Thursday, Oct 26, 2006

US House Prices show largest fall for 35 years

Yahoo Finance: Home Price Drop Is Largest in 35 Years

The Commerce Department reported that the median price for a new home sold in September was $217,100, a drop of 9.7 percent from September 2005. It was the lowest median price for a new home since September 2004 and the sharpest year-over-year decline since December 1970.

Posted by paulm @ 05:16 PM (524 views)
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16 Comments

1. Inflation Is Eating My Savings said...

So why is it not happening here?

Thursday, October 26, 2006 05:53PM Report Comment
 

2. Nohpc said...

this is a ray of light for the us housing market.
prices dropped by 10% but sales have picked up by 5%
this suggests that 10% will be the trough and things should pick up now. 10 % does not constitute a crash

Thursday, October 26, 2006 11:00PM Report Comment
 

3. Nohpc said...

In Asia businessmen have been known to compare property investment to a first born son.
It may disappoint from time to time but over the long run it will make you proud. Who cares if the market drops over a few years then rises again. The only people affected are those that have to sell and in all honesty they are the mugs who should never have got into it in the first place. With low interest rates and high EMPLOYMENT as well as unemployment people should not be in a position of having to be forced to sell. The american market will not drop by more than 20% which is merely a correction rather than a crash.

And inflation is eating my savings... it will happen here. It is a definite rather than a possible. The only thing is nobody knows when or by how much but my guess is not in the near future and not by that much. I think property is slighlty over priced (maybe 10%) but if you have a 20% deposit your interest is still lower than rent (by a lot on my flat).

I have recently cashed in all my savings to plow them into my mortgage because it saves me double the amount of money that my savings earn me.

Friday, October 27, 2006 02:19AM Report Comment
 

4. Jimmytennor said...

IIEMS

Just a matter of waiting a little longer, my friend...

Friday, October 27, 2006 08:41AM Report Comment
 

5. jimmytennor said...

IIEMS

Just a matter of time, my friend...

Friday, October 27, 2006 08:42AM Report Comment
 

6. the bald man said...

Usually what happens in the US is reflected in the UK. Their economy is much like the UK, based on consumer debt and spending.

Friday, October 27, 2006 09:16AM Report Comment
 

7. Nohpc said...

baldman you are wrong. Their ecomomy is like the UK but what happens in the US is not usually reflected in the UK

Friday, October 27, 2006 10:16AM Report Comment
 

8. Monty said...

You'll notice that this 9% drop refers to NEW homes. Some possible reasons why it is not happening here (yet)

The US;
1. is at a different point in the interest rate cycle - the BoE effectively stopped stepping the rate in Sep 04 whereas the Fed has only held steady for the last few months.
2. has a surplus of new housing stock - 600k units (I think) - we don't
3. has more speculation (flipping) in the new build market. When the music stops and prices stop ramping up, people are stuck with houses they didn't intend to keep (or have finance for!)
4. like Australia is less homogenous than our market and more prone to regional boom busts and variations. The East coast, West coast, Florida, New England and Washington markets are influenced by loca. Word is that many of the flippers are West coast types who haved MEWed and are speculating in different states - Arizona being a favourite. This last year the Washington DC market has been in the doldrums while Florida has been booming.

Friday, October 27, 2006 10:32AM Report Comment
 

9. inbreda said...

I suspect it is happening here. Just not across all possible surveys and permutations of those surveys simultaneously.

Our Neu Labour spin doctors are just too damn manipulative.

Friday, October 27, 2006 11:23AM Report Comment
 

10. jimmytennor said...

Agree with you both...just a matter of an IR rise next month, and possible further rise soon after - and we will start to see the true figures coming thorugh...

Friday, October 27, 2006 11:41AM Report Comment
 

11. monty said...

The 9% drop in the article is about new house prices. Possible reasons why this has not happened in the UK market (yet) are...

The US
1. is at a different point in their interest rate cycle - the BoE stopped stepping rates back in Sep 2004, the Fed only in July 06.
2. has a surplus of new housing stock - around 600k homes, I think.
3. has a new build market in which speculation (flipping) is rife. This means that when the music stops and prices stop increasing, flippers are left with properties they didn't expect to keep, nor have finance for and are then required to sell quickly at a loss.
4. like Australia has a housing market which is far less homogenous than the UK (IMHO) - Washington DC has been stagnating for well over a year whereas Florida has been booming. There are accusations that it is California money from refinancing (MEWing) which is driving the markets up elsewhere through speculation.

Friday, October 27, 2006 11:48AM Report Comment
 

12. Renter said...

I guess that there are not as many Russian oligarchs knocking around in the States as there are in Central London. Monty is right in that we are in a different cycle and as I've said before the sequence is Aussie,UK then US. If this theory holds water then the US should be on the verge of a very large recovery. If not then bye bye UK.

Friday, October 27, 2006 12:27PM Report Comment
 

13. indiablue19 said...

monty....

FYI: It's more extensive than you might think from much of the media. But on a personal basis, people are fairly panicked. Florida was one of the worst for overspeculation, overbuilding, 125% mortgages, and the first to crash. Even homes that would have been considered a wonderful "buy" in the Spring don't sell at all. Expensive areas of California are also crashing. If MEWing from California was driving anything, it must be well over. Surprisingly, Phoenix, Arizona is crashed and there are "sale" signs lining entire streets. Areas that were already depressed like the mid-Atlantic States and Mid-West are worse than they were. The Northeast seemed impervious for absolute years, but is falling rapidly, including places like resort areas, from which I get e.mail all the time. This represents a very wide spread of property disaster. My information is firsthand from friends, family, and professional investors all in the same boat together.

Friday, October 27, 2006 01:58PM Report Comment
 

14. Nohpc said...

Short term panic does not make a crash. Things will settle shortly. This is nothing compared to the house crash of 1990s in the UK when people were handing their keys into the banks. And Americans are probably much less level headed than peolpe in the UK in general. I don't think people here will flock to offload properties as dramatically as over the pond.

Friday, October 27, 2006 11:45PM Report Comment
 

15. indiablue19 said...

Nohpc....

Whether one is level headed or not has nothing whatever to do with repossession. Further, where do you get your information on the social and psychological trends in America?

Saturday, October 28, 2006 02:44PM Report Comment
 

16. indiablue19 said...

Nohpc....

Are you aware at all that a massive house price crash in the States just preceded/coincided with the last one here? At the time, my spouse and I had property in both places, and there was no difference at all between the panic that went on in Kent versus that in the USA, and both took a similar number of years to recover. Like it or not, many world markets, perhaps all, are connected at this point. I have savings accounts in three currencies, and I'm sure I'm not alone in that respect.

Saturday, October 28, 2006 02:48PM Report Comment
 

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