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Plenty Of People Have Gone Broke, It’s A Bit Of A Gamble

A report from the Globe and Mail in Canada. “1225 Barclay St., No. 802, Vancouver. Listing price: $1.388-million. Selling price: $1.160-million. Previous selling price: $1,230,000 (2018). The sellers had purchased the condo as a flip, but after completing major renovations, the market softened, and they made less than expected, listing agent Ian Watt says. They had listed with a previous realtor for $1.548-million before dropping the price. ‘It’s the reality of the market,’ says Mr. Watt.”

The Offaly Express in Ireland. “House prices are falling across the country, according to Daft.ie. In Offaly, prices in the third quarter of 2019 were 3% lower than a year previously, compared to a fall of 12% seen a year ago. The average house price is now €184,000, 41% below peak levels. Ronan Lyons, economist at Trinity College Dublin and author of the Daft.ie Report, said: ‘Price falls are concentrated in the Greater Dublin Area and, within that, in the most expensive markets. ‘”

“Raychel O’Connell, Communications Manager at Daft.ie said: ‘It looks like we are finally seeing the effects of increased supply in the market. This is particularly true in Dublin where there was more than twice the number of homes for sale in mid-2019 than two years previously.'”

The Chiangria Times on Thailand. “Thailand’s residential property developers are being forced to rethink their project strategies as Chinese buyers dwindle. The residential property sector has shrunk by 13% year-on-year in the first half of 2019. Of the $3 billion transferred from abroad to purchase condo units in Thailand in 2018, 43% came from China.”

“But Chinese money is now ebbing away from Thailand. Singha Estate joins a line of developers that have been struck by the slowing residential market. One large developer, Noble Development, in May presented a ‘special’ starting price of 4.7 million baht ($150,000) for units of a condominium project in central Bangkok. The price was 19% lower than its initial starting price of 5.8 million baht.”

The South China Morning Post on Hong Kong. “Homebuyers took advantage of steep discounts and snapped up 351 of the 352 flats Sun Hung Kai Properties, Hong Kong’s biggest developer, had on sale at its The Cullinan West III project on Thursday. Developers have been rushing to offload flats before the introduction of a vacancy tax, now expected as soon as January.”

“The developer priced the latest batch of flats at the project at an average of HK$23,172 per square foot, up to 25 per cent below the prevailing market rate in the area.”

The Sydney Morning Herald in Australia. “Apartment buyers could be forced to stump up higher deposits as nervous lenders consider tightening mortgage restrictions due to Sydney’s oversupply of apartments and fears about building defects. Lenders are traditionally more conservative when loaning money in suburbs with high-density apartments. RiskWise Property Research founder Doron Peleg said it is common practice for lenders to ‘simply blacklist suburbs or postcodes’ and refuse to lend in areas with a glut of apartments.”

“On top of the oversupply which has doubled the Sydney apartment rental market in two years, major issues in building construction are affecting confidence right across the industry. The cracking at Opal Tower and subsidence at Mascot Towers in the past nine months are chief among those concerns.”

“General manager of valuations at Opteon Scott Chapman said the uncertainty means the high-density apartment segment of the market is moving slowly. Mr Chapman said it becomes a self-fulfilling cycle where difficulty to get a loan meant fewer properties were sold. Mortgage Choice broker Paul Pappas said he has noticed lenders beginning to crack down on building cladding.”

“‘We’ve been lending for timber shacks in Balmain and Katoomba for 100 years and it’s never been a problem. There seems to be a focus on brand new properties that have some kind of cladding,’ he said. ‘Since when are valuers building experts? They’re not. Everyone’s just covering their backsides.'”

From Good Returns in New Zealand. “There’s a widely held belief that anyone who buys and sells a residential property within a short space of time will be earning vast, untaxed profits while trampling over vulnerable people along the way. But this belief relies on a number of assumptions – which have been showcased in some recent articles – that are blatantly incorrect, Auckland Property Investors Association president Andrew Bruce says.”

“‘Most of the time people actually don’t make the huge amounts from every sale that is implied. I know plenty of people who have gone broke doing it. It’s a bit of a gamble in fact,’ says veteran landlord Peter Lewis.”

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This Post Has 87 Comments

  1. ‘Price falls are concentrated in the Greater Dublin Area and, within that, in the most expensive markets‘

    Just like everywhere else. A classic sign of a speculative bubble bursting.

    1. Please, dear baby Jeebus, spread this eee-bola outbreak of falling home prices to San Diego County, U.S.A., in order to shut up the horde of real estate sages who confidently assure one and all that there is no smarter financial move than to buy a San Diego house and sit back and watch the home equity gains flow like manna from Heaven.

      1. I have heard this same sage advice from three independent sources within the span of a week. I take this as a sign that we are at or past the l current bubble tsunami tide crest, with the water on the brink of rushing back out to sea.

        Today’s discussion was with a stealtor. I told her that this is a bad time to buy, but that five years from now seems promising. Blank stare was the response…

        1. The force is strong amongst the stealtors. I ventured out to 5 open houses today and only one said the market is correcting. She even said if I could wait, it would be in my best interest. I would imagine SD has ALOT of hungry realtors that will do and say ANYTHING to ABC!

    2. An overpriced place in my hood backed up to a shady apt complex and subject to street noise from two different directions just went pending, asking was 750k. When I saw the crazy asking price I figured it would languish until the price came down. But someone appears to be buying the place and the limits are still being pushed price wise in my hood in SD. I’m flummoxed as to where the money is coming from at this point.

  2. “Hong Kong’s biggest developer, had on sale at its The Cullinan West III project on Thursday. Developers have been rushing to offload flats before the introduction of a vacancy tax, now expected as soon as January.”

    Next year should be real interesting. A vacancy tax could take all the fun of speculation.

    1. Surely these speculators somehow hooked up with AirBnB? Rent the place out 3-6 months at a time. Reap the appreciation while keeping the place occupied. Basically a backdoor version of converting condos to apartments.

  3. ‘Selling price: $1.160-million. Previous selling price: $1,230,000 (2018). The sellers had purchased the condo as a flip, but after completing major renovations, the market softened, and they made less than expected’

    Less than expected? They just took an a$$-pounding from where I sit.

    ‘It’s the reality of the market’

    But the Canadian REIC says it’s to the moon Alice?

    1. They lost $70,000 + sales transactions costs + renovation expenses. So much for the theory that real estate always goes up.

      1. The reno-to-sell craze is most annoying. Put $50K renovation into a house in order to sell the house for $50K more. The realtor pockets of that 6% of that reno cost without lifting a finger. The gov gets transfer taxes on the reno cost without lifting a finger. And you don’t even get to enjoy the renovation.

        And in an aesthetic sense, Minimalist Millenial Gray clashes — strongly — with original hardwood floors.

        2. Put $50K renovation into a house

          In saner times, that would get you at best a $25K increase in price, not $50K

          1. As one who would want everything to be in perfect working order in a dwelling, I am sure there are some renovations that I would consider true value-adds. But very few of what I see on Zillow seems to match what I would be willing to pay for vs. what the flipper is hoping/expecting to get.

  5. ‘‘Since when are valuers building experts? They’re not’

    Unlike used house salespeople, who are experts on all things real estate after completing a rigorous 30 hour course.

  6. Concrete boxes for everyone!

    Sanders unveils $2.5 trillion ‘Housing for All’ plan
    The Hill | 09/18/19 | Tal Axelrod

    White House hopeful Sen. Bernie Sanders (I-Vt.) on Wednesday released a $2.5 trillion plan to guarantee housing for every American.

    Sanders said the plan would “guarantee every American — regardless of income — a fundamental right to a safe, decent, accessible, and affordable home” and would be paid for by a wealth tax on the top one-tenth of 1 percent of income earners.

    Sanders’s plan seeks to invest $1.48 trillion over 10 years in the National Affordable Housing Trust Fund to build and maintain 7.4 million “quality, affordable and accessible housing units” that he says will eliminate the gap in affordable housing for the lowest-income renters. It would also invest another $400 billion to build 2 million mixed-income social housing units.

    https://thehill.com/homenews/campaign/461942-sanders-unveils-25-trillion-housing-plan

    1. invest another $400 billion to build 2 million mixed-income social housing units

      Do low income people really want a $200000 house unless it’s given for free?

      1. No sane person would pay $200k for a rapidly depreciating asset like a house….. Unless they were broke in the first place. That’s the only way houses sell for that much…. poor people.

      3. I’m not voting for anybody that thinks “right” means being given something. It’s right up there with the word “deserve” in the misuse hall of fame.

        1. I’m not voting for anybody that thinks “right” means being given something

          Especially when that “right” can only be guaranteed by violating the fundamental rights of others, including those that are already enshrined in the constitution.

      4. I’m not voting for any Democrat who promises free shit for everyone as a fundamental right.

        Like free public education?

          1. Unless he’s purchased a personal residence since January, OAM lives at two locations owned by other entities so he personally doesn’t pay property taxes. If he sends his son to public schools, he’ll just be freeloading off of other people’s money yet again. Is it any wonder why he favors socialism?

          2. Unless he’s purchased a personal residence since January, OAM lives at two locations owned by other entities so he personally doesn’t pay property taxes.

            We live in one location (Southern Utah). When I do site visits, I stay in an empty Airbnb unit of 25 that I have in a pool. We pay rent, so of course property taxes are baked in. There is no free lunch. Of course, the dwelling we choose to rent is very modest, so we pay less property taxes via our rent than someone else would.

          3. Okay, yeah, sure. But that is kind of my point. When we say that everyone in this country is entitled to free public education, it is implicit that taxes support this. And we have other social programs too like cash support to farmers, food stamps, pell grants, housing vouchers, Medicaid, social security, etc. None of these are free.

      6. Bernie Sanders answer to everything is to give a bunch of stuff to people free because it’s their right to have it. All the people who work hard for what they get are just shit out of luck.

        1. it’s their right to have it

          I’m the type that’s willing to discuss whether a little more socialism makes sense in a specific area, especially health care. But as soon as the word “right” is used I know we’re going to a bad place. Just because something may or may not be a good idea to solve a problem for our society in no way makes it a “right”. If everything is a right then nothing is a right.

          1. In my mind this is a bit of semantics. When people say that housing is a right, they generally mean that they would support a political economy where everyone of all incomes would be able to afford shelter and those who cannot afford it would have it provided for them. In that sense, I do believe that housing is a human right because I believe that everyone in this country should be able to have the basic needs: food, clothing, shelter, and medical care. But that doesn’t mean that the food should be filet mignon or the housing luxurious. Not working to get public benefits should never be more of an attractive option than working.

          2. In my mind this is a bit of semantics.

            I think it’s a lot of semantics…very important semantics. They may mean that, but it’s incorrect use of the word “right”. I would like to see everyone be able to support themselves too. But I won’t call it a right.

            I will concede that when we had a frontier this was much simpler. If you couldn’t get a job with a living wage you could always just go clear some ground and do your best to not starve without needing anything from others. And because that was an option nobody owed you anything. It is more complicated if all the resources needed to survive are owned by someone else already. But I still wouldn’t say you have a “right” to those resources.

          3. I will concede that when we had a frontier this was much simpler. If you couldn’t get a job with a living wage you could always just go clear some ground and do your best to not starve without needing anything from others.

            Historically there have been rights to protect gleaners and much of the bible supports taking care of the widows and the fatherless. Compassionate and moral societies have always supported some safety net I believe. The trick is to design the structure so that it is rarely gamed/abused.

            With regards to the usage of rights, I think this can be chalked up to negative vs positive rights. Wikipedia has a good discussion of this.

        2. With regards to the usage of rights, I think this can be chalked up to negative vs positive rights. Wikipedia has a good discussion of this.

          I can look it up but I don’t really care what Wikipedia says. I don’t think there is such a thing as positive rights. I think that you CAN have an ethical/moral claim on charity from your society IF there is enough for everyone…but that is NOT the same as a right to it. How can you have a “right” to something that may not even exist at times? And if it does exist it may be needed by the person who produced it just as much as you need it? Or more? It’s not logical to call it a right.

    3. This is so awesome. My favorite part of this plan is that all this housing will be built using power from windmills and solar panels as his Green New Deal energy policy will completely eliminate fossil fuels. Truly visionary.

      1. Private equity is already building this type of housing. I know the manager of this new complex. It is really a cool development:

        https://www.isyourhome.com/soleil-lofts-herriman-ut/

        “Be the first in the door at Soleil Lofts, a newly constructed green community of apartments in Herriman, Utah—coming soon! With designer 1, 2, and 3 bedroom rental apartment homes where you can enjoy the finest in contemporary living under one roof, Soleil Lofts offers additional luxury with available modern master suites. Peruse the diverse assortment of floor plans, take in impressive amenity-rich interiors, and bask in the breathtaking community features of our community. At our green Herriman apartments in UT, we believe in protecting our planet and utilizing clean solar energy—Soleil Lofts utilizes clean energy with onsite solar energy generation. Every one of our homes has state-of-the-art battery storage and back-up power, in addition to energy efficient appliances.”

        1. Using solar energy to power your light bulbs is a bit different than harvesting and processing lumber, mining and smelting industrial ores, welding, making copper wire and roofing nails, quarrying and cutting granite, making concrete, operating cranes and bulldozers, etc…

          From Bernie Sanders website COMPLETE DECARBONIZATION By at least 2050:

          Reaching 100 percent renewable energy for electricity and transportation by no later than 2030 and complete decarbonization by 2050 at latest – consistent with the United Nations Intergovernmental Panel on Climate Change goals – by expanding the existing federal Power Marketing Administrations to build new solar, wind, and geothermal energy sources.

          And please stop pretending that you care about the environment. You bought a new Tesla. If your carbon footprint was a top priority you would have bought a fuel efficient used car and saved it from the junkyard. But driving a dented 1994 Toyota Corolla with torn up seats probably wouldn’t have the same cachet with your clean energy private equity buddies.

          1. Banning the internal combustion engine will just be the start. After that even if you drive an EV, they will go after the number of miles you drive, the size of your refrigerator, the temperature you heat your house to, how much red meat you can eat, how many children you are allowed to have, how long you are allowed to live….
            Once the artificial scarcity is created, they will use it to strip you of every liberty you have.

          2. And please stop pretending that you care about the environment. You bought a new Tesla. If your carbon footprint was a top priority you would have bought a fuel efficient used car and saved it from the junkyard. But driving a dented 1994 Toyota Corolla with torn up seats probably wouldn’t have the same cachet with your clean energy private equity buddies.

            You can compare the carbon footprint of a gas car to an EV here:

            https://www.ucsusa.org/clean-vehicles/electric-vehicles/ev-emissions-tool

            Gas: 381 g CO2/mile
            Battery EV: 128 CO2/mile

            So a gas car would be less eco-friendly. But before my Tesla I had a Hyundai Sonata hybrid and before that a Honda Civic. In between those two cars I was car-less and used an electric bike + public transportation.

            I didn’t just buy a Tesla because it is cleaner and better for the environment. I bought it because of autopilot and how quiet, fast, and fun it is to drive and how I never have to do oil changes or brake changes and fewer moving parts to worry about.

      2. And applying the insights of Modern Monetary Theory, they can use an electronic money printing press to create all the money needed from thin air to pay for the free shit.

    5. “a fundamental right to a safe, decent, accessible, and affordable home”

      Such homes already exist, all over this country. Just not in desirable spots like San Francisco or Austin. Sorry, you might have to relocate to a rural area, and live in a 1950s converted motel. And, oh horrors, work a menial job.

      Say what you will about illegal immigrants, but somehow they are surviving in America. Somehow, they are finding housing and jobs and food banks. Somehow they are able to secure transport to rural areas of the country to work in meatpacking plants or pick veggies. Somehow their kids are getting fed, even if they mooch off the school systems and/or churches. Somehow they are acquiring beater cars and white vans and the gas to drive them. Somehow they are getting basic medical care.

      Why can’t these poor American citizens do the same? There are plenty of opportunities to work, under the table if necessary. Or even to mooch. We can then decry them as moochers, but at least we won’t be paying another $2.3 trillion to line the pockets of greedy developers who would jump at the chance to build new slum projects.

      1. “Say what you will about illegal immigrants”

        OK

        Impaired, unlicensed driver flees deputies, kills man: Sheriff

        by Lizandra PortalSaturday,
        September 21st 2019

        WEST PALM BEACH, Fla. (CBS12) — A man is dead and another in jail after a traffic stop turned into a deadly crash.

        According to the Palm Beach County Sheriff’s Office, 21-year-old Pedro Hernandez was speeding on State Road 80 westbound after failing to stop for deputies.

        Hernandez ran the red light at the intersection of Pike Road and Florida’s Turnpike, according to the sheriff’s office. Michael Dibartolo, 28, was driving southbound on Pike Road near the intersection of State Road 80 when Hernandez’s vehicle struck the rear driver’s side of Dibartolo’s vehicle, which caused it to spin and eject Dibartolo from the car. Dibartolo was pronounced dead at the scene.

        Hernandez suffered minor injuries, deputies say. He does not have a driver’s license and showed signs of impairment. Hernandez is facing vehicular homicide and no driver license causing death charges.

        http://cbs12.com/news/local/impaired-unlicensed-driver-flees-deputies-kills-man-sheriff

      2. If you can tolerate third world conditions you can thrive anywhere.

        I once saw a two bedroom apartment in Hong Kong with twelve residents. They were “thriving”, at least compared to back in Indonesia…

      3. Why can’t these poor American citizens do the same?

        I think it comes down to various types of capital: social capital, cultural capital, and human capital. Many immigrant groups have strong social/family ties and a work ethic that is ingrained in them that is to their benefit.

    6. Oh boy! Soviet-style apartment blocks for everyone! The “Progressive” transition almost complete, and of course, all for free thanks to comrade Sanders vote- buying plans for the useful idiots.

      “Socialism is Communism, only better English.”

  8. Bahahahahahahahahahahaha.

    Alpine property in hot demand despite climate change worries – ABC News (Australian Broadcasting Corporation)
    https://www.abc.net.au/news/2019-09-20/snow-homes-not-melting-despite-climate-change-concerns/11516176

    (snip snip snip)

    “Alpine real estate is getting more expensive at Australian ski resorts, despite concerns that climate change will diminish natural snowfalls.”

    “CSIRO modelling predicts the average snow season will decrease by 20-55 days over the next 30 years.”

    Bummer!

    “It does not seem to make sense — a pricey asset in a rugged environment, hours from the capital cities and heavily exposed to climate change. But investors cannot seem to get enough.”

    “Modelling from the CSIRO predicts average seasons will fall by between 20 to as much as 80 days in the next three decades, potentially all but annihilating the 112-day ski season.”

    Super bummer!

    “In the worst-case scenario that would leave just a month of skiing by 2050.”

    Extra-super Bummer!

    But wait, what’s this? …

    “And we’ve invested significantly over the last decade in snow making … of course we’ve been fortunate enough in the last three years to have some really strong natural snowfall.”

  10. Eurozone manufacturing PMI drops in September to worst level in nearly 7 years
    By Steve Goldstein
    Published: Sept 23, 2019 5:02 a.m. ET

    German manufacturing PMI at 123-month low
    Getty Images
    Employees of Porsche AG assemble a Porsche Taycan car during the production launch of the new model on September 9, 2019 at the company’s plant in Stuttgart, southern Germany.

    Manufacturing sentiment in the eurozone fell in September to the worst level in nearly seven years, new figures released Monday show.

    The flash eurozone manufacturing purchasing managers index fell to an 83-month low of 45.6 in September, down from 47 in August.

    Economists polled by FactSet expected a 47.3 reading, and any reading below 50 indicates worsening conditions.

    German manufacturing PMI fell to 41.4 in September from 43.5, the worst reading in more than a decade.

    The flash eurozone services PMI fell to an 8-month low of 52 from 53.5 in August, which was below the 53.2 reading expected by economists.

    “The eurozone economy is close to stalling as a deepening manufacturing downturn shows further signs of spreading to the services sector,” said Chris Williamson, chief business economist at IHS Markit.

    New orders for goods and services fell for the first time since January, dropping at the sharpest rate since June 2013.

    The flash readings are based on 85% to 90% of typical responses.

    The deterioration comes as the European Central Bank, which cut interest rates in September and said it would restart bond purchases, has asked eurozone countries to use fiscal measures to help prod the economy forward.

    Germany has so far been running a budget surplus as the country nears a recession.

    European stocks fell on Monday, with the Stoxx Europe 600 losing (SXXP, -0.78%) 1%.

    The yield on the 10-year bund (TMBMKDE-10Y, -10.53%) fell 8 basis points to -0.58%, and the yield on the U.S. 10-year (TMUBMUSD10Y, -1.56%) fell 6 basis points to 1.69%.

      2. Pretty crafty use of a bed pan. What’s the reference to OAM all about though

        It’s because I’m an RN.

    2. “Investigators say she was ‘killed instantly’ by electrocution after the phone, which was plugged into a 220-volt plug ‘slipped’ and landed in the water with her.”

      It might be 220v out of the wall, but it is only 5v into the phone. Am I missing something here?

      1. The only possibilities I can think of are that it was some kind of charger that the charger design was such that it had 220V in a cord that went all the way to the water before converting to 5V OR she OD’ed or something similar and her phone fell in the water as she died and they are just blaming it on the phone.

  16. I think it’s a major con job to try to convince people that free shit is a right. This is especially true when it’s a political platform. Free shit isn’t equality because the group that doesn’t get the free shit has to pay for the free shit. Than that group will want the free shit also because they aren’t getting a equal amount of free shit.

    Than the people who use to work for their shit will stop working for their shit, because why work when you can get free shit . It’s just human nature. So than the human being gets corrupted like the rich are today, who get a lot of free shit and unearned profit.The rich and the poor want unearned profit. So, the problem is free shit.

    1. The rich and the poor want unearned profit.

      Everybody wants it. The middle class just hasn’t found a good angle yet.

      1. Yep, everybody likes the free stuff. The middle working majority people have never been able to figure out how to get their free stuff because they are to busy working. They don’t qualify for the free stuff.

        I was trying to be funny in my above post, but the more I think about it , the root of all evil is free stuff.

        1. the root of all evil is free stuff.

          Seems like I remember that the love of money is the root of all evil from Sunday School (Timothy 6:10).

          1. One has to ask, “How did the 16th amendment get passed to begin with?*

            In around 1919 the government passed the power to tax income. At first it was no big concern because it was only against the rich people who made over 20 thousand at a tax of 4%.
            Than fast forward and the rich figured out how to get tax write offs and they changed the tax laws to nail the majority. Big business is always trying to figure out how to get the government to pay for stuff.

            So when anybody tells you that something will be paid for by tax on the rich, don’t believe it.

          2. “One has to ask, “How did the 16th amendment get passed to begin with?*”

            “Prior to the early 20th century, most federal revenue came from tariffs rather than taxes, although Congress had often imposed excise taxes on various goods.” —wiki

            There has been tremendous mission creep in the federal government’s role down at the Joe Sixpack level from the right to bear arms down to providing children with nutritious meals because a SNAP card isn’t enough support from “the man.”

        1. They found it in the Housing Bubble.

          They found it all right. And they’re going to get it good and hard. Again.

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