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What does this mean?
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“It is no use trying to 'see through' first principles. If you see through everything, then everything is transparent. But a wholly transparent world is an invisible world. To 'see through' all things is the same as not to see.”
― C.S. Lewis, The Abolition of Man -
It means inflation is rising and the demand for new houses is declining. It means proprty values will drop because fewer people are interested in buying. It means my buddy, who is a general contractor, will have some lean months ahead - he is already out of work. But, it is all transient and 9 months from now things could be completely opposite.. -
Interest rates are on the rise. Lots of implications.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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I've always wondered, what was the cause of the demand that drove this rise in prices in the last years in the USA and europe? I mean, here, we've experienced a large rise, but we've gained almost 50% to our population in the last 15 years.Comment
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At one level, you would think that less housing starts would decrease the supply, thus keeping prices up“It is no use trying to 'see through' first principles. If you see through everything, then everything is transparent. But a wholly transparent world is an invisible world. To 'see through' all things is the same as not to see.”
― C.S. Lewis, The Abolition of ManComment
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THE SKY IS FALLING, THE SKY IS FALLING, THE BUBBLE'S GONNA BURST!!!
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Many experts say that appreciation will begin to slow, hardly any I have seen say it will depreciate. With the current rates of appreciation it would take a large drop in property values to adversly effect the market.Comment
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I just wonder about this: is there already some sort of concensus that these prices are unsustainable? and if so, who the hell keeps buying?Comment
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People who need/want a house."I have been reading up on the universe and have come to the conclusion that the universe is a good thing." -- Dissident
"I never had the need to have a boner." -- Dissident
"I have never cut off my penis when I was upset over a girl." -- DisComment
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I think the main form of demand is the ability of households to take on more housing-related debt than before, partially due to lower real interest rates but mainly due to the 'money illusion' of lower nominal rates.Originally posted by Az
I've always wondered, what was the cause of the demand that drove this rise in prices in the last years in the USA and europe? I mean, here, we've experienced a large rise, but we've gained almost 50% to our population in the last 15 years.
This can be seen by the large rises in mortgage debt as a percentage of income:
Mortgage debt as % of disposable income in 2003 and (1993):
United States: 84% (64%)
Japan: 62% (54%)
Germany: 77% (54%)
Britian: 102% (78%)
France*: 60% (54%)
Italy: 31% (15%)
Canada: 73% (66%)19th Century Liberal, 21st Century EuropeanComment
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The figure is quite disheartening for Britain, el freako .
People who need/want a house.
Not really. Unless they have secret cloning bases, I assume most of the increased demand is due to people wanting more space, and people starting to live alone.
Plus el freako's numbers.
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For the US, there's a pretty huge difference between 1993 and 2003. We've just come off a period of extremely low interest rates, whereas in 1993 the interest rates were as low as they were going to get. Trough to trough, the difference was a full 2 percentage points. This is important to keep in mind when considering a mortgage market like the US that runs mostly on fixed rates and refinancing.
People can handle very large mortgages nowadays.Last edited by DanS; April 19, 2005, 14:14.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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Mortgage debt as % of disposable income in 2003 and (1993):
United States: 84% (64%)
Japan: 62% (54%)
Germany: 77% (54%)
Britian: 102% (78%)
France*: 60% (54%)
Italy: 31% (15%)
Canada: 73% (66%)
I think that most of our population is ****ed...You just wasted six ... no, seven ... seconds of your life reading this sentence.Comment
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Well you also need to compare it with assets (the OECD figures I use have a section called 'non-financial assets' which is probably mostly housing)Originally posted by Az
The figure is quite disheartening for Britain, el freako .
Those went from 304% of disposable income in 1993 to 455% by 2003, the comparable figure for the US went from 206% to 243%
So whilst the UK's debt went up relative to it's income it went down compared to the assets (whereas in the US debt rose against both)
Here is the amount of mortgage debt as a percentage of non-financial assets:
USA: 35% (31%)
Japan: 11% (16%)
Germany: 15% (23%)
Britian: 23% (26%)
France: 15% (17%)
Italy: 5% (3%)
Canada: 25% (26%)
On that measure the US looks the most vunerable of the G7
Also British households have an above average asset-to-income ratio.
Net assets:
United States: 5.5 years worth of income
Japan: 7.6 years worth
Germany: 5.1 years worth
Britian: 7.2 years worth
France: 6.4 years worth
Italy: 8.1 years worth
Canada: 5.2 years worthLast edited by el freako; April 19, 2005, 14:35.19th Century Liberal, 21st Century EuropeanComment
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el freako: if these by "non-financial assets", it means not bonds or stock, then real estate is indeed all that remains, and we go back to the bubble situation. ( I assume that the assets-to-income is a number that is, too, "non-financial assets" figure)
I really don't like this picture.Comment
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