Wednesday, August 1, 2012

Rhetorical question

Why is the housing market so slow?

With mortgage approvals at their lowest for 18 months, weakness of demand and high prices contribute to stagnation.

Posted by dill @ 05:43 PM (1534 views)
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2 thoughts on “Rhetorical question

  • For the same reason why London is dead right now, because fearmongering has got people running away!

    But of course, put simply, prices are too high now that liquidity is returning closer to normal levels. Just wait for when they undershoot!

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  • The banks will only repossess if it is the least unprofitable choice for them. This isn’t the case since repossession pushes house prices lower which creates an value implosion in all the assets the banks use for collateral, houses. This would raise capital reserve requirements to support their loans… which means less profit.

    I think the banks have learnt their lesson from the 1990s. The banks pretend as a group that the shitty assets they are holding are still worth what they want it to be worth. As long as they do so, these assets don’t reach their real market value, so the pretense becomes true. They are supposed to act in ‘self interest’. If they could be proven to be acting as a group to fix prices, then we could do something, but just look at the libor scandal. If that’s the penalty for price fixing… then they might consider that a fee for doing business rather than a punishment.

    House prices are not going to be driven lower by the banks. Since mortgages are supplied by a cartel, we don’t have a free market system in the housing market. And that’s most people’s equity.. scary..

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