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The Price Drop Isn’t Meeting The Market, And Buyers Are Saying ‘No’, Waiting For It To Drop Further

A report from the Canadian Press. “An online auction for a luxury home is drawing attention for its novel approach, which some observers say has potential to inspire new sales. Scott Pate, a project sales manager with Concierge, said luxury real estate has been a buyers’ market for quite some time in both the United States and Canada and auctions are a way to give sellers more certainty.”

“A real estate agent in Victoria tried the in-person auction approach in 2016 with a property in the city’s upscale Rockland neighbourhood. But local media reported that although 60 people filled the room, only one was an interested buyer so the auction was cancelled. In 2017, the B.C. Supreme Court accepted a $1.8-million offer for the historic mansion in foreclosure.”

“‘It certainly could be a direction the market could go. In segments where the market is slow today, people will try different approaches to move product, so it’s certainly possible,’ said Tom Davidoff, director of the University of British Columbia’s Centre for Urban Economics and Real Estate.”

From In Cyprus. “Cyprus banks will put entire apartment blocks and luxury properties under the hammer this month and in April in their bid to get dues back. Foreclosures are keeping Bank of Cyprus, Hellenic Bank, Altamira, Alpha Bank and Societe Generale Bank Cyprus on alert these days and mass listings in the media are no coincidence.”

From Ahval News in Turkey. “Turkey’s state-run construction giant TOKI is cutting the prices of some new apartments and workplaces by 22 percent as a result of a persistent downturn in the housing market. The reduced price will apply to buyers who have already signed deals to buy housing and started payments by the end of last year, Karar newspaper said citing a statement by TOKI.”

From Mansion Global on Ghana. “Cantonments, a luxury suburban neighborhood in Accra, which is the capital and largest city of Ghana, possesses a distinct diplomatic air. In the last five years, Cantonments has experienced rapid development, which, according to Delores Sekyere, CEO/managing director of Ghana Prime Properties , has led to a glut of properties.”

“Prices for luxury townhouses range from US$500,000, which is the starting point for a three-bedroom unit, according to Sekyere. ‘Because of the oversupply of properties, prices will begin to fall,’ she said. ‘Most of the people who live here are renting; there are not many people other than Ghanaians who have enough confidence to buy because the prices are high.'”

The Bangkok Post in Thailand. “Condominium end-user buyers are smiling this year, as developers concentrate on clearing completed but unsold inventory in response to weaker demand, partly due to stricter Bank of Thailand mortgage requirements for buyers of second and third homes.”

“As a result, the residential market this year will be more driven by end-user demand, with fewer investors or speculators than in recent years.”

From Domain News in Australia. “Sellers trying to find buyers for $2 million-plus Melbourne homes in Melbourne had mixed results at weekend auctions. The wait-and-see approach of many prospective buyers reflects concerns that house prices could fall further.”

“Buyer advocate Nicole Jacobs said there was no urgency to purchase in some areas and even high-quality properties were not attracting bids at auctions. Typical of this trend was 36 Imbros Street, Hampton, which was passed in by Buxton on a $2.85 million vendor bid on Saturday.”

“‘It was a really lovely home in one of Hampton’s best pockets and I believe there were buyers there,’ Jacobs said. ‘In this market, people are deciding to wait and negotiate later. Everybody thinks that there is zero urgency.'”

“Many higher-priced properties were originally listed for private sale on elevated price quotes late last year, she said. Asking prices were later dropped significantly, but buyers expected further cuts. ‘The price drop isn’t meeting the market, and buyers are saying ‘no’. People are waiting for it to drop further,’ Jacobs said.”

From Money Morning New Zealand. “In the world of housing, New Zealand sits upon a mighty throne. We roost among some of our planet’s most inflated…most at-risk…most over-valued housing markets in existence. Sharing our high stage are countries like Canada, Hong Kong, Australia, Sweden and Great Britain.”

“It’s a fun group. We sit around laughing and toasting to our great housing returns. We look down upon the rest of the nations, tottering about with their 1% or 2% annual gains. ‘Peasants,’ we scoff.”

“We announce that, thanks to the housing market, New Zealanders will soon be able to stop working altogether. Their homes will earn more than they ever could. Jobs, schmobs. Just lie out in your hammock and enjoy the sun while the equity rolls in…We’re having a good ol’ time, filled with debauchery and joy.”

“But suddenly, Canada sneezes…Then Great Britain…then Sweden…then Hong Kong. We look nervously at Australia…’Don’t do it. Don’t do it.’”

“The Aussies sneeze.”

“In housing, we’re seeing our peers starting to look a bit green. Our brothers in Hong Kong are seeing rents drop by double digits annually, with analysts predicting a 40% freefall within two years. Our syrup-sipping friends in Canada have seen home resales drop by 43.5% year-over-year. And they’re especially nervous as Toronto and Vancouver hold the third and fourth most at-risk cities in the world, according to UBS.”

“London house prices are falling for the first time since 2009, with a looming Brexit around the corner to trigger a full-scale fire sale. And sunny Sydney — plus its equally plump sister, Melbourne — has seen prices slip for 12 months in a row. It’s on track for a 20% fall in the coming months, according to AMP Capital Chief Economist, Shane Oliver.”

“So while our friends are getting woozy, clutching their chests and gasping for air, we Kiwis close our eyes and repeat, ‘There’s no place like home. There’s no place like home. There’s no place like home.’”

“We picture our multimillion-dollar, one-bedroom, no-bath beach houses on the Coromandel. We think hard of our $1.36 million shed in Kingsland. ‘We’re special. Our houses go up by 10% every year. Like clockwork. No ‘ifs,’ ‘ands’ or ‘buts’ about it.’”

“Australia rolls her bloodshot eyes, ‘You’re coming down with us…just a matter of time.’”

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This Post Has 26 Comments

  1. “Prices for luxury townhouses range from US$500,000, which is the starting point for a three-bedroom unit, according to Sekyere. ‘Because of the oversupply of properties, prices will begin to fall,’ she said. ‘Most of the people who live here are renting; there are not many people other than Ghanaians who have enough confidence to buy because the prices are high.’”

    Ebola Ghana!

  2. How about that negative first and second derivatives on the Case-Shiller Index?

    Home price gains slow to a 6 1/2-year low, Case-Shiller says
    By Andrea Riquier
    Published: Mar 26, 2019 9:00 a.m. ET
    The 20-city charts a monthly decline for the third-straight month.
    Bloomberg News/Landov
    A for sale sign stands outside a home in a snowy town in Illinois.

    The numbers: The S&P CoreLogic Case-Shiller 20-city index declined a seasonally adjusted 0.2% increase in January compared to December, the slowest pace of annual growth since 2012. Price gains were still 3.6% higher compared to a year ago.
    …
    Big picture: The housing market has hit an inflection point. After years of runaway price growth, home values are braking hard. More cities saw a monthly decline in January than saw gains.

    Amid the slowdown in expensive West Coast cities — San Diego and San Francisco were among the slowest annual price gainers in January — a new contender cracked the top 3. Price growth in Minneapolis, when taken to the third decimal place, was just higher than Charlotte — and Minneapolis was among the metros that experienced a monthly decline.
    …

    1. San Diego still on target for y-o-y declines around June 2019, barring near term slashing of interest rates, another QE, and looser lending standards,

  3. “Cyprus banks will put entire apartment blocks and luxury properties under the hammer this month and in April in their bid to get dues back. Foreclosures are keeping Bank of Cyprus, Hellenic Bank, Altamira, Alpha Bank and Societe Generale Bank Cyprus on alert these days and mass listings in the media are no coincidence.”

    Gosh, Mr. Banker, I sure hope you’re not losing sleep over this.

  4. “Australia rolls her bloodshot eyes, ‘You’re coming down with us…just a matter of time.’”

    Looking across the Pacific Ocean to California shores…

  5. “‘It was a really lovely home in one of Hampton’s best pockets and I believe there were buyers there,’ Jacobs said. ‘In this market, people are deciding to wait and negotiate later. Everybody thinks that there is zero urgency.’”

    Not only that, Jacobs, but savvy buyers know the real cratering hasn’t even started yet. We’ve got all the time & popcorn in the world.

    1. As a renter I’ve saved so much money that I could buy the nicest gourmet popcorn to eat while watching all of this unfold!

  6. “It’s a fun group. We sit around laughing and toasting to our great housing returns. We look down upon the rest of the nations, tottering about with their 1% or 2% annual gains. ‘Peasants,’ we scoff.”

    A few years hence, when this same fun group is dining on hobo stew around a trash can fire, drowning their sorrows with copious quantities of Night Train or Ripple, maybe those “peasants” who sat out the madness will be kind enough to spare you some loose change or a nice sturdy cardboard box.

  7. So I google-mapped Accra, Ghana. It’s definitely better than Lagos, Nigeria. About half of it appears to be gentrified by Westerners, and some of it looks rather new and nice. Of course anything new is surrounded by gates and 6-foot walls and fences (Trump is right.) But the other half is still s-hole Africa (but still better than Lagos).

    1. It seems like post-bubble eee-bola is spreading to the luxury condo market in every third world city on the planet!

  8. “A real estate agent in Victoria tried the in-person auction approach in 2016 with a property in the city’s upscale Rockland neighbourhood. But local media reported that although 60 people filled the room, only one was an interested buyer so the auction was cancelled. In 2017, the B.C. Supreme Court accepted a $1.8-million offer for the historic mansion in foreclosure.”

    There are unmentioned details here regarding the reserve price used to identify the ‘one interested buyer’ at the auction. Anyone else in the room would likely have been willing to buy the place at some price, just not at the seller’s wishing price.

    1. Trump is being stupid. The media is so distracted with weeping and vowing investigations and such, that Trump isn’t being watched. He’s got at least one free news cycle. Instead of taking victory laps, he should use this opportunity to sign some controversial executive orders or send more military to the border, or spend some quality Tindr time with Kim Jong Un.

    2. “Beto should write some poetry to accompany Jim Carrey’s drawings.”

      Beto 🙂 you mean Franny

      From Wikipedia, the free encyclopedia

      Robert Francis “Beto” O’Rourke

  10. Yield curve inverted + Negative interest rates in Germany + Case Schiller down + housing starts down + housing permits down = Nasdaq up 1% + S&P 500 up 1%

    I just don’t understand ANYTHING anymore!!!!!

    1. Don’t bother trying to understand it, too exhausting…. With the PPT and the endless supply of money from the printing press, stawks always go up!

    2. The most critical time for the PPT to support stocks is when bad fundamental data releases would otherwise tank them.

    3. “+ housing starts down + housing permits down”

      3-4% mortgages will get those housing back into positive territory in March. The slowdown in housing kicked in when 30 year hit 5% in the fall. Going from 5% to 4% is about $300 a month cheaper for a $500K mortgage. It’s about the equivalent of a price drop from $500K to $430K for the same house.

  11. But suddenly, Canada sneezes…Then Great Britain…then Sweden…then Hong Kong. We look nervously at Australia…’Don’t do it. Don’t do it.’”
    “The Aussies sneeze.”

    – Hmmm. I’m seeing a trend here. Surely not the housing Ebola? Ragin’ Contagion.

  12. “So while our friends are getting woozy, clutching their chests and gasping for air, we Kiwis close our eyes and repeat,”‘There’s no place like home. There’s no place like home. There’s no place like home.’”
    – ‘Sounds serious. Ruby slippers treatment (and other fantasies).

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