Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


US Association Of Realtors July 2008 Report


US National Association Of Realtors – July 2008 Report

COMMENT

HUGH PAVLETICH

AUGUST 26, 2008


The key point here is that while sale levels have generally risen due to the substantially lower prices in the bubble markets – inventory levels are increasing at a faster rate (now in excess of 11 months supply overall – equilibrium 6 months supply) – due to the large foreclosure volumes.

Unfortunately researchers and media in other countries fail to inform the public of “months of supply” as the Americans do.

The economists and general comments in the Wall Street Journal article below are worth reading closely.

The reality is that if the “bubble markets” (e.g. California, Florida, Nevada etc) were taken out of the equation – the United States would not have a problem of any significance. The 2008 Demographia Survey (data Sept Qtr 2007) illustrates that of the 227 urban markets covered within the 6 Anglo countries – the Median Multiple (median house price divided by gross annual household income – refer Fig 1, Page 11) was US 3.6 times household earnings – Canada 3.1 – Ireland 4.7 – UK 5.6 – Australia 6.3 – New Zealand 6.3.

At its peak – California hit in excess of 9 times earnings. With the collapse of the California bubble – it now seems likely than Sydney and Australia will have the most inflated markets in the 5th Annual Demographia International Housing Affordability Survey – due for release January 2009 (data Sept Qtr 2008).

At or below 3 times annual household income should be considered “real value” – above that “bubble value” or “fake value”.

This would suggest that the US has to work out of the system around the equivalent of 70% of its GDP – the UK and Ireland slightly below double – New Zealand and Australia, slightly above the equivalent of double their GDPs of fake or bubble value.

The greatest advantage the United States has is the diversity of its urban markets – where the soundly governed “discipline” the poorly governed. The rigid “one size fits all” regulatory regimes of the UK, Ireland, Australia and New Zealand have far larger bubbles and greater problems – and will not have the capacity to “self correct’ as quickly as the United States housing markets. An example of a rigid regulatory environment is the “Japanese bubble” which took 16 years (1990 – 2006) to correct.

July Existing-Home Sales Show Gain - NAR July Report - issued 25 August 2008

Existing-Home Sales Regional Breakouts - NAR

Realtors say existing home sales rose in July: Financial News - Yahoo! Finance

Real Time Economics : Economists React: Troubling Housing Inventories – Wall Street Journal – Economists and General comments

Home Sales Are Up, but So Are Inventories - The Home Front (usnews.com)

Scoop: Housing: The Disaster Zone Of California - Hugh Pavletich


ENDS

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Strike: Lyttelton Port Workers Vote To Escalate Dispute

Members of the Rail and Maritime Transport Union (RMTU) at Lyttelton Port today voted to escalate their industrial action. Around 200 RMTU members have been operating an overtime ban since 17 December and today they endorsed a series of full withdrawals of labour at the port. More>>

ALSO:

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

NASA, NOAA: Find 2014 Warmest Year In Modern Record

Since 1880, Earth’s average surface temperature has warmed by about 1.4 degrees Fahrenheit (0.8 degrees Celsius), a trend that is largely driven by the increase in carbon dioxide and other human emissions into the planet’s atmosphere. The majority of that warming has occurred in the past three decades. More>>

ALSO:

Scoop Business: New Zealand’s Reserve Bank Named Central Bank Of The Year

The Reserve Bank of New Zealand’s efforts to stifle house price inflation by using new policy tools has seen the institution named Central Bank of the year by Central Banking Publications, a publisher specialising in global central banking practice. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news