Property Crash!

Grumbles · Oct 18, 2007

There has been a lot in the News lately about the Housing Market debts both here and in North America
Anyone got thoughts on whether this is going to see a major slump in the economy in the near future or whether 'things' will pick up again?
We were hoping to sell our house early next year, but now we are very unsure

G

Lev · Oct 18, 2007

Recession here we come FWIW

Corporal Punishment · Oct 19, 2007

Speaking of the USA - I doubt you will see a housing crash – unless you live in one of the bubble areas. You certainly won’t see the increases you have over the last few years, maybe even a small decline but, as long as the fed is active, a crash in residential housing doubtful.

The huge upswing was basically driven more by VERY low interest rates of the 90’s – unfortunately that is also what gave birth to this whole sub-prime problem. Togther his caused a bubble. The Fed as it tightened over looked the sub-prime loans as an issue since they simply didn’t have data on that sort of thing, and BLAM. Defaults – bad paper – no backing – freaking capitol Armageddon.

The Fed eased last month but will probably have to keep easing rates maybe 2-3 more times inorder help the mortgage companies recover a little and let things settle out slowly. The banks will tighten their lending practices, but at least the liquidity will be there and qualified people should be able to get the lending they need.

This may affect pricing somewhat because it will drive a portion of the population out of the market that could only qualify with some of the creative type loans but with full employment (in the USA anyway) and lower rates, it shouldn’t be too bad.

Certainly though it is a significantly more magnified problem for those of ya’ll in highly populated areas. They could be in for a tough cycle. Good time to move to the country.

The reality is that property inevitably goes up – if only for the fact that they rarely make more of it. Supply and demand is a tough task master.

I think Lev is right though – The likely hood of a recession in the short term is rather likely. Seems counter intuitive if you look simply at fed cut, but there is typically a 12-18 month lag time between what the fed does and its effect on the economy. Factor in the lower dollar, high gold and $90 oil --- the short run looks pretty ugly.

Grumbles · Oct 19, 2007

Kestrel13! said: ↑

The prices of houses these days are appalling. No matter where the area, it's going to take the average joe a hell of a long time to save up for a property. I'm afraid I don't understand too much about mortgages and the like but is that the only was to go about buying your own house now a days?
Will the prices ever drop for houses:confused
Click to expand...

Getting a foot on the property ladder is really hard just now Not enough houses (supply) and ever increasing demand. This is pushing the house prices higher. But the banks have increased the interest rates up (for loans) 4 times this year and another one to come in January. People are struggling to pay their mortgages every month, so expect a slow down in house prices very soon. The media are talking about values decreasing and more re-possessions happening.

Tarquin BA · Oct 19, 2007

When an economy expands at an unsustainable rate, it will self correct. First time buyers have all but been squeezed out of the market, partly due to buy to let landlords buying up large numbers of residential properties over the last 10 years, and also because of the amount of people who have moved to this country from elsewhere. When first time buyers can't afford to get on the property ladder, the market tends to stagnate.
There's a big difference between a recession (8 - 20 months) and a depression, which can last many years and is devastating in comparison.
When things settle down in the next year or so, confidence in the housing market and the economy in general will increase, and things will pick up again, for a few more years at least.
The world is due for another major financial crash but there aren't enough warning signs in evidence yet.

Grumbles · Oct 20, 2007

Glad to see all the MG Economists are posting their thoughts here

BILLMCC66 · Oct 21, 2007

here in Brugge where i live the price of houses has gone through the roof.

my house is a 4 bedroom property with 2 bathrooms(one on the ground floor for me) we paid the equivalent of 100.000$ 12 years ago now it worth 3 times that.
a a young couple who live just 100 meters down the road are having to sell because they can not afford the mortgage repayments after having a new baby.

one of the things that have forced house prices up is a rule imposed by the city governor's that there is no more land to be built on so if want a new house you have first to buy an old one with the planning permit to demolish it and then build your new one but because the city is so old and full of historic buildings there are not many of those available so they buy old houses and modernise the interior.

some of the crazy rules I.E i can not put in new windows without a permit/i can not change the colour of the house i can not have a satellite dish on the outside wall and may more plus the taxes are horrendous we have to pay a premium because my postcode is 8000 (that's the old inner city area)

so all in all it's a beautiful place to live but rather expensive.

http://img212.imageshack.us/img212/9851/60193609lu9.jpg

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Property Crash!

Grumbles Bamboozled Geek

Lev MajorGeek

Corporal Punishment Head of Software Shenanigans Staff Member

Grumbles Bamboozled Geek

Tarquin BA Private First Class

Grumbles Bamboozled Geek

BILLMCC66 Bionic Belgian