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It's Happening In The Us

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By Roger M. Showley


1:55 p.m. February 13, 2006

– San Diego County resale housing prices began the new year inching moderately upward, but a
record drop
in new housing prices pushed the
overall median down
from December levels, DataQuick Information Systems reported today.
The January median stood at $490,000, down 5 percent from December
but still up 2.5 percent from year-ago levels – the lowest year-over-year rise in nearly seven years.
Sales dropped from 4,262 transactions in December to only 2,763 last month
, reflecting the usual seasonal pause in buying and selling activity.
But, in the new-housing category, which included newly built homes as well as apartments converted to condos for sale,
there was a $104,000 drop from $539,500 in December to $435,000 last month.
That dollar decline represented an
all-time record change
, based on DataQuick reports back to 1988; while
the 19.4 percent decline was the second biggest after a 24 percent decline recorded in July 1997

The median seems to be the most reliable measure of where prices are going. With a reported drop of 5% overall in one month it is difficult to imagine how this is not the "Big One" so many have been expecting for so long. Annualised the drop is terrifying. Resales seem to be bucking the trend although thse may reflect fewer, more expensive, homes being sold. With new sales builders tend to react to market conditions more quickly offering discounts to "move the bricks" before the punters dissappear.

What does this mean for the UK? In the history of booms and busts Californina and the UK have been the most closely linked in terms of timing and scale of loss.

Its interesting that the President issued a statement that the market will not crash but have a "soft landing." Yeah-right--just like all the soft landings that house price bubbles have experienced in the past! :lol:

HPC 2006.

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Having been a "global citizen", living and working alternately in San Diego and the UK over the past six years, I'm very surprised by this news. I had expected the UK's bubble to pop first since our valuations seemed even more ludicrous given the difference in incomes between SoCal and the UK.

I put it down to mentality: you never hear the words "housing ladder" over there and renting is a perfectly acceptable way of living. San Diegans also have a much broader understanding of investment and finance.

Another factor may be the sheer amount of construction taking place in SD County over the past few years. Also condo conversions (when rented apartment complexes start selling off individual units). Yes, there is an influx of migrant workers there, as here, but there is also a lot of new housing (plenty of desert to build on). Oh and interest rates stateside are rising at a rate of knots.

I think the UK has been very lucky not to have seen a crash to date. It must come down to the economy: if we had boomed over the past few years, we would have seen IR rises, house prices crash and then a recession. In fact, the economy here has only just been strong enough to break even with tax and energy price increases. So no boom and bust, my best guess is that, external shocks aside, we'll see a long painful slump in UK economy and house prices.

San Diego will be able to weather their little localized crash, the wider economy in that region is very strong.

Edited by echapps

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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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