Showing posts with label Properties. Show all posts
Showing posts with label Properties. Show all posts
Friday, 7 September 2012
Monday, 12 December 2011
Ask an expert: Shares v houses
Shares v houses
March 2, 2011
Question: The idea of common sense investing needs to be taught as a mandatory subject in our education system. But if you BUY Australian blue chips stocks and hold them over your lifetime the magic rule of 72, with marvelous compounding effects will return profits far in excess of an average residential home.
Take for example Westfield shopping Centers, if you invested just $1,000 back in 1960 and then reinvested the dividends, it would now be worth over $132 million dollars!!!
The average house purchased for $1,000 at that time would now only be worth around $500,000. That means shares outperform houses by a margin of over 264 times!!!
I not recommending buying Westfield shares, but what I'm saying is the investment thought process in this country is too biased towards real estate, through elements like our parents, media, political benefits, etc.
Over our lifetime there are much more rewarding investments we could make. The most intelligent advice I could give any young couple now would be something that most people don't want to hear!
Don't buy an OVERPRICED house, instead invest all your savings into the Big 4 Bank stocks, so you can retire much earlier from receiving Fully Franked TAX FREE dividends from all the other sheep in mortgage stress for the next 30+ years.
"Fortune favors the brave"
Answer: Australia seems to be divided into share lovers and property lovers and I tend to be on your side. The benefit of shares is that you can buy and sell quickly and in part and never have the worries of maintenance, land tax, vacancies, etc. On the other hand you can't generalise about the property market as some properties have done spectacularly well. For most people a diversified portfolio is still the way to go.
Read more: http://www.smh.com.au/money/ask-an-expert/blogs/ask-an-expert/shares-v-houses-20110301-1bcfu.html#ixzz1gHDqVARv
March 2, 2011
Question: The idea of common sense investing needs to be taught as a mandatory subject in our education system. But if you BUY Australian blue chips stocks and hold them over your lifetime the magic rule of 72, with marvelous compounding effects will return profits far in excess of an average residential home.
Take for example Westfield shopping Centers, if you invested just $1,000 back in 1960 and then reinvested the dividends, it would now be worth over $132 million dollars!!!
The average house purchased for $1,000 at that time would now only be worth around $500,000. That means shares outperform houses by a margin of over 264 times!!!
I not recommending buying Westfield shares, but what I'm saying is the investment thought process in this country is too biased towards real estate, through elements like our parents, media, political benefits, etc.
Over our lifetime there are much more rewarding investments we could make. The most intelligent advice I could give any young couple now would be something that most people don't want to hear!
Don't buy an OVERPRICED house, instead invest all your savings into the Big 4 Bank stocks, so you can retire much earlier from receiving Fully Franked TAX FREE dividends from all the other sheep in mortgage stress for the next 30+ years.
"Fortune favors the brave"
Answer: Australia seems to be divided into share lovers and property lovers and I tend to be on your side. The benefit of shares is that you can buy and sell quickly and in part and never have the worries of maintenance, land tax, vacancies, etc. On the other hand you can't generalise about the property market as some properties have done spectacularly well. For most people a diversified portfolio is still the way to go.
Read more: http://www.smh.com.au/money/ask-an-expert/blogs/ask-an-expert/shares-v-houses-20110301-1bcfu.html#ixzz1gHDqVARv
Investing an inheritance
March 9, 2011
Question: I am 23 years old and have recently inherited $100,000. I am uncertain as to whether I should simply leave this money in a high interest cash account, or invest in shares. Although I have studied some finance, I am unsure as to where I should go for impartial share advice. What is the best thing to do with this amount of cash at present?
Answer: Your best strategy depends on your goals because it is unwise to invest money in property or shares unless you have at least a seven to ten year timeframe in mind. Leave it in a high interest online cash account while you examine your options but cash is probably the best place for it if you are thinking about buying a house in the next three or four years.
Read more: http://www.smh.com.au/money/ask-an-expert/blogs/ask-an-expert/investing-an-inheritance-20110307-1bkop.html#ixzz1gHF0FT5a
Saturday, 3 December 2011
Spain's banks hold billions of euros in properties that will be tough to sell
The Real Threat Facing Spanish Lenders
Spain's banks hold billions of euros in properties that will be tough to sell
One analyst estimates it could take 40 years for banks to unload their holdings Denis Doyle/Bloomberg
While Europe’s sovereign debt crisis grabs all the headlines, distressed real estate may pose a bigger threat to the Spanish banking system. The country’s lenders hold about £30 billion ($41 billion) of unfinished homes and land that’s “unsellable,” according to Pablo Cantos, managing partner of MaC Group in Madrid. MaC Group is a risk adviser to several leading Spanish banks. “I’m really worried about the small and medium-size banks whose business is 100 percent in Spain and based on real estate growth,” says Cantos. He adds that only bigger, more diversified lenders such asBanco Santander (STD), Banco Bilbao Vizcaya Argentaria (BBVA), La Caixa, and Bankia are strong enough to survive their real estate losses: “I foresee Spain will be left with just four large banks.”
Spain’s central bank tightened rules last year to force lenders to set aside more reserves against property seized in exchange for unpaid debts and is pressing them to sell assets rather than wait for the market to recover from its four-year decline. Yet unloading the real estate may be difficult or impossible. Bank-owned land “in the middle of nowhere” and unfinished residential units will take as long as 40 years to sell, Cantos predicts. Fernando Rodríguez de Acuña Martínez, a consultant at Madrid-based adviser RR de Acuña & Asociados, has a more dire view. About 43 percent of unsold new homes are in exurbs far from city centers, he says, and “if you take into account population growth for these areas, there’s no demand for them. Not now or in 10 years.”
Dozens of Spanish banks have failed or been absorbed since the economic crisis ended a debt-fueled property boom in 2008. The cost to taxpayers of cleaning up the industry’s books has come to £17.7 billion so far. Banks may face increased pressure following Nov. 20 national elections that propelled the conservative People’s Party to power. Its leader, Mariano Rajoy, has said the “cleanup and restructuring” of the banking system is his top priority.
“Stricter provisioning rules for land need to be implemented,” says Luis de Guindos, director of PricewaterhouseCoopers and IE Business School Center for Finance. De Guindos has been named by newspapers as a contender for finance minister in a Rajoy government. “Many banks will be able to deal with it, but others won’t.”
Idealista, Spain’s largest real estate website, currently advertises 45,912 bank-owned homes there, up from 29,334 in November 2010. In 2008 it didn’t list any.
Spanish home prices have fallen 28 percent, on average, from their peak in April 2007, according to a Nov. 2 joint report by Fotocasa.es, a real estate website, and the IESE Business School. Land values fell 33 percent nationwide. Fernando Acuña Ruiz, managing partner of Taurus Iberica Asset Management, a Spanish mortgage servicer, expects the slide in home prices to continue. “Spain has 1 million new homes that won’t be completely absorbed by the market until the middle of 2017,” he says. “Prices will fall a further 15 percent to 20 percent in the next two to three years.”
Banks are reluctant to acknowledge the size of the declines. There is an “enormous” gap between prices offered by lenders and what investors are willing to pay, preventing sales of large property portfolios, MaC Group’s Cantos says. He estimates that prime assets can be sold at a 30 percent discount, while portfolios comprising land, residential, and commercial real estate may sell only after 70 percent discounts. “Therein lies the problem,” he says. “Banks have already provisioned for a 30 percent loss, but if you are selling at 70 percent discount, you have to take another 40 percent loss. Which small and medium-size banks can take such a hit?”
The bottom line: With home prices down 28 percent from the peak, real estate losses may swamp smaller lenders, leaving Spain with four big banks.
Smyth is a reporter for Bloomberg News.
Friday, 5 November 2010
Tuesday, 22 December 2009
Govt said planning compulsory acquisition of land
Govt said planning compulsory acquisition of land
By Vasantha Ganesan
Published: 2009/12/22
The government plans to compulsorily buy a piece of land measuring 0.38ha on Jalan Tun Razak, Kuala Lumpur, from property developer IGB Corp Bhd (1597).
The land is near Megan Phileo Promenade and a stone's throw from the Petronas Twin Towers.
Should the government pay the prevailing price of around RM1,200 per sq ft for the piece of land, the land may be sold for some RM40 million, a source said.
It is understood that the government may build a fire station on that location.
"IGB has already received a development order to build 166 units of high-end service apartments with 200,000 sq ft of net saleable area," a source told Business Times.
The source added that IGB hopes to get at least RM1,200 per sq ft, given that land prices in vicinity of the Kuala Lumpur City Centre ranges from RM1,900 to RM2,200 per sq ft.
Should IGB be paid RM1,200 per sq ft, it may get some RM40 million from the government.
"The project is in the pipeline, but it has not been launched yet," another source said.
Citigroup in a research report dated December 16 said that the book cost for the land is RM6.4 million or RM156 per sq ft.
"Typically, compulsory acquisition is done at market price (but what is the market price is also subjective) ... In the property market report, the last transaction in the KLCC area (off Jalan Tun Razak) was close to RM1,500 per sq ft," the report said.
It added that should the land be sold at RM1,200 per sq ft, IGB has a potential after tax-gain of RM32 million.
http://www.btimes.com.my/Current_News/BTIMES/articles/igbforce/Article/index_html
By Vasantha Ganesan
Published: 2009/12/22
The government plans to compulsorily buy a piece of land measuring 0.38ha on Jalan Tun Razak, Kuala Lumpur, from property developer IGB Corp Bhd (1597).
The land is near Megan Phileo Promenade and a stone's throw from the Petronas Twin Towers.
Should the government pay the prevailing price of around RM1,200 per sq ft for the piece of land, the land may be sold for some RM40 million, a source said.
It is understood that the government may build a fire station on that location.
"IGB has already received a development order to build 166 units of high-end service apartments with 200,000 sq ft of net saleable area," a source told Business Times.
The source added that IGB hopes to get at least RM1,200 per sq ft, given that land prices in vicinity of the Kuala Lumpur City Centre ranges from RM1,900 to RM2,200 per sq ft.
Should IGB be paid RM1,200 per sq ft, it may get some RM40 million from the government.
"The project is in the pipeline, but it has not been launched yet," another source said.
Citigroup in a research report dated December 16 said that the book cost for the land is RM6.4 million or RM156 per sq ft.
"Typically, compulsory acquisition is done at market price (but what is the market price is also subjective) ... In the property market report, the last transaction in the KLCC area (off Jalan Tun Razak) was close to RM1,500 per sq ft," the report said.
It added that should the land be sold at RM1,200 per sq ft, IGB has a potential after tax-gain of RM32 million.
http://www.btimes.com.my/Current_News/BTIMES/articles/igbforce/Article/index_html
Friday, 18 December 2009
Evaluating your property investment
Evaluating your property investment
Mon Dec 14, 2009 9:12am
Investing requires discipline - one can’t blindly invest money without knowing what one is getting into. Investing into Real Estate is no different. Here is a checklist that you should use when evaluating your property investment.
1. Desirability of the location: This is the single most important criterion to value real estate.
2. Reputation of the builder and quality of construction: Properties by some developers are worth a lot more than others because of quality. Don’t always go for the lower price because there could be huge execution risk with less reputed builders
3. Payment terms: Time-linked or construction linked payment plan, and cash vs. cheque component. This will affect your cashflow in other aspects of your personal finances. (Click here to know more)
4. Project approvals and licenses: This might affect your ability to get a home loan if project approvals have not come through yet.
5. Contractual guarantees: For assured return schemes get a written guarantee from the builder and post-dated cheques in your name. Understand the delivery date of your project
6. Demand and supply: Over or under-supply will affect both the capital appreciation potential and the rental yield you might expect.
7. Floor space index and carpet area: Local rules on the built up area and the available square footage (carpet area) might reduce the usable area. Recognize that what you pay for might not be what you get
Tips on the process of Real Estate Investing
When it comes to the process of making a property investment and exiting from it, there are a few things that you must keep in mind.
1. Transaction costs: When you buy or sell property, there are many transaction costs associated with these activities. You might have to pay a brokerage fee to the intermediary. If you have made a gain on the sale, there will also likely be a resulting capital gains tax liability.
You will also face some expenses related to the stamp duty at the time of the transfer and registration costs of the property. All these costs can add a material amount to the purchase or sale price of your investment.
2. Liquidity: Unlike stocks that you can sell readily and convert into money in the hand within a couple of days, buying and selling property takes time. Your ability to convert your investment into cash in hand is quite restricted.
Its not uncommon for deals to take up to one year, and still fall through at the last minute. So if you feel that you can sell your property to pay for your child’s education abroad once he/she gets admission, you might be in for a shock. To have easy access to this money, you might be better off putting it into a financial asset that you can access at a short notice (e.g., fixed deposit, or liquid fund).
3. Cash: Property investments are not always the cleanest when it comes to cash versus cheque component of paying for deals. Unlike mutual funds where KYC norms require that the investment be made in cheque and the PAN card details be shared, real estate investments can have a huge cash component to them. This might not suit everyone.
http://in.reuters.com/article/personalFinance/idINIndia-43604720091214?sp=true
Mon Dec 14, 2009 9:12am
Investing requires discipline - one can’t blindly invest money without knowing what one is getting into. Investing into Real Estate is no different. Here is a checklist that you should use when evaluating your property investment.
1. Desirability of the location: This is the single most important criterion to value real estate.
2. Reputation of the builder and quality of construction: Properties by some developers are worth a lot more than others because of quality. Don’t always go for the lower price because there could be huge execution risk with less reputed builders
3. Payment terms: Time-linked or construction linked payment plan, and cash vs. cheque component. This will affect your cashflow in other aspects of your personal finances. (Click here to know more)
4. Project approvals and licenses: This might affect your ability to get a home loan if project approvals have not come through yet.
5. Contractual guarantees: For assured return schemes get a written guarantee from the builder and post-dated cheques in your name. Understand the delivery date of your project
6. Demand and supply: Over or under-supply will affect both the capital appreciation potential and the rental yield you might expect.
7. Floor space index and carpet area: Local rules on the built up area and the available square footage (carpet area) might reduce the usable area. Recognize that what you pay for might not be what you get
Tips on the process of Real Estate Investing
When it comes to the process of making a property investment and exiting from it, there are a few things that you must keep in mind.
1. Transaction costs: When you buy or sell property, there are many transaction costs associated with these activities. You might have to pay a brokerage fee to the intermediary. If you have made a gain on the sale, there will also likely be a resulting capital gains tax liability.
You will also face some expenses related to the stamp duty at the time of the transfer and registration costs of the property. All these costs can add a material amount to the purchase or sale price of your investment.
2. Liquidity: Unlike stocks that you can sell readily and convert into money in the hand within a couple of days, buying and selling property takes time. Your ability to convert your investment into cash in hand is quite restricted.
Its not uncommon for deals to take up to one year, and still fall through at the last minute. So if you feel that you can sell your property to pay for your child’s education abroad once he/she gets admission, you might be in for a shock. To have easy access to this money, you might be better off putting it into a financial asset that you can access at a short notice (e.g., fixed deposit, or liquid fund).
3. Cash: Property investments are not always the cleanest when it comes to cash versus cheque component of paying for deals. Unlike mutual funds where KYC norms require that the investment be made in cheque and the PAN card details be shared, real estate investments can have a huge cash component to them. This might not suit everyone.
http://in.reuters.com/article/personalFinance/idINIndia-43604720091214?sp=true
Thursday, 26 November 2009
Asian Property Market Bubble Threatens In China And Singapore
Asian Property Market Bubble Threatens In China And Singapore
Published on: Wednesday, November 25, 2009 Written by: Property Wire
The threat of an Asian property market bubble have some concerned that government stimulus plans have worked too well, and have simply lead to unbridled speculation and a glut of development. Yet the low rate of home ownership in the region suggests there is still capacity for growth, even with prices climbing. Meanwhile, federal authorities in Singapore and China continue to keep a close watch over the direction of their real estate markets.
The government in Singapore will continue to monitor real estate prices to see if further measures are needed to cool the market to avoid a property bubble but officials said that so far cooling measures are working.
Many markets in Asia including Singapore, Malaysia and China have seen property prices rise in recent months amid fears that a mini boom could dent recovering markets and lead to another down turn.
But Singapore’s National Development Minister Mah Bow Tan said that releasing more land for development and making it harder for property buyers to defer payments seems to be dampening speculative demand.
‘The government will continue to monitor the property market closely and assess the market response to the measures introduced before deciding whether further measures are necessary to promote a stable and sustainable property market,’ he said.
But in China opinion is divided over whether or not the government should halt its stimulus packages which have led to soaring property prices.
China should immediately halt some of its real estate stimulus policies or risk inflating a bubble, according to an opinion piece in the government owned Financial News which is published by the central bank.
It described ‘rampant speculation in the country's property market’ as like a time bomb that could threaten future growth.
‘If China does not exit its stimulus policy property prices and the market may go out of control,’ it said.
Residential property prices in China have been rising since March propelled by a slew of government measures including lower down payments and mortgage rates and tax cuts.
Rising prices have encouraged developers to break ground on new projects, with real estate investment up an annual 18.9% in the first 10 months of the year, compared with a mere 1% rise in the first two months.
While the government has welcomed this surge in building activity, which is an important pillar of the economy, some officials now worry that property development is outstripping end-user demand in some locations and that prices are not affordable for ordinary citizens.
But others say there is no risk of a property bubble.
It is not a concern according to a new report from CLSA.
It says that the country’s home ownership ratio is between 30 and 50% in first tier cities and just 25% in second tier cities suggesting that the need for first home and upgrades is strong.
‘There is strong underlying housing demand which is underpinned by a low home ownership ratio, low leverage and high income growth,’ said Nicole Wong Yim, regional head of property research.
She predicts that the government will not curb mortgages although it may ‘fine tune’ its policies rather than tightening lending.
‘There is still room for property prices to climb in China,’ she added.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.
http://www.nuwireinvestor.com/articles/asian-property-market-bubble-threatens-in-china-and-singapore-54134.aspx
Published on: Wednesday, November 25, 2009 Written by: Property Wire
The threat of an Asian property market bubble have some concerned that government stimulus plans have worked too well, and have simply lead to unbridled speculation and a glut of development. Yet the low rate of home ownership in the region suggests there is still capacity for growth, even with prices climbing. Meanwhile, federal authorities in Singapore and China continue to keep a close watch over the direction of their real estate markets.
The government in Singapore will continue to monitor real estate prices to see if further measures are needed to cool the market to avoid a property bubble but officials said that so far cooling measures are working.
Many markets in Asia including Singapore, Malaysia and China have seen property prices rise in recent months amid fears that a mini boom could dent recovering markets and lead to another down turn.
But Singapore’s National Development Minister Mah Bow Tan said that releasing more land for development and making it harder for property buyers to defer payments seems to be dampening speculative demand.
‘The government will continue to monitor the property market closely and assess the market response to the measures introduced before deciding whether further measures are necessary to promote a stable and sustainable property market,’ he said.
But in China opinion is divided over whether or not the government should halt its stimulus packages which have led to soaring property prices.
China should immediately halt some of its real estate stimulus policies or risk inflating a bubble, according to an opinion piece in the government owned Financial News which is published by the central bank.
It described ‘rampant speculation in the country's property market’ as like a time bomb that could threaten future growth.
‘If China does not exit its stimulus policy property prices and the market may go out of control,’ it said.
Residential property prices in China have been rising since March propelled by a slew of government measures including lower down payments and mortgage rates and tax cuts.
Rising prices have encouraged developers to break ground on new projects, with real estate investment up an annual 18.9% in the first 10 months of the year, compared with a mere 1% rise in the first two months.
While the government has welcomed this surge in building activity, which is an important pillar of the economy, some officials now worry that property development is outstripping end-user demand in some locations and that prices are not affordable for ordinary citizens.
But others say there is no risk of a property bubble.
It is not a concern according to a new report from CLSA.
It says that the country’s home ownership ratio is between 30 and 50% in first tier cities and just 25% in second tier cities suggesting that the need for first home and upgrades is strong.
‘There is strong underlying housing demand which is underpinned by a low home ownership ratio, low leverage and high income growth,’ said Nicole Wong Yim, regional head of property research.
She predicts that the government will not curb mortgages although it may ‘fine tune’ its policies rather than tightening lending.
‘There is still room for property prices to climb in China,’ she added.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.
http://www.nuwireinvestor.com/articles/asian-property-market-bubble-threatens-in-china-and-singapore-54134.aspx
Sunday, 18 October 2009
Ten tips to survive a property downturn
February 25, 2008
Ten tips to survive a property downturn
It’s the news that every homeowner has been fearing – house prices are definitely falling.
Halifax says prices fell 2.4 per cent in May and are now down 3.8 per cent on a year ago. Last week Nationwide also reported that prices fell 2.5 per cent in May. Most experts expect there to be plenty more bad news to come.
But there is no need to panic. Falling house prices bring opportunities for buyers. There is also plenty that sellers can do to ease the pain. Here are ten tips to help you ride out the property downturn
TIPS FOR BUYERS
Falling prices are positive
As house prices have soared, more and more first-time buyers have been priced out of the market. A slowdown could change all that as more homes fall within the range of would-be homeowners.
A downturn is also good news for people who already own a property and would like to move to a bigger home or more expensive area. Trading up gets easier in a downturn because the gap between the cost of smaller and bigger properties narrows. Say your flat is on the market for £250,000 and you are trading up to a £400,000 house. Prices in your area fall 10 per cent meaning you take a £25,000 hit on your flat but the price of the house drops by £40,000 to £360,000. That’s a net gain of £15,000.
Don't count on big discounts
If you’re holding off buying, hoping that prices will plummet, prepare to be disappointed in London and the south east as property experts believe prices will remain resilient. Analysts also expect prices in Scotland to hold up as well.
However, it doesn’t hurt to haggle. There is so much bad news around that sellers are feeling nervous – experts say that you could easily knock 10 per cent or more off the asking price.
Rent to lock in profits
If you’re convinced the market in your area is going to fall further be prepared to move into rented accommodation and wait for the market to drop before buying back in. House prices need to fall by about 4 per cent to make it financially worthwhile to sell to rent, according to property analyst Knight Frank.
Do your homework
Find out how much similar properties have sold for by typing the postcode into the website Hometrack.co.uk or Upmystreet.com. But remember that these are backward looking: they tell you what homes sold for in the past not what they are selling for now. Propertyforecasts.co.uk, which estimates future price movements for the next five years, is also worth a look, although it costs £15 for a full report.
Get your finances in order
As sentiment has soured, fewer vendors are putting their properties on to the market so you must be ready to pounce when your dream home comes along. Talk to a mortgage broker when you start looking to find out how much you can borrow and what the best deals are. You improve your chances of having access to the best deals if you have a deposit of 20 per cent or more, don't need to borrow a high income multiple and have a spotless credit record. Several brokers such as L&C (www.lcplc.co.uk) and Charcol (www.charcol.co.uk) have useful calculators which estimate how much you will be able to borrow.
AND FOR SELLERS...
Price realistically
Putting your home on the market at the right price is key if you want to guarantee a quick sale. Get several valuations from estate agents and also take a look at the websites mentioned above – then set the price somewhere in the middle. As a rule of thumb, estate agents suggest you should ask for about 5 per cent more than you realistically expect to get. However, if you really need to sell fast, set an asking price slightly lower than your ideal from the off – it looks better than desperately slashing the price at a later date.
Flexibility pays
You’ll make yourself more attractive to potential buyers if you can move out fast – it also gives them less chance to back out of the deal. Consider moving into rented accommodation if you are offered a good price but have nowhere to move to.
Don't move, extend
If you’re moving because you need extra space, extending your existing home could be cheaper and less hassle. However, you need to make the right improvements at the right price. A loft conversion is the single most valuable alteration you can make to your home, according to a study by Nationwide. By adding 300 square feet of floor space made up of an extra bedroom and bathroom you can add over 20 per cent to the value of your property. Turn a two-bedroom house into a three-bed and you can increase its value by 12 per cent. But can you bear the builders and the mess?
Don’t be afraid to pull out
Just because you’ve hoisted a “For Sale” sign doesn’t mean that you can’t change your mind if you’re not seeing the interest you hoped. Ignore the hard sell from your estate agent. They’ll probably try to convince you that there are lots of interested buyers waiting in the wings – the chances are it’s the first time you’ve heard their voice in weeks.
If you don’t need to sell, stay calm
It’s a statement of the obvious but one that, in property obsessed Britain, we often forget: if you’re already on the ladder and not planning to sell in the near future it doesn’t matter if house prices drop. The chances are that by the time you need to sell prices will be back up again. Even if they’re not think of all those juicy gains you’ve made over recent years –house prices are up an average 59 per cent over the past five years, according to Halifax. A house that was worth £120,000 at the end of 2002 was worth nearly £200,000 in December. Think about all that “free” money and stop worrying.
http://timesbusiness.typepad.com/money_weblog/2008/02/ten-tips-to-sur.html
Ten tips to survive a property downturn
It’s the news that every homeowner has been fearing – house prices are definitely falling.
Halifax says prices fell 2.4 per cent in May and are now down 3.8 per cent on a year ago. Last week Nationwide also reported that prices fell 2.5 per cent in May. Most experts expect there to be plenty more bad news to come.
But there is no need to panic. Falling house prices bring opportunities for buyers. There is also plenty that sellers can do to ease the pain. Here are ten tips to help you ride out the property downturn
TIPS FOR BUYERS
Falling prices are positive
As house prices have soared, more and more first-time buyers have been priced out of the market. A slowdown could change all that as more homes fall within the range of would-be homeowners.
A downturn is also good news for people who already own a property and would like to move to a bigger home or more expensive area. Trading up gets easier in a downturn because the gap between the cost of smaller and bigger properties narrows. Say your flat is on the market for £250,000 and you are trading up to a £400,000 house. Prices in your area fall 10 per cent meaning you take a £25,000 hit on your flat but the price of the house drops by £40,000 to £360,000. That’s a net gain of £15,000.
Don't count on big discounts
If you’re holding off buying, hoping that prices will plummet, prepare to be disappointed in London and the south east as property experts believe prices will remain resilient. Analysts also expect prices in Scotland to hold up as well.
However, it doesn’t hurt to haggle. There is so much bad news around that sellers are feeling nervous – experts say that you could easily knock 10 per cent or more off the asking price.
Rent to lock in profits
If you’re convinced the market in your area is going to fall further be prepared to move into rented accommodation and wait for the market to drop before buying back in. House prices need to fall by about 4 per cent to make it financially worthwhile to sell to rent, according to property analyst Knight Frank.
Do your homework
Find out how much similar properties have sold for by typing the postcode into the website Hometrack.co.uk or Upmystreet.com. But remember that these are backward looking: they tell you what homes sold for in the past not what they are selling for now. Propertyforecasts.co.uk, which estimates future price movements for the next five years, is also worth a look, although it costs £15 for a full report.
Get your finances in order
As sentiment has soured, fewer vendors are putting their properties on to the market so you must be ready to pounce when your dream home comes along. Talk to a mortgage broker when you start looking to find out how much you can borrow and what the best deals are. You improve your chances of having access to the best deals if you have a deposit of 20 per cent or more, don't need to borrow a high income multiple and have a spotless credit record. Several brokers such as L&C (www.lcplc.co.uk) and Charcol (www.charcol.co.uk) have useful calculators which estimate how much you will be able to borrow.
AND FOR SELLERS...
Price realistically
Putting your home on the market at the right price is key if you want to guarantee a quick sale. Get several valuations from estate agents and also take a look at the websites mentioned above – then set the price somewhere in the middle. As a rule of thumb, estate agents suggest you should ask for about 5 per cent more than you realistically expect to get. However, if you really need to sell fast, set an asking price slightly lower than your ideal from the off – it looks better than desperately slashing the price at a later date.
Flexibility pays
You’ll make yourself more attractive to potential buyers if you can move out fast – it also gives them less chance to back out of the deal. Consider moving into rented accommodation if you are offered a good price but have nowhere to move to.
Don't move, extend
If you’re moving because you need extra space, extending your existing home could be cheaper and less hassle. However, you need to make the right improvements at the right price. A loft conversion is the single most valuable alteration you can make to your home, according to a study by Nationwide. By adding 300 square feet of floor space made up of an extra bedroom and bathroom you can add over 20 per cent to the value of your property. Turn a two-bedroom house into a three-bed and you can increase its value by 12 per cent. But can you bear the builders and the mess?
Don’t be afraid to pull out
Just because you’ve hoisted a “For Sale” sign doesn’t mean that you can’t change your mind if you’re not seeing the interest you hoped. Ignore the hard sell from your estate agent. They’ll probably try to convince you that there are lots of interested buyers waiting in the wings – the chances are it’s the first time you’ve heard their voice in weeks.
If you don’t need to sell, stay calm
It’s a statement of the obvious but one that, in property obsessed Britain, we often forget: if you’re already on the ladder and not planning to sell in the near future it doesn’t matter if house prices drop. The chances are that by the time you need to sell prices will be back up again. Even if they’re not think of all those juicy gains you’ve made over recent years –house prices are up an average 59 per cent over the past five years, according to Halifax. A house that was worth £120,000 at the end of 2002 was worth nearly £200,000 in December. Think about all that “free” money and stop worrying.
http://timesbusiness.typepad.com/money_weblog/2008/02/ten-tips-to-sur.html
Sunday, 13 September 2009
Focus on how Buffett best avoids losses
List Your Top 5 Rules for Success in Investing
If I polled 1,000 investors and asked them to list their top 5 rules for success, their answers would differ from Buffett's. Here is what they would probably say:
Rule 1: Take a long term perspective.
Rule 2: Keep adding money to the market and let the magic of compounding work for you.
Rule 3: Don't try to time the market.
Rule 4: Stick to companies you understand.
Rule 5: Diversify.
Few investors would think to mention Buffett's cardinal "don't lose money" rule.
Why?
1. Avoiding losses is probably the most important tool for long-term success in investing. No investor, even Buffett, can avoid periodic losses on individual stocks. Even, if you resigned yourself to buying only at incredibly cheap prices, occasional mistakes will still occur. What differentiates Buffett from nearly all other investors is his ability to avoid yearly losses in his entire portfolio.
2. Diversification alone can't prevent losses. All diversification can do is minimise the chances that a few stocks implode (non-market risk or stock specific risk) and drag the performance of the portfolio with them. Even if you hold 100 stocks, you are forever vulnerable to "market risk," the risk that a declining market causes nearly all stocks to drop together.
3. Most investors use the market as their mechanism for avoiding losses. What does this mean? They simply sell when a stock falls below its break-even point, no matter the fundamentals. One highly touted strategy of the 1990s, espoused by Investor's Business Daily, implores investors to sell any issue that falls more than 8% below its purchase price, irrespective of events. Market timers rely on similar strategies. They make short-term bets on the direction of individual stocks and are prepared to exit quickly if the market turns against them.
4. These strategies ultimately degrade into a form of gambling, where the odds of success shrink because the investors' holding period is too short. Other investos avoid losses by continuing to hold poor-performing stocks, sometimes for years, until they rally back above their original cost. To profit from this strategy, you must pin your hopes on the market's ultimately validating your decision.
How Warren Buffett avoids yearly losses in his entire portfolio?
Warren Buffett would rather not place his faith in the hands of investors and traders. The methods he uses to lock in yearly gains take the market out of the equation.
He reckons that if he can guarantee himself returns, even in poor markets, he will ultimately be way ahead of the game.
To learn more, we should focus on how Buffett best avoids losses.
These include:
Timing the market. He is not concerned about the day-to-day fluctuations in the stock market. However, Buffett - whether by accident or calculation - must be recognized as one of the most astute market timers in history.
Convertibles. Some of Buffett's most lucrative investments in the late 1980s and early 1990s involved convertibles, which are hybrid securities that possess features of a stock and an income-producing security such as a bond or preferred stock.
Options. On a number of occsions, Buffett has expressed his disdain for derivative securities such as futures and options contracts. Because these securities are bets on shorter-term price movements within a market, they fall under the definition of "gambling" rather than of "investing." If Warren Buffett does dabble in options, and few doubt he could dabble successfully, he does so quietly. He once acknowledged writing put options on Coca-Cola's stock; at the time he was thinking of adding to his stake in the soft-drink company.
#Arbitrage. Not only did Buffett continue to beat the major market averages, but he suffered few single-year declines along the way. That second accomplishment is, by far, the more remarkable. Buffett's scorecard shows that he has increased the book value of Berkshire Hathaway's stock 35 consecutive years. In only 4 years, did the S&P 500 Index beat the growth of Berkshire's equity. Right from the start of his investment management career, Buffett resorted extensively to takeover arbitrage (the trading of securities involved in mergers) to keep his portfolio results positive. In poor market years, arbitrage activities have greatly enhanced Buffett's performance and keep returns positive. In strong markets, Buffett has exploited the profit opportunities of mergers to exceed the returns of the indexes. Benjamin Graham, Buffett's mentor, had made arbitrage one of the keystones of his teachings and money management activities at Graham-Newman between 1926 and 1956. Graham's clients were informed that some of their money would be deployed in shorter term situations to exploit irrational price discrepancies. These situations included reorganizations, liquidations, hedges involving convertible bonds and preferred stocks, and takeovers.
----
There are only 3 ways an investor can attain a long-term, loss-free track record:
1. Buy short-term Treasury bills and bonds and hold them to maturity, thereby locking in 4 to 6 percent average annual gains.
2. Concentrate on private-market investments by buying properties that consistently generate higher profits and that can sell for greater prices each year.
3. Own publicly traded securities and minimise your exposure to price fluctuations by devoiting some of the portfolio to unconventional "sure things.# "
If I polled 1,000 investors and asked them to list their top 5 rules for success, their answers would differ from Buffett's. Here is what they would probably say:
Rule 1: Take a long term perspective.
Rule 2: Keep adding money to the market and let the magic of compounding work for you.
Rule 3: Don't try to time the market.
Rule 4: Stick to companies you understand.
Rule 5: Diversify.
Few investors would think to mention Buffett's cardinal "don't lose money" rule.
Why?
- Some investors, sadly, refuse to believe that losses can occur, so accustomed are they to the unprecedented rally in the major indexes since 1987.
- Surveys done by mutual fund companies during the past few years indicate that a high percentage of individual investors still don't believe that mutual funds can lose money or that the market is capable of dropping more than 10% anymore.
- Other investors see losses as temporary setbacks or as opportunities to add to their positions.
- Still others, acting out a psychological defense mechanism, try to avoid losses by violating their own rules. They let the ticker tape infect decision making and trade in and out of winners and losers to avoid the psychological trauma of having to report a loss.
1. Avoiding losses is probably the most important tool for long-term success in investing. No investor, even Buffett, can avoid periodic losses on individual stocks. Even, if you resigned yourself to buying only at incredibly cheap prices, occasional mistakes will still occur. What differentiates Buffett from nearly all other investors is his ability to avoid yearly losses in his entire portfolio.
2. Diversification alone can't prevent losses. All diversification can do is minimise the chances that a few stocks implode (non-market risk or stock specific risk) and drag the performance of the portfolio with them. Even if you hold 100 stocks, you are forever vulnerable to "market risk," the risk that a declining market causes nearly all stocks to drop together.
3. Most investors use the market as their mechanism for avoiding losses. What does this mean? They simply sell when a stock falls below its break-even point, no matter the fundamentals. One highly touted strategy of the 1990s, espoused by Investor's Business Daily, implores investors to sell any issue that falls more than 8% below its purchase price, irrespective of events. Market timers rely on similar strategies. They make short-term bets on the direction of individual stocks and are prepared to exit quickly if the market turns against them.
4. These strategies ultimately degrade into a form of gambling, where the odds of success shrink because the investors' holding period is too short. Other investos avoid losses by continuing to hold poor-performing stocks, sometimes for years, until they rally back above their original cost. To profit from this strategy, you must pin your hopes on the market's ultimately validating your decision.
How Warren Buffett avoids yearly losses in his entire portfolio?
Warren Buffett would rather not place his faith in the hands of investors and traders. The methods he uses to lock in yearly gains take the market out of the equation.
He reckons that if he can guarantee himself returns, even in poor markets, he will ultimately be way ahead of the game.
To learn more, we should focus on how Buffett best avoids losses.
These include:
Timing the market. He is not concerned about the day-to-day fluctuations in the stock market. However, Buffett - whether by accident or calculation - must be recognized as one of the most astute market timers in history.
Convertibles. Some of Buffett's most lucrative investments in the late 1980s and early 1990s involved convertibles, which are hybrid securities that possess features of a stock and an income-producing security such as a bond or preferred stock.
Options. On a number of occsions, Buffett has expressed his disdain for derivative securities such as futures and options contracts. Because these securities are bets on shorter-term price movements within a market, they fall under the definition of "gambling" rather than of "investing." If Warren Buffett does dabble in options, and few doubt he could dabble successfully, he does so quietly. He once acknowledged writing put options on Coca-Cola's stock; at the time he was thinking of adding to his stake in the soft-drink company.
#Arbitrage. Not only did Buffett continue to beat the major market averages, but he suffered few single-year declines along the way. That second accomplishment is, by far, the more remarkable. Buffett's scorecard shows that he has increased the book value of Berkshire Hathaway's stock 35 consecutive years. In only 4 years, did the S&P 500 Index beat the growth of Berkshire's equity. Right from the start of his investment management career, Buffett resorted extensively to takeover arbitrage (the trading of securities involved in mergers) to keep his portfolio results positive. In poor market years, arbitrage activities have greatly enhanced Buffett's performance and keep returns positive. In strong markets, Buffett has exploited the profit opportunities of mergers to exceed the returns of the indexes. Benjamin Graham, Buffett's mentor, had made arbitrage one of the keystones of his teachings and money management activities at Graham-Newman between 1926 and 1956. Graham's clients were informed that some of their money would be deployed in shorter term situations to exploit irrational price discrepancies. These situations included reorganizations, liquidations, hedges involving convertible bonds and preferred stocks, and takeovers.
----
There are only 3 ways an investor can attain a long-term, loss-free track record:
1. Buy short-term Treasury bills and bonds and hold them to maturity, thereby locking in 4 to 6 percent average annual gains.
2. Concentrate on private-market investments by buying properties that consistently generate higher profits and that can sell for greater prices each year.
3. Own publicly traded securities and minimise your exposure to price fluctuations by devoiting some of the portfolio to unconventional "sure things.# "
Wednesday, 12 August 2009
Tuesday, 16 June 2009
Property prices often lag stock prices
Strategy: Property prices often lag stock prices
---
What one investor did.
"In 1989, I shocked a lot of people in my dealing room when I suddenly sold my home in Sydney, and put my sale proceeds into Deutschmarks. It was viewed as rather bizzare. However, I was convinced that the property market would start to feel the effects of the share market crash some 18 months earlier.
I was also very keen to rent a stunning apartment overlooking Sydney Harbour. It was directly opposite the Opera House, and nearly as high as the Sydney Harbour Bridge. Despite having one of the best views in the world it wasn't exactly very expensive - amazingly only a few hundred Aussie dollars a week.
Anyway, as it turned out I was right about housing prices (and fortunately the Deutschmark, which went on to rise against the Australian dollar)."
---
In general, share prices have been a good leading indicator for property prices, which often follow the direction that the stock market took two or three years earlier. The economy pushes the shares and property in generally the same direction, but with property, the reaction takes longer.
1. There are always exception to rules
Recently in 2005, however, there may have been a decoupling of the two markets, and this strategy may not have been very effective.
A few years ago, stocks were dominated by weak global economies and the tech wreck. This was followed by a persistent recovery which started after the invasion of Iraq. Housing prices on the other hand, have until recently been surging, inspired by the massive drop in housing interest rates.
So housing has not shown any tendency to follow a lead set by the share market. Whither this strategy?
It is always valuable to be aware of patterns like this and when they don't work, to try and figure out the reason. On this occasion, dramatic events have dominated each of the markets and swamped any usual behaviour.
It is not too bad. We only need among all our strategies, to be right on most occasions or on our bigger positions, to have a comparative advantage.
Don't buy or sell property just because of the share market - always wait until property prices themselves started to move in the right direction, to give you further confidence before taking action.
Ref: 100 Secret Strategies for Successful Investing by Richard Farleigh
---
What one investor did.
"In 1989, I shocked a lot of people in my dealing room when I suddenly sold my home in Sydney, and put my sale proceeds into Deutschmarks. It was viewed as rather bizzare. However, I was convinced that the property market would start to feel the effects of the share market crash some 18 months earlier.
I was also very keen to rent a stunning apartment overlooking Sydney Harbour. It was directly opposite the Opera House, and nearly as high as the Sydney Harbour Bridge. Despite having one of the best views in the world it wasn't exactly very expensive - amazingly only a few hundred Aussie dollars a week.
Anyway, as it turned out I was right about housing prices (and fortunately the Deutschmark, which went on to rise against the Australian dollar)."
---
In general, share prices have been a good leading indicator for property prices, which often follow the direction that the stock market took two or three years earlier. The economy pushes the shares and property in generally the same direction, but with property, the reaction takes longer.
1. There are always exception to rules
Recently in 2005, however, there may have been a decoupling of the two markets, and this strategy may not have been very effective.
A few years ago, stocks were dominated by weak global economies and the tech wreck. This was followed by a persistent recovery which started after the invasion of Iraq. Housing prices on the other hand, have until recently been surging, inspired by the massive drop in housing interest rates.
So housing has not shown any tendency to follow a lead set by the share market. Whither this strategy?
It is always valuable to be aware of patterns like this and when they don't work, to try and figure out the reason. On this occasion, dramatic events have dominated each of the markets and swamped any usual behaviour.
It is not too bad. We only need among all our strategies, to be right on most occasions or on our bigger positions, to have a comparative advantage.
Don't buy or sell property just because of the share market - always wait until property prices themselves started to move in the right direction, to give you further confidence before taking action.
2. Property may be the easiest market
Despite a lot of talk about whether stocks, bonds or cash are the best investment, it may be the property market that is the easiest of the markets, for three reasons:
1. You can watch the stock market for a useful buy or sell indicator, and hve plenty of time to act in the property market.
2. There are not many false trends in property prices. The market is not a listed market where everyone can see the prices - deals are done privately and price trends develop slowly and surely. You can wait for the herd to start to move and then join them for a nice journey.
3. Just about everywhere, there is no tax on capital gains on people's own homes.
Ref: 100 Secret Strategies for Successful Investing by Richard Farleigh
Monday, 30 March 2009
British property not quite a bargain yet
British property not quite a bargain yet
Saturday, 21 March 2009 23:36
“YOU REALLY SHOULD buy a property in London if you’ve got some spare cash; they’re going for a song!” a Londoner friend said recently. Indeed, after years of a property boom that saw prices triple, the UK housing market has crashed following the global credit crunch, with average house prices having fallen about 20% from their peak and the bottom of the market yet to be seen.
Anecdotes of prices of some central London properties plunging 50% — estate agent Hamptons International cites a London property worth £1million in December 2007 going for £470,000 in January 2009 — have attracted interest from investors, particularly foreign buyers drawn by bargain prices and a weak sterling. Recent figures from Hamptons reveal that properties in prime central London saw a 20% increase in European buyers in 4Q2008 y-o-y, while 12% more European and American investors registered to purchase property in the rest of the country.
Foreign interest has resulted in some central London property prices bucking the trend. According to property website Primelocation.com, prices in Mayfair and Knightsbridge rose for the fourth consecutive month in February by 0.94%, compared with the 0.56% fall in southeast London and 1.83% drop in southwest London.
Investors should, however, be aware that there may be further downside. Analysts warn that prices are set to fall further as they have yet to reach their fair value. Comparing total house prices with economic output, RAB Capital’s Dhaval Joshi said in The Observer that house prices will need to fall by another 15% before they are fairly valued. MoneyWeek reports that the UK house price-to-earnings ratio is currently 4.8, compared with the long-run trend of between 3.5 and four times, and that prices should fall another 17% to 39% before hitting fair value. Numis Securities, however, thinks house prices could fall by as much as another 55% if the market over-corrects itself to the same extent as during the 1990s recession. It’s a scary figure but highly possible, given the worsening economic outlook.
UK housing sales have remained at their lowest level since 1978, with an average of 9.5 transactions per agency over the three months to February, according to the Royal Institution of Chartered Surveyors (RICS)’s latest UK housing market survey. The Guardian reports that London agents are experiencing the worst transaction levels, with only six properties sold per agency over the three months to February.
The slowdown in transactions, however, is not due to a lack of demand. The RICS survey found that new-buyer inquiries in London jumped to a two-year high in February, as chartered surveyors reported a 44% rise in new-buyer inquiries, up from 25% in January. There is, apparently, strong interest nationwide, particularly in London and the south of England. Some analysts, however, see this as just “window shopping”, and do not foresee these inquiries leading to a marked rise in actual sales any time soon.
The reason for poor sales is the lack of funding, as the availability of mortgages tightens due to the credit crunch and first time buyers struggle to cough up the higher deposit or downpayment required — this now averages 25% of the property price, a long way from the 0% to 5% during the good times.
The current rate of mortgage approvals is still less than half of what it was a year ago, even if it has levelled out to an average of 31,000 a month for the past six months, as reported by the BBC. Last week’s indications that the Financial Services Authority may consider limiting the size of home loans in future to protect people from borrowing too much will certainly not help matters.
Grim unemployment figures — Office for National Statistics data revealed last week that unemployment has risen to its highest level in 12 years with nearly 2.03 million jobless in the three months to January — also means that would-be buyers concerned about their jobs will be reluctant to commit to a house purchase. Expectations of a further fall in prices are also holding back buyers; as Guardian Money editor Patrick Collinson said in his housing price blog recently, no one in their right mind would sink their life savings into a property if they felt it was about to drop 20% in value.
Anecdotal evidence suggests the contrary in some situations, however. Location will always matter, as well as a lack of supply. A house-hunting friend in Cambridge recounts situations where several of her offers for family homes were quickly outbid. The offers were for homes in a village location near good schools: Very few such properties ever come up in the market.
In the meantime, investors eyeing lucrative rentals should watch out for falling rental rates in London, where the top-end rental property market has been hard hit by cutbacks on employees’ rental allowance and by an exodus of financial expats from the City. According to Primelocation.com, prime London letting prices have fallen for the 11th consecutive month in February, registering 13.7% lower than the same time last year. Stock levels are up 97% on last year, as house sellers unable to secure a good price resort to renting out their properties instead. More and more of these “unplandlords” are expected to enter the market as the property sales market is not expected to bounce back any time soon, adds property expert Sarah Beeny in the Evening Standard.
Investors with spare cash would do well to tread carefully and do their homework before responding to the siren call of bargain British property.
Lim Yin Foong was editor of Personal Money, a Malaysian personal finance magazine published by The Edge Communications, from 2001 to 2006. She is currently based in the UK.
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British property not quite a bargain yet
Saturday, 21 March 2009 © 2009 - The Edge Singapore
Last Updated on Sunday, 22 March 2009 13:53
http://www.theedgesingapore.com/blogsheads/999-lim-yin-foong-2009/3138-british-property-not-quite-a-bargain-yet.html
Saturday, 21 March 2009 23:36
“YOU REALLY SHOULD buy a property in London if you’ve got some spare cash; they’re going for a song!” a Londoner friend said recently. Indeed, after years of a property boom that saw prices triple, the UK housing market has crashed following the global credit crunch, with average house prices having fallen about 20% from their peak and the bottom of the market yet to be seen.
Anecdotes of prices of some central London properties plunging 50% — estate agent Hamptons International cites a London property worth £1million in December 2007 going for £470,000 in January 2009 — have attracted interest from investors, particularly foreign buyers drawn by bargain prices and a weak sterling. Recent figures from Hamptons reveal that properties in prime central London saw a 20% increase in European buyers in 4Q2008 y-o-y, while 12% more European and American investors registered to purchase property in the rest of the country.
Foreign interest has resulted in some central London property prices bucking the trend. According to property website Primelocation.com, prices in Mayfair and Knightsbridge rose for the fourth consecutive month in February by 0.94%, compared with the 0.56% fall in southeast London and 1.83% drop in southwest London.
Investors should, however, be aware that there may be further downside. Analysts warn that prices are set to fall further as they have yet to reach their fair value. Comparing total house prices with economic output, RAB Capital’s Dhaval Joshi said in The Observer that house prices will need to fall by another 15% before they are fairly valued. MoneyWeek reports that the UK house price-to-earnings ratio is currently 4.8, compared with the long-run trend of between 3.5 and four times, and that prices should fall another 17% to 39% before hitting fair value. Numis Securities, however, thinks house prices could fall by as much as another 55% if the market over-corrects itself to the same extent as during the 1990s recession. It’s a scary figure but highly possible, given the worsening economic outlook.
UK housing sales have remained at their lowest level since 1978, with an average of 9.5 transactions per agency over the three months to February, according to the Royal Institution of Chartered Surveyors (RICS)’s latest UK housing market survey. The Guardian reports that London agents are experiencing the worst transaction levels, with only six properties sold per agency over the three months to February.
The slowdown in transactions, however, is not due to a lack of demand. The RICS survey found that new-buyer inquiries in London jumped to a two-year high in February, as chartered surveyors reported a 44% rise in new-buyer inquiries, up from 25% in January. There is, apparently, strong interest nationwide, particularly in London and the south of England. Some analysts, however, see this as just “window shopping”, and do not foresee these inquiries leading to a marked rise in actual sales any time soon.
The reason for poor sales is the lack of funding, as the availability of mortgages tightens due to the credit crunch and first time buyers struggle to cough up the higher deposit or downpayment required — this now averages 25% of the property price, a long way from the 0% to 5% during the good times.
The current rate of mortgage approvals is still less than half of what it was a year ago, even if it has levelled out to an average of 31,000 a month for the past six months, as reported by the BBC. Last week’s indications that the Financial Services Authority may consider limiting the size of home loans in future to protect people from borrowing too much will certainly not help matters.
Grim unemployment figures — Office for National Statistics data revealed last week that unemployment has risen to its highest level in 12 years with nearly 2.03 million jobless in the three months to January — also means that would-be buyers concerned about their jobs will be reluctant to commit to a house purchase. Expectations of a further fall in prices are also holding back buyers; as Guardian Money editor Patrick Collinson said in his housing price blog recently, no one in their right mind would sink their life savings into a property if they felt it was about to drop 20% in value.
Anecdotal evidence suggests the contrary in some situations, however. Location will always matter, as well as a lack of supply. A house-hunting friend in Cambridge recounts situations where several of her offers for family homes were quickly outbid. The offers were for homes in a village location near good schools: Very few such properties ever come up in the market.
In the meantime, investors eyeing lucrative rentals should watch out for falling rental rates in London, where the top-end rental property market has been hard hit by cutbacks on employees’ rental allowance and by an exodus of financial expats from the City. According to Primelocation.com, prime London letting prices have fallen for the 11th consecutive month in February, registering 13.7% lower than the same time last year. Stock levels are up 97% on last year, as house sellers unable to secure a good price resort to renting out their properties instead. More and more of these “unplandlords” are expected to enter the market as the property sales market is not expected to bounce back any time soon, adds property expert Sarah Beeny in the Evening Standard.
Investors with spare cash would do well to tread carefully and do their homework before responding to the siren call of bargain British property.
Lim Yin Foong was editor of Personal Money, a Malaysian personal finance magazine published by The Edge Communications, from 2001 to 2006. She is currently based in the UK.
Back to TopQuote this article on your site
To create link towards this article on your website,
copy and paste the text below in your page.
Preview :
British property not quite a bargain yet
Saturday, 21 March 2009 © 2009 - The Edge Singapore
Last Updated on Sunday, 22 March 2009 13:53
http://www.theedgesingapore.com/blogsheads/999-lim-yin-foong-2009/3138-british-property-not-quite-a-bargain-yet.html
Friday, 2 January 2009
Buy Instead of Renting When You Have the Down Payment
Buy Instead of Renting When You Have the Down Payment
Friday, September 30, 2005
After looking at all the costs involved in buying house, you may have begun to have second thoughts: Perhaps, it is better to rent a home.
Real estate in most areas today is not a top investment compared with investment securities. "You're not going to get a 30 percent return on your house," said Steve O'Connor, senior director of residential finance at the Mortgage Bankers Association of America. In the past decade, people have been advised to think of a home "as shelter not investment" O'Connor said. "Wealth accumulation is secondary."
Still, as shelter, most experts say if you can afford the down payment, it makes sense to buy your home rather than rent it. That's because you can deduct mortgage interest on income tax and build equity in your property. This is especially true when mortgage interest rates are low. Mortgage interest rates are deductible up to a $100,000 annual limit.
Example
A homeowner has a gross annual income of $40,000. The monthly mortgage payment is $1,000 on a 30-year mortgage. In the first few years, 80 percent of that payment goes to interest and is therefore tax deductible. In the 15 percent tax bracket, the homeowner saved about $375 more in taxes with the home provision versus with only a standard deduction.
-----
Lease-Purchase Agreements
Some people take a middle road. They ease into homeownership by renting a house or condominium with an option to buy.
• Lease-purchase gives a buyer time to save for a down payment or to clean up a credit history.
• It can work in a buyer's favor in areas where real estate values are rising quickly at a rate of 10 percent a year. A buyer benefits from this appreciation because the purchase price of the home is locked in on the day the buyer signed the rent-to-own contract with the seller.
• In most agreements, the seller allows a portion of the rent to be applied towards the purchase price, which some lenders consider to be part of the down payment. The amount of rent credited could be 10 percent to 100 percent, based on your contract.
• Most rent-to-own options require some down payment to secure the agreement, which is not refundable in case the renter decides not to buy.
Homeowners who would agree to a lease-purchase option include people who have had property on the market longer than they wish or owners who had to move and want the house to be lived in. The owner benefits with rental income to help pay the carrying costs of the home, and the strong possibility of selling the house when the contract expires.
Copyrighted, Bankrate.com. All rights reserved.
http://finance.yahoo.com/real-estate/articleindex
http://finance.yahoo.com/real-estate/article/101345/Buy_Don't_Rent_When_You_Can_Afford_the_Down_Payment
Friday, September 30, 2005
After looking at all the costs involved in buying house, you may have begun to have second thoughts: Perhaps, it is better to rent a home.
Real estate in most areas today is not a top investment compared with investment securities. "You're not going to get a 30 percent return on your house," said Steve O'Connor, senior director of residential finance at the Mortgage Bankers Association of America. In the past decade, people have been advised to think of a home "as shelter not investment" O'Connor said. "Wealth accumulation is secondary."
Still, as shelter, most experts say if you can afford the down payment, it makes sense to buy your home rather than rent it. That's because you can deduct mortgage interest on income tax and build equity in your property. This is especially true when mortgage interest rates are low. Mortgage interest rates are deductible up to a $100,000 annual limit.
Example
A homeowner has a gross annual income of $40,000. The monthly mortgage payment is $1,000 on a 30-year mortgage. In the first few years, 80 percent of that payment goes to interest and is therefore tax deductible. In the 15 percent tax bracket, the homeowner saved about $375 more in taxes with the home provision versus with only a standard deduction.
-----
Lease-Purchase Agreements
Some people take a middle road. They ease into homeownership by renting a house or condominium with an option to buy.
• Lease-purchase gives a buyer time to save for a down payment or to clean up a credit history.
• It can work in a buyer's favor in areas where real estate values are rising quickly at a rate of 10 percent a year. A buyer benefits from this appreciation because the purchase price of the home is locked in on the day the buyer signed the rent-to-own contract with the seller.
• In most agreements, the seller allows a portion of the rent to be applied towards the purchase price, which some lenders consider to be part of the down payment. The amount of rent credited could be 10 percent to 100 percent, based on your contract.
• Most rent-to-own options require some down payment to secure the agreement, which is not refundable in case the renter decides not to buy.
Homeowners who would agree to a lease-purchase option include people who have had property on the market longer than they wish or owners who had to move and want the house to be lived in. The owner benefits with rental income to help pay the carrying costs of the home, and the strong possibility of selling the house when the contract expires.
Copyrighted, Bankrate.com. All rights reserved.
http://finance.yahoo.com/real-estate/articleindex
http://finance.yahoo.com/real-estate/article/101345/Buy_Don't_Rent_When_You_Can_Afford_the_Down_Payment
Real Estate Education
Real Estate
Buy
A Home-Buying Primer
How to Find the Perfect Home
Buy, Don't Rent, When You Can Afford the Down Payment
Online Sleuthing Resources for Home Buyers
Web Can Help With Questions Your Realtor Can't Answer
Finding Your Ideal Neighborhood
Is a Bigger Lot Better When Buying a Home?
Five Ways to Beat Buyer's Remorse
A Web-Surfing Guide to Finding Discounts on Brand-New Homes
New Homes: Beware of Shoddy Construction
Forget the Mansion: Why Buying Bigger Doesn't Guarantee a Rich Retirement
Should You Buy That Home?
Seven Questions You Must Ask Before Buying a Condo
How to Avoid a Bad Co-op or Condo
The Lure of Living South of the Border
Recreational Land: Own Your Piece of Paradise
Can't Afford the Down Payment? Share the Wealth
Tips for Purchasing a House With a Pal
Best Places to Live 2007: America's Top Ten Towns
Best Places to Live 2007: Most Affordable Towns
Best Places to Live 2007: Where We'll Live Tomorrow
Best Places to Live 2007: A Look at Past Winners
Sell
Four Steps to Selling Your Home for Top Dollar
Ten Things Your Real Estate Broker Won't Tell You
Boosting Your Home's Value in a Down Market
How to Make the Most of Your Curb Appeal
Top Tips: Moving Your Home in a Bad Market
The Incentives Game: Know Your Competition
Five Reasons to Sell Your Home Yourself
Sellers Should Run From These Home Buyers
How to Overcome the Neighborhood Eyesore
Your Home Not Selling? Swap It
The Home-Sale Tax Exclusion
Selling a House Quick and Cheap
Ten Things Your Mover Won't Tell You
Let Uncle Sam Help Pay for Your Move
Rent
Renters, Fight for Your Rights!
Rent or Buy?
New Realities of the Rent vs. Buy Conundrum
Renters Insurance Can Offer a Safety Net
Got Pets, Eviction Record? Make Landlords Love You
Best and Worst Cities for Renters
How to Live Rent-Free
The Pros and Cons of Renting in Retirement
Why Homeowners Get Rich and Renters Stay Poor
Home Improvement
Which Home Improvements Pay Off -- and Which Don't?
Small Projects That Appeal to Buyers
Age-Appropriate Makeover Tips That Can Sell Your Home
Twenty Things That Can Alter Your Home's Value
How Much Is Too Much on Home Improvements?
Fixer-Uppers Can Be Dreams or Money Pits
Don't Let Repair Costs Drain Your Savings
How to Avoid Contractor Disputes, and What to Do If They Arise
How to Cope With Zoning Boards
Your Household Energy Crisis Solved
Which Backyard Features Add Value?
Medical Needs Can Help Pay for Remodeling
Tapping Friends and Family for Home Projects
Source: http://finance.yahoo.com/real-estate/articleindex
Buy
A Home-Buying Primer
How to Find the Perfect Home
Buy, Don't Rent, When You Can Afford the Down Payment
Online Sleuthing Resources for Home Buyers
Web Can Help With Questions Your Realtor Can't Answer
Finding Your Ideal Neighborhood
Is a Bigger Lot Better When Buying a Home?
Five Ways to Beat Buyer's Remorse
A Web-Surfing Guide to Finding Discounts on Brand-New Homes
New Homes: Beware of Shoddy Construction
Forget the Mansion: Why Buying Bigger Doesn't Guarantee a Rich Retirement
Should You Buy That Home?
Seven Questions You Must Ask Before Buying a Condo
How to Avoid a Bad Co-op or Condo
The Lure of Living South of the Border
Recreational Land: Own Your Piece of Paradise
Can't Afford the Down Payment? Share the Wealth
Tips for Purchasing a House With a Pal
Best Places to Live 2007: America's Top Ten Towns
Best Places to Live 2007: Most Affordable Towns
Best Places to Live 2007: Where We'll Live Tomorrow
Best Places to Live 2007: A Look at Past Winners
Sell
Four Steps to Selling Your Home for Top Dollar
Ten Things Your Real Estate Broker Won't Tell You
Boosting Your Home's Value in a Down Market
How to Make the Most of Your Curb Appeal
Top Tips: Moving Your Home in a Bad Market
The Incentives Game: Know Your Competition
Five Reasons to Sell Your Home Yourself
Sellers Should Run From These Home Buyers
How to Overcome the Neighborhood Eyesore
Your Home Not Selling? Swap It
The Home-Sale Tax Exclusion
Selling a House Quick and Cheap
Ten Things Your Mover Won't Tell You
Let Uncle Sam Help Pay for Your Move
Rent
Renters, Fight for Your Rights!
Rent or Buy?
New Realities of the Rent vs. Buy Conundrum
Renters Insurance Can Offer a Safety Net
Got Pets, Eviction Record? Make Landlords Love You
Best and Worst Cities for Renters
How to Live Rent-Free
The Pros and Cons of Renting in Retirement
Why Homeowners Get Rich and Renters Stay Poor
Home Improvement
Which Home Improvements Pay Off -- and Which Don't?
Small Projects That Appeal to Buyers
Age-Appropriate Makeover Tips That Can Sell Your Home
Twenty Things That Can Alter Your Home's Value
How Much Is Too Much on Home Improvements?
Fixer-Uppers Can Be Dreams or Money Pits
Don't Let Repair Costs Drain Your Savings
How to Avoid Contractor Disputes, and What to Do If They Arise
How to Cope With Zoning Boards
Your Household Energy Crisis Solved
Which Backyard Features Add Value?
Medical Needs Can Help Pay for Remodeling
Tapping Friends and Family for Home Projects
Source: http://finance.yahoo.com/real-estate/articleindex
Thursday, 4 December 2008
Home Prices Seem Far From Bottom
Home Prices Seem Far From Bottom
by Vikas Bajaj
Friday, October 17, 2008
The American housing market, where the global economic crisis began, is far from hitting bottom.
Home prices across much of the country are likely to fall through late 2009, economists say, and in some markets the trend could last even longer depending on the severity of the anticipated recession.
In hard-hit areas like California, Florida and Arizona, the grim calculus is the same: More and more homes are going up for sale, but fewer and fewer people are willing or able to buy them.
More from NYTimes.com: • Don't Be Rushed Into Buying Stock • Start-Ups Give Idaho an Identity Beyond Potatoes • The Frugal Teenager, Ready or Not
Adding to the worries nationwide are rising unemployment, falling wages and escalating mortgage rates -- all of which will reduce the already diminished pool of would-be buyers.
"The No. 1 thing that drives housing values is incomes," said Todd Sinai, an associate professor of real estate at the Wharton School at the University of Pennsylvania. "When incomes fall, demand for housing falls."
Despite the government's move to bolster the banking industry, home loan rates rose again on Tuesday, reflecting concern that the Treasury will borrow heavily to finance the rescue.
On Wednesday, the average rate for 30-year fixed rate mortgages was 6.75 percent, up from 6.06 percent last week. While banks are moving aggressively to sell foreclosed properties, the number of empty homes is hovering near its highest level in more than half a century.
As of June, 2.8 percent of homes previously occupied by an owner were vacant. Nearly 1 in 10 rentals was without a tenant. Both numbers are near their highest levels since 1956, the earliest year for which the Census Bureau has such data.
At the same time, the number of people who are losing jobs or seeing their incomes decline is rising. The unemployment rate has climbed to 6.1 percent, from 4.4 percent at the end of 2007, and wages for those who still have a job have barely kept up with inflation.
In New York and other cities that rely heavily on the financial sector, economists expect that job losses will increase and that pay heavily tied to year-end bonuses will decline significantly.
One reliable proxy of housing values -- the ratio of home prices to rents -- indicates that in many cities prices are still too high relative to historical norms.
In Miami, for instance, home prices are about 22 times annual rents, according to analysis by Moody's Economy.com. The average figure for the last 20 years is just 15 times annual rents. The difference between those two numbers suggests that a home valued at $500,000 today might be worth only $341,000 based on the long-term relationship between prices and rents.
The price-to-rent ratio, which provides one measure of how much of a premium home buyers place on owning rather than renting, spiked across the country earlier this decade.
It increased the most on the coasts and somewhat less in the middle of the country.
Economy.com's calculations show that while it remains elevated in many places, the ratio has fallen sharply to more normal levels in places like Sacramento, Dallas and Riverside, Calif.
The current housing downturn is much more national in scope and severe than any other in the postwar period, partly because of the proliferation of risky lending practices. Today, foreclosures are running ahead of the downturn in the economy, a reversal of previous housing slumps.
"We are in uncharted waters," said Brian A. Bethune, an economist at Global Insight, a research firm.
Colleen Pestana, a real estate agent in Orange County in California, said many people losing their homes in Southern California used to work at mortgage and real estate companies. Many of them bet heavily on real estate by upgrading to bigger houses every few years. Now, many are losing their homes.
At the same time, Ms. Pestana said, her clients who are looking to buy are having a harder time lining up financing. One of her clients recently had to give up on a home after the lender that had offered a pre-approved loan changed its mind -- a frequent occurrence, according to real estate agents and mortgage brokers.
"I am working harder than I have ever had to work to get a deal together and keep it together," said Ms. Pestana, who has been a real estate agent for seven years.
To cushion themselves from potential losses if homes lose value, Fannie Mae and Freddie Mac, the mortgage finance companies that the government took over in September, have increased fees on loans made to borrowers who have good but not excellent credit records, even those who are making down payments as big as 30 percent.
Those higher fees are generally invisible to borrowers because banks factor them into mortgage interest rates. While the national average rate for a 30-year fixed-rate mortgage is now 6.75 percent, according to HSH Associates, mortgage brokers say the rates for many borrowers in the Southwest or Florida can be as high as 8 percent, especially for so-called jumbo loans that are too big to be sold to Fannie Mae and Freddie Mac. (Those loan limits vary by area from $417,000 to roughly $650,000.)
Higher interest rates result in bigger monthly payments, pricing some potential buyers out of the market. For example, monthly payments are $2,700 on a 6 percent 30-year, fixed-rate loan of $450,000. If the interest rate rises to 7 percent, those monthly payments jump to $3,000. All things being equal, when rates rise prices generally fall.
This month, Fannie and Freddie canceled a fee increase that would have applied to markets where home prices are falling, but the companies still have many other fees in place. In an effort to help drive down rates, the Treasury Department has announced plans to buy mortgage-backed securities issued by Fannie and Freddie. The government also recently increased the amount of loans the companies can buy and hold.
Still, those efforts will take time to have an impact and it is not clear whether they will be sufficient to get banks to lend more freely, especially in areas where jumbo loans make up a bigger percentage of lending, like New York and parts of California and Florida. Economists say that prices in those places will probably fall further.
In some of those places, price declines are being driven by a sharp increase in sales of foreclosed homes.
More from Yahoo! Finance: • Towns That Could Be Hit Hardest by the Financial Crisis • Most And Least Expensive U.S. Cities For Homeowners • Top 5 Inexpensive Ways to Boost Your Home's Value
Visit the Real Estate Center
Hudson & Marshall, a Dallas-based auctioneer that holds sales for lenders, reports that banks are accepting prices that they refused to consider just 12 months earlier. In a recent auction of 110 foreclosed homes in the Las Vegas area, for instance, the auctioneer's clients accepted 90 percent of the bids submitted by buyers, up from 60 percent a year earlier, said David T. Webb, a co-owner of the company.
Single-family home prices in Las Vegas have already fallen 34 percent from their peak in the summer of 2006, according to the Standard & Poor's Case-Shiller home price index. Prices in San Diego have fallen 31 percent since late 2005.
While those declines have been painful to homeowners in those cities, economists said the quick decline might help the markets reach bottom faster than in previous housing cycles, said Edward E. Leamer, an economist at the University of California, Los Angeles. In a previous boom, home prices peaked in the Los Angeles area in 1990 but did not hit bottom until 1996. Prices remained near that low for more than a year before starting to climb again.
"In some areas of California, we are really at appropriate levels," Mr. Leamer said of current home prices. But he added: "The risk is that we are going to get some overshooting, meaning that prices will be lower than they ought to be."
In Florida, Jack McCabe, a real estate consultant, said that while some cities, like Fort Myers, are showing tentative signs of a rebound, others like Miami and Fort Lauderdale are still under pressure. Two homes on his street in Fort Lauderdale that sold for about $730,000 apiece in 2005 recently sold for $400,000 -- a 44 percent decline.
"The rocket has run out of fuel, and now it's plunged back down to earth," he said.
Tara Siegel Bernard contributed reporting.
http://finance.yahoo.com/real-estate/article/105964/Home-Prices-Seem-Far-From-Bottom
by Vikas Bajaj
Friday, October 17, 2008
The American housing market, where the global economic crisis began, is far from hitting bottom.
Home prices across much of the country are likely to fall through late 2009, economists say, and in some markets the trend could last even longer depending on the severity of the anticipated recession.
In hard-hit areas like California, Florida and Arizona, the grim calculus is the same: More and more homes are going up for sale, but fewer and fewer people are willing or able to buy them.
More from NYTimes.com: • Don't Be Rushed Into Buying Stock • Start-Ups Give Idaho an Identity Beyond Potatoes • The Frugal Teenager, Ready or Not
Adding to the worries nationwide are rising unemployment, falling wages and escalating mortgage rates -- all of which will reduce the already diminished pool of would-be buyers.
"The No. 1 thing that drives housing values is incomes," said Todd Sinai, an associate professor of real estate at the Wharton School at the University of Pennsylvania. "When incomes fall, demand for housing falls."
Despite the government's move to bolster the banking industry, home loan rates rose again on Tuesday, reflecting concern that the Treasury will borrow heavily to finance the rescue.
On Wednesday, the average rate for 30-year fixed rate mortgages was 6.75 percent, up from 6.06 percent last week. While banks are moving aggressively to sell foreclosed properties, the number of empty homes is hovering near its highest level in more than half a century.
As of June, 2.8 percent of homes previously occupied by an owner were vacant. Nearly 1 in 10 rentals was without a tenant. Both numbers are near their highest levels since 1956, the earliest year for which the Census Bureau has such data.
At the same time, the number of people who are losing jobs or seeing their incomes decline is rising. The unemployment rate has climbed to 6.1 percent, from 4.4 percent at the end of 2007, and wages for those who still have a job have barely kept up with inflation.
In New York and other cities that rely heavily on the financial sector, economists expect that job losses will increase and that pay heavily tied to year-end bonuses will decline significantly.
One reliable proxy of housing values -- the ratio of home prices to rents -- indicates that in many cities prices are still too high relative to historical norms.
In Miami, for instance, home prices are about 22 times annual rents, according to analysis by Moody's Economy.com. The average figure for the last 20 years is just 15 times annual rents. The difference between those two numbers suggests that a home valued at $500,000 today might be worth only $341,000 based on the long-term relationship between prices and rents.
The price-to-rent ratio, which provides one measure of how much of a premium home buyers place on owning rather than renting, spiked across the country earlier this decade.
It increased the most on the coasts and somewhat less in the middle of the country.
Economy.com's calculations show that while it remains elevated in many places, the ratio has fallen sharply to more normal levels in places like Sacramento, Dallas and Riverside, Calif.
The current housing downturn is much more national in scope and severe than any other in the postwar period, partly because of the proliferation of risky lending practices. Today, foreclosures are running ahead of the downturn in the economy, a reversal of previous housing slumps.
"We are in uncharted waters," said Brian A. Bethune, an economist at Global Insight, a research firm.
Colleen Pestana, a real estate agent in Orange County in California, said many people losing their homes in Southern California used to work at mortgage and real estate companies. Many of them bet heavily on real estate by upgrading to bigger houses every few years. Now, many are losing their homes.
At the same time, Ms. Pestana said, her clients who are looking to buy are having a harder time lining up financing. One of her clients recently had to give up on a home after the lender that had offered a pre-approved loan changed its mind -- a frequent occurrence, according to real estate agents and mortgage brokers.
"I am working harder than I have ever had to work to get a deal together and keep it together," said Ms. Pestana, who has been a real estate agent for seven years.
To cushion themselves from potential losses if homes lose value, Fannie Mae and Freddie Mac, the mortgage finance companies that the government took over in September, have increased fees on loans made to borrowers who have good but not excellent credit records, even those who are making down payments as big as 30 percent.
Those higher fees are generally invisible to borrowers because banks factor them into mortgage interest rates. While the national average rate for a 30-year fixed-rate mortgage is now 6.75 percent, according to HSH Associates, mortgage brokers say the rates for many borrowers in the Southwest or Florida can be as high as 8 percent, especially for so-called jumbo loans that are too big to be sold to Fannie Mae and Freddie Mac. (Those loan limits vary by area from $417,000 to roughly $650,000.)
Higher interest rates result in bigger monthly payments, pricing some potential buyers out of the market. For example, monthly payments are $2,700 on a 6 percent 30-year, fixed-rate loan of $450,000. If the interest rate rises to 7 percent, those monthly payments jump to $3,000. All things being equal, when rates rise prices generally fall.
This month, Fannie and Freddie canceled a fee increase that would have applied to markets where home prices are falling, but the companies still have many other fees in place. In an effort to help drive down rates, the Treasury Department has announced plans to buy mortgage-backed securities issued by Fannie and Freddie. The government also recently increased the amount of loans the companies can buy and hold.
Still, those efforts will take time to have an impact and it is not clear whether they will be sufficient to get banks to lend more freely, especially in areas where jumbo loans make up a bigger percentage of lending, like New York and parts of California and Florida. Economists say that prices in those places will probably fall further.
In some of those places, price declines are being driven by a sharp increase in sales of foreclosed homes.
More from Yahoo! Finance: • Towns That Could Be Hit Hardest by the Financial Crisis • Most And Least Expensive U.S. Cities For Homeowners • Top 5 Inexpensive Ways to Boost Your Home's Value
Visit the Real Estate Center
Hudson & Marshall, a Dallas-based auctioneer that holds sales for lenders, reports that banks are accepting prices that they refused to consider just 12 months earlier. In a recent auction of 110 foreclosed homes in the Las Vegas area, for instance, the auctioneer's clients accepted 90 percent of the bids submitted by buyers, up from 60 percent a year earlier, said David T. Webb, a co-owner of the company.
Single-family home prices in Las Vegas have already fallen 34 percent from their peak in the summer of 2006, according to the Standard & Poor's Case-Shiller home price index. Prices in San Diego have fallen 31 percent since late 2005.
While those declines have been painful to homeowners in those cities, economists said the quick decline might help the markets reach bottom faster than in previous housing cycles, said Edward E. Leamer, an economist at the University of California, Los Angeles. In a previous boom, home prices peaked in the Los Angeles area in 1990 but did not hit bottom until 1996. Prices remained near that low for more than a year before starting to climb again.
"In some areas of California, we are really at appropriate levels," Mr. Leamer said of current home prices. But he added: "The risk is that we are going to get some overshooting, meaning that prices will be lower than they ought to be."
In Florida, Jack McCabe, a real estate consultant, said that while some cities, like Fort Myers, are showing tentative signs of a rebound, others like Miami and Fort Lauderdale are still under pressure. Two homes on his street in Fort Lauderdale that sold for about $730,000 apiece in 2005 recently sold for $400,000 -- a 44 percent decline.
"The rocket has run out of fuel, and now it's plunged back down to earth," he said.
Tara Siegel Bernard contributed reporting.
http://finance.yahoo.com/real-estate/article/105964/Home-Prices-Seem-Far-From-Bottom
Wednesday, 3 December 2008
The Future for Home Prices (For Property Investors)
DECEMBER 2, 2008
The Future for Home Prices
Americans still see real estate as their best shot at wealth. It may be wishful thinking.
By JAMES R. HAGERTY
Over the past few years, Americans have had a brutal lesson in the risks of real estate. House prices have crashed more than 35% in some parts of the country, millions of people are losing their homes to foreclosure, and banks are failing.
The takeaway?
Many Americans still see real estate as their best shot at wealth. In survey after survey, people expect prices to bounce back -- in some cases, as soon as six months from now.
The Journal Report
See the complete Your Money Matters report.
Those hoping for a quick rebound are likely to be disappointed. Economists and other pros generally say home prices won't bottom out before the second half of 2009, and some don't see a bottom until 2011 or 2012. Even when they stop falling, prices may scrape along the bottom of the rut for years.
Down the Road
And longer term? Over the next 10 to 20 years, housing economists expect prices will rise again -- but, on average, probably not nearly as much as they've averaged over the past decade. That isn't to say that some places won't experience booms (and busts). But, the experts say, you should generally expect house prices to rise just a bit more than inflation and roughly in line with household income.
Karl Case, an economics professor at Wellesley College whose name adorns the S&P Case-Shiller home-price indexes, has studied U.S. house prices going back to the 1890s. Over the long run, he says, home prices tend to increase on average at an inflation-adjusted rate of 2.5% to 3% a year, about the same as per capita income. He thinks that long-run pattern is likely to continue, despite the recent choppiness.
Other experts make similarly modest predictions. William Wheaton, a professor of economics and real estate at the Massachusetts Institute of Technology, says he expects house prices to increase at a rate roughly one percentage point higher than inflation over the long term. Celia Chen, director of housing economics at Moody's Economy.com, a research firm, expects house prices to increase an average of around 4% a year over the next couple of decades.
Some experts say it's a bad idea to count on your home rising in value at all. People should think of their own homes mainly as places to live, not as investments, advises Kenneth Rosen, chairman of the Fisher Center for Real Estate at the University of California, Berkeley. Sure, home mortgages provide tax benefits, and most homes appreciate in value over the long run, he says, but there is always risk.
For all of those forecasts, many Americans are undaunted. Consider three surveys, all from October.
In a poll of 2,000 adults, real-estate-data provider Zillow.com found that 61% believed the value of their home would either remain level or rise over the next six months. Another survey of more than 1,000 homeowners, sponsored by real-estate-services firm Realogy Corp., found that 91% thought that owning a home was the best long-term investment they could make. And an online survey of 5,000 people commissioned by Citigroup found that just 32% believed it was a good time to invest in stocks -- but 51% said it was a good time to buy a home.
Real Time Economics
The S&P/Case-Shiller home-price index showed accelerating price declines in September. See a sortable chart of home prices, by metro area.
"I just believe in real estate," says Jason Schram, a lawyer in Chicago who has bought two rental properties this year at what he considers fire-sale prices. "I've seen over and over people I know build wealth through rental real estate, and that's the path I intend taking, even though it's a bit bumpy at the moment."
Location, Location
So, as homeowners and buyers look ahead, what factors will determine whether their homes are really likely to rise in value, rather than just in their dreams? What are some of the bullish signs -- and some of the bearish ones?
In the long term, house prices are driven by fundamentals that are hard to predict:
The trick is to figure out where job and income growth will be strongest and where immigrants and others will want to live. (My Comment: Selangor, Malaysia :) )
William Frey, a demographer and senior fellow at the Brookings Institution, a think tank in Washington, says young people and immigrants are likely to flow to Florida, Georgia, the Carolinas, Tennessee, Virginia, Nevada, Arizona and some of the more affordable interior parts of California.
These areas generally have lower housing costs than the Pacific Coast or Northeast and job growth from modern industries and leisure businesses, he says. Areas with little immigration and low growth or falling populations are likely to include Michigan, Ohio, the Dakotas, Iowa, western Pennsylvania and upstate New York, Mr. Frey says.
Hit Parade
Newland Communities LLC, a San Diego-based planner and developer of neighborhoods, employs a full-time researcher to study long-term housing demand and ranks metro areas in terms of their growth prospects. Among those near the top of Newland's hit parade are Washington, D.C., Raleigh and Charlotte, N.C., Atlanta, Dallas, Houston, Phoenix and Las Vegas, says Robert McLeod, the developer's chief executive.
All of them, Newland believes, will keep growing because they have well-diversified regional economies and other attractions, including mild climates. With the exception of Washington, they all have fairly affordable housing costs. Washington has a highly educated work force, high incomes, a stable source of government-related jobs and rapidly expanding technology firms, Newland says.
"The older industrial cities are going to suffer" from shrinking employment and forbidding weather, says Mr. Rosen of the University of California. Some Sun Belt cities, including Atlanta, also could languish if traffic jams and sprawl ruin their charms, he says.
Among metro areas that Mr. Rosen expects to do well in the long run are Albuquerque, N.M.; Boise, Idaho; Salt Lake City; Seattle; Portland, Ore.; Denver and Colorado Springs, Colo. He says those places generally offer "urban vitality" and "easy access to outdoor activities" combined with affordable housing and good job-growth prospects from modern industries, such as biotechnology.
Still, just looking at population trends isn't enough. Prices in the crowded coastal areas tend to be more volatile, rising and then falling much faster during booms and busts than do inland areas, Mr. Case notes. Shortages of land and building restrictions make it hard for builders to respond quickly when demand for housing rises in coveted neighborhoods near the coasts; further inland, it's usually much easier to find vacant homes or land, and so sudden movements in prices are less likely.
For instance, despite rapid growth, home prices in Texas cities have tended to climb only gradually. Those cities typically have plenty of room to sprawl, and Texas regulates land use less strictly than many other states. Supply swells to meet demand.
The Wonder Years
What's more, no one can assess the outlook for housing without considering the effects of 78 million aging baby boomers. For instance, some housing experts believe the boomers will be much less likely than their parents to settle for sun and golf in their retirement; they may prefer urban settings with lots of cultural life or to live nearer friends and families. That could mean higher demand -- and increased prices -- for housing in urban neighborhoods.
Most of this is just guesswork, though. "A lot of people have theories about the baby boomers," says Mr. Frey, the Brookings demographer, but boomers always have tended to confound expectations.
Dowell Myers, a professor of urban planning and demography at the University of Southern California, warns that the retirement of boomers over the next two decades is likely to depress house prices in many areas. As boomers relocate to retirement homes and cemeteries, there will be a lot more sellers than buyers in parts of the country, he says.
"It's going to really mess up the housing market," says Mr. Myers. He predicts that this "generational correction" will be larger and longer-lasting than the current slump.
To get a sense of the effects of aging boomers, Mr. Myers looks at the number of Americans 65 and over per 1,000 working-age people. He sees that number soaring to 318 in the year 2020 and 411 in 2030 from 238 in 2000.
Many people over 65 buy homes, of course, but as they get older they become more likely to sell than buy. People aged 75 to 79 are more than three times as likely to be sellers than buyers, Mr. Myers says.
In some areas, younger people will be happy to buy (and probably renovate) those boomer nests. The problem, Mr. Myers says, will be in places where lots of older people are selling and few young people are settling down. He says the effects will be strongest in the "coldest, most congested and most expensive states rather than the high-growth states of the South or West." Among the states where Mr. Myers sees downward pressure on prices within the next decade: Connecticut, Pennsylvania, New York and Massachusetts.
Of course, applying demographic trends to house-price forecasts can be hazardous. Economists N. Gregory Mankiw and David Weil predicted in a paper in 1989 that demographic trends would lead to a "substantial" fall in real, or inflation-adjusted, home prices over the next two decades "if the historical relation between housing demand and housing prices continues." They reasoned that baby boomers were coming to the end of their prime house-buying years and that the smaller baby-bust generation would bring lower demand for housing.
That warning proved, at a minimum, premature. Despite the recent drop, the average U.S. home price is up about 35% in real terms since the end of 1989, according to the Ofheo index. Messrs. Mankiw and Weil both declined to comment.
Few people who invest in housing have time to follow these academic debates. For nearly four decades, Rich Sommer and his wife, Carolyn, have been investing in rental properties in and near Stevens Point, Wis. Mr. Sommer describes real estate as a good way "to get rich slowly." He and his wife, both former schoolteachers, gradually have built their net worth from zero to around $2.5 million through their rental properties. They have dealt with countless plumbing emergencies, evicted deadbeats and even once had to clean up after a suicide in one of their properties.
Still, he hasn't been hit very hard by the real-estate crash, in part because the Midwest is much less vulnerable to booms and busts than coastal areas. When asked what he would do if someone handed him $1 million today, Mr. Sommer doesn't hesitate: He would put it into real estate.—Mr. Hagerty is a staff reporter for The Wall Street Journal in Pittsburgh.
Write to James R. Hagerty at bob.hagerty@wsj.com
http://online.wsj.com/article/SB122764977315457619.html
The Future for Home Prices
Americans still see real estate as their best shot at wealth. It may be wishful thinking.
By JAMES R. HAGERTY
Over the past few years, Americans have had a brutal lesson in the risks of real estate. House prices have crashed more than 35% in some parts of the country, millions of people are losing their homes to foreclosure, and banks are failing.
The takeaway?
Many Americans still see real estate as their best shot at wealth. In survey after survey, people expect prices to bounce back -- in some cases, as soon as six months from now.
The Journal Report
See the complete Your Money Matters report.
Those hoping for a quick rebound are likely to be disappointed. Economists and other pros generally say home prices won't bottom out before the second half of 2009, and some don't see a bottom until 2011 or 2012. Even when they stop falling, prices may scrape along the bottom of the rut for years.
Down the Road
And longer term? Over the next 10 to 20 years, housing economists expect prices will rise again -- but, on average, probably not nearly as much as they've averaged over the past decade. That isn't to say that some places won't experience booms (and busts). But, the experts say, you should generally expect house prices to rise just a bit more than inflation and roughly in line with household income.
Karl Case, an economics professor at Wellesley College whose name adorns the S&P Case-Shiller home-price indexes, has studied U.S. house prices going back to the 1890s. Over the long run, he says, home prices tend to increase on average at an inflation-adjusted rate of 2.5% to 3% a year, about the same as per capita income. He thinks that long-run pattern is likely to continue, despite the recent choppiness.
Other experts make similarly modest predictions. William Wheaton, a professor of economics and real estate at the Massachusetts Institute of Technology, says he expects house prices to increase at a rate roughly one percentage point higher than inflation over the long term. Celia Chen, director of housing economics at Moody's Economy.com, a research firm, expects house prices to increase an average of around 4% a year over the next couple of decades.
Some experts say it's a bad idea to count on your home rising in value at all. People should think of their own homes mainly as places to live, not as investments, advises Kenneth Rosen, chairman of the Fisher Center for Real Estate at the University of California, Berkeley. Sure, home mortgages provide tax benefits, and most homes appreciate in value over the long run, he says, but there is always risk.
For all of those forecasts, many Americans are undaunted. Consider three surveys, all from October.
In a poll of 2,000 adults, real-estate-data provider Zillow.com found that 61% believed the value of their home would either remain level or rise over the next six months. Another survey of more than 1,000 homeowners, sponsored by real-estate-services firm Realogy Corp., found that 91% thought that owning a home was the best long-term investment they could make. And an online survey of 5,000 people commissioned by Citigroup found that just 32% believed it was a good time to invest in stocks -- but 51% said it was a good time to buy a home.
Real Time Economics
The S&P/Case-Shiller home-price index showed accelerating price declines in September. See a sortable chart of home prices, by metro area.
"I just believe in real estate," says Jason Schram, a lawyer in Chicago who has bought two rental properties this year at what he considers fire-sale prices. "I've seen over and over people I know build wealth through rental real estate, and that's the path I intend taking, even though it's a bit bumpy at the moment."
Location, Location
So, as homeowners and buyers look ahead, what factors will determine whether their homes are really likely to rise in value, rather than just in their dreams? What are some of the bullish signs -- and some of the bearish ones?
In the long term, house prices are driven by fundamentals that are hard to predict:
- immigration,
- birth rates,
- the size and nature of households, and
- incomes.
The trick is to figure out where job and income growth will be strongest and where immigrants and others will want to live. (My Comment: Selangor, Malaysia :) )
William Frey, a demographer and senior fellow at the Brookings Institution, a think tank in Washington, says young people and immigrants are likely to flow to Florida, Georgia, the Carolinas, Tennessee, Virginia, Nevada, Arizona and some of the more affordable interior parts of California.
These areas generally have lower housing costs than the Pacific Coast or Northeast and job growth from modern industries and leisure businesses, he says. Areas with little immigration and low growth or falling populations are likely to include Michigan, Ohio, the Dakotas, Iowa, western Pennsylvania and upstate New York, Mr. Frey says.
Hit Parade
Newland Communities LLC, a San Diego-based planner and developer of neighborhoods, employs a full-time researcher to study long-term housing demand and ranks metro areas in terms of their growth prospects. Among those near the top of Newland's hit parade are Washington, D.C., Raleigh and Charlotte, N.C., Atlanta, Dallas, Houston, Phoenix and Las Vegas, says Robert McLeod, the developer's chief executive.
All of them, Newland believes, will keep growing because they have well-diversified regional economies and other attractions, including mild climates. With the exception of Washington, they all have fairly affordable housing costs. Washington has a highly educated work force, high incomes, a stable source of government-related jobs and rapidly expanding technology firms, Newland says.
"The older industrial cities are going to suffer" from shrinking employment and forbidding weather, says Mr. Rosen of the University of California. Some Sun Belt cities, including Atlanta, also could languish if traffic jams and sprawl ruin their charms, he says.
Among metro areas that Mr. Rosen expects to do well in the long run are Albuquerque, N.M.; Boise, Idaho; Salt Lake City; Seattle; Portland, Ore.; Denver and Colorado Springs, Colo. He says those places generally offer "urban vitality" and "easy access to outdoor activities" combined with affordable housing and good job-growth prospects from modern industries, such as biotechnology.
Still, just looking at population trends isn't enough. Prices in the crowded coastal areas tend to be more volatile, rising and then falling much faster during booms and busts than do inland areas, Mr. Case notes. Shortages of land and building restrictions make it hard for builders to respond quickly when demand for housing rises in coveted neighborhoods near the coasts; further inland, it's usually much easier to find vacant homes or land, and so sudden movements in prices are less likely.
For instance, despite rapid growth, home prices in Texas cities have tended to climb only gradually. Those cities typically have plenty of room to sprawl, and Texas regulates land use less strictly than many other states. Supply swells to meet demand.
The Wonder Years
What's more, no one can assess the outlook for housing without considering the effects of 78 million aging baby boomers. For instance, some housing experts believe the boomers will be much less likely than their parents to settle for sun and golf in their retirement; they may prefer urban settings with lots of cultural life or to live nearer friends and families. That could mean higher demand -- and increased prices -- for housing in urban neighborhoods.
Most of this is just guesswork, though. "A lot of people have theories about the baby boomers," says Mr. Frey, the Brookings demographer, but boomers always have tended to confound expectations.
Dowell Myers, a professor of urban planning and demography at the University of Southern California, warns that the retirement of boomers over the next two decades is likely to depress house prices in many areas. As boomers relocate to retirement homes and cemeteries, there will be a lot more sellers than buyers in parts of the country, he says.
"It's going to really mess up the housing market," says Mr. Myers. He predicts that this "generational correction" will be larger and longer-lasting than the current slump.
To get a sense of the effects of aging boomers, Mr. Myers looks at the number of Americans 65 and over per 1,000 working-age people. He sees that number soaring to 318 in the year 2020 and 411 in 2030 from 238 in 2000.
Many people over 65 buy homes, of course, but as they get older they become more likely to sell than buy. People aged 75 to 79 are more than three times as likely to be sellers than buyers, Mr. Myers says.
In some areas, younger people will be happy to buy (and probably renovate) those boomer nests. The problem, Mr. Myers says, will be in places where lots of older people are selling and few young people are settling down. He says the effects will be strongest in the "coldest, most congested and most expensive states rather than the high-growth states of the South or West." Among the states where Mr. Myers sees downward pressure on prices within the next decade: Connecticut, Pennsylvania, New York and Massachusetts.
Of course, applying demographic trends to house-price forecasts can be hazardous. Economists N. Gregory Mankiw and David Weil predicted in a paper in 1989 that demographic trends would lead to a "substantial" fall in real, or inflation-adjusted, home prices over the next two decades "if the historical relation between housing demand and housing prices continues." They reasoned that baby boomers were coming to the end of their prime house-buying years and that the smaller baby-bust generation would bring lower demand for housing.
That warning proved, at a minimum, premature. Despite the recent drop, the average U.S. home price is up about 35% in real terms since the end of 1989, according to the Ofheo index. Messrs. Mankiw and Weil both declined to comment.
Few people who invest in housing have time to follow these academic debates. For nearly four decades, Rich Sommer and his wife, Carolyn, have been investing in rental properties in and near Stevens Point, Wis. Mr. Sommer describes real estate as a good way "to get rich slowly." He and his wife, both former schoolteachers, gradually have built their net worth from zero to around $2.5 million through their rental properties. They have dealt with countless plumbing emergencies, evicted deadbeats and even once had to clean up after a suicide in one of their properties.
Still, he hasn't been hit very hard by the real-estate crash, in part because the Midwest is much less vulnerable to booms and busts than coastal areas. When asked what he would do if someone handed him $1 million today, Mr. Sommer doesn't hesitate: He would put it into real estate.—Mr. Hagerty is a staff reporter for The Wall Street Journal in Pittsburgh.
Write to James R. Hagerty at bob.hagerty@wsj.com
http://online.wsj.com/article/SB122764977315457619.html
Monday, 1 December 2008
Investment : Types & Overview
Investment : Types & Overview
Though the term investment simply means using the present income for generating wealth in the future or net addition to the stock of capital, still it has its infinite meanings through its versatile application in the real practices.
The term investment has gained its strength in the recent years through changing economic climate over the world. The world business climate is changing very fast and it is the term investment, which is in the perfect direction to provide smell to more than 6 billions over the world.
From the latest United Nations Conference on Trade and Development( UNCTAD report, it is found that the developing nations over the world have actively participated in the field of investment. As to UNCTAD statistics, investment to the developing countries over the world has nearly doubled in two years.
Increasing liberalization among the countries over the world can justify the best result from investment. Present economic success brought by the countries such as India and China have gained a lot from the investment boom.
Present economic growth is largely dependent upon investment factor. This section covers meaning of investment, trend in investment and investment companies over the world.
Investment refers to an asset which is purchased with the expectation that it will generate income in the future or its’ value will appreciate in future so that it will be sold at a higher price. In other sense, we can say that Investment is the purchase of the goods which are not consumed at the present but is used to create wealth in the future. Investment cannot be done without Savings. Savings provides the funds necessary for investment. Investment is influenced by Rate of Interest. Falling interest rates result in increasing rate of Investment. Investment plays a vital role in economic growth of the country as Investment increases the production capacity of the economy.
The meaning of the term Investment is different in different genres. In Economics, Investment is the production per unit time of goods which are not consumed at present and are used for future production. According to economic theory Investment depends on income and rate of interest. An increase in income positively affects the Investment but an increasing rate of interest has a negative effect on it. The interest rate in this case is nothing but the opportunity cost of investing the funds rather than using them at the present. In Finance, Investment means purchasing of securities or any other assets in money market or capital market or purchase of any liquid assets like gold or residential real estate property or commercial real estate property.
Find below various Investment types , investment companies, and real estate investment:
Investment Companies & Types
Edward Jones Investment
Fidelity Investment
Franklin Templeton Investments
Vanguard Investment
Fremont Investment
Land Investment
Property Investment
Bank of America Investment
Financial Advisors
Financial Planning
Private Equity
Retirement Planning
Investment Overview
Finance Investment
Investment Brokerage
Investment Guide
Online Investment
Investment Securities
Return on Investment
Business Investment Opportunity
Investment Strategy
Types of Financial Advisors
Unit Trust
Venture Capital
Wealth Management
Real Estate Investment
Real Estate Investment
Real Estate Investment Property
Real Estate Investment Trust
Investment Firm
Fremont Investment and Loan
Investment Property Loan
Investment Banks
http://www.economywatch.com/investment/
Though the term investment simply means using the present income for generating wealth in the future or net addition to the stock of capital, still it has its infinite meanings through its versatile application in the real practices.
The term investment has gained its strength in the recent years through changing economic climate over the world. The world business climate is changing very fast and it is the term investment, which is in the perfect direction to provide smell to more than 6 billions over the world.
From the latest United Nations Conference on Trade and Development( UNCTAD report, it is found that the developing nations over the world have actively participated in the field of investment. As to UNCTAD statistics, investment to the developing countries over the world has nearly doubled in two years.
Increasing liberalization among the countries over the world can justify the best result from investment. Present economic success brought by the countries such as India and China have gained a lot from the investment boom.
Present economic growth is largely dependent upon investment factor. This section covers meaning of investment, trend in investment and investment companies over the world.
Investment refers to an asset which is purchased with the expectation that it will generate income in the future or its’ value will appreciate in future so that it will be sold at a higher price. In other sense, we can say that Investment is the purchase of the goods which are not consumed at the present but is used to create wealth in the future. Investment cannot be done without Savings. Savings provides the funds necessary for investment. Investment is influenced by Rate of Interest. Falling interest rates result in increasing rate of Investment. Investment plays a vital role in economic growth of the country as Investment increases the production capacity of the economy.
The meaning of the term Investment is different in different genres. In Economics, Investment is the production per unit time of goods which are not consumed at present and are used for future production. According to economic theory Investment depends on income and rate of interest. An increase in income positively affects the Investment but an increasing rate of interest has a negative effect on it. The interest rate in this case is nothing but the opportunity cost of investing the funds rather than using them at the present. In Finance, Investment means purchasing of securities or any other assets in money market or capital market or purchase of any liquid assets like gold or residential real estate property or commercial real estate property.
Find below various Investment types , investment companies, and real estate investment:
Investment Companies & Types
Edward Jones Investment
Fidelity Investment
Franklin Templeton Investments
Vanguard Investment
Fremont Investment
Land Investment
Property Investment
Bank of America Investment
Financial Advisors
Financial Planning
Private Equity
Retirement Planning
Investment Overview
Finance Investment
Investment Brokerage
Investment Guide
Online Investment
Investment Securities
Return on Investment
Business Investment Opportunity
Investment Strategy
Types of Financial Advisors
Unit Trust
Venture Capital
Wealth Management
Real Estate Investment
Real Estate Investment
Real Estate Investment Property
Real Estate Investment Trust
Investment Firm
Fremont Investment and Loan
Investment Property Loan
Investment Banks
http://www.economywatch.com/investment/
Tuesday, 28 October 2008
Properties
The outright ownership of real estate has long been considered as a sound long-term investment, carrying with it a goodly amount of protection against inflation.
Unfortunately, real-estate values are also subject to wide fluctuations; serious erros can be made in location, price paid, etc.; there are pitfalls in salesmen's wiles.
Finally, diversification is not practical for the investor of moderate means, except by various types of participations with others and with the special hazards that attach to new floatations.
This too is a field not without risk. As the usual advice given to investors: "Be sure it's yours before you go into it."
Unfortunately, real-estate values are also subject to wide fluctuations; serious erros can be made in location, price paid, etc.; there are pitfalls in salesmen's wiles.
Finally, diversification is not practical for the investor of moderate means, except by various types of participations with others and with the special hazards that attach to new floatations.
This too is a field not without risk. As the usual advice given to investors: "Be sure it's yours before you go into it."
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