The shiny metal god is deeply saddened.
Posted on 10/14/2006 9:48:44 AM PDT by GodGunsGuts
'The US housing bubble will disappear'
By Laurie Osborne, Editor
Published 11th Sep 2006
That the US housing bubble will disappear someday is a certainty. That it will blow up catastrophically is a fair bet, warns The Daily Reckoning's Bill Bonner.
Observing recent statistics, Bonner calls the evidence "formidable".
The total value of residential property in developed countries rose by more than $30 trillion, to $70 trillion, over the past five years – eclipsing the combined GDPs of those nations.
Consumer spending and residential construction have accounted for 90 percent of the total growth in the American GDP over the last four years, and more than 40 percent of all private-sector jobs created since 2001 have been in housing-related sectors, including construction and mortgage brokering.
America made some of its biggest gains this past year, with average prices of homes rising 12.5% in the year and prices in Florida, California, Nevada, Hawaii, Maryland and Washington, DC, rising more than 20 percent, while in Palm Beach County, Florida, it rose over 35%. Sales of existing homes in the US set a new high at 7.18 million in April.
Some foreign countries showed bigger gains than the US in the last year, with prices up by 23.6 percent in South Africa, 19 percent in Hong Kong and over 15 percent in Spain and France. But average house prices have actually fallen by 7% in Australia since 2003; Sydney's bubblicious prices have plunged by 16%. In Britain, sales have contracted by a third from last year and have also slowed down in Ireland, the Netherlands and New Zealand. In Britain and Australia, these declines followed what were only very modest interest rate increases.
23 percent of all American houses bought last year were for investment and in Miami, one speculation hot spot, 70% of condo buyers are investors/speculators.
Last year, 42 percent of America's first-time buyers – and 25 percent of all buyers – put no money down.
In California, 60 percent of all new mortgages this year are interest-only or negative-amortization.
House prices in relation to rent have hit all-time highs in the US, Britain, Australia, New Zealand, France, Spain, the Netherlands, Ireland and Belgium. In the US, the ratio is 35 percent above its 1975-2000 average. The price to rent ratio is a cardinal indicator of over valuation.
Only when my previous trade resulted in profits.
And we wouldn't want to assume that. LOL!
I took some losses to reposition at lower prices. Turned out to be the right decision. I didn't get charged broker commissions. I'm already up $20.00 on my new positions, not to mention what I saved by getting out of my higher positions.
Don't forget the $8 spread.
Don't forget commissions!
GGG - Forgot to ping you to 425.
Don't forget margin interest.
And storage fees!
The shiny metal god is deeply saddened.
And... Since gold bullion is taxed at the 28% collectibles rate, you lose an extra 13% of your profit when you sell compared to investing in equities. More chump change I guess.
All of which tends to prove Gigi, er, I mean GGG is MakingCrapUp™.
The good news is that my stock dividends are taxed at 15% while gold dividends are still taxed at 0%.
That's been the case in southern California.
Why don't you try digging up another definition of 'bubble' from Kindleberger? That last attempt of yours was ... impressive.
Ha!
How about you buy a little avocado-ranchette in Fallbrook and show him you're fearless.
You can dispute it all you want. Payment option ARMs allow the borrower to pay less than what is required to cover even the interest on his loan. The difference is added to the principal of the loan each month. These loans have become very common in southern California. Research will serve you better than attitude, but suit yourself.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.