Are We Imune?

[music man]

http://www.usatoday.com/money/economy/hous...ome-sales_x.htm.

Please comment you bulls... you normanlly criticise anyone with a global viewpoint, actually any viewpoint.

Has the boom been created micro-economically or is the 0% IR in Japan not at all related to this one. I use the word boom in this HPI as it is generally agreed and wisely so because after every boom is a bust.

And state why we will not be effected by the States.

When they catch a cold the rest of the world sneezes as they say.

Oh - and turning from Oil rich to energy negative in £'s every month is not good.

Why Oh why, you bullies can you not see what is clearly in front of your eyes.

Edited August 16, 2006 by music man

[adibrown]

http://www.usatoday.com/money/economy/hous...ome-sales_x.htm.

Please comment you bulls... you normanlly criticise anyone with a global viewpoint, actually any viewpoint.

Has the boom been created micro-economically or is the 0% IR in Japan not at all related to this one. I use the word boom in this HPI as it is generally agreed and wisely so because after every boom is a bust.

And state why we will not be effected by the States.

When they catch a cold the rest of the world sneezes as they say.

Oh - and turning from Oil rich to energy negative in £'s every month is not good.

Why Oh why, you bullies can you not see what is clearly in front of your eyes.

Its probably because we have seen these arguments time and time again for the past 4 years.

Supply and Demand...Supply and Demand...Supply and Demand. Housing shortage in the South East. Change in demographics increasing numbers of single dwellers....Olympics in 6 years....UK economy continues to grow.....interest rates still lower than 2000......BTL's buying property for long term investment (depreciating interest in pensions/stock market) so do not ditch if short term gains dont add up (unlike 89).

Why oh why can people not see....the crash is simply not happening, not in the South East anyway....perhaps other areas in the UK do need some correction.

[Bobbins]

Music Man,

I'm not a bull - far from it.

However, the US housing market couldn't be more different. Whilst interest rates in the US are only 50 basis points ahead of the UK, they have just gone through 17 (yes seventeen) consecutive interest rate rises, whilst the UK has has 1 (yes one) rise in the last two years.

House prices are largely driven by sentiment, and 17 interest rate rises impacts that sentiment. One rise has less of an impact.

For UK prices to drop, sentiment needs to take a hit - whether that be by interest rate rises or the media. After all the market in the South East dipped 10% after the BoE raised rates from 3.5 to 4.75% in 2004.

Becuase 4.5-4.75% interest rates are now the norm, sentiment is still high.

[music man]

It's amazing how quick you bulls come out.

In fact surprising for a site called housepricecrash.co.uk.

I've only just listened to my new track 6 mins maybe and here you are. Although the times are messed up starngely.

Are we micro-economic?

Maybe a straight answer would be good. And also how do we deal with the rising insolvencies and DEBT.

[OnlyMe]

Music Man,

I'm not a bull - far from it.

However, the US housing market couldn't be more different. Whilst interest rates in the US are only 50 basis points ahead of the UK, they have just gone through 17 (yes seventeen) consecutive interest rate rises, whilst the UK has has 1 (yes one) rise in the last two years.

House prices are largely driven by sentiment, and 17 interest rate rises impacts that sentiment. One rise has less of an impact.

For UK prices to drop, sentiment needs to take a hit - whether that be by interest rate rises or the media. After all the market in the South East dipped 10% after the BoE raised rates from 3.5 to 4.75% in 2004.

Becuase 4.5-4.75% interest rates are now the norm, sentiment is still high.

The US market predominantly runs on lifetime (of the loan) fixed rates, so that ultra-low rates were only really a factor for those taking up ARMS (under the advice of Greenscum - now nice of him to do that so he could keep the boat afloat whilst still at the helm).

Average US prices are in the region of $220K - so no comparison with the UK.

The place where sentiment will change is the banks and lenders when their profligacy comes back to bite them on the **** (and those who have bought the packaged debt) when it all turns sour. Unemployment is rising, bankruptcy is rising and in the face of this lenders are relaxing their lending criteria and pumping out ever higher motrage multiples to try and paint the tape. This is a recipe for disaster.

Edit : France looks like it might have topped too - froam 15% inflation last year, to 8%, to a slight negative number last month.

If locations all over the world are getting to be better value the UK is going to carry merrily on its way, raising prices, raising costs, squeezing manufacturers, squeezing services - it is not going to happen.

Edited August 16, 2006 by OnlyMe

[Guest muttley]

Why oh why can people not see....the crash is simply not happening, not in the South East anyway....perhaps other areas in the UK do need some correction.

Why do yo think there will be a correction in the rest of the UK? What about.......Change in demographics increasing numbers of single dwellers....Olympics in 6 years....UK economy continues to grow.....interest rates still lower than 2000......BTL's buying property for long term investment (depreciating interest in pensions/stock market) so do not ditch if short term gains dont add up (unlike 89).

?

[music man]

The US market predominantly runs on lifetime (of the loan) fixed rates, so that ultra-low rates were only really a factor for those taking up ARMS (under the advice of Greenscum - now nice of him to do that so he could keep the boat afloat whilst still at the helm).

Average US prices are in the region of $220K - so no comparison with the UK.

The place where sentiment will change is the banks and lenders when their profligacy comes back to bite them on the **** (and those who have bought the packaged debt) when it all turns sour. Unemployment is rising, bankruptcy is rising and in the face of this lenders are relaxing their lending criteria and pumping out ever higher motrage multiples to try and paint the tape. This is a recipe for disaster.

Maybe we did it the other way round - we have realxed criteria for a long time to raise bank capital under a fractional reserve system.

And debt is coming home home to roost.

As a FTB looking around I went to A town called Thetford and in one agency they had 8 repos in 3 weeks.

Success comes with failure - It's a Jin / Jang thing.

And as lots of successes have come from huge monetary inflation a.k.a. HPI, Commodity Inflation, Oil price inflation etc. the debt has grown for countries to pay off.

This is clearly a predisposed move to a credit crunch where debt is proportionately high to the average Joe in the street.

To assume that economies are uncontrolled is mind boggling to me,.

[OnlyMe]

Maybe we did it the other way round - we have realxed criteria for a long time to raise bank capital under a fractional reserve system.

And debt is coming home home to roost.

As a FTB looking around I went to A town called Thetford and in one agency they had 8 repos in 3 weeks.

Success comes with failure - It's a Jin / Jang thing.

And as lots of successes have come from huge monetary inflation a.k.a. HPI, Commodity Inflation, Oil price inflation etc. the debt has grown for countries to pay off.

This is clearly a predisposed move to a credit crunch where debt is proportionately high to the average Joe in the street.

To assume that economies are uncontrolled is mind boggling to me,.

Agree, it strikes me if you wanted to enginee a disaster and cripple as many people financially as possible this is exactly the way you would go about it.

[music man]

You guys know I have no answers but many questions and thanks for the replies. I'm just not buying when there are so many gamblers in the market.

A studio for sale round here is on at £100K and it's..... well. I best not say. Yet 2 bed £90K flats are coming down £10K in price.

And there are many big high value properties up for sale as a Bull reminded me.

This is obvious - it props up the stats and distorts reality. I know I'm right but others may be right as well and have differing views.

I look for reality in the lies that are told frequently and that may be why the S.E is distorted as well.

Nobody knows.

[MadJock]

As a Brit who owns property in the UK and has been living in the US for 8 years, I can tell you that anyone that says the markets between the two countries are chalk and cheese hasn't looked at both closely. Both boomed in the late 80s/early 90s then crashed to a low in the mid 90s, with a slow rise in the late 90s and then raising to multiples like 10x salary over the last 5 years. Both are marked by massive entry of investors/BTL buying up multiple properties in a heavily leveraged manner, and people who would not have bought otherwise doing so because of historically low interest rates and very easy lending. People who would not get a loan 5 years ago (or 5 years from now) get given $750k to spend without requiring a dollar of their own put in. Fraud at all levels is rampant, from self-certification, to appraisal fraud. Economic growth in both countries has predominantly come from two area - growth in housing/real estate/mortgage finance industries, and consumer spending financed by MEW. When the MEW stops, the jobs go. Homebuilders in both countries have gone overboard turning every brownfield site into 'luxury flats' ensuring massive oversupply for years to come.

Both countries have pushed the cheap money from the Fed and BOJ into property rather than into training, equipment and productivity improvements - in other words wasting it. They've been able to do this without inflation stopping it because they can use the cheap Chinese imports, Indian services, and fiddled figures to hide it, but economic reality will catch up eventually.

How soon? Well, givent hat the builders in the US are looking at 50% drops in their orders, and last months sales of houses in CA were down about 40% on 2005, and inventories in most locations are up over 100% in a few months - I'd say it was pretty much here.

And the last similarity? Everyone with a vested interest will tell you why it could all crash, except of course their area because they are <insert reason why they are different>.

[mightytharg]

http://www.usatoday.com/money/economy/hous...ome-sales_x.htm.

Please comment you bulls... you normanlly criticise anyone with a global viewpoint, actually any viewpoint.

Has the boom been created micro-economically or is the 0% IR in Japan not at all related to this one. I use the word boom in this HPI as it is generally agreed and wisely so because after every boom is a bust.

And state why we will not be effected by the States.

When they catch a cold the rest of the world sneezes as they say.

Oh - and turning from Oil rich to energy negative in £'s every month is not good.

Why Oh why, you bullies can you not see what is clearly in front of your eyes.

I'm not a bull, but I'll have a go. I'm assuming your fear is that our own price inflation could go as low as 3.7%

"The median price for a home in the USA rose 3.7% to $227,500"

As I mentioned over on the dark side. The difference is that in America they have relatively free markets, whereas in Britain you are slaves under the yoke of socialism. America have been building record numbers of new houses while in Blighty we have record numbers of refused planning applications. The councils have the power and they are laughing at your pain from their subsidised "key worker" houses.

Think you can escape by voting them out? How? They are encouraging over a million more people to come from socialist countries each year? They will all be able to vote here soon.

DOOOOOOOOOOOOOOOOMED!

[music man]

'The councils have the power and they are laughing at your pain from their subsidised "key worker" houses.'

There really are no reasons are there if you look at debt as a system of control.

And thus credit inflation a.k.a. debt structure is implemented with fury and investment opportunities because of debt. It's all based on debt if you look at the systemic structure.

As I say some win and many loose - i.e. the 8 repos. in 3 weeks in Thetford from 1 agency.

Please don't forget the downward pressure when the rest of this years insolvency and repo. figures come to fruition. The amount of Repos in this area will increase and the result will be harsh.

And may not even show because of the large amount of 4bed really nice £450K properties that have not been built with the boom.

The crash is happening here though it has been stagnant for a while but now I see it. I's getting worse.

More high value prperty and less sales. It's the end of a long run, but still potential BTL landlords are sucking air through their teeth and they are gonna get hit for future profits.

Once again many of the BTL lardlords will make huge amounts as they recently have and accumulate property but there will be fall outs. And recent ones as well. It's the band wagon / greatest fool theory we hear about and have posted on the site.

So micro-economic - as a question. Is a bunch of repos hitting an area gonna cause a negative HPI?

[dessie123]

As a Brit who owns property in the UK and has been living in the US for 8 years, I can tell you that anyone that says the markets between the two countries are chalk and cheese hasn't looked at both closely. Both boomed in the late 80s/early 90s then crashed to a low in the mid 90s, with a slow rise in the late 90s and then raising to multiples like 10x salary over the last 5 years. Both are marked by massive entry of investors/BTL buying up multiple properties in a heavily leveraged manner, and people who would not have bought otherwise doing so because of historically low interest rates and very easy lending. People who would not get a loan 5 years ago (or 5 years from now) get given $750k to spend without requiring a dollar of their own put in. Fraud at all levels is rampant, from self-certification, to appraisal fraud. Economic growth in both countries has predominantly come from two area - growth in housing/real estate/mortgage finance industries, and consumer spending financed by MEW. When the MEW stops, the jobs go. Homebuilders in both countries have gone overboard turning every brownfield site into 'luxury flats' ensuring massive oversupply for years to come.

Both countries have pushed the cheap money from the Fed and BOJ into property rather than into training, equipment and productivity improvements - in other words wasting it. They've been able to do this without inflation stopping it because they can use the cheap Chinese imports, Indian services, and fiddled figures to hide it, but economic reality will catch up eventually.

How soon? Well, givent hat the builders in the US are looking at 50% drops in their orders, and last months sales of houses in CA were down about 40% on 2005, and inventories in most locations are up over 100% in a few months - I'd say it was pretty much here.

And the last similarity? Everyone with a vested interest will tell you why it could all crash, except of course their area because they are <insert reason why they are different>.

Excellent poost MadJock.

I agree with all your statements and they are soundly based on economic theory. However, the wisest and wealthiest will come through the housing cycle unscathed, leaving those least equipped to deal with the pain and the scenario will begin all over again again(although may take a decade +). Ultimately the whole process is creating a society with greater and greater disparities between the rich and poor! This is the economic reality!

It's notoriously difficult to assess how much the global economy impacts the housing market as most nations are incredibly inward looking when it comes to personal finances although the forces of globalisation should continue to limit any of the downsides of the excesses of the good times e.g the last decade in the U.K as deflationary pressures hold firm in the economy. The low productivity created by wasted funds may take a century to unwind as the western economies continue to retain intellectual capital and a USP in a wide range of services and technology, however the next generation will live in a very different world.

Edited August 17, 2006 by dessie123