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Rare enough for me to start a thread and I hope I have pasted the link rightly, am not au fait with these things:
http://www.dailymail.co.uk/money/article-1308526/US-housing-jump-stuns-economists.html?ito=feeds-new
I post this because just 7 days ago Mark posted a thread which was stating the exact opposite, and really, once again I haven’t got a clue what to believe.
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The increased volume is probaby because the Banks are selling some of the millions of repos of the last 5 years!
Prices in the US (and other mature western economies are only going one way)!
http://www.telegraph.co.uk/finance/e…l-Roubini.html
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“The bitter truth is that there is no way out of this with monetary and fiscal policy. They (the US) will just have to see their living standards go down. I see a decade of difficulties for the US,”“the market for mortgage securities (CDOs) had collapsed from $1.9 trillion in 2006 to just $50bn last year, leaving the US property market reliant on federal agencies.
“The world is simply not willing to buy these dubious financial products again. Germany is leaving, China is no longer there, and Japan is pulling away. The US system of mortgage finance is on government life support and that cannot drive a sustainable upswing,”.
http://www.nytimes.com/2010/09/06/bu…2&ref=business
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“the era of trying to buy stability while hoping the market will catch fire — called ‘extend and pretend’ or ‘delay and pray’ — has run its course”.The coments below are regarding Orlando Florida but have some relevance to Spain:
With property in Florida historically not being a great investment (from a capital ‘real’ growth perspective). E.g Between 1980 and 2000 prices in Orlando stayed roughly the same. Despite prices falling throughout 2006 to 2010 (following the 2001 to 2005 boom), they are currently still well over the long term trend. (see link).
http://mysite.verizon.net/vzeqrguz/h…e/orlando.html
Property is only worth what a buyer is willing to pay and as most buyers require mortgage finance, what banks are willing to lend and currently they are not very willing. Anyone waiting for Orlando prices to return to their 2005/6 peaks will probably be very disappointed for a long time, possibly a generation.
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@marjal wrote:
Can anybody tell me how houses were sold before the property boom and without easy low interest finance?
I remember my parents telling about 15-20% interest rates for 10 year mortgages!!!
Is it really down to properties have to represent a smaller portion of our salary/ earnings?It’s simple. Prices were lower in relation to income, and people saved more.
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@mark wrote:
Prices were lower in relation to income
I remember well the strict rule of thumb of only being able to borrow up to three times your salary max. That is what was always considered affordable/sensible. The problem for first time buyers now is that a mortgage of 3 times the average salary gets you nothing.
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@charlie wrote:
@mark wrote:
Prices were lower in relation to income
I remember well the strict rule of thumb of only being able to borrow up to three times your salary max. That is what was always considered affordable/sensible. The problem for first time buyers now is that a mortgage of 3 times the average salary gets you nothing.
Charlie, either wages go up or prices come down! In Spain, Ireland and the USA they’ve come down arround 50% from peak (in the real world, as opposed to made up indicies) peak for Ireland 2007, USA 2006 and Spain 2004/5. Uk down circa 20% since then up circa 8 to 10%, now they’re going down again.
Lots more trouble coming to the US, they’ve just been papering over the cracks and playing pass the parcel with a ticking time bomb.
http://money.cnn.com/2010/09/08/markets/thebuzz/index.htm
also read the comments at the end of the article.
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The real problem for the economies of the US and UK are the very high levels of personal debt. In the last decade people borrowed as if there was no tomorrow. Banks allowed it it happen because greed was good and their brains were somewhere else. Now the consequences of this credit binge will take a decade or more to work through their economies.
Europe does not have such high levels of personal debt but governments do. They borrowed to appease their populations unrealistic expectations of social welfare and public sector employment.
This debt pile and it’s service costs have to be repaid. It will take a generation of austerity and government resolve to achieve it. Throwing more money at the problem simply makes it worse and only marginally slows the inevitable. With the demand side of all western economies in terminal decline because of the debt mountain the prospects for any improvement are bleak.
Do not look for a significant recovery in the housing markets. It’s not going to happen. At least for many years to come. Property has become just somewhere to live, second homes a luxurious and unsustainable burden. The party is over. -
“Charlie, either wages go up or prices come down!”
In a recession, both go down.
This shows UK BASE (mortgage rate is usually 2-3% above it). From 1973-1993 the average base rate was about 11%, but it peaked at 17%.
http://www.bankofengland.co.uk/statistics/rates/baserate.pdf
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“In a recession, both go down.*
I agree that is the situation facing us now ‘real’ wages are falling, property prices in the Uk follow. Forget the technical definition of a recession, if you look at the true inflation figure. The US, UK and many other Western country’s are still in one, and everything points to it getting a lot worse over the comming few years. Were in for a step change in living standards. I went on the record as saying the years leading up to 2005/06 were a great time to be paying down debt, not taking more on.
PS: We have a whole generation of under 40’s and a lot of people old enough to know better, who not only think that base interest rates ‘can’t or magicaly wont be aloud’ to get back to 4 or 5% let alone 8, 9 or 10%. It is highly likey that base rates will be back up to 5 or 6% within 2 to 3 years. That will mean SVR (Morts) of arround 7 to 9% and fixed rates will be pushed up ahead of the curve. Most peoples mortgages are for 25 years, the artificialy low interest/mort rates we have been ‘rate tarting on’ seen over the last 7 to 8 year were not normal and would have best been viewed as a great opportunity to overpay and reduce debt.
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Quite simply the prices. Miami beach looks very affordable with prices down 30-50%. For instance, house on Miami beach with pool 350k http://www.zillow.com/homedetails/771-Fairway-Dr-Miami-Beach-FL-33141/43877272_zpid/
Though I hear property taxes are quite high.
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@adiep wrote:
Quite simply the prices. Miami beach looks very affordable with prices down 30-50%. For instance, house on Miami beach with pool 350k http://www.zillow.com/homedetails/771-Fairway-Dr-Miami-Beach-FL-33141/43877272_zpid/
Though I hear property taxes are quite high.
Its a short sale, last sold in 1994.
They must have MEW’ed for the mortgage to be worth more than the sale price… surely?
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@katy wrote:
Certainly a good location, a plot on the islands would have sold for more than that a few years ago. Taxes are high but have dropped as prices have declined. Better rental prospects than spain and year round too. Personally I wouldn’t want to stay long in Miami, fab place for a couple of weeks 😀
Yes, couldn’t live there myself but looks a good spot for rental income. Actually Zillow has some sort of price estimate feature (look just below the main advert) which seems to think its 70k over-valued.
Its a great site, look at this http://www.zillow.com/homedetails/5703-Sunberry-Cir-Fort-Pierce-FL-34951/70415837_zpid/ 5 beds, brand new, $99k. Or this, 6 bed thing for 77k http://www.zillow.com/homedetails/408-N-7th-St-Haines-City-FL-33844/47406533_zpid/ — I bet that last even has a local crack house where one can partake in the local custom of getting stoned and carjacking sum mofo.
Good stuff, gotta love the US of A.
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or live out those ambitions of becoming a slum landlord
http://www.zillow.com/homedetails/100-Wood-Ave-Haines-City-FL-33844/81486130_zpid/
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@adiep wrote:
Or this, 6 bed thing for 77k http://www.zillow.com/homedetails/408-N-7th-St-Haines-City-FL-33844/47406533_zpid/
Stunning photography re. picture no. 6. Clinches it for me, I’m going to make them an offer. 🙂
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Good site Zillow. Problem is with browsing areas that are unknown to you it is impossible to calculate the extent of the bargain. Similar to Spain, saw someone had put a link to a property in algerciras. I wouldn’t consider anything in that place! I did have a look at properties in areas in Naples, Florida that I know well and yes there are some great bargains in good locations around $250,000.
There is a similar site for the UK. zoopla which shows the price a house last sold for and it’s estimated value now. Ours has increased in value by £67,000 since we bought last August….I think that site is absolutely accurate, great feel good factor
😉Mark maybe we should have a worldwide property section for fun 💡
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@adiep wrote:
@katy wrote:
Certainly a good location, a plot on the islands would have sold for more than that a few years ago. Taxes are high but have dropped as prices have declined. Better rental prospects than spain and year round too. Personally I wouldn’t want to stay long in Miami, fab place for a couple of weeks 😀
Yes, couldn’t live there myself but looks a good spot for rental income. Actually Zillow has some sort of price estimate feature (look just below the main advert) which seems to think its 70k over-valued.
Its a great site, look at this http://www.zillow.com/homedetails/5703-Sunberry-Cir-Fort-Pierce-FL-34951/70415837_zpid/ 5 beds, brand new, $99k. Or this, 6 bed thing for 77k http://www.zillow.com/homedetails/408-N-7th-St-Haines-City-FL-33844/47406533_zpid/ — I bet that last even has a local crack house where one can partake in the local custom of getting stoned and carjacking sum mofo.
Good stuff, gotta love the US of A.
$77K? it was probably worth 300k a couple of years ago and describe as an excellent investment opportunity. You are assuming that price has any relation to the desirability in relation to what you could buy in the UK or Spain. When credit is no longer available, prices of assets collapse, 180k houses sell for 35k. It could happen in Spain quiet easily, with 1.5million spare properties – almost as much as the ‘US of A’, after all Florida has all the advantages of Spain (the weather).
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The number os sold houses might have increased, but the number of houses lost to foreclosure in USA jumped by 25%…
The news is not good:
“More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to RealtyTrac. The firm estimates more than 1 million American households are likely to lose their homes to foreclosure this year.
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