Garbage Journalism - article on the "imminent property bubble bust"

This article here - http://www.smh.com.au/world/stressed-out-waiting-for-the-bubble-to-burst-20100212-nxjf.html

.... is complete garbage IMO. Just another one of those "it happened in america, so its going to happen here. Also, Steve Keen says it will happen. The sky is going to fall on your home and leave you homeless! RUN FOR THE HILLS!"

You really need to wonder if journalists actually do any real research into the topic they are reporting anymore.... or if their degrees are actually worth the paper they are printed on.

Is the average reader really that dumb?
 
I see much poorer written articles in favour of property prices continuing to increase.

Sure it's a bit of a leap from US housing crashed so Australian housing must, but the message I got from the article was simply in the last couple of lines: "There are few precedents for bubble soft landings"

Is the average reader really that dumb?
Perhaps something you have to tell us...:p

I don't personally tend to scour the popular news sites (though do read when linked), usually I wait for reports & data to form my positions.
 
And these people who are "walking away from their homes" in America - where are the going? The need to live somewhere!

Actually, one option, assuming you weren't behind on your original loan. Buy the house next door for 50% what you bought it for, then default on your original home. Assuming your state does non-recourse loans and a homestead exemption (that is, your PPOR is specifically excluded from bankruptcy proceedings), this can work. Your credit will be trashed, though. There's tons of supply out there.

Of course, Australians can't do this.
Alex
 
Interesting - there is an article in today's Courier Mail, bemoaning housing affordability and how SEQ is on the brink of a new boom.

Horses for courses
 
Actually, one option, assuming you weren't behind on your original loan. Buy the house next door for 50% what you bought it for, then default on your original home. Assuming your state does non-recourse loans and a homestead exemption (that is, your PPOR is specifically excluded from bankruptcy proceedings), this can work. Your credit will be trashed, though. There's tons of supply out there.

Of course, Australians can't do this.
Alex

That would work! Didn't know it could work like that in US.
 
That would work! Didn't know it could work like that in US.

There are still consequences, of course. Your credit score will be trashed. Any credit you take out in the future, including credit cards, etc. wll have much higher rates. Some jobs might require credit checks.

However, if I borrowed 100% LVR and now I'm sitting on a 50% loss, I'd be tempted.
Alex
 
That would work! Didn't know it could work like that in US.

Yes it does work. It's important to borrow to buy the new house BEFORE you blow your credit rating by returning your keys for the old one though.

I read lately that there is a tax cost because the repayments avoided/forgiven is considered taxable. A VERY knowledgable RE guy said that, not me. :)
 
I read lately that there is a tax cost because the repayments avoided/forgiven is considered taxable. A VERY knowledgable RE guy said that, not me. :)

Only if it's a short sale (i.e. you sell the place for less than you owe, and the bank forgives the loan). If it's a foreclosure on a non-recourse loan, then the foreclosure is not considered debt forgiveness and therefore no tax is payable.

http://www.irs.gov/newsroom/article/0,,id=174034,00.html

Whether loans are non-recourse or not, and homestead exemptions are state-specific rules. So what works in one state may not work in the other.
 
What! Steve Keen said it's going to happen? It must be true.:rolleyes::p

Skater so true!!

The Gospel according to Steve keen, sell everything and run for the hills. Steve should broaden his skillset to not just property but other avenues like telling us how the weather will be in 2 years or when I am going to have serious injury. All his so called predictions have yet to come true

Jezza
 
but the message I got from the article was simply in the last couple of lines: "There are few precedents for bubble soft landings"
well there are big example of housing bubble soft landing, one is Japan, where home prices dropped (and still dropping) on a time span of over 20 years, same thing in Germany where the house bubble post unification burst in a 20 years span (in real term)


In my opinion there are few point in the article that are quite important,
one is that sold property volume down is the first sign of downturn.
Also bank lending is a key point in a property downturn in Australia, the risk of drop in lending is very real as AUS major banks have something like 1.5 tril$ of lending and amount of mortgages are over 1 tril$, these are very big numbers and represent big leverage.
 
There are still consequences, of course. Your credit score will be trashed. Any credit you take out in the future, including credit cards, etc. wll have much higher rates. Some jobs might require credit checks.

However, if I borrowed 100% LVR and now I'm sitting on a 50% loss, I'd be tempted.
Alex

Great idea.
However i was once listen to one of the USA financial channels when overseas during the crisis, and the 'adviser' was saying forget about your house repayment, make sure your credit card payments are up to date.

So i think they actually rank differently on your credit score, ie credit card payments being much more important than house repayments.

Different system, yet its really amazing that foreigners bought into the all this orignination stuff (ie buying the underlying debt instruments) on the presumption that the US system is the same as theirs.
 
I'm a journalist; we don't all suck. I even have an article appearing in the next edition of "Your Investment Property". Thoroughly researched, of course! :)

Cheers,

Harriet
 
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I'm a journalist; we don't all suck. I even have an article appearing in the next edition of "Your Investment Property". Thoroughly researched, of course! :)

Cheers,

Harriet

like with almost anything, not all journalists are bad... there are heaps of good ones out there. Its just a shame that there seems to be a disproportionately high number of rubbish ones writing for our large newspapers, and running our TV news content.
 
I'm a journalist; we don't all suck. I even have an article appearing in the next edition of "Your Investment Property". Thoroughly researched, of course! :)

Cheers,

Harriet

Without knowing the contents of your article, by chance is it a 'positive property review'.

If positive you are 'intelligent' and if negative, you are 'dumb'.

I'm making a broad brush here (which might be unitelligent in itself:D)
 
This article here - http://www.smh.com.au/world/stressed-out-waiting-for-the-bubble-to-burst-20100212-nxjf.html

.... is complete garbage IMO. Just another one of those "it happened in america, so its going to happen here. Also, Steve Keen says it will happen. The sky is going to fall on your home and leave you homeless! RUN FOR THE HILLS!"

You really need to wonder if journalists actually do any real research into the topic they are reporting anymore.... or if their degrees are actually worth the paper they are printed on.

Is the average reader really that dumb?

I have just spent some time re-reading the article. Actually its not so 'dumb'.

There are some sensationalist points, but i will comment on a few points:

First paragraph: US specific, not relevant to australia
Third paragraph: very relevant to australia, and one that i think many somersofters should take notice of (especially those with leverage which requires refinancing to make up for negative cash flow).

Steven Keenes quote is also very relevant, i just wish he would make more intelligent quotes like that one, instead of blanket 'the market is going to drop by 40%' or what ever he said. As an accademic he should be highlighting potential risk factors rather than estimating future pricing. (maybe he has learnt the hard way)

Dr Joes flood point is very very relevant, in fact its incredibly relevant.
 
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