How To Pick The Right House For Your Needs?

When choosing the right house for your needs in the Philippines, there are several important factors to consider. Here is a step-by-step guide to help you in the process:

1. Determine your budget: Before you start looking for a house, establish a realistic budget. Consider your current financial situation, including your income, savings, and potential loan options. This will help you narrow down your choices and prevent you from overspending.

2. Identify your needs and priorities: Make a list of your requirements and preferences. Consider factors such as the size of the house, number of bedrooms and bathrooms, location, proximity to schools or workplaces, access to amenities, and any specific features or amenities you desire.

3. Research locations: Research different areas in the Philippines to find the one that best suits your lifestyle and needs. Consider factors such as safety, proximity to essential facilities (schools, hospitals, markets), transportation options, and the overall quality of the neighborhood.

4. Choose the right type of house: Decide whether you want to buy a new house, a pre-owned house, or consider building your own. Each option has its pros and cons, so carefully evaluate your preferences, budget, and timeline.

5. Engage a real estate agent: Consider hiring a reputable real estate agent who has extensive knowledge of the local market. They can provide valuable insights, help you find suitable properties, negotiate deals, and guide you through the entire buying process.

6. Visit potential properties: Once you have a list of potential houses, schedule visits to physically inspect each property. Pay attention to the condition of the house, structural integrity, any repairs or renovations required, natural lighting, ventilation, and overall suitability to your needs.

7. Consider future growth and development: Evaluate the potential for future growth and development in the surrounding area. This can affect property values and your quality of life in the long run.

8. Assess the neighborhood: Take time to explore the neighborhood during different times of the day. Look for factors such as noise levels, safety, cleanliness, access to public transportation, and the availability of essential amenities like grocery stores, parks, and recreational facilities.

9. Review the legal aspects: Before making a final decision, review the legal aspects of the property. Verify the title, ownership documents, and any legal restrictions or encumbrances associated with the property. Consult with a lawyer or a trusted professional to ensure a smooth and secure transaction.

10. Compare and make an informed decision: Finally, compare all the information you have gathered and evaluate each property based on your needs, priorities, budget, and other relevant factors. Make an informed decision that aligns with your long-term goals and aspirations.

Remember, choosing the right house is a significant decision, so take your time, conduct thorough research, and seek professional guidance when necessary.

Source: Ziggurat Real Estate Sales

US Housing Is Having a Bedroom Boom

Of the just over a million new single-family houses completed in the US last year, 4,900,000 had four or more bedrooms. That worked out to a 48% share, the highest

since the US Census Bureau started keeping track in 1973— and more than double the percentage in 1973. This might seem a little perverse in a country where almost two-thirds of households now consist of one or two people, and only 21% of four or more.

But there are explanations.

One is that apartments in the US have headed in the opposite direction, with 52% of multifamily units completed in 2022 consisting of one-bedrooms or studios, the highest

percentage since that data series started in 1978. Another is that a lot of those extra bedrooms in new single-family houses aren’t really intended for people to sleep in.

The rise of remote and hybrid work—recent survey results from WFH Research indicate that close to 30% of paid full workdays in the US are being worked from home this year, up from around 5% in 2019—is making home workspaces with doors you can close much more important.

Eighty-eight percent of builders in a National Association of Home Builders survey said demand for home office increased during the pandemic, and 72 % said a home office was a “likely” feature in a typical 2023 new home, on a par with granite countertops.

It’s not that new houses have been getting bigger. While the median floor area of new single-family houses rose slightly in 2022, to 2,299 square feet, it’s still below pre- pandemic levels, and quarterly statistics on housing starts indicate that it will fall in 2023. But the uses to which that space is put are changing.

Source: Bloomberg

China’s Economy Faces Even Bigger Housing Crisis

Two years after Evergrande’s fall, distressed property giant Country Garden threatens to create worse problems

China’s giant housing industry is lurching into a new crisis that threatens to be the country’s worst yet. Two years ago, the debt-laden developer China Evergrande Group spiraled into insolvency, bursting the country’s real-estate bubble and setting off a chain of developer defaults and business losses.

The industry’s troubles have dragged down China’s economy. Now China’s largest privately run property developer, Country Garden, is struggling to survive. Unlike Evergrande, which was brought down by its profligate habits, Country Garden’s troubles come from the retreat of investors and home buyers from the industry.

Its financial distress could create far bigger problems for the economy and policy makers than Evergrande’s debt default in 2021. Country Garden focused much of its enormous footprint on rural cities and industrial zones, which were an engine of China’s growth in good times.

Those areas are now wrestling with strained government finances and an accelerating exodus of residents, leav- ing them less able to absorb the fallout from a large developer’s failure.

China’s economy is also sputtering on many fronts after a short-lived rebound from its post-Covid reopening earlier this year.

Economists predict the housing industry’s problems will deal another big hit to consumer confidence and prolong what has already been a protracted property-sector downturn.

Real estate and related industries contribute roughly a quarter of China’s gross domestic product. “The whole industry is in trouble,” said Kenneth Rogoff, an economics professor at Harvard University, adding that the problems are particularly severe in smaller and medium size cities.

Years of overbuilding have resulted in a huge oversupply of homes, and there will need to be an adjustment in the property market, he added. “How do you prevent the Chinese population from going into a panic mode since most of its wealth might collapse? It’s not easy,” Rogoff said.

Record loss

As of June 30, Country Garden was involved in more than 3,000 property projects encompassing millions of homes. It carried the equivalent of $186 billion in liabilities, including homes it sold but hasn’t delivered, money owed to suppliers, bank debt and bonds. Most of those obligations come due within a year.

The company reported a record first-half loss topping $7 billion after writing down the value of some of its property developments and other assets. Last month, the developer missed $22.5 million in interest payments on two U.S. dollar bonds, but scraped together enough cash before the end of a 30-day grace period to avoid defaulting.

Country Garden’s creditors in mainland China granted it payment extensions on some of its yuan-denominated debt, helping the developer buy time to resolve its liquidity problems.

Country Garden’s contracted sales of new homes in August fell 70% from a year earlier, to the equivalent of $1.1 billion. Without a rebound in sales, the developer will likely slide into default, analysts say.

Country Garden was founded in the 1990s by Yeung Kwok Keung, 68 years old, who grew up in a family of eight siblings in a village in China’s southern Guangdong province. A small house made of bricks, with tree trunks on top of the walls holding up a metal roof, sits at the company’s headquarters— a life-size replica of its original office.

A nearby sign reads: “Without a strong China, today’s Country Garden would not exist.” By the mid 2000s, the company was building residential projects that included townhouses, apartment buildings and mixed-use developments across the country.

It also owned and operated hotels. Yeung retired in March. His daughter, 41-year-old Yang Huiyan, is the company’s chair. Country Garden expanded over the years with a focus on smaller cities.

Researchers group China’s more than 600 cities into tiers based on their gross domestic product, population size and density, and other factors. The wealthiest cities, such as Beijing, Shanghai and Shenzhen, are in the first tier.

Those in the fifth tier are considered the poorest. Country Garden benefited from China’s redevelopment program in lower-tier cities beginning in 2015, which gave residents new houses or cash to buy them.

It also marketed and sold apartments in rural areas to people living in bigger, more expensive cities. In 2016, the developer’s contracted sales more than doubled, and they topped more than 500 billion yuan, equivalent to more than $69 billion at current exchange rates, for each of the next five years.

Country Garden bought more than 3,000 plots of land over the past decade to build homes. They included parcels in all of China’s third-tier cities, 86% of the country’s fourth-tier cities, and 44% of its fifth-tier cities, according to an analysis of the developer’s land sales records on Wind.

Evergrande, in comparison, had land in roughly a third of China’s fourth-tier cities and 12% of fifth-tier cities. The company told investors that the projects it launched in lower-tier cities produced much higher returns on investment than those in wealthier cities.

In Shaoguan, a fourth-tier industrial city in China’s southern Guangdong province with around 3.4 million people, Country Garden had four large residential developments that were among its top 100 projects nationwide last year.

The biggest one was designed to have thousands of apartment units, a hotel, a few preschools and several clinics. A 1,500- square-foot three-bedroom apartment there was recently advertised for sale at just under $100,000. City and provincial governments that previously derived a large chunk of their revenues from land sales to Country Garden and other private developers are already feeling the pinch from a plunge in transactions.

Some weaker provinces and cities are struggling with heavy debt loads. In many poorer cities, people’s incomes are lower and less stable, and local governments’ budgets and finances are more stretched.

Home sales and prices have declined more steeply in weaker parts of the country than in wealthy cities like Beijing and Shanghai. “Country Garden was synonymous with China’s mass-market housing and urbanization story,” analysts from Barclays said in a note in September, adding that it didn’t have as much debt as Evergrande and was widely expected to survive the housing downturn.

When the developer had trouble making debt payments last month, “it shook what little confidence remained in the market,” they added.

“Chinese households no longer view housing as a safe investment,” said Michelle Lam, a China economist at Société Générale. She said privately run developers currently account for one-third of China’s total housing sales.

Crisis of confidence

In 2022, Evergrande’s default set off a chain reaction in the housing market that brought down dozens of other developers, including Sunac China, one of the three largest private-sector players.

Investors and banks pulled back, and a crisis of confidence began to spread across the market. Early in the year, Country Garden was one of a small number of property companies that was still able to sell U.S. dollar debt.

It said its financial position was strong, and expressed confidence that it could withstand the downturn. As the country’s property slump deepened, Chinese authorities in the middle of last year gave a boost to Country Garden and a few other privately run developers by helping them secure funding and backstopping their domestic bond sales.

By autumn investors had turned bearish again, and Country Garden’s bonds plunged to deeply distressed levels. Country Garden and its units began to shed assets to raise cash, including selling shares in a mall in the city of Guangzhou to a restaurant chain famous for pickled fish dishes and selling its stake in the famous Guangzhou Asian Games City, a popular housing complex built for the 2010 Asian Games, to a state-owned developer.

In late 2022, China came up with a new 16-point plan to resuscitate the housing market. State-owned banks made commitments to supply ample credit to a group of “model developers,” including Country Garden. Investors bid up its bond and stock prices, enabling the developer to raise money again in Hong Kong. The country’s reopening also gave nationwide housing sales a boost.

They rose for a few months earlier this year, making Country Garden executives optimistic that the worst was over. In April, Yang Huiyan, Country Garden’s chair, said in the developer’s annual report that she felt a “burden of responsibility” to steer the company through a transition in the property market from a rapid growth phase to a period of stabilization.

The developer resumed buying land in public auctions. It turned out to be poorly timed. Home sales began slumping again that same month, and have continued to decline. Investors dumped the company’s stocks and bonds.

Next steps

Last month, the developer told investors that there is uncertainty over its ability to continue as a going concern, but it isn’t giving up.

The company also said its priority is completing and delivering the homes it has presold. That could help free up cash currently locked in escrow accounts, enabling the money to be used to pay down debt.

Meanwhile, in mid-August, China Evergrande filed for chapter 15 bankruptcy in New York, edging closer to the finishing line of one of the world’s largest and most complicated debt restructurings.

Its shares resumed trading on Aug. 28 after being suspended since March 2022. They crashed 79% that day. Chinese authorities have recently made it easier for people to buy homes in another attempt to boost sales.

They broadened the definition of first-time home buyers, a category that comes with extra perks and subsidies, and lowered down-payment ratios on people’s first and second home purchases. That has brought potential home buyers back to property showrooms in Beijing, Shanghai and other top-tier cities.

“At the end of this cycle, sales in big cities will stabilize and even rebound, but the best-case scenario for many small and medium-size cities is that their property sales don’t deteriorate more,” said Ting Lu, Nomura’s chief China economist.

Even if Country Garden avoids defaulting, it will have to be significantly downsized, said Yao Yu, the founder of YY Rating, a Chinese credit research firm. He said that further sales declines are unavoidable. “The era of China’s giant privately run developers is over,” he said.

Source: Wall Street Journal