Matrix Blog

International

Miami Vice

August 24, 2005 | 10:26 pm |

miamivice

In the Economist print edition: From Coke to Cubists [Note: Paid Subscription] the current surge in Miami condo development is characterized as leading its transformation from drug-dealers’ playground to mainstream metropolis.”

miamimap
Source: The Economist

Roughly 65,000 condos are under some stage of development.

According to a Merrill Lynch study on “Mega Metro Bubbles”, Miami was top on the list. The study analyzed income to price ratios to determine affordability. Miami housing had some of the highest appreciation rates found in the US since 2001.

With all this development, someone got the idea to start a franchise in Miami for flipping condos called, oddly enough, Condo Flipâ„¢ pat. pend. (Coming soon to an overheated market near you.)

Their slogan:
bathtub
Source: Condo Flip.

Seems a bit arrogant, doesn’t it?


From Rubble to Rubles

August 16, 2005 | 10:07 pm | |

There is a housing boom in Russia where prices in an exclusive area of Moscow known as Ostozhenka, housing exceeds $10,000 per square meter. That translates to just under $1,000 per square foot. After New York, Moscow has the highest concentration of billionaires.

Mortgage financing is a relatively new concept in Russia and is helping fuel the boom. Lack of supply, is also fueling the boom, but as little as 6 months ago, the government was saying there was no housing boom.

Like Russia, China and Korea are seeing lack of supply and ready credit is very similar to the US situation. The housing boom pattern seems to be similar around the globe, however, the disparity between the entry and luxury segments as well as investor speculation in China, Korea and Russia are at a higher level than seen in the US.


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A Bear in a China Shop?

August 13, 2005 | 12:38 am |

Apparently, the Chinese government (The National Development and Reform Commission)was concerned about housing prices back in 2004 which rose 7.7% nationwide last year. In addition, values increased 25% over the period 1998 to 2003 with a 16% market share of investment properties.

The article also said that “The commission Tuesday also said the government’s housing supply is not as balanced because common commercial apartments are not available in large enough numbers, while there is an oversupply of luxury apartments and high-end villas.”

Is it just me, or does this sound familiar? But wait a minute…this is China…”oversupply of luxury apartments and high-end villas?”

Fast forward to the current real estate market in China…

Housing prices in 20 cities fall in July but the average nationwide increase in 70 cities increased 6.4% annually. China, like us has localized markets with different housing trends. 20 out of 70 cities saw falling prices, yet the overall average saw an increase.

Shanghai has observed soaring housing prices in recent years. Its commercial housing prices topped 5,118 yuan (US$617) per square metre last year, about 24.2 per cent or 1,000 yuan, up from the previous year.

Does that sound familiar?

Note: By my conversion calculations, Shanghai averages $6,641 per square foot! Please help me out on this…did I do the conversion correctly? Thats 30% higher than the highest sales in Manhattan on a per square foot (Rupert Murdoch’s $44M penthouse purchase was just north of $5,000 per square foot).


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Phew! No Housing Bubble In Canada.

August 12, 2005 | 11:56 pm |

Canadian housing prices are on the rise, but the underlying conditions do not suggest the threat of a bubble similar to that of the late 1980s, according to the Bank of Montreal.

I would hope Bank of Montreal (BOM) learned their lesson from the late 1980’s when they were active construction lenders in the New York market with what appeared to be loose underwriting standards.

BOM says the same things that economists are generally saying in the US: a modest rise in mortgage rates will temper demand but there are concerns about affordability.

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Yuan Inflation?

August 8, 2005 | 10:06 am |

Inflation seen as key to Fed policy.

Tomorrow marks the likely 10th 1/4 point increase in the Federal Funds rate since June 2004 and with the jobs report showing growth, an increase seems almost certain.

The Chinese currency [Yuan] was recently strengthened by 2%, which could reek havoc with the housing market if allowed to float as much as 40% to which would be needed to benefit the manufacturing sector. The US would see a competitive advantage in manufacturing, allowing prices to increase, placing upward pressure on rates, tempering activity in the housing sector.

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