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Old 08-30-2011, 10:41 PM
 
Location: The North
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Sure all real estate is local, but locally ridiculous is more like it in some of these economies. Australia, much of Europe, even major cities in Asia now are getting insanely overpriced and yet all we hear about is how terrible US real estate is?

A good report I sadly can't copy here (its by a major bank analyst) detailed how very similar neighborhoods in Sydney are pricing at almost double comparable LA neighborhoods. This despite LA incomes being about 25% higher and the area not exactly representing the best values in the US. Most of the US outside of high-end areas have homes priced between $80-120 per square foot for construction and the land they are built on is considered nearly worthless for the standard tract home according to the analysis. In the UK despite lower incomes, less land on average for each housing unit and far older housing stock, real estate generally sells for about double US averages. Areas with little income earning opportunities such as the south of France and many coastal areas of Spain cost nearly the same.

So how will this clear imbalance play out? US housing stock is made of slightly less costly material stock, but according to the analysis its not that significant of a difference and in any event locational housing value has almost always been correlated more to income earning potential than replacement cost. Will the rest of the industrialized world come crashing down in a US style housing collapse?
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Old 08-30-2011, 11:17 PM
 
Location: Conejo Valley, CA
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Shouldn't one expect the landowner gentry to push both productive business and laborers into bare subsistence?

Is it a bubble, or is exactly what one would expect to happen happening?
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Old 08-31-2011, 09:22 AM
 
Location: Here.
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I wasn't aware of the housing bubble outside the US, but yes, it will pop too. Bubbles always pop.

Hopefully the rest of the world will learn from our mistakes. Would you happen to know if the government is pushing sub-prime mortgages in these countries?
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Old 08-31-2011, 09:45 AM
 
Location: Warwick, RI
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I would suspect that it has more to do with the weak dollar compared to foreign currencies. When the dollar weakens, it costs more dollars to buy the same amount of house.
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Old 08-31-2011, 01:56 PM
 
Location: Conejo Valley, CA
12,470 posts, read 18,188,668 times
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Quote:
Originally Posted by treasurekidd View Post
I would suspect that it has more to do with the weak dollar compared to foreign currencies. When the dollar weakens, it costs more dollars to buy the same amount of house.
Huh? People in Australia aren't buying houses in US dollars, instead Australian dollars.

Perhaps some of the building materials are made cheaper by a weak US dollar, but how much of these are actually still made in the US?
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Old 08-31-2011, 01:58 PM
 
Location: San Diego California
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The Australian market is already imploding, and in my opinion, China and Canada are not far behind.
Bubbles are relatively easy to manufacture, but they always end in deleveraging and the economic devastation that goes with them.
If you want to know what reasonable levels are, then look at long-term values.
Real estate and equities are still well above their long term values.
Just because you can point to other markets that are even more over-valued, does not mean that ours are under-valued.
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Old 08-31-2011, 07:15 PM
 
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You also have to factor in cost of ownership. Property taxes, and insurance mainly not the cost of the house.
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Old 09-01-2011, 07:00 PM
 
Location: The North
5,576 posts, read 9,856,435 times
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Quote:
Originally Posted by jimhcom View Post
The Australian market is already imploding, and in my opinion, China and Canada are not far behind.
Bubbles are relatively easy to manufacture, but they always end in deleveraging and the economic devastation that goes with them.
If you want to know what reasonable levels are, then look at long-term values.
Real estate and equities are still well above their long term values.
Just because you can point to other markets that are even more over-valued, does not mean that ours are under-valued.
Long term values mean little. Housing prices are driven by incomes which at times get somewhat led by housing costs. Long-term values don't reflect current incomes or interest rates. When most markets see affordabilty up into the 80% range I can only conclude housing as a whole is undervalued in the US and overvalued in many other markets. Canada is a pretty obvious one, loans cost more and have no locked in rates. Incomes are about in line with US levels yet most Canadian markets see higher prices. It seems a clear reflection of Canadian consumers having more confidence than US consumers. Fair enough, but over the long haul these are times when the most marginal customers overpay to get into a market while the most suitable customers in the less confident market stay out. Guess which make for better long term investments?
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Old 09-02-2011, 02:20 AM
 
Location: Brisbane
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No its not sustainable, housing prices are starting to come down in Australia,although i dont think implosion is quite the word to use - Yet. Personally i think prices will continue to slide, but a US style implosion wont happen.

The reason is lending standars, yes they were loosened somewhat in the years leading up to the GFC, however we have nothing like Fanny May and Fredie Mac in Australia. Quite simply No Imcome and no Jobs means no house, and it always has.

Last edited by danielsa1775; 09-02-2011 at 03:37 AM..
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Old 09-02-2011, 09:48 AM
 
2,515 posts, read 1,818,320 times
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Quote:
Originally Posted by Willy702 View Post
Sure all real estate is local, ...Will the rest of the industrialized world come crashing down in a US style housing collapse?
In short yes. We are at the end of a nearly 80 year long debt bubble world wide. Hard times are hear.
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