Us Property Prices The Total Opposite Of Uk

dj9928

I was watching NBC nightly news lastnight and there was a feature on it about house prices, in the US prices of property have got so low people can't sell there homes.

It featured a couple who had bad credit and had taken out a certain type of bad credit mortgage, and the idea was that there property would make money and they could eventually remortgage and pay of the difference but because prices have fell so low thousands of people are on the verge of being homeless.

Its the total opposite of the UK where house prices are so high people can't afford to buy them, Around here (Mid Ulster Northern Ireland) the avergae house price has risen to £225k and ironically we are the lowest paid area in the UK so 90% of first time buyer have no hope.

dunstonh

It's not the opposite to the UK. The US market is a little ahead of us and could be a sign of things to come here. They had their bubble just as we have now.

fimonkey

Really? Given that the US is such a big country, can this generalisation be applied to the whole of the USA?

Also, was/is their political and economical situation during their growth period the same as ours is now? (I'm genuinely interested as a potential FTB who will have to stretch finances to get a mortgage, but unsure if tha't sbest thing to do as yet).

Cheers

PosterBoy77

dunstonh wrote: »

It's not the opposite to the UK. The US market is a little ahead of us and could be a sign of things to come here. They had their bubble just as we have now.

Very true, anyone who thinks that property prices can carry on going up forever in the UK needs a reality check. Someday the bubble here in the UK will also burst.

dj9928

If you go here http://www.msnbc.msn.com/id/3032619/ and click Subprime mortgages become problem for some homeowners near the top of the screen you can watch the report

dunstonh

http://en.wikipedia.org/wiki/Housing_bubble

http://en.wikipedia.org/wiki/US_housing_bubble

Ok, it's wiki and some of it is subjective but it will give you an idea

Guy_Montag

Is this not just about people finding themselves in negative equity - can't afford to sell because they'll get less for the place than they owe on it.

There also seems to be something of a problem with US sub-prime mortgage lenders going bust. 36 companies as of today

ManAtHome

Could be worse over here - increase taxes to feed the public sector, build up a nice bit or inflation then hit the brakes...

Inflation 35-50% over target for a year or 2 but that's ok, we'll limit the public sector to sub-2% pay rises (what could possibly go wrong), attract heaps of on or near min-wage EU workers to keep private sector wages down, carry on "borrowing to invest" moving the economic cycle as necessary, let the balance of payments follow the US model - eg ever-increasing defecit (despite not being a first-rank currency) and everything will work out.... won't it?

EdInvestor

Vast majority of US homeowners are on long term (25 year!) fixed rate mortgages so have no problem.It's only the few at the bottom end with short term variable rate loans who are in trouble because interest rates have gone up a lot.

The flip side of that is that if either the US or the UK economy were to tank in any mainstream way, there is plenty of scope for cutting rates right back as they are currently at high levels. So no real need for concern.

dunstonh

The US had a high proportion of interest only mortgages as well. Something that has trended over here in recent years. That is a concern. We dont have the inflation of the 70s, 80s and early 90s to get away with putting off until tomorrow what should be paid today.

PosterBoy77

EdInvestor wrote: »

Vast majority of US homeowners are on long term (25 year!) fixed rate mortgages so have no problem.It's only the few at the bottom end with short term variable rate loans who are in trouble because interest rates have gone up a lot.

The flip side of that is that if either the US or the UK economy were to tank in any mainstream way, there is plenty of scope for cutting rates right back as they are currently at high levels. So no real need for concern.

It is not as simple as that. Inflation is running way above target already. If the economy slows and rates are reduced to lower levels, inflation will get stoked up even more, if not internally in the economy, then from the pound loosing value, making imports more expensive. This could also lead to a vicious circle, as the UK imports far more than it exports. In this case reducing rates could make any downturn even worse.