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cobran20

US: The Plummet in Housing Market Sentiment

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Such negative sentiment makes you wonder if US housing is approaching a bottom?!

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One common immediate reaction to this chart would be serious concern. More than half of Americans don't see a housing recovering until 2014 or later. Presumably, they won't be crazy about buying a home until the market is near recovery, which is to say that you can take them out of the equation until at least 2013. Another 24% doesn't see the market recovering until 2013. So take them out of the equation for the rest of this year and next year. That leaves a measly 23% of Americans who are optimistic about the housing market recovering in the relative near-term

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Such negative sentiment makes you wonder if US housing is approaching a bottom?!

The debt-driven run-up lasted for decades and the bottom is reached in four years?

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Such negative sentiment makes you wonder if US housing is approaching a bottom?!

Pfft. More than 50% of Americans see a recovery happening in 2-3 years. Get back to me when 90% say there will never be a recovery. Then, we've reached the bottom wink.gif

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The debt-driven run-up lasted for decades and the bottom is reached in four years?

It really depends on how sharp the drop is and the excesses are removed. Unfortunately with housing, it is next to impossible to get meaningful stats.

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Americans were under the delusion that property prices always rise. This delusion is crushed. The American economy is not recovering. Their dollar is weakening, and the cost of importing petrol will rise. Energy costs are rising, impacting many industries. More unemployment and lower consumer sentiment to come. The USA, like other countries will not recover until total debt levels return to at least under 50% of GDP. Doing a Mussolini, in other words, bank/corporate bailouts, only make things worse. No, their property prices will not recover for decades. Japan has yet to recover from its property crash, and Australia took decades to recover.

http://books.google....%20boom&f=false

“The political economy of environmental policy: an Australian introduction” by Ken J. Walker.

Page 97

Huge paper fortunes were backed by the ‘security’ of land valued at prices so inflated that some Melbourne suburban blocks did not reach their 1888 prices again until 1962!

Page 161, "Sydney Boom, Sydney Bust" by M.T. Daly (1982)

Land at Hurstville which had fetched £25 000 in the 1880s could attract no takers when reofferred for sale in 1905 at £4000, and another estate at Tennyson which had changed hands for £50 000 in the boom was sold in 1905 for £3000.

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Uncle scam wants you to invest in cheap US homes - and some of you already are

Scott Pape reminds herald sun readers not to be stupid.

With Australia's property price bubble, Aussies are piling into US property at record-breaking pace.

According to the National Association of Realtors in the US, Australians invested $600 million in American property last year.

But before you rush to your computer to Google 'Buy US homes + Australia', consider this:

For those looking to buy a cheap sub-prime slum for $30,000, it could be one of the dumbest and most dangerous investments you'll ever make.

Despite the fact that there are bargains to be had, most Aussies investing in US property right now are getting screwed, and they don't even know it yet.

The dumb way to invest in the US property market

OVER the past few weeks I've travelled to some of the worst sub-prime-affected spots in America, which ironically Aussies have been unwittingly buying up in droves: greater New York, Memphis, and now Florida (or, as many locals call it, the Ponzi State).

The place feels a lot like the Gold Coast - it's a tourist destination full of theme parks, it's a warm spot for the grey nomads to retire to, and there are plenty of shady characters flogging get-rich-quick plans.

But the similarities don't stop there: In the boom years property spruikers - called condo flippers - drove up the price of condominiums (apartments to you and me) to unsustainable levels, and now Florida is at the epicentre of the sub-prime bust.

Today almost 20 per cent of the homes in Florida are vacant. And with some condos on the market for as little as $10,000, you'd think there'd be bargain-hunting investors everywhere.

Yet having visited sub-prime suburbs across America, I now understand why there's not. Most are depressing and dangerous places - ghetto ghost towns where many of the houses have been looted and trashed.

So with few American buyers, the spruikers have resorted to peddling their unwanted wares in an unlikely place: Down Under - where property is expensive, the Aussie dollar is surging, and our only knowledge of Miami comes from CSI (or Don Johnson for you older kids).

Some of these sub-prime scammers buy foreclosed homes from US banks for as little as $10,000, then tart them up and on-sell them to investors for $30,000 - or, as some have marketed it, buy a home for the cost of a used car.

Aussie Property Punter: "What could go wrong? It's only $30,000."

Barefoot: "Let's see. The house may really only be worth $10,000, it could cost you another $3000 a year, plus $10,000 in repairs each time it gets looted, which is likely to be often."

This is a real-life case I've seen. At the rate Aussie investors are getting fleeced, there will be many more in the years to come.

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Such negative sentiment makes you wonder if US housing is approaching a bottom?!

... and then perhaps not!

The US real estate market continues to struggle. For some perspective, today's top chart illustrates the US median price (adjusted for inflation) of a single-family home over the past 41 years while today's bottom chart presents the annual percent change in home prices (also adjusted for inflation). Today's chart illustrates that, prior to the financial crisis, the inflation-adjusted median home price rarely declined more than 5% in one year (gray shading). It is also very important to note that due to a large number of distressed properties, a high unemployment rate and stagnant wages, the inflation-adjusted median home price has declined 7.9% over the past year -- an annual decline larger than any that occurred during the 35 years prior to the financial crisis.

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Chicago

Sales of existing homes in the Chicago metropolitan area sank 19.2 percent in April from the same month last year, and the median price fell 14.5 percent, the Illinois Association of Realtors said Thursday.

There were 5,710 existing homes sold, down from 7,070 sold a year earlier, when the market got a boost from a federal tax credit. The median price was $162,500, down from $190,000 in April 2010.

http://newssun.suntimes.com/business/5469835-420/chicago-area-home-sales-prices-plummet.html

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REPORT - Over 50% Of U.S. Homeowners Are Underwater

http://dailybail.com...underwater.html

On US totals, if you figure average house prices use conforming loan balances, then a repeat buyer has to have roughly 10 percent down to buy in addition to the 6 percent Realtor fee to sell. Thus, the effective negative equity target would be 85%. You also have to factor in secondary financing, which most measures leave out.

Based on that, over 50 percent of all mortgaged households in the US are effectively underwater — unable to sell for enough to pay a Realtor and put a down payment on a new purchase without coming out of pocket. Because repeat buyers have always carried the market as the foundation, this is why demand has not come back. It's as if half the potential buyers in America died over a two-year period of time.

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(Reuters) - Watching the U.S. home market struggle to rebound is like listening to children in the back of a car. No, we're not there yet.

The National Association of Realtors reported that ten real estate markets are "leading the nation toward a general recovery and stability of the housing sector," but myriad problems are going to weigh down the housing market for months to come.

The lingering malaise in the economy has triggered a new wave of defaults and foreclosures. After five straight quarterly drops, foreclosures nationwide shot up 14 percent from the second to third quarter this year, according to data released by Realtytrac, the foreclosure information service (see link.reuters.com/kaw94s), in October.

http://www.reuters.com/article/2011/11/16/us-usa-housing-prices-idUSTRE7AF1Z820111116

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