Sunday, Oct 21, 2007
Lessons from across the pond
The Observer: How the roof fell in on America's property gamblers
If you want to know if Britain is heading for a housing market crash, just take a look at what has become of the American market.
Over the past two decades it has become less a means of securing an place to live and more of get-rich-quick speculation.
Since the 1990s many American homeowners have used their houses like virtual ATMs, withdrawing wads of cash every time prices rose another ten or twenty thousand dollars.
Flipping became a national pastime.
Posted by little professor @ 12:07 PM (460 views) Add Comment
4 Comments
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1. Quiet Guy said...
The article is a good summary of the property speculation disaster in the US but hardly news to regular readers of this site.
I would like to draw attention to another aspect of the house boom that applies just as much to the UK as the USA.
We have 'invested' enormous sums of cash in something that does not produce anything. Houses cost money to maintain. Imagine what sort of country we would be living in if the housing bubble money had been invested in education, infrastructure and industry? As a nation, I fear that all we will have to our name is huge debts.
2. alan said...
"Since the 1990s many American homeowners have used their houses like virtual ATMs, withdrawing wads of cash every time prices rose another ten or twenty thousand dollars".
If you substitute the word "American" with the word "Essex", then you describe many of my neighbours. I just keep falling over people who have low grade jobs and who want to live like Posh Spice...
3. enuii said...
The system can only be milked of cash for so long, at some point someone has to pick up th bill and it won't be the Baby Boomers.
4. Icarus said...
This article shows that 'sub-prime' should be re-defined to include not only those with poor credit histories but also all those who over-extended themselves to buy as much property as possible and banked on prices rising endlessly. On this definition sub-prime is everywhere, so watch out when the whole mess unravels.