Monthly Archives: July 2013

MARKET UPDATE – 30 JULY 2013

Don’t you just get sick and tired of all the bloody spin and rubbish coming out of the Banks, smart-arse know-it-all economists, second tier lenders, brokers and self serving major real estate companies?

Building starts are DOWN, big time, AGAIN. “Analysts” were expecting a result to be “flat” but they are between 10 and 15% LOWER than the same time last year and 2012 was a bloodbath for builders and subcontractors.

The big difference is that I TALK to Builders and subbies, the guys and girls in the hardware stores, book-keepers and accountants who look after the books and tax returns of builders and tradespeople.  They KNOW, in real time, that the whole sector is in the shit.

I mean, just look the disaster that is “MASTERS”, Woolworths attempt to take market share from Bunnings. Again I’ve been into a few Masters’ Stores and chatted candidly with front-line staff and Supervisors who are not afraid to tell all as they think they’re gonna lose their jobs anyway.

As to existing property sales, in a local suburb near me the lowest volume of sales since 2001 was in 2011, a very sad year indeed. 2012 saw sales rise 50% but that was explained by the Receivers moving in and fire sale-ing a bunch of apartments.  Take those sales out and it was a disaster.  2013 is looking, even with fire sales still taking place, to be more than 20% lower than 2011.

More soon.

Advertisements

AMERICA THE BRAVE

Just take a look at this Bloomberg Video.  CLICK HERE to watch.

I liked this comment to another Bloomberg article on the real estate and economic situation in the USA. Sure it’s political, and who knows which side of politics would be able to “fix” it, but its a similar story to ones I hear all the time right here in Australia.

“When will this administration learn that no matter how they spin the numbers, no matter how they try to paint the economic outlook, We’re in a serious mess that’s only getting worse day by day.

It’s a painful but true fact that my wife and I set an all-time record for income last year, and it’s all we can do to pay the bills we have. We’ve been without insurance for 4 years and there is no way we could afford the Obamacare that’s being unconstitutionally forced down our  throats.

Our house was “reassessed” by the town at 3 times what we might pray to get in the current market. The taxes are KILLING us and I know I’m not alone.

It used to be that it took two full time jobs to make ends meet, we’re now working 2 full and 1 part time job and it’s not helping as much as we hoped. In fact, it’s looking like our house will be on the market soon… as a foreclosure property. When we purchased it 16 years ago we intentionally purchased conservatively to keep within our means and have a comfort margin in the budget.

That margin is gone and the cost of this administration’s healthcare DISASTER is only now beginning to show it’s true colors. This president is killing America and most of the media is protecting him by not reporting the truth. ”

Think it can’t happen here?  Watch this space…

Tagged , , , ,

MARKET INTELLIGENCE – SURVEY

Oh dear.  People DO get excited about buying land to build on, or an existing house to renovate or move straight into.  They engage a law firm or conveyancer to assist them with the settlement process.  Searches are done to make sure its not flood prone, going to have a free-way or railway line built next door, is set for full or partial resumption or major power-lines nearby now or in the future.

When I was actively selling I’d always advise buyers to obtain a boundary survey even if the property was brand new. Not one of the hundreds of buyers I’ve advised over the years has ever spent the $700.00 – $1,200.00 to obtain a brand new, sparkling boundary survey. Continue reading

Tagged , , , , , , ,

MORE PAIN – 10 JULY 2013

Just thought I’d share some market intelligence.  Plenty of spruikers out there saying the market is turning or has turned.  I have no idea where they’re coming from or what they’re talking about.  One thing for sure, they never seem to be able to back up their claims with any results that aren’t padded or don’t tell the whole story.

We do however, have sharks circling and taking bites into the market here as they look to park cash or feel that the market is maybe bumping along or near the bottom and they see a bright future ahead.  Good on them.  I’m glad they have the money to invest and wait because they’ll be waiting a long time.

Reported recently was a sale of a small high rise apartment block. The shark paid $6.5 million.  The owners owed $14.5 million from their purchase in late 2006. Ouch!

Or another recent sale for $5.7 million where the sellers paid $11.2 million. And $3.8 million including stamp duty etc, for $2.7 million less agents fees and legals. Those types of losses are eye watering and they are happening every day.

The Gold Coast will continue to suffer as local and State governments argue over who should pay to fix our wrecked beaches, tourism accommodation operators report a 30-50% plunge in holiday bookings, the mining boom dies before our eyes, people stay at home instead of going on holiday and house prices, despite continuing declines, remain seriously unaffordable.

Speaking of unaffordable, I find it incredulous that media keep publishing some rubbish figures that home ownership is easily done on 30% of the main breadwinner’s income.

Gold Coast – say the main income earner makes $60,000.00 a year.  In this economic climate that’s a substantial stable income.  Take out tax and Medicare levy and they’re left with about $52,000.00.  Loan repayments on a $390,000.00 mortgage swallow up $32,000.00 ayear.  Add home insurance, rates, taxes, repairs and maintenance and a small capital reserve and there is easily $43,000.00 a year GONE. Let’s start quoting some realistic figures shall we?  To own a very modest home here on the Gold Coast, having saved a $60,000.00 deposit, will set you back more than EIGHTY PERCENT of a primary income earners cash in hand.  EIGHTY PERCENT.  How on Earth can you feed, cloth, educate and otherwise care for your family on what’s left?

Tagged , , , , , , , ,

MARKET UPDATE 09 JULY 2013

I monitor several hundred properties that have been recently sold or are on the market across a wide range of sectors.  Houses in the suburbs, acreage properties, duplexes, town-houses, apartments, waterfront, ocean front, well positioned, poorly positioned, new, old, renovated, ones that are owner occupied and those that are clearly rental properties.

Despite the best efforts of self serving spin doctors across all forms of media, for most people, the market is just not their friend at the moment.

I read a report last week about a ‘seemingly’ spectacular sales result for an Agent and owner which would have had tongues wagging within a couple of miles radius.  Ever the sceptic, I made a few phone calls.  The property had not been renovated nor had a pool added, or even solar panels and hot water.  Mmmm.  What could have caused such a price hike?  I called the local Council Town Planning Department.  BINGO. A long fought for Town Planning permission to add another house at the rear of the property and a height limit increase from 2 levels to 4 levels, which would give the top level spectacular views, had finally been approved.

Talk about spin and plain old fashioned lies.  The property had not appreciated on its own but had value added by the approvals – significant value.

So, that just throws a huge statistical spanner in the statistics for that street, suburb and area and skews the results so that no-one really knows what’s going on.

The following is an example of what is really happening in the market.  Family home. Nice street. Well finished. Great pool. Close to everything. Great regular public transport.  Ticks a lot of boxes. Sold for $182,500.00 in 1997. Sold again in 2002 for $275,000.00 just when the market started to soar. 7 months later the new owners flicked it for $341,000.00 in May 2003. Just as the GFC hit the owners put it on the market in the mid 600’s and finally settled on $575,000.00 in mid 2009.

The new owners set about renovating, adding the pool, solar hot water, a roof full of solar panels, new landscaping, ripped up and re did the driveway, all new fences.  All up I would say they would have had no change out of $100,000.00.  Add that plus stamp duty and other costs and they are staring at a cost base of near $720,000.00.

The house has been on the market now for 9 months, starting at $750,000.00. The agent who listed this property at $750,000.00 should have been shot. I know who it is and he’s an idiot and tells people ANYTHING to get a listing.

Several Agencies later and the ASKING price is now $525,000.00 with not an offer in sight.  There is nothing wrong with the home except that there are a lot of other homes in better locations with nicer facilities and neighbours, for less…pure and simple…

And that, my friends, is the true state of the market.

DEPOSITS – I’m hearing murmurs about people agitating for the use of Superannuation Funds as deposits to enable first home buyers access to the market.  Good Grief what a ridiculous, short sighted idea.  One of the reasons we are in such a pickle today is free and easy credit with no discipline. The housing market is a dangerous enough place as it is without drawing out most of your Superannuation to place a deposit on an overpriced property that may well crash in value (will crash in my humble opinion expressed elsewhere in this blog).  Result – loss of saved deposit AND a 5 or 10 year setback in your retirement savings. Some people are nuts, really.

More soon – thanks for reading!

Tagged , , , , , , ,
%d bloggers like this: