House prices to keep rising for years

[CAFA1234]

http://www.bloomberg.com/apps/news?pid=&sid=aDyYp9o4DMGI&refer=home
April 24 (Bloomberg) -- Purchases of new homes in the U.S. plunged more than forecast in March to the lowest level in almost 17 years as stricter loan rules and falling prices caused buyers to hold off.

Sales dropped 8.5 percent to an annual pace of 526,000, the fewest since October 1991, from a 575,000 rate the prior month, the Commerce Department said today in Washington. The median sales price slumped 13.3 percent from the same time last year, the most in almost four decades.
------------------------------------------------------

This my friends is not some isolated backwater in the middle of Texas - this is the whole of the USA, including Manhattan etc. And this despite the vested interests of almost everybody in talking up house prices.

 

[Kauri]

http://www.bloomberg.com/apps/news?pid=&sid=aDyYp9o4DMGI&refer=home
April 24 (Bloomberg) -- Purchases of new homes in the U.S. plunged more than forecast in March to the lowest level in almost 17 years as stricter loan rules and falling prices caused buyers to hold off.

Sales dropped 8.5 percent to an annual pace of 526,000, the fewest since October 1991, from a 575,000 rate the prior month, the Commerce Department said today in Washington. The median sales price slumped 13.3 percent from the same time last year, the most in almost four decades.
------------------------------------------------------

This my friends is not some isolated backwater in the middle of Texas - this is the whole of the USA, including Manhattan etc. And this despite the vested interests of almost everybody in talking up house prices.

Figures, I figure, can figuratively be figured to suit any figjam argument.. The median sales price of a new single-family home fell by 6.8% from February to March and by 13.3% from March 2007 to March 2008. From two years
ago, the median home price is down only 4.7%. That's a far cry from the 20% year-ago declines espoused by many, including the former Fed chairman. amongst others...

Cheers
............Kaurifig

 

[CAFA1234]

Figures, I figure, can figuratively be figured to suit any figjam argument.. The median sales price of a new single-family home fell by 6.8% from February to March and by 13.3% from March 2007 to March 2008. From two years
ago, the median home price is down only 4.7%. That's a far cry from the 20% year-ago declines espoused by many, including the former Fed chairman. amongst others...

Cheers
............Kaurifig

Kaurifig - trust me, anyone who purchased a house with 100% mortgage, 1 year ago or even 2 years ago knows what a loss of 13% or even 5% is like.

The problem, in the USA, is that one can walk away from a property and the lender can't get their money back from you - all they can do is foreclose and auction the property. So, if you purchased a $500k home and it is now worth $65k less, then a lot of folks will think about walking away and renting. The numbers are not particularly large, but they can become the tipping point that puts further pressure on prices.

Now, if you really feel that the pundits are wrong with their calls of ANOTHER 10/15% reduction then my friend, you have the opportunity of a lifetime. Australia has a more restricted market, but in the USA (Chicago futures exchange), and the UK you can actually bet on the future prices of property.

So, go boldly and make your fortune for the streets are paved with gold.

Markets only exist because of differing views, so I'm grateful that we differ.

 

[Kauri]

Kaurifig - trust me, anyone who purchased a house with 100% mortgage, 1 year ago or even 2 years ago knows what a loss of 13% or even 5% is like.

The problem, in the USA, is that one can walk away from a property and the lender can't get their money back from you - all they can do is foreclose and auction the property. So, if you purchased a $500k home and it is now worth $65k less, then a lot of folks will think about walking away and renting. The numbers are not particularly large, but they can become the tipping point that puts further pressure on prices.

Now, if you really feel that the pundits are wrong with their calls of ANOTHER 10/15% reduction then my friend, you have the opportunity of a lifetime. Australia has a more restricted market, but in the USA (Chicago futures exchange), and the UK you can actually bet on the future prices of property.

So, go boldly and make your fortune for the streets are paved with gold.

Markets only exist because of differing views, so I'm grateful that we differ.

Bean there... done that... the spread is murder though unless you really are confident of your own opinion.. maybe??..

Cheers
...........Kauri

 

[CAFA1234]

Bean there... done that... the spread is murder though unless you really are confident of your own opinion.. maybe??..

Cheers
...........Kauri

That looks as if it is a 2% spread - in a volatile market it looks reasonable.

Also remember, in the USA, that some areas are down over 20% in the last year - check out a little county called Riverside near Los Angeles. And this in Southern California, one of the great engines of world economy - I think CA has the 5th or 6th largest economy in the world (I could be wrong on this point).

I recently drove down that way (about 40 miles) and I was amazed at the 'super deals' that the builders are offering right now for anyone with a good credit rating and a good deposit - you can almost name your price. They just want to shift the stock.

In my local area there are significant blocks of units that are in various states of building and yet they don't appear to be in any hurry to finish them off - some have not had any work done on them in months. This implies that the developers feel the market is so bad that it's cheaper to leave them half finished than risk spending even more money for then to sit unsold and overhang the market.

Having said all of the above I remain a long term investor in many assets, but the heading of this thread suggests that houses will only ever keep going up, and that believe is in my mind, foolish and defies history. How many people got stuffed in 1989 in Aus with 18.5% mortgage rates?

 

[Kauri]

Kaurifig - trust me,

Markets only exist because of differing views, so I'm grateful that we differ.

We don't differ... I happen to agree.. just tired of the way figures are interpreted by .... aahh.. them..

This my friends is not some isolated backwater in the middle of Texas - this is the whole of the USA, including Manhattan etc. And this despite the vested interests of almost everybody in talking up house prices

Also remember, in the USA, that some areas are down over 20% in the last year - check out a little county called Riverside near Los Angeles. And this in Southern California, one of the great engines of world economy - I think CA has the 5th or 6th largest economy in the world (I could be wrong on this point).
?

Glad it isn't some isolated little backwater... so to speak..

That looks as if it is a 2% spread - in a volatile market it looks reasonable

2% reasonable hey the Euro is pretty volatile at the moment..
15645.0 bid 15647.0 offered ... the mind is a bittle fuddled on a Y day but I don't think that % approaches 2% by a country mile...

Cheers
...............Karri

 

[Whiskers]

Figures, I figure, can figuratively be figured to suit any figjam argument..

HA ha, I like your style Kauri.

I have not long expressed a similar point in the immenent market correction thread... but you take the points for articulation. :

 

[CAFA1234]

2% reasonable hey the Euro is pretty volatile at the moment..
15645.0 bid 15647.0 offered ... the mind is a bittle fuddled on a Y day but I don't think that % approaches 2% by a country mile...

Cheers
...............Karri

hey, Karri that is unfair. You know perfectly well that the depth of the currency markets, particularly the Euro, is so different to housing futures it unreal that you could compare the two. A tad like comparing the BHP or TLS spread to an untraded over the counter 4th rate junior miner. If you get my drift?

The fact is, if one really believes (as opposed to ramping on BBs) that house will not drop another 10% or more then there is money on the table. I say to those people put your money where your mouth is and take the money.

Now if they do think that house prices will drop 10/15% in the USA, Ireland, Spain & the UK but still keep going up in Aus then they are either good at wishful thinking or they should articulate some bloody good rationales behind their thinking rather than ramping.

 

[Kauri]

hey, Karri that is unfair. You know perfectly well that the depth of the currency markets, particularly the Euro, is so different to housing futures it unreal that you could compare the two. A tad like comparing the BHP or TLS spread to an untraded over the counter 4th rate junior miner. If you get my drift?

The fact is, if one really believes (as opposed to ramping on BBs) that house will not drop another 10% or more then there is money on the table. I say to those people put your money where your mouth is and take the money.

Now if they do think that house prices will drop 10/15% in the USA, Ireland, Spain & the UK but still keep going up in Aus then they are either good at wishful thinking or they should articulate some bloody good rationales behind their thinking rather than ramping.

Ramping house prices... I wish.. when I sold out a year back,,,
Try Nick Radges excellent book.. ( sorry kENNAS)... and try out the "Bang for Buck" filter... house prices are just a commode to be traded.. and should be treated as such..
house prices in Aus will/have drop/dropped... butt... aahh where was I... oh yes... maybe the Aussies didn't embrace the free ride as much as elsewhere... and the losses fueled by greed are not expected to be as severe as elsewhere... needless to say we will be affected by the ntoxic crup being... as always.. exported from the home of capitalism... but we will weather the storm... as we always have.. when they come sweeping in from a toch east of north east.. Y Y Y :drink: Ynott..

Cheers
............Kurlie

 

[CAFA1234]

Ramping house prices... I wish.. when I sold out a year back,,,
Try Nick Radges excellent book.. ( sorry kENNAS)... and try out the "Bang for Buck" filter... house prices are just a commode to be traded.. and should be treated as such..
house prices in Aus will/have drop/dropped... butt... aahh where was I... oh yes... maybe the Aussies didn't embrace the free ride as much as elsewhere... and the losses fueled by greed are not expected to be as severe as elsewhere... needless to say we will be affected by the ntoxic crup being... as always.. exported from the home of capitalism... but we will weather the storm... as we always have.. when they come sweeping in from a toch east of north east.. Y Y Y :drink: Ynott..

Cheers
............Kurlie

Hey, Karri or is it Kurlie (you are confusing an old chap ).

Firstly any comments I make are not directed on a personal level, so no need to defend the ramping comment - just a general comment for those rampers out there - you see them all the time, if it's not making a fortune on one thing it is another.

I'm sure a lot of the time it's simply that they need the feel good factor of reading that other people agree with them - I don't mind losing money as long as everyone else is doing the same. They used to say that you didn't get fired for buying IBM. Funny that the hedge fund managers who made the real money last year were betting on house prices falls - one chap made $3.5B!!!

Secondly I'm not sure about Aussie house prices. I think if you look at the period 2000 - 2008 it suggests that Aussies have embraced the get rich quick mentality very much the same as the Yanks and Europeans (well the Brits, Irish and Spaniards).

I was in Perth, WA in Jan, Feb & March, and I detected a rather different attitude to 8/12 months ago. A year ago 'everyone' in Perth was going to get an investment property and retire on the proceeds on the back of the mining boom. Well the mining boom is still there and house prices are sort of off the boil.

Thirdly, and I'm not sure how old you are and where you were in the late 80's, but some very good friends on mine got wiped out in Queensland in 1989 - 18.5% mortgage rate. They were in denial for about a year - just could not believe what had happened to them.

People generally tend to forget bad experiences easier than they remember the good one - 'Those were the days my friend, I thought they'd never end......'

Anyway I've enjoyed our banter and I wish you every success in your investments - whatever they be.

BTW - the market 'owes' me about $200k over the past 10 months - maybe I should stick to housing

 

[Kauri]

Hey, Karri or is it Kurlie (

BTW - the market 'owes' me about $200k over the past 10 months - maybe I should stick to housing

Thanks...

...Kurrie..

 

[robots]

hello,

yeah great stuff cafa, while around check out "property prices to stagnate for years",

its been going on for 2.5yrs and guess what those in have done very nicely on their INITIAL money down (ROI, although many dont like talking about ROI though)

thankyou

robots

 

[CAFA1234]

hello,

yeah great stuff cafa, while around check out "property prices to stagnate for years",

its been going on for 2.5yrs and guess what those in have done very nicely on their INITIAL money down (ROI, although many dont like talking about ROI though)

thankyou

robots

Robots - I agree that in many areas the past 2.5 years have been a great time to invest in property, as in shares, commodities etc.

Having said that, I own a property in Sydney, a share of a unit in Manly, and a share of a property in Brisbane. The Brisbane one has done well over the past 5 years - gone from $132k to about $290k. A very worthwhile return. However the properties in Sydney have just about kept up with inflation since about the peak in 2003, maybe tad under.

Please don't think that I'm downing property as an asset class, it's just that is what it is (ignoring the fact that one has to live somewhere). Because of the huge gearing that is available in property it is always going to be an interesting investment, but never believe that it will only ever go up in price.

That is the message.

I try to give a balance to the rampers that would fool less experienced investors. And I assume that it is investors that are reading this BB???

 

[alwaysLearning]

Those of you who are predicting a crash in house prices--would you agree that the only way this will happen is if Australia goes into a recession?

This is what the RBA said a day or so ago regarding the percentage of income used per month into paying back mortugages.

http://www.news.com.au/business/money/story/0,25479,23596478-5013952,00.html

 

[CAFA1234]

Those of you who are predicting a crash in house prices--would you agree that the only way this will happen is if Australia goes into a recession?

This is what the RBA said a day or so ago regarding the percentage of income used per month into paying back mortugages.

http://www.news.com.au/business/money/story/0,25479,,00.html

It may not be a crash - it may just be like Sydney, a stagnant market for several years. Maybe 10/15 years. However I hear that in some suburbs of out west of Sydney that prices are already around 10/12% below their peak. And I'm sure some areas are still booming.

As with any investment don't get in over your head. If you can take the losses and not be forced to cash out then back your view.

Don't forget almost everyone has a vested interest, including the RBA, in talking up the house market. Read the RBA web site and see that they are relaxing their funding rules, and ask yourself why would they do this if they are so confident, and the economy is booming??? What people say and what they do are sometimes very different.

Can there be a problem even if no recession? Maybe. The issue right now is lack of funds in the wholesale market, which means that banks that are still lending are having to take some of this onto their own books. If this continues for any length of time it WILL impact the market.

See comments in todays FT in London regarding lack of funds impacting the market there - no shortage of buyers, but an acute shortage of funds.
http://www.ft.com/cms/s/0/0e6833a8-1235-11dd-9b49-0000779fd2ac,s01=1.html


Sorry I could not help any more than simplistic views of the world, and I'm sure many will have others and opposing views

To end on a bright note - the US market hit an intra-day high of almost 13,000. This is well within 10% of last years high. If, and a big IF, it continues on Friday then the Aussie market should open a good deal higher come Monday. Order another latte!

 

[Mofra]

Sometimes rent is not dead money.

Well, not any more than non-deductable bank interest which is generally higher than rent anyway, although only effects people silly enough to live in any property they own

 

[KIWIKARLOS]

i think that is you can afford to keep your house at the moment you will be in a good position for the future even if it did decrease in value in the short term i think medium term we could see house prices increases rapidly.

With the price of energy going up rapidly building materials will start to increase just as much. You will not be able to build a home cheaply in future. Land prices will decrease in the fringe suburbs where the cost of servicing the outer burbs will also dramatically increase. Electricity, water, food transport, public transport will all be up causing demand for land closer to the city and existing infrastructure to climb.

Its just not going to be affordable to live 50kms from work in huge houses with large heating cooling costs.

The gov knows this and are currently converting ports in australia to all electric and with associated heavy rail lines which will move freight from the ports to suburban nodes. When oil hits $150 + a barrel in the next year or two we can kiss alot of road freight goodbye as we are oil poor in this country but electrical energy rich.

Plus think about the potential influx of environmental and economic refugees we will probably have knocking at our door very soon. We are still the lucky country we have huge amounts of natural resources and bith agricultural, metal and energy. Public debt is rediculous but that is correcting itself right now thanks to the non sustainable economies of the US, UK, Spain, etc. We have alot of common wealth to back up our public debt. I think australia is well positioned in the transfer to the new world

 

[xoa]

Figures, I figure, can figuratively be figured to suit any figjam argument.. The median sales price of a new single-family home fell by 6.8% from February to March and by 13.3% from March 2007 to March 2008. From two years
ago, the median home price is down only 4.7%. That's a far cry from the 20% year-ago declines espoused by many, including the former Fed chairman. amongst others...

Cheers
............Kaurifig

Two years ago, the median price peaked at $230,200. It's now $200,700. This is a nominal fall of 13%. In real terms, factoring inflation, the fall is almost exactly 20%.

It's still falling - some people expect the market to fall by another 20% before it bottoms.

 

[theasxgorilla]

Two years ago, the median price peaked at $230,200. It's now $200,700. This is a nominal fall of 13%. In real terms, factoring inflation, the fall is almost exactly 20%.

It's still falling - some people expect the market to fall by another 20% before it bottoms.

Would that be real or nominal?

 

[numbercruncher]

"Head em up punters", Melbourne hits reverse ! ( was always going to happen wasnt it ? )

THE Reserve Bank's interest rate noose has tightened on Melbourne's housing market, cutting almost $40,000 from prices so far in 2008.

http://www.theaustralian.news.com.au/story/0,25197,23597617-20142,00.html