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These Offers Tend To Only Happen When There Is A Severe Downturn

A report from Western Australia Today. “The housing price plummet has allowed more first homebuyers to enter the market, but for sellers it has seen the value of the average Perth dwelling drop from $540,556 in 2014 to $442,716 in March 2019. In regional WA, mining towns in the west Pilbara are beginning to recover. However the value is still 58 per cent down from its peak in 2012, when humble country homes were being sold for seven-figure sums as mining companies scrambled to house their employees.”

From the Daily Telegraph. “Sydney’s housing slump has delivered a feast of bargains for home seekers, with sellers offering to sponsor buyer stamp duty bills and cut up to $265,000 off their prices. The deals have come as data released this week showed Sydney’s median home price dropped another 0.9 per cent over March to hit $782,000 — nearly 14 per cent below what it was in July 2017 when the market peaked.”

“Many of the discounted homes hit the market months ago but have yet to capture the interest of buyers, who have 28 per cent more homes to choose from than they did at this time two years ago. House hunters also have about 30 per cent fewer rival buyers competing with them for properties.”

“Units in numerous developments in Rosebery, Mascot and Waterloo are also available with stamp duty discounts sponsored by the developer. Realestate.com.au economist Nerida Conisbee said the generous offers showed just how far Sydney had shifted into a buyer’s market after being favourable for sellers for years. ‘These offers tend to only happen when there is a severe downturn. It’s great for buyers,’ Ms Conisbee said.”

“SQM Research analyst Louis Christopher said developers were making these offers because they were ‘desperate.’ ‘We will see more of this going forward,’ he said.”

“A house on Dukic Rd in Bonnyrigg Heights first listed for $1.325 million is now up for grabs at $1.06 million, a discount of $265,000. Further south, in Campbelltown, a home on College St is available for $499,000-$525,000, more than $225,000 below the original price, while in Camden a house on Hill St is available at an $83,000 discount.”

The Australian Financial Review. “The downturn in Melbourne’s Toorak is pulling prices down to the $7000-per-square-metre level as the heat of recent years comes out of the market in the Victorian capital’s most prestigious suburb.”

“The downturn that has pushed Melbourne’s property prices down 10.7 per cent since their peak in November 2017, is even weighing on values in leafy Toorak, where the median sales price fell from a peak of $5,025,000 in September 2017 to $3.2 million by December last year.”

“RT Edgar agent Jack Edgar said the Washington Street site could have fetched between $8500 and $9500 a square metre a year earlier, but that the lower prices were now drawing buyers back into the market. ‘It has come back to a level, this new level where at $7500 per sq m, now it’s come back, people are a lot happier to transact,’ Mr Edgar said.”

“Prices have been falling for a while. In October, a 865-square-metre site at 6 Bruce Street, Toorak, with approval for a six apartments and a penthouse sold in a mortgagee-in-possession sale for $6.3 million, records show, making a rate of $7241 per sq m.”

From Manley Daily. “Almost half of Australia’s mortgage holders are struggling to make their payments despite interest rates being at record lows, a survey has found. Comparison site Finder released results of a survey of mortgage holders, estimated that 4.8 million households were already in various forms of financial distress.”

“The survey found that 40 per cent of mortgage holders were living ‘month to month,’ seven per cent were ‘barely able to make repayments each month’ and two per cent were ‘behind in repayments.'”

“Finder’s insights manager Graham Cooke, said financial hardship was a pervasive problem in Australia. ‘Living month to month is a reality for millions of Australians, so if you’re in this situation, you are not alone,’ he said.”

The Property Observer. “A Glen Eden, Qld home has sold under the mortgagee auction hammer for $110,000. This marks a price reduction of $195,000 on its 2013 sale price of $305,000. The 2013 sale price was an $181,000 increase from its previous 2002 sale price of $124,000.”

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This Post Has 48 Comments

  1. ‘financial hardship was a pervasive problem in Australia. ‘Living month to month is a reality for millions of Australians, so if you’re in this situation, you are not alone’

    Misery loves company.

    ‘the value is still 58 per cent down from its peak in 2012, when humble country homes were being sold for seven-figure sums’

    I was blogging about this at the time, and the writer isn’t joking. The photos at the time looked like old Oklahoma farmers shacks.

    1. I remember seeing some video of those Aussie shacks. One of them had the flush toilet in an outhouse in the backyard. And the yard was overgrown with shrubs and weeds. Imagine going out in the middle of the night to an overgrown yard… in a country famous for creepy-crawlies.

  3. “The survey found that 40 per cent of mortgage holders were living ‘month to month’ …”

    No big deal.

    “… seven per cent were ‘barely able to make repayments each month’ …”

    This is worth watching in that it could evolve into something important.

    “… and two per cent were ‘behind in repayments’.”

    Now this is a genuine problem. These lazy two percenters had better git off their lazy-assed butts and work a secondbjob so as to fulfill their end of the agreement they made to their betters, er, their lenders.

  5. W the real estate industrial complex so prevalent it’s fair to say a recession=
    35% drop in permits
    35% increase in inventory
    12% price drop

    1. Interesting. I wonder if that will lead to a return to the Manhattan of 30+ years ago. It was a lot more “fun” then. What was that guy’s name…Goetz?

  7. An interesting article that contains an interesting observation.

    First comes the interesting article …

    Negative Interest Rate Insanity Is Behind Western Europe’s New Tallest Skyscraper | RIA
    https://realinvestmentadvice.com/negative-interest-rate-insanity-is-behind-western-europes-new-tallest-skyscraper/

    Now here comes the interesting observation …

    “After reading that piece, what immediately came to mind was the fact that the construction of skyscrapers (especially record-breaking ones) is a common hallmark of economic bubbles.

    “During an economic bubble, credit is cheap and readily available, asset prices such as stocks and real estate are rising rapidly, people are in a good mood, and business leaders become increasingly cocky and hubristic. It is at this time that pursuing grandiose undertakings such as building massive, opulent new corporate headquarters or skyscrapers starts to appeal to business leaders. These leaders are often ‘bubble drunk’ and forecast prosperity ‘as far as the eye can see.’

    “This complacent attitude can be seen in many indicators, including in the Multi-Asset Volatility Index that we posted in our RIA PRO subscription service (when volatility is low, investor complacency is high):”

    Okay, so let’s take a look at, say, The Empire State building.

    From Wikipedia …

    “The site of the Empire State Building, located in Midtown South on the west side of Fifth Avenue between West 33rd and 34th Streets, was originally part of an early 18th-century farm. It was later purchased by the Astor family, who built the Waldorf–Astoria Hotel on the site in the 1890s. The hotel remained in operation until the late 1920s, when it was sold to the Bethlehem Engineering Corporation, then to Empire State Inc., a business venture that included famous businessman and former General Motors executive, John J. Raskob, members of the du Pont family, and former New York governor Al Smith.”

    Okay, folks, pay close attention to this …

    “The original design of the Empire State Building was for a 50-story office building. However, after fifteen revisions, the final design was for an 86-story 1,250-foot building, with an airship mast on top. This ensured it would be the world’s tallest building, beating the Chrysler Building and 40 Wall Street, two other Manhattan skyscrapers under construction at the time that were also vying for that distinction.”

    Okay, so when was this?

    “Demolition of the Waldorf–Astoria began in October 1929, and the foundation of the Empire State Building was excavated before demolition was even complete.”

    October, 1929. This was at the absolute peak of the stock market mania of the Twenties.

    FWIW.

  8. Some good news for posters here. Several Dem run states, including NY, CT, WA, CA and IL are about to impose much higher taxes on evil rich people, including higher taxes on property.

    1. Why would you celebrate higher taxes in places where they are aleady high enough to drive away anyone wealthy enough to own a business?

      1. I’m not celebrating. I said good news for many posters here who are cheering for an economic collapse.

        1. You seem to live in your own reality distortion force field. No one here is “cheering” for an economic collapse. Quite a few here recognize that the that “prosperity” built on debt and credit is an unsustainable chimera that is going to implode under the weight of its own fictitious valuations and fraud, and are bracing for impact.

          1. No one here is “cheering” for an economic collapse. Quite a few here recognize that the that “prosperity” built on debt and credit is an unsustainable chimera that is going to implode under the weight of its own fictitious valuations and fraud, and are bracing for impact.

            Bracing = cheering? Nobody likes people who look ahead. Always with the smug and the I told you sos.

        2. I myself am just hoping for a collapse of the NAR monopoly, which is one of the key factors underlying the disastrous state of the US housing market.

          2. ” … which is one of the key factor$ underlying the disa$trous state of the U$ hou$ing market. ”

            Doubt that NAR is gonna just “give.it.away” concerning their $weet $ale commi$$ions.

        3. “I said good news for many posters here who are cheering for an economic collapse.”

          Are there any posters here who are cheering for an economic collapse? So far i haven’t seen any.

          Perhaps the term “economic collapse” needs to be defined so that everyone can understand what is being discussed.

          Wikipedia says this …

          “Economic collapse is any of a broad range of bad economic conditions, ranging from a severe, prolonged depression with high bankruptcy rates and high unemployment (such as the Great Depression of the 1930s), to a breakdown in normal commerce caused by hyperinflation (such as in Weimar Germany in the 1920s), or even an economically caused sharp rise in the death rate and perhaps even a decline in population (such as in countries of the former USSR in the 1990s).

          “Often economic collapse is accompanied by social chaos, civil unrest and a breakdown of law and order.”

          Correct me if I am wrong but I don’t think anyone here is cheering for any of this.

          1. “Often economic collapse is accompanied by social chaos, civil unrest and a breakdown of law and order.”

            An “adjustment” in our housing and financial markets is in order but not an all out collapse. A collapse would cause a apocalyptical scenario and at that point nothing would matter, everyone would be living as if it was there last days and we would all be “doomed”. I would prefer it to balance out so I can watch my children turn into adults and raise families of their own even if they have to suffer through an economical hiccup.

          2. Black Friday edit:

            Often economic con$under promotion$ is accompanied by $ocial chao$, civil unre$t and a breakdown of law and order.

      2. Remember my good friends….. Nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels. Nothing.

  9. Not everyone is convinced by the stock market’s recent sugar high.

    Buy dollars even if stocks keep rising, says Goldman alumnus who predicted the financial crisis
    By Barbara Kollmeyer
    Published: Apr 4, 2019 7:28 a.m. ET
    Critical information for the U.S. trading day
    All about the dollar…

    It’s T-minus one day to jobs data, and further upward momentum for stocks appears to be partially riding on hopes we won’t see a repeat of February’s paltry payrolls gain in the U.S..

    Potentially positive data “will reinvigorate the bullish sentiment taking equities to new highs,” predicts Konstantinos Anthis, head of research at ADSS. Or at least maybe pull the S&P 500 off its mini roller coaster and send it solidly one way or another.

    Read: Disappointing jobs data Friday could wipe out investor optimism

    For now, things look sluggish, perhaps not helped by news that German manufacturing orders collapsed, which means investors are now keeping a beady eye on further trade headlines.

    Enter our call of the day from Goldman Sachs alumnus, Raoul Pal, who predicted the global financial crisis. He sees trouble on the horizon for the world’s economies and is advising investors to buy bonds and the dollar.

    Pal, who writes The Global Macro Investor newsletter, which is followed by the world’s biggest hedge funds, sees few places for investors to park their money right now. While he’s not bearish on U.S. stocks, he still thinks the dollar is a better bet and the recent pullback for bonds is a buying opportunity for those who agree with his gloomy global view.

    “Even if the stock market continues higher, it’s going to pump in capital from abroad,” he said in an interview with Real Vision, a TV service he co-founded. Europe, the U.K. and Japan all need to put money to work in the U.S., whether its bonds or the equity market, which should help the dollar “break higher,” he said.

    Pal has been warning about a slowing global economy since last August, advising investors to buy bonds, which he says eventually turned into “the best trade in the world.” While bonds have recently curbed that run, which he partly blames on some upbeat data out of China, he’s worried about falling imports and exports across Asia and trouble for Europe, notably Germany, among other things.
    …

    1. “Buy dollars” = “Avoid real estate investment like the plague, and shun used home sellers”

    2. When buying yer dollar$, pay attention to the denomination$:

      $100 bill$ in circulation $oar to a record, hinting at ri$e in global criminal activity

      U.S. hundred-dollar bills in circulation hit an all-time high last year, according to new data from the Federal Reserve out this week.

      Meanwhile, overall global demand for cash is slowing down.
      Some say the surge in $100 bills in the past decade may be a sign that global corruption is alive and well. These high denomination bills tend to be the currency of choice for criminals because there’s no transaction record, and total anonymity.
      Kate Rooney | CNBC | April 4 2019

      Over$eas buyer$

      Most of it is overseas. A 2018 research paper from the Federal Reserve Bank of Chicago estimates that 60 percent of all U.S. bills and almost 80 percent of all $100 bills are now abroad. That total is up from 15 to 30 percent around 1980, according to research from Federal Reserve Board economist Ruth Judson. Judson found that political and economic instability contribute to this demand.

      Colas said the Federal Reserve and Treasury is not incentivized to scale back production as long as they profit off of printing bills, then selling them offshore. It’s also helpful from a policy perspective.

      “It does reinforce the notion of reserve currency status, which is tremendously useful to American monetary policy and foreign policy,” Colas said. “There’s a desire to keep printing these things.”

  10. Weekly unemployment claims: 202,000. 40+ year lows. And adjusted for population growth, all time low (or hovering around all time low) number.

    And yet the MSM is in non-stop talk of recession. Talk about a disconnect from reality.

        1. Unemployment has never stayed below 4 percent for very long before a recession ensued. Just observing, not cheerleading, and I have no explanation for why this happens, either.

          1. “… and I have no explanation for why this happens, either.”

            An article: “Why America’s Sub-4% Unemployment Rate Means A Recession Is Not Far Off”

            (snip)

            “By the time the unemployment rate is under 4%, the economic cycle is already mature, the labor market is tight, and inflation is becoming a concern. At this time, the Federal Reserve has been hiking interest rates steadily, which eventually causes the demise of the economic cycle.”

            Why America’s Sub-4% Unemployment Rate Means A Recession Is Not Far Off
            https://www.forbes.com/sites/jessecolombo/2018/09/10/why-americas-sub-4-unemployment-rate-means-a-recession-is-not-far-off/#7b018a862cb3

          2. I guess maybe we’re about to find out what happens when the Fed chickens out instead.

          3. From the Forbes article: “What we find is that the low unemployment rate is often associated with a boom phase just before a recession.”

            That out-of-state law firm job I just applied for isn’t so appealing right now.

    2. What goes up must come down. Would you prefer we continue our financial trajectory to the moon? If so, how would that work? Printing presses running 24/7, PPT buying the entire stock market, loans that everyone can qualify for with no obligations to pay back, gov programs that bailout FBs and the lenders so they can both rinse and repeat? We have been doing that for long enough but one side always suffers. I’m not an economist by any means but there is enough data out there proving we cannot continue this path. If a casino’s odds where 2/1 in favor of the gambler, that casino would collapse rather quickly. Kinda how I see our economy ATM.

      1. “We have been doing that for long enough but one side always $uffers. I’m not an economist by any means but there is enough data out there proving we cannot continue this path.”

        Where doe$ million$ of U$ consumer$ stand as concerning their “Personal $avings”?

      1. I’m not exactly sure what you mean but “lucky ducky” but I recently received an email from a recruiter, the likes of which I haven’t seen in over a decade, for a patent attorney position at Genentech. Law firms nationwide are also hiring people to service the biotech sector.

  13. Comparison site Finder released results of a survey of mortgage holders, estimated that 4.8 million households were already in various forms of financial distress.”

    Oh dear. I hope there’s enough emotional support koalas to go around.

    1. Interesting. The population of Australia is 24.6 million. Supposing the average household has 2.6 people (as in the US), then 12.48 million people are “financially distressed.”

      That’s half the population!

  15. Any thoughts on when the Australia and Canada bubble implosions will spill over to US housing markets?

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