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What Happens When The Train Hits The Wall And You Don’t Have The Cash

A report from NBC Montana. “Nationwide, 2023 saw the lowest number of homes sold in the past 30 years. ‘We have to stop the bleeding before an improvement can take place,’ Lawrence Yun, an economist with the National Association of Realtors told the crowd at the Gallatin Association of Realtors. ‘There’s a steady change in consumer sentiment. (It’s) slightly better now than before. But let’s not get too excited, it’s simply coming out of the grave.’ According to the report, a household earning Gallatin County’s average median income of $83,520 could comfortably cover only 39% of a payment on a median priced home without facing financial burden. In Bozeman, ranked as the county’s least affordable area, the prospect of buying a home is even less attainable. ‘Montana is no longer affordable,’ said Yun.”

Naples Daily News in Florida. “According to Naples Area Board of Realtors, transactions are down more than 9% from that time in 2023 while 67% more abodes are available, reaching above 5,000. Even with rising costs, not all Naples homeowners are getting the price they desire. February featured 2,264 price decreases, indicating ‘sellers are shifting from aspirational pricing to realistic market pricing,’ NABOR research concluded. ‘Some sellers are still struggling to accept the fact that the pandemic buying frenzy years with climbing price increases are over. As more new sellers enter the market, those sellers with overpriced properties risk missing an opportunity” attracting buyers.'”

“The NABOR report showed a 103.4% leap in properties under $300,000. Possibly, ‘investors are offloading rental property units to capitalize on the winter selling season,’ said Mike Hughes, Downing-Frye Realty vice president. ‘Also, the carrying costs on some of these properties has climbed in recent years.'”

The American Statesman. “This just in from Ben Caballero, a top-ranked real estate agent who tracks the new-home market in the Austin area and across Texas: the spring homebuying season is ‘underperforming,’ Caballero, CEO of Dallas-based HomesUSA.com, says in his latest report. ‘The spring homebuying season is underperforming as the new home sales recovery has been unimpressive in Austin,’ Caballero says. ‘New home markets throughout Texas are struggling to return to normal seasonality.'”

The Business Journal in California. “Across all sectors, Fresno County real estate has been marked by rising costs (insurance, particularly), a difficult lending environment and low inventory. The near-term forecast predicts much of the same. Low commodity prices, tighter lending and increased scrutiny of underground water supplies due to the Sustainable Groundwater Management Act have commingled to depress farmland values, said Sullivan Grosz with Pearson Realty. For ‘low risk’ areas with more than one source of irrigation water, prices have dipped 10-15% in the last year. For ‘high-risk’ areas, such as those with a single irrigation option, prices are down 25-30%. ‘There’s going to be fewer Escalades purchased by farmers this year,’ joked Grosz. But underscoring the position the ag industry is in, he forecast more bankruptcies and forced land sales to come.”

The Gazette Journal in Nevada. “The good news for renters is that average rents in Reno-Sparks have gone down for two quarters in a row, ending 2023 at $1,612. That’s the lowest average rent seen in the area since, well, early 2021. Reno-Sparks would see the largest number of housing permits filed since the 2005 housing bubble. Permits for apartments, in particular, surged and several new apartment projects started to come online in recent years. For now though, the pace of housing development in Reno-Sparks is still high, according to Yardi’s Doug Ressler.”

“When the percentage of housing units coming on board is equal to 3% of the existing housing stock, the pace of development is considered to be aggressive, Ressler said. The pace this year for Reno-Sparks is 3.5%. Next year is even higher at 4.8% of inventory, Ressler added. ‘So there’s a tsunami (of new housing units) for Reno,’ Ressler said. ‘The pipeline is pretty full.'”

From Bisnow. “‘In the major life science markets, like San Diego, Boston and the Bay Area, it’s still the perfect storm when it comes to the real estate side,’ said Savills Vice Chairman Shane Poppen, market leader for the firm’s San Diego life sciences practice. ‘Companies just aren’t taking down space at the same clip they used to. And there’s no scarcity of supply anymore. In fact, it’s mind-numbing how much space there is.'”

The Vancouver Sun in Canada. “‘Projects will stop,’ Rob Blackwell, an executive vice-president at Anthem Properties, told Metro’s board of directors. ‘There’s a formula, and that formula allows for projects to be built and a certain amount of fees can be built into that. But it’s past the tipping point. And I think what you’re going to see — because I know it because I’m dealing with it — is projects getting cancelled.’ Beau Jarvis, president of Wesgroup Properties, keeps a running list of Vancouver development site foreclosures, court-ordered sales, and receiverships, which he estimates could total close to 7,000 homes across dozens of different projects at last count.”

“Some of those distressed developments may eventually get built, but many will likely be delayed. Insolvencies can halt projects for years. Jarvis has also tallied another 3,000 or so homes in several Metro Vancouver residential projects that have been put on hold, some of them from established B.C. development companies — including his own. Perhaps Vancouver’s highest profile recent real estate insolvency case was Coromandel Properties seeking creditor protection last year, citing $700 million in outstanding debt on 16 prime Vancouver sites.”

“The Coromandel situation is ‘indicative of what happens when the train hits the wall and you don’t have the cash to service the debt,’ said Alan Frydenlund, a lawyer with Vancouver firm Owen Bird, which specializes in commercial foreclosures. Frydenlund has seen upticks in foreclosures over his four-decade career, and says the past year or so in Vancouver has been busier in terms of big real estate insolvencies than any time since the early 1980s, including the 2007-08 financial crisis.”

The Express. “A city under construction which has been designed to become Egypt’s new centre of power risks worsening the country’s already difficult financial situation. The city, known as the New Administrative Capital, is rising in the middle of the desert some 20 miles east of Cairo. Mostafa Madbouly, Egypt’s Housing Minister between 2014 and 2018, said at the time: ‘This project will produce 1.7 million new employment opportunities and it will have the biggest park in the world.’ This new, ambitiously lavish megacity is expected to become the new home of the Egyptian palaces of power.”

“However, the huge costs of the project itself paired with the price of the houses in the city likely unaffordable to most everyday Egyptians are turning the New Administrative Capital into a massive financial headache. Political analyst Maged Mandour told the Wall Street Journal last year: ‘It’s a city for six million people and I don’t think there are six million people that can actually afford this city.’ The starting price for an apartment in the New Administrative Capital still under construction, the Journal reported, is at £64,230. In 2020, the average income of a household in an Egyptian urban community was approximately £2,087.”

News.com.au in Australia. “When they bought a dated 1980s brick veneer home on the Gold Coast, Bec and Jared Wiseman had hoped to do a knockdown-rebuild. In doing so, they calculated they’d make enough money to halve the mortgage on their family home, where they live with their three children. But their dream turned into a nightmare when the builder they had hired for the job pulled the pin, Bec lost her job and interest rates started to rise, so they could no longer borrow the amount of money they needed for the project. When they tried to sell, things went from bad to worse.”

“They’d bought the property for $1.55 million, but the offers that were coming in were around the $1 million to $1.2 mark. If they’d sold as it was, they would have been looking at a $400,000 to $500,000 loss — doubling the mortgage instead. In pure desperation, the couple turned to Selling Houses Australia for help. Host and real estate expert Andrew Winter said the couple’s predicament was an issue of timing. ‘It was a hell of a lot of bad luck,’ he said. ‘Markets go in cycles all the time but there’s not necessarily a big crash or boom, it’s just changing a little bit. The trouble is these days when we’re talking about house prices with so many zeros a little blip in the market can be $100,000 and that can really ruin things. That’s exactly what happened here. They thought they could do a duplex development, but the site was a little bit too small.'”

Channel News Asia on Singapore. “Liquidators are seeing more construction companies going under, with numbers higher than pre-pandemic levels. Construction engineering company TA Corporation, which for years profited from building freehold condominium projects, is one such victim of the spillover from the pandemic years. It closed its subsidiary Tiong Aik Construction last July, citing inability to pay debts. ‘The burn rate for our company was very high for our construction arm. We’re talking about S$2 million (US$1.47 million) to S$3 million a month,’ said the firm’s group CEO Neo Tiam Boon. ‘The COVID years were the drag. Most, if not all, construction companies suffered (similar) fate. Whenever we see each other, our first question is: ‘how much have you lost?’”

The Wall Street Journal. “It seemed to be a great deal at the time: Swap an aging townhouse and a small piece of farmland for five apartments and two stores. Bella Zhao’s family grabbed that offer in 2009, when property developers led by Wanda Group moved into their sparse, snow-capped village in China’s northeastern Jilin province. Wanda planned to spend $2.8 billion to turn the area into a high-end resort replete with ski slopes, golf courses, hunting spots and five-star hotels. The developer offered locals a large number of new apartments in town in exchange for their old homes, creating a village of property tycoons almost overnight.”

“‘I was so happy then,’ said Zhao, who was a teenager at the time and later inherited the properties. Now, all five of her apartments sit empty. Only one of the stores has a tenant. The ambitious development project stalled years ago; the promised tourism boom never happened. Zhao has become so desperate that she has offered to lease the apartments rent-free so long as the tenants agree to pay the bills and management fees. ‘But no one wants to live there, even for free,’ she said. ‘Everyone who still lives in the town has their own properties.'”

“While much attention has focused on Chinese property developers in the wake of the country’s real estate crash, homeowners, too, are stuck. Many are desperate to sell with no buyers in sight. Others, like Zhao, thought they had a winning lottery ticket, only to find it is now impossible to cash it in. ‘When property prices started to fall, I felt upset,’ said Zhao, 26. ‘It felt like my life plans were thrown into disarray.'”

“Making matters worse, villagers who traded their homes with developers, often for several new apartments, are adding to the wall of potential supply, said Liu Yuan, head of property research at Centaline. ‘It is impossible to sell at a decent price,’ said a homeowner in Nanjing, who owns eight properties with her husband and parents, five of which were compensation for relocating.”

“A man in China’s Henan province said he is still waiting for the six apartments he was promised in 2018 in exchange for his townhouse and piece of farmland when a developer moved into his town. The apartments were to be delivered in 2021, but the development has stalled. He said he is optimistic that the apartments will eventually be finished, but he isn’t optimistic about much else. Perhaps two of the apartments will be occupied by his relatives, he said. The rest will sit empty. ‘It’s not possible to sell or rent out. It’s not worth decorating,’ he said.”

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This Post Has 72 Comments

  1. ‘she has offered to lease the apartments rent-free so long as the tenants agree to pay the bills and management fees. ‘But no one wants to live there, even for free’

    Are you saying you can’t give it away Zhao?

      2. Why should a reasonable person have to wildly overpay for what should be a depreciating asset? Contrary to popular belief, plywood doesn’t actually become more valuable as it ages. Perhaps something other than capitalism is happening here. Do you enjoy being a slave or are you a realtor?

        Please enlighten us regarding yesterdays thread how LA, NYC, and Chicago are actually doing really well and are great places to invest. If you could do SF and Ookland too that would be great. If you have time maybe do Philly, Baltimore, and Gary, IN too. Educate us on the amazing opportunities these cities represent for the go getters on this forum. I’m ready to up my game, I just need help narrowing the list down.

        2. Why should a reasonable person have to wildly overpay for what should be a depreciating asset?

          You gotta live somewhere. The way things will play out is house prices go down, wages go up, or a combination of both. Either way, a reset of sorts. Life is unfair and the government actively makes it worse.

          Please enlighten us regarding yesterdays thread how LA, NYC, and Chicago are actually doing really well and are great places to invest.

          What are you talking about?

          1. I probably misunderstood the gist of your question. It sounded like you were going to defend LA, NYC, and Chicago as doing fine. I was intrigued. 🙂

  4. ‘It’s a city for six million people and I don’t think there are six million people that can actually afford this city.’ The starting price for an apartment in the New Administrative Capital still under construction, the Journal reported, is at £64,230. In 2020, the average income of a household in an Egyptian urban community was approximately £2,087′

    That may be Maged, but I’ll have you know Egypt is a red hotcakes sellers market!

    2. Egypt is one of the scariest countries that I’ve ever worked in. Hotter than Hades, packed tight like a sardine can and corrupt beyond belief.

      2. I’ve never been to Cairo but I’ve seen pictures and it’s dense ugly sprawl and no culture for miles upon miles.

  5. “The NABOR report showed a 103.4% leap in properties under $300,000. Possibly, ‘investors are offloading rental property units to capitalize on the winter selling season,’ said Mike Hughes, Downing-Frye Realty vice president.

    Or maybe the STR speculator scum are reading the writing on the wall.

  6. In pure desperation, the couple turned to Selling Houses Australia for help. Host and real estate expert Andrew Winter said the couple’s predicament was an issue of timing.

    No, it was a matter of reaping the consequences of greed & hubris. Couples like this are directly responsible for making housing unaffordable for the prudent and responsible, and if they end up becoming a cautionary tale, that’s called poetic justice.

    1. “A whopping 2349 construction firms have collapsed in the past year.”

      The trend is your friend.

    1. “Over 4,000 people were recorded as sleeping rough on the capital’s streets between July and September.”

      Good that London has nice weather.

  9. Demoralization of U.S. taxpayers.

    Russia Today — New US aid package will just kill more Ukrainians (4/22/2024):

    “Washington’s $61 billion pledge to Kiev will make little difference on the battlefield, Russian presidential spokesman Dmitry Peskov has said.

    The US House of Representatives approved a $95 billion foreign aid package, almost two thirds of which would be spent on Ukraine-related programs. The Kremlin, however, doesn’t appear the slightest bit alarmed.

    “Fundamentally, this will not change the situation on the battlefield,” Peskov told reporters on Monday.

    Reacting to the vote on Saturday, Russian Foreign Ministry spokeswoman Maria Zakharova said the US was using Ukrainians as “cannon fodder” and hoping to keep Kiev on life support until after the November presidential election. In the end, she said, the US will end up facing a “loud and humiliating fiasco on a par with Vietnam or Afghanistan.”

    https://www.rt.com/russia/596431-kremlin-peskov-aid-ukraine/

    1. Authored by Ron Paul (4/22/2024):

      “When future historians go searching for the final nail in the US coffin, they may well settle on the date April 20, 2024.

      On that day Congress passed legislation to fund two and a half wars, hand what’s left of our privacy over to the CIA and NSA, and give the US president the power to shut down whatever part of the Internet he disagrees with.

      The nearly $100 billion grossly misnamed “National Security Supplemental” guarantees that Ukrainians will continue to die in that country’s unwinnable war with Russia, that Palestinian civilians will continue to be slaughtered in Gaza with US weapons, and that the neocons will continue to push us toward a war with China.

      It was a total victory for the war party.

      The US and its allies have already sent over $300 billion to Ukraine and the country is still losing its war with Russia. Nobody believes another $60 billion will pull a victory from the jaws of defeat. But this additional money is meant to keep up appearances until November at the expense of Americans who are forced to pay for it and Ukrainians who are forced to die for it.”

      https://original.antiwar.com/paul/2024/04/22/final-nail-in-americas-coffin/

    2. pretty much
      Why any country accepts the (occupied) US as “allies” is beyond me, they always get left. And that’s been true since Vietnam.

  10. The Washington Post does not recognize the territorial sovereignty of the United States.

    Washington Post — You don’t want immigrants? Then tell grandma she can never retire (4/23/2024):

    “As I’ve noted before, immigrants are driving the U.S. economic boom. That is: The United States has escaped recession, hiring growth has exceeded expectation, and inflation has cooled faster than predicted — all largely because immigration has boosted the size of the U.S. labor force. Don’t just take my word for it; ask the Federal Reserve chair or Wall Street economists.”

    The Federal Reserve chair and Wall Street economists want you replaced.

    “After a stretch of depressed immigration levels — primarily driven by Donald Trump’s hobbling of the legal immigration system — the number of immigrants coming here began to rebound mid-2021. Immigrants are more likely to be working-age than native-born Americans, so their arrivals helped solve a number of problems facing the U.S. economy.

    Some other countries would love to have the problems we have — to have so many talented people clamoring to replace retiring boomers (or care for them) and to infuse their economies with new skills, ideas, businesses and drive. The influx of new talent has not only helped us beat recent recession predictions; it’s also helped us best our competitors in Asia and elsewhere, where demographic challenges are dragging on growth. The U.S. economy is one of the only places in the world right now that is doing even better than expected before the pandemic began.

    And, if current immigration trends continue — which they might not, depending who wins in November — immigration is likely to boost our fortunes in the years ahead: The Congressional Budget Office recently revised upward its 10-year gross domestic product projections by $7 trillion, attributing the increase to immigration-driven labor force growth. Our longer-term fiscal challenges also look better, since immigrants pay taxes and are much less likely than native-born Americans to (ever) qualify for benefits, including programs such as Medicare and Social Security.”

    https://archive.ph/AcNO4

    You are being replaced.

    1. immigrants pay taxes and are much less likely than native-born Americans to (ever) qualify for benefits, including programs such as Medicare and Social Security.

      So they admit SS and Medicare are nothing but scams to siphon money from the GenX/Milliennials/GenZs to the WWII generation.

      tell grandma she can never retire

      The problem with old people nowadays is that they don’t want to work.

        1. WTH? WWII generation never paid into the system?

          They paid nowhere near the amount they expect to take out of the system. It is a Ponzi scheme.

  12. Naples Daily News in Florida.

    “…indicating ‘sellers are shifting from aspirational pricing to realistic market pricing,’ NABOR research concluded.”

    \\

    – “Aspirational pricing.” 😂. 🤡🌎
    – You are here: Denial.

    \\

    “Some sellers are still struggling to accept the fact that the pandemic buying frenzy years with climbing price increases are over.”

    \\

    – National resale / existing hovel prices are still at sub 3% mortgage rates, but rates are now super 7%. Hmmm. 🤔

    – National new hovels are being priced down to reflect higher prices and rates. Builders get it. Lower new prices reflect incentives and rate buy-downs. Builders need to move that inventory.

    – Existing and new prices are about even, with new soon to undercut existing. Why buy used for the same price (or more) vs. new?

    – This is why existing prices haven’t come down yet; prices “sticky to the downside.”

    – In either case, it’s still much cheaper to rent than buy, and by a large margin, just based on P&I vs. rent. Include taxes, insurance, HOA, maintenance, etc., and it’s even more lopsided.

    – Your .gov, including the GSEs and the Fed intentionally did this; they blew Housing Bubble 2.0. The U.S. housing market is FUBAR due to .gov choosing winners and losers. A centrally planned, command and control economy always fails, comrade. Now housing is completely unaffordable. Thanks a lot!

    – Asset bubbles always burst, since an unsustainable construct.

    – Let’s see where prices are 2-3 years from now. Right now is a terrible time to buy an overpriced hovel.

  14. “So there’s a tsunami (of new housing units) for Reno,’ Ressler said. ‘The pipeline is pretty full.’”

    So my neck of the woods. Since I’m inside the beast I can tell you it is set up for an epic meltdown. And that’s all I’m gonna say about that.

  15. A reader sent these in:

    The desperation is getting embarrassing. “Ya’ll get robots! 😭😭😭 please stop selling $TSLA ”

    https://twitter.com/seybertooth/status/1782323394890846239

    Yikes. $TSLA ended up just cutting 10%. How is this still a growth story when car deliveries dropped 20% quarter on quarter? Also, how do you justify the valuation even after the recent price drop? The PE ratio is 34 even at the current stock price.

    https://twitter.com/StealthQE4/status/1782332630886653977

    Anyone else think its crazy that not ONE SINGLE INSIDER of $TSLA has bought shares in 2024. I mean not one person on the board has bought any shares in the last 6 months!

    https://twitter.com/DekmarTrades/status/1782206486401167495

    Canada is spending 75% of its deficit to buy as many mortgage backed securities as possible. Even better, Canada blew through 25% of this mortgage budget in only 2 months. Ironically, the more they spend the higher treasury yields/interest rates will go.

    https://twitter.com/FinanceLancelot/status/1782235274174484806

    When people say that the economy is super strong, please understand…We are running a HISTORIC deficit. 6.2% of GDP. Never seen before outside of WW2, the GFC or Covid. If we weren’t running crisis level deficits and balanced the budget, or even got close, GDP would collapse.

    https://twitter.com/Geiger_Capital/status/1782460565660512624

    Home price forecasts are collapsing “Forecasts for U.S. home prices suddenly look a lot different compared to just a month ago, according to Freddie Mac’s latest outlook. Price will increase only 0.5% in 2024 and 2025, the mortgage giant said Thursday. That’s down sharply from its forecast in March, when it predicted home prices would rise 2.5% in 2024 and 2.1% 2025.”

    https://twitter.com/GRomePow/status/1782219242433319044

    Nike:
    *Laying off 740 employees
    *Paid its CEO $32.8 million last year, a raise of 13.7%

    https://twitter.com/DanPriceSeattle/status/1782454385018274297

    Active Listings grew 5% last week in Nashville. In one week. (Davidson County, Tn)

    If they do that again this week, we will blow past the November high of last year and we will have more active listings than we did Pre-Covid. I’ve reached out to Realtracs as they don’t provide more than 5 years back on data. So when will prices start dropping? 🤷‍♂️It will be fascinating to see how this plays out.

    https://twitter.com/ethanflynncpa/status/1782442967451554222

    Median home prices are officially contracting at levels NEVER seen in 60 years

    https://twitter.com/GameofTrades_/status/1782469422239842614

    Lumber just limit down wow. higher rates -> less demand for new homes -> no use for lumber

    https://twitter.com/TedHZhang/status/1781099276615008483

    I was flipping through my pages of strong economy narratives and didn’t find this one in there…

    https://twitter.com/DonMiami3/status/1782584386216399316

    Bristol Myers Squibb is reportedly undergoing significant layoffs affecting 1,000+ employees

    https://twitter.com/MacroEdgeRes/status/1782565646137475461

    1. “When people say that the economy is super strong, please understand…We are running a HISTORIC deficit. 6.2% of GDP. Never seen before outside of WW2, the GFC or Covid. If we weren’t running crisis level deficits and balanced the budget, or even got close, GDP would collapse.”

      \\

      – The uniparty, the same one that has just voted for a) a continuation of unconstitutional warrantless searches, and b) continued funding for the forever war in Ukraine, also wants 4 more years of Brandon.

      “Oceania has always been at war with Eastasia.” – Geo. Orwell, 1984

      – Potemkin village economy right up to Nov. 5th.

      – Inflation stays elevated with fiscal dominance. No one is “fighting” inflation. F*ck the poors.

      – US = BK

      – 🤡 🌎

    2. ” not ONE SINGLE INSIDER of $TSLA has bought shares in 2024. ”

      You don’t need to be an insider to read the stories about never-ending range anxiety, frozen cars stuck at frozen chargers, resale value diving 50% after the first year, and and dried-up demand from early-adopter virtue-signalers. I wouldn’t have bought shares either; in fact I would have sold them.

      1. I would guess insiders rarely buy shares – they usually get them as part of the compensation package so do acquire more shares without needing to buy them

    1. I call massive BS. They’re 71 and have $700K of equity to play with. How is that “trapped?” 🙄

      1. Trick out a single-wide real nice in a trailer park for under $200K and have enough cash left over for 40 years of lot rent.
      2. Rent a flat in any number of apartment buildings.
      3. Buy a tear-down in the boondocks, clean it up, toss down a slab, and put a pre-fab on it.
      4. Pay son/daughter to put a granny flat on their house so you can play with grandbabies.

      They can probably do any of of those still in NH. If they get up the gumption to move, they have even more options. No sympathy.

      2. Agreed. Hearing boomers whine about how they are trapped or had it so hard while literally getting their entire life on easy mode grates just a wee bit.

        at least 700k of equity, at least. Plus SS, plus medicare, far in excess of what they contributed (almost like it’s a Ponzi scheme). But then they whine.

          1. Sorry, BS, the numbers don’t lie. You can put together a simple spreadsheet using historical tax rates and maximum taxable income from the SS gov’t website. Someone who worked from 1955-1995 and earned the maximum taxable income each year would have contributed $103,509.58 to SS (employer + employee contributions). If they were then retired for 20 years they would have collected an average of about $2,500 per month, totalling $600,000.

          2. the numbers don’t lie.

            “There are three kinds of lies: lies, damned lies, and statistics.”

            I’ve no doubt that your column of numbers have been added up accurately, but there are a few nuances. Three come to mind. The person in your example at age 20 had a life expectancy of 65, not 85. What would their fortune be at age 65 if their contributions had been kept by them in a regular savings account with compound interest? What would the comparison look like if the decline in the value of the dollar (via government theft called Inflation) was factored in? At the beginning of your example, the price of gasoline was $0.30. I have some dimes from 1955. They are worth $2.

            In this case, we’re all sorry.

    2. “Apel is having trouble going up the stairs and Irwin struggles with yard work and shoveling the large property.”

      Susan Apel and Keith Irwin are safe right where they are. The financial wizards are only interested in their commissions if they can force this couple into the street.

  18. It turns out that much of the building of condos and associate pre-purchases was for speculation on appreciation in the Greater Toronto area. Wow 4% interest rates really does make a difference vs 7% and 8%. Wonder what all the ‘investors’ that have 2-5 prebuys will do when their units are finished and they have to come up with the mortgates and not just a 5% downpayment. They cannot just walk away.


    The Greater Toronto Hamilton Area (GTHA) new condominium market reported 1,461 sales in Q1-2024, the lowest quarterly total since the Global Financial Crisis in Q1-2009 (884 sales). Outside of that brief period in early 2009, new condominium sales haven’t been this low since the late-1990s. Sales were down 71% when compared to the latest 10-year average for Q1 periods (4,978 sales), dropping 85% from the Q1 high in 2022 (9,723 sales).

    Developers dramatically pulled back on new launches in early 2024, with only four projects totaling 958 units brought to market in the first quarter. Three out of the four projects launched in the GTHA during Q1 were in the 905 Region, resulting in an average opening price for new condos of $1,168 psf — down 12% from Q4-2023 ($1,333 psf) and a 17% drop from the record high in Q1-2023 ($1,407).
    …
    On average, projects in pre-construction during Q1-2024 were 50% presold, down from a 61% average absorption level a year ago and 85% two years earlier. With pre-construction sales falling well below typical construction financing requirements of at least 70% absorption, construction starts have experienced a sharp decline. In Q1-2024, 2,361 new condominiums began construction in the GTHA, down 52% annually. At the same time, completions surged to a record high of 12,132 units in Q1-2024, causing the total number of condos under construction to fall to a more than two-year low 91,590 units.

  19. ‘There’s a steady change in consumer sentiment. (It’s) slightly better now than before. But let’s not get too excited, it’s simply coming out of the grave’

    And you got a lawsuit on yer hands Larry.

  20. ‘transactions are down more than 9% from that time in 2023 while 67% more abodes are available, reaching above 5,000’

    Wa happened to my shortage Naples?

    ‘Even with rising costs, not all Naples homeowners are getting the price they desire’

    Yes, but they can always sell. And pay the rising costs in the meantime.

    ‘February featured 2,264 price decreases, indicating ‘sellers are shifting from aspirational pricing to realistic market pricing,’ NABOR research concluded. ‘Some sellers are still struggling to accept the fact that the pandemic buying frenzy years with climbing price increases are over. As more new sellers enter the market, those sellers with overpriced properties risk missing an opportunity’ attracting buyers’

    That’s the spirit NABOR!

  21. ‘For ‘low risk’ areas with more than one source of irrigation water, prices have dipped 10-15% in the last year. For ‘high-risk’ areas, such as those with a single irrigation option, prices are down 25-30%. ‘There’s going to be fewer Escalades purchased by farmers this year,’ joked Grosz. But underscoring the position the ag industry is in, he forecast more bankruptcies and forced land sales to come’

    That is funny Sullie. Again, it’s gratifying to see the farmland bubble pop after following it for so long.

  22. ‘In the major life science markets, like San Diego, Boston and the Bay Area, it’s still the perfect storm when it comes to the real estate side…Companies just aren’t taking down space at the same clip they used to. And there’s no scarcity of supply anymore. In fact, it’s mind-numbing how much space there is’

    Another no-brainer market goes south Shane.

    1. Its not just the major bio-tech – it was all the support services companies that ramped up 50% to 200% in these areas.

      I remember visiting Sanofi (major bio tech) just outside MIT in Cambridge. Walking down the street there were a ton of new buildings for the support services. One was a 6 floor building that was being built just to hold and service genome sequencers – it was built and outfitted – and they never got more than 20% utilization.

      The amount of waste – based on crazy trends was unbelievable. What really happens in Boston, San Diego etc.

      1. However, with the downturn, perhaps teh Hyatt Regency outside of MIT might have room rates lower than $600/night

  23. ‘has seen upticks in foreclosures over his four-decade career, and says the past year or so in Vancouver has been busier in terms of big real estate insolvencies than any time since the early 1980s, including the 2007-08 financial crisis’

    The lending is rock solid.

  24. How did you lose yer shack Andy?

    It was a hell of a lot of bad luck. Markets go in cycles all the time but there’s not necessarily a big crash or boom, it’s just changing a little bit. The trouble is these days when we’re talking about house prices with so many zeros a little blip in the market can be $100,000 and that can really ruin things. That’s exactly what happened here.

    1. “The trouble is these days when we’re talking about house prices with so many zeros a little blip in the market can be $100,000 and that can really ruin things.”

      No worries, it’s just a gully.

  25. ‘The COVID years were the drag. Most, if not all, construction companies suffered (similar) fate. Whenever we see each other, our first question is: ‘how much have you lost?’

    It was a minor respiratory illness Neo.

  26. ‘He said he is optimistic that the apartments will eventually be finished, but he isn’t optimistic about much else. Perhaps two of the apartments will be occupied by his relatives, he said. The rest will sit empty. ‘It’s not possible to sell or rent out. It’s not worth decorating’

    Bargaining <- man in Henan province, you are here.

  27. Why Are There So Many Vacant Houses For Sale?
    Diane Neto – Living in Barrie

    1 day ago

    The number of vacant houses for sale is 28% right now in Barrie. Are investors selling now that they have vacant properties? Are people buying new builds unable to afford their mortgages now due to the increase in interest rates since they purchased? Mark and Diane look at the large amount of vacant houses for sale in Barrie right now.

    https://www.youtube.com/watch?v=rDojQ988PEo

    18:47.

  28. ‘Companies just aren’t taking down space at the same clip they used to. And there’s no scarcity of supply anymore. In fact, it’s mind-numbing how much space there is.’

    No surprise, given that nobody except the very wealthy can afford to buy or rent here, and many are leaving.

  29. Is it safe to assume that since no recession has happened yet, a recession won’t happen?

    1. Economy
      The yield curve has been inverted for 18 months without a downturn – but the famed indicator isn’t wrong, and a recession is near, strategist says
      Jennifer Sor
      Apr 23, 2024, 9:12 AM ET
      stock market crash
      Yichiro Chino/Getty Images

      – The bond market’s famous recession gauge has been flashing for 18 months.

      – A downturn could be delayed for months after the yield curve first inverts, Paul Dietrich said.

      – He predicted a recession would hit the economy “sometime soon.”

      A famously accurate recession indicator has been flashing for 18 months without an economic slowdown materializing — but the inverted yield curve is still correct, and a downturn is looming, B. Riley Wealth’s chief investment strategist Paul Dietrich says.

      Dietrich pointed to the inverted Treasury yield curve, a highly accurate recession gauge that flashes when the yield on the 2-year US Treasury surpasses the 10-year Treasury.

      An inversion on the 2-10 Treasury spread has correctly predicted every recession since 1955 — and it’s been flashing its infamous warning since November 2022, around the time B. Riley’s collection of leading economic indicators also began to signal a coming recession.

      The resilience of the US economy has stunned observers, but while some economists have dialed back their warnings of a coming downturn, one is still coming, Dietrich said in a note to clients last week. In the past, recessions have taken up to 28 months to officially start after being signaled by the yield curve and leading economic indicators, he noted.
      …
      https://www.businessinsider.com/recession-outlook-yield-curve-inversion-economy-hard-landing-indicator-stocks-2024-4?amp

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