Tag Archives: Investing

China’s Real Estate Market on the Decline (Bubble Burst there?)

Beijing Financial Street - overall

Image via Wikipedia

Sure looks like it.  I can’t say that I have followed the China Real Estate Market very close (and I don’t intend to either…), but I think this is interesting…  Mainly because the possible size and scope.

I don’t think this will have any impact on our market unless of course it is large enough to create global economic troubles, and if that is the case then all markets will be effected..   

China’s overheated real estate market is showing signs of correction. With a glut of overpriced, vacant residential real estate on their hands, many large developers in Beijing have been offering steep discounts recently, even 60 percent. But the developers may be taking a hard hit, Chinese experts say, as they are sitting on a mountain of debt, according to a recent report.

The mid-term report of China’s 98 real estate development companies that are listed on the stock market showed that they have an average debt to equity ratio of 62 percent–with 40 of them exceeding 70 percent–and a total combined debt of 1.01 trillion yuan (US$158.3 billion), far exceeding their revenue growth.

Read Full Article from Epoch Times

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Commercial real estate outlook turns grim

This is good update on the commercial real estate market on a national outlook.  It is funny that the Municipalities and State are looking to shift more property tax burden on the Commercial Real Estate that happens to be struggling worse than residential.  I don’t think that will help anyone out…

Just as the commercial real estate sector showed signs of recovery, analysts now forecast a renewed struggle as the economy slumps.

Financial advisory firm Deloitte said in a report Thursday modest GDP growth, still high unemployment and weakened housing demand delayed a full-fledged commercial real estate recovery. Nearly $1.7 trillion in CRE loans will come due between 2011 and 2015. According to Deloitte, 60% of these loans are underwater, making it difficult for tenants to refinance and extend their terms.

This strategy of “extend and pretend” may be waning as workouts faded in the first quarter of 2011 and new commercial REO showed an uptick (see chart below).



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Commercial Real Estate Market compared to Residential (case shiller)

This is a great visualization from calculatedrisk blog.  The commercial real estate market is tracking about 18 months behind residential.  Commercial Property Price Index vs. Case Shiller.  So what my question is:  In order for the Residential Market to recover, we need jobs. The primary purpose of Commercial property is commerce aka Jobs.    So which market will recover first?  Residential or Commercial??   Thoughts?

Also another question comes to mind – had we not interfered with the residential market (government intervention) would the Case Shiller index bottomed out like the CPPI?  Was it really worth it?

CPPI vs. Case Shiller (calculatedrisk blog)


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Mortgage Delequincies falling (S&P Experian reports)

There is some good news that we will hopefully begin feeling in the real estate market.  The default index is dropping on first and second mortgages despite high unemployment rates, reported by S&P Experian.

S&P Experien Default Index

This is Nationally, so hopefully our market place is tracking similar or better.  Could this be a sign the worst of the foreclosures is behind us?  Or is this too early to judge if this is just a temporary lull?


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Time to buy rental properties?

After looking at the stock market crash, this is really looking to me like the safest place to put money right now…

Buy some homes for rental properties.  (on the right column – use my spreadsheets to analyze rental properties to see if the investment makes sense for you.)

Star Tribune Article on rental vacancy


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