If you don't own a home by your 40s, you never will. And you'll end up poorer than those who do.; Silly bears who think they can rent their way to wealth are only fooling themselves...
Tweet Topic Started: 10 Oct 2016, 07:29 AM (8,616 Views)
Your starting position is that both the buyer and the renter have $500,000 in cash?
If you had $500,000 and invested it in a P2P platform at the equivalent return of the largest platform in Australasia, you'd have $1.8 mio within 20 years. (allowing 4% of the loan portfolio to default). Also, the return would be generating a return of $35K within its first year and increasing at annual rate of 7% after that.
Far better than buying a house, using the same logic forced down the throats of the suburbanites.
It's two things. Firstly, it's the fact that lifetime accommodation costs are significantly lower for homeowners than renters. Secondly, it's the fact that homeowners end up holding a valuable asset that tends to rise in value over time, compared to renters who don't own a home. Taken together, these two factors result in greater wealth accumulation for homeowners than renters.
I didn't say "wealthy" (since that term is quite subjective) but certainly "wealthier" than someone who chooses to rent an equivalent home for their lifetime, instead of buying it.
He probably doesn't know or understand the Sydney market, or have any interest in it. He invests in what he knows, and seems to do pretty well out of it. But most people aren't Warren Buffet. For most Australians, the choice is between buying a home or renting a home. In which case, buying will generally end up being a better generator of wealth.
It's not a choice between buying a home or 'being Warren Buffet'. By choosing to rent, Australians don't suddenly gain Warren Buffet's investment prowess. They just end up squandering their money on rent payments. I highly doubt Warren Buffet pays rent to a landlord. How does that work? A bank isn't going to lend you money secured by your savings. It will want a real asset as security.
As discussed last week, although the bears refuse to admit it.
The truth is it costs far more to rent for a lifetime than it does to buy a home.
And homeowners end up vastly more wealthy than renters.
People like Crazy Ted and Steve Keen seriously damaged their financial futures by selling perfectly good Sydney homes just before the recent boom.
Life-long renters face financial stress in retirement, new report says
Oct 10, 2016
If you do not own a home by the time you are in your late 40s, you will probably never own one — and you will probably be significantly poorer than those who do.
That is according to a paper released on Monday by Swinburne University, which found more Australians are renting in retirement and facing financial stress.
“Housing is a probably the key way of generating wealth, but people who are unable to purchase or fall out of home ownership will find that they don’t have as much wealth in retirement,” research author Andrea Sharam said.
The paper showed if you had not purchased property by mid life (45-49 years old), there was a strong likelihood you would not purchase thereafter.
Financial experts have previously advised “generation rent” — the growing cohort of young people priced out of the property market — would find it difficult to retire as wealthy as a property owner, largely because Australia’s retirement income system is predicated on owning a home outright in retirement.
The study also showed that in the older age brackets, 65 to 69 year olds, the wealthiest segments were those who owned both their own home and other properties.
You know the one that is trying to look at what might happen during the next decades rather than what has already been.
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Assuming real house prices increased at the historical expected real rate of 2.4 per cent, buying beat renting if the owner held for more than eight years.
However if the expected real rate of 1.7 per cent experienced over the past 10 years was used, owning only beat renting over a period longer than 30 years.
“Consistent with conventional wisdom, households expecting to move again in a few years’ time are better off renting, unless they believe they can sell the property for an unusually large capital gain,” the paper said.
As in, do you buy a house in Sydney right fcking now with prices at nosebleed levels?
Besides, the majority of people aspire to home ownership. Those who dont attain generally fail because they never earn enough. Others fall out of it due to divorce, ill health etc.
The fact that they rent is a function of their poverty not the other way around.
A subject you will one day start a thread about when you are finished masturbating about your property investments on the Northern beaches.
Property acquisition as a topic was almost a national obsession. You couldn't even call it speculation as the buyers all presumed the price of property could only go up. That’s why we use the word obsession. Ordinary people were buying properties for their young children who had not even left school assuming they would not be able to afford property of their own when they left college- Klaus Regling on Ireland. Sound familiar?
The evidence of nearly 40 cycles in house prices for 17 OECD economies since 1970 shows that real house prices typically give up about 70 per cent of their rise in the subsequent fall, and that these falls occur slowly. Morgan Kelly:On the Likely Extent of Falls in Irish House Prices, 2007
If you had $500,000 and invested it in a P2P platform at the equivalent return of the largest platform in Australasia, you'd have $1.8 mio within 20 years. (allowing 4% of the loan portfolio to default). Also, the return would be generating a return of $35K within its first year and increasing at annual rate of 7% after that.
Far better than buying a house, using the same logic forced down the throats of the suburbanites.
That's great but what if you instead invested in a P2P platform the worst in Australasia?
How do you know that todays best performing P2P lender will perform at an equal return for 20 years generating $1.8mio?
Isnt the disclaimer that past performance is not a guarantee of future returns?
And as you can not build shelter under the fabric of the digital certificates of your investment where will you live while you wait for these hypothetical future returns from your P2P lender and at what cost?
At least if you buy a house you know what the house cost, what the repayments are and where you will sleep at night.
For somebody who pretends to be intelligent you regularly set the bar for stupidity Tezza.
In fact you are the intellectual equivalent of a skid mark on the bowl of the real worlds toilet.
That's great but what if you instead invested in a P2P platform the worst in Australasia?
How do you know that todays best performing P2P lender will perform at an equal return for 20 years generating $1.8mio?
Isnt the disclaimer that past performance is not a guarantee of future returns?
And as you can not build shelter under the fabric of the digital certificates of your investment where will you live while you wait for these hypothetical future returns from your P2P lender and at what cost?
At least if you buy a house you know what the house cost, what the repayments are and where you will sleep at night.
For somebody who pretends to be intelligent you regularly set the bar for stupidity Tezza.
In fact you are the intellectual equivalent of a skid mark on the bowl of the real worlds toilet. Well answer me this - do you plan to live more than, or less than 30 years from today?
Good heavens Uncle Matty.
Far better than buying a house, using the same logic forced down the throats of the suburbanites.
But let's think about a little, let's take a worse case scenario and all those P2P loans go belly up in the next hour. That will be $300 mio defaulted on and 20,000 suburbanites whose credit ratings have just sunk into the toilet. Great for the economy.
Sure, you can buy a little house and shuffle off to the tire fitters every day or your little cubicle. Not very scaleable or exciting (except for the weekly installment of Masterchef), but life's all about choices. I would definitely not recommend most suburbanites to play with P2P lending. Most of them barely have 2 sticks to rub together.
You're talking about suburbia and you're basing the future based on assumptions that have no rigor.
It's not an assumption Roddy. It's a known fact that most Australians require accommodation for their entire lives, and the main options are to buy it or rent it.
Jon Snow
10 Oct 2016, 11:49 PM
Your starting position is that both the buyer and the renter have $500,000 in cash?
Starting position is that the potential buyer and renter are the same person - i.e. that person can either choose to buy or rent, using whatever capital and income they have at their disposal.
Veritas
11 Oct 2016, 01:33 AM
Groan. How about you debunk this one Shadow? Assuming real house prices increased at the historical expected real rate of 2.4 per cent, buying beat renting if the owner held for more than eight years.
No issues with that. If you only require accommodation for eight years of your life (for example, if you have a terminal illness and expect to die within eight years) then it's probably financially better to rent. However, if you're a normal healthy Australian then I'd recommend performing the comparison over a 70-year period, since it's likely you'll live well into your 80s or 90s.
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As in, do you buy a house in Sydney right fcking now with prices at nosebleed levels?
A lot of people like Steve Keen, Roddy and Crazy Ted asked themselves this same question before this recent boom, and decided to sell existing property or delay purchase. Bad decision.
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Besides, the majority of people aspire to home ownership. Those who dont attain generally fail because they never earn enough. Others fall out of it due to divorce, ill health etc.
The bears who I'm addressing haven't failed for those reasons. You and the other bears here have failed because you hold the mistaken view that it's actually cheaper to rent than buy. Hence my posts to try and help you see some sense.
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A subject you will one day start a thread about when you are finished masturbating about your property investments on the Northern beaches.
I haven't mentioned my own investments. It's not about me.
"The truth is that there are no good men, or bad men. It is the deeds that have goodness or badness in them. There are good deeds, and bad deeds. Men are just men."
Over-55s in England have more wealth locked away in their homes than the entire annual GDP of Italy
Homeowners who are aged over-55 have more wealth locked-away in their homes than the entire annual GDP of Italy, research shows. People in England aged 55 and over currently own £1.5trillion worth of property, £0.1trillion more than Italy’s annual GDP, according to retirement income firm Age Partnership. With the average cost of a house in England standing at £229,383 and 6.3million over-55s owning their home outright, the £1.5trillion figure puts this age group among the richest property owners in the world.
If you had $500,000 and invested it in a P2P platform at the equivalent return of the largest platform in Australasia, you'd have $1.8 mio within 20 years. (allowing 4% of the loan portfolio to default). Also, the return would be generating a return of $35K within its first year and increasing at annual rate of 7% after that.
Far better than buying a house, using the same logic forced down the throats of the suburbanites.
Where would they get $500,000 from terry? Investing large amounts of money isn't in reach of the working class.
Also, which P2P platforms have been around for 20 years?
Over-55s in England have more wealth locked away in their homes than the entire annual GDP of Italy
Homeowners who are aged over-55 have more wealth locked-away in their homes than the entire annual GDP of Italy, research shows. People in England aged 55 and over currently own £1.5trillion worth of property, £0.1trillion more than Italy’s annual GDP, according to retirement income firm Age Partnership. With the average cost of a house in England standing at £229,383 and 6.3million over-55s owning their home outright, the £1.5trillion figure puts this age group among the richest property owners in the world.
It's not an assumption Roddy. It's a known fact that most Australians require accommodation for their entire lives, and the main options are to buy it or rent it.
Well yes they do mother cat, however you will not know how much they have to pay for the privilege (if they have to pay at all), regardless if they buy or rent. That's why you have to make the simplest of calculations based on the most crude frameworks of the future.
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