drbubb

Okay. Good luck to both of you. It sounds like a big drop might suit you both

I will bet you, but not much. However, to make the bet fair, you must either: + Give me suitable odds, or + You win the bet, only if the market rallies by a "fair amount" - probably 20% also. In the middle, no money changes hands. To bet otherwise would be to simply make a skewed bet at away from market odds, and I am not in that business.

The UK Property Crash - Has it been avoided, or just delayed ? (This was written to be posted on Property Tribes - but I thought it belonged here too): This question came up on another thread, and I thought this discussion deserved a place of its own. People may want to look back this thread in the months to come, and see how accurate my forecasts have proven to be. I offer no guarantees, but I can tell you that I have seen the type of correction that I describe in many markets. So I will say I have a strong expectation that we will see a second and BIGGER leg down in the UK, and a second and maybe smaller leg down in US real estate. The price drop we saw in 2007-2009 has not been sufficient to complete the job of correcting the huge price excesses that we have seen in both property markets. The thread was inspired by a comment from PT's Nick Parkin: "Not enough credit was given to Brown & Darling for avoiding the crash, but some of us believe that the new government will now remove the support, and that reality is inevitable." AVOIDING a crash? I think he must mean: DELAYING the crash. The over-valuation continues. A crash is baked in the cake, it just hasn't been eaten yet. By delaying the pain, Brown and Darling did the country a huge disservice, IMHO. They have made the eventual pain much worse. More debt has been piled on-top of debt. More people have been tricked into making malinvestments in property and other areas. Therefore, the losses when they come will be larger, and the required bank bailouts will be greater. The time for a genuine recovery in the economy has been pushed back by years. The best thing would have been if the interest rate cut made in August 2005 had never happened. At that point, the UK property cycle looked set to roll over - just as the US residential real estate market rolled over a few months later in mid-2006. And had the UK market been allowed to correct then, it would have been accompanied with less pain, and much less damage to the overall economy and to the UK banking system. My forecasting record is not perfect. In the second half of 2005, I missed the fact that the market would be saved, at that critical juncture. ( You can read more about how I have forecast the market over the last few years in my property diary*.) But Fred Harrison got it right. He said the market would have one last hurrah, and move into a two year period that he calls the "Winner Curse" period. It is part of his 18 year cycle. The "Winner Curse" is when people buy at high prices and feel like winners, but ultimately they wind up lumbered with losses. As far back as 2000, he foresaw a peak in 2008 (which ultimately came around Q4-2007) to be followed by a downturn which he expected to last for 3-5 years. If you want to hear how crazy things still were in June 2007, listen to this podcast of Frisby's Bulls and Bears: UK Housing; Moon-bound or Pear-shaped : http://commoditywatch.podbean.com/2007/07/...or-pear-shaped/ John Wriglesworth was talking about UK banks lending 6-7 times incomes. We nearly got there, but not quite. The market soon turned down, peaking within the next quarter, and property began a serious correction - the biggest in many years. For Harrison, the ideal next bottom would have been: 2012-13. In 2006 or so, he even wrote a book about the coming crash, which he entitled, "Boom Bust: House Prices and the Great Depression of 2010." That's the time frame we are in now: and if Harrsion is right we should expect a deep correction in property, not the modest 20% drop we saw already. The painful corrective period has been stretched out by Brown/Darling's recklessness. Low rates have brought a nice 12-18 months Dead Cat bounce. The H&N property index, which is the average of Halifax and Nationwide fell 20% from its August 2007 to make a low in February 2009, just a few weeks after rates were cut dramatically. Eventually, ultra-low rates put a floor on the market. For many who had sufficient deposits, it suddenly became cheaper to buy and pay a cheap mortgage, rather than going on renting. And hard-stretched landlords, saw their interest rates drop, and this cash flow savings took the pressure off, and allowed them to hold onto their portfolios. But the relief will not be permanent. Ultra-low rates triggered a nice bounce which lasted over a year, and allowed the average UK property to recoup about half of the value that it had lost. But even with low rates continuing, the upwards momentum has been lost. The property market is running out of cash-rich buyers, and the economics for BTL investors is about to be undermined by the removal of some of the excessively-large taxpayer-financed housing benefits. With that, rents could stop rising this year, and begin a fresh descent in 2011, as rental subsidies are capped or cut. The mid-correction bounce that we have just seen, is part of the normal cycle. A brief upwards rally is common within the 3-5 years correction. In fact, to show how common the mid-correction rally is, we have also seen a bounce in the US. And now, the US has resumed its slide too after the buyers tax credit was ended just a few months ago. If you haven't see this chart before, I recommend you study it closely: Here's the data that goes with the cycle: ==== : H&N index------------ : Rightmove-UK ----- : R-Gr.London--------- : Peak : Aug 2007 : 192,490 : May 2008: 242,500 : Nov 2007 : 412,731 : Low1 : Feb 2007: 153,477 : Jan 2009 : 213,570 : Aug 2008 : 379,162 : Drop : ====== : - 20.3 % : ======= :- 11.9 % : ======= : - 8.1 % : DCat : Apr 2010 : 169,287 : May 2010 : 237,134 : Jun 2010 : 429,597 : Drop : ====== : +10.3 % : ======= :+11.0 % : ======= : +13.3% : Now : Sep 2010 : 165,198 : Sep 2010 : 229,767 : Sep 2010 : 399,019 : Chg. : ======= : - 2.4% : ======= :: - 3.1 % : ======= :: - 7.1% : I have reservations about using the Rightmove data, since I think it includes various distortions. But I decided to include it because it does show that Greater London prices did hold up far better than UK-wide prices during the first leg down in the property correction. Using the H&N index, UK house prices fell -20.3% before regaining about half of that drop. Meantime, Rightmove says that Greater London property dipped only -8.1% in a few months, and then gained back the full loss and then some. Rightmove's June 2010 high for GL of 429,597 was actually 4.1% above the November 2007 high of 412,731. Although London shrugged off that initial drop, it is not invulnerable, as some would have you believe. London will be hit hard by job losses in the public sector, and by the cap on Housing benefits. And if banks slide into a second crisis, there will be big job losses in the City also. My own cyclical analysis is that the Dead Cat bounce (or "bear market rally") is now over, and the second leg down has begun. All three of the indices that I have summarised above showed peaks in the first half of 2010. The huge -3.6% drop reported in the Halifax index for September, has also been followed by a -1.4% drop for Nationwide in October, with a big slowdown reported in Hometracks numbers as well in recent months. Some will say that Rightmove's report of a big jump up in their October figures is a counter-indicator, but if you look closely, you will see that it is merely a rising in asking prices. This is a seasonal thing that happens every year, as vendors "try out" high prices on the market in the fall. I expect it to be retraced very quickly. A very useful bellwether for UK property prices is the share prices of the major UK homebuilders. Another is mortgage approvals. Both of these are near record low levels. The builder share prices, I follow closely, especially the prices of Barratt Development (BDEV) and Persimmon (PSN.) Both share prices peaked in September 2009, months ahead of the spring 2010 top in the property indices. A lead of 6 months or so is normal. And now both stocks have slid down to new lows, or very near the low of the year in teh case of PSN. For instance, BDEV closed last Friday at 78p, after beginning the year at over 120p, after having twice spiked up to near 140p. Barratt Development (BDEV) .. update A key signal that I look for is when prices crossover the 252d./1 year moving average. The last "sell signal" calculated in this way occurred in Feb./March 2010, just before the H&N-index peaked. Many who are new to using the builders as a bellwether, think backwards - that the share prices are driven by earnings announcements, and that they should therefore lag property prices. But that is not the case. In fact, like property-buying itself, builder share prices reflect sentiment towards the sector. And upwards share movements are most positive when good feelings about property is most intense. They work as a good barometer of how people are feeling. And they are up-to-date and immediate, unlike the property indices which are reported after lags of weeks or months, depending on the index. So fresh lows for the year (in both BDEV and PSN) tell us that today's sentiment is very negative, and the property indices when they are reported in a few weeks time are likely to show that price falls have continued. From here, I expect a slide of at least 2-3 years. And during that period, I would expect prices to fall at "crash cruise speed" with monthly price falls averaging 0.5% - 1.0% per month, and perhaps more than that. 30 months of falls, averaging 0.8% per month, would be a drop of about 24%. And that would not surprise me. If interest rates push upwards, the drop could be more than that, and the fall could last longer than 2-3 years. If Barratt or Persimmon shows a sharp rise during that period, then I would consider changing my forecast, But unless or until that happens, I think we could see a bigger second leg down in UK property than the 20% drop we saw in the first leg. And this time, I do not think that Greater London will be able to shrug off the falls. Keep an eye out for postings in my Property Diary. If I see something dramatically new emerging, I will write about it there. DrBubb - 1 Nov. 2010 ============== *DrBubb's Property Diary: http://tinyurl.com/GPC-Diary / UK Property Data :: http://tinyurl.com/UKtrap PT Clone thread.. :: http://propertytribes.ning.com/forum/topic...avoided-or-just

That is a BTL owners fantasy notion IMHO, RichG. Hanging on thru a big price drop is likely to be a suckers game. Suppose prices drop 20% over the next 3-4 years, and rates start rising. The owner will find himself trapped. Much of his equity will be wiped out, and he may find himself in a position where he has to sell and accept that big loss, or hang on longer and cover an increased financing cost, feeding cash into the property(-ies) until he eventually gives up. Ultra-low rates bought time, and temporarily put cash flows into a positive mode for many LL's. But this level of rates is not sustainable, unless austerity plays out, and then you may see rents falling over the next few years, with rates rising after that. The rate cut created a wonderful selling window, but it seem that few LL's have taken advantage, and instead some of increased their portfolios rather than slimming them down. They are sleep walking into probably disaster - that's how I see it.

Not ... "at any cost" What choice does the UK have? Current levels of: Property prices + Interest rates + Incomes : are unsustainable Something in the current formula has to give. ...There are no easy choices. And "kicking the can down the road" / ie holding things as they are - becomes more and more difficult.

EXCERPT: The equipment he uses is relatively simple, which is just as well, since he's had to pay for a lot of it himself. If you want to reduce the mass of an object in the privacy of your own basement workshop, here's how it's done: Obtain a high tech ceramic capacitor (a standard electronic item) and attach it to the speaker terminals on a stereo amplifier. Feed in a steady tone (perhaps from one of those stereo-test CDs) while using some kind of electromechanical apparatus (maybe the guts from an old loudspeaker) to vibrate the capacitor up and down. According to Woodward, the capacitor's mass will vary at twice the frequency of the signal, so you will need a circuit called a frequency doubler to drive your vibrator at the correct rate. If the vibrator lifts the capacitor while it's momentarily lighter and drops it while it's heavier, you achieve an average mass reduction - which sounds as if you're getting something for nothing, except that Woodward believes that in some mysterious fashion you are actually stealing the energy from the rest of the universe. I asked him why no one had ever noticed that the weight of capacitors varies in rhythm with their energy level. "Well," he said, "people don't normally go around weighing capacitors." He claimed that so far he's measured a reduction of up to 150 milligrams; just a fraction of an ounce. Still, practical applications could be developed. "If someone decided to put substantial amounts of money into this, you could have something within three to five years. For spacecraft, all you'd need would be big solar arrays instead of rocket fuel." Have a look at the Hutchison Effect: The Hutchison Effect

FTSE has been weaker than the SPX in recent days / FTSE update The 3d.MA has crossed below both the 8d and 21d MA's In the past, FTSE has often led US markets lower. By comparison, my favorite property bellwether, Barratt / BDEV ... update ... is on a nice "lazer beam" slide to the downside. The BDEV slide does not bode well for UK property prices in the months to come.

Yes. The latest Nationwide index was down -0.7% - that's right in the middle of the -0.5 to -1.0% "normal Crash Cruise speed." House prices fell 0.7% in October, says Nationwide House prices dropped in October compared with the previous month as the property market saw an autumn fall, according to the Nationwide. The building society said that prices were down 0.7% compared with September, with the average home now costing £164,381 The more reliable three-month on three-month comparison showed prices fell by 1.5% in October. The average home still costs 1.4% more than it did a year ago. However, this was closer to parity than in September, when the difference was 3.1%. "If the recent trend in house prices were to continue through November and December, the annual rate of house price inflation would drop to between 0% and -1% by the end of 2010," said Nationwide's chief economist Martin Gahbauer. . . . "First-time buyers - the life-blood of the housing market - are almost entirely shut out," said Stewart Baseley, executive chairman of the federation. "We desperately need an increase in lending and a properly functioning and sustainable mortgage market." (NO! Stewart, what is needed is for the banks to tighten lending to "investors", and for the government to stop paying such unrealistic and high housing benefits, and that will "cut the legs off" the artificial payments that help to prop up BTL investments. If prices continue sliding at near 1% a month, than within 2-3 years, they will be much more affordable to prudent and patient First Time Buyers. The smart ones are waiting for that day.)

Interesting comment. Do you mean: Property prices will not fall? Or: Property investors will see bargains after they fall?

?? Do you mean how to "find" this thread? I have been moving most of the property threads from Main (& elsewhere) onto the new GPC section: http://GlobalPropertyCycles.com But property is a side-interest for many of our posters, so only a small, but rising number are visiting GPC, and the starter of this thread (Goldfinger) recently asked that it be moved back to Main, and that was done. This thread is a bit Iconic, people look for it, so it will attract ongoing posts, which will move it to the front page of Main. Other property-related threads on Main will get transferred to GPC after they slide down off the front page. They will be easier to find there. In the long run, I expect traffic on GPC to grow, as we get more posters whose primary interest is discussing property related topics. Gold, Stocks and Economics tend to rule on GEI's Main board now.

RMV's earnings have done well, as vendors and buyers seek a new, cheaper alternative to old-fashioned EA's

Crash Cruise speed : -1.4% is above the speed limit

Crash Cruise speed : -1.4% is above the speed limit Actual m-o-m figure is -0.7%, right in the middle of the -0.5-1.0% Crash Cruise speed.

U.S. home prices drop 0.2% in August .. Oct. 26, 2010 Report is ‘disappointing,’ says chair of index preparation committee WASHINGTON (MarketWatch) — Home prices fell 0.2% in August, according to the Case-Shiller home price index released Tuesday by Standard & Poor’s, in a report labelled “disappointing” by its compilers. This is the first drop in the index after four straight monthly gains as demand spiked by the homebuyer tax credit that expired at the end of April. Prices fell in 15 of the 20 metropolitan areas tracked by Case-Shiller in August compared with July. Annualized price growth slowed to 1.7% from 3.2% in July. Chicago, Detroit, Las Vegas, New York and Washington, D.C. were the only five cities that recorded small improvements in home prices over July. David Blitzer, chairman of the index committee at Standard & Poor’s, called the report “disappointing.” “At this time, it does not seem that any of the markets are hanging on to the temporary momentum caused by the homebuyers’ tax credits,” Blitzer said in a comment that accompanied the report. Economists are concerned that there may be additional downward pressure on prices as demand slows in cooler months. The expiration of the tax credit combined with the cooler temperatures may create “a downside double-whammy for prices,” Josh Shapiro, chief U.S. economist at MFR Inc, wrote in a research note. FHFA report In a separate report, U.S. house prices rose 0.4% on a seasonally adjusted basis from July to August, the Federal Housing Finance Agency said Tuesday. See FHFA data. The positive tone of the report was muted because declines in July and June were deeper than previously estimated. Paul Dales, economist at Capital Economics in Toronto, said in an interview that the Case-Shiller and FHFA data often move in different directions on a monthly basis but are telling the same story on a longer term. For the 12 months ending in August, home prices fell 2.4%, up from a 3.4% decline in July, the FHFA said in its monthly house price index. The Case Shiller is also trending lower on an annual basis. “Both are pointing down consistent with softening in the housing markets,” Dales aid. The FHFA index is calculated using purchase prices of houses with mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. Case-Shiller is a 3-month moving average. It is based on repeat sales of the same properties. Read the full report. On a year-over-year basis, 12 of the 20 metropolitan areas posted negative growth rates, according to Case-Shiller. Seventeen of the regions showed a deceleration in growth rates. Only Charlotte, Cleveland and Las Vegas saw improvement in year-over-year growth rates. Here’s a list of the 20 cities in the Case-Shiller index, with percentage changes over the past year: San Francisco, up 7.8%; San Diego, up 6.9%; Los Angeles, up 5.4%; Washington, up 4.8%; Minneapolis, up 2.9%; Boston, up 1.5%; Phoenix, up 0.4%; New York, up 0.1%; Detroit, down 0.1%; Cleveland, down 0.4%; Miami, down 1.0%; Denver, down 1.2%; Dallas, down 1.7%; Atlanta, down 2.0%; Portland, down 2.3%; Seattle, down 2.4%; Chicago, down 2.9%; Charlotte, down 3.4%; Tampa, down 4.1%; and Las Vegas, down 4.5%. /see: http://www.marketwatch.com/story/us-home-p...nk=MW_news_stmp

AUGUST REPORT, released in October 2010 : August's decline was the largest here since June 2009. Nationally, home prices were up 1.7 percent from last year in the monthly Case-Shiller survey. But more than half the 20 cities in the report suffered annual declines. Case-Shiller analysts called the latest numbers disappointing. Mon: comp20, YoYr.% : +mom% / CSXR10 YoYr.% : mom% / Average : Exist. : New .. dec : 145.90, - 3.08% : - 0.19% / 158.16, - 2.42%: - X.XX% / 189.7K : 2010 - jan. : 145.31, - 0.70% : - 0.40% / 157.87, - 0.06% : -0.18% / 188.9k : 163.8k : 215.8k feb. : 144.06, +0.66% : - 0.86% / 156.85, + 1.45% : -0.65% / 187.3k : 163.9k : 221.6k mar : 143.35, +2.35% : - 0.49% / 156.22, + 3.13% : -0.40% / 186.4k : 170.7k : 214.0k apr. : 144.57, +3.81% : +0.85% / 157.36, + 4.60% : +0.73% / 187.9k may: 146.47, +4.64% : +1.31% / 159.41, + 5.44% : +1.30% / 190.4k jun. : 148.00, +4.25% : +1.04% / 161.07, + 5.03% : +1.04% / 192.4k jul . : 148.91, +3.18% : +0.61% / 162.28, + 4.06% : +0.75% / 193.6k aug : 148.59, +1.70% : - 0.21% / 162.13, + 2.57% : - 0.09% / 193.3k === Note: "Average" is Comp20 x $1300

MM, You will like this guy's story: UFOTV Presents...: David Adair at Area 51 - Advanced Symbiotic The maths come to him "in dreams"... like Stephen Hawkin.

MM, You might enjoy this - newly uploaded Video on YouTube UFOTV Presents...: Cereal Worm Holes 1 - They Are All Real http://www.youtube.com/watch?v=MRBeuoH09E0 The sheer Quality of this Film Production is Mind Blowing! Investigating the Extra-Dimensional Aspects of the Crop Circles. For a long time opinions about Crop Circles have been heavily polarized. They are either seen as signs from a non-human intelligence or plain human vandalism. In reality things are rarely black and white. What are the small light balls flying around Crop Circles? Why are there anomalous energy fields even in man-made formations? How is it possible that people think about shapes and then they appear in the fields? Is there a force protecting and guiding the human Circle makers?

From a SP thread: "I am very confused at the moment as to where the property market is heading, obviously no one can predict the future but was just looking for other peoples views here. About 2 weeks ago i read in the news that house prices were set to rise maybe 20% over the next 4 years or so, which sounded promising after all the doom and gloom of late." - pound behind / 24 Aug. 2010 Yes, it is difficult to predict accurately. Most cannot do it, especially Estate Agents, who will always tell you what you want to hear. But if you use cycles, and some other technical indicators, you can sometimes have a good idea of what the future path of property moves might be. As evidence of a "surprisingly accurate forecast" made just as the early 2009 "Dead Cat Bounce" was beginning, look at this: If you follow the tinyurl link given in the chart, you can get an idea of how the forecast was made, and what may lie ahead. Warning: the Property Bulls may not like it!

A late downturn, may mean a later bottom to the post-October dip. Please take this with a grain of salt, since it is unlikely to exactly fit the historical seasonal pattern.

Terence McKenna talks about 2012, the tree of life & worm holes http://www.youtube.com/watch?v=4uT4sSEXnuI An intimate chat with Terence McKenna about 2012, the tree of life & worm holes. Enjoy This video is credited to Teal of www.livingdreamfilms.com. Check out the full video here: http://www.youtube.com/watch?v=4Q6sa7...

If you read DrBubb's property diary, you will see charts showing how quickly BDEV broken down to new Lows for the year after a brief blip on that news. I think vendors will have to begin cutting prices aggressively, if they are going to have any hope of selling this Fall. Bearish sentiment may settle in very quickly indeed.

DANGER ! A Key breakdown in Market sentiment seems to be underway. BDEV.L / We are in a treacherous part of the chart ... update : BDEV-mas : PSN-mas BDEV has fallen to a new LOW for the year, and is now in a part of the chart where there is little historical support, and it could fall quickly to near 60p or even to near 40p. I think the property indices will follow BDEV down, if we see those deep falls. We could see sharp falls right through the winter, and then we could see a disappointing bounce next spring. Don't "hang your hat" on these educated guesses, based on my chart reading. Since we will need to monitor subsequent price action. But the current action in BDEV provides a grim foreboding.

A Great Chance - to unload those Juniors and Exploration stocks? We may be seeing that now. CDNX may peak between 1900 and 2000. Ideally: 1950-70? The CDNX (Canadian Venture Index) ... http://bigcharts.marketwatch.com/charts/big.chart?symb=ca%3Acdnx&compidx=aaaaa%3A0&comp=gld%2Cspx%2Chui&ma=0&maval=18%2C52%2C126&uf=0&lf=268435456&lf2=2&lf3=0&type=2&size=2&state=11&sid=1002675&style=320&freq=2&startdate=3%2F31%2F2004&enddate=6%2F30%2F2011&nosettings=1&rand=5562&mocktick=1 : updated The CDNX is still rising ...while GLD and HUI are coming off their highs CDNX Monthly ... http://bigcharts.marketwatch.com/charts/big.chart?symb=cdnx&compidx=aaaaa%3A0&ma=4&maval=18%2C%2C48%2C%2C78&uf=0&lf=2&lf2=0&lf3=0&type=128&size=3&state=8&sid=1002675&style=320&freq=3&startdate=10%2F4%2F2001&enddate=12%2F31%2F2011&comp=NO%5FSYMBOL%5FCHOSEN&nosettings=1&rand=9777&mocktick=1 CDNX Weekly ... http://bigcharts.marketwatch.com/charts/big.chart?symb=cdnx&compidx=aaaaa%3A0&ma=4&maval=18%2C%2C52%2C%2C200&uf=0&lf=268435456&lf2=0&lf3=0&type=2&size=2&state=8&sid=1002675&style=320&time=12&freq=2&comp=NO%5FSYMBOL%5FCHOSEN&nosettings=1&rand=6123&mocktick=1 : CDNX-2yr-D : CDNX-6mo-D : CDNX-10d xx Creeping up the the cliff's edge? CDNX Daily ... CDNX-6mo-D : image: http://img88.imageshack.us/img88/9203/cdnxd6m.gif

EXCERPT: Steven J. Smith Murdered? Dooney is one of the psychics who was nearly murdered, last year--intensely frustrating for her mate, Doc STevo, who is an incredibly skilled physician and has cured a lot of incurable folks over the years. We believe they were intent to erase her on account of all the help she's provided to so many people, teaching them to defend themselves from the various agency psi corps' assaults. The psi corps and the associated poisinings are in league against absolutel;y everyone who is in a posistion to improve humanity's lot, even against infants and children who have the clear potential to someday do that. When enough people (accountable people with consciences) will finally face how rotten this ancient world order is, I doubt the parasitic world order will last another week or two. M., Do you worry about your own personal safety, with the types of projects you are working on?

LOL. The temporary nature of hope. That stupid little "Rightmove rally" got reversed in two days ... BDEV chart : BDEV-vs-PSN I wonder how many fools rushed in and bought on a mere seasonal blimp in Delusional thinking? The used to say: "the early bird catches the worm", now it will be: "The sensible vendors will catch the few buyers." The delusional ones will be left chasing the market lower in the months to come.