Welcome To The Capitulation Stage?

[Acid In The Punch Bowl]

I wholeheartedly accept that it is a bit early for a thread with this title but I have definitely noticed a change in reporting recently.

The weird thing is I had imagined capitulation to be like despair and submission to the inevitable. However it seems to be moving towards a realisation that it is a good thing and necessary.

It's amazing to see the mass mindset moving in slow motion. These last few months have been fascinating.

[catmandu]

I wholeheartedly accept that it is a bit early for a thread with this title but I have definitely noticed a change in reporting recently.

The weird thing is I had imagined capitulation to be like despair and submission to the inevitable. However it seems to be moving towards a realisation that it is a good thing and necessary.

It's amazing to see the mass mindset moving in slow motion. These last few months have been fascinating.

Capitulation is not about the media's view. The real capitulation stage can only come about when homeowners are so desperate that they think it's better to sell at a ridiculously low price compared to their expectations. I don't think we're there yet, but we're not far away - there are many stories of people accepting 10% or more less than asking. Probably needs 30% or more less than asking before it can be considered capitulation given that 10% less than asking is actually still a very good price for most vendors.

Certainly though, the media seem to have warmed to the new reality.

[Si1]

capitulation will be when people respond 'huh' to mentions of house prices, apathy, like share prices in 2009

[_w_]

Capitulation will be when prominent politicians will stop comparing rent lowering measures to ethnic cleansing.

We are, depressingly, far from it yet. These people never give up.

[interestrateripoff]

I've noticed too that there does appear to be more of a bearish view being permitted in some quarters.

[Bloo Loo]

capitulation?

we havent had the FEAR yet.

Fear has been covered with taxpayer handouts to the overindebted, the over paid and the over pensioned.

If that doesnt change, maths will do it for us....and maths has no mercy....

[Reluctant Heretic]

I wholeheartedly accept that it is a bit early for a thread with this title but I have definitely noticed a change in reporting recently.

The weird thing is I had imagined capitulation to be like despair and submission to the inevitable. However it seems to be moving towards a realisation that it is a good thing and necessary.

It's amazing to see the mass mindset moving in slow motion. These last few months have been fascinating.

I agree - it's funny isn't it how the predictions change in line with unfolding events. For example, 'housing market to remain buoyant despite economic turn down' becomes 'price increases to slow' becomes 'prices to fall slightly' and ... eventually ... 'prices crashing hard'.

[zilly]

Besides, people just won't sell unless they have no choice.

That's a Sibleyism - and it just doesn't work like that in practice.

As prices start to drop, people see properties that were previously out of reach financially appearing on their radar. So of course they will sell - and it doesn't matter if they get less for their place, as it's all relative.

Smart people will grasp the chance to buy a bigger place for less money.

The mathematically illiterate Sibleys of this world will sit tight waiting for the 'recovery' so they than have the privilege of paying more for their next place.

[hedgefunded]

capitulation?

we havent had the FEAR yet.

Fear has been covered with taxpayer handouts to the overindebted, the over paid and the over pensioned.

If that doesnt change, maths will do it for us....and maths has no mercy....

Yeah, but you can prove anything with facts.

[Bloo Loo]

I agree - it's funny isn't it how the predictions change in line with unfolding events. For example, 'housing market to remain buoyant despite economic turn down' becomes 'price increases to slow' becomes 'prices to fall slightly' and ... eventually ... 'prices crashing hard'.

to change the habits of 15 years is difficult.

[EMac]

As with the previous phases we've had of our so-far accurate bubble diagram it's not a sudden switch for everyone in denial to fear and from fear to capitulation but a gradual change in ratios. Even now there will be those still in denial, those fearful and even some who have capitulated and actually put their house on the market for a reasonable price, which is then quickly sold.

It's all about the majority thinking though and at the moment I personally believe that the majority is in the fear stage. Sure some have capitulated but nowhere near enough to say we've entered that phase yet.

[Bloo Loo]

As with the previous phases we've had of our so-far accurate bubble diagram it's not a sudden switch for everyone in denial to fear and from fear to capitulation but a gradual change in ratios. Even now there will be those still in denial, those fearful and even some who have capitulated and actually put their house on the market for a reasonable price, which is then quickly sold.

It's all about the majority thinking though and at the moment I personally believe that the majority is in the fear stage. Sure some have capitulated but nowhere near enough to say we've entered that phase yet.

if the majority are in fear, why are they calling for more availability of mortgages.

Fear will be here when there are mortgages going begging....its the stage that starts competitive lending again.....just makes one wonder how they can possibly reduce criteria any more??

[exiges]

if the majority are in fear, why are they calling for more availability of mortgages.

I don't think "they" are. I think that's mainly noise from VIs + MSM.

I think as more people are being squeezed more people are seeing current prices are ridiculous, it's a big oil tanker to turn around and will take time.

Edited October 29, 2010 by exiges

[bricor mortis]

Not really convinced we are in the fear stage, there are few forced sellers.

I think we have gone through Mexican standoff territory between buyers and sellers, to sellers having to discount more than they would have wished should they really want to sell up.

If the market does not dip around 1% a month between here and spring ( that WOULD create fear ) then we are just treading water im sorry to say.

I would just like to add that there is a fair possibility that the economy of the UK is in a much worse state than GDP figures for Q3 indicate, and we may yet have a game changing economic recession / depression.

[lets get it right]

Capitulation is not about the media's view. The real capitulation stage can only come about when homeowners are so desperate that they think it's better to sell at a ridiculously low price compared to their expectations. I don't think we're there yet, but we're not far away - there are many stories of people accepting 10% or more less than asking. Probably needs 30% or more less than asking before it can be considered capitulation given that 10% less than asking is actually still a very good price for most vendors.

Certainly though, the media seem to have warmed to the new reality.

The housing market doesn't work by people suddenly accepting 30% less than asking. It is a long, slow grind on the way down with asking prices begrudgingly dropped by 5k or 10k at a time. And, possibly, people accepting another smallish margin below their asking price.

Capitulation is not really a feature of the housing market and, in a market as illiquid as housing, is never likely to be.

I had a look yesterday at the auction results for the latest auction at a local agents - not a huge number of properties to be fair - but, nonetheless the vast majority of them sold at up to 10% above guide.

There is very little sign of capitulation where I live. And, in the last week, two I have been watching have gone under offer. Doesn't mean much, but it does mean offers are still being made and accepted.

[SarahBell]

capitulation?

we havent had the FEAR yet.

Fear has been covered with taxpayer handouts to the overindebted, the over paid and the over pensioned.

If that doesnt change, maths will do it for us....and maths has no mercy....

+1

There's very little fear out there. No huge numbers of repos. Plenty of financial support for people who lose their jobs.

Are there figures for repos about?

[lets get it right]

I would just like to add that there is a fair possibility that the economy of the UK is in a much worse state than GDP figures for Q3 indicate, and we may yet have a game changing economic recession / depression.

If we were going to have a game changing recession/depression surely we would be in it now.

But we aren't. People are spending less, people are borrowing less, people are paying down their borrowing.

Yet the economy is still growing. And thank heavens for that.

I've argued against it in the past - but, then again, I've been wrong about a lot of things (particularly the house price crash I've been waiting 7 years for) but it seems to me that the debt is going to be paid down gradually and some of it is going to be inflated away. It's going to take 20 years and in that period we are going to see a (continuing) structural shift in property ownership - with a lot more renting and a lot more people with big property portfolios.

I work from home and I can hear the dulcet tones of Martin and Lucy on Homes Under the Hammer drifiting into my office most mornings. It seems to me that the people on there at the moment are all serial property investors. 2 young lads a couple of days ago (dad was a builder/developer) had 9 (or was it 15?) properties and loads of them are saying things like 'this is property 36' and 'this is property 27' etc.

Despite the alleged death of BTL and the alleged death of the BTL mortgage market, these feckers are still expanding their portfolios - because the rents they get are so high.

I really do hate to say it, but I think your generation is fecked.

[EMac]

What stage would you say we are in then?

Return to normal/denial? - Not seeing many deniers these days. Most have taken on board the economic reality and at the very best expect the market to flatline (when have you ever seen an economic cycle show flat for an extended period)?

Fear - Many news stories reporting house price decline and this as a very bad thing. Lots of anecdotals on fearful people and friends/family sentiment turned to a bearish outlook. Still a stand off between buyers/sellers as though people may be fearful they still hold on to hope that a miracle will pull the market back from the brink.

Capitulation - For this to happen many more sellers will need to price realistically and sales will pick up. Sentiment on housing as an investment will be destroyed. The market will continue to fall.

Despair - This is when most people will be telling you to stay away from housing but as we're approaching the bottom it is actually a good time to buy if circumstances allow.

Return to the mean - We haven't got low enough to be able to return to it!

Not only the sentiment, but for me the shape of the bubble also points to fear.

Now you can rubbish the model all you like but it's still a good fit for what we're seeing at the moment.

Edited October 29, 2010 by EMac

[Bloo Loo]

What stage would you say we are in then?

Return to normal/denial? - Not seeing many deniers these days. Most have taken on board the economic reality and at the very best expect the market to flatline (when have you ever seen an economic cycle show flat for an extended period)?

Fear - Many news stories reporting house price decline and this as a very bad thing. Lots of anecdotals on fearful people and friends/family sentiment turned to a bearish outlook. Still a stand off between buyers/sellers as though people may be fearful they still hold on to hope that a miracle will pull the market back from the brink.

Capitulation - For this to happen many more sellers will need to price realistically and sales will pick up. Sentiment on housing as an investment will be destroyed. The market will continue to fall.

Despair - This is when most people will be telling you to stay away from housing but as we're approaching the bottom it is actually a good time to buy if circumstances allow.

Return to the mean - We haven't got low enough to be able to return to it!

Not only the sentiment, but for me the shape of the bubble also points to fear.

Now you can rubbish the model all you like but it's still a good fit for what we're seeing at the moment.

I beleive that a couple fo months ago, where we were seeing much conflict in the figures and opinions, that we were at the change from the bull trap to the fear phase....For me, the fear phase is just starting.

In the US, securitization is on the road to total abandonment, the frauds the bankers have commited are slowly being exposed, yet the debts they accumulated are still there. they will have to be outed some way or another for a full recovery to take place.

That sbodes badly for the future of prices of any asset supported by borrowing...failed banks cant lend except what people save, and investors cant touch securitization with a barge pole.. It started there, it came here and its going to be nasty.

[lets get it right]

I beleive that a couple fo months ago, where we were seeing much conflict in the figures and opinions, that we were at the change from the bull trap to the fear phase....For me, the fear phase is just starting.

In the US, securitization is on the road to total abandonment, the frauds the bankers have commited are slowly being exposed, yet the debts they accumulated are still there. they will have to be outed some way or another for a full recovery to take place.

That sbodes badly for the future of prices of any asset supported by borrowing...failed banks cant lend except what people save, and investors cant touch securitization with a barge pole.. It started there, it came here and its going to be nasty.

To compare the US with 300 million people in a country that is 40 times the size of the UK with 60 million people and draconian planning laws - is to compare chalk and cheese.

And, as we have seen, printing money seems to have no negative consequences.

[cybernoid]

Despite the alleged death of BTL and the alleged death of the BTL mortgage market, these feckers are still expanding their portfolios - because the rents they get are so high.

I really do hate to say it, but I think your generation is fecked.

We're very much in wait and see mode at the moment, the pace of change now since thie coalition have been in power is far greater than it has been at any other time during the boom. And by change here i mean policy change as well as some encouraging figures.

I'm giving it a couple of years and if it turns out i can't have a reasonable standard of living here for a reasonable cost despite having gone through the financial crisis and a change of government there will be no point of staying in the uk, and, reluctantly, i will go.

It will be sad to watch the suffering of the people and the decline of such a once great country from afar, but it won't be as sad as being there.

[EMac]

I beleive that a couple fo months ago, where we were seeing much conflict in the figures and opinions, that we were at the change from the bull trap to the fear phase....For me, the fear phase is just starting.

In the US, securitization is on the road to total abandonment, the frauds the bankers have commited are slowly being exposed, yet the debts they accumulated are still there. they will have to be outed some way or another for a full recovery to take place.

That sbodes badly for the future of prices of any asset supported by borrowing...failed banks cant lend except what people save, and investors cant touch securitization with a barge pole.. It started there, it came here and its going to be nasty.

I would agree that it's only the start of the fear stage. This is a huge bubble that has built up over many years and it's going to take a long time for the cycle to complete. As I mentioned before I don't think the phases are set in stone but are an indication of what the leading sentiment is so it can be a bit 'blurry' and open to interpretation.

[lets get it right]

What stage would you say we are in then?

Return to normal/denial? - Not seeing many deniers these days. Most have taken on board the economic reality and at the very best expect the market to flatline (when have you ever seen an economic cycle show flat for an extended period)?

Fear - Many news stories reporting house price decline and this as a very bad thing. Lots of anecdotals on fearful people and friends/family sentiment turned to a bearish outlook. Still a stand off between buyers/sellers as though people may be fearful they still hold on to hope that a miracle will pull the market back from the brink.

Capitulation - For this to happen many more sellers will need to price realistically and sales will pick up. Sentiment on housing as an investment will be destroyed. The market will continue to fall.

Despair - This is when most people will be telling you to stay away from housing but as we're approaching the bottom it is actually a good time to buy if circumstances allow.

Return to the mean - We haven't got low enough to be able to return to it!

Not only the sentiment, but for me the shape of the bubble also points to fear.

Now you can rubbish the model all you like but it's still a good fit for what we're seeing at the moment.

As far as 'Return to the mean' goes - the longer we stay above the mean, the more the mean goes up.

As far as fear goes - who cares what the press say? Their daft headlines are meant to sell papers. People are intrinsically optimistic - particularly about housing. That much has been absolutely proved over the last few years.

Despair? When most people will tell you to stay away from housing? Never seen it in my lifetime yet. On the contrary - the level of constant advice to get on the ladder, do it sooner rather than later, houses always go up in the long term etc, etc. - means that despair never happens.

This endless armageddon stuff is becoming very tiresome. How about a reasoned look at what is happening in the economy and the housing market. Despite EVERYTHING the economy is still growing and the housing market is chugging along with minor falls.

Given the current economic situation - aren't you beginning to ask yourself 'what the feck will it take to take the housing market down?'

First they said the market couldn't do without FTBs. It can.

Then they said BTL would die. It hasn't.

Then they said the banks wouldn't be able to lend. They are.

Time to face facts I think.

Edited October 29, 2010 by Let's get it right

[lets get it right]

I would agree that it's only the start of the fear stage. This is a huge bubble that has built up over many years and it's going to take a long time for the cycle to complete. As I mentioned before I don't think the phases are set in stone but are an indication of what the leading sentiment is so it can be a bit 'blurry' and open to interpretation.

Question: When is a bubble not a bubble?

Answer: When it has been inflated slowly and stayed inflated for a long time after the inflation stopped.

[EMac]

Question: When is a bubble not a bubble?

Answer: When it has been inflated slowly and stayed inflated for a long time after the inflation stopped.

New paradigm huh? I thought we'd passed that phase