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The Masked Tulip

Interesting Comment On Us Housing

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http://wallstreetpit.com/56971-stock-market-success-the-two-key-principles-i-have-followed-for-30-years

“The proof the party is over in the U.S. housing market could not be clearer to me. The price action of the new-home builder stocks is telling the true story—these stocks are falling in price daily (and the media is not picking it up). Those that will hurt most when the air is finally let out of the housing market balloon will be those buyers that bought in late 2005. In fact, the latecomers to the U.S. housing market may end up looking like the latecomers to the tech-stock rally that ended so abruptly in 1999.” Michael Lombardi in PROFIT CONFIDENTIAL, March 1, 2006. Michael started warning about the crisis coming in the U.S. real estate market right at the peak of the boom, now widely believed to be 2005.

And this article on US housing:

Why 2011 Won’t be Much Better for the Housing Market

http://wallstreetpit.com/57084-why-2011-wont-be-much-better-for-the-housing-market

Edited by The Masked Tulip

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If you look at the history of booms and busts.. after a great bubble, the market always crashes below the longterm trendline. The American housing market still isnt back to the longterm trendline.

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These are clear contrarian buy signals. At the end of last year, inventory in my part of inner Seattle declined rapidly. It looked like everything decent just sold overnight! I'm thinking of buying a $350K California 4-bed place with cash because I like to own hard assets. It was last sold in 2004 for $700K. Yes, I could lose but you can hardly build these places for the prices they are on for. In real terms it will cost me 175K pounds, as I exchanged at $2 to the pound. I've also made interest on they original cash, so it's probably $2.30 to the pound really. In the little Sussex village I used to live I couldn't even buy an ex-council-house flat for that money. This house has 4 bedrooms, 3 bathrooms, nice garden and in a beautiful area near Sonoma. ;)

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Yes, I could lose but you can hardly build these places for the prices they are on for.

Could that be because some of the materials, commodities, still remain in a bubble, or in part are being supported by extraordinary circumstances. Still high demand in other countries such as India, where sand and brick prices, at least locally sourced, are rapidly rising.

Some perfectly decent building materials should become available at a really low price. Local labour costs should become ever more less of an issue too, with businesses eager for your business. I'm not very US newbuild homes knowledgeable, but my pricing thoughts also includes an understanding you are less able to go about building yourself in the US, and have to use qualified people who hold the correct permits. Architect/site manager/builder: "Can start immediately Mr Xurbia".

Really, how much can a house like this cost to build?

Sonoma 1

Sonoma 2

And there are similar foreclosed properties in less desirable areas of the US selling for very little money. With your logic their prices should be supported by the materials and build cost value? Sonoma hasn't felt the full force of the crash yet.

Edited by Venger

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Could that be because some of the materials, commodities, still remain in a bubble, or in part are being supported by extraordinary circumstances. Still high demand in other countries such as India, where sand and brick prices, at least locally sourced, are rapidly rising.

Some perfectly decent building materials should become available at a really low price. Local labour costs should become ever more less of an issue too, with businesses eager for your business. I'm not very US newbuild homes knowledgeable, but my pricing thoughts also includes an understanding you are less able to go about building yourself in the US, and have to use qualified people who hold the correct permits. Architect/site manager/builder: "Can start immediately Mr Xurbia".

Really, how much can a house like this cost to build?

Sonoma 1

Sonoma 2

And there are similar foreclosed properties in less desirable areas of the US selling for very little money. With your logic their prices should be supported by the materials and build cost value? Sonoma hasn't felt the full force of the crash yet.

Well the house I'm looking at is a much better looker than those two grim dumps but I understand what you're saying. I've looked at building plots and just decided it's not worth the hassle for me. Time is a valuable and I don't want to waste 6 months to a year messing around. There's a lot to be said for a ready built home in a desirable area. I look at what has actually sold recently and the quantity. Buying foreclosures and short-sales can be tricky too. It's very vague. My decision making process is fairly easy: The house has come down 50%. My sterling conversion allows me to be more than 25% inaccurate. Other people have already made a 'contingent' offer. It's a good gut feel deal. The most compelling reason is that I can never be as stupid as the person that paid $700k.

If the USA tanks even more we get hyperinflation and houseprices will rise. If the economy strengthens houseprices will rise. If houseprices continue to fall for the next 5 years I will have learned a valuable lesson! I have no intention of living back in the UK on a permanent basis. The UK prices just look like jokes in comparison.

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Will take your word about foreclosures and short-sales coming with problems when looking to buy. Not saying you should build either, just examining your argument about build costs. Can understand people not wanting the stress of building.

True about you never being as stupid as the person that paid $700K, but where are they now? Buying at a lower value when it's more of your own money on the line, with less credit around, it might still hurt if values fell for five years.

You may have already read this. 3 page story of Estate Agent or Industry opinions for Sonoma. Two of the four reader's comments I find interesting too. I think the cure for recovery is for further falls to bring prices in line with what people can afford, but so much resistance to it, over there and over here. US and UK side, hyperinflation threat or banking collapse, meaning what for younger people here who've been waiting for values to come down to what we can afford? Property market not allowed to fall to lower values objectively in line with economic conditions? UK side, even though so much property is owned outright, or nearing paid off, and it's only those who chose to buy at high prices who would feel it most, or those who've taken money out of their homes? So what do I know.

January 9th, 2011 01:30am

What will Sonoma County home prices do this year?

He noted that about 25 percent of California homeowners owe more than their homes are worth and 9 percent aren't paying their mortgages.

"We have a ridiculously low number of foreclosures given how many people aren't making payments right now," O'Toole said.

State and federal governments have found ways to delay foreclosures, he said. But he doubts that will help matters in the long term.

"If we want a growing economy, we've got to clean out the problems," O'Toole said. "Twenty-five percent negative equity is a big problem."

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Will take your word about foreclosures and short-sales coming with problems when looking to buy. Not saying you should build either, just examining your argument about build costs. Can understand people not wanting the stress of building.

True about you never being as stupid as the person that paid $700K, but where are they now? Buying at a lower value when it's more of your own money on the line, with less credit around, it might still hurt if values fell for five years.

You may have already read this. 3 page story of Estate Agent or Industry opinions for Sonoma. Two of the four reader's comments I find interesting too. I think the cure for recovery is for further falls to bring prices in line with what people can afford, but so much resistance to it, over there and over here. US and UK side, hyperinflation threat or banking collapse, meaning what for younger people here who've been waiting for values to come down to what we can afford? Property market not allowed to fall to lower values objectively in line with economic conditions? UK side, even though so much property is owned outright, or nearing paid off, and it's only those who chose to buy at high prices who would feel it most, or those who've taken money out of their homes? So what do I know.

January 9th, 2011 01:30am

What will Sonoma County home prices do this year?

Hey, thanks for doing the legwork. That's something to be mindful of. I could easily secure a big mortgage on the place to hedge my position! Mortgages are subject to tax relief too. I will also look at rental costs in the area and compare to mortgage costs. Thanks for your help, I appreciate it. :)

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These are clear contrarian buy signals. At the end of last year, inventory in my part of inner Seattle declined rapidly. It looked like everything decent just sold overnight! I'm thinking of buying a $350K California 4-bed place with cash because I like to own hard assets. It was last sold in 2004 for $700K. Yes, I could lose but you can hardly build these places for the prices they are on for. In real terms it will cost me 175K pounds, as I exchanged at $2 to the pound. I've also made interest on they original cash, so it's probably $2.30 to the pound really. In the little Sussex village I used to live I couldn't even buy an ex-council-house flat for that money. This house has 4 bedrooms, 3 bathrooms, nice garden and in a beautiful area near Sonoma. ;)

A good price, is still a good price in the long run even if you don't perfectly catch the bottom.

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  • 312 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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