Wolfgang Grulke An Economist's View

This comment received from Maarten Ackerman: "I fully agree with all the fundamental views and investor tips given the state of the market. Most fundamentals currently suggest that the market is overvalued and rising interest rates should have the impact as discussed in the article. However, given that there might be a potential bubble does not necessarily mean it will burst. If monetary policy is done in a prudent way the 'bubble' can be managed. This is the intention of the Fed using their 'measured' normalization of rates policy. In other words they slowly prepare the market for rising rates and investors can slowly adjust to the tighter policy (this will cool the market down to saver levels). This approach will not burst the bubble, but an external shock causing rates to rise much more than expected might be very harmful. Thus, it is not the direction but the magnitude of the rise in interest rates that will determine the impact on the 'bubble'”.
Posted: 1 May 2005 at 00:00

Frank Winter Frenzied Froth

The Economist in the 28 May/3 June 2005 edition says that the US housing market is like "Frenzied Froth: More evidence that the US housing market has lost touch with reality" - just wait for the 'bang'!
Posted: 31 May 2005 at 17:27

John Chamberlain House price bubble

Fair enough piece, some of which is happening already
Posted: 10 August 2005 at 00:58

Wolfgang Grulke RE: House price bubble

The danger of course is that it escalates and teh dominoes start falling in related areas. I see that the US increased its interest rates again yesterday - 10 times in a row. At some stage US house-buyers will get the message...and suddenly!
Posted: 10 August 2005 at 09:18

Wolfgang Grulke This week's BusinessWeek cover story

Confused about the direction of the housing market? You're in good company - in this climate, everyone is running scared. We can't predict which way home prices will go over the next year or so. But we can tell you how to avoid some serious problems

Posted: 2 April 2006 at 07:00

Wolfgang Grulke 3rd quarter 2006 house price figures from US

Home Sales Plummet in 38 States in 3Q

NEW YORK (AP) Monday November 20, 2006 - The feeble U.S. housing market showed more frailty when third-quarter home sales plummeted in 38 states, hitting Nevada, Arizona, Florida and California particularly hard, government data showed on Monday.

The once-booming real estate market's persistent weakness over the past year has reined in expectations for economic growth but hasn't been severe enough to offset a rising stock market, lower gas prices and improved consumer expectations.

Read more at http://biz.yahoo.com/ap/061120/economy.html?.v=15
Posted: 21 November 2006 at 10:51

Wolfgang Grulke Can the economy survive the housing bust?

The current fortune mag runs this headline...read the astounding conclusions!

Posted: 22 November 2006 at 13:43

Vivek Chand How does this impact emerging economies

The property frenzy is also prevalent in India and to some extent in China. However, before we assess the likely occurrence of a crash in these markets we need to consider a few country specific characteristics:
- India has a very low mortgage to GDP ratio (less than 5%) compared to over 50% for OECD markets
- Disposable incomes are rapidly rising and housing is a natural first investment for the youth entering the job market
- There is a shift away from the traditional joint family culture
- Greater job mobility
- Growing economy
- Greatly improved access to mortgages

The property market in India is going through three years of a strong bull run, but how much of this is led by strong underlying demand versus speculation? In addition, a crash in the US is likely to have some spillover to Asian markets. So the question in my mind is: how do we assess the risks of a bubble in emerging economies where the fundamentals are quite different? Or will a economic slow down in the US have a much larger effect on India and China which in turn will also impact property.
Posted: 20 January 2007 at 05:10

Wolfgang Grulke RE: How does this impact emerging economies

My feeling is that if teh US property market tanks it could have a serious impact on the US economy for 3-5 years. It will destroy consumer demand and that will hurt business in US, China and of course India - so it could have massive global spillover.

These things tend to happen like a bifurcation point - there seem to small, even insignificant changes, and then suddenly all hell breaks loose. My personal view is that a property crash of minor or major proportion is still a more than 50% 'certainty' in teh US for the next 18 months.

At least it will give politicians something other than Iraq to talk about.
Posted: 21 January 2007 at 11:57


Posted: 2 February 2007 at 13:53


Hi Mark - I see that your comment field is blank. Do you want to try again?
Posted: 2 February 2007 at 17:34

Vivek Chand Looks like the cracks are showing..

The recent problems with the sub prime market is an indication of the potential problems. However, there is still some thinking that it is not a larger issue.
Posted: 18 March 2007 at 03:53

Wolfgang Grulke RE: Looks like the cracks are showing..

All the signs are coming together for a 'perfect storm' - both in the US and the UK - let's see what will happen in the netx 12 months!
Posted: 19 March 2007 at 14:16

Wolfgang Grulke Citigroup and UBS feel the sub-prime sting

Posted: 9 October 2007 at 13:32

Wolfgang Grulke Feedback from the ULI Trends conference yesterday

Here are some comments from the Arizona day-long real estate think tank:

"Because of foreclosures metro home prices could fall 30 to 35 percent from 2006 peaks and values won't likely return to that high befoee 2015", Gadi Kaufmann, RCLCO

"It's going to be ugly, ugly, ugly this year. But in five years this will all be a bad memory", Elliot Pollack, economist.

Posted: 17 January 2008 at 18:19

Doug Vining The bust begins

FOR years the housing market in Britain has defied gravity. For a few months in 2004 and 2005 house prices moderated, before taking off again. But now, finally, tighter credit and overstretched household budgets are pulling prices down.
Economist, 8 April 2008
Posted: 10 April 2008 at 07:14

Wolfgang Grulke The worst crisis EVER?

This headline in the Guardian this weekend: "We are in the worst financial crisis since the Depression, says IMF".

Well, don't say we didn't tell you. In May 2005 we issuesd our MindBullet titled: The House Price Bubble bursts, with a timeline of December 2007.

Here's a great link to an analysis of the IMF report:
Posted: 14 April 2008 at 18:38
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