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PROPERTY
nipper
post Posted: Mar 24 2019, 11:47 AM
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Boomer retirees stranded
QUOTE
Large, high-end homes across the Sunbelt in the southern states of the US are sitting on the market, enduring deep price cuts to sell.

That is a far different picture than 15 years ago, when retirees rushed to build elaborate, five or six-bedroom houses in warm climates, fuelled in part by the easy credit of the real estate boom.

Now, many boomers are discovering that these large, high-maintenance houses no longer fit their needs as they grow older, but younger people aren’t buying them. Tastes — and access to credit — have shifted dramatically since the early 2000s. These days, buyers of all ages eschew the large, ornate houses built in those years in favour of smaller, more-modern looking alternatives.

The problem is especially acute in areas with large clusters of retirees. The area around Scottsdale, Arizona, also popular with wealthy retirees, had 349 homes on the market at or above $US3 million ($4.2m) as of February 1 — an highest, according to a Walt Danley Realty report.

Homes built before 2012 are selling at steep discounts — sometimes almost 50 per cent, and many owners end up selling for less than they paid to build their homes, said Walt Danley’s Dub Dellis.

Kiawah Island, a South Carolina beach community, currently has around 225 houses for sale, which amounts to a three- or four-year supply. Of those, the larger and more expensive homes are the hardest to sell, especially if they haven’t been renovated recently, according to local real-estate agent Pam Harrington.

The problem is expected to worsen in the 2020s, as more Baby Boomers across the country advance into their 70s and 80s, the age group where people typically exit homeownership due to poor health or death, said Dowell Myers, co-author of a 2018 Fannie Mae report, “The Coming Exodus of Older Homeowners.” Boomers currently own 32 million homes and account for two out of five homeowners in the country.

“You had this wave of homes built that now just don’t make sense for a lot of the people who bought them,” said real estate agent Rick Palacios.
https://www.theaustralian.com.au/business/w...be94d12501a1768

- a sensible view of one's own residence is that it should be classified as a lifestyle option and not an asset



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: triage  
 
triage
post Posted: Mar 15 2019, 04:16 PM
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In Reply To: nipper's post @ Mar 15 2019, 01:00 PM

... in bed with the vampire squid ... yeah nah I'll take that as a negative indicator for Geocon's prospects.



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"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog
 
nipper
post Posted: Mar 15 2019, 01:00 PM
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In Reply To: triage's post @ Mar 14 2019, 01:02 PM

triage, the AFR article was rather lengthy , and did go to point out the ACT is the anomaly
QUOTE
....Data from construction information provider BCI Australia confirmed the pattern in Sydney and Melbourne, adding that the ACT was the only state where almost all approvals in 2015 – while much fewer than NSW and Victoria – proceeded to construction...

The other general observation was that off-the-plan sales have slowed dramatically for those blocks still under construction. Opal Towers wouldn't have helped!!

And I suspect Geocon (the biggest local player) is an outlier in Canberra. They did a strategic alignment with Goldman Sachs last year, I recall, that then allowed the company to bring forward some of the more complex, multi-building projects. Which of the joint venture gets to benefit in any upside from such an arrangement remains to be seen.

But, as a general rule, when the incentives become widespread.... 5 years guarantee rental, or a fitout/ furniture etc, it's time to get worried. Anything to not drop the price, which market forces would be demanding.



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: triage  
 
triage
post Posted: Mar 14 2019, 01:02 PM
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In Reply To: triage's post @ Mar 14 2019, 10:38 AM

... though there's this ... corelogic reported auction stats for Canberra for this last weekend and the corresponding weekend last year. The auction results were below 30% and I heard it explained as being a slow weekend because of the local long weekend (for Canberra Day). So it was reported that there were 44 auctions held last Saturday with only 10 "cleared" auctions (as in the gavel dropped), which is about a 28% clearance.


But for the corresponding weekend last year, which was also the Canberra Day long weekend, there were 64 auctions held with a clearance of about 77%. So not only was there a 30% drop in auction activity there was a collapse in properties sold by auction in the ACT of about 80% compared to the corresponding weekend last year.

House prices in the ACT appear not to have fallen much yet, but going on auction activity and auction clearance rates all of the pressure is starting to pile on to the sellers.

(data via macrobusiness)



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog
 
triage
post Posted: Mar 14 2019, 10:38 AM
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In Reply To: nipper's post @ Mar 14 2019, 05:33 AM

nip - by my count Geocon currently has 8 construction sites for high rise developments in the ACT. They claim to account for about 50% of the apartments being built in the territory. All their sites seem to be active again after the Christmas shutdown but I keep expecting to see flags on their construction cranes during working hours (they hang an Australian flag on inactive cranes). I see that they are guaranteeing set rental yields for 5 years for at least some of their off-the-plan projects which suggests that their sales side is under pressure.

Having said that I know of no apartment projects in Canberra that have shut down and local house and unit prices seem to be holding up okay. People keep telling me that the Canberra market is different, maybe they're right.



--------------------
"The market can stay irrational longer than you can stay solvent." John Maynard Keynes

"The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought." Rudiger Dornbush

Mozart fixes everything and Messi is a dog
 
nipper
post Posted: Mar 14 2019, 05:33 AM
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QUOTE
Nearly half of new apartments approved for construction in Melbourne and about a third of apartments approved in Sydney at the height of the housing boom in 2014 and 2015 – potentially worth close to $10 billion – have not been completed or have stalled.

An analysis by The Australian Financial Review of Cordell/CoreLogic data showed about 21,000 out of about 36,000 approved apartments in Melbourne worth about $6.5 billion over the two years have been categorised as "deferred" or "possible" but have not firmed up to go ahead. In Sydney, just over 10,000 out of 26,000 units with an end value of about $3 billion are in the same boat.

While the housing boom has delivered a record number of approvals, particularly of apartments to satisfy a throng of investors, many projects have not gone ahead as a result of weak sales caused by the credit crunch, delayed or slow planning, site flips, and in some cases developers over-leveraging on projects....

https://www.afr.com/real-estate/10-billion-...20190307-h1c3nt

- remember the "World Trade Centre" hole in Sydney? .... Took more than a decade to be finished. Same sort of thing will happen again.
And I reckon the "crane count" will drop dramatically.




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 


nipper
post Posted: Mar 12 2019, 06:33 PM
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The downturn in one graphic, and other generalisations

https://www-businessinsider-com-au.cdn.ampp...ce-falls-2019-3



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
mullokintyre
post Posted: Jan 1 2019, 07:37 AM
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In Reply To: nipper's post @ Dec 31 2018, 05:25 PM

Lot safer being the only member of the "strata title body corporate".

Mick



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sent from my Olivetti Typewriter.
 
nipper
post Posted: Dec 31 2018, 05:25 PM
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In Reply To: nipper's post @ Dec 31 2018, 03:41 PM

QUOTE
...The surprise about the problems at Opal Tower in Olympic Park is it was an expensive apartment tower. A two-bedroom apartment there is advertised for $930,000. Opal Tower’s structural failure is extremely bad news for the apartment market overall.

Market expectations are that top-end developments are put together with care and due diligence. If buyers can’t even trust top-end developments then the whole market for new apartments could have a problem. When buyers can’t tell which developments are high quality and which are not the only way to be safe is to stop buying new apartments altogether. That would be a big negative for apartment prices.

Even worse is if banks can’t distinguish between good quality apartments and bad. Banks make mortgage loans cheaply because they are backed by the underlying asset. The bank gets to own the home if you default and it can get its money back. This is the difference between a mortgage (interest rate 4 per cent) and a credit card (interest rate 18 per cent).

If you default on a defective apartment with structural problems the bank is stuck with something it can’t easily sell. They don’t want that. If banks stopped lending for the purchase of new high-rise apartments then the bottom would really fall out. There is no signal yet they plan to do that. But after Opal Tower’s problems you can bet they are reassessing all their lending policies...

https://amp-news-com-au.cdn.ampproject.org/...586a81a938e7337

- I'm happy enough to own my land and well as the walls and roof (n not share with anyone) !



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: mullokintyre  
 
nipper
post Posted: Dec 31 2018, 03:41 PM
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QUOTE
Opal Tower: 'Fridge buyers have better consumer protection than apartment buyers'

https://mobile.abc.net.au/news/2018-12-26/s...lained/10668936



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
 


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