... being about one year ahead of the US housing market, this is what we in the US have to look forward to next year !





... being about one year ahead of the US housing market, this is what we in the US have to look forward to next year !
Let's hope for a softer landing here. Worst I have seen internationally is Dublin, oddly enough. Considered by some the most expensive city in Europe. I saw a listing there I would have parked at $750,000 or so in a reasonably strong US market like Chicago or Washington -- nice 3 or 4 bedroom duplex with a common wall -- and it was listed at 4.3 million Euro. The driver seems to be a big inestment surge in Ireland that is not balanced by a rise in interest rates, which of course reflect the Euro zone as a whole.
Oddly enough, compared to most developed economies, US real estate actually doesn't look that expensive, despite the run up. But the market is softening, definitely.





well, it's certainly got the US mortgage lenders worried ...





and in some areas of the US, they may not have to wait a year ...
"The bubble trouble view from Port Huron, Mich....
Homeowners fret as house sales stagnate
Agents, sellers say local economy to blame
By DANIELLE QUISENBERRY
Times Herald
It's a six-bedroom, five-bathroom house only a short distance from Lake Huron. It sits on a shaded, 1-acre lot. By all accounts, it is a beautiful home.
But Bruce Brock can't sell his house on Lakeshore Terrace in Fort Gratiot. It's been on the market for about two years.
Brock's story isn't an unfamiliar one. The neighborhoods around his home are dotted with "for sale" signs. Local real-estate agents said the area housing market is saturated with homes forcing some properties to sit on the market for six months, a year or sometimes longer. Six months use to be a long time to wait for a home to sell, said Theresa Meharg, a real-estate agent at JoAnn Wine and Associates Inc. in Fort Gratiot. No longer.
The trend is good for buyers because there are plenty of home choices, and, in an effort to sell, homeowners will often reduce their prices. "They say it's a good time to buy," said Carlene Lymburner of Port Huron Township as she and her husband, Bill, looked at a home listed at $279,000 on Loton Drive in Fort Gratiot.
A tough sell The trend is not so good for sellers.
Between January and April 2005, 31% of Michigan homes listed for sale sold. Through April 2006, 21% of listed homes had been sold, according to MiReal Source, a multiple-listing service. Bob Herber, a real-estate sales associate at Real Estate Masters in Port Huron, said there have been 97 fewer home closings in Port Huron, Marysville and surrounding townships between August 2005 to this month than the same time period in 2004-05.
"You can't get a house sold unless you keep lowering prices, and sometimes that is not possible," Herber said.
Finding a buyer is especially tough for people trying to sell their home for more than $170,000, said Cliff Schrader of Schrader Reality. "It's the worst I've seen," said Schrader, who has been in business since 1983.
It's the economy Nationally, experts blame the nation's home sales decline on slowly rising mortgage interest rates. Area agents and homeowners blame the local economy.
Port Huron's unemployment rate in June was 9.9%, nearly half again higher than the state unemployment rate of 6.5%, according Michigan Department of Labor and Economic Growth.
St. Clair County had a June unemployment rate of 6.9%.
It appears people don't trust the economy enough to buy a home, Brock said. "There are so many choices and so few buyers willing to take the risk," Brock said. "The economy is weak. Mortgage rates are up."
Wasted efforts Since it went up for sale, Brock has redone his home's kitchen, floors and bathrooms and dropped the price $30,000. Independently appraised at $369,000 before the improvements, it is listed at $338,000. Still, no bites. "It doesn't seem to make any difference," said Brock, a business consultant for franchise companies.
Brock said many of his clients are in the Southeast. Tired of long commutes to the Detroit airport and extended periods of time away from his family, he and his wife, Kim, and their two daughters, Sydney, 15, and Madison, 7, plan to move to North Carolina. The state is a more central location to his client base. But they can't move until their home sells, and it hasn't been looking good, Brock said.
Priced right Joe Joachim, owner and broker at Coldwell Bankers Premier Properties Inc. with offices in Lexington and St. Clair, said homes might take longer to sell, but will sell when priced right. "The sellers who are astute to the market, and getting good advice from their broker are selling," he said.
Properly priced houses will sell regardless of the marketplace, said John Cooper, executive officer of the Eastern Michigan Association of Realtors. There are a lot of properties priced high, because owners owe more than what the house is worth, Joachim said.
If a real-estate agent doesn't know the market, they can improperly price a home, which inflates the market and leaves the "consumer saying, 'Well, why is there so much for sale, and why is it so high?'" Joachim said.
Economical homes It's the smaller homes priced less than $100,000 that go quickly, said Rita Warfel, an agent for Rowling Real Estate Inc. in Fort Gratiot. Warfel was waiting for people to check out a small, $94,500 home on Howard Street in Port Huron during a recent Sunday open house. "I will be surprised if this house is on the market for a month," she said.
Still, even modestly priced homes can be a tough sell. Gary Peacock has moved to a larger home in Port Huron Township, but still is trying to sell his condominium on Wright Street in Port Huron. It has been on the market since March. Available for $112,000, he said he's reduced the price three times, and moved into his new home, in the mistaken belief the condo wouldn't be on the market long. Now he's left paying two mortgages. "I just more or less assumed I'd sell it," he said."
the 'tin foil hat' crowd's take on the real estate situation is that many would-be sellers have refused to drop asking prices and turned away purchase offers which were below the 'outstanding balance owed' on their property in order to avoid taking a 'loss' - and in the meantime have had to continue making mortgage payments plus insurance payments plus property tax payments. Sometimes they're making these payments on two properties. However, like in Australia, eventually the added cash drain pushes the homeowner into a corner such that the property must be sold at whatever price actually results from the highest outstanding purchase offer or a bankruptcy auction. When such a sale price is 'booked' it immediately affects the market price appraisal of surrounding properties, which has far reaching implications.





If you want to stay up2date with the Australian Housing Market esp. in an investment sense... hang around http://www.propertyinvesting.com/forumplus there's always http://www.propertyinvesting.com/newslinks
enter: E3167322D9 for your 10% discount





more bad news on US housing market trends. It appears that the 'standoff' between buyers and sellers, with buyers offering one 'realistic' bid price while sellers hold out for a much higher 'asking price' which will allow them to break even on the sale, is finally starting to resolve itself. So many people have been 'caught' temporarily owning two houses, so many speculative investors are being eaten up with mortgage, property tax and utility payments etc. that some distressed sellers are finally realizing that they have no choice but to sell their homes, and sell at whatever price the market will actually pay. Thus discounted sales are starting to be booked, which of course affects the assessed values and sale prices of all surrounding homes.
{snip}"“People who bought recently and have little equity are in the most difficult situation, says Vince Rizzo, broker for HungryAgents.com. ‘There are so many people now that borrowed 95% or 100%, and with the market slipping back a little, and you have to pay 6% commission, you are going to have to bring money to the table,’ Rizzo says.”
“Short sales have become increasingly common. Sue Hunt, of Consumer Credit Counseling Service of Greater Atlanta, says that her nonprofit is currently advising ‘50 or so’ clients to short-sell their homes to try to avoid foreclosure.”"{snip}



The UK market hasn't got there yet. It has been a little confused of late. One month the 'market' is up, the next it is down. Just by small % points, so nothing major, but the trend is that there does not seem to be one.
That said, about three weeks ago, one of the national dailies, The Daily Express, had a front page headline that prices are due to double in the next 20 years. The suggestion is that the housing crisis is going to get worse and shortfalls will push prices higher each year. The irony is that most people find housing difficult to afford now!! If it doubles...
My own opinion is that this is one last fools rally to get the punters in at the very top of the market. You see it so often in the markets but once every 20 years or so in housing - the cycles are so long. The last one in the UK was in about 1989 / 1990, then prices plummeted and 1991 / 1992 were the depths as repos were everywhere and bankruptcys galore.
Re the comments about Dublin above, quite correct. Two of my best friends live there and they often email me links to Dublin property sites so that I can see prices. Ordinary three bed semis are iften over 1 million euros. It is truly amazing.
IMHO this is the impact of free EU money to help build infrastructure, generous tax laws to bring in finance firms (and staff) and cheap interest rates making excessive borrowing commonplace via the euro. Scary.
Reminds me of this one duplex in Austin. It has been "sold" three times - or at least it had a SOLD sign on it three times and then it had For Sale on it again. My guess the contract failed three times. Now it has For Rent and For Sale next to each other. Yea - like a renter is going to rent in a house with For Sale on the front yard!Originally Posted by Melonie





finally, an extremely 'well distilled' theory of where US housing is heading and why ...
(snip)"For instance, we learn from Rob Peebles' Random Walk column at PrudentBear.com that "one out of three Americans worries that rising monthly payments will force them to sell their home and buy a less expensive one. One-third!"
Even worse, he adds that inflation is everywhere, and that "surprisingly, these skittish homeowners aren’t worried so much about escalating mortgage rates as are they are about rising property taxes and energy costs. The survey reports that state and local property taxes were up 13.8% in fiscal 2004. Likewise, the cost of electricity was 12% higher year-over-year in February 2006 with natural gas prices up 28%. As a professional consumer economist would say, 'Yikes!'"
Well, I am thankful to finally learn what a "professional consumer economist" would say, as when I try to attend their precious little meetings, they slam and lock the door in my face! And because I can only hear a few muffled things through the closed and locked door before the security guards haul me away, I never got the chance to hear them actually say, "Yikes!" But it is, I will agree, a good word for it, especially when I add in the higher costs for homeowners and liability insurance policies, too. Yikes! "(snip)
from the Mogambo at





fresh study just released ...
(snip)"While Adjustable Rate Mortgages (ARMs) account for 24 percent of all home loans nationwide, they represent a much greater percentage of certain types of loans and of the mortgages made to specific communities and demographic groups. In 2005, ARMs made up three-quarters of all subprime loans, a huge
increase from 1999 when half of all subprime mortgages were ARMs. Until this year there has been little recognition of the prevalence of adjustable interest rates in subprime loans and the danger posed by these ARMs. Attention in past years had focused on other predatory practices that are common in the subprime market, such as prepayment penalties, excessive fees, high interest rates, flipping, yield spread premiums, and balloon payments.
Subprime loans have always been considered more risky in and of themselves than prime loans; with interest rates rising and an increase in the number of subprime loans that are ARMs, subprime borrowers will struggle more than ever. Borrowers with subprime loans are already paying higher interest rates and are more likely to be lower-income and have fewer resources to cope with the coming “rate shock.” Furthermore, borrowers in the subprime market are often steered into ARMs without being given a choice and have little knowledge of how ARMs work or the risks associated with these loans.
Although subprime loans are intended for people who are unable to obtain a conventional prime loan at the standard bank rate, Fannie Mae and Freddie Mac have estimated that between one third and one half of all borrowers in subprime loans could have qualified for a lower cost mortgage. Thus it follows that a large
number of the borrowers who have received ARMs should not have been in the subprime market.
As shown in this report, America’s lower income and minority communities receive a disproportionate number of subprime loans and thus are most at risk of increased defaults and foreclosures. With sixty percent of subprime loans set to have their interest rates change by the end of 2006, ARMs pose a huge threat to the security of individual homeowners and entire neighborhoods. Using public data available under the Home Mortgage Disclosure Act we examined the extent of high-cost lending for 130 metropolitan areas, determined the disparities between borrowers of different race and income levels, and identified those metropolitan areas that are at a greatest risk of “rate shock”(snip)
"In the ten metropolitan areas at greatest risk, high-cost loans represented more than two of every five home purchase and refinance loans. These ten metropolitan areas were largely concentrated in the South (including Texas) but also include three cities in the Midwest:
Detroit, MI; Memphis, TN; Jackson, MS; McAllen, TX: El Paso,TX; Laredo,TX;
Brownsville, TX; Flint, MI; Springfield ,IL; and Birmingham, AL."(snip)
"Borrowers will have failed to build much, if any, equity at this point meaning that (if) they cannot afford the increase [in ARM monthly payments - sic], and particularly if their home value fails to increase significantly, they will not have enough equity in their home to refinance or sell. The result is damaged consumer credit, possible loss of the home, increased defaults for lenders, and in communities with large concentrations of these loans – more vacant houses.
This can be seen in the quarterly reports issued by the Mortgage Bankers Association. In the first quarter of 2006, the delinquency rates for prime ARMs and fixed subprime loans decreased, from 2.54 to 2.30 percent and 9.70 to 9.61 percent respectively, while the delinquency rate for subprime ARMs increased from 11.61 to 12.02 percent"(snip)
~
Last edited by Melonie; 08-25-2006 at 11:56 AM.
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