It’ Friday desk clearing time for this blogger. “A price chop this big might cast some doubts on the world’s tallest residential tower. Gary Barnett’s Extell Development has sold a sponsor unit at its Central Park Tower at 217 West 57th Street for nearly 50 percent below its original asking price, property records show. The unit, a four-bedroom, 7,984-square-foot condominium, was originally asking $95 million. It went into contract in June and sold for $49.7 million when the deal closed this month.”
“New housing data shows inventory hit a 2021 high in September, giving buyers more choices than they have had all year, according to Realtor.com. In September, the count of listing price reductions was more than 8 times higher than the count of listing price increases.”
“Realtors say they have been seeing fewer offers on certain homes in Metro Atlanta. Broker Cheri Benjamin said, ‘Things have cooled down, which is a good thing. So we’re not seeing everyone having to pay $50,000 over and above asking prices. I think there might be a slightly less urgency, which could be good news for buyers. I think we’re going to see more listings coming on the market and I think our market will start to stabilize in 2022.’”
“As the state ban on evictions draws to a close, tenants, landlords and elected officials in Santa Clara County are bracing for an uncertain future. Jeff Zell, is a landlord and property manager of multiple properties around the South Bay that house approximately 6,000 to 7,000 residents. By Nov. 1, landlords will be able to take tenants to small claims court to recover past rent, but Zell said he doesn’t plan on doing that. ‘If the tenants don’t have money, there’s no way to recover money,’ Zell said.”
“On September 16, the Straight reported about a forecast by the Real Estate Board of Greater Vancouver. In its analysis, the REBGV anticipates an ‘upward pressure on prices’ this fall season ‘as above-average sales volumes meet low inventory levels.’ For the story, this publication used a photo of a seven-bedroom Vancouver mansion at 1453 Laurier Avenue, which sold for $5.8 million. The choice of the photo of the Shaughnessy estate got the attention of a person who identifies on social media as Julia Longpre, and who is someone ‘obsessed with Van RE.’”
“In a Twitter post, the individual called out the Straight and pointed that it missed something about 1453 Laurier Avenue. It’s that the property sold for a loss of $80,000 seven years after it was purchased. The individual is correct. Tracking by real-estate site Zealty.ca shows that 1453 Laurier Avenue sold on September 11 for $5.8 million. Zealty’s summary notes that the sold price is 15.7 percent lower than the asking price of $6,880,000. Also, the sold price is 9.7 percent lower than the Shaughnessy property’s 2021 assessed value of $6,423,000.”
“Spring has finally sprung for the Sydney property market as the number of homeowners looking to sell begins to soar. CoreLogic latest Property Pulse report revealed the number of freshly advertised dwellings was 31 per cent higher than August.”
“Australian house prices remain red hot but the foot has slipped off the accelerator. ‘Also a near record number of homes are being built,’ said CommSec chief economist Craig James.”
“If Lehman had been an isolated case of a badly managed large firm, it could also have been resolved by other means, any of which would have been the end of the story, just as with LTCM and Enron. But Lehman wasn’t an isolated case. The problem was much more fundamental: The entire financial system was leveraged to an enormous housing bubble, and that bubble had begun to burst. Propping up the bubble itself would have been a mistake if it was even possible, but given the extent of leverage the entire financial system was at risk. The problem was systemic, and required a systemic solution.”
“Those are the important questions about Evergrande as well. Yes, it would be a very large bankruptcy — but even $300 billion in debt is relatively small in the context of a $16 trillion economy. The real danger comes from the degree to which the problems that plague Evergrande are systemic — and, if they are, how China’s government will address them.”
“There’s ample evidence that those problems are systemic — and serious. Beijing’s development model plows Chinese citizens’ extremely high rate of national savings into physical capital: power plants, roads, railways, and especially housing, to facilitate China’s transformation from a mostly-rural to an overwhelmingly urban society. When those projects no longer had a clear case for being economically viable, though, China continued to build. In consequence, they overbuilt so much that people began to speak of ‘ghost cities,’ entire municipalities without inhabitants.”
“Real estate has remained a preferred investment for Chinese families, in part because they have few other options: Bank deposits have very low yields, the stock market is viewed as corrupt, and capital controls prevent investing outside of China.”
“That describes a classic housing bubble, and Evergrande is centrally exposed to it. China may want to punish Evergrande to warn other firms to improve their financial management, but if the bubble starts to pop, then even if contagion is prevented those other firms won’t have a ready means of exit. And individual homeowners, of course, will have the least recourse of all.”
“Ultimately, the risk is to the Chinese political and economic model itself. A decade ago, the Chinese Communist Party could say that, whatever its other failures or oppressive features, it was delivering a dramatically increased standard of living, as well as certain freedoms. The scope of those freedoms has narrowed steadily in the Xi years, and economic growth has slowed as well. Beyond the short-term risk of unrest from angry bondholders, if the main mechanism for wealth-building — the value of housing — goes into reverse, what will the regime be able to point to for legitimacy?”
“And what will happen to its economic model if ordinary people wonder why they are working so hard and saving so much? Beijing may make a showy example of a few real estate moguls and corporate executives to demonstrate that they are on the people’s side, but you can’t eat schadenfreude.”