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Rental Prices Were Dropping As Landlords Needed To Get A Return On Assets They Were Mortgaged To The Hills On

A report from Canadian Mortgage Trends. “Home sales in the Greater Toronto Area were down 69% year-over-year in the first 17 days of April, the Toronto Regional Real Estate Board reported in a mid-month update. ‘For now, we have pencilled in a 5% drop in nationwide house prices in the next few months. That is based on the assumption that there will be some forced sellers in the near term,’ noted Stephen Brown of Capital Economics. ‘That will include those who had already bought a new home without selling their previous one, which was becoming increasingly common in Toronto, and those investors that were previously targeting the short-term rental market and have now suffered steep hits to their income.'”

From Euro Weekly News on Spain. “Nick Snelling, director of Casalasafor Consultancies says: ‘Of course, the property market has stopped dead, but it has in almost every country in the world. However, this is just a pause and the market will recover once the corona-virus is under control and ‘normal’ life returns. Certainly, the fundamentals of Spain have not changed. Property here is excellent value compared to most of northern Europe and if prices drop, then there may be no better time to buy for years to come.'”

The Times of Malta. “Running the island’s largest real estate company has given RE/MAX Malta chairman Kevin Buttigieg significant insight into the topic and he stressed that – at this stage – there is no saying what will happen to prices and whether they will go down by five, 10 or even 20 per cent. ‘I am quite certain that there will be a correction but it is impossible to quantify by how much,’ he said.”

“Buttigieg explained that the market was already seeing a slowdown before COVID-19 hit the country and the industry was experiencing a price correction to shift it from a sellers’ to a buyers’ market. ‘Just like with any other crisis, we must now weather the storm and adapt to the markets we are facing,’ he added.”

From Edge Malaysia. “James Wong, VPC Alliance (KL) Sdn Bhd managing director: ‘We are witnessing the coming of the worst property cycle as well as an unavoidable recession. Oversupply and non-performing loans are expected to increase this year. It will be a buyers’ market and buyers with cash will be spoilt for choice. They can choose the property they want to buy at reduced prices.'”

From Domain News in Australia. “Sydney’s property market recovery has been stopped in its tracks, with a drop in homes on the market and a rise in price discounting as sellers look to offload properties amid worries of further economic deterioration. More than 14 per cent of vendors have revised their price expectations, reducing them by 4.36 per cent on average. Domain senior research analyst Dr Nicola Powell. said the pandemic was weighing on sellers’ minds. ‘Those who have to sell are editing their price to achieve the timely sale in fear of what could be ahead economically,’ Dr Powell said.”

“Mascot vendor Chris Thomas is still hopeful he will be able to sell and upgrade in the same market, as long as he does not receive any low-ball offers. ‘It probably wasn’t an ideal time to sell but buying and selling in the same market won’t make too much of a difference,’ Mr Thomas said. ‘I wouldn’t take a considerable amount less than what I expect. I’m still waiting on the sale of my property so I can’t jump the gun too quickly.'”

“EY Oceania chief economist Jo Masters said she expected discounting would accelerate in weeks to come and predicted a rise in forced sales as unemployment increased. ‘Falling house prices is a recent memory so people’s ability to adjust their prices is greater than that downturn,’ Ms Masters said.”

From Stuff New Zealand. “Queenstown’s previously strained rental market is being flooded with new properties as a big dip in property values is predicted. The number of Queenstown rental property listings on Trade Me jumped about 80 per cent from February to March as Covid-19 led to the international visitor market shutting down. Economist Benje Patterson said the shift was driven by tenants doing ‘runners’ as the tourism industry shut down and landlords pulling their property from the visitor accommodation market into long term rentals.”

“TradeMe figures showed the median weekly rental across the district was $665 in March, an 11 per cent decrease from February and well below the record median price of $800, set in January. ‘Rental prices were dropping as landlords needed to get a return on assets they were ‘mortgaged to the hills on,’ he said.”

“Patterson predicted the increase in rental properties would be the first wave in a shift in the property market, which would include the loss of hospitality and tourism jobs. The second wave would hit once the Government’s wage subsidy and moves by retail banks to allow mortgage holidays expired. That would flow into the service industry, retail and construction sectors.”

“‘Two-thirds of jobs are in tourism,’ he said. ‘When you add in construction that’s almost 80 per cent of the economy. We’re not going to be able to indefinitely stop the inevitable.'”

This Post Has 41 Comments
  1. ‘Mascot vendor Chris Thomas is still hopeful he will be able to sell and upgrade in the same market, as long as he does not receive any low-ball offers. ‘It probably wasn’t an ideal time to sell but buying and selling in the same market won’t make too much of a difference…I wouldn’t take a considerable amount less than what I expect’

    You are fooked Chris.

  2. ‘That will include those who had already bought a new home without selling their previous one, which was becoming increasingly common in Toronto’

    How the heck do you qualify for two mortgages at the same time?

    ‘and those investors that were previously targeting the short-term rental market and have now suffered steep hits to their income’

    Click!

    1. At most – just a 5% loss!

      “For now, we have pencilled in a 5% drop in nationwide house prices in the next few months.”

  3. ‘We are witnessing the coming of the worst property cycle as well as an unavoidable recession. Oversupply and non-performing loans are expected to increase this year. It will be a buyers’ market and buyers with cash will be spoilt for choice. They can choose the property they want to buy at reduced prices’

    ‘Sir, this is a Wendy’s.’

  4. “Running the island’s largest real estate company has given RE/MAX Malta chairman Kevin Buttigieg significant insight into the topic”

    Any relation to Mayor Pete? 😀

  5. If there’s one thing that warms the cockles of my heart, it’s seeing the STR market crater. AirBnbuhbye.

  6. ‘Patterson predicted the increase in rental properties would be the first wave in a shift in the property market, which would include the loss of hospitality and tourism jobs. The second wave would hit once the Government’s wage subsidy and moves by retail banks to allow mortgage holidays expired. That would flow into the service industry, retail and construction sectors’

    ‘Two-thirds of jobs are in tourism,’ he said. ‘When you add in construction that’s almost 80 per cent of the economy. We’re not going to be able to indefinitely stop the inevitable’

    The global real estate landscape is going to change for a while.

    1. I think I see the problem.

      “Two-thirds of jobs are in tourism,’ he said. ‘When you add in construction that’s almost 80 per cent of the economy.”

      1. It would be a problem if shacks were at 180-250 thousand NZ pesos. But 600k – 1 million are the norm.

  7. Coeur d’Alene, ID Housing Prices Crater 16% YOY As Sellers Flood Market And Slash Prices Double Digits

    http://www.zillow.com/coeur-dalene-id-83814/home-values/

    *Select price from dropdown menu on first chart

    As a noted economist said so eloquently, “liquidate whatever you’ve got to eliminate all debt and hold onto every dollar you’ve got…. You’re going to need every last one of them.”

  8. Is there any remaining doubt at this point that with the support of the Fed’s asset purchases through Unlimited Quantitative Easing, stocks are buying a stairway to Heaven?

    1. Would you mind dear Professor po$ting a $imilar type que$tion tomorrow, eye think$ eye have a repre$entative $olution to exactly such a query.

      $incerely, Hwy50

    2. At what point in the unending stock market rally do repeated warnings become a stopped clock that never again rings?

      Key Words
      ‘Bond King’ warns the stock market could hit new lows amid ‘social unease’
      By Shawn Langlois
      Published: Apr 27, 2020 5:18 pm ET
      Jeffrey Gundlach speaks at the Vanity Fair New Establishment Summit in Beverly Hills in 2017.
      ‘I’m certainly in the camp that we are not out of the woods. … I think a retest of the low is very plausible.’

      That’s the gloomy outlook Jeffrey Gundlach, CEO of DoubleLine, delivered to CNBC on Monday as the stock market staged a strong rally in the face of what he believes is too much optimism.

      “People don’t understand the magnitude of … the social unease … that’s going to happen,” Gundlach explained. “We’ve lost every single job that we created since the bottom in 2009.”

      With that in mind, he revealed that he just shorted the S&P at 2,863.

      “At this level, I think the upside and downside is very poor,” he said. “I don’t think it could make it to 3,000, but it could. I think downside easily to the lows or beyond.” The S&P hit a low of 2,192 on March 23 before rebounding about 30% as the Fed rolled out its historic stimulus measures.

      Earlier this month, Gundlach warned of more selling in a webcast, with a “more enduring low” on the way for the “dysfunctional” stock market.

      At last check, the S&P 500 index (SPX+1.47%) ended nearly 42 points, or 1.5%, higher on Monday, while the Dow Jones Industrial Average (DJIA+1.51%) and the tech-heavy Nasdaq Composite (COMP +1.11%) also finished the session firmly in green territory.

    3. It’s hard to argue against Mr Market when nearly every stock in the Dow Jones Industrial Average is giving the all clear signal on the nearterm end of the COVID-19 downturn.

      Only 6 Dow Stocks Dropped on Monday. What They Say About the Market’s Coronavirus Recovery.
      Published: April 27, 2020 at 5:17 p.m. ET
      By Ben Levisohn

      The stock market is placing a big bet on an economic recovery from coronavirus—and we only need to look at the performance of Dow Jones Industrial Average components to see it.

      Monday was a good day for the Dow, which finished up 358.51 points, or 1.5%. And it was even better for some of the Dow’s hardest-hit stocks, Walt Disney (DIS), 3M (MMM), JPMorgan Chase (JPM) and Dow Inc. (DOW), among them.

    4. If only the bears would stop ripping the poor oil HODLers a new one!

      U.S. stock futures fall as oil prices continue to tumble
      Published: April 27, 2020 at 10:21 p.m. ET
      By Mike Murphy

      U.S. stock index futures sank Monday night as crude oil prices continued to fall. Dow Jones Industrial Average futures (YM00, -0.24%) were last down about 100 points, or 0.5%, and S&P 500 futures (ES00, -0.38%) and Nasdaq-100 futures (NQ00, -0.28%) dipped as well. June WTI crude (CLM20, -12.21%,) the U.S. benchmark was down more than 14%, below $11 a barrel, after tumbling nearly 25% during Monday’s trading on renewed worries about a scarcity of places to store an overflow of crude. June Brent crude (BRNM20, -3.55%,) the international benchmark, fell more than 4% Monday night after sliding nearly 7% the previous session.

      1. When is the best time to catch a falling knife in the absence of a zero bound?

        Oil
        Oil drops 11%, extending Monday’s 25% decline
        Published Mon, Apr 27 2020 9:50 PM EDT
        Updated Moments Ago
        Pippa Stevens
        GP: Oil worker in Permian Basin 141212
        A worker prepares to lift drills by pulley to the main floor of a drilling rig in the Permian basin.
        Brittany Sowacke | Bloomberg | Getty Images

        Oil prices slid 11% during overnight trading, extending Monday’s nearly 25% decline on ongoing fears that storage around the world is rapidly filling.

        1. The Financial Times
          Markets Briefing Oil
          US oil prices sink as coronavirus fuels storage fears
          Traders fear WTI crude could again turn negative as pandemic pummels global economy
          Demand for oil has been pummeled due to the economic impact of the coronavirus pandemic
          © AP
          Thomas Hale in Hong Kong an hour ago

          The rout in US oil prices gained momentum on Tuesday as concerns over global storage capacity prompted fears the American crude benchmark could again plummet into negative territory.

          West Texas Intermediate skidded as much as 12.1 per cent to $11.2316.7 per cent to $10.64 per barrel in Asia trading hours. That decline came on the heels of a 25 per cent plunge in the price of US oil for June delivery overnight.

          Extreme price swings have roiled global oil markets in recent sessions. Last week, WTI for May delivery fell to negative $40 a barrel, marking the first time in history that the price of an oil contract had fallen below zero.

    5. Not everyone is a true believer, just yet, in the success of the Fed’s financial rescue to full COVID-19 economic recovery.

      The Tell
      The ‘Great Repression’ is here and it will make past downturns look tame, economist says
      Published: April 27, 2020 at 2:50 p.m. ET
      By Andrea Riquier
      David Rosenberg is often considered a permabear, but that’s not entirely true
      iStockphoto

      The economic aftermath of the 2008 financial crisis was so tepid it was referred to as the “Great Recession.” In the wake of the coronavirus catastrophe, investors need to brace for the “Great Repression,” which may be even uglier than the downturn of a decade ago.

      That’s the takeaway from an analysis out Monday from economist David Rosenberg. Rosenberg is often considered a “perma-bear,” but that’s not entirely fair. He’s had his optimistic spurts.

      This just isn’t one of them.

    6. I’ll be shocked after this is over if Uncle Warren doesn’t reveal having picked up a few oil shares on the cheap while futures traders’ hair was ablaze.

      Coronavirus Fear Disrupts the Market — Here’s Why Warren Buffett and Charlie Munger Might Not Get Greedy
      Berkshire’s top executives appear hesitant to stake out new bullish positions in a market defined by unprecedented complexities.
      Keith Noonan
      Apr 26, 2020 at 12:25PM

      “Be greedy when others are fearful” has been one of the guiding strategic principles across Berkshire Hathaway’s incredibly successful stock-picking run. With the novel coronavirus creating unprecedented conditions and heightened uncertainty, it might stand to reason that Warren Buffett, Charlie Munger, and the team at Berkshire would be snatching up discounted shares and jumping at the chance to acquire majority stakes in promising businesses.

      Investors will get to see whether Buffett and Co. made any big buys in the first quarter when Berkshire publishes its 13-F filing in May, but signs point to the company keeping plenty of cash on the sidelines despite recent sell-offs.

      Rather than treating the current market conditions as an opportunity to be greedy with asset purchases, actions and statements from the Berkshire team appear to reflect a cautious approach. Here’s why it looks like Buffett and Munger might not be rushing to buy during the coronavirus crisis.

    7. $tairway$ to Heaven!
      Bye $tephen Munchin

      🆙️…………..📈💲🎉
      🆙️……….📈💲🎉
      🆙️……📈💲🎉
      🆙️..📈💲🎉

      Next: Trade.War$.i$.Ea$y!(mini.pha$e ll) cha cha.
      Bye Peter$ Navarro

      Followed by that old time hit: “Money💵, Money💵, Money💵! …Money💵”. By Joey “punchbag” Powell

      & on the “B” $ide:

      “You ain’t nothing but a ($ocialist) Hound dog!🐩”
      By Alvin & The Chipmuck$ 🐿 also featuring “The Chipette$”

  9. I believe that I suggested a post-COVID-19 Fed balance sheet in the $10-$12 trillion range when someone asked me to guess the eventual size.

    The Tell
    Fed’s fast and furious reaction to pandemic could grow balance sheet to $10 trillion by early next year
    Published: April 27, 2020 at 6:47 p.m. ET
    By Joy Wiltermuth
    Fed is charting new waters, which means fresh problems
    The Federal Reserve in Washington. Getty Images

    The Federal Reserve didn’t miss a beat this time around, when crisis erupted last month as the coronavirus dug its heels into the U.S. economy.

    As stocks plunged in March and liquidity in key credit markets froze as the coronavirus pandemic deepened in the U.S., the central bank quickly cut its benchmark target rates to near zero and unleashed a tide of emergency funding facilities to help keep credit flowing.

    Its “unlimited” bond-buying and up to $2.3 trillion of aid from lending facilities quickly led to a mushrooming of the Fed’s balance sheet, as the central bank embarked on a “radically different approach” to shoring up the U.S. economy than it took more than a decade ago, when the subprime mortgage crisis engulfed the American housing and financial markets, and sparked a global financial crisis, wrote a team led by Jeffrey Phlegar, chief executive at MacKay Shields.

  10. Best theory I’ve heard on the mysterious disappearance:

    Asia Politics
    South Korea says North Korean leader Kim Jong Un may be trying to avoid coronavirus
    Published Tue, Apr 28 20202:40 AM EDT
    Reuters
    Key Points
    – Kim Jong Un may have missed a key holiday on April 15 because of concerns over the coronavirus, not because he is ill, South Korea’s minister for North Korean affairs said on Tuesday.
    – North Korea has said it has no confirmed cases of the coronavirus, but given the fact that the country has taken stringent steps to head off an outbreak, Kim’s absence from the ceremonies is not particularly unusual, Unification Minister Kim Yeon-chul, who oversees North Korea engagement, told lawmakers.

  11. Pssst…now is the perfect time to acquire real estate (yes acquire, not merely buy). Or so I’ve been told.

    10 views|Apr 27, 2020, 07:30am EDT
    Why Now Might Be The Perfect Time To Acquire Real Estate
    Brian H. Robb Forbes Councils Member
    Forbes Real Estate Council
    COUNCIL POST| Paid Program
    Real Estate
    Post written by
    Brian H. Robb
    Chief Marketing Officer of Marketing Real Estate, Robb Capital & CRE Loan.

  12. Makes sense – do we buy sight unseen over the internet. Or should charter a cruse liner to take us across the Atlantic.

    —–
    Certainly, the fundamentals of Spain have not changed. Property here is excellent value compared to most of northern Europe and if prices drop, then there may be no better time to buy for years to come.’”

  13. Mr Wong is going to be suspended from the Malaysia Real Estate board.

    You are not allowed to give accurate advice if it ends up stalling sales.

    ———-
    “James Wong, VPC Alliance (KL) Sdn Bhd managing director: ‘We are witnessing the coming of the worst property cycle as well as an unavoidable recession. Oversupply and non-performing loans are expected to increase this year. It will be a buyers’ market and buyers with cash will be spoilt for choice. They can choose the property they want to buy at reduced prices.’”

  14. “Mortgaged to the hills.”

    Always amusing when youngsters mix their idioms. Pro tip: when you are mortgaged to the hilt, run for the hills.

    1. At this point the crazy humans trying to control a airborne flu seems like a impossible dream.

      It’s like the safe space idea at colleges, as if you can protect people from ideas that aren’t endorsed by the establishment. The idea that you feed young people anti depressants at the first sign of any stress .

      What’s interesting about life is how people solve stress and any challenge in a creative way. Big Government acting like the great savior that’s going to keep you safe by giving you peanuts while the greedheads take the Lions share is the power brokers game.

      Keep people in a fear state by false narratives like climate change or anything that advances the Big Government controlling people.

      The big Government control freaks are in bed with the big money control freaks that want to control the money flow.
      It’s obvious that the Globalist with the One World Order idea was the way to crash the power the middle class had achieved by 1975 in the USA.

      So go ahead and think it’s normal to have a candidate like Biden , who no doubt will do whatever the power brokers want.
      The USA Citizens should be sick and tired of being disenpowered as they have been by the political class being in bed with the Globalist and Commie
      Power Brokers.

      Little time left to save the USA from the forces that have been showing their true colors lately. It’s actually a good sign that people are starting to rebel against the stay at home orders.

  15. Case Shiller was up in Feb —- but this was the most @(#*& statement in Diana Olick’s report: “While most analysts do not expect home prices to fall nationally, as they did following the subprime mortgage crisis, price gains are likely to weaken along with home sales. Sales of both new and existing homes started to drop in March and likely fell very sharply in April.” Really – who are these analysts – the NAR guy who later admitted was tell the full story – Learer?

    Also – no way that Seattle was up 6% y/y. We sold/closed our downtown condo end of Feb – and it was definitely off 10% Y/Y – but we were happy to grab and run

    —–
    Prices in February were fueled by strong homebuyer demand, very tight supply and near record-low mortgage rates. While rates are still low, and supply is even lower, demand has fallen dramatically due to Covid-19 and the economic shutdown.

    “Results for the month were broad-based, with gains in every city in our 20-City Composite; 17 of the 20 cities saw accelerating prices,” said Craig Lazarra, managing director and global head of index investment strategy at S&P Dow Jones Indices in a release.

    Price gains continued to be strongest in Phoenix, Seattle, Tampa and Charlotte. In February, Phoenix home values were up 7.5% year over year, followed by Seattle with a 6.0% increase, and Tampa and Charlotte with 5.2% increases. Chicago, New York and Dallas saw the smallest annual price gains at 0.7%, 1.5% and 2.5% respectively.

    1. It’s called bamboozling with bs data. The whole country is like that. You can’t trust data from anywhere and anyone. They are painted to show everything in positive light while hallowing out from inside.

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