October 20, 2014

Bits Bucket for October 20, 2014

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October 19, 2014

A Point We Haven’t Started From Before

It’s Friday desk clearing time for this blogger. “Sure, home prices are rising across Greater Boston, but when it comes to really big gains, some suburbs and city neighborhoods are in a league of their own. To the north of Boston, Middleton is hard to beat, with prices up nearly 50 percent, hovering around $637,000, the Warren Group finds. Still, what goes up will come down at some point. There are signs sellers may be starting to overprice their homes, notes Matt Hanson, a Redfin agent who works with buyers in Woburn and other north of Boston areas. ‘The listing agents are pricing the properties higher,’ Hanson said. ‘It has gotten to the point where it is all the market can bear.’”

“A new forecast predicts that Southwest Florida’s single-family home prices will continue to inflate over the next three years into bubble territory. Local Market Monito’s president Ingo Winzer called the Naples-Marco Island metro area’s sizzling price increases justified because prices had fallen so far from their 2006 peaks, he now characterizes them as ‘worrisome.’ ‘It’s starting to look like a new bubble is building,’ he said. ‘The market is no longer underpriced.’”

“Seeing a growing disconnect between what they want and what they can afford, many buyers are starting to sit on the sidelines, said Naples real estate agent Dona Schrim. ‘I think the market is coming to a point where prices may not be able to be sustained,’ she said.”

“Homeowners across Southern California are getting hit with a fresh wave of foreclosures. KNX 1070’s Ed Mertz reports industry analysts say there’s been a 30 percent jump in foreclosures from August to September in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties. Tens of thousands of properties across the Southland that were purchased before 2008 were delayed being foreclosed on due to the California Homeowners Bill of Rights, which was enacted in Jan. 2013, said RealtyTrac VP Darren Bloomquist.

“‘We’re looking at three to four thousand a month,’ he said. ‘That could take close to a year to clear that backlog.’”

“Colorado was one of several states where homes scheduled for foreclosure auction spiked in the third quarter of 2014, with the 2,919 homes set for auction, up 50 percent from 1,941 in the second quarter, and up 48 percent from 1,968 in the third quarter of 2013, RealtyTrac said. Scheduled foreclosure auctions also spiked year-over-year in North Carolina and Oregon, both up 85 percent; New Jersey, up 66 percent; Oklahoma, up 58 percent; New York, up 57 percent; and Connecticut up 51 percent.”

“Blomquist said the increased foreclosure activity ‘is not the result of underlying economic or housing market problems. The bad news is that Colorado’s housing market may have looked better than it actually was over the past 12 months because of these artificially held back foreclosure actions.’”

“One out of every 292 Atlantic County homes was in the foreclosure process in August, making the area’s foreclosure rate second-worst in the nation, according to RealtyTrac. ‘Our data shows the average foreclosure process in New Jersey is over 1,000 days, so I would say it’s probably too early (to reflect casino closings),’ said Daren Blomquist.”

“With a glut of foreclosed properties hitting the market, the trend could have dire ramifications for local real estate values, said Carlo Losco, president of Balsley Losco Real Estate in Northfield. ‘I think people need to pay attention and make some realistic choices,’ Losco said. ‘If they wait, all the figures could line up against them and decrease value. Or are they going to do the best they can now before all these issues come into play?’”

“Iskandar Malaysia (IM) has come under heavy fire in recent weeks from analysts, valuers and the media for the apparent free fall of the property market here. They claim developers who were eager to make their presence felt in IM early this year are now beating a retreat because prices have slumped to an untenable level. This scary prognosis is naturally turning away prospective investors.”

“Even giant China players with enormous capital at their disposal have not been spared, with reports suggesting that they may also be in trouble as they had been ‘over confident’ about prospects in IM and are now reeling with disbelief as they had become ‘over exposed.’”

“China does not have large independent labor unions, yet the world’s second-largest economy has witnessed an increasing number of worker strikes over the past year. According to an Oct. 14 report from the Hong Kong-based watchdog group China Labour Bulletin (CLB), the number of strikes and worker protests in the third quarter of 2014 was double the number of labor actions recorded in the same period last year.”

“Notable is the uptick in strikes led by construction workers, from just four demonstrations last summer to 55 this summer. Amid a slumping housing market, new home prices in August tumbled in 68 of 70 Chinese cities monitored by the government. As the CLB report explains, ‘Developers are saddled with declining sales, weaker credit availability, and continued pressure from local governments to buy land. In these situations, it is the construction workers who are always the last to be paid.’”

“Taiwan’s Ministry of Finance has asked eight state-owned banks to provide details on outstanding loans to Chinese companies as fears grow of defaults involving privately owned firms on the mainland. Taiwan’s banks are among Asia’s largest lenders of syndicated loans and have lent heavily to private and state-owned Chinese companies in recent years. The MoF move comes on the heels of similar action of the Hong Kong Monetary Authority, which stepped up its scrutiny of banks under its jurisdiction this year after their exposure to Chinese onshore companies soared in 2013.”

“The ministry also sought information on the terms and conditions of security and repayments on the loans, bankers said. ‘We are afraid there will be a ripple effect of loan defaults for Chinese companies. We are even cautious of lending to Chinese state-owned companies,’ said a banker at a state-owned Taiwanese bank.”

“Stakeholders in the housing sector opine that it is not wise for estate developers to construct houses and lock them up until buyers offer them the exorbitant amount of money they require for rents or sales of such houses. They argue that if the owners of such houses were a bit flexible with their terms, the high cost of rent would have been reduced in Abuja. Unarguably, many of the private housing estates in the FCT have remained unoccupied years after they have been completed by their owners.”

“‘What private estate developers are doing is to create a class problem in the FCT where only the wealthy can own and live in descent homes. I foresee a crash in the estate market, especially in the FCT, because the income of most Nigerians is not enough to enable them to purchase these houses,’ said Mr Emma Akeem, a resident of the FCT.”

“The global financial markets are dangerously stretched and may unwind with shock force as liquidity dries up, the Bank of International Settlements has warned. Guy Debelle, head of the BIS’s market committee, said investors have become far too complacent, wrongly believing that central banks can protect them, many staking bets that are bound to ‘blow up’ as the first sign of stress.”

“In a speech in Sydney, Mr Debelle said: ‘The sell-off, particularly in fixed income, could be relatively violent when it comes. There are a number of investors buying assets on the presumption of a level of liquidity which is not there. This is not evident when positions are being put on, but will become readily apparent when investors attempt to exit their positions. The exits tend to get jammed unexpectedly and rapidly.’”

“Mr Debelle, who is also chief of financial markets at Australia’s Reserve Bank, said any sell-off could be amplified because nominal interest rates are already zero across most of the industrial world. ‘That is a point we haven’t started from before. There are undoubtedly positions out there which are dependent on (close to) zero funding costs. When funding costs are no longer close to zero, these positions will blow up,’ he said.”

Bits Bucket for October 19, 2014

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October 18, 2014

Bits Bucket for October 18, 2014

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October 17, 2014

Bits Bucket for October 17, 2014

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October 16, 2014

When You Have A Lot Of Flippers, That’s A Bubble

The Toronto Star reports on Canada. “Canada’s housing market is in Goldilocks mode — not too hot and not too cold, except in Toronto and Calgary which are ‘bucking the trend of moderation’ now taking hold in major cities from Halifax to Montreal and Winnipeg, says a quarterly house price survey from Royal LePage. Low interest rates and an improving U.S. and Canadian economy are expected to buoy the housing market, says Royal LePage president Phil Soper. ‘Further, early indicators, such as declines in the number of new listings in some key cities, suggest that as demand slows, so shall supply, further protecting Canadian homeowners’ primary investment.’”

The Leader Post. “Average prices for single-family homes in Regina have fallen seven to eight per cent during the past year, according to the Royal LePage house price survey. The average price for standard two-storey homes decreased 6.9 per cent to $346,450 and detached bungalows decreased by 7.9 per cent to $307,250, the report said. Mike Duggleby, managing partner with Royal LePage Regina Realty said the Regina market is taking a breather after seven years of unprecedented price appreciation.”

“The inventory levels available on the market right now are approximately 40 per cent higher than usual, which has created a supply-demand imbalance and pushed home prices down,’ Duggleby said. ‘Strong unit sales this quarter have not been enough to support previous price levels.’”

The Ottawa Sun. “It’s a smorgasbord of a real-estate market as Ottawa enters its fall housing season, especially when it comes to first-time homebuyers. But one thing’s for certain, the number of units being sold shows a declining trend. In September, 5,139 units were sold, down from 7,172 in August. ‘In Ottawa, the demographics aren’t there to afford them,’ said Marnie Bennett, broker at Bennett Property Shop Reality. ‘So if I was the owner of a large property with a very big lot, I would start selling it now.’”

From Reuters. “While Toronto’s housing boom rolls on, some of the housing itself is falling apart. Glass panels have been falling off newly built Toronto condos. New buildings suffer from water leaks and poor insulation, making them ill-suited to Canadian weather. Real estate brokers are dealing mostly with 10-year investors who want to buy from a blueprint, double their equity during the five years of construction, and enjoy rental income and price appreciation for five more years before selling and investing again elsewhere.”

“‘It’s all about timing. We advise most clients to get out before that five-year mark,’ said Roy Bhandari of Sage Real Estate, which notched nearly C$50 million in Toronto condo sales in 2013, with clients typically from China, Eastern Europe, or the Middle East. ‘It’s the magic number because after five years the warranties are expired.’”

The Globe and Mail. “The CEO of a U.S. luxury home builder says his company considered expanding into Toronto’s condo market but was scared off by the high number of investors buying real estate in the city. Toll Brothers Inc. ’snooped around’ in the city about three years ago, but was concerned that 60 to 70 per cent of condo buyers didn’t plan to live in their homes, said CEO Douglas Yearley. ‘We’re always looking for new places to grow, but the level of investment, and not just foreign investment, is what concerned us,’ Mr. Yearley said. ‘We saw a lot of people buying with no intention of living there – they just planned to flip. When you have a lot of flippers, that’s when a bubble comes.’”

From MoneySense. “Solo-dwellers, as they are called, are top of mind for urban planners, explains Brian Jackson, Vancouver’s general manager of planning and development. That’s because almost 30% of Canadian homes have just one person living in them, according to 2011 census figures — a number that’s more than doubled since 1971. On a recent trip to Vancouver, I had the pleasure of talking to a few solo-dweller condo-owners—all of whom had independently bought into the thriving Vancouver market when interest rates were really low.”

“Unfortunately all three of these condo owners were still in the process of building their careers—a process that was forcing them to sell their units so they could pursue promotions. Despite their low monthly mortgage payments and good, sizeable initial downpayment, each solo-dwellers was faced with the prospect of losing money on the sale of their unit.”

The Financial Post. “It might be hard to convince some Canadians the end of the housing boom is near based on new statistics from the Canadian Real Estate Association which show prices still rising. But the growing consensus, even in the face of record valuations for homes in Canada’s three most expensive cities, is that prices will flatten out — a thesis even supported by one of Canada’s largest real estate companies. David Madani, an economist with Canada Economics who has called for a major correction, wonders whether some consumers are even prepared for a flat market let alone one that is falling.”

“‘What concerns me is some buyers seems to have this view that prices can only go up,’ says Mr. Madani. ‘People feel it’s a one-way bet. A lot of younger people seem to think that if they don’t get in now on the home ownership ladder, they’ll miss out. Some of these people will come to regret this decision. In the more expensive markets, it’s almost like a capitulation where they say ‘If I don’t buy now, I’ll never own a home.’ This is what happens in a housing bubble.’”

Bits Bucket for October 16, 2014

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October 15, 2014

A Special, Special Part Of The World

The Marin Independent Journal reports from California. “The median price of a single-family home in Marin soared to $1.1 million in September while sales dropped 13 percent from a year ago, according to CoreLogic DataQuick. Sales were down in most Bay Area counties, dropping 6 percent in the area overall and 7 percent in San Francisco. Sales have been declining in Marin and the Bay Area for many months. Regardless of the differences within the county, Fred Kusin of Bradley Real Estate said, ‘Marin is unique. We live in a special, special part of the world.’”

The Telegraph. “According to figures released this week by Forbes magazine, the quiet suburb of Atherton, in Silicon Valley, is now the most expensive postcode in the United States. Estate agents say many of their Chinese buyers looking for homes here are happy to buy sight-unseen and almost all pay upfront in cash - some 80 percent of the $10million homes they sell. ‘I think we have several more years of growth left,’ said Mr DeLeon. ‘It’s a real property boom and not just a bubble.’”

“‘It’s the curse of Silicon Valley,’ added one long-time resident. ‘I just pray that before long, they’ll move on to the next shiny penny.’”

The Press Democrat. “After lagging for most of the year, Sonoma County home sales jumped last month to the highest level for September in nine years. Prices may continue to rise over the next six months, said Jeff Schween, an agent with Pacific Union International in Santa Rosa, because those sellers coming to market now may do so with the thought that ‘this is the kind of price I want to get.’”

“Lori Sacco, manager of Vanguard Properties office in Sebastopol, said some buyers of upper-end properties may be willing to pay extra to get that home they really want. But she cautioned that recent sellers of more modest homes have failed to sell promptly because they sought more than buyers were willing to pay. Her advice: ‘Price it right or it’s going to sit around.’”

The Orange County Register. “A fall chill crept into the Orange County housing market in September, freezing the median home price below the $600,000 threshold touched briefly earlier this year and keeping a lid on sales. The median price of an Orange County home was $585,000 last month, CoreLogic DataQuick reported. Last month was the first time in more than two years that none of the Southern California’s six counties posted double-digit year-over-year price gains. ‘Price appreciation has dipped into single-digit territory as more would-be buyers get priced out, investors back off and incomes rise modestly at best,’ DataQuick Analyst Andrew LePage said.”

The Los Angeles Daily News. “CoreLogic DataQuick analyst Andrew LePage said that September’s small sales increase by no means signals a market turnaround. ‘We still have some summer activity closings, so I wouldn’t read a whole lot into September,’ LePage said. ‘We’ll see what happens over the next couple of months.’”

“Last month the median price across the six-county region increased from $382,000 to $413,000. It fell 2 percent from $420,000 in August, which was the highest median price since $425,000 in December 2007. Economist William W. Roberts, director of the San Fernando Valley Economic Research Center at Cal State Northridge, said that prices have been flattening out since the spring, and he expects that trend to continue for the rest of the year. Sales had lagged last year’s lackluster total until September, in part because inventory remains tight. ‘It’s going to be another crappy year,’ he said of the region’s market.”

The Glendale News Press. “For the first time in over three years, the median prices for single-family homes and condominiums declined last month in Glendale compared to September 2013. The median price for homes slid from $825,000 in September of last year to $740,000 last month, according to statistics compiled by Realtor Keith Sorem with Keller Williams Realty in Glendale. At the same time, the number of homes sold declined almost 18%.”

“‘Prices are stabilized,’ said Margi Simpkins, a Realtor with Coldwell Banker in Glendale. ‘There’s no real sense of urgency on the part of the buyer.’”

The Bakersfield Californian. “In theory, people should be approaching retirement debt free. But life is a long way from theory. A new study by the non-profit Employee Benefit Research Institute reported that an increasing number of boomers are retiring with mortgage debt. The EBRI report found housing-related expenses are the largest category of costs for seniors, consuming 40 to 45 percent of an older homeowner’s budget. By comparison, health costs consume 8 percent of the budget for people 50 to 64 years of age and 19 percent for seniors 85 years of age and older.”

“The Consumer Financial Protection Bureau recently painted an even bleaker picture. The federal agency reported that sixty-five percent of retirement-age people have mortgages today. This is up from 52 percent in 1992. And while many are struggling to make their mortgage payments, the bureau estimates about 5 percent of seniors are seriously delinquent on their debts.”

“My clients Bob and Mary illustrate some of the reasons why many retiring boomers are not debt free. In early 2000, when Bob was receiving promotions and pay raises at work, the couple decided to trade in their modest three-bedroom home for a larger one in northwest Bakersfield. Their children were in high school and the family needed room to stretch out. They seemed to buy just at the right time. Shortly after they moved in, home prices spiked in their neighborhood. They refinanced three times, taking equity out to help pay for their children’s college educations and to pay for one daughter’s wedding. Their monthly mortgage payment climbed to about $3,000.”

“Then the housing bubble burst and the Great Recession of 2009 hit. While Bob did not lose his job, as many of his neighbors did, his wages have not increased significantly in recent years. And Mary, who has worked part time for years to be home with her children, has been unable to find a full-time job.”

“I advised them to consider all their current and future expenses and income. Downsize. The ‘empty nesters’ have put their home on the market, with plans to buy a smaller home, or rent. They are hoping to reduce their mortgage payments and shed related homeowners’ costs. They also will cut spending on entertainment, travel and ‘non-essentials,’ while increasing their funding of retirement investments.”

“It took years of decisions and spending for Bob and Mary to get into their financial situation. There is no easy, one-step solution to getting out. It will take time and discipline to secure their retirement.”

Bits Bucket for October 15, 2014

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October 14, 2014

Sellers Are Wondering Why Buyers Aren’t Competing

The Daily Commercial reports from Florida. “Real estate watchers say new home construction appears to be coming back strong this year, and the evidence is in the myriad subdivisions that are sprouting fresh homes in recent months. A Sept. 19 statement from D.R. Horton, owner and homebuilder of the new 55-lot Brookshire subdivision in Eustis, said 14 homes were under construction and were planned to be ‘ready for move-in very soon.’ At that time, just one home had been sold. Lake County Property Appraiser Carey Baker said the fact that homes are being built on speculation is a good sign. ‘They are moving full steam ahead and building homes just anticipating that they’ll be able to sell them, Baker said.”

The Herald Business Journal in Washington. “Pending sales for Snohomish County homes jumped 15.48 percent in September compared with the same month of the previous year, according to the Northwest Multiple Listing Service. One novelty of the market is the number of international buyers, especially from China, who are picking up prime homes in the Puget Sound area particularly east of Seattle. ‘The influx of buyers from China is very real,’ said Gary O’Leyar, broker for Prudential Signature Properties in Seattle.”

“Dick Beeson, a real estate broker in Tacoma and a Multiple Listing Service director, said he believes that the China-Washington connection will continue. He said he believes that the Vancouver, B.C., has grown too expensive so Chinese buyers are looking south to the Puget Sound region. ‘Like the San Francisco Bay Area, Vancouver was their location of choice,’ he said, adding that skyrocketing values in those cities have some of them looking elsewhere to buy.”

The Star Tribune in Minnesota. “Higher house prices beckoned sellers to list their homes in the Twin Cities area last month. Buyers weren’t as plentiful. Many sellers are left wondering why buyers aren’t competing for house. ‘Our expectations were to see a sold sign on our home within three months of listing,’ said Don and Jen Mohs, who put their house in Chaska on the market in mid-August. After more than 40 days on the market, they’ve had plenty of showings, but still no offers. ‘We sense a lack of urgency from potential buyers, due to a greater number of houses on the market this season to choose from,’ Jen Mohs said.”

The Oregonian. “The way the numbers tell it, metro home prices are nearly back to where they were at the height of the housing bubble. But tell that to Dan Gering, who sold his house in Tigard this week – after dropping the price three times. ‘Everyone around us was saying the market was hot,’ he said. ‘I was stunned.’”

“When Gering listed his house in the 97223 ZIP code in May, several real estate agents he consulted expressed high hopes. But when they threw open the doors for the expected throngs of waiting buyers, they saw only a trickle of interest. ‘It was not as hot as we were thinking it was going to be,’ he said. ‘I never felt like it was a seller’s market. Ever.’”

The News & Observer in North Carolina. “The average price of homes that sold during the third quarter rose 3 percent to $257,300. But there are signs that pricing in some areas of the Triangle may be softening. The percentage of new home listings that have had at least one price reduction is now 24 percent, up from 17 percent during the same period a year ago. Stacey Anfindsen, a Cary appraiser who analyzes MLS data for area real estate agents, said a big run-up in the average list price of new homes over the past three years may be a factor. The average list price of new homes is now $367,900, up from $309,800 in 2011.”

“‘That could be where we’re starting to see some of the softness come into it,’ Anfindsen said.”

The Capital Gazette in Maryland. “As the real estate and mortgage collapse of 2008 fades into history, state officials and real estate agents point to the decreasing number of new foreclosures and default notices as evidence of recovery. But thousands of bank-owned properties sit empty in neighborhoods across the state, a backlog of unsold properties that will eventually make it into Maryland’s housing market at a discount.”

“Maryland has just recorded the largest influx of ‘real estate owned’ properties in its history. Housing experts say the deluge is linked to Maryland’s efforts two years ago to push back against foreclosures — a drive that delayed foreclosures and allowed mediation for many properties. It helped homeowners, but also created a backlog of homes that would inevitably be foreclosed.”

“Edgewater resident Chris Christoforou lives across the street from a home with broken windows, cracked bricks and a boarded-up back door. Christoforou said the vacant home may be interfering with the efforts of one of his neighbors to sell his own home. One such vacant home can drag down the neighborhood, he said. ‘I wish someone could buy (the vacant home) and fix it up,’ Christoforou said. ‘People trying to sell their homes right now won’t get top dollar.’”

Bits Bucket for October 14, 2014

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October 13, 2014

Like The Locusts, Destroying Everything In The Fields

The Daily Breeze reports from California. “With income inequality growing at home and abroad, Manhattan Beach’s housing market is seeing record numbers of home-buyers paying in cash. More than 30 percent of homes that sold for more than $1 million this year were purchased without financing. Several South Bay real estate agents said that they have seen an increase in the number of foreign investors this year. Often parents with children at Southern California schools will buy a home as an investment, knowing they can flip the home for a profit in four years, said Realtor Steve Goddard.”

“International buyers accounted for $92 billion in home sales in the 12-month period that ended in March, up from $66 billion in 2010, according to the National Association of Realtors. ‘It’s basically a world market that these sorts of properties are trading in. It’s not a local market anymore,’ said Richard Green, director of the USC Lusk Center for Real Estate. ‘As expensive as Manhattan Beach is for us, compared to China, compared to Singapore, compared to Hong Kong, compared to London, it looks like a bargain.’”

The Globe and Mail in Canada. “Demand from wealthy migrants from mainland China such as Ms. Hong has helped make the Vancouver area the most expensive real estate market in Canada. The average price of a single-family detached home is $1.26-million, higher than any other Canadian city. ‘In my opinion, I think it’s good for the economy,’ says Qiqi Hong, noting that the number of Chinese residents on her street has soared in recent years and that the local businessman she bought her house from made a cool $1.5-million more than he originally paid. ‘In Vancouver, the house prices are perfect.’”

“The Vancouver housing market has been less kind to Brent VanderRose and his wife Amy, who are both nurses. A few years ago, Mr. VanderRose purchased an older one-bedroom, 643-square-foot condo in Vancouver’s Fairview neighbourhood for $385,000. He and his wife wanted to start a family there, but they could not afford a bigger place nearby. The VanderRoses finally decided on a $585,000 detached, three-bedroom home in the suburb of Surrey, but couldn’t sell their older condo before the move-in date. They rented out the new house at a $500-a-month loss. They finally sold the condo at a loss for $335,000. They are expecting another child, but say they are stopping at two – because of housing costs.”

The Daily Mail in the UK. “A stampede of Chinese and Russian investors is snapping up British homes aimed at families and first-time buyers. Michael Sacks, of Sequre Property Investment, said foreign investors buying homes above their real value were ‘corrupting the market.’ He said overseas investment had seen prices for two-bedroom apartments in Manchester go ‘through the roof.’ ‘We know that Chinese investment companies are securing entire developments and then selling them to investors overseas for significantly more than they are actually worth, 25 to 35 per cent more in some cases,’ he said.”

The Sydney Morning Herald. “Chinese investors are aggressively lifting their Australian residential and commercial real estate investment at a time when the Reserve Bank is warning bubbly property markets could be hit with a price correction. Melbourne’s skyline will blossom with another 42 new skyscrapers to cater for demand if the state government approves all current proposals over 25,000 square metres on its books when there are already fears of a big oversupply. China has been booming for a decade but is now showing signs of slowing. ‘Now in our own market, more or less, we have reached certain capacity,’ says Adrian Sum (who) controls the purse strings of one of China’s largest property developers.”

“Its housing is in oversupply. The number of apartments in Shanghai is expected to double next year to total 1.1 million square metres. One new project in Shanghai’s redevelopment precinct is the size of both Melbourne and Sydney’s CBDs put together, says Savills’ Hong Kong-based research director Simon Smith. As a result, house prices, which rose to record highs for five consecutive years, are now experiencing a sharp deceleration. ‘Their main hurdles are lack of expertise and capability, so they are just dipping a toe in the market. They want to get practice,’ Mr Smith says, and they can ‘afford to fail.’”

The Associated Press. “By road, the little apartments are nearly an hour from central Hong Kong and the protests that have swept through it. Twice that long if you take the subway. But the apartments are also affordable, at least in the way that any real estate can be affordable in one of the world’s most expensive cities. The cheapest sell for 2.9 million Hong Kong dollars, or about $375,000. They are slightly larger than the average American kitchen. Young couples are desperate to buy them.”

“So when student-led pro-democracy protests began roiling Hong Kong two weeks ago, realtors saw a reflection of something else: the frustrations of a generation increasingly unable to afford the lives their parents had. Wealthy tourists from mainland China are regularly dismissed here as loutish boors who cut in line, spit constantly and flaunt their newfound wealth with newfound arrogance. To the people of Hong Kong, the rich shoppers are ‘wong chung’ — locusts — who buy whatever they can. ‘They are like the locusts, destroying everything in the fields,’ said Chan, the protesting student.”

From Bloomberg. “Rating companies say the risk of defaults in China has risen as Premier Li Keqiang pares implicit guarantees for local-government financing vehicles. The State Council said Oct. 2 that the finance arms can no longer raise funds for local authorities, and that the governments have no obligation to repay debt that wasn’t raised to fund public projects. ‘The market is entering a new era,’ said Chen Jianheng, a Beijing-based fixed-income analyst at CICC. ‘The time when everybody bought LGFV bonds for high returns without considering credit risks are gone. For any sales in the future, investors will apply a different set of criteria.’”

Want China Times. “The country’s economic slowdown and a slump in coal prices is taking its toll on the coal-rich areas surrounding the northern Chinese cities and township of Ordos, Ningdong and Yulin, with coal-mining and trading businesses in the region beginning to terminate their coal-related operations and turning to other business sectors. The ‘Energy Delta,’ previously dubbed an economic miracle, has now been overshadowed by the drop in housing prices, population outflows and loan problems, reports the Guangzhou-based 21st Century Business Herald.”

“During the rapid growth era, private loans mushroomed and investments were made in the real-estate market, given that housing purchases are one of few channels for people wanting to manage wealth acquired from coal mining.”

“However, the slump in coal prices triggered a fall in housing prices, which then sparked disputes between land developers and housing buyers over losses caused by the housing price drops. People who had bought property when the price was high complained about the sudden price drops and are seeking refunds or compensation from local governments or developers, according to the report.”