bearishonhouses

I'm sorry to hear of your loss and I agree that there should have been better disclosure of what was happening to monies invested in the fund - through a prospectus etc; especially where the fund was so close to an implicit investment in housing. (Of course, I suspect that almost no-one would have read said prospectus, but that's another story.) However, it seems to me to be unsurprising that a fund is invested in some kind of interest earning security and not just cash. An investment in anything other than gilts necessarily bears credit risk, but should have higher ex-ante expected returns to compensate. Clearly, ex-post, the return has not compensated for the risk, but the charge of incompetence cannot be fairly judged unless one excludes the unfair benefit of hindsight.

An approach suggested by a writer in the New York Times was along the lines: Dear Seller: I’m writing to let you know that I would like to make a bid on your property. I love the area and am committed to buying a house nearby. And your home fits my needs. But given that my offer is well below your asking price, I also feel I owe you an explanation. First, consider the big picture. Nationwide, home prices in the first quarter of 2008 fell 14.1 percent compared with the same period a year earlier, according to the Standard & Poor’s/Case-Shiller U.S. National Home Price Index. That’s the biggest decline in the 20-year history of the data. And just in case you’re wondering, during the housing downturn of the early 1990s, the decline was never worse than 2.8 percent. Not only that, earlier this month, the National Association of Realtors pointed to the huge number of existing homes on the market. As of the end of April, the total number was 4.55 million. At the rate people are buying right now, that represents an 11.2-month supply. So buyers have options right now. A lot of them. I’m no different. Your home is great, but it isn’t unique. Few homes are. I know this may be hard to hear, since you’ve spent years creating memories here. But you may be waiting a long time if you hope to find a buyer with the same emotional connection that you have. My mindset is hardly unique. We’ve all been reading the headlines. The accompanying articles appear prominently in major newspapers and sit on the Web pages where people check their e-mail every day. Everyone sees them, and the psychological impact is real. Has your real estate agent laid any of this out for you? Maybe so, and you didn’t want to believe it. But it’s also possible that your agent, afraid of offending you and losing the listing, simply doesn’t want to initiate that sort of discussion. It may be worth sitting down for a candid reassessment. It will be tempting to view my low bid as an insult. Please don’t make that mistake. Your home is genuinely appealing, and I wouldn’t have written this note unless I was serious about buying it. Getting a firm offer in this market is an accomplishment. So congratulations! Oh, and one more thing. You presumably need someplace to move. My guess is that you’ll find these same points compelling when it’s your turn to buy. You just might succeed in buying for a better price, too. I look forward to hearing from you soon. Yours Truly, The Realist "

then, of course, there is this one almost next door for GBP495k! Personally, I find it very touching to see so much optimism in the world when generally we live in such troubled times. FYI, there is a real estate listing site in the US that now enables one to predict the eventual selling price of properties. It would be fun if there were something similar in the UK. see www.ziprealty.com. You probably need to register to put in your estimates. Can't help but wonder how much negative ramping is going on by folks who wish to buy soon (being fed up of renting) but are frustrated that sellers seem not to realize that asking prices should be around 2002 levels - not 10% greater than 2006.

Could you possibly post the graph with a logarithmic scale for price? Given that earnings at present are in excess of twice earnings as shown in 1989, I suspect that in percentage terms, while the size of 01-08 bubble is greater than the 86-91 bubble, the difference is not as big as one's initial perception obtained from looking at a graph with a linear scale.

agreed - the unquestioned life is not worth living etc

I think that the justification for excluding repos and transfers between ex-spouses etc is similar to the reason for excluding fuel and housing costs from the RPI. That is, the movements in the prices of these excluded items are more volatile than the other items that are included in the index. Therefore, to avoid undue volatility in the index, these items are excluded. In the long run (other than that we're all dead) the effect of the excluded items will indirectly affect the prices of the items that are included. For example, with respect to fuel costs, increases in petrol/diesel will lead to increases in transport costs and hence selling prices of goods in the retail outlet. Changes in the prices of properties sold at auction, will indirectly lead to similar changes in the prices of properties not sold at auction because of competitive forces. (i.e. why would anyone pay GBP200 for a house if the adjacent on house is available for sale as a repo for only GBP150?) Hence, so changes in the prices of excluded items will eventually, if indirectly, be incorporated in the index. Thus, on the plus side, excluding potentially volatile components, avoids undue volatility the price indeces. On the minus side, the resulting indeces can become severely "lagging" indicators. Arguably, the lack of timely information about asset prices has been at least partially responsible for some bad decisions - about interest rates, the need to reflate the economy post 9/11 etc. I do not know for sure that the above really is the rationale for excluding repos etc; it's just my speculation, based on a belief that the folks who decided to exclude such items are not, in fact, as stupid as some commentators would suggest, and that they do not believe that politically motivated bias in reporting the figures could be worthwhile. (Call me naive or idealistic, if you will.)

Due to a job move, we sold in July, and are currently renting (in different US cities). It is frustrating not being able to do the nest building that one does when owning a home and we are looking to buy. However, it seems to me that the financial markets (spread bets in the UK, futures markets in the US) and UK auctions are generally predicting a return to prices circa 2002 levels. Therefore, until we get there, I am extremely hesitant to move in. I take some comfort that finding a price within 5% of the bottom of the market should not be too difficult. After the bubble of the late 1980's, the flat part of the trough lasted for several years. That is, even if I don't get back in as soon as prices have stopped falling, I do not see any sudden turn around happening. an_expat

Use of appropriate netiquette and correct spelling would be appreciated by all readers.

Does anyone know what the results were of the action on October 1?