Housing can only go up and up and up they told us. There's never a bad time to buy real estate, they told us. Housing prices have never fallen, they told us.
I found it interesting in the article below that homes in the far-flung surburbs are getting killed even more than the closer in ones because of petrol prices. Ditch the hummer, and ditch the stucco roof home in Maricopa too...
Also, that sea of interest-only, no down, speculative buyers in 2004 and 2005 who have never seen a real estate downturn? They're about to find out why a down-payment, paying principal and PMI used to be the norm, not the exception. Hopefully they'll be the norm again one day soon.
And all of a sudden, 40%+ price drops seem more realistic. Away we go...
Housing crash puts sellers in debt crisis
A THREE-BEDROOM brick-veneer house in St Clair sold for just $260,000 at the weekend - down about 42 per cent from its last sale at $450,000 in 2003 in a further sign of the depressed state of the Sydney property market.
Only one person bid on the house in the city's west. The mortgagee sale was forced after the owners could not meet the interest payments on the $405,000 they borrowed to buy the house at the peak of the market.
The Herald checked 16 properties in south-western and western suburbs listed at the weekend and found 60 per cent had prices or had attracted offers at a discount to their last sale price.
Increasing petrol prices appear to be compounding the impact of repeated interest rate rises on properties in Sydney's outlying suburbs by driving prices down.
Lethbridge Park, near Penrith, recorded the second highest fall, when a townhouse that sold for $257,000 in 2003 was resold by mortgagees for $156,500, reflecting a roughly 40 per cent fall.
At Heckenberg, a four-bedroom house that sold for $330,000 in 2003 resold at $255,000 in another mortgagee sale. Four of the seven registered buyers put in bids before the Adaminaby Street house sold at an approximate 22 per cent discount to the property-boom price.
Given it has been 16 years since the last recession, long-time estate agents fear the fate of a generation of owners who had not experienced having a loan when times were tough.
Mr Beatty said: "There was a wave of people punting on the expectation of constant price rises until well into 2004, even after the three interest rate rises of late 2003. There has been significant price deflation and many now have negative equity in their homes.
August 21, 2006
Want a peek at what's to come? Look at the housing crash underway in Australia
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holy crap mate
Lowe's (LOW - commentary - Cramer's Take) sank 3.4% early Monday after the home improvement retailer trimmed second-half sales guidance, citing near-term pressure on the U.S. consumer.
The Mooresville, N.C., company made $935 million, or 60 cents a share, for the quarter ended Aug. 4, up from the year-ago $839 million, or 52 cents a share. Revenue rose to $13.39 billion from $11.93 billion a year earlier. Analysts surveyed by Thomson Financial were looking for a 61-cent profit on sales of $13.38 billion.
Same-store sales rose 3.3% from a year ago for the second quarter, but Lowe's said they would be flat to up just 2% for the third quarter. The company also guided to third-quarter total sales growth of 11%, shy of the 13% Thomson Financial target.
I'm guessing 2003=2005, and 2004=2006 here. Therefore, by 2008, we can expect 40% price declines and a depressed economy here in the USA.
-Dragasoni-
40% price declines will put this country into a depression
nice that congress changed those bankruptcy laws just in the nick of time huh?
nice picture! get rich quick!
Stupid people part with their $. Nothing wrong with that.
"Clare said...
Mamboni,
I agree that a "withdrawal" is what is needed, However I don't see the federal government bailing everyone out. I forsee some people losing their homes but I think there will be more inter-generational households where grandparents, parents, and adult children live together to keep the house."
That has already started here. Four couples that I know have had their children (and spouses) with grandchildren move back in because they couldn't make it "out there". The couples,all retired or pushing retirement, are not all that happy, having gotten pretty much settled in their semi/retired lives, once the kids were finally out. But what are you going to do, it's family! This of course kills the rest of us because the school board's property tax increase is levied on the flat number of property owners it can rape, not the number of school age children that reside on those properties that caused the required increase. I would love to see a yearly fee ,per kid, assessed
on parents to help fund the schools. Maybe they wouldn't be so keen to crank them out like free kittens if the parents had to pay more to the school board for each school age kid.
Fosters, Australian for beer.
I would love to see a yearly fee ,per kid, assessed
on parents to help fund the schools. Maybe they wouldn't be so keen to crank them out like free kittens if the parents had to pay more to the school board for each school age kid.
It is this kind of thinking that has got us into the mess outlined by Pat Buchanan in the other HP story today. $20,000 for every White baby born!
If those prices quoted are in US Dollars you have to convert to Austrailian dollars to see what is really going on. $450,000 US would be around $600,000 Australian. Higher a few years ago when the US dollar was almost 2-1. Sydney was one of the most expensive cities in the world, still is, and at those prices you didn't get much.
People never seem to understand that most countries pay a lot of homes and get a lot less than Americans. Not to say American's buy more home than they need or can afford. Still, I look at international real estate a lot, and have for years, and even when I found places that looked cheap by American standards when you too the incomes of those countries and other third-world factors, they didn't look like a bargain. You could still find cheaper homes in depressed American cities and towns than in most countries overseas.
The other thing is these were forced sells, so what does the price paid for an asset at auction say? First, those who buy must feel that the price leaves room for profit if they want to sell so that bottom price doesn't really assess current market values.
Still a correction is finally going on in Australia three years after their so called "soft landing". Taking inflation and price reductions into account, a lot of people lost money (those who bought at the peak) and a lot still are sitting on real assests (those who bought before the peak, put a lot down, or bought years ago).
I go to auctions and see new furniture liquidated that goes for ten cents on the dollar, not even enough to pay for the raw materials. I've even seen large loads of new furniture crushed and taken to the landfill because it was less expensive to destroy than to store or transport somewhere where supply and demand might liquidate the stuff. Distress sell happen in all markets and during all economic cycles so again, this type of reporting is yellow journalism Geraldo style.
I'm not an anti-house bubble guy. I believe there are lots of local bubble markets and that they will affect all markets if they get out of control and that just like stocks we might be entering a bear market, but it is all part of the cycle.
I was told by some Australians I met in Italy that all their homes are sold at auction. It's how their market works.
True?
Fellows, I love Oz. I've been there some four times during the past decade, Cairns to Sydney, but here's one thing that I've noticed... it's not a place to make money. Many Aussies and Kiwis go abroad to make their fortunes and return home for the laid back lifestyle.
That's part of the reason why there was an anti-middle eastern riot, a couple of years ago. Australians have less of a KKK issue than many continental Americans. The issue is that they really don't have much of a pie to begin with and I believe ~90% of their interior is desert.
They're angry with Sydney based Lebanese gangs for attacking their ladies but then the stupid Anglo-Saxon Aussies of Cornulla took it out on anyone with olive skin which turned the thing into a KKK-type of feastival when it was really an isolated incident against one particular subnationalty and its gang elements. Apparently, they haven't been to Los Angeles so this is kinda new terrain.
And Australians, unlike Europeans, think the USA is the richest and best country in the world to work in yet, the median household income here is like ~$45K/yr which I hate to say it, is the working poor for a nuclear family with today's expenses.
$45K/yr can only afford a single person (w/o kids), a middle class existence. That's a take home of $35K/yr or $2700 per month.
Let's say the single person lives in an urban location: ~$1K rent.
Car payments (Civic or Corolla, Insur, Tax): $350
Gas: $80
Groceries: $250
Telephone/Net: $150
Health insurance contribution: $50
Utilities: $100
That totals to nearly $2K of monthly expenses which gives this single person $700 to either save or blow on going out to places. Well... that's a bare middle class lifestyle for a person. Now, imagine a family and consider their budget? Most people are a paycheck or so from living on the streets.
Yep, the median household income is like ~$45K/yr which I hate to say it, is the working poor for a nuclear family with today's expenses.
$45K/yr can only afford a single person (w/o kids), a middle class existence. That's a take home of $35K/yr or $2700 per month.
Let's say the single person lives in an urban location: ~$1K rent.
Car payments (Civic or Corolla, Insur, Tax): $350
Gas: $80
Groceries: $250
Telephone/Net: $150
Health insurance contribution: $50
Utilities: $100
That totals to nearly $2K of monthly expenses which gives this single person $700 to either save or blow on going out to places. Well... that's a bare middle class lifestyle for a person. Now, imagine a family and consider their budget? Most people are a paycheck or so from living on the streets.
Cool deal.
Sincerely,
Shopping Shirley
shopping
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