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We’re The Best. Nothing Can Hurt Us. How Fast Things Change.

A report from the Globe and Mail in Canada. “Michael Bublé has owned this 7,100 sq. ft. West Vancouver mansion with ocean and city views for 11 years. The house was a year old when he bought it in 2007 for $4,550,000. Asking price: $6.998 million. Selling price: $5.180 million. The sale reflects a severe downturn in the high-end detached house market, particularly in West Vancouver, says listing agent Carsten Love.”

“Mr. Bublé bought the house at a peak in the market and did renovations. The selling price reflects the withdrawal of Mainland Chinese money from West Vancouver. He saw another sale in the neighbourhood where a new house that was listed for $10.5 million went for $6 million, well below assessed value. It created a new market.”

“‘That sale really did put us in a different mood,’ says Mr. Love. ‘The market has drastically dropped, and West Vancouver is the worst market in North America with its months of supply. It’s got about 14 months of supply, and for example, Burnaby has about seven or eight months, which is not great. But it’s double in West Van. And it’s going to get worse as we come into spring.'”

“But with 20/20 hindsight, Mr. Love says a lot of sellers are wishing they’d unloaded their properties two years ago, when the market was at another peak. ‘I think people are going to have to wake up, because we thought our market was impervious to anything. We all bragged about it: ‘Vancouver, people love us. We’re the best. Nothing can hurt us.’ How fast things change. Now people go, ‘ Uh, okay…’ he says, laughing.”

“‘Reality is starting to set in. Prices went up so fast, and maybe for false reasons – not because people wanted to live here, but because they were propping up our market for a safe place to park their money.'”

The Courier Mail in Australia. “Bargain hungry home hunters are in the box seat with a spike in the number of discounted properties hitting the market. The top 20 homes with the biggest price cuts on the market in Queensland right now have been revealed, giving savvy buyers a chance to snap up a bargain for up to $800,000 below market value.”

“Death, divorce and desperate vendors are some of the reasons for the number of ‘distressed’ listings, according to SQM Research. SQM Research managing director Louis Christopher said 23,000 of the 330,000 properties on the market nationally were distressed, compared to only 18,000 a year ago.”

“‘There is the potential to be able to buy at, or below, fair market value,’ Mr Christopher said. ‘Especially in a downturn similar to the one we’re having now, that probability has increased. I suspect it’s because the Gold Coast has a higher percentage of investors as a proportion of total buyers than most other regions in the country and it’s also a transient place, so people come in, live there for a few years and move out again.'”

“Helen and Tim Stieler are selling their renovated, three-bedroom house in the heart of Chermside for offers over $565,000. The Stielers have already moved to a property on a bigger block of land to accommodate their growing family. Mrs Stieler said she could not believe the property had not been snapped up yet.”

“‘The convenience is amazing,’ Mrs Stieler said. ‘We’ve had a large number of people go through, but just haven’t found the right person. It really is a bit of a bargain.'”

The Wall Street Journal on China. “SHANGRAO, China—Investors were pouring into this sleepy city in southeastern China until late last year to scoop up apartments as new high-rise projects mushroomed. Then sentiment turned. Unsold units started piling up and developers began cutting prices. Homeowners fearing a housing-price collapse protested at one sales office in October.”

“The deepening slump, visible as well in other smaller Chinese cities, illustrates why property sales aren’t expected to help bail out China’s economy as overall growth slows this year. This time, Beijing is trying to avoid a repeat. Officials express deepening concern with financial risks from years of rising property debt, as well as social discontent in cities where homeowners have much of their wealth tied to property values and young people fear prices have soared out of reach.”

“In a suburb of Beijing, 29-year-old Zhang Jianhua said he pays two-thirds of his monthly income from a job making soup dumplings to cover his mortgage for an apartment. Prices in his area dropped 20% from last year, and recently, Mr. Zhang joined 200 other homeowners at the central housing ministry to protest.”

“‘I felt like I had no other choice but to protest,’ Mr. Zhang said. ‘I’ve been so upset.'”

“Shangrao home prices are 11% off their peak last May, according to Anjuke, a Chinese property brokerage. On a recent weekend, local developer Youbang Real Estate was pulling out all the stops to market the biggest project in the city, One Sino Park, with 5,500 units.”

“At another project, built by Country Garden, one of China’s top three home builders by sales, a 54-year-old small-business owner who only gave his surname, Liu, said he had just signed the contract on a new apartment for when his 23-year-old son, a recent college graduate, gets married someday.”

“‘I feel like Shangrao’s vacancy rate is already really high,’ said Mr. Liu, who bought the home for 30% less than the advertised price. ‘A lot of my friends already hold two or three homes.'”

“Wang Lingling, 34, bought a home in Shangrao last October. She and her husband, who have two children, are struggling to pay 3,900 yuan a month for the housing loan because they work part-time jobs and don’t have fixed incomes. They say they don’t eat out as much anymore to save money.”

“‘Now we have to think twice before buying things,’ Ms. Wang said. ‘We must first put all our money toward paying the mortgage.'”

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This Post Has 40 Comments

  2. ‘We’ve had a large number of people go through, but just haven’t found the right person. It really is a bit of a bargain.’

    Cut the price Helen.

  3. Prices went up so fast, and maybe for false reasons – not because people wanted to live here, but because they were propping up our market for a safe place to park their money.’”

    Each of these formerly superheated bubble markets needs a memorial to the billions of Yellen Bux that perished there.

  4. Also from the last link:

    ‘The company staged a fashion show in its sales office with women in fur-lined coats and qipao, a traditional Chinese dress, attracting an audience of about a hundred people. Posters pumped up the urgency to buy, with messages like, “You’ve got money but won’t buy a house? Isn’t that like watching your wealth disappear?”

    1. Lol to have women doing catwalk shows including both traditional Chinese dress ( mom would be happy to see) and modern conspicuous consumption of fur (mmm buttery soft) lining is a giant reminder to men of means that they ain’t never gonna get it if they don’t get mortgaged up!!

  5. Homeowners fearing a housing-price collapse protested at one sales office in October.”

    They stamped their little feet, to no avail.

  7. My recent grad son spent time in China last summer and I think he caught a definitive vibe of reduced consumption due to high housing costs for sure. Also we’ve been reading about life in China and how to get married men will really need to have a bought apartment and prospects for more to be appealing in the quest for woman folk so buying properties for your sons seems necessary if you’d like nice grandkids! The idea though that dumpling makers have big mortgages is more than a little terrifying for the prospects of a housing debt collapse in China yikes!!

    2. Been binging on the ADVChina youtube channel since someone posted it here. Pretty interesting to hear just how much saving face and appearances at all costs seems to matter there, though it’s less than their social ‘holy grail’ – making money by any means possible (Apparently there is no Chinese word for ‘ethical’).

      Also interesting are their reports on the government’s tightening down on everyone with social control, the resurgence of ‘the party’ and the making of life very uncomfortable for any foreigners living there.

      The eeee-bola is strong over there.

      1. This video made me think that maybe my realtor has disappeared to go to foreclosure forums to get ahead of that emerging market?! Still no email response and it’s been weeks now .

        1. Hopefully he feels guilty about potentially destroying your finances, and is doing you a favor by not responding.

  10. Queensland right now have been revealed, giving savvy buyers a chance to snap up a bargain for up to $800,000 below market value.”

    Still livin in the casino.

  11. A couple of Settled Science reports regarding California …

    The first report is from 2014 and it goes like this …

    “California’s 100 Year Drought.”

    (snip)

    “Ault continues to investigate the relationship between climate change and megadroughts and the likelihood that an even more severe megadrought might hit in the next hundred years in the Southwest — one that’s worse than any other drought in the past 1,000 years.

    “Specifically because of global warming, Ault says, the chances of the Southwestern USA experiencing a decade-long drought is at least 50% (but may be closer to 80%-90%), and the chances of a three-decade-long megadrought range from 20% to 50% over the next century. Ault is writing a study about this that will be published in a forthcoming issue of the American Meteorological Society’s Journal of Climate.

    “‘For the Southwestern U.S., I’m not optimistic about avoiding real megadroughts,’ Ault said. ‘As we add greenhouse gases into the atmosphere — and we haven’t put the brakes on stopping this — we are weighting the dice for megadrought conditions.

    “‘The risks would be lower if we didn’t warm the planet as much as is expected to occur, but they aren’t zero, because we know these things happen naturally,’ he said.

    “This is serious stuff: ‘Megadroughts are a threat to civilization,’ Ault said at an American Geophysical Union conference this year. ‘They could possibly be even worse than anything experienced by any humans who have lived in that part of the world for the last few thousand years.'”

    https://www.usatoday.com/story/weather/2014/09/02/california-megadrought/14446195/

    The second report is from today’s news and it goes like this …

    “Snow too thick to plow keeps skiers from California resorts”

    https://news.yahoo.com/risk-flooding-mudslides-remains-california-storm-041226665.html

    FWIW.

    1. I have noticed in AA MI over the last 5 years that there has been a change in the Chinese population, from a more wealthy seeming and elite educated vibe to an increase in less linguistically sophisticated and just less elite seeming folks. I’d always assumed that RE assets bought in the US would be cash sales and money parking schemes but could it really be the case that some of those are via borrowed money and Chinese debt burdens can really cause even non luxury markets to be affected if their house of cards comes down?!

      1. I wonder if it could it be some sort of ‘second tier’ of Chinese buyer – one whom doesn’t have the wealth to buy in the coastal hotspots and is more likely wanting a foreign residence that they can actually move themselves or family to?

        1. that’s what it feels like but i’m thinking about how leveraged they might be. i’d always assumed the Chinese folks were paying cash only somehow, and then the less-wealthy-seeming started appearing and only now am I entertaining the possibility that they’ve borrowed?

          1. i’d always assumed the Chinese folks were paying cash only somehow, and then the less-wealthy-seeming started appearing and only now am I entertaining the possibility that they’ve borrowed?

            There’s more than one reason for Chinese to be buying up RE. Some are just moving money out of the country, others want to move themselves and their families out of the country in anticipation of future bad times.

            Remember they are only a single generation removed from the cultural revolution where tens of millions were persecuted and many died, as well as the crackdown on ethnic minorities. Add the 1.2 Billion+ population, the 1984-level crackdown and monitoring on behavior and the rate at which they are polluting and destroying their own environment (Chinese visitors here routinely in awe at how clean and nice America is by comparison) and you got a lot of Chinese thinking about getting out.

            That said, I’ve feel that SE MI is notch below many other places desirability-wise, but it’s also cheaper. (Not trying to dump on MI unfounded – I grew up outside of Detroit and went to UM there in Ann Arbor and based my opinions on my personal experiences) Anyway, I think some of the buyers you are seeing are those wanting a home outside of China for the above reasons, but can’t afford to just go pay cash in the Chinese ex-pat hotspots like California, Vancouver, etc.

    2. I always wonder why only 12 or so congresspeople get all the attention. What are the rest of them doing all day? They get paid quite a bit to hide and do nothing.

  15. Zillow predicts 22151 home values will increase 6.4% next year, compared to a 5% rise for Springfield as a whole.

    For HA!

  16. Butt-hurt progressives are stamping their little feet over Amazon’s decision to ditch their SJW-infested city where the demands by “community activists” would’ve been incessant and extortionate. Instead, it looks like this rapacious and evil corporation is looking to retrench rather than expand, as the implosion of Tech Bubble 2.0 draws closer.

    https://www.zerohedge.com/news/2019-02-16/scathing-nyt-editorial-de-blasio-claims-amazons-nyc-pull-out-proved-its-critics

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