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Some Of Them Already Paid Deposits, But They Had A Change Of Heart

A report from the Globe and Mail in Canada. “In June, the Toronto Regional Real Estate Board reported that the average price in the Greater Toronto Area sailed to a record high of $930,869. Real estate broker Farrell Macdonald says some properties that sold three years ago are selling for less today. ‘It’s really hard to lose money in Toronto real estate but it happens.’ He’s hoping the market won’t see distress sales but even a shift towards more listings combined with a slight pullback in buyers would change the market dynamics.”

From Now Toronto in Canada. “Toronto real estate prices are headed for a cliff. The condo market will drag it further down according to the Canada Mortgage and Housing Corporation (CMHC). According to the Canadian Bankers Association (CBA), more than 760,000 Canadians have opted to defer their mortgages or skip payments. That’s about 16 per cent among those with mortgages in bank portfolios. There will be an increase in Toronto real estate supply from homeowners who can no longer defer mortgages. That supply will couple with inventory from the condo market fuelled partly by short-term rental restrictions during the pandemic.”

“‘More units could also sit on the market longer as more buyers wait on the sidelines,’ the CMHC says. They attribute that decline in demand to job losses and general financial uncertainty. ‘A significant number of condominium units under construction (54,000 units currently) will make its way to the resale pool and will further increase supply.'”

“The Toronto Regional Real Estate Board (TRREB) is reporting how hard the condominium rental market got hit in the year’s second quarter. According to TREBB, GTA realtors reported 7320 apartment rentals in Q2, which is down 24.8 per cent from the same time last year. Meanwhile, the number of rental listings were up by 42 per cent from last year.”

From Bloomberg on the UK. “Chinese President Xi Jinping and then-U.K. Prime Minister David Cameron were on hand to toast the signing of the deal to transform 35 acres of derelict London riverfront into a bustling finance hub. Five years on, developer Xu Weiping’s vision for another Canary Wharf packed with Chinese companies looks more like a mirage. Overlooking the Thames, along the old Royal Albert Docks and across the water from City Airport, stand 21 new buildings that form the first phase of the 1.7 billion-pound ($2.2 billion) project. They’re almost all empty.”

“‘All of these geopolitical changes have brought uncertainty, which affected the mindset of Chinese and Asian investors,’ says Xu, a China-born citizen of the Seychelles who has been in London since the outbreak of the pandemic. ‘Some of them already paid deposits, but because of those changes they had a change of heart.'”

The Malaysia Star. “Property Auction House executive director Danny Loh said that he is anticipating a challenging post-loan moratorium period. The higher foreclosure of commercial units is likely due to more housing projects being built under integrated development, a change in business model from brick-and-mortar to online platforms, and slower economic growth in recent years, Loh says.”

“A source from Lelongtips.com says there are expectations for foreclosures to rise. ‘Otherwise, there is no need for a loan moratorium, or its extension,’ he says. He says 10,301 properties went for 13,403 rounds of auctions for January-June, some having gone through two to three rounds auction, with a 10% drop in reserve price each time.”

“In its July 21 note, CGS-CIMB said: ‘We gather that the auction property market is likely to gain traction in future as financial institutions intensify their recovery efforts, increased handover of completed units and weaker property prices due to more auctions and a more competitive property market.'”

The Sydney Morning Herald. “Sydney and Melbourne house values tumbled through July with warnings the reduction of government and private bank support through the final three months of the year could weaken the property market even further. With much support starting to fall from October, and mortgage repayment holidays likely to expire by March, the market deteriorate that could force more properties to sale. ‘Urgent sales are likely to become more common as we approach these milestones, which will test the market’s resilience,’ said CoreLogic’s head of research, Tim Lawless.”

The Australian Financial Review. “Residential developers are facing the biggest credit squeeze since the global financial crisis, with construction loans especially hard to come by, according to a new report by law firm Ashurst. Not only are loans harder to secure from increasingly cautious and risk-averse banks and non-bank lenders, but they have become more expensive and restrictive since the onset of the COVID-19 pandemic.”

“Average aggregate margins and line of credit fees offered by banks have increased by 50 basis points since the start of the pandemic, rising from around 3 per cent a year to around 3.5 per cent. Developers have also had to find significantly more equity to get a bank loan, with average loan-to-value ratios (LVRs) tightening from 62.5 per cent to 50 per cent over the same period.”

“Bass Capital partner Yehuda Gottlieb added that valuations had also been falling, the impacts of which would need to be covered by additional equity from the developer. ‘The risky assets are seeing greater falls in valuations and greater falls in LVRs. Lender and valuers are being more cautious in these sectors than for vanilla residential construction loans,’ he said.”

The New Zealand Herald. “Auckland’s most exclusive suburbs made a booming start to the new year, but have since endured falling prices as the sale of luxury mansions slows, new data shows. In fact, 13 of the 17 suburbs had now dropped in value post-lockdown. ‘The downward trend is similar to one that emerged post-GFC, when higher value housing stock was the first to respond to changing market conditions,’ James Wilson, director of valuation at property analysts Valocity, said.”

“The recent slump at the top end was potentially a canary in the coal mine indicating the booming price rises of early 2020 had potentially slowed in the near future. Wilson said luxury home buyers tended to be more influenced by international market conditions and so were often the first to pull back. However, property investors and mum and dad home owners thinking about buying a better home also appeared to have temporarily stepped back from the market, he said.”

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This Post Has 85 Comments

  1. ‘the average price in the Greater Toronto Area sailed to a record high of $930,869’

    One of these things is not like the other:

    ‘Macdonald says some properties that sold three years ago are selling for less today’

    See, these people lie. They twist statistics around, churning the mix, and voila! a record high! Remember the Australian professor who recently caught the REIC flat out hiding lower prices? That’s one way to get there I suppose!

    1. Why would the REIC hide lower prices, though? It makes no sense. They make money in any market, so the price shouldn’t matter.

      1. Price equals value and thus rising prices translate to rising values, which in turn translates to the creation of wealth.

        The REIC is interested in volume; The greater the volume the greater the income for everyone involved. The perception that wealth is magically produced by rising prices is what draws in the schmucks and hence ups the volume of transactions.

    2. CMHC the fed agency (similar to FHA/Fredie/fanny) increase the criteria effective end-June. A bunch of first timers (esp for condos) did not qualify – it will take them time to go to 3rd party or their parent to get the full downpayent

  2. ‘‘A significant number of condominium units under construction (54,000 units currently) will make its way to the resale pool and will further increase supply’

    Well, that’s up from the 24,000 new Toronto airboxes on the way I last heard.

    1. a lot of condos were built in the downtown corridor – say 15 blocks NS by 10 blocks EW where folks could walk to work. At the banks, lawfirms, brokerages etc.

      These were 2 bdrm 800-1000 sq feet – albeit with fancy trim, appliances etc. The ideas was to ‘build equity’ and when you started having kids buy a townhouse further out.

      So much for best laid plans. My sister (very senior in a law dept at a major bank) says that they are super worried about some of the late 20’s, early 30’s employees. With only 2 people allowed in condo elevators and condos with 30-50 floors, it is taking them up to 40-60 minutes to even get on an empty elevator to just get food.

      Otherwise they are stuck in the condo by themselves or with a room mate.

          1. If I was in the marketing/sales department for the condo, I’d spin it as, “think of all the money you’ll save on a gym with all these stairs available to climb!”

  3. I just got this:

    $2,614,500 3 bd
    2,530 sqft
    Price cut: $50K (8/3)

    900 W Olympic Blvd UNIT 48C, Los Angeles, CA 90015

    Price history
    DATE EVENT PRICE
    8/3/2020 Price change $2,614,500 (-1.9%)

    6/3/2020 Price change $2,664,500 (-0.9%)

    1/9/2020 Price change $2,689,500 (-2.2%)

    1/6/2020 Listed for sale $2,750,000 (-1.4%)

    10/17/2019 Listing removed $2,788,800

    7/26/2019 Price change $2,788,800 (-6.9%)

    3/28/2019 Listed for sale $2,995,000 (-0.1%)

    9/1/2018 Listing removed $2,997,000

    7/9/2018 Price change $2,997,000 (-3.3%)

    6/4/2018 Price change $3,099,000 (-4.6%)

    3/27/2018 Listed for sale $3,250,000 (+55.1%)

    7/31/2013 Sold $2,095,020

    https://www.zillow.com/homedetails/900-W-Olympic-Blvd-UNIT-48C-Los-Angeles-CA-90015/119677631_zpid/

    1. It’s weird that the high end may already have given up 6+ years of gains, yet the low end hasn’t even budged in places. That’s serious spread narrowing.

      1. If buyers can pay a little more for a much nicer place, the slightly cheaper less nice places will tend to not sell…until their prices are adjusted downwards to reflect new market realities.

        1. a little more for a much nicer place

          That house with the mini-vineyard has multiple offers being reviewed today.

          3. The last thing I need to dabble in is winemaking. 🤪

            I try to keep my focus on the wine drinking part!

    2. They’re having a hell of a time trying to find a multimillionaire buyer who is willing to pay way over market value for the place.

      The only hope for them is to keep dropping the list price until a buyer makes an offer. This technique is known as a Dutch auction. I don’t know if the term originated with the collapse of the tulip bubble.

      1. nicely staged condo – esp with the liquor – if someone lives in the area – would be nice to take a tour and a few swigs

  5. I’m starting to see a number of businesses for sale, and the real estate as well. People are trying to get out.

    1. No worries about a wall that keeps yachts out. Quarantine Act, $750,000 fine and six months in jail. Oh, and your yacht, it’s not your’s anymore.

    1. I played in a backup orchestra for Page once, but never saw nor joined the Stones on stage.

        1. He once owned a Harley Davidson and a Triumph Bonneville.
          Counted his friends in burned-out spark plugs
          and prays that he always will.
          But he’s the last of the blue blood greaser boys
          all of his mates are doing time:
          married with three kids up by the ring road
          sold their souls straight down the line.
          And some of them own little sports cars
          and meet at the tennis club do’s.
          For drinks on a Sunday — work on Monday.
          They’ve thrown away their blue suede shoes.

          Now they’re too old to Rock’n’Roll and they’re too young to die.

          https://www.azlyrics.com/lyrics/jethrotull/toooldtorocknrolltooyoungtodie.html

          1. “Now they’re too old to Rock’n’Roll and they’re too young to die.”

            Sounds like me.

      3. I saw Jimmy Page play Stairway to Heaven in Seattle in the late 70s at the King Dome after I returned stateside.

  10. Seems like the Fed has decided to throw Uncle Buck under the bus to prop up risk assets.

    Currencies
    Dollar could be a ‘crash risk’ if U.S. loses ‘credibility,’ analyst warns
    Last Updated: Aug. 3, 2020 at 5:53 p.m. ET
    First Published: Aug. 3, 2020 at 5:33 p.m. ET
    By William Watts
    Others see bigger risk of bounce for oversold dollar
    Getty Images

    The U.S. dollar began August with a bounce after suffering its worst monthly fall in just shy of a decade, but it did little to dissuade bears who are looking for further weakness in the greenback.

    “We expect the currency to be undermined by an ebbing of safe-haven flows, a reduction in the U.S. rate advantage, and political uncertainty ahead of the November presidential election,” wrote analysts at UBS, in a note last week.
    …

    1. I said years ago that the one U.S. asset Generation Greed hadn’t cashed out yet was the country’s standing as a global reserve currency, and surely they wouldn’t let later born generations have that either.

      1. and surely they wouldn’t let

        Funny as usual Larry. You think ordinary working people like you and I are the masters of the financial universe?

        1. Even the non ordinary people aren’t the masters that others think they are.

          FED Chairman Janet Yellen: “We don’t really understand inflation.”

          2. “We don’t really understand inflation.”

            Rarely can anyone define it precisely and accurately.

            It’s used quite effectively at separating what little money people have and compelling them to do really dumb things like borrowing for 30 years for a rapidly depreciating asset like a house.

          3. See? For years I have been telling people that these Federal Reserve folks, although they try to keep it hidden, really do, deep down, have a well-developed sense of humor.

    2. Seems like the Fed has decided to throw Uncle Buck under the bus to prop up risk assets.

      They decided that about 12 years ago. Every decision since then has been how to milk it for as long as possible before it dies.

    3. Dollar could be a ‘crash risk’ if U.S. loses ‘credibility,’ analyst warns

      I’m surprised it hasn’t crashed already. But perhaps the current trajectory of gold and silver shows that the dollar is quietly crashing.

    1. Here’s the source of future U.S. housing demand. I.e. you can stick a fork in yer bubble.

      US income inequality
      Why the Covid-19 financial crisis will leave lasting scars on Gen Z
      The effects of this economic downturn will likely be felt for years as people born between 1997 and 2012 try to start careers and build savings with an economy that was struck to rubble
      For people born between 1997 and 2012, life has practically been upended and the financial crisis caused by the virus threatens their livelihoods for years to come
      Lauren Aratani in New York
      Published on Mon 6 Jul 2020 03.00 EDT

      Graduation was supposed to be one of the best moments of Stephany Torres’s life.

      As a first-generation student at the University of California Los Angeles, Torres was looking forward to celebrating her new degree with friends and family. After graduation, she was supposed to have an internship at a law firm in Los Angeles, making new connections and getting more insight into the type of law she wants to study.

      Instead, graduation and the internship were cancelled. Torres, 21, who is from South Central Los Angeles, was laid off from her on-campus job that was helping her pay her rent and support her mother. She moved back home, and while she is planning on taking on a research position at UCLA, she has been trying to look for paid positions in the legal field.

      “I had built up my resume to land an internship like this,” Torres said. “When that was taken from me it was really hard because I just feel so much uncertainty right now.”

      The coronavirus pandemic has hit every generation hard, disproportionately killing older Americans and spreading economic fear across the entire country. For Gen Z, people born between 1997 and 2012, life has practically been upended and the ramifications of the virus and the financial crisis it has engendered threatens their livelihoods for years to come.
      …

  13. San Francisco Business Times
    Two major Contra Costa housing developments move
    ahead …
    The area to the east of The Ranch is also seeing a glut of homes go up right now as Concord-based DeNova Homes is building 533 houses as part of its Aviano …

        1. ‘One person was killed and two more were critically wounded after shots were fired at a large party at a mansion in the upscale hillside neighborhood of Beverly Crest in the early morning hours Tuesday. Kennie D. Leggett, who identified himself to CBSLA as the head of security for the party, alleged it was being thrown to celebrate a player recently getting drafted to an NFL team, but did not clarify the name of the player or which team he was drafted to.’

          “We have money,” Leggett said. “We are people. This, COVID I mean, is just pushing us out everywhere, and we have nothing, so the only thing we do have is Airbnbs to rent, swimming pools for our kids, to do big things and things of that nature.”

          ‘On Monday night, prior to the shooting, police had responded to numerous complaints from neighbors worried about the size of the crowd. Pack buses were seen dropping dozens of people off at the home. When officers first arrived at about 6:30 p.m. Monday, they found about 200 people.’

          https://losangeles.cbslocal.com/2020/08/04/gunfire-beverly-crest-large-party-3-wounded/

          1. What is it with STR and shootings?

            ‘Last night, another shooting at a Scottsdale short-term-rental. The looting at Fashion Square was planned and staged from a nearby STR. Often seen, occupants at STRs jumping off patio roofs into pools. What is the city doing to halt the general disruption in our neighborhoods, overstuffed trash receptacles and misused recycling containers?’

            ‘All of the above are intolerable in our family-friendly neighborhoods. Near my house are four short-term rentals, excess cars on the street, the occasional long limo and six passenger beer buggy. On the way to Pueblo Elementary, kids have to walk the gauntlet between two corner short-term rentals. Next to one STR lives a family with four young daughters. Unacceptable.’

            https://www.yourvalley.net/stories/ortega-confronting-short-term-rentals,177155

          3. ‘One person was killed and two more were critically wounded after shots were fired at a large party at a mansion in the upscale hillside neighborhood of Beverly Crest in the early morning hours Tuesday.

            These Amish Rumspriga capers are getting out of hand. Someone needs to tell the Amish elders to rein in their wayward youth.

          4. Airbnb Was Like a Family, Until the Layoffs Started
            What happens when a kumbaya office culture meets the business realities of a pandemic?
            By Erin Griffith
            July 17, 2020

            SAN FRANCISCO — On May 5, after almost two months of working alone in his San Francisco apartment, Brian Chesky, Airbnb’s chief executive, cried into his video camera.

            It was a Tuesday, not that it mattered because the days had blurred together, and Mr. Chesky was addressing thousands of his employees. Looking into his webcam, he read from a script that he had written to tell them that the coronavirus had crushed the travel industry, including their home rental start-up. Divisions would have to be cut and workers laid off.

            “I have a deep feeling of love for all of you,” Mr. Chesky said, his voice cracking. “What we are about is belonging, and at the center of belonging is love.” Within a few hours, 1,900 employees — a quarter of Airbnb’s work force — were told they were out.

            The moves thrust Airbnb into the center of a growing debate in Silicon Valley: What happens when a company that has positioned itself as family to its employees reveals that it is just a regular business with the same capitalist concerns — namely, survival — as any other?
            …

          5. ‘Last night, another shooting at a Scottsdale short-term-rental…’

            A large percentage of these STRs are in high dollar neighborhoods, and the people who “own” them are the higher income earner/wealthy crowd. They will happily destroy their brethren for a buck.

        1. I think we are years from any deals on anything. You can name any asset, investment or otherwise and it is grossly overpriced. Even all these people piling into precious metals at these prices will likely be disappointed.

  14. The beginnings of the next global financial crisis are emerging in Turkey, where the central bank (run by corrupt President Erdogan’s son-in-law) is desperately trying to prop up the lira. Developers close to the repressive Erdogan regime went on a speculative building frenzy enabled by huge euro- and dollar-denominated loans from the PIIGS banks, which are now proving prohibitively costly to pay back as the Turkish economy tanks along with the lira. When the cascading defaults start, the PIIGS banks will of course turn to the globalist Quislings of the EU and ECB for bailouts, but the rapid rise of populism and nationalism in Europe means taxpayers in countries like Germany may balk at being put on the hook for the bankster’s gambling losses, limiting the central bankers’ ability to keep kicking the can on the next financial crisis.

    https://www.nasdaq.com/articles/rates-soar-for-turkish-lira-in-long-dormant-offshore-swap-market-2020-08-04

  17. I saw Jimmy Page play Stairway to Heaven in Seattle in the late 70s at the King Dome after I returned stateside.

    1. Ya gotta love it. These parasites are getting paid more to stay home than work, and they refuse to pay the rent, because they know they don’t have to (for now).

      I’m sure there will be a lot of political pressure to make the $1000 a week permanent, and with no limits for the recipients. A back door to UBI.

    2. “Dope will get you through times of no money better than money will get you through times of no dope.” —Gilbert Shelton, The Fabulous Furry Freak Brothers

  24. I still think the American Ship can be turned around.
    The Commie ideas will only make us fall fast.

    The USA has been down before. It’s a matter of going back to capitalism, shrinking the Big Government, and getting productive again.

    Having Globalist Monopolies and Wall Street Casino Markets turned the USA into some kind of a Looter economy for the one percent.
    So if we go into a big Depression, it’s opportunity to correct the system that went haywire .
    I don’t know about others, but to me it’s so insulting that the Dem are running a corrupt old senile man like Biden. In fact, I have never been so insulted that these people think that people are this brain dead that the racism narrative is top priority, verses the survival of millions of people.

    Given the wacky course we are on, millions could become homeless. This is survival and Climate Change and having a Black female V.P. isn’t relevant to the needs of the near future.

    The collapse of health care will take place if you have massive unemployment and homelessness.
    Anyway, enough of this corrupt Big Government that’s detached from millions of people who need to survive. Like Ben Jones would say in essence that we can’t live on selling overpriced homes to each other.

    1. “I still think the American Ship can be turned around.”

      I believe that too. Among the many things that need to happen we need to scrape the hull clean of parasites particularly the middle east, and our steerage passengers need to downsize their living standards in-line with their input.

  25. The globalists and their collectivist minions are escalating their efforts to rewrite and falsify history, just as Orwell predicted.

    “Every record has been destroyed or falsified, every book rewritten, every picture has been repainted, every statue and street building has been renamed, every date has been altered. And the process is continuing day by day and minute by minute. History has stopped. Nothing exists except an endless present in which the Party is always right.”

    ― George Orwell, 1984

    Chicago-Area Leaders Call for Illinois to Abolish History Classes

    https://www.nbcchicago.com/news/local/chicago-area-leaders-call-for-illinois-to-eliminate-history-classes/2315752/

    1. “I’m calling on the Illinois State Board of Education and local school districts to take immediate action by removing current history books and curriculum practices that unfairly communicate our history. Until a suitable alternative is developed, we should instead devote greater attention toward civics and ensuring students understand our democratic processes and how they can be involved.”

      Like arson and looting?

      1. BLM Leader: We’ll ‘Burn’ the System Down If U.S. Won’t Give Us What We Want

        Current Year Civics

      2. ensuring students understand our democratic processes

        Make sure you include why we’re a republic and not a pure democracy…a very important distinction!

  27. How’s the plan to make everyone rich by inflating housing costs working out?

    Pocket worthy
    In Rich Countries, the Middle Class Is Getting Smaller and Smaller, Generation by Generation
    Automation and the rising cost of living are pinning the middle class into a corner.
    Quartz
    Eshe Nelson
    Suburban dreams. Photo by Reuters / Neil Hall.

    Across Western Europe and North America, the middle class is shrinking, according to a 2019 report by the OECD. With each new generation, a smaller share of the population find themselves earning middle incomes.

    When the Baby Boomers, who were born between 1943 and 1964, were in their twenties, some 68 percent were in middle-income households. Only 60 percent of Millennials, who were born between 1983 and 2002, could say the same at a similar time in their lives.

    The OECD defines the middle class as people earning between 75 and 200 percent of the national median annual income. Its data is an average of results from Canada, Denmark, Finland, France, the United Kingdom, Ireland, Italy, Luxembourg, Mexico, the Netherlands, Norway, Spain, Sweden, and the United States.

    The “economic influence” of the middle class has also dropped sharply over time, said the OECD report, which was published on April 10, 2019. Across the OECD, middle incomes have increased by just 0.3 percent per year, on average, over the past decade. By comparison, in the decade before the financial crisis, middle incomes grew by 1.6 percent per year, and by 1 percent the decade before that.

    Housing costs are squeezing the middle class the hardest; this now consumes a third of disposable income for middle-class households, up from a quarter in the 1990s. Housing and higher education expenses have been rising faster than middle incomes, the OECD said.
    …

  28. Automation and the rising cost of living are pinning the middle class into a corner.

    Automation leverages labor and helps lower the cost of living. It’s the declining value of the dollar by other means that’s pinning the middle class into a corner.

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