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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: SouthFloridaGuy who wrote (19992)	12/31/2004 8:01:12 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 116555

Do you think the U.S. housing prices will go up in a vacuum as other nations such as Australia and the U.K. see significant slowing? i didn't say that, although it appears to me that US housing bubble has been operating in "vacuum mode" for quite some time. i'm not sure what Australia and UK have to do with it, except as more evidence that bubbles do indeed end--but we already knew that from the historical record. i do not see a "domino effect" here, and if anything, the overvalued AUD and GBP (and EUR) would only seem likely to spur foreign buying of "cheap" USD real estate, at least for a while. re: US housing bubble possibly not ending, i'm just playing devil's advocate. i agree there are some signs that the more bubbly markets have topped out, but i'm not sure the fat lady has sung yet. i and many others have been waiting for US housing to crumble for a long time now. it's been nearly two years since The Coming Crash in the Housing Market was published, and my sister who lives in LA is glad she never read the copy i sent her. heck, "The Residential Real Estate Crash Index" thread was started back in 2001--nothing like getting to the party early! -g- the point is, the fundamental reasons for the bubble to end have been present for years, but the housing bears (myself included, although at least i never bet against it) have underestimated the ability for the mortgage industrial complex to keep the ball rolling. My recent trip to London solidified my stance as I saw what exactly a housing bust looks like. The key is always in the inventory if i'm not mistaken the UK bubble was even worse than ours in valuation terms, and also they did not have the same access to easy credit. so maybe their bubble got stretched too thin. has ours? i will wait to see the big plunge in prices on a YoY basis. didn't Elroy say we can expect this?

To: SouthFloridaGuy who wrote (19992)	12/31/2004 10:23:48 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

UK House prices set to fall but not crash, says Nationwide By Becky Barrow (Filed: 31/12/2004) The price of the average home in Britain rose by nearly £50 each day this year but homeowners were warned yesterday that property is no longer a quick route to riches. Nationwide, the country's biggest building society and one of the most influential housing experts, said there has been "a rapid deceleration in price growth" which started in July. It has published a list of the areas it believes are most vulnerable to a fall in house prices next year, which includes affluent areas such as Tunbridge Wells, Woking, Maidstone and the New Forest. Over the past 12 months, prices have risen by nearly 13pc but most of this growth took place in the first six months. It said it has been "a year of two halves." The rate of house price inflation has been falling rapidly in many parts of the country since the summer, including former "hotspots" such as Islington, Tony Blair's former neighbourhood in north London. Cannock Chase in the west Midlands was the worst affected, with a fall of 11pc. In December, prices fell by 0.2pc, the second monthly fall recorded by the building society in the past three months. Alex Bannister, group economist at the Nationwide, refused to rule out the possibility of a house price collapse next year but said economic factors, particularly low unemployment, means a disaster is not expected. He said: "A sharp downturn in prices cannot be completely ruled out but, while the economic outlook remains positive, it looks unlikely." A terrorist attack, large-scale job losses, many people deciding to sell their buy-to-let properties or home-owners being forced to sell quickly could all trigger a collapse. He predicts that prices will rise by just 2pc this year, which would be equal to the same rate of growth achieved in a single month last year. The trebling of prices since 1995 has forced many young people to buy smaller homes, particularly flats, in "less desirable" locations. The ratio of house prices to earnings has risen from 2.9 in 1995 to 5.9. "The move `downmarket' as a result of the sharp rise in house prices is clear to see," said Mr Bannister. The building society expects the base rate, now 4.75pc, will not go above 5pc "in the current cycle." telegraph.co.uk