Irvine Housing Blog

More leaks regarding the state AGs’ settlement:

“...As things stand, the settlement, said to total about $25 billion, would cost banks very little in actual cash — $3.5 billion to $5 billion. A dozen or so financial companies would contribute that money. The rest — an estimated $20 billion — would consist of credits to banks that agree to reduce a predetermined dollar amount of principal owed on mortgages that they own or service for private investors. How many credits would accrue to a bank is unclear, but the amount would be based on a formula agreed to by the negotiators. A bank that writes down a second lien, for example, would receive a different amount from one that writes down a first lien…” http://www.nytimes.com/2011/10/30/business/a-foreclosure-settlement-that-wouldnt-sting.html?_r=2&ref=your-money&pagewanted=print

I didn’t you could own real estate in China?  They are still communist, right?

A view of surrounding office buildings, and a small storage locker! Well hot-damn, all of my lifelong dreams in one place, I gotta get me a piece of that! Where do I sign up?

I note that the association fees are still at their reduced level. I wonder how they are paying for maintenance and repairs, and building up a contingency account for long-term requirements?

I was in Shanghai in 2008 and there were already many empty high rise condo buildings.  But they were not empty because they hadn’t sold.  Rather the buyers were mostly pure speculation buyers and they believed if the units were occupied then it would reduce their resale value.  Craziest thing I ever witnessed.  About the same time I visited Vancouver BC and also saw many empty condo buildings. Similar situation.  All of the units were sold but the owners for the most part lived in China and used them as vacation spots.  But they were not renting them out presumably because of resale concerns.  Construction of new condo buildings were briskly continuing in neighborhoods surrounded with dozens of dark towers.

I was sure that these two markets were headed for a collapse, but at least in Vancouver have seen little sign of it happening.  Different cultures have different bubble psychologies I guess.

Good Post, IR.

I lived in China for three years and things are getting crazier than ever.  It is worse than California ever was due to the lack of an open economy and a limited number of good investment opportunities.  One of the great ‘benefits’ of communism is that the whole society has lost it’s sense of supply and demand.  In middle-class areas of Shanghai, condos are stll trading for $500,000 and up, despite the fact that the prevailing wage in those parts is around US$10,000 per year. People don’t bother to rent them out because they are investing ‘for the capital gains’.  Sound familiar?

In the smaller cities it is even worse.

Chinese (and Russian) real estate purchases in London, Australia and Vancouver are examples of capital flight.

Wealthy people know that they are only one informant or Cultural Revolution away from losing it all.

So they mainly care about parking capital somewhere else, and generating rental income is low on their list of priorities.

The wealth disparity in China is also so great that some rich people who have “made it” dream of emigrating to countries where they can have a lower profile. Or for now at least keeping their options open.