China "Bubble" ( Bursting ) Update & Newest Spin "Excluding Tier 1 Cities Everything Is Fine......"

Not only the cracks regarding the Three Gorges Dam are getting more and more obvious on a daily basis...... You can read my earlier takes on China here

Nicht nur der Drei Schluchten Damm zeigt erste Risse...... Mehr von mir zum Thema China gibt es hier

Andy Xie via NC

How many flats in China are sitting empty? The media recently floated a story — denied by power companies — that 64.5 million urban electricity meters registered zero consumption over a recent, six-month period. That led to a theory that China has enough empty apartments to house 200 million people….

What especially distinguishes China’s property bubble…is an unprecedented amount of living space. This huge stock of empty flats equals the nation’s quantity bubble.

Although the government doesn’t publish vacancy data, I think the vacancy rate for the nation’s private, commercial housing stock is between 25% and 30%. That’s at least double what’s required in a normal market. The gap between what’s needed and what’s available can be viewed as speculative inventory. The value of this inventory held by speculators is probably around 15% of GDP.

It’s being kept on ice, just as copper and other commodities are hoarded in anticipation of rising prices…

Looking at the clip & the TIME photo gallery Ordos, China: A Modern Ghost Town the very high number looks less "hyperbolic"....

Wenn man sich den Clip & die Photoserie von TIME Ordos, China: A Modern Ghost Town ansieht erscheint die extrem hohe Zahl weniger "übertrieben"....



China Tests Said to Check Risk of Cash Crunch Among Developers Bloomberg

China’s stress tests of banks will assess the risk that a possible slump in property prices may strain developers’ finances and cause homebuyers to default, a person with knowledge of the matter said.

The banking regulator told lenders to include worst-case scenarios of prices dropping 50 percent to 60 percent in cities where they have risen excessively

Banks were also told to stress test loans to industries including steel, cement, construction materials and home appliances that are related to housing, the person said

Previous stress tests carried out in the past year assumed home-price declines of as much as 30 percent.

I´ll bet that every (big) bank will pass.....;-) I have to repeat myself Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... & that despite almost $60 billion in recent capital increases from the big banks the term "Drop in the bucket" fits perfectly....

Bin mir sicher das keine einzige (wichtige) Bank durchfallen wird.... Verweise hier auf Another Reason Why The Chinese Banking Financial Strength Rating Is Just Beating Iceland & Kyrgyzstan..... Denke das trotz der fast 60 Mrd $ an Kapitalerhöhungen der Banken in jüngster Zeit die Bezeichnung "Tropfen auf den heissen Stein" dürfte passen....

Cracks in the Chinese bubble? FT Alphaville

....the rule of law remains weak in Chinese property overall — 24 out of 30 developers surveyed said they knew of companies that had illegally taken out bank loans to buy land.

Land ministry finds 1,457 unused plots China Daily via FT Alphaville

China's Ministry of Land and Resources has found 1,457 unused plots of land nationwide and given a list of what companies hold rights to these plots to the China Banking Regulatory Commission, the China Securities Journal reported today, citing a person familiar with the situation.

The banking regulator will use the list to conduct a risk assessment, the Beijing-based newspaper reported. About 80 percent of the unused plots may be repossessed by the government, according to the report.

It looks like the latest spin attempt to keep the "story" intact comes along the line "excluding Tier 1 cities everything is fine "..... Where have i heard this bevore.... ? ;-)....

Sieht ganz so aus als wenn die nächste Sau die durchs Dorf getrieben wird um zumindest den Anschein zu erwecken das noch nicht alles verloren ist die Überschrift trägt "Abseits der Tier 1 Städte ist der Immobilienmarkt noch intakt"....... Wo habe ich das bloß vorher schon einmal gehört.... ? ;-)

Standart Chartered FT Alphaville

while the focus is on Tier 1 cities, there is a good chance that they do not represent the national trend.

There are, after all, hundreds of other cities around China that are busy growing, and in which people might be still busy building and selling apartments.

Sales have fallen in Tier 2 and Tier 3 cities too, but not by as much as in Tier 1 cities, as Chart 2 shows [above]. (In our chart, we have used data from 10 cities: Tianjin, Chongqing, Chengdu, Hefei, Wuhan, Changsha, Dalian, Nanjing, Suzhou and Changchun).

Indeed, in some cities – Hangzhou in Zhejiang province, for instance – we have actually seen prices push up a little since April.

This was a Tier 1 bubble and it looks to have been pricked without killing the Tier 2 and Tier 3 markets

China Real Estate Survey

H/T ZH

At least they acknowledge that Tier 1 is a bubble.....Take a secound look at the volume stat on page 2...... Crashing is defintely not an overstatement....UPDATE:StanChart: Chinese property correction imminent

Immerhin wird richtigerweise der Tier1 Immobilienmarkt als Bubble identifiziert.....Denke die Volumenangabe auf Seite 2 ist besonders "beeindruckend"..... Der Begriff "Crash" ist sicher nicht als übertrieben einzustufen....UPDATE: StanChart: Chinese property correction imminent

UPDATE:

Following the great (stock market) leader — China FT Alphaville

As equity markets should act as a leading indicator of broader economic growth trends, it seems, therefore, that the Chinese equity market has recently become ‘the leading indicator of the leading indicators’. Given that the local Shanghai Composite index and MSCI China have both rebounded by 13-15% from their recent lows and our China strategist, Minggao Shen, has just turned more bullish on the market1, these events are a positive mix for global emerging markets as a whole. This is, therefore, a good time to consider the Chinese market’s role as a signaling mechanism for GEMs as a whole.

China is now a very large economy (the second biggest in the world, accounting for an estimated 9% of global GDP in 2010) and a big stock market (the ninth biggest in the world).

The Chinese economy is also expected to account for as much as 23%10 of global growth (i.e., the rise in global GDP) in 2010, a share that is higher at present due to the weakness of developed economies . . .

China not only now accounts for a significant proportion of global growth in a but it is, by far, the biggest consumer of commodities. Our commodities analyst, Alan Heap11, reports that China currently accounts for the consumption of around 40% of several major metals including copper, nickel, and aluminum . . .

Oh boy.... Wall Street Finest / Shanghai strikes again.... Too bad that he didn´t mention that one reason for the rise in the stock market is probably the stalling real estate market.... With negative real interest rates Chinese have besides GOLD almost no place to put their money to work..... If my view on real estate is correct all his bullish arguments would be turned upside down......

Mal wieder perfektes ( Experten ) Timing..... Wäre nett gewesen wenn zumindest in einem Nebensatz erwähnt worden wäre das einer der Haupttreiber für den Geldfluss in die Aktienmärkte der rapide abkühlenden Immobiliensektor ist....Da die Chinesen mit negativen Realzinsen leben müssen und Abseits von GOLD nur der Aktienmarkt als Alternative übrig bleibt verwundert die gesehene "Stärke" nicht....Sollte ich mit meiner Meinung zum Immobilienmarkt in China auch nur im Ansatz Recht behalten drehen sich die o.a. "bullischen" Argumente über Nacht ins Gegenteil....

On the Block in California / NYT

with so much ( and rising) inventory on the market, tightening credit, higher rates, slowing economy, just the beginning of the big unwinding of the bubble i think the buyers are to early in buying in this kind of auction. but nevertheless compared to just 12-18 month ago when buyers camped outside to get one of the contracts , bidding wars or had to win in a lottery to get into real estate quite an improvement and a significant reversal in sentiment..... :-)

mit unmengen von immobilien auf halde (die zudem ständig weiter ansteigt), verknappung der kreditmöglichkeit, höheren zinsen, einer schwächeren wirtschaft und gearde erst dem beginn des platzes der blase sind diese auktionen sicher in zukunft deutlich billiger zu haben. nichtsdestotrotz isr das eine komplette kehrtwende von dem verhalten von 12-18 monaten als zum teil vor neuen baugebieten gecampt wurde, es ein wettbieten gab oder gar lotterien veranstaltet wurden um überhaupt an objekte zu kommen...... :-)
ON a foggy Sunday morning last month, the parking lots around the convention center here were filling fast.

The volume of the traffic downtown was not unusual. What was unusual was that the men directing the traffic were wearing tuxedoes.

The crowd — about 1,200 people looking for deep discounts in real estate — was decidedly less formal, in jeans and Dockers, shorts and sandals. The casual dress code concealed the fact that many were serious buyers carrying millions of dollars collectively into the hall in cash and cashier’s checks.

Some were investors, like Dendy and Rita Villegas of San Diego, who were looking to pick up an inexpensive house to rent out. Some were first-time buyers, like Rodolfo and Veronica Gonzalez of Fontana, who were hoping to save $200,000 or so off the asking price of a family home.

They converged on an event the likes of which Californians have not seen in a decade: a large-scale auction of foreclosed homes.

On this occasion in Riverside, two lenders had put 100 properties on the block. By the end of the day, 93 had sold. Most of those properties were in fast-growing exurban and desert communities in Riverside and San Bernardino Counties east of Los Angeles.

this chart is taken from the

Dimitris´excellent Countrywide Forclosure Blog http://tinyurl.com/22vw96

>make sure you click on the link to see the total disaster that countrywide is facing nationwide with almost $ 1.75 billion in housing inventory on their books......

>empfehle auf den link zu klicken um im detial zu lesen wie sich die inzwischen $ 1.75 billion an immobilien in den büchern zusammensetzen....

The company that held the auction had been dormant for a decade. But in recent months, when mortgages started going bad and foreclosures multiplied, several lenders contacted the company’s officers and asked if they could get back into the business of auctioning properties.

“We went into hibernation, and we’re back!” said Robert Friedman, the chairman of the Real Estate Disposition Corporation, which is based in Irvine.

The company sold more than 265 properties in San Diego, Los Angeles and Riverside during two weekends in May, and it is planning to hold auctions in Sacramento, Modesto, the Bay Area and Atlanta this summer. > they might have to upgrade the future size of the the convention centers

> evtl. sollten schon einmal vorsorglich gräßere hallen gebucht werden

Mr. Friedman described his trade as a “countercyclical business,” and he said that the banks unloading the properties preferred not to be identified.

In some cases, he said, the institutions sold the properties for less money than they were owed.

“It’s not a happy occasion,” he said. “They’d rather take a little loss quickly, rather than waiting and seeing.”

However unhappy the occasion may have been for lenders, the auction company put on a driving, shrieking, high-spirited event. All that was missing was the preacher and the tent.....

Opposite the hall, a ballroom held 41 loan officers and 25 escrow officers. Before the bidding started, a jubilant soundtrack poured from the speakers. The rotation included “Jumpin’ Jack Flash,” the happiest songs of Earth Wind and Fire, and a modern version of “I’m a Believer.”

here is an example how not to bid.....hier ein beispiel wie man es besser nicht machen sollte....

"The time to buy real estate is when the market is soft,” he said. “Today’s the day. Don’t regret not buying at this auction.”

>see opening comments...siehe einleitenden kommentar...

Foreclosures have surged in Southern California in the last year, particularly in outlying areas.

In seven counties, lending institutions foreclosed on 6,007 properties in the first quarter of 2007, up from 721 properties in the first quarter of 2006

In Riverside and San Bernardino Counties, lenders foreclosed on 255 homes in the first quarter of 2006. That number grew to 2,369 in the first quarter of 2007, according to DataQuick. ..

.... Buyers have no opportunity to inspect the properties and must pay in full, in cash. The sellers do not have to guarantee that the title is clear of liens and additional mortgages.

The recent real estate auction in Riverside eliminated many of those problems.

The company presented every property for public inspection for three days, and it guaranteed title insurance as well. In addition, the company arranged for a lender to finance the deals, so that buyers did not have to pay cash for the full price.

Buyers paid the auction company a fee of 5 percent of the sale price for the first house, and 15 percent of the sale price on additional houses.....

>15 must be a typo, i think it could be 1.5 percent

>die 15 prozent müssen ein tippfehler sein, denke es soll 1,5% heissen.

Dendy and Rita Villegas drove two hours from San Diego with their 7-month-old daughter for the chance to bid on a house in Murrieta, about 80 miles southeast of downtown Los Angeles. They are real estate agents, and Mr. Villegas is also a home inspector. He said that the house they wanted looked better than the other bank-owned houses on its street, but that it needed a lot of work.

“It looked like whoever had lived there just got up and left,” he said. The walls were dirty, the floor was damaged and the pool equipment wasn’t working.

When the property came up for bidding, Mr. Villegas was quick to raise his card. He was prepared to go as high as $300,000.

Within seconds, the auctioneer, at blood-boiling pace, ran the price up to $350,000. Ultimately, the four-bedroom, 1,828-square-foot house went for $400,000 to another bidder. The auction catalog said it had been previously valued at $425,000.

Throughout the bidding, the loudspeakers shrieked at rock-concert levels. The young men in tuxedoes — called “ring men” by the auction company — ran up and down the aisles in a sweat, spotting bids, flashing the totals on their fingers.

At pauses in the bidding, the auctioneer would shout encouragement. “What the heck?” he would say. “It’s only money!” At the front table, a chorus of young women clapped and cheered with each surge in the price.....

Even so, the concern among many bidders at the event was that even if the properties sold for 20 or 30 percent less than their value at the peak of the market, the price might still be too high.
Jim and Betty Botley of Chino attended the event with their Realtor, Maurice Merchant. They were looking to spend what Ms. Botley defined as “$300,000, and that’s it.”

The house they wanted went for an auction price of $550,000. The Botleys thought it would have needed $50,000 to $100,000 for renovation. After the repairs, auction fee and closing costs, they couldn’t see how anyone got a deal.

“We learned a lot today,” Mr. Botley said. “You can probably buy them cheaper on the market than buying here.”

>one thing is for sure...this cartoon is now outdated......

>dieser cartoon dürfte damit veraltet sein......

disclosure: short cfc and several other lender

some housing charts.....

what a chart from the Economist ..... now look at the slump that is happening in real time in the us.......this might gives us an impression how hard the hit for the uk market will be.......

wenn man sich jetzt den verfall in den usa ansieht und sich die fallhöhe der briten ansieht kann einem angst und bange werden........

thanks to Bespoke Investment for the charts. please click on the headline to see more charts and what the S&P Case Shiller futures are pricing in.

dank geht an Bespoke Investment für die charts. klickt bitte auf die überschrift um adere regionen zu sehen sowie welchen weiteren verfall die S&P Case Shiller derivate anzeigen.

no surprise that inventory is through the roof. ugly news and a sign that the slump is just beginning. click to start the interactive chart for 18 metro areas.

http://tinyurl.com/3368m8

kein wunder das in der gleichen zeit die häuser die zum verkauf stehen explodieren. klickt bitte auf den link um sich die 18 metro regionen im detail anzusehen.

UPDATE:

Barry Ritholtz has had the same thoughts and has put a nice overview.

http://tinyurl.com/25nubb

Barry Ritholtz hat die gleiche idee gehabt. extrem sehenswert

Interactive Inventory Chart for 18 housing regions

click on the headline to start the chart for 18 metro regions

bitte auf die überschrift klicken um die einzelnen regionen im chart zu sehen

The supply of houses and condominiums available for sale continues to grow quickly in much of the U.S., reflecting weak sales.

The number of homes listed for sale in 18 major metropolitan areas at the end of April was up 7% from March.

The increase was above the seasonal norm. Over the past 22 years, home inventories nationwide have increased an average of 4.5% in April from March...

Some of the biggest increases last month were in the metro areas of San Francisco, up about 19%; Washington, 17%; Orange County, Calif., 15%; and Seattle, 14%. Inventories declined nearly 1% in the Los Angeles area, according to Zip.

In a report issued yesterday, Ivy Zelman, a Cleveland-based housing analyst for Credit Suisse, said her building-industry contacts have been surprised by the weakness of sales recently, "given the typical seasonal bounce that occurs at this time of year." She added, "Our contacts have officially declared the spring selling season a bust." Many people who had expected a recovery by year end "now believe the market rebound will be pushed out until 2008 at the earliest," Ms. Zelman wrote.

Housing Inventory Surges / WSJ

make sure you click on the headline to see the interactive chart for every region.

and if these charts havn´t shocked you take a look at the inventory to sales ratio tracked from this excellent site http://bubbletrackinggraphs.blogspot.com/. thanks ocrenter!

lege euch den interaktiven chart für die einzelnen regionen ans herz. bitte auf die überschrift klicken.

und wenn euch das noch nicht geschockt hat gibt es hier noch die relation von inventory zu verkäufen. kann man wohl einen käufermarkt nennen..... (link oben)

A sharp increase in homes offered for sale last month suggests that home shoppers will find plenty of choices this spring.

The number of homes listed for sale in 18 major U.S. metropolitan areas at the end of March increased 6.5% from a month earlier, according to data compiled by ZipRealty Inc., a national real-estate brokerage firm in Emeryville, Calif. The data cover listings of single-family homes, condominiums and town houses on local multiple-listing services.


Over the past 22 years, home inventories nationwide have increased an average of 1.7% in March from February, according to Credit Suisse Group. Supplies typically rise modestly in March as sellers pursue the many families with children who seek new homes in the spring, so they can move during summer vacations

The big rise in the latest month may reflect sellers' expectations that it will take much longer to find buyers than it did during the housing boom of the first half of this decade, said Patrick Lashinsky, president of ZipRealty. Rather than waiting for April or May, he said, many people planning to move this summer put their homes up for sale in March. He added that many sellers are being cautious, waiting to sell their old homes before committing to buy new ones.

ZipRealty recorded the biggest increases in the metro areas of Los Angeles (12.8%), San Francisco (12.2%) and Washington, D.C. (9.4%). Miami, where a glut of unsold condos has been weighing on the market, showed a modest rise of 1.8% in the supply of all types of homes in March from a month before. But the Miami inventory was up 61% from a year earlier. For all 18 metro areas, the inventory at the end of March was up 35% from a year earlier.

Large inventories have caused prices to level off or fall modestly in much of the country over the past year or so. The recent surge in defaults on subprime mortgages -- loans to people with blemished credit records -- has prompted lenders to tighten credit standards. That tightening is expected to put downward pressure on home prices by removing many potential buyers from the market