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Condos Crashing In Washingon,d.c., Area,

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There are many great quotes in this article (from the NYTimes). For example:

"The Great Condo Gold Rush is fading from memory and the Great Sell-Off has begun."

"'I hate it when people say prices can never go down,' said Mr. LLosa, a resident of the building. 'The speculators make the profits more volatile.'"

"...weakness in the condo market, he said, 'is a consistent indicator that the great boom has really ended.'"

"For those buyers who had dreamed of quick riches, the change in the market has come as a sobering lesson."

"Ms. Qureshi said she regretted her investments. If she had to do it all over again, she said she would have spent more money on travel and a new car. 'I would have been more carefree and invested once I had a family,' she said." [FTBers, take note.]

"Already, the rate of appreciation in some of the hottest markets for speculators has slowed. In San Diego, the median home price (the exact middle of all prices) rose at an annual rate of just 2.5 percent in January, compared with 20 percent a year earlier, according to DataQuick Information Systems, a research firm.

Last week, in a sign of a broader slowdown in the housing market, Toll Brothers, the luxury home builder, said orders for new homes fell by nearly 30 percent in the three months ended Jan. 31. On Monday, KB Homes also said that orders were down significantly and that more buyers were canceling contracts."

"Some brokers say that speculators have unrealistic profit expectations. 'I think a lot of sellers are saying I should make X percent,' said Eve Thompson, an agent with Long & Foster in Fairfax, Va. 'But your chances of being able to do that are as good as going to Oracle and telling them you want more for your stock.'"

"For now, the bumper crop of properties is a boon to buyers. In San Diego, Tom Hinks, a 21-year-old who is looking to buy a condo downtown, has realized he can take his time.

His approach might scare some sellers. Since Mr. Hinks started looking four months ago, he has viewed 30 condos. 'I've actually liked quite a few of them," he said. "But every day it seems like the prices are starting to trim down so I don't want to pay too much.'"

Here's the link to the entire article. Not all of it is bearish (an impression is left that detached homes won't be affected as much), but I think the bulls quoted may be engaging in wishful thinking.

http://www.nytimes.com/2006/02/17/business...article_popular

:D

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Last week I got more e-mail return fire than ever in response to this sentence: “The Fed is already on the edge of bursting a housing bubble where there was not one in the first place.” Most were certain that there is a bubble, Fed or no Fed, but many were confused.

Try this picture. A drunk comes running down the street past a cop. He hasn’t done anything wrong, he’s just running for the sheer exuberance of it. Cops tend to chase running drunks, and this one does. The drunk is thrilled at the competition. After a while the drunk begins to run out of gas, staggering to a stop just as the frustrated cop catches up and gives him a shove from behind. Faceplant.

The Perfesser says housing will slow gently and not interfere with 3.5% economic growth this year and next. The same guy who intends 5% Fed funds, meaning 8% prime, 8%-plus HELOCS, 9% construction money, ARMs to 7.5%-plus.

Paul McCulley, bond-market-giant PIMCO’s Fed-watcher, wrote last week that “Weakness in residential property activity self-feeds” and that we are in for a cyclical “wicked turn” in the economy, and “unconventional property-market weakness.”

The Perfesser has lost the class, and he’s only taught one.

http://www.mortgagemag.com/today/newsitem.php?item=5119

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This article reinforces the fact that the correction is already well underway in the US. California, Virginia, Massachusetts, NY all report sharp falls with the West Coast leading the way. Its just as Al Greenspan warned a couple of years ago when he coined the "froth" word to describe irrational exhuberance in the housing market. The UK will soon follow as our market always booms and busts at about the same time as the US and for similar reasons.

http://www.signonsandiego.com/news/busines...orniahomes.html

HPC 2006.

Edited by Realistbear

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The history of Fed interest rate raising is that they keep going until something breaks. Looks like the housing market will be what breaks this time, indeed it's already showing pretty big cracks and it looks like at least another two interest rate rises to come.

Fair chance we are witnessing the beginning of a global recession IMO. US real estate falters thus ending MEW and killing spending which in turn hits the Chinese and then the raw material suppliers such as Australia. Hard to see how it wouldn't effect the UK even though it's not as obvious as the US - China - Australia link.

(Yes I know that much of Australia's exports are to countries other than China, but a slowing in China would likely see prices slump which is the point).

Just one question though, TIMING. Anyone got any ideas on how events might unfold and when? My personal thinking is that it takes time to build momentum but then happens rather quickly. Could be wrong though.

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The history of Fed interest rate raising is that they keep going until something breaks. Looks like the housing market will be what breaks this time, indeed it's already showing pretty big cracks and it looks like at least another two interest rate rises to come.

Fair chance we are witnessing the beginning of a global recession IMO. US real estate falters thus ending MEW and killing spending which in turn hits the Chinese and then the raw material suppliers such as Australia. Hard to see how it wouldn't effect the UK even though it's not as obvious as the US - China - Australia link.

(Yes I know that much of Australia's exports are to countries other than China, but a slowing in China would likely see prices slump which is the point).

Just one question though, TIMING. Anyone got any ideas on how events might unfold and when? My personal thinking is that it takes time to build momentum but then happens rather quickly. Could be wrong though.

The Great Crash (1989-96) in California happened literally overnight. One day houses were selling and the next they weren't. IMHO things happen much more quickly these days due, in large part, to the internet. See how quickly news travels on this site! There is a lot of fear in people's minds right now (rational or otherwise) and that is what is causing the spending crash. Add Bird Flu, heating costs and the Moslem cartoon demonstrations to the mix and you have a recipe for recession. It is not the sort of climate where people want to spend money.

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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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