wayneL said:This is an interesting point.
...
But the indicies stayed flat
Rafa,Rafa said:Is this becuase of bad data, or is it because the way the median house prices works, a few fire sales here and there don't really move the price much...
And do a few fire sales here and there matter anyway...?
My statements are based on the indices... and I guess you can see when I say, its you guys saying the markets gonna come crashing down, are actually the ones hoping that 'this time is different'!
wayneL said:Rafa,
With respect, you are spinning my post. This was not a few fire sales.
legs said:What the hell has any of this got to do with stagnating house prices...get a bit carried away did we?
Sure about that?theasxgorilla said:I didn't say any of this.
theasxgorilla said:Longer term its going to be more beneficial for the individual to identify a new profession that will allow them to become valuable and hence make property prices seem less over-valued, relative to them.
Kris, we are clearly enjoying jousting over this, nobody is being unreasonable (except the bullsStop_the_clock said:Hence the reason why I would like this thread closed down, clearly we are all going around in circles and nothing is being solved here. It really is a useless waste of a thread.
The thread has now become too long, too invloved and inconclusive.
Can we have the padlock please?
We've all heard and scoffed at the diktat that houses must only ever rise.
I would like to open a discussion of how much of this is actually paid for via the process of gentrification, i.e. the money sunk into property in renovations and additions.
Let's take a small example of 5 houses which all sold at the same time:
1/ @ 100,000
2/ @ 110,000
3/ @ 130,000
4/ @ 150,000
5/ @ 200,000
We have a median value here of 130,000 and a mean of 138,000
The buyer of the first house does an extensive addition and reno on the house and spends 80,000
By a freak occurrence, the same five houses sell at the exact same time 2 years later:
1/ @ 180,000
2/ @ 110,000
3/ @ 130,000
4/ @ 150,000
5/ @ 200,000
In the example there has been absolutely no HPI at all, except for someone paying up for the reno on the 1st house.
But lo! Look how the figures change; we have a median value of 150,000 and a mean of 154,000. It appears that there is an increase of ~15%. But that 15% increase in the reported figures has been paid for by the renovator.
The current boom has partly been a renovating boom as well
On another thread, 1 poster stated that anecdotally, prices in the NW have been stagnant for 2 years, whereas another pointed to a rise in the official figures... gentrification?
I suspect so. New builds must surely add to this as well. This process of gentrification always adds an upward skew on the official figures.
These nominal values could decrease somewhat and the median and mean values could syill show an increase.
chops_a_must said:Sure about that?
Rafa said:I may be wrong, but surely, 'this time is different' means, this time housing will actually crash!
I mean, there have been many booms, followed by plateaus, then followed by another boom... (not adjusted for inflation, i am talking absolute figures here...)
When was there a time in Oz when house prices actually fell substantially?
Why should this time be any different?
I have to say, its you guys saying the market is going to crash, that are the ones hoping for it to be different this time...
growth due to the Eastlink works.
tech/a said:And there is the reason.
Pretty simple??
Find a REASON
tech/a said:Wayne.
Do you honestly believe there is going to be an across the board 20-30% decrease in housing prices?
tech/a said:That the wont be opportunities in abundance?
tech/a said:The only way this was likely for this to occur is a world wide recession/depression.
tech/a said:In which case the arguement of waiting to buy a home when its cheaper---it would then be cheaper---falls as flat as a pancake---as you couldnt afford to buy---you maybe lucky to have a job---or pay the rent,any savings you had youd be scared stiff of losing.
Let's pray that never happenstech/a said:But hell they could drop a dirty bomb in my backyard tommorow!
US mortgage crisis goes into meltdown
By Ambrose Evans-Pritchard
Last Updated: 1:15am GMT 24/02/2007
Panic has begun to sweep the sub-prime mortgage sector in the United States after the bankruptcy of 22 lenders over the past two months, setting off mass liquidation of housing loans packaged as securities.
Analysts say the housing bust is pulling America into recession, citing a 14.4pc drop in housing starts
The rapid deterioration could not come at a worse time for British bank HSBC, which has set aside $10.5bn (£5.4bn) to cover bad loans in the US.
The cost of insuring against default on these loans has rocketed in recent weeks, from 50 basis points over Libor to 1,200, raising fears that a credit crunch could spread to the rest of the property market.
Low-grade BBB-rated securities - measured by the ABX index - have crashed from near par of 100 in early November to 72.5 this week.
Peter Schiff, head of Euro Pacific Capital, said the sector was in an unstoppable meltdown. "It's a self-perpetuating spiral: as sub-prime companies tighten lending they create even more defaults," he said.
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California's ResMae Mortgage filed for bankruptcy last week as it struggled to cope with defaults on a $7.7bn book of sub-prime loans issued last year, while Accredited Home Lenders in San Diego warned that bad debts had reached 7.18pc of its portfolio.
HSBC chief executive Michael Geoghegan, who stepped in to take control of the US division earlier this month claiming "The buck stops at my door", has ousted top executives. But the worst may not be over for Household International, the property arm it acquired for $14.4bn in 2003 to capitalise on the housing boom.
Rating agency Standard & Poor's is shifting its focus to the tier of debt above sub-prime, eyeing loans covering people viewed as better credit risks but who lack the steady income needed for prime status.
S&P has placed 11 loan packages worth $146m on watch for a possible downgrade this week, saying it was most worried about "piggyback" second mortgages. "There is a potential danger of default on these deals," said credit strategist Robert Pollson.
For now, the US Federal Reserve believes the damage can be contained. "I don't think there'll be a large impact on prime mortgages from the sub-prime market," said governor Susan Schmidt Bies.
However, she warned of a "hidden" problem caused by sellers pulling property off the market. " The percentage of homes where nobody is living in them is at a record level. So the potential for inventory correction is still very high," she said.
Nouriel Roubini, economics professor at New York University, says the housing bust is slowly pulling America into recession. He cites a 14.4pc drop in housing starts last month; an expected loss of 600,000 real estate jobs in 2007; a sharp fall in home equity withdrawals - down from 6pc of GDP at the top of the boom; and a squeeze as $1,000bn of mortgages are adjusted upwards this year to higher interest rates.
Mr Roubini said: "America faces a 'reverse cycle' where a credit crunch has hit before the slowdown, a rare pattern. Normally, recession comes first, setting off credit troubles in its wake. We have a housing recession, an auto recession, a manufacturing recession, and a real investment recession already present. If all this happening in what the consensus terms as a 'Goldilocks economy', what would happen if the economy slows down?"
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