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The Buyers Get Huge Discounts And Have Been Using Lower Values To Negotiate

A report from the Wall Street Journal. “China’s home-price growth slowed to an 18-month low in January, but it looks set to fall a lot further as Beijing’s long-running attempts to rein in the property market meet with effects from the coronavirus outbreak. It didn’t begin to affect consumer behavior until after authorities ordered Wuhan’s shutdown on Jan. 23. Since then, home sales in China likely plunged by nearly 90% compared with a year earlier, according to Centaline, as property developers closed sales centers across the country. ‘There will certainly be a nationwide large-scale price reduction in February,’ said Zhang Dawei, a Beijing-based analyst for Centaline.”

“One of China’s largest developers, China Evergrande Group, late Sunday began promoting discounts online, slashing prices by 25% for all residential properties, starting Tuesday through the end of the month. For March, the discount will be 22%.”

From Market Watch. “Zhu Min decided to put her three-bedroom apartment on the market two months ago. She had inherited the aging first-floor unit from her grandparents and felt it was time to trade it in for a newer, higher-floor unit, away from the noise and exhaust of bustling Chengdu, one of China’s biggest and fastest-growing cities. Then the coronavirus hit. ‘It’s been like a desert,’ she said. ‘Nobody has come since the outbreak.'”

The Bangkok Post in Thailand. “Competition in the condo market will escalate as a large supply booked by Chinese buyers will return to the market, says MAI-listed developer Chewathai Plc. Around 20 new condo projects with thousands of units are scheduled to be completed this year. Many of these projects had Chinese buyers making up as high as 49% of the units, said Boon Choon Kiat, Chewathai’s managing director.”

“‘Due to the Covid-19 outbreak, Chinese buyers who booked a unit at an off-plan project a few years ago won’t be able to travel to Thailand to receive the unit transfer once construction is complete,’ he said.”

“The outbreak affects many small businesses in China, causing unemployment. This may concern some Chinese buyers, causing them to refuse transfers later this year, said Mr Boon. He said these dumped units will be a further blow to developers as a glut already exists unsold in this market. ‘Small developers like us will face more difficulties this year as we have to fight a price war with bigger players who are likely to release a huge supply of unsold condos refused by Chinese buyers. They will turn to the same target as us — domestic buyers,’ said Mr Boon.”

“Economy of scale gives big companies an advantage in marketing campaigns as they have a lot of projects on hand, he said. However, when Chinese buyers refuse transfers, their down payments will be seized by developers, giving them a budget to offer discounts to new customers, said Mr Boon. He expects the situation to worsen considering the domestic economic outlook. A number of Thai buyers have had their mortgage applications rejected. Some Thais may also refuse unit transfers because of the slowing economy, said Mr Boon.”

The Globe and Mail in Canada. “Vancouver’s high-end house values took a major tumble last year, with the number of houses valued in the $3-million-and-over range dropping by almost a third. Research by Simon Fraser City Program director Andy Yan shows that 4,397 Vancouver houses priced at $3-million or more in 2018 had by 2019 fallen below that mark – a 28-per-cent drop. As well, the number of buyers who paid the foreign-buyers tax in key areas of Metro Vancouver had fallen so low that the numbers were not reportable by municipality.”

“Mr. Yan has seen a steep downhill direction on payment of the foreign-buyers tax since the province introduced the tax in 2016. ‘There seems to be a sea change in Metro Vancouver where a torrent of foreign buyers has become a dribble,’ Mr. Yan says. ‘The most dramatic changes were in West Vancouver, where, for 10 out of 12 months, the foreign buyers were below the reportable threshold.'”

“Realtor Clara Hartree says buyers of West Vancouver houses are refusing to pay the millions they were willing to pay three years ago. It means homeowners are less inclined to sell and downsize. ‘The [buyers] get properties at huge discounts and they have been using the lower assessed values to negotiate,’ she says.”

“When asked to comment on Mr. Yan’s analysis, provincial Minister of Finance Carole James responded with a statement by e-mail: ‘For too long our housing market was left to spiral out of control, creating a real estate market where money launderers and speculators flourished, and families fell behind. Increasing the foreign-buyers tax rate from 15 to 20 per cent and expanding it to areas beyond Greater Vancouver is helping to moderate B.C.’s housing market and is just one part of our 30-point housing plan.'”

“Developer Michael Geller completed his Ambleside Mews complex in West Vancouver a year ago, but still has three of the four units unsold, largely, he says, because downsizers can’t sell their houses at the prices they want. ‘There’s no doubt that we are witnessing a number of market downturns, especially in West Vancouver and Westside Vancouver. I still have three of the four homes to sell at Ambleside Mews, in large part because although potential buyers repeatedly tell the real estate agent they love the homes, they can’t sell their houses at the prices they want.'”

This Post Has 80 Comments
  1. ‘‘The [buyers] get properties at huge discounts and they have been using the lower assessed values to negotiate’

    Step right up and catch yourself a falling knife.

    Step right up, step right up, step right up,
    Everyone’s a winner, bargains galore
    That’s right, you too can be the proud owner
    Of the quality goes in before the name goes on
    One-tenth of a dollar, one-tenth of a dollar, we got service after sales
    You need perfume? we got perfume, how ’bout an engagement ring?
    Something for the little lady, something for the little lady,
    Something for the little lady, hmm
    Three for a dollar
    We got a year-end clearance, we got a white sale
    And a smoke-damaged furniture, you can drive it away today
    Act now, act now, and receive as our gift, our gift to you
    They come in all colors, one size fits all
    No muss, no fuss, no spills, you’re tired of kitchen drudgery
    Everything must go, going out of business, going out of business
    Going out of business sale
    Fifty percent off original retail price, skip the middle man
    Don’t settle for less
    How do we do it? how do we do it? volume, volume, turn up the volume

    -Tom Waits

      1. I took a couple hours off on Friday and saw the exact same scene in the floral section at the grocery store.

        I don’t believe I was ever this demanding to my beaus back in the day. I realize people are busy and that they might not be able to set up X thing on a certain day. But hey, if a high-demand high-maintenance thigh gap is your fancy, prepare to pony up on schedule.

        1. I worked in a corporate health care office environment part-time for years (thankfully I now work from home) and each year witnessed the ridiculous herd mentality on V-day. Many dozens of red roses arrived dutifully on the designated day and were put on display by the often dispassionate recipients. Oh, the absurdity of humanity!

        2. Trader Joe’s – $12 for a dozen roses and .99 for a nice card.

          They have good prices on flowers year round and don’t jack up the price on V-Day, Mother’s Day, etc.

          1. I picked up a dozen roses at Aldi (I believe owned by the brother of the TJ’s owner?) for $9.99 on Friday. Didn’t seem like a huge markup, as I regularly get the wife a smaller bouquet for around $4-$6 anyway. She really likes flowers. But fortunately not cars, purses, diamonds, or any of that junk.

          2. I drive by a Trader Joes everyday on the way to work and on Friday (Feb 14) morning there were people waiting outside BEFORE the store opened!

  2. ‘Developer Michael Geller completed his Ambleside Mews complex in West Vancouver a year ago, but still has three of the four units unsold, largely, he says, because downsizers can’t sell their houses at the prices they want. ‘There’s no doubt that we are witnessing a number of market downturns, especially in West Vancouver and Westside Vancouver. I still have three of the four homes to sell at Ambleside Mews, in large part because although potential buyers repeatedly tell the real estate agent they love the homes, they can’t sell their houses at the prices they want’

    Stamp em’!

    1. Im sensing some major foot stamping and rock throwing will soon take place. What happened to those specuvestor money launderers, i mean buyers??!!

      “creating a real estate market where money launderers and speculators flourished”

    2. ‘There’s no doubt that we are witnessing a number of market downturns, especially in West Vancouver and Westside Vancouver.

      A number of downturns? B…b…but I thought these were one-off anomalies and the temporary softening would be forgotten once the Spring Miracle Revival took real estate to new highs.

  3. ‘Zhu Min decided to put her three-bedroom apartment on the market two months ago. She had inherited the aging first-floor unit from her grandparents and felt it was time to trade it in…’

    Waitin’ for the peak, eh Zhu?

    ‘Then the coronavirus hit. ‘It’s been like a desert,’ she said. ‘Nobody has come since the outbreak’

    Don’t give it away!

    1. It’s not really like the desert, Zhu Min. Deserts are sterile. Your skybox, on the other hand, is a Petri dish of viral plague. Watch out for those toilet pipes!

          1. “Korean kimchee breath” AKA “death breath” I often engage with clients of Asian descent and have to often cover my nose while in close verbal contact. kinda raysis but its fact

  4. ‘4,397 Vancouver houses priced at $3-million or more in 2018 had by 2019 fallen below that mark – a 28-per-cent drop. As well, the number of buyers who paid the foreign-buyers tax in key areas of Metro Vancouver had fallen so low that the numbers were not reportable by municipality’

    Remember the days when anyone who even mentioned foreign buyers was immediately shouted down as a racist? How things have changed:

    ‘For too long our housing market was left to spiral out of control, creating a real estate market where money launderers and speculators flourished, and families fell behind. Increasing the foreign-buyers tax rate from 15 to 20 per cent and expanding it to areas beyond Greater Vancouver is helping to moderate B.C.’s housing market and is just one part of our 30-point housing plan’

    1. A Long Rant About Bob Rennie : vancouver – Reddit
      https://www.reddit.com/r/vancouver/comments/…/a_long_rant_about_bob_rennie/

      May 16, 2016 – One year ago I was blood boiling angry with Vancouver “Condo King” Bob Rennie. I recall distinctly thinking “I want to … You’re just rambling about how people are misattributing the housing bubble as being the result of foreign investment and idolizing an asshole developer.

      Sep 13, 2017
      Brace for more housing shortages, warns Vancouver real estate guru

      torqcampbell on Twitter: “bob rennie: current title holder of the biggest …
      https://twitter.com/torquilcampbell/status/744880110449332224
      Jun 20, 2016 – … bob rennie: current title holder of the biggest asshole in canada

      ASKBiblitz on Twitter: “Crash! And take that asshole Bob Rennie with it …
      https://twitter.com/leobiblitz/status/613724921789743104

      And the “Winners” are … the Worst of Vancouver, 2015 | scamcouver
      https://scamcouver.blog/2015/09/…/and-the-winners-are-the-worst-of-vancouver-201…

      Sep 28, 2015 – BMW (possibly an M5, possibly belonging to Bob Rennie) … be an asshole.

      2013: The Scam Reviewed | scamcouver
      https://scamcouver.blog/2013/12/31/2013-the-scam-reviewed/

      Dec 31, 2013 – bob rennie is an asshole

      http://housingbubble.blog/?p=1393

      1. I’m going to guess that Bob Rennie is a closer, and he has the coffee maker all to himself. The knife catchers don’t even have two nickels to rub together.

  5. Wave of the future?

    Unoccupied SFR/condos can become a problem because of physical deterioration.

    (ie. A house sealed up with no airflow can become a host to mildew and molds, drain trap water can evaporate and release gas, etc.)

    I have often wondered if things could get to the point that (particularly builders) stuck with lots of unsold inventory would actually drop rents to near zero or even pay individuals to house sit, just to slow down deterioration and to prevent squatters breaking in (under so-called adverse possession laws?

    1. US lenders have been doing this with foreclosures for many years.

      What sitting empty does to foreclosed shacks: Seasons come and go with the temp changes, humidity, pests. Fridges spill open with rot. Pipes freeze, skylights leak and no one is around to stop a small problem from becoming a huge problem. One time in the Village of Oak Creek, I was asked to check on a townhouse. The upper level was collapsing into the first from a leak. But no one had heard anything in the adjacent units. Turned out a tiny pin-hole leak in an upstairs shower wall had dripped and dripped unobserved for about a month. It cost thousands to repair.

      1. When we all read here on the HBB about some Hollywood rock star buying a huge monster with 19 bathrooms, my first reaction always is ‘Do these people have *any* idea what they are getting into?’

        (Apparently not, because so many of these folks end of selling at a loss. (Nicholas Cage and MC Hammer come to mind).

    2. “pay individuals to house sit”

      Another solution is to let the FB live there for 11 years after default to keep an eye on the place. When the market goes up enough, let the FB try to sell it. If that fails, spend the next few years scheduling and then postponing the foreclosure auction.

      Foreclosure in LA –
      02/05/2020 Notice of Trustee Sale issued A notice of trustee sale has been issued. The property is scheduled to be sold at public auction for $574,270 on 3/12/2020.
      06/22/2018 Listed for $895,000
      12/24/2017 Listed for $697,000
      02/25/2009 Notice of Default issued
      06/19/2003 Sold $268,000

      1. I think so, too. Basically the choice boils down to:

        MMT for rich folks or
        MMT for everyone

        Which would you rather have?

          1. Barney Sanders is unelectable.

            Bernie Sanders, like Trump, is a middle finger to the crony capitalist status quo. And like Trump, he is going to walk all over the Establishment’s anointed stooges.

        1. I don’t like either choice, honestly. I hate both parties, and I’m a swing voter.

          If I ask myself if my life is better or worse after the past 4 years, the answer is worse. Why? Skyrocketing rent and healthcare, with rising costs at the grocery store and all other areas as well. This is entirely due to FED policies which blew a massive (still increasing) asset price bubble. The worst central bank policy in my lifetime.

          Then there’s Bernie and his pro-open borders and debt forgiveness nonsense, both of which I detest. But Bernie is against Wall St. and the FED, and wants a single-payer system, which is appealing. Would my life be better or worse under Bernie? Hard to say, but at this point I’m guessing it might actually be better. I know the current policies don’t benefit me in any way, but I’m not into equities or real estate, so I’m not one of the chosen ones.

          1. I don’t think Bernie is against the FED. With all their nonsense about income inequality I don’t think neither bernie nor Pocahontas have come out against the FED/QE,.

          2. “PS – If somehow Bloomberg buys the nomination, I’m voting for Trump again.”

            DON’T VOTE. That’s an option, too.

          3. IMO one should evaluate a potential president based on the purview of their office. President = the executive, and CIC.

            Instead, one should ask whether Bernie would better enforce our laws and protect our borders/country.

            Congress writes/passes laws (like single payer, etc). Bernie has been in Congress how long? And has he improved the laws being passed? Passed laws that have made your life better?

            Wait, Bernie says that corporations are writing the laws….while he’s been in Congress. So, has he been abdicating his responsibility? If it’s not his job to fix that while he’s in Congress, who’s is it?

            Why would he be more effective at fixing that while leading the executive branch?

            (This all holds true for all candidates, not just Bernie)

          4. “But Bernie is against Wall St. and the FED”

            And if he were elected, I’m sure he would carry through with that.

            /sarc

          5. If somehow Bloomberg buys the nomination, I’m voting for Trump again ??

            I LMAO when I read statements like this…Seems like a amoral person that raises Hundreds of Millions of Pac & Dark money is okay but if another candidate self funds that’s somehow buying the election…Hypocritical don’t ya think or don’t you care…

          6. “The worst central bank policy in my lifetime.”

            Bethany McLean, Author, “All The Devils Are Here”
            https://youtu.be/3C8tC_0dsDI?t=2218

            *Prior to 2010, Bethany McLean and Joe Nocera discovered during their research that the American economy cannot survive without Easy Credit to stimulate economic growth. The pension system relies on phony stock price data, and the middle-east war’s need funding. Greenspan said entitlements, not war funding, have to be cut! Hence, we’re just like the stars in the night sky, already burned-out, but you can still see the light.

          7. IMO one should evaluate a potential president based on the purview of their office.

            My, how logical!

          8. I feel like the Trump supporters and Bernie supporters could actually get along if they stopped to think about their commonalities for a minute. And honestly I bet Bernie could drop the free-borders thing if he had to. That’s just pandering to the rest of the dems. If these two groups could focus more on their similarities maybe we could get a legit 3rd party…

          9. I feel like the Trump supporters and Bernie supporters could actually get along if they stopped to think about their commonalities for a minute. And honestly I bet Bernie could drop the free-borders thing if he had to.

            Same with gun control, he’s made sane statements in the past about it. But the entire system’s primary job is to try to make sure that sort of meeting of the minds never happens.

          10. I LMAO when I read statements like this

            You should definitely keep laughing, so you don’t cry. Your globalist hack candidates are a the bottom of my list. I didn’t so much vote for Trump as I did against Hillary. And I’ll do the same to Bloomberg.

            I don’t know if I can stomach voting for Bernie, even though I think he’s the best shot we have at getting something done about healthcare. It’s a very important issue to me. Also, I don’t think he’ll be a warmonger like Obama was.

            I’m looking forward to Bernie winning the nomination so I can watch he and Trump debate. Only then would I decide if he was worth a shot.

        2. AOC says billionaires should not exist. But once Bernie gets elected and cranks up the Treasury’s printing press to fund all of his promises, we’re all going to be billionaires. Of course a can of beans will cost $1000.

        1. “And honestly I bet Bernie could drop the free-borders thing if he had to. That’s just pandering to the rest of the dems.”

          “He Has Made Wild Shifts”: How Bernie Sanders Has Changed His Approach To Immigration

          Bernie Sanders used to get knocked over his immigration record. He has spent years talking with activists and shifting his approach.

          Nidhi Prakash
          January 19, 2020

          “And I think at a time when the middle class is shrinking, the last thing we need is to bring over in a period of years, millions of people into this country who are prepared to lower wages for American workers,” he later added. Sanders voted against the 2007 bill, but went on to vote in favor of a similar 2013 bill while making plain his fears that it could exacerbate the issue of immigrant workers “making it harder for US citizens to find jobs.”

          That rhetoric stands in stark contrast to how Bernie Sanders sounds today. Just four years after a contentious presidential primary where his immigration record was a consistent point of attack, Sanders has changed, people who have worked with him closely on immigration issues told BuzzFeed News. Sanders, they said, has spent time closely listening and working with immigrant rights activists, forming new policy and finding new ways to talk about the issue, in line with the more progressive conversations in this primary. And he is now running for president with the support of grassroots Latino activists and major immigrant rights groups.

          https://www.buzzfeednews.com/article/nidhiprakash/bernie-sanders-immigration-record

          1. FWIW, his promises of “Medicare for All” and open borders are incompatible. We can have one or the other, but not both.

      2. I think Bernie Sanders is going to win in November.

        Not impossible. But to me it appears the 50th percentile American still trusts billionaires more than communists. That may not always be true, but it seems to be true in 2020.

      3. “I think Bernie Sanders is going to win in November.”

        Bernie has a good chance of winning the democratic nomination, but that’s it. Don’t forget who moved the embassy to Jerusalem, smashed ISIS, and showed Iran, Syria as well as Putin who is calling the shots.

        1. “I think Bernie Sanders is going to win in November.”

          That would put a lot of “News” companies right out of business.

      4. “I think Bernie Sanders is going to win in November.”

        Winning the primaries in California and Texas on March 3rd needs to happen first, that’s alot of delegates.

        Am currently receiving emails from the campaign asking for more money before this Friday, specifically for ad buys in Super Tuesday states.

        And as a renter with so much money left after “throwing money away on rent” every month, I may do just that.

      1. I misread that. My response to “biggest stock bubble in history.” And yes, TSLA is one of the major bubble stocks, IMHO.

  6. “The outbreak affects many small businesses in China, causing unemployment. This may concern some Chinese buyers, causing them to refuse transfers later this year, said Mr Boon. He said these dumped units will be a further blow to developers as a glut already exists unsold in this market. ‘Small developers like us will face more difficulties this year as we have to fight a price war with bigger players who are likely to release a huge supply of unsold condos refused by Chinese buyers. They will turn to the same target as us — domestic buyers,’ said Mr Boon.”

    Easy come, easy go?

    “Economy of scale gives big companies an advantage in marketing campaigns as they have a lot of projects on hand, he said. However, when Chinese buyers refuse transfers, their down payments will be seized by developers, giving them a budget to offer discounts to new customers, said Mr Boon. He expects the situation to worsen considering the domestic economic outlook. A number of Thai buyers have had their mortgage applications rejected. Some Thais may also refuse unit transfers because of the slowing economy, said Mr Boon.”

    But can’t they just sell? Oh wait.

    1. The outbreak affects many small businesses in China, causing unemployment.

      True. My wife is really scrambling to keep her staff employed in Shanghai, selling as much online as possible and getting her store staff to try to help market and sell and fulfill online orders to stay alive.

      I do hope their real estate bubble pops from this even though my wife does still own one property there.

  7. A team member called Expedia today and tried to use the flight insurance they purchased to cancel a flight next month, used the Coronavirus as the reason. Expedia’s response “Unless you can prove you would catch it, we aren’t going to cover it”.

    More trade shows and conferences are being impacted daily. (Sony just pulled out of Pax East this morning)

      1. Not GDC or Pax (yet). But some have, like the Mobile World Conference in Spain (that industries biggest) – https://www.anandtech.com/show/15503/mobile-world-congress-2020-cancelled.

        Those that are still on are publicizing that they are taking extra measures like this https://www.gdconf.com/novel-coronavirus-update

        We are talking about tens of thousands of attendees and all the related logistics for these big events. I imagine a lot of smaller events are suffering similarly.

  8. Talked to my PCB FAB rep they have a big FAB in Guangdong and by law all employees need to wear face masks at work now because of virus. They scramble and fine a supply in Italy but it gets confiscated at the boarder by the Government of China for hospitals and military use.

    Things are getting backed up , lead times are long, supply chains are moving around.

    1. Folks I know in Guangzhou are still at home, not really allowed to leave their homes aside from buying food/supplies.

      They all make sure I understand influenza kills many Americans annually xD.

        1. There is an amazing habit in the People’s Republic of China for people to ignore the obvious. It’s a weird cultural quirk.

          The response to you would be something like “That’s because America’s weak system cannot deal with problems. But we Chinese don’t have a problem because we have strong government solutions and aren’t individualistic and instead believe in harmony. You need to immediately open all air travel again. Did you know H1N1 killed Americans?”

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