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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Mick Mørmøny who wrote (21819)	6/27/2004 6:28:34 PM
From: Elroy Jetson	Respond to of 306849

Property escrows in England take far longer than what we have come to expect in the US, at least three months. This is especially true in central urban areas like London where escrow chains often involve twenty or more linked sales, as occurs here with tax-free property exchanges, and escrows can sometimes take years. Under these conditions, people often live in a home for two or three years, then sell their rights to the home - even before their original escrow closes. This is the environment in which a new party will offer a higher price to Gazump their way into an existing escrow by offering a higher price for one of the properties in the chain of escrow. When property prices are weak, some Buyers will Gazunder. In this case they arbitrarily refuse to close escrow at the last moment unless the Seller accepts a lower price. This wild-west has been a feature of UK real estate markets, especially London, since the 1920's or earlier. Many sections of London have been held by Lords and Ladies for generations. In these areas, tenants often rent these properties for 99 years at a time. They frequently sell their lease to other tenants, or leave their lease to their heirs in a will. Tenants often sub-lease from others who are sub-leasing in turn from tenants who died decades earlier.

To: Mick Mørmøny who wrote (21819)	7/1/2004 11:19:51 AM
From: Mick Mørmøny	Read Replies (1) \| Respond to of 306849

A day after the rate hike. Home prices poised to take a hit By Thomas C. Palmer Jr., Globe Staff \| July 1, 2004 Rising interest rates are bound to hurt home prices in Boston: It's just a question of how much. Home prices in the area have risen 64.4 percent over the past five years, among the steepest increases anywhere in the country. Last year alone, for instance, prices rose 8.4 percent. Even the most optimistic analysts who follow the Boston real estate market say that prices will flatten. ''We're starting to see some signs of slowing of prices," said Nicolas P. Retsinas, director of the Joint Center for Housing Studies at Harvard University. ''Price appreciation is still high, but it's less than it was." On the other extreme Mark Zandi, chief economist at Economy.com, a West Chester, Pa., consulting firm, thinks prices in Boston could fall. ''The Boston market is somewhat speculative," Zandi said. ''People should expect prices to be flat to down over the next three years." Mortgage rates have been rising for several months in anticipation of yesterday's move by the Federal Reserve, which raised the federal funds rate to 1.25 percent from 1 percent. Analysts expect that refinancings will slow dramatically, variable-rate mortgage interest rates will rise further, and many first-time home buyers could be shut out of the market. About a quarter of all new mortgages nationwide are written with variable interest rates. And variable-rate mortgages are tied closely to the rate that went up yesterday. In areas like New York, parts of California, and Boston, where the housing supplies are limited, home buyers are caught between prices that are still relatively high and rising interest rates. For more than a decade in Boston, prices have steadily increased, most recently in double-digit percentages. What some fear is that increased interest rates, combined with an economy that is not turning around fast enough, could spark a precipitous drop in prices like the one seen in the late 1980s. Zandi predicted that fixed-rate mortgage interest rates, though less affected than those attached to variable-rate loans, will rise from just over 6 percent, where they are now, to 7 or maybe higher in about a year. ''That will ultimately have a measurable negative impact on housing," Zandi said. ''It signals what will be a lengthy series of rate hikes over the course of the next couple of years, particularly in juiced-up areas such as Boston." How quickly that happens and how high rates go will determine whether prices just flatten or actually decline, Zandi said. ''The next three years are going to be difficult for home buyers compared to the last three years." But, like others interviewed, Zandi said the sky isn't falling. ''I don't think the market is going to cave," he said. Noting that Massachusetts has added 20,000 jobs in the last three months, after a long period of no growth, Case said, ''There's a little bit of a tug of war going on between the improving economy and the rising rates. ''I'm anticipating the market will probably slow a little bit, but not too much," he added. boston.com