Thursday, February 14, 2008

Repos will hit the bottom end and top end of the market

Rust and Sun Belt cities lead '07 foreclosures

"Most of the metro areas with the highest foreclosure rates were either cities like Stockton and Las Vegas, which experienced meteoric growth and unsustainable price appreciation over the past few years, or cities like Detroit, which are undergoing a more widespread economic downturn along with higher unemployment rates," We have loads of rust belt north of London but where is the UK equivalent of the Sun Belt?

Posted by happyrenterz @ 08:28 AM (595 views)
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3 thoughts on “Repos will hit the bottom end and top end of the market

  • The Sun Belt would be South of London (and probably include London too)…

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  • Sandbanks, Brighton etc?

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  • Pushing At The Cliff-edge says:

    “North of Brimingham” surely more precise than “north of London” in England, though don’t forget many ailing towns in Wales. Sun belt USA’s best equivalent in the UK is probably South West England beyond Bristol’s travel to work area.

    In both, house prices grew due to high demand from in-migration (largely due to climatic and environmental factors), rather than fundamentals in the local economy. In the US, the strength of the increasing demand for homes was overplayed, resulting in the present correction in prices, but will this happen in SW England? I suspect “no” if the US problems were caused by over-supply of homes in these areas, but “yes” if the corrections in the US sub-belt were due to an over-inflation of house prices caused by people thinking the “in-migration” effect was stronger than it was in reality – ie it created a localised bubble. That’s not to say that I think that SW Eng is immune from a correction, I think it will at minimum, along with the rest of the UK, “correct”, at max suffer a severe crash, the question I’m addressing is whether it will correct or indeed crash at a faster rate than the UK in general.

    Another reason the SW might correct to a less than average extent is that it has an old age profile and so has a higher than average proportion of people with small or no mortgage. One reason that it might correct more than the UK average is the high wage to price ratio in the SW, which rival those in London due to prices inflated by elderly in-migrants with large downpayments and a more rural than average low-wage labour market.

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