MSE News: Halifax: House prices up again in August (+0.8%)

chucky

Graham_Devon wrote: »

No, you are not interested in my view at all. If you were, you would read my view instead of changing it.

why do you want to fight and argue with everyone?

julieq

Graham_Devon wrote: »

Julie petal, yes, I am. As of course it was a trigger. If we didnt have high house prices, we wouldn't have had problems here regardless of the US.

The US had problems with tent cities. We didn't because we have the welfare state. If we hadn't have had high house prices, I doubt we would have shared the US problems.

I missed this pearl of wisdom the first time through, but to recap, Britain would have escaped the world recession by virtue of relatively high public spending had house prices not been elevated?

It's an interesting assertion, certainly.

But how does it square with the assertion earlier on the intererlinkedness of things?

I've probably missed the significance of a preposition somewhere in this though :rotfl:

HAMISH_MCTAVISH

julieq wrote: »

Actually, here is the structural composition of a Graham Devon argument

1) Make broad statement based on rehashing of received HPC wisdom
2) When challenged, scan his original post for ambiguity and use that to deny the original statement was what was made in any case
3) Claim he can't be bothered arguing with people who misrepresent his position, and become all indignant at people using a debating board to debate
4) Refuse to explain what he meant in the first place
5) Mutter about the "fundamentals"
6) Rinse and repeat

All good stuff.

:rotfl:

"Oh look, a shiny thing...."

Graham_Devon

julieq wrote: »

I've probably missed the significance of a preposition somewhere in this though :rotfl:

No, you haven't missed anything.

Just turned a whole conversation about house prices, into me suggesting I was talking about the recession as a whole.

I was, of course, in a house price conversation, talking about houses. But you have conviniently turned that into the "whole of the recession".

ess0two

chucky wrote: »

why do you want to fight and argue with everyone?

Like ground hog day with Dev.

baileysbattlebus

Graham_Devon wrote: »

No, you are not interested in my view at all. If you were, you would read my view instead of changing it.

Now you are turning this into "explain how house prices triggered".

I never said that either. I said it was a trigger. I explained further back the views you are asking for. I really don't see the point if all you are going to do is take what I say and make it into something different. This is all that seems to be happening at the moment, and not only to myself.

All this just drags the board down and must be so boring for anyone reading to see me repetatively say "did I say that".

I am interested in your views. I may not agree with them - but I am interested and I do read your posts.

As it happens I don't think house prices were a particular trigger for the banking crisis or the housing crash. I think that high house prices were caused by the trigger that caused the banking crisis. For me the trigger was in 2003 and the subprime lending and securitization that happened from then on.

Up until 2003, the US had seen house prices rise on the back of economic growth, low unemployment, increasing incomes and population growth - the normal stuff. And up until 2003 Freddie Mac and Fannie Mae issued and bought conventional mortgage asset backed securities.

There were some accounting irregularities in 2003 (and probably politics, US politicians are all owned by someone) - which meant FM & FM had their loan portfolios virtually capped This meant the gov't backed FM & FM had their lending reduced and had a reduced presence in the mortgage market.

Their place was taken by private funding in the form of asset backed securities and residential mortgage backed securities replaced conventional, conforming mortgage backed securities as the most commmon source of mortgage funding.

This new environment allowed looser underwriting standards (often computerised) and increased appetite for riskier, high yield loans.
This new borrowing climate provided previously marginal borrowers with easy access to credit. The change in the market led to a record increase in total mortgage volume and pushed up home prices. And the rest is history - for me that was the trigger. High house prices were a by product if you like.

Germany has had no housing bubble - the German housing market has been in the doldrums for years, they have a welfare state, public housing, a good health service, a strong manufacturing base. And are generally a nation that save as much as they spend. Their banks didn't lend to Germans with dodgy credit histories. More Germans rent than own. They did buy securitized debt. So theoretically, according to you they should have escaped the crisis.

I do disagree with your views on housing as a trigger of the banking crisis - it doesn't mean I'm right and you're wrong - it means I disagree wth you and if you want to my change mind - you'll have to convince me that I'm wrong.

Saying that I haven't understood/read/been selective with your post isn't enough. I've explained why I think house prices had nothing to do with it.

I actually agree with Julie - without the crisis house prices would probably have stagnated and the market would have slowed - they wouldn't have crashed.

Graham_Devon

baileysbattlebus wrote: »

As it happens I don't think house prices were a particular trigger for the banking crisis or the housing crash. I think that high house prices were caused by the trigger that caused the banking crisis. For me the trigger was in 2003 and the subprime lending and securitization that happened from then on.

I totally agree.

My point was, why did sub prime ever exist?

Was it because:

- well, it just did
- or house prices were getting too high for a large section of the population, and these mortgages, now called sub prime, were issued as a way of those people being able to buy a home as prices rose out of their "normal" reach...but it was unlikely they could ever pay the loans back.

This is all I was saying god knows how many pages ago.

Why does sub prime that caused so many problems exist?

Would the sub prime problem exist is people could afford to pay the high loans?

If it's nothing to do with houses becoming too expensive for a section of society, then fine, I will agree I am wrong to say high house prices were a trigger. But you have just explained to me that basically, it was, looser standards etc, allowing higher loans for higher house prices.

I'm just going one step further backwards. You are starting out with sub prime as the issue and looking no further back. I'm simply, and always have been, looking at what caused sub prime.

As I said 2 or 3 pages ago, when this whole thing started...never said anything about UK house prices, it said, what caused the sub prime crisis, high house prices. The sub prime crisis is largely US based, so I didn't think I would have to explicitly state high US house prices, as I regard you as an intelligent poster. Everything else since then has been totally skewed out of all proportion.

Graham_Devon wrote: »

Depends how you ask the question I guess.

As you could always say, what caused Northern Rock the problem with borrowing money?

A sub prime crisis. What caused the sub prime crisis? High house prices.

So although I see the gist of what you are saying, i.e. houses fell because of lack of credit, the lack of credit was caused because of high house prices and people simply unable to ever pay for those high house prices.

IveSeenTheLight

Graham_Devon wrote: »

My point was, why did sub prime ever exist?

Was it because:

- well, it just did
- or house prices were getting too high for a large section of the population, and these mortgages, now called sub prime, were issued as a way of those people being able to buy a home as prices rose out of their "normal" reach...but it was unlikely they could ever pay the loans back.

Would you consider another option in that it was not about house prices, but bonuses for bank workers in achieving their KPI targets?

This was a contributer to the root cause.
The upshot may have been that people could not afford the properties, but then we've discussed this many times regarding how some people will just never be able to buy property.

Graham_Devon

IveSeenTheLight wrote: »

Would you consider another option in that it was not about house prices, but bonuses for bank workers in achieving their KPI targets?

Yes, I would. But as these loans primarily targetted those who couldn't afford the ever highering prices....If houses had of been affordable, there wouldnt have been such a massive amount of people on these mortgages, so we wouldn't have had such a crash.

Need I go on?

The silly thing on this thread is that we are all basically agreeing. It's just some are starting at different points in history. You are now stepping one step further back than I was into the various triggers that lead to where we are.

IveSeenTheLight

Graham_Devon wrote: »

You are now stepping one step further back than I was into the various triggers that lead to where we are.

This is what being analytical means.
You want to get to the root cause of the problem.

In regards to house prices, they were set at the market at the time when sub prime started.
You are saying they should be lower so that in effect everyone could afford to buy, meaning the banks would not have been a problem in giving the loans.
That's not what should have happened, they should only have given loans to those that could afford it

Graham_Devon wrote: »

Yes, I would. But as these loans primarily targetted those who couldn't afford the ever highering prices....If houses had of been affordable, there wouldnt have been such a massive amount of people on these mortgages, so we wouldn't have had such a crash.

If the lenders didn't give out sub prime loans, there would have been less demand and probably lower HPI.
The banks facilitated the ease of credit to those that should not have been able to get so hence fuelled the HPI

At the end of the day, house prices are set like any market.
Supply and demand will always dictate the market prices.

You cannot wave a magic wand and say prices should be lower so that more can afford.
That contradicts the supply and demand theory.