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It’s Literally A Race To The Bottom

A report from ABC News in Australia. “Owners of units in Sydney’s Opal Tower have launched legal action against the NSW Government after discovering more than 500 new defects in the beleaguered building. Apartment owner Andrew Neverly said he had bought the unit as part of his retirement plan, but now it’s worth nothing. ‘It’s emotionally been a real rollercoaster, when we bought into this we thought we were buying into the Australian dream,’ he said.”

The Sydney Morning Herald. “‘We have suffered incomprehensible loss and disruption to our lives. Unfortunately, we have now discovered that our losses are much greater,’ said Owners corporation chairman Shady Eskander. ‘It’s time to put an end to the concrete slums that are going up and the defects that are burying us owners in the ground.'”

From Domain News. “For those in the market for a good opportunity, where should you be looking? Here are some sellers willing to negotiate on price. The China-based vendor bought the two-bedroom, two-bathroom apartment off the plan for about $1.5 million more than a decade ago. Now, the fully furnished pad with world-class views is listed for urgent sale with a negotiable price tag of $1.175 million.”

“Since it was first listed two months ago, the price of this three-bedroom brick home on Phillip Island has dropped three times. The vendors are now asking $519,000. The couple selling the home are looking to relocate to Queensland, and are motivated to secure a deal.”

The Herald Sun. “Units in some of Melbourne’s blue-chip suburbs are cheaper than they were five years ago — but experts warn they may not be the bargain they seem. Carlton’s median unit price fell 24.4 per cent to $340,000 in the five years to May 31, according to realestate.com.au data. Other poor performers were Toorak and Armadale, where the average unit dropped 20.8 per cent in value to $950,000 and 15.4 per cent to $660,000 respectively.”

“The inner ring dominated the worst-performing suburbs, with Abbotsford, North Melbourne and Travancore also recording falls of more than 10 per cent. Propertyology head of research Simon Pressley said ‘abysmal’ quality control and oversupply of similar products meant units around inner Melbourne remained poor price performers.”

“‘I wouldn’t touch it if you gave one to me,’ Mr Pressley said of inner-city apartments. ‘In a nutshell, inner-city and high-rise apartments are bloody horrible investments.'”

“Compounding those price woes, the CBD vacancy rate last month skyrocketed to a 15-year high of 9.3 per cent, according to SQM research. Mr Pressley said the high vacancy rate was indicative of ‘the really high volume of gullible investors that didn’t do the research or didn’t listen to the warnings.’ Collings Northcote director Christian Gravias said high vacancy rates in the inner city had also seen rental prices plummet during the pandemic.”

“‘It’s literally a race to the bottom,’ Mr Gravias said. ‘The cheapest ones are the only ones that are getting rented.'”

From Nine News. “There are currently more vacancies in Sydney’s rental market than ever before, according to new data obtained by 9News. More than 30,000 homes and apartments are currently empty. The collapse of short-term rentals, combined with a drastic drop in students seeking accommodation, is driving the vacancies. ‘There’s really no sign that we are going to see an easing in new supply or an increase in new demand that will soak up these numbers,’ Dr Andrew Wilson, chief economist with My Housing Market, said.”

From Seven News. “Australians who rent and want to save a bit of cash are being urged to look for a new home or renegotiate their lease. It comes amid fears Australia’s apartment market could be on the brink of collapse due to the coronavirus crisis, with inner-city rental listings skyrocketing as tenants move out. A whopping 16.2 per cent of inner city properties in Sydney are currently empty, with Brisbane CBD close behind at 13.3 per cent. 9.3 per cent of inner Melbourne properties are collecting dust, 7.8 per cent in Adelaide, 7.7 per cent in Canberra and 6 per cent in Perth.”

“Anna Porter from property advisory company Suburbanite added that landlords need to be ‘realistic’ about the rental market if they want to stem their financial losses over the next 12 months. ‘Landlords might need to start getting creative by looking at incentives, like a few weeks rent-free, a free internet connection or local gym membership to differentiate themselves from the rest,’ she said. ‘Tenants are the big winners from all of this.'”

From Perth Now. “Many parts of the Australian property market are feeling the effects of the pandemic. Mandurah dwelling values were 38 per cent below their 2006 peak at the end of May this year and the renewed downwards pressure comes just after the Perth market was beginning to see a long-awaited growth phase at the start of 2020.”

“Head of research Eliza Owen said the area’s continued decline was surprising. ‘Payroll data analysis from the ABS suggests that payroll job losses across Mandurah has been 6.0 per cent between mid-march and the end of May,’ she said. ‘This is not especially severe when it comes to job loss across Perth regions, nor would Mandurah have been particularly susceptible to a demand shock from a decline in overseas migration. However, the decline in dwelling values is off the back of a longer-term downward trend, suggesting demand conditions were already fragile across the region.'”

“Ms Owen said the area had recently been almost entirely dependent on net overseas migration for new housing demand. ‘As the wider economic downturn drags on housing demand, mild price declines are likely to spread, resulting in a more broad-based downturn in the next 12 months,’ she said.”

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This Post Has 67 Comments

  1. ‘he had bought the unit as part of his retirement plan, but now it’s worth nothing. ‘It’s emotionally been a real rollercoaster, when we bought into this we thought we were buying into the Australian dream’

    Well, it was cheaper than renting Andy.

    1. buying into the Australian dream

      Perhaps hoping to siphon off someone else’s Dream.

  2. ‘Landlords might need to start getting creative by looking at incentives, like a few weeks rent-free, a free internet connection or local gym membership to differentiate themselves from the rest…Tenants are the big winners from all of this’

    I’m thinking hour long foot rubs Anna. The only question is how many a week.

  3. Kinda like house in Detroit.

    “‘I wouldn’t touch it if you gave one to me,’ Mr Pressley said of inner-city apartments. ‘In a nutshell, inner-city and high-rise apartments are bloody horrible investments.’”

  4. Ah, the Opal Tower, the gift that keeps on giving.

    Great collection of Aussie CR8R, Thx. 🙂

  5. San Diego, CA Housing Prices Crater 19% YOY As The Stench Of Mortgage And Appraisal Fraud Hovers Over US Housing Market

    https://www.zillow.com/rancho-bernardo-san-diego-ca/home-values/

    *Select price from dropdown menu on first chart

    As a distinguished economist remarked, “If I had a house, I’d be dumping at the first offer that comes along. In fact, that is exactly what I did last week.”

  6. China, the gift that keeps on giving…

    “Scientists Say New Strain of Swine Flu Virus Is Spreading to Humans in China

    …The newer strain, known as G4 EA H1N1, has been common on China’s pig farms since 2016 and replicates efficiently in human airways, according to the study published on Monday. So far, it has infected some people without causing disease, but health experts fear that could change without warning.

    “G4 viruses have all the essential hallmarks of a candidate pandemic virus,” the study said, adding that controlling the spread in pigs and closely monitoring human populations “should be urgently implemented.” ”

    https://www.nytimes.com/2020/06/30/world/asia/h1n1-swine-flu-virus-china-pig.html

    1. Getting warmed up for the 2021 pandemic season?

      Just imagine if a bad flu strain compounded the existing COVID-19 challenges. Unfortunately, regardless of how bad things currently seem, it is generally possible for the situation to deteriorate.

      1. Depending on how things go, I may not get a flu shot this year. I figure that if I’m already in semi-quarantine and wearing masks and face shields, I won’t get the flu either.

  7. Apartment owner Andrew Neverly said he had bought the unit as part of his retirement plan, but now it’s worth nothing.

    Someone ought to ping Manuel about this.

  8. I’m hoping the 100,000 new cases a day turns out to be a wildly high overestimate.

    The Financial Times
    Coronavirus business update 30 days complimentary
    Coronavirus pandemic
    Anthony Fauci warns US virus cases could reach 100,000 a day
    Testimony that ‘we are not in total control’ comes as increase in US cases nears new record
    ‘I am very concerned because it could get very bad,’ Anthony Fauci said about the rise in coronavirus cases in some states, advising that Americans should wear masks to slow the surge ©
    Demetri Sevastopulo in Washington and Peter Wells in New York 5 hours ago

    Anthony Fauci has warned that the US could see coronavirus cases soar to 100,000 a day, reflecting mounting fears in Washington that western and southern states may be unable to rein in new spikes in infections.

    Dr Fauci’s warning, which the White House coronavirus task force member made in Capitol Hill testimony on Tuesday, came as the daily increase in new US infections hit 44,358, near the one-day record set on Saturday.

    According to data compiled by the Covid Tracking Project, the rate of daily infections has more than doubled over the course of June, up from just 21,672 at the start of the month.

    “We’re now having 40-plus thousand new cases a day. I would not be surprised if we go up to 100,000 a day if this does not turn around,” Dr Fauci told a Senate hearing. “I am very concerned because it could get very bad.”

    Florida has had the biggest increase in infections over the course of June and is now averaging nearly 7,000 new cases a day, compared with about 760 a month ago.
    …

    1. Are we gonna inject Fauci with the Wuhan flu, or chop him up like the Saudis do?

    2. it could get very bad,’ Anthony Fauci

      Thankfully, the death toll in the US continues to track down, no matter how many harmless cases are conjured.

      1. If only we weren’t importing bad cases from Mexico that probably add to the death count.

        1. I bet they also count the people that the Mexican patients murder along the way as covid deaths.

          1. Per some news stories, American expats and Mexican green card holders are crossing the border back into the US for covid treatment as Mexican hospitals are overwhelmed.

    3. Given that so many cases are asymptomatic or mild and therefore not tested, we’re probably already at 100,000 cases per day, total.

      I’m still frustrated at the lack of mainstream scientific reporting. For example, we should have better antibody studies by now. They should have been tracking people and taking blood every week to do true antibody tests. Without antibodies, a vaccine is worthless. I saw somewhere that there are 200+ studies of HCQ going on. Why haven’t we seen preliminary results, at least in other countries who don’t have TDS and big Pharma? No recommendations for Vitamin D either, especially for the hard-hit African American communities.

      1. “I personally think testing is overrated, even though I created the greatest testing machine in history”

      2. the lack of mainstream scientific reporting

        After how many months of misleading, contradictory, hysterical, illogical, unscientific reporting will you cease to be simply frustrated?

      3. Exactly Oxide,
        Vitamin C and D daily with HCQ and zinc for anyone becoming symptomatic might go a long way to improving the situation. Ironically, Fauci and his cronies seem very opposed to that message getting out. I say, follow the money! Big pharma has greater profits without these generic preventives and treatments. It’s pretty obvious that the LameStream Media is suppressing this information which i have gleaned from alternative sources.

    4. Just in case COVID-19 really is worse than a bad cold, we’d better all keep wearing those fashion masks, just like Senator Mitch.

      Coronavirus update: U.S. case tally climbs above 2.6 million and Republican leaders urge Americans to wear face masks
      Published: July 1, 2020 at 11:34 a.m. ET
      By Ciara Linnane
      FedEx, General Mills and Constellation Brands benefit from pandemic buying, Michael Kors parent Capri takes a hit
      Senate Majority Leader Mitch McConnell dons a face mask. Associated Press
      …

  9. Does it seem like the more the economic picture darkens, the more Wall Street cheers the stock market to ever higher levels?

    What other bad economic news might enter the picture to further buoy stocks?

    1. The Financial Times
      Coronavirus business update 30 days complimentary
      Mergers & Acquisitions
      Global dealmaking drops to lowest level in over a decade
      Coronavirus calls time on one of the longest waves in mergers and acquisitions history
      Companies have struck just $485bn worth of deals since the beginning of April, down more than 50 per cent from the same period last year
      © FT montage
      Ortenca Aliaj and James Fontanella-Khan in New York and Kaye Wiggins in London an hour ago

      Coronavirus brought an end to one of the longest waves in mergers and acquisitions history as global dealmaking dropped to its lowest levels in more than a decade during the second quarter of 2020.

      Companies have struck just $485bn worth of deals since the beginning of April, down more than 50 per cent from the same period last year when close to $1tn deals were agreed, according to the data provider Refinitiv. The fall in activity was particularly sharp in the US, where overall acquisitions collapsed almost 90 per cent from a year ago, to $75bn.

      Dealmaking hit a rough patch in the second quarter as government-mandated shutdowns to halt the spread of coronavirus wreaked havoc on financial markets and caused liquidity to dry up. Against this backdrop companies were largely focused on shoring up their existing businesses and tapping back-up credit lines from their lenders, rather than seeking out new acquisitions.

      “For most of the last few months, although things were extremely busy, the emergence of new deals of substantial size had essentially ground to a halt,” said Eric Schiele, a corporate partner at the law firm Kirkland & Ellis.

      Blockbuster deals all but vanished during the second quarter with little appetite from companies to execute large mergers amid a global pandemic. However, a landmark £31.4bn deal between Liberty Global and Telefónica to combine their British operations Virgin Media and O2 in early May helped to resuscitate M&A activity in Europe.

      There were already signs of a drop off in global dealmaking in the first quarter, which had its slowest start in seven years as companies failed to execute deals of the size seen in previous years. So far in 2020, M&A deals above $10bn are down by 60 per cent from the same period in 2019, and the volume of transactions has hit a seven-year low.

      Private equity firms lead the action

      Private equity groups emerged as some of the most active dealmakers this year, accounting for 16 per cent of worldwide activity in the first half, the highest level since 2007.

      The industry is sitting on a record $2.5tn in dry powder — funds that have been committed by investors but not yet spent — and a group of mostly US-based firms have been active in snapping up companies more cheaply throughout much of the crisis.

      Private equity firms have been “occupying a disproportionate part” of global dealmaking “because they were still active deploying capital [when] corporate activity went to zero basically”, said Borja Azpilicueta, global head of HSBC’s financial sponsors group.
      …

    2. This news is several days old, so presumably already priced in by ever vigilant stock traders.

      The Financial Times
      Coronavirus business update 30 days complimentary
      Global trade
      Pandemic causes ‘unprecedented’ fall in global trade
      Eurozone hardest hit as goods volumes drop more than 12% in April
      A worker wearing a face mask in the port of Jebel Ali, Dubai. Trade volumes fell in every world region
      © AFP via Getty Images
      Valentina Romei in London June 25 2020

      World trade experienced an “unprecedented” decline in April as most big economies suffered from strict coronavirus lockdowns, according to widely watched data which found that the eurozone was the hardest-hit area.

      The volume of global trade in goods dropped by 12.1 per cent in April compared with the previous month, according to the Netherlands Bureau for Economic Policy Analysis — the largest monthly contraction since records began in 2000.

      The drop exacerbated the 2.4 per cent decline in world trade in March, the bureau’s CPB world trade monitor said, leaving global goods trade volumes 16.2 per cent smaller than the same time last year.

      All regions reported a fall in trade volumes, but the eurozone was the hardest hit with trade volumes falling by 20.1 per cent month on month in April. Its goods trade has contracted by 28.5 per cent over the past year.

      Trade volumes in the US dropped by 16.8 per cent month on month in April, while trade in emerging Asia, which includes China and India, fell by 6 per cent. Chinese export volumes shrank in April, after a mild expansion in March as the pandemic eased in the country.

      Between February and April, the period in which lockdowns were in place in various large economies, “none of the regions shows a plus [in trade activity]”, the bureau said.

      “As April was affected by the most widespread and stringent lockdown measures, trade volumes were dragged down by disruptions to production and logistics, as well as less demand for imports worldwide,” said Joanna Konings, senior international trade economist at ING.

      Thursday’s data leave global trade on track to be more than 10 per cent lower this year than in 2019, according to estimates by ING.

      Adam Slater, lead economist at Oxford Economics, said the data “points to a decline in goods trade in 2020 of a potentially comparable magnitude to that seen in the global financial crisis in 2009”.

      Earlier this week the World Trade Organization estimated that global trade would fall by 18.5 per cent in the second quarter of this year, compared with the same period last year.

      On Wednesday, the IMF forecast that the volume of goods and services trade would shrink by 12 per cent this year and urged policymakers “to co-operate to resolve trade and technology tensions that endanger an eventual recovery from the Covid-19 crisis”.

      Separate data published by the bureau showed that the economic slowdown had hit industrial production hard. Global industrial output dropped by 12.1 per cent year on year in April as factories shut across the globe. Although every region was affected, the eurozone was the worst, experiencing a nearly 30 per cent contraction.
      …

    3. The Financial Times
      Coronavirus business update 30 days complimentary
      Opinion The FT View
      IMF downgrades are a warning to the world
      Fund’s forecasts reflect the fact that the pandemic is not under control
      The editorial board
      (FILES) In this file photo taken on October 08, 2019 International Monetary Fund (IMF) Managing Director Kristalina Georgieva delivers her curtain raiser speech previewing the key issues to be addressed in the Annual Meetings in Washington, DC. – A key lesson from the 2008 global financial crisis was that governments should not remove stimulus measures too soon, IMF chief Kristalina Georgieva said June 15, 2020. (Photo by NICHOLAS KAMM / AFP) (Photo by NICHOLAS KAMM/AFP via Getty Images)
      IMF managing director Kristalina Georgieva: the fund now expects the world economy to shrink by 4.9% this year
      © Nicholas Kamm/AFP/Getty
      The editorial board June 25 2020

      The IMF has provided a stark warning that the damage coronavirus has done to the global economy is worsening. With the world failing to keep a lid on infections and the focal point of the crisis moving from Europe to the Americas, the fund has lowered the growth forecasts it made in April — which even then forecast the worst contraction since the Great Depression. With the downturn deepening, it is vital that policymakers redouble efforts to avoid further economic collapse, and support the eventual recovery.

      While the general mood in Europe is one of relief at the gradual suppression of coronavirus and a determination to enjoy what is left of the summer, the disease is still spreading across the world. Many of the most populous countries such as India and Brazil are seeing rapid increases in the number of deaths. The case count is also rising in the US south and west but so far, mercifully, deaths are not increasing at the same rate. Even many of those countries that appear to have eliminated the virus altogether are occasionally seeing isolated outbreaks and must now learn to live with the virus as a constant presence and potential threat.

      This persistence of the pandemic is one reason for the IMF’s downgrades. The fund now expects the world economy to shrink by 4.9 per cent this year, from 3 per cent in its previous set of forecasts. This would “imperil” much of the world’s progress in reducing extreme poverty since the 1990s. Government debt, meanwhile, will surpass the record level it reached during the second world war according to Gita Gopinath, the fund’s chief economist. Projections for next year are weak, too; apart from China, neither advanced nor emerging countries as a group will exceed the pre-crisis peak size of their economy before the end of 2021.
      …

      1. So was 2008, when the spring time collapse of Bear Stearns was prologue to the fall time collapse of Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, to name a few. All happened before November, although after the onset of recession in December of 2007.

        1. I think it’s relevant that in 2008, the sitting president was not running for re-election.

    5. There’s Unlimited Crater to lift stock prices.

      GM’s U.S. vehicle deliveries fall 34% in Q2
      Published: July 1, 2020 at 11:12 a.m. ET
      By Tomi Kilgore

      General Motors Co. (GM, -0.49%) said Wednesday that second-quarter deliveries fell 34.0% from a year ago to 492,489 vehicles, weighed down by the effects of the COVID-19 pandemic. Retail sales for the quarter fell 24%, as a 35% drop in April was followed by 20% declines in May and June. The auto maker said it will keep most of its U.S. plants operating, including all of its truck and sport-utility vehicle plants, during the traditional two-week summer shutdown period, as the company looks to restock inventory. GM said most of the increased output will be to restock retail channels, with capacity made available by lower rental volumes. Among deliveries for GM vehicle brands, total Chevrolet deliveries fell 33.6%, GMC declined 32.9%, Buick dropped 35.9% and Cadillac slid 41.4%.
      …

  10. Michigan’s Nurse Whitmer Wants To Make “Racially Motivated” 911 Calls A Hate Crime.

    So, if a non-white is robbing a bank, don’t report it.

    In other news, a BLM activist pulls a gun and shoots a driver in Provo, Utah. What provoked the shooter isn’t known. It looks like the driver was just driving through town.

      1. The fact that you actually asked for a “Link?” to confirm that Eva Braun would say such a thing speaks volumes but here you go.

        Governor Proposes Classifying ‘False, Racially-Motivated 911 Calls’ As Hate Crime

        June 29, 2020

        Gov. Gretchen Whitmer said in a press release she is proposing to “classify false, racially-motivated 911 calls as a hate crime.”

        The proposal is characterized as a law enforcement reform. Whitmer offered no additional details on the June 29 press release.

        https://www.michigancapitolconfidential.com/governor-proposes-classifying-false-racially-motivated-911-calls-as-hate-crime

        PS

        I’m going to let you find the video showing the BLM activist pulling a gun and shooting a driver in Provo, Utah, it’s easy enough to do.

        5. What’s wrong with asking for a source or at Linq? Not everyone blindly believes everything they see on the internet.

  11. Clip from the article. It went from $430 in 2002 to now 1.625 asking (1.7 in March). Although well refurbished – it has

    Relatively small rooms, a bland backyard and bar fence and bars on the glass doors (maybe not a safe neighbourhood)
    ———–
    When 41 Palace Street went to auction in March, the owners were looking to achieve a $1.7 million result. A bid of $1.64 million was topped by a vendor bid, before the property passed in.

    Now listed for private sale, listing agent Martin Khoury, of Exclusive Real Estate, said the price had been dropped to $1.625 million.

    Mr Khoury said the house was the vendor

    1. also from the article – things are picking up and real estate is only down 10-15% from peak pricing. Is there a real-estate term for knife-catchers

      —
      “Originally we were looking for $1.3 million to $1.4 million at the auction, but that was the weekend that COVID-19 came out so that just stopped it,” he said.

      The price has been slashed to $1.25 million. “It’s an absolute bargain,” Mr Khoury said.

      The pandemic had hindered some deals from transacting. “A lot of people lost their job, so they’d love to buy it but they just can’t,” he said. “The vendors are very understanding but they want to move on.”

      The rate of inquiries has picked up in recent weeks, Mr Khoury said.

      1. At least this one has a pool and an outdoor kitchen.
        But I will never understand what attraction Californians have to those ugly brown lumps they call “mountains.”

        1. You have to see them in a year like this one, when they are bathed in green thanks to above-normal rainfall.

          1. Yeah, and then two months later all that lush growth dries up and burns to a crisp. No thanks.

        2. At least this one has a pool and an outdoor kitchen.

          Tight fit. Small deck space.

        3. those ugly brown lumps they call “mountains.”

          They come with the low humidity and the overall lack of rainy days. Ocean views are far more desirable. To be honest, I’ve never heard a Californian wax about the “mountain views”, which are often obscured by smog anyway. Now the weather, about that they won’t shut up.

        1. If transaction costs are 7%, they’re losing money. At least they’re motivated unlike the financial manager/seller of a property I looked at last week. There’s so little single-story inventory with a safe backyard that I may be going back to him in a month or so with a “this is your last chance” offer. We already told his realtor the pool needs to be remodeled. It’s munchkin size and one of the most important features for what we need.

  14. What song were these lyrics stolen from?

    Mr. Slow Joe Biden, Mr. Slow Joe Hidin’
    Mr. Slow Joe Biden, Mr. Slow Joe Hidin’
    Got to keep on Hidin’
    Hidin’, Biden

    Well, I just got into town about an hour ago
    Took a look around, see which way the wind blow
    Where the little girls in their Hollywood bungalows

      2. “ooh ooh Mr Bojangles do i win a house???????”

        I’m sorry dj that is incorrect, so you must now buy a house at today’s inflated prices.

        For those who guessed L.A. Woman by The Doors you win and thus may continue renting.

        Any future rules and or regulations will be posted regarding um…uh…you know the thing.

        https://youtu.be/PpMAd7uXMSY

    3. Better hide the wimmin and children… Biden’s gonna be the next president.

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