Todays Gdp Figures Must Surely Signal The End Of The Current Bull Trap Phase In Housing?

[getdoon_weebobby]

discuss

[Dorkins]

One would hope so... Trouble is the housing market is determined by

1. supply of houses

2. supply of deposits and mortgages

3. people's expectations

At the moment 1 is low, 2 is low but increasing, and 3 is as batty as ever.

[twatmangle]

Don't know if it will signal the end, but its a pretty strong sign at least that this IS a bull trap.

I would suggest it might actually boost the market a little.

Poor GDP figures might mean more QE and an increased perception in the population that low interest rates are here to stay.

Mortgage payments will be lower... fewer people need to sell, reduced supply, increased mortgage lending, at cheaper rates add to this the dash for assets as QE devalues the currency.

Just thinking out loud.

[Realistbear]

The end of the house price madness will come when people are no longer able to raise the money to buy at today's grossly inflated prices.

The following brew needs to be in place:

1. Banks forced to implement prudent lending practices.

2. Prevailing high unemployment

3. A reversal of recent sentiment based on VI propaganda that the worst recession in history will all be over by Crimbo.

Number 1 has not happened yet, number two is still underway and number 3 depends on the first two.

Supply and demand are secondary to the above 3. E.g. All the demand in the world will not help if the buyer cannot get a loan and unemployment beckons.

Edited October 23, 2009 by Realistbear

[thedebtisreal]

discuss

Don't know if it will signal the end, but its a pretty strong sign at least that this IS a bull trap.

[Guest_FaFa!_*]

If it doesn't, the question would rapidly become "What will?"

I think it will come down whether the banks will lend out the printy printy or whether print printy disappears into a large financial black hole. I believe it will be the latter.

[tomandlu]

discuss

I'd like to think so, but HPI seems to be behaving like some serial killer in a slasher movie. They stab it, electrocute it, run over it with a car, but it just keeps getting up and killing anyone who's had sex....

My analogy may have lost it's way there at the end...

(Hmm, is this going to be my first double-post?)

[Realistbear]

I'd like to think so, but HPI seems to be behaving like some serial killer in a slasher movie. They stab it, electrocute it, run over it with a car, but it just keeps getting up and killing anyone who's had sex....

My analogy may have lost it's way there at the end...

(Hmm, is this going to be my first double-post?)

I nominate for best post of the week.

[scepticus]

I would suggest it might actually boost the market a little.

Poor GDP figures might mean more QE and an increased perception in the population that low interest rates are here to stay.

Mortgage payments will be lower... fewer people need to sell, reduced supply, increased mortgage lending, at cheaper rates add to this the dash for assets as QE devalues the currency.

Just thinking out loud.

I'm inclined to agree. Low volumes support prices, low rates support prices, (imaginary) threat of imminent inflation supports prices. A reasonable supply of cheap mortgages for a limited buyers with good credit is sufficient to maintain a low turnover in the housing market.

[Bloo Loo]

I would suggest it might actually boost the market a little.

Poor GDP figures might mean more QE and an increased perception in the population that low interest rates are here to stay.

Mortgage payments will be lower... fewer people need to sell, reduced supply, increased mortgage lending, at cheaper rates add to this the dash for assets as QE devalues the currency.

Just thinking out loud.

Why? QE hasnt cured the recession even WITH a huge Stimulus as well.

[thedebtisreal]

I would suggest it might actually boost the market a little.

Poor GDP figures might mean more QE and an increased perception in the population that low interest rates are here to stay.

Mortgage payments will be lower... fewer people need to sell, reduced supply, increased mortgage lending, at cheaper rates add to this the dash for assets as QE devalues the currency.

Just thinking out loud.

So bad economic data raises house prices and good economic data crashes them?

We've entered the twighlight zone.

[Guest_FaFa!_*]

So bad economic data raises house prices and good economic data crashes them?

We've entered the twighlight zone.

Or,

If the economy is doing well, people feel confident, banks lend and house prices go up

If the economy is doing badly, govt slashes interest rates, banks lend and house prices go up

Hmmmm...........

[thedebtisreal]

Why? QE hasnt cured the recession even WITH a huge Stimulus as well.

Its worth point out that low rates have not fed through to new mortgages (except for those banks who stupidly gave out long term rate trackers near the base rate) and QE in my opinion is not doing a darn thing and won't until the government reduces its borrowing so that the QE can find itself to businesses.

[dredwerker]

I'd like to think so, but HPI seems to be behaving like some serial killer in a slasher movie. They stab it, electrocute it, run over it with a car, but it just keeps getting up and killing anyone who's had sex....

My analogy may have lost it's way there at the end...

(Hmm, is this going to be my first double-post?)

LOL

Can we do that to TB/GB?

[Realistbear]

The negative data was a massive BUY signal for stocks:

FTSE 100( FTSE: ^FTSE / ISIN GB0001383545 )

Index Value: 5,267.10

Trade Time: 12:00pm

Change: +60.42 (1.16%)

On the other hand, the currency markets shifted somewhat:

1 GBP = $1.63972 Euro:1.08995

[Darkman]

If it doesn't, the question would rapidly become "What will?"

The bull trap will continue sadly........ UNTIL interest rates rise.

I believe interest rates are the key here.

[crashologist]

I would suggest it might actually boost the market a little.

Poor GDP figures might mean more QE and an increased perception in the population that low interest rates are here to stay.

Mortgage payments will be lower... fewer people need to sell, reduced supply, increased mortgage lending, at cheaper rates add to this the dash for assets as QE devalues the currency.

Just thinking out loud.

Will the QE money eventually swell and swell in the bank to a breaking point about 6 months time when it just spews forth into the economy? Would this save the current housebuyers as their debts fall in real terms?

[Bloo Loo]

The bull trap will continue sadly........ UNTIL interest rates rise.

I believe interest rates are the key here.

Where are the LOW low interest rates for your average jo FTB? you know, 10% down, 25 year repayment?

[dalkent]

Where are the LOW low interest rates for your average jo FTB? you know, 10% down, 25 year repayment?

That doesn't matter does it? Need to force people to sell to drive prices down.

[JonnyTomes]

Its worth point out that low rates have not fed through to new mortgages (except for those banks who stupidly gave out long term rate trackers near the base rate) and QE in my opinion is not doing a darn thing and won't until the government reduces its borrowing so that the QE can find itself to businesses.

Government absorption of QE is a driver here. As is banking absorption. When we do ever get some positive economic data the banks will have a huge battery of cash - stored as an offset against their housing 'assets'. Once the banks perceive their toxic loans as viable, the more foolish spivs will then start dumping cash into the mortgage market left right and center.

However, this does assume that we get positive data anytime soon. The elephant in the room has had so many buns it's trunk is hanging down the stairs and its ar*e is out the window. Positive GDP relies upon people having money to spend, and the confidence to take this out into the general economy. What is everyone spending ALL their money on? Doesn't take a genius to realise its housing and the huge mortgage debts they could never really afford in the first place. You won't get spending out of these people. They'll be no holidays or big ticket items from this demographic slice for the next twenty years.

Sure, there are some people with savings who are financially solvent. But, if you make them pay all of their hard-earned cash into cr*p housing, they also won't be spending in the general economy either. Until housing comes down in price people will have very limited disposable income, and economic growth will be flatlined. The second part of this poison pill is that as long as housing stays high in cost, so does commercial property (development potential etc.). So, redudnant people with a bit of cash who would have started their own business cannot afford shops, office premises etc. So they simply go on the dole. We won't see any meaningful recovery in this country until the housing market re-adjusts. For that we need a change in Government which won't happend (if it happens at all) until June. If we don't get a change of Government anyone who can should pack their bags and leave. Never will the Sun's headline "Will the last person out of Britain please turn out the light?" be more appropriate than at the next election...

[Georgia O'Keeffe]

The negative data was a massive BUY signal for stocks:

FTSE 100( FTSE: ^FTSE / ISIN GB0001383545 )

Index Value: 5,267.10

Trade Time: 12:00pm

Change: +60.42 (1.16%)

On the other hand, the currency markets shifted somewhat:

1 GBP = $1.63972 Euro:1.08995

the stockmarkets not moved since the data was announced it was up 60 through the night folliwing the late Dow rally last night

[JonnyTomes]

Its worth point out that low rates have not fed through to new mortgages (except for those banks who stupidly gave out long term rate trackers near the base rate) and QE in my opinion is not doing a darn thing and won't until the government reduces its borrowing so that the QE can find itself to businesses.

Government absorption of QE is a driver here. As is banking absorption. When we do ever get some positive economic data the banks will have a huge battery of cash - stored as an offset against their housing 'assets'. Once the banks perceive their toxic loans as viable, the more foolish spivs will then start dumping cash into the mortgage market left right and center.

However, this does assume that we get positive data anytime soon. The elephant in the room has had so many buns it's trunk is hanging down the stairs and its ar*e is out the window. Positive GDP relies upon people having money to spend, and the confidence to take this out into the general economy. What is everyone spending ALL their money on? Doesn't take a genius to realise its housing and the huge mortgage debts they could never really afford in the first place. You won't get spending out of these people. They'll be no holidays or big ticket items from this demographic slice for the next twenty years.

Sure, there are some people with savings who are financially solvent. But, if you make them pay all of their hard-earned cash into cr*p housing, they also won't be spending in the general economy either. Until housing comes down in price people will have very limited disposable income, and economic growth will be flatlined. The second part of this poison pill is that as long as housing stays high in cost, so does commercial property (development potential etc.). So, redundant people with a bit of cash who would have started their own business cannot afford shops, office premises etc. So they simply go on the dole. We won't see any meaningful recovery in this country until the housing market re-adjusts. For that we need a change in Government which won't happen (if it happens at all) until June. If we don't get a change of Government anyone who can should pack their bags and leave. Never will the Sun's headline "Will the last person out of Britain please turn out the light?" be more appropriate than at the next election...

Edited October 23, 2009 by JonnyTomes

[abharrisson]

One would hope so... Trouble is the housing market is determined by

1. supply of houses

2. supply of deposits and mortgages

3. people's expectations

At the moment 1 is low, 2 is low but increasing, and 3 is as batty as ever.

Quite right... even though poor gdp figures or rising unemployment or expanding govt debt should arguably be triggers for a reduction in confidence and therefore lessen demand AND increase supply... unfortunately the great british public never seems to join the dots... they only really see the releveance where the media writes a headline as follows:

House prices could soon return to crash mode becasue the economy is stalling again

But what they actually write is

Economic recovery stalls........ to which house owners think... thank christ for that, at least its not something serious like news that house prices are falling again.

[Bloo Loo]

That doesn't matter does it? Need to force people to sell to drive prices down.

Thats true, but its not necessarily interest rates driving this other factor you mention.

That would be the 200,000 Grodon Brown BOASTED about helping to keep their homes.

Low rates have not helped so much as Government paid monthly installments.

then theres the banks buying their own possessions through shell companies.

How many of the possessions have you seen sold, a skip appears, then its up for rent.

I have seen 2 very recently...both long term sales and empty...skip, for rent sign, tenants....

Edited October 23, 2009 by Bloo Loo

[Caveat Mortgagor]

Where are the LOW low interest rates for your average jo FTB? you know, 10% down, 25 year repayment?

In the stand-off between buyers and sellers, the sellers breathe more easily due to low rates, yet buyers get impatient!

When rates go up, there will be more motivated sellers. The eventual and long awaited rush of a glut of these entering the market at the same time should prove interesting!

Edited October 23, 2009 by Nick Dastardly