The Housing Market Is Hanging On By A Thread Signals High End Real Estate

[Verified Investing]

The housing market is hanging on by a thread. The thread that is holding it up? Super low interest rates. This is keeping the real estate market floating but significant weakness in high end housing spells trouble. While many areas across the United States are showing increases in housing prices, this is mostly in middle to low end housing. Once you move north of $1+ million, demand has cratered. Why? The upper income buyers have too many questions about the future of housing in relation to the domestic and global economy. In many areas, housing has jumped dramatically from the 2010-12 lows, some places it is approaching the highs from 2007. The wealthy tend to be more housing savvy in regards to finding a good deal. They are also the buyers who use all cash, meaning they are less likely to care about interest rates being a historic lows. The high end real estate buyers are more likely to follow the global news and realize Europe is a mess, Brexit may have a long lasting impact and the United States election in November could have major consequences. Canadian buyers have also left the high end United States markets because of the collapse in oil from over $100 per barrel. While it has recovered somewhat, they are not yet inching back into the market.

Ultimately, high end real estate weakness may be a signal of a downturn in all of housing. Smart money is usually the first to leave the market. The scariest of all is what will happen if interest rates rise even a tiny bit. Look for a major slow down to spread from $1+ million housing into all of housing.

By Pro-Trader
Maekus Teller

 

[alexisjohn]

How are we going to survive, i read recently that home prices in U.S. increased 5% this May

 

[new_trader]

Don’t worry, be happy.

Don’t panic! If the housing market crashes the super genius Central Bankers will lower interest rates, print money and save it, again...then, if the housing market crashes again after that, the super genius Central Bankers have another tool in their kit, they will even more lower interest rates and print more money and save it, again...and if the pesky housing market crashes after that, don’t worry, the super genius Central Bankers will even much more lower interest rates and print even much more money and save it again...Nothing is a problem thanks to our genius Central Bankers and their fiat money!

 

[sminicooper]

Perhaps in UK if house prices crash it will give an opportunity to some of those who currently can't afford to buy a house? As far as I can see, there is a selfish proportion of those already on the housing ladder who can only see positivity to ever increasing house prices. A potential revolution indeed – and all of this despite the amazing genius of our bankers!

But I hold little hope – there will always be a shortage of houses(and therefore unaffordability) where people need to live and work e.g. London.

 

[NVP]

jees the property market is so damn simple why does everyone make it complicated ?

here we go - property 101


DEMAND / SUPPLY
CREDIT AVAILABILITY/RATES

next subject please ?....I wish trading was as simple .......

N

 

[new_trader]

jees the property market is so damn simple why does everyone make it complicated ?

here we go - property 101


DEMAND / SUPPLY
CREDIT AVAILABILITY/RATES

next subject please ?....I wish trading was as simple .......

N

You've completely missed the point...

 

[forker]

I think the housing market is only going to get worse in terms of prices. Population growth and people living longer will continue to pressure demand. Added to this is availability of land and how fast builders deliver new supply. In my opinion, which is based on the evidence, the days of boom and bust doesn't apply globally anymore. Sure there will always be the high end market where the greatest fluctuations take place but it won't affect the rest of the market as much. Take London as an example, the high end market has taken a hit but the rest has either increased or unchanged.

 

[new_trader]

It is different this time.

In my opinion, which is based on the evidence, the days of boom and bust doesn't apply globally anymore.

 

[ffsear]

Perhaps in UK if house prices crash it will give an opportunity to some of those who currently can't afford to buy a house? As far as I can see, there is a selfish proportion of those already on the housing ladder who can only see positivity to ever increasing house prices. A potential revolution indeed – and all of this despite the amazing genius of our bankers!

But I hold little hope – there will always be a shortage of houses(and therefore unaffordability) where people need to live and work e.g. London.

Banks aren't going to lend people money to invest into a market thats falling. Lending will simply dry up or only be avaiable to those with large deposits.

A house price crash helps no one! Building more and affordable homes is whats needed.

 

[sminicooper]

Banks aren't going to lend people money to invest into a market thats falling. Lending will simply dry up or only be avaiable to those with large deposits.

A house price crash helps no one! Building more and affordable homes is whats needed.

Sadly, I think you're right. I suppose an overall crash might be a bit like a stock split – but the relative differences between new price and borrow ability would still be there. Building more and affordable homes is the obvious answer but if it was so easy then why hasn't it already been done? The basic problem is that people can no longer afford to buy houses due to supply and demand and I can't see how that's going to change.

They tackled this problem (supposedly temporarily but many of them lasted 50 years) post WW2 with prefab houses which were fast and cheap to build and by the standards of the day of a very high standard. This is the sort of thinking we need now but I suspect too many people would consider that sort of house-equivalent below their expectations and would rather accept the status quo and carry on moaning. Unless you live in outer Bunduland where there is no work and property is cheap you're going to continue having housing problems if your desire is ownership.

 

[Atilla]

Sadly, I think you're right. I suppose an overall crash might be a bit like a stock split – but the relative differences between new price and borrow ability would still be there. Building more and affordable homes is the obvious answer but if it was so easy then why hasn't it already been done? The basic problem is that people can no longer afford to buy houses due to supply and demand and I can't see how that's going to change.

They tackled this problem (supposedly temporarily but many of them lasted 50 years) post WW2 with prefab houses which were fast and cheap to build and by the standards of the day of a very high standard. This is the sort of thinking we need now but I suspect too many people would consider that sort of house-equivalent below their expectations and would rather accept the status quo and carry on moaning. Unless you live in outer Bunduland where there is no work and property is cheap you're going to continue having housing problems if your desire is ownership.

House price crash aggravates quite a few issues and leads to reallocation of wealth distribution.

Those who have purchased homes with stretched finances usually get repossessed.

Those with tidy lump savings and deposits with cash sitting around idle move in to buy up cheap-er assets and let (usually the magic ROI number is around 6% p/a).

Hence, those with least financial ability, get enslaved to high rents which often account for 40-60% of salaries in some cases.

The key factor for high price of housing is cost of land and UK's permitted developments policy.

Farmers struggle to make ends meet and they are still not allowed to even change 2% of their agricultural land to residential building land without the skies caving in. Too many vested interests. Instead we have people living in densely populated areas instead of spatial more idealistic ones.

You are right about those prefab houses. Large number of Canadian model prefab houses were built near Hainault Forest. 100s of em, very quickly and at low cost.

 

[NVP]

You've completely missed the point...

the point of what .......wondering if prices will go up or down ?

ive just told you what will determine that

so pick a country / area and more specifically a market segment you are focusing on

and apply the 2 criteria i've already given

N

 

[NVP]

Banks aren't going to lend people money to invest into a market thats falling. Lending will simply dry up or only be avaiable to those with large deposits.

A house price crash helps no one! Building more and affordable homes is whats needed.

why the Government strayed off of the council build route is beyond me .......they should have just kept building low cost housing and rented it out ......full stop...........by letting the private sector into the equation (and all this shared ownership cr*p) .....they let the capitalists in ......

sure I know why they did it ....(lessor of many evils)....but that's why every damn low cost development lets the dogs in ........because they cant ringfence it effectively

N

 

[NVP]

House price crash aggravates quite a few issues and leads to reallocation of wealth distribution.

Those who have purchased homes with stretched finances usually get repossessed.

Those with tidy lump savings and deposits with cash sitting around idle move in to buy up cheap-er assets and let (usually the magic ROI number is around 6% p/a).

Hence, those with least financial ability, get enslaved to high rents which often account for 40-60% of salaries in some cases.

The key factor for high price of housing is cost of land and UK's permitted developments policy.

Farmers struggle to make ends meet and they are still not allowed to even change 2% of their agricultural land to residential building land without the skies caving in. Too many vested interests. Instead we have people living in densely populated areas instead of spatial more idealistic ones.

You are right about those prefab houses. Large number of Canadian model prefab houses were built near Hainault Forest. 100s of em, very quickly and at low cost.

not in the UK A last time around ..........we never cleansed out the system (like the US did) hence our issues now .......most people buying in UK are pretty sure they wont get repo'd.........a silly mindset but one we have created through a nanny state

N

 

[Atilla]

not in the UK A last time around ..........we never cleansed out the system (like the US did) hence our issues now .......most people buying in UK are pretty sure they wont get repo'd.........a silly mindset but one we have created through a nanny state

N

Are you sure?

https://www.gov.uk/government/statistical-data-sets/live-tables-on-repossession-activity#live-tables

 

[forker]

That's just a projection. I have seen dozens of these over the years and none of them have ever come to light.

 

[new_trader]

the point of what .......wondering if prices will go up or down ?

ive just told you what will determine that

so pick a country / area and more specifically a market segment you are focusing on

and apply the 2 criteria i've already given

N

This is complete B.S! The only difference between property 'trading' and forex trading is the leverage involved, there is nothing inherently simple about investing in property. With any financial instrument, there is a right time to buy and a right time to sell and property is no different. If you bought a house today and paid £350,000 and tomorrow it is worth £351,000 it is no big deal. However, if you were trading at £1 pip it would be a big deal.

 

[new_trader]

That's just a projection. I have seen dozens of these over the years and none of them have ever come to light.

I have bought and sold property many times over the years. I don't know where you get your 'facts' from.

 

[new_trader]

I’ve talked to many people over the years who think you can’t lose with prop-uh-ee and almost every one of them have no idea of the difference between real house prices and nominal house prices, they give you a vacuous expression with that question. None of them consider opportunity cost, outgoings or any other of the various factors that can determine whether or not property is a good investment and whether ‘now’ is the right time to buy.

 

[Atilla]

This is complete B.S! The only difference between property 'trading' and forex trading is the leverage involved, there is nothing inherently simple about investing in property. With any financial instrument, there is a right time to buy and a right time to sell and property is no different. If you bought a house today and paid £350,000 and tomorrow it is worth £351,000 it is no big deal. However, if you were trading at £1 pip it would be a big deal.

It's not BS but you do have your phases of talking it up large and rubbishing other peoples input.

All instruments have the peculiarities and propery is no different.

Property has many attributes attached it too. Is it to live in or let. Is it to be done up and sold on with value added. Location, size, type etc. So without considering market segment type, timing is but just one factor.

Absolutely nothing like trading Forex other than buying or selling anything.


Stop spreading your BS know-it-all and just contribute what ever S you have.