Current public sentiment towards the housing market?

[fatmanknows]

[broken link removed]

Near my own neck of the woods - see 100 Sandford Road above. It had a day out at the Auction a few months ago with an AMV of €2m. It never made it to the podium and had been for sale since. Couple of weeks ago it finally goes sale agreed ( at what price I don't know). Then just this morning I notice the FOR SALE flag goes back up. No big deal but just a further little bit of somewhat anecotal evidence that buyers are getting nervy.

 

[Duplex]

W2dew
If I remember correctly you predicted 8% by 08. That's way off the map. I find it hard to imagine (Breakup of the euro is the only possible scenario).
If it does happen this would be the worst possible scenario for the Irish economy. There won't be enough stretchers to go round.

Duplex
If I read you correctly you're predicting a deflationary recession/ Depression.
Deflations do happen but they're very rare particularly in an era of fiat money. There was a global deflation in the 30s and Japan had a deflation in the 90s.
There certainly has been a massive build up of debt and global inbalances partly as a result of previous attempts to "fight" deflation/recession. Central bankers would move heaven and earth to prevent deflation taking hold. In general deflation has been a bad prediction.
So if I had to pick between the two scenarios I go with W2deW 's inflationary scenario although I think it's unlikely.

tyoung

The US housing market is/was a bubble and attempting to reflate a bubble is impossible. The disconnect between fundamentals and valuations remains vast; the elemental driver of house price appreciation, wage growth, has remained all but static in the US since 2000. The Fed will attempt to reflate the market with a rate cut at some stage next year in response to falling values but this will not address the fundamental issue that has dogged the US economy; a deficit in labour pricing power due to globalisation. If cutting interest rates were a panacea for all economic woes (which it isn’t) we would never have cyclical slowdowns, we would just cut rates and continue on our merry way. The ‘mad, bad and dangerous to know’ money needs to be flushed from the system, the Central Bankers know this, but are unlikely to shout it from the roof tops.

A couple of interesting articles that give an indication of how a consensus is building re a sharp slowdown in the US.

Housing: more pain ahead
Many investors assume the damage to the housing industry is an isolated event (much as it was assumed that the dot-com implosion was an isolated event). I find myself more concerned than the consensus, believing the housing industry is vastly more important to the overall economy than many are currently assuming. Given that prices have yet to fall enough to drain inventories, and mortgage rates have yet to fall enough to stimulate another mortgage refinancing boom, there is still likely more pain and suffering to come before we can close the books on this housing cycle. And the harder housing falls, the harder it will be for the economy to land softly.

http://www.schwabinsights.com/2006_09/mktoutlook.html

Note the chart below. It is a comparison of the price of copper relative to the NASDAQ bubble. There are so many charts like this, I think the message that the bond market is telling us is very important and may eventually lead to a change in my firm's view in our maturities that we hold for clients. The bond market is screaming slowdown or recession and these charts show the roadmap to that end. If these bubbles burst simultaneously, I don’t think the Fed or any central bankers will be able to stop the cascading of prices. This is for both commodities and stock prices. It would also affect corporate bonds, particularly junk and emerging market debt. I realize this is all sobering, and the pictures are downright scary, but to hide from the facts is the wrong “M.O.!”

[broken link removed]

 

[Eben]

If it wasn't spoof I bet they could sell if off the plans!

Our very own

They forgot Israel!? Should be between b21 Egypt and d98 Jordan. What gives?

 

[Remix]

[broken link removed]

Near my own neck of the woods - see 100 Sandford Road above. It had a day out at the Auction a few months ago with an AMV of €2m. It never made it to the podium and had been for sale since. Couple of weeks ago it finally goes sale agreed ( at what price I don't know). Then just this morning I notice the FOR SALE flag goes back up. No big deal but just a further little bit of somewhat anecotal evidence that buyers are getting nervy.

There's a great story here if any Irish Indo Journalists are still reading

Use the method outlined here (posts #4409 #4411) to find houses that have had big price drops - or even use the numerous examples of price drops on this thread.

Contact the owners for an interview. I'm sure they'll have some story to tell about the difficulty in selling their house and having to come to terms with their asking price falling.

Some owners might not discuss but others might appreciate the free publicity.

 

[beattie]

There's a great story here if any Irish Indo Journalists are still reading

I am sure that there are journalists from the IT already on the case...

 

[CelloPoint]

Here's some first-hand insight into the trials and tribulations of (trying to) sell in Lucan:

http://www.askaboutmoney.com/showpost.php?p=281887&postcount=5

 

[BigM]

Here's some first-hand insight into the trials and tribulations of (trying to) sell in Lucan:

http://www.askaboutmoney.com/showpost.php?p=281887&postcount=5

I do think it's hilarious the way that prices aren't falling, it's just that they were "overpriced in the 1st quarter of 2006"

 

[tyoung]

Correction: Central Bankers are appointed by German politicans and their great unwashed happen to like high interest rates because they are savers not borrowers.

Good point The Germans have put up with a fair amount of pain recently in the name of the euro. If growth had been as slow in the US poeple would have been screaming for lower IR. Monetary stability does seem to be more prised in Germany.But they are not the whole Eurozone....Spain Italy Portugal Greece Ireland may all be calling for lower IR if Duplex is correct. We'll see what happens.

 

[Calina]

Good point The Germans have put up with a fair amount of pain recently in the name of the euro. If growth had been as slow in the US poeple would have been screaming for lower IR. Monetary stability does seem to be more prised in Germany.But they are not the whole Eurozone....Spain Italy Portugal Greece Ireland may all be calling for lower IR if Duplex is correct. We'll see what happens.

We may well see what happens. But while they might be screaming for lower interest rates now, why weren't they screaming for higher interest rates when we needed them? And if they were, and we didn't get them, why should it be different now that we need lower interest rates.

 

[BigM]

We may well see what happens. But while they might be screaming for lower interest rates now, why weren't they screaming for higher interest rates when we needed them? And if they were, and we didn't get them, why should it be different now that we need lower interest rates.

The ECB's number 1 objective is Price Stability = keep inflation in check. To start targeting member states' property markets (esp small ones like us & Spain) would require a change of Policy on their part, and would be impossible anyway given the diverse cycles throughout Europe.

 

[CelloPoint]

We may well see what happens. But while they might be screaming for lower interest rates now, why weren't they screaming for higher interest rates when we needed them? And if they were, and we didn't get them, why should it be different now that we need lower interest rates.

Blaming the EU's monetary policy rings hollow in my ears. We knew for years that we'd have no control over interest rates. Domestic government policy did nothing to counteract this loss of monetary control: instead of responding with a whole series of measures to control the market, what did we do? We allowed our political representatives to incentivise builders and developers, whilst allowing local authorities to rezone their mates' land.

 

[Afuera]

Good point The Germans have put up with a fair amount of pain recently in the name of the euro. If growth had been as slow in the US poeple would have been screaming for lower IR. Monetary stability does seem to be more prised in Germany.But they are not the whole Eurozone....Spain Italy Portugal Greece Ireland may all be calling for lower IR if Duplex is correct. We'll see what happens.

Fighting inflation = ECBs responsibility
Fighting internal market imbalances = Local governments resposibility

The ECB has already made calls for the Irish and Spanish governments to try and keep a handle on their markets and stop them from going out of control. If the respective governments choose to ignore this I think the most we can expect from the ECB, if it goes pear-shaped, is a "I told you so"!

To be honest, I'd be more worried if the ECB was willing to bail out every nation that got itself in a bit of a financial mess. Emerging economies in Eastern Europe would have nothing to fear and no country would have to take responsibility for bad management. Hardly going to encourage a stable environment, would it?

 

[Remix]

I do think it's hilarious the way that prices aren't falling, it's just that they were "overpriced in the 1st quarter of 2006"

Hang on a second ! Property prices are coming down from the 1st qtr 2006 because they were overpriced ??

But we where told earlier that the high prices in the 1st qtr were justified because Irish property has been undervalued !! These vested interests are spinning so fast they can almost see the back of their own necks.

 

[whizzbang]

These vested interests are spinning so fast they can almost see the back of their own necks.

that made my day

 

[baby_tooth]

Good point The Germans have put up with a fair amount of pain recently in the name of the euro. If growth had been as slow in the US poeple would have been screaming for lower IR. Monetary stability does seem to be more prised in Germany.But they are not the whole Eurozone....Spain Italy Portugal Greece Ireland may all be calling for lower IR if Duplex is correct. We'll see what happens.

tyoung, sorry, my post of yesterday wasn't very clear.

What I was saying was that Interest rates are linked to many differing factors.
Money Supply...the more money, the lesss valuable it is, the more prices increas in nominal terms.
Money Velocity...the quicker money changes hands the more money can be manufactured into the system with the fractional reserve banking.

Inflation, directly related to interest rates....more money supply, then things cost more in nominal terms.

Now, interest rates are inversely related to the yields, ie the profits or returns made on an asset, be it a house, a loan, a bond etc.

So if inflation rises, then rates rise, if rates rise then yields drop, if yeilds drop then prices drop to come back into line with returns and so the cycle continues.

The more liquid the asset, the quicker this circle spins...so if rates rise then bond prices drop overnight. But with houses things take longer to turn full circle. With vested interest and taxations on liquidity (such as stamp duty, solictors costs (whihc in themselves are also responsible for losses in the way of taxation inefficiences) this circle turns even slower again....

Add in Sentiment and historical behaviour, esp with house prices, then this circle turns even slower, but it does turn.

TO further complicate matters, consider the chaos theory of markets. mr yank sells but miss yank buys at lower rates, now mr yanks drops his sentiment on his returns and miss yanks drops her sentiment on her prospective yeilds, they talk to each group of friends....they lower the expecations...akin to the adaptive expectation hypothesis, and expect lower....this in turn fuels furhter sentiment and so on....

now all these elements pull together to direct the market for any good...as housing has some many more factors in play than most makrets it's more compicated than most...but at the ned of the day it will all boil back to yeilds, be it daily value extraceted from rent or compounding retunrs in the form of capital apprecaition...

so, long term view is that rates will rise, yeilds will drop and then rise again as prices realign themselve with money supply and inflation will come back on track....

long winded but hopefully a bit clearer...

excuse spellings.

 

[StoppedClock]

Good point The Germans have put up with a fair amount of pain recently in the name of the euro. If growth had been as slow in the US poeple would have been screaming for lower IR. Monetary stability does seem to be more prised in Germany.But they are not the whole Eurozone....Spain Italy Portugal Greece Ireland may all be calling for lower IR if Duplex is correct. We'll see what happens.

It’s been quite a while since I have seen Portugal, Ireland, Greece and Spain bundled together. Some may remember in the 80's when we were the basket cases of Europe we were collectively known by the suitable acronym PIGS. We were the countries scoffing at the trough while rich Europe ploughed money into us in the hope we would become modern responsible economies.
For a short time around 2000/2001 this dream probably came true but the irresponsible and incompetent government that presided over us when we were poor basket cases in the past managed to effortlessly turn us into rich basket cases. I can’t see this lasting long though and I expect the inevitable transition back to poor basket case will be a lot quicker and a lot less fun.

 

[daveirl]

They forgot Israel!? Should be between b21 Egypt and d98 Jordan. What gives?

They deliberately didn't put it in.

 

[bearishbull]

Another auction property withdrawn/didnt sell yesterday evening, this time its the one i spoke about earlier on this thread that i saw no one viewing it, its now straight back on market today for sale by private treaty with an asking price the same as AMV of auction.

 

[thejuggler]

I post this for the benefit of posters not from Cork. I thought it summed up the current situation rather well.
Magical Mystery Tour (Editorial from this weeks Cork Independent. (widely read freesheet in Cork - not online so can't be linked)
"All aboard!!" shouts the Fat Controller. "All aboard the gravy train". Like an episode of Thomas the Tank Engine the puffing behemoth that is the Irish property boom is chugging down the tracks but the most attentive kids in the audience can see its about to derail, thanks to the healthy dose of reality lying on the line, also known as a "correction".
The puffy chested big wigs who run the railway are telling the pasengers that the line is clear, the worst that can happen is that the train will slow down a bit.
Their friends, The Fat Contractor and the Greedy Banker egg them on helped by their chums in PR. "Don't worry," they say, "we'll all be fine". But alas the train did indeed hit a fallen tree (correction) and derailed.
The Fat Controller was quick to call for help. He called his friends in the Garda Station, he called his golfing buddy Dr Stretched in the hospital. "Come quick the gravy train has left the tracks. I think some of the passengers have been injured".
He waited ... and waited... and waited ...and waited. But nobody came. He tried to calm the passengers who were starting to panic. Those who could walked away from the gravy train, they wouldn't be getting onboard again in a hurry.
Dr Stretched finally turned up, lights flashing. "Where have you been? said the Fat Controller. "I had to go and pick up the paramedics", said Doctor Stretched. "They live a long way from the big city".
"Wheres Garda Plod?, said the Controller. "He's on his way," said Dr Stretched. "He'll be a bit longer, he lives even further from the big city".
Nobody had the heart to tell the Fat Controller that Plod couldn't afford to live near the big city. The story didn't end happily ever after for the Fat Controller. The passengers took a long time to come back to the gravy train and by then he had been made redundant.

 

[CelloPoint]

I post this for the benefit of posters not from Cork. I thought it summed up the current situation rather well.
Magical Mystery Tour (Editorial from this weeks Cork Independent. (widely read freesheet in Cork - not online so can't be linked)
"All aboard!!" shouts the Fat Controller. "All aboard the gravy train". Like an episode of Thomas the Tank Engine the puffing behemoth that is the Irish property boom is chugging down the tracks but the most attentive kids in the audience can see its about to derail, thanks to the healthy dose of reality lying on the line, also known as a "correction".
The puffy chested big wigs who run the railway are telling the pasengers that the line is clear, the worst that can happen is that the train will slow down a bit.
Their friends, The Fat Contractor and the Greedy Banker egg them on helped by their chums in PR. "Don't worry," they say, "we'll all be fine". But alas the train did indeed hit a fallen tree (correction) and derailed.
The Fat Controller was quick to call for help. He called his frineds in the Garda Station, he called his golfing buddy Dr Stretched in the hospital. "Come quick the gravy train has left the tracks. I think some of the passengers have been injured".
He waited ... and waited... and waited ...and waited. But nobody came. He tried to calm the passengers who were starting to panic. Those who could walked away from the gravy train, they wouldn't be getting onboard again in a hurry.
Dr Stretched finally turned up, lights flashing. "Where have you been? said the Fat Controller. "I had to go and pick up the paramedics", said Doctor Stretched. "They live a long way from the big city".
"Wheres Garda Plod?, said the Controller. "He's on his way," said Dr Stretched. "He'll be a bit longer, he lives even further from the big city".
Nobody had the heart to tell the Fat Controller that Plod couldn't afford to live near the big city. The story didn't end happily ever after for the Fat Controller. The passengers took a long time to come back to the gravy train and by then he had been made redundant.

Another fine analogy.

So there you have it folks. The party started with Packie's save in 1990 and will end with the Ryder Cup. So enjoy the last hurrah while it lasts. National anthem anyone?