The Terrifying Thing About Nationwide Mom Drop

[SurgeonGeneral]

In the original thread today, compounded annualised drops have been calculated at approx -26%.

The rate at which this index WILL decrease WILL ONLY INCREASE.

WE ARE LOOKING AT - 50 TO 60% BY CHRISTMAS.

Feel free to panic. This is complete financial meltdown, as per the guvnor, mr cgnao.

ps Congrats to Steve Cook and Paddles for calling April as the first yoy -ve.

Edited April 8, 2008 by SurgeonGeneral

[Converted Lurker]

this is just silly. Keep it in your trousers, we've had large drops before, let's wait and see if we have three consecutive months of 2.5% falls. Let's not forget 25% drops only takes us back to approx. 2004 prices

[Guest Steve Cook]

In the original thread today, compounded annualised drops have been calculated at approx -26%.

The rate at which this index WILL decrease WILL ONLY INCREASE.

I agree with the general thrust of this regarding the rate of the rate of change.

The size of the MOM took even me by surpise.

I should say, though, if we were to get 50%+ reductions by Christmas, our most pressing concern would be the extent of our confidence in the authorities being able to keep the inevitable riots under control, as opposed to how much further prices could fall.

Steve

Edited April 8, 2008 by Steve Cook

[A.steve]

I agree with the general thrust of this regarding the rate of the rate of change.

The size of the MOM took even me by surpise.

Significant, yes, I agree.

What is interesting though, as mentioned in another thread, is that next month we are almost certainly going to see YoY negative. Wouldn't it be advantageous to have a month-on-month positive on a month for which year-on-year-negative is recorded?

I wonder if that's why we're seeing a bigger drop this month than otherwise expected?

[Venger]

I don't buy in to the riot theory - or at least violent riots. (Although I might be wrong)

What exactly would people be rioting for / protesting at?

The Government to come up with a magic solution to restore some insanely high valuation of their properties?

The sheeple are too weak and disorganised - and on the whole very pampered, soft and very scared - to go up against authority in that way.

Edited April 8, 2008 by friday

[dances with sheeple]

The sheeple can take it. Hey man, ten years ago a tenement flat was £40,000, but there was this crazy period of cheap credit, and mad greed and fear took that price up to £140,000, but everything is back to normal now, it was just a blip, you can buy again for £40,000.

Hey man, we were out last night and had a load of beer and spirits and drugs, we were talking to some Eastern European chicks and went to a party with them, I cant remember what happened after that, but today is Sunday and your missus wants you to go to B&Q, and tomorrow is Monday and your boss wants you to go to work. OK man?

[Spoony]

What are you on about? The figures today came from Halifax. I have a theory. They delibrately kept the index high in previous months, even show gains on some months, completely at odds with nationwides figures. Then they had to make a sharp drop this month to correct it - on purpose this time - so they can make headlines with their 2.5%. All that publicity for HBOS, you couldn'tbuy it.

[REP013]

What are you on about? The figures today came from Halifax. I have a theory. They delibrately kept the index high in previous months, even show gains on some months, completely at odds with nationwides figures. Then they had to make a sharp drop this month to correct it - on purpose this time - so they can make headlines with their 2.5%. All that publicity for HBOS, you couldn'tbuy it.

In March, the time of the spring bounce - No Way!

[A.steve]

I don't buy in to the riot theory - or at least violent riots. (Although I might be wrong)

What exactly would people be rioting for / protesting at?

I am not predicting riots... but I can see how they could erupt.

If you want to know the best way to de-stabilise someone, you move them... you take their home. Thereafter these people have no incentive to act rationally. Add into the mix groups of people desperate for cash to remain solvent - and ready to do anything to get it... and you've an explosive mixture.

I remember the last crash... I was only a teenager... I was helping out on a Saturday at a roadworks company. A call came in to say that a site had been left without being locked... and I was asked to call the contractor... I got hold of his wife - to whom I spoke softly and asked to speak to her husband (by name) and was given the most aggressive verbal reply I've ever heard. It transpires that the contractor paid his own debts with his employees wages... and the contractor had a nasty accident falling downstairs - involving breaking both his legs... entirely a coincidence, he insisted. I learned then how quickly violence can follow from economic hardship.

Can you be sure there won't be civil unrest? How many repossessions do you think it would take before people start to act irrationally?

[A.steve]

All that publicity for HBOS, you couldn'tbuy it.

HBOS got plenty of publicity when their stock took an 18% nose-dive in a morning.

I don't think that house-price-drops are exactly the sort of publicity that HBOS want.

[Guest Steve Cook]

I don't buy in to the riot theory - or at least violent riots. (Although I might be wrong)

What exactly would people be rioting for / protesting at?

The Government to come up with a magic solution to restore some insanely high valuation of their properties?

The sheeple are too weak and disorganised - and on the whole very pampered, soft and very scared - to go up against authority in that way.

I agree with your general point about people being hopelsssly politically disorganised in this country these days. In a sense, though, that worries more.

If we had a recognisable, self-aware proletariat (I do not use that term from a particularly left-wing perspective), then we could expect socially dsruptive but essentially organised protest.

The kind of social disruption I envise if we were to get the kind of falls suggested by the OP would be more sporadic and based on disorganised rage. Why would such riots occur? Well, I think it highly likely that there would be runs on major banks as the liquidity of the financial system siezed up in panic. It is also highly likely, in my opinion that unemployment will rise significantly over the coming months in any event. If price falls are not too severe in that time frame, there would be some repossessions and distressed sales. However, people, whilst being extremely disgruntled, would still cope. On the other hand, if there were to be falls in the order of say 50% over such a short time scale in conjunction with significant numbers of people who are suddenly, en-mass facing the prospect of being made homeless, the pressure on local councils to temporarily house them would be quite simply overwhelming. Councils would be literally forced to turn people away.

Unemployment, homelessness and massive debts would lead inevitably, I think, to riots. I say this because people are at the moment in massive debt. They think nothing of having a debt of 150+k around their necks. This is because this debt has been hitherto assigned to an asset that appeared to be only going one way in terms of its value. Thus, the debt has not seemed real. Take away the asset leaving only the debt and people's capacity to psychologically compartmentalise and cope with it will profoundly change. 80+k of debt suddenly becomes terrifying when you no longer have an asset that covers it and no job to service it.

People would panic. This panic would very very quickly turn to anger.

Steve

Edited April 9, 2008 by Steve Cook

[Bloo Loo]

I beleive the february figures reported a rise.

[Guest Steve Cook]

I admit it Huw

I am a HPC oholic

I only managed to go cold-turkey for 24 hours...

I need help...

Professional help....

Edited April 9, 2008 by Steve Cook

[huw]

Can you be sure there won't be civil unrest? How many repossessions do you think it would take before people start to act irrationally?

The pain will be worst for those who are least likely to riot, by which I mean those with children. Young single men might take to the streets, but will they have sufficient reason to?

[huw]

I admit it Huw

I am a HPC oholic

I only managed to go cold-turkey for 24 hours...

I need help...

Professional help....

Any tremors, sleeplessness, inability to focus...?

[Guest Steve Cook]

Any tremors, sleeplessness, inability to focus...?

I suspect so when I have to get up in less tnhan five hours for work....

You're probably right about the lack of capacity of young families to riot

Jeez I need to get to bed...

Steve

[huw]

On the other hand, if there were to be falls in the order of say 50% over such a short time scale in conjunction with significant numbers of people who are suddenly, en-mass facing the prospect of being made homeless, the pressure on local councils to temporarily house them would be quite simply overwhelming. Councils would be literally forced to turn people away.

The houses would still be there, though. I can't see eviction levels that could lead to serious unrest happening while homes stood empty. If necessary I think they'd be requisitioned (as happened to property during the war, I believe). Or given that the banks would certainly need some major bailing-out, mortgaged homes could be taken into public ownership as part of that.

Unemployment, homelessness and massive debts would lead inevitably, I think, to riots. I say this because people are at the moment in massive debt. They think nothing of having a debt of 150+k around their necks. This is because this debt has been hitherto assigned to an asset that appeared to be only going one way in terms of its value. Thus, the debt has not seemed real. Take away the asset leaving only the debt and people's capacity to psychologically compartmentalise and cope with it will profoundly change. 80+k of debt suddenly becomes terrifying when you no longer have an asset that covers it and no job to service it.

This would indeed be a major downer. Would the debtors try for a quick bankruptcy?

[A.steve]

The pain will be worst for those who are least likely to riot, by which I mean those with children. Young single men might take to the streets, but will they have sufficient reason to?

Really? What makes you think that those who have children are incapable of violence?

I suspect that those with children are more likely to act irrationally as they have more to loose.

[huw]

Really? What makes you think that those who have children are incapable of violence?

I suspect that those with children are more likely to act irrationally as they have more to loose.

The bit I bolded above, mainly. It's when you haven't got anything to lose that you're likely to lash out, IMO. Plus, those who've had time to accumulate a mortgage and a couple of kids tend to be older. Probably fatter and creakier, too

What was the demographic in the poll-tax riots?

[A.steve]

The bit I bolded above, mainly. It's when you haven't got anything to lose that you're likely to lash out, IMO. Plus, those who've had time to accumulate a mortgage and a couple of kids tend to be older. Probably fatter and creakier, too

What was the demographic in the poll-tax riots?

I've no idea what the demographic was for the poll-tax riots...

I imagine the demographic most likely to riot in future would be those who had a house and a mortgage - but no-longer do. I would imagine them being provoked, feeling victimised and unable to respond appropriately.

I'm reminded of the report of vigilantes hounding a paediatric nurse because they confused the title with paedophile... they weren't young single politically motivated... they were distraught ill-educated parents reacting in rage.

I think that riots are unlikely, but if they transpire, they will be born of desperation not idealism.

[Bloo Loo]

I've no idea what the demographic was for the poll-tax riots...

I imagine the demographic most likely to riot in future would be those who had a house and a mortgage - but no-longer do. I would imagine them being provoked, feeling victimised and unable to respond appropriately.

I'm reminded of the report of vigilantes hounding a paediatric nurse because they confused the title with paedophile... they weren't young single politically motivated... they were distraught ill-educated parents reacting in rage.

I think that riots are unlikely, but if they transpire, they will be born of desperation not idealism.

at the peak of GC1, there were 900 firms going bust every week, 1000 personal bankruptcies every week, 1000 official repos every week, probably 3 times that in keymail.

IVAs were new and used extensively.

I dont recall any riots. Lots of suicides.

[huw]

I think that riots are unlikely, but if they transpire, they will be born of desperation not idealism.

If there are riots I don't think they will be born of idealism either (neither were the poll tax riots IMO, it was just that people were enraged that they were expected to pay!)

[Timm]

It's when you haven't got anything to lose that you're likely to lash out

...riots are unlikely, but if they transpire, they will be born of desperation not idealism.

"Freedom's just another word for nothing left to lose."

Transposed, that would suggest that those who have lost everything can act with the greatest freedom.

[The Ayatollah Buggeri]

Agreed that the difference in the rate of fall between last month's Nationwide figure and yesterday's is very startling. However, I don't think you can simply compound it to extrapolate a prediction of a 50-60% drop by Christmas. Property owners are not going to sell at that extent of a loss unless they are totally and absolutely forced to (absoutely meaning more or less with an electric cattle prod up their rectum). That's only going to happen if they lose their job or cost of living increases (including mortgage) sends them right to the end of the credit line and slamming into the buffers. And even if it does, that process takes time and they won't be selling until they hit those buffers. A much wider economic downturn is going have to take a much tighter grip before that scenario starts happening in significant numbers. When Tesco announces 100,000 redundancies, then you'll know it's happening. Until that happens, people who have their houses on the market will simply refuse to sell them at a 50% fall for as long as they can afford to keep owning them.

In the meantime, the statistics to watch in order to get a sense of how fast the HPC is happening are those for the volume of properties on the market and the volume of completed sales. I'm expecting the former to go dramatically up from here on in, but for the latter to dip a bit before heading seriously up in about six months' time. The latter will be accompanied by significant falls in HPs, as more and more forced sellers hit those buffers. We've already had a significant early warning sign in the form of a big increase in unsecured consumer credit (overdrafts, mainly) last month.

[WSG]

Wouldn't it be advantageous to have a month-on-month positive on a month for which year-on-year-negative is recorded?

I wonder if that's why we're seeing a bigger drop this month than otherwise expected?

you are good....fancy a job at the Halifax media relations team

;-)