Housing Collapse and Demographics
From The New York Times:
DUBLIN — The collapse of the housing bubble in the United States is mutating into a global phenomenon, with real estate prices swooning from the Irish countryside and the Spanish coast to Baltic seaports and even parts of northern India.
This synchronized global slowdown, which has become increasingly stark in recent months, is hobbling economic growth worldwide, affecting not just homes but jobs as well.
In Ireland, Spain, Britain and elsewhere, housing markets that soared over the last decade are falling back to earth. Property analysts predict that some countries, like this one, will face an even more wrenching adjustment than that of the United States, including the possibility that the downturn could become a wholesale collapse.
To some extent, the world’s problems are a result of American contagion. As home financing and credit tightens in response to the crisis that began in the subprime mortgage market, analysts worry that other countries could suffer the mortgage defaults and foreclosures that have afflicted California, Florida and other states.
Citing the reverberations of the American housing bust and credit squeeze, the International Monetary Fund last Wednesday cut its forecast for global economic growth this year and warned that the malaise could extend into 2009.
“The problems in the U.S. are being transmitted to Europe,” said Michael Ball, professor of urban and property economics at the University of Reading in Britain, who studies housing prices. “What’s happening now is an awful lot more grief than we expected.”
You can read the entire story HERE
Yes, some banks made loans to a few people who really couldn’t afford the housing, and yes, a small percentage have been foreclosed. Is the entire downturn in the housing market caused by the sub-prime loan debacle?
In the USA, there is a HUGE demographic, the baby boomers, who have already started retiring. As they retire, many are downsizing, looking for a simpler way of life. Could it be that there is more than one factor acting here? Could housing demand be dropping? Wasn’t there a similar post World War II baby boom in Europe? How will the boomers’ retirement effect the US economy?
Kuwait has one long continuous baby boom – seems to me the housing prices here continue to go up!
12 Comments »
Leave a reply to momcat Cancel reply
Recent Comments
Catherine on Donna Leon Crossing Cultu… intlxpatr on Ignoring the Law thani on Ignoring the Law Anon. on British Soldier Kidnapped, Esc… Reeva Mills on Cahors to Bordeaux, Preparing… Wikipedia Donate Button
Amazina
Early Voting in Florida
Here There and Everywhere 
unless kuwait develops hard core ghettos in the central residential areas, prices will continue to go up.
God bless you, Mrm, you always comment on the more substantive posts. I think you even read them. No wonder I look forward to your comments.
Analysts were anticipating the bubble to burst in Ireland for ages, even before the Subprime debacle. The prices in Ireland have gotten just insane.
I mean the apartment prices in Ireland are comparable to those in NYC but that could also be due to the fact that supply is very limited.
Anon, doesn’t Ireland also have a booming high tech industry, and a lot of young people with high salaries, a peace dividend after decades of unrest and turbulence? Wouldn’t that continue to drive prices? Or have there also been bad loans in Ireland?
*blushf*
Intlxpatr, you are right. To blame economic woes on a single thing is simplistic. It’s like trying to blame the climate on any one thing. There are natural cycles to these things but the media has to have something/someone to point the finger at. Housing prices have cycled up and down in the various markets in the US over the years. All it takes is a movement of people saying, “I’m not going to pay these prices, I’ll rent.” and the market swings down for a while. There are still markets in the US that are in growth mode, ours being one of them.
Momcat “ours being one of them” damn. I’ll never get my house with a view of the sound and the Olympics. 😦
You are not keeping up with the news. House prices in Kuwait have crashed in the last few months by as much as 50%.
http://www.aljarida.com/aljarida/Article.aspx?id=55419
(Arabic)
Intlxpatr, Yes Ireland does have all these things at the moment but everyone is afraid that the four tech companies (Dell, Intel, Microsoft and HP I think) which account to an inconceivable 20% of GDP will pull out at any moment due to the increases in wages which is directly caused by inflation (due to the EU’s interest rates’ policies).
Anonymous Coward, I can sound out a little arabic, but reading the newspaper requires grammar and vocabulary I don’t have . . . and no, I haven’t seen anything in the English press about housing prices falling. So food is up, but housing prices are down?
Yikes, Anon, 20%? That is really scary, that kind of dependency.
Housing prices are down due to a new law that was passed making it illegal for companies to own housing lands. The companies are trying to get rid of the lands they have, this created a supply.
Here is a funny, but understandable translation from google
http://translate.google.com/translate?u=http%3A%2F%2Fwww.aljarida.com%2Faljarida%2FArticle.aspx%3Fid%3D55419&langpair=ar%7Cen&hl=en&ie=UTF-8
Note, “Abu Pie” or “the pie” is the “Abu Fatira” Area!
Hahahahahahaha – “Abu Pie” Doncha just love it? Thank you, AC, for helping me out. And yes, not it all makes sense – more supply on the market . . .basic econ 1.