Providing Thoughtful Analysis on the Housing Market
Traders predict UK house prices will fall by 50% in four yearsThe slide in house prices will continue for at least three years and crush the value of a home by almost 50% in real terms, according to a key index of property price futures. Indications from futures trading on long term property prices shows that the average UK home will recover its current value only in 2017.Can't happen here because... well just because.
"In some areas, we will see price declines." -Ozzie Jurock, June 8 2008.The hype is fading.
"...ten years from now we're going to be a lot higher" -Ozzie Jurock, June 8 2008.I'm confused.
Oh it's confusing. Not that real estate coverage in the media ever makes much sense.I have a wild imagination but I can't see prices being "a lot" higher in ten years, unless Vancouver incomes magically triple by 2018.Let's think about this future of even higher prices. Are we seriously thinking buyers will shell out $775,000 for a third floor studio suite in Spectrum? This is comedy.
I'm confusedIt would appear Ozzie is setting himself up for his first bottom call. Any bets on when that will be?I don't see even a recovery to 2008 nominal prices by 2018 BTW. Remember folks, the only inflation that supports RE prices is wage inflation.
Ozzie likes to talk about the high level of unreported inflation. So what I think he's saying is on the one hand you might have nominal price declines in the short term, but you'll have nominal price increases over the next ten years as wage inflation catches up with price inflation. But that argument seems to depend on the idea that not only price inflation continues but wage inflation really accelerates. Heck, anything's possible, but I think a 30% crash over two years is much more likely even that flatlining while wage inflation brings house prices into line. Ozzie's scenario (if I understand it) seems like whistling in the dark.
"Remember folks, the only inflation that supports RE prices is wage inflation."A lot of highly leveraged people will find their mortgage payments increasing faster than their wages. Wage inflation is a false hope when the general level of leverage is high. Like, say, now.
But that argument seems to depend on the idea that not only price inflation continues but wage inflation really acceleratesThat's exactly what the bulls were counting on in 1981, and we all know how that turned out.Wage inflation during a protracted US recession? Fergettit.
"...ten years from now we're going to be a lot higher" -Ozzie Jurock, June 8 2008.Ozzie made the same statement a year ago, so he only has 9 years left to hit bottom and sky rocket back up to be ahead of today. The last correction took 8 years to go from peak to trough and back to previous peak. 1995-2003I predict this will get ugly.Wait and see???
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