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bearishonhouses

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Everything posted by bearishonhouses

  1. Prices are just coming back to normal, having been pushed too high because of Covid induced supply chain issues. 2 years ago, my 19 yo car needed major repair or scrapping. I decided at 5k to repair it, even if it lasts 2 years (it has) repairing would be cheaper than the likely extra depreciation on a new (or new to me) similar vehicle. At the time, dealers were selling cars for 10% above manufacturers suggested selling price. Now, they are back to a normal 2% - 5% below.
  2. Your quoted statistics seem a bit inconsistent; what is GWper annum? However, i agree with the gist of your assertion. UK demand peaked in 2005 at about 400 Terawatt-hours and has fallen consistently to about 320Twh (decline of 20%) by 2022. However, I cannot see how ‘home’ generation and demand is dealt with. https://www.statista.com/statistics/323381/total-demand-for-electricity-in-the-united-kingdom-uk/
  3. I am interested to see where $50B comes from. The latest 10-Q filed for June 2023 shows liabilities of $19B, of which $13B is long term lease obligations. I think the implication of this is that if WE goes bankrupt, the landlords will not get paid, but those landlords will have access to the properties - to rent out to someone else; if they can find customers who want them, and at who knows what rent. Not a good position to be in, but probably better than the $5B of other creditors who have no collateral.
  4. Is this sarcasm, or the result of being completely misinformed? Murder rates are higher in red states: https://www.axios.com/2023/01/27/murder-rate-high-trump-republican-states violent crime generally higher in red states: https://gigafact.org/fact-briefs/do-red-states-rank-higher-in-violent-crime-rates-than-blue-states death rates are higher and mortality lower in red counties: https://www.scientificamerican.com/article/people-in-republican-counties-have-higher-death-rates-than-those-in-democratic-counties/ suicide rates are higher in red states: https://www.statista.com/statistics/560297/highest-suicide-rates-in-us-states/ As @AThirdWay has pointed out, red states are subsidized by economic activity in blue states. For some detail, see https://www.washingtonpost.com/business/2023/07/07/states-federal-benefits/ - about 80% of the way down search for "The political pattern is clear but not absolute"
  5. I don't go to pubs much, but spent the best part of three weeks this past summer eating out in in pubs most nights. Though there was some variation, it amazes me how some of them survive. In one, on a Friday night in June, there were maybe 8 people in the restaurant and no more than 10 in the bars over a two and a half hour window. A nice country pub - old building - but dark, and presumably not very well insulated. The landlord told me the next morning, the fuel bills are now over 10k a month. The staff were really helpful and friendly but I cannot see they will have their jobs for much longer.
  6. It would be very helpful if those posting charts would include references/citations so that others can investigate their meaning directly without having to ask for explanations from the OP. Could you do so tor these data? Thanks.
  7. As we all know, LR figures are subject to revision. The revisions for the house price index seem to be only for 12 months. (It is possible, the revision period is longer, but there were no revisions more than 0.005% 13 months out.) col (1) is month of interest col (2) is LR house price index ('HPI') for England and Wales as reported in December 2022 col (3) is HPI for this month as reported in August 2023 col (4) is percentage change in index revision /initial value) Unsurprisingly, the biggest revision between December 2022 and August 2023 in percentage terms is for October 2022; the earlier months had already been revised between initial computation and December 2022. As it happens, over this period, the index was being revised downwards as more data were processed. However, I do not doubt that the statisticians at LR monitor the direction of revisions very carefully. If they find that revisions are, on balance, downwards, I'll wager they would adjust their initial reported estimate to take into account the anticipated direction of what would be otherwise be a revision.
  8. Agreed. The loan was secured on the house AND the endowment life insurance policy. Which means the bank looked after the policy. It was only when I sold a house and repaid the mortgage loan entirely that I got my hands on the policy.
  9. Why? If the loan is secured on the house at 75% LTV, I would have said their position is fairly secure.
  10. "you can't take it with you" so for someone who does not wish to leave a legacy an IO mortgage might make sense. For someone in that position, what is the benefit of dying with a 400k mortgage free house if the alternative was to have used, say, a 300k loan secured on the house to improve quality of life in their last 25 years in this world? For someone aged 70, 300k could purchase an annuity of about 27k per year. If the interest rate on the loan is less than 9%, it might be worth doing. And for someone older, the deal could be even more beneficial. If they die after only 5 years, so be it - they will not even know. If they live to 100, they will have 'beaten the system'.
  11. If you buy a 5 year bond now for 100 that yields 6% then in 5 years' time it will be worth exactly 100. There will be neither capital growth, nor capital loss - irrespective of what interest rates are at that time - whether they be 2%, 6% or 10%. It is true however, that if rates move from 6% between purchase and redemption in the intervening period there will be an effect on the bond's price. If the interest rate on 3 year bonds is 3% after 2 years, the price of your 3-years-left-to-run bond will indeed rise - to 108.49 (assuming interest payment once per year) - resulting in actual return over the next three years of 3%. If it helps, you can think of this new price as the price level at which the combination of the running yield on the bond and anticipated annal capital loss - because we know at the end of the bond's life it WILL be worth exactly 100. (i) The running yield on the bond is approximately the coupon of 6 per year divided by the average value of the bond over its remaining life ((108.49 +100)/2) = 6/104.25 = 5.7%, and (ii) The guaranteed annualized capital loss over the next three years as a percentage of average capital invested is approximately (108.49-100.00)/104.25 = 7.8% over 3 years, or 2.6% per year. In this approximation, the combined yield to maturity is: 5.7% - 2.6%. = 3.1%. But as I said, this model is an approximation that you may find useful in rationalizing the yield to maturity.
  12. FYI: I am having no problem using Chrome on an iMac (with AdBlock Plus). I hear the criticisms of Google - but I use it because I like the ability to have multiple Profiles - being able to log on to different banking sites with different saved identities. Maybe I need to reconsider.
  13. The law depends on the particular state. Some have so-called no-recourse mortgage loans (e.g. California, Texas, Arizona, Washington). Some do not - e.g. Illinois, New York, Florida, Virginia). However, unsurprisingly, non-recourse debt has higher interest rates and more restrictive borrower qualifications than recourse because non-recourse debt is riskier for lenders.
  14. Not a complete dump without hope, but I think it qualifies for this list based on a comparison of asking price and condition. https://www.rightmove.co.uk/properties/140028764?#/?channel=RES_BUY
  15. Here is a an example of how this proposal would work and bring about the desired change in use of housing. My understanding is that all assessments in USA are based on the total value of the property - but 'land' and 'improvements' i.e. the house are assessed as separate components of that value. It is much easier to split the value in this way in the USA because semi-detatched houses are quite rare, and hence it is easier to demolish and replace single houses. It therefore makes sense to separate the value of the two components. A friend who lives in a 1950's house in Ohio knows that when he sells (probably soon) the actual value of the house is negative; that is the plot would be more valuable if the house were already demolished and the site razed ready for construction of the MacMansion that will doubtless replace his small cape cod. Having said that, the authorities do not actually want to fully reflect that fact and so for the time being, they underassess the value of the land and overassess the value of the house. (at $200k and $200k instead of $430k and -$30k). But since the tax rate is the same for both parts, the tax he pays is based on the total value. If real estate taxes were charged at different rates - more on land than improvements - the taxing authority would have an incentive to assess more accurately and he would then have a greater incentive to sell up. (Whether it is a good thing environmentally for a 1600 sf cape cod to be replaced with a 4500 sf macmansion that will sell for > $1m is another matter.)
  16. My goodness - that woman is stupid! I am not sure I have ever heard her on the radio - and having read the article have no desire to. Her brother was someone I enjoyed listening to, and learned a lot from. It is a shame that his behaviour (I suspect linked to alcoholism) meant that he was, understandably, canceled by the BBC.
  17. There's more: The YouTuber who received £500k for facilitating a tax avoidance scheme https://www.taxpolicy.org.uk/2023/10/13/ranjan/
  18. Comparisons between mortgage terms that highlight the difference in total amount of interest that will be paid on the longer term loan are completely pointless. Whether it makes sense to pay down a mortgage loan in advance of formerly agreed terms depends on how you feel about risk. I took out a loan in 2009 and paid it off well in advance of what the lender had agreed. From a money perspective, it turns out that it would have been far better to invest the spare funds I had in the stock market instead. But at the time, that was far from a certain outcome. Paying off the loan rapidly and avoiding paying the the interest on the mortgage was better than any risk-free interest rate available, so it made sense. And, as others have noted, it is a good feeling not to be mortgage free.
  19. All markets have norms - the expected behaviors by both buyers and sellers; and different markets have different expected behaviors. For example, in Sainsbury's it is not the norm to try and negotiate over the price of a can of beans; in an antique/junk shop, an offer to buy an item from a potential purchaser at lower than the original asking price would not be unexpected. The dealer would likely respond with a counteroffer at somthing less than the original asking price. These norms are not 'rules', no-one is forcing anyone else to adhere to them; there are no penalties for not complying. But buyers and purchasers generally behave in accordance with these accepted and expected social norms and expect other involved parties to do the same. Suppose that in the current housing market in the UK, buyers believe that offers at less than 90% of the asking price are not normally accepted. Then most potential purchasers will not make such offers. And it makes sense that most vendors will therefore not entertain offers at less than 90% of the asking price if one is made. If an offer comes in at 80%, the vendor could reasonably believe that there might be another buyer out there who is prepared to buy at 89% of the asking price but did not bother to make such an offer because they believed such an offer would be rejected. However, even in these circumstances, it would make sense for the agent to respond to the 'cheeky' offer and explain why it was being rejected. (And, perhaps to recommend to the sellers that they might reduce the asking price by about 10% to test the market at that level.) And norms change over time; it is possible that it will soon be normal for offers to be made at anything more than 80% of the asking price. Then everyone should take them seriously because if the only offer received is at 82% of asking price the vendor can infer that no-one else out there thinks the item is worth more than 80%, but has held back because they thought their offer would be rejected out of hand.
  20. That Dan Neidle chap’s organization is really turning stuff up. They have dug up another non-working tax-avoidance/evasion scheme. https://www.taxpolicy.org.uk/2023/10/05/lt4f/ Extract Less Tax for Landlords is a high profile firm. They sponsor the National Landlord Investment Show and are promoted by the National Residential Landlords Association. They’ve sold hundreds of landlords a “hybrid partnership” structure which is supposed to avoid income tax, capital gains tax, stamp duty land tax and inheritance tax. It’s flown under HMRC’s radar, and so avoided about £50m in tax to date. But in reality the scheme doesn’t work, and triggers significant additional taxes. HMRC have just confirmed this. Worse, the scheme will in many cases default the landlord’s mortgage.
  21. Of the three authors, Lennard is a prof at LSE; Turner is a prof at Queens University, Belfast. Institutions such as NIESR have few of their own researchers. Academics at universities typically compete for funding from the institution to pay them to do the research.
  22. There is a limited number of ‘the best’ houses. The ‘best’ are positional goods and therefore their values are likely to increase not in line with general prices but in line with the ability to pay of those who are most wealthy. The rule applies to other assets with similar positional characteristics e.g. owning the ‘best’ examples of impressionist paintings.
  23. Typically, auctioneers of houses are paid for hosting the sale - even if it does not sell. But they earn far more more commission if it does sell - so they have an incentive not to allow the reserve price to be too high. Similarly, the vendor has an incentive to allow the guide price to be low enough to generate interest - but a reserve price high enough that represents the minimum amount they will sell for - taking into account that if the house does not meet the reserve price, the vendor has to pay the auctioneer and they still have a house to sell. It's just a question of balance. The way house auctions work is that initially, if there are not two genuine parties bidding, the auctioneer will take bids off the wall until the reserve price is almost met. It might be two pretend bidders playing each other, or one pretend bidder and a real bidder. As the reserve price is approached the auctioneer will ensure that the last bid less than the reserve is a pretend bid and will then only accept a real bid at or above the reserve. If no real bidder is prepared to make that bid, the auctioneer will announce that the house has failed to meet its reserve price and will not sell. After the failure to meet the reserve is announced, an interested party who was not prepared to offer the reserve price (and now knows that nor was anyone else) can approach the auctioneer to make an offer to the vendor. If the reserve price has been met, I have heard auctioneers inform the room by saying something like "make no mistake ladies and gentlemen, the property will be sold tonight' . I guess they do this to let folks know that there will be no opportunity to negotiate later - if you want it you had better bid right now. If bidding has slowed to a standstill and the auctioneer does not say something like this, I infer that the reserve price has not been met.
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