Monday, May 26, 2008

The final coffin nail is recession

Number of homes on market surges but buyers stay away

"In order to get sizable price falls, a large majority of transactions need to be 'forced' sales which are mostly prevalent in periods of rising unemployment and recession." The UK has sizable personal debt, large government debt, increasing debt service costs, inflation in consumer goods, and a collapsing financial sector.

Posted by stillthinking @ 12:06 PM (1319 views)
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7 thoughts on “The final coffin nail is recession

  • shipbuilder says:

    What nonsense – to sum up, this article says that more properties are flooding the market but buyers aren’t buying so prices aren’t dropping as much, so what needs to happen are more properties coming onto the market from repossesions.
    Are house sales from repos magically guaranteed? Why will they make any difference if there are still no buyers?

    As is happening in NI, it is the lack of buyers forcing the price cuts – this will be reflected first in the asking price stats. After that, only a few houses need sell at the lower prices for the selling price stats to plummet. In other words, there does not need to be any economic unrest for a crash, just for buyers to stay away for a while.

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  • It does seem like a contradiction…….but I think lots of sellers are in denial. After so many years of hearing that prices can only go up, they are unable to accept that they could fall.

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  • shipbuilder – there’s probably an unstated assumption that asking prices for repos will be lower (more realistic) than for non-repos.

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  • I’m not really surprised that nothing’s happening yet. It will probably take all summer for the penny to drop. I imagine some of those putting their house on the market are testing to see if they can get the value they think it’s worth, and don’t really have any need to sell. Some may be trying to STR, but I think the moment’s passed for that and greed will cause many to procrastinate long enough for them to ‘lose’ a sizable chunk of their ‘gains.’

    In denial is a very good way to put it, and the longer it lasts, the more pressure there will be from those that are forced to sell (the obvious categories of divorcees and people moving because of their job). Life goes on, and the economy won’t stop just because sellers are unhappy.

    I expect to see some of these houses being taken off the market. But the head of steam still building so that by autumn the flood gates may start to open. Then again, I wouldn’t be too surprised if this doesn’t drag on to next spring. I can’t see the dam holding beyond that, however.

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  • montesquieu says:

    Board’s just gone from my house, not sure if the landlord has given up after 11 months or whether he is changing agent.

    He’s going to have to make a decision as I’m moving house in August – does he slash his price and try seriously to sell, or does he rent it out again and give up the selling idea for a bit? He’s subsidising this place by £600 month over my £1000 rent at the moment, no more than a dozen viewers in 11 months, asking price dropped in that time only slightly from £499k to £475k, despite the fact there are 5-bed, 1/2 acre plot large farmhouses on sale now for less than that in the village here. I think he’ll be lucky to clear £360k which is what he paid new build in 2002.

    My point being – reality is only **just** setting in now for this guy and he’s on the market for almost a year. £499k asking price for a 4-bed, two garage, fairly standard new modern house in a small development in somerset – those days are history I think.

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  • Massive size on the offer, nobody on the bid, and volume has completely evaporated.
    There’s only one possible outcome, seen this kind of thing time and time again.
    This is not a Jeremiad. This is the way markets work.
    TIMBBEEEEERRRRRRRRRRR!!!!!

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  • If significant falls require high unemployment, how is it that prices in California have fallen by 32% (in one year!) and yet the unemployment rate is only 6.2%?

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