Independent joins the 70% club

macaque_2

Interesting article

Some estimates suggest they would need to fall by between 40 and 60 per cent to bring them into line, a nightmare scenario for lenders whose customers would face being locked into negative equity for years to come.

Dean Baker, the influential US economist, has pointed out that American wages are significantly higher than in the UK. He has branded prices here as "unsustainable" even after recent falls and warned that anything from a small increase in interest rates to a pick-up in supply could trigger a collapse.

http://www.independent.co.uk/news/business/news/houseprice-crash-fear-as-buyerseller-standoff-leaves-the-market-in-limbo-8010311.html

RenovationMan

Its always interesting to hear viewpoints from outside the UK, this time from a US economist, but you have to wonder if they are looking at the entire picture (population growth, housing demand and the UK populations lovae affaire with property) or just a set of figures on a piece of paper showing incomes vs house prices and is that pice of paper just showing the South East?

The bloke says that people in the US earn more, but then they need to because they then have to put money into insurance to cover medical and other benefits that we get via social security.

FTBFun

The population density between the US and UK is not even remotely similar, so I don't know how you can claim a comparison between the two for house prices.

Graham_Devon

I think this is a valid, and often overlooked (by those in the UK) point...

Dean Baker, the influential US economist, has pointed out that American wages are significantly higher than in the UK. He has branded prices here as "unsustainable" even after recent falls and warned that anything from a small increase in interest rates to a pick-up in supply could trigger a collapse.

It appears to me that's exactly where we are. The concensus appears to be to simply suggest interest rates are going nowhere for a few years yet, which may well be true, but it still leaves the problem. Let's fave it, these low rates are not fixing any issues, merely keeping us ticking.

Certainly, I believe, where we stand at the moment, it's like the housing market is treading on eggshells. I view it very much the same as the EU personally.

The EU is in a position whereby it could be taken down at any point over a minor point, triggering all manor of issues. The same stands for the housing market in the UK. It's getting by, but something minor could just tip the iceberg. On the other hand, it will take a string of succesful interventions just to keep it on the same track as it's on now (EU and UK housing market).

How it will pan out, no one knows, but I have certainly been wrong so far like many others in how I saw it playing out. So what the future holds, no one really knows. All I know is that it will take a hell of a lot more to keep it all going than it will to tip it over the edge.

StevieJ

macaque wrote: »

Interesting article


http://www.independent.co.uk/news/business/news/houseprice-crash-fear-as-buyerseller-standoff-leaves-the-market-in-limbo-8010311.html

This is interesting, I always thought that US wages were much lower than European wages (apart from the Wall St Brigade).

Dean Baker, the influential US economist, has pointed out that American wages are significantly higher than in the UK.

purch

StevieJ wrote: »

This is interesting, I always thought that US wages were much lower than European wages (apart from the Wall St Brigade).

US minimum wage is $ 7.25 per hour (some States set a different rate, and employees who receive tips have a much lower rate in return for not being fully taxed on the tips)

FTBFun

purch wrote: »

US minimum wage is $ 7.25 per hour (some States set a different rate, and employees who receive tips have a much lower rate in return for not being fully taxed on the tips)

Actually that's not quite correct - they are taxed on their tip income, but their per hour wage is reduced in anticipation that they'll receive much more in tips to take their wage over the minimum amount.

purch

What was incorrect about what I posted ?.

A waiter/waitress will be paid a lower minimum wage (varies from state to state) and their employer will declare 8% of the total sales made by that employee as tips received, and on which they are taxed.

The rest of the tips they receive will be untaxed.

Therefore they receive a lower minimum wage in return for not being fully taxed on their tips.

A good server, working in a good establishment would expect/hope to receive a very small pay check each week from their employer.

The servers I employed in my establishment in FL would expect to be tipped at around 17-18% of their total sales.....my #1 bartender would throw a hissy fit if her tips did not amount to 25% of her sales on a busy day.

The amount they are paid, and the tax deducted are irrellevant to them.

they are taxed on their tip income

As stated above.....no they are not. Only a small part of their overall tip income is required to be declared.

FTBFun

purch wrote: »

What was incorrect about what I posted ?.

A waiter/waitress will be paid a lower minimum wage (varies from state to state) and their employer will declare 8% of the total sales made by that employee as tips received, and on which they are taxed.

The rest of the tips they receive will be untaxed.

Therefore they receive a lower minimum wage in return for not being fully taxed on their tips.

A good server, working in a good establishment would expect/hope to receive a very small pay check each week from their employer.

The servers I employed in my establishment in FL would expect to be tipped at around 17-18% of their total sales.....my #1 bartender would throw a hissy fit if her tips did not amount to 25% of her sales on a busy day.

The amount they are paid, and the tax deducted are irrellevant to them.



As stated above.....no they are not. Only a small part of their overall tip income is required to be declared.

Sorry I'm a US tax accountant and was looking at it from a simple tips and employee wage received = taxable perspective. I wasn't aware of this was how it operated.

the_flying_pig

40-60% will not happen, for all the well-rehearsed reasons [social housing policy, ZIRP, QE, & so on].

from here to the next [nominal] trough i reckon:

falls of up to around 10% - i do expect some further falls from here so yes.
falls of 10-20% - plausible, certainly at the low end of the range, but less likely than not on balance IMO.
falls of 20%-30% - borderline plausible worst [for pwoperdee] case scenario.
falls of 30%+ - implausible.