Looks like another Housing Bubble is about to burst

User Forum Topic
Submitted by ocrenter on September 21, 2016 - 5:47am

https://youtu.be/nGHmk4UeK_w

starting at 10:30, footage of fraudulent loans using fake documentations and inflated sales price reminiscent of our own bubble from 10 years ago.

Submitted by The-Shoveler on September 21, 2016 - 6:17am.

Nope IMO anyway.

The thing they did not say is that CHINA IS THE BANK.

The tier one cities are doing fine.

The bad loans will be covered up IMO.

Also I was amazed (I saw it my self) If the Gov says there will be 15% inflation next month, there will be 15% inflation next month.

Money will be printed, problems will be paved over IMO anyway.

Submitted by ocrenter on September 21, 2016 - 6:45am.

The-Shoveler wrote:
Nope IMO anyway.

The thing they did not say is that CHINA IS THE BANK.

The tier one cities are doing fine.

The bad loans will be covered up IMO.

Also I was amazed (I saw it my self) If the Gov says there will be 15% inflation next month, there will be 15% inflation next month.

Money will be printed, problems will be paved over IMO anyway.

That's like saying NYC, LA, SF, Chicago are doing fine so everything will be ok.

Don't you think it is a bit weird that if the gov says 15% inflation there will be 15% inflation? kinda like how their 7% projected growth are always matched by 7% growth rate? That's some super awesome projection!

Submitted by The-Shoveler on September 21, 2016 - 6:48am.

Not saying its not weird, its just they have near TOTAL control and the ability to cover almost anything up they want or pave it over with freshly printed money.

Submitted by ocrenter on September 21, 2016 - 6:51am.

The-Shoveler wrote:
Not saying its not weird, its just they have near TOTAL control and the ability to cover almost anything up they want or pave it over with freshly printed money.

That I do agree with, they do have near total control and ability to cover up anything they want. That is true. You saw how even everyday pollution magically disappear during major events too. ;-)

Submitted by Coronita on September 21, 2016 - 7:19am.

Yes, and you know what's happening right? All the slightly weaithier ones (including the ones that made an honest business) are quickly trying to move their assets to Europe, the U.S. and Canada. Because when the crapper hits the fan, anyone that is wealth(ier) is a sitting target by the government.

So, no, this isn't simply like the 80ies when Japan heavily invested abroad. There definitely is that going on too. But I think for a lot of people, there is an interest to have a "get the hell out of the country" plan.

Planned economies are great..... as long as you are the beneficiary of it and the government doesn't decide to turn around and make you the scapegoat....

Maybe you haven't noticed but there has been certain cases in which hedge funds/investment groups in China had shorted the market, only for the government to come back and confiscate those profits and jailed certain fund managers. Some say it was because of inside trading. Others say, it was just a way for the government to claim down on those bearish on the market.

Investing in China is the wild wild west right now. Some CEO's on the board are shorting their own company stock! No conflict of interest there (end sarcasm)

Vancouver did interesting recently. They passed a 25% tax on home purchases by non-citizens I think. And you know what happened? Drove up real estate prices in Seattle, WA.

Submitted by spdrun on September 21, 2016 - 7:30am.

Speaking of NYC, the bubble in high-end condos is already bursting in NYC and probably other places. New regulations on purchases through shell corporations plus people realizing it's stupid to pay $10+ million for a place that's vacant 99% of the time and costing $100,000+ per year in fees and taxes.

http://gothamist.com/2016/09/09/nelson_h...

I'm of the opinion that real estate only has value in that it's cheaper to buy at prevailing rates vs renting the same property. Especially in cities where renters are heavily protected, and having a lease is almost like owning.

If it's much more expensive to buy vs rent, market is ripe for a short-term correction. Market doesn't have to be an entire city, BTW. It can be a specific class of properties, like high-end condos in Manhattan.

Submitted by scaredyclassic on September 21, 2016 - 10:41am.

my zillow appraisal went up 150k in the last few months. not sure if that signals anything re crash. i definitely wouldnt pay that amt. now.

Submitted by The-Shoveler on September 21, 2016 - 11:24am.

scaredyclassic wrote:
my zillow appraisal went up 150k in the last few months. not sure if that signals anything re crash. i definitely wouldnt pay that amt. now.

There is a big difference between over priced and over built (or over leveraged).

Over Priced usually just means things move slower, over built (or over leveraged) means it is likely to crash (no matter if it was over priced or not).
Also does not apply the same in China where the Gov IS the banker.

IMO anyway.

Submitted by FlyerInHi on September 21, 2016 - 11:09am.

Shoveler, I agree that the government will paper over loans.
Essentially, people will get condos for free or nearly free which is actually good public policy to give poor people decent housing and elevate the bar.

Maybe they'll create a new housing ministry.

That's what Singapore did with its poor citizens before, except the government there directly built the housing.

Submitted by spdrun on September 21, 2016 - 11:45am.

Poor people already get "nearly free" housing via Section 8. I think we'd see a guaranteed basic income sooner than more specific help for housing. Fed rates are already near zero, and bankers need to take their cut. Huge lobby, as big as health insurance, and we couldn't pass national health insurance.

Submitted by spdrun on September 21, 2016 - 11:46am.

my zillow appraisal went up 150k in the last few months. not sure if that signals anything re crash. i definitely wouldnt pay that amt. now.

That's an automated system that's perhaps working on previous changes in value and extrapolating. An estimate without seeing the property of comps (inventory is tight, so there might be a dearth of recent comps) doesn't really reflect reality.

Submitted by FlyerInHi on September 21, 2016 - 12:03pm.

spd, section 8 is not the same a pride of ownership.

If you look at NYC people there live in shit section 8 neighborhoods. Ok, Ok, there is rent control too, but decades old and not helpful the poor today. Take a trip to Singapore and compare to NYC. Then look at objective economic metrics of the 2 world-class cities.

In Singapore, decades ago, the government built condos on good land and sold them to people. They took peasants with no education and turned them to polite, modern, city dwellers.

I think that China is executing the Singapore model on a grand scale. I wish them the best because we all want to people to live better.

Free people from the burden of crushing housing payments (as % of income) and the economy will blossom in consumer spending. That's what we enjoyed after WWII. Remember housing subsidies for returning veterans and new city dwellers? Fred Trump made a fortune.

Here, too bad we didn't listen to Elizabeth Warren and given poor people housing ownership. Our fixation on the free markets and private mortgage contracts prevented us from carrying out good public policy.

In China, those new condos/houses will be filled. The government will make sure of that. Give the masses a free condo as part of the social contract. Elevate their living standards and educational level and the economy will enjoy a new renaissance.

Submitted by spdrun on September 21, 2016 - 12:12pm.

Better the economy not blossom. More crap imported from China just means more worldwide environmental degradation. Growth is truly a cancer.

I like what the Swedes are planning ... pay people to fix existing stuff versus buying new stuff in order to reduce the waste stream...

http://www.cnn.com/2016/09/20/europe/swe...

Re: Singapore, it's an island smaller than NYC (as a whole, not just Manhattan). Much easier to run things centrally in a tiny country than in the US.

Submitted by FlyerInHi on September 21, 2016 - 12:44pm.

Spd, consumer spending can take many forms. But we want people to have disposable income to spend in the economy otherwise things stop.

I think China doesn't get enough credit for what they achieved and the scale of economic development. I'm surprised Trump likes Russia, a country of alcoholics over the wealth and grand projects of China.

I hope China is able to power through the next decade and lift their second and third tier population. The world would benefit greatly.

Submitted by spdrun on September 21, 2016 - 1:01pm.

The world would benefit more through something like Zika spreading and rendering 90% of humans infertile for a generation. Drop the human population down to 500 million inside of a century.

Things stopping and people becoming too concerned about the immediate to want to raise a family would actually be a good thing, not bad.

Submitted by FlyerInHi on September 21, 2016 - 1:02pm.

Haha, maybe right spd but not from a human centric perspective.

Submitted by spdrun on September 21, 2016 - 1:05pm.

We can't have a population of over 7 billion on this planet and expect to consume resources at the present rate.

We either need to go for more sustainability (energy sources, make durable goods truly durable) or we need to have a lower population in the long term. Otherwise, clean air, clean water, land without diseases and with a good climate, will become things to fight over. We'll run the real risk that population reduction will happen through nuclear war or worse.

Submitted by FlyerInHi on September 21, 2016 - 1:11pm.

Sure, with sustainability, consumer spending can be in the form of leisure and services.

Native population in the developed world is decreasing That's why we need more immigration, to lift up people and preserve undeveloped areas. As the whole world gets developed, we will reach sustainable levels. Maybe within 100 years.

Submitted by spdrun on September 21, 2016 - 1:15pm.

If the whole world reaches present US living standards and energy consumption, it would be an ecological disaster. Goal should be a population of 500 million inside a century or two, heavily supported using automation and sustainable/nuclear energy. Basically turn the Earth into a pleasure garden for lotus eaters.

Submitted by FlyerInHi on September 21, 2016 - 2:52pm.

That would be nice, spd.

But I see countries competing for immigrants/population because of megalomania. A country needs lots of people and a large growing economy to sustain a large military. I read an article explaining that China is increasing military budget and asserting itself now before population decrease in decades ahead.

In a future of decreasing population, China and the US maybe competing for immigrants.

Population decerease can be bad like in the former sprawl of Detroit and Philadelphia. You don't want to be stuck in a dying city with nowhere else to go. the dying cities of thr former Soviet Empire are creepy.

Submitted by earlyretirement on September 21, 2016 - 3:39pm.

ocrenter wrote:
https://youtu.be/nGHmk4UeK_w

starting at 10:30, footage of fraudulent loans using fake documentations and inflated sales price reminiscent of our own bubble from 10 years ago.

Thanks for sharing ocrenter! That video brought back memories from our own housing mess. There will also be a day of reckoning for China and unfortunately we'll probably feel it here in the USA as well.

Great seeing you today at lunch. We have to do that more often!

Submitted by ocrenter on September 21, 2016 - 8:26pm.

earlyretirement wrote:
ocrenter wrote:
https://youtu.be/nGHmk4UeK_w

starting at 10:30, footage of fraudulent loans using fake documentations and inflated sales price reminiscent of our own bubble from 10 years ago.

Thanks for sharing ocrenter! That video brought back memories from our own housing mess. There will also be a day of reckoning for China and unfortunately we'll probably feel it here in the USA as well.

Great seeing you today at lunch. We have to do that more often!

Haha, total Deja vu moment when the realtor offered to find someone to write the income verification letter for $25 followed by an offer to inflate the sales price so the buyer can obtain 100% financing.

Yes, great meeting up, awesome ride in the MX!

Submitted by ocrenter on September 21, 2016 - 8:30pm.

flu wrote:
Yes, and you know what's happening right? All the slightly weaithier ones (including the ones that made an honest business) are quickly trying to move their assets to Europe, the U.S. and Canada. Because when the crapper hits the fan, anyone that is wealth(ier) is a sitting target by the government.

So, no, this isn't simply like the 80ies when Japan heavily invested abroad. There definitely is that going on too. But I think for a lot of people, there is an interest to have a "get the hell out of the country" plan.

Planned economies are great..... as long as you are the beneficiary of it and the government doesn't decide to turn around and make you the scapegoat....

Maybe you haven't noticed but there has been certain cases in which hedge funds/investment groups in China had shorted the market, only for the government to come back and confiscate those profits and jailed certain fund managers. Some say it was because of inside trading. Others say, it was just a way for the government to claim down on those bearish on the market.

Investing in China is the wild wild west right now. Some CEO's on the board are shorting their own company stock! No conflict of interest there (end sarcasm)

Vancouver did interesting recently. They passed a 25% tax on home purchases by non-citizens I think. And you know what happened? Drove up real estate prices in Seattle, WA.

Yup, I can totally see RE prices here heading for a correction when the Chinese money dries up. Problem here is China is so opaque there's no way to reliably track this thing.

Submitted by spdrun on September 21, 2016 - 8:59pm.

There will also be a day of reckoning for China and unfortunately we'll probably feel it here in the USA as well.

fortunately

Submitted by Coronita on September 21, 2016 - 9:31pm.

earlyretirement wrote:
ocrenter wrote:
https://youtu.be/nGHmk4UeK_w

starting at 10:30, footage of fraudulent loans using fake documentations and inflated sales price reminiscent of our own bubble from 10 years ago.

Thanks for sharing ocrenter! That video brought back memories from our own housing mess. There will also be a day of reckoning for China and unfortunately we'll probably feel it here in the USA as well.

Great seeing you today at lunch. We have to do that more often!

....And you guys don't even bother to remember to include some of us... Thanks a lot..... :) J/K..... I'm kinda way out yonder now.....

Submitted by CA renter on September 22, 2016 - 1:36am.

spdrun wrote:
Better the economy not blossom. More crap imported from China just means more worldwide environmental degradation. Growth is truly a cancer.

I like what the Swedes are planning ... pay people to fix existing stuff versus buying new stuff in order to reduce the waste stream...

http://www.cnn.com/2016/09/20/europe/swe...

Re: Singapore, it's an island smaller than NYC (as a whole, not just Manhattan). Much easier to run things centrally in a tiny country than in the US.

What the Swedes are doing is a good idea. I've often thought that we should replace our "Energy Star" rating system with a system that takes the total life cycle of a product into account. From mining raw materials, production, shipping, distribution, end-of-life disposal, etc. -- the ecological damage from all of these stages should be calculated and given a rating so that the more durable and most easily/cheaply repaired items get the higher ratings. We could offer some kind of a tax incentive, or (even better, IMHO) people could decide for themselves which goods would provide better value for their money.

Here's a summary of what they're considering in the EU:

"In this debate, BEUC sees an important need to ensure that the useful lifetime of
consumer products is prolonged through
design for durability, possibility to repair,
upgrade, disassemble and recycle products. Reliable and durable products provide value
for money to consumers and prevent overuse of resources and waste.

Enhancing the reliability of products will not only provide economic benefits to consumers but also to companies and to the overall economy. For instance, greater reliability will reduce product returns due to failure which currently costs retailers and brands a lot of money."

http://www.beuc.eu/publications/beuc-x-2...

------------

These types of measures can't come soon enough.

Submitted by CA renter on September 22, 2016 - 2:22am.

That was a very fascinating -- and depressing -- video, OCR. People have been discussing China's ghost cities on housing bubble blogs for quite a few years, and I had read that they had slowed/stopped building these cities and that people had begun to move into them over the past few years. From this clip, it looks like that's not the case.

It's surreal to see how investment has been so grossly misallocated around the world. We have an oversupply on so many levels, yet we are continually told that we need more debt and more expansion.

I've been watching commodity prices over the years and found the price of copper to be rather telling.

http://www.nasdaq.com/markets/copper.asp...

We desperately needed to deleverage after the dot.com bubble, and again after the housing bubble, but the central bank(s) didn't allow that to happen. When it finally implodes, it could get ugly. IMHO, 2008 was just a preview of what can happen. Currency markets could get interesting going forward.

Submitted by ocrenter on September 22, 2016 - 6:36am.

CA renter wrote:
That was a very fascinating -- and depressing -- video, OCR. People have been discussing China's ghost cities on housing bubble blogs for quite a few years, and I had read that they had slowed/stopped building these cities and that people had begun to move into them over the past few years. From this clip, it looks like that's not the case.

It's surreal to see how investment has been so grossly misallocated around the world. We have an oversupply on so many levels, yet we are continually told that we need more debt and more expansion.

I've been watching commodity prices over the years and found the price of copper to be rather telling.

http://www.nasdaq.com/markets/copper.asp...

We desperately needed to deleverage after the dot.com bubble, and again after the housing bubble, but the central bank(s) didn't allow that to happen. When it finally implodes, it could get ugly. IMHO, 2008 was just a preview of what can happen. Currency markets could get interesting going forward.

Thanks CAR, that is quite an interesting graph.

The way I look at it, China is overwhelmingly export dependent, specifically to the US and EU. After the global melt down, they were slowing down as well. But to keep pace with their predicted 7% GDP growth, they started their own money printing endeavor.

The way China is structured, Every city and province are given a predicted GDP growth rate that they will need to meet. If a governor or mayor doesn't meet that target, there goes his political career. So somehow, every municipality meets that magical 7% predicted growth rate. The best way to achieve this of course is to build. And if there's no money then you simply borrow. Once the buildings are constructed, then they need to be purchased by flippers, who also need borrowed money.

Someone mentioned the Chinese gov will somehow get people into these buildings. That would only happen after a complete financial meltdown and the state simply takes over ownership of entire ghost towns wholesale.

Maybe that's their plan all along?!!! After all, they planned to use cheap and dirty coal, fully aware of the environmental catastrophe in stored. But figuring they'll be rich enough to clean it up and rich enough to use renewables moving forward. Substitute cheap and dirty coal for cheap and dirty credit, and it all makes sense.

Submitted by The-Shoveler on September 22, 2016 - 6:40am.

More than 50% of china's population still lives in very rural villages, IMO they can continue build cities and back fill them with rural population for another 20-50 years.

It's hard to grasp the situation even if you are on the ground, you can only see whats in front of you and not the big picture.

Submitted by ocrenter on September 22, 2016 - 6:43am.

flu wrote:
earlyretirement wrote:
ocrenter wrote:
https://youtu.be/nGHmk4UeK_w

starting at 10:30, footage of fraudulent loans using fake documentations and inflated sales price reminiscent of our own bubble from 10 years ago.

Thanks for sharing ocrenter! That video brought back memories from our own housing mess. There will also be a day of reckoning for China and unfortunately we'll probably feel it here in the USA as well.

Great seeing you today at lunch. We have to do that more often!

....And you guys don't even bother to remember to include some of us... Thanks a lot..... :) J/K..... I'm kinda way out yonder now.....

Way out in yonder? Where are you now? I thought you were in RB?

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