowest since December 2006. Karratha’s too has fallen from $897,380 at its peak in the March 2013 quarter, to a low at the September 2015 quarter of $484,134, a drop of more than $400,000 in two years. “I think what occurred occurred is because of the widespread notoriety of extraordinary well-publicised cases three or four years ago, of tin shacks getting a million dollars, we saw speculators move in and it wasn’t really reflective of a natural housing market dynamic,’ said Domain chief economist Dr Andrew Wilson. ‘It was more about a commodity that was scarce and spectators taking advantage of that.’”
“He described the result as a ‘casino market’ where speculators could make a profit depending on when they got out. However these latest figures show the music has well and truly stopped and some speculators have no chair left to sit on. However these latest figures show the music has well and truly stopped and some speculators have no chair left to sit on.”
The Hong Kong Standard. “More price-slashing deals in the mass homes market are expected in Kowloon after an estate agency’s index tracing local prices saw the biggest fall in five weeks. In Tseung Kwan O, where the new home supply is concentrated, a two-bedroom flat at Tseung Kwan O Plaza was sold for HK$5.188 million, or HK$11,427 per square foot, after HK$1 million was cut off the asking price in four months. In Mei Foo, estate agency Hong Kong Property said homeowners are more willing to cut prices, with some even dropping as much as 15 percent.”
“Centaline’s Centa-city Index slid by 1.05 percent last week, showing prices in both the mass market and of luxury homes are on a downward trend. Meanwhile, Hong Kong Ferry (0050), a subsidiary of Henderson Land (0012), has priced its project Harbour Park at Cheung Sha Wan. One of the 50 units in its first batch is priced below HK$3 million at HK$2.967 million after discounts. Otherwise the average per-square-foot price is between HK$13,300 and HK$16,000. The developer said it is priced close to the secondary homes nearby.”
The Business Times on Singapore. “Good class Bungalows, the creme de la creme of the landed housing market, have turned out to be somewhat of a bright spot in 2015. At least 34 transactions totalling S$730 million in Good Class Bungalow (GCB) Areas were sealed in 2015 - up from 28 deals adding up to S$626 million in 2014. Realstar Premier Group managing director William Wong estimates that GCB prices retreated 10 to 15 per cent in 2015. ‘A good GCB in a location such as Dalvey/Holland which used to be able to sell at S$30-32 million a year ago will probably be able to fetch S$25-27 million at best now.’”
“He attributes the price drop to generally weaker economic sentiment globally as well as in Singapore. ‘Also owners are more realistic in their pricing especially for those who have not been able to find a buyer after putting their property in the market for more than a year. Coupled with the fact that there are quite a few GCBs transacted below S$20 million, this has somehow brought the overall asking prices of GCBs a notch down.’”
The Malaysia Star. “The property sector is deluged with an oversupply of condominiums and commercial buildings. Speculators are in for a hard time if they have been over geared as tenants are hard to find and unwilling to pay normal rental rates. Developers are switching as fast as they can to affordable housing and landed terrace houses but with higher cost of construction, margins will be thin. Survival and holding power is the name of the game. The year 2015 reveals an oversupply syndrome of almost everything.”
“Yes, the ringgit will continue to be weak. No worries, lower consumption will reduce imports as supply adjust to reducing demands. Importers will be forced to reduce operating costs. More retrenchments or right-sizing moves are on the horizon. Exporters will cash in on higher forex earnings. Yes, cost of funds will definitely go up. No worries, trade customers automatically will ask for longer credit terms or just simply stop paying. Banks will enjoy higher credit card usage as consumers turn to alternate financing due to shortage of cash.”
“High margin business with high delinquency but opportunities abound. Yes, more write-offs on non performing property loans. No worries, they are easily recoverable due to the active auction market as there are still many cash rich investors looking out for good buys.”
The International Business Times on the UK. “You could probably sum up the London property market’s recent performance like this: the bottom has fallen out of the top and there is no top to the bottom. Changes to the tax regime, such as a stamp duty increase on high-value homes, have hit the most expensive properties hardest. Sales and house prices in prime central London areas are dropping. But prices in much of the rest of the city continue to boom and reports say demand is surging in some outer areas.”
“In Kensington and Chelsea, City of Westminster, Camden, Hammersmith and Fulham, City of London and Camden, the average property price dropped 8.7% over the year in November 2015, according to a house price index compiled by LSL Property Services. Individually, Westminster saw the steepest drop of 14.4%, to £1,385,797. Why?”
“For a while now, prices look to have topped out in prime central London areas, so investors have looked for bigger returns elsewhere in the city. And the stamp duty increases have made it markedly more expensive to buy properties over £1.5m (€2m, $2.1m) in value, which is making some buyers think twice, or at least demand lower prices from sellers.”
The Calgary Herald in Canada. “Data from the Canadian Real Estate Association show Fort McMurray MLS sales last year fell by 43.5 per cent from 2014 levels, while the average sale price declined by 6.2 per cent — both the biggest annual declines in the province.”
“‘Edmonton’s market traditionally follow’s Calgary’s market by 12 to 18 months and is normally less volatile thus not experiencing as deep of lows and highs of peak. Edmonton has also enjoyed the more consistent in-migration and lower unemployment rate due to the many infrastructure and large construction projects on the go across the city,’ said Don Campbell, senior analyst with the Real Estate Investment Network. ‘Conversely, due to the less diverse economies of the smaller centres in the province, we always witness dramatic swings of the market pendulums as layoffs and economic stagnation hit these smaller cities much more quickly and with much more fervour.’”
“However these latest figures show the music has well and truly stopped and some speculators have no chair left to sit on.”
It’s been around seven years since I last saw the ‘musical chairs’ metaphor in print.
“As long as the music is playing, you’ve got to get up and dance.”
Wiki …
“The Dancing Plague (or Dance Epidemic) of 1518 was a case of dancing mania that occurred in Strasbourg, Alsace (then part of the Holy Roman Empire) in July 1518. Around 400 people took to dancing for days without rest, and, over the period of about one month, some of those affected died of heart attack, stroke, or exhaustion.”
More …
“The outbreak began in July 1518, when a woman, Mrs Troffea, began to dance fervently in a street in Strasbourg. This lasted somewhere between four to six days. Within a week, 34 others had joined, and within a month, there were around 400 dancers, predominantly female. Some of these people eventually died from heart attacks, strokes, or exhaustion.
“Historical documents, including “physician notes, cathedral sermons, local and regional chronicles, and even notes issued by the Strasbourg city council” are clear that the victims danced. It is not known why these people danced, some even to their deaths.
“As the dancing plague worsened, concerned nobles sought the advice of local physicians, who ruled out astrological and supernatural causes, instead announcing that the plague was a “natural disease” caused by “hot blood”. However, instead of prescribing bleeding, authorities encouraged more dancing, in part by opening two guildhalls and a grain market, and even constructing a wooden stage. The authorities did this because they believed that the dancers would recover only if they danced continuously night and day. To increase the effectiveness of the cure, authorities even paid for musicians to keep the afflicted moving.
“Historian John Waller stated that a marathon runner could not have lasted the intense workout that the men and women died from hundreds of years ago.”
“However, instead of prescribing bleeding, authorities encouraged more dancing, in part by opening two guildhalls and a grain market, and even constructing a wooden stage. The authorities did this because they believed that the dancers would recover only if they danced continuously night and day. To increase the effectiveness of the cure, authorities even paid for musicians to keep the afflicted moving.”
Who knew there was a precursor to the Fed in sixteenth century Strasbourg?
Cause tonight… god is a DJ.
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.” Charles Mackay
Women too.
“You could probably sum up the London property market’s recent performance like this: the bottom has fallen out of the top and there is no top to the bottom. Changes to the tax regime, such as a stamp duty increase on high-value homes, have hit the most expensive properties hardest. Sales and house prices in prime central London areas are dropping. But prices in much of the rest of the city continue to boom and reports say demand is surging in some outer areas.”
The top generally keeps a lid on the bottom. If the top subsides enough, the turtles below get crushed beneath the weight.
This is it. Figuring out exactly how this correction will play out is all about understanding the interrelatedness of different price points. In my neck of the woods there remains strong demand on homes priced in the $300-500k range. There is endless supply, however, of homes priced from $650k-$1MM.
For now, buyers are content paying $450k for a home equivalent to what other buyers paid $450k for. Hence home prices are sticky. But as the weight of supply at the significantly higher price range continues to exert its toll, a crash will happen. The supply must fall to the demand. And this doesn’t result in slow price changes but rather a price reset of thousands of basis points.
Doesn’t mean much without a location.
Where?
I’m not sure why location matters. The phenomenon is similar in the majority of suburban locales the country over. Today’s buyers looking for a primary residence expect to own homes comparable to the ones the people in their same pay scale are looking to offload. The problem is the people doing the offloading of primary residences are folks who, though they spent their careers in the same income bracket as today’s buyers, inhabit homes that are currently unaffordable for the buyer, as there was no housing ladder for today’s buyer to have ascended. Without upward wage pressure, these homes will never become affordable for the buyer. Thus today’s white collar professional is buying the home of yesterday’s skilled laborer. When yesterday’s white collar professionals wanting to sell turn into yesterday’s white collar professionals needing to sell, there will be a great price reset. That day is fast approaching. And along with the carnage it will wipe out an entire group of folks that have spent the last decade working as effectively real estate market makers…the flippers and buy-to-lease folks.
But to answer your question, Chicago’s west and north suburbs.
“When yesterday’s white collar professionals wanting to sell turn into yesterday’s white collar professionals needing to sell, there will be a great price reset. That day is fast approaching.”
Great insight!
“thousands of basis points.”
Sort of like tenths.
“He attributes the price drop to generally weaker economic sentiment globally as well as in Singapore. ‘Also owners are more realistic in their pricing especially for those who have not been able to find a buyer after putting their property in the market for more than a year.’”
You have to wonder how many sellers who keep their property listed at the same above market price for an entire year manage to attract a buyer after the first month.
‘Regulatory Regime Dims the Mood in CMBS’
‘The mood at the Commercial Real Estate Finance Council’s annual Industry Leader’s Conference in Miami this week reflected nervousness at how the market will handle the changes.’
‘CMBS prices fell sharply in the second half of 2015 as the industry begins to wrestle with how to retrench after Dodd-Frank and other regulations are fully in effect. The mood at the Commercial Real Estate Finance Council’s annual Industry Leader’s Conference in Miami this week reflected nervousness at how the market will handle the changes.’
“It feels at this point that the deck is stacked against us,” is how one long-term industry executive put it.’
‘Recently issued AAA-rated CMBS was priced to yield 135-150 basis points over Treasuries, up from about 85 bps in the spring. Wider spreads are caused by a variety of factors, including global economic instability, investor concerns about deteriorating loan quality and the impact of new regulations.’
‘The new rules were meant to curtail trading of complex derivatives for the sake of profits, which got out of control before the global financial crisis (exemplified by AIG), but they also have limited banks holding of fixed-income products such as CMBS for the purposes of “market-making.” Investment banks used to be willing to buy securities from investors that wanted to sell in order to provide liquidity to the market. Today, the investment banks are less willing to take the risk of holding CMBS and other products on their books. Investors pay for more liquidity, so prices have dropped in an environment with less liquidity.’
‘Put simply, if the average coupon that a CMBS trust pays to investors is 4 percent, and the average loan coupon of the underlying collateral is 5 percent, the bank makes a 1 percent profit. If spreads rise and investors get a 4.5 percent coupon, the bank’s profits are cut in half to 0.5 percent.’
‘Consequently, when spreads widen securitization programs have to increase the coupon that they offer to borrowers in order to make the same amount of profit. That makes the segment less competitive relative to life companies and banks, whose cost of capital is less volatile. According to Commercial Mortgage Alert, CMBS issuers floated $101 billion in 2015, a 7% increase from 2014, but the market disappointed expectations due to a slowdown in the second half when spreads were wider. If CMBS is less competitive, market players fear not only that they will lose business but that they will be seen as the lender of last resort, limited to lower-quality assets and secondary and tertiary markets.’
‘The other major challenge for CMBS comes from the “risk retention” requirement of Dodd-Frank that takes effect in 2017. Developed to reduce the abuses mainly in the residential MBS market before the global financial crisis, the rule requires issuers of asset-backed products to retain 5 percent of the bonds they sell. The idea is that banks won’t knowingly sell bad bonds if they have to own some of them.’
‘Alone among asset classes, CMBS issuers have the option to sell the 5% strip (which can either be a “horizontal” strip of bonds, such as the lowest rated 5 percent, or a “vertical” strip, which would be 5 percent of each tranche) to a third party. The CMBS industry lobbied for this change to keep with long-standing market practice to sell the below-investment-grade classes to investors known as “B-piece” buyers. These investors buy junk-rated CMBS at steep discounts, but they also take the most risk, since the classes they own are the first to be wiped out if loans default. B-piece buyers also act in tandem with special servicers to repair or liquidate troubled loans.’
‘Under risk retention rules, the owners of the 5 percent strip are not allowed to sell the investment for five years. The constraint on liquidity is likely to depress prices further, which contributes to the worries about lower prices and competitiveness. What’s more, the regulations do not yet specify a remedy in the event the B-piece buyer–which is independent from the issuer–does sell the bonds it owns. That is one of the many scenarios that will have to be hashed out between the industry and regulators in coming years.’
‘Given the constraints on the B-piece buyers, some worry that it will be difficult–if not impossible–to raise enough capital to buy the 5 percent strip. Market players estimate that some $3 billion to $4 billion of B-piece capital will be needed to keep the market fully functioning next year. Without that capital, the market could grind to a halt, since few banks seem willing to retain the bonds.’
‘The industry was formed in the wake of the Savings & Loan crisis in the late 1980s and has been adept at being reinvented to meet current market conditions. Asset-backed issuers have adapted to the risk-retention rules in other segments and other countries, so they might do the same in U.S. CMBS, even if they do so with some grumbling. The new rules are likely to lead securitization programs to become more conservative about lending standards to make sure that they can sell all of the loans they originate, but many would argue that is a good thing since the market has gotten in trouble whenever deals became more complicated with more aggressive terms.’
‘Britain’s biggest housebuilders possess enough land to create more than 600,000 new homes, an analysis by the Guardian has found, raising questions about whether they are doing enough to solve the housing crisis facing Britain.’
‘The nine housebuilders in the FTSE 100 and FTSE 250 hold 615,152 housing plots in their landbank, according to financial disclosures. This is four times the total number of homes built in Britain in the past year.’
‘Berkeley, Barratt, Persimmon and Taylor Wimpey – the four biggest companies in the industry – account for more than 450,000 of the plots. They are also sitting on £947m of cash and declared or issued more than £1.5bn in payouts to shareholders in 2015.’
‘Shelter said the figures showed how dysfunctional the housing market has become. Toby Lloyd, head of policy for the housing charity, said: “Developers do need a pipeline of future sites – but when housebuilding is still stubbornly low and landbanks are this large it is a signal of how dysfunctional our housebuilding system is.”
“These are private companies so it’s reasonable for them to seek profits. But when their profits are so high we should be questioning why the government is directing subsidies towards developers to build barely affordable starter homes and away from providing the genuinely affordable housing we so desperately need.”
‘The land held by housebuilders includes sites they own and sites that they have an contractual option to build on. Some housebuilders do not publicly disclose all the land they control, meaning their total landbank could be even bigger.’
‘When David Cameron said this week that he is worried his children would not be able to afford to buy their own homes, he struck on one of the greatest economic problems of his premiership. The old British promise is that if you work hard and make the right decisions, you can advance in life and own your own home. This is the ladder that most aspire to climb. But for an entire generation, even the hope of home ownership is slipping out of view. A huge number of young Britons cannot hope to have the kind of life their parents enjoyed.’
‘The Prime Minister must know he is on dangerous ground here. His own children, of course, will not have to worry — just as he did not have to worry. A fat handout from the Bank of Mum and Dad will be available to help the young Camerons raise a deposit for their first homes. It is people who hail from families with resources of rather less than the Camerons’ estimated £30 million who face being frozen out of the housing market for life. Or at least for as long as the era of rock-bottom interest rates lasts.’
‘When George Osborne spoke about a “dangerous cocktail” of risk, he blamed everyone but himself. In fact, the biggest risk is that the Chancellor has built his recovery on a mountain of debt. It’s very cheap debt, to be sure, but he has increased the national debt burden almost as much in five years as Labour did over 13 years. Nailing interest rates to the floor pours more vodka into the economic punch bowl: with every pound he borrows, the Chancellor fortifies his own ‘dangerous cocktail’. This creates all kinds of risks in an economy, and all kinds of crazy side effects. One of them is sky high property prices.’
‘Just as last time, we have learnt not to recognise the side effects of cheap debt. We like to blame all kinds of people for high house prices: immigrants (and their children) who add to the population faster than houses can be built for them. The rich foreigners who buy up apartments in London, jacking up the prices of property across the south-east of England. Ed Miliband tried denouncing housing companies and landlords as ‘predators’. Then there’s the councils who refuse planning permission. Yet perhaps the greatest single factor is one that no one seems willing to acknowledge: the curse of low rates.’
‘The cost of mortgages has also collapsed. Before the crash, the average rate for a 75 per cent mortgage was 6 per cent; now it is under 2 per cent. The maths is not difficult. The cost of borrowing is a third of what it was, so people can afford to borrow three times what they once did, on the same monthly repayment. Asset prices rise accordingly. We have been witnessing the era of low credit forcing house prices up by an extraordinary amount.’
‘George Osborne’s six-bedroom house has risen in value by about £2 million since he bought it ten years ago. Ed Miliband has ended up owning one of the ‘mansions’ he wanted to tax. He bought his two–kitchened house for £1.6 million seven years ago. It’s now worth more than £2.5 million. The boom is not restricted to housing: the era of cheap credit has sent the value of all kinds of rare assets through the roof. During the crash, a vintage Ferrari 250 could be bought for £1.2 million: they now sell for about £10 million.’
‘Rather than address the asset bubble, Cameron’s government has helped to inflate it further. With George Osborne’s Help to Buy scheme, the government is making mortgages artificially cheap in the same way that George W. Bush’s administration did when creating the great sub-prime mortgage disaster. It is as if nothing has been learned from that crash.’
‘For as long as the era of cheap credit continues, asset prices will remain sky-high — representing a grave injustice to young people who wish to make the same journey through life as their parents. Once, the Conservatives spoke about the danger of treating cheap debt as a horn of plenty. Now, Osborne is presiding over a recovery that is expected to see household debt ratios rise to where they were before the crash.’
‘And the Bank of England? Osborne talks about rate rises being inevitable but the rise envisaged is barely worthy of the name. The Bank is expected to raise rates at a glacial speed — to just 1.75 per cent by the end of the decade. At this rate, it would take half a century for things to get back to normal.’
the same way that George W. Bush’s administration did when creating the great sub-prime mortgage disaster. It is as if nothing has been learned from that crash.’ ??
Along with his War Games the combination of the two bringing our country to the point of a depression….Many lenders (wall-street) should be in jail but Jr. should be their roommate….Criminal is a understatement…
‘We have been witnessing the era of low credit forcing house prices up by an extraordinary amount’
I don’t know about this. How come Double Flip Triple Gainer’s baseball cards haven’t gone up significantly?
‘During the crash, a vintage Ferrari 250 could be bought for £1.2 million: they now sell for about £10 million’
The easy money facilitates speculation. But a thing has to catch the speculators fancy. This is all well and good, but where governments have an obligation to act is when this speculation creeps into housing. And they are acting in many parts of the world, belatedly. Singapore has been on a anti-bubble crusade for years. China was in a way. This recent crack down on money-laundering in the US has more to do with propping up China’s currency, IMO.
“This recent crack down on money-laundering in the US has more to do with propping up China’s currency, IMO.”
Ding ding ding. Every nosebleed property purchase that is rejected keeps a few more UST’s on the Chinese balance sheet.
‘Asset prices around the world soared as central bankers embarked on the greatest money printing experiment in history. While much of that money flowed into the stock market, a great deal also found its way into house prices. What we are now witnessing on trading screens around the world is the unwinding of the era of monetary excess, and house prices will not escape the fallout.’
‘There is a delayed effect on property prices because the market is so inefficient. Transactions can take up to three months to complete and the property itself may have to languish on the market for even longer. The prices are also dictated by estate agents, who have an interest in inflating them to raise fees. The number of transactions is also still about 40pc below that of 2006 and 2007, which allows prices to stray from the fundamentals for a longer period.’
‘It is true that Britain is suffering from a housing shortage, which drove UK house prices to a record high of an average of £208,286 in December, but like all asset prices they are on borrowed time. The fundamentals of demand and supply in UK housing will undergo a huge shift in the year ahead.’
‘A large portion of the demand for UK housing will fall away as the benefits of buy-to-let have effectively been killed off in recent budgets. George Osborne slapped a huge tax increase on buy-to-let in the summer Budget, which will take effect from 2017 onwards. The removal of mortgage interest relief was the first stage and was followed by hiking stamp duty four months later in the November review.’
‘This could prove a double whammy on the housing market, turning potential buyers into sellers, and flooding the market with additional supply. A survey of landlords suggested 200,000 plan to exit the sector. The rapid growth of buy-to-let during the past decade looks set to be slammed into reverse.’
‘The UK property market has been a highly attractive place for wealthy individuals across the world to protect their savings. However, many of the biggest buyers have been forced out of the market.’
‘UK households are simply drowning in about £40bn of debt according to the latest figures from the Office of Budget Responsibiliity. When budgeting is this finely balanced , it doesn’t take much to tip it over the edge. The UK economy is weighted towards financial services and a collapse in markets could cause a painful correction./
/Britain’s housing market has defied gravity and logic for far too long. Government intervention by way of cheap help-to-buy loans allowed it one last hurrah, but the limits of state intervention are being brutally exposed in China, the UK is no different.’
‘More than a trillion dollars of investment flows has fled emerging markets over the past 18 months but the exodus may not even be halfway done, as once-booming economies appear trapped in a slow-bleeding cycle of weak growth and investment.’
‘While developing economies are no stranger to financial crises, with several currency and debt cataclysms infecting all emerging markets in waves over recent decades, leaders gathering for this year’s World Economic Forum in Davos in the Swiss Alps are fearful that this episode is much harder to shake off.’
‘Seeded by fears of tighter U.S. credit and a rising U.S. dollar, and coming alongside a secular slowdown of China’s economy and an implosion of the related commodity ’supercycle’, there’s growing anxiety that there will be no sharp rebound at the end of this downturn to reward investors who braved out the worst moments.’
“The global backdrop and the drivers for emerging markets are very different from 2001,” David Spegel, head of emerging markets at ICBC Standard Bank said, referring to the time Asia, Russia and Brazil were recovering from the crisis waves of the late-1990s. “Back then all the stars were aligned for globalisation and emerging markets benefited the most. This time around, we just don’t have those multiple catalysts.”
‘The chief catalyst in 2001 was of course China. Its entry to the World Trade Organisation unleashed a decade-long export and investment miracle that propelled its economy from sixth place globally, to the world’s second biggest.’
‘Its ascent hauled up much of the developing world, from Latin American exporters of soy and steel to the Asian workshops which became part of its gigantic factory supply chain. But its slowdown is whacking these countries equally hard.’
‘The gloomy conclusion some are reaching is that the China effect was possibly a once-in-a-lifetime shift, whose effects are now dissipating forever. “Rather than expecting emerging markets to mean-revert towards the golden years of 2002-2007, there is a risk that in terms of trade, what we are reverting to is the environment of 1980s,” UBS strategist Manik Narain said.’
‘IIF executive director Hung Tran says emerging markets’ problems are not just external. They must overcome a key homegrown issue - falling productivity. Tran estimates productivity, which provides clues on future economic growth, is growing at just 0.9 percent a year across much of the developing world, a quarter the rate seen before 2007 and not far from richer countries’ 0.4 percent.’
“Productivity advantage of EM countries, which is key for attracting capital flows and investment, has collapsed,” Tran said. “There is a cycle of diminishing returns on investment.”
‘The gloomy conclusion some are reaching is that the China effect was possibly a once-in-a-lifetime shift, whose effects are now dissipating forever’
Way ahead of ya’ Davos dummies. Maybe you should have read the HBB all along. What they are really saying is, we never had a plan for when this China thing ended. Hmmm, maybe these guys shouldn’t be running the global economy?
“running the global economy”
‘ruining’?
NAHB housing market index at 60. Buyer traffic dropped to 44 from 46. The index has been above the 50 threshold forever, but the buyer traffic subcomponent has yet to reach positive territory. Is it not a bit strange that these homebuilders remain ever optimistic in spite of the fact that very few people come to see the product they are selling?
It reminds me of being a ten year old in the 80s collecting baseball cards. I just knew my Kirby Puckett rookie card was going to soon be worth a small fortune, and lots of my peers believed their Don Mattingly and Jose Canseco rookies were a future gold mine, but whenever we went to the local hobby shops to sell these valuable pieces of cardboard, the shop owners just didn’t want to take the cards off our hands. Nevertheless, our optimism remained undeterred.
They speak for a minor sliver of SFR constructors. They’re irrelevant.
According to their website, their members are responsible for 80% of all new construction in the country, both single and multifamily.
To be fair, I know nothing about the NAHB apart from the fact that the indicator they put out each month seems a farce.
“An Oversupply of Almost Everything…”
The rally cry of this age? MOAR!!!!!!
I was in Haikou, China last week and I snapped a picture out my hotel of all the construction projects in the distance. They’re lined up as far as the eye can see, and each one is the size of a Las Vegas hotel tower. I count 17 high-rise cranes in the photo I snapped, with several others blocked by completed projects. There were even more towers between the hotel and the airport. At night, when you look at the completed projects, there are no more than a dozen lit windows (but it is off-season).
The scale of the ongoing construction in is something I could never have imagined. Had I not seen these projects for myself, I might have written off all the talk of oversupply as hyperbole. These are not tourist resorts; those are built near the water and often have golf courses, these are set back from the water quite a distance. The whole area is surrounded by semi-rural farming community - who is going to live there?
future rodent habitat
Here’s a question…what ever happened to Albuquerque Dan? I distinctly recall having a discussion with him on China and/or oil prices some ten or twelve months ago in which, after expounding upon the undeniable robustness of the Chinese economy, he concluded by saying something to the effect of ’soon enough you will leave this blog with your tail between your legs, never to return.’
Perhaps instead he never returned from a spelunking trip to Carlsbad Caverns? Would only be fitting for a guy who’s head was always inserted deep inside his own rectum to get lost in a giant crevasse.
’soon enough you will leave this blog with your tail between your legs, never to return’
Yeah, he was pretty sure of his predictive powers.
Update: Crude Oil Plummets To New 52 Week Low
http://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic
“China’s Housing Is Recovering, Just Ignore The 10 Billion Square Feet Of Vacant Housing”
http://www.zerohedge.com/news/2016-01-18/chinas-housing-recovering-just-ignore-10-billion-square-feet-vacant-housing
We have 50 billion of our own that is being ignored.
Encino, CA Housing Market Craters; Prices Plunge 6% YoY
http://www.zillow.com/encino-los-angeles-ca/home-values/