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Who listened to housing bears and had their property ownership dreams crushed?
Topic Started: 25 Jun 2014, 11:39 PM (7,865 Views)
Mike
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Investor888
26 Jun 2014, 03:00 PM
15-20% is not a crash. Over a period or 2-3yrs to 2017/2018 it's just a return to balance after the 20% spike since the start of 2013, as interests rates rise. My call is 15-20% nominal (or that equates to around 35% in real inflation adjusted terms), then flat, and onto the next boom phase in the early 2020's when the market again reached new highs and the latecomers again buy in ~2022-2024 at the peak of the boom.

Hey, I'm the bull here! But I'm also realistic and understand the cycles.
I agree with most things you post.

You have a very similar strategy and thought process on investment as I do.

Good balanced view point.

Another point with bears is this. When a market is falling such as it did in 2011 in Perth (-10%) they continue to wait hoping for the -40% price drop that Keen predicted way back during the GFC. Yet looking at the economic trends at the time, going to home opens, visiting new estates it was obvious an upswing had already started during late 2011 and started to emerge during 2012. By the time bears admitted they got it wrong (waiting for data) it was to late. They had missed the boat and prices rapidly increased. Since late 2011 prices in Perth increased over 16% breaking new highs.

For FHB looking to enter the market the best advice I can give you is this. Buy when you can afford the house you want to buy, you are confident about employment. Do not buy because you think prices are about to increase 10% or do not put off a purchase as you think prices will fall 10% or more. Unless you are involved in the market on a daily basis and devote huge quantities of time to it, you will likely get it completely wrong. Even the experts get it wrong most times. The best time to buy is when you can afford to do so and I do not mean your dream home, a half decent starter home. Don't listen to me or bears about price rises or falls in the future, buy when it suits your own life and just do it, dive in, take the plunge. Having a happy wife or the satisfaction of owning your own home is far better then worrying about price movements in houses.

Always remember, just because some indices says prices went down 10% in your city does not translate into price declines in the suburb you want to buy in. Median prices might decline, but your location could be rising in price, same is true when prices are rising you have locations falling in value. Even then it comes down to each street, one street could be worth $100,000 more then the next street across. So stop worrying about price movements that likely have little to no bearing on price of the home you want.

Imagine how many people would be better off had they not listened to Steve Keen back in 2008 and bought a house back then. 6 years of lost time, renting, saving for a deposit only to see prices rise and a deposit shrink as a % of the house.


http://mike-globaleconomy.blogspot.com.au/
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CSI
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Do not buy because you think prices are about to increase 10% or do not put off a purchase as you think prices will fall 10% or more.


This is good advice. Honestly though I don't think very many people have put off buying a house because they anticipate prices crashing. Far more people would have bought hastily because they were panicking that they were about to be "priced out of the market forever", which isn't something you should really worry about.
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hoofarted
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I agree with this. I would say that many more have crashed and burned their financial situation by listening to the "buy now or miss out forever" crew than those that waited for a crash... They still have their cash... the others just have debt and cannot get credit anymore.
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stinkbug
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hoofarted
28 Jun 2014, 08:13 AM
I agree with this. I would say that many more have crashed and burned their financial situation by listening to the "buy now or miss out forever" crew than those that waited for a crash... They still have their cash... the others just have debt and cannot get credit anymore.
If you're the sort of person that listens slavishly to either side you're going to get burnt. Learn how things work, do your own due diligence, make your own decisions.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Koala Bear
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My forum name should give away that when I joined I was a bear, hoping for a crash, crash, crash.

I lost interest after a while and kept saving money and, after having a baby, came to the point where I knew I wanted a house and couldn't afford to wait for a crash that might not happen. I did the sums, decided to buy a block of land first and just build when I can afford (I live overseas and will for a few more years so I'm not in a hurry).

I'm kind of glad I took the time to wait, as I know that I have bought in the right place for us (although it would have been nice to buy when it was cheaper). However, I do agree that listening to all the bear news was a bit of wishful thinking.

Perhaps I should change my forum name now to Koala Idunno.

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herbie
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Koala Bear
30 Jun 2014, 11:21 AM
My forum name should give away that when I joined I was a bear, hoping for a crash, crash, crash.

I lost interest after a while and kept saving money and, after having a baby, came to the point where I knew I wanted a house and couldn't afford to wait for a crash that might not happen. I did the sums, decided to buy a block of land first and just build when I can afford (I live overseas and will for a few more years so I'm not in a hurry).

I'm kind of glad I took the time to wait, as I know that I have bought in the right place for us (although it would have been nice to buy when it was cheaper). However, I do agree that listening to all the bear news was a bit of wishful thinking.

Perhaps I should change my forum name now to Koala Idunno.

Speaking as a Brisbane boy, I'm basically happy I've kept my powder dry for the last 5 years - Thought I might have fucked up (minimally) about 9 months ago when prices moved up. But maybe not, as I've spotted a property or two again I reckon could be worth a punt.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Admin
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No longer a nation of home owners, now we're renting
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provocateur
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Alex Barton
18 Oct 2015, 10:04 AM
Apparently a huge haircut in standard of living is a win for the bulls. Imagine how excited they'll be with a return of feudalism. We're nearly there!
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Rastus2
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Ex Sydney Bear
25 Jun 2014, 11:39 PM
It's about time somebody asked this question. It's like the taboo subject around here.

I have now come full circle, after going through the GFC, watching Keen rise to prominence and following his views, and those of other bears such who reside here. I don't really understand everything Keen and co. say, I really don't and I'm not ashamed of that (I have an IQ of 135). They are clearly very very smart guys. Smarter than your average smart guy.

But I put it to you all that academic smarts don't always lead to real life success. Sometimes it comes down to politics and backdoor deals and factors that academic analysis may not be able to grasp as well as the man on the street. As well as the man whose gut tells him although the argument sounds right, it clearly isn't - for a reason unknown.

I wish I had more street smarts and less academic smarts, the older I get, the more I realise street smarts are far more valuable.

Look, I don't really care anymore, it's a hopeless situation. I've missed the boat and now it's either mortgage myself to the eyeballs or buy something I don't wanna buy. I'm going for the mortgage myself to the eyeballs route. What's the worst that can happen. Bankruptcy I guess. Not optimal, but it's a risk I'm going to take. I can honestly see this market steaming ahead for a long time to come. There is no respite out there on the streets. The desperation is tangible.

Tell me please, where are all these buyers going to go? The 100 or so who walk through a property with me every weekend. Where are they going to go?

Honestly, it has hit home hard since I've hit the Saturday inspection trail over the last couple of months.

It's hopeless. It's frustrating. It makes me hate this city I call home.

Now, I'm not blaming anyone for my extremely bad decision not to buy a home when prices were significantly cheaper. That was my bad decision. My decisions are my own. But I wish I never had of found this forum and others like it. I wish I had never seen Keen on "your money your call". Then I'd be like all the other ignorant buyers who dived in and are now on their way to the easy life. Ignorance really can be bliss.

But I think it needs to be pointed out that there are people on this forum and elsewhere, the proclaimed expert on the topic of home prices, who have got it FLAT OUT WRONG. I just want them to admit that (Keen did with his walk to some degree and I respect that a lot). I just want them to admit, that even though they are super duper smart and understand economics and markets and whatever to a level that us mere mortals could never dream, that their smarts may not be so "street smart".

I'm done following them. I am no longer a bear. I am not a bull. But I just don't believe these guys any more. Good luck to those who follow them into the future.

I would love to hear some other experience of FHBs on the street each Saturday. Maybe theirs is different to mine and there are properties within 10km of the Sydney CBD that are not in high demand. There may be opens without an air of desperation from the buy side. I'd like to hear it. I'd also like to hear where all these displaced buyers are going. I've upped the ante on my finance arrangements and willingness to pay. I suspect many others are doing the same.

All this may make the crash bigger, or it may set a floor under the market forever. No one really knows!

ahem.. I was a bear, and I was right.

Gold Coast (the area I predicted) pretty much got smashed... none of the bulls wanted to talk about it because it did not fit their picture.

I became bullish on Gold Coast (and Sunshine Coast/Brisbane) about a year ago... still some upside to the GC market.. Sunshine Coast still not exactly booming.. brisbane... boooming quite well.
Edited by Rastus2, 18 Oct 2015, 01:49 PM.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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newjez
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Rastus2
18 Oct 2015, 01:48 PM

ahem.. I was a bear, and I was right.

Gold Coast (the area I predicted) pretty much got smashed... none of the bulls wanted to talk about it because it did not fit their picture.

I became bullish on Gold Coast (and Sunshine Coast/Brisbane) about a year ago... still some upside to the GC market.. Sunshine Coast still not exactly booming.. brisbane... boooming quite well.
Perth just on 2010 values and falling. Renters will have saved a nice deposit on like for like.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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