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Housing crisis is global
Old 09-07-2008, 01:23 PM   #1
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Housing crisis is global

With all the talk blaming the housing crisis on the US housing industry, I think it's interesting to note that the housing crisis is not a US phenomenem. It's global. Here are a couple of links with evidence of the slump in the UK:

House price crash goes global | Money | guardian.co.uk

The map that reveals how long you will have to wait until your house price recovers | Mail Online

When I was travelling around the world in 2004-2005, I remember noticing that most westernized countries (Ireland, Netherlands, Canada, Australia, New Zealand) that I visited were experiencing the same kind of bubbles that were happening in the USA. And now the bubble bursts seem to be happening worldwide as well.

This tends to make me think the housing bubble was more a result of credit being loosened by the fed (which affects interest rates globally), and less a result of corruption or other nefarious activities.
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Old 09-07-2008, 03:41 PM   #2
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I absolutely agree with your conclusion and would add that LOW interest rates combined with loose credit are what did it. Most people just care what the monthly payments are...so therfore as rates decreased over time people happily paid more because they could still afford the monthly payment.
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Old 09-07-2008, 05:01 PM   #3
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It was more than the the US Fed having lower interest rate - this has happened in the past. Other factors played into it:
1. Secularization of mortgages
2. Lowing of loan requirements
3. New types of mortgages other than the traditional 30yr etc
4. Demand for the secularized mortgages - high rate
5. Population growth
6. Speculators
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Old 09-07-2008, 05:13 PM   #4
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We need a map like that for the US.
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Old 09-08-2008, 10:44 AM   #5
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In Australia we definitely had the bubble followed by the fall. However, loans in Australia are structured very differently from they are in the US which is preventing widespread default. Most loans in Australia would be for principal and interest, as we tend not to have ARMS and Interest Only loans are available but less commonly used. Interest rates were jacked up in Australia a couple of years ago when our Treasury could see house prices getting out of control, and in fact last week they started bringing rates down to get the market moving again.

The problem is, with this last bubble in Australia buying a home has moved out of the reach of many. If only we were able to deduct interest off tax, it would be wonderful.
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Old 09-09-2008, 03:14 PM   #6
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interesting to read in expat forums similar discussion as we had earlier in the housing crisis in the usa. similar disbeliefs & denials & arguments on all sides. deja vu all over again.

I Would Not Want To Have Just Invested In Property In Bangkok - Thailand Forum

Quote:
You are an idiot if you bought property in the last 2 years in Bangkok, get out now ! 100 000 up oer sq m has no relation to the Thai econmy (where have i heard that before?) or current unstable position, yes you have been mugged !
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Old 09-09-2008, 03:16 PM   #7
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Originally Posted by rec7 View Post
We need a map like that for the US.
Home Values, Real Estate Market Reports | Zillow Real Estate
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Old 09-09-2008, 03:27 PM   #8
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Here's an interesting chart...from my area, Sacramento, which is a typical boom/bust market.



Looking at this chart, people who have owned real estate in the area since prior to 2001 have enjoyed an 8% annualized rate of return on their properties...at todays 'bust' prices. Not too shabby for a 'crisis' situation.

Excepting people who became first time homebuyers in 2004-2007, people who moved from a super cheap area to a 'boom' area in the same time period, and people who pulled equity out of their homes in the same time period, long term homeowners dont really have a whole lot to complain about.

Awful exciting to watch those prices fly up and back down again...but the truth seems to be that we're at about a fair and reasonable level of valuations against the long term trends...and long term property owners have made plenty of money.

Check out Miami...its done even better... you're looking at a ~10% annualized rate of return

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Old 09-09-2008, 04:16 PM   #9
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Originally Posted by cute fuzzy bunny View Post
Check out Miami...its done even better... you're looking at a ~10% annualized rate of return
shhhhhh. don't tell anyone. they think we're doing really badly. seriously folks, lots of bargains to be had here. now is the time to buy, buy, buy.

my zip code is up over 12% in 10 years even counting our last 25-30% drop, but then 15 years ago it was a cracktown and not the gayberry rfd it's become. i can see already it will get more expensive into the future as a young hetero family with a little kid just bought the house across from me. double income families. damn. there goes the gayborhood. never mind two more suv's to block my line of vision in the supermarket parking lot. why can't you people just drive stationwagons!
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Old 09-09-2008, 07:57 PM   #10
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Originally Posted by cute fuzzy bunny View Post
Here's an interesting chart...from my area, Sacramento, which is a typical boom/bust market.



Looking at this chart, people who have owned real estate in the area since prior to 2001 have enjoyed an 8% annualized rate of return on their properties...at todays 'bust' prices. Not too shabby for a 'crisis' situation.
Of course that line is still trending down at at pretty good rate, eh?

If it were to follow normal market behavior it will overshoot on the downside, so I'd expect a bit of that. Of course the guvmint is trying hard to prop it up artificially so who knows.
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Old 09-09-2008, 08:56 PM   #11
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Of course it will. There are a couple of years worth of foreclosures and unsold new homes sitting in inventory. Nobody will buy one until they can sell their old house for a half decent price. All the suburban-peripheral areas dropped a huge amount because gas was >$4 and nobody was that excited about a long expensive commute anymore.

But now gas is cheaper, those homes way out there are dirt cheap, some people will make the move, prices will firm up, and it'll be back to business as usual.

Anyone look at that US map I linked to above and notice how many areas are up this year?
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Old 09-09-2008, 11:20 PM   #12
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Even though the Sunnyvale, Santa Clara, CA area is down by 12%, the average price of a home is still very unaffordable.

Sunnyvale Home Value Information


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Old 09-10-2008, 12:48 AM   #13
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I've heard that Moscow is one of the most expensive cities to live.

Why anyone would want to is beyond me.


Too cold.


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Old 09-10-2008, 04:42 AM   #14
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There's a writer I've been following off & on who describes this as the "Anglo disease".
Free4now draws attention to
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most westernized countries (Ireland, Netherlands, Canada, Australia, New Zealand) that I visited were experiencing the same kind of bubbles that were happening in the USA.
While the "Anglo disease" is basically defined as the financial sector developing an unstable predominance in a country's economy.. it does seem to have affected Anglophone countries to a greater extent than in the rest of the world. Why? boh!?

Explorations of greater or lesser merit on this theme here:
European Tribune - Community, Politics & Progress.
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Old 09-10-2008, 08:36 AM   #15
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Thats easy to explain. Since its all press driven, everyone who could speak english read our news reports about the bubble and they all wanted in on the action.
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