November 29, 2006

13% of HP'ers are now outside the US as the biggest bubble in world history pops


Yes, this bubble, the biggest in recorded human history, was worldwide.

And now the great housing meltdown shall be as well.

Enjoy the Economist classic - In Come the Waves. Now THAT was some good reporting.

The worldwide rise in house prices is the biggest bubble in history. Prepare for the economic pain when it pops

Never before have real house prices risen so fast, for so long, in so many countries. Property markets have been frothing from America, Britain and Australia to France, Spain and China. Rising property prices helped to prop up the world economy after the stockmarket bubble burst in 2000. What if the housing boom now turns to bust?

According to estimates by The Economist, the total value of residential property in developed economies rose by more than $30 trillion over the past five years, to over $70 trillion, an increase equivalent to 100% of those countries' combined GDPs. Not only does this dwarf any previous house-price boom, it is larger than the global stockmarket bubble in the late 1990s (an increase over five years of 80% of GDP) or America's stockmarket bubble in the late 1920s (55% of GDP). In other words, it looks like the biggest bubble in history

22 comments:

Anonymous said...

¡Ahora poseer tu propio hogar! ¡Tarifas de hasta sólo el 1%!

Es un nuevo paradigma, y todos que ahora no compra, será tasado hacia fuera por siempre. Recompensarán cualquiera que compra con un curso de la vida de riquezas, a medida que su característica continuará su aumento el 30% anual del precio.

Los que se alquilan, y cualquiera nacido en una generación futura, no podrán producir un hogar de arrancador $10.000.000 en 15 años. Vivirán en ciudades de la tienda, y Hondas.

Esta burbuja del activo es diferente que todos los otras - nunca retrasará, o hacer estallar. Los aumentos son permanentes.

Anonymous said...

Lej læser din blog, da der mangler sådanne sider på mit eget sprog.

Vi har også voldsomt overvurderede boliger her, men ikke den samme grad af giftige lån.
Jeg forventer at et sammenbrud på boligmarkedet i USA vil sprede sig til Europa. Vi får se hvordan det går.

Anonymous said...

The bubble is ripening rapidly in India too FYI.

Rao

Anonymous said...

Samanlainen kiinteistökupla täällä Suomessakin. Asuntolainaa saa jopa 3,5 prosentin korolla ja lainamäärät ovat suuria. Parin prosentin nousu aiheuttaisi hyvin monille uusille "talonomistajille" vaikeuksia. Suurin osa lainoista on täällä vaihtuvakorkoisia. Mitään ei opittu edellisestä kuplasta 15 vuotta sitten.

Translation:

The same kind of housing bubble is also here in Finland. Mortgage interest rates are even 3,5 percent and mortgages are big. Even two percent rise of interest rates would cause big troubles for many new house "owners". Most loans are here ARM. Nothing was learned from the previous housing bubble 15 years ago.

Concerned said...

Here in Greece as well.....we are talking about a 150% increase in price in 7 years.

It's getting ready to blow.......

Rao said...

A bit more on India - Prices have gone up by 100% in some cities in the last year. These are cities that are dependent on the outsourcing of IT and related work from US. When the projects in companies in the US are put on hold due to budget freezes, I guess thats when the bubble here bursts. Because thats when the flow of money into such cities stops. The central bank has taken a small step to tightening liquidity here already. Over a 6 year period prices have increased by over 300% to 400% - thats not a typo and it is a conservative estimate. This phenomenal increase (the 6 year one)is not restricted to only urban areas - it is in the urban core, metro-suburbs, smaller towns and even agricultural land.

Rao.

keith said...

Welcome HP Internacionales!

Welkom
Bienvenido
Dzieñ dobry
Benvenuto

Mammoth said...

Привет!

concerned said...

'Yia sou' Keith.......

jon said...

Hey greek 10:43:44 AM
what up, Astoria NY aka "little Athens" here. same shit happening here

Arvo said...

Hello Finland!

devestment said...

Notice that Bakersfield tops the list of where not to buy for the nation. Keith, I want credit for the good call I made about a year ago.

BubbleShanker said...

Devestment:

Bakersfield is worse than Phoenix?

foxwoodlief said...

First off Keith, Puerto Rico is part of the USA so why did you include it in your statistics?

Also plenty of folk, me included, have posted comments and questions for a year about comparing our bubble with the world-wide bubble and very little comment and now you are trying raise the issue? A little late I think, but often you seem to be behind the curve rather than making the curve.

Your site running out of steam? People getting as tired of talking about the bubble as they were about flipping?

Like many, I see a slow down, caution, but not a major retreat yet. I still think we can go either way for the next year based on watching these "World wide bubble markets track records."

Searched homes on several real estate sites in Phoenix, took a break from Craigslist which doesn't seem to really give a true picture, and searched for listings between $150,000 and $325,000 and you know, most were in neighborhoods I wouldn't live (having lived in Phoenix). Still can't believe there is a meltdown in Phoenix when they want $175,000 and up in the Garfield area! There were some houses in the Willow and surrounding for $325,000 which places them in the range between the end of 2004 and the middle of 2005, still to buy about 1200 sq ft for that is no bargain!

And for places likek Monterey? I don't think a drop from $1000 a sq ft to $980 a sq ft is a major correction.

A fizzle maybe? Definitely not a POP!

foxwoodlief said...

Also, the commerce department released this tidbit, "“The Commerce Department said…the number of homes completed and waiting to be sold rose by 6,000 to 166,000 in October.”

In a country of 300,000,000, 166,000 homes divided by the number of states sounds like a pop to me! NOT. There are markets that seem to have corrected faster, parts of Florida and maybe central California, Nevada and Arizona seem to be stubborn. The places with the highest run-up will see the highest corrections but in many cases can afford to since most didn't buy at the peak and so the ratio of loss is inverse to when you bought and how much you put down.

Also the Commerce report said that the price of new homes increased by something like 2.6% but doesn't include incentives, we a lot of HPers have recognized as being between 2.5-5% on average and for million dollar babies maybe 10% so subtract that 2.6% increase and some markets are stagnant and the other drops not so bad yet.

I do believe that there is still room for another wind next year in price apreciation before the real pain begins. The housing market is a market just like the stock exchange and cyclically goes up and down. I for one didn't think the Dow would be over 12,000 when I sold my stocks between March and April as I believed the stock market would tank like I believed housing would. I was wrong on the later and after 2 years of waiting for the house market to tank appear wrong the on the later.

Rao said...

Now they head east to accentuate the bubble there.

Starwood Capital looks east
By Joe Leahy in Mumbai

Published: November 28 2006 13:05

With property funds scrambling into India’s largest metropolises, second and third-tier cities offer some of the best returns for foreign real estate investors, according to Starwood Capital Group, the US-based real estate investment company.

Cities that have upgraded roads, airports or other infrastructure, and begun to attract call centres and other new industries generally, tend to experience a subsequent real estate boom.

The rest of this article is for FT.com subscribers only

https://registration.ft.com/registration/barrier?referer=http://www.ft.com/home/asia&location=http%3A//www.ft.com/cms/s/8e572f14-7edf-11db-b193-0000779e2340.html

Anonymous said...

the price of beread used to be 10 cents, now that it 2 dolars does that mean its over priced and has to go back down to 50 cents, gee and people used to make 5k a year are we going back to that to-

the absolute price is just a number and doesnt mean it has to go up or down from that number , its up to supply and demand,'

keith im sure you mean well but youd make a terrible trader, and or housing price analyst in that sense, youd probably have told me to sell oil futures when they went form 7 to 15 dollars a barrel cause the price more then doubled...

it would be great to hear more reasoned arguments to support a nationwide or worldwide position, other then prices went up or my neighbor in phoenix has an option arm and no money and paid to much so the whole world will collapse...

and why are you rooting for this anyway, dont get it...

foreclose_me said...
This comment has been removed by a blog administrator.
foreclose_me said...

Puerto Rico isn't part of the US. It is just under our protection and authority. Hence, they have no vote in Congress.

Screwed said...

The economist article WAS a true classic. Really eye-opening, though I knew it was a bubble already. The international comparisons, and hint of global liquidity, were interesting.

We're all screwed.

Anonymous said...

no were not you all worry too much here...

Anonymous said...

IRELAND HAS NO PROPERTY TAX!! Thus the large increase in value as most of the other E.U. country members try to buy there. May not decline as fast as other countries.