US property

[Buzzman]

This past week the major Sydney daily (Sydney Morning Herlad) carried an article highlighting the recent sales of several multi-million dollar trophy home bought by Chinese rich listers. (talkin' AUD$20 mill and up)

The article speculated that the high-end homes were being sold to inject capital back into their businesses.

Apparently the slightly lesser cost not-so-rich lister market around the AUD$4 - 10 mill market is still quite active.

Oz has fairly open, but 'ministerial-controlled' foreign invesment criteria. For example, there was a public furore over the NT govt letting Darwin Ports to a Chinese consortium a cuppla years back, and some larger rural land sales have been knocked back, but there is still plenty of interest from Chines govt-controlled companies in purchasing farming land in Oz.

Public opinion opposed, though, so is risky for govt to enable or allow.

[Buzzman]

Just on a funner note, I love watching TV shows like Good Bones, the 'Karen and Mina' show based in Indianapolis.

I see them buying houses that really don't take a huge amount to rehab. Sorta thing a DIY entrepreneur can get into (like they are), but let out rather than sell on.

Is that a 'thing' anywhere else in the US where real estate prices are depressed?

I believe Detroit is particularly bad, and any of the flood-prone areas in N'orleans houses go for chump change.

Risky business, for sure, many are not 'desirable' neighbourhoods, but the low cost surely must be tempting some..??

I saw a house the Two Chicks bought for like $14K that really only needed insulation and internal sheet rock plus kitchen and bathroom to rehab to a livable standard (like not the high-end rockstar jobs they normally do), and probably could have been let for $200/wk. So for maybe $50-60K outlay you could get $11K return p.a.

As long as you outlaid less than $100K, you're beating the stock market, getting better than 10% annual.

Or does this not work for some unknown to me reason...??

And, yeah, it's off-topic a bit, as it requires hands-on control, but could be maybe the pre-cursor to 'jumping off'...??

[belizesailor]

Originally Posted by Buzzman

Just on a funner note, I love watching TV shows like Good Bones, the 'Karen and Mina' show based in Indianapolis.

I see them buying houses that really don't take a huge amount to rehab. Sorta thing a DIY entrepreneur can get into (like they are), but let out rather than sell on.

Is that a 'thing' anywhere else in the US where real estate prices are depressed?

I believe Detroit is particularly bad, and any of the flood-prone areas in N'orleans houses go for chump change.

Risky business, for sure, many are not 'desirable' neighbourhoods, but the low cost surely must be tempting some..??

I saw a house the Two Chicks bought for like $14K that really only needed insulation and internal sheet rock plus kitchen and bathroom to rehab to a livable standard (like not the high-end rockstar jobs they normally do), and probably could have been let for $200/wk. So for maybe $50-60K outlay you could get $11K return p.a.

As long as you outlaid less than $100K, you're beating the stock market, getting better than 10% annual.

Or does this not work for some unknown to me reason...??

And, yeah, it's off-topic a bit, as it requires hands-on control, but could be maybe the pre-cursor to 'jumping off'...??

A friend of mine in Beaumont, TX used to do that. Buy cheap houses, minimal renovations, rent them out. He had 13 properties when I left in 2004. There is a large base of factory (mostly refineries, plastics plants, etc) there who tend to make very stable long term tenants.

[daletournier]

Originally Posted by Paul L

Interesting but pretty noncommittal.

I've read his stuff over the last couple of years including his book irrational exuberance, yes he's very non committal.

You probably know that the Cape P/e ratio that is used to value stocks was created by him. He sees alot of problems but doesn't make definite this will happen statements.

In fairness to him, who can definitely say what's going to happen and when?

[john61ct]

Yes delusions can go on a very long time.

But no civilization has remained intact more than a few hundred years, morality/ethics and wisdom of the political leaders are key, economic stability is just the wagged tail.

And IMO it's all one global civilization now. . .

[senormechanico]

Originally Posted by belizesailor

A friend of mine in Beaumont, TX used to do that. Buy cheap houses, minimal renovations, rent them out. He had 13 properties when I left in 2004. There is a large base of factory (mostly refineries, plastics plants, etc) there who tend to make very stable long term tenants.

My next door neighbor (and a cruiser) does that very thing.
He owns and rehabs houses in Anacortes WA and rents them for about 10% under market.
He's got very stable and thankful renters with minimal hassle.
He recently purchased an Offshore 62 to replace his old 50 footer.

[Buzzman]

I came to the same conclusion 20 years ago.....

But here's a sobering thought.....

IF (note the caps), IF runaway climate change/global warming does occur (and I personally have zero confidence our current crop of so-called leaders can prevent it), then if civilization collapses, who's going to be worse off?

Us, in the West, living in cities reliant on an extremely vulnerable supply chain for every one of our daily needs (fuel, power, water, food)...

OR, those in less developed countries where the people are largely rural and living in farming communities, essentially producing all their own food?

There's gonna be a new 'gold rush' - for land and food.

Think Hurricane Katrina aftermath, but on a global scale....

The Pacific islands are looking good and, with aviation collapsed due to lack of fuel supplies, only we sailors will be able to get there.

[belizesailor]

Buzzman, did you post in the right thread?

[Buzzman]

Originally Posted by john61ct

But no civilization has remained intact more than a few hundred years, morality/ethics and wisdom of the political leaders are key, economic stability is just the wagged tail.

And IMO it's all one global civilization now. . .

I was responding to the above. As john61ct says, no civilization has lasted more than a few hundred years, and those that did were in the pre-mass-communication era.

On the other hand, the indigenous peoples of the world have pretty much retained their farming or hunter-gatherer lifestyles almost endlesly - provided "civilization" left them alone.

The Australian aboriginal peoples survived (and not much more than that) for around 40,000 years prior to the advent of European 'civilization'.

So as property investment tends to be a longer term investment, it's good to bear the 'potential' for global collapse in mind.

Buy a rural property as a 'retreat' and hedge your bets....

OR, buy a sailboat so you can get to the Pacific islands.

The Marquesas are underpopulated, for example....

[Orson]

Is China Driving Global Housing Markets in bubble cities?

Earlier in this thread, I posted on the links between China's faltering and increasingly oppressive politics generating flight capital, thereby going into leading world cities. Expectations on China are of increasing - if unadmitted - economic weakness. Even fear in places and sectors of the economy...will China stimulate AGAIN? is the prescient question.

Meanwhile, the Vancouver housing market has reached 10-year lows, and falling housing prices are seen in Singapore, Hong Kong, Sydney, and London. This suggests that either Chinese flight capital can no longer flee and/or that domestic liquidity is needed in the domestic capital markets.

Here's a roundup from Bloomberg (via Zero Hedge):

Macro factors have triggered a global economic slowdown that is unraveling luxury marketplaces worldwide, according to Bloomberg. As a result, a turning point has been reached, with home prices globally now under pressure, and rising mortgage rates leading to depressed consumer optimism, while also triggering a housing affordability crisis, S&P Global Ratings said in a December report....

[T]here are a few common denominators at play: rising borrowing costs, quantitative tightening, a crackdown on money laundering and increased government regulation, emerging market capital outflows and volatile financial markets. Bloomberg notes that there is also declining demand from Chinese buyers, who were the most powerful force in many housing markets globally over the course of this cycle.

“As China’s economy is affected by the trade war, capital outflows have become more difficult, thus weakening demand in markets including Sydney and Hong Kong,” said Patrick Wong, a real estate analyst at Bloomberg Intelligence.

One of the first dominos to fall has been in Hong Kong, home values in the city have plummeted for 13 weeks straight since August, the longest losing streak since the 2008 financial crash, data from Centaline Property Agency show.

Homeowners and investors have taken great caution due to a jump in borrowing costs, a looming vacancy tax, and the trade war that has derailed economic growth in mainland China.

“The change in attitude can be explained by a slowing mainland economy,” said Henry Mok, JLL’s senior director of capital markets....

https://www.zerohedge.com/news/2019-...in-global-rout

Emphasis added.

People interested in buying housing property assured of appreciation will closely follow the prospects in China for an eventual turnaround. Nothing like a bottom is within sight.

But I understand that market investors can buy ETFs that short the Australian Dollar. Australia heavily exports to China, and thus its currency functions as a proxy for emerging markets in general and other resource exporters, globally.

[john61ct]

No need for a general Chinese downturn for this bubble factor to burst.

Local jurisdiction can and do ban foreign buyers because housing becomes unaffordable for local working residents. Same as Uber.

And China can crack down further on their citizens exporting their wealth.

And personally I do think a major Chinese bubble-pop is likely sooner rather than later.

[Lake-Effect]

Just wondering if the author of this post from 6 months ago would like to revisit any of their claims in light of more recent numbers.


I don't know if a China "pop" is imminent... They have a firm foothold in most major technologies, they are beginning to show leadership and innovation in many areas, the "first world" is still addicted to cheap labour, they have a huge domestic market... Besides, there are more levers to pull in a controlled economy. I'm more worried that China will become less dependent on trade with the west, and more assertive and competitive economically and politically... the very position we seem to be driving them towards.

[BugzyCan]

Meanwhile, the Vancouver housing market has reached 10-year lows, and falling housing prices are seen in Singapore, Hong Kong, Sydney, and London.

Rules were added to make money laundering more difficult in Vancouver, and to charge a fee if a house is purchased but not lived in or rented out. They also added a non-resident purchase fee. These three items have pretty much cut off the flow from overseas. Now the housing market is way up in price and unaffordable for most.

Wages are not increasing, only costs are going up. Locals have stopped buying houses hoping for a market correction.

Our house assessment went up 38% last year, and another 9% this year, so it seems to be very slow in coming, if it happens at all. We are not in a bad place if we decide to sell the house and live on a boat.

[john61ct]

Not saying anything is "imminent", short-term timing is irrelevant here.

Both China's real estate and banking sectors are a house of cards unsupported by reality fundamentals.

My point is not that they won't continue short term to artificially inflate select foreign markets.

But that when (not if) the correction comes, those specific markets will suffer **a lot**

[Lake-Effect]

For a number of reasons, you are seeing that Vancouver and Toronto have become "world-class" cities. These factors include business environment, culture, quality of life.

Yes there's a lot of Chinese money that's come into the Canadian market over the last 20 years... but there's a lot of other money too.

If you look at comparisons like this tool, you'll see that Vancouver is still more "affordable" than San Francisco, NYC, London, Paris...