Casual Observer
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Posts posted by Casual Observer
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"Soft landing". A phrase coined by the former * chief economist of the US Realtors Association. Lereah postulated that prices for houses would plateau after a decade or so of inflation busting rises accompanied by record levels of debt. He tried to convince the public that the laws of economics would be suspended as house prices only ever rise. Mr, Lereah was proven to be wrong by the events that followed his "soft landing" idea.
There are no examples in the history of economics of a plateau market following a prolonged period of boom or "irrational exuberance" where debt levels have breached historic averages by more than 18%. In the long term view house prices have never exceeded wage growth without a sharp correction. Miracles in terms of property prices are short-lived.
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*David "Mr. Realestate" Lereah resigned recently from his post as chief economist for the US Realtors association after the US housing market began to collapse under the weight of too much debt and irresponsible lending.
I first heard soft landing in the 70's. When did this fellow "invent" it?
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Unless of course you are just living in your house because it is your home....old fashioned I know but I believe there are still people out there using their homes to live in themselves
Well said.
I'm sure RB is just a speculator who sees homes as money making devices.
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CO YOU BIG FRAUD! Why have you edited your post where you said you would get some figures or 'do some research'!!! I know it was there because my reply is right below it (annoyingly without quoting you and therefore having no proof!)
You've edited your post, half an hour later, removing your statement that you were going to do some research! WHY?
Because I edited it to actually add some
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don't forget to watch the bbc news @ 6:30 tonight CO, tell your son as well, it might be of interest to you both.
Here the link to the thread discussing the programme.
edited to add link.
Why will my son and I be interested in it?
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All crashes begin with slowing. .
So do all soft landings...
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I still think we will see negative this year,
But with regard to this article 5% is not very bearish. That is still something like 8 thousand pound increase for each property.
RB calls it bearish because BTLers won't make a profit
My definition of bearish is prices falling for outpriced home Owners
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Nationwide are very optimistic IMO--or they are presenting a "best case" scenario. If you remove London and the SE from the mix we should see some negative by the end of the year. At 5% and adjusting for inflation it does not look good for the millions of BTLers. Especially if IR rise another .25%.
Bottom line: Big VI goes bearish.
Don't forget--the beginning of a long term trend is characterised by slowing. One momentum to the downside begins it won't stop until the market corrects its years of irrational exuberance.
No, their "best case" was 8%. Their "worst" case was 5%
5-8% HPI is bearish?
Call me Casual uber-Bear then, in that case! -
http://business.timesonline.co.uk/tol/busi...icle1802616.ece
From Times Online
May 17, 2007Nationwide forecasts house price slowdownUK's second-largest mortgage lender says annual house price growth could fall from over 10.% to as little as 5% this yearMiles CostelloBritain's housing market will suffer a sharp slowdownduring the second half of the year, leading to average annual property price rises this year of as little as 5 per cent, Nationwide, the country's second-biggest mortgage lender, cautioned today.Graham Beale, the new chief executive, said: "Our forecast for house price growth is 5 per cent to 8 per cent in 2007, reflecting a cooling in the second half of the year as increased interest rates filter through."They must be seeing a lot of stress in the market with sheeple starting to hand in their keys and walking away. 2nd Q of 2007 anyone?
Yes I'd agree with your post RB. Annual HPI of about 5% for 2007.
I'd have preferred something around 2-3% but I think we'll all have to wait another year for that. Q2 2008 I reckon.
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edited for spelling
Why did you bother?
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homophobic? not when I've been about. I find the rest funny when its from PG. Come on, its a forum!!
Search his posts.
I'm not bothered either way, actually, but If I were a Moderator I would ban him.
For 1 thing, I thought that trying to pose as another poster was against the forum rules. I would have also thought that being personally abusive to other posters and their families, to the degree that he is, was also against the rules.
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If you think the forum benefits from childish, obscene, homophobic, personally insulting and often disgusting posts that add no insight to the property market, then don't ban him.
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no your not, that place has been reserved for pedantic Pete.
Has someone taught you a new word?
Don't wear it out will you?
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pedantic Pete strikes again.
Good Luck in this thread!
Oh, don't give up!
I was enjoying the debate.
Now I'm bored.
I'm gonna make myself a cup of tea to cheer myself up.
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the same way I try to keep out of inflation talks with you, as I feel the need to have a solicitor present, inserting several clauses in my posts to cover all percieved angles. I bet your a joy to be with on the dark winter nights.
Oh, come on! You can hardly excuse your schoolboy howlers by claiming I'm too pedantic - that's just a cop-out.
We can't have meaningful analysis of the issues without us all going into a bit of detail, can we?
Would you rather I just said the usual superfluous nonsense. e.g.:
CPI only has CD players from China in it
The MPC fiddles the figure every month
The media all lie about the housing market
Halifax fiddles its figures every month
There's enough of those kind of posts about. My more detailed nonsense provokes a bit more of a lively diversion, surely?
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so you base all of your arguments on one key area, wage inflation going up. This is probably the worst area to base it on, as it's the area that has the least chance of going up based on our current economic status in the UK imo.
Are you winding me up!?
You said no-one has a fixed debt (you were getting confused with fixed interest rates I think) and I was correcting you.
How do you go from that to me basing all my arguments on wage inflation??
Read my virtual lips: I don't think we will have high inflation, high wage rises or high interest rates
But, if inflation ever did take off, causing further problem with affordability through higher IRs, wage inflation would accompany it. In my opinion of course. And all the other caveats. Always read the label. Not to be taken seriously by anyone with a limited mental capacity.co.uk etc. etc.
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it's simple at the end of the day.
You choose to believe the RPI/CPI & any inflation related figures, I do not.
You are really confusing me now!
We're talking about the prospect for IRs and their effect on house prices. It doesn't matter if you or I think true inflation is 50%. The fact is that IRs are 5.5%, wage inflation is 4.5%, and CPI is 2.8%.
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But the difference now is that higher IR's due to inflation combined with the borrowing multiples we are seeing these days will cause defaults. If people had sleepless nights back then when lending was restricted what do you think it will be like for recent homeowners who are stretched to the limit.
I'm not saying it was easy in previous decades so please look at this from an un-biased point of view.
I don't disagree with you, but don't forget that people who took out high multiple mortgages will see those decrease as their wages increase.
Example, my son borrowed about 4.2 times salary originally, or thereabouts, but with wage rises this is now down to about 3.5ish after 16 months. If inflation (including wage inflation) increased, this process of debt erosion accelerates
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edited to add, who said the debt was fixed ? I don't know many people with a fixed 25 year mortgage, do you ? Go away and think about what you've said, GOM.
I said the debt is fixed, not the interest rate. It's the originbal loan that erodes through wage inflation. Borrow 200k and its real value will erode with inflation.
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that depends on whether you believe the inflation figures doesn't it ? & based on the BoE's run lately, I wouldn't pin too much hope on those figures.
But the inflation figures which you don't believe are the ones that the IRs are targetting. If the CPI is reading 2%, they're not going to increase IRs to 8%, on the grounds that they don't believe in the accuracy of the CPI.
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you argument surely has a simple fatal flaw, why are employers going to give everyone big pay rises, or any type of rise above inflation ? when we have an oversupply of cheap labour, that just doesn't make sense to me.
I assume you mean double digit wage inflation ?
I don't think employers will give everyone big pay rises actually. Which is precisely the reason I don't think inflation will grow too high.
The flaw in your argument is that you don't need wage increases above inflation to erode a fixed debt. You just need wage inflation.
If general prices and wages both rose by 10% per annum for 3 years. today's 200k mortgage would look a lot more sane.
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Wage Inflation: 3.6%.
This is not the seventies.
Quite. This is a period of low inflation compared to the seventies. I was responding to the poster who spoke about inflation rising.
BTW, wage settlements are at about 4.5%
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But back then lending criteria was stricter so although it was a stretch to buy there was still slack in peoples budgets to absorb higher rates. Now the slack has gone so high inflation will result in high IR's and bang - there goes the house.
High inflation and static house prices would soon bring slack back.
Just like in the 70's when you borrowed the maximum and had sleepness nights for a year, but then after a few years of double digit inflation, the repayments were suddenly far easier
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Although PG didn't used to be that like that. Wonder why the change?
Fair play to CvD for putting his hands up. The orthodoxy that rent is wasted money only works up to a certain level of house prices. That level has been breached and left behind on the road.
You may be thinking of the original Property Guru, whose name this PG stole, after he left the forum. PG used to be Crash is Under Way, and had an obsession with the original Property Guru. He's always been a nasty piece of work, with a wierd homosexual hang-up thing going on.
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I don't know why you've become such a ****, PG, as I used to enjoy a bit of banter with you.
Now I just think you're a piece of sh1t.
Tthis guy's just a cowardly internet bore. He's been thrown off other web forums for his foul and abusive posts. He's given grovelling apologies for his posts in the past, only to come back weeks later just the same.
Offer to meet up with him and he'll run a mile.
I'm surprised he's not been banned from this site, for his language - after all it would put a few new posters off the site I would have thought.
Nationwide: "housing Market Will Suffer A Sharp Slowdown"
in House prices and the economy
Posted
I think eventually we will get average HPI of about 1-2% for 4 or 5 years. Actually I think my area had it for about 3 years for some categories of house, between about 2003 and 2006. A correction in real terms.