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A Buyers’ Market, As Investors Hold Out For The Best Deals Amid A Glut Of Choices

A report from the Huffington Post on Canada. “Advertised rental rates are on a downward slide in many cities. Some of the priciest cities saw some of the steepest drops. One-bedroom units in Toronto fell 4 per cent in April from March, while two-bedroom units fell 7.7 per cent. In Vancouver, one-bedroom units fell 5.6 per cent while two-bedrooms dropped a steep 15.8 per cent. There is likely more downward pressure to come. With vacation travel at a standstill, owners of Airbnb units are putting their properties on the apartment rental market, causing a spike in new listings, said.”

“The owner-occupied housing market is also seeing falling prices amid the COVID-19 pandemic. Data released this week by the Canadian Real Estate Association showed the average selling price of a home in Canada fell nearly 11 per cent from March to April.”

The Times of Malta. “It is a tenant’s market for rental property right now, with supply far outstripping demand and prices going down by as much as 50 per cent in some cases, according to real estate agents. Rental fees have dropped an average 20 per cent and even halved ‘in the case of already overpriced apartments,’, after an injection of an estimated 9,000 properties from the short-let sector of the industry.”

“Contractors with tens of short-let flats, whose bookings have now been lost, are flogging them at reduced prices, while many others are preferring to leave them empty than make less money. ‘Prices of available properties are being slashed on the one hand, with no budging on the other, and no in-betweens. We are either being told to get rid of the properties, or not to call back,’ said Steven Mercieca, CEO of Quicklets, whose listings have doubled since the outbreak.”

From EdgeProp Malaysia. “With the tourism sector being battered by the Covid-19 pandemic, short-term hosts are also suffering. The Edge Malaysia reported Airbnb operators saying ‘they had never imagined such a crisis plaguing the travel industry.’ An Airbnb operator with more than 60 units in his portfolio told the weekly that he has cut rentals by about 40% to keep tenants.”

“‘I’ve seen many operators just pack and go off. They didn’t even inform the [property] owners and didn’t do a proper handover. The owners also didn’t know their tenants [who are Airbnb operators] had left,’ he added. He revealed that although some Airbnb operators ‘secured a 50% cut in rental from unit owners, they decided to quit the business because of the gloomy outlook.'”

“Things are especially hard for individual Airbnb operator Hendy Tan since the beginning of the movement control order. Bookings went down so much that he told The Edge that he had ‘zero income in March.’ It was then that Tan decided to convert his property into a long-term rental at RM1,800 per month. ‘At least, I can secure a consistent income every month to pay for my monthly housing loan instalment,’ he explained.”

The Herald Sun in Australia. “Five and a half thousand more Melbourne rental homes were vacant at the end of April than a month earlier, new figures show, as COVID-19 ravaged the inner-city rental sector. A rush of Airbnb properties hitting the long-term rental market also contributed to greater Melbourne’s rental vacancy rate climbing to 2.8 per cent in April, SQM Research found. This equated to 16,575 properties. These numbers increased from 1.9 per cent and 11,091 properties in March to mark ‘one of the largest one-month rises ever recorded’ by SQM, managing director Louis Christopher said.”

“Mr Christopher said ‘deeper falls in rents’ were inevitable if vacancy rates remained high. Another research firm found vacancy rates soared month-on-month in Southbank (from 5.5 per cent to 13 per cent), Docklands (4.4 per cent to 9.1 per cent) and CBD (5 per cent to 7.6 per cent) to make them full-blooded renter’s markets. The figure also doubled in South Yarra and Prahran (both now 3.9 per cent), Port Melbourne (3.5 per cent) and St Kilda (3.8 per cent).”

“Propertyology head of research Simon Pressley said oversupplied inner-city apartments had ‘never been great investments’ even before the pandemic. But these markets were in more strife now the tenant pool most likely to rent there — comprising young people, hospitality workers, migrants and international students — had been slashed by unemployment and border closures.”

“‘Landlords with tenants in these more vulnerable areas should do their best to hold on to them,’ Mr Pressley said. ‘And tenants looking to relocate in the inner city can pretty much name their price.'”

“Collings head of property management Caleb Pikoulas said some of his landlords in Melbourne’s inner north were ‘dropping prices by about 10 per cent and still struggling to lease them.’ A surge in short-term accommodation hitting the long-term rental market also boosted vacancy rates in the inner city and holiday hot spots like Lorne (8.9 per cent) and the Bellarine Peninsula (6.6 per cent), Propertyology found.”

The South China Morning Post. “Hong Kong’s property sales flopped for the fourth straight weekend, as homebuyers turned their backs on unsold projects to wait for better discounts, amid a real estate slump in the city’s worst economic contraction in decades. Wheelock Properties sold 13 flats, or 13 per cent of the 101 units on offer at its Grand Marini project in Lohas Park as of 6:45pm, sales agents said. The same project was 90 per cent sold two months earlier, with 18 potential buyers vying for every available unit then.”

“”The reversal of fortune for Wheelock’s Grand Marini over two months underscores how Hong Kong’s residential property is becoming a buyers’ market, as investors hold out for the best deals amid a glut of choices. The city’s monthly average home price has fallen by 7.6 per cent from its peak in June 2019, tracking the economic contraction that saw Hong Kong’s first-quarter growth shrinking by 8.9 per cent compared with last year, according to the Centa-City Leading Index.”

“Average home rent had also fallen, as rising unemployment weighed on demand in the residential property market. Average rent fell for nine consecutive months, or by a cumulative 12.1 per cent, to HK$33.3 per square foot in April, according to Centaline Property Agency. Transactions in the world’s most expensive home market slowed to a trickle. A flat measuring 234 sq ft at Lee Bo Building in Tuen Mun sold at just HK$2.35 million recently, 34 per cent below market price and back to 2015 level, according to Ricacorp Properties.”

“CK Asset, one of the city’s biggest developers, is poised to launch its Sea to Sky project, comprising 1,422 flats, in Lohas Park next month. CK Asset is likely to be joined by Sun Hung Kai Properties (SHKP), Henderson Land Development, Vanke Holdings (Hong Kong), Wing Tai Properties and the Easyknit Group, as they rush to launch new projects after suspending them for two months during the coronavirus outbreak.”

“The abundance of options will almost certainly lead to discounts. Wing Tai has already discounted the first batch of its Oma by the Sea flats in Tuen Mun by 10 per cent compared with prices of new projects nearby, according to Centaline.”

This Post Has 27 Comments
  1. ‘Wheelock Properties sold 13 flats, or 13 per cent of the 101 units on offer at its Grand Marini project in Lohas Park as of 6:45pm, sales agents said. The same project was 90 per cent sold two months earlier, with 18 potential buyers vying for every available unit then’

    I hope no one overpaid in such an environment.

  2. “‘Landlords with tenants in these more vulnerable areas should do their best to hold on to them,’ Mr Pressley said. ‘And tenants looking to relocate in the inner city can pretty much name their price.’”

    A real estate agent told me that renter will be paying my mortgage. Just sit back and enjoy the sweet, sweet equity.


  3. With unlimited bad news raining down from all corners of the global economy, tomorrow should be another outstanding day of stock market gains.

    Bad news =
    Higher stock values

    1. CR8R

      It Will Take 3 Years for the Global Economy to Recover—if Everything Goes Right
      Last Updated: May 18, 2020 at 3:11 p.m. ET
      First Published: May 18, 2020 at 1:25 p.m. ET
      By Lisa Beilfuss

      As investors’ attention turns to recovery from reopening, some economists are warning that it may take up to three years for the global economy to get back to pre-pandemic levels—and that’s if everything goes right.

      In a report Monday, IHS Markit predicted it will take two to three years for a full worldwide recovery. That’s as gross domestic product in China dropped at a record annualized pace of 33.8% in the first quarter, and as the U.S. is on track to record a second-quarter annualized contraction of around 40%.

      1. The stock market has completely decoupled from underlying economic reality, and is 100% dependent on central banker love and support.

        Gamble at your own risk. And may the odds be ever in your favor.

        1. Bulls are quite confident that the stock market is headed up at three month and twelve month time horizons. Where’s that wall of worry stocks are supposed to climb, or any acknowledgment in stock prices of the worst employment situation since the 1930s?

          Need to Know
          The next stage of the COVID-19 recovery is here. This is how investors prepare, says UBS.
          Published: May 19, 2020 at 10:03 a.m. ET
          By Barbara Kollmeyer
          Critical information for the U.S. trading day

        2. Today in scary numbers — pandemic could cost global economy $82 trillion
          Published: May 19, 2020 at 11:06 a.m. ET
          By Steve Goldstein
          A medical worker wearing protective equipment disinfects a colleague after escorting a patient by ambulance to a COVID-19 hospital in St. Petersburg, Russia, on Monday. Associated Press

          How badly will the coronavirus pandemic impact the economy? Does $82 trillion sound not good?

          That is the scary number put out by the Centre for Risk Studies at the University of Cambridge’s Judge Business School.

          That figure, of course, needs to be put into context. That’s over five years, not one, and represents the potential hit to the global economy and not just the U.S. in what’s called the “economic depression” scenario.

          The GDP for the world’s 19 leading economies was $69.2 trillion last year.

          Its “optimistic” take is a loss of $3.3 trillion over five years. It says the consensus expectation calls for $26.8 trillion, or 5.3% of five-year GDP, to be lost.

          For the U.S., the potential five-year loss ranges from $550 billion to $19.9 trillion.

  4. ‘Israel’s outgoing Health Minister Yaakov Litzman on Sunday accused his former chief executive of overexaggerating the impact of the coronavirus on the country just before stepping down from office. ‘

    ‘In comments made to Israel public broadcaster Kan, Litzman made clear that he disagreed with the government and Moshe Bar Siman-Tov, the former director-general of his office, over coronavirus model projections in early March.’

    “I also thought so, that the panic was overblown, and when [Bar Siman-Tov] said he feared tens of thousands would die, I yelled at the cabinet meeting, in his presence and in the presence of the ministers, that I disagreed with that assessment. It’s just exaggerated.”

    ‘Litzman, who tested positive for coronavirus in early April, has been heavily criticized for his perceived lackluster response to the COVID-19 epidemic and “knowingly disregarding his own ministry’s guidelines by not following social distancing rules.”

    1. Some Hospitals Prepared for Coronavirus Cases That Never Came

      San Francisco center was one of dozens around the country that readied but have seen far fewer cases than expected

      ‘All the preparation has come at a cost, including in lost business from canceled elective procedures and sick people afraid to come in. Hospitals now face sharp falls in revenue; the AHA puts losses expected at health-care facilities from those canceled surgeries, and the costs associated with Covid-19 treatment, at about $202.6 billion so far.’

      1. What gets me is the Medical service business never care about protecting nursing home people from prior flu seasons. They never thought the high death rate from Medical Mal practice and Pharma deaths was
        something to get concerned about, even when it has been the fifth cause of death for years.

        No doubt they knew they were not prepared for the wrong models of cases they thought they were going to get with C19. They didn’t have enough protective gear, so I don’t blame them for wanting to get shored up.

        It’s just that a total shut down should of been a short term thing as more information came out. I mean people can still wear their masks and open up . Nursing homes no doubt need extra care or protection, or some hot spots.
        In the final analysis you can’t fool mother nature, not even with Big Pharma magic pills, so making yourself low risk by taking care of yourself is smart.

        I think a certain % of the population is always going to be high risk of ending up in the ICU ward.

        Anyway, if this was a manmade virus, there should be no reason for that other than evil intent or maybe military weapon intent.

  5. ‘COVID-19- related corporate bankruptcies and debt defaults in the U.S. are on the rise. And it’s likely to get much uglier in the months ahead, despite efforts by lawmakers to shore up corporate balance sheets.’

    “So far this year, we’re almost running at a rate of double the defaults of last year,” said S&P Global CEO Douglas Peterson on Yahoo Finance’s The First Trade. “We think that there is going to be an increase in default levels up to potentially 10% of the high yield debt [markets].” In April, the rate was 3.9%.’

    ‘Peterson would know: One of his firm’s main profit centers is to issue ratings and analysis on various corporate debt issuances.’

    ‘April had the highest single month default rate (32 defaults) since the Great Recession, according to S&P’s research. The greatest number of defaults last month came from the U.S. (21), led by retail and restaurants, media and entertainment, and health care.’

    ‘Meanwhile, total commercial Chapter 11 bankruptcy filings surged by 14% in the first quarter, according to the American Bankruptcy Institute. In March alone, commercial bankruptcies rose 18% year-over -year.’

    1. Market Extra
      Fed actions in corporate debt point to crisis averted, for now
      Published: May 18, 2020 at 2:24 p.m. ET
      By Joy Wiltermuth
      Fed’s policy might be an insurance policy: claim, if needed
      The Federal Reserve in Washington, DC. Getty Images Getty Images

      The Federal Reserve found a way to help restore calm to the booming U.S. corporate debt market during the pandemic.

      Dangle a big $2.6 trillion pot of emergency funds in front of U.S. companies, Wall Street dealers, states and cities and more, just in case things get worse.

      Last week, when the Fed embarked on its first foray into buying existing shares of exchange-traded funds, or ETFs, it added $305 billion in its first two days to its near $7 trillion record balance sheet.

      At that pace, BofA Global Research analysts estimate the Fed could purchase $30 billion worth of ETFs through the program’s Sept. 30 deadline for funding.

      But will it even need to?

      “You certainly can’t claim the primary market is dysfunctional anymore,” said David Del Vecchio, portfolio manager, U.S. investment grade corporate bonds, at PGIM Fixed Income, of the corporate bond market’s swift rebound from shocks felt as the coronavirus deepened its hold in the U.S.

      He pointed to a “wide open” market for highly rated U.S. companies to borrow in the bond market, since the Fed unveiled plans in late March to start buying corporate debt for the first time in history.

      Investors also piled into U.S. stocks Monday, with the Dow Jones Industrial Average (DJIA, -0.38%) up more than 900 points, amid signs that the American economy has begun to percolate again as more states reopen, air travel picks up and work continues toward a COVID-19 vaccine. Benchmark 10-year Treasury yields (TMUBMUSD10Y, 0.708%) also rose to 0.72.

    2. A reader sent this in:

      ‘About 1882 24th Ave E’

      ‘WHO WE ARE/HOW WE WORK:This home is offered by Seattle Vacation Home, for rental ranging from 1 to 12 months, either furnished or unfurnished. Rent is determined based on the start and end dates of your lease. The rent displayed in this listing is the “last minute” pricing for the next 30 days.’

      1. “Seattle Vacation Home”

        When you think about the hundreds of thousands, possibly millions, of new short term rental houses in the US, which are competing directly with the hotels, you quickly come to the conclusion that there’s no way most of them are making money. If they were it would mean that we had some massive shortage of hotel rooms and Airbnb came to the rescue. Uh-uh. These are speculative flips meant to capture appreciation on the upside.

    3. since the Great Recession

      If you take the mask of debt issuance off, we’re in the same recession.

      1. If you take the mask of debt issuance off, we’re in the same recession.

        …and will continue to be until we clean out the insolvency surrounding us instead of papering over it.

        1. Never gonna happen. Did you see Powell’s comments on 60 minutes? He fully admitted they’re just printing mass money. No shame. Nothing. Debasing the currency with a tsunami of liquidity with no fear of Weimar consequences or anything. Just boldly saying f*** you to everybody except the wealthy.

          1. Never gonna happen.

            Not until they lose control. So my point is this recession/depression will never end until they lose control. And then it will get much worse before it gets better.

          2. Never gonna happen.

            Never is a very long time. I might be taking my dirt nap when the house of cards finally collapses.

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