Private property prices set to keep rising in 2013: Report

[corydorus]

The problem with continuation of High Unemployment Rate is that the rate stop tracking those people after some period of time.
So we can have a large pool of unemployed people since 2008 accumulated.

Every year the Rate stay up there around 8%, larger the adult pool as US population growth rate is only around 1%.

America needs to find a way to clear this backlog. eg. War to create jobs ? Depreciation to attract lower level jobs ? Printing to extend their welfare?...

[Muck]

The problem with continuation of High Unemployment Rate is that the rate stop tracking those people after some period of time.

The unemployment rate only accounts for those who are not working but are actively looking for a job. It excludes those who are no longer actively seeking a job, as well as those who are under-employed (i.e. Overqualified, engaged in involuntary part-time work, or not fully occupied on the job).

[corydorus]

This is getting interesting.

Here's the definition i found from the United States Dept of Labor Websites.

To summarize, employed persons are:

All persons who did any work for pay or profit during the survey week.
All persons who did at least 15 hours of unpaid work in a family-owned enterprise operated by someone in their household.
All persons who were temporarily absent from their regular jobs because of illness, vacation, bad weather, industrial dispute, or various personal reasons, whether or not they were paid for the time off.

Unemployed persons are:

All persons who did not have a job at all during the survey reference week, made at least one specific active effort to find a job during the prior 4 weeks, and were available for work (unless temporarily ill).


Cory

[csl123]

Well i do not want to bet on that. They can move their benchmark anytime as needed.
I remember years back 2% inflation is a concern by Fed.

That's true, but my point here is that since they can change their tune so suddenly, what makes everyone so sure that interest rates will be kept low until at least 2014-2015?

The Fed has committed that it will keep interest rate low all the way up till 2014-15. The credibility of the Fed is crucial in anchoring inflation expectation, a key component of inflation. If it changes its monetary position frequently, it will not maintain credibility and general public will lose confidence, which could result in rising prices. Price stability is a mandate given to the Fed.
Unless there is a sharp decrease in unemployment rate, it is unlikely the Fed will change its monetary policy from expansionary to contractionary anytime before 2014/15.

So how? will people park their money in hard asset like property and gold??? the ans is an obvious, "Yes"...next question why this ppty bubble never burst, becos govt constantly & regularly keep deflating the balloon, how to burst?

It seems that the deflating an asset bubble can only be done when two conditions are met 1) An sharp increase in interest rates and 2) A large number of property sale resulting in "tipping point" being reached. However, given the current property cooling measures imposed by the government, it is unlikely any drop in property prices due to increase in i/r, will be drastic.

[corydorus]

Well i do not want to bet on that. They can move their benchmark anytime as needed.
I remember years back 2% inflation is a concern by Fed.

That's true, but my point here is that since they can change their tune so suddenly, what makes everyone so sure that interest rates will be kept low until at least 2014-2015?

The Fed has committed that it will keep interest rate low all the way up till 2014-15. The credibility of the Fed is crucial in anchoring inflation expectation, a key component of inflation. If it changes its monetary position frequently, it will not maintain credibility and general public will lose confidence, which could result in rising prices. Price stability is a mandate given to the Fed.
Unless there is a sharp decrease in unemployment rate, it is unlikely the Fed will change its monetary policy from expansionary to contractionary anytime before 2014/15.

So how? will people park their money in hard asset like property and gold??? the ans is an obvious, "Yes"...next question why this ppty bubble never burst, becos govt constantly & regularly keep deflating the balloon, how to burst?

It seems that the deflating an asset bubble can only be done when two conditions are met 1) An sharp increase in interest rates and 2) A large number of property sale resulting in "tipping point" being reached. However, given the current property cooling measures imposed by the government, it is unlikely any drop in property prices due to increase in i/r, will be drastic.

How about China tank bringing down the whole asia with her. Jobless up and many people can't service the property loan.

[hongonn]

How about China tank bringing down the whole asia with her. Jobless up and many people can't service the property loan.

Hehe same thought. I guess US might slow recovering but this turn is for China to tank. China growth has lack basis, all it has cheap labour and huge factories. Lack innovation and i can't find any reputed brands from China. All talk is China has the population to back them.

For US is the huge debt it has but it is hard to measure how soon the debt is going to backfire them. If they manage the policy well.

Could fiscal cliff be a surprise? Very hard too.

[csl123]

How about China tank bringing down the whole asia with her. Jobless up and many people can't service the property loan.

With the government injecting stimulus into the economy at times of weakness, it is very unlikely that China's economy will stall.

The key role of the Chinese government is to provide employment and boost living standards by increasing per capita GDP. Personally, a rise in unemployment rate seems very unlikely.

[camelking]

You can have a case where the price still goes up despite failling rental simply because there is still a high demand for property assets here. If one buyer is buying 5- 6 properties at one go, how is there supply to go around?

And why would one buyer buy 5-6 properties at one go when there is nobody renting? Even if there are such buyers, they are a tiny minorities.
Majority of the buyers were and still are looking for rental yield to offset against their instalement.

Not sure about mass market but high end rental market is essentially dead.
My boss got severals units (just TOP) vacant.

Perhaps the momentum or confidence is dropping and what if, the lack of confidence turn into panic?