Unexplained property price increases

Here in Melbourne Australia. During a pandemic all of a sudden whist thousands have lost jobs, in my line of work many of my clients are in financial dire straits.

This sudden property demand makes no apparent sense. Granted people are of able to travel Though spending on line shopping has increased, though what would explain why during a pandemic median house prices now average a million dollars.

My theory as the crown casino was shut down for a long time criminal syndicates can’t launder their I’ll gotten monies.

So how do we not know that criminal syndicates aren’t targeting every day joes to help them buy up property to launder the syndicates money, it’s simple have a pleb buy property in their name syndicate funds it. Pays the purchaser a few thousand to buy the house. The after six to twelve months the syndicate has the pleb sell the property and takes the total and pockets the capital gain.

Easy way to launder money, and falsely jack up house prices.

a reply to: robsmith

It's happening all over the world. People living in small apartments have cabin fever and want bigger places to live with proper gardens after having spent so long cramped up in doors. This demand is pushing up prices.

Also people want bigger places with home offices so that they can telecommute. Which is also pushing up prices.

Basically, the people who can afford it are now upgrading.

It can actually cheaper to get a mortgage on a house in the burbs than it is to rent an apartment in a city.

It is a combination of factors that has little to do with income, but a lot to do with supply and demand.

The pandemic put a lot of people into a holding pattern where they didn't want to make a move, so those that needed to buy or really wanted to and had the means had to compete over a much smaller inventory. This led to lots of multiple offer situations where the trend drove prices up.

Another factor was lumber availability and prices. The cost and time-frame of building became a problem for many where it wasn't before, so they turned to existing homes thus further increasing the demand in an already low-inventory market.

Additionally, the artificially-raised prices in the market have now trigger some of the hold-outs to cash-in in the increased equity of their home. Some have decided they can live anywhere now that the work from home, and the market is beginning to open up in some areas but with the inflated prices still in effect.

There is another factor in some areas where due to the freedoms they allowed by not locking down (Florida in the US etc) they were very attractive to those in places with strict lockdowns (which traditionally also had high home values) and they further drove demand in the "free" market.

It's complex and not just one factor, but covid is a big factor behind it all

My gut tells me that thing will open up and people will begin to flood the inventory a bit and the damage to the economy that has been forced on people and propped up with toothpicks will correct some of this, but who knows. Its 2021 after all.

a reply to: robsmith

Not that easy.
If an 'ordinary joe' suddenly buys a million dollar house you can be sure as sh1t that the authorities will be sniffing around his sudden wealth. He will have to show where the money came from.
These days countries go after crimes exactly like you mentioned for money laundering.

So no, thats not the reason for sudden price increases.

a reply to: AaarghZombies
Agreed there are places where a mortgage is cheaper than renting. Though could this be a potential influence due to the CCP influencing property prices with the expectation the belt and road initiative,and possibly having their agents inflate prices just like a stock market crash.
Can
The ccp appear to fo all they can to crush their enemies, and with the BRI being scrapped how do we not know they will take a hit to cause a property market crash.

Not much mystery behind this phenomenon, at least here in the US (there might more strangeness and mystery to this in other areas).

It's attributable to what AarghZombies said. The pandemic put the fear of God into the masses, terrified them, frightened them, however you want to say it, and most especially those living in large urban areas.

There was a point last year, IIRC, where there was talk/rumors of quarantining some urban areas like NYC. Seemed like the most draconian and ridiculous thing imaginable (it would take even a larger force than the 20k security detail assigned to D.C. recently), and it'd be virtually impossible to restrict all movement in/out. But I distinctly remember there being news reports, something to the effect of "no plans for quarantining NYC (for now)". I think the possibility of being locked inside of an urban area in the midst of virulent disease outbreak terrified many people, and woke them the F up.

Oh, and there was also just that minor detail of "mostly peaceful burning, looting, pillaging, mob-fueled pandemonium" that swept across nearly every large city in the country. As if people didn't have enough incentive to move out of cities. The BLM/Antifa crime wave last year was the final nail in the coffin for many who'd been on the fence about continuing to live in large urban areas.

So what happened next? At least here in metro NYC, as 2020 progressed, the gates opened up, and those with any ability to relocate and had geographic mobility, high tailed it out of town.

Living here in Connecticut, the increases in NY and NJ license plates moving about our town is staggering. We've had a huge influx of people moving here from the 5 boroughs, Northern NJ and Westchester county. Anecdotally, our little league had record enrollment at certain age groups this year, and if I'm understanding right, the number of teams in one of the younger age divisions nearly doubled from like 5-6 to 10. So record turnout in the midst of a pandemic. That tells me that there was a huge increase in net population of 8-12 year olds in this area.

So once you come to terms with this demographic shift (people exiting big cities en masse), it then becomes a simple matter of supply and demand. Around here, new home construction is pretty stable/slow, but the folk looking to move here dramatically increased. Free market economics at work: house prices blew up.

I would hazard a guess the crims choose areas where the socio economic incomes are better to potentially recruit purchasers who are on higher incomes to appear they have servicibilty on a loan, have the pleb apply for finance
Go make the activity appear legal, then have the sell the property after 12 months. Who wants to be on the wrong side of triads or the Albanian mafia.

I would hazard a guess the crims choose areas where the socio economic incomes are better to potentially recruit purchasers who are on higher incomes to appear they have servicibilty on a loan, have the pleb apply for finance
Go make the activity appear legal, then have the sell the property after 12 months. Who wants to be on the wrong side of triads or the Albanian mafia.

a reply to: robsmith
Same thing everywhere in America. If you look into the groups buying the houses you will find a money trail back to China. Until China is kicked out of the western world they will continue to sow chaos

a reply to: robsmith

I live right outside NYC, we've had an influx of people from the city moving in since last April, properties are going above the asking price and only staying on the market for a week or two tops.

This is about one of the most explainable phenomena there is, it's called 'supply and demand'.

I think all cities around the world need to move away from the hub and spoke system. A positive of the pandemic is flexibility to allow people to work from home, and reduce transit times.

We need business hubs in the outer suburbs though possibly duplicated east to west south to east, though the benefits to work life balance would be if it staff reducing travel times.

How would you feel just travelling 20 minutes instead of a hour to work.

This right here people just want out of the box. They are starting to value their space.
a reply to: AaarghZombies

Canada’s housing market too. Everyone wants out or the cities, or if they’re in the country, they want back in the city.
There’s not enough houses, building materials are 3 times what they were last year.

Canada has a thing of sorts set in to prevent foreign buyers from buying from across the ocean. We had those issues with China buying up houses decades ago, so this has nothing to do with them.

Low interest rates and people are bored, want space. Want different than what they had. There’s bidding wars going on and houses are selling for way way more than they’re worth. Some hundreds of thousands over value.

Strangely I live 30 kilometres from Melbourne, and agreeed old units 2 bedroom like built in the 1970s selling for 550 thousand and needing renovation of another 30 thousand. In a crap suburb is really odd. In my suburb houses are often selling in a week or two.

a reply to: robsmith

About the same distance for me from NYC so it's very relative.

interest rates are really low here. Sadly as you say people want more space though pay the minimum mortgage payment, though when rates increase many will screw themselves when rates go up. How do we not know this is a long term plan by aforeign actor to financially ruin a country to walk in and buy for fire sale prices.

originally posted by: robsmith
How do we not know this is a long term plan by aforeign actor to financially ruin a country to walk in and buy for fire sale prices.

If your new neighbors are a bunch of foreigners then you know.

Lol they are mostly from the Middle East. not many agents in my area.

originally posted by: AugustusMasonicus
a reply to: robsmith

I live right outside NYC, we've had an influx of people from the city moving in since last April, properties are going above the asking price and only staying on the market for a week or two tops.

This is about one of the most explainable phenomena there is, it's called 'supply and demand'.

My aunt flips houses up there and she's making bank. About a year ago I thought about going up there to get a piece of the action, but man I cannot stand that whole area.

originally posted by: AutomateThis1
My aunt flips houses up there and she's making bank. About a year ago I thought about going up there to get a piece of the action, but man I cannot stand that whole area.

It's not that bad, I'm no more than an hour from everything, beach, city, country, sacrificial altars, you know, all the good stuff.