Debate House Prices


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sold for 40% less than construction costs.

3161 Michelson Drive, a delightful-looking office block just a short drive from the Orange County airport has just sold for $160m, or about $300 a square foot. That's 40% less than its construction cost: note we're not talking about 40% less than its peak value but 40% less than the actual cost of the materials and labour used to put the thing up in 2007.
That's beginning to look like the kind of deal you only see in very nasty depressions – the kind of deal we haven't seen much of since the commercial property nightmare of the 1930s


http://www.moneyweek.com/investments/property/property-deals-arent-pointing-to-a-quick-recovery-14915.aspx


A reminder, were one needed, that, in a credit crunch, a building is only worth what someone with cash is prepared to pay for it.

Comments

  • 97trophy
    97trophy Posts: 915 Forumite
    It matters because the fate of the banks is inextricably linked to US property prices: as long as they are falling, we know the banking crisis isn't nearly over

    For me this is the most convincing bearish argument.
  • Nylontokyo
    Nylontokyo Posts: 50 Forumite
    Yes it anoys me when people say oh but thats America, its different here!

    Dont they realise that we are affected by everything. Just a few years behind the yanks.

    Soon property like this will be sold for less than it costs to build here in the UK.
  • Norfolk_Jim
    Norfolk_Jim Posts: 1,301 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    When swine bird flue inevitably arrives and kills off half the population there will be such a glut of empty property you'll hardly know what to do with it all. When that happens, buy up all the houses you can in Cumbria and Northumberland in advance of the enormous demand that'll be generated by the London dirty bomb disaster.
  • StevieJ
    StevieJ Posts: 20,174 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Yes, OK :rolleyes:
    'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher
  • hearts
    hearts Posts: 1,191 Forumite
    If all/any of the things suggested here happen, I wouldn't worry, we'll all be fooked anyway.
  • adr0ck
    adr0ck Posts: 2,374 Forumite
    Part of the Furniture Combo Breaker
    When swine bird flue inevitably arrives and kills off half the population there will be such a glut of empty property you'll hardly know what to do with it all. When that happens, buy up all the houses you can in Cumbria and Northumberland in advance of the enormous demand that'll be generated by the London dirty bomb disaster.

    and when most of england floods property prices in wales and scotland will sky rocket :D
  • sabretoothtigger
    sabretoothtigger Posts: 10,036 Forumite
    Part of the Furniture 10,000 Posts Photogenic Combo Breaker
    Someone got a bargain there I guess

    Nylontokyo wrote: »
    Yes it anoys me when people say oh but thats America, its different here!

    Dont they realise that we are affected by everything. Just a few years behind the yanks.

    Soon property like this will be sold for less than it costs to build here in the UK.


    Things that do vary are population density, bankruptcy law, property taxes, planning laws and we have a longer history of house ownership rather then renting

    Might be worse even but its simplistic to say it'll be just the same here. Imo we have greater long term demand overall
  • blakester
    blakester Posts: 139 Forumite
    Part of the Furniture Combo Breaker
    When swine bird flue inevitably arrives and kills off half the population there will be such a glut of empty property you'll hardly know what to do with it all. When that happens, buy up all the houses you can in Cumbria and Northumberland in advance of the enormous demand that'll be generated by the London dirty bomb disaster.

    You're a little ray of sunshine Jim:rotfl:
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