Jump to content
House Price Crash Forum
Sign in to follow this  

Bloomberg: Homebuilder Confidence In U.s. Drops To 11-year Low

Recommended Posts

What is it about the US, they never seem to be plagued with the same spin we have to endure...


Homebuilder Confidence in U.S. Drops to 11-Year Low (Update3)

June 19 (Bloomberg) -- Confidence among U.S. homebuilders dropped to an 11-year low this month amid a glut of unsold homes and rising mortgage rates.


Share this post

Link to post
Share on other sites

What is it about the US, they never seem to be plagued with the same spin we have to endure...


No, that is not true. 18 months ago the spin was just as bad if not worse than the UK. In the US there is about 3 cable channels that are devoted to home improvements, flipping, and houses in general. The newspapers are still bullish on houses even during the mini crash we are going through. What you are seeing in the UK are reports from the internet that are more factual than local newspapers or the TV in the US.

I think the same is also true in the UK. The TV and newspapers will remain bullish right up the point when everything is crashing around them. I think a lot of newspaper revenue comes from adds from Estate Agents and Money Lenders, so they can't be seen as bearish. My local newspaper today has decent size ads from banks and other money lendors and a 3 page spread on houses for sale. This revenue accounts for at least 60% of all newspaper add revenue. I don't expect any non biased reporting from them.

Check for yourself. Get todays Evening Standard and count all the money lending and home related adds. The front page today makes a lot more sense when you realize where most of their ad revenue is coming from.

Forget the spin....keep your eyes and ears open to what the BoE and Fed say and do. They are in control of house prices - no one else.

Edited by Pluto

Share this post

Link to post
Share on other sites

What is it about the US, they never seem to be plagued with the same spin we have to endure...


I don't understand what your saying!


s it a good idea to leverage properties?

Posted: 6/19/2006

Fleet Heating & Air Conditioning


Editor's note: Industry Vista is a weekly column providing officials from various industries the opportunity to share thoughts on issues affecting their Northern Nevada companies. Today's column is by Andie Wilson, commercial sales and leasing associate and principle for Coldwell Banker Premier Brokers. (Photo by Reno Gazette-Journal)

Although buying properties outright might seem initially appealing, you may be surprised at the benefits of buying with borrowed money.

The benefits might include an increased rate of return, significant tax breaks and incentives, and increased realization of real estate appreciation through divers-ification.

Leveraging might increase risk, but those risks might be offset by potential rewards, especially in an appreciating real estate market where a higher volume of real estate purchased means increasing your total real estate appreciation over time.

Your equity dollars will often work more productively when leverage is used, effectively boosting your yield from the same investment.

A simplified example of this could be as follows:

Buyer A purchases a property for $1 million and pays cash for the purchase. The property generates $100,000 in net rental income, annually. The property is appreciating at a rate of 10 percent per year.

At the end of five years Buyer A has received $500,000 in rental income and the property has appreciated to $1.61 million.

In that five-year period Buyer A's investment has grown from $1 million to $2.11 million. Her return on this investment is 16.8 percent per year.

Buyer B uses his $1 million as a down payment and purchases five buildings with a 25 percent down payment on each building. Buyer B now owns $4 million in real estate with $3 million in loans on those properties.

Using the same parameters as Buyer A above, the properties generate $400,000 a year in net rental income and appreciate at 10 percent per year. In addition, the loan payments on $3 million in loans at 7 percent interest with a 25-year amortization, are $254,440 a year.

Buyer B's properties are generating $145,560 a year in net rental income.

Buyer B is also paying down his loans, on average, $4,419 a month in principal in addition to the interest due.

At the end of the five-year holding period Buyer B has received $727,800 in net rental income, paid down $265,140 in principal on his loans, and the properties have appreciated by $2.44 million for a total market value of $6.44 million on the five buildings.

Buyer B's investment has now grown to $4.43 million and Buyer B's return on investment is 44.7 percent per year.

Buyer B was able to generate a greater return on investment by taking advantage of the appreciation on five properties instead of one, as well as generating more annual net rental income using leverage on all the properties than he would have paying cash.

A qualified real estate professional or investment specialist can help you decipher these concepts, and show you the short- and long-term risks and rewards of leveraging versus paying all cash.

The Reno Gazette-Journal Business section welcomes your views on our Monday Industry Vista column. Please e-mail your letters to business@rgj.com, fax them to 788-6458, snail mail them to Business section, Reno Gazette-Journal, Box 22000, Reno, NV 89520-2000 or drop them off between 8 a.m. and 5 p.m. weekdays at our office at 955 Kuenzli St. in Reno.

Share this post

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%

  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.