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Now, There’s A Fear Of Getting In Before The Market Bottoms out

A report from the South China Morning Post. “Hong Kong’s residential property market witnessed another weekend of dismal sales, as even double-digit discounts could not lure buyers to commit, in yet another sign that the world’s priciest flats have given way to a buyers’ market. Chuang’s China Investments, which offered discounts of up to 16 per cent for 150 flats of The Esplanade project in Tuen Mun, managed to sell three units at 5:30pm, five hours after the launch kicked off, agents said.”

“‘The market has turned soft,’ said Midland Realty’s residential division chief executive Sammy Po Siu-ming, adding that seven units, at most, would be sold by the end of the day. ‘No one is getting up early to queue, as they know that even if they were to come in at 7:00pm, there would still be enough flats for them to choose from.'”

“What a difference six months make. Developers were able to sell at least 90 per cent of their property on every sales launch during the first six months of this year.”

“As many as 20 buyers were bidding to buy every available flat in Hong Kong as recently as May, before the government proposed a vacancy tax in July to force developers to put more apartments on the market. That was also before Hong Kong’s commercial banks finally bowed to rising interest rates and raised their mortgage payments for the first time in a decade.”

“Developers’ sales weekends have gone from bustling shows to humdrum events, turning in recent weeks into deserted affairs. ‘Such poor response has not been seen in the past 10 years,’ said Thomas Lam, executive director at Knight Frank.”

“Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor, who has made housing affordability one of the top priorities of her administration, is showing no signs of easing the pressure.”

“‘At this moment, it is not appropriate to relax any demand-side management measures,’ said Secretary for Transport and Housing Frank Chan Fanhe in the city’s Legislative Council last week. ‘Otherwise we would be sending a wrong signal to the market, and seeing it heat up again.'”

The Sunday Herald Sun in Australia. “Foreign buyers should be let back into the market and stamp duty cut in a bid to revive Melbourne’s stalling property fortunes. Market experts have warned politicians would need to consider radical ideas to avert predicted price drops for at least another 18 months.”

“Real Estate Institute of Australia president Malcolm Gunning said the federal government’s tightening of lending had slowed house price growth and created an ‘artificial credit squeeze.'”

“He said the result was that rather than cooling the market, they had sent parts of it into ‘free fall.’ But he warned even pulling back now wouldn’t renew price growth as buyers were spooked.”

“‘Last year, there was a fear of missing out. Now, there’s a fear of getting in before the market bottoms out,’ Mr Gunning said. ‘So now we have a stand-off.'”

“He said the government underestimated impact of the Royal Commission into financial services. ‘This is all a controlled deflation of the market,’ he said. ‘But I reckon they have been blindsided by what’s coming out of the Royal Commission and by how quickly the public has ­reacted.'”

“Mr Gunning said the government was using lending restrictions as a brake but ‘they have put it on too hard.'”

“Realestate.com.au chief economist Nerida Conisbee said increasing the population at an even faster rate and encouraging investors would help Melbourne recover. Ms Conisbee said the ‘biggest problem’ was investors had staged a ‘massive pull back.’ ‘To return the market to strong conditions, they’re the group you would have to look at,’ she said.”

“Treasurer Josh Frydenberg defended the government’s efforts to slow the market through the Australian Prudential Regulatory Authority. ‘APRA’s intervention in the housing market is a targeted, proportionate and short-term approach, introduced at a time when prices were going up,’ Mr Frydenberg said.”

From ABC News in Australia. “Having just bought my first home, I was left wishing I could find a course on ‘how to buy a house,’ instead of having to learn by experience and blunder through with little understanding. Here are some things I wish I knew before I started looking to buy a home.”

“Having visited a mortgage broker early in the research phase, it became apparent some institutions would have loaned double what my partner and I could afford to repay.”

“The broker entered our earnings, expenses and a modest deposit amount in a program, which returned the different amounts institutions were willing to lend us. Some were offering to lend us well over $1 million, with repayments that would have been unachievable.”

“It could be easy to fall into a trap where you borrow too much to buy a dream home, and then struggle to make the repayments.”

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This Post Has 60 Comments

    1. a bit off the usual housing-related topics but it IS business related:

      spending Thanksgiving holiday in Vegas . .
      huge eye-popping LCD screens advertising marijuana shops.

      what a difference from N. Cal!

      Vegas promoters really go all out if it’s profitable. just incredible.

  2. ‘As many as 20 buyers were bidding to buy every available flat in Hong Kong as recently as May, before the government proposed a vacancy tax in July to force developers to put more apartments on the market. That was also before Hong Kong’s commercial banks finally bowed to rising interest rates and raised their mortgage payments for the first time in a decade.’

    ‘Developers’ sales weekends have gone from bustling shows to humdrum events, turning in recent weeks into deserted affairs’

    Note to trolls and supply and demanders: they didn’t build their way to lower prices. A little tax, tighten up the lending and crater.

    Doesn’t that make more sense than building more and more until the market collapses under oversupply, like Manhattan and Miami Beach? Plus you get stuff no one really needs.

    1. I like the idea of a vacancy tax for empty houses in the US, but I don’t think we’ll ever see that. There are millions of empty bank-owned shacks just rotting away.

      2. Such a ridiculous waste of resources to make sure the speculators who went long into residential real estate don’t lose their @sses in a return to affordable housing…

        1. I agree – just another sickening display of market manipulation to ensure the moneyed set doesn’t have to take their speculative losses.

          Seemingly every neighborhood has a few houses which are unoccupied, and which neighbors are aware of. You can’t have a vacant house next door and not know. Most people don’t want to live next to such thing because it invites break-ins and other unsavory activities.

      3. I like the idea of a vacancy tax for empty houses in the US, but I don’t think we’ll ever see that.

        Funny how most “affordable housing advocates” want to build taxpayer-subsidized housing instead of going after the real problem, which is speculation. If a critical mass of people in each community throw their active support behind initiatives to tax absentee owners, there’s no reason why such measures shouldn’t pass.

        1. Agreed. We’ve talked about the practical aspects of how to enforce such a tax. For instance, how to you determine that a house is empty without the system being gamed (e.g. monthly water usage, electricity usage, mail correspondence, an occasional check-in by a local government employee). I’m sure there are bullet-proof ways of doing this that are simple and difficult to game, we just need to start the process and refine it as we go.

          1. how to you determine that a house is empty

            I own one house. I use it in the winter. I was gone living it up cruising on my boat. I got inspected because my meters weren’t turning. Society designers and control freaks don’t need to monitor and tax me. Just stop subsidizing mortgage debt.

  3. ‘government’s tightening of lending had slowed house price growth and created an ‘artificial credit squeeze.’ He said the result was that rather than cooling the market, they had sent parts of it into ‘free fall.’

    Stamp em’ Malcolm, stamp those little feet!

  4. ‘Such poor response has not been seen in the past 10 years’

    What started 10 years ago? Oh yeah, that QE funny business. Boy didn’t that create a whole bunch of not-good?

    1. It seems like everyone from the POTUS on down who is villifying glacially normalizing interest rates for the present round of international financial panic among risk asset traders has a collective case of amnesia about how extraordinary accommodation policy set the stage for this episode.

      1. If you can’t resist turning this into a partisan political issue, then you can blame it on Obama’s Fed Chairs, Bernanke and Yellen. I’m not sure Powell was even in the mix of FOMC members when QE happened.

        1. No reason to turn QE into a partisan political issue. Both wings of the Republicrat duopoly are bought and paid for by their oligarch donors. Every piece of legislation passed by Congress is written by lobbyists for the FIRE sector. Both parties are equally culpable in the repeal of Glass-Steagall and the deregulation of the financial sector that led directly to the orgy of speculative excesses that caused Housing Bubbles 1.0 and 2.0. So the beginning of wisdom is to disabuse yourself of any notion that one party is any better than the other when it comes to looking out for the public interest.

          1. I expect that whatever ‘solution’ to the crisis that is enacted by congress in the near future will continue the primary mission to increase the power and wealth of those oligarch donors.

      2. I wonder if any of this will ever lead to real conversations among the people in charge of running this sham economy. They don’t have to be long conversations, either, just admissions of facts.

        For instance something like this:

        “We have had a number of massive speculative bubbles due to irresponsible monetary policies. These bubbles are now bursting. We don’t intend upon fueling these devastating bubbles any longer.”

        1. “We have had a number of massive speculative bubbles due to irresponsible monetary policies. These bubbles are now bursting. We don’t intend upon fueling these devastating bubbles any longer.”

          Actions speak louder than words, and the Fed is currently doing its best to walk back extraordinary accommodation without tipping the apple cart.

        2. Most of the people ‘in charge’ are isolated and shielded from life as experienced by the masses. And what they do hear about ‘the average citizen’ comes from the lobbyists … which is anything but accurate.

          They may honestly think they are doing the right thing for the citizens at large, but most are operating with a very distorted view of said citizens.

        3. “We have had a number of massive speculative bubbles due to irresponsible monetary policies.

          The Fed since it’s surreptitious 1913 founding by the robber barons of the era has had one purpose: to serve as the oligarchy’s chief instrument of plunder against the 99%. Engineered boom-bust cycles every 8-10 years have been the most efficient means for the Wall Street-Federal Reserve Looting Syndicate to transfer the wealth and assets of the proles to a corrupt and venal .1% in the financial sector. You seem to be under the mistaken impression that the Fed might someday issue a mea culpa for fueling speculative bubbles, when those are its most lucrative swindles against the middle and working classes in this country.

  5. ‘No one is getting up early to queue, as they know that even if they were to come in at 7:00pm, there would still be enough flats for them to choose from.’”

    Oh dear – Hong Kong realtors are failing to whip up a contrived sense of urgency. Now the lemmings are sleeping in instead of scurrying to their financial destruction each weekend.

    1. Why commit financial suicide first thing in the morning if the opportunity remains wide open by 7:00pm?

  6. It’s not like real estate collapse is a new thing for Hong Kong. It’s more like a predictably recurrent economic malaise.

  9. ‘As many as 20 buyers were bidding to buy every available flat in Hong Kong as recently as May, before the government proposed a vacancy tax in July to force developers to put more apartments on the market.

    Those winning bidders must feel like such geniuses right about now.

  10. Orlando
    Why is it still perky?
    I consider any market w endless land and no constraints (oceans) dangerous. Like many Midwest cities

  11. “some institutions would have loaned double what my partner and I could afford to repay”

    I realized that something crazy was going on in 2001. I was moving and looking for a house around 1x income. I still had the old house with a mortgage that was 2.5 x income. The bank pre-approved me for an additional 5 x income loan. That and they would lend me the downpayment as a sort of home equity loan. I was raising four kids on my own. I would never have been able to make that huge a payment. I wasn’t thinking the debt would make me rich.

  12. How’s that HODLing working out?

    $198.89 Bitcoin Cash price
    −$148.38 Since last week (USD)
    −42.73% Since last week (%)

    1. Uh-oh, we’ve got a breach!!

      $3,970.74 Bitcoin price
      −$173.49 Past hour (USD)
      −4.19% Past hour (%)

        1. News search on “bitcoin price” filtered to the last 24 hours has several *news* sources calling a $3,000 bottom. Which is $2,999 more than the value of this fake internet money.

          Loosers.

  13. A while back somebody posted a video by Tim and Julie Harris. They’re real estate coaches. I’ve been listening to their podcast lately. They’ve been doing a series on the real estate reset happening right now. It’s been very insightful with multiple anecdotes that shed light on the current market.

    Teaser: one of the anecdotes was a mortgage officer in LA who only does multimillion dollar home loans. He told Tim Harris that his business has all but dried up in the last few months.

    https://timandjulieharris.com/2018/11/23/podcast-urgent-massive-real-estate-reset-happening-now-part-4.html

  14. Speaking of “fear of getting in” this published today:

    “The Trump administration has won the support of Mexico’s incoming government for a plan to remake U.S. border policy by requiring asylum seekers to wait in Mexico while their claims move through U.S. courts, according to Mexican officials and senior members of president-elect Andrés Manuel López Obrador’s transition team.

    The agreement would break with long-standing asylum rules and place a formidable new barrier in the path of Central American migrants attempting to reach the United States and escape poverty and violence. By reaching the accord, the Trump administration has also overcome Mexico’s historic reticence to deepen cooperation with the United States on an issue widely seen here as America’s problem.”

    https://www.chicagotribune.com/news/nationworld/politics/ct-united-states-mexico-asylum-20181124-story.html

    1. The number of illegal aliens in this county has been consistently under-reported. I wonder how much impact the general populace’s backlash is actually causing – I can’t trust anything I see in the media on the topic.

      One of the personal barometers I use is keeping in touch with people I went to school with in a tiny, 4 thousand person town in the rust belt. One of my former school mates is the chief of police, and from what he tells me, over the last decade they’ve had a serious influx of illegals, bringing a lot of crime and other problems to what historically was a very homologous community. It’s sounding like that’s becoming more the norm than the exception.

      1. Australia has done a good job of getting control of the masses of migrants and asylum seekers coming in by boat. Their crackdown has weakened the human smuggling which was controlled by criminal gangs and they use off-shore processing of asylum in Papua New Guinea. Australia is an island country, but what we are seeing from other countries, whether it is Italy or Greece, is that off-shore processing for immigrants and asylum seekers reduces the demand-pull and it dramatically undercuts the bad actors in the process. The Trump administration is right to start doing this with the southern border.

        By the way, NPR Planet Money has a great episode on the massive Chinese asylum scam being run by immigration lawyers essentially inventing hundreds of stories about being a persecuted minority (e.g. forced abortion by the state, persecution for being dissident or Christian, etc.). The asylum laws are being abused and definitely need to be tightened considerably.

        1. I don’t think that most people in charge want to admit yet that opening their borders to any and all outsiders and providing them with all sorts of assistance (at the expense of citizens) is something that is no longer easily afforded by any country.

          Today there are 2.3 people for every person alive when I was born. There are 3.5 times as many people alive as when my father (who is still alive and going strong) was born. That’s one lifetime in which the supply of monkeys has greatly outstripped the supply of bananas (despite great technological gains). That doesn’t even begin to discuss the damage to the metaphorical banana trees.

          I do expect to see things get rather nasty on a global scale if I live as long as expected I can given my genes (3 of 4 grandparents lived into their mid+ 90s, and it looks like I inherited some of the favorable traits)

          1. the supply of monkeys has greatly outstripped the supply of bananas (despite great technological gains). That doesn’t even begin to discuss the damage to the metaphorical banana trees.
            But the bosses don’t pay in bananas. They pay peanuts. And then they complain that monkeys are willing to work for peanuts.

          2. It seems ‘the bosses’ don’t really care what happens to the masses.

            Competition for resources is heating up. We live in interesting times.

  16. 89,430 views|
    Nov 24, 2018,11:42 am
    Bitcoin – Stick A Fork In It – It’s Done
    Peter TchirContributor
    Markets
    Bitcoin’s Latest Fork Causes Confusion and Price Drop Getty

    As of November 15, Bitcoin Cash had a fork which seemed to trigger yet another wave of price declines for Bitcoin Cash, Bitcoin and Bitcoin SV (according to coinmarketcap and coinbase). Bitcoin is now far less than the $6,200 it was trading at on November 14 before this fork occurred. Since the fork was in Bitcoin Cash, not Bitcoin, it is unclear why it should have had an impact, yet, apparently it did. Adding to the overall confusion of interested observers.

    This latest drop in price made many already awkward Thanksgiving conversations even more awkward. I remain of the view that it isn’t a total coincidence that the meteoric rise in Bitcoin to almost $19,000 in December 2017 started just ahead of American Thanksgiving as college students came home and explained the potential investment to their family and friends and bitcoin futures were due to be launched.

    But now, over a year later, anyone who purchased Bitcoin has lost money (in US dollars). Not making money in a year is enough to demoralize some die hard HODLers, let alone curious potential investors who were largely drawn to crypto by the fear of missing out on the next great investment.

    https://www.forbes.com/sites/petertchir/2018/11/24/bitcoin-stick-a-fork-in-it-its-done/#187fb344e40b

    3. Bitcoin’s haven claim is destroyed amid broad pummeling of riskier assets
      By Aaron Hankin
      Published: Nov 24, 2018 8:34 a.m. ET
      Bitcoin plunges around 30% in 10 days, and ‘there is no one left to buy’

      In a week where investors sought cover, one asset that had been touted as a potential alternative haven to shield against any market turmoil proved to be anything but that.

      In the space of just 10 days, bitcoin, (BTCUSD, -4.89%) the world’s largest digital currency, fell through $6,000, then waved goodbye to $5,000 before eventually finding some support ahead of $4,000. All told, the so-called next digital gold lost around 30% over those 10 days and is down more than 80% from its all-time high.
      …

  17. Does it seem like Bitcoin HODLers are in a full-blown panic? It almost brings to mind an avalanche in motion.

      1. The cost of the mobile home is less than 3 years space rent… damn… and as you suggest, a potential scam.

    2. Notice the over 10% recent price cut… for a property one block from Monterey Bay. The eeeebola contagion continues to spread.

      In all honestly, that would be something I would have enjoyed living in when I was in my 20s and single (if priced right of course). Very low maintenance, quirky in a good way (my DeLorean I had back then would have fit right in parked out front), encourages you not to fill it will stuff, and more at harmony with the landscaping and lot and being outside than any of the ‘California (maxx) Box’ homes around it.

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