Tuesday May 30 2017 Housing and Economic stories

TOP STORIES:            

All Heck Breaks Loose in Toronto’s House Price Bubble - (www.wolfstreet.com) During the first two weeks in May, according to preliminary data from Toronto Real Estate Board, home listings surged 47% from the same period last year even as sales plunged 16%. The average selling price dropped 3.3% from April – and this, after a 33% year-over-year spike in home prices in March and a 25% surge in April. Something is happening to Toronto’s blistering house price bubble. Canada’s largest alternative mortgage lender, Home Capital Group, which focuses on new immigrants and subprime borrowers turned down by the banks, is melting down after a run on its deposits that crushed its funding sources. The industry is worried about contagion. At the same time, the provincial government of Ontario announced a slew of drastic measures, including a 15% tax on purchases by non-resident foreign investors to tamp down on the housing market insanity that left many locals unable to buy even a modest home.

NYC Landlords Slash Retail  Rents to Ward Off Vacancies - (www.jewishvoiceny.com) The poshest parts of Bleecker Street between Seventh Avenue and Hudson Street have fared the worst of all the Manhattan markets. Rents there tumbled 27 percent from $513 per foot to $373 per foot since last spring, and nine vacancies remain. On Broadway in the Flatiron, rents dropped 22 percent to $348 per foot, a decline that served to fill most of the vacancies. Rents also fell 18 percent in both Herald Square and the now less-pricey Times Square to $734 and $1,930 per foot, respectively. In Tony Madison Avenue between 57th and 72nd Streets building owners lowered the asking rents by 12 percent to $1,446 per foot, down from $1,644 last spring. Nonetheless, there are still 33 vacancies in this area.

70% Of Millennials Have Less Than $1,000 Saved For Buying A House - (www.zerohedge.com)  A new survey has revealed that despite almost every millennial dreaming of home ownership, nearly 70% of young American adults have saved less than $1,000 for a down payment. One of the frequent reasons cited for the failure of the US housing sector to rebound to its pre-recession levels, is the lack of household formation among young American adults and specifically the unwillingness, or inability, of Millennials, which last year overtook Baby Boomers as America's largest generation... ... to move out of their parents' basement, or stop renting, and purchase their own home. Now, a new study from Apartment List confirms the underlying problem: nearly 70% of young American adults, those aged 18 to 34 years old, said they have saved less than $1,000 for a down payment. This is similar to what a recent GoBanking Survey found last year, according to which 72% of "young millennials"- those between 18 and 24 years old - had $1,000 in their savings accounts and 31% have $0; a sliver (8%) have over $10,000 saved. Of the "older millennials", those between 25 and 34, 67% had less than $1,000 in their savings accounts, 33% have nothing at all, and 15% have over $10,000.

China's Rating Cut Exposes Companies Hooked on Dollar Borrowing - (www.bloomberg.com) China’s first credit rating downgrade by Moody’s Investors Service since 1989 couldn’t have come at a worse time for the nation’s companies, which have never been more reliant on the overseas bond market for funding. While Chinese companies’ foreign-currency debt is only a fraction of the $9 trillion local bond market, China Inc. is on pace for record dollar bond sales this year after the authorities’ crackdown on financial leverage drove up borrowing costs at home. Overseas borrowing has also been part of the government’s strategy to encourage capital inflows in a bid to ease the depreciation pressure on the yuan.

Warning Signs Flashing in Korea as Investors Dump Stock ETFs - (www.bloomberg.com) Cracks are emerging in South Korea’s stock market, which has been showing remarkable resilience to a range of pressures, not least tension with the North. Global investors have pulled $2.17 billion from equity exchange-traded funds focused on South Korea this year, even as those securities have returned 12 percent on average, according to data compiled by Bloomberg. About half the outflows are from the Samsung Kodex 200 Securities ETF, which aims to closely track the Kospi 200 Index. Net outflows from the fund total $1.15 billion in 2017 even though it’s posted a 16 percent gain. That’s the most outflows for any Asia Pacific ETF this year and more than double the next closest fund, the data show.

OTHER STORIES:

Shanghai’s Financial Center Was a Swamp Last Time Moody’s Cut China’s Rating - (www.bloomberg.com)
S&P's Famous FANG Trade Has Nothing on Chinese Four-Stock Frenzy - (www.bloomberg.com)
Fed Sounds Cautious Note but Doesn’t Deter Forecast of Rate Increase - (www.nytimes.com)

China’s Addiction to Debt Now Threatens Its Growth - (www.nytimes.com)
Moody’s Serves Warning to China - (www.wsj.com)
CBO Report on Health Bill: What It Is and Why It Matters - (www.wsj.com)