As the old saying goes, “there are lies, damn lies, statistics and the inane musings of The Speculator” but given the current global climate, it’s tempting to make a few dangerous extrapolations from the Devonport housing market stats for 2011.
There has been one consistent trend for the entire year; not only are those selling more expensive properties in more exclusive parts of Devo generally taking bigger hits on their prices than those in up and coming areas, these properties are still actually taking longer to sell on average than those in the less salubrious areas.
This trend continued into December, with one interesting additional observation to be made; more expensive properties sold faster than they had for several months, but demonstrated no concomitant increase in price versus RV margins. In fact, these property’s margins went backwards, by -2%. That is, owners in this segment look to be taking bigger hits to get rid of their properties faster.
Has the dastardly demon of de-leverage finally come to town?
Now, as a phenomenologist from way back, The Speculator is loath to turn abstract stats into stories, but this is a story that a crude analyst could view within the context of the global debt crisis with some concern. They might even employ such clichés as “rats leaving the sinking ship” etc. However, as an analyst of considerably more pedigree, The Speculator (damn, I wish I hadn’t picked that name sometimes) would be highly adverse to even contemplate such a conclusion.
Nevertheless, those selling in the more exclusive areas within Devonport took some big hits – some in the 20 to 30% range would you believe it, although there were some special circumstances around at least one of these sales. Going back twelve months, properties in this segment have on average sold for around 1% more than their RV, with the vast majority selling under RV. It’s only a couple of big, profitable sales that has turned the overall picture around.
Meanwhile, those properties north of the golf course and south of Old Lake Rd showed modest growth of 4%, while the Devonport sweet spot – those properties south of the golf course and sub-million – showed 8% growth. Also, only four properties in this latter area sold, suggesting supply and demand is working very nicely in favour for these owners.
The next big step in the unfolding Euro crisis will occur March 20th , when a large chunk of Greek debt comes due. Greece’s private creditors are refusing to take more than about a number 4 haircut on their loans, although it doesn’t matter how much Greece cuts their debt… they would still have a ballooning deficit, because they don’t have enough revenue to pay the bills.
If you’re sick of hearing words of a non-specific nature used to describe what happens next – “contagion” etc , which is really the commentator’s way of saying s/he doesn’t really understand the actual details of what will follow, here is a pithy little quote that might provide you with an er, better idea.
“Then there are credit default swaps on sovereign debt that banks own, that are hedged against loss because of other CDSs that they sold short to other banks, who have hedged against loss because THEY sold other CDSs to other banks and so on. It’s a matter of one little Christmas light bulb going out to shut down the whole chain.” Christopher Rowe, III
Thank goodness Christmas has come and gone; we should be alright.