If it can happen in U.K., why can't it happen here?

hmmm..commodities that are priced in dollars are going up..maybe becuase the dollar is getting crushed?? its official that most people here have no idea how things really work.

marco_m,
The pace of gains across the board is outperforming the destruction. Oil is up over 50% off the lows, silver is up 100%, copper is up 120%, etc. etc. etc.
The dollar index have lost about 10% of it's value off the top.

http://stockcharts.com/h-sc/ui?s=%24usd

I think there's a lot of book worms in these forum and not enough folks that actually understand the dynamics of the economy and the global markets.

Technical breakout of the baltic exchange dry index.

http://www.investmenttools.com/futures/bdi_baltic_dry_index.htm

"commodities that are priced in dollars are going up..maybe becuase the dollar is getting crushed??"

Comical

Buy now or be priced out forever.

looks as though that upturn might be short lived. due to increasing unemployment brits are expecting up to a 50% decline in housing prices. they've lost 19% thus far.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6383107.ece

honesty forces me to post the relevant portion of the article, which admits that the stress test's housing predictions may be on the high side (although with Brit speak i can't really tell. so make it 40% to be on the conservative side).

Analysts said the stress test parameters were, if anything, not severe enough. The market is already expecting a peak-to-trough fall in GDP of 4.5 per cent and unemployment peaking at 10.5 per cent, “which is not significantly better than the assumptions made,” analysts at Credit Suisse commented. However, the house price scenario did look more extreme, it added.

please use whatever tools you have to chart the dollar against gold and oil and tell me what correlation you see.

"looks as though that upturn might be short lived. due to increasing unemployment brits are expecting up to a 50% decline in housing prices. they've lost 19% thus far.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article6383107.ece
"

ARE YOU KIDDING ME???? You are posting the result of a 'STRESS TEST'!!!
Did you not read the U.K. news on housing????

You are UNBELIEVABLE! It's like walking past a 100 dollar bill thinking it's monopoly money.

i think its perfectly clear that we have a sustainable recovery at hand here. Consumers are healthy, no debts, and jobs market is strong. Buy now before you miss the fire sale!

is there a way to post graphics on here ? i just made a graph but I dont think i can post it on here

"..sustainable recovery at hand here.."
I never said that.

I said we are seeing signs of a recovery. You bears are too much.
First you guys said there no signs anywhere 2 weeks ago! Can we all agree that there are signs of recovery in the economy? And with a stabilized economy, this is a positive on housing?

Is this really that hard to understand?

urbandigs.....you appear to be a young man who made a career change to being a real estate broker .you also plot graphs ,and make projections and predictions.you never spoke of your past successes or qualifications as a forecaster.what are they, may i ask?

Dudes, a wave of condo conversions is coming down the pike to take advantage of rising real estate prices.

Get your checkbooks ready.

HELLO DOLLY!

no qualifications...im just an idiot broker, who plots graphs.

I agreee that there are mixed signs about a bottom. But that in no way will do anything in the next year to stem the decline that is hitting manhattan RE.

"I agreee that there are mixed signs about a bottom."
Thank You! Like pulling teeth.

"But that in no way will do anything in the next year to stem the decline that is hitting manhattan RE."
Would a 'recovered' economy stem the decline?

here's your challenge, ericho: find an apartment that you could rent out to an unrelated third party and be cash-flow neutral to positive from the get-go, using a standard 30-year 80/20 mortgage.

That is, rental income - all expenses (except principal amortization) >= 0.

The day you can is the day real estate will be properly priced.

Right now, there's another 50% to fall.

Sorry.

sorry, I shouldnt have answered jokingly.

I started following markets when I was 13, and invested bar mitzvah money in stocks. That started the addiction to markets. I studied everything I could and followed all markets from then on. I have a BS in Psychology and missed a minor in economics by 2 credits from Union College - Im still pissed at myself for that and took courses in biology, math, philosophy instead. Dont ask why, I was young and stupid and took the easy road to graduation.

Started trading stocks and options more aggressively in college and enjoyed internships with top brokers at MorganStanleyDeanWitter, at that time, and Salomon Smith Barney during summers.

After college, in June 2008, instead of getting a job, I borrowed 12K from my grandmother and became a equities trade at Tradescape. This was the ltcm, asian financial crisis time. markets were very tough to trade, but great to learn in. Turned that 12K into 1.3M over the next 3 years. I was 23-24, arrogant, and thought it would never end. I put all my trading profits into separate account and bought blue chips, this was early 2000 or so near peak of dot com boom, and bought the stuff I thought would do OK if markets fell: IBM, GE, SUNW, FDRY, AOL, CSCO, etc..lost of tech, yes. Lost about 50% in this account after doubling down on down move. didnt trade it, just left it there and bought more later in year after fall thinking I could make up profits. i didnt. lost my a$$. still had to pay taxes for profitable 1999 and 2000, and combination really hurt me.

great learning experience, and one that allowed me to not make same mistake this time around in late 2007. Back to story. Had some good change left, but trading was very difficult, very stressful, and fractions turned to decimals killing the game I played in. Spreads narrowed, and it became a huge chore just to make 70K or 80K a year. I wanted out after 5 years trading professionally. This is 2003 now. I never lost money day trading on a yearly performance basis, but I lost my a$$ putting trading profits into separate account and doing a buy & hold strategy. I especially got killed in FDRY, after it had a profit warning and dropped from 50 to 19 in one day, I think I lost 80K that day in my separate account. More learning.

I had a dream of starting a dot com company, and launched hotspothaven.com, I think around 2003 or so. I learned a ton about starting a online web search engine, online ad, html coding, stickiness of site, etc..I would say that set stage for urbandigs platform later on. hotspothaven.com in the end lost me a little bit of money, not much, and was more of a learning experience.

In 2004, I realized hotspothaven wasnt working, I still traded and made a little each year but got less and less interested in trading full time. decimals really sucked! So, I registered urbandigs.com and then went to get my re license. I started blogging about what I love in late 2005, the markets, which is what I know best and have most passion about - real estate, ehh, not so much.

I felt brokers were car salesman, only looking to get their deal and their commission, and there was a lack of macro/micro fundamental analysis on our local market. I truly feel its tied together and turns out, it is. So I started blogging daily about what I see out there in the markets, and how I feel it may or may not impact our local market. I talk about what I think for that day. Thats all.

The blog was meant to offer a different view of the markets, not a car salesman view that it only goes up and is immune to everything, and to make this market a bit more transparent by providing real time data instead of relying on lagging quarterly reports.

Im not perfect. Im wrong at times. I was a Manhattan bull from late 2005 when I started blogging up until about early/id 2007, and then turned uber bearish by fall of 2007 when credit markets froze up and I knew something bad ws brewing. If you go back to entries starting in mid/late 2007 on urbandigs, you will notice I switched from providing content on tips/tricks for Manhattan RE to discussing the macro picture and problems in creditville, almost daily.

forgot - I bought real estate and signed contract in OCT 2001 after 9/11 brought fear into this market and instant deals could be had. Im a contrarian by nature.

I closed (245 E 93rd - 2M) in April 2002, because it took 4 months just to get a loan committment. Yes, this was before lending went parabolic with no standards! I sold this property in July 2006, after about a 87% move in 4 years time. It was a combination or the right time for me, wanting to get out before 2nd ave subway work started in early 2007, and wanting to lock in profits after what I thought was a unsustainable move in housing.

Would a 'recovered' economy stem the decline?

no..manhattan RE was a function of the excesses of wall st. which is now gone and changed so much that it will be years before we get back to anything that resembles what was. I know this because I work on a desk at a major bank.

We saw that the price levels of NY real estate in 2006 were not sustainable. If you think that:
1. Houses in NY are cheaper than 2006
2. The economic outlook of NY is better than in 2006
3. Consumers have more money than 2006
4. There is more of a "real estate only goes up" mania than there was in 2006

Then go ahead and load up on Manhattan condos, and you may do as well as people who bought in 2006.

urbandigs......thank's for your extensive, and sincere reply.you do have an impressive ,enerprenorial background.you're contrarian-post 9/11 purchase was fab.i've done equivalent deals.my quarrel with you is that you're relying too much on analasis and charts.i think that's the anthithisis of what brought you success with your post 9/11 real estate purchase.too much analasis can lead to paralasis.

stevejhx,
What about tax savings? And income levels? If your gross income for your family is 400K a year, the savings over a 7 year stretch can be substantial. In 7 years time, that savings can dwarf a 10-20% price decline.

UD,

is your bio for real? pretty much parallels tim sykes if i remember correctly. what's up with the bar mitzvah money stories and easy options to borrow $$$ from grandma like its nothing. funny coincidence..

i'm just being jealous for not having these now seemingly 'common' options, and being forced to save and bootsrap...nothing more. carry on.

ericho, the example has nothing to do with your mortgage tax deduction. It is merely, if you were an INVESTOR, could you buy an apartment and rent it out to an unrelated third party and break even?

In that case, all taxes, mortgage interest, maintenance, insurance expenses are tax deductible. The only thing that isn't tax deductible is the principal amortization.

Moreover, capital gains taxes are deferred indefinitely if you reinvest the proceeds into a new investment property.

So - can you do it? Historically, those owners' carrying costs are equivalent to market rents from the get-go. If you can't find such a property, then property is overpriced by the difference between market rents and owners' carrying costs.

ha, yes I am very serious, and never heard of tim sykes until I just googled him. Funny. My first stock I bought was SGI...because they made the video game I loved when I was that young. My big hit was in college and DELL, and options on that. That got me really hooked! Im sure many out there have similar story.

Hey, Im just amazingly grateful that I had parents that gave me a good childhood, and paid for a good college education. I was never spoiled though and I certainly never had money thrown at me. I had to go through hell to get that 12K startup trading money after college. When my dad passed, we were left with nothing, no savings, no equity in the house, no life insurance, and tons of debts. That was hell and we had to adjust to new reality. This was June 2007. It was a very humbling experience. I always had to work for my money growing up, and was brought up to save. It was in the euphoria of the dot com boom that I strayed and paid for it. Life is a lesson. Always learn.

jrw293 - your welcome. I think my weakness is my trader mentality. Its good and bad, I think. When it comes to economy, I certainly am not married to charts or technical analysis, and rather I find myself to be more dynamic with my approach to what may or may not happen in short to medium term. The world changes, and if you dont change with it, well you can get slaugthered.

I view it as being able to see what is going on in all markets, macro, and try to put the pieces of the puzzle together to hopefully see a bigger picture. Some dont see the picture, others see it very clearly. I try to see it clearly, but sometimes I dont. Manahttan real estate is a good example. Brokers were used to a market that only went up and thought that a weak dollar would always mean great foreign interest and that an island always has limited supply. They didnt put the pieces together that a credit crisis can ripple through and eventually change everything.

For my post 9/11 purchase, I was planning to buy anyway with what I had left, and I didnt like prices. Then 9/11 happened and a deal presented itself. I couldt ignore the opportunity. I certainly didnt expect a 87% gain on that deal, but I was confident in the medium term prospects at that time. I just wanted a deal, like everybody else I guess.

oops, meant JUN 1998, in above comment about after college. sorry

stevejhx,
I think we're comparing oranges to apples. Buying a home for home ownership and buying a home for restrictively as a investment vehicle are 2 separate matters. I'll have to look at numbers in my area, but without mortgage tax deductions it'll be a tough.

"Buying a home for home ownership and buying a home for restrictively as a investment vehicle are 2 separate matters."

Actually, no they're not. One buys property to capitalize future rent, and as a hedge against future rent increases. Therefore, what it costs you to own should be what it costs you to rent, and historically it will be.

"I'll have to look at numbers in my area, but without mortgage tax deductions it'll be a tough."

It will be, especially because over time the tax benefit goes down. If you do that, you'll also have to add back in what you could have earned investing the money elsewhere (opportunity cost), and subtracting it from market rents. Over long periods of time they offset each other.

Here is what is funny, and I bet stevejhx or someone more tenacious than me can dig up exact quotes...but we ALL know that when comments or articles that point to bearish news in the UK are posted here (think the discussions on Canary Wharf rents or increased foreclosures in the UK), the bulls like ericho75 say "The London/UK market is NOT COMPARIBLE TO NEW YORK!!!!!!!!!" Ditto for when someone discusses negative economic or housing news regarding SF, LA, Chicago, whatever. "THEY ARE NOTHING LIKE NEW YORK!!!!!!!!!!" Even when discussing NEW YORK, but not the island, they say "CASE SCHILLER DOES NO REFLECT MANHATTAN! MANHATTAN IS UNIQUE AND SPECIAL AND INVIOLATE AND PURE!"

Well, perhaps not those exact words, but you get the idea.

But as soon as there is GOOD housing news anywhere from the Bronx to Jakarta, they come here and tell us this is 100% correlated with the NYC and Manhattan markets.

Heads the market is going up, tales its not going down.

Jason,

Wrong....i've never made those type of arguments...the wrong-way bulls of the bubble area did.

You are wrong Jason. I am a bull and I fail to see how the positive article about the UK has any correleation with the U.S.

Noah, I find it interesting when you said " For my post 9/11 purchase, I was planning to buy anyway with what I had left, and I didnt like prices." You agree like a lot of people back then that prices were high in 2000/2001 & that was only 8 years ago. Since then, except people in finance for the most part and the filthy riches, average incomes havn't gone up much (at least not for the middle class). That leads me to wonder if as today, the middle class would be stupid enough to jump on a RE purchase, while prices are still 200/300% more expensive than pre 9/11. If it was expensive for them back in 2000, it's totally out of reach today. I think so many got burnt with this crisis that no matter how bullish brokers can be now with this spring/summer season, most will just keep renting until we reach some sort of equilibrium.

Alphine292,

The major arguments that the bears are making is that with high unemployment and no wage increase here in the US, housing prices cannot inflate. If that's correct then the latest news above debunks it at least in a shorter time frame in a country going through the same crisis.

The reason the UK bounce is interesting is that there has historically been an interesting correlation between UK residential (Halifax U.K. House Price Index) and US residential (Existing and New).

Just to be a bit nerdy, since 1984 the correlation between UK residential and US Existing Homes has been +0.44. The correlation between UK residential and US New Homes has been +0.55.

I was surprised by the bounce. And I'm skeptical that it will follow through as by many measures the UK market had an even bigger bull market than that of the US. Monthly blips have not been all that unusual over time.

Topper,

I agree...it could merely be a blip, but it's a data point that shouldn't be discounted and totally ignored.

Come on...look at history!!!
Could it be possible that RE has corrected itself and now it's poised for it's next big up swing?
Does anyone really believe this? Better than it was in January-March, ok but in January I was busy changing my underwear 2-3 X a day as we teetered at the edge of a complete global financial melt down. Now we have been assured that the 4 horsemen of the apocalypse turn out to be benevolent bankers that were improperly motivated by greed and a lack of supervision. The apocolypse might not be so bad, they still serving ice cream. RE, at least in this town, has reajusted from it's psycho 'bid from the hallway' pricing but, only a little as compared to it's meteoric rise. It cant be like in 2002-2003. There is not going to be a Fed that's going to do anything it can it get you to buy because banks will be gun shy for several years. I'll say it again...be patient...summer is comming...money reserves don't last forever, shadow inventories make their debut, projects become the property of banks to dispose of. all this is still on the horizon. If this by some chance marks the true bottom and it's generally an up trend from here then, my friends, you live in the greatest city in the greatest country run by the smartest, luckiest people that ever lived on the face of the earth. Now if it turns out that this is a stop on the train on the way down to the next leg then it would follow past trends and conditions.
As I see it there is choice A, which is calling for an unprecidented economic miricle and then there is choice B, which is a call for clear critical thinking and the use of didactic information in the analysis of economic trends. Don't get me wrong, I'm rooting for the miricle. I'm just making my plans as if there is no miricle in the pipe line. There are those who pray for a miricle and there are those that work their but off to make things happen.

Pray while you work.

unemployment is at 7.1% right now in the UK. I just got my issue of The Week - not over 10%. Now younger workers have higher Unemployment there - one in six of 18-24 yos are out of work. I doubt they are buying property

UD - thanks for the bio and additional thoughtful responses. As I've said before, you are a leader in this field. Keep up the great work!

"Wrong....i've never made those type of arguments...the wrong-way bulls of the bubble area did."

Ok, so now you are saying that you think all real-estate related news from any big city is highly correlated with NYC? Ok, we will hold you to that.

> Would a 'recovered' economy stem the decline?

Besides marco's good point about the permanent effect on wall street...

folks seem to be confusing a recovering economy with a recovered economy. Stopping the bleeding is not the same as recovered. That generally takes years.

Again, one more time for the slow folks.... Manhattan RE took FOUR YEARS to bottom after the 87 stock market crash.

"Ok, so now you are saying that you think all real-estate related news from any big city is highly correlated with NYC? Ok, we will hold you to that."

Like hypocrisy from the bulls should surprise us now.

NYC is different! Now its the same!

RE doesn't follow stocks! OH wait, stocks are up, that means RE is up!