The decline in land prices will be a lot! It will astonish all! Don’t Buy Now! Invest in equities!
The decline in land prices will be a lot! It will astonish all! Don’t Buy Now! Invest in equities!; Negative equity will be widespread! It will ruin lives and marriages!
Predicting the percentage decline in land prices is speculation! It will be a lot and astonish everyone!
The economic agony ahead can be predicted with some accuracy! There will be very little liquid money around as everyone with a mortgage tries to pay down principal as fast as they can to restore their equity base! Good luck with that if your mortgage is $500k! Negative equity will be widespread! That $500k mortgage will be very irksome if the property it is secured on is worth $350k, maybe less!
In the USA, a significant percentage of mortgaged homeowners are still in negative equity from 2007! If the mortgage is more than market price, you can’t sell to move up or down or across town unless you tip in cash! For this group, the combination of negative equity, physical paralysis and constant cash drain – and being held in this state for many many years – will ruin lives and marriages!
The banks won’t foreclose much – mostly, people will quietly surrender their homes and equity!
Mortgagee sales will be widespread, though rarely advertised as such. Anchoring will be a serious problem – what was once worth $1m selling at $650k will seem a bargain! It isn’t if prices are still falling and have not found a floor!
When it makes sense to transact is a difficult question, one that can only be answered at a personal level! One useful metric is where the mortgage is LESS than (real or imputed) rent! The bulls will scoff that this is not possible! This is exactly what happened in 1989-90 when I bought a big period house in Brighton 3186 on 8900sqft, it happened in 1890 and in 1930!
It will happen again, right here, quite soon! And we have done it on overseas borrowings, too!
This is why I urge my fellow citizens to save, invest in equities, study for another degree, build your career or travel instead of drinking the Kool-Aid!
Predicting the percentage decline in land prices is speculation! It will be a lot and astonish everyone!
The economic agony ahead can be predicted with some accuracy! There will be very little liquid money around as everyone with a mortgage tries to pay down principal as fast as they can to restore their equity base! Good luck with that if your mortgage is $500k! Negative equity will be widespread! That $500k mortgage will be very irksome if the property it is secured on is worth $350k, maybe less!
In the USA, a significant percentage of mortgaged homeowners are still in negative equity from 2007! If the mortgage is more than market price, you can’t sell to move up or down or across town unless you tip in cash! For this group, the combination of negative equity, physical paralysis and constant cash drain – and being held in this state for many many years – will ruin lives and marriages!
The banks won’t foreclose much – mostly, people will quietly surrender their homes and equity!
Mortgagee sales will be widespread, though rarely advertised as such. Anchoring will be a serious problem – what was once worth $1m selling at $650k will seem a bargain! It isn’t if prices are still falling and have not found a floor!
When it makes sense to transact is a difficult question, one that can only be answered at a personal level! One useful metric is where the mortgage is LESS than (real or imputed) rent! The bulls will scoff that this is not possible! This is exactly what happened in 1989-90 when I bought a big period house in Brighton 3186 on 8900sqft, it happened in 1890 and in 1930!
It will happen again, right here, quite soon! And we have done it on overseas borrowings, too!
This is why I urge my fellow citizens to save, invest in equities, study for another degree, build your career or travel instead of drinking the Kool-Aid!
Don’t Buy Now!
Welcome the Uber-bear.
This may occur in the little hamlets with no jobs, prospects or quality of living IE all of Tasmania, SA, WA and NT.
But there are so many cashed up buyers waiting for the slightest dent in the market to stock up again in quality investments that it is unlikely that any correction will ever get to 20% let alone beyond for Sydney or Melbourne.
Where we will see the drop; is in those investment new home unit sales where units worth $500k have been sold for $700k with buyer expectations that the market will catch up before the project is complete. These may show a 30% drop not in value, but rather that the purchase price was artificially inflated because of the sales spiel that went along with it.
I doubt that any second hand property bought will devalue by more than 10-15% and as Sydney has seen a 50% increase in 3 years on these properties, then only the "johnny risk lateleys" will be harmed.
You cant drive a house, BUT you can always sleep in a car!
"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works." John Stuart Mill
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