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U.s. Former Homeowners Ponder When To Re-Enter Real Estate Market

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http://www.washingtonpost.com/wp-dyn/content/article/2010/07/24/AR2010072400195.html

New york -- In hindsight, Scott Feldman's decision to sell his first home in late 2006 could have been a case study in a textbook called "How to Time the Real Estate Market."

Feldman, who works at a private equity firm, sold his two-bedroom apartment on Manhattan's Upper East Side for $879,000, about 40 percent more than what he paid for it in 2003.

But whether Feldman's return to homeownership proves as financially savvy remains to be seen. After weathering the recession in a rental unit, he bought a five-bedroom house in a New Jersey suburb last spring for 30 percent below the original asking price.

"We probably overpaid for it -- but we're happy here," Feldman said, adding that he and his wife's decision to buy had less to do with calling a market bottom than settling into a community their two young children, nearing school age, could grow up in.

Indeed, while some financially sophisticated professionals who foresaw the housing crisis -- and acted on it -- have re-entered the housing market, others remain renters today. With the fledgling housing-market recovery suddenly deteriorating, these holdouts are scrutinizing the increasingly uncertain economy and doing old-fashioned, shoe-leather research on their local real estate markets as they weigh the timing of their return to homeownership.

Of course, no one is expecting the kind of double-digit annual appreciation that created the illusion of homes as red-hot investments and bottomless cash machines. But as other assets recover from the lows of the financial crisis -- the Standard & Poor's 500-stock index is up 65 percent from March 2009, for example -- and home sales and even prices inch up in some markets, more investors sitting on cash are starting to wonder: Do I dare put my money in real estate?

Those who have bought say they largely wanted to take advantage of record-low interest rates and a recently expired tax credit for homeowners. They also note that prices had dropped to a point where the emotional benefits of homeownership outweighed potential losses from further price declines.

Meanwhile, the holdouts cite a number of reasons for staying put -- cheap rents and still-declining home prices, tight credit and expiration of a popular tax credit to spur home sales, lingering unemployment and rising uncertainty about the economy.

More at the link.

Interesting I wonder how stable the community that they have bought into really is? How many who are living there own or have serviceable mortgages? Buying into today's ideal area could literally be tomorrow's 5h1thole with abandoned derelict homes, the perfect area to bring up your children.

So if some of these people have bought because of the tax breaks, then demand has been brought forward and sales are going to collapse along with prices.

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http://www.washingtonpost.com/wp-dyn/content/article/2010/07/24/AR2010072400195.html

More at the link.

Interesting I wonder how stable the community that they have bought into really is? How many who are living there own or have serviceable mortgages? Buying into today's ideal area could literally be tomorrow's 5h1thole with abandoned derelict homes, the perfect area to bring up your children.

So if some of these people have bought because of the tax breaks, then demand has been brought forward and sales are going to collapse along with prices.

With nearly 20 million empty homes that will be a problem but probably not in some wealthy New Jersey suburb.

Its the places that had the massive booms like Vegas, Phoenix and Florida that will be the squatters's havens.

TaoCondominium3.jpg

These condos in Florida are apparently completely empty.

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With nearly 20 million empty homes that will be a problem but probably not in some wealthy New Jersey suburb.

Its the places that had the massive booms like Vegas, Phoenix and Florida that will be the squatters's havens.

TaoCondominium3.jpg

These condos in Florida are apparently completely empty.

Overpriced are they?

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While on the subject of the US housing market...

(apologies if mentioned)

http://www.guardian.co.uk/business/2010/jul/25/us-economy-bernanke-recession-fears

Spectre of the double-dip haunts uneasy US

Dhaval Joshi at RAB Capital believes it is not feasible for the US economy to return to anything like "business as usual" when it has 4m more homes than it needs, when one in four homes is in negative equity, and when there is an overhang of mortgage debt worth an estimated $4tn – 30% of national output.

Over the years, Joshi says, total mortgage debt in the US has been equivalent to 40% of the value of the housing stock. In 1990, $2.5tn of mortgages supported $6tn of housing collateral, while at the peak of the boom in 2006 there was $10tn of mortgage debt against housing valued at $23tn. "But since then, the US housing stock's value has slumped to $16tn, which means the amount of mortgage lending supportable by the collateral [should have] plunged to $6tn. However, actual mortgage debt has remained at $10tn – $4tn too high.

"The fact that mortgage debt has barely declined suggests that relatively few homeowners have defaulted on their mortgages or paid off debt yet. Instead, a quarter of all borrowers are sitting on negative equity. That's just as well – because were mortgage debt to shrink by even half of $4tn [for example, if homeowners crystallised the debt by defaulting], the US economy would slump."

Stubbornly high unemployment and the bombed-out state of the housing market help to explain why consumer confidence has nose-dived recently. Those who fear a double dip warn that companies, even if awash with cash, are not going to invest unless they can expect strong demand for their products.

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Overpriced are they?

It seems about 10% of the units actually sold but it was to BTL investors and not surprisingly they couldn't find anyone to pay the $2000+ monthly rent to cover their mortgage.

And living in a ghost tower might be offputting as well.

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The Economist ran an article recently on property value around the world.

The US market is now at 'fair value' on the measure of yields and price to earnings.

Of course property usually bottoms at much less than fair value, but if I was a yank I would be much happier to buy in at their prices than ours.

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http://www.washingtonpost.com/wp-dyn/content/article/2010/07/24/AR2010072400195.html

More at the link.

Interesting I wonder how stable the community that they have bought into really is? How many who are living there own or have serviceable mortgages? Buying into today's ideal area could literally be tomorrow's 5h1thole with abandoned derelict homes, the perfect area to bring up your children.

So if some of these people have bought because of the tax breaks, then demand has been brought forward and sales are going to collapse along with prices.

An emerging trend in the US is for EAs to present research to prospective buyers about the level of mortgage debt in the communities in which they are trying to sell houses for precisely the reasons that you state.

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With nearly 20 million empty homes that will be a problem but probably not in some wealthy New Jersey suburb.

Its the places that had the massive booms like Vegas, Phoenix and Florida that will be the squatters's havens.

TaoCondominium3.jpg

These condos in Florida are apparently completely empty.

they even look like a house of card, Im sure thats the joker there trying to convince people they are worth 250K each. ACE

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Russia Today (Sky Channel 512) was running a story yesterday that foreclosure's been over 300,000 a month for over a year! people's finances are in dire state & getting bad to worse with rising unemployment, this is at 0.25% base rate!!!

Talking about unemployment, its been posted here by Swiss Tony (LRMS) that the real figures are touching or are above massive 25% & not bloody 9.5% as we're told by MSM! I have several friends & family over there & nearly half of them aren't working or forced to work part-time, some have lost homes as well, anecdotal evidence for you.

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  • 152 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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