thehousingbubble@gmail.com
Blog

Excess Being Shed After Years Of Price Increases Resulted In Bulged Valuations

A report from Canadian Mortgage Trends. “New data shows that home sales and prices continue to fall in Toronto and Vancouver, with the exception of Toronto condo sales, which have reached a new high. Vancouver condo prices posted their largest year-over-year decline since 2009, according to the Real Estate Board of Greater Vancouver. The benchmark condo price fell to $660,300 in February, down 4% from last year and down 5.1% over the past six months. There were 759 condo sales in the month, down 36% compared to a year ago, while detached home sales were down 32.8%.”

“The fall in luxury home prices in Vancouver has been dramatic, but that city isn’t alone in experiencing this trend. The Economist magazine noted that prices of ‘prime’ properties in Vancouver were down 12% over the past year. But falling luxury home prices isn’t unique to the Vancouver market. The Economist recently looked at falling prices in other ‘desirable cities’ like Hong Kong, London, New York and Sydney.”

“It described the declines as ‘excess being shed’ after years of price increases that resulted in ‘bulged’ valuations. It noted prices for prime properties in Sydney were down 16% since 2017, while prices in Hong Kong have fallen 9% since August.”

The Journal Enterprise on the UK. “Sterling De Vere, a leading UK real estate agency, reported that housing prices in some key London neighborhoods, like Clapham, Balham and Putney, have collapsed by as much as 15 percent over the past year. Analysts have taken note because the region once served as the center of the country’s property boom. But now, according to recent studies, estate values in several parts of the city are dropping by the hundreds of thousands.”

“For example, over the past 12 months: Wandsworth properties that once commanded £805,000 are now going for £685,000. Southwark homes that fetched £666,000 are currently running about £585,000. Islington rates have sunk to an average £684,000 from £750,000.”

“The downturn is particularly lousy news for places like Wandsworth and Southwark, which, in recent years, have welcomed high-profile speculative property development projects, like the Battersea Power Station where buyers plunked down £1 million or more for smaller flats.”

“Your Move contends that the real estate pricing plunge represents ‘the steepest annual rate of decline in London prices since August 2009, during the last housing slump, which was itself associated with the banking credit crisis of 2008-09.’ In addition to London, home costs in the southeastern and northeastern parts of the country are also on the decline.”

From Edge Prop in Malaysia. “According to AuctionGuru.com.my executive director Gary Chia, the current property market slowdown in the country has been tough on property owners who purchased their properties for short-term investment. Many investors found themselves having problems servicing their monthly mortgage repayments.”

“‘There was an increase in number of newly completed properties and properties in established locations that went under the hammer last year. Reserve prices of these properties are now far lower than the asking prices of similar properties on the secondary market which make them a good bargain. Some properties in established or prime areas have seen prices drop by more than 30%,’ says Chia.”

“According to Chia, interest in auction property seems to be rising based on the number of enquiries that his company has been receiving. However, the increase in interest has not translated into sales. ‘This could be because most people are still waiting for prices to decrease further in upcoming auctions as they know the reserve price of the property will decrease 10% each time the same property is put up for bids,’ he explains.”

The Daily Mail on Australia. “Australia’s housing market contagion is spreading beyond Sydney and Melbourne with every mainland state capital city going backwards in the first quarter of 2019. Sydney’s median house prices has dived by a record 16 per cent or $169,140, to $880,594, since peaking in July 2017 despite record-low interest rates.”

“Prices in Australia’s biggest city have slumped by 11.8 per cent during the past year, with Sydney home to seven of Australia’s 10 worst performing metropolitan housing markets. Melbourne’s equivalent values has plummeted by 13.8 per cent or $114,005, to $718,443, since reaching a summit in November 2017, with median house values diving by an annual pace of 12.4 per cent.”

“Melbourne’s inner-east has the dubious distinction of being Australia’s worst performing housing market, with values plunging by 16.1 per cent during the past year. Ryde, in Sydney’s north, suffered an annual downturn of 14.7 per cent, with values in Sydney’s inner south-west diving by 14.1 per cent.”

“Double-digit dwelling price declines were also recorded in Sydney’s inner south (down 10.9 per cent), Parramatta in Sydney’s west (down 11.1 per cent), Melbourne’s outer east (down 11.3 per cent), Sydney’s eastern suburbs (down 11.4 per cent), Sydney’s south-west (down 11.6 per cent), Sydney’s Sutherland Shire (down 12.4 per cent) and Melbourne’s inner south (down 13.2 per cent).”  

Related Posts
This Post Has 45 Comments

  1. That’s a lot of crater!

    ‘prices in some key London neighborhoods, like Clapham, Balham and Putney, have collapsed by as much as 15 percent over the past year. Analysts have taken note because the region once served as the center of the country’s property boom. But now, according to recent studies, estate values in several parts of the city are dropping by the hundreds of thousands’

    Most expensive fall first and fastest, consistent with a bubble collapsing. Plus London has been sinking like a turd in a well going on 5 years.

    1. Since the global asset bubble unwind started overseas, it gives the perfect cover for the Fed. How long before we hear the talking point that “we did everything right but we couldn’t control markets globally so their problems are affecting the US economy”? Maybe they started with this propaganda campaign already and I missed it.

      1. I suppose the credit should be shared with other major central banks who joined the Quantitative Easing experiment.

      2. “Maybe they started with this propaganda campaign already and I missed it.”

        Likely a next quarter NAR report headline in the making.

    2. For reference, when I bought my house in 2012, its price had dropped ~35% from its 2005 peak Zestimate. 15% in a year is half the 2008 bubble pop.

      2. boots
        no fear of Orangeman cuts on the N VA side of the river.
        finally prices are over the 05 peak.

        1. Prices haven’t reach prior peak here — at least not prior peak Zestimate.

          It’s hard for me to gauge what prices are in my nabe, because of the unspoken requirement to do HGTV reno. You have to put $35K in to get $30K out if you’re lucky.

          1. Round up of cities that haven’t quite reached their last peak:
            And the Less-Splendid Housing Bubbles & Crushed Markets in America?
            by Wolf Richter • Mar 28, 2019

            wolfstreet.com/2019/03/28/the-less-splendid-housing-bubbles-and-crushed-markets-in-america/

            Ones who’ve reached it (and more):
            The Most Splendid Housing Bubbles in America Deflate Further
            by Wolf Richter • Mar 26, 2019
            wolfstreet.com/2019/03/26/the-most-splendid-housing-bubbles-in-america-deflate-further/

  2. “The downturn is particularly lousy news for places like Wandsworth and Southwark, which, in recent years, have welcomed high-profile speculative property development projects, like the Battersea Power Station where buyers plunked down £1 million or more for smaller flats.”

    Buyers most certainly did not plunk down “£1 million or more” unless they’re Russian oligarchs or Chinese embezzlers. Most put down a tiny downpayment and thus will have no qualms about walking away from their underwater “investment,” accelerating the rate of collapse.

  4. “Australia’s housing market contagion is spreading beyond Sydney and Melbourne with every mainland state capital city going backwards in the first quarter of 2019. Sydney’s median house prices has dived by a record 16 per cent or $169,140, to $880,594, since peaking in July 2017 despite record-low interest rates.”

    Australian FBs and speculators are well and truly schlonged. Their Deliverance-like squealing is music to my ears.

    1. I’m guessing all the secondary housing is heading down fast

      lake front- beach front- Bend-Asheville etc

  6. VIDEO: Students support socialism…but not when it comes to their GPAs

    More young people than ever before now say they prefer socialism over capitalism.
    But students at Florida International University weren’t so open to socialism if it were to apply to their GPA.

    Surprise surprise surprise.

    https://www.campusreform.org/?ID=12038

    1. This is common pro-conservative talking point. The difference is in the degree. It’s one thing for ten 4.0 students to give 1.5 points to ten 1.0 slackers, resulting in all 20 getting a 2.5. That’s full socialism/communism and yeah it sucks.

      But it’s quite another if ten 4.0 students give .1 point to one 1.5 student so that the underperformer gets a 2.5, but the better students still have a 3.90. That’s more tolerable. But it’s workable only if the non-producers are only 9% of the population. Between the illegal immigrants and the addicts, that proportion is rising.

      Of course, that’s too complex and nuanced to discuss with ANYone. Anytime I’ve tried to bring this up, on either side, I’m either hit with bumper sticker BS, or the conversation shifts. Useless.

      1. “But it’s quite another if ten 4.0 students give .1 point to one 1.5 student so that the underperformer gets a 2.5, but the better students still have a 3.90. That’s more tolerable.”

        I like your use of the word “give”. It sounds a bit, er, … softer than the word “take”.

        “Take” is a more accurate word to use but the word “give” feels better so in the end “give” wins out.

        1. It is quite benovelent of you to want to give some of your GPA to others but less benovelent of you to want to give some of my GDP to others. It would be nice if I had something to say in the matter.

          1. Of course we all know that students who get into highly selective colleges and universities do so purely on merit.

      2. “Anytime I’ve tried to bring this up, on either side, I’m either hit with bumper sticker BS, or the conversation shifts.”

        This should tell you something.

        1. Notwithstanding that the exercise of transferring the grade points (whether it be considered “giving” or “taking”) is pointless, because the knowledge or achievement associated with it didn’t transfer with them.

          If anything, the recipient is now worse off than they were before, because now they get to spend the rest of their lives lying about themselves and their abilities, and hopefully never getting caught.

          1. The presumption is that the grade received is an accurate reflection of mastery and learning. In some cases yes, in other cases no.

          2. whether it be considered “giving” or “taking”
            Socialism is taking people’s money, property and liberty by force, not faking grades in school.

            I gave a few people a leg up in college by tutoring them after hours. They earned what ever they got out of it, and didn’t have to steal it from me.

  7. Homeowners who rejected lowball offers rewarded with four bids in February

    “This backsplit residence has a layout unlike most bungalows and two-storey homes that were sold in the Richview community this winter, so arriving at an appropriate listing price was a bit of a challenge and the four-month path to a sale was rocky. The home was originally listed at $1.089-million, but got no offers at that price. The asking price was then dropped below $1-million, which drew three offers, but the one bid the owners choose to negotiate eventually feel apart. Relisted once more above $1-million, one more offer was received but that too collapsed in negotiations. When the home was relisted and the price dropped to $999,000 in February, the owners received four offers, the best of which sealed the deal.”

    https://www.theglobeandmail.com/real-estate/toronto/article-homeowners-who-rejected-lowball-offers-rewarded-with-four-bids-in/

    1. Asking price: $999,000

      Selling price: $1,015,000

      Previous selling prices:
      $495,000 (2006)
      $318,500 (1996)

      Holy smoke.

      I’ve never been in a backsplit, but it’s a more interesting version of a split level. But I wouldn’t want to live in one after age ~60.

  10. Speaking of falling prices, got deflation?!

    The Financial Times
    Oil & Gas industry
    Shale boom cuts price of gas to record low
    Prices turn negative as booming shale oilfields lead to glut of natural gas
    There is a growing oversupply of gas that is a byproduct of booming crude output in the shale oilfields of the Permian Basin © AP
    Ed Crooks in New York yesterday

    In west Texas last week, you could not give gas away, as prices dropped to record lows. Companies trying to offload natural gas at the Waha hub, in the booming shale oil region of the Permian Basin, found they had to pay operators with pipeline capacity to take it away.

    The gas price at Waha registered a low last Thursday of minus $2.50 per million British Thermal Units and closed at minus $1.95, its lowest level since S&P Global Platts started collecting the data back in 1994.

    The steep negative prices last week were in part caused by equipment failures on one pipeline system and planned maintenance on another, which made it harder to find outlets for unwanted gas. The fundamental problem in west Texas, however, is that there is a growing oversupply of gas that is a byproduct of booming crude output in the shale oilfields of the Permian Basin. That surge of surplus gas, which could continue for years, is expected to have global implications, with several companies developing projects for exporting it to world markets.
    …

  11. Most importantly, a recession isn’t until economists agree it is.

    What is a Recession

    A recession is a significant decline in economic activity that goes on for more than a few months. It is visible in industrial production, employment, real income and wholesale-retail trade. The technical defintion of a recession is two consecutive quarters of negative economic growth as measured by a country’s gross domestic product (GDP), although the National Bureau of Economic Research (NBER) does not necessarily need to see this occur to call a recession.
    …

    2. Wait, mild, $oft, kinder & gentler, pa$$ive, … $evere!, OK, who slipped $evere onto the pronouncement$.to.thee.public list!

      The former head of the National Bureau of Economic Research said in March 2008 that he believed the country was then in a recession, and it could be a $evere one. A number of private economists generally predicted a mild recession ending in the summer of 2008 when the economic stimulus checks going to 130 million households started being spent. A chief economist at Moody’s predicted in March 2008 that policymakers would act in a concerted and aggre$$ive way to $tabilize the financial market$, and that the economy would $uffer, but not enter a prolonged and $evere recession. It takes many months before the National Bureau of Economic Research, the unofficial arbiter of when recessions begin and end, would make its own ruling.

      According to numbers published by the Bureau of Economic Analysis in May 2008, the GDP growth of the previous two quarters was positive. As one common definition of a recession is negative economic growth for at least two consecutive fiscal quarters, some analysts suggested this indicates that the U.S. economy was not in a recession at the time. However, this estimate has been disputed by analysts who argue that if inflation is taken into account, the GDP growth was negative for those two quarters, making it a technical recession. In a May 9, 2008 report, the chief North American economist for investment bank Merrill Lynch wrote that despite the GDP growth reported for the first quarter of 2008, “it is still reasonable to believe that the recession started some time between September and January”, on the grounds that the National Bureau of Economic Research’s four recession indicators all peaked during that period.

      New York’s budget director concluded the state of New York was officially in a recession by the summer of 2008. Governor David Paterson called an emergency economic session of the state legislature for August 19 to push a budget cut of $600 million on top of a hiring freeze and a 7 percent reduction in spending at state agencies that had already been implemented by the Governor. An August 1 report, issued by economists with Wachovia Bank, said Florida was officially in a recession.

      White House budget director Jim Nussle maintained at that time that the U.S. had avoided a recession, following revised GDP numbers from the Commerce Department showing a 0.2 percent contraction in the fourth quarter of 2007 down from a 0.6 percent increase, and a downward revision to 0.9 percent from 1 percent in the first quarter of 2008. The GDP for the second quarter was placed at a 1.9 percent expansion, below an expected 2 percent. On the other hand, Martin Feldstein, who headed the National Bureau of Economic Research and served on the group’s recession-dating panel, said he believed the U.S. was in a very long recession and that there was nothing the Federal Reserve could do to change it.

      In a CNBC interview at the end of July 2008, Alan Greenspan said he believed the U.S. was not yet in a recession, but that it could enter one due to a global economic $lowdown.

  12. “The Federal Reserve is not currently forecasting a recession.”

    — Fed Chairman Ben Bernanke, January 2008.

  14. (yawn) we are ten minutes into today’s trading and Lyft is trading at $72.14, down 7.86% from Friday’s close.

    FWIW.

    1. Low of $69 which is about 69x more than it should have been IPO for. Good thing the two co founders dumped it Friday, got there money and ran! Pets.com ring a bell? Where’s that bull who praised this one Friday??

      1. DOOMED got DOOM LOL.

        Wait until the next few IPOs…people were saying this is like the middle of the Gold’S RUSH. We all know how gold rush end…with a few being super rich and the rest eating sh*T and sh*T on the sidelines

    2. Here’s a great promotion article for Lyft. It’s stocked full with heroism and underdogism and a few other isms.

      Here’s a snip or two …

      “The year was 2014.”

      (Was it also a dark and stormy night?)

      “Competition was heating up between Uber and Lyft, two companies with similar visions: Use the rapidly emerging gig economy to transform the transportation industry. Uber, which had a three year head start, was bigger, had more money, and was operating in more cities than Lyft.”

      OMG!

      “It was at this point that Travis Kalanick, Uber’s CEO at the time, tried to eliminate his closest competition–by offering to buy Lyft. But Lyft’s co-founders, Logan Green and John Zimmer, turned down the offer.”

      What a guy!

      “It was a huge risk, one that looked like it would doom Lyft only months later.”

      OMG!

      “In early 2015, Lyft only had about four months of cash left. (In stark contrast, Uber had just raised over $2.5 billion.) One of Lyft’s largest investors, a serial entrepreneur and investor with decades of experience, advised the two cofounders to shut down the company.”

      “‘The odds were stacked against us,’ Zimmer said in a recent interview with Inc. ‘Most people were already counting us out.'”

      Only by extreme heroic action could Lyft be saved!

      “Fast forward to today. As of Friday, Lyft has officially beaten Uber in the race to go public, raising $2.34 billion in the process.”

      Victory is at hand at last!

      “Lyft, which now operates in 300 markets, says that its number of quarterly active riders has tripled in the last two years. And while Uber continues to hold a larger U.S. market share, Lyft has gained major ground: Lyft says it now holds 39 percent of the U.S. rideshare market, up from 22 percent just two years ago.”

      “So, how did Lyft do it?”

      “Looking back at the company’s actions over the past few years, we could sum up Lyft’s great comeback in a single word:

      “Focus.”

      YES! Focus!

      “‘What that investor told us was the best and most important advice Logan and I ever received because it forced us to double down on our conviction, to double down on our values, and to double down on our belief in the team,’ said Zimmer.

      “With their backs up against the wall, Lyft’s co-founders focused on what made their company different from its competitor. For example, Lyft built a reputation as the kindler, gentler of the two brands, partially through efforts to prioritize drivers.”

      A real cliffhanger. Go here for more …

      A Few Years Ago, Uber Almost Killed Lyft. Then Lyft Did Something Brilliant | Inc.com
      https://www.inc.com/justin-bariso/a-few-years-ago-uber-almost-killed-lyft-then-lyft-did-something-brilliant.html

        1. Yeah, Travis’s comments about “boober” pretty much solidified him as a class A douche bag.

      2. I prefer Lyft but it doesn’t matter. Brilliance is a serious stretch.
        Their success was clearly a case of the second mouse gets the cheese after Travis repeatedly acted like a moron and offended everybody.

        1. That about sums it up well Carl. Travis leaving may have saved Uber. Will be interesting to see how their IPO fares. Travis repeatedly said that the only way to profitability is to cut out the human aspect of things. Uber takes 25% and Lyft takes 20%, so that means the human takes 70-75%. If you could start some rides on fixed paths with completely predictable courses, the robo-taxi would then take 100%. If they can’t get there, I can’t see how profitability happens with their model.

          1. the human takes 70-75%

            I would say it as “the human and the car they chose and the fuel and maintenance it requires takes 70-75%”. The human themselves might take less than 25%. There’s also lots of money to be saved by using vehicles so economical that they are barely acceptable for cheap taxi service and no human would want to own as a personal vehicle.

  15. ‘Early results Monday in Ukraine’s presidential election showed a comedian with no political experience maintaining his strong lead against the incumbent in the first round, setting the stage for a presidential runoff in three weeks. With over 70 percent of the polling stations counted, Volodymyr Zelenskiy had 30 percent support in Sunday’s vote, while President Petro Poroshenko was a distant second with just over 16 percent.’

    ‘Ex-Prime Minister Yulia Tymoshenko trailed behind in third with 13 percent support.’

    ‘The strong showing for the 41-year-old Zelenskiy reflects the public longing for a fresh leader who has no links to Ukraine’s corruption-ridden political elite and can offer a new approach to settling the grinding five-year conflict with Russia-backed separatists in eastern Ukraine that has left 13,000 dead since 2014.’

    https://www.cbsnews.com/news/ukraine-presidential-election-results-comedian-volodymyr-zelenskiy-poroshenko-russia/

Comments are closed.