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No One Realized It Was The Peak

A report from Stuff New Zealand. “Property prices in some parts of Auckland have fallen by more than a quarter, year-on-year. Mt Albert had the biggest price fall, from a median $1.170 million last year to $805,250 this year – a drop of 31.2 per cent. Royal Oak had the next biggest drop, from $1.160m in 2018 to $865,000 this year, or 25.4 per cent. Long Bay was in third place, with a price drop of 24.8 per cent. Even exclusive suburbs such as Herne Bay also reported price falls.”

“‘The complicating factor is the high levels of housing unaffordability in Auckland, which has been the driver of lower prices recently. We expect that potential buyers have hit the limits of what they’re able to pay for housing – they’d like to pay more to secure a house, but simply can’t access the funds for higher and higher prices. So as a result, vendors are readjusting their prices lower to secure a sale in some instances,’ said Infometrics economist Brad Olsen.”

The Daily Mail Australia. “Homeowners saddled with mortgages are set to be hit with another financial obstacle as 200,000 new properties are built. Australia was already home to one million empty properties on Census night in August 2016, during a boom in house prices.”

“During that time, apartment developers began building thousands of new projects hoping to cash in on demand for homes as Sydney and Melbourne real estate values surged by double-digit figures every year. Since peaking in July 2017, Sydney’s median house price had dived by a record 16 per cent, or by more than $169,000.”

“With investors already deserting the housing market, Digital Finance Analytics founder Martin North said there would be an oversupply of new homes, which would put more downward pressure on prices. ‘Now we know there’s another 200,000 new properties coming on stream this ‘ year and next year based on the approvals over the last two or three years,’ he told Daily Mail Australia. ‘We’ve still got a million properties vacant in Australia.'”

From ABC News in Australia. “It is hard to believe that Newman, in Western Australia, is the epicentre of BHP’s largest Australian iron ore operation when you take a drive past the town’s homes, boarded up and in a state of complete disrepair.”

“Doc Davey owns one of the worst damaged properties in Newman — a home he bought as part of his retirement plan. ‘We rebuilt the back fence six times, the damage just kept on coming,’ Mr. Davey said. ‘It is a basket case and we just haven’t been able to get on top of it. It’s worse than third world.'”

The Borneo Post on Malaysia. “The residential property market continues to be soft, particularly for landed residences, while other subsegments of residences like high-rise apartments are also experiencing a slowdown in sales. When asked why these exorbitant prices continue to persist, Dato Alex Ting, director of Kozin Real Estate, explained that this was largely due to the cost of land.”

“‘The main reason why our property prices are so high is due to the high price of land. Land prices in good areas like Jalan Song are now commanding around RM5 million per acre, Ting said. ‘So just imagine, RM5 million divided by eight – that is already over RM600,000 in land costs alone. Even at 10 units per acre, it’s still over half a million. What about the building itself? That is another RM200,000 at least.'”

From Globes on Israel. “The Israel Builders Association has begun a campaign in recent days arguing that if the supply of housing increases, prices will fall. This campaign relies on the obsessive counting of housing units begun at the beginning of the decade, when housing prices began to rise. This obsession caused damage, a small part of which began to surface recently, but most of which will appear in the coming decades.”

“The government enthusiastically jumped on the housing shortage bandwagon in order to demonstrate that it was doing something to lower housing prices. Economists also endorsed this thesis, because it was simple and fitted in with simplistic economic models.”

“Spacious apartments built to a high standard in new neighborhoods stayed on the shelf, and not only because the prices were still high. Why? Because the apartments were not built where they were needed.”

“Most of the activity aimed at increasing the supply of housing created a phony supply of housing of no relevance to the country, to no one’s benefit in the near future. On the other hand, demand pressure in the places that are relevant will continue. We will pay the price of the unneeded supply and the missing supply in the next housing crisis.”

The Globe and Mail in Canada. “Real estate investors looking to buy, fix and flip housing for profits in Toronto are increasingly finding it difficult to sell their upgraded properties, let alone make the kinds of margins that justify the risky ventures. Some are now turning their property portfolios into rental accommodations to help them weather the slowing market.”

“As the Toronto real estate market neared the end of its decade-long hot streak Imran and Winnie Latif left office jobs behind ‘No one realized it was the peak. Right up to 2017, that’s when it popped around April-May. We had renovated for a client, he listed in April and that week was when everything fell down,’ Imran said.”

“Their current project is in Riverdale, where they intend to live in the upper floors of a detached they are renovating with plans to rent out the basement and main floor. Before they settle on living there, they will try to list the house and see if they can get a quick sale at a good price.”

“It all adds up to a more cautious approach to a business that still carries a good deal of risk. ‘I’m more conservative, I feel like we’re sometimes underwater but it works out in the end,’ Winnie says. ‘Imran has the big picture vision, he visualizes something and he doesn’t compromise. He needs to complete the job, even if that means borrowing more funds.'”

This Post Has 19 Comments
  1. My parents are in Oakville, the well-off western suburb of Toronto. Driving around – it was amazing how many $2-$4M CDN houses were built on spec with sales signs on the front hard.

    What it was – when these bungalos, normal houses were set up in the 60’s and 70’s they were on double lots. So they can now build fancy houses with large half circle driveways etc.

    —————-
    The Globe and Mail in Canada. “Real estate investors looking to buy, fix and flip housing for profits in Toronto are increasingly finding it difficult to sell their upgraded properties, let alone make the kinds of margins that justify the risky ventures. Some are now turning their property portfolios into rental accommodations to help them weather the slowing market.”

    “As the Toronto real estate market neared the end of its decade-long hot streak Imran and Winnie Latif left office jobs behind ‘No one realized it was the peak. Right up to 2017, that’s when it popped around April-May. We had renovated for a client, he listed in April and that week was when everything fell down,’ Imran said.”

    ————-
    Oakville, Ont., this year’s winning city in the Best Places to Live ranking, barely missed making the top 10 wealthiest cities. Its average household net worth of $1.7 million landed it in 11th place.

  2. “Doc Davey owns one of the worst damaged properties in Newman — a home he bought as part of his retirement plan…”

    LMAO at anyone who thought investing into one of these remote communities was a good retirement plan. I am referring in particular to all the social issues surrounding the Aboriginal AKA “traditional owner” populations out there.

  3. “they’d like to pay more to secure a house, but simply can’t access the funds for higher and higher prices…’ said Infometrics economist Brad Olsen”

    Are economists the dumbest people on the planet or what?

  4. “We expect that potential buyers have hit the limits of what they’re able to pay for housing – they’d like to pay more to secure a house, but simply can’t access the funds for higher and higher prices.“

    Brad, you’ve built yourself a world of delusion in which buyers prance around begging to throw more and more money to buyers who feel entitled to demand more and more of it. These REIC nut jobs feel perfectly comfortable pushing a system in which the supply and demand of debt rules real estate rather than the supply and demand of actual properties.

  5. I too wanted to pay more when I bought my condo. Praise the lard I couldn’t and had to settle for what I had.

  6. ‘Now we know there’s another 200,000 new properties coming on stream this ‘ year and next year based on the approvals over the last two or three years…We’ve still got a million properties vacant in Australia’

    Still no bubble?

    Another day, another formerly hottest city on the planet with 30% price falls.

  7. Pretty soon you will be able to substitute. … xxx town in Australia with .. .xxx town in USA. Once sellers have to reduce by large amount to get their properties sold, they become value buyers for their subsequent purchase. Viola, the attitude changes and then it’s the next seller’s turn to reduce then process repeats like falling bowling pins or dominoes. Starting to see here despite real estate media nonsense reporting.

    Welcome to the machine.

    1. Already happened in NYC, Miami, Greenwich, New Canaan, Westchester. Now we got abandoned unfinished shacks in Salt Lake City and north of Dallas with lawsuits flying around. Last reports said over 3,000 finished, unsold shacks in Orange County CA. Over 6,000 of the same in greater Dallas. Decades of condo inventory in Miami. Prices falling 6 digits in a few months in Seattle, California and Denver. Foreclosures in south Florida up over 60%. Foreclosures in Orlando were up 45% a year ago, and just jumped 60% on top of that. Are we there yet?

  8. ‘Finding someone to live with can be a precarious task, particularly if you have a niche list of requirements. But what if they’re not astrologically compatible with you?’

    ‘Such was the concern of one landlord, who recently turned down an applicant for a room in their Portland, Oregon home because they were a Capricorn.’

    ‘The response was posted in a Portland Queer Housing group on Facebook and subsequently shared on Twitter over the weekend, where it has since gone viral. “Hey Christine! Sorry I haven’t responded earlier. My concern is that you’re a Capricorn,” reads the response.’

    “Our main goal is to keep things egalitarian, without anyone being ‘in charge’ or domming the household [sic],” it continues. “I love Capricorns, but I don’t think I could live with one (or be in a band with another one).”

    https://www.independent.co.uk/life-style/capricorn-housing-star-sign-application-query-facebook-twitter-a8883756.html

  9. Not really housing except for the space needed for vintage HiFi stereo systems… High Fidelity was published from April 1951 until July 1989 covering audio and high fidelity audio equipment, FM radio, FM stereo, video equipment, audio recordings, and related fields. In mid-1989, the title was acquired by Stereo Review, which began adding “Incorporating High Fidelity” on the cover of the October, 1989, issue. https://www.americanradiohistory.com/High-Fidelity-Magazine.htm

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