Chinese housing bubble collapse

The controlled collapse of the Chinese housing bubble seems to be proceeding right on schedule. If HAM is a factor in BC what affect will this have here?

Home prices nationwide declined in November for the third straight month, according to an index of values in 100 major cities compiled by the China Index Academy, an independent real estate firm. Average prices in the Shanghai area are down about 40% from their peak in mid-2009, to about $176,000 for a 1,000-square-foot home.

Sales have plummeted. In Beijing, nearly two years’ worth of inventory is clogging the market, and more than 1,000 real estate agencies have closed this year. Developers who once pre-sold housing projects within hours are growing desperate. A real estate company in the eastern city of Wenzhou is offering to throw in a new BMW with a home purchase.

The swift turnaround has stunned buyers such as Shanghai resident Mark Li, who thought prices had nowhere to go but up. The software engineer closed on a $250,000, three-bedroom apartment in August, only to watch weeks later as the developer slashed prices 25% on identical units to attract buyers in a slowing market.

Outraged, Li and hundreds of others who paid full price trashed the sales office, scuffled with employees and protested for three days before police broke up the demonstration. Walking away now would mean losing the $75,000 down payment that he borrowed from his working-class parents.

“I still haven’t told them,” Li, 29, said of his home’s plummeting value. “It will just make them worry, and it’s already too late.”

Full article in the LA Times.

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So There You Have It
So There You Have It
8 years ago

Is China's credit bubble going to set off a global financial meltdown?
http://shanghaiist.com/2011/12/20/chinas_economy_

patriotz
8 years ago

@DEFAULT NAME:

"Except that selling doesn’t terminate the lease – the new landlord assumes the lease."

That was precisely my point. A new owner is stuck with a lease, so a property with month-to-month tenancy is easier to sell, as notice can be given to the tenant to move out for the new owner as soon as it's sold.

Anonymous
Anonymous
8 years ago

@patriotz: "Quite valuable if the landlord is renting out a property that he wants to sell at an opportune time"

Except that selling doesn't terminate the lease – the new landlord assumes the lease. And a landlord can't evict under the guise that he's moving in when the real intention is to sell – if they do, there's a built-in penalty – equivalent to two months rent owed back to the tenant. I have recently collected on this ploy.

So There You Have It
So There You Have It
8 years ago

An excellent point made in the comments section of that article (makes me realize a lot of the drivel these real estate shills here spout off is just unchecked, word-of-mouth nonsense): "I find it interesting that so little is know about the complexity of this issue. The major assumption is always that the decline in housing prices in China is controllable due to inherent demand by rural residents moving into urban areas. The idea that migration into cities is going to cause demand for housing is simply not true. Migrants into Chinese cities have two major reasons why they will never buy housing in the cities they work in. The 1st is rather basic, they are simply to poor to ever afford an apartment in a large city (in Beijing, an average apartment cost 50 years wages for the average… Read more »

patriotz
8 years ago

@Bally:

"My understanding of the BC Residential Tenancy Act is that the landlord cannot raise the rent more frequently than once a year "

That's for a sitting tenant. ANY time a property is rented out to a new tenant the landlord can ask for any rent he wants.

That's doesn't mean he's going to get it, of course, which is why I said it gives an opportunity to raise the rent.

VMD
VMD
8 years ago

Thanks VHB for the stats, very useful!

And since this is a China thread, I'll add the observation that China seems to be the only place the current Santa-rally's not visiting..

Today all Asian stock indexes (including HK's Hang Seng) had gone up 1-4%, while Shanghai index is the sole loser at -1.1%.

Mish or Zerohedge was commenting on how Shanghai index had been under-performing the Asian norm the last year. It apparently still is.

http://ca.finance.yahoo.com/intlindices?e=asia

VHB
VHB
8 years ago

@Tony: Here is Jan 2011:

date Sales Listings ratio

4-Jan-11 88 267 33.0%

5-Jan-11 76 250 30.4%

6-Jan-11 40 165 24.2%

7-Jan-11 86 177 48.6%

10-Jan-11 98 266 36.8%

11-Jan-11 44 261 16.9%

12-Jan-11 73 186 39.2%

13-Jan-11 74 200 37.0%

14-Jan-11 58 171 33.9%

17-Jan-11 119 292 40.8%

18-Jan-11 90 272 33.1%

19-Jan-11 129 257 50.2%

20-Jan-11 79 247 32.0%

21-Jan-11 75 225 33.3%

24-Jan-11 123 287 42.9%

25-Jan-11 101 234 43.2%

26-Jan-11 142 270 52.6%

27-Jan-11 130 250 52.0%

28-Jan-11 115 270 42.6%

31-Jan-11 136 273 49.8%

Annonymous
Annonymous
8 years ago

@VHB…You can't say "Just Sluggin Along"..It's "Crash" or nothing.Don't you know the Zombie Apocalypse is just around the corner?

Tony
Tony
8 years ago

Does anyone know what listings are generally like in the first few weeks of Jan?

VHB
VHB
8 years ago

Unless interest rates drastically change in early 2012, I don't see a rush to the exits. A few more people may try to list to get out, but no 'rush'. Instead, I expect sales to be quite slow. Net effect will be total inventory building at a brisk enough pace. If Jan sales are under 1500 or Feb under 2000 then we'll be seeing something special. Otherwise, just sluggin along. REBGV sales and listings taken from monthly reports: January sell list sell/list 2001 1225 3395 36.1% 2002 2248 3626 62.0% 2003 1966 3810 51.6% 2004 1954 3039 64.3% 2005 1697 3360 50.5% 2006 1924 3471 55.4% 2007 1806 4067 44.4% 2008 1819 4675 38.9% 2009 762 3700 20.6% 2010 1923 5147 37.4% 2011 1819 4801 37.9% Mean 1740 3917 44.4% median 1819 3700 47.5% February sell list sell/list 2001 2002… Read more »

VHB
VHB
8 years ago

December 2011 month-end projections Days elapsed so far 13 Days missing 1 Days remaining 6 5 Day Moving Average: Sales 85 5 Day Moving Average: Listings 79 SALES Sales so far 1160 Projection for rest of month (using 5day MA) 593 Projected month end total 1753 +/- 190 NEW LISTINGS Listings so far 1251 Projection for rest of month (using 5day MA) 555 Projected month end total 1806 +/- 47 Sell-list so far 92.7% Projected month-end sell-list 97.0% MONTHS OF INVENTORY Inventory as of December 8 13824 MoI at this sales pace 7.89 Listings are pretty much at the 10yr average. Sales are on pace for slowest December over the last 10 years, except for 2008. We are a couple thousand units ahead of where we were at this time in 2006 and 2007 and 2009 and 2010. We will… Read more »

JR
JR
8 years ago

Can somebody weigh in on inventory levels at the end of December in past years as a basis for comparison?

ReadyToPop
ReadyToPop
8 years ago

Millions in deals could be on the verge of unravelling at the exclusive Trump tower with just a few weeks to go until Toronto’s newest luxe hotel and condo development is slated to open its doors.

A number of condo purchasers — including Irish investors who reportedly bought a whole floor of the five-star project being built by Talon International Development Inc. — have tried to back out of deals inked pre-recession.

Investors fight to back out of Trump tower

Not much of a name..
Not much of a name..
8 years ago

@patriotz:

Also remember that the landlord can raise the rent any amount he wants for a new tenant, so month-to-month gives him more opportunities to raise the rent.

Not necessarily. That's assuming the month-to-month tenants are rolling over faster than a lease tenant. Otherwise, the landlord may end being "stuck" in a position of being capped for the annual rental increase. That too assumes that they are able to raise rents in the current market.

Bally
Bally
8 years ago
Bally
Bally
8 years ago

@patriotz:

My understanding of the BC Residential Tenancy Act is that the landlord cannot raise the rent more frequently than once a year unless they apply for a special exemption due to some exception circumstance.

A tenant is better protected under month-to-month than fixed term. With a fixed term you can be forced out at the end of the term without cause. With month-to-month there are only certain reasons that justify the landlord giving notice. This includes that they wish to use the property themselves or that they've sold it and the new buyer wishes to use it. However, they need to give at least 2 months notice and 1 month rent in compensation.

I'll take m-2-m over fixed any day!

patriotz
8 years ago

@DEFAULT NAMEe:

"What’s possible benefit does month-to-month have for either tenant or landlord over a fixed term lease?"

The benefit to the tenant should be obvious – he can move out at any time with a month's notice.

The benefit to the landlord is that he (or a new owner) can give notice to the tenant to leave so he can move in at any time rather than at the end of the lease. Quite valuable if the landlord is renting out a property that he wants to sell at an opportune time.

Also remember that the landlord can raise the rent any amount he wants for a new tenant, so month-to-month gives him more opportunities to raise the rent.

paulb.
paulb.
8 years ago

New Listings 68

Price Changes 24

Sold Listings 77

TI:12937

http://www.laurenandpaul.ca

Anonymouse
Anonymouse
8 years ago

@Devore:

Sure, I expected to be wrong because the question seemed too obvious. I'm not a landlord so don't need to read the Act. What's possible benefit does month-to-month have for either tenant or landlord over a fixed term lease?

Devore
Devore
8 years ago

@DEFAULT NAMEe: What's really funny is someone actually voted you up. BC Residential Tenancy Act. Read it.

crabman
8 years ago

@Hovering: Can't do that. You weren't thinking of getting around rent control rules, were you? ;^)

http://www.bclaws.ca/EPLibraries/bclaws_new/docum

human
human
8 years ago

Can't end tenancy in this situation without cause.. see s. 44 onward rta. Bc.

Anonymous
Anonymous
8 years ago

….but ridiculing a married couple who pay $1600.00 a month Mortgage for a 3 bedroom townhouse 5 minutes from skytrain.Worst debaters….

Who knew the SkyTrain went all the way to Medicine Hat?

Anonymouse
Anonymouse
8 years ago

@Hovering:

"how does a landlord end a month to month tenancy in Vancouver ?"

Give the tenants a months notice?

Hovering
Hovering
8 years ago

off topic

how does a landlord end a month to month tenancy in Vancouver ?

assume rent is faithfully paid. Assume property is not going to be used by Landlord.

thanks