Home sellers fear lower prices

Really2

Mallotum_X wrote: »

One of the key phases kids are taught when they first start to study economics is "Ceteris paribus" - All things remaining equal. With a given set of circumstances, then if everything else stays the same the results are likely to be the same.

We are not in the same postion that we were in 2008, so a possible dip in supply of property supply does not necessaily mean we will get the same results. You think the economy is better, I think it is worse, but either way its not the same.

To suggest that recessions etc always follow the same pattern doesnt really make a lot sense does it.

If it makes you happy to convince youself prices will be going up soon then fair play. I would suggest that the various other economic factors at the moment would mean something else.

We dont appear to have stongly different views, I think we will have continued gradual falls, with the odd up blip, you seem to be arguing for fairly constant prices, not much in it really.

I never said prices will go up, I just said it caused a problem the last time it happened.
I never suggested all recession follow the same pattern either.

You will never get identical circumstances or an outcome in any of this, it's obvious, so why you are going on about them is really odd TBH.

But you can look at similarity to judge similar outcomes.

I think and said back in 2009 we will see cycles of falls and rises gradually getting smaller and smaller in size until we are out of this (god knows when). That is why I latched on to this as it was for the same reason, there are a core of people who want to sell at peak value, they don't need to sell, but they think their house is worth it and would move if the got 2007 price.
They will keep flooding and contracting supply until most probably inflation means that nominal figure is reached. (the real term loss to them will be irelevent, their mindset is a nominal figure.)

It is my theory, but if these people keep withdrawing from the market, it wont have been a bad stab.
Infact many agreed with it when prices were rising in 2009, as they were also rising for the same (wrong) reasons, abnormal supply contraction. They then started to fall again due to those same pulled houses coming back on the market.

Really2

lostinrates wrote: »

I'm afraid I can't remember the discussion itself....I saw a lot pulled and remarketed.

I can't find it at the moment, but I remember the discussion, one of the few times we agreed.
I think we all saw a pattern in 2008/2009 and again in 2010. of the same houses coming off the market in falls and coming back on when prices were increasing.

My point on this thread (which was as well received as a fart in a lift) that if the same people do the same again, a similar outcome could be forced again.
And then forced falls again, then a smaller forced rise, then a smaller forced fall, then a smaller forced rise...... until the majority of the price stubbon are gone.

The same factor is still here,
The people who do not need to sell at any price can't be forced to sell at any price.
Unless something big changes that will not change either until they get what they want.

the_flying_pig

Really2 wrote: »

Yes I made 2009 up?

So if prices fall, demand increases? if price fall supply decreases according to your example?

So if you start to remove stock faster than demand increasing tell me what starts to happen?
and when demand outstrips supply what happens?

So for your failed GCSE economics (or you may be under 14?)
If you want price to fall quickly.
A) In a falling market, increasing stock levels would increase falls as supply would saturate demand.
Thus causing a crash.

That is why if you want prices to fall you would want supply to keep outstriping demand, simple really.

Well, to a layman it’s not *especially* simple, really.
In simple supply and demand analysis price is said to be ‘endogenous’ – a demand/supply curve is something that tells you what the demand/supply is for every different price level. Price is the thing that, eventually, equalises supply and demand.
Demand & supply curves shift because of changes to ‘exogenous’ factors, e.g. the supply of credit, population, & whatnot.

Realmoney_2

the_flying_pig wrote: »

I don’t really see where you’re coming from but strongly suspect that it’s nonsensical.

The very first thing a 14 year old GCSE economics student is taught is that demand almost always tends to fall the higher prices are – you know, the whole downward-sloping demand curve thing.

The very next thing that he is taught is that supply tends to increase the higher prices are – almost all supply curves slope downwards. This, of course, does very emphatically not mean that the price of goods can’t fall when demand is falling.

The house price bulls and precious metal bears do not like to think about supply/demand fundamentals.

The price of silver is way down right now compared to long term norm, but unlike houses you can not just build more silver!

Really2

Realmoney wrote: »

The price of silver is way down right now compared to long term norm, but unlike houses you can not just build more silver!

You can find tons of it under the sea in old boats though.

What long term norm, 20 years?


I make it way over the long term norm?

joguest

Really2 wrote: »

Yes I made 2009 up?

So if prices fall, demand increases? if price fall supply decreases according to your example?

So if you start to remove stock faster than demand increasing tell me what starts to happen?
and when demand outstrips supply what happens?

So for your failed GCSE economics (or you may be under 14?)
If you want price to fall quickly.
A) In a falling market, increasing stock levels would increase falls as supply would saturate demand.
Thus causing a crash.

That is why if you want prices to fall you would want supply to keep outstriping demand, simple really.

Supply isn't the same thing as stock levels - it's the quantity of sellers willing (and able) to sell as a function of price. As such, changes in supply are caused by changes in either/or sentiment/fundamentals.

The market is always in equilibrium and a change in demand or supply implies that the demand/supply curves have moved to a different position. What happened with the credit crunch was that demand contracted rapidly (sharp shift left for the demand curve). The fact that volumes decreased more rapidly than price shows that supply was quite elastic (a low gradient on the curve), explained by sellers being increasingly unwilling (in the hope of future price recovery) and unable (if in neg. equity) to sell at lower prices. If that sentiment changes (because of a price-recovery coming off the rails) then it is likely that supply will become more elastic (effectively an increase in supply for lower volumes leading to price falls in order to be in equilbrium with demand).

The way I see it:

Prices Rise/Volumes Rise = Market dominated by increased demand.
Prices Rise/Volumes Fall= Market dominated by decreased supply.
Prices Fall/Volumes Rise = Market dominated by increased supply.
Prices Fall/Volumes Fall = Market dominated by decreased demand.

I don't think the number of houses on the market has that much to do with it (especially since the abolition of HIPs has increased the number of chancers that overprice). It's the houses that sell that matter.

The question, to my mind, is are we likely to see supply increase by increasing number of forced sellers and/or a change in long term sentiment regarding property?

I can't see where an increase in demand is going to come from with unemployment going up, taxes rising, spending being cut, people paying down debt, etc.

Really2

joguest wrote: »

Supply isn't the same thing as stock levels - it's the quantity of sellers willing (and able) to sell as a function of price. As such, changes in supply are caused by changes in either/or sentiment/fundamentals.

New instructions, which reflect supply levels, dropped in September as more surveyors reported falls rather than rises in available properties, said the Royal Institution of Chartered Surveyors (RICS).

Stock + New instructions - Sales - Those pulled of the market = current stock.

The intangible part of UK house sales is good stock, bad stock, overpriced stock etc.

In reality there was enough stock in 2009 when prices rose, the problem was there was not enough of the right stock.

The UK housing market is far more complex than the back of a fag packet economics we all do on here, that is why it seems to always defy logic.

HAMISH_MCTAVISH

Really2 wrote: »

I make it way over the long term norm?

But rapidly heading down towards it.

tyllwyd

Graham_Devon wrote: »

Can anyone explain the mindset that if house prices look to fall, it's better to pull your house off the market, and sit on it for longer, therefore possibly watching it fall further before you move?

I think you are in danger of forgetting that there is more going on than just purely the money side of things.

We've taken our house off the market after it has been for sale for over a year. In that time, we've reduced the price, agreed a sale which fell through, reduced the price, agreed a sale which fell through, reduced the price - even less interest than before so we've said sod this for a game of soldiers, we're fed up of the emotional stress and waste of time involved in arranging viewings, tidying up the house and all the rest of it, we're going give up and wait until things pick up again. If you aren't forced to sell for a job relocation or something similar, it's not just about the selling price of your house, it's how quickly your house sells, whether there is a house you'd like to move to, how many times you can face chains collapsing and all the other things that you have to cope with in the real world.

crash123

I can`t believe that nobody has mentioned the dead cat bounce. Will it bounce again?