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Bears should capitulate and buy a house, because homeowners are wealthier than renters; In buying a house you are investing in a tax-free asset that in the long term will increase in value
Topic Started: 2 Nov 2016, 09:08 AM (3,505 Views)
Khaderbhai
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Wealthy Suburbanite

http://www.abc.net.au/news/2016-11-01/why-gen-y-should-buy-a-house-from-a-baby-boomer-parent/7983592

Housing market: Why Gen Y should buy now

I am a baby boomer parent and I have had that conversation with my eldest son who recently got married.

Like Michael Janda, my son loves his smashed avo lifestyle too much to think about houses.

And just as an aside, it is a point of frustration among my friends that our adult children, when they talk about possibly buying a house, will only consider a limited range of very expensive suburbs.

As a trained financial planner (even though I don't work as one) my focus is on building wealth for the long term.

The overwhelming evidence is that home ownership does that and renting doesn't.

For example, in its most recent survey of Household Income and Wealth, the Bureau of Statistics says this:

"Average household wealth for those households who were renting was about 21 per cent of the average wealth of owner occupied households with a mortgage, and 13 per cent of owner occupiers who owned their home outright."

In other words, renters have about one-eighth to one-fifth of the wealth of home owners.

69 per cent of renters are in the "low net worth" category.

And it's not just an Australian phenomenon.

According to the US Federal Reserve's "Survey of Consumer Finances," the average net worth of an American homeowner is 36 times greater than a renter.

Many people believe the soaring house prices in Sydney and Melbourne in particular, are in bubble territory, a bubble that's ready to burst at any time.

But as the US experience during the global financial crisis shows, even if house prices plummet by up to 40 per cent, home owners are still far better off than renters.

And, yes, if you've just bought your house when the bubble bursts you may owe more on it than it's worth for a while but that situation won't last forever.

No-one is making you sell and crystallise that loss.

Buying a house forces you to be disciplined in your saving because you have to keep up with the repayments.

It may crimp your 'smashed avo' lifestyle and may mean holidays in Australia rather than overseas, but in buying a house you are investing in a tax-free asset that in the long term will increase in value.

Owning a house will provide somewhere for you to live in retirement and the opportunity, if needed, to downsize and use capital from your house to boost your retirement income.

Despite the bloated house prices in Sydney and Melbourne there are still affordable and liveable suburbs.

They're not by the water, but it will be yours and buying your own home will start you on the road to long term prosperity.
Banks can't repossess your home simply because the market value falls. Australia's Consumer Credit Code says consumers aren't liable for things ordinarily outside their control and can't be held to obligations that could only be met by selling their home. Click for details.

"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."
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Rufus
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Khaderbhai
2 Nov 2016, 09:08 AM
http://www.abc.net.au/news/2016-11-01/why-gen-y-should-buy-a-house-from-a-baby-boomer-parent/7983592

Despite the bloated house prices in Sydney and Melbourne there are still affordable and liveable suburbs.

They're not by the water, but it will be yours and buying your own home will start you on the road to long term prosperity.
But when the First Fleet arrived everyone could afford harbour views, even the convicts.

I demand my harbour view and private beach.
Take risks - if you win you will become wealthy, if you lose you will become wise
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herbie
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Rufus
2 Nov 2016, 09:52 AM
But when the First Fleet arrived everyone could afford harbour views, even the convicts.

I demand my harbour view and private beach.
Just had ta kill a few blackfellahs ta get 'em.

'N nowadays they'll just have ta kill a few baby boomers ta get 'em.

Should all be easy enough ... No? :)
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Terry
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Great advice. Avocados on toast in cafes should be for special occasions, like birthdays and religious holidays.

Also, one of my clients is a Chinese manufacturer of smart phones (Oppo). Pretty much the same functionality as a Samsung or an iPhone. Buying an Oppo will help young people get on the property ladder quicker. Actually, not owing a smart phone or a car altogether should mean that you can pay off your house much earlier.
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Foxy
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Zero is coming...

Terry
2 Nov 2016, 11:29 AM
Great advice. Avocados on toast in cafes should be for special occasions, like birthdays and religious holidays.

Also, one of my clients is a Chinese manufacturer of smart phones (Oppo). Pretty much the same functionality as a Samsung or an iPhone. Buying an Oppo will help young people get on the property ladder quicker. Actually, not owing a smart phone or a car altogether should mean that you can pay off your house much earlier.
There is always the next step...

https://www.youtube.com/watch?v=SVpN312hYgU
http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Ex BP Golly
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An economy built upon builders, bankers and real estate agents while everyone eats mince and hitchhikes to work emptying their bins.

Awesome.
WHAT WOULD EDDIE DO? MAAAATE!
Share a cot with Milton?
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Terry
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Ex BP Golly
2 Nov 2016, 12:19 PM
An economy built upon builders, bankers and real estate agents while everyone eats mince and hitchhikes to work emptying their bins.

Awesome.
Bring back payphones. Smartphones should only be used by "important people": politicians, builders, bankers, media, and REAs. If a phone is vital for your business, you can apply for a license.

Add tarrifs for growing and distributing avocados. Porridge instead of mince.
But back to this piece of "cerebral" advice on money and social advancement. The key takeaway is "the poorest people in society cannot afford to buy houses."

Well duh.
Edited by Terry, 2 Nov 2016, 12:56 PM.
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Foxy
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Zero is coming...

Ex BP Golly
2 Nov 2016, 12:19 PM
An economy built upon builders, bankers and real estate agents while everyone eats mince and hitchhikes to work emptying their bins.

Awesome.
The evolution of humanity, while their champions live in $100,000,000 plus houses.

http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Foxy
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Zero is coming...

Terry
2 Nov 2016, 11:29 AM
Great advice. Avocados on toast in cafes should be for special occasions, like birthdays and religious holidays.

Also, one of my clients is a Chinese manufacturer of smart phones (Oppo). Pretty much the same functionality as a Samsung or an iPhone. Buying an Oppo will help young people get on the property ladder quicker. Actually, not owing a smart phone or a car altogether should mean that you can pay off your house much earlier.
What if i just had to call her and she did not have a phone??

http://moshlab.com/asian-tattoo-girl-dragon-designs-art-wallpaper-desktop-hd-free-mobile-26629938734/

http://www.afr.com/content/dam/images/g/n/2/1/u/8/image.imgtype.afrArticleInline.620x0.png/1456285515560.png
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Terry
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foxbat
2 Nov 2016, 03:19 PM
It's a valid point Foxy and I have to pull things back a bit. Feature phones go for less than $100. They could even come in the avocado color just to remind the youth of the sacrifices needed to participate in the national goal.
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