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Realistbear

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  1. No one interested in this area? Oh well, I got my answer: http://news.telegraph.co.uk/news/main.jhtm...15/nhouse15.xml Suggestion: to avoid confusion can we term this present crash "The Brutal Crash" to distinguish it from the "Great Crash" of 1990-96? Remember the Vicar of Dibbly and the confusion they all had over the names of the "Big Storms" "Great Storms" and which was which? Why brutal? That chart ("That Chart") suggests a 60% drop is history repeats: http://www.housepricecrash.co.uk/forum/ind...type=post&id=47
  2. I have a suggestion that may help all of us avoid confusion. Can we agree to call the market correction of 1990-96 the "Great Crash." If that chart is right ( http://www.housepricecrash.co.uk/forum/ind...ype=post&id=47) this current crash will be worse so can we agree to call it the "Brutal Crash?" The crash of the 1980's could be termed the "Big Crash." Anyone remember the Vicar of Dibbly? They were having a problem sorting out the various storms to hit England and were not sure if one was the "Big Storm" of the "Great Storm" etc. etc. "Brutal Crash" sounds about right for this current melt down
  3. I may be locating to the Wantage-Grove area in Oxfordshire sometime in the Spring. How are prices doing in that area? Given the overall picture it looks like renting is the best bet for the short and medium term.
  4. Yes--I think it was Hegel--should have included a (sic). I earned my history degree from UCSD and have spent years moving back and forth to England and California. This forced fortuitous sales of homes with two good market timing experineces and one bad. I have a feeling this next one may be the big one to the upside. We are possibly moving back to England (Oxford area) this Spring is a job materialzes. I just hope the dollar does not tank any further as it will more than wipe out any drops in home prices in England. If the Dollar should melt down my guess is that the economic instability that will follow will be a form of financial Tsunami with some nasty fallout for everyone. Snow needs to stop talking the dollar down because it ain't working anymore--Americans are exporting even less than they were when the dollar was strong. Check-mate?
  5. For the US--yes a muted slowdown. But for the "hot spots" such as Southern CA, Boston, NY and segments of FL (where Brits have been buying heavily) there will, I believe, be some severe corrections. OUr local market tracker, Dataquick, reported on January 2nd that homes in some zip codes in San Diego county are down by as much as 24% in 2004. http://www.signonsandiego.com/uniontrib/20...ws_1h2peak.html Alan Greenbubbles issued a warning back in October 2004 that certain real estate markets had manifested "distortions that have strayed too far from the fundamentals." With prices rise of 120% in 5 years something has gotta give. Not many people in CA have received pay rises of that magnitude and the latest report out of CA says high tech salaries are headed down. All the jobs are going to India and other parts of SE Asia. I was taking some glee out of this market correction but I am now getting a little scared that it is going to be a lot worse that even the bears would like. BTW--the Hurricanes are expected to get progressively worse in Florida over the next 50 years (the historical cycle). I know a lot of my fellow countrymen have bought in there with cheap dollars. Might be a good time to sell.
  6. That certainly seems to be the consensus view. The Piper has to be paid for all those years of Alan Greenbubble's low interest rates that have only put off, not removed, the necessary correction. 4% sounds about right zzg113.
  7. No January bounce in the US: http://www.reuters.com/financeNewsArticle....storyID=7308487 In the absense of any news supporting a continuing bull market for housing perhaps the debate can move on to the question of how far is the market going to fall? That chart: http://www.housepricecrash.co.uk/forum/ind...type=post&id=47 shows that the trough is approximately 50% of the prior peak. With prices up around 120% (UK and Southern California move together and saw the identical fall and rise over the same period in the 90's) we can expect history to repeat itself--as it always does--and see a 60% or so correction to the downside. "the only lesson we learn from history is that we do not learn from history" starter for 10--who said that?
  8. The bulls seem to be falling back on the old "I see you are still paying rent to the Landlord" position. I sold our house at around the peak (in Sunny CA) and deposited the proceeds of the sale in a savings account that covers approximately 50% of my rent. The market in my area has so far corrected about 10% which in money terms is about $50,000 since the peak in June. Thus, for the 6 months I have been renting I have made about $8,000 a month tax free reverse capital gain (I plan to get back into the market at some point) and have earned a paltry 2.5% on the capital (US rates suck big time) that has paid half the rent. The only downside to this market timing exercise has been some expense connected with a mild addiction to muscle relaxants to help wipe the incessant smile of my face Here in Southern CA the bears are winning the battle as even the EA/Realtors are admitting the market is in trouble. For these guys to admit that the market is going down is a big deal--a really big deal. http://realtytimes.com/rtmcrloc/California~Carlsbad
  9. You are right--charts and graphs are more often than not based on hindsight. However, current data tells you like it is. I am tracking the data here in CA and it shows month over month decline for several months. This tells me that we are in a real time correction and now is not the time to buy. BTW--I did not buy into the "millenium" thing either. No current stats to back it up! The pensions crisis is just emerging here in the US. George is trying to shore up Social Security by turning part of the fund over to Wall Street. Many corporations are dropping the old formulas that paid retirees according to length of service switching over to "401k" plans that invest in stocks and bonds and over which the employee has a great deal of control. In other words if you do not save you get owt when you retire. Most of the US is stable property-wise. The only areas that have cyclical booms and busts are located on both coats. Like I said, the UK and California seem to be tied together and go up and down at about the same time. The P/E ratio in CA (Southern part of the State) is about 10:1. People earn about $52k and the median price of a home is ten times that amount. Worse than the UK? That you are jumping back in is evidence that the propaganda machine in England is working! I have been reading the reports about the new year "bounce." They are all over the place here also. I like the "dead cat" analogy. If you study the stats (if any reliable ones are availaible in the UK) you may find there is simply no evidence to suggest prices have reversed and are going up. The opinions of the propaganda machine should be ignored. If you can find a current trend that shows month-over-month data showing increases then it may be a good idea to get back in. If not, stand firm and wait until nearer the bottom (when the psychology of the market shows the bears turning bullish).
  10. As I study the property market both in the UK and the US I am able to discern some interesting patterns. There is a "psychology" in the marketplace that reflects the kind of data or opinion being released to the puplic. The BoE said earlier this year that house prices are a matter of opinion whereas debt is real. Thus, a key influencer to the direction of the market is "opinion" or sentiment. I spend several hours a day reading the latest news on the property market (I am a Real Estate Analyst--hobby of mine--I am a UK ex-pat living in the most inflated market in the world--San Diego) and observe some interesting patterns. Whenever a bearish report is released it is followed by a flurry of reports from EA's/Realtors who refer to year-over-year statistics or how business is picking up without any reference to statistical data (e.g. see above where an EA said "more" people are looking). Because there is doubt over the extent of price falls the bears tend to over-react with reports of their own that rely on data showing prices are falling. The interesting thing is that most of the bear reports are backed by data whereas the bulls are simply presenting conjecture and anecdotal evidence without the backing of statistical data (precisely what the bears were doing when no data existed to back them up). In my own marketplace, San Diego, California, a propaganda war is raging and the reports from the bulls are becoming more and more optimistic as the statistical data showing price falls mounts up. Thankfully, we have access to data that tracks the prices that sellers are getting so it is easy to demonstrate that a correction is a fact. So far, most of the press will not touch the story as they rely too much on advertizing revenue. Facts are the bulls ultimate nemesis. Ignorance (or confusion) is the best weapon in the hands of a EA/Realtor. Some of you historians will remember Goebel's (sp?) great skill in this area. However, here in CA we are expecting the year-over-year stats to begin to show minuses in the "appreciation" column very shortly so everything is being done by the property sellers to try to steer the market ahead of that crucial point so that they will be able to show a current upswing to offset the bad news. This crucial nature of this point in the market cannot be underestimated as homeowners have known nothing but plus signs for at least the past 8 years. Most people (80%+ over the past 18 months) here have bought with "creative financing" (interest only mortgages) that will show negative equity with price falls as small as 2 or 3 percent. The psychology of seeing losses is a powerful market mover and when the herd begins to move a stampede will follow. America is a litigious society and it is interesting to see that Construction Companies are having to release their quarterly details about their balance sheets and prospects for the year ahead. Locally, they are reporting sales down by as much as 39% in the last quarter. It is hard to spin these kinds of data and the Companies themselves dare not do so as they will get slapped with a law suit for making a false statement to induce the purchase of shares. England and California have historically moved in tandem with regard to the booms and busts of the past 50 years. As I read information on this site it is amazing to me how similar it is to the stuff we get here in the US on such forums as the Wall Street Journal who invite contributions on the boom/bust debate (http://discussions.realestatejournal.com/WebX/RealEstateJournal%20Discussions/1) All of that to say--the BoE got it right--house prices are a matter of opinion. The fundamentals are important also but most crashes occur when the psychology of the market reaches the point it needs to. The current psychology of the market seems to be that even the bulls are saying things cannot go on rising and that, at worst, the market will flatten before picking up again later on--a typical defensive posture taken by those who fear the opposite. Greed (self-centered opinion) drove prices up and fear will bring them down. Perception eventually becomes reality. What are most people "thinking." These websites are a reflection of what is on people's minds and as goes the debate so goes the market.
  11. Statistical Analysts are useful people. They study the raw data and present it, hopefully without spin. I am an amateur "SA" and use the data to show the current trend in our market here in Southern California: down. Year-over-year: still up.
  12. Regarding low interest rates: http://realtytimes.com/rtcpages/20050110_mtgwarning.htm Time to pay the Piper?
  13. I was pleased to see someone else has picked up the article in the San Diego Union Tribune printed on January 2nd, 2004. I have been corresponding with the journalist concerned for some time lobbying the paper to ignore year-over-year data in favor of warning the public that the current trend shows dramatic falls in the median price of homes. Please email the journalist and thank him--he may be the lone voice out there with integrity to print the truth in the public interest! Yes, I also believe ther UK and CA move in tandem. I was in the market during what I have termed the "Great Crash" of the early 1990's. Sold a home in San Diego at the top of the market in 1989 and made $100k over the year before. Bought a home in Surrey, U.K. in 1990 for Pound 189K that the EA said had sold to the sellers for 289K at the top of the market. This to demonstarte that the markets do seem to move together. THus, the artcile in the San Diego Union Tribune may be of some value to UK market watchers. Why are both markets connected? The IMF did a piece on this in the Spring suggesting that the bubble had gone international with Australia, E & W Coasts in the US, UK, Netherlands etc. exhibing the same kinds of irrational exuberance for much the same reasons: inflationary interest rates and creative financing (a.k.a. irresponsible lending). Greed caused people to see their homes as private banks with the result that "home equity" loans exploded stimulating the economy with yet more borrowed money. Al Greenspan, recognizing the inflationary monster he had helped create, switched tack in October with a heads up on what he would do in January--begin raising rates sharply. The BOE got smarter sooner and began raising UK rates much earlier. The "bubble" will be the sacrificial lamb of Fed policy as recognized in this link: http://yahoo.reuters.com/financeQuoteCompa...06443521_newsml
  14. This last bubble has been caused by a confluence of factors and greed is certainly one of them, if not the principle one. When we look back I think we will blame low interest rates causing (people to buy more house than they need or can afford (when the rates start to rise). The speculators and "flippers" were out for the fast buck and only the ones who get caught when the market turns will be the losers. But, sad to say, there are quite a few victims in the bubble markets. The poor sods who have had to pay a fortune just to find a house to live in. It makes me sad to see people here in Southern California priced out of owning a home or unable to afford the one they bought--especially if it was all they could do given the prevailing prices. It is possible Al Greenspan carries a great deal of the blame as it was his low interest rate policies (to avoid a recession that should have happened after 911) that fuelled the bubbles. Then again, it may just be the economic cycle. California has seen boom-bust cycles ever since the gold rush of 1849 where the lust for quick wealth drove prices through the roof. That bubble burst and it was not until the big agricultural boom in the central valley of California that brought another recovery--and another bust. The beat goes on. . . . .
  15. I am an ex-pat living in San Diego, California where the market is beginning to sink after a 8 year run up. I have become somewhat of an expert on market crashes and currently contribute to the Wall Street Journal's Real estate Forum online. Jenman's stuff is good but I have found some practical warning signs that may apply back home also. 1st. The rhetoric coming out of the vested interests becomes more bullish in spite of statistical data showing a downturn. 2. Each piece of bad news about house prices is explained away by "seasonal fluctuations." 3. The vested interests publish a lot of year-over-year data to show that the market is still climbing. 4. A load of "good news" reports about rising prices follow each credible report that the market is in trouble. 5. New construction building sites begin to hire "sign twirlers" to entice motorists to drive in (perhaps a US only thing), 6. Stockbrokers who know what is going on issue warnings based on the fundamentals--there are a lot of these coming out of Wall Street at present (http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh80667_2005-01-06_18-05-57_n06443521_newsml) 7. Al Greenspan says things like: "there is no bubble but some local markets have exhibited distortions that have deviated from the fundamentals." The link cited explains how the market was warned months ago that interest rates were headed up. 8. Vested interests say higher interest rates are good for house prices. 9. Your neighbour can't sell their house for the price they expected. 10. FTB's are thin on the ground. 11. Rental value does not cover the capital outlay of the purchase--seems Anthony and Sherry may have this problem? More BTL's on the market. 12. EAs/Realtors exhibit that telltale "look" of people who are facing hard times--sad hollow expressions, nervous smiles, sweaty hands, shuffling papers and faking telephone calls when you enter their offices. 13. Obvious things like increasing inventories of unsold properties, time on market increasing, increased hiring by law firms specializing in foreclosures and bankruptcies. 14. Muscle relaxant sales increase--bought by market timers who got out in time and can't wipe the smile off their faces.
  16. I am currently living in San Diego, California and have been doing extensive research on the property market here and in England. I believe our markets will move in the same direction at the same time--as they did in the 90's. Yes, things are very quiet. Went to Macy's, a major department store, during the January Sale week and my wife and I were the only two people on the particular floor where we were looking. I have visted new home sites and they are reminiscent of an old Western: not a soul in site, a creaking "For Sale" sign and the odd piece of tumbleweed passing by aimlessly. You go into the sales office and are greeted with a hollow sad look and an unspoken: 'thanks for coming in but I know you are not stupid enough to buy anything. ' Big news in the US this morning-- Associated Press Consumer Borrowing Drops Record Amount Saturday January 8, 9:15 am ET By Jeannine Aversa, Associated Press Writer Consumer Borrowing Drops $8.7 Billion in November, Largest Monthly Decrease on Record . Ironically, I believe low interest rates have been a primary cause of the housing bubble as it has caused people to pay more for the same house--no one gains unless you sell at the top and get back in after the correction (market timing). The net effect has been to syphone money out of the economy leading to less public expenditure in other segments of the economy. Today's big drop in consumer spending seems to be confirmation. FTBs are priced out here in California also where the median price of a home is 10 times average earnings. A report issued yesterday says that only 5.4% of the local population can afford the median priced home. The result: the median dropped from $527,000 to $517,000 August-November. The more expensive areas are dropping a lot faster. Thus, empty shops are yet another sign of the coming storm. People have been spec buying here and then cannot afford to furnish there home due to the debt they have taken on. Very little left over to spend in the local economy. BTW--Costco is a great store and we have visited the one in Reading many times. They are doing a huge service for England in helping to bring down the rip-off prices you have to pay.
  17. It is interesting to read about the frustration that exists among bears who are tiring of the "Blue Skies Forever" mentality of the vested interests. I am a UK ex-pat that has been trying to breath some reality into the equally overheated property market in Southern California. Go to the Wall Street Journal at http://discussions.realestatejournal.com/W...20Discussions/1 where I am a regular contributor under the same name, "Realistbear." We see Brits from time to time to give an international dimension to the discussion--please feel free to join in! My approach has been to constantly rely on statistical data to demonstrate that the median price of homes has been going down for several months and that year-over-year data must be ignored as it does not show current trends. We all know that when the year over stats hit the soft patch that there will be an increased rush for the exits. In the US we have a wonderful source of information (not all areas have this) known as the MLS or multiple listing service. In San Diego, where I live, this data is available free off the web. I have compiled a chart tracking several zip (post) codes that show sharp declines in values since the turn in the market in June. I have constantly bomabarded our two local newspapers, the San Diego Union tribune and the Orange County Register with polite suggestions that they "publish and be damned" or the public will want to know whey there was no advance warning when the year-over-year stats show some minuses in the "appreciation" column. I am pleased to report that our local San Diego paper, in co-operation with a data company specializing in real estate (and up to now bullish on everything) let the cat out the bag this past Sunday. Some zip codes off by as much as 24% this year. The public have been led to believe prices are up--which they are on a year-over-year basis. The problem we have here is that the newspapers rely heavily on advertizing by the Real Estate industry and Sunday papers contains volumes of such material. The battle is raging folks and I see the UK is exactly the same as California in terms of the volume of bovine excretia being produced by vested interests. Do not worry, the laws of economics are busy working and history will repeat itself. Remember the early 90's? Same thing happened in sunny CA as it did in England. OUr bubble is a full of air as yours and I suspect the same falls in prices are extant--despite the cover up. My recommendation: get some hard data on the movement in median prices and get the Sun to publish it! The market's undoing this time around will not be loss of jobs or interest rates but over-supply. BTL's are becoming a problem here now and empty rentals are finding their way back on the market as nervous investors start to see the blue skies turn gray. Additionally, first time buyers have dissappeared due to pricing choking the food chain. Investors have gone also as pricing has long since ruled out positive cash flow. As the Bank of England so eloquently put it a few months ago: the value of your home is a matter of opinion whereas debt is real. For what it is worth my forecast is that California will mirror the UK and see 30% down from the peak by the end of 2005.
  18. I have been back a few times over the past 2 years and did suffer with the M25 although it is no better or worse than we put up with here in Southern California. The police radar traps are a little "big brother" though. I may be suffering from nostalgia also--I have a keen interest in history and find little of interest locally given the newness. It is difficult to find anything to do on weekends other than visit Costco (if this store was not in England I would stay put!) or Wal-mart! The beach is nice but you can only do so much with it if you are not into surfing etc. The walks along the coast of Devon and Cornwall are incomparable. However, I am fully aware of the downsides to England which has always been a frustrating place to "get ahead." My Dad emigrated to the US in 1964 for this reason. The high house prices in England just add to the frustration of younger buyers or older ones hoping to be able to afford retirement. But the same thing applies here with young people moving to other states where they can afford a home. Most of the US is dirt cheap, especially the South where you can buy a literal mansion for around $350,000. In fact, everything is dirt cheap here except medical care. Even dentistry and optical expenses are half the rate of England. The housing bubbles in the US are limited to a few areas such as Southern California, Boston, NY, parts of Florida (that market may be in trouble if the Hurricanes come back in large numbers in 2005). My wife is American and I plan to keep my US residency as back-up. We plan to bring everything we need with us and buy clothes etc. on our trips back to the US. In fact the job I am moving to in England is for a 5 year term and we may reconsider after that. We will not buy a house right away as it looks like the bottom of the market will be a couple of years away and things may remain flat for a few years after that.
  19. Call it a "rhythm of life" choice. I have been out here for about 12 years and have realized that sunshine, palm trees, grossly overpriced houses, pollution, too many "foreigners" and gridlocked traffic is not a good trade off for green fields, trees and old villages! This forum is interesting because I see the same kinds of comments I have been making on the Wall Street Journal's Real Estate Forum to which I contribute everyday (the editor must like my comments and British approach to the BS that flows with abandon from the Real estate industry this side of the pond). The bears comments are very encouraging and it appears that England is in for a big drop that may exceed the early 1990's. Our P/E ratios in California are about the same as Southern England so something has gotta give!
  20. I am a UK ex-pat thinking about moving back to England very shortly. I have been spending a lot of time researching the property market both in England and in Southern California where I am now living. What is interesting is that both markets seem to be taking a dive at about the same time and with similar drops--just as they did back in the early 1990's. The hype that is flowing from those connected with and dependent upon a robust market is also the same. Until recently, the press here in California have been reporting year-over-year statistics that show prices still going up. I have been lobbying our local newspaper to start reporting current trends so that the public know what is happening now. They have done so and the truth is finally out. San Diego County has the distinction of having the most overpriced houses in the US. Average per-household income is around $52,000 a year. The median price home is ten times that amount. Low interest rates with a creative touch (interest only) have fuelled the bubble causing people to pay more for a home than would have been the case if normal lending practices were followed. Thank Mr Greenspan's inflationary policies. Prices are down in some postal codes (zips) in our area by up to 24% since April. Until recently the public were only aware that, compared with this time last year, prices were up! Reading through some of the entries on this site I see that reality differs from that which is being widely reported. I have mostly read about drops of less than 1% and increases in November etc. Yahoo UK has a link suggesting that prices might drop by as much as 2% in 2005! Wow--2% that is catastrophic. I encourage someone out there in the UK to do what I have done and lobby the press to print the truth and ***** the bubble . We would like to come back to England and be able to afford a home!
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