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Turning A Long-Running Housing Shortage Into A Glut

A report from the Globe and Mail in Canada. “The condominium market in Calgary remains mired in a lengthy slump that has resulted in falling prices and a growing glut of new units that are sitting empty. ‘The condo sector’s been struggling for some time,’ said Ann-Marie Lurie, CREB’s chief economist. ‘We have a lot of supply, and not just in Calgary, but in some of the areas surrounding our city, too.'”

“Plenty of new units sit empty. In 2017, there was a monthly average of 1,227 completed and unsold condos in the Calgary area, according to CMHC, up from an average of 29 units three years earlier. After a drawdown in 2018 and 2019, the number of empty condos has recently spiked to nearly 1,200 as of May. As of the first quarter, new condo prices in the Calgary area have dropped by about 21 per cent since 2017, according to Statistics Canada.”

“Realtor Julie Dempsey said she’s working with three developers to sell new condo units that, in some cases, have been sitting empty for quite awhile. ‘These are brand new homes that no one’s lived in and they’ve been for sale for three years,’ she said.”

From 980 CJME in Canada. “Buyers are on the hunt for new homes in Regina, but there aren’t as many options on the market. But sellers with their houses on the market might not be getting the best bang for their buck. ‘A house is worth what a buyer is willing to pay,’ said Craig Adam of RE/MAX Crown Real Estate. ‘The good thing is if you keep your house in good top condition and showing well, it will sell. But prices have come down 10 (per cent), 20 per cent and some cases 30 per cent depending where you are in the city.'”

“Adam said prices of homes in Regina have gone down over the past few years and the current price tag on a home might be similar to what it was back in 2010.”

The Daily Sun in the UK. “Noel Gallagher is struggling to sell his London abode as the property remains on the market after four years. The six-bed house, located in Maida Vale, has seen its price reduced from its original asking price of £11.5million to £7.95m.”

The Connacht Tribune on Ireland. “House prices in Galway city dropped by 8 percent in June when compared to the same month last year. According to property website Daft’s latest housing market report, house prices in the county also fell by 2 percent in June. Average rental prices have dropped by 2 percent in Connacht. The number of homes available to rent nationally has increased by 21 per cent over the past year.”

From Dutch News. “Rent levels have fallen in the largest Dutch cities partly because the coronavirus crisis has led to a slump in the number of expats arriving, housing market specialists say. Thijs IJpeij, of Amsterdam-based estate agency HousingNet, said around 80% of his stock was normally rented out to expats. In the absence of international workers expat properties are being offered for up to 25% less.”

“‘We’ve got a typical expat property with 120 m2 in Amsterdam-Buitenveldert. Previously the owner would have been asking more than €2,400 for it: right now it’s at €1,850,’ he said. The ranks of rental properties have also been swollen by the collapse of the Airbnb market during the coronavirus lockdown. The national estate agents’ body NVM recently found that 29% more rental properties had been put on the market in the eight weeks from mid-March to early May than in the same period a year ago.”

From Euro Weekly News. “The Costa del Sol in Spain is still experiencing a massive drop in tourists visiting what was once Europes favourite holiday destination. A local costa del sol resident took to social media, which is full of debate on the subject, to express his concerns over rental prices.”

“Jamil-Facebook said: ‘I’m just waiting for all the rentals to go down in price as everyone including any tourist has not much money and hardly anyone has a job so good luck to all of you landlords and landlady who think there gonna get extortion prices after a world collapse also no one has 3 months deposit so yea good luck and all will have to change so I’m just waiting for the prices to collapse because greed is not gonna work if you ask me rental need to come down by half and the 3 months deposit needs to be removed then and only then will the economy start getting better ok rant over.'”

The South China Morning Post. “The former home of actor and singer Nicholas Tse in Hong Kong’s Southern district recently sold for a loss of up to HK$14 million (US$1.8 million), casting a shadow over the city’s luxury housing market. The 2,583 sq ft house in The Redhill Peninsula was this week sold for HK$60 million, or HK$23,229 per square foot, according to agents. Its former owners bought the house for HK$70 million in 2012, according to Land Registry documents.”

“When expenses such as stamp duties and commission are included, their loss on the property amounts to about HK$14 million, the biggest loss reported during a property transaction since the introduction of the national security law. The selling price is also 11.8 per cent lower than the asking price of HK$68 million, according to the agents. It is also 25 per cent below the HK$80 million that a neighbouring house with the same area sold for in January 2019.”

The Wall Street Journal on China. “Holders of yuan bonds issued by China’s Tahoe Group Co. were left empty-handed this week, when the company failed to pay around $214 million due. But they’re not the only creditors to Chinese real-estate developers worth watching. Like many developers, Tahoe in recent years has rapidly increased its presale income—money from sales of homes not yet built.”

“The company’s unearned revenue, denoting income received for work not yet completed, stood at $7.134 billion at the end of 2019, having more than doubled over two years. Buyers of properties at one Tahoe development in Beijing wrote to the company’s chairman last month after suspensions in construction, fearing they would be left without their homes, according to the Securities Times newspaper.”

From Reuters on Australia. “The hit to Australia’s population growth from closing its international borders is quickly turning a long-running housing shortage into a glut, bringing an end to the apartment building boom behind much of the country’s recent prosperity. Lindsay Partridge, managing director of Brickworks, a building materials company, sees the pipeline for big multi-unit housing developments drying up as immigration stalls and non-permanent residents depart.”

“‘We are seeing quite high vacancy rates emerging,’ Partridge told Reuters. ‘A lot of the people who were renting apartments are going home.’ Sydney, the biggest city, is experiencing the worst residential vacancy rate in the country at over 16 per cent in May from between 4 per cent and 5 per cent late last year, according to SQM research.”

From Domain News in Australia. “Asking rents for Sydney units have recorded their sharpest quarterly drop in 15 years, new figures have revealed. ‘The rapid rise in advertised rentals has put pressure on rents and tenants are using this as bargaining power to negotiate a deal,’ said Domain senior research analyst Nicola Powell.”

“With plenty of choice for tenants, Marrickville renter Melodie Marsh is leaving her share house for a two-bedroom unit. At $395 a week, it’s now cheaper than it was back in 2015 when it was advertised for $460 a week, and is also cheaper than it was back in 2010 – when it was advertised for $400. ‘This is a pretty major score as far as I’m concerned,’ Ms Marsh told Domain.”

“‘I had tried to move in January but [could only] afford a studio apartment,’ she said. ‘I knew the market was dropping [and decided to look again]. ‘[The landlord] was well aware of the vacancy rate and not wanting to have it sitting empty long, so they had already dropped the price,’ she said.”

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  1. ‘cheaper than it was back in 2010 – when it was advertised for $400. ‘This is a pretty major score as far as I’m concerned,’ Ms Marsh told Domain’

    ‘I had tried to move in January but [could only] afford a studio apartment,’ she said. ‘I knew the market was dropping [and decided to look again]. ‘[The landlord] was well aware of the vacancy rate and not wanting to have it sitting empty long, so they had already dropped the price’

    And the ankle-biter poster said earlier I want economic collapse? Does this sound like economic collapse? Lower prices for housing are desirable on every level. If you get foreclosed, you just gotta move. It was never yours anyway.

    1. And the ankle-biter poster said earlier I want economic collapse? Does this sound like economic collapse? Lower prices for housing are desirable on every level. If you get foreclosed, you just gotta move. It was never yours anyway.

      That’s the thing. So, you have to move because you borrowed for something you can’t afford? Big effing deal! Lower real estate prices are a boon for the economy.

      1. “…Lower real estate prices are a boon for the economy….”

        Exactly. Even landlords should realize this if they could get their heads out of the sand.

        I can’t think of one other consumer product in which rising prices are considered a good thing.

        1. Even landlords should realize this if they could get their heads out of the sand.

          I don’t think you’re going to get a group of people that’s highly leveraged to cheer for lower prices. Are there any old fashioned landlords left who own all their properties free and clear?

    2. Affordable housing has been an officially stated U.S. economic policy goal for as long as I have paid attention to the housing situation. It’s great to finally see a few signs emerging to suggest that the goal is within reach.

  2. ‘The company’s unearned revenue, denoting income received for work not yet completed, stood at $7.134 billion at the end of 2019, having more than doubled over two years. Buyers of properties at one Tahoe development in Beijing wrote to the company’s chairman last month after suspensions in construction, fearing they would be left without their homes’

    7 billion of fooked right there.

  3. ‘The condo sector’s been struggling for some time,’ said Ann-Marie Lurie, CREB’s chief economist. ‘We have a lot of supply, and not just in Calgary, but in some of the areas surrounding our city, too’

    Just a reminder, Ann-Marie spent 2 or 3 years saying ‘it’s goin’ up any day now’ but for years now she reads out the crater. And remember, before Vancouver, before Toronto, Calgary was the golden star in Canada’s bubble. More expensive than you California!

  4. Silver Spring, MD Housing Prices Crater 20% 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.”

    1. “…cheap….COVID-19 treatment…”

      Yeah, that’s not happening. The moneyed special interests want the $3,000+ per treatment drug. Whaaa – it doesn’t work? That doesn’t matter, it’s about profitZ.

      1. It’s not just the $3000 for Remdisivir. You also need to be in a hospital bed getting it via IV for over a week. That racks up a lot more charges than going home and taking a couple pills.

      2. $3,000+ per treatment drug

        Speaking of which, I’m finally getting around to reading Naomi Klein’s “Shock Doctrine”. I wasn’t aware that Gilead was one of Donald Rumsfeld’s money making projects from way back. They patented a whole portfolio of stuff and every crisis try to find a way to make money off it. Interesting that Trump is fighting it rather than trying to get in on it. They must really not like him in Bush country.

    2. At 3:37 to be exact. Inhaled steroid Pulmicort. Here’s something a little more scientific:

      “Furthermore, early, not yet peer-reviewed data, suggest ciclesonide blocks SARS-CoV-2 RNA replication in vitro [20] and inhibits SARS-CoV-2 cytopathic activity [21], which may be of great relevance to reducing the risk of developing of COVID-19 in response to SARS-CoV-2 infection or reducing the severity of the disease.” https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7236828/

      So the steroid seems to do mostly the same thing that hydroxychloroquine does, which is to stop the virus from replicating. There’s no spectacular studies or results yet, but worth pursuing. BTW the doc in the video also states that HCQ works. There’s also evidence that Ivermectin, and anti-parasite, may work too, but they’re looking for more data on that.

  6. “New York’s Finest are putting in for retirement faster than the NYPD can handle — while citing a lack of respect and the loss of overtime pay, The Post has learned.

    A surge of city cops filing papers during the past week more than quadrupled last year’s number — as the city grapples with a surge of shootings — and the stampede caused a bottleneck that’s forcing others to delay putting in their papers, officials and sources said.”

    https://nypost.com/2020/07/08/nypd-limits-retirement-applications-amid-411-surge-this-week/

    This is what you voted for. You wanted it, now you got it.

    1. Daytime public executions are back in NYC. Happened in the Bronx on Sunday. If you haven’t seen it on the news, search for it. It’s horrific. You won’t know whether to shit or go blind when you see it.

      1. My googling isn’t coming up with anything as disturbing as the guy a couple of weeks ago that got shot point blank while he was changing his tire by a guy walking by who just looked around for a second and held a pistol to the side of his head and popped one off and kept walking.

      2. Is this about white cops killing innocent black victims?

        If not, then MSM reporters don’t give a flying fook, as the story does not fit into the BLM world view.

    2. “You have to be crazy to stay on a job where you are losing money, abused by the people you are trying to protect and not appreciated by the politicians,” the source said.

      Well, that’s that.

    3. loss of overtime pay

      How much you want to bet that these new retirees are geezers who were just pension padding? If there’s no overtime and you’ve already maxed your high 3, there’s no reason to keep working.

  7. “Realtor Julie Dempsey said she’s working with three developers to sell new condo units that, in some cases, have been sitting empty for quite awhile. ‘These are brand new homes that no one’s lived in and they’ve been for sale for three years,’ she said.”

    If only something could be done to make them more attractive to buyers. I remember long ago in one of my MBA classes something about sunk costs but I just can’t remember how that applies now.

    1. Toss in one of Ben’s foot rubs, or the keys to a BMW in the garage, etc., are all tricks to avoid altering the list price, and having to adjust the project’s prospectus. It’s kind of like “the comps” for an existing neighborhood, i.e., a write-down has to be avoided.

  8. Well there is a serious housing shortage all over California especially in northern California here in Sacramento. Low inventory and low interest rates keep prices high and homes are selling fast! Not sure if the low inventory problem will ever end in California? Seems like only low wage service workers on minimum wage lost jobs in COVID-19 not the high wage professionals who can buy homes.

    1. Shortage = deadbeats living payment free in rentals or owner-occupied homes with unpaid rents or mortgages.

        1. I don’t wish any malice on deadbeats. Was just pointing out why there’s a housing shortage that hasn’t changed much despite record levels of unemployment and (presumably) nonpayment of rents and mortgages.

  9. Another day, another new record level of increase in U.S. COVID-19 cases. And COVID-19 deaths are creeping back up to nearly 1000 a day again. (Yawn…)

    1. The Financial Times
      Coronavirus business update 30 days complimentary
      Coronavirus pandemic
      US coronavirus cases jump by one-day record of 62,000
      Death toll also shows signs of rising for first time since new outbreak in south and west
      California has started to slow or reverse reopening plans in parts of the state hardest hit by the latest outbreak
      © AP
      Peter Wells and Matthew Rocco in New York and Courtney Weaver in Washington 6 hours ago

      The US had its biggest one-day increase in coronavirus cases since the start of the pandemic, recording 62,000 infections on Wednesday in a sign that a series of new restrictions has failed to snuff out the outbreak.

      The 62,117 new cases shattered Friday’s record of 57,562 and took the nationwide tally to more than 3m cases since the pandemic began, according to the Covid Tracking Project. It was accompanied by data showing that the number of fatalities was also beginning to rise after weeks of trending lower.

      The White House has sought to temper concerns over the month-long outbreak in the US south and west by noting it has not been accompanied by a rise in coronavirus-related deaths, which was the hallmark of earlier phases of the pandemic.

      But according to the Covid Tracking Project, the US recorded about 900 deaths on Wednesday, the second day of such numbers in a row, up from just 242 on Monday. Texas, which recorded about 10,000 new cases for the second consecutive day on Wednesday, reported 98 deaths that day, a sharp increase from a record 60 tallied on Tuesday.
      …

        1. And give rise to a few new explanations of why this won’t derail the green shoots of economic recovery that are beginning to emerge…

    2. Local
      COVID-19 deaths cross 400 as San Diego officials consider how to go back to school
      Despite the lower numbers, other signs show the pandemic is far from easing.
      Author: City News Service
      Published: 5:36 PM PDT July 8, 2020
      Updated: 5:36 PM PDT July 8, 2020

      SAN DIEGO — San Diego County health officials reported 264 new COVID-19 cases and seven additional deaths Wednesday, raising the county’s totals to 17,842 cases and 406 deaths.

      Of the 7,607 tests reported Wednesday, 3% returned positive. A total of 402,494 tests have been completed in the county, along with 20,691 contact tracing investigations.

      Wednesday’s results come a day after a record-high 578 cases, a 10% positive test rate and 12 deaths were reported Tuesday.

      Despite the lower numbers, other signs show the pandemic is far from easing. A new daily high of 38 COVID-19 positive patients were hospitalized in Wednesday’s data, and about 136 of every 100,000 San Diegans are testing positive for the illness, well above the state’s preferred target of 100 per 100,000. Total COVID-19 hospitalizations have inched up over the last several weeks, said Dr. Wilma Wooten, the county’s public health officer.

      “The pandemic is not over,” she said. “The disease is still widespread in our community, as evidenced by the rising cases.”
      …

      1. back to school

        My son was so excited to go to summer school today. One of eight days this summer. 32 hours total in 5 months.

  10. Not every bear has gone into permanent hibernation, just yet.

    Key Words
    ‘The market isn’t pricing in an all-clear on the economy,’ say BofA analysts, who say the S&P 500 will end the year at 2900
    Published: July 8, 2020 at 5:53 p.m. ET
    By Andrea Riquier
    If investors thought everything was hunky-dory, they wouldn’t continue to reward work-from-home stocks, this analyst notes
    A bearish call
    Getty Images

    Many analysts have spent the past few weeks advising investors to buy the dips and pointing to unprecedented levels of fiscal and monetary stimulus, among other things, as reasons to be bullish on stocks.

    Not BofA head of equity research Savita Subramanian. On a mid-year outlook briefing webinar, Subramanian explained that her year-end target for the S&P 500 (SPX, +0.78%) is 2900: an 8% decline from current levels. She offered one bull case for stocks — that they’ve rarely been so attractive, relative to bonds — but also noted a litany of headwinds.

    “I wouldn’t paint myself as a bear but the risks between here and year end are completely to the downside,” Subramanian said. “We’ve had a reopening frenzy and now we’re seeing payback.
    …

    1. This is a nice opportunity for those who doubt the majority of polls to make long shot bets that pay off.

      With no sport to bet on, punters have turned to the US election – and they’re backing Joe Biden
      James Moore
      Wednesday 1 July 2020 09:23

      With sport shut down for months, punters have turned in unprecedented numbers to the forthcoming US presidential poll for their thrills.

      Paddy Power says its market is currently four times the size that it was at this point last time around, while the betting exchange run by sister company Betfair has seen more than double the activity compared with 2016.
      …

  12. Back in March, at the onset of U.S. COVID-19 social distancing measures, there were predictions for how housing would spectacularly outperform other assets during the upcoming quarantine period. I can’t recall the reasons the MSM-cited housing market experts gave to support their predictions.

    Can anyone possibly provide an update on how well these predictions have held up, now that we are in the middle of the red hot summer sales season?

    1. Here’s a recent press release from the California Association of Used Home Sellers:

      Full impact of coronavirus pandemic hits California housing market in May, C.A.R. reports

      – Existing, single-family home sales totaled 238,740 in May on a seasonally adjusted annualized rate, down 13.9 percent from April and down 41.4 percent from May 2019.

      – May’s statewide median home price was $588,070, down 3.0 percent from April and down 3.7 percent from May 2019.

      – Year-to-date statewide home sales were down 12.9 percent in May.
      …

        1. Desirable properties always sell. The more relevant question is what’s happening to the millions more middling properties.

    2. 2021 Could See First Decline in Home Prices in 9 Years
      Jul 7 2020, 9:21AM
      Jann Swanson

      Did the housing happy talk just get a little less so?

      CoreLogic’s Housing Price Index Forecast (HPI) over the May 2020 to May 2021 window is seeing more rapid price deceleration in the face of the COVID-19 situation than did their previous 12-month forecast that ended in April of next year.

      In its report last month CoreLogic said it expected that “the housing market may be equipped to lead the broader economy through the recovery” but that home prices increases would slow and that the gain from April to May would be only 0.3 percent. They went on to predict that 2021 would bring the first decline in nine years, and by April 2021 the national price gain would turn negative, down 1.3 percent.

      Today the company says that pent-up demand and tightening supply continued to prop up home prices in May even as the number of coronavirus cases and levels of unemployment soared. However, the downturn is expected to be reflected in the June data and will continue throughout the summer as unemployment persists and dampens buying. CoreLogic now anticipates that home prices fell 0.1 percent in June and forecasts the decline to reach 6.6 percent by May 2021.
      …

    3. 1991 was a year that kicked off a half-decade long slide in California housing prices.

      News
      San Diego County home sales plummet to level not seen in nearly 30 years
      There were 2,327 home sales in San Diego County in May, down more than 40 percent from the same period the previous year, according to CoreLogic data provided by DQNews.
      By Phillip Molnar
      June 20, 2020
      10:41 AM

      Housing sales in San Diego County had their biggest annual drop in nearly 30 years in May as the COVID-19 coronavirus brought the market to a crawl.

      There were 2,327 home sales in May, down more than 40 percent from the same period the previous year, according to CoreLogic data provided by DQNews. Analysts pointed to a lack of consumer confidence and sellers pulling homes off the market to wait out for a better selling time.

      The decline represents the biggest annual drop in home sales since January 1991, when sales were down by 41.5 percent.

      Despite few sales, home prices were largely unchanged. The median price of $590,000 was down about $4,000 from last month but still up 3.5 percent in a year. The home inventory decline resulted in bidding wars for a limited number of properties and pushed prices up, or at least meant almost no price reductions.
      …

  14. ‘Chinese state media urged investors to think long term, and authorities highlighted hundreds of operations making illegal loans against shares, showing that Beijing is eager to avoid stocks overshooting.’

    ‘Mr. Zhang said extra funds in the financial system, introduced partly by easier monetary policy, had nowhere to go but stocks. “It can’t go to the housing market. The wealth-management market’s yield is low,” he said.’

    ‘Wang Jian, a 37-year-old project manager at a games company in Shanghai, said there were no better investment opportunities than stocks at the moment. He said the rally could continue, given that investors’ concerns about trade conflict and the coronavirus have receded, and valuations are still low by global standards.’

    “Many people around me are keen to join the party,” Mr. Wang said. “Normally they are terrified of investing in the stock market, but now they are eager to put in 10,000 or 20,000 yuan,” he said, referring to the equivalent of about $1,430 to $2,860. Mr. Wang said his wife previously opposed him buying more stocks, when the Shanghai Composite was trading at a lower level, but she recently started asking if he needed more cash to buy shares.’

    https://www.wsj.com/articles/china-tries-to-keep-market-exuberance-under-control-11594291014

    2. “… authorities highlighted hundreds of operations making illegal loans against shares, …”

      Sounds reminiscent of U.S. corporations borrowing money to pump up their own stock prices.

      Seems like we may never run out of crater the way things are going!

    3. his wife …recently started asking if he needed more cash to buy shares

      So, is it 1929 or 1930? I’m having trouble keeping up.

  15. City of Denver wants to create “temporary” homeless camps.

    Denver mayor to council members: Where do you want to put a homeless camp in your district?

    I wonder if the virtue signalers in their pricey Denver houses will be thrilled when a camp that we all know won’t go away sets up shop a few blocks from their 800K Washington Park or Stapleton house in that nice little park.

    1. All homeless camps should be placed in the wealthiest neighborhoods. The financial “winners” essentially stole all that money from the losers as all the wealth has gone to the top. And I am not talking about million dollar houses, I am talking about the $10 million+ houses. That’s where all the homeless should be placed.

        1. The Denver convention center has been converted into a field hospital, though it is currently unused.

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