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gasket37

No U.s. Housing Bust

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Yet another reason why the Independent seems to be the least serious (ex)broadsheet of the bunch.

Front-page: school lessons on celebrating immigration, multi-culturalism, and all things Green; a Property Section devoted to second homes; and now this nonsense....

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I mentioned his quick-change act, because it shows me his time frame. I have no doubt that in its decline towards the negative, the rate of growth of the US housing market will have some big rallies.

People like this cling to every straw all the way down.

What was he saying in April?

Anyways, this housing bust will take five years at least, quite possibly more. We're only just at the very start.

In 2007 will we start to see thousands of American homeowners evicted from their homes, and the banking failures that accompany a bust.

Then the press will call it a recession.

And as in busts gone by, when these broadsheets are saying the market will never recover, it's time to buy.

Interesting how they just reflect public opinion, I won't read much more into it than that.

Edited by BandWagon

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The rise in short-term US interest rates over the past year and a half is undoubtedly the reason for the demise of "condo-flipping". But at the last count, and here is the key, 76 per cent of US mortgages were fixed-rate deals for between 15 and 30 years. Even better, as long-term interest rates fell, households refixed their mortgages at ever lower rates, with little or no penalty.

The main point about ARMs is that, although they don't make up a large part of the overall market, they have been increasingly dominant in the new mortgage market thus pushing up prices and supporting the wealth effect for all property owners.

This refinancing has driven another myth - that the US householder "has been using his home as an ATM" and that, without this effect, consumer spending will collapse. Except, as the Federal Reserve suggests, only around 15 per cent of the $1 trillion of mortgage equity withdrawal actually went on increased consumption. The rest went to refinance existing debt and fund small businesses.

Here he misses the point that the existing unsecured debt will have been used to fund consumption in the first place and that lower debt servicing costs also put money back into consumer's pockets. All these things have provided one off boosts to the economy in recent years.

Housing was responsible for around 40 per cent of US employment growth between 2001 and 2005, and there is naturally talk of mass layoffs now. Less well known, however, is that housing-related employment has contributed only around 13 per cent of the total since 2004. In effect, the housing market helped the US survive the recession of 2000-02 but has ceased to be the key economic driver.

If these jobs are going to be lost it doesn't matter when they were created, the negative effect on the economy will be the same. Also, just because a job appears unrelated to housing doesn't mean it hasn't indirectly been created due to higher housing employment. Construction workers buy goods and services just like everyone else.

This article seems to be a typical piece of one-sided propaganda intended to encourage people not to be too frightened of the equity markets in the coming months. As usual there's no attempt to properly understand and then balance both sides of the debate.

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This refinancing has driven another myth - that the US householder "has been using his home as an ATM" and that, without this effect, consumer spending will collapse. Except, as the Federal Reserve suggests, only around 15 per cent of the $1 trillion of mortgage equity withdrawal actually went on increased consumption. The rest went to refinance existing debt and fund small businesses.

How funny. Existing debt like previous MEWing, previous expenditure on unsecured borrowing is the same thing, except the money is spent first then replaced with MEW. I mean just how many people are now going to be remortgaging soley to get a better "rate" at the moment??

Small business investment? So thats MEWing to spend money in the economy via a company account rather than from the individual. Same difference ffs, doesnt matter how the money is spent, its a dollar MEW'd and put into the economy that wouldnt otherwise be there.

And what about the jobs created through small business investment? What happens when this investment MEW tap gets tuened off? Goodbye jobs, but wait its ok because they arent related to the housing market so they dont count...aaargh!

Edited by DabHand

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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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