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The Alarmist Type Will See A Bubble That Is About To Burst

A report from Star Vancouver in Canada. “After years of skyrocketing values in Vancouver, owners of homes worth millions will see the value of their properties drop by about 10 per cent this year, representing about $10 billion in total lost equity.”

“That’s according to Paul Sullivan, a partner at property appraisal firm Burgess, Cawley, Sullivan and Associates. And Sullivan is blaming the decline on one culprit: a new provincial tax aimed at homes worth more than $3 million. ‘We have a lot of homes in Vancouver worth $4 million, $5 million, $6 million,’ Sullivan said. ‘They’re not selling right now.'”

From Financial News on the UK. “The UK’s largest asset managers have seen the equivalent of more than £1bn wiped off the value of their shares every month this year. According to analysis of Factset data by Financial News, £12.4bn has disappeared from the collective value of Ashmore, Jupiter, Man Group, Schroders and Standard Life Aberdeen since the first trading day in January.”

“Justin Bates, an analyst with Canaccord Genuity, said: ‘There is a fear that markets have peaked in the medium-term and the correction we have seen is just the tip of the iceberg. From a domestic perspective, retail is being hammered and housing has stalled. Internationally, US and European politics is a mess and tech has taken a hammering. All this adds up to investors asking, where the upside is coming from?'”

From Ahval News on Turkey. “Turkey’s housing market renewed a downward spiral in November as mortgage lending dived 86 percent on an annual basis. The government has sought to revive the housing industry, which is now suffering from a supply glut in newly built homes.”

From The Standard on Kenya. “If only the developers of the 70 storey building — Pinnacle Towers in Upper Hill, Nairobi — knew how inactive single or two-storey buildings have been, they would stop the building’s frantic clamber for the heavens and bring it down to earth, closer to reality.”

“The alarmist type will see a bubble that is about to ‘burst.’ Those who are not as hot-headed will see a price correction in the offing as the supply of houses exceed demand. But to everyone else, things are simply bad across Kenya’s housing market. So bad that this year, even the numbers have refused to join in the sing-song of ‘real-estate is the hottest investment.’”

From News.com.au on Australia. “Experts have come out swinging over the ‘boom-burdened’ building industry in major cities, saying Sydney’s cracking Opal Tower is part of a much wider problem. But now the developer of the Olympic Park building has hit back, saying any suggestion the damage points to ‘a broader pattern in the industry’ is completely wrong.”

“The city’s ‘development boom’ has not led to cutting of corners,” Ecove director Bassam Aflak said in a statement this morning. ‘There has been no cutting of corners.'”

“Others who don’t live in the building have shared their thoughts on the area’s safety. ‘Will #Sydney become the new equivalent of the #GoldCoast after their #property bust many years ago? Looks like many more defective Sydney buildings will crash in value. Nobody sane would buy at Opal Tower in #Olympicpark,’ wrote another man.”

From Bloomberg on Hong Kong. “One of Hong Kong’s biggest sales of residential land this year added to the picture of a worsening home market. China Overseas Land & Investment Ltd won the site in Kai Tak on Thursday with a bid of HK$13,523 (US$1,726) per square foot of floor area. That’s 13% less than Goldin Group paid last month for a nearby parcel.”

“Hong Kong’s home prices are sliding and land sales have had a rough year after a record-breaking 2017. The value of land parcels sold by the government in 2018 stands at HK$80 billion, down by 37% from last year, according to data compiled by Bloomberg. In October, the government failed to sell a residential site on the Peak. So far, home prices have dropped 7% from an August high.”

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This Post Has 23 Comments

  1. ‘Experts have come out swinging over the ‘boom-burdened’ building industry in major cities, saying Sydney’s cracking Opal Tower is part of a much wider problem’

    For those who may not be aware of this situation, it’s a tower with possible structural failure. But it’s really freaking out the airbox owners in Australia.

  2. From a domestic perspective, retail is being hammered and housing has stalled. Internationally, US and European politics is a mess and tech has taken a hammering. All this adds up to investors asking, where the upside is coming from?’”

    Welcome to the bursting of the central bankers’ Everything Bubble. The speculators – as opposed to investors – better get used to the fact that an epic schlonging awaits as trillions in fictitious valuations get wiped away.

    1. “… as trillions in fictitious valuations get wiped away.”

      Bahahahaha … these fictious valuations are directly related to PRICES, something that was VOTED ON, voted on and voted up by large numbers of ignorant pukes who somehow got access to huge gobs of money.

      Take away the gobs of money and the stupid prices that were voted up are left stranded in space in the style of my personal hero Wiley Coyote.

      These prices are considered by ignorant pukes to equate EXACTLY to values, exactly equal to WEALTH – equal to wealth that was magically created by the actions of ignorant pukes – strangers – who threw huge gobs of money (money that isn’t even theirs) to boost prices into the stratosphere and thus create wealth (choke) for hundreds of neighbors, also strangers, who somehow feel this is some form of normality.

      This mass stupidity is pure f*cking amazing if one bothers to stop and think about it a bit. IMHO.

      1. Where do these “huge gobs of money” originate?

        Wealth Matters
        Risky Home Loans Are Making a Comeback. Are They Right for You?
        By Paul Sullivan
        Dec. 14, 2018

        Interest rates have started to rise, and the housing market is cooling off, a combination that is putting a squeeze on mortgage lenders. Now, some of them are turning to more complicated loans, a remnant of the last housing boom, to bolster their business.

        These risky offerings fall under the umbrella of non-qualifying loans, meaning they do not conform to standards set by the Consumer Financial Protection Bureau. But lenders are starting to push the loans on borrowers, who are using them to get into homes that may be bigger and more expensive than what they could otherwise afford.

        One popular loan is the interest-only adjustable rate mortgage, with which a borrower pays only the interest for a period before the rate resets and principal becomes part of the payment. Another is the income verification or “ability to repay” loan, tailored to a borrower who does not have regular wages but is paid in large chunks of money — for example, from an investment partnership.

        These types of loans may be a good strategy for a wealthy home buyer, but some say they still carry the taint of overeager and unscrupulous brokers who pushed them on borrowers unable to repay them, creating a bubble in the housing market that burst in 2008.
        …

      2. “Take away the gobs of money and the stupid prices that were voted up are left stranded in space in the style of my personal hero Wiley Coyote.”

        This is one of the areas of RE I have a hard time grasping. If values shoot to the moon they have to be supported by “pukes” that can afford them but often is the case, they can’t afford them so they buy with borrowed money in hopes that borrowed money will continue going up at little or no risk to them as it was not “their” money in the first place. Now in the event that prices go down they can simply default leaving the banks holding the bag, if this happens on a large scale the banks then default and now the governments are left bailing them out. Then the strain on the government trickles back onto the people who started the mess in the first place. Who benefits from this? Why wouldn’t the gov send in some sort of PPT like team to mediate it all? Other than having the feeling that we are in store for a major correction, I just don’t get how or why this is all happening, again!

        1. “… I just don’t get how or why this is all happening, again!”

          Here, let me help you out a bit:

          Clue Number One: We are dealing with huge populations of ignorant pukes who are products of our totally dumb-’em-down-and-graduate-them educational system.

          Clue Number Two: The PTB folks have convinced themselves that they can perform miracles by converting Business Cycles into Credit Cycles. They do this by controlling the flow of money into the economic system. So far they have been successful at doing this large due to the success of Clue Number One.

          1. “dumb-’em-down-and-graduate-them educational system”

            I get this perspective and see how creating a new class of, for lack of a better word, slaves to our economy. Keep the majority straddled with student debt and a paycheck to paycheck lifestyle while perusing the “American dream”. What happens when they all decide to stop contributing? Do they all become homeless, imprissoned, give up with life? My question is more of the “end all” goal with all of this and why would government ALLOW this to be happening.

          2. why would government ALLOW this to be happening.

            Because certain people are making a ton of money out of the credit bubble. These certain people give money to the lawmakers to encourage them to allow the rape of the country. The lawmakers hate the president that works for $1.

          3. “What happens when they all decide to stop contributing? Do they all become homeless, imprissoned, give up with life?”

            This seems to describe the fate of a significant share of 21st century American society, especially in Democrat dystopian California. With credit-inflated rents on everything from farmland to low-end housing, plus minimum wages set high enough to eliminate low-end work opportunities for anyone except illegals, it’s tough to just get by anymore.

          4. “Because certain people are making a ton of money out of the credit bubble.”

            So long as these people remain in the good graces of political leaders in power, why would anything ever change?

        2. Another angle: So long as homes are inflated to prices where few can households can afford them, we have an affordable housing crisis.

          And so long as there is a crisis, there is an opportunity for politicians to make campaign promises to do something.

          Once elected, a campaign promise is an opportunity to pass policy measures which nominally address the crisis and materially reward your political donors.

          1. Right! So now we will be hearing all the future candidates promises of how they will make housing more affordable and allow the American dream. create a problem so the next elect can vow to fix it…

          2. create a problem so the next elect can vow to fix it…

            It’s worse than that, IMO.

            It’s the same problems over and over, with each politician promising to “really fix it this time”.

  3. ‘There is a fear that markets have peaked in the medium-term and the correction we have seen is just the tip of the iceberg.
    …
    All this adds up to investors asking, where the upside is coming from?’

    That’s easy: The stock market always goes up, in the long run. So HODL the stock you already own, buy more on the dips, and get rich!

  5. “The alarmist type will see a bubble that is about to ‘burst.’”

    Yeah right, since Kenya real estate is red hot, and everyone wants to live there.

  8. “The alarmist type will see a bubble that is about to ‘burst.’ “

    Well, I see a bubble that has already burst. So, I am not alarmist at all! 😀

    1. Good point. If you see and describe the bubble that has already burst, you aren’t an alarmist, but rather more of a historian.

  9. “We have a lot of homes in Vancouver worth $4 million, $5 million, $6 million,” Sullivan said. “They’re not selling right now.”

    Hehe… then they’re not worth $4M, $5M & $6M.

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