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munimula

Is The Us Housing Market Crumbling?

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We have repeatedly said that the key indicator for most of the world’s major stock markets is the US housing market. The Philadelphia Housing Market Index has now fallen to its major support level of 225. Any further weakness from here would be a prelude to a shock.

Because of the importance of this indicator, it has been our policy each fortnight to publish the latest news from the US housing market – it is getting worse!

Ten Las Vegas house projects have been halted or put on hold.

Toll Brothers, one of the major luxury house builders in the US, have said that their second quarter orders were down 33%.

Not surprising, bearing in mind the above, the National Association of House Builders say that the industry’s confidence is the lowest it has been since 1995.

According to the Washington Post a greater proportion of mortgage financers tapped their home equity for cash in the first quarter 2006 than any other quarter in 15 years. More than 50% of these applicants borrowed at higher rates.

One of America’s leading mortgage lenders, Ameriquest, is closing 229 branches and laying off 3,500 employees. (A clear indication of sharply lower activity.)

According to the Commerce Department, housing starts in April were down 7.4% at an annual rate of 1.85 million, the third consecutive monthly decline and the slowest since November 2004.

According to the Wall Street Journal, late payments on mortgages are rising. Delinquencies are sharply higher on loans made last year.

According to a recent study, 29% of 2005 purchasers now have no equity in the homes.

America’s new jobs figure for March was 138,000 - economists had estimated 200,000. 138,000 is the lowest since October last year and it followed three months of downward revisions.

The University of Michigan’s Consumer Confidence Index for April was 79, compared to 87.4 in March, the lowest since Hurricane Katrina.

Lombard Street Research said this week that the US economy had peaked and was tipping into an unstoppable bust. The property market is crumbling - “the real US hard landing starts now”.

By John Robson & Andrew Selsby at RH Asset Management Limited, as published in the Onassis Newsletter, a fortnightly newsletter that gives insight into the investment markets.

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One of America’s leading mortgage lenders, Ameriquest, is closing 229 branches and laying off 3,500 employees. (A clear indication of sharply lower activity.)

pretty drastic !

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Lots and lots of bearish news from across the Atlantic:

Flippers ‘Panic-Stricken’ In ‘Terrible Ghost Towns’

Some housing bubble reports from Florida. “Today’s tough housing market is pitting neighbor against neighbor in the selling wars. Ken and Wilaiwan Koch have had their home on the market for five weeks and already lowered the price $10,000. Their neighbors to the right have dropped their price from $345,000 to $269,900 since November. Their neighbor to their left reduced his home from $344,500 to $309,900.”

“Competition is stiff. Inventory is at an all-time high, 50,000 homes for sale in Lee County, according to (realtor) John McWilliams.”

“‘There are no stinking buyers around here and these people are panic-stricken, everyone can smell the fear,’ (realtor) Debbie Elentrio said. ‘If you don’t have to sell, now is not the time.’ But her client’s panic impacts the homes around her. Her neighbors, who live six houses away, dropped their price from $549,000 to $499,900.”

“But homeowner Christopher Jacob, who also is a realtor’, doesn’t blame that on his neighbor. ‘I think people who are mad at each other want to make the most money and that’s not going to happen right now,’ said homeowner Christopher Jacob, who also is a realtor.”

“‘The market got out of whack,’ he said ‘Now it’s coming back into reality. Your house is only worth what someone will pay for it.’”

The Palm Beach Post. “Joe Passarelli wakes up anxious and sweaty some nights, wondering how much longer it will take to sell his never-lived-in townhouse south of Stuart. Despite slashing his asking price by $55,000 to $285,000 and keeping vigil at sparsely attended open houses for six months, he still has no takers.”

“‘They come, they look, they give a low-ball offer and they leave,’ said Passarelli, a New York native.”

“If he doesn’t sell the four-bedroom home, he’ll have to walk away from contracts on two other investment homes, one in the new Port St. Lucie community where he lives and another in West Palm Beach. If he pulls out of those deals, he’s down $80,000. ‘I was never much of an investor before this wild craze began, and somehow I backed into it,’ Passarelli said.”

“Meanwhile, the communities’ builders, Centex Homes Inc. and Lennar Homes Inc., also are continuing to jockey for buyers. Passarelli said the builders are undercutting him and other sellers as they try to unload their inventory.”

“Passarelli made out well last year, grossing about $100,000 on a home he flipped in St. Lucie West and an additional $50,000 from his mortgage and real estate business. But this year is emerging quite differently. ‘The end result is it may have to all be given back,’ he said.”

“‘For Sale’ signs peer from curtainless windows, and real estate agents’ lockboxes are affixed to doorknobs. For full-time residents, the result is downright depressing. Lou and Marie Cucci have few neighbors. Across the street and on both sides of them, homes sit empty. ‘There are more places for sale than occupied right now,’ Lou Cucci said.”

“In Newport Isles, Passarelli said he and his wife take walks after dinner to count the lockboxes. As an investor who’s also living in an investor-laden community, he sees all sides of the fallout.”

“We thought we were going to meet new neighbors and new friends, and it’s been like a terrible ghost town,’ Passarelli said. ‘This is not family living as they advertised it.’”

“Fearing they’ll lose more if they hang on to homes in the community, some investors are walking away from deposits of $30,000 to $50,000, said Stuart-based real estate broker Mike Morgan. ‘What happened there is no different than what happened in the condo market and everywhere else: greed, greed, greed,’ Morgan said.”

“Elizabeth Weed and her cousins got sucked into the craze. ‘The exact words that were told to us were, ‘Oh, you’re going to make money. It’s just a matter of how much you want to make,’ said Weed. Within days, each of the four women plunked down a $25,000 deposit on a Lennar townhouse in Martin’s Crossing, locking in the $249,000 price.”

“Now, three of them are considering a lawsuit against Lennar and Centex, claiming the developers misrepresented how visible a nearby trailer park would be from their homes, and the fourth lost money on the home she finally managed to resell. ‘It’s not as if we were these great big investors. The four of us said, ‘Let’s get together and do this.’ Never, ever, ever again,’ said Weed.”

these people are panic-stricken, everyone can smell the fear

Seems to be moving along nicely out there

Luvvly chubbly

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Lots and lots of bearish news from across the Atlantic:

Seems to be moving along nicely out there

Luvvly chubbly

Tuberider, where did you get that article from? URL if possible please.

I've a few friends who have been considering buying in Florida, they might be interested to read this article (and wait).

Thanks,

Xil.

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'I was never much of an investor before this wild craze began, and somehow I backed into it'

Note how the 'greatest fools' never say 'I was a ******tard who made a really stupid decision': instead it's something that just happened to them, so they shouldn't have to take the blame or any responsibility.

I've a few friends who have been considering buying in Florida, they might be interested to read this article (and wait).

Why would anyone in their right mind buy a house in Florida today? Even if houses weren't overpriced and crashing, we're in the middle of a major hurricane period.

I have an acquaintance who bought a holiday home in Florida a few years ago: wonder if they're still above water on it (literally and figuratively :))?

Edited by MarkG

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Yeah, however interest rates in the US have gone up five fold in 18 months....

Imagine interest rates in the uk had gone from 4% to 20% in 18 months, im pretty sure the housing market would also crash. Will we see such extreem IR movements in the uk?

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interest rates in the US have gone up five fold in 18 months....

But mortgage rates have barely doubled since they bottomed out a few years ago. I believe the lowest you could ever get (ignoring short-term low-rate trickery) was around 3.5% and the lowest is now around 6-7%.

That's not much more of an increase than we've already had on mortgage rates in the UK.

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Those that remain will be alligator fodder:

http://www.cbsnews.com/stories/2006/05/15/...in1620674.shtml

"We are building more and more into wild territories"

I like Florida, despite all the old people and the crap overrated beaches with murky water and little sharks that take chunks out of your calf when you go for a paddle

But buying one of those wooden US homes there in that big hurricane zone - yep total nuts - let alone calling it an investment. I think with this kind of investor acument a US housing crash is a done deal, fuggedaboudit

P.s Cletus Van Damme ... wasn't that Shane's alias during the armenian money train? great season of the shield, I gotta get number 4 on DVD

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Yeah, it's happening here in the U.S...can't you hear that giant sucking sound of Americans' home equity going down the drain from across the big pond?

Florida (both coasts), Las Vegas, San Diego, Boston, Washington are falling like rocks and on deck is LA, San Fran, NYC and Phoenix. In my book, here's the real evidence...a few weeks back the NYTimes, which of course is notoriously liberal and is a rah-rah real estate booster ad nauseum, had a pic of a house with a "for sale" sign and icicles on it on its front page. "A Chill Is In The Air For Sellers"

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The US is not directly comparable with the UK. American buyers have seen interest rates increase almost 500 per cent; we are not in the same boat. :)

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American buyers have seen interest rates increase almost 500 per cent

Don't you even read the thread before posting? I already pointed out that was nonsense up above.

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http://uk.biz.yahoo.com//23052006/214/taylor-woodrow-ceo-retire.html' rel="external nofollow">
LONDON (ShareCast) - Housebuilder Taylor Woodrow said group chief executive Iain Napier will retire in the Spring of 2007 to become the non-executive chairman of Imperial Tobacco
Napier, who is already joint vice chairman at Imperial Tobacco, has spent five years at Taylor Woodrow (LSE: TWOD.L - news) since joining as chief executive in 2002.
"He has been responsible for steering Taylor Woodrow successfully through a period of significant change and considerable growth," said Taylor Woodrow chairman Norman Askew.

A period of considerable growth that is now at an end?

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The US is not directly comparable with the UK. American buyers have seen interest rates increase almost 500 per cent; we are not in the same boat. :)

Really? Funny, I thought that if you'd check the house price graph going back to the 1980s, that there was a very close relationship between US and UK housing price changes. But I could be wrong.

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Hey StevieK

are you out there in the US ?

any good anecdotal evidence you can share with us?

tell us something man

Yeah, I live in Charlotte NC (official capital of the "New South" and 2nd largest banking city in the U.S.), but kept my place in NYC when I moved here 3 years ago. I was thinking about selling the NYC place several months ago, but realize I have missed the mark, as there are now a ton of places for sale on my block. Most are not selling and the stubborn fools refuse to lower their prices. So it's a stalemate that buyers will ultimately win on. My sister lives in Long Island, about 50 miles from Manhattan and she says prices have already dropped about 5-10% since the beginning of the year.

I was around for the last major real estate recession in NYC. I hear the same garbage now that I did back then - "this piece of property can't be replicated", "people always want to live in a world class city", "real estate never goes down - especially in New York". Yet, my best friend bought a Manhattan condo in 1988 that he sold in 1996 - FOR A LOSS. 8 year hold for a negative return. Yikes!

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Guest Winners and Losers

"people always want to live in a world class city", "real estate never goes down - especially in New York"London, . Yet, my best friend bought a Manhattan condo London flat in 1988 that he sold in 1996 - FOR A LOSS. 8 year hold for a negative return. Yikes!

But have you not heard?? It can never happen here. :rolleyes:;)

Edited by Winners and Losers

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Yeah, I live in Charlotte NC (official capital of the "New South" and 2nd largest banking city in the U.S.), but kept my place in NYC when I moved here 3 years ago. I was thinking about selling the NYC place several months ago, but realize I have missed the mark, as there are now a ton of places for sale on my block. Most are not selling and the stubborn fools refuse to lower their prices. So it's a stalemate that buyers will ultimately win on. My sister lives in Long Island, about 50 miles from Manhattan and she says prices have already dropped about 5-10% since the beginning of the year.

I was around for the last major real estate recession in NYC. I hear the same garbage now that I did back then - "this piece of property can't be replicated", "people always want to live in a world class city", "real estate never goes down - especially in New York". Yet, my best friend bought a Manhattan condo in 1988 that he sold in 1996 - FOR A LOSS. 8 year hold for a negative return. Yikes!

I have a friend who bought a condo in New York in the early 90s, when prices were suppressed. She sold it last fall for a huge profit and is now renting. Her realtor has told her that the NYC market has since stalled. My friend timed it perfectly. She thanks me. :) She was in a bit of financial trouble, and I "ran the numbers" for her to show her that she'd be better off renting than owning--at least until the market cools back down.

People who think that prices will never fall in their city, neighborhood, etc., are in real denial.

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People who think that prices will never fall in their city, neighborhood, etc., are in real denial.

Absolutely. I just don't understand where this mindset comes from. I think it's a combination of:

- people have very short term memories

- there are many young people buying who have no knowledge of the history of real estate markets

- people getting caught in the frenzy to keep up with the Joneses

- absurdly risky lending practices by banks

- immigrants who also have no historical perspective on markets they have not lived in for a long time

- stupidity

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hey StevieK

thanks

I have relatives in Winston Salem, coincidentally they are trying to sell up and move back to Europe but the falling dollar and softeneing market are playing havoc with their plans

I was around for the last major real estate recession in NYC. I hear the same garbage now that I did back then - "this piece of property can't be replicated", "people always want to live in a world class city", "real estate never goes down - especially in New York".

could not agree more - same tired arguments recycled over and over - its a wonder more people do not wise up to this whole pyramid scam, the amount of times its been perpetuated you'd think they would have learned

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The US is not directly comparable with the UK. American buyers have seen interest rates increase almost 500 per cent; we are not in the same boat. :)

As Mark G pointed out above. Interest rates might have gone up 500% but mortgage rates have gone up less than 100%

So it is comparable to what 'could' happen here.

Mortgage rates - fixed deals were around 3.5% here a few years ago, they are already knocking on 5% and that's before the base rates actually go up!

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hey StevieK

thanks

I have relatives in Winston Salem, coincidentally they are trying to sell up and move back to Europe but the falling dollar and softeneing market are playing havoc with their plans

You are welcome. Luckily for your relatives, although the dollar continues to be worthless, most U.S. "non-coastal" real estate markets, sans Las Vegas, should be in for a much softer landing than the coasts. Historically, the coastal cities have always been much more volatile.

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We sold our house in Florida in December for the full asking price - thank god we got out of there as the reports from our friends out there are not clever. Mrs Grommit was getting slightly worried as we had two hurricanes go right overhead which pretty much trashed the locality. The National Guard came out and set up curfews and helped get things sorted, but it was not fun.

For Brits thinking of getting into Florida, just a few words of caution;

1) the real estate agents charge 6% to sell the place. With all the closing costs etc, it is much more expensive to sell than here in the UK

2) The IRS withholds 10% of the sale price for capital gains and then you have to fight to get it back

3) When the money finally hit the Bank of America, they tell me I cannot arrange a money transfer back to the UK unless I am standing in the branch in Florida for security reasons. Their advice was to give the money to a friend who lives locally and then get them to send the money back. I could not believe they were saying this to me.

Glad to be home actually. There is only so many burgers you can eat. We are off to Italy this year for a bit of "sanity!!!". The other thing, the price of flights to Florida is much, much higher than previous years. The rental agents we worked with out there had their worst year in 2005 for UK people going over to rent. Don't believe any of the hype of guaranteed rental levels, these will not happen.

Grommit

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You are welcome. Luckily for your relatives, although the dollar continues to be worthless, most U.S. "non-coastal" real estate markets, sans Las Vegas, should be in for a much softer landing than the coasts. Historically, the coastal cities have always been much more volatile.

I think you need to make an exception for Arizona too. 'For Sale' inventroy there has gone from single digit thousand to nearly 50,000 in the space of a few months - their rise was driven by speculation, principally from CA, and will plummet as soon as CA house price rises stall.

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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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