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They Have No Other Option Except To Walk Away

A report from ABC News in Australia. “Doc Davey purchased his home in a booming West Australian mining town for $560,000 in 2009, but today the same home is close to worthless after ongoing vandalism by local youths. ‘I’ve rebuilt the back fence six times, and they’ve knocked it down within two days, because they use it as a thoroughfare,’ Mr Davey said.”

“The median house price for Newman has fallen from $805,000 in 2013, to just $210,000 today, according to the Real Estate Institute of WA.”

The South China Morning Post. “The Chinese government is unlikely to ease its controls over the domestic property market, so developers should consider branching out into other industries, according to billionaire real estate tycoon Sun Hongbin.”

“‘Moving the economy away from relying too much on real estate is highly political and it is the country’s choice for a long-term strategy. We must understand this adjustment,’ said Sun. ‘Many people think that the pressure [on the housing market] is so big now, when will they ease? I say it is unlikely [that they will do so],’ he added.”

The Daily Mail on the UK. “A property developer has sparked fury after being given the green light to demolish five brand new homes worth £6.5million and replace them with flats. Alex Collier applied to bulldoze the luxury properties in Poole – worth £1.3million each – to make way for 30 £450,000 flats, claiming Brexit had put off potential buyers.”

“The council has now given his plan the go-ahead, despite more than 100 objections from residents slamming the ‘wasteful, obnoxious and ludicrous.’ Locals claimed the homes were overpriced for the residential area in Dorset and have accused officials of helping the developer ‘get out of a hole’ and subjecting them to months of noisy and unnecessary building work.”

“Adrian Wardlow, chairman of the Branksome Park Residents Association, said: ‘Only the developer and the planning committee seem to think its appropriate. It’s an incredible decision, we can’t make sense of it all. The Brexit excuse is laughable and treating us with absolute contempt. The original homes were obnoxious and overpriced. It is quite clear from viewing the existing properties that they would never sell at the asking prices.'”

The Estevan Mercury in Canada. “As of Oct. 31, Estevan has experienced the largest decrease in housing prices of anywhere in the southern part of Saskatchewan. Lynn Chipley, who is owner/broker with Century 21 Border Real Estate Service said that over 10 years, they are exactly where they were when they started.”

“‘We knew that the market in Estevan was sweeping, and we knew that the prices were falling, and we knew that our numbers were down. We knew all that, but we weren’t sure how much though. So this confirmed my own rough calculations,’ said Chipley.”

“Over the last five years, the real estate in Estevan went down 23.65 per cent with Weyburn being second at -19.36 per cent. On top of that, Estevan now is seeing an alarming number of repossessed properties coming onto the market.”

“‘That’s not because those were bad people who bought them that just don’t care. I think there were a lot of good people that came to Estevan to work and they didn’t really have a choice if they were coming to work, except to buy into our market at that time,’ said Chipley.”

“‘And now, if they no longer have work in Estevan, they have to relocate for whatever reason and they bought during boom times. If the prices are 25 per cent less than what they purchased, they simply can’t sell them, because they can’t afford to clear their mortgages. So they have no other option except to walk away,’ she said.”

“Chipley said they are seeing at least a couple of repossessed homes a week coming onto the market. ‘No one else in the province has seen something like what has happened to us,’ said Chipley.

This Post Has 67 Comments
  1. ‘I think there were a lot of good people that came to Estevan to work and they didn’t really have a choice if they were coming to work, except to buy into our market at that time’

    Well it was cheaper than renting. Oh, Lynn I got an idear! How about you UHS give them back the money you made selling these shacks? What’s that? No freaking way?

    1. The original homes were obnoxious and overpriced.

      Nothing says Mania like grotesque Bubble Houses being worth less than zero. Alot less.

      Now the developer hopes to make good by building a bunch of overpriced Bubble Flats atop their bones. I sure hope you manage to pay off the loans for this stuff.

    2. So, they couldn’t find buyers willing to overpay ~30% each for five mansions, but they can find buyers willing to overpay ~15% each for 30 flats. I guess they make it up on volume.

  2. ‘Only the developer and the planning committee seem to think its appropriate. It’s an incredible decision, we can’t make sense of it all. The Brexit excuse is laughable and treating us with absolute contempt.

    Grotesque malinvestment and speculative excesses enabled and encouraged by central bankers and cheap unlimited Yellen Bux.

  3. “Chipley said they are seeing at least a couple of repossessed homes a week coming onto the market. ‘No one else in the province has seen something like what has happened to us,’ said Chipley.

    Oh, but they will, Chipley. Wait for it. The bursting of Housing Bubble 2.0 and unwinding of 11 years of speculative excesses run amok, courtesy of the Keynesian fraudsters at the central banks, is going to lay waste to inflated shack prices in every Canadian province and every U.S. state. The wails and lamentations of FBs and their lenders will be downright Biblical.

      1. correct BlueSkye – the correction only lasted a year until it was to the moon.

        And even for Sept – the average sales prices is at an all time high. Most of this is due to the mix of new sales (I Think).

        But when a correction hits – i wonder if it will drop significantly (say 20-30%) or will boomer parents step in to buy condos and starter houses for the 20-30 year old kids.

        Granted we grew up in the prosperous western Toronto suburbs (Oakville and Burlington) but from the way my mom is talking – about 30% of her friends / neighbours helped their kids with the full down payment (or more)

        1. say 20-30%

          Is there any reason that houses on your side of the lake/river should be twice the price of the same house in NY?

          1. Toronto has a lot of good career jobs. Foreigners need special permission to live and work.

            I’m not sure what you can do for a good stable salary in upstate NY.

          2. Per capita income in Mississauga is $83,000. Buffalo, NY, by contrast, is a mere $32,000. Big divergences there. A mere 140km away.

            Ontario is a giant province that has urban and rural areas. Province wide income is useless in this comparison because we are talking houses right across the lake, not 200km north in the boonies.

            Not to justify Ontario prices, but the quality of life there, especially in urban areas, is high and there are good jobs.

            What can I do in upstate NY for money? Near Toronto I can work in banking, insurance, engineering, the trades, law, education, etc.

          3. I know Toronto is very special, and the City of Buffalo has been in a depression since the Welland Canal was built. I’m a Buffalo kid but haven’t lived there for almost 60 years. The money moved to the suburbs as in Amherst. I live closer to Kingston. Still the question begs, why should the same house be double in price going across the St. Lawrence? No reason that I can think of.

            Yes, people actually do have jobs in Central NY. There is no place called “Upstate” anymore.

          4. Is there any reason that houses on your side of the lake/river should be twice the price of the same house in NY?

            Drake and the Raptors?

          5. Not to justify Ontario prices, but the quality of life there, especially in urban areas, is high and there are good jobs.

            Paoburen, have you lived in Toronto? I lived in Montreal for a couple of years. Our 4yo is actively watching all episodes of Telefrancais. Our plan is to eventually find us in either Ontario or Quebec province in the not-too-distant future.

          6. @ BlueSkye — Just meant Upstate geographically. Fact is, wages are higher in areas across the river and Canada does not tolerate illegal labor. Americans cannot just cross the river each morning and go to work. There is a real, secured border. They immediately arrest, depart, and blacklist.

            Of course prices are inflated in Ontario! As Mafia Blocks noted and Ben has shown again and again, Canada is a hotbed for fraud and money laundering. It is going to bite them long-term.

            @OneAgainstMany — yep, I lived in Montreal for a while. It’s my favorite city in North America by far. Amazing place. My French isn’t good enough to justify sticking around, though. And the weather is too horrible for long-term living.

            With that said, I do miss winter jogs on the Mount Royal!

          7. Americans cannot just cross the river

            I understand, although I’ve done work in Canada frequently for decades, having been with an international company. I never had a problem telling them at the border I was just training Canadians to do their job better. Now I’m there frequently fishing or seeing my girlfriend. Canada is wonderful, but their houses, even in the hinterlands away from Toronto, are ridiculously high. A 20 to 30% correction is wishful thinking.

            A higher wage? Maybe. But higher taxes and higher price of everything and the Loonie being 75c on the USD rather more than level the field.

          8. With that said, I do miss winter jogs on the Mount Royal!

            I do as well. I also miss good Poutine, smoked meat sandwiches, tire d’erable, and the metro system. Good times!

            The winter and the French is probably why Montreal housing is far below other major French cities. But coming from Idaho and living most of my life in Salt Lake area, the cold doesn’t bother me.

  4. LOL@ the “tech” economy.

    You’re leasing office space nobody wants, and you’re underpaying drivers who deliver overpriced sh*t to people who overpay for it and can’t afford it, without going deeper into debt.

    “In a furious money-burning attempt to impress investors with its market share, WeWork opened almost 100 offices in the third quarter, bringing its total to 625, and helping lift WeWork’s net revenues in the period by 94% from 4482 million a year earlier to $934 million. That was the good news: the bad news is that WeWork affirmed that it continues to lose more than two dollars for every dollar the group generated in sales in the period.”

    https://www.zerohedge.com/economics/weworks-quarterly-loss-exploded-13-billion-ahead-failed-ipo

    1. although based in Seattle, we are renting a place in downtown Toronto (Liberty Village) for the next year. Our ‘luxury building’ is new – and WeWork opened up a facility on the 4th floor (retail is on the 1st 3) in the last few weeks. There is only one pod that had lights on – and seems to be a few people using the facility.

      So no initial demand or pipeline of customers

    2. “…WeWork affirmed that it continues to lose more than two dollars for every dollar the group generated in sales in the period….”

      No worry’s. WeWork will make it up in volume.

      Thursday short quiz time: Which is the biggest scam of all time 1) WeWork or 2) “Luxury Student Housing” or 3) ? (new nominations welcome)

      1. Matt Levine did a good summary off the actual business case for WeWork “working” at some point. This is from the business presentation to tenants and landlords:

        “We can offer space more affordably while charging ~2-2.5x our lease cost because we:

        — Buy in bulk

        — Have a scaled construction platform with standardized build-out procedures

        — Receive subsidies from landlords

        — Utilize square footage more efficiently than any lessor we know of, while curating the space to optimize member experience

        We average ~4% gross churn, but have a net member retention rate of 121% driven by existing member firms who want more space

        Landlords like us because we aggregate demand, can close quickly, and improve the perception of their building”

        When you strip out Adam and his wacko ideas (which were enabled by Masayoshi Son), it may very well be possible that WeWork can be slightly profitable, albeit having chewed up massive amounts of cash in unrelated bets and majorly overpaying for some leases.

  5. ‘I’ve rebuilt the back fence six times, and they’ve knocked it down within two days, because they use it as a thoroughfare,’

    Speaking as an ex-military guy, perhaps you should review the design of your fence.

      1. more concrete and….land mines???

        Ah, just try some barbed wire first. If they get tricky and cut that, then get serious.

  6. to make way for 30 £450,000 flats

    Almost $600,000 USD for an apartment, in Poole, not London, in Poole.

    If that isn’t bubbly, I don’t know what is.

  7. Fauxahontus is pushing her “wealth plan” to soak the rich. Never mind that the category of “rich” is going to expand to include anyone who creates wealth and jobs. The bovine stupidity in the eyes of the adoring would-be freeloaders harkening to her message is telling. So is the fact that Senator Running Deer has had years to do something about the ultimate source of wealth inequality in this country – the Federal Reserve and its “No Billionaire Left Behind” monetary policies – but instead voted to block a real audit of the Fed, and has never lifted a finger to stop taxpayer bailouts of the Wall Street grifters or apply the rule of law to the .1%. And then there’s that shrill screechy voice – the thought of enduring that for four years is appalling beyond words.

    https://www.youtube.com/watch?time_continue=1&v=mN0a_ZhYjac&feature=emb_logo

    1. “And then there’s that shrill screechy voice – the thought of enduring that for four years is appalling beyond words.“

      HRC is a few octaves higher. Many vowed to leave the US if she somehow took office, no different for fauxahauntas. I would at the very least go off grid for 4 years and take away all audio / communication devices. i dont think my ears could handle either one of them squealing

    1. Am I the only person who actually goes through each statement every month? Bank statement, credit card statement, utility bill, whatever.

    2. BTW, even the innocent can become the victims of the Endless calls from debt collectors.

      A few years back, I started getting calls from Honda Financial about a past-due loan. But it wasn’t my loan. Somehow my cell number had gotten attached to the record.

      Eventually, Honda stopped calling. But other people called. This dragged on as the loan was sold on to two or three different debt collectors.

      In time, I stopped getting any calls about this. I guess they all finally completely gave up on ever getting paid for that particular loan.

    1. Yet every day, on the likes of CNBC and Bloomberg, they trumpet how strong the US consumer is. At this point I just laugh.

      1. Well I guess it depends on which quintile of American consumer we are talking about. The top 20%, and especially the top 10% and top 1% are doing extremely well. The machine for consumption is changing to cater to high-end individuals from everything from housing to autos. GM and Ford got out of building cars under $20k.

        1. GM and Ford got out of building cars under $20k.

          I assume the expectation is that “those people” are going to buy used or take the bus. The problem is that we’ve been doing that for a long time with used cars that could be kept on the road cheap. And maybe electric cars will fall into that category eventually. But right now the new cars (tomorrow’s used cars) are turning into really complex machines that cost more than $1000 every time you take them in for anything. A person who can’t afford a new car also can’t afford that. So the cramdown continues in the form of forcing people out of cars who were in them for generations and live in places that require them…and that’s a politically dangerous thing. Or Toyota and Honda and the Koreans manage to ride the fine line successfully and completely replace domestic brands out in the sticks.

          1. So the cramdown continues in the form of forcing people out of cars who were in them for generations and live in places that require them

            Astute observation. I do think that the domestic automakers might have shot themselves in the foot by completely ceding the affordable/econ option to the Japanese/Koreans/Germans because in the past there was typically a trade-up phenomenon that happened. You bought a starter car and built loyalty to a brand, and then you traded it up to a larger, more expensive vehicle when you had the means.

            The real challenge these days is that millennials and gen Z are going to have to accept the fact that unless they are from a privileged background, some of the rites of passage into adulthood (e.g. moving out, owning a vehicle, purchasing a starter home) are not realistic.

          2. “The real challenge these days is that millennials and gen Z are going to have to accept the fact that unless they are from a privileged background, some of the rites of passage into adulthood (e.g. moving out, owning a vehicle, purchasing a starter home) are not realistic.”

            That’s a huge slice of our economy.

          3. in the past there was typically a trade-up phenomenon that happened

            Maybe that’s the most important part of this…maybe this is the signal that the domestics think that is going away (at least for them and their traditional customers) and never coming back. And that was a big part of our culture before. But as of today that culture still exists out in the sticks. Which tells me they think that part of the country is also going away and never coming back…at least as customers.

          4. But as of today that culture still exists out in the sticks. Which tells me they think that part of the country is also going away and never coming back…at least as customers.

            AKA, the new normal.

  8. True financial i$$ue$ + Fal$e propaganda $olution = $ucker$!

    (Knot only are The Federal Re$erve Wizard$ indemnified from accountability, they remind all U$ taxpayer$, it’$ knot their responsibilities to “fix.it!)

    “The head of the United States Federal Reserve has admitted current economic policy is “not sustainable” — but that it is not its job to fix it.

    Speaking during testimony before Congress’ Joint Economic Committee on Nov. 13, Jerome Powell noted that currently, U.S. national debt is growing faster than nominal GDP.”

    https://cointelegraph.com/news/got-bitcoin-us-fed-warns-national-debt-growth-is-not-sustainable/amp

  9. QE is deflationary:

    English wine industry to see ‘a lot of casualties over next 5 years

    ‘Balfour-Lynn said that the 2018 vintage yielded the equivalent of 13m bottles of sparkling and still wine, while sales in the past year totalled somewhere between 3-4m bottles.’

    ‘Furthermore, he recorded that 3m more vines were planted this year alone, encouraging him to comment that he expects this “massive oversupply” to appear in the next four to five years.’

    https://www.thedrinksbusiness.com/2019/11/english-wine-industry-to-see-lot-of-casualties-over-next-5-years/

    1. “ma$$ive over$upply”

      Milk, wine, cannabis, … over.priced $helter.$hack$ & Fed fund$
      (might bee time to make a li$t)

      1. I$ it possible to have & hold a “ma$$ive over$upply” … of Debt$?

        U.$. Corporate Debt Continues To Ri$e As Do Problem Leveraged Loan$

        Forbes |Mayra Rodriguez Valladares |Contributor Banking & Insurance

        American$ now have a record $14 trillion$ in debt$

        By Matt Egan, CNN Business |November 13, 2019

  10. Over in Denver:

    Lyft makes 200 electric cars available to drivers in Denver
    Electrek
    Fred Lambert
    11/15/2019

    “Lyft is striving to make every ride 100% electric over time. This transition starts with electrifying fleets like those that are part of Lyft’s Express Drive rental program, which because of their higher utilization, will have an even larger positive impact when compared with personally owned EVs.”

    “Ride-share rentals are an effective, flexible way to overcome this hurdle and provide access to those who have been previously excluded. And once in the hands of drivers, EVs can increase net driver earnings — after our first deployments, EV renters in our Express Drive program have saved approximately $70-100 per week on fuel costs alone.”

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