Monday, April 6, 2009

Across the pond: Green shoots, or pond scum?

Housing: Signs of Life

Last year the Cape Coral area of Florida had the highest foreclosure rate in the country. But recently a curious thing has been happening in this blighted former boomtown: Buyers are swooping in. First-time home-owners are suddenly entering bidding wars with real estate speculators from as far away as Spain and Germany. Sales in February outpaced those at the peak of the boom, with some houses getting more than 50 offers and selling above their asking price. So what's going on? In all of these markets, banks are dumping foreclosed properties, attracting cash-rich speculators looking for cut-rate bargains. Government incentives of up to $8,000 in tax credits for first-time buyers and low mortgage rates engineered by the Federal Reserve are luring buyers who otherwise would be sitting out.

Posted by drewster @ 12:44 AM (898 views)
Please complete the required fields.



3 thoughts on “Across the pond: Green shoots, or pond scum?

  • The get-rich-quick mentality of property “investing” is still clearly present:

    Those dizzying price drops are attracting the likes of Mark and Claudia McLaughlin. The couple, who work for the New York State Corrections Dept. and live in Westernville, N.Y., plan to retire in Las Vegas in six years or so. They’re eager to find a place while prices are still low. In late March they went house hunting with an agent, checking out 18 homes between $75,000 and $100,000. “We figure we’ll buy something now and get a good price on it,” says 55-year-old Mark McLaughlin. “We’ll rent it out, and it’ll pay for itself.” They won’t need to sell their upstate New York home for years, by which time that local market might have improved.

    They clearly expect a quick recovery – using terms like “while prices are still low”. Also they expect money for nothing – “it’ll pay for itself”. Make your own minds up on this one….

    Reply
    Please complete the required fields.



  • Old_traveller says:

    Drewster,

    Funny how you post two articles back to back on the US seemingly suggesting opposite directions. February sales up 80% and fastest pace of decline on record YoY in March 09.

    I guess the answer is that both situations are not incompatible. A lot more is selling now in the US, it’s just that it is happening at the lowest prices ever.

    Reply
    Please complete the required fields.



  • old traveller,

    I like to see both sides of the debate. I think in the US, repossessed homes have hit rock bottom, but owners trying to sell are still clinging on to higher asking prices. The US market is highly regionalised too (as shown by the Case-Shiller figures) so it’s hard to compare this article about a select group of small towns with the other article about the whole country.

    However even if they (the US) are at the bottom, there’s nothing to drive house prices back up. Unemployment is still rising and wages are under immense pressure (anybody on a commission- or bonus-based job has seen their income decimated). There won’t be a V-shaped bounce in prices – this is an L-shaped recession, and there’s no way house prices will shoot back up again for several years yet.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>