Has the Housing crash arrived?

[namestrands]

If you took every working american and sent them to China, China would still have a job surplus.

The latest statistics is that for every child born in america, 200 are born in china. This is why UK and America need to embrace the migrant workers of the world in order to sustain a comparable growth.

China is a booming economy and with $200 Billion in american bonds being added to the Chinese vaults each month, they are able to artificially keep the Yuan at such a low level that within the next 10 years it would be almost impossible to compete against the chinese export market.

But back to interest rates, I am betting a lot on them being lowered within the next 2 months and further reductions throughout the year.

 

[Gerry]

I hope you are correct. But if inflation starts creeping into the picture then there is a strong possibility it will go in the opposite direction.

In regards to China and it's booming economy, I was feeling this as a home owner about 4 years ago. It is amazing how a country on the opposite side of the world could impact me on a one to one level.

When I was rebuilding an addition onto my house, I had to pay almost 3 times the normal price to have concrete delivered to the pour the footers.

Why? With the booming economy and the construction of the worlds largest damn in China, all portland cement (the basic component of concrete) and steel was being bought up and being shipped to China.

When tarriffs or levees where threatened to be imposed, the Chinese bought some steel mills and cement manufacturers in the states. The clamp down came when they tried to buy one of the US based oil companies (Unical?).

Interest rates are a fickled thing and there are certain economic conditions that drive them, under normal circumstances. Hard to classify what is going on in this country and ill advised decisions along with other globally impacting events as being normal circumstances.

I guess we, as consumers, can only adopt a wait and see approach.

Which leads me to another point regarding domain names...diversify. Domains ARE a portfolio. Diversify, diversify, diversiy. They are your stock fund.

 

[Steen]

You say that, but you have to realise that the one commodity that we no longer make is Land.

I never understood the logic behind this. Unless we are talking about the Vatican or perhaps Monaco there is plenty of land in most countries. Even the UK is small, well populated island nation, and there there is tons and tons of vacant land.

Of course some cities do not have much/any land left, but in that case there is the outskirts

 

[Duckinla]

But back to interest rates, I am betting a lot on them being lowered within the next 2 months and further reductions throughout the year.

I'm fairly educated on Real Estate finance and I would take that bet. There once was a time when a change in the Fed Funds rate was expected to have an impact on 10 year treasury notes which would then impact home mortgages. Prime mortgage rates are most closely tied to the 10 year treasury because on average they are expected to last 7 years (even though the loans themselves may be 30 years, the average loan is repaid in 7 years, typically through the sale of the home). A prime mortgage typically will go for maybe 1% higher than the yeild of a 10 year treasury note. The mortgages are bought in the secondary market in bundles of 100's or 1,000's. However, in recent years changes in the Fed Fund rate have not had as direct an impact on 10 year treasuries. Treasuries and mortgages have stayed abnormally low in relation to Fed lending rates. In effect, the fed seems to have lost it's ability to dictate long-term lending rates. I don't believe one entity could lower home mortgage rates now if they were so inclined. Also, even if you were successful at getting rates lowered, wiping out the sub-prime lending takes a significant amount of demand out of the home buying market.

 

[touchring]

I never understood the logic behind this. Unless we are talking about the Vatican or perhaps Monaco there is plenty of land in most countries. Even the UK is small, well populated island nation, and there there is tons and tons of vacant land.

Of course some cities do not have much/any land left, but in that case there is the outskirts

No need for speculation, residential prices in Hong Kong and Singapore dipped 50% and 40% respectively from 1996 to 2003. General market prices has not recovered to 1996 levels despite a 3 year real estate bullrun. Most of the houses and condos bought at market peak 10 years ago have become old, the original buyers will probably not see the prices they bought their property for until many years later. And by that time, many would have paid twice the purchase amt in mortgage payments.

Stats from CIA website:

Hong Kong -
Area:
Definition Field Listing Rank Order
total: 1,092 sq km
land: 1,042 sq km
water: 50 sq km

Area - comparative:
Definition Field Listing
six times the size of Washington, DC

Population:
Definition Field Listing Rank Order
6,940,432 (July 2006 est.)

Population/Sq KM:
6660

Singapore -

Area:
Definition Field Listing Rank Order
total: 692.7 sq km
land: 682.7 sq km
water: 10 sq km

Area - comparative:
Definition Field Listing
slightly more than 3.5 times the size of Washington, DC

Population:
Definition Field Listing Rank Order
4,492,150 (July 2006 est.)

Population/Sq KM:
6579


Tokyo land prices rose in 2006 - for the first time in 16 years:
http://www.forbes.com/afxnewslimited/feeds/afx/2007/03/22/afx3540610.html

 

[typist]

The latest statistics is that for every child born in america, 200 are born in china. This is why UK and America need to embrace the migrant workers of the world in order to sustain a comparable growth.

I couldn't agree more.

This applies to other countries as well, and could also be an interesting thought for those with Ponzi-style pension schemes (popular in many European countries...).

 

[Duckinla]

The outsourcing of production jobs is pretty much inevitable to countries with cheap labor. The only thing that can change this is rising costs of transportation, rising cost or raw materials or changes in exchange rates and tarrifs. Countries like to US will have to be more focused on Services and Resell of products produced elsewhere. I have hard time understanding how countries like France or Germany even compete anymore. I guess it's all high-end luxury items.

 

[touchring]

The outsourcing of production jobs is pretty much inevitable to countries with cheap labor. The only thing that can change this is rising costs of transportation, rising cost or raw materials or changes in exchange rates and tarrifs. Countries like to US will have to be more focused on Services and Resell of products produced elsewhere. I have hard time understanding how countries like France or Germany even compete anymore. I guess it's all high-end luxury items.

If only it can be so simple, i read that in the 1930s, America plunged into the Great Depression despite having a booming manufacturing industry and exporting to Europe.

And Japan's economy is in doldrums the past 10 years despite exporting and having a huge trade surplus with America.

 

[Gerry]

And today's timely news on a vaild discussion:

http://www.msnbc.msn.com/id/17754284/

Existing U.S. home sales rose in February
But house prices still falling amid subprime mortgage worries​

Analysts said the price declines were helping to lure buyers back into the market. But analysts expressed concerns about what the growing problems in the subprime lending market will do to the prospects for future sales.

Subprime mortgages were offered to people with weak credit histories who could not qualify for standard types of mortgages. Now an increasing number of those mortgages are going into default. That is forcing lenders to tighten up on their loan standards, meaning people who would have qualified for subprime mortgages will not be able to do so.

David Lereah, chief economist for the Realtors, said he believed that demand for homes could be cut by 150,000 to 200,000 annually over this year and 2008 because of the lending troubles.

Sales of existing homes were up 3.9 percent in the Midwest and 1.6 percent in the South, while sales were unchanged in the West. Lereah said the reluctance of sellers in the West to trim prices was holding back a rebound in that region.

Also, take into consideration that this is EXISTING HOMES and not new construction. That is a whole 'nother can of worms. The reluctance of sellers in the West to trim prices may be a curse in the long run and perhaps further evidence of having paid too much for a property that is now depreciating. There is no equity and there won't be any equity with prices falling. These are the diehards who plan on riding out the storm and many will...if they don't plan on relocating or lose their job anytime soon.

If you paid $500,000 in a hot market that was worth $425,000, you're in the hole. If your neighbor down the street is selling his house for $410,000, you're in the hole. Reluctance to sell is fine if you can hold out and hold on. But it will take some time for the prices to stop dropping, level off, and then gradually come back up. Many markets will not see double digit increases year after year like they have in the past.

By region of the country, sales were up 14.2 percent in the Northeast

Again, this is the -X- factor (Boston). Imagine, if sales had not been that steep we would be looking at a tremendous dip on the bell curve.

Sales fell by 8.5 percent for all of last year as housing hit a sharp slowdown after setting sales records for five straight years.

 

[Creature]

What is a subprime mortgage? Is that the same as 'interest only' ?

 

[touchring]

As i understand, Sales stats is based on "completion", which might be 1-3 mths before signing of the sales agreement. So, Feb stats is actually last year's stats.

And today's timely news on a vaild discussion:

http://www.msnbc.msn.com/id/17754284/

Existing U.S. home sales rose in February
But house prices still falling amid subprime mortgage worries​

 

[Duckinla]

What is a subprime mortgage? Is that the same as 'interest only' ?

Not exactly, although interest only may be one example of a sub-prime mortgage. A sub-prime mortgage is a loan made to a borrower that would not qualify on the "prime" standards. Either their credit is not good enough, the loan is to big, they don't make enough money, they don't have enough down payment, etc. Prime mortgages are typically financed by FNMA (Fannie Mae) and sub-prime are typicaly financed by private investors...a lot of South Korean investors recently, I was told.

 

[Gerry]

What is a subprime mortgage? Is that the same as 'interest only' ?

Subprime mortgages were offered to people with weak credit histories who could not qualify for standard types of mortgages. In many cases, it is similar. It gave those who could not afford a traditional mortgage an opportunity to borrow...common sense should tell one that if you can't quality "traditionally" then you shouldn't be qualified...period.

If I gave you an interest only loan, all you were required to pay me back was the interest on the loan. That is it. It was usually offered at sub-prime or close to it. The down side is, if all you paid back was the interest and nothing towards the principle, you never made any headway.

It was also a tool used by lending institutions to offer even good customers with good credit more and more and more ways to borrow. That is why some people were literally carrying three, four and five mortgages at a time in hopes of flipping for the fast buck.

Basically, it was a way of saying, "don't worry...we'll figure out a way to give you all the money you want even though we know you can't pay it back".

In my opinion, it is another savings and loan scandal that the taxpayers in this country will be eating...again!0.

 

[HasRob]

For those confused with all the technical mumbo jumbo in this thread, just buy low and sell high :lol:

 

[Gerry]

As i understand, Sales stats is based on "completion", which might be 1-3 mths before signing of the sales agreement. So, Feb stats is actually last year's stats.

February's stats are February stats as recorded by deeded transactions, if I am correct. Essentially, it is measured in real time, although about a month goes by to gather and compile all the data.

March results of deeded sales will be released in April.

For those confused with all the technical mumbo jumbo in this thread, just buy low and sell high :lol:

BINGO! Problem is, many bought high (thinking it was low) and were going to sell high (thinking it was going to go higher).

It is a timing...just like the stock market. Guess wrong and get drilled.

Anyone want to buy my Cisco stock for what I paid for it?

 

[NYdomainer]

What's causing the crash?

At the same basement in the White House where Lt. Colonel Oliver North used to cook books they now print money, at a $1 Zillion a pop.
This is why economy is tanking.

 

[Duckinla]

What's causing the crash?

At the same basement in the White House where Lt. Colonel Oliver North used to cook books they now print money, at a $1 Zillion a pop.
This is why economy is tanking.

I'm thinking you probably don't come from a finance background.
Thanks for playing though.

 

[NYdomainer]

Yep,
Analyst on Wall Street.

 

[touchring]

Subprime mortgages were offered to people with weak credit histories who could not qualify for standard types of mortgages. In many cases, it is similar. It gave those who could not afford a traditional mortgage an opportunity to borrow...common sense should tell one that if you can't quality "traditionally" then you shouldn't be qualified...period.

If I gave you an interest only loan, all you were required to pay me back was the interest on the loan. That is it. It was usually offered at sub-prime or close to it. The down side is, if all you paid back was the interest and nothing towards the principle, you never made any headway.

It was also a tool used by lending institutions to offer even good customers with good credit more and more and more ways to borrow. That is why some people were literally carrying three, four and five mortgages at a time in hopes of flipping for the fast buck.

Basically, it was a way of saying, "don't worry...we'll figure out a way to give you all the money you want even though we know you can't pay it back".

In my opinion, it is another savings and loan scandal that the taxpayers in this country will be eating...again!0.

As i understand from articles, the securitization of every subprime loan can earn bankers millions of dollars. So they give out as many loans as possible to scam the security buyers.

February's stats are February stats as recorded by deeded transactions, if I am correct. Essentially, it is measured in real time, although about a month goes by to gather and compile all the data.

March results of deeded sales will be released in April.

I know, but the transaction prices for the Feb stats were agreed like last year?

 

[namestrands]

Prime: good 3 letter dot com with great history

SubPrime: 8 letter dot com that makes no sense or a domain involved in Spyware.