Tuesday, June 19, 2007

Deep thoughts: Christmas is going to suck.

Today on the HBB I read about Germans being net sellers of Florida properties.

“Peter Feuerstein, an Anna Maria Island real estate agent who caters to German buyers, said taxes already are causing his compatriots to sell their houses and head home. One of his clients just sold his Anna Maria house for $455,000 because he was paying $11,0000 in taxes and another $10,000 for insurance and maintenance.”

“‘He told me that for $20,000, he can travel all over the world,’ Feuerstein said.”

While on vacation in Hawaii I read about how the Japanese are net sellers of Oahu real estate. (Sorry, dead tree edition of a local paper.)

Several years ago I was in NYC and *every local* was bragging about how the Europeans were buying floors of this building or that building.

The LA Times had an article on how Chinese investors (mainland), were buying California property on speculation...

Right now the sales are a trickle (until they get their Florida property tax bill...). What happens when they want their money back in their original currency? I have a feeling the dollar will hit a pretty low support level.

Now, this is all going from memory... But does anyone have a link to a graph of foreign owned property with time? Hopefully going back to 1970 or so...

All of this will be exacerbated by the Spanish real estate market (its going to spook international property investors). When? I'm still thinking not much until late Fall.

1. So combined with the ARM resets...
2. Foreclosures...
3. Foreclosures returning to the market
4. Jump in multi-family construction
5. Drop in Construction employment (look at Western Union Payments to Mexico. Its down $600 million/month and supposedly they send an average of $1,000/month each... Yes, wages in construction are down, so it might not be a cut in employee count...
6. Weak car sales (read Detroit layoffs)
7. Negative savings rate (that will bite us some day...)
8. Home afford ability in LA at 2% per Wells Fargo...
9. Credit tightening
10. Down payment requirements creeping up
11. Interest rates creeping up
12. Stagnant wages (certainly in real terms)
13. Rapidly dropping MEW (which supports our trade deficit).
14. Rising credit card debt (expensive debt...)

I'm officially predicting that Christmas 2007 will suck.

2008 will be worse.

None of us want this. Even bears lose money in bad bear markets.

But I think foreign real estate sales of US residential market could prick the bubble in Florida, California, Hawaii, and New York. Probably Boston and DC too...

Got popcorn?

1 comment:

Anonymous said...

Thank you for this post.

Today I was informed that the market will pick up because all of the money-laden Chinese are on the way to bail out the Californians; who will then arrive to purchase the over-priced junk in my little neck of the woods.

I am waiting for logic to return. Then again I wonder if it was ever here.