U S Housing First Yo Y Decline In 11 Years

[Pluto]

Yes, that is what many economists here in the US are betting. Many are asking the Fed to following the UK model which avoided the HPC. Also remember that 2008 is an election year and generally the stock market does well during an election year. The stock market cannot do well, if interest rates are kept high. This gives another compelling reason why the Fed will lower rates next year. And that could mean that HPI may start again next year. No wonder the Home builder's index in the US is up 2% today.

Also note that the price decline has been in the condo market which had been extremely overheated. Single family home prices are still flat or rising across the board. Looking at the Australian and the British markets, I doubt that there will be a significant correction here in the US. The Fed will step in and lower the rates before housing goes into a free fall. Its quite possible that they may be too late to avoid it, but the *intention* to avoid the housing collapse is there and the Fed will do anything it can to prevent a HPC from happening. That is not good news for FTBs.

Errr..no. It's not just the condo market. Everything has taked a haircut.

As for cutting rates, I'm not sure the dollar will survive another round of cuts. I think which ever way the Fed goes with interest rates it is totally screwed.

[?...!]

Yes, that is what many economists here in the US are betting. Many are asking the Fed to following the UK model which avoided the HPC. Also remember that 2008 is an election year and generally the stock market does well during an election year. The stock market cannot do well, if interest rates are kept high. This gives another compelling reason why the Fed will lower rates next year. And that could mean that HPI may start again next year. No wonder the Home builder's index in the US is up 2% today.

Also note that the price decline has been in the condo market which had been extremely overheated. Single family home prices are still flat or rising across the board. Looking at the Australian and the British markets, I doubt that there will be a significant correction here in the US. The Fed will step in and lower the rates before housing goes into a free fall. Its quite possible that they may be too late to avoid it, but the *intention* to avoid the housing collapse is there and the Fed will do anything it can to prevent a HPC from happening. That is not good news for FTBs.

It would be very nice for the property market if that was how the Fed worked.

Unfortunately, for your prediction, the American population requires higher rates.

You see...

Americans are continuing to spend more than they earn, if this continues unabaited many people will find themselves stripped of their assets or get their ass hauled into jail.

Americans are spending too much money in stores and not saving enough for the future, the day they retire.

US monetary policy has for the past 5 years been dictacted by fighting torrorism, the fed dropped rates to prevent the dotcom recession being accounted to terrorists, this has lead to imbalances the likes of which we have never seen.

I do sometimes wonder how far into the future Osama Bin Laden tried to predict when orchestrating his vile plan. Did he foresee a time where the American people would grow poorer and poorer through their own spending habits as shown in the graph? I doubt it.

However the economic fallout from that day is still stored up for the future, and as it stands Americans need to start earning more or spending less, both of which will hurt the economy of the entire world.

[Saving For a Space Ship]

Related article

"US rate cuts predicted as house prices start to fall"

http://business.timesonline.co.uk/article/...2374646,00.html

[Realistbear]

The Fed have placed a large bet on the dollar and my greatest fear as a Brit expat is that my hard earned savings are at risk from a collapse in the dollar. Its already down 30% on when I arrived and there is little sign of a recovery. To offset the risk I joined Merrill Lynch who told me they would hedge the risk by inversting in foreign equities and commodities. That sounded good until I realised their plan was to place me in their consults portfolios which include ADRs. This is of course a rather opaque form of investing. I had hoped that ETFs were the solution but found to my cost last year just how volatile they are.

I did ask the Merrill U.S. office to tell me how their UK office are invested and what proportion was in the USA - still no reply!

Peter Schiff of Euro Pacific and Steve Lehmann are very bearish on the US economy and dollar so I wonder whether now is the time to sit on cash held in money markets.

What do y'all think.

I am a long term $ bull as against sterling. With recession looming the UK will suffer more than the US as we have a much more housing dependent economy. Sterling is not only up against the $ it is at a 15 month high against the Euro. This, IMO, spells speculation. The traders are seeing the pound as a higher yielding alternative to the Euro. If Trichet hikes the Eurozone rate high enough the speculators will move back into the Euro as the differential will not be worth the risk factor associated with sterling.

The cycle is over for the UK as a borrow and spend economy. I see the debt ceiling as being months or even weeks away and without borrowing and spending to fuel the economy it has to collapse. The banks are just waking up to the idea that they could be caught short in a downturn and repossession rates are beginning to show up as flashing reds.

The US economy is still doing reasonably well. Oil is tanking and I do not see the Iraq thing lasting beyond another 3 years. It will be another Viet Nam with an Iranian/Russian backed Shiite Mullah take-over the day the US and UK pull out. That will be good for the dollar but bad news for those who aren't so keen on a Theocracy--more Iraqi immigrants to follow.*

The UK is continuing to spend itself into a frenzy despite the warning signs all of which is pound bearish:

http://today.reuters.co.uk/news/articleinv...MES-SEPT-26.XML

PRESS DIGEST - Financial Times - Sept 26

Tue Sep 26, 2006 3:30 AM BST253

SAVING PUT OFF TO PAY MORTGAGE DEBTS

A survey for The One Account has found that people are putting off saving for their future, because of the scale of mortgage debt, and may be forced to work into retirement to pay off their mortgages. The survey found that 36 percent of those polled would be at least 60 years old before they owned their own house, with more than 40 percent of the respondents saying that mortgage repayments prevented them from saving.

http://www.citywire.co.uk/News/NewsArticle...rsionID%3d85202

Published: 07:00 Wednesday 27 September 2006

By: Lorna Bourke, Money Columnist

One of the most alarming developments for lenders is the change in attitude towards paying off debt. Young people, particularly students, frequently have a cavalier approach towards running up debts and walking away.

http://news.independent.co.uk/business/new...icle1747129.ece

Bank: Strong pound has ravaged exports

By Philip Thornton, Economics Correspondent

Published: 25 September 2006

The scale of the havoc wrought on Britain's manufacturing sector by the strength of the pound is exposed today by Bank of England research showing nine of the 12 main industrial sectors have lost their foothold in the global export market over the past decade.

It found that the vast majority of UK factories had to keep their prices closely in line with their foreign rivals, leaving them vulnerable to the massive surge in sterling in the late 1990s.

The UK is a severely debt ridden economy with persoanl debt much higher than the US who "owe" 11.2 trillion $ as against our massive 1.24 trillion pounds with a population one fifth of the size of the US! Strong sterling is destroying the manufacturing base of the country and we cannot go on with HPI being our only industry.

_____________________

* Example: http://news.independent.co.uk/world/asia/article1757264.ece

Human rights groups point out, however, that the battle for women's rights is in serious danger of being lost. There are now entire provinces where there is no girls' education; of the 300 schools shut or burnt down, the majority were for girls. The death rate at childbirth is the second highest in the world, and the number of women who have committed suicide, mainly through self-immolation, has risen by 30 per cent in two years.

Edited September 26, 2006 by Realistbear

[Waitingforthesun]

However, there's one thing nagging away at the back of mind which is worrying me. What if the FED start cutting rates to shore up housing and consumer spending, will the madness continue?

This is exactly what I am afraid of

The only chance would be that it leads to a dollar collapse

In that case, our faith is in the hands of the Chinese... not very reassuring

[goldeneye977]

This is exactly what I am afraid of

The only chance would be that it leads to a dollar collapse

In that case, our faith is in the hands of the Chinese... not very reassuring

Guys,

Let's stop daydreaming. The thoughts posted here indicating an imminent meltdown about UK, US etc etc have an implicit assumption that people like Gordon Brown and Ben Bearnanke are essentially fools who "know not what they do" and we know better. Surely they are aware of the perils much better than you or I.

Debt is not a bad thing if you know how to manage it. In the financial world, the US is a unique country and the US consumer account for nearly 30% of all

world trade. Countries like China and India depend upon the lowly US consumer to sustain their economies. A recession in the US would mean problems for all these so-called growth engines of the future and if the recession does happen, the only option these countries have is to revive the US economy.

The fact that the dollar is bound to fall is known to everyone. And a falling dollar is not as bad as this thread would like to believe. It has happened before and will happen again. The huge budget deficit of the US is a concern but by making the dollar fall and by making the Chinese yuan stronger, a large part of this deficit can be wiped off. The other trump card that the US has is the protectionist measures. If in the future the US start implementing strict import rules, that will spell the doom of countries like China and the local US economy will start flourishing. Of course, the US consumers will not like it since that would mean higher prices, but it is a possibility. Until Chindia develops their own local economies they are mute spectators to the US economy.

Regarding whether the Fed will lower rates or not - I think there is a 90% chance that this will happen next year regardless of the fact about what it can do to the dollar.

[Waitingforthesun]

Guys,

Let's stop daydreaming. The thoughts posted here indicating an imminent meltdown about UK, US etc etc have an implicit assumption that people like Gordon Brown and Ben Bearnanke are essentially fools who "know not what they do" and we know better. Surely they are aware of the perils much better than you or I.

Debt is not a bad thing if you know how to manage it. In the financial world, the US is a unique country and the US consumer account for nearly 30% of all

world trade. Countries like China and India depend upon the lowly US consumer to sustain their economies. A recession in the US would mean problems for all these so-called growth engines of the future and if the recession does happen, the only option these countries have is to revive the US economy.

The fact that the dollar is bound to fall is known to everyone. And a falling dollar is not as bad as this thread would like to believe. It has happened before and will happen again. The huge budget deficit of the US is a concern but by making the dollar fall and by making the Chinese yuan stronger, a large part of this deficit can be wiped off. The other trump card that the US has is the protectionist measures. If in the future the US start implementing strict import rules, that will spell the doom of countries like China and the local US economy will start flourishing. Of course, the US consumers will not like it since that would mean higher prices, but it is a possibility. Until Chindia develops their own local economies they are mute spectators to the US economy.

Regarding whether the Fed will lower rates or not - I think there is a 90% chance that this will happen next year regardless of the fact about what it can do to the dollar.

[Waitingforthesun]

Guys,

Let's stop daydreaming. The thoughts posted here indicating an imminent meltdown about UK, US etc etc have an implicit assumption that people like Gordon Brown and Ben Bearnanke are essentially fools who "know not what they do" and we know better. Surely they are aware of the perils much better than you or I.

Debt is not a bad thing if you know how to manage it. In the financial world, the US is a unique country and the US consumer account for nearly 30% of all

world trade. Countries like China and India depend upon the lowly US consumer to sustain their economies. A recession in the US would mean problems for all these so-called growth engines of the future and if the recession does happen, the only option these countries have is to revive the US economy.

The fact that the dollar is bound to fall is known to everyone. And a falling dollar is not as bad as this thread would like to believe. It has happened before and will happen again. The huge budget deficit of the US is a concern but by making the dollar fall and by making the Chinese yuan stronger, a large part of this deficit can be wiped off. The other trump card that the US has is the protectionist measures. If in the future the US start implementing strict import rules, that will spell the doom of countries like China and the local US economy will start flourishing. Of course, the US consumers will not like it since that would mean higher prices, but it is a possibility. Until Chindia develops their own local economies they are mute spectators to the US economy.

Regarding whether the Fed will lower rates or not - I think there is a 90% chance that this will happen next year regardless of the fact about what it can do to the dollar.

I see that like most speculators you believe in the so-called "Greenspan put" (FED will lower rate at any problem and flood the markets with liquidity to keep bubbles inflating" and the US is simply "too big to fail".

Of course Benmarke knows what he is doing, and he may cut rate very aggressively like Greenspan did in 2001-2002

But last time, US dollar was a strong currency, the US budget was in surplus, US T-bonds were hold by Japanese...

Of course a recession in US would hurt China and the rest of Asia, but theu know the dollar will fall one day, the longer the worse

And Chinese have their own political agenda, and will compete with US for oil

USA has no industry anymore, if they try protectionism, China will just dump T-bonds, you are dreaming if you think a fall in US dollar will be a charming walk and local US economy will flourishing

If FED cuts rates, it may bounce the market, but because of falling dollar and increasing inflation, the tightening will be harder in the future (remember what Volker has to do?)

By the way, cutting rate to 1% did not prevent the stock market bubble to explode

[MarkG]

The thoughts posted here indicating an imminent meltdown about UK, US etc etc have an implicit assumption that people like Gordon Brown and Ben Bearnanke are essentially fools who "know not what they do" and we know better.

And?

Why should Brown and Bernanke do any better than any previous governments at managing to miraculously avoid a crash after an artificial boom?

If in the future the US start implementing strict import rules, that will spell the doom of countries like China and the local US economy will start flourishing.

LOL. Yeah, they'll be able to export all those flying pigs around the world.

[goldeneye977]

I see that like most speculators you believe in the so-called "Greenspan put" (FED will lower rate at any problem and flood the markets with liquidity to keep bubbles inflating" and the US is simply "too big to fail".

Of course Benmarke knows what he is doing, and he may cut rate very aggressively like Greenspan did in 2001-2002

But last time, US dollar was a strong currency, the US budget was in surplus, US T-bonds were hold by Japanese...

Of course a recession in US would hurt China and the rest of Asia, but theu know the dollar will fall one day, the longer the worse

And Chinese have their own political agenda, and will compete with US for oil

USA has no industry anymore, if they try protectionism, China will just dump T-bonds, you are dreaming if you think a fall in US dollar will be a charming walk and local US economy will flourishing

If FED cuts rates, it may bounce the market, but because of falling dollar and increasing inflation, the tightening will be harder in the future (remember what Volker has to do?)

By the way, cutting rate to 1% did not prevent the stock market bubble to explode

Guys, don't get me wrong. I am NOT a speculator or a real estate investor. I am one of those buyers who is priced out and desperately want a home for my family. In 2004, I had found a very good house but all the bubble talk scared me and I failed to buy it when the price and time was ripe. Today that same house has appreciated by almost 35%, the interest rates have risen and I will never be able to afford it again. Those BusinessWeek morons then were publishing articles daily about how people are going to get burnt in the next housing doom etc etc and I failed to make a move.

Even today I feel scared to buy a house because all those @#$% doom-sayers churn out bad news when its clear that they have no idea how housing is going to unfold Likewise, the realtors churn out the "price will always rise" theories and give compelling reasons for the same and the poor consumer is caught up in their crossfire. These @#$% reporters/realtors make their money by printing such doom-and-gloom theories but people like me get screwed in the bargain.

BTW: Just when it looked that the US housing bubble has burst, the August new home sales were released and they were up 4.1% since July. New home sales are supposed to be a leading indicator.

Also, someone asked me why the Fed''s lowering of interest rates to 1% did not stop the stock market collapse. The answer is the rates were lowered *after* the collapse and the low rates did revive the US economy by creating this housing boom.

Also, in the US, commercial real estate is now picking up fast and is expected to make up for the slack in residential housing. The Fed has many trump cards up their sleeve. The housing bubble in the US has a great patron - the Fed itself and the Fed is an very powerful ally. Look at what happened in the UK. Even though prices here are way higher than in the US, the housing market is still going on strong, thanks to Gordon Brown who does not want it to deflate. Likewise with Ben.

All I am looking for is to muster enough courage to buy a house.

[Waitingforthesun]

Guys, don't get me wrong. I am one of those buyers who is priced out and desperately want a home for my family. In 2004, I had found a very good house but all the bubble talk scared me and I failed to buy

Even today I feel scared to buy a house because all those @#$% doom-sayers churn out bad news when its clear that they have no idea how housing is going to unfold Likewise, the realtors churn out the "price will always rise" theories and give compelling reasons for the same and the poor consumer is caught up in their crossfire. These @#$% reporters/realtors make their money by printing such doom-and-gloom theories but people like me get screwed in the bargain.

Also, someone asked me why the Fed''s lowering of interest rates to 1% did not stop the stock market collapse. The answer is the rates were lowered *after* the collapse and the low rates did revive the US economy by creating this housing boom.

Also, in the US, commercial real estate is now picking up fast and is expected to make up for the slack in residential housing. The Fed has many trump cards up their sleeve. The housing bubble in the US has a great patron - the Fed itself and the Fed is an very powerful ally. Look at what happened in the UK. Even though prices here are way higher than in the US, the housing market is still going on strong, thanks to Gordon Brown who does not want it to deflate. Likewise with Ben.

All I am looking for is to muster enough courage to buy a house.

I think you should not blame the other the "mistake" you did

Nobody knows the future for sure, so ultimately you have to take your decision and take your responsability

If you buy and price crashes, don't blame Realtors

If you don't buy and price goes up, don't blame Moneyweek columnists

I don't think you need "courage" to buy a house, especially today, all you need to do is do what everybody else do, sign 2 pieces of paper (purchase contract, mortgage contract) and then it's done

I think you need more courage NOT to buy today, when everybody tells you "buy now or you will miss the boat"

Anyway, I don't know where you live, but statistics do not show 35% increase since 2004

The FED cut rate in 2001 and 2002, when the Dow was falling and the Nasdaq collapsing. The peak was in March 2000.

The stock markets rebound in 2004, afer Ow losing 1/3 of its value and Nasdaq was divided by 5 (there were very good bargains at that time, but nobody - including me - was interested in buying stocks anymore)

The new house sale up 4% in August comes from a correction of the previous July indicator, which finally ended worse than when it was published (stats are corrected very often in the US because they are published early, before all the date are checked). That was the markets are still pricing a real estate market slowdown

I don't think commercial real estate will save the market if US are headed for a recession, or even a softlanding. People will do less shopping, companies will outsource more...

But I agree the UK market rebound after August 2005 cut was unexpected and put some doubt on the HPC case - so I would understand if you choose to buy now. Personnaly, I prefer to wait and see, but it is my bet and I will face the consequences (I hope I am doing the right choice - time will tell)

[goldeneye977]

Nobody knows the future for sure, so ultimately you have to take your decision and take your responsability

If you buy and price crashes, don't blame Realtors

If you don't buy and price goes up, don't blame Moneyweek columnists

What you say makes sense, but it is easier said than done. Its true that nobody knows the future, that's the reason why expert advice becomes so important. Its very difficult to buy a house when the "experts" around you are bombarding you with information about how you are about to make the greatest mistake in your life. Its now that I realize that these goddamned "experts" are as clueless as you and me. What bugs me is that these "experts" are making money by dishing out half-baked sensational stories that are designed mostly to catch your eye. Many of my friends were brainwashed into buying last year by the realtors/realtor-sponsered articles. Its quite possible that they may soon regret it. On the other side there are many like me who were disuaded from buying by crafty, wishful-thinking atricles from vested interests. Its impossible to not get influenced by them, since this is not a bag of popcorn that you are buying; you are making the biggest investment in your life. I personally feel that there should be some accountability for these people, since what they write influences a lot of people and it can make a lot of difference in someone's life. People like David Lereah lie from the skin of their teeth and get away with it since they have the freedom to speak whatever they want. Likewise magazines like Businessweek write whatever they want knowing fully well that doom stories sell like hot cakes. Not only are these people ruining your life, they are actually making money out of it and this has got to stop. I will blame these turds if things don't work out well for me!!! If they have the freedom to heap trash, I have the freedom to blame them for their trash.

BTW: I live in Seattle, US. The housing market here seems to have stabilized but the so-called esteemed sources such as Forbes claim that it is going to rise by 55% in the next 10 years. Just 1 year ago, Forbes published an article claiming that Seattle was the most overpriced city in the US. I feel like slapping their crooked CEO and asking them to publish the truth for once or admit that they know nothing and are just speculating, rather than behaving as if they know everything.

[tahoma]

Interesting article on US home price revisions here.

Edited September 28, 2006 by tahoma

[Guest mattsta1964]

This is great news for us and I'm pretty convinced the USA has a one way ticket to a REAL recession (unlike 2001) next year.

However, there's one thing nagging away at the back of mind which is worrying me. What if the FED start cutting rates to shore up housing and consumer spending, will the madness continue? Can the FED cut rates without any damaging consequences?

I'm 99% certain but if anyone can allay my 1% fears I'd be very grateful!

If they cut interest rate now, they'll risk a major run on the dollar.

[Guest Shedfish]

Interesting article on US home price revisions here.

going to bump this one, that link makes sobering reading

-- beump --

Edited September 28, 2006 by Shedfish

[goldeneye977]

Greenspan says the worst is over for US housing. What?? I thought it had "bear"ly started??

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Do guys of this stature also lie? If not, then I guess it time to start thinking of buying a home here in Seattle. I waited for 3 years for the so-called

bust, and as per Greenspan, the bust has happened and ended??? The prices in Seattle have risen about 50% in the last 3 years and in some places they have doubled. When the "bust" was going on in the US (in the last 6 months), prices rose by 10%. What kind of bust is this!!

<Common Rant>

Wish I had bought 3 years ago .

</Common Rant>

[bob monkhouse]

get a grip

[goldeneye977]

I was just reading a thread posted here in Nov 2004.

http://www.housepricecrash.co.uk/forum/ind...?showtopic=4078

This was time when the rate incrases in UK were taking effect and house prices were beginning to drop down. The US is exactly at the same stage now.

YoY prices dropped for the first time in 10 years. Doom and gloom stories abound. But look what happened to UK. A couple of rate cuts and things were back to "normal". I think the Fed will start lowering the rates next spring, like the UK model and I think the HPI will restart in the US. The US boom will remain steady till the 2008 presidential election years. Then things may go awry.

[Realistbear]

I was just reading a thread posted here in Nov 2004.

http://www.housepricecrash.co.uk/forum/ind...?showtopic=4078

This was time when the rate incrases in UK were taking effect and house prices were beginning to drop down. The US is exactly at the same stage now.

YoY prices dropped for the first time in 10 years. Doom and gloom stories abound. But look what happened to UK. A couple of rate cuts and things were back to "normal". I think the Fed will start lowering the rates next spring, like the UK model and I think the HPI will restart in the US. The US boom will remain steady till the 2008 presidential election years. Then things may go awry.

When Great Crash 1 began it took 7 years to recover. The fundamentals behind Great Crash 2 are far far worse--expect a 10-15 year recovery time.

The US is facing millions of resetting mortages this month and in November. Thats is over leveraged Sheeple about to see their payments double, and in some cases quadruple. A recession is coming and the world is going to have to pay for its irrational exhuberance that will lay waste to the delusion that house prices can triple without dire consequences to the economy. The IMF were right when they said the next crash would be worldwide.

[Sarah Beeny!]

When Great Crash 1 began it took 7 years to recover. The fundamentals behind Great Crash 2 are far far worse--expect a 10-15 year recovery time.

The US is facing millions of resetting mortages this month and in November. Thats is over leveraged Sheeple about to see their payments double, and in some cases quadruple. A recession is coming and the world is going to have to pay for its irrational exhuberance that will lay waste to the delusion that house prices can triple without dire consequences to the economy. The IMF were right when they said the next crash would be worldwide.

Looking to buy Gold and found this. Read and weep, scary stuff indeed.

http://www.kitco.com/ind/Willie/sep292006.html

[goldeneye977]

When Great Crash 1 began it took 7 years to recover. The fundamentals behind Great Crash 2 are far far worse--expect a 10-15 year recovery time.

The US is facing millions of resetting mortages this month and in November. Thats is over leveraged Sheeple about to see their payments double, and in some cases quadruple. A recession is coming and the world is going to have to pay for its irrational exhuberance that will lay waste to the delusion that house prices can triple without dire consequences to the economy. The IMF were right when they said the next crash would be worldwide.

When the Great Crash 1 occurred, many people/govt were dumb. The Great Crash2 will not happen because people/govts learn from past mistakes. Come on. Give the sheeple some credibility. Its true that there are many mortgages that will reset in 2007. Again the magnitudre is unknown. I think till cheap money is flooding the market, this HPI will keep going on. Cheap money is coming mainly from Japan and the Western world who have unusually low interest rates. Japan is not willing to raise its rates. UK won't raise its rates. US has risen its rates but won't go further. Excess liquidity still exists in the market. The DOW hit an all-time high.

My game plan: Wait to see the effect of mortgage resets in 2007. If nothing happens to housing by 2008. I am going in.

My gut feeling is that the Fed will not let a housing crash happen in the US. Any sign of a serious crash and they will cower down like Gordon Brown and lower the rates immediately.

Interestingly, no one on this thread has thought of the 3rd scenario that played out in Netherlands. What if due to rising rates a recession does happen but housing does NOT go down??? It happened in Netherlands in 2003 so one can't say it cannot happen. If that happens, well, I'd consider us the unluckiest folks alive.

[goldeneye977]

Looking to buy Gold and found this. Read and weep, scary stuff indeed.

http://www.kitco.com/ind/Willie/sep292006.html

Dude, look at the article carefully and note that it says "Articles in this series are promotional". This is equivalent to the "prices can only go up" ******** that the realtors give us. Each serve their own interest. It is due to such articles that I did not buy when the time was right. These a**holes write s**t and we get get screwed. Do NOT trust these slimy b***tards and do your own thinking, research and act on your own judgement.

[Badlad1967]

When the Great Crash 1 occurred, many people/govt were dumb. The Great Crash2 will not happen because people/govts learn from past mistakes. Come on. Give the sheeple some credibility. Its true that there are many mortgages that will reset in 2007. Again the magnitudre is unknown. I think till cheap money is flooding the market, this HPI will keep going on. Cheap money is coming mainly from Japan and the Western world who have unusually low interest rates. Japan is not willing to raise its rates. UK won't raise its rates. US has risen its rates but won't go further. Excess liquidity still exists in the market. The DOW hit an all-time high.

Could you please expand on how you think people have learnt from their past mistakes please?

Many ARM's are going to reset in 2007 - this is quite widely reported in the US media and link have been posted here (would look through for you but if I don't start the decorating soon I will be speaking in a much higher pitched voice by the end of the day......)

I've also seen a few articles in the UK mainstream press that lenders are looking to expand their business overseas as the UK now appears to be "maxed out"...

UK won't raise rates? US won't raise any further? This is not what the markets are saying - not even the press.

History shows that we "the human race" does not learn its mistakes. I'm glad I don't share your pessimism that HPI will continue. People will wake up, the market will crash (although I think the fallout will be greater this time....), people will forget and the whole bloody process will start again....

[MRMX9]

Just scene a piece on the US TV channel Fox News (which is owned by Rupert Murdoch and is sickeningly pro Republican so doesn't want to see a crash in any circumstances).

They started off by showing a brief clip of a rather boring economist saying house prices in some parts of the country could fall by 50% (although other areas might rise). Then they started interviewing a real estator (estate agent) in the studio - he looked like Jon Bovi Jovi with a bad hairdresser - who was sickeningly overexcitable and said the economists comments were ridiculous and this was a perfect time to buy because sentiment out there was so bad. No point waiting till Spring as prices would have gone up by then.

The blond over made up bimbo of a presenter then said she was looking to buy a house at the moment, started fawning over the real estate guy and then concluded that she was going to go out after the show with her chequebook and buy a property as soon as (and implying all viewers should do the same).

You thought VI biased reporting was bad in the UK!

[Realistbear]

When the Great Crash 1 occurred, many people/govt were dumb. The Great Crash2 will not happen because people/govts learn from past mistakes. Come on. Give the sheeple some credibility. Its true that there are many mortgages that will reset in 2007. Again the magnitudre is unknown. I think till cheap money is flooding the market, this HPI will keep going on. Cheap money is coming mainly from Japan and the Western world who have unusually low interest rates. Japan is not willing to raise its rates. UK won't raise its rates. US has risen its rates but won't go further. Excess liquidity still exists in the market. The DOW hit an all-time high.

My game plan: Wait to see the effect of mortgage resets in 2007. If nothing happens to housing by 2008. I am going in.

My gut feeling is that the Fed will not let a housing crash happen in the US. Any sign of a serious crash and they will cower down like Gordon Brown and lower the rates immediately.

Interestingly, no one on this thread has thought of the 3rd scenario that played out in Netherlands. What if due to rising rates a recession does happen but housing does NOT go down??? It happened in Netherlands in 2003 so one can't say it cannot happen. If that happens, well, I'd consider us the unluckiest folks alive.

Ben has already burst the bubble and the crash is only just gaining momentum in the US:

http://www.realestatejournal.com/buysell/m...06-hagerty.html

Prices in 100 U.S. Cities Expected

To Decline for Next Few Years

By James R. Hagerty and Anjali Athavaley

From The Wall Street Journal Online

Home buyers have another reason to sit on their hands.

In the latest news from the slumping U.S. housing market, a report released this week says that median house prices are likely to decline more than 10% over the next few years in 20 metro areas, including Las Vegas, Tucson, Ariz., and Washington, D.C.

The report, by Moody's Economy.com Inc., a research firm in West Chester, Pa., also says that the slump won't end quickly. Indeed, according to the report, prices may keep falling until 2008 or even 2009 in some areas. In all, prices are falling or likely to decline soon in about 100 metro areas, the firm says.

Even Al Greenbubbles warned before he quit the Fed that the "froth"markets would see some pain. The rationale at the Fed is to burst the bubble markets (E & W coasts and select inland markets such as Phoenix, Las vegas and Chicago) and hope the majority of the US housing markets see a gentle landing of about 10-20% or so. The markets where HPI has been exhuberant are expected to fall 50% in some cases.

The UK is like the US bubble markets and full of hot air that needs to be let out by higher IR or it will cause that much more pain the longer it is allowed to go on. When houses are at 9 or 10 times income there is no way it can sustain at anything like those levels. See the thread on government hiring to deal with catastrophic levels of insolvency that are just around the corner. The 770,000 people who have already defaulted on mortgages in the UK so far this year is just the beginning of the "pain" Greenspan predicted.