August 26, 2006

Here's England's house price chart. Anyone see the bubble? Look closely - it's there somewhere


Anonymous said...

" bubble here. Please move along. Thank you."

Anonymous said...

where's waldo?

Anonymous said...

So ... the next peak would be 262000 pounds in the 2023?

bobbyj0708 said...

Each successive bubble appears to get larger than the one before, and not just in a linear fashion. Makes me wonder what the next one will be like.

Anonymous said...

Each bubble, bigger than the last?

I bet it also speeds up a bit---classic signs of self-organized criticality and an oscillation.

Read the books and articles by Didier Sornette (UCLA physics professor).

Check this one out: a preprint published on 3 Jun 2005.

We analyze the quarterly average sale prices of new houses sold in the USA as a whole, in the northeast, midwest, south, and west of the USA, in each of the 50 states and the District of Columbia of the USA, to determine whether they have grown faster-than-exponential which we take as the diagnostic of a bubble. We find that 22 states (mostly Northeast and West) exhibit clear-cut signatures of a fast growing bubble. From the analysis of the S&P 500 Home Index, we conclude that the turning point of the bubble will probably occur around mid-2006.


"Turning point of the bubble around mid-2006", not bad, hmm?

I think it was only may or june that you started really hearing stories of "houses not selling" in the media---and that of course self-organizes and creates additional feedback force by convincing more sellers to GET OUT NOW, and more buyers to wait it out.

The more you say "real estate is an illiquid asset", and the more you say "cycles take many years", the more you reinforce this behavior.

Bill said...

'US recession will be nasty and deep'

The United States is headed for a recession that will be "much nastier, deeper and more protracted" than the 2001 recession, says Nouriel Roubini, president of Roubini Global Economics.

Roubini repeated his call that the U.S. would be in recession in 2007, arguing that the collapse of housing would bring down the rest of the economy.

Roubini wrote after the National Association of Realtors reported Wednesday that sales of existing homes fell 4.1% in July, while inventories soared to a 13-year high and prices flattened out on a year-over-year basis.

"This is the biggest housing slump in the last four or five decades: every housing indicator is in free fall, including now housing prices," Roubini said.

The decline in investment in the housing sector will exceed the drop in investment when the Nasdaq collapsed in 2000 and 2001, he said.

And the impact of the bursting of the bubble will affect every household in America, not just the few people who owned significant shares in technology companies during the dot-com boom, he said. Prices are falling even in the Midwest, which never experienced a bubble, "a scary signal" of how much pain the drop in household wealth could cause.

Roubini is a professor of economics at New York University and was a senior economist in the White House and the Treasury Department in the late 1990s. His firm focuses largely on global macroeconomics.

While many economists share Roubini's concerns about imbalances in the global economy and in the U.S. housing sector, he stands nearly alone in predicting a recession next year.

Fed watcher Tim Duy called Roubini the "the current archetypical Eeyore," responding to a comment Dallas Fed President Richard Fisher made last week in referring to economic pessimists as "Eeyores," after Winnie the Pooh's grumpy friend.

"By itself this slump is enough to trigger a U.S. recession: its effects on real residential investment, wealth and consumption, and employment will be more severe than the tech bust that triggered the 2001 recession," Roubini said.

Housing has accounted, directly and indirectly, for about 30% of employment growth during this expansion, including employment in retail and in manufacturing producing consumer goods, he said.

In the past year, consumers spent about $200 billion of the money they pulled out of their home equity, he estimated. Already, sales of consumer durables such as cars and furniture have weakened.

"As the housing sector slumps, the job and income and wage losses in housing will percolate throughout the economy," Roubini said.

Consumers also face high energy prices, higher interest rates, stagnant wages, negative savings and high debt levels, he noted.

"This is the tipping point for the U.S. consumer and the effects will be ugly," he said.

It's not all bad.

The upside is that when practically everybody in America defaults on their loans at once, there's no way on earth that creditors can go after everyone. It'll be cheaper to press RESTART and start from scratch.

Either that, or press the red button for self-explode.

scary shit!!

Anonymous said...

Hey Keith,

Do you have data for France? I'm trying to decide whether to sell my Paris apartment. I have a great sentimental attachment to it and it breaks even, but if I can buy it back in 3 years for much less I would consider it.

Anonymous said...

You gave me an interesting idea. Thx.

Steve @

Anonymous said...

Sell and buy back? Don't be foolish. If I were to buy a home then it drops significantly in price, I would have not choice but to keep it (and the paper loss) fo many years, even decades to get back to break even. Now if don't plan on buying that same place back, that's a differnet story.

Anonymous said...

Check it ou homes facias and aluminum siding

Anonymous said...

Panic now and avoid the rush

Anonymous said...

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