Jump to content
House Price Crash Forum

The Colour

Members
  • Posts

    1,323
  • Joined

  • Last visited

Everything posted by The Colour

  1. So I am priced out so junkie mcsmack can have his fix? Damn. Thing is, what are the implications for a crash when so much of the property is owned by people who don't reside there? What happens in villiages where this happens (besides the 'charm' going)? Do house prices become more sensitive to rates or other fundamentals changing? Is this something else we can add to the list of "Reasons there may be a crash soon"?
  2. Hi people I usually aim to post on fridays - when I can usually get away with it at work, though my boss is out today. Here is a moneyweek link look at who is actually buying london property, and why this is not a good thing for the residential property bulls.
  3. I particularly like the part which says "The worst possible scenario, that prices would 'stay the same' over the next three years, was selected by just 5% of homeowners.", and "No matter how much talk of a bubble there may be, homeowners continue to demonstrate that they have no clue about the ramifications of one." What is marked here is that, unlike many on this board, she is saying that sentiment is not as important as people think. If the market start to drop despite the VAST majority of people believing it will never fall, then it's the fundamentals which drive the market down, and not the sentiment. Put like this, do you still think that sentiment has the power that it is often creditted with on this board?
  4. THE BIG “WHAT IF?” by Susan C. Walker It's long past time to talk about housing markets losing their sizzle. They've already begun to turn down in the most-bubbly markets on the East and West coasts. Now we've arrived at the truly difficult part of any real estate boom-and-bust cycle - the time when prices hang in the balance. Will they go up any more, will they plateau or will they - collective shudder - go down? This uncertainty particularly worries those who have bought some investment property - say, a second home or condo - and are having trouble selling it. Is it time for them to face their inner fear that they might have to sell their property for less than what they originally paid? Worse yet, what if the property doesn't sell even then? It happens to the best of families - relatives lose their shirts on real estate. In my own extended family, there's a perfect example. Let's call him Uncle Mike. Back in the early 1970s, he retired and used his nest egg to buy property on Hilton Head Island in South Carolina. One lot for himself and his wife, and four more pieces of land for his kids to build on some day. Easy to see what a great investment that must have been. Hilton Head is such a success story. Wasn't he smart to get in at the very beginning? Well, Uncle Mike was smart, but the investment was not. The developers of Hilton Head went bankrupt and took Uncle Mike down with them. He had to sell his home at a loss. He found no buyers for the four lots, and the bank took them over. (Some lucky buyers later scooped them up for a pittance.) Then he and his wife had to move into an apartment that was one-third the size of their previous home. His retirement ended up looking less like "Easy Street" and much more like "Difficult Drive." Once the real estate market shook out, Hilton Head recovered and went on to become the luxurious vacation spot it is, but Uncle Mike never recovered. Ah, but most people who have bought investment properties recently didn't own in the 1970s. It's hard to be prepared for the history you don't know to repeat itself. In fact, ElliottWave.com points out that people choose to see only one side of the price equation. Even as sales of new homes drop and the number of homes on the market rise, still there is virtually no fear about home values: A recent national survey of homeowners by the L.A. Times shows 'widespread faith in the real estate market.' The worst possible scenario, that prices would 'stay the same' over the next three years, was selected by just 5% of homeowners. That total was less than the 6% who said they expect to see a rise of 31% or more. No matter how much talk of a bubble there may be, homeowners continue to demonstrate that they have no clue about the ramifications of one. And this is in an environment in which prices actually are falling! The denial runs so deep; it's not even denial anymore. It's some kind of epic disconnect between the reality of a newly falling housing market and an unwritten social contract that says home prices do not fall. [The Elliott Wave Financial Forecast, April 2006] Yet, you don't have to have lived through a housing bust yourself to appreciate the effects. Just think of someone you know who lived through the bust in the Houston oil patch during the 1980s, or the Northeast condo bust in the late '80s and early '90s, or Atlanta's real estate bust in the 1970s. Most property owners then twisted in the wind, waiting, waiting for prices to turn back up. Many of them couldn't hold onto their property, and the people who picked up the pieces at rock-bottom prices became the next land barons. That brings us to the big "What if?" What if that investment house or condo you bought doesn't sell? Plan B is usually to rent it, but what if you can't find renters? Do you just hold on and keep paying the mortgage and other carrying costs, or do you throw the towel in and sell at a loss to whomever will buy? The real problem is that markets can move much slower than we expect, which makes it all the more difficult to decide what to do. For reference, historian John Brooks wrote about how it felt to live during the Great Depression. In one word, it was "surreal." Keep in mind his description of the 1929-1933 experience: [it] came with a kind of surrealistic slowness ... so gradually that, on the one hand, it was possible to live through a good part of it without realizing that it was happening, and, on the other hand, it was possible to believe one had experienced and survived it when in fact it had no more than just begun. When a market starts to turn, it doesn't have to be quick. It's more likely to be slow and painful - like boiling a frog. (The idea goes that a frog would jump out if it were thrown into a pot of boiling water. But if it's put into a pot of cold water and then the heat is turned on, the frog could not judge the threat.) In fact, economist Gary Shilling wrote in Forbes magazine last September, "History also suggests that a housing boom does not have to end violently. The Federal Deposit Insurance Corp. counted 63 home-price run-ups in various cities over the last 30 years, but so far just nine of these ended in busts, and all of those were regional." He goes on to point out that prices that went up gradually tend to come down gradually over many years. That means slow housing market busts can slowly boil investors who don't have the cash flow to hold onto their properties until the market turns again. So, will there be more Uncle Mikes in the world next year this time? Thinking about human nature, the answer has to be a resounding 'yes.' There are only a hardy few who can hold on through a protracted bust or who are able to absorb a loss and move on to the next investment. In the meantime, though, many people who own property will suffer from the effects of mental anguish and indecision, not unlike that poor frog who doesn't know if the water is going to keep getting hotter. Regards, Susan C. Walker for The Daily Reckoning
  5. Hello everyone I would be very grateful if someone could explain the difference between real and nominal interest rates. Thanks in advance Thecolour
  6. Hi RFD If you don't mind me asking, what is the best way to regularly transfer money into a EUR account? I have one in Holland I would like to start using. Thanks colour
  7. Central London is the same. Last november the flat next to me sold for £304K, and just a few days ago the flat next to that one sold. But this is City Borders, East, one of the only areas of London showing strong growth (as far as I know). Just my luck - this is also my favourite area of London. I will know what prices are doing in my block once the land registry releases Q1 2006.
  8. Check out the link to the estate agent's letter further down in the article.
  9. This site provides the best set of statistics for determining demographics by small area I have ever seen. http://www.neighbourhood.statistics.gov.uk/dissemination/ Enjoy.
  10. Goodbye Dollar dominance (Written by Ron Paul, Republican congressman for Texas)
  11. I heartily applaud you sir - injecting a bit of humour! So what if we alter the quotations - what are we, a news source or something? People should always click thru a link anyways to check the context.
  12. Actualy here's the gov's stats on it: http://www.statistics.gov.uk/STATBASE/tsda...vlnk=341&More=Y
  13. Here's a link to an eu thing. It needs some mining but there are definately UK stats by sector in there. http://www.eurofound.eu.int/publications/files/EF0121EN.pdf
  14. And if those estate agents go out of business....?? Hmmm no more subscriptions. Ho ho
  15. Well then, does anyone have a bloomberg subscription??? One of the city traders perhaps? C'mon lets hustle!
  16. Two mates of mine worked on the EDS ABN account. They were both contractors on £550 per day. When they came up for renewal they went back to ABN direct and now are on £800+ pd through a supplier outfit they set up for themselves, and they get muppets in and pay them £300pd and bill them out at about £800. So that's what happens when you outsource. You lose control of the quality and the cost of your workforce.
  17. If your profits ore only 5% of your turnover then a 4% loss equates to 80%
  18. It's easy to get into debt. I was out of work for 4 months last year - I was even doing bit'n'bobs on the side and I ran up an amazing 9K worth of debt! Rent + child support + phone etc.
  19. Are you kidding? You are not even allowed to sleep for longer that two hours by law in the park. They would run you off with succesive police horse charges.
  20. They can't be serious. You could flip it to your mate for half the price and then get them to reimburse you.
×
×
  • Create New...

Important Information