thehousingbubble@gmail.com
Blog

Almost All The Major Drivers Of Price Increases Have Fallen In Unison

From ABC News in Australia. “When Michael Neal found a house he wanted to buy in the Blue Mountains mid last year, he jumped on it. He purchased the home before selling the one he already owned. At that point the property market was on a run and his plan was to fix up his original place and sell it on the rising market. But then the bushfires broke out and the RFS volunteer had to put his home renovation on hold. ‘The plan had always been to renovate it and sell,’ Mr Neal told 7.30. ‘[But I] started renovating and the bushfires happened, so I was off fighting fires for three-and-a-half months.'”

“By the time he was able to get back on the tools to finish work on the house, Australia — and the property market — had changed significantly. Two weeks before he finished the renovation, COVID-19 restrictions for home inspections and auctions began being announced. Mr Neal was now facing a shaky real estate market, two mortgages and being stood down from his job as a sole trader for a bus-building company. ‘I was basically racing against time,’ Mr Neal said. ‘I missed out on getting it on the market by two weeks.'”

“Almost all the major drivers of property price increases have fallen in unison. There has already been a steep rise in unemployment and fall in wages with the jobs market expected to continue to deteriorate. Less money in people’s pockets means they have less money to bid up property prices and less money to bid up rents.”

“The short-term rental accommodation market (think websites like AirBnB) has all but disappeared overnight due to restrictions on both international and national travel. Many owners of those properties are now attempting to find longer-term tenants, but the increased supply will lead to lower rents. Australia’s high population growth is set to come to a screeching halt.”

“In Sydney, 13.1 per cent of live listings on the Domain website were discounted in April, compared to 5.7 per cent in October 2019. In Melbourne, discounted listings jumped from 2.8 per cent to 10.7 per cent over the same period. ‘The trend shows an uptick in discounting,’ Domain senior research analyst Nicola Powell said. ‘The market has only really just been impacted, roughly since mid-March, with listings declining, clearances declining and discounting rising. Hobart had the largest jump in discounting rates. Hobart will be more exposed to the economic shock of the coronavirus pandemic than other Australian cities due to the reliance on tourism, hospitality, the arts and recreation industries.'”

“Mr Neal said buyers had been low-balling offers on his three-bedroom home in Winmalee in the NSW Blue Mountains by as much as $80,000 below the asking price. ‘If someone came in close to under my figure, I’d sell. There’s no problem with that,’ he said. ‘There’s a few very low-ball figures, people hoping that I’m desperate to sell, but I’m not desperate yet.'”

From Domain News. “Price discounting on Sydney properties is back on the rise amid the coronavirus pandemic, new data shows, with vendors in some pockets slashing prices by six-figure sums to sell. Sellers who lowered their price expectations to sell over the past three months gave an average discount of 5.37 per cent for houses and 5.81 per cent for units, Domain figures show.”

“That is a discount of about $62,765 on a house that hit the market at Sydney’s median of $1,168,806, or a price drop of about $43,265 on a median priced unit – at $744,672, according to the latest Domain House Price Report. Sellers on the lower north shore have been offering the biggest price cuts, dropping house asking prices by an average of 9.14 per cent to sell over the six months to April. That’s a price reduction of almost $240,000 on the region’s median house price of $2.623 million.”

“Geoff Smith director of Ray White Lower North Shore said buyer demand and prices in the region had been holding up well, but noted some properties were back at prices from 12 to 18 months ago. ‘Some vendors have come down in price, but to others we’ve said, ‘Your house is worth the money, we should wait.’ he said.”

“Mr Smith was surprised by the region’s higher discount average, and felt this was more likely due to vendors aiming higher with asking prices and revising down when necessary, as opposed to forced price cuts. He added most vendors hitting the market now had realistic price expectations. The lower north shore was followed by the northern beaches and upper north shore with average discounts of 7.97 and 7.17 per cent – equivalent to six-figure price cuts on both their medians.”

“Bronwen Lipscombe of DiJones Real Estate North Shore said most vendors hitting the market now understood that their pricing had to be sharp and realistic to attract buyers. ‘Vendors understand that we can’t go out with boom-time expectations on price, so discounting may be showing as less [than last year] because the owners are more realistic to begin with … rather than having to make significant adjustments throughout the campaign.'”

“Domain senior research analyst Nicola Powell said the upper end of the market had led the downturn and then the recovery, which left it more exposed to the latest slowdown. ‘If we are going to see a slowdown in prices, it’s likely to be in similar vain to the most recent downturn,’ Dr Powell said. ‘Those more expensive areas do tend to have more discounting than other areas.'”

“While the citywide discount was greater for apartments than houses, Dr Powell said, this was a trend that only began late last year. She said the widening gap in the discount rates in recent months could partly be due to the pullback in demand for apartments as buying activity from investors, new arrivals and foreign buyers subsided in the wake of the COVID-19 pandemic. She added as unit prices recorded smaller falls during the downturn, they potentially had further to fall now.”

The Sydney Morning Herald. “A dispute has erupted between the company owned by billionaire developer Harry Triguboff and Randwick City Council over plans to build 1900 apartments at Little Bay. A Meriton spokeswoman said the company would ‘build tomorrow’ if planning approvals were issued for the proposal, which she said would provide up to 7800 jobs and $750 million in government taxes. Meriton’s Little Bay development was not among the 24 projects chosen last week by the state government to be fast-tracked through its Planning System Acceleration Program.”

“Meriton’s plans have also met opposition from community group Save Little Bay, whose spokesman Olde Lorenzen said it ‘completely disregards’ local planning controls and an ‘enormous oversupply’ of high-rise development in the area.”

The Daily Mail. “Tenants looking for beachfront homes in Sydney have been encouraged to make the most of plummeting rental prices brought on by the coronavirus pandemic. Ric Serraro from Raine & Horne in Double Bay said they have seen up to 30 per cent price drops on some properties in the city’s exclusive eastern suburbs, including at Bondi Beach, due to the health crisis.”

“‘The tenants have got more choices, if you’re looking to move into a suburb where you thought you may not have been able to afford, now may be the time,’ he told Nine News.”

“A two-bedroom apartment across the road from Bondi Beach has dropped its weekly rent from $920 to $650 due to the COVID-19 outbreak. Rental property prices have also been slashed on the Northern Beaches. A four-bedroom home in Fairlight, which neighbours Manly Beach, has been discounted by $445 per week. ‘Property has been significantly reduced to $950 per week for the first 6 months of the lease agreement, rental will then return to market value of $1,395 per week,’ an advertisement read.”

Related Posts
This Post Has 44 Comments

  1. ‘Powell said the upper end of the market had led the downturn and then the recovery, which left it more exposed to the latest slowdown’

    Last crater was 2019. Great idea ginning up another leg of the bubble Australia.

    ‘If we are going to see a slowdown in prices, it’s likely to be in similar vain to the most recent downturn…Those more expensive areas do tend to have more discounting than other areas’

    As always the more expensive the more crater. It’s discretionary. Nobody really needs it. The only reason you buy a 3 million peso shack is you think you’ll sell it for 4.

      1. Gotta love the written English language. Many non English speakers find the concept of homonyms to be baffling.

    3. Or it has a killer view of the harbor! That or it’s close to transit because driving anywhere in Sydney these days is pure insanity. Almost as bad as Lima.

  2. ‘Meriton’s plans have also met opposition from community group Save Little Bay, whose spokesman Olde Lorenzen said it ‘completely disregards’ local planning controls and an ‘enormous oversupply’ of high-rise development in the area’

    Oh for the days, (24 months ago) when they waxed so eloquently about the need to build more so prices would fall.

  3. “If someone came in close to under my figure, I’d sell. There’s no problem with that,’ he said. ‘There’s a few very low-ball figures, people hoping that I’m desperate to sell, but I’m not desperate yet.’”

    He is going to look back on that decicision and kick his own arse. Ride that pony on down into the valley.

  4. You know what happens when people sit around with no job and no haircut? They become hippies.

    1. A seized up, lethargic economy brought to you by shitbags like Cuomo, Lamont, Murphy and Wolfe. These guys are destructive monsters.

      Ya know….. when you go scaring the daylights out of everybody and then it turns out to be bullshit, you’re gonna have problems that aren’t going away.

    2. Worked out pretty well for Bernie Sanders.

      I hiked the Blue Mountains back in ’16, theyre epic. The real estate could fall by 1/3 to 1/2 and you might be at fair value based on income (household average is under 50K I believe, and their currency fell through a 20 year low).

      The prices along the whole east coast but particularly in Melbourne, Sydney, Brisbane and pockets in between defy description. They had hot Chinese money buy up properties and it was off to the races.

    2. Doobs! Ah… summer time, cruisin’, windows down, sharing a bottle of Boone’s Farm in our bellbottoms and tank tops. We were never growing old.

      1. What happens when you’ve got no job or no hope. You become a doobie brother.

  7. Are you concerned about currency debasement leaving you with no safe place to put your money?

    1. The Financial Times
      Coronavirus business update 30 days complimentary
      Hedge funds
      Hedge funds bet on gold as refuge from ‘unfettered’ currency printing
      Big-name investors such as Elliott and Caxton act on concerns over debasement of money
      Some big hedge funds are bullish on the yellow metal, which has already risen about 12% this year
      © FT montage; Reuters
      Laurence Fletcher and Henry Sanderson in London yesterday

      Some of the world’s largest hedge funds are raising their bets on gold, forecasting that central banks’ unprecedented responses to the coronavirus crisis will lead to devaluations of major currencies.

      Paul Singer’s Elliott Management, Andrew Law’s Caxton Associates and Danny Yong’s Dymon Asia Capital are all bullish on the yellow metal, which has risen about 12 per cent this year. They are wagering that moves to loosen monetary policy and even directly finance government spending, intended to limit the economic damage from the virus, will debase fiat currencies and provide a further boost to gold.

      “Gold is a hedge against unfettered fiat currency printing,” said Mr Yong, founding partner at Dymon Asia, which is up 36 per cent this year, helped by its bet on the gold price.

      New York-based Elliott, which manages about $40bn in assets, told its investors last month that gold was “one of the most undervalued” assets available and that its fair value was “multiples of its current price”.

      In a letter, Elliott cited the “fanatical debasement of money by all of the world’s central banks” as well as low interest rates and disruption to mining caused by coronavirus. Profits from gold positions helped the hedge fund to a gain of about 2 per cent in the first quarter.
      …

      1. First Mover: Amid Economic Meltdown, Bitcoin Is Winning as ‘No Value’ Buffett Eats Crow
        May 5, 2020 at 11:42 UTC
        Updated May 5, 2020 at 13:25 UTC
        Bradley Keoun

        Billionaire investor Warren Buffett says he’s having a hard time finding attractive investments as the coronavirus ravages the global economy.

        Maybe he should take advice from professional crypto investors like Pantera Capital’s Dan Morehead – and reconsider bitcoin.

        Bitcoin, the cryptocurrency the 89-year-old Buffett described in February as having “no value,” is up 23% this year to about $8,870. The Standard & Poor’s 500 Index of large U.S. stocks, which Buffett routinely endorses for amateur investors, is down 12%. Shares of Berkshire Hathaway, Buffett’s insurance-to-utilities conglomerate and investment vehicle, are down 21% in 2020.
        …

    1. Unlike stocks, which apparently remain buoyant on a sea of monetary froth, oil sinks to the bottom, as it is the rare asset which thus far in the current credit event has truly capitulated.

      How do I know that? Last month its price hit the lowest level in the history of oil prices.

      But given that physical storage is still running out, it’s unclear an ultimate bottom has yet been reached.

      1. If you see a light at the end of the tunnel, make sure that it’s not a train before entering.

        The Financial Times
        Markets Briefing Oil
        Oil and stocks buoyed by cautious easing of lockdowns
        Euro slips after German court ruling on ECB bond-buying programme
        Traders expect data later on Tuesday to confirm reserves at the oil storage centre of Cushing, Oklahoma, rose last week by the smallest amount in more than a month
        © REUTERS
        Myles McCormick in London and Hudson Lockett in Hong Kong 4 hours ago

        US oil prices rose for a fifth straight day and global stocks pushed higher as the cautious reopening of economies helped buoy markets.

        Countries such as Spain, Italy and India have tentatively eased lockdown measures this week, allowing some businesses to reopen. California, the most populous US state, is set to relax its restrictions from Friday.

        Hopes that lockdown exits will boost crude demand have underpinned a rebound in the oil prices. West Texas Intermediate, the US marker, was up 10 per cent at $22.42 a barrel in mid-morning trading in Europe on Tuesday, leaving it up more than 80 per cent during the past week. Brent crude, the international benchmark, rose 7.1 per cent to $29.13.

        “The reopening of economies has injected a degree of cautious optimism back into an oil market that plunged to historic lows only weeks ago,” said Michael Tran, commodity strategist at RBC Capital Markets, who cited data suggesting US vehicle traffic levels had already rebounded off their lows.

        But with oil demand down by as much as a third and storage capacity continuing to fill, some analysts are still concerned that crude prices may yet slip back.

        “Many market participants believe there is light at the end of the tunnel,” said Giovanni Staunovo, an analyst at Swiss bank UBS. “But while the inflection point appears near, we would describe the current environment as the darkest hour just before the dawn. With oil inventories still increasing, crude oil prices remain vulnerable to renewed setbacks.”
        …

  9. ‘While CAAR doesn’t have solid numbers yet for the second quarter so far, the organization is monitoring the situation daily. “In the short term, we’re taking a hit, but it’s not killing us,” Woolfolk said. “Nothing’s collapsing at this point. It’s not 2007-2008, for sure. Nothing like that.”

    https://www.dailyprogress.com/realestate/area-housing-market-strong-in-first-quarter-pandemic-likely-to-hurt-current-period/article_7db148cd-a605-52a8-a9fd-8dd2c3ca5e53.html

  11. Is your FOSI* preventing you from surfing on the never-breaking wave of the Unlimited Quarantinive Easing asset price rally?

    * Fear Of Staying In

      1. What about Boeing? Wasn’t that on AlbuquerqueDan’s recommended buy list?

        Boeing Stock Not A Buy

        Boeing 737 Max jets are still grounded, and U.S. airlines have taken the jet off their schedules through the fall. The coronavirus is hitting global air traffic, depressing already weakened demand for widebody planes like the 787.

        After an epic free fall, BA stock rebounded a bit but is moving sideways, and shares are well below their 50-day and 200-day lines. The stock has been underperforming the S&P 500 for the better part of a year.

        Shares fell to the lowest levels in seven years in early March, and Boeing’s market cap is still below companies like Tesla (TSLA). Boeing stock is also not in any kind of buy zone, and is not forming a discernible pattern.

        Bottom line: Boeing stock is not a buy.
        …

        1. Airbus is also in dire straits, with customers canceling orders and postponing deliveries.

          From what I’ve read airlines are even retiring their older 737’s and A320’s as they aren’t expecting to ever need them again. And to think that just a few months ago an older, used non MAX 737 was a hot commodity and airlines were wailing over lost business due to the narrow body shortage, and pilots were suing Boeing over lost wages.

          United is now “encouraging” employees to take separation packages, which in Corporate speak is: if you don’t take it now, we might lay you off anyway and with less severance (or possibly none if we go BK) . Of course if you are a pilot you’ll have a hard time finding another job, maybe with a cargo airline if you’re lucky, I knew a few pilots who lost their jobs after 9/11 and it took them a long time, years, to find another pilot job.

      2. With all this talk in recent years about people being entitled to health care, a income, a house they can’t afford, and a free education, it seems like under medical emergency your urged to give up for the State.

        So, my point is the reality of big Government is your not entitled to much under real circumstances. The sheep are equally screwed, and that’s how it works.

        In spite of most people paying expensive health insurance , under covid 19 you were rationed on even being able to get a test and told to stay home unless your case was extreme.

        I think the health insurance Companies should give a rebate to anybody who couldn’t engage in normal health services , or elective services.

        The health insurance companies are strangly silent right now. Some car insurance companies are giving 25 percent rebates on car insurance , but where are the health insurance rebates for a disruption in service.

        I know some people might think I’m being outrageous in noticing how much the average Joe is expected to give up verses the entities that win in the bail out game.
        People are starting to rebel now because after 7 weeks of this lock down they are willing to take the risk of infection verses bankruptcy and homelessness. People know they are getting peanuts compared to the entities that are getting the Lion share of bail outs.

        If anybody thinks that Big Government is going to be the grand equalizer they are in the dark how it really works.

        1. “The health insurance companies are strangly silent right now.”

          They are making buckets of money collecting premiums when nobody is going to the doctor.

          1. If your employer is large and self insured, then your employer is saving money.

    2. Economic Report
      Service side of the U.S. economy crashes in April to recession levels, ISM shows
      Published: May 5, 2020 at 10:40 a.m. ET
      By Jeffry Bartash
      ISM index tumbles to 41.8%, breaks 11-year positive streak
      An empty restaurant in New York City. The coronavirus pandemic has devastated service oriented companies such as restaurants and retailers. Getty Images

      The numbers: The massive losses suffered by retailers, restaurants, hotels, airlines and other service-oriented companies from the coronavirus cause a key economic bellwether to plunge in April to the lowest level since the 2007-2009 Great Recession.

      The Institute for Supply Management’s survey of non-manufacturing companies plummeted to 41.8% in April from 52.5% in March, breaking a string of 112 straight months of positive readings.

      Any number over 50% is considered a sign of growth; readings below 50% signal contraction or even recession.
      …

    3. This bull cannot be stopped. Buy the rally now, or get priced out forever.

      The Financial Times
      Markets Briefing Oil
      Global stocks rally as Brent crude breaches $30
      Investors anticipate boost in oil demand as economies reopen
      © REUTERS
      Myles McCormick in London and Hudson Lockett in Hong Kong an hour ago

      A rally in energy stocks led Wall Street higher as Brent crude breached $30 a barrel for the first time since mid-April.

      The S&P 500 climbed 1.5 per cent at the open, with energy the best performing sector. The Nasdaq Composite was up by a similar margin, leaving the tech-heavy index just 1.5 per cent off entering positive territory for 2020.

      The cautious reopening of economies have helped buoy markets. Countries such as Spain, Italy and India have tentatively eased lockdown measures this week, allowing some businesses to reopen. Austria has reopened stores while Denmark has already sent children back to school.

      Hopes that lockdown exits will boost crude demand have underpinned a rebound in the oil prices. Brent added 10.7 per cent to trade at $30.12 a barrel, rebounding from a drop to less than $16 a barrel last month. West Texas Intermediate was up 16.7 per cent at $23.66 a barrel, setting the US marker on track for its fifth consecutive day of gains and leaving it up more than 80 per cent during the past week.

      “The market is still vulnerable but now one thing is clear, the demand bottom is behind us, and this is manifesting in oil prices which are on the rise,” said Per Magnus Nysveen at consultancy Rystad Energy. Analysts at RBC Capital Markets also noted that congestion data showed US vehicle traffic levels had already rebounded off their lows.

      Donald Trump, the US president, who has sought to boost prices through a push for global supply cuts welcomed the rally. “Oil prices moving up nicely as demand begins again!” he wrote on Twitter.
      …

        1. Next week it will be 8 weeks since I filled up, and I still have over half a tank. At this rate I’d never need another vehicle in life, and my tires would age out before wearing out. Same with oil changes.

  12. Housing prices were cratering long before CoronaScam.

    Silver Spring, MD Housing Prices Crater 15% YOY As Northern Virginia/Washington DC Rental Rates Tank On Surging Mortgage Defaults

    https://www.movoto.com/silver-spring-md/market-trends/

    As one Washington DC broker conceded, “If you’re a buyer, the broker is lying to you. I know a liar when I hear one. I’ve been lying my entire life.”

Comments are closed.