You think you've got it bad? Rich people are stuck paying very high prices for housing with no relief in sight.
Sales of U.S. homes costing more than $10 million increased in the past year, said Kay Coughlin, president and chief executive officer of Christie's Great Estates in Santa Fe, New Mexico.
In San Francisco, 14 houses were sold for more than $5 million in the year ending in June, just one fewer than a year earlier. That suggests luxury homes there ``haven't taken any kind of hit'' amid the U.S. housing slowdown, said Andrew LePage of DataQuick Information Systems in La Jolla, California.
A newly constructed home near the Broadway property sold this year for $15.8 million. Another sold for $14 million, which was $1.5 million more than the asking price, said Moore of Alain Pinel.
A growing legion of rich people are bidding up the prices for prime real estate. It just is not fair. Poor people and the middle class are witnessing declining housing prices. But rich buyers get no break.
The Saudis are suffering just like American rich people. All that money flooding into Saudi Arabia due to rising oil prices is pushing up prices of housing and food.
RIYADH: Inflation in Saudi Arabia rose to a five-month high of 3.1 per cent in June as food and housing costs climbed, official data showed yesterday.
The cost of living index rose to 104.4 points in June, up 0.2pc compared with May, the Central Department of Statistics said, without giving a comparative figure for June last year.
Those Saudi princes and the Saudi masses sure have it tough. They didn't ask the East Asians and Western countries to bid up the price of oil. Now they have lots of money they didn't expect to have and not enough stuff to buy with it.
On Tuesday, the Case-Shiller Home Price Indices revealed a 3.4 percent fall in its market basket of 10 U.S. cities in the past 12 months; San Diego prices plunged 7 percent. Those declines will have an effect on consumer spending, which accounts for 70 percent of the gross domestic product.
Will consumer spending slow as people feel less wealthy and feel the drain of higher energy prices? The American people have already have stepped back from profligacy in the last couple of years. Where'd this small dose of sobriety come from? Baby boomers saving for retirement?
America still has debt problems, but as of this week the phrase "negative savings rate" no longer applies to the nation's household habits.
Through June of this year, US citizens have socked away $164 billion. Moreover, in releasing its annual revision of prior-year data, the Commerce Department now says that Americans earned more income than they spent in 2005 and 2006 – a reversal of prior tallies showing a negative savings rate for those years.
Why has the savings rate improved? The same reason housing prices are up for rich folks: Personal income increased so much for rich folks that they saved more than the poor folks spent.
Also troubling, McMillion says, is that much of the upward revision in personal income stemmed from greater interest and dividend income, not wages. That suggests that the savings picture has improved mainly for the best-off Americans, those with substantial financial assets.
Markets are driven by greed or fear. The greed phase has run so many years that people have begun looking for signs of the fear phase. The housing market and the oil market are both signalling reasons to focus more on fear. The oil market looks set to keep signalling louder and louder "fear, fear, fear".
|Share |||By Randall Parker at 2007 August 03 08:43 PM Economics Housing|