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Realistbear

Wall St Journal: Housing Soft Landing Not Happening

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What a Bear week this is turning out to be? :o

http://www.realestatejournal.com/buysell/m...24-corkery.html

Housing Slump Proves Painful

For Some Owners and Builders

By James R. Hagerty and Michael Corkery

From The Wall Street Journal Online

F

or years, real-estate brokers and home builders promised that the soaring property market eventually would glide to a soft landing. These optimists predicted that home prices, which had more than doubled in parts of the country between 2000 and 2005, would continue to rise, but at a more normal pace of 5% or 6% a year.
It isn't working out that way.
The rapid deterioration of the market over the past 12 months has caught many homeowners and builders off guard.
Some are being forced to cut prices far below what their homes could have fetched a year ago. It's too early to say how hard the landing will be, but at a minimum it will be bumpy for many people who need to sell homes. And the economy as a whole, buoyed in recent years by the housing frenzy, could suffer..../
"It would be difficult to characterize the position of home builders as other than in a hard landing,"
says Robert Toll, chief executive of luxury home builder Toll Brothers Inc., which reported yesterday that net income fell 19% in the third quarter ended July 31.
In his 40 years as a home builder, Mr. Toll says, he has never seen a slump unfold like the current one.
"I've never seen a downturn in housing without a downturn in employment or... some macroeconomic nasty condition that took housing down along with other elements of the economy," he says. "This time, you've got low unemployment, you've got job creation, you've got a stable stock market and relatively low interest rates."
It gets worse, read on.................../

That is THE MOST BEARISH report I have read so far from a credible news source. A "soft landing" was never on the cards as USD house prices are up over 100% on the coasts and 20% overall. We are up 300% since 1996 and some think we are going to get a "soft" landing here? :lol::lol::lol:

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you can't compare the market in the US to the UK market, they operate in a totally different way.

don't be so **** a hoop over bad economic news - it could affect you adversly too. Try and be a bit more positive and take control of your own circumstances and situation rather than seeing it as someone elses problem.

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A big increase in supply seems to have played a part here - something we don't have in this country

We have had a big increase in supply in the UK (especially newbuild flats). Up to now this has been counterbalanced by an even bigger demand, but much of this demand has been speculative and could dry up very quickly in a downturn.

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you can't compare the market in the US to the UK market, they operate in a totally different way.

don't be so **** a hoop over bad economic news - it could affect you adversly too. Try and be a bit more positive and take control of your own circumstances and situation rather than seeing it as someone elses problem.

I have lived in both countries for many years and bought & sold during the Big Crash and the Great Crash. Our market is an exact mirror of the US bubble markets with identical features: unsustainable HPI, accomodative rates, IO proliferation, speculative buying of 2nd homes, MEW, salary lag etc.. California is most like the UK market and we mirrored them throughout the 1989-96 crash with the only difference being we trailed them by 6 months. I sold in CA in 1989 just getting top of the market and my house dropped $100k within 2 years. I bought in the UK in 1991 and paid 189K for a bungalow in Surrey that had last sold in the mid-1980's for 260k.

The US will drag the UK market down as it always has. A recession in the US is a recession + in Europe. We will tank harder than the US because our HPI is that much higher and our personal debt levels exceed those of the US on a per-capita basis. Further, the US economy is driven by the housing sector 32% whereas our economy is 72% dependent which means a crash here is REALLY going to hurt.

Both the US and the UK peaked around 2005, late 2004 and we are both seeing a sharp decelleration in the YoY figures going from double digit to low single digit in less than 18 months. We are, at best 5% YoY (with some local areas going negative) and the US is barely at 1% YoY. IN another 6 months we will be 1% or less YoY. Its happening exactly the same again.

Try to be more positive? I AM being postive as this HPI-MEW Miracle Economy is a disaster and the quickler it ends the better for everyone except BTLers and greedy 2nd home owners. I am totally in control of my circumstances because I STM'd in late 2003 and have invested wisely outpacing property by a huge margin ever since. Gone mostly to cash now as recession looms and that is not good for stocks. Also 100% debt free and living rent free also with STM funds covering everything with ease. That's what I call "in control." Whereas the sheeple who bought into Gordon's promise of no more bust, only boom, are threatened with losing everything including their health, marriages and credit rating. Its a terrible legacy for Gordon Brown to face one day. Tragic.

Edited by Realistbear

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We have had a big increase in supply in the UK (especially newbuild flats). Up to now this has been counterbalanced by an even bigger demand, but much of this demand has been speculative and could dry up very quickly in a downturn.

Yup, was down in Surrey recently and there are loads of new blocks of empty flats everywhere. Even up here in the northlands (Warwickshire) we have new developments of houses empty. In the village next to where I live a builder couldn't shift any of his linked detached and now has FOR LET signs up. The local property paper is full of "no upward chain" sales and reduced prices. The bear market is beginning to pick up some pace.

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Funnily enough I recently lived very close to Northern Virginia where the story of the auctioned house comes from. Now I live in London.

The property markets are not the same.

Even though metropolitan DC is extremely urbanised it is sprawled out everywhere and yet there is still room to build more and more big new houses - constrained only, in fact, by demand.

The same is certainly not true in London.

RB, look up the work 'circumspect'. If you were a little more so, you would have much more credibility.

Edited by BoredTrainBuilder

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London might not have the same lack of constraints as US cities, but what about the the Thames Gateway site in East London where 40,000 new homes are planned...? How will that effect an overpriced market?

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New homes sales ststas out--also bad. Inventory levels as bad as 1995:

http://www.marketwatch.com/News/Story/Stor...amp;siteid=mktw

ECONOMIC REPORT

Sales of new homes fall 4.3% to 1.07 million

Inventories of unsold homes at 11-year high

By Rex Nutting, MarketWatch
Last Update: 10:19 AM ET Aug 24, 2006
Washington (MarketWatch) - Sales of new homes dropped 4.3% in July to a seasonally adjusted annual rate of 1.07 million, the Commerce Department said Thursday.
Inventories of unsold homes rose to an 11-year high,
while median prices flattened out.
New-home sales are down 21.6% in the past year. So far this year, sales are down 14.2% to 682,000 from 796,000 at this time last year.
July sales pace was the lowest since February's 1.038 million annual pace. July's sales were weaker than the 1.10 million expected by economists surveyed by MarketWatch. See Economic Calendar.
Inventories of unsold homes rose 1.1% to a record 568,000 in July, representing a 6.5-month supply at the July sales rate. T
hat's the largest months' supply since November 1995.
All of the increase in inventories came in completed homes. About 18% of homes for sale have not yet begun construction.
Inventories are up 22.4% in the past year.
Builders have said they are cutting prices and offering incentives to boost sales to keep inventories from building up.
The median sales price in July was up 0.3% year-over-year to $230,000.
The report confirms a dramatic decline in real estate in July
. The Federal Reserve will be keeping a close eye on the impact of the housing bust on the rest of the economy as it tries to steer the economy between recession and inflation.
On Wednesday, the National Association of Realtors said sales of
existing homes
fell about 4.1%
to a seasonally adjusted annual rate of 6.33 million, while inventories rose to 13-year high and year-over-year price appreciation was flat. Prices were up just 0.9% in the past year. See full story.
Builders' sentiment has collapsed in the past year
, housing starts are down, and major builders have reduced their forecasts for construction for this year and next.
The government cautions that its housing data are subject to large sampling and other statistical errors. Large revisions are common.

Hard landing confirmed. :o

Funnily enough I recently lived very close to Northern Virginia where the story of the auctioned house comes from. Now I live in London.

The property markets are not the same.

Even though metropolitan DC is extremely urbanised it is sprawled out everywhere and yet there is still room to build more and more big new houses - constrained only, in fact, by demand.

The same is certainly not true in London.

RB, look up the work 'circumspect'. If you were a little more so, you would have much more credibility.

Its Bear news, Bulls don't like Bear news and try to undermine it with their own opinions that tend to run counter to heavyweight articles from such as the WSJ. For a Bull, to admit that the UK is going to suffer the same as OZ and the US would be tantamount to capitulation. We went down in 1989 and stayed down until 1996 and mirrored the US market in timing and depth of the collapse. The crashes of the 70's and 80's were also in tandem with the US. Nothing changes.

"It won't happen here" are the dying words of the blind to the obvious. Almost as bad as "it's different this time" or "houses only go up in price."

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Its Bear news, Bulls don't like Bear news and try to undermine it with their own opinions that tend to run counter to heavyweight articles from such as the WSJ. For a Bull, to admit that the UK is going to suffer the same as OZ and the US would be tantamount to capitulation. We went down in 1989 and stayed down until 1996 and mirrored the US market in timing and depth of the collapse. The crashes of the 70's and 80's were also in tandem with the US. Nothing changes.

"It won't happen here" are the dying words of the blind to the obvious. Almost as bad as "it's different this time" or "houses only go up in price."

I see that you still have some work to do on your circumspection.

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you can't compare the market in the US to the UK market, they operate in a totally different way.

don't be so **** a hoop over bad economic news - it could affect you adversly too. Try and be a bit more positive and take control of your own circumstances and situation rather than seeing it as someone elses problem.

House prices can go down as well as up - what goes up comes down!

The bigger they are the harder they fall

:-D

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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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