Post: #1

It seems that the entire world is creating money at a very fast pace. It is to the point that it is down right stupid to save a significant amount of cash for a long period of time. No to mention the risk of some type of bail in. We are forced to speculate somewhere. I am not just talking about since 2008 but look at the price increases in general from 2000 to 2010, a lot of basic necessities doubled in price.

Condo buildings are popping up around the world and shooting up in price. I have been looking into buying a condo in South America(gotta park cash somewhere, right?) and I noticed that in a lot of places it's hard to even find decent listings of already build buildings. There are so many in mid or preconsturction.

Out of curiosity I went on to check out apartments in Thailand. Half or more of the apartments for sale are preconstruction, especially apartment buildings on the beach.

Its not just that, there seems to be a little America in every small city in the world now(outside certain places obv). I'm currently in a 3rd tier city(1 mil) in Mexico working and there seems to be a wings restaurant opening every month and condo buildings being thrown up in the new part of town, their version of little America and that is exactly what it looks like.

In English Teacher X he talks about the transformation the Russian city where he lived made in just a few years. Same shit has been happening all over the world. Obv we hear a lot about the Chinese ghost cities.

On the other hand, we now have the internet. It's very easy for retirees or anyone to do some research and find out that a place like Lima, Santiago, Medellin aren't all that dangerous. Or that Pattaya is a retirees disney land.

I'm at a loss. Is there a worldwide bubble? Will these buildings, shopping malls, and restaurants mostly turn into run down ghettos? Or will this stabilize.

What do you guys think?

Post: #2

Like you (and probably anyone who travels) I've found that those second and third tier cities worldwide are now getting condos, Starbucks, wifi, and what you call "little America". Even 10 years ago you would go there and feel like you were in another world, now you can have the same bland but safe experience anywhere. I don't really have a problem with it. People are becoming more mobile and things are flattening out worldwide.

Why would it be a bubble? Of course there is a risk of downturn, even turmoil, but overall the population is growing, money is being made and technology is spreading throughout the world. In 20 years you might be able to retire comfortably in an English speaking zone in Myanmar, Kazakhstan or Kenya the way you can now in Thailand or Costa Rica.

Post: #3

Yes, I think there is a residential property bubble in many countries around the world. For certain reasons many people like to pump what money they have into physical property. And for almost all amateurs that is usually residential rather than commercial property. The problem is that residential property in countries with low property transaction costs is subject to wild swings (i.e bubbles).

Personally I don't really care about this bubble. I specifically don't get involved with residential property as an investment, and as far as I'm concerned having bubbles overheat means that a lot of stuff (i.e. buildings) are built that would not otherwise have been. Since they are (probably) not just going to be knocked down when the bubble bursts the bubble provides physical infrastructure for people that would have taken decades to come into existence in the absence of said bubble. Just don;t be caught with your name on the mortgage. Onward and upward.

Post: #4

This is a great trend, given my long term goal of "internationalization". If the western countries turn into a third world shells of themselves (i.e. gated cities buffered from poverty and crime), why bother staying? Gated city in Kenya is much cheaper than gated city in the USA.

Post: #5

I find it odd when 3rd world countries start undergoing westernization. Higher end shopping malls, starbucks, and what not, but they still keep the similar price points as the rest of the world. Very few can afford, some people who can't do anyways. Drives up the prices in general for everyone.

I'm just freaked out by this High Frequency Trading that's going on. Investments made in microseconds based on trends, it just seems freaky and its all going to crash soon and take everyone down with it. Everything is illusory.

Post: #6

I'm hoping that there is another 2008 style financial crash or geopolitical event that pushes all of those US dollars abroad back to this country. The Fed will have to sell those toxic MBS securities back to the banks to avoid a hyper-inflationary situation.

This being a good thing because it would cause the housing market to crash flat on its face and make homes cheap for everyone again.

Post: #7

Wouldn't be surprised at all to see the world enter and leave bubbles at the same time due to globalization.

Post: #8

(05-06-2014 08:46 PM)Samseau Wrote:  Wouldn't be surprised at all to see the world enter and leave bubbles at the same time due to globalization.

It won't be pretty that's for sure.

Samsaeu, have you looked into inverse and short etfs?

Post: #9

Bad Husser, I think one reason people are flooding into real property is because they dont know what else to do with their money. While a lot people are struggling these days, a lot of others are doing very well. Those of us who are doing well are forced to speculate or park money in places. Its great to be doing so well in rough times but it sucks to feel like we have to speculate on investments.

These "little Americas" arent necessarily a bad thing except it happened to fast IMO. As somebody already said, investments are being made everywhere that shouldnt be being made.

Frenchie, I would also semi welcome a 2008 style crash. The only problem is that it would be a little different. It would really suck to have some sort of bail in done to us in the west or a MF Global on a larger scale.

Post: #10

(05-06-2014 10:24 PM)Jaydublin Wrote:  Bad Husser, I think one reason people are flooding into real property is because they dont know what else to do with their money. While a lot people are struggling these days, a lot of others are doing very well. Those of us who are doing well are forced to speculate or park money in places. Its great to be doing so well in rough times but it sucks to feel like we have to speculate on investments.

These "little Americas" arent necessarily a bad thing except it happened to fast IMO. As somebody already said, investments are being made everywhere that shouldnt be being made.

Frenchie, I would also semi welcome a 2008 style crash. The only problem is that it would be a little different. It would really suck to have some sort of bail in done to us in the west or a MF Global on a larger scale.

Real property is the operative term. Here in Taiwan, they're still throwing up apartment buildings as quickly as they can. It's going to end badly.

Regardless, why would anyone buy an apartment? Buying an apartment rarely entails owning the actual land beneath the apartment building, and even if it did, if you divided it up with the other 80+ apartment owners in the apartment building, you'd be looking at owning a piece of land about the size of a bath mat. That's a very, very expensive piece of land in my opinion. As such, what people really own is the air space between four walls, because that's all an apartment is: four walls, a floor and a ceiling around some air.

This does, of course, lead on to another thought. If all one owns is some air space, and there is plenty of air space, if someone else builds some other walls around some other air (i.e. builds another apartment building, perhaps even taller than one's own), wouldn't that suddenly increase the supply of air space on the market, and thus devalue the existing air space? One of the supposed strong points about owning land is that land is finite in supply. To all intents and purposes, air space is infinite because whilst air space is technically finite, we're not about to run up against that finite limit any time soon.

Building apartments is not unlike running the printing presses, and in my opinion, owning an apartment is not unlike owning paper money to a certain extent (unless you own one in a very good location). An apartment building anywhere else is pretty much worthless, in my opinion, for the reasons stated above, and you can see this played out in the endless skyline of apartment buildings in Asian cities where most of these places aren't going to be worth a damn thing when the crash comes.

Post: #11

(05-06-2014 10:15 PM)frenchie Wrote:  

(05-06-2014 08:46 PM)Samseau Wrote:  Wouldn't be surprised at all to see the world enter and leave bubbles at the same time due to globalization.

It won't be pretty that's for sure.

Samsaeu, have you looked into inverse and short etfs?

I haven't but it's a good idea. DJIA is at all time highs, same with S&P. "This time it's different" - probably not.

Speaking of rents, I've noticed that rents have gone up for 2 years in a row between 2012 and 2014, but they haven't gone up this year. This is in Boston. The "rental boom" is definitely reaching its peak this year. I would be surprised to see rents continue to increase because it's not like people are making any extra money in this economy.

Quote:While a lot people are struggling these days, a lot of others are doing very well. Those of us who are doing well are forced to speculate or park money in places.

Exactly Jay. What good is money if you know shit is gonna crash? Property today could be worth nothing post-crash. It's also bad because there's no way to know if your currency will hold value post-crash. The dollar could be next in line to take a hit or any other currency.

I own silver, I have for years, I bought it back when it was $20 and I have watched it go to $50 and back. Most of my time and effort has been focusing on teaching myself new skills (programming) because those are the only things that hold value through time. A crash can't take away your education but don't confuse an education with a college degree.

Post: #12

(05-07-2014 07:23 AM)Samseau Wrote:  

(05-06-2014 10:15 PM)frenchie Wrote:  

(05-06-2014 08:46 PM)Samseau Wrote:  Wouldn't be surprised at all to see the world enter and leave bubbles at the same time due to globalization.

It won't be pretty that's for sure.

Samsaeu, have you looked into inverse and short etfs?

I haven't but it's a good idea. DJIA is at all time highs, same with S&P. "This time it's different" - probably not.

Speaking of rents, I've noticed that rents have gone up for 2 years in a row between 2012 and 2014, but they haven't gone up this year. This is in Boston. The "rental boom" is definitely reaching its peak this year. I would be surprised to see rents continue to increase because it's not like people are making any extra money in this economy.

Quote:While a lot people are struggling these days, a lot of others are doing very well. Those of us who are doing well are forced to speculate or park money in places.

Exactly Jay. What good is money if you know shit is gonna crash? Property today could be worth nothing post-crash. It's also bad because there's no way to know if your currency will hold value post-crash. The dollar could be next in line to take a hit or any other currency.

I own silver, I have for years, I bought it back when it was $20 and I have watched it go to $50 and back. Most of my time and effort has been focusing on teaching myself new skills (programming) because those are the only things that hold value through time. A crash can't take away your education but don't confuse an education with a college degree.

You're in Boston? Dang man me too. I pay way too much in rent for this town. Boston's great, but my rent rivals that of apartments in Los Angeles and Miami. This town is definitely not worth the sticker price for rent.

Something has to give soon.

Post: #13

When population booms are young, you face high inflation. When population booms are old, you face low inflation.

Taking out loans now is cheap because of low inflation ...because of the older baby boom in the us. Whole lot of speculation construction being done.

The game changer is residential housing construction has remained on site, labor intensive, and resistant to technology advance to decrease cost. When 3 printing and drones/bots get into constructing buildings fast, it will be destabilize market prices. Current costs are still at $8 US per cubic inch, so we're looking at 50 years out still.

But in the future, yes trends and whim will drive residential. "Have Justin Biebe's custom house" will just be going on vacation for a week and letting bots do the work. And it'll cost around a month's average salary.

Post: #14

(05-07-2014 01:12 AM)Feisbook Control Wrote:  

(05-06-2014 10:24 PM)Jaydublin Wrote:  Bad Husser, I think one reason people are flooding into real property is because they dont know what else to do with their money. While a lot people are struggling these days, a lot of others are doing very well. Those of us who are doing well are forced to speculate or park money in places. Its great to be doing so well in rough times but it sucks to feel like we have to speculate on investments.

These "little Americas" arent necessarily a bad thing except it happened to fast IMO. As somebody already said, investments are being made everywhere that shouldnt be being made.

Frenchie, I would also semi welcome a 2008 style crash. The only problem is that it would be a little different. It would really suck to have some sort of bail in done to us in the west or a MF Global on a larger scale.

Real property is the operative term. Here in Taiwan, they're still throwing up apartment buildings as quickly as they can. It's going to end badly.

Regardless, why would anyone buy an apartment? Buying an apartment rarely entails owning the actual land beneath the apartment building, and even if it did, if you divided it up with the other 80+ apartment owners in the apartment building, you'd be looking at owning a piece of land about the size of a bath mat. That's a very, very expensive piece of land in my opinion. As such, what people really own is the air space between four walls, because that's all an apartment is: four walls, a floor and a ceiling around some air.

This does, of course, lead on to another thought. If all one owns is some air space, and there is plenty of air space, if someone else builds some other walls around some other air (i.e. builds another apartment building, perhaps even taller than one's own), wouldn't that suddenly increase the supply of air space on the market, and thus devalue the existing air space? One of the supposed strong points about owning land is that land is finite in supply. To all intents and purposes, air space is infinite because whilst air space is technically finite, we're not about to run up against that finite limit any time soon.

Building apartments is not unlike running the printing presses, and in my opinion, owning an apartment is not unlike owning paper money to a certain extent (unless you own one in a very good location). An apartment building anywhere else is pretty much worthless, in my opinion, for the reasons stated above, and you can see this played out in the endless skyline of apartment buildings in Asian cities where most of these places aren't going to be worth a damn thing when the crash comes.

I completely agree that this is going to end badly and I saw the same thing when I searched apartments in Thailand as you are talking about in Taiwan. South America seems to be bad as well, though not nearly as bad.

But I wouldnt go so far as to say a nice condo downtown in a nice city is worthless. People will be moving back into the cities as energy prices climb as well as some people just enjoy living in the city.

There are plenty of good reasons to own a nice high rise, maybe it not best to buy now but generally speaking.

I am curious as to how they are financed in Asia. In a decent portion of South America it is a little difficult to finance and when possible it requires a very large down payment.

Shitty scenario..... buy a penthouse condo in Lima(definitely in a bubble),things go to shit, the elevator breaks, nobody will fix it and you have to walk 15 flights of stairs to your condo.

Post: #15

(05-07-2014 08:44 AM)Blackhawk Wrote:  When population booms are young, you face high inflation. When population booms are old, you face low inflation.

Taking out loans now is cheap because of low inflation ...because of the older baby boom in the us. Whole lot of speculation construction being done.

The game changer is residential housing construction has remained on site, labor intensive, and resistant to technology advance to decrease cost. When 3 printing and drones/bots get into constructing buildings fast, it will be destabilize market prices. Current costs are still at $8 US per cubic inch, so we're looking at 50 years out still.

But in the future, yes trends and whim will drive residential. "Have Justin Biebe's custom house" will just be going on vacation for a week and letting bots do the work. And it'll cost around a month's average salary.

The bigger game changer is declining population among the affluent. Sure population is exploding among the poor but the poor do not buy houses.

It is obvious that the housing market in the US is set to crash (again). So fucking dumb... the government is slow to learn.

Post: #16

(05-07-2014 09:43 AM)Samseau Wrote:  

(05-07-2014 08:44 AM)Blackhawk Wrote:  When population booms are young, you face high inflation. When population booms are old, you face low inflation.

Taking out loans now is cheap because of low inflation ...because of the older baby boom in the us. Whole lot of speculation construction being done.

The game changer is residential housing construction has remained on site, labor intensive, and resistant to technology advance to decrease cost. When 3 printing and drones/bots get into constructing buildings fast, it will be destabilize market prices. Current costs are still at $8 US per cubic inch, so we're looking at 50 years out still.

But in the future, yes trends and whim will drive residential. "Have Justin Biebe's custom house" will just be going on vacation for a week and letting bots do the work. And it'll cost around a month's average salary.

The bigger game changer is declining population among the affluent. Sure population is exploding among the poor but the poor do not buy houses.

It is obvious that the housing market in the US is set to crash (again). So fucking dumb... the government is slow to learn.

Yes but I guess there will be an incease in one-person households as well. So houses that are too big might become obsolete.

Post: #17

Probably the housing market will be taken over by institutional investors who then rent the properties out.

The government will do everything it can to prop up housing.

Post: #18

Yes, due to too much government manipulation. There are basically zero low-risk investments and with no interest rates, one who wants to invest is being pushed into stocks and housing, which are always risky. Also, America's deflationary forces via slow economic recovery and inflationary forces via massive money printing is a huge bubble, along with the credit bubble in China. Gonna be interesting to see what happens in next couple of years

Post: #19

Speaking of Bubble:

http://online.wsj.com/news/articles/SB10...3419741570

Quote:Developers Turn Former Office Buildings Into High-End Apartments

Lol, people are losing jobs, better make them into apartment buildings so you can make money off of rents!!!

lawl...

Post: #20

Guess what - I'm starting to see "property investment seminar" adverts in the local London newspaper. So yes we're approaching the peak of the current boom, but it might have a few more years left in it yet. I'd say we're back in 1986, and that boom lasted right through till '89.

Post: #21

(05-07-2014 09:21 AM)Jaydublin Wrote:  I completely agree that this is going to end badly and I saw the same thing when I searched apartments in Thailand as you are talking about in Taiwan. South America seems to be bad as well, though not nearly as bad.

But I wouldnt go so far as to say a nice condo downtown in a nice city is worthless. People will be moving back into the cities as energy prices climb as well as some people just enjoy living in the city.

There are plenty of good reasons to own a nice high rise, maybe it not best to buy now but generally speaking.

I am curious as to how they are financed in Asia. In a decent portion of South America it is a little difficult to finance and when possible it requires a very large down payment.

Shitty scenario..... buy a penthouse condo in Lima(definitely in a bubble),things go to shit, the elevator breaks, nobody will fix it and you have to walk 15 flights of stairs to your condo.

It's probably different in every Asian country to an extent. The one constant would be family aid. In Taiwan, it's 20% or 30% down, which is usually funded by the parents (kids can't afford that). That also allows the parents to hold the puppet strings, which is big in Confucian culture. Rich families outright buy their kids apartments.

In Taiwan, interest rates are ~3% p.a. Mortgages are very frequently 10x income or more. Supposedly, 16x is not unheard of. Rent to buy is completely out of line. It would supposedly take 60+ years of rent to pay off the average place here. It is one of the worst bubbles in the world, apparently. It's very important to buy an apartment when people get married here. That pressure comes from the parents, but they also end up having to finance it. That is a large part of what is driving the bubble too. Combine all of that with a declining and ageing population, and all signs point to an utter bloodbath in a few years. The trouble is that everyone has been saying this for years. It will happen, but when? The longer it lasts, the worse it will be. There's tons of dodgy money in Taiwan and people with deep pockets propping things up. There's also hope that Chinese will prop things up, but they have their own bubble, but still, there are some deep pockets there, too. It can't go on forever though.

My point was not that all apartments are worthless. An apartment overlooking Central Park in Manhattan is never going to go out of style. Something on a nice beach front is never going to go out of style. The trouble is though, that you can go from central Taipei for 30km south to Taoyuan, and then the same or more again to Xinzhu (Hsinchu), and it's literally an endless sea of this crap. It's one of the most densely populated parts of the world. It's just row after row after row of apartment blocks, punctuated by some lower rise stuff occasionally (never less than three levels except out in the sticks) and very occasionally some farms, but those are all being rezoned. There is absolutely nothing to distinguish one ugly grey tower from another ugly grey tower. People in those ugly grey towers look out their windows and guess what they see? Another person looking out the window of his ugly grey tower right at them. That's what they get for their blood that will soon be flowing on the streets. Tragic.

I try to tell people not to get caught up in this, but as mentioned above, there is a lot of pressure to buy a place when getting married, so it falls on deaf ears.

Post: #22

(05-07-2014 08:14 AM)frenchie Wrote:  

(05-07-2014 07:23 AM)Samseau Wrote:  

(05-06-2014 10:15 PM)frenchie Wrote:  

(05-06-2014 08:46 PM)Samseau Wrote:  Wouldn't be surprised at all to see the world enter and leave bubbles at the same time due to globalization.

It won't be pretty that's for sure.

Samsaeu, have you looked into inverse and short etfs?

I haven't but it's a good idea. DJIA is at all time highs, same with S&P. "This time it's different" - probably not.

Speaking of rents, I've noticed that rents have gone up for 2 years in a row between 2012 and 2014, but they haven't gone up this year. This is in Boston. The "rental boom" is definitely reaching its peak this year. I would be surprised to see rents continue to increase because it's not like people are making any extra money in this economy.

Quote:While a lot people are struggling these days, a lot of others are doing very well. Those of us who are doing well are forced to speculate or park money in places.

Exactly Jay. What good is money if you know shit is gonna crash? Property today could be worth nothing post-crash. It's also bad because there's no way to know if your currency will hold value post-crash. The dollar could be next in line to take a hit or any other currency.

I own silver, I have for years, I bought it back when it was $20 and I have watched it go to $50 and back. Most of my time and effort has been focusing on teaching myself new skills (programming) because those are the only things that hold value through time. A crash can't take away your education but don't confuse an education with a college degree.

You're in Boston? Dang man me too. I pay way too much in rent for this town. Boston's great, but my rent rivals that of apartments in Los Angeles and Miami. This town is definitely not worth the sticker price for rent.

Something has to give soon.

Pro-tip: Move to Somerville/Malden/Medford (anywhere along the orange line). Much higher bang for your buck.

Post: #23

"Pro-tip: Move to Somerville/Malden/Medford (anywhere along the orange line). Much higher bang for your buck."

Boston burbs: I'd add that you should try to find a place within walking distance of the T. I have friends who lived a short bus ride from Malden Center - the buses in the boonies run only like once an hour in off peak hours. You won't enjoy the cold late night walks in the winter and spending cash on taxi rides will eat up your real estate savings.

Also, Malden lacks night life and young women, and a car is a big help, unlike more central locations. Can't speak to Medford.

Somerville - you'll want to look early or try to move with friends to lock down an entire place, good location and good price are tough to find outside of beginning of school year. My friend lucked out with a landlord who has multiple properties, so he was able to pick and choose. Feel free to reach out.

Post: #24

(05-07-2014 06:19 PM)polar Wrote:  You won't enjoy the cold late night walks in the winter and spending cash on taxi rides will eat up your real estate savings.

Use lyft/uberx.

Post: #25

(05-07-2014 11:41 AM)mastauser Wrote:  Yes but I guess there will be an incease in one-person households as well. So houses that are too big might become obsolete.

This is one of the points that makes me think some cities will be ok. Some obviously are going to have a huge problem on their hands, especially in Asia. But some others should be able to survive with all of these 400-800 ft2 apartments.