Chinese billionaire Wang Jianlin, whose vast property and entertainment empire reportedly brought in $44 billion in revenue last year, appeared on CNN Wednesday to warn about what lies ahead for the country’s overheated real-estate market.
It’s the biggest bubble in history… I don’t see a good solution to this problem. The government has come up with all sorts of measures — limiting purchase or credit — but none have worked.
Jianlin pointed to the troubling fact that real estate prices just keep rising in the major cities, like Shanghai and Beijing, while falling across the rest of the country, where smaller cities are littered by properties that lie vacant. Continue reading »
The failures of government intervention in the economy have made headlines yet again. Recent stress tests by the Federal Housing Finance Agency found something sinister brewing under the surface at notorious mortgage giants Fannie Mae and Freddie Mac. The results show that these puppet companies could need up to a $126 billion bailout if the economy continues to deteriorate.
That’s right — the two companies that were taken over by the government and that sucked $187 billion from the treasury could be entitled to more taxpayer money. The toxic home loans bought during the last crisis coupled with a lack of liquidity have suddenly become serious risk factors. The so-called “recovery” that has been trumpeted for years by countless politicians and economists is falling apart in plain view. The media will do just about anything to assure the public that this is all isolated and overblown, but the canary in the coal mine has just dropped dead. Continue reading »
The mind-numbing Case-Shiller regional charts below are presented without too much comment. As MHanson.com’s Mark Hanson adds,the visual says it all.
Q: If 2006/07 was the peak of the largest housing bubble in history with affordability never better vis a’ vis exotic loans; easy availability of credit; unemployment in the 4%’s; the total workforce at record highs; and growing wages, then what do you call “now” with house prices at or above 2006 levels; worse affordability; tighter credit; higher unemployment; a weakening total workforce; and shrinking wages?
A: Whatever you call it, it’s a greater thing than the Bubble 1.0 peak.
1) Funny (and Demented) Seattle area Realtor anecdote regarding the potential for another housing Bubble: “House prices can’t be in a bubble because they are only 10% greater than the 2006 peak, meaning growth of only 1% per year since 2006. And 1% per year is not the Bubble type gains we saw back in the mid-2000’s”. Continue reading »
Real Vision TV’s Grant Williams offers a true look into what is known as an absurd debt level and unimaginable central bank manipulation. Less than a week ago we highlighted Grant’s comments on commodities. Although the information contained in the video below is nothing new to Zero Hedge, we do enjoy the way the information is presented. Set aside some time to listen as Grant tells a story about debt and the current investment landscape.
Grant sees people “with more power than you can possibly imagine” as the ones responsible for experimental economics that led the world down a path of self destruction.
“I don’t think there is any argument about whether or not the central bankers of the world should have done something in 2008. The question is ‘should they still be doing it 8 years later‘?”
We recommend viewing the entire clip
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“When a country embarks on deficit financing (Obamanomics) and inflationism (Quantitative easing) you wipe out the middle class and wealth is transferred from the middle class and the poor to the rich.”
– Ron Paul
“Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.”
– Ron Paul
“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
– John Maynard Keynes
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”
– Alan Greenspan
“Capital must protect itself in every way… Debts must be collected and loans and mortgages foreclosed as soon as possible. When through a process of law the common people have lost their homes, they will be more tractable and more easily governed by the strong arm of the law applied by the central power of leading financiers. People without homes will not quarrel with their leaders. This is well known among our principle men now engaged in forming an imperialism of capitalism to govern the world. By dividing the people we can get them to expend their energies in fighting over questions of no importance to us except as teachers of the common herd.”
– J. P. Morgan
“We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks, hereinafter called the FED. They are not government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers.”
– Louis McFadden
“It was not accidental [the 1929 stock-market “crash”]. It was a carefully contrived occurrence. … The international bankers sought to bring about a condition of despair here so that they might emerge as rulers of us all.”
– Louis McFadden
“What good fortune for governments that the people do not think.”
– Adolf Hitler
Tags: Bank of England, Banking, Bonds, Collapse, Debt, Economy, EU, Europe, Fed, Federal Reserve, Global News, Government, Housing, Housing Bubble, Housing market, IMF, Politics, Quantitative Easing, Real Estate, U.K., U.S.
In April we pointed out that due to an already abundant supply of condos on the market, luxury real estate developer Extell Development Co couldn’t sell luxury condo’s at its One57 tower, in the heart of New York’s premier ultra luxury destination.
Extell decided that instead of leasing luxury apartments, it would sell the units as higher end apartments in order to fill vacancies and generate cash. As a reminder, Bill Ackman paid $91.5 million for a condo in One57 in April of 2015 just “for fun” in hopes of flipping the unit at some point. Continue reading »
Over the past several months we have repeatedly noted a recurring peculiarity of the Vancouver housing bubble: there are numerous multi-million dollar mansions, which rot, abandoned, their owners having long ago disappeared.
Two months ago, we first postulated the hypothetical timeline that starts with the purchase of a Vancouver mansion Continue reading »
Since the Fed may not, or simply refuses, to see if not a bubble then at least “froth” in any asset class, perhaps it should hire Peter Thiel to be on its macroproduential supervisory committee, because according to the venture capital legend who co-founded PayPal everything is overvalued. Speaking at the LendIt USA Conference in San Francisco on Tuesday, he said that he is “somewhat concerned about the frothiness of the markets” and adds that “startup tech stocks may be overvalued, but so are public equities, so are houses, so are government bonds.”
He adds that “if there is a bubble it is probably centered on the zero % interest rates, the quantitative easing, the money printing and that’s a very strange one because it permeates everything.” Continue reading »
The Bauhouse Group has filed bankruptcy for BH Sutton Mezz LLC, their entity that was to build out a 78 floor luxury condominium tower at Sutton Place, located on Manhattan’s Upper East Side. The bankruptcy comes on the heels of foreclosure efforts by Gamma Real Estate, who alleges that Bauhouse has defaulted on a loan of roughly $147 million.
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Another major city is experiencing a pullback in demand for its property – once again as a direct result of Government action to dampen the impact of foreign investment. In London, as Bloomberg reports, demand has slumped so badly that developers are offering discounts of up to 20% for their newly constructed homes. And just as the case was in Manhattan, it’s a result of the UK putting in a speed bump. The UK recently increased taxes on those deemed to be purchasing a second home, specifically designed to slow the pace of overseas investment.
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While real estate is all about “location, location, location,” it appears there are sometimes more prescient factors that any prospective buyer should pay attention to. Amid yet another government-fueled housing bubble, it seems in their haste to fulfil a rapacious demand for property in which to gamble their hard-grafted assets, Chinese construction companies have cut a few corners. As the following stunning video shows, a “newly constructed apartment” crumbles before the owners’ eyes as the ‘concrete’ walls turn to sand…
LiveLeak exposes, in the following video, just how poor the standards can be of so-called “new” properties. LiveLeak footage shows two men in a supposedly “new apartment building” in China where the concrete walls crumble like sand.
China is currently in the midst of a huge property bubble…
“Considering the global luxury real estate market is one of the most inflated asset bubbles on earth, current weakness could pretty quickly turn into a crash.”
It appears the music may have finally stopped for one of the world’s largest luxury real estate bubbles: London.
It’s well known that foreign oligarchs love London real estate as a means to launder funds, typically “earned” by soaking their host countries dry via corruption and fraud. This has caused absurd and irrational spikes in high-end residential real estate in the English capital, as well as a flood of new construction.
With emerging markets now completely collapsing, the seemingly endless flood of foreign money is drying up, and with it, London real estate.
So has the London real estate bubble popped? Probably.
– From the September 9, 2015 article: Luxury London Home Sales Plunge 26% – Has this Mega Real Estate Bubble Finally Burst?
The first real signs that the global luxury home price bubble had popped emerged last fall in the world’s capital of oligarch money laundering: London.
Since then, we have seen weakness in high end Manhattan real estate, but the trend has now spread and is starting to make itself apparent all over the place. Continue reading »
“We aren’t going to sugar coat this, as you can see by the photos, this is a basement crawl space and the ground is un-even. My roommate Neil has agreed to help out and level off the dirt crawl floor and we have some scraps of rug to throw down. There is a decent amount of room for a mattress and night stand…”
According to the broker, it’s the cheapest home on the market in San Francisco, and it’s an unlivable shack.
As Fortune reports, it is a worn-down, decomposing wooden shack that was built in 1906, and the interior is unlivable in its current condition. The San Francisco house is also selling for $350,000.
According to Zillow, $350,000 would comfortably fetch a 1,500-square-foot, three-bedroom home in many smaller cities in the U.S., including Cincinnati, Ohio.
Realtor Alexander Han, would definitely advise against moving in too soon.
“The house still needs a lot of work. I would not recommend anyone moving right in. The bathroom is not functioning. The kitchen needs a bit more work. The flooring has a couple of places that are little bit weaker, and needs to be reinforced.”
– Existing Home Sales Extrapolation Surges To Highest Since Feb 2007 (ZeroHedge, Aug 20, 2015):
By the miracle of NAR extrapolation and seasonal adjustment, the SAAR Existing Home Sales data just printed 5.59mm units – the highest since Feb 2007. Sales were dominated by increases in The West and The South with The Northeast falling. We have two questions for NAR – where are the buyers coming from… and how long is this sustainable?
What’s wrong with this picture?
Some other data from the NAR: median prices. Continue reading »
– London Housing Bubble Watch: $630/Month For A Bed “In” A Shared Kitchen! (ZeroHedge, May 13, 2015):
You know it’s a bubble when… A listing has appeared online advertising a single bed in a house in London where the mattress is located in the kitchen.…
– Why The Record Drop In Chinese House Prices Suggests Beijing Is Already In A Recession (ZeroHedge, April 18, 2015):
If one compares the history of the Chinese and US housing bubbles, one observes that it was when US housing had dropped by about 6% following their all time highs in November 2005, that the US entered a recession. This is precisely where China is now: a 6.1% drop following the all time high peak in January of 2014. If the last US recession is any indication, the Chinese economy is now contracting! So much for hopes of 7% GDP growth this year.
From the article:
As the FT reports, “sales of homes worth more than £2m have dropped by 80 per cent in the past year.”… “It is like the 1970s again, when waves of wealthy people left Britain and it was a disaster.”
– UK Housing Bubble Bursts: Sales Of Luxury Homes Crash By 80%; “Waves Of Wealthy People Are Leaving” (ZeroHedge, April 12, 2015):
About a year ago, when the Chinese housing bubble had just begun to burst (as a reminder Chinese house prices are now crashing at a faster pace than in the US after Lehman) and forcing the real estate bubble blowers to consider a different venue, namely the stock market, another housing bubble several thousand miles away was in full blown escape velocity mode – that of the UK. In fact, as we showed in the following table from last June, the appreciation in UK home prices had surpassed that of China as recently as 10 months ago. Continue reading »
– The Canadian Housing Bubble Has Begun To Burst (ZeroHedge, March 24, 2015):
Energy accounts for 10% of Canadian GDP and around 25% of exports and the swift fall in oil prices is having a profound effect in the nation’s oil producing regions where home sales are collapsing by as much as 65%.
– Crash Landing: China Home Prices Plunge At Fastest Pace On Record, Surpass Post-Lehman Collapse (ZeroHedge, March 18, 2015):
Less than three weeks ago, when the PBOC proceeded with its latest “surprise” rate cut, we showed a chart that should scare everyone who is hoping that China will avoid a hard-landing would prefer would never have been revealed: the annual collapse in Chinese home prices is now so sharp and so widespread, that it has surpassed the housing collapse in the aftermath of the Lehman collapse.” Overnight things went from bad to worse, when China’s National Bureau of Statistics reported that contrary to hopes for a modest rebound, China’s average new home prices fell at the fastest pace on record in February from a year earlier.…
– This Has Never Happened Before Without A Massive Bubble Bursting (ZeroHedge, Oct 28, 2014):
Back in June we first observed that “America’s Most Important Housing Market Signals A Red Alert For Housing Bubble Watchers” and showed the following chart:
– California Leads Housing Slowdown As Case-Shiller Home Prices Decline For 4 Months In A Row (ZeroHedge, Oct 27, 2014):
Following misses in yesterday’s Markit Service PMI, Existing Home Sales and the Dallas Fed report, and today’s Durable Goods numbers, we just made it a pentafecta for misses in US econ data, when the just released August Case-Shiller data for August confirmed once again that US housing is rapidly slowing down, when the Top 20 Composite Index (Seasonally Adjusted) posted another decline in August, its fourth in a row, declining by -0.15% and missing expectations of a modest 0.2% rebound (following last month’s -0.5%) decline. The best summary of the situation came from S&P’s David Blitzer: “The deceleration in home prices continues… The Sun Belt region reported its worst annual returns since 2012, led by weakness in all three California cities — Los Angeles, San Francisco and San Diego.” But who cares what the birth (and death) place of every housing bubble is doing, right?…
– Burst Chinese Housing Bubble Leads To First Annual Price Decline Since 2012; Prices Drop In Record 69 Cities (ZeroHedge, Oct 24, 2014):
It has been over six months since the Chinese housing bubble has popped. What’s worse, as overnight housing numbers out of China confirmed, the government has so far failed to contain the fallout, and according to the National Bureau of Statistics, which is anything but, after a fifth straight monthly decline, Chinese home prices have now wiped out all price gains in the past year. This was immediately spun as bullish by media outlets and sellside experts as “raising expectations the government will have to implement more economic support measures to cushion the blow.” I.e., buy stocks because central banks will push risk prices artificially higher yet again. In other words, bad is still good and failure continues to be success.
– China Housing Bubble Bursts: Q3 Land Sales Crater 50% (ZeroHedge, Sep 29, 2014):
China may be doing everything in its power to divert attention from the simple fact that its housing bubble, the largest in the world in terms of both assets comprising it as well as divergence from fair value, has burst. But while there is no clear threshold of what constitutes a bursting bubble when it comes to housing, the latest data out of Soufun, China’s largest real-estate website, which said that land sales have dropped a massive 22% to 1.7 trillion Yuan in 2014 so far, is likely as clear an indication as any that Beijing is about to panic.
And if that was not enough Bloomberg adds that land sales in 300 cites followed by Soufun fell almost 50% Y/Y to 415.9 billion yuan in 3Q, while residential land sales declined more than 50% to 265.3b yuan in 3Q. Continue reading »
– French Housing “In Total Meltdown”, “Current Figures Are Disastrous” (ZeroHedge, July 30, 2014):
If Venezuela is the case study of a country in the late stages of transition into a socialist utopia, then France is the clear runner up. The most recent case in point, aside from the already sliding French economy, whose recent contraction can be best seen be deteriorating PMI data…
… which hints at the dreaded “triple dip” recession, nowhere is the economic collapse in France more evident than in its housing market which as even Bloomberg admits, citing industry participants, is now “in total meltdown.”
The reason? The belief of the socialist president that a few economists know better than the overall market, especially when the sanctity of the “fairness doctrine” and the greater good is to be upheld at all costs. To wit: “French President Francois Hollande’s government may have made a housing slump worse, pushing the construction market to its lowest in more than 15 years. Housing starts fell 19 percent in the second quarter from a year earlier, and permits — a gauge of future construction — dropped 13 percent, the French Housing Ministry said yesterday.” Continue reading »
– The Rot Within, Part I: Our Ponzi Economy (OfTwoMinds, July 21, 2014):
Depending on blowing the next bubble to temporarily prop up the economy is the height of foolhardy shortsightedness. Yet that’s our Status Quo, increasingly dependent on inflating bubbles to evince “economic strength” when the Ponzi paint will soon peel off the rotten wood of the real economy.