Real estate dropping like a rock in U.K. - can the U.S. be far behind?

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CULater
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Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by CULater » Sat Aug 18, 2018 8:01 am

Seems like real estate prices and bidding wars in the U.S. have been as crazy as in England. Now with rising interest rates, the party seems to be over in the U.K. Is this likely to be a global phenomenon? Bad time to be buying?

http://www.thisismoney.co.uk/news/artic ... risis.html
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by afan » Sat Aug 18, 2018 8:24 am

The UK has to deal with the anticipated effects of Brexit. Although there may be some spill over to the US, that is a unique issue to the UK. I would not draw any direct links to the markets in other countries.

US residential real estate is cooling but the last I saw it was still going up. Will prices go down somewhat, at some time, in US? Probably. I doubt anyone can predict how much or when.
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by letsgobobby » Sat Aug 18, 2018 8:25 am

Prices are falling in Seattle. Just a little. But that's a big change.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by minimalistmarc » Sat Aug 18, 2018 8:26 am

In london prime and the south of england there are some drops but most of that is just the froth of th e recent bubble but overall prices are still going up and seem likely to continue to do so.ly

I definitely haven't seen anything reasonably priced in the areas I look in.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by drk » Sat Aug 18, 2018 9:47 am

letsgobobby wrote:
Sat Aug 18, 2018 8:25 am
Prices are falling in Seattle. Just a little. But that's a big change.
Not falling yet, just rising more moderately. It's still a big change, though.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by runner540 » Sat Aug 18, 2018 9:49 am

Don't forget Canada and Australia that are also seeing big drops in housing values right now.

I'm seeing lots of price reductions and much bigger inventory at all price points in my area of DFW than I did the last 2 years.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by snackdog » Sat Aug 18, 2018 9:59 am

The party in the states is ending slowly as rates rise. High end has already slowed a lot.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by unclescrooge » Sat Aug 18, 2018 10:02 am

Mortgage application in California are sharply down in past few weeks. A couple of people whose opinion I value think the peak in this cycle was beginning of August.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by AerialWombat » Sat Aug 18, 2018 10:05 am

Housing prices in most major US markets are still going up, just slower as demand fades as buyers give up.

As an active real estate investor in the acquisition phase, I'm all for a correction in property values.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by AlohaJoe » Sat Aug 18, 2018 10:25 am

CULater wrote:
Sat Aug 18, 2018 8:01 am
the party seems to be over in the U.K. Is this likely to be a global phenomenon? Bad time to be buying?
From the article you linked
A report by the Office for National Statistics and Land Registry yesterday showed:

Overall UK house prices rose by only 3 per cent or £6,714 to £228,384 in the 12 months to June – the slowest increase since August 2013
So by "dropping like a rock" you mean "up 3 per cent"? Is there a need to be overly histrionic? What does that serve?

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by TomatoTomahto » Sat Aug 18, 2018 11:13 am

snackdog wrote:
Sat Aug 18, 2018 9:59 am
The party in the states is ending slowly as rates rise. High end has already slowed a lot.
Our house in Northern NJ is considered high end. It just went under contract for approx 20% less than realtors recommended listing it for, and we all considered it fairly priced.

NY suburbs are experiencing shaky buyers. Their jobs, often on Wall Street, are not very secure. DeutscheBank laying off piles, other banks are tightening belts. Garment industry jittery because of possible trade wars. SALT and mortgage deductions changes.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by letsgobobby » Sat Aug 18, 2018 1:37 pm

drk wrote:
Sat Aug 18, 2018 9:47 am
letsgobobby wrote:
Sat Aug 18, 2018 8:25 am
Prices are falling in Seattle. Just a little. But that's a big change.
Not falling yet, just rising more moderately. It's still a big change, though.
No, it's actually falling month to month, and that is not a seasonally adjusted change.

https://www.seattletimes.com/business/r ... ce-growth/

drk
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by drk » Sat Aug 18, 2018 1:41 pm

letsgobobby wrote:
Sat Aug 18, 2018 1:37 pm
drk wrote:
Sat Aug 18, 2018 9:47 am
letsgobobby wrote:
Sat Aug 18, 2018 8:25 am
Prices are falling in Seattle. Just a little. But that's a big change.
Not falling yet, just rising more moderately. It's still a big change, though.
No, it's actually falling month to month, and that is not a seasonally adjusted change.

https://www.seattletimes.com/business/r ... ce-growth/
Ah, we were referring to different things. We'll see if month-over-month declines continue, but it'll really be news when we see a year-over-year price-drop.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by letsgobobby » Sat Aug 18, 2018 2:32 pm

First May to June price drop since before the recession. I think it's already notable.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by nguy44 » Sat Aug 18, 2018 3:00 pm

This is just an anecdotal observation, but I am now receiving 3-4 times a week a "WE WILL PAY CASH FOR YOUR HOME" flyer from some outfit... and those always seem to show up with that frequency when the local housing market is about to slow down. :happy

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by KyleAAA » Sat Aug 18, 2018 3:07 pm

drk wrote:
Sat Aug 18, 2018 1:41 pm
letsgobobby wrote:
Sat Aug 18, 2018 1:37 pm
drk wrote:
Sat Aug 18, 2018 9:47 am
letsgobobby wrote:
Sat Aug 18, 2018 8:25 am
Prices are falling in Seattle. Just a little. But that's a big change.
Not falling yet, just rising more moderately. It's still a big change, though.
No, it's actually falling month to month, and that is not a seasonally adjusted change.

https://www.seattletimes.com/business/r ... ce-growth/
Ah, we were referring to different things. We'll see if month-over-month declines continue, but it'll really be news when we see a year-over-year price-drop.
I had this same discussion recently. It’s not unusual to see MoM price drops in a normal healthy market where the YoY trend is still up. It just seems weird in Seattle because the last few years have been so crazy. A lot of people seem to have have forgotten what normal RE markets are like. I think we’ll still see 4-5% appreciation over the next 10 years in Seattle.

denovo
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by denovo » Sat Aug 18, 2018 3:09 pm

CULater wrote:
Sat Aug 18, 2018 8:01 am
Seems like real estate prices and bidding wars in the U.S. have been as crazy as in England. Now with rising interest rates, the party seems to be over in the U.K. Is this likely to be a global phenomenon? Bad time to be buying?

http://www.thisismoney.co.uk/news/artic ... risis.html
I don't see any reason why the UK should be a leading indicator of the US.

Also, there is no national real estate market, 2008 was a rare example of real estate going down in the entire county at the same time, but that's usually not the norm. Different local economies have had real estate go up at different rates, and they will go down, if down at all, at different rates.
Last edited by denovo on Sat Aug 18, 2018 3:13 pm, edited 1 time in total.
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denovo
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by denovo » Sat Aug 18, 2018 3:12 pm

letsgobobby wrote:
Sat Aug 18, 2018 1:37 pm
drk wrote:
Sat Aug 18, 2018 9:47 am
letsgobobby wrote:
Sat Aug 18, 2018 8:25 am
Prices are falling in Seattle. Just a little. But that's a big change.
Not falling yet, just rising more moderately. It's still a big change, though.
No, it's actually falling month to month, and that is not a seasonally adjusted change.

https://www.seattletimes.com/business/r ... ce-growth/
This is interesting info, thank you.
"Don't trust everything you read on the Internet"- Abraham Lincoln

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Grt2bOutdoors » Sat Aug 18, 2018 3:15 pm

TomatoTomahto wrote:
Sat Aug 18, 2018 11:13 am
snackdog wrote:
Sat Aug 18, 2018 9:59 am
The party in the states is ending slowly as rates rise. High end has already slowed a lot.
Our house in Northern NJ is considered high end. It just went under contract for approx 20% less than realtors recommended listing it for, and we all considered it fairly priced.

NY suburbs are experiencing shaky buyers. Their jobs, often on Wall Street, are not very secure. DeutscheBank laying off piles, other banks are tightening belts. Garment industry jittery because of possible trade wars. SALT and mortgage deductions changes.
Realtors are the worst at providing appraisal. Their job is to get the highest price because they are paid commissions based on selling price. Garment industry jitters? Ha! Garment industry never paid that well. Agree with Wall Street though, it’s a feast or famine business. Deutsche has been written up in the papers for years now, this is nothing new there.
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Grt2bOutdoors » Sat Aug 18, 2018 3:17 pm

nguy44 wrote:
Sat Aug 18, 2018 3:00 pm
This is just an anecdotal observation, but I am now receiving 3-4 times a week a "WE WILL PAY CASH FOR YOUR HOME" flyer from some outfit... and those always seem to show up with that frequency when the local housing market is about to slow down. :happy
They will pay cash alright, but only offer you 50-60 percent fair value. That sound like a good idea?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by StealthRabbit » Sat Aug 18, 2018 3:18 pm

Housing can be very cyclical (economy / employment / interest rates)

Has been a very long 'rich' spell for all sectors, so I expect some 'adjustment' in RE (which affects my 'passive' portfolio / asset mix / income a lot).

Cash and accessible capital is a good thing to have in a RE downturn.

As mentioned... the UK has some unique challenges at the moment, so likely not a direct indicator of a WW trend.
The WORLD has other pending issues.... (potential torpedoes and other Bombs)

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by TomatoTomahto » Sat Aug 18, 2018 4:36 pm

Grt2bOutdoors wrote:
Sat Aug 18, 2018 3:15 pm
TomatoTomahto wrote:
Sat Aug 18, 2018 11:13 am
snackdog wrote:
Sat Aug 18, 2018 9:59 am
The party in the states is ending slowly as rates rise. High end has already slowed a lot.
Our house in Northern NJ is considered high end. It just went under contract for approx 20% less than realtors recommended listing it for, and we all considered it fairly priced.
NY suburbs are experiencing shaky buyers. Their jobs, often on Wall Street, are not very secure. DeutscheBank laying off piles, other banks are tightening belts. Garment industry jittery because of possible trade wars. SALT and mortgage deductions changes.
Realtors are the worst at providing appraisal. Their job is to get the highest price because they are paid commissions based on selling price. Garment industry jitters? Ha! Garment industry never paid that well. Agree with Wall Street though, it’s a feast or famine business. Deutsche has been written up in the papers for years now, this is nothing new there.
I have to disagree about realtors: in practice, their job is to close the transaction, and the selling price is less important than them being involved in the transaction rather than another realtor.

DW and I both worked at Deutsche Bank, years ago, and still have many friends inside. I know DB's troubles have been reported on for years; it is different now, and the psychology has, imo, reached a tipping point. Ditto other workers at marginal financial firms.

By garment industry I didn't mean retail or wholesale clothing workers; I mean designers, fashion company CEOs, buyers, etc.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by FIREchief » Sat Aug 18, 2018 5:53 pm

In the US, I would expect the new talk laws to be a key driver to reduced demand. For a large number of modest home buyers, the government will no longer be subsidizing their house purchase.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by montanagirl » Sat Aug 18, 2018 6:00 pm

Grt2bOutdoors wrote:
Sat Aug 18, 2018 3:17 pm
nguy44 wrote:
Sat Aug 18, 2018 3:00 pm
This is just an anecdotal observation, but I am now receiving 3-4 times a week a "WE WILL PAY CASH FOR YOUR HOME" flyer from some outfit... and those always seem to show up with that frequency when the local housing market is about to slow down. :happy
They will pay cash alright, but only offer you 50-60 percent fair value. That sound like a good idea?

I think this observation was offered merely as a symptom of a slowdown.

Those signs started showing up here last year.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Grt2bOutdoors » Sat Aug 18, 2018 6:59 pm

TomatoTomahto wrote:
Sat Aug 18, 2018 4:36 pm
Grt2bOutdoors wrote:
Sat Aug 18, 2018 3:15 pm
TomatoTomahto wrote:
Sat Aug 18, 2018 11:13 am
snackdog wrote:
Sat Aug 18, 2018 9:59 am
The party in the states is ending slowly as rates rise. High end has already slowed a lot.
Our house in Northern NJ is considered high end. It just went under contract for approx 20% less than realtors recommended listing it for, and we all considered it fairly priced.
NY suburbs are experiencing shaky buyers. Their jobs, often on Wall Street, are not very secure. DeutscheBank laying off piles, other banks are tightening belts. Garment industry jittery because of possible trade wars. SALT and mortgage deductions changes.
Realtors are the worst at providing appraisal. Their job is to get the highest price because they are paid commissions based on selling price. Garment industry jitters? Ha! Garment industry never paid that well. Agree with Wall Street though, it’s a feast or famine business. Deutsche has been written up in the papers for years now, this is nothing new there.
I have to disagree about realtors: in practice, their job is to close the transaction, and the selling price is less important than them being involved in the transaction rather than another realtor.

DW and I both worked at Deutsche Bank, years ago, and still have many friends inside. I know DB's troubles have been reported on for years; it is different now, and the psychology has, imo, reached a tipping point. Ditto other workers at marginal financial firms.

By garment industry I didn't mean retail or wholesale clothing workers; I mean designers, fashion company CEOs, buyers, etc.
I see your point.
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Sasquatch » Sat Aug 18, 2018 8:09 pm

Purely anecdotal in my area but when you hear 30 something’s talking about their latest flip in the grocery line something bad is going to happen. Heard the exact same conversations in 2007.

FWIW. The bottom of the housing market here had 1100sf starter homes at $89,000 (short sale) same street, similar house today $330,000

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Irisheyes » Sat Aug 18, 2018 8:29 pm

Lots of "price reduced" notices on property in our HCOL NorCal neighborhood. Also more inventory available as compared to last year. Starter homes not affected so much. Tax laws seem to be having an effect on the mid-higher end properties.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by arcticpineapplecorp. » Sat Aug 18, 2018 9:10 pm

fyi I've noticed people saying "Prices are falling" rather than "Prices have fallen". The first assumes the past will continue into the future (unknown). The second says the only thing we know, what has happened, not what will happen.
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Valuethinker » Sun Aug 19, 2018 8:19 am

CULater wrote:
Sat Aug 18, 2018 8:01 am
Seems like real estate prices and bidding wars in the U.S. have been as crazy as in England. Now with rising interest rates, the party seems to be over in the U.K. Is this likely to be a global phenomenon? Bad time to be buying?

http://www.thisismoney.co.uk/news/artic ... risis.html
AFAIK the US has local pockets of mania but housing in the USA does not look overvalued overall. Not all places have caught up with their 2006 highs, even. The problem is, as ever, a shortage of new homes in metropolitan areas with high demand plus the near mania associated with a very strong tech sector.

UK is different. Housing prices outside of London and SE did slip back post 2008 but are pretty much recovered or exceeding them. London they are near all time highs (say 10% below). And there is Brexit which casts a cloud over everything -if the financial services industry moves significant numbers of jobs, London will hurt.

Canada and Australia have the obvious bubbles right now. Serious bubbles (Vancouver, Toronto, Sydney, Melbourne + Auckland & maybe Singapore & Stockholm). All cities far above their historic averages and relative to incomes and rents extremely expensive.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by desafinado » Sun Aug 19, 2018 9:21 am

TomatoTomahto wrote:
Sat Aug 18, 2018 11:13 am
snackdog wrote:
Sat Aug 18, 2018 9:59 am
The party in the states is ending slowly as rates rise. High end has already slowed a lot.
Our house in Northern NJ is considered high end. It just went under contract for approx 20% less than realtors recommended listing it for, and we all considered it fairly priced.

NY suburbs are experiencing shaky buyers. Their jobs, often on Wall Street, are not very secure. DeutscheBank laying off piles, other banks are tightening belts. Garment industry jittery because of possible trade wars. SALT and mortgage deductions changes.
Multiples in Manhattan and Brooklyn are still way up there. Anything bigger than a studio apartment is still selling for 20x rents or more.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Boglegrappler » Sun Aug 19, 2018 9:29 am

I have a friend in the NYC suburbs. He reports that houses above the median price in his HCOL area are hard to sell, and virtually none of them sell at the tax assessor's appraised value of them that were done about four years ago. The market is very very soft, with many houses to look at for a potential buyer. The problem is that the sellers won't (can't?) budge on the price.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by SimplicityNow » Sun Aug 19, 2018 9:35 am

New York City suburb here and prices have decreased and number of days on market have been increased.

Also noticing many homes in areas we are considering in western Florida seem to be on the market for longer periods of time before sale.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by bikechuck » Sun Aug 19, 2018 9:58 am

Another anecdotal data point from Columbus, Ohio.

We listed our house three weeks ago on a Thursday and showed it on Friday, Saturday and Sunday. We had nine offers (all above asking price) to choose from by 6:00 p.m. on Sunday. We have a modest 1,700 sq foot house and there are more buyers for homes in this price point than higher end properties. Our house was in excellent condition which had to help.

That said, we are happy to be moving on to a new house that will be better to age in. In our case we are up sizing to 2,300 sq feet though we will be without a basement for the first time in our home owning days.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Gray » Sun Aug 19, 2018 1:56 pm

It’s all based on location. The 1951 house next door to mine with 1500 square feet is getting its list at $770k.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Valuethinker » Mon Aug 20, 2018 2:56 am

Gray wrote:
Sun Aug 19, 2018 1:56 pm
It’s all based on location. The 1951 house next door to mine with 1500 square feet is getting its list at $770k.
Granted there is this "proximity to Gray" factor which lifts housing prices ;-).

But where in the USA (metropolitan area) is this?

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by denovo » Mon Aug 20, 2018 2:57 am

Valuethinker wrote:
Mon Aug 20, 2018 2:56 am
Gray wrote:
Sun Aug 19, 2018 1:56 pm
It’s all based on location. The 1951 house next door to mine with 1500 square feet is getting its list at $770k.
Granted there is this "proximity to Gray" factor which lifts housing prices ;-).

But where in the USA (metropolitan area) is this?
My money is on Los Angeles or No Va.
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Valuethinker » Mon Aug 20, 2018 3:09 am

bikechuck wrote:
Sun Aug 19, 2018 9:58 am
Another anecdotal data point from Columbus, Ohio.

We listed our house three weeks ago on a Thursday and showed it on Friday, Saturday and Sunday. We had nine offers (all above asking price) to choose from by 6:00 p.m. on Sunday. We have a modest 1,700 sq foot house and there are more buyers for homes in this price point than higher end properties. Our house was in excellent condition which had to help.

That said, we are happy to be moving on to a new house that will be better to age in. In our case we are up sizing to 2,300 sq feet though we will be without a basement for the first time in our home owning days.
The US economy is strong to very strong.

Unemployment is at a more than 10 year low.

House construction dropped off a cliff after the crash, and only slowly recovered. Many smaller builders were wiped out, and banks are less willing/ able to lend to housing developers. There is a broad skill shortage now in the industry.

It's not surprising then that supply is having trouble keeping up with demand.

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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by abuss368 » Mon Aug 20, 2018 10:13 pm

Thank you for sharing.
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by abuss368 » Tue Aug 21, 2018 7:21 pm

unclescrooge wrote:
Sat Aug 18, 2018 10:02 am
Mortgage application in California are sharply down in past few weeks. A couple of people whose opinion I value think the peak in this cycle was beginning of August.
I did read a good article on the decline in California as well.
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by abuss368 » Tue Aug 21, 2018 7:27 pm

Irisheyes wrote:
Sat Aug 18, 2018 8:29 pm
Tax laws seem to be having an effect on the mid-higher end properties.
In my opinion I believe we may hear of more surprises at tax time and adjustments to the housing market once the full impact of the tax law changes ripples through.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

JackoC
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by JackoC » Tue Aug 21, 2018 9:59 pm

The Economist's indices of house prices in various countries says they have been much more richly valued in the UK, Canada and Australia recently than in the US.

https://infographics.economist.com/2017/HPI/index.html
You can play around with dates and prices vs incomes or v rents but similar story post US crash: US went significant down on those measures of home price richness in the crash and only somewhat back up since, other three went down less in the crash and more up since, through end of 2016.

I agree though as others commented NY area now is on the soft side compared to say last year, noticeably. Not dropping like a rock though.

passiveTiger
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by passiveTiger » Wed Aug 22, 2018 12:23 am

CULater wrote:
Sat Aug 18, 2018 8:01 am
Seems like real estate prices and bidding wars in the U.S. have been as crazy as in England. Now with rising interest rates, the party seems to be over in the U.K. Is this likely to be a global phenomenon? Bad time to be buying?

http://www.thisismoney.co.uk/news/artic ... risis.html
Median Sales Price for New Houses Sold in the United States - https://fred.stlouisfed.org/series/MSPNHSUS

Average Sales Price for New Houses Sold in the United States - https://fred.stlouisfed.org/series/ASPNHSUS

Median Sales Price of Existing Homes - https://fred.stlouisfed.org/series/HOSMEDUSM052N

Mean Sales Price of Existing Homes - https://fred.stlouisfed.org/series/HOSAVGUSM052N

AlphaLess
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by AlphaLess » Wed Aug 22, 2018 12:59 am

CULater wrote:
Sat Aug 18, 2018 8:01 am
Seems like real estate prices and bidding wars in the U.S. have been as crazy as in England. Now with rising interest rates, the party seems to be over in the U.K. Is this likely to be a global phenomenon? Bad time to be buying?

http://www.thisismoney.co.uk/news/artic ... risis.html
Fundamentals are somewhat different in UK vs US.
For example, UK has Brexit, with rather uncertain outcomes.

AlphaLess
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Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by AlphaLess » Wed Aug 22, 2018 1:00 am

passiveTiger wrote:
Wed Aug 22, 2018 12:23 am
CULater wrote:
Sat Aug 18, 2018 8:01 am
Seems like real estate prices and bidding wars in the U.S. have been as crazy as in England. Now with rising interest rates, the party seems to be over in the U.K. Is this likely to be a global phenomenon? Bad time to be buying?

http://www.thisismoney.co.uk/news/artic ... risis.html
Median Sales Price for New Houses Sold in the United States - https://fred.stlouisfed.org/series/MSPNHSUS

Average Sales Price for New Houses Sold in the United States - https://fred.stlouisfed.org/series/ASPNHSUS

Median Sales Price of Existing Homes - https://fred.stlouisfed.org/series/HOSMEDUSM052N

Mean Sales Price of Existing Homes - https://fred.stlouisfed.org/series/HOSAVGUSM052N

I much prefer this one:
https://fred.stlouisfed.org/series/CSUSHPINSA
S&P/Case-Shiller U.S. National Home Price Index (CSUSHPINSA)

This is a much more robust index, based on repeat sales pair method.

There are several variations:
- firstly, for most indices there is NSA (not seasonally adjusted) and SA (seasonally adjusted),
- there is a 10 mega city average index,
- there is a 20 large city average index,
- there are indices for many major metro areas in the USA,
- for some metro areas, there are multiple indices (e.g., New York City has a broad index and a Condo index),
- also for New York City, for example, there are 'Tier' indices, where 'Tier' indicates different level of housing stock.

Here is the index series page:
https://fred.stlouisfed.org/release?rid=199

Case Shiller index is really the gold standard in measuring housing price levels.

passiveTiger
Posts: 72
Joined: Tue Apr 17, 2018 9:22 pm

Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by passiveTiger » Wed Aug 22, 2018 1:47 am

AlphaLess wrote:
Wed Aug 22, 2018 1:00 am
passiveTiger wrote:
Wed Aug 22, 2018 12:23 am
CULater wrote:
Sat Aug 18, 2018 8:01 am
Seems like real estate prices and bidding wars in the U.S. have been as crazy as in England. Now with rising interest rates, the party seems to be over in the U.K. Is this likely to be a global phenomenon? Bad time to be buying?

http://www.thisismoney.co.uk/news/artic ... risis.html
Median Sales Price for New Houses Sold in the United States - https://fred.stlouisfed.org/series/MSPNHSUS

Average Sales Price for New Houses Sold in the United States - https://fred.stlouisfed.org/series/ASPNHSUS

Median Sales Price of Existing Homes - https://fred.stlouisfed.org/series/HOSMEDUSM052N

Mean Sales Price of Existing Homes - https://fred.stlouisfed.org/series/HOSAVGUSM052N

I much prefer this one:
https://fred.stlouisfed.org/series/CSUSHPINSA
S&P/Case-Shiller U.S. National Home Price Index (CSUSHPINSA)

This is a much more robust index, based on repeat sales pair method.

There are several variations:
- firstly, for most indices there is NSA (not seasonally adjusted) and SA (seasonally adjusted),
- there is a 10 mega city average index,
- there is a 20 large city average index,
- there are indices for many major metro areas in the USA,
- for some metro areas, there are multiple indices (e.g., New York City has a broad index and a Condo index),
- also for New York City, for example, there are 'Tier' indices, where 'Tier' indicates different level of housing stock.

Here is the index series page:
https://fred.stlouisfed.org/release?rid=199

Case Shiller index is really the gold standard in measuring housing price levels.
I realize that Case-Shiller is well cited, but averages can be too skewed toward the higher end that has been selling. Medians have their place.

Repeat sales method is a good measurement for existing property value, but it excludes (by definition) new homes. The median and average prices for new homes have been falling since March, but the median and average prices for existing homes have been rising sharply since February - just like Case-Shiller shows they are.

The Fed housing price data is available in regional issues as well.

Valuethinker
Posts: 36009
Joined: Fri May 11, 2007 11:07 am

Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Valuethinker » Wed Aug 22, 2018 2:25 am

JackoC wrote:
Tue Aug 21, 2018 9:59 pm
The Economist's indices of house prices in various countries says they have been much more richly valued in the UK, Canada and Australia recently than in the US.

https://infographics.economist.com/2017/HPI/index.html
You can play around with dates and prices vs incomes or v rents but similar story post US crash: US went significant down on those measures of home price richness in the crash and only somewhat back up since, other three went down less in the crash and more up since, through end of 2016.

I agree though as others commented NY area now is on the soft side compared to say last year, noticeably. Not dropping like a rock though.
And, not coincidentally, US personal debt levels are much more reasonable than Canada, Australia, probably UK. US consumer has deleveraged since 2006.

Stockholm is apparently also bad - real signs of a bubble. The Swedes went through the mother of all banking crashes in the early 1990s (along with the Norwegians) so one assumes Bank of Sweden is on it. One assumes.

boglerdude
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Joined: Fri Jul 10, 2015 1:28 am
Contact:

Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by boglerdude » Wed Aug 22, 2018 4:12 am

Sweden has 100 year mortgages. Can someone explain why this good? Because it is good, quality of life in Sweden is high.

Jags4186
Posts: 2475
Joined: Wed Jun 18, 2014 7:12 pm

Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Jags4186 » Wed Aug 22, 2018 5:53 am

SimplicityNow wrote:
Sun Aug 19, 2018 9:35 am
New York City suburb here and prices have decreased and number of days on market have been increased.

Also noticing many homes in areas we are considering in western Florida seem to be on the market for longer periods of time before sale.
We recently purchased in NYC suburbs. I can’t speak for the high end but in the $400-$500k range I didn’t find it to be soft at all. The issue was that there simply aren’t many houses for sale in that price range. And many of the ones that were needed extensive work.
I likely overpaid for the house I’m in but the reality was that we had been outbid on 3 other homes and we were not seeing many homes worth purchasing.

Valuethinker
Posts: 36009
Joined: Fri May 11, 2007 11:07 am

Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Valuethinker » Wed Aug 22, 2018 6:12 am

boglerdude wrote:
Wed Aug 22, 2018 4:12 am
Sweden has 100 year mortgages. Can someone explain why this good? Because it is good, quality of life in Sweden is high.
Japan had these also - at least at the peak of the boom.

There's a lot of change and social tension going on in Sweden -- to go further would get us into contentious and forbidden areas. It is not paradise-- although the Nordic mentality seems generally to be a pragmatic problem-solving one.

I tend to view 100 year mortgages as a sign that a housing market has gotten overheated. The mortgage lender is basically taking equity risk (almost) for debt return? However it may be the way of the future.

Stockholm's housing market is overheated. Really overheated.

Valuethinker
Posts: 36009
Joined: Fri May 11, 2007 11:07 am

Re: Real estate dropping like a rock in U.K. - can the U.S. be far behind?

Post by Valuethinker » Wed Aug 22, 2018 6:14 am

Jags4186 wrote:
Wed Aug 22, 2018 5:53 am
SimplicityNow wrote:
Sun Aug 19, 2018 9:35 am
New York City suburb here and prices have decreased and number of days on market have been increased.

Also noticing many homes in areas we are considering in western Florida seem to be on the market for longer periods of time before sale.
We recently purchased in NYC suburbs. I can’t speak for the high end but in the $400-$500k range I didn’t find it to be soft at all. The issue was that there simply aren’t many houses for sale in that price range. And many of the ones that were needed extensive work.
I likely overpaid for the house I’m in but the reality was that we had been outbid on 3 other homes and we were not seeing many homes worth purchasing.
This is a consistent theme that one reads about US metropolitan markets. Not enough new homes have been built in the USA to meet new demand plus unsatisfied or deferred demand from the last 10 years post crash.

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