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It's not ganging up - it's just a persuit of interests. Market forces.
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Ok then. American housing prices seem to have stalled. Does that mean the propertied classes have stopped 'pursuing their interests' over there?DISCLAIMER: the author of the above written texts does not warrant or assume any legal liability or responsibility for any offence and insult; disrespect, arrogance and related forms of demeaning behaviour; discrimination based on race, gender, age, income class, body mass, living area, political voting-record, football fan-ship and musical preference; insensitivity towards material, emotional or spiritual distress; and attempted emotional or financial black-mailing, skirt-chasing or death-threats perceived by the reader of the said written texts.Comment
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I don't know, perhaps their hummers are so much more expensive to run since the oil prices rose, that it has indirectly reduced upward pressure on property. Perhaps the fact that the US is a vast country with more relaxed development regulations might be a factor.Originally posted by Colonâ„¢
Ok then. American housing prices seem to have stalled. Does that mean the propertied classes have stopped 'pursuing their interests' over there?Comment
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Yes, easy credit is the common thread... There's a lesson here somewhere.They've been low everywhere. Easy credit is the common thread across all these countries.
Also curious that two notable exceptions to the real estate boom are Germany and Japan. Two countries that experienced a real estate crash in a not so distant past.
In the US, the interest rates were at lows not seen for over a generation.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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The opposite is more true.Originally posted by Cort Haus
I don't know, perhaps their hummers are so much more expensive to run since the oil prices rose, that it has indirectly reduced upward pressure on property.
Perhaps the fact that the US is a vast country with more relaxed development regulations might be a factor.
That would only explain why price/m2 are on average lower in the US than in other countries. That doesn't explain the movement. Why prices went surging the past years only to stall now. The US didn't suddenly became a bigger country and then stopped getting bigger.DISCLAIMER: the author of the above written texts does not warrant or assume any legal liability or responsibility for any offence and insult; disrespect, arrogance and related forms of demeaning behaviour; discrimination based on race, gender, age, income class, body mass, living area, political voting-record, football fan-ship and musical preference; insensitivity towards material, emotional or spiritual distress; and attempted emotional or financial black-mailing, skirt-chasing or death-threats perceived by the reader of the said written texts.Comment
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The increase in house prices in the US is also odd given that Canada's had a more favourable macroeconic climate for the last 5 years, yet didn't see the same runup in prices, nor the associated growth of "creative financing"...12-17-10 Mohamed Bouazizi NEVER FORGET
Stadtluft Macht Frei
Killing it is the new killing it
Ultima Ratio RegumComment
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It takes time. When good times roll, hot money are speculating in stock market first where things are more liquid.Originally posted by KrazyHorse
The increase in house prices in the US is also odd given that Canada's had a more favourable macroeconic climate for the last 5 years, yet didn't see the same runup in prices, nor the associated growth of "creative financing"...Comment
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This whole discussion begins and ends with interest rates, with a little side helping of speculative froth and other factors. Really, it's not that tough folks.Last edited by DanS; October 2, 2006, 12:43.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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Let's close the thread, then. Ming?Comment
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No, there's still lots of gloating to be done. Prices are still outrageous for me (I don't know where they're finding buyers at these prices), but maybe not for much longer.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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And I'm still looking for opportunities to opportunities to disparage Greenspan.
Besides Cort Haus, look at it from the bright side: the Bank of England recognizes asset prices (such as house prices) is a factor when setting the official rate. It has actually moved against mitigating price rises. The Federal Reserve isn't quite at that point yet. For all his candor in recognizing the risks the real estate boom posed to the wider economy, Greenspan did nothing to counter it.
Ok, had another go at Greenspan. Thread can be closed now.DISCLAIMER: the author of the above written texts does not warrant or assume any legal liability or responsibility for any offence and insult; disrespect, arrogance and related forms of demeaning behaviour; discrimination based on race, gender, age, income class, body mass, living area, political voting-record, football fan-ship and musical preference; insensitivity towards material, emotional or spiritual distress; and attempted emotional or financial black-mailing, skirt-chasing or death-threats perceived by the reader of the said written texts.Comment
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Do I really need to repeat myself?Originally posted by DanS
This whole discussion begins and ends with interest rates, with a little side helping of speculative froth and other factors. Really, it's not that tough folks.
Not really. Lowering interest rates provides a one-time kick, not an ongoing growth impetus.12-17-10 Mohamed Bouazizi NEVER FORGET
Stadtluft Macht Frei
Killing it is the new killing it
Ultima Ratio RegumComment
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You shouldn't have, because that's not correct. The ammunition-analogy is often used, implying a one-time kick, but that anology is flawed. It's the level of the interest rates that determines spending.DISCLAIMER: the author of the above written texts does not warrant or assume any legal liability or responsibility for any offence and insult; disrespect, arrogance and related forms of demeaning behaviour; discrimination based on race, gender, age, income class, body mass, living area, political voting-record, football fan-ship and musical preference; insensitivity towards material, emotional or spiritual distress; and attempted emotional or financial black-mailing, skirt-chasing or death-threats perceived by the reader of the said written texts.Comment
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The market is pricing in an expectation of future demand for housing in the US being higher then in Canada. Perhaps we can find harbingers of this effect based on movement between countries...oh wait.Originally posted by KrazyHorse
The increase in house prices in the US is also odd given that Canada's had a more favourable macroeconic climate for the last 5 years, yet didn't see the same runup in prices, nor the associated growth of "creative financing"...
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So? The level of interest rates can increase the value of a home. That increased value will stay priced in until the interest rate changes, but it doesn't continue adding growth to value.Originally posted by Colonâ„¢
You shouldn't have, because that's not correct. The ammunition-analogy is often used, implying a one-time kick, but that anology is flawed. It's the level of the interest rates that determines spending.
In other words, if the interest rate on a 5 year variable mortgage drops from 7% to 5% it might add 10% to a home's value. It adds that value 1 time. The next year it doesn't add another 10% to the home's value. The fact that more and more mortgages were being financed on longer terms/on interest-only/on reverse amortization(!) should tell you that the increase in prices was not being driven by either wage growth or by low interest rates. If it were being driven precisely as expected by those factors then people wouldn't have had to take on longer repayment periods/infinite repayment periods/increasing debt load
Do you understand now? It might be that the initial gains in house values due to lowered interest rates spurred a frenzy of speculative buying. That would explain the evidence. Lower interest rates does not.12-17-10 Mohamed Bouazizi NEVER FORGET
Stadtluft Macht Frei
Killing it is the new killing it
Ultima Ratio RegumComment
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