Saturday, September 16, 2006

Housing Prices in UK Accelerate

Did you know that home prices in California and the UK have a 98% correlation this century? CA followed the UK into the slowdown with about a year lag, and it will follow it out as well. The recovery started this spring in Britain, does that mean a spring bounce for CA in 2007? Residentialpropertymarket/market_surveys.htm

"House prices accelerate despite interest rate hikeHouse prices rose for the fifth consecutive month in August, up at the fastest pace since May 2004 says RICS' UK housing market survey published today, (14 September 2006).
35% more Chartered Surveyors reported a rise than fall in August, up from 30% in July.
RICS estate agents reported that price rises are being driven by a combination of would-be buyers returning to the market and limited availability of new property coming onto the market.
Buyer enquiries accelerated at the fastest pace since September 2003, rising for the fifteenth consecutive month in August; above trend economic growth and a firm labour market is encouraging would-be buyers to re-enter the market.
Newly agreed sales showed a strong rise in August, up at the fastest pace since last November."


JR said...

Wow, I think I will run right out and buy as much real estate as I can possibly finance, since the U.S. market always follows the U.K......NOT.

It is very idiotic notion to ignore the fundamentals showing the affordability index in Sacramento is 17%, that the median home price is 60% higher than what the median income can income can realistically support, that rents on new homes, after expeneses, provide a sub 2% ROI assuming an ALL CASH purchase.

Dr. Brightside, you must be a medical doctor, because they are known for making poor investment decisions. You certainly can not have a Ph.D. in economics!!

Dr. Brightside said...

Thank you for your opinion I greatly appreciate it. Let's put it on the record right now. How long do you think it will be until CA house prices appreciate again? I believe it will start by end of 2007.

JR said...

Good question. The typical housing downturn takes 36-48 months to work out the excess, just as it did from 1990-94. Then the market will coast along the bottom for 2-3 years, before resuming a normal appreciation rate, which, based on inflation figures, will be 2.4%/year.

Of course, the manic rise in prices this time around was much more out of balance than the one in the late 1980s. Plus it is national in scope this time. Plus buyers needed "real" equity in the form of a down payment in the 1980's, but not in 2005.

I think your a bit optimistic to think it will return to "normal" in 2007. I also think you're neither a doctor nor very bright. But you do have a certain side to you...........

Anonymous said...

we are not at the bottom yet bright