A weekend topic starting with Better Dwelling. "Canada’s central bank has had researchers quietly studying bubbles overseas. The study, Bubbles, Crashes and Information Contagion In Large-Group Asset Market Experiments, appeared in the June issue of Experimental Economics. The researchers found people coordinate with others naturally, adopting similar expectations. It didn’t matter if they saw the overvaluation news or not. Most would coordinate their expectations of future price growth with those that did."

"When prices climbed due to higher expectations amongst the cohort, so did expectations. This occurred even with knowledge of an overvaluation. The reality was less interesting than doing what their friends were doing. Real chimps with pants stuff. In some groups lowered expectations weren’t enough to stop extreme bubbles. In these cohorts, the market reached the absolute upper bound of overvaluation. Due to coordination, they were willing to risk the maximum they could. Risk was less important than doing what others did."

"For a bubble to pop, participants need to have a varied opinion on where the valuation should be. Either information changes enough opinions and there’s no consensus, or prices hit an extreme. The latter, aka a hard limit, is when prices can no longer rise. It has the worst outcome possible, with maximum losses. What a fun topic for the Bank of Canada to explore now for no particular reason."

The Nashville Scene in Tennessee. "The Nashville-area real estate market started to slow down a bit at the end of June. Single-family homes in the $200,000 to $300,000 range were starting to stay on the market as long as three, sometimes four days. OK, that’s hyperbole, but not much. Nashville’s loony housing market isn’t unique. It’s happening all over the country. The United States is now in the bizarre situation of having more real estate agents than homes to sell."

"In Davidson County in June, there were 311 homes sold that were originally listed between $200,000 and $300,000. Of those, 235 — about three-quarters — sold after a week or less on the market. On average, those 235 homes sold for $8,819 more than the asking price. Only 24 of those homes sold at or below their listing price. The waters calm with time. The 25 percent of those mid-priced homes that lasted longer than a week in June? They sold for, on average, $4,700 less than list."

"Owners of homes that have languished on the market for a few months — though such a waiting period was once the norm — are more likely to take a lowball offer. The good news, agents tell the Scene, is that things seemingly began to calm down in the last few weeks of June after the febrile spring, setting Nashville up to have a merely rapid market rather than one set at ludicrous speed."

From Bloomberg. "The outlook for U.S. homebuilder stocks is darkening as investors see slowing home sales and skyrocketing prices as a sign the housing boom may fade. An S&P index of 16 builders had surged nearly 250% between March 2020 and early May. But the index has slumped about 12% since then, with industry bellwethers DR Horton Inc. and PulteGroup Inc. among the 11 companies that saw double-digit declines. The retreat came as multiple metrics showed that the real estate market is cooling off."

"BTIG analyst Carl Reichardt said he is telling homebuilders not to be overaggressive. He is 'nervous' that builders may end up in a negative feedback loop where builders have to cut prices to retain buyers that are discouraged by ferocious bidding wars. 'We have to make sure the builders don’t kill the goose that lays the golden egg,' Reichardt."

From Builder Online. "Zonda has tracked the new residential development pipeline and lot supply in the Dallas-Fort Worth metroplex since the 1980s. At the end of March, there were 59,000 vacant developed lots in the market. There are an additional 50,000 future lots under construction that should be delivered over the next 12 months, the most in over a decade. However, with starts anticipated to push past 50,000 homes in the next 12 months the lot pipeline is barely enough to keep up."

"The surge in demand and record low lot supply have sent home builders and developers on a buying spree, creating a land seller’s dream. Land and lot prices are hitting record highs and pushing buyers further out in pursuit of affordability. There is hardly a day that goes by without an announcement of a new upcoming residential development. Zonda added more future lots to its database during the past 90 days than all of 2020. Included in these futures are 12 new master-planned communities with at least 1,000 lots planned."

From News Hub New Zealand. "Auckland Central MP Chlöe Swarbrick told The AM Show she and Davidson will reveal a pathway to decommodifying the housing market at Friday night's meeting. 'For the past 30 years - my entire life - the housing market has become effectively a runaway gravy train that now 1.4 million New Zealanders cannot afford a ticket on. You've got a third of the population that rent and you have also got a third of the housing stock owned by people who own between four and more than 20 homes in this country.'"

"Swarbrick says the only way to fix things is by admitting things have to change. 'I think one of the big challenges we have had, at least in my time in politics, is that no politician or no political party bar the Greens has been willing to say that house prices have to drop,' she said."

"Beyond helping Kiwis into houses, Swarbrick says a drop in prices is needed to protect the country from a property bubble that could burst and wreak havoc on our economy. 'Local economists and even the Reserve Bank of New Zealand are warning there's a bit of a speculative bubble forming potentially here. It is far more dangerous for us to end up in a situation where we have financial stability completely threatened because of the amount of speculation we've enabled.'"

From Channel News Asia. "Professor Sing Tien Foo, director of the Institute of Real Estate and Urban Studies (IREUS) at the National University of Singapore, pointed that one of the issues that may affect the affordability of such flats for buyers is that of Cash Over Valuation (COV) prices, noting these would increase given the current resale flat boom. COV refers to the difference between the transacted price and the unit’s official valuation by the HDB, which buyers must pay fully in cash."

"Property analyst Ong Kah Seng said the resurfacing of high COVs could point to stiff competition between buyers trying to outbid one another. This could result in buyers’ remorse should they realise they 'overbid' for a flat, he said, urging buyers to do their due diligence and carefully consider buying a resale flat."

"'Of note, there is also a bumper crop of flats exiting the five-year Minimum Occupation Period (MOP), where some home owners may sell their flat and look for new homes in the resale market or the private residential market,' said Mr Ismail Gafoor, CEO of real estate firm Propnex. 'Over 25,500 flats are estimated to reach their MOP this year, making them eligible to be sold in the resale market.'"

"Mr Ismail suggested that a fall in the resale prices of HDB flats may not necessarily be a positive thing. 'With the majority of Singaporeans owning and living in HDB flats, many households have a huge chunk of their savings tied up in their flat; a sharp decline or persistent fall in HDB resale values could negatively impact household wealth and retirement adequacy,' he said."

The Globe and Mail. "The Canadian technology sector has never had a year like 2021 – and it’s only half done. Companies have raised nearly as much venture capital as the record $7.5-billion for all of 2019, and are on pace to surpass 2000′s inflation-adjusted record ($6.4-billion, equal to $9.4-billion in 2021 dollars) at the peak of the dot-com bubble. Twenty-two companies have announced financings of $100-million or more – 10 more than the 2019 record. Ten have hit the industry’s 'unicorn' status – private tech companies that achieve US$1-billion valuations – backed by domestic venture capitalists and foreign investors."

"It’s a similar story on public stock markets. By May 31, technology companies had raised $8.4-billion on the Toronto Stock Exchange and the TSX Venture Exchange – more than 2020′s full-year record of $8.1-billion. Next week’s debut of digital wellness platform provider LifeSpeak Inc. will mark the 14th tech IPO on the senior exchange in 12 months, more than the previous decade combined. 'The dynamic [18 months ago] was, 'Why go public,' said Dani Lipkin, the TSX’s director of global business development. 'We don’t hear that any more.'”

"It’s been enough to wipe away bad memories of a decade ago. So, is this a new era in which domestic technology stars will transform the Canadian economy? Or should cautious Canadians think 'we’ve seen this movie before' and prepare for trouble? Many of Canada’s emerging tech successes don’t look like mania enablers. They’ve applied technological advances to more day-to-day tasks – such as helping companies to operate more effectively or enabling online commerce."

"But there are reasons for concern. Retail investors have flooded the market, chasing cryptocurrencies and pumping up meme stock. Throngs of hot money-seeking punters also fuelled the dot-com boom – andthat ended poorly. Another cause for concern is that financings are coming together quicker than ever, driven by aggressive U.S. private capital firms. They have showered startups with offers, frequently unsolicited, often at rich valuations and with fast closing times, based less on due diligence than a read of broader trends, momentum and market intelligence."

"If momentum abates and markets pull back, companies that raised large sums should survive short-term drops in their valuation, but 'the bigger concern will be on the smaller fundraises done at FOMO-induced valuations,' said Sid Paquette, head of Royal Bank of Canada’s RBCx innovation banking division. That could leave some companies 'locked out,' overpriced and forced to raise at lower valuations, he said."

"Retail and venture investors are responsible for the overall surge in valuations. But rapid digital adoption during the pandemic has accelerated growth for many online companies, so some upward valuation adjustments make sense, argues Toronto-based Inovia Capital partner Karamdeep Nijjar. 'Valuations are high now compared to historical norms, but so are growth rates and exit values,' he said."

"But those rates may decelerate as the pandemic eases. If so, valuations could plummet. Ian Carew, managing director with Toronto’s Northleaf Capital Partners, worries there will be 'some issues' when the business cycle turns. 'The trick is recognizing when the switch flips and pulling back appropriately.' But, like other Canadian innovation funders, he believes Canada’s tech sector will keep thriving. 'Every part of the ecosystem is a lot stronger' than a decade ago, he said."

"Yet one of the major lessons from the past year is that early investor demand does not always translate into long-lasting market strength. In December, telemedicine startup MindBeacon Holdings Inc. set out to raise $50-million and ultimately received about $400-million worth of orders. So the company decided to price its shares at $8 each, at the top end of its marketing range. Management also boosted the deal size to $65-million. The shares jumped 64 per cent over their first two months of trading."

"But it’s been nothing but misery for MindBeacon since early February, when many growth stocks started to sell off in Canada and the U.S. The company’s shares now trade for about $4.60 each – about half their IPO price."