Think the housing market is bad here? Scott A. Anderson, senior economist at Wells Fargo Economics, suggests the U.K., European and Australian markets are in for an even bigger hurt.
He bases his theory on how much the home price-to-rent ratio in the U.S. and those foreign markets rose above their historical norms during the peak in 2004 compared to 2003.
“At the height of the bubble, the U.S. wasn’t as overvalued as some of the other markets,” he says. “It was a global price bubble.”
He cites this chart, based on data from The Economist and the National Association of Realtors, which shows the percentage the home price-to-rent ratios soared above their usual rates. All four foreign markets outdid the U.S. in the bubble department.
| Country | 2004 | 2003 |
|---|---|---|
| U.S. | 32% | 23% |
| U.K. | 60% | 50% |
| France | 46% | n/a |
| Australia | 60% | 33% |
| Spain | 60% | 68% |
Americans, Anderson says, can take small comfort that they are farther along toward the end of the bubble, which is just hitting foreign shores. Still, he doesn’t expect the U.S. turnaround to start anytime soon. He’s predicting a recovery in U.S. home prices in late 2009 or early 2010.
To see Anderson’s latest take on the economy, CLICK HERE.
Related news…
So much for Bubbs moving…continue your enjoyment of the oil wells of Newport Beach and that vastly overpriced RE.
So much for the US RE system and realtors being the main cause of the bubble - in the UK you need a lawyer to buy a house - of course that might be the cause of the 60% spike.
Bill Says:
September 8th, 2008 at 8:15 pm
–Speaking of foreign markets, the entire world is falling apart.–
Easy on the dramatics…the entire world is falling apart? –In financial markets, Black Monday is the name given to Monday, October 19, 1987, when stock markets around the world crashed, shedding a huge value in a very short period. The crash began in Hong Kong, spread west through international time zones to Europe, hitting the United States after other markets had already declined by a significant margin. The Dow Jones Industrial Average (DJIA) dropped by 508 points to 1739 (22.6%).[1] By the end of October, stock markets in Hong Kong had fallen 45.8%, Australia 41.8%, Spain 31%, the United Kingdom 26.4%, the United States 22.68%, and Canada 22.5%. New Zealand’s market was hit especially hard, falling about 60% from its 1987 peak, and taking several years to recover.–Wiki
I do not believe we are there yet………………………
2 OUT OF 4 MULLIGANHEAD POSTS
WHY ARE U SO WORTHLESS GO BACK TO METH CLINIC
ADD THAT TO THE 39 POSTS OUT OF 79 TODAY
SO FAR 41 OUT OF 83 POSTS ARE FROM YOU MULLIGAN HEAD
GO SEEK PROVIDER TO GO TO TREATMENT FOR BLOGGING ADDICTION
Mully,
The problem the feds are causing is going to make black Monday look like an average day.
Freddie Mac’s portfolio contains many securities backed by subprime and Alt-A loans.
But the company has not written down the value of many of those loans to reflect current market prices.
For years, both Freddie and Fannie have effectively recognized losses whenever payments on a loan are 90 days past due.
But in recent months, the companies saidthey would wait until payments were TWO YEARS late.
As a result, tens of thousands of other loans have also not been marked down in value.
If the $49 trillion mountain of U.S. debts and the $180 trillion pile-up of U.S. derivatives are beginning to crumble, all those resources don’t amount to more than a band-aid and a prayer.
Bear Stearns shareholders got wiped out.
Fannie and Freddie Mac shareholders are getting wiped out.
Ditto for shareholders in any of Detroit’s Big Three that go belly-up, any bank taken over by the FDIC or any insurer taken over by state insurance commissioners.
Most people assume that when the government steps in, that’s it.
The story dies and investors shift their attention to other concerns.
In smaller bailouts, perhaps.
But not in this Mother of All Bailouts.
The taxpayer cost for just these two companies is up to $200 billion, it’s more than the total cost of bailing out thousands of S&Ls in the 1970s.
But it’s still just a fraction of the liability the government is now assuming.
Having paid approx. less than 100K for a house with an acre of land a few years ago, I doubt if I would be overly concerned about the bubble in my area.
Homes are still selling here, close to 400K, but then we are not in America
Have a wonderfdul sunny day