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The Golden Goose Is Over

A report from Domain News in Australia. “Sydney’s weekend auction clearance rate slumped to a low of 44.5 per cent on Saturday. The result was Sydney’s lowest preliminary clearance rate in a decade, excluding public holiday long weekends. Danny Grant, of The Agency North, said realistic vendors were forgetting about last year’s surge in median house prices and reducing their asking prices by about 10 per cent to 2016 price levels.”

“‘This market is normalising,’ he said. ‘It is abnormal to have 10 or 12 people competing at an auction and prices that go hundreds of thousands of dollars over reserve.'”

“Buyer’s agent Amanda Bidder-Segers, of Amanda On My Side, said families looking to upgrade to a north shore home in the $4 million to $5 million range were buying at advantageous prices without much competition.”

“‘I say to my clients, ‘If we don’t find the right property, you don’t have to rush’,’ she said. ‘You don’t have that sick feeling of last year where, if you missed out on a home, you knew that the market was going up by $20,000 a week right in front of you.'”

The New Daily in Australia. “Sydney’s weekend clearance rate dropped to 44 per cent, according to Domain, with Melbourne not faring too much better at 48 per cent. Dr Andrew Wilson, at My Housing Market, advised the market had ‘plunged to new depths’ on Saturday in the toughest market conditions since the economic shock of the GFC.”

“A rising crisis of confidence is now gripping markets with buyer and seller wariness,’ he noted.”

From Stuff New Zealand. “Christchurch’s real estate market is nearing the end of another “slow but steady” year, leaving some in the industry to ponder an uncomfortable question: does the city have too many houses? In early 2017, Stuff reported on multi-unit properties sitting finished and unsold in suburban subdivisions. ‘[We] certainly won’t be building any more of those,’ construction boss Mike Greer said at the time.”

“Speculative developments were the first to go. Management consultant Mike Blackburn monitors building activity in the city for his small and medium-sized builder clients. ‘The golden goose is over,’ Blackburn said, ‘I wouldn’t be advising anyone to be building large-scale spec houses at the moment because we just don’t have the population for growth.'”

From Bloomberg on Canada. “It’s a product of one of the largest financial flows of the 21st century: The money being frenetically shuffled by millions of wealthy Chinese into safe assets abroad, in defiance of their country’s capital controls. Since mid-2014, capital flight from China may have totaled as much as $800 billion, according to estimates from the Institute of International Finance.”

“In Vancouver, the tidal wave has wrought a dramatic economic, demographic, and physical transformation. Much of the money coming in has been legitimately earned, if sometimes extricated by gray-market means. But officials say that a substantial proportion is the proceeds of corruption or crime, including the illegal sale of opiates such as fentanyl.”

“With public anger rising over astronomical housing prices and an economy distorted by wealthy outsiders, British Columbia’s left-leaning government—elected last year on a platform focused on calming the real estate market—is building a global laboratory for policies meant to restrain the arrival of Chinese money. The province is hiking taxes, toughening transparency rules, and tightening oversight of casinos and financial institutions.”

“The money is arriving so fast, and in such volume, though, that standing by is no longer an option. Vancouver was perhaps the first major Western city to experience the full force of Chinese capital. Soon, it could be the first to learn what happens when you try to stop it.”

“Thanks substantially to purchases by wealthy foreigners, the city’s property values are now the highest in the country. The median cost of a detached home in Vancouver proper has tripled since 2005, to C$1.5 million, making millionaires of thousands of homeowners.”

“During much of this buildup, ‘no one was complaining,’ says Chip Wilson, the controversial founder of clothing retailer Lululemon Athletica Inc., one the few international brands to come out of the city. ‘If you’re 60 years old and you want to retire, well, you’ve got a two-and-a-half-million-dollar house. You sell it, you move to one of the most beautiful islands in the world off the coast here for $500,000. You’ve got $2 million in the bank, and Bob’s your uncle.'”

This Post Has 32 Comments
    1. That was a well documented article. Given the power and violent nature of those involved, wouldn’t be surprised if he was Khashoggi’ed

    2. That video (showing guys literally bringing bags of cash to the casino cage) is priceless. But, “nothing to see here, folks”!

  1. ‘It is abnormal to have 10 or 12 people competing at an auction and prices that go hundreds of thousands of dollars over reserve’

    You know Danny, I’ve been saying that for years. So is $4 million Australian pesos for an 80 year old shack that could be in flyover country.

    ‘The median cost of a detached home in Vancouver proper has tripled since 2005, to C$1.5 million, making millionaires of thousands of homeowners.

    Sounds Abby Normal too.

    1. Amanda…said families looking to upgrade to a north shore home in the $4 million to $5 million range were buying at advantageous prices…

      Most families earn a million $ or two over their working career. That’s gross income. Paying multiples of that, which you can double for interest and taxes and such, isn’t “advantageous”. It is outright insanity.

  2. ‘You don’t have that sick feeling of last year where, if you missed out on a home, you knew that the market was going up by $20,000 a week right in front of you.’

    Gosh, I hope no one overpaid in such an environment.

    1. ‘You don’t have that sick feeling of last year where, if you missed out on a home, you knew that the market was going up by $20,000 a week right in front of you.’

      That sick feeling of missing out pales in comparison to the dawning realization that you massively overpaid and no Greater Fools or Knife Catchers are going to show up to save you as your shack craters by $20,000 a week right in front of you.

  3. Gosh, who knew that unaffordable housing caused by the Fed’s monetary malpractice would ever cause the housing bubble to crater.

    https://wolfstreet.com/2018/10/19/us-housing-turns-into-buyers-market/

    In its report today on existing-home sales in September – they fell by 4.1% from a year ago to the lowest level since November 2015 — the National Association of Realtors blamed inevitably the “decade’s high mortgage rates.” This is no surprise. The Fed has been hiking its policy rates, and mortgage rates have been rising for a while and now average over 5% for a 30-year fixed-rate conforming mortgage. While this may seem high by 2016 standards, it remains low compared to rates in the pre-Financial-Crisis era.

    And yes, after years of rampant home price inflation, touted by everyone in the media, at the Fed, and elsewhere as the greatest thing since sliced bread, the NAR finds that “affordable home listings remain low, continuing to spur underperforming sales activity across the country.”

  4. “Sydney’s weekend auction clearance rate slumped to a low of 44.5 per cent on Saturday. The result was Sydney’s lowest preliminary clearance rate in a decade, excluding public holiday long weekends.

    In both Australia and Hong Kong, the weekend Running of the Lemmings, which for years had seen a mass herd impulse to rush to their financial destruction by purchasing insanely overpriced housing, is rapidly diminishing as the last of the Greater Fools and Knife Catchers rush to join the Caravan of the Schlonged. Now that financial Darwinism is finally starting to do its thing, after the artificial debt-based “boom” of the bubble years, any bets on when we’re going to see a reverse running of panicked lemmings out of their cratering housing “investments”?

  5. Went to another open house in my ‘hood in Colorado Springs. The last one I went to a couple weekends ago sold less than a week after being listed. I have a rule of being courteous and respectful to realtors as long as they don’t try to bullshit me, and so far, of the three open houses I’ve been to, the realtors have been reasonably candid and forthright about the local and national housing market. This disappoints me greatly, as I have fond memories of turning unscrupulous realtors into quivering bundles of neurosis back during the 2006/2007 housing bubble crash by calling them out on their lies and dissembling.

  6. Vancouver Real Estate Developers Will Now Pay Your Mortgage

    Steve Saretsky
    Published on Oct 20, 2018
    “Total home sales across the nation fell 9% year over year in September. It was the fewest sales for the month of September in six years.”

    “According to the Canadian Real Estate Association, home buyers retreated across the country, “About 70% of local markets were down on a y-o-y basis, led primarily by declines in major urban centres in British Columbia, along with Calgary, Edmonton and Winnipeg.”

    “On a more local level, we are seeing abrupt changes in the lower mainland, particularly in Langley where inventory has increased substantially and developers are offering more incentives, including a year of mortgage payments.”

    “According to MLA Canada, the pre sale absorption rate for new developments fell to 38% in September, down from a high of 94% in January. Further, October is expected to be the busiest month for pre-sales in 2018 bringing over 2,000 units to market. This will place added pressure and competition between the re-sale market and the pre-sale market, both which are starved for buyers.”

    https://www.youtube.com/watch?v=GgAWwrpWBI4

    “With the Greater Vancouver condo market having slowed considerably, sales for the month of September dropped 44% – a six year low, the effects are now trickling into the new development space. Pre sale centres for new developments are beginning to ramp up their incentives and trying to lure buyers with discounts, decorating bonuses, free upgrades, and even a years worth of mortgage payments.

    “Call it desperation, or call it a brilliant marketing strategy, ‘The Landing’ a pre sale condo development in Langley, has perhaps set a new precedent by offering to pay the first year worth of mortgage payments.”

    “Just 12 months ago developers were having to contain the madness of crowds, many of whom were lining up overnight to secure a pre-sale contract. Today, incentives have become the new normal.”

    “However, this slowdown is not exclusive to Vancouver. As global liquidity tightens, reports are growing of weaker buyer demand which is now plaguing real estate developers across the globe.”

    “In Hong Kong, “Developers are rushing to unload their stock, as they are afraid the market will get even worse,” said Derek Chan, head of research at Ricacorp Properties. “Some projects, which have been priced lower, too have failed to get an enthusiastic reaction among buyers. Other developers will not dare to set prices as aggressively as they did before.”

    https://vancitycondoguide.com/vancouver-condo-developers-buyer-incentives/

  7. “Call it desperation, or call it a brilliant marketing strategy, ‘The Landing’ a pre sale condo development in Langley, has perhaps set a new precedent by offering to pay the first year worth of mortgage payments.”

    Like a carjacker giving you cab fare. This kind of desperation should cue buyers that the real cratering is still to come.

  8. Just got an email from a realtor with the subject:
    End of Sellers’ Market – Time to Buy Home
    That doesn’t sound quite right :/

    Anyway, what I hear is that it’s Saul Goodman.
    In reality, things must be pretty bad for her to send this out.

  9. “But officials say that a substantial proportion is the proceeds of corruption or crime, including the illegal sale of opiates such as fentanyl.”

    No longtime reader here will find this news in the least bit surprising.

  10. Investors weigh whether to ditch stocks for bonds as yields finally offer an alternative
    By William Watts

    Published: Oct 20, 2018 5:02 p.m. ET
    Share

    Yields still not attractive enough to justify underweighting equities: UBS
    Getty Images
    Time to underweight stocks?

    Farewell, TINA?

    TINA is the acronym for “there is no alternative,” a market mantra that reflected the frustration of investors who saw no alternative to stocks in a post-financial crisis world dominated by ultralow government bond yields as the Federal Reserve and other global central banks embarked on asset-buying programs and other forms of extraordinary stimulus.

    A selloff in Treasurys has seen longer-dated yields rise quickly in recent weeks, playing catch-up with a long-running rise in shorter-dated yields. Yields and debt prices move in opposite directions.

    Indeed, the rise in the 10-year Treasury yield (TMUBMUSD10Y, +0.24%) to a more-than-seven-year high above 3.26% on Oct. 9 was blamed by some investors for a subsequent U.S. stock-market selloff that turned into a global rout. That selloff, in turn, sparked a flight to traditional haven assets, like Treasurys, pulling yields back down. But they began to creep back up, with the 10-year yield ending Friday near 3.195%.

    The question for investors is whether the yield on Treasurys and other lower volatility alternatives is attractive enough to justify shifting money out of stocks. For one money manager, the answer is, not yet.

    “While investors now have some fixed income alternatives to equities, we do not consider them attractive enough yet to warrant underweighting equities relative to fixed income. The backdrop for equities remains sufficiently supportive, valuations are favorable relative to historical norms, and upside risks at least partly offset the downside risks we continue to monitor,” said Mark Haefele, chief investment officer at UBS Wealth Management, in a note.

  11. More updates to the JT extension over the weekend — added basic format buttons to the comment form. Full list of features now:

    * show new comment count for each post on main page
    * hilight new comments within a post
    * add toolbar to jump to next/previous new post
    * ignore list/automatically collapse comments by ignored users (and visually indicate they’re ignored)
    * minor UI/UX tweaks

    1. I’m so clueless, I didn’t even realize JT worked with the new blog, LOL. I had refreshed Firefox so it got rid of my extensions and such. Guess I need to get JT again!

      1. It didn’t until recently. Been re-enabling features/functionality over the past few weeks.

        Still missing some things, but should be helpful at this point

        1. Definitely helpful at this point. The change you might for the slight delay in activating the next button is working perfectly for me.

          1. The change you might for the slight delay in activating the next button is working perfectly for me.

            Glad to hear it!

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