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Yankee

Why We Should Cheer When The Bubble Pops

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This guy has the housing situation in perspective:

IT'S funny how much comfort people can derive from something as transparent as a bubble.

Now that home prices in some markets are showing signs of moderating, lamentations are rising from all sides about the many bad things that may happen as a result. These include bankruptcies, foreclosures, bank failures, unemployment and recession.

Unfortunately, all of this hand-wringing tends to distract from the essential truth about soaring home prices, which is that they are a bad thing. So before you become carried away with mourning, let me break the news: the housing bubble never loved you. The bubble is not even your friend. In fact, the very best thing you can say about the passing of this particular bubble is "good riddance."

Read the full article here:

http://www.nytimes.com/2005/09/18/business...ney/18cont.html

(My apologies if this has already been posted.)

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Excellent article!

It goes to show there is still some sanity in the media, albeit the US media.

Why does it take the NY Times to state the obvious?

What's so bad about skyrocketing home prices? Almost everything. First, they make life awfully difficult for people who aren't already homeowners and do little for people who are, because selling one inflated house only to buy another affords little profit.

This argument is central to the whole bubble debate, but bring it up down the pub and you'll be politely ignored.

"We made another £15,000 this year on our flat."

"No you didn't, it just means that when you come to move you have to borrow more money to move up the ladder."

"Umm..."

"Do you understand what I mean?"

"Uhh... Anyway, we've decided to use some of the money to go skiing next month."

"Uhh, ok. That sounds like fun."

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This guy has the housing situation in perspective:

Read the full article here:

http://www.nytimes.com/2005/09/18/business...ney/18cont.html

(My apologies if this has already been posted.)

I know the BBC get slated regularly on HPC, and generally it is justified.

However their economics editor Evan Davies made the case for falling prices last year:

Why I want a House Price Crash

:)

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There are other factors (some are non-PC) to consider as to why house prices in the UK still seem reluctant to fall:-

We have a smaller country with higher population density with few opportunities for new build due to a limited supply of available land to build on.

High population density which is growing at a ridiculous rate keeping up the pressure on prices to resist falls.

Fear that those who don't act now will only be left able to afford a sh1thole, or rent, in a chav/ethnic/druggy infested area drives them to borrow (unwisely) as much as possible to make sure it's not them.

The unspoken desire to eventually live in a nice, safe, leafy, white suburb with good schools again requiring people to borrow vast sums allowing them 'membership' of these regions. As always the high cost will conspire (help) to keep out the you-know-whats.

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Even Fox News is doom laden, with the popping of the US bubble you can forget about an upturn in the UK market for a decade or so.

Coming after Ophelia in the alphabet, its name begins with an R, as in "real estate bubble (search)." And it's going to leave a path of destruction, starting with plummeting real estate values and hemorrhaging bank balance sheets. Banks have been stuffing those balance sheets with mortgage assets: in 1980, mortgage-related assets were 20 percent of total bank credits; now, in 2005, they are 61 percent of that total.
But when it comes to one of our national pastimes (and I don't mean baseball), it's hard to keep people from pointing fingers. There's even a new piece of paraphernalia to help play the game. It's a giant foam rubber hand with forefinger extended and the words, "It's Your Fault!" written on it, manufactured by a company called ShiftTheBlame.

Fox News

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As more and more warning headlines about the housing bubble are popping up, even Fed Chairman Alan Greenspan felt compelled to address it last week. He pointed out that "history has not dealt kindly with the aftermath of protracted periods of low-risk premiums." Which, translated, means: Watch out. When mortgage rates go up and home prices stop increasing, it's going to be a killer for people who have overextended themselves and bought real estate they could not normally afford.

Well, it's good to see that Greenspan is finally ready to acknowledge what readers of Bob Prechter's Conquer the Crash learned a few years ago: that too much credit (and easy credit, at that) has been helping to blow up a huge asset bubble around real estate. Bob is predicting a bear market so large that it will result in a deflationary depression, in which stocks, bonds, and – yes – houses will lose value. Read this excerpt from Conquer the Crash to get some advice on what to do to prepare for the popping of the housing bubble.

After the stock experience of 2000-2001, people are saying, "maybe stocks can come down for a few months from time to time, but real estate won't; real estate never has." They are saying it because real estate is the last thing still soaring at the top of the Great Asset Mania, but it, too, will fall in conjunction with a deflationary depression. Property values collapsed along with the depression of the 1930s. Few know that many values associated with property – such as rents – continued to fall through most of the 1940s, even after stocks had recovered substantially….

http://www.elliottwave.com/features/defaul...at=pmp&aid=1907

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  • 301 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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