Never Say Never...

[thaigene2]

Whilst not wanting to steal bingbongo's thunder...I'd like to point out the latest BBC report on the real estate meltdown in the US. Moody's now predicting it will move into the entire economy - and affect ALL housing markets.

Does this affect Thailand? Well if you think that the first thing a financially distressed person does is to get rid of his 'holiday home' in Spain, the Bahamas, Thailand or wherever, to fix things closer to home, then 'maybe' - it's worth a quick read at least. Here's a segment (check out the factors he sites then think about here too..):

Mark Zandi, an economist at Moody's, who is tracking the housing market, expects the fall in house prices to accelerate from 5% this year to 10% in 2008.

He says that prices could end up 10-15% lower than the peak of 2006 - if policymakers move quickly to stem the wave of foreclosures.

But if they don't, and if interest rates are forced up by the inflationary worries, he says prices could fall by 15% to 20%.

Mr Zandi says there are three factors that have caused the property crash:

* speculative purchase of homes in hot areas by investors who intended to "flip" them, reselling quickly at a profit;

* the availability of easy credit, where mortgages were granted to people who could not really afford them;

* and the over-supply of new houses by builders.

Here is the link to the full BBC report: http://news.bbc.co.uk/2/hi/business/7078492.stm

TG2

[BEENTHEREDONETHAT]

It seems that if we get high inflation it will drive up the price of building a new home, that in turn will put upward pressure on existing homes. Maybe.

[Artamus]

inancially distressed person does is to get rid of his 'holiday home' in Spain, the Bahamas, Thailand or wherever,

I would imagine people likely to be "financially distressed" would not own overseas properties in the first place. Those that can afford that are probably one of the last to be affected.

[PeaceBlondie]

I don't know, but I doubt this is Thailand related. Most Americans who are here for the long term have already sold their only home(s). Most homes in the USA have enough equity to weather the storm, or they simply aren't up for sale. Some Americans with Thai families may have less spare cash to wire to Thailand.

[pkrv]

I'm sorry I really, really cant help myself

Those from the US, who own property outside of the US, may soon be able to buy outright the ENTIRE freehold of the US, if of course they repatriate their funds. but the repatriated funds may be taxed to offset this, and fill someones pocket designer economics at play

Edited November 12, 2007 by pkrv

[TonyLeung]

I'm sorry I really, really cant help myself

Those from the US, who own property outside of the US, may soon be able to buy outright the ENTIRE freehold of the US, if of course they repatriate their funds. but the repatriated funds may be taxed to offset this, and fill someones pocket designer economics at play

then they will be reintroduced to property taxes. a nice 500k home in the usa might pay 15k a year in property tax.

[backflip]

"I'd like to point out the latest BBC report on the real estate meltdown in the US. Moody's now predicting it will move into the entire economy - and affect ALL housing markets."

Where do you find this stuff? There is no "meltdown" of real estate values in the US. The sub-prime problem has DOUBLED the mortgage default rate...from one percent to two percent. Ho hum.

You are convinced that this will cause US citizens to dump their Thai housing at a lost, just to recoup "something", and you can pick up a few bargains. You, bingobongo, and thedude are funny guys.

[thaigene2]

"I'd like to point out the latest BBC report on the real estate meltdown in the US. Moody's now predicting it will move into the entire economy - and affect ALL housing markets."

Where do you find this stuff? There is no "meltdown" of real estate values in the US.

Must be your Alzheimer's Backflip -- look, here it is AGAIN - any more issues of dementia?

As quoted> "Here is the link to the full BBC report: http://news.bbc.co.uk/2/hi/business/7078492.stm

[thaigene2]

I don't know, but I doubt this is Thailand related. Most Americans who are here for the long term have already sold their only home(s). Most homes in the USA have enough equity to weather the storm, or they simply aren't up for sale. Some Americans with Thai families may have less spare cash to wire to Thailand.

Never question the Mods - I know..but S-Blond - I'll bet there are LOTS of expats with a foot in both markets..thinking about which way to jump if things look like they may be turning bad? Yes, many (perhaps not the retirees) are here cause we love the country, our Thai woman/en, our kids - and even simply just the lifestyle... But if those fortunate enough to have a CHOICE in a shit+y situation for their families - which way would they jump??

Edited November 13, 2007 by thaigene2

[pkrv]

I don't know, but I doubt this is Thailand related. Most Americans who are here for the long term have already sold their only home(s). Most homes in the USA have enough equity to weather the storm, or they simply aren't up for sale. Some Americans with Thai families may have less spare cash to wire to Thailand.

Never question the Mods - I know..but S-Blond - I'll bet there are LOTS of expats with a foot in both markets..thinking about which way to jump if things look like they may be turning bad? Yes, many (perhaps not the retirees) are here cause we love the country, our Thai woman/en, our kids - and even simply just the lifestyle... But if those fortunate enough to have a CHOICE in a shit+y situation for their families - which way would they jump??

Then we have a tough enough road to travel - any help?

[rken]

I don't know, but I doubt this is Thailand related. Most Americans who are here for the long term have already sold their only home(s). Most homes in the USA have enough equity to weather the storm, or they simply aren't up for sale. Some Americans with Thai families may have less spare cash to wire to Thailand.

Never question the Mods - I know..but S-Blond - I'll bet there are LOTS of expats with a foot in both markets..thinking about which way to jump if things look like they may be turning bad? Yes, many (perhaps not the retirees) are here cause we love the country, our Thai woman/en, our kids - and even simply just the lifestyle... But if those fortunate enough to have a CHOICE in a shit+y situation for their families - which way would they jump??

Then we have a tough enough road to travel - any help?

I have my foot in the US and LOS. Not sure whick way I will jump if any.

However Hawaii has seen a 25% drop in Prices but that was only after going up 4% a month for about two years. (big Island) Prices had been depressed there for years and probable have remained so for a few more years had it not been for Trump and Opera.

Just sold a house in Hawaii and building another one. I wouldn't sell out there as it would be hard to get back in the market if I wanted to live back there more permantly, but its a nice place to visit about 4 months out of the year. aloha

[london]

Interesting thread.

There are many issues here, but probably the most pertinent is whether the US sub-prime and alt-A mortgage meltdown will effect the Thai (or for that matter..any other) property market ?

As I see it, the correction in this segment of the US market is based on aspirational purchases by people who just didn't have the financial resources to actually buy a home in the first place. Sure, it would be great to buy a home/investment on 1% or 2% interest, however, this was never viable and was going to end sometime....either in tears (as it is now) or with people making a packet from their property "investment" in an ever rising property market.

I agree with a post above that says that it is doubtful whether anyone without a certain amount of financial resources would have bought in Thailand (or anywhere overseas) in the first place. This is no doubt correct.

However, that is not to say that there won't be a fallout from this problem in the US...but the question is whether it will effect the property market in Thailand or other countries or have an overall impact on the credit markets.

Personally, I feel that it will be the latter.

These days, banks, financial instituations, insurance companies, are all inter-related. A problem in one market, if large enough, will have some impact in other markets....be it a simple re-pricing of risk, or even a credit crunch.

For Thailand, I feel that we may see a re-pricing of risk.....but that will be it. Perhaps interest rates may go up over a period of 6-9 months by 1.5%.....but this too may be short-lived....as then too you have the problem of an even stronger Baht. If all pans out in the US by 2009, and the whole of the US avoids a recession, then it will hopefully be back to business as usual.

After all, Thailand has a trade surplus, strong employment, and is a hub in the fastest growing region on the planet. This isn't likely to change anytime soon.

Personally, I'm bullish on the Thai economy and the Thai property market. I see no reason to change this view.

[pkrv]

Interesting thread.

There are many issues here, but probably the most pertinent is whether the US sub-prime and alt-A mortgage meltdown will effect the Thai (or for that matter..any other) property market ?

As I see it, the correction in this segment of the US market is based on aspirational purchases by people who just didn't have the financial resources to actually buy a home in the first place. Sure, it would be great to buy a home/investment on 1% or 2% interest, however, this was never viable and was going to end sometime....either in tears (as it is now) or with people making a packet from their property "investment" in an ever rising property market.

I agree with a post above that says that it is doubtful whether anyone without a certain amount of financial resources would have bought in Thailand (or anywhere overseas) in the first place. This is no doubt correct.

However, that is not to say that there won't be a fallout from this problem in the US...but the question is whether it will effect the property market in Thailand or other countries or have an overall impact on the credit markets.

Personally, I feel that it will be the latter.

These days, banks, financial instituations, insurance companies, are all inter-related. A problem in one market, if large enough, will have some impact in other markets....be it a simple re-pricing of risk, or even a credit crunch.

For Thailand, I feel that we may see a re-pricing of risk.....but that will be it. Perhaps interest rates may go up over a period of 6-9 months by 1.5%.....but this too may be short-lived....as then too you have the problem of an even stronger Baht. If all pans out in the US by 2009, and the whole of the US avoids a recession, then it will hopefully be back to business as usual.

After all, Thailand has a trade surplus, strong employment, and is a hub in the fastest growing region on the planet. This isn't likely to change anytime soon.

Personally, I'm bullish on the Thai economy and the Thai property market. I see no reason to change this view.

As usual london - great post - Personally I 'feel' if the proverbial hit the fan it would mean people have less money, and look at the baby boom generation. Would you decamp from Thailand to move home and have a minimal life style, or retrench in Thailand and have a great lifestyle. I know what I would do, and in a way that is what I am doing today along with a lot of others

[london]

As usual london - great post - Personally I 'feel' if the proverbial hit the fan it would mean people have less money, and look at the baby boom generation. Would you decamp from Thailand to move home and have a minimal life style, or retrench in Thailand and have a great lifestyle. I know what I would do, and in a way that is what I am doing today along with a lot of others

Hi PKRV.

Thank-you.

I agree.....the lifestyle that Thailand offers to even those of fairly modest means is just so far ahead of other alternatives.

I know where I prefer to be!

[bingobongo]

Hi PKRV.

Thank-you.

I agree.....the lifestyle that Thailand offers to even those of fairly modest means is just so far ahead of other alternatives.

I know where I prefer to be!

right, living in a police state/junta truly is priceless.......... let me know when the midlife crisis breaks

[ProThaiExpat]

The cited BBC article is fraught with inaccuracies and distortions and is clearly worded in inflammatory language. One thing they do make right is that Cleveland's experience of a 30% decline is not reflected in other parts of the country.

The agent in question is clearly one of the many agents who get their licenses and flock into the industry during the good times and then when there is the inevitable cyclical downturn, leave the market and go back being a housewife.

To say that this downturn in the housing market is the first one since the great depression is such b.s. as I wonder why anyone would give any credence to the article's contents. Thats ingnoring the clear anti-American bias of BBC.

[backflip]

I have a quarter-acre home site in Florida. Last year, the accessed value was $150K; this year, the accessed value is $130K. Before you start prancing around, gloating that home values are "melting down" and "plummeting", I should tell you that I bought the land for $3000 a decade ago.

[pkrv]

Hi PKRV.

Thank-you.

I agree.....the lifestyle that Thailand offers to even those of fairly modest means is just so far ahead of other alternatives.

I know where I prefer to be!

right, living in a police state/junta truly is priceless.......... let me know when the midlife crisis breaks

Bingo let me explain life.

Porsche Boxster - Z frame convertable top - 12 seconds up, and 12 seconds down.

Top goes up

Top goes down

Top goes up

Top goes down

Top goes up

Top goes down

Top goes up

Top goes down

Top goes up

Top goes down

Top goes up

Top goes down

Top goes up

Top goes down

Top goes up

Top goes down

Top goes up

Top goes down

Whilst some can continue this forever others move on, Boxster sold - Condominium in Bangkok bought.

[naklang]

I have a quarter-acre home site in Florida. Last year, the accessed value was $150K; this year, the accessed value is $130K. Before you start prancing around, gloating that home values are "melting down" and "plummeting", I should tell you that I bought the land for $3000 a decade ago.

Exactly. Not every region of the US is declining. Up here in Seattle, the market is going strong. Especially the condo market with almost every project selling quickly. Washington state is a bit of a microcosm and somewhat isolated from the rest of the US. Its the only state in the country with a trade SURPLUS with China. Lets just say, I'm glad I left overpriced/overtaxed California 11 years ago. House is paid off and still appreciating. Gotta love that.

[naklang]

I have a quarter-acre home site in Florida. Last year, the accessed value was $150K; this year, the accessed value is $130K. Before you start prancing around, gloating that home values are "melting down" and "plummeting", I should tell you that I bought the land for $3000 a decade ago.

Exactly. Not every region of the US is declining. Up here in Seattle, the market is going strong. Especially the condo market with almost every project selling quickly. Washington state is a bit of a microcosm and somewhat isolated from the rest of the US. Its the only state in the country with a trade SURPLUS with China. Lets just say, I'm glad I left overpriced/overtaxed California 11 years ago. House is paid off and still appreciating. Gotta love that.

And there is good reason why President Hu came up here before going to see Bush in the "Other" Washington. Speaks volumes about who is really running the country. Hint: men who know how to CREATE wealth and commerce. Not waste and destroy it.

http://www.usatoday.com/money/world/2006-0...orts-usat_x.htm

China will continue to be a huge export growth story for the US and for Washington state especially. As China's labor and energy costs continue to rise, the trade gap will narrow predictively and significantly. Overall, the US is doing amazing well in spite of the horrendous management in place right now. All the tabloid headlines make it sound like the end of the world over here, but everybody I know is doing pretty darn good.

[thaigene2]

The cited BBC article is fraught with inaccuracies and distortions and is clearly worded in inflammatory language. One thing they do make right is that Cleveland's experience of a 30% decline is not reflected in other parts of the country.

The agent in question is clearly one of the many agents who get their licenses and flock into the industry during the good times and then when there is the inevitable cyclical downturn, leave the market and go back being a housewife.

To say that this downturn in the housing market is the first one since the great depression is such b.s. as I wonder why anyone would give any credence to the article's contents. Thats ingnoring the clear anti-American bias of BBC.

Not sure what agent you're referring to. The main focus of the news story is Moody's - one of the world's main credit-rating companies. This is the company that Governments fear - when they get down-graded from AAA to BBB, etc.

One other point - the sub-prime market is not as isolated as people like to think (Moody's point too I believe). So for anyone to suggest that the credit crunch just caught up with the American low-class riff-raff is very short-sighted. In property purchase - especially in N America and the UK (though less so here in LOS for sure), there is often a 'chain' - so, I sell my starter home to the riff-raff first-time-buyers who've worked at Wall Mart for 2 years, and with that money I then buy a nicer place with the additional money I've saved, and the middle-class owner of that place does the same moving into an upper-middle class neighbourhood. However if the Mr and Mrs Wall Mart Shelf Stackers lose their loan offer, I can't buy Mr. Semi-Professionals place and he in turn cannot buy Mr. IT Start-Up's house either. Screw around with that "chain" and everyone suffers.

The IT Start Up Guy really NEEDS to sell cause he wants to take up a job in San Francisco, so he drops his price on his non-sub-prime home to get rid of it fast. Prices begin to decline. Economics 101 really...

[Gary A]

The problem that created the sub prime situation is greedy bankers. Home prices went up year after year so loans were made to people who couldn't possibly make the payments. Those people struggled for a year or two then the home had to be sold. It was sold for more than the purchase price so everyone was happy and made money. BUT, what goes up sometimes comes down. Now the housing bubble broke and many people were in the position of owing more than the house was worth. Now the bank owns a house that is worth less than they have invested in it.

The moral of the story is that those who count on making money because property goes up every year have a VERY good chance of getting hurt.

[BEENTHEREDONETHAT]

I think the banks off-loaded the loans to any corp that had money to invest, including pension funds. The banks and the developers were busy putting large billion dollar packages of loans to sell. They sold them all over the world and now the places that bought them are having to write them off.

To make the property appealing they would sell it at nothing down and 1.25% interest rate for the first year of two and then a increase as time goes on. After five years a loan for 200,000 would be at 220,000 and the payments would have gone from $670 a month to 1600 a month. So what do the people do? They walk away from it. Probably didn't have any credit to start with so a bankruptcy dosen't hurt them. These loans started in 2004 when the housing market went wild and you could sell anything. So the buyers were told to buy now and in a couple of years sell at a big profit. So now the houses woun't sell and the payments jump up out of sight.

The banks aren't worried the goverment will bail them out. Can't affort to have the banks go broke. So just print up some more money and sell some more bonds. However, the world is catching on and those may be difficult to sell. Reward greed and ignorance.

[thaigene2]

I think the banks off-loaded the loans to any corp that had money to invest, including pension funds.

That's something I haven't seen covered - though maybe it has been. The news reports keep focusing on the banks and investment houses- but I wonder about the big Pension funds. Autoworkers, teachers, nurses, civil servants. Interesting. I guess all will become clearer in the next year as they all report..