It’s Friday desk clearing time for this blogger. “The figures from the Greater Boston Association of Realtors point to a market that, while certainly pricey, is significantly less frenzied than it was a year or two ago, when buying a house here usually meant a bidding war, fought at lightning speed. The number of days a property sits on the market is creeping up, and more homes are selling below their initial asking price. Those are all signs, said Jim Major, president of the association, that the market is approaching something like normal. Buyers are responding accordingly, he said, and sellers should get the message.”
“‘There is less of a sense of urgency among today’s buyers, and they’re showing more sensitivity to price and condition as the market has showed signs of cooling,’ he said. ‘As a result, homes are sitting on the market longer and owners need to be more realistic in their pricing if they expect their property to sell.’”
“San Francisco, San Jose, Las Vegas and Seattle have slowed down the most, with San Jose and San Francisco seeing a decline in year over year home values. ‘As we approach the winter holidays, housing, too, is taking a breather,’ said Skylar Olsen, Zillow’s director of economic research. ‘Motivated sellers trying to close before the end of the year dropped their list prices in September and October.’”
“New York City prices will fall 3% next year, a continuation of this year’s trend. In the third quarter of 2019, prices were down 4.4% from the same period the previous year, according to Knight Frank. To sell all the newly built condos in Manhattan at the current sales pace, it would take nine years. ‘The luxury market on the sales side is the weakest segment of the housing market,’ says Jonathan Miller, president of appraiser Miller Samuel Inc.”
“‘Although interest rates are near historically low levels and financing guidelines have loosened, the buyer pool has not come pouring back into the market,’ noted Mike Opyd, broker/owner of RE/MAX Next in Chicago. ‘The result has been an increase in inventory and a slowdown in sales. Buyers continue to take their time making decisions, knowing they have options and a better chance of getting what they want at a price they want. I expect this trend to continue into the new year.’”
“The Bank of Canada just went all of 2019 without an interest-rate move. The way it’s being hemmed in by Canada’s high household debts, it could go all of 2020 without one, too. The clues lie in the types of debt that are fuelling the insolvency rise. Leading the way are home-equity lines of credit (HELOCs) and unsecured lines of credit – debts whose interest rates reset automatically with changes in lenders’ prime rates, which move in lockstep with the Bank of Canada’s policy rate.”
“”If raising the [Bank of Canada’s] overnight rate to only 1.75 per cent could set off a climb in insolvencies, before any major job losses have been seen, it’s clear that taking rates to anywhere near what was historically neutral, or even where some models might currently put neutral, could prove to be overkill,’ economists Benjamin Tal and Avery Shenfeld said in a research report.”
“A property developer who became one of this year’s biggest bankrupts with debts of £40 million has described how he used cocaine to work 22 hours a day in a doomed effort to save his business. Martin Skinner was jailed in September for a drug-drive crash, lost his £500 million property empire the following day, was declared bankrupt earlier this month and evicted from his home last week. He came under fire for driving to Worthing magistrates’ court in a McLaren 675LT Spider supercar, but he said this was only because a friend had filled it with fuel. The former millionaire said he could not afford the train fare as he had ’42p in my bank account and 30p in my pocket.’”
“As Dubai’s real estate sector crashes, even expat investors are shying away from bargains. Real estate values in Dubai have now dropped by 25 per cent over the past four years, leaving the property market in confusion and investors looking to pull out before it becomes worse. The continuing slump in oil prices plus the massive oversupply of luxury properties has taken a huge bite out of demand and left many real estate agents wondering where to go next. The market’s nose-dive is also affecting the rest of the UAE, with the biggest falls in the upscale property sector.”
“Even the most publicised developments in Dubai have been affected, with Palm Jumeira Island prices collapsing by almost 10 per cent in 2018 and still falling further this year. The majority of Dubai’s exclusive upscale developments came onstream and were sold prior to the 2008 financial crash, with homes listed at $1 million in 2014 now fetching less than $500,000. The dramatic decrease in value of many of the world’s most luxurious developments has hit investors and wealthy expat professionals hard, with the general feeling that hanging on and praying for common sense to be restored is better than losing a large chunk of invested earnings.”
“Property expats believe the market will take at lease a two-year period to recover, even although oversupply is still being ratcheted up as new developments come onto the market. Over 30,000 homes are due to be completed by the end of this month, with a further 96,000 scheduled for the back end of next year.”
“The slowdown in the Bangkok condominium market this year reflects low confidence among developers and buyers alike in the country’s economic situation. Purchases by foreigners are down around 40% from a year ago, mainly because of the stronger baht and sluggish economic conditions globally. Chinese buyers, the largest foreign buyer group, have almost disappeared.”
“Beijing’s housing prices have hit its lowest level since 2017, falling by about 18.5 percent compared to its peak in April 2017, according to a report. Home prices across first-tier cities have diverged since July 2019, with Shenzhen in southeast China’s Guangdong Province alone continuing its rising momentum.”
“There is an oversupply of poor quality high rise and off-the-plan apartments in Sydney, Brisbane and Melbourne. We’ve seen an oversupply of newly built high rise apartment towers in many of our cities. Some will make great investments increasing substantially in value over the long term, but many of the high-rise towers built in the last fifteen years will continue to underperform with poor, if any, capital growth in the foreseeable future. Of course, these Lego Land apartment blocks never made good investments.”
“They offered little scarcity and had no owner occupier appeal having been built with investors in mind, and often overseas investors who didn’t fully understand the needs of the local market. Worse still, because of the high developer margins and marketing costs, many investors paid too much to start with and have since found that on completion their properties were worth considerably less than their contract price.”
“An attorney representing a group of Chinese investors who loaned $49.5 million to a developer to build a 60-story hotel/condominium at Wabash & Superior is now demanding that his clients get their money back. Doug Litowitz, representing the investors in a federal class action lawsuit, says construction of Carillon Tower was supposed to be finished in 2017. The tower was not built and now New York-based Symmetry Development, LLC, says it does not even own the land on which the tower would be built.”
“‘After four years of hiding $49 million in Chinese money on a five-year loan, investors were told it would be completed in 2017 [but] no shovel has hit the ground,’ said Litowitz. ‘There is no proof Symmetry even owns the main parcel on which they are supposed to build, and the other parcels of the project are in foreclosure and heavily encumbered, and the whole thing is subject to future landmark committee approval.’”
“Each investor loaned at least $550,000 to Symmetry in order to participate in the federal EB-5 Visa program that would provide for them a path to become a legal resident of the U.S. ‘We believe Symmetry should give back the Chinese investment and instead locate a rural area to build a more modest structure such as a teepee, yurt, or bamboo hut reinforced with elephant dung,’ mused Litowitz.”