"Its different this time". They said the same before and during the last crash.

"john boyle" wrote

The lowest figures there appear to be for 1984 and 1989. So 1984 *was* low, wasn't it?

Do you understand the meaning of the word 'indicate' ?

It means a sign or signal. With regard to the future direction of house prices there are several indicators/signs/signals some of which may contradict others and so all indicators must be considered when trying to predict outcomes. You cannot take just one indicator in isolation to others.

Clearly some indicators are far more relevant than others and in the scheme of things repo figures would appear to be far less indicative than others ie at present perhaps the strongest indicator is that the p/e ratio (ratio of house prices to earnings) is historically very high which is a clear indicator that house prices are overvalued by as much as 40% on historical precedents, combine this with the fact that are also heading into an economic slowdown/recession and the strongest indicators are not good for continuing high house prices.

In 1984 repo figures were historically low but a manufacturing recession had just ended and the economy was on the up again and house prices were not way out of kilter with earnings whereas in 1989 repo figures were again low but the economy was heading into recession and house prices were out of kilter with earnings.

It is a straw man argument to say that I or anyone else on this thread has claimed that repo figures are low ergo house prices will crash. Repo figures are just one factor (and not a particularly important one) amongst many.

"Crowley" wrote

Yes - do you?

"Crowley" wrote

Yep, OK.

"Crowley" wrote

Of course. But we've shown that "a low level of repos" is not an indicator for future house prices, because it doesn't give a "sign" or "signal" as to whether they will rise (as happened from 1984) or fall (as happened from

1989).

"Crowley" wrote

... or even: "not indicative at all". So why suggest the comparison with repo levels in 1989?

If you had read my posts on this thread correctly you would see that though repos are at a historically low level they have rocketed by 66% from a year ago, a sign that they are on the upward curve and a useful indicator of trouble ahead for the housing market though not one to be taken in isolation from other indicators as I have repeatedly said.

Oh dear.

Let me repeat myself again.

In response to another poster (John Boyle or Tumbleweed)who said that repo levels are low today I said that they were also low in 1989 when the last crash started but that within 3/4 years they rocketed to record levels. Now what can't you understand about that ?

I did not state that history was certain to repeat itself simply that history shows that low repo levels today do not mean that they won't increase drastically in the next 2 or 3 years as happened in 1989 (though not in 1984) and the YOY increase of 66% seems to bear this out, though only time will tell.

Now whats so complicated or contentious about that ?

"Crowley" wrote

The fact that the same happened from 1984, but you seem intent on ignoring it!

"Crowley" wrote

Ermm - they did increase from 1984, didn't they? Looking back at John's figures :-

"john boyle" wrote > In 1984 the percentage of all mortgages that > were repossessed was 0.17%. Over the next > five years it was 0.25%, 0.3%, 0.32%, ...

... that was 47% higher in 1985 (compared to 1984) and 88% higher by 1987 (again compared to 1984).

So a similar progression happened from 1984, from 1989 and from recently.

"Crowley" wrote

Why should the recent progression have more to do with "1989+" than "1984+" ?

There you go again.

I have more than adequately answered this several times already but you choose to ignore the substance of my recent posts and persist with repeating the same crass question in an increasingly troll-like manner.

I can only conclude that either you are too thick to understand (which I doubt) or that you are simply a wind-up merchant with too much time on your hands which is sad.

Forgive me therefore when I ignore most of your posts from now on as I am a strong believer in discouraging childish attention-seeking behaviour by not acknowledging it. Its best for you as its the only way you'll learn and I have clearly given you too much encoragement and wasted too much of my time on you already.

Now please feel free to have the last word as Im sure you must, secure in the knowledge that having sussed your silly little game I won't be responding again.

"Crowley" wrote

Not at all - you have suggested other (perhaps quite relevant) possible indicators, but I've merely been suggesting that "low repos" is *not* an indicator for future house prices. I've not debunked any other indicators, have I?

I'm simply suggesting that there's no point looking at the level of repos, because the past shows that house prices might go up or down from a time when repos are low..

So - if we concentrate just on the one feature of "low repos", you constantly suggest that it indicates house prices may fall - because they did from 1989. I've merely been pointing out that "low repos" doesn't indicate that at all - house prices may rise or fall, as they did from 1984 or 1989.

"Crowley" wrote

Pot ... kettle .... ?!

"Crowley" wrote

That's a shame. You still haven't explained why you think "low repos" is an indicator of future house prices, when in the past it has preceded both booms & slumps.

In message , Tim writes

Quite right. Repos and arrears are an indicator of interest rates, not house prices.

In message , Crowley writes

Bur dont forget that repo figures lag arrears by about a year. You seem to be forgetting the high interest rates that were applied around that time which were a major cause of arrears and repos and f0or which a direct correlation can be drawn form the data. We dont have high interest rates today.

In message , Tim writes

Not in 1984 on a 'historical' basis it wasnt.

The 'preceding' five years (starting in 1979) were 0.05%, 0.06%, 0.08%,

0.11%, 0.12% then in 1984 0.17%. . The 'historical' average in 1984, from 1969 -1983, was 0.075%. So, in 1984 it was an all time high.

"john boyle" wrote

OK. I was talking about a "historical average" over all time known now...

In message , Tim writes

Well the only stats I have are form 1969 to 2004. The average over those

35 years was 0.22%. The highest was 0.77% and the lowest 0.03%. The distribution is such that the 1984 figure is in the second quartile despite being lower than the average. So even on your historical basis it wasnt a 'low'. It was for period 1984 - 1988 though.

But people have borrowed more against inflated property values - so it is probably not too long before the repos increase.

Here's an interview on the K-cycle with Ian Gordon who foresees a deflationary collapse of our monetary system leading to a major depression. All very apocalyptic if he is right .................

HoweStreet.com

November 12 2005

Ian Gordon Reviews His Deflationary K-Winter Thesis

Between January 1, 2000 and September 30, 2005, our Model Portfolio gained 122% while the S&P 500 actually lost 16.4%. An investment of $1,000 in J Taylor's Model Portfolio during that time would have grown to $2,220 while that same investment placed in the S&P 500 would have shrunk to $836. Being human, your editor would like to take credit for this performance but such boastfulness would be misplaced because whatever correct market calls I have made have resulted from the collective wisdom of many different independent thinkers. Of all those who have helped me in constructing our investment philosophy, none have been more influential than my good friend, Ian Gordon. From the first time that Ian sent me his newsletter back in 1998, I have found his well-reasoned fundamental and historical approach to investing to be most compelling. Since then I think it is fair to say I have become one of Ian's leading supporters, especially with respect to his Kondratieff-cycle theory.

Ian has believed we are poised for a devastating deflationary collapse of our monetary system and a major depression akin to or worse than that of the 1930s. As a good, compassionate human being, Ian certainly isn't wishing for that to happen. But his study of history tells him a major credit contraction is all but inevitable and that when the most devastating portion of the Kondratieff cycle, (which he has labeled the Kondratieff Winter) pays us a visit, it will drastically reduce the standard of living we in the west have become accustomed to over the past several generations. Helping us prepare for a world of high unemployment, massive debt defaults and plummeting incomes is what Ian's work is all about. Unfortunately, I'm afraid he is right

-that we are nearing a deflationary collapse. That is why Ian's views are published more often than most others in our weekly messages.

It has been more than six years since our first interview with Ian and more than five years since the stock markets peaked. Yet, on the surface, signs of inflation more than deflation still abound. So we thought it would be a good idea to interview Ian once again to see if his views have changed. Thankfully he agreed to allocate his valuable time to talk to us again. Because many of our subscribers are very interested in Ian's theories I sent out an email invitation to you to question him directly. Many of you did send in your questions, many of which Ian has answered in the following dialog. Does Ian hold fast to the Kondratieff deflation ideas he first talked about in 1999? If so, just where does he think we are now in terms of the impending deflationary collapse. I trust you will benefit if not enjoy Ian's "doomsday" answers that follow... .....................CONTINUED AT.............

00

The OECD stated this week that UK house prices are "significantly overvalued" and "warned of the danger of a protracted period of large house price falls."

UK house prices are overvalued, warns OECD

By Scheherazade Daneshkhu and Jamie Chisholm

Published: November 29 2005 22:59 | Last updated: November 29 2005

22:59

House prices in the UK are "significantly overvalued" warned the Organisation for Economic Co-operation and Development on Tuesday in a new analysis of the world housing boom.

It warned of the danger of a protracted period of large house price falls with implications for a slowdown in consumer spending.

The Paris-based organisation of the world's 30 wealthiest economies said the current housing boom was unusual because of its duration, size

and the degree to which it was widespread among OECD countries.

Of the 15 countries with booming property markets, it found that only the UK, Ireland and Spain were "significantly overvalued". This was based on large statistical models, taking into account demand and supply.

However, the OECD noted that even though the mortgage debt burden had risen, the ability to service that debt had improved since the early

1990s.

House prices had been driven upwards by relatively easy lending and low

interest rates and, additionally in the UK, by demand from buy-to-let, an increase in net migration and tight supply due to restrictive planning regulations, it said.

The OECD forecast that the Bank of England's main interest rate would remain at its current level of 4.5 per cent, although it warned that "house prices have become potentially more sensitive to even modest changes in their (interest rate) levels".

It said there was "no compelling case" for another cut in rates after the Bank's quarter point reduction in August, adding that an expected pick-up in exports and investment suggested "the Monetary Policy Committee can afford to wait"......

Interesting. His views accord pretty much with my own, particularly in that the kick that drives the next phase will start in the US (possibly driven by a credit incident in the derivatives markets).

FoFP

In message , Doug Ramage writes

I think something else has to happen before repos increase. Whilst many thousands have increased their borrowing on account of the comfort they feel from their supposedly more valuable house, they have done so within the existing affordability limits of the mortgagees, i.e. within existing income multiples. I do not think, increased borrowing alone is likely to make a major increase in arrears and repossessions. The figures above suggest that an increase in interest rates is a factor which cause such an effect.

John, I believe that it could be the Self Cert sector which will the trigger. I think the fraud levels are much higher than is being admitted. Likewise the amateur BTLs where rent is not covering 85% LTV mortgages is another high risk area.

I came across this set of articles (~ 3 years old) on Gold - do have any substance or are they mis-conceived rantings?