Real estate

http://www.escapeartist.com/OREQ14/Monac...

Top 838. Oct 20, 2005 4:09 PM

» Laangaan - o boy oboy oboy oboyoboy oboyoboy

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HOT DAMN !

Look @ this:

Remember how we watched them smartypants richy riches splashing and frollicking in the peninsula in the old country, as we looked on in envy?

Well they aint doing so well now.

HA!

As a result of these conditions in (pardon me) Olde Europe, prospects for further investment in Cinicinati are doomed. I am withdrawing my bid on the house/barn combo,submitted earlier in the week.

Now where is that danged real estate report on New Zealand I was looking for?

-- posted by Laangaan

Top 839. Oct 20, 2005 5:49 PM

» Laangaan - Re: o boy oboy oboy oboyoboy oboyoboy

In response to o boy oboy oboy oboyoboy oboyoboy posted by Laangaan:

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This is what is most encouraging:

"...Monaco similarly has had no water supply problems, but has also seen a lack of buyers. The tourists are still visiting the Principality and hotels in Monaco and Monte Carlo have been as busy as ever, but again there is a lack of serious property buyers, and negative property inflation is quite possible in Monaco this year for the first time in a decade."

This will dampen prospects for investments in Gatlinburg, in view of the natural Monaco-Gatlinburg linkage we have all observed over the years.

In fact I consider investments throughout the entire Gatlinburg/ Townsend/ Pigeon Forge tri-cities area are doomed. History shows us that declines in real estate in Monaco are followed by similar softness in these cities. Especially Pigeon Forge.

Ya could set yer watch by it.

Before long the real estate dandies will be washing cars, and the stock market boys will be back in tall clover.

Just as the Almighty has always intended.

-- posted by Laangaan

Top 840. Oct 25, 2005 12:11 PM

» Jas_Jain - Californica Single Family Home Prices DECLINED 4.4% in Sept., An

Californica Single Family Home Prices DECLINED 4.4% in Sept., Annually @ 41.4%

The data that was released today was for sales that took place in July-August. All indications are that things have been noticeably softer during Sep-Oct than they were during Jul-Aug. For example, active listings in Santa Clara Valley, home to Silly.con Valley, are up 80% compared to last year. In Bakersfield, number of listings are three times what they were at the end of May.

IF this rate of price decline continues for three more months Californica will be in a recession. And it will not recover from this recession for years and years. There will be so many bankrupt people in Silly.con Valley that it will be a dead-place, economically. Unemployment rate, counting those who stop looking for jobs, will be higher than 20%. Let us see what happens to all the Chinese speculators, in homes, in Cupertino. We will find out all about the foreign money that wants to buy homes in Californica.

Jas

-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-
http://www.car.org/index.php?id=MzU2MTE=

Media contact:
Mark Giberson (213) 739-8304
E-mail: markg@car.org
For release:
Tuesday, Oct. 25, 2005
Median price of a home in California at $543,980 in Sept., up 17.3 percent from year ago; sales increase 3.9 percent
LOS ANGELES (Oct. 25) – The median price of an existing home in California increased 17.3 percent in September and sales increased 3.9 percent compared with the same period a year ago, the California Association of REALTORS® (C.A.R.) reported today.
Closed escrow sales of existing, single-family detached homes in California totaled 650,780 in September at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 3.9 percent from the 626,210 sales pace recorded in September 2004.
The statewide sales figure represents what the total number of homes sold during 2005 would be if sales maintained the September pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.
The median price of an existing, single-family detached home in California during September 2005 was $543,980, a 17.3 percent increase over the revised $463,630 median for September 2004, C.A.R. reported. The September 2005 median price decreased 4.4 percent compared with August’s revised $568,730 median price.
“The September median home price compared with August has fallen every year since 1993, and in 20 of the last 26 years,” said C.A.R. President Jim Hamilton. “This year is no exception and is part of the seasonal shift to an off-peak period in the real estate market as we approach year’s end.
“Despite the seasonal slow down for the market as a whole, the median price in the High Desert, Riverside/San Bernardino, Santa Barbara South Coast and San Luis Obispo regions hit record highs last month,” he said.
“Year-to-date sales are on track with our expectation that the market in 2005 will set new records for both statewide sales and median price,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Entry level and mid-range homes are showing more strength in year-over-year price gains compared with the high end of the market. But all tiers of the market are appreciating more slowly than they did a year ago.”
Highlights of C.A.R.’s resale housing figures for September 2005:
. C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in September 2005 was 3.3 months, compared with 3 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
. Thirty-year fixed mortgage interest rates averaged 5.77 percent during September 2005, compared with 5.75 percent in September 2004, according to Freddie Mac. Adjustable mortgage interest rates averaged 4.51 percent in September 2005 compared with 3.99 percent in September 2004.
. The median number of days it took to sell a single-family home was 32 days in September 2005, compared with 29 days (revised) for the same period a year ago.
Regional MLS sales and price information is contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORSâ throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.
In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 95.2 percent or 394 of 414 cities and communities showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The top 10 lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)
Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. Online at http://www.car.org/index.php?id=MzU2MTI=.
. Statewide, the 10 cities and communities with the highest median home prices in California during September 2005 were: Palos Verdes Estate, $1,600,000; Manhattan Beach, $1,578,000; Burlingame, $1,419,000; Los Altos, $1,410,500; Newport Beach, $1,399,000; Coronado, $1,350,000; Saratoga, $1,314,000; Calabasas, $1,218,000; Carmel, $1,200,000; Hermosa Beach, $1,200,000.
. Statewide, the 10 cities and communities with the greatest median home price increases in September 2005 compared with the same period a year ago were: Reedley, 89 percent; Twentynine Palms, 81 percent; Sanger, 79 percent; Laguna Hills, 60 percent; Barstow, 57 percent; Upland, 53 percent; Adelanto, 52 percent; Ripon, 52 percent; Merced, 50 percent; Taft, 48 percent.
Leading the Way...® in California real estate for 100 years, the California Association of REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 180,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
September 2005 Regional Sales and Price Activity*
Regional and Condo Sales Data Not Seasonally Adjusted
Median Price Percent Change in Price from Prior Month Percent Change in Price from Prior Year Percent Change in Sales from Prior Month Percent Change in Sales from Prior Year
Sep-05 Aug-05 Sep-04 Aug-05 Sep-04
Statewide
Calif. (sf) $543,980 -4.4% 17.3% 2.9% 3.9%
Calif. (condo) $424,580 -1.9% 14.9% -11.1% 4.5%

C.A.R. REGION
Central Valley $361,290 -0.7% 22.7% -6.9% 3.7%
High Desert $312,410 2.2% 31.1% -2.4% 22.3%
Los Angeles $560,990 -0.6% 22.3% 2.4% 8.0%
Monterey Region $712,800 -2.0% 13.4% 0.7% -4.8%
Monterey County $680,000 -1.4% 18.3% 2.5% 4.1%
Santa Cruz County $750,000 -4.2% 16.3% -1.8% -15.2%
Northern California $434,690 -1.3% 16.0% -11.4% -11.0%
Northern Wine Country $639,390 -0.2% 26.5% 2.2% 1.3%
Orange County $708,840 -1.0% 11.9% -11.8% 19.2%
Palm Spgs/Lwr Desert $371,250 0.1% 8.7% -6.5% 27.4%
Riverside/San Bern. $389,450 0.6% 27.2% 2.7% 14.5%
Sacramento $383,920 -2.7% 14.5% -13.2% -13.9%
San Diego $612,030 -0.8% 6.8% -9.1% -1.6%
San Francisco Bay $709,980 -2.8% 10.5% -9.7% -8.5%
San Luis Obispo $602,160 6.3% 24.4% -9.2% 30.5%
Santa Barbara County $610,710 -25.5% -19.2% -18.1% -12.3%
S. Barbara So. Coast $1,475,000 11.3% 55.3% -36.6% -34.5%
No. S. Barbara County $462,700 0.0% 6.9% 7.1% 10.0%
Santa Clara $733,000 -3.6% 16.3% -4.6% -9.1%
Ventura $678,380 -1.1% 10.6% -13.0% 14.0%

Note: Santa Barbara County median price decreased significantly from August 05 primarily due to the changes in sales composition of Santa Barbara South Coast and North Santa Barbara County
na – not available
*Based on closed escrow sales of single?family, detached homes only (no condos). Reported month?to?month changes in sales activity may overstate actual changes because of the small size of individual regional samples. Movements in sales prices should not be interpreted as measuring changes in the cost of a standard home. Prices are influenced by changes in cost and changes in the characteristics and size of homes actually sold.
sf = single?family, detached home
Source: California Association of REALTORS®
Median Prices By Region - Current Month vs. Year Ago
Sep-05 Aug-05 Sep-04
Statewide
Calif. (sf) $543,980 $568,730 r $463,630 r
Calif. (condo) $424,580 $432,700 r $369,380

C.A.R. REGION
Central Valley $361,290 $363,720 $294,330
High Desert $312,410 $305,700 $238,340
Los Angeles $560,990 $564,340 $458,590
Monterey Region $712,800 $727,500 $628,660
Monterey County $680,000 $690,000 $575,000
Santa Cruz County $750,000 $783,000 $645,000
Northern California $434,690 $440,420 $374,810
Nor. Wine Country $639,390 $640,700 $505,290
Orange County $708,840 $716,300 $633,340
Palm Spg/Lwr.Desert $371,250 $371,020 $341,460
Riverside/San Bern. $389,450 $387,230 r $306,180
Sacramento $383,920 $394,450 $335,280
San Diego $612,030 $616,870 $573,080
San Francisco Bay $709,980 $730,360 $642,360
San Luis Obispo $602,160 $566,510 $483,900
S. Barbara County $610,710 $819,850 $756,250
S.Barbara So.Coast $1,475,000 $1,325,000 r $950,000 r
N. S. Barbara Cty $462,700 $462,880 $432,650
Santa Clara $733,000 $760,000 $630,000
Ventura $678,380 $685,680 $613,200
na - not available
r - revised

-- posted by Jas_Jain

Top 841. Oct 25, 2005 6:00 PM

» Jas_Jain - If Housing Prices In Hong Kong Can Decline 60-70% Twice in the P

October 25, 2005

If Housing Prices In Hong Kong Can Decline 60-70% Twice in the Past 25 Years, Why Not In Silly.con Valley?

I was listening to a Hong Kong real estate veteran of 25 years on a CNBC-World broadcast from Singapore. He said that during his career he has seen two declines of 60-70%.

For those who are not familiar, Hong Kong residential real estate is booming right now. But, in early 2003 it was in a bust and I listened one commentator who was calling the Hong Kong authorities to “limit the supply of land” to stop the decline in prices! Like most localities in Californica, where land available for development is HIGHLY regulated, i.e., manipulated, the same is the case in Hong Kong. Needless to say, it is invariably “regulated” for the benefit of large developers and large land holders who have direct line to the authorities. The developers are very skillful at exploiting this fear of “limited supply of land” to create a frenzy among buyers during the periods of boom. They have played this game again and again and they are masters at it.

What does Hong Kong have to do with Silly.con Valley? Plenty. For the first time, there is significant Chinese speculation in housing in Silly.con Valley (most of them live there and there is supposedly some outside money from China, etc.) as well as in parts of L.A. It is a matter of fact that Chinese and East Asians engage in gambling and speculation more than most other groups.

This “limited supply of land” theory led to a much bigger bubble in real estate than in stocks in Japan during 1980s. The result was thirteen consecutive years of decline in prices! If the “limited supply of land” theory didn’t prevent prices in Japan and Hong King from falling precipitously, more than 50%, then to believe that this theory will prevent prices in bubble areas like Californica from falling more than 50% is idiotic. Why can’t prices in 2007 go back to where they were in early 2002 or 2001?

The supply of land to build homes in Californica is five to ten times the combined supply in Japan and Hong Kong. And the population is only 1/4th. The growth rate in households in Californica is lower than the US average! Since 1990 the home prices in Californica have put a severe damper on migration of white families from East and mid-West. Things are far worse today and there is a net emigration of white families to east and mid-West.

The Californica Housing Bubble burst will financially ruin at least two million families. Smart people have already sold and suckers are slowly but surely running out of the buying power. Developers are doing everything to get the last of the suckers while there is some getting still left. The Game may be over soon and without notice. Developers know that; they just want to keep pushing while the buble still breaths.

Jas

-- posted by Jas_Jain

Top 842. Oct 25, 2005 6:03 PM

» Laangaan - September sales match 2d highest level

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DAMMIT !

U.S. September Existing Home Sales Hold at 7.28 Million Rate
Oct. 25 (Bloomberg) -- U.S. sales of previously owned homes were unchanged in September from a month earlier, matching the second-highest level on record and suggesting the recent rise in mortgage rates has yet to slow demand.

Existing home sales of 7.28 million at an annual rate were second only to a 7.35 million pace in June, the National Association of Realtors said today in Washington. The median price of a previously owned home rose 13.4 percent from the same month last year to $212,000.

DAMMIT DAMMIT DAMMIT DAMMIT !!!!

-- posted by Laangaan

Top 843. Oct 25, 2005 7:07 PM

» Jas_Jain - Price Decline -- Re: September sales match 2d highest level

In response to September sales match 2d highest level posted by Laangaan:

--

"The median price of a previously owned home rose 13.4 percent from the same month last year to $212,000."

This price is definitely lower than the last month (I only keep data for Californica) . Does someone know the % decline in price?

The US-wide price decline is more serious than only in one or two states.

Jas

-- posted by Jas_Jain

Click here for a detailed map of the region

Top 844. Oct 26, 2005 4:50 PM

» Normxxx - Arctic's new gold rush

The Arctic's new gold rush

By Paul Reynolds, BBC News | 25 October 2005

A predicted thaw in the Arctic ice cover combined with a search for energy supplies is leading to a new "gold rush" in the high north, bringing diplomatic problems in its wake as five countries vie for access to resources.

Then and now: Nasa photo shows
ice cover in September 2005
and as it was in September 1979

There are disputes involving all of the five— the United States, Canada, Russia, Norway and Denmark.

The US and Canada argue over rights in the North West Passage, Norway and Russia over the Barents Sea, Canada and Denmark are competing over a small island off Greenland, the Russian parliament is refusing to ratify an agreement with the US over the Bering Sea and Denmark is seeking to trump everyone by claiming the North Pole itself.

"It's the way the geography works," said Peter Croker, an Irish government petroleum expert who is also chairman of the UN's Commission on the Limits of the Continental Shelf, a body set up to arbitrate on how far a country's coastal rights extend.

"It's the only place where a number of countries encircle an enclosed ocean. There is a lot of overlap. If you take a normal coastal state, the issues are limited to adjoining states and an outer boundary. In the Arctic, it is quite different," he told the BBC News website.

The ice thaw is predicted by a team of international researchers whose Arctic Climate Impact Assessment suggested last year that the summer ice cap could melt completely before the end of this century because of global warming. If the ice retreats, it could open up new shipping routes and new areas where natural resources could be exploited.

In any event, the hunt is on for oil and gas. The US Geological Survey estimates that a quarter of the world's undiscovered energy resources lies in Arctic areas.

'Pitching for action'

Dr Rob Huebert, of the Centre for Military and Strategic Studies at the University of Calgary in Canada, said that during the Cold War, security around the North Pole had to do with nuclear submarines and who was sending them.

"Now everyone is pitching for action. Climate change is reshaping the Arctic. The issues are energy, fish and shipping lanes," he said.

"It is going to get worse before it gets better. We could create an interim regime which could paper over the sovereignty disputes, but there would need to be compromise."

These are the main disputes:

The North Pole

Under Article 76 of the Law of the Sea Convention, a state can claim a 200 nautical mile exclusive zone and beyond that up to 150 nautical miles of rights on the seabed. The baseline from which these distances are measured depends on where the continental shelf ends.

At the moment, nobody's shelf extends up to the North Pole so there is an international area around the Pole administered by the International Seabed Authority from Kingston, Jamaica.

To get round the issue of the international area around the Pole, the five countries are pushing for one of two other potential ways of sharing the region, in which all the sea would be divided between the five nations.

The median line method, supported by Canada and Denmark, would divide the Arctic sea between countries according to their length of nearest coastline. This would give Denmark the Pole itself but Canada would gain as well.

The sector method would take the North Pole as the centre and draw lines south along longitudes. This would penalise Canada but Norway and, to a lesser extent, Russia would gain.

The North West Passage

This is the fabled northern route across the Americas, the exploration of which cost many lives. The route is open only during a brief few weeks in the summer. But it could become commercially important if it remained open for longer. Ships could transport goods to Churchill and then onto railways to take it south, for example.

Or there could be a new route between the Atlantic and Pacific Oceans, avoiding the need for larger ships to go round Cape Horn.

However, the United States does not recognise Canada's sovereignty over the Passage. It has in the past sent its ships on unannounced voyages in order to maintain its claim that the waters are international.

It argues that waters between two open seas have to be open to all shipping. Canada claims this as a unique case. There is now an agreement that the US will notify Canada of such transits but that Canada cannot stop them.

Another Canadian-US dispute is over the Beaufort Sea, which has implications for oil and gas exploitation.

There is also a potential dispute about the so-called North East Passage along the north Russian coast. Here the US feels that Russia is claiming too much territorial water.

Hans Island

This is a mouse that roared. Canada and Denmark both claim this tiny lump of rock 100 metres or so wide in the Nares Strait between Canada's Ellesmere Island and the Danish territory of Greenland.

Hans Island: is it Danish...

In 1973 the two countries settled their line of control in the Strait, except for Hans Island. Its possession could influence exploration and exploitation rights.

Government ministers from each side pay rival visits and landing parties from both navies raise their national flag and leave whisky and brandy as signs of their visit— and perhaps as an offering to the opposing side.

To help it police the High North, Canada is having to invest in new equipment including better ships and aircraft.

"Canada does not want to be seen to be weak," said Rob Huebert.

The Barents Sea

..or is it Canadian?

Here, the problem goes back to Stalin, who simply drew a line from the northern Russian port of Murmansk to the North Pole and declared it to be the Soviet Union's polar territory.

During the Cold War, in which Norway played a key role in Nato (it shares a frontier with Russia), not much happened.

But now commerce and capitalism are the way forward. Already vast deposits of gas have been found under the sea.

There needs to be a solid long-term arrangement, as there has been among the states encircling the riches of the North Sea.

Bering Sea

In 1990, the United States and the then Soviet Union signed an agreement dividing this sea which separates Alaska from Siberia.

However the Russian parliament has refused to ratify it, saying that it had taken 50,000 square kilometres away from Russia. This, it is said, would deny Russia 200,000 tons of fish as well as rights to other resources.

No 19th Century grab

According to Peter Croker of the UN Commission on the Limits of the Continental Shelf, the Arctic sea grab is not a repeat of the 19th Century imperial land grab.

"People have bought into the mechanism for settling disputes and to some extent we will be used," he said.

The Commission recently ruled on a Russian submission, turning down the initial Russian demand for greater Arctic rights and telling it to reconsider and resubmit its claim.

But the Commission deals only with continental shelves and cannot rule on the other disputes.

Another complication is that states have to make claims under the Law of the Sea Convention within a time limit and the United States has not ratified the Convention. This is because of opposition from some senators who are concerned at giving away US sovereignty. Thus a major player is left on the outside.

The Arctic "gold rush" is not as chaotic as the one in California, but it is not all plain sailing either.

Paul.Reynolds-INTERNET@bbc.co.uk

-- posted by Normxxx

Top 845. Oct 26, 2005 6:30 PM

» Laangaan - Re: Price Decline -- the paradox

In response to Price Decline -- Re: September sales match 2d highest level posted by Jas_Jain:

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Here's the problem: As noted, the "theory" of limited supply of land, is blithely accepted by nearly everyone.

Look @ THIS:

William Buckley,the famous famous person, writing in recent days,boldly declares:

"...But choice parts of the United States face "build-out".New Jersey averages 1,165 people per square mile - denser than India (914)and Japan (835)."

And..."Henry George,the eminent social philosopher of a century ago turned the attention of planners and economists, however briefly, to the indefeasible factor of LAND SCARCITY. Capitol and labor can increase; LAND CANNOT."

And....

"...If John Jones wants an acre protecting his house, he lays claim to something that CANNOT EXPAND."

OK You will note how yours truly has pointed out, and debunked, these elemental - and mistaken - concepts many times before. However, unlike Mr. Buckley ,and the ordinary Johnnie Sixpack, I, and my associates,know that ,in fact:

Land IS NOT limited.,and...

Land actually CAN expand.

... from some of our secret studies and relentless clandestine observation of the hidden powers that secretly expand the supply of land.

If this were not the case, that is , if land actually were limited, then it would be , as Buckley claims "scarce" and unable to expand as do labor and capitol. Inevitably that would have to mean that the price of land would have to rise as a result of its scarcity. But we know better dont we.

All of this I have debunked in recent months, but now comes Buckley claiming the same tired old theories; and using the same old tired platitudes:,""build-out"" and so on.

Buckley and Johhny Sixpack are wrong; as is the real estate sorority, when they say the hackneyed cliche:

" Buy land , cause they aint makin any more of it"

And just as soon as my associate's parole restrictions are lifted we will begin our own Lot Expansion Program,in which we lift duplicate copies of our demonstration lots , thereby collapsing the entire real estate market like a 25-cent condom.

Ha !

-- posted by Laangaan

Top 846. Oct 26, 2005 6:44 PM

» Normxxx - Canadian Housing Bubble

Canadian Housing Bubble Update

By Philippe Bérubé | 26 October 2005

Mortgage loans have never been more easily obtained than in the past four years. Meanwhile, more houses are being put for sale on the North American market, but they are bought less quickly and their prices aren’t increasing as rapidly as they were in the spring or summer of 2005. Slowly, but surely, interest rates and tax assessments for homes are climbing, increasingly burdening already cash-strapped owners.

The rental option is also making a comeback, with major Canadian cities such as Toronto and Montreal showing 5% vacancy rates, compared to figures hovering below the 1% mark seen just three years ago. This does not bode well for the fiscal health of indebted North Americans in the short run, especially in the construction and financial sectors.

In Canada, while the national CBC network was on strike, their francophone counterpart (SRC) was busy broadcasting a series of news stories on the housing bubble and its repercussions in different North American markets. These stories were shown during the first and second week of October.

The first case study focussed on the housing boom in the greater Montreal area. In the past 6 years, the median value of homes in this city has risen by 70%. Many young couples interviewed in this case study had to borrow more than 90% of the total value of their house to be able to afford it.

One segment showed two brothers who were moving in a condo together, which they paid $182,000 CDN last September. The same condo would have cost $107,000 CDN in 1999, so the reporter asked the two men if they thought they were buying at the peak of the bull market in real estate. They acknowledge that this could be the case.

Another segment showed a young woman who had won the “condo lottery” by purchasing an $85,000 condo in 1999 and selling it for $180,000 last spring. This allowed her to pay the full price of her next house up front, with enough change left to buy a car. These two segments can be viewed as “extremes” of the housing boom in Montreal, but I suspect that a lot more people will experience the situation of the two brothers than the situation of the “condo lottery” winner in the next two years.

The second case study examined the recent popularity of luxury condos in downtown Montreal. 2000 of these units were under construction when the story was shot, but demand for condos was already slowing. The main factor for their popularity was attributed to retiring baby-boomers who were selling their houses in the suburbs to buy condos in the downtown area.

Roughly 10% of these condo buyers were considered speculators and a growing number of foreign buyers were entering the market. Local demand for luxury condos in Montreal is seriously faltering, after climbing 55% in the past four years. The local realtors roughly have one local buyer for every 24 units costing more than $500,000 CDN. The price of luxury real estate per square foot in Montreal has declined to $350 CDN compared with a more robust and stable price of $500 per square foot in Toronto, although speculators make up to 20% of condo buyers in that city (compared with 30% in 1995).

The last case study pertained to the current housing boom in Florida. The particularly vicious hurricane season recently experienced in the Gulf Coast apparently had no major impact on the real estate boom that is taking place in the Sunshine State. To illustrate this point, it was shown that median home prices have risen 85% in the Miami area in the past 4 years. A parcel of land that was sold $3 million US then, can now fetch close to $20 million US.

One segment of the Florida story examined the booming housing market in Coral Springs and Singer Island. Footage showed investors camping outside a real estate office early in the morning to be the first to get their hands on a condo unit. If they had waited in the afternoon to purchase the same unit, the price would have already gone up by $15,000 US.

Americans aged between 45 and 65 were identified as the wealthiest population segment, the largest pool of buyers, and the main factor driving housing prices to the moon, along with low interest rates. Many boomers in the story bought second condos to rent out, to resell when construction was completed or to sell at a potential profit 4 or 5 years later.

It is our opinion that nothing aside from reduced demand can stop this orgy of speculation. During the final months of this housing bubble, the only trend we can expect is a surge in new and existing homes flooding the market, with insufficient buyers waiting in the sidelines. North Americans are certainly in poor financial shape to take on any new debt caused by soaring real estate prices. We are now, on average, saving less than 0% of our incomes for a rainy day.

All this speculation in the Florida housing market reminded me of the account of the 1926-28 Florida real estate boom found in John Kenneth Galbraith’s “The Great Crash of 1929”. While we have avoided another black Monday or black Thursday this week, it’s hard for us to find any silver lining for the Canadian or US economy in the weeks and months to come. We still recommend getting out of real estate and into precious metals and mining stocks for the rest of the decade. Whether we’re hit by deflation or inflation, the best alternative is to opt for a smaller home, and hold on to your tangible assets!

______________

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

-- posted by Normxxx