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The Market Is Now Flooded With Stock

A report from the South China Morning Post. “Two of China’s top three leading property developers saw their November sales plunge even after cutting prices by nearly a third at some of their projects, as fears of a housing recession grows larger. China’s property market has seen a U-turn in the second half of this year after a long period of growth, forcing developers to come up new marketing strategies, including price discounts and compensations to drum up sales.”

“In July, the Communist Party Politburo, China’s top decision-making body, issued a stern statement after the housing market showed no signs of cooling. It said ‘rises in home prices should be firmly curbed,’ removing the word ‘excessive’ from the phrase used in its previous policy stance, showing that it was determined in controlling the rapid home price increases.”

“Moody’s Asian Liquidity Stress Indicator in October showed tight liquidity conditions for rated Chinese property developers because of their high refinancing needs. This will force cash-strapped developers to lower prices to unload their units to collect money as quickly as possible.”

The Daily Telegraph in Australia. “Property listing numbers have risen to a decade high across Sydney as panicked homeowners rush to sell their homes before the end of the year. Total listings rose by 7.5 per cent over November, pushing the volume of homes available for sale to nearly 40,000 — the largest number recorded since 2009, SQM Research figures showed.”

“Current listing levels are also 20.4 per cent higher than those recorded a year ago. The surge in sales has added to an already large backlog of unsold properties — many listed months ago. The glut of sales has put sellers increasingly in competition with each other to attract a dwindling pool of buyers and many are now dropping their prices.”

“‘The market … is now flooded with stock. Vendors who do not price their properties realistically will not sell in this market,’ said SQM Research managing director Louis Christopher.”

From CBC News. “An association of Alberta home builders says the economic downturn and government policies are crippling its industry. Building Industry and Land Development Alberta Association (BILD Alberta) represents 1,800 land developers, home builders and renovators in the province.”

“The organization says new mortgage rules and proposed provincial legislation are creating uncertainty and higher housing prices. It’s resulting in layoffs in the industry and new homes sitting empty while Albertans are losing out on home ownership opportunities, the association says.”

“BILD Alberta says there are more than 5,000 completed but unsold new homes in Alberta, leading to a significant reduction in housing starts.”

“The Realtors Association of Edmonton reported this week that residential housing sales in the Edmonton area were down more than 10 per cent in November compared to the same month last year. The average price of a single-family home in Edmonton in November was $421,715, down 4.55 per cent year over year. New listings and inventory were both up nearly 10 per cent year-over-year.”

“BILD Alberta CEO Carmen Wyton said some builders have been forced to reduce their staff by up to 20 per cent to survive the slowdown.”

From News in English.”Norway’s real estate brokers’ organization (Eiendom Norge) reported another price decline in the housing market on Wednesday, with figures showing prices to be down another 1.5 percent on average in November. It was even weaker than normal for the month, but widely viewed as another correction after years of price hikes.”

“The brokers stressed that what they call ‘price development’ is often weak in November. The numbers this past November were negative in all of Norway’s biggest cities: Oslo prices were down by 0.7 percent compared to October, while Stavanger prices fell 1.1 percent. Bergen and Trondheim both logged price declines of 2.1 percent.”

“While some sellers are now nervous, the CEO of the brokers’ group claimed that moderation was healthy. ‘It’s good, because it contributes to less accumulation of debt and lower risk for financial imbalance,’ Geving wrote in a comment to state broadcaster NRK. Others feel the market has become more ‘reasonable’ and may flatten out in the months ahead.”

This Post Has 49 Comments
  1. It’s good to be back home in Arizona!

    ‘In July, the Communist Party Politburo, China’s top decision-making body, issued a stern statement after the housing market showed no signs of cooling’

    I’ve been pointing out for a couple of years that many of these cratering global markets have been the result of government/central bank actions.

    ‘The organization says new mortgage rules and proposed provincial legislation are creating uncertainty and higher housing prices’

    ‘BILD Alberta says there are more than 5,000 completed but unsold new homes in Alberta’

    Is 5,000 a lot? Cuz it sounds like a lot.

    1. ‘It’s good, because it contributes to less accumulation of debt and lower risk for financial imbalance,” Geving wrote in a comment to state broadcaster NRK’

      BTW, the article doesn’t give Gevin’s full name.

    2. ‘The organization says new mortgage rules and proposed provincial legislation are creating uncertainty and higher housing prices’

      A few lines down the article says prices are falling. Poor poor Developers. The only shame in your layoffs is that the wasteful jobs were ever created in the first place.

    1. The article:
      (9 kronor approx 1 USD)

      Property prices continued to drop in Sweden in November, according to new figures.

      Apartment prices saw the sharpest decrease in the metropolitan areas of Sweden’s two second-biggest cities, Gothenburg and Malmö, where a so-called bostadsrätt fell by two percent last month.

      In both greater and central Stockholm apartment prices dropped by one percent in the same period, according to the real estate number crunchers at Svensk Mäklarstatistik.

      The price of detached homes – villor – fell by one percent in November but remained steady in year-on-year figures, with the average home costing 3,025,000 kronor ($335,000).

      In the Stockholm metropolitan area, a detached home now costs on average 5,588,000 kronor last month – with a five-percent drop in the last 12 months marking a downturn on the property market.

      As for bostadsrätter – one of the most common types of Swedish home ownership, which usually refers to apartments but can also be for example terraced or semi-detached housing – they, too, have been affected by a general trend of the housing market slowing down in the past year.

      Bostadsrätt prices fell two percent in central Stockholm and Malmö, three percent in Gothenburg and two percent nationally compared to September-November last year, according to Svensk Mäklarstatistik.

      But the prices vary hugely depending on where you live.

      An apartment in central Stockholm costs on average 86,907 kronor per square metre, compared to 58,717 kronor per square metre in central Gothenburg or 30,501 kronor in Malmö.

      1. Where did all the oligarchs go who were pushing up residential real estate prices to unprecedented heights in globally prominent cities all around the planet?

    2. Having lived in Stockholm for 2 years I can only imagine foreign buyers taking the plunge for speculative purposes. Dark all winter, very cold, slushy streets and everything is closed for the winter or closes early in the afternoon. The locals get paid next to nothing and if it wasn’t for government assistance programs they couldn’t afford to buy anywhere near the Swedish capitol. Specuvesting at its best until it all comes crashing down.

  2. “Property listing numbers have risen to a decade high across Sydney as panicked homeowners rush to sell their homes before the end of the year.

    B…b…but every realtor quoted in every media story about the housing market assures us there’s no cause for panic.

  3. “[P]roperty developers saw their November sales plunge even after cutting prices by nearly a third at some of their projects, as fears of a housing recession grows larger.”

    I would think if developers are cutting their prices over 30% it would be safe to assume there is in fact a housing recession.

    1. Maybe since “this time it’s different” they will up the par on what % is needed to qualify as a recession or crash. 0-50 could be the new healthy, 51-75 could be cooling or softening, 76+ would possibly be signs of a upcoming recession. I’ll check this with Yun to get his approval

      1. The fact that contractors slashed prices 30% simply mean their is a whole bunch of room to move on the downside. At current prices, they’re profitable even after another 50% price reduction.

        1. At current prices, they’re profitable even after another 50% price reduction.

          And that’s when I become interested in talking to them.

          1. You’ll have your opportunity. What’s even better is resales won’t fetch more than 65% of the contractors price.

  4. Asian markets plunge, led by tech stocks, after Huawei exec’s arrest
    By MarketWatch and Associated Press
    Published: Dec 6, 2018 12:49 a.m. ET
    Hang Seng tumbles more than 2.5%; Nikkei falls over 2%
    Reuters
    A man walks by a Huawei logo at a shopping mall in Shanghai, China, on Wednesday.

    Asian stock prices fell Thursday, led by tumbling tech stocks, following the arrest of a senior official at Chinese telecom equipment maker Huawei that could derail progress in China-U.S. trade talks.

    Canadian authorities arrested the chief financial officer of Huawei Technologies for possible extradition to the United States, for allegedly violating sanctions against Iran. Meng Wanzhou was detained in Vancouver, British Columbia, on Saturday, but the news is only recently being released.

      1. I don’t think I’m quite clear on what law gives us the right to arrest citizens of other countries for doing business with somebody we don’t like? Is there some one-world government that I’m not aware of?

        1. Waiting for an explanation as well. I take anything stated by the press “on the word of an unnamed insider” as non factual.

    1. Get ready for the ‘Scrooge market’ of 2019, investor says
      Dion Rabouin
      Yahoo Finance
      December 6, 2018, 4:58 AM PST
      Scrooge fan David James stands outside his house which is three doors away from Charles Dickens’ birthplace on February 7, 2012 in Portsmouth, England. (Photo by Peter Macdiarmid/Getty Images)

      The dreaded down wave is coming, says Yves Lamoureux, president of market research firm LaMoureux and Co. He believes it’s all downhill from here and expects the U.S. stock market to lose 10% next year, bucking most Wall Street forecasts for a less-stellar-but-still-higher 2019 outcome.

      “For the many it will be a scrooge market in 2019,” Lamoureux told Yahoo Finance in an email.

    2. What Christmas specter are some Fed bank presidents seeing that makes them hesitant to follow through with punchbowl removal plans?

      1. Fed’s Kaplan: Central bankers need to show patience on rate hikes as economy slows
        – Central bankers need to show patience on future interest rate hikes as the U.S. economy slows, Dallas Federal Reserve President Robert Kaplan says.
        – “We’ve raised rates eight times over the last 2 and a half, or 3 years,” he says. “We ought to shorten up on our assessments and be really patient.”
        – The number of rate hikes next year has been the subject of great debate on Wall Street as borrowing cost concerns continue to slam the stock market.
        Berkeley Lovelace Jr.
        Published 1 Hour Ago Updated 5 Mins Ago

        1. How the mighty have fallen: Where Canada’s housing market now …
          The Globe and Mail-4 hours ago
          “Household credit and regional housing markets appear to be stabilizing following a significant slowdown in recent quarters,” the central bank said.’

          From the Globe and Mail no less. A good point though. It wasn’t that long ago that Canada was riding high. Both Sydney and Hong Kong were recently the most expensive residential real estate on the planet.

      2. One theory: The damage wrought by Quantitative Easing to a functioning credit market may take many years to reverse.

    3. Global Stocks Plunge, Suggesting a Grim Day on Wall Street
      By Alexandra Stevenson
      Dec. 6, 2018

      HONG KONG — Global stock markets fell sharply on Thursday and Wall Street was poised for another sell-off after cautious hopes for a lasting trade truce between the United States and China were jolted anew by the arrest of a prominent Chinese technology executive.

      Investors’ anxiety over the fragile peace between the world’s two largest economies mounted after the chief financial officer of Huawei, Meng Wanzhou, was arrested in Canada at the request of the United States.

      Ms. Meng was arrested in Vancouver on Saturday, the same night that President Trump and President Xi Jinping of China dined together in Buenos Aires and agreed to a 90-day pause in their countries’ trade war. The move was expected to renew tensions.

    4. A near flash-crash spooks markets, so it’s time for ‘maximum caution,’ says trader
      By Barbara Kollmeyer
      Published: Dec 6, 2018 9:48 a.m. ET
      Critical information for the U.S. trading day

      That leads us to our call of the day from trader Greg McKenna, who runs McKenna Macro. He says while the jury’s still out on whether a so-called fat finger, or accidental trade, caused that big spike down, or it was something else, it’s a warning shot for investors.

      “This is a very dangerous set up. I’m not Chicken Little, but we need to see a base build up or prices will slip,” he said in emailed comments. “Market collapses happen from weakness so we need to get through Thursday trade in the U.S. to give folks more confidence again.”

      1. more confidence

        Is he saying “we need” higher prices so that people will believe in the prices? (so that we call sell our crap for higher prices)

      1. I expect they will be for a while. But only because 5000 point crashes that rip the bandaid off are no longer allowed. Long ago I predicted one more visit to Dow 10k. We’ve gone up so far that’s gotten kind of hard to imagine, so now I question whether that will happen. But it’s not impossible.

        1. one more visit to Dow 10k

          I remember that. So tell me, what has happened since that day to make the Dow worth more than 10K?

  5. Morning Sh!tcoin update:

    Bloomberg Analyst Bearish, Expects Bitcoin To Fall To $1,500

    While selling pressure has begun to abate, with 24-hour volumes in the cryptocurrency market falling to $14 billion, BTC continued its seemingly endless downtrend on Wednesday. The asset, which ranged primarily between $3,900 and $4,200 for a week, fell under the former price level in recent hours. During one point on Wednesday, the foremost cryptocurrency suddenly fell to $3,668, nearing its one-year low around $3,500, originally established in November.

    1. “Jessie’s Story”

      Skip a few years ahead, and she’ll marry someone who will settle her debts while she rides his pony a couple times a week.

    2. $1.3 trillion spread over 42 million borrowers averages to about $31 thousand a student. Of course some owe far more, others far less.

      What share of this is expected to never be repaid?

      1. I’d like to see a closer examination of these data ranked by gender, ethnicity, marital status, sexual orientation, etc., to see what sort of culture surfaces.

  6. Chinese investors unloaded more than $1 billion in U.S. real estate in the third quarter, extending their recent retreat from hotels, office buildings and other foreign property under pressure from Beijing to reduce debt and curb money sent abroad.

  7. forcing developers to come up new marketing strategies, including price discounts

    Price Discounts are a NEW marketing strategy?!?! It’s the oldest one in the book!

    Keep sawin’ and slashin’!

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