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- When is the Best Time to Buy Commercial Real Estate? | Bull Realty, Inc. | #CRE Blog
Historically, commercial real estate values have been cyclical and will continue to be so in the future. The availability and cost of financing is a key component of these cycles. Available capital is affected by the economy, interest rates, supply and demand, and the perception of the market. Real estate prices fluctuate as these factors exert their influence.
To determine the best time to buy, consider where we are in the cycle. Then, see how your particular business or personal financial goals can be strengthened by considering the effects of the cycles.
There are four distinct phases to the commercial real estate cycle: Recession, Recovery, Expansion and Contraction.
Read about each and more:
- Housing markets about to get squeezed – MarketWatch
… analysts caution that lowering their caps could have a domino effect on home sales. Many borrowers who use the maximum dollar amount of Fannie Mae and Freddie Mac loans tend to live in high-cost areas and rely on these mortgages to buy homes. If they’re unable to get financing, given that the private mortgage market is more selective, sales could stall and prices as a result may drop, says Jack McCabe, an independent housing analyst in Deerfield Beach, Fla. “This will be a real eye-opener,” he says.
It would be good for high-end landlords.
Read the source article … https://www.marketwatch.com/story/housin g-markets-about-to-get-squeezed-2013-09- 13
- Bank of England chief warned: Don’t let house prices rise so fast and ban 95% mortgages – or face new property bubble | Mail Online
How tight to tighten lending standards is the same debate on both sides of the pond.
House prices should not be allowed to rise by more than 5 per cent a year — and the Bank of England should stop them if they do, a report will say today [September 12, 2013].
The Royal Institution of Chartered Surveyors (RICS) will today call for radical new rules, such as banning banks from lending more than 80 per cent of a property’s value and shrinking the maximum life of a mortgage.
In an explosive move, it says urgent action is needed by the Bank due to ‘a growing risk of another house price boom’.
- Chinese buying “unprecedented” Sydney property | MacroBusiness
I will remind everyone at this point of two things. First, it was Chinese money (among others) that played a major role in blowing up US housing via purchases of Treasury and GSE bonds. This held down interest rates and stoked a local investor blowoff. So think carefully before you conclude it is a good idea to have a wave of foreign capital distort your asset markets.
Read the source article … https://www.macrobusiness.com.au/2013/09 /chinese-buying-unprecedented-sydney-pr operty/
- Chasing Yield | CCIM Institute
As competition for core properties continues to intensify, office investors have been casting a wider net to move capital off the sidelines and to capture higher returns. The question is, How much risk are buyers willing to assume when the office recovery still has a significant hill to climb?
Nationally, office sales totaled nearly $80 billion in 2012, which is a 23 percent increase over the prior year, according to New York-based Real Capital Analytics. Even after a surge of buying boosted 4Q12 sales alone to $31 billion, 1Q13 posted a respectable $16 billion in sales, which is a slight 2 percent gain compared with 1Q12, according to RCA.
The article is fairly detailed. It will help give you a good sense of what’s going on in the office sector. It doesn’t go into the downsizing issue.
Read the source article … https://www.ccim.com/cire-magazine/artic les/323098/2013/07/chasing-yield
- Tensions Mount in Japan Over Sales Tax – Real Time Economics – WSJ
Tensions are mounting between Prime Minister Shinzo Abe and the Ministry of Finance over how to buffet the economy from the effects of a sales tax increase.
The Bank of Japan and the finance ministry are pushing for the country to raise its sales tax, which is low for a developed country, to help reduce a public debt that is currently over twice the size of the nation’s economy.
But some, including Mr. Abe’s advisers, are reluctant, fearing such action could wipe out gains that monetary and fiscal stimulus policies have made in recent months. The government will make a decision on the sale tax next month.
Japan’s economy grew 3.8% on an annualized basis in the second quarter, beating most other industrialized countries, and helping Japan in its battle to end 15 years of deflation.
Yet consumer confidence has begun to ebb in recent months, as wages have failed to rise with the economy, and some fear a sales-tax rise will further dent confidence.
What Japanese Finance Minister Taro Aso doesn’t seem to understand is that growth increases government revenue without a tax hike. It is also completely correct that the wrong tax hike during a recovery can send an economy back into recession or at least needlessly slow growth. A general sales-tax increase is exactly the type of tax hike that can do that. It can dampen general demand, which is not what you want in your economy during a recovery.
Read the source article … https://blogs.wsj.com/economics/2013/09/ 13/tensions-mount-in-japan-over-sales-ta x/
Here’s an additional link for more background: https://preview.reuters.com/2013/9/13/ja pan-ministers-disagree-on-sales-tax-offs et
- Manufacturing Jobs Returning to U.S. From China, but Not All Will Come Back: ManpowerGroup CEO – China Real Time Report – WSJ
… a new auto factory in the U.S. offering hourly pay of $12 to $14 for entry-level jobs, including benefits. That compares with $7 to $8 in China.
That’s a dramatic change in relative pay from just a few years ago, when similar jobs in the U.S. paid up to $40 per hour. And the trend is accelerating: wage inflation in China has averaged 15% to 18% each year for the past five years, Mr. Joerres said, and it is likely to hit 20% this year as China rebalances its economy toward consumption.
Generally, globalization has been a process of simultaneously lowering US standards and wages while raising standards and wages elsewhere.
How long will it take, if ever, for all the labor in the world (type of work for type of work) to be nearly at the same level, and what will that level be like if/when it happens?
Read the source article … https://blogs.wsj.com/chinarealtime/2013 /09/13/the-rebalancing-of-the-worlds-ma nufacturing-sector/
- What can we learn from Norway’s massive housing bubble? – OC Housing News
Four links above (“Chinese buying “unprecedented” Sydney property | MacroBusiness”) expressed the same warning: foreign investment of hot money causes bubbles that burst, leaving the locals in pain. It’s why the emerging markets were so worried about the Fed tapering, which would have caused even more money to leave their countries.
Of course, the Fed will likely taper at some point, but it just won’t be as dramatic a cut as had been being predicted.
During the 00’s many countries inflated massive housing bubbles. The readers of this blog are well acquainted with the issues surrounding the US housing bubble, but Spain, Great Britain, and Ireland, among others also inflated painfully deflating housing bubbles. Norway inflated a housing bubble during this period, but after a brief pullback, they went on to inflate an even larger and more potentially damaging one.
Read the source article … https://ochousingnews.com/news/what-can- we-learn-from-norways-massive-housing-bu bble