So Where Is The Housing Crash?

[crown]

So here we are

We have record low lending for home purchase

We have massive tightening of lending criteria

We have removal of most of the sub prime lending.

We have the virtual removal of fast track and self cert loans.

We have the removal of 100%+ loans.

We have the removal and credit tightening of most buy to let deals.

and we have the FSA investigating (at last Eric) the Liar Loans brokers

But what we do not have yet are the distressed sellers to tip us over the edge.

If I look on property snake for my area most properties have been reduced by around 2/3% and have been on the market for as long as property snake have been collecting the data.

There is only one property that has been reduced from £750k to £650k over the last year.

Until sellers face reality and reduce their asking prices the market will stagnate and drift lower. My fear is that the market will stagnate with sellers not realistically marketing their properties and property will drift along for several years not really moving much to the downside.

Repossessions caused the 90's crash, but we are still a long way from those repossession figures.

Heres hoping for some bear news from the Home survey tomorrow

Edited March 11, 2008 by crown

[HenryWeston]

I think we are into the denial stage ?

Edited March 11, 2008 by HenryWeston

[Meerkat]

I think we are into the denial stage ?

Exactly, the denial stage + no big number of forced sellers + a hope of a spring recovery..but where is the credit that fostered the boom?

[bazzzzzzz]

So here we are

We have record low lending for home purchase

We have massive tightening of lending criteria

We have removal of most of the sub prime lending.

We have the virtual removal of fast track and self cert loans.

We have the removal of 100%+ loans.

We have the removal and credit tightening of most buy to let deals.

and we have the FSA investigating (at last Eric) the Liar Loans brokers

But what we do not have yet are the distressed sellers to tip us over the edge.

If I look on property snake for my area most properties have been reduced by around 2/3% and have been on the market for as long as property snake have been collecting the data.

There is only one property that has been reduced from £750k to £650k over the last year.

Until sellers face reality and reduce their asking prices the market will stagnate and drift lower. My fear is that the market will stagnate with sellers not realistically marketing their properties and property will drift along for several years not really moving much to the downside.

Repossessions caused the 90's crash, but we are still a long way from those repossession figures.

Heres hoping for some bear news from the Home survey tomorrow

You've echoed my feelings precisely.

Any meaningful correction could be 5 years away.

I can't come to terms with that sort of time span.

[Qetesuesi]

You've echoed my feelings precisely.

Any meaningful correction could be 5 years away.

I can't come to terms with that sort of time span.

Especially since many of you STRs have already waited 5 years in growing disbelief, especially in August 2005!

[Guest KingCharles1st]

I think we are into the denial stage ?

High five me brudder

DE-NI-AL DE-NI-Al DE-Ni-AL...

[Paddles]

You've echoed my feelings precisely.

Any meaningful correction could be 5 years away.

I can't come to terms with that sort of time span.

CML data today convinced me that the big drops will arrive by the summer. There will be hardly any buyers with approved mortgages in April, May and June and the distressed sellers due to the "Northern Rock 125" etc. being pulled will be on their shoe uppers.

Today was a great day for HPC and I'm surprised at how few people don't realise.

[Nomadd]

Until sellers face reality and reduce their asking prices the market will stagnate and drift lower. My fear is that the market will stagnate with sellers not realistically marketing their properties and property will drift along for several years not really moving much to the downside.

Repossessions caused the 90's crash, but we are still a long way from those repossession figures.

But repo's are climbing quite steadily. And they'll continue to climb. And the mainstream press is now littered with bad house price stories every day...

And just where do sellers get those unrealistic prices from in the first place? EA's. And I can't see them sitting around for 5 years waiting for the market to correct...

Still, I agree with you that things are moving slowly. But, as we've known from past experience, the "top" to "bottom" in housing cycles does take 5 years or so. Still, I do expect some pretty nasty falls over the next 6-9 months, once we've had a failed Spring and Summer bounce. You see that's the problem, the credit crunch has passed most sellers by, as they think the lack of a sale is just due to seasonal effects. Once it becomes clear it isn't, then we'll see a change in the market.

Hold tight and be patient.

Nomadd

[Guest KingCharles1st]

High five me brudder

DE-NI-AL DE-NI-Al DE-Ni-AL...

All depends if you got a job- no job, money- no money- a home- no home- so complicated- but- it's going to shatter- like our economy

[uncle_monty]

Exactly, the denial stage + no big number of forced sellers + a hope of a spring recovery..but where is the credit that fostered the boom?

So what will change this in large numbers? I'm afraid its the classics death / divorce / unemployment / relocation axis. The big downward leg in HPI will only happen when these effects manifest themselves.

[EmpiricalBear]

Have you guys not noticed.

The RICS figures show the worst drop in valuations since 1990. The speed of the change is faster than 89/90.

This will be reflected in achieved prices in the very near future.

The supertanker takes a while to turn. But we are watching it start that turn right now, in a global climate of shrinking financial liquidity.

The only think that I lose sleep over as an STR is the possibility of inflation eating away my savings. A reversal in house prices is now a matter of when not if. It will be steeper and worse than 89-95. More weapons have been been brought to bear than ever before to try to prevent this from happening... but most people in the country, subconsciously at the least, know it is now happening.

Inside track have abandoned their seminars.

Galliard Homes now have to offer a 'price protection guarantee' in their advertising to allay fears of price falls.

Its upon us, happening now... the only real question is how low will it go. The very fact that Alisdair Darling will tomorrow guff out his plans for long term mortgages based on covered bonds reveal that the only solution now for politicians is to announce initiatives to show that at least their titanic-deck-chair-rearrangement skills are not lacking. They can at least have a 'story' to tell the populace that they are at least trying to help.

[Crashman Begins]

If you bought in 2007 chances are you'd already be i negative equity...so relax

and enjoy the ride.

Steep drop approaching...old onto your hats

[ebob]

Exactly, the denial stage + no big number of forced sellers + a hope of a spring recovery..but where is the credit that fostered the boom?

Meerkat

Good point, the steroids have been withdrawn; not only that but the banks have stopped lending to each other let alone foolish consumers. Some of the banks are now bankrupt; others are on the verge of bankruptcy.

Naive speculative sellers will not lower their prices and will simply ride the bust down to the bottom. Distressed sellers, will take whatever they can.

My wealthy borther-in-law, bought a flat in Kensignton three weeks ago. Last year the flat was on the market for 600K GBP. He bought it for 480K GBP; a 20% discount.

I suspect a similar flat will sell for 20% less than he paid for it next year (2009; 384K GBP) and depending upon the market perhaps an additional 20% the year after (2010; 308K GBP). These forecast incremental decreases to 2010 will equate to an approx 50% decline from the 2007 price.

The driver for this is the absence of speculative credit. Furthermore, the flat prchased by my brother-in-law will register on the various sites, thereby exacerbating the spiralling sell price.

Anyone that doubts this can simply ring up any estate agent and masquarade as a cash buyer, looking for a deal. I have done this recently in the Paddington, London area and was staggered at the candour of estate agents.

I was simply informed that nothing was shifting and I could easily get 20% of the silly asking prices.

Bob

[joey]

So here we are

But what we do not have yet are the distressed sellers to tip us over the edge.

http://britishexpats.com/forum/showthread.php?t=518829

I guess you have read this website where sellers have been complaining of hardly any viewings also with drops upto 65K, read above and you get the real picture out there . These are some of the distressed sellers who are trying to emigrate. I am not sure there are discussion groups for REPO's but these are apparently inreasing DAY by DAY with failed BTLs and also CREDIT CARD debt. Lastest Auctions Clearances are way down. I could go on. Go out and test the water and put a ridiculous offers, the 50% drops don't come knocking at your door.

Edited March 11, 2008 by joey

[joey]

So here we are

But what we do not have yet are the distressed sellers to tip us over the edge.

http://britishexpats.com/forum/showthread.php?t=518829

I guess you have read this website where sellers have been complaining of hardly any viewings also with drops upto 65K, read above and you get the real picture out there . These are some of the distressed sellers who are trying to emigrate. I am not sure there are discussion groups for REPO's but these are apparently inreasing DAY by DAY with failed BTLs and also CREDIT CARD debt. Lastest Auctions Clearances are way down. I could go on. Go out and test the water and put a ridiculous offers, the 50% drops don't come knocking at your door.

Edited March 11, 2008 by joey

[hostman]

You have to look at whats pushing mortgage approvals down: Lack of credit.

Any crash that materialises will initially be different to the previous ones. The current turmoil is not yet being fueled by mass unemployment, its being caused by:

1) Banks covering their arses, they are all very worried about the deepening credit crunch

2) Over supply of "city centre" flats, billed as luxury, when in reality not even housing association deem them livable

3) Greedy developers inflating prices by offering incentives, such as deposit, stamp duty paid etc, further fueling the bubble

3) Too many speculators - Not with their own money, with borrowed money

4) "Normal" people who should stick to working 9 to 5 getting involved with BTL - Not with their own money, with borrowed money

[nmarks]

Just as the VI's five years ago would have us believe in Saddam's WMDs, so they'd have us now believe there isn't an HPC in progress.

[DoctorJ]

Tomorrow could be the day that the Government try to pull another rabbit out of the hat.

Be vigilant.

Edited March 11, 2008 by DoctorJ

[Fed Up]

I found this on the Irish property pin website.

http://www.thepropertypin.com/viewtopic.php?t=6731

I'm posting it because of the embedded article by Wolfgang Münchau in the FT, which according to the person who posted it, you may need to register to read.

[beans on toast]

At least prices are not going up. This is wearing me out, the market needs to crack soon, otherwise, i'll probably crack. I'm not looking for a crash, but atleast 10 or 15% off last year's prices would be good.

I've seen some reductions, but these were on shite properties. One has been reduced from 750 to 725. An agent showed me a property earlier this week that was on for 695 and needed to be gutted out!! I'm looking in SW6 - fulham. The Estate Agents are still marketing properties for more than the last sold prices recorded by the Land registry.

Sellers are under no pressure yet. Where is the pressure going to come from ?? Its got to be rising unemployment. Everything else has been thrown at the property prices and its hardly budged.

[Bubble&Squeak]

http://www.thepropertypin.com/viewtopic.php?t=6731

I like this comment... they have had exactly the same problems as we have... and will have the same fate I am sure

Ahh jasus lads thats the UK and has nothing to do with the unique situation we have here in Ireland Razz

Considering we have a bubble in this country which is even worse than the UK's then the future really is not very bright. What a pity we did'nt/don't have a truly independent media that rather than printing and reporting the ugly truth of the great property swindle in this country chose to assist the VI cheerleaders at every juncture and for the most part gave them an unchallenged vehicle for peddling their self serving confidence trickery.

Evil or Very Mad

[Guest KingCharles1st]

the only solution now for politicians is to announce initiatives to show that at least their titanic-deck-chair-rearrangement skills are not lacking.

Pure class

[Mr Nice]

But repo's are climbing quite steadily. And they'll continue to climb. And the mainstream press is now littered with bad house price stories every day...

And just where do sellers get those unrealistic prices from in the first place? EA's. And I can't see them sitting around for 5 years waiting for the market to correct...

Still, I agree with you that things are moving slowly. But, as we've known from past experience, the "top" to "bottom" in housing cycles does take 5 years or so. Still, I do expect some pretty nasty falls over the next 6-9 months, once we've had a failed Spring and Summer bounce. You see that's the problem, the credit crunch has passed most sellers by, as they think the lack of a sale is just due to seasonal effects. Once it becomes clear it isn't, then we'll see a change in the market.

Hold tight and be patient.

Nomadd

I would disagree that things are moving slowly, they are actually going with blistering speed by normal housing market standards.

it's only been a few months since the credit crunch happened and already the market expectations have made an almost 180 degree turn.

in a normal crash, the drop would be much more spread out, this time it is looking very possibly like there will be %10-20 drops within the first year.

you also have to take into account all the shennanigans with the recorded price figures, the paying of duty for the buyer, the massaged sales numbers etc.

once you do that, it's likely that there have already been close to %10 nominal drops, and when you factor in understated inflation, the crash (%20 drop) could ALREADY have happened in many areas, and be close to happening in many others.

I agree that by summer the hammer will have dropped much more clearly, and by then there should be little doubt by anyone which way the wind is blowing.

[yellerkat]

From the referenced Wolfgang Munchkin article:

Remember: the first stages of a housing downturn consist of denial followed by anger. A fall in actual prices is a relatively late-stage phenomenon of a housing crash.

In normal cycles, perhaps, but we seem to be in hyperdrive right now.

[Queen of Spades]

I would disagree that things are moving slowly, they are actually going with blistering speed by normal housing market standards.

it's only been a few months since the credit crunch happened and already the market expectations have made an almost 180 degree turn.

in a normal crash, the drop would be much more spread out, this time it is looking very possibly like there will be %10-20 drops within the first year.

you also have to take into account all the shennanigans with the recorded price figures, the paying of duty for the buyer, the massaged sales numbers etc.

once you do that, it's likely that there have already been close to %10 nominal drops, and when you factor in understated inflation, the crash (%20 drop) could ALREADY have happened in many areas, and be close to happening in many others.

I agree that by summer the hammer will have dropped much more clearly, and by then there should be little doubt by anyone which way the wind is blowing.

Totally agree.

Having bought and sold during the last crash - this one is definitely gathering pace.

This time last year it felt as though it was never coming - I distinctly remember promising myself that if things were not bloody obvious by spring 08 I would throw in the towel and buy.

Then we had Northern rock, then the words 'credit crunch' become known to joe public, not just us hpc'ers.

Since January things have revved up considerably.

The amount of bearish information revealed on this website on a DAILY basis is now breathtaking.

The broadsheets are bearish, parts of the media are bearish. This time last year, one hint of a bearish news item would keep me going for a couple of days. Now I can only stomach so much bad news before I feel reassuringly reassured.

The only thing that concerns me is the budget speech tomorrow and Gruffyds warnings regarding VI's scurrying around hatching cunning plans to keep HPI going.............again..........