I know it's probably a subtle distinction, but have you only lost the money if you sell?
A trader would say you have lost money whether you sell or not.
On the other hand, a homebuyer probably would not. They have got a roof over their head or an income-producing asset, and it is continuing to keep the rain off or continuing to provide income. Utility has not decreased.
A homebuyer will also probably be of the view that if and when they sell, it will be to buy again in the same market so unless they are in a hurry to changeover (and hence cannot refinance easily), market gyrations are not so serious. At most they have missed the opportunity to save some money.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
On the other hand, a homebuyer probably would not. They have got a roof over their head or an income-producing asset, and it is continuing to keep the rain off or continuing to provide income. Utility has not decreased.
This is sort of what I was getting at. For all the focus here on fluctuations in price, at an individual level it's only really an impact when you're buying or selling, and houses aren't something homeowners tend to churn through. Apart from forced sales, I don't think many people would have bought a year ago intending to sell in 12 months. What is the impact of value being down now if you're not intending to sell for 10, 20 years?
This is sort of what I was getting at. For all the focus here on fluctuations in price, at an individual level it's only really an impact when you're buying or selling, and houses aren't something homeowners tend to churn through. Apart from forced sales, I don't think many people would have bought a year ago intending to sell in 12 months. What is the impact of value being down now if you're not intending to sell for 10, 20 years?
You have lost financial flexibility, of course. But that is always the problem with real estate.
The truth will set you free. But first, it will piss you off. --Gloria Steinem AREPS™
If you plunged your hard earnt cash into the average house in Melbourne last year in June, your house just lost you $36,604 dollars in 12 months!!!
Lets break that down some more, thats $3050 per month, and wait, aren't you paying interest on that as well??? Scary.
In some areas of Melbourne for sure but not all.
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and if you plunged your hard earned into the average house in 2008 you are still up like a mother fucker. What's your point Timo?
A lot of houses have been bought post 2008 and many are worth less than was paid. Not everyone one was a first home buyer who benefited from grants and stamp duty concessions.
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There will not be a crash in the near term.
If we get to ZIRP repayments will be cheaper than current rents. It's over Timo - Steve Keen is calling for a rally.
RBA rate may continue to decline, mortgage rates are fast approaching their lows. SK is calling for a bit of a rally in prices next year and then the deflationary cycle to continue.
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Not really Timo - there were much more generous FHOG entitlements and lower stamp duty rates in place then, so although you might be down a little on a comparison with what a buyer today would pay, it would be less than what you have calculated.
You're in Melbourne so you will have a better feel for the market than I have, but I think that 2013 might be a tough year in Melbourne real estate - it might be a good time to buy Mel, there will be some negative press if iron ore and coal prices fall lower and our dollar stays high. A few high profile job losses, builder and sub-contractor quotes should fall for your project Mel. Population increases should soak up the housing surplus in Melbourne fairly quickly.
Again not all the purchases were FHB's A large proportion of Melbournes population increase in that era was foreign students, their numbers are reducing, high dollar and violence against them being major issues.
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Anything is possible but how did he arrive at the 40% figure if he doesn't know which doom scenario will get us there?
That's a bit of back stepping from him isn't it?? If he was talking about the 2010 peak, why did he "do the walk" before the 2010 peak?
There are a few possible reasons why Melbournes property market could continue to decline, I do not think anyone knows for sure which one will impact the most and by how much. A combination of factors.
Why he did the walk was because his bet was in two parts a 20% reduction early and then a 40% reduction over time, the 20% reduction did not occur so he honoured that part of the bet and walked. The bet is still open on the 2nd part so one of them is walking up the mountain later.
I group these two quotes together.
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This is sort of what I was getting at. For all the focus here on fluctuations in price, at an individual level it's only really an impact when you're buying or selling, and houses aren't something homeowners tend to churn through. Apart from forced sales, I don't think many people would have bought a year ago intending to sell in 12 months. What is the impact of value being down now if you're not intending to sell for 10, 20 years?
You have lost financial flexibility, of course. But that is always the problem with real estate.
The impact is reduction of spending, capital gains in property prices are used to fund lifestyle and larger purchases. Eg Car Sales are down in Melbourne with heavy marketing for low interest offers, "registered but never driven demos" etc.
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it's now December you imbecile. you are deliberately picking a report that's 4 months old and talks about June because prices bounced back after June.
your ever growing desperation is highly amusing, please don't ever stop!
The thread is Melbourne specific, latest data has Melbourne prices down nearly 1%
As Mel has pointed out in another thread there are some areas of Melbourne with severe social issues. There are also areas that Mel would agree are not doing very well, Northern and Western suburbs an excellent example.
I feel the potential for further substantial falls in these areas over the next couple of years to be quite high. 30% to 40% not out of the realm imho. Overall for Melbourne it could still be an average of only say 10% to 15% but that will be false comfort for those FHB's and investors that purchased in those areas. Many of the PPoR buyers in that area are recent immigrants with low to semi skilled jobs (manufactoring mainly that is in decline in Melbourne)
mel
3 Dec 2012, 09:35 AM
Im not expecting ZIRP anytime soon (and im not super bullish on our local market). The irony of SHTF Round 1 in 2008 was that our prices spiked while the u.s. was simultaneously burning to the ground in real time. I agree with you on the FHB's - i wouldn't buy right now if i was a fhb but i'd be looking at getting ready to buy in the near future.
SHTF Round one saw massive stimulus measures from China and our government(s) threw a few coins into the ring too with the raising of FHB grants, stamp duty concessions and $900 cheques in the mail.
Some areas of Melbourne I would be happy to commit to a PPoR for the long haul regardless of what the market may or may not do in the short to medium term.. Other areas I would not touch even after they have significant falls in price.
There are some people who seem angry and continuously look for conflict. Walk away, the battle they are fighting isn't with you, it's with themselves.
The first lesson of economics is scarcity: There is not enough of anything to satisfy all who want it. The first lesson of politics is to disregard the first lesson of economics. ~ Thomas Sowell.
Who was the fool, who the wise man, who the beggar or the Emperor? Whether rich or poor, all are equal in death.
If we get to ZIRP repayments will be cheaper than current rents. It's over Timo - Steve Keen is calling for a rally.
Dream on Mel D, negative equity is your new black, making your intelligence look decidedly slimmer.
After a bubble has burst, no one denies that it existed. But before it does, the popular refrain is that though bubbles existed elsewhere in the world, “there’s no bubble here”. So housing bubbles are admitted to have existed in Japan, the USA, Spain and Ireland – because they’ve already burst.
I know it's probably a subtle distinction, but have you only lost the money if you sell?
Say you bought a house for $400,000 on a 25 year mortgage, and 5 years later ones just like it down the street are selling for $200,000. Every month you are making around twice the repayments you could have been making if you had rented and waited and you still have 20 years to pay.
Negative gearing is a form of leveraged speculation in which a speculator borrows money to buy an asset, but the income generated by that asset does not cover the interest on the loan
A negative gearing strategy can only make a profit if the asset rises so much in price that the capital gain is more than the sum of the ongoing losses over the life of the speculation. http://en.wikipedia.org/wiki/Negative_gearing
Dream on Mel D, negative equity is your new black, making your intelligence look decidedly slimmer.
That statement was rhetoric - what does it mean to you when the biggest bear finally accepts the possibility prices could rise, even for a short while?
How were you feeling about the markets in 2008 and what happened thereafter? There will be no crash Timo - at least within the next couple of years.
APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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