House prices in freefall

[sbe]

Suggo

I must be having a blonde moment (which is pretty bad, considering I'm not blonde....). I don't get your message -

sbe did you read Bills post, you don't agree that this is what LB does?

What don't I agree with ??? I think he's wrong.

While I think it's easy to dismiss LB's ideas at times (and at times when I read them, it does take a bit to respond 'nicely'), the reality is this is what some people out there believe - rightly or wrongly.

By bringing some of these (sometimes inconsistent) points and raising them here, I'm sure some less experienced people are getting a good flip side to these comments that are rolled out on ACA/TT/NJ whenever they need more sensationalism/publicity...

Well, that's what I keep telling myself anyway...... No really, there must be a good reason for his posts.........please tell me its true............please.......pretty please.............

 

[suggo]

see-change totally agree, and after reading your post, whilst still not using the ignore, I am going to try and approach the silliness a different way. I do apoligise to anyone who I may have annoyed by repling to LB's posts(except LB of course!) in the manner in which I did.

sbe, Fair enough.

 

[Sunfish]

I haven't been here long and have read little of LB's work, but I'm surprised that you dismiss his price drop scenerio so quickly.

There are many writers very concerned about the future. One even talks of "The Greater Depression" coming while most talk of credit defaults. The banking systems of Japan China and many Asian countries are a shambles.

Aus in not immune. We have one of the highest personal debt rates in the world and our Res Bank is printing money at twice the rate of America and they are concerned. No one cares here.

I take this seriously enough to be conservitive in the gearing of my investments and feel some of the less experienced here are staking all on a continuation of the good times. Time will tell.

Thommo

 

[Bill.L]

Hi all,

Thommo,

The points you raise about possible economic collapse have been around for many,many years in different guises. It is what stops many people from investing because of the "what iffs".
I once suffered from the gloom and doom scenarios that would stop me from making sound investments. It is not easy to get out of the habit of thinking of the worst possibilities.

I know people who have been certain that the world will come to a standstill when the oil runs out, and they "know" that it will happen VERY soon, much sooner than everyone expects. It will obviously bring economic collapse.
The problem for me is that these people have believed this for over 30 years, but they are just as worried now. Meanwhile they have lost 30 years of opportunities, and will probably waste quite a few more.

There are quite a few people on this forum who wish to stay positive and look for opportunities. They probably all agree that we wont see the growth across the board in most houses, that we have had over the last couple of years. But despite all the doom and gloom in the press regarding property, the reality of the following remains :-
1/ The population is growing at about 250,000 people per year.
2/ They have to live somewhere.
3/ Building costs continue to rise.
4/ Land in areas close to facilities(you choose your own) is in limited supply.
5/ Interest rates, and hence repayments on loans are at very low levels compared to the last 30 years.
6/ Inflation is still occuring, which means higher wages to pay off loans, and higher rents into the future to pay off the loans.


Nobody here suggests to go out and buy anything. You need to do your research, and then you will find that as Kristine says,
The opportunity of a lifetime comes along every Tuesday.

bye

 

[L Bernham]

Great work Thommo. Thats what i like to hear. I don't care if people agree with my views or not but its good to see that I might get some people thinking about the possibility that what many expect to happen may not necessarily happen.

99.9% of the population of Hong Kong said in 1998 that although the prices were high there was no way they could fall 70% , yet here we are 2004 with exactly that happening.
We have different fundamentals and forces acting in Australia and the chances of a fall larger than 50% are very very small but I wouldn't say that its impossible.

When challenged about misleading statements YOU made, you attack the messenger

Bill, you've really lost me this time. When I didnt agree with what you said in that post you refer to, I told you why. You directly misquoted me. I showed you where you did this. Rather than accept that you made an error, you come back a few posts later and state "When challenged with the ambiguity, you attack rather than defend your statement."
If you are going to rebut a post, try to make sure you read it carefully. Otherwise it looks like you're just arguing for the sake of it. In future I wont respond to this kind of thing.

I have always tried to discover the basis on how opinions that are contrary to mine are formulated just in case I have missed something, like I sometimes do. I can't do this when my attempts to discuss are taken out of context.

 

[Bill.L]

LB,

And the answer to the 2 questions I asked???

bye

 

[Sunfish]

Bill...... Read the threads. 50% (ok, a guess) are indeed out buying everything they can get with 100%LVR. One poster with less than 100K net worth (assume $0 cash injection) is indignant that he can't borrow 800k. Personally I think think any investment leveraged over 80% is risky.

As for oil, we are 30yrs closer to genuine shortage than we were 30yrs ago. Have you no concept of what the Chinese are doing with all the US$ they are raking in? Hint.....cars. Their petrolium imports are skyrocketing, and they have US$ to pay for it.

I don't give a rat's bum what you do, by the way. Just don't slag everyone who sees life through different coloured glasses and passes that opinion on. Remember that if the excreta hits the cooling device, He who looses least wins!

No investor today has any personal experience of a major war. History tells you they happen regularly enough though.

By your standards I would be a chicken little. I try not to be. As I said, time will prove one of us to be correct.

Thommo

 

[L Bernham]

Bill
I've skimmed them over in the bookshop. Couldn't agree or disagree with the method of investing.
What I have been talking about is the timing of investments. There are only perhaps 5 or 6 periods in a century where its blatantly obvious that its not a good time to buy. Late 2003/2004 is clearly one of them.
I have heard nowhere near the number of easy riches stories from people buying 6 months ago (there are some out there I know) comapred to the number I was hearing 2 years ago.

LB

 

[Bill.L]

Hi Thommo,

I'm not sure what I have stated that offends you,I have tried to highlight the fallacy of worrying about that which you cannot control.
In regard to the car situation, electric cars, fuel cell cars, hydrogen cars. As oil gets more expensive, they become more cost competitive and civilisation will move on.
We all need to think laterally and not doom and gloom.

bye

 

[Bill.L]

LB,

What have you read in regard to property investing??

bye

 

[L Bernham]

Could it be argued that the whole doom and gloom thing about oil could be likened to the this whole scare tactic I've heard from some about land running out.

...Must buy now, land is so scarce, nearly none left, pay whatever you can just to secure some of your own, people will always need somewhere to live so therefore it cant go down in price etc etc. buy,buy buy, and do it now before you miss out altogether. Quick there's only about 10,000kms of uninhabited coastline left in Australia.

LB

 

[Sunfish]

I guess that at my age I resent being preached to. One size does not fit all. All of life is about risk management; we see different risks. I've seen too many smarties go bust and take down honest tradesmen with them.

Should I go on?

It is clear that the "cream" of posters here are way beyond causing grief to others. They have ARRIVED! If you can do a worst case study and assure me (no proof needed) that you also put no-one elses retirement at risk (including bank shareholders) then I would congratulate you.

Meantime allow me my sorrows.

Thommo

 

[Bill.L]

Hi Thommo,

Sorry about the sounding like I was preaching bit.It's just that I have known many people who have all sorts of doom and gloom scenarios. Some find religion, others have their doom and gloom stories created by religion. Some look at the environmental side of things.
The one thing in common with the people I know, is that they don't invest in the future, because of their beliefs that there is no future.

How many people sold up everything and headed for the hills as the year 2000 approached, worrying about the end of the world because of either religious implications or Y2K bug??

To my knowledge the world did not end(though I could be dreamin.. )

When the history of the 21st century is looked at in hindsight, there will be wars, depressions, booms and panics. There will also be booms, innovations, long periods of peace and(I assume) a larger population across the world.(human population has been growing for quite a few centuries now)

bye

PS. the story about the oil comes from some people down the road who I have known for over 20 years, and they frustrate the hell out of me.

 

[Sunfish]

Bill you started your post "Sorry about the sounding like I was preaching bit" and promptly started to tell me where I'm wrong. Preaching?

I've never asked this on any forum before but how old are you and do you have a family dependant on you? The reason I ask is that most "families" would prefer to live in the relative comfort that competent parents can provide than experience the highs and lows that a speculator's life can easily entail.

And you sidestepped the Q about blowing up and harming other peoples plans. My morals would not allow me to risk either my family's future (clearly will not retire a millionaire) or that of strangers.

Each to his own I guess. But this is my last word. Make of it what you will.

 

[Bill.L]

Hi Thommo,

Actually I'm 46(but will be 47 in 43 minutes). I have wife and 3 children, live in house I built myself.
Is the messenger more important than the message??

Question about blowing up and harming other peoples plans; I'm not sure that I understand the question, but if you mean "doing no harm" then that is what I always try to do anyway.
An investment approach in property along the lines that Jan Somers outlines in her books, purchasing residential property when I can afford to.

Is that "speculating" in your opinion??

You state that you will clearly not retire as millionaire. Why not?? the choice is yours!

I know nothing about you, but if you are in your 20's you will probably retire a millionaire just through inflation!!!

What are your plans to provide for your family and yourself??

bye

 

[Sunfish]

Happy birthday for tomorrow. I mean that sincerely.

No, not in my twenties. If I were and with 20/20 hindsight it would be easy. I'm about to retire in a few yrs and with no claim to fame or education I am trying hard to find an extra 100g or two before then. Managed it in 03. Will see what comes, but you can understand that, for me, there are no more chances and I am trying to stay liquid in what I see as stormy weather ahead. I doubt this is the best time to be brave.

Have a XXXX for me.

Thommo

 

[abcdiamond]

Originally posted by Thommo

No investor today has any personal experience of a major war. History tells you they happen regularly enough though.

Slightly of topic here, but would you like to check that ? I think WW2 was a major war, even if Korea and Vietnam weren't.
My Dad isnt much of a Computer user, so can't say this himself, but he still invest's and still remembers circling the Titpitz from the air, before they sank it. 1944 for those who dont know.

 

[tomd]

Hello

A real estate agent rang me the other day.

So the market must be slow!

I didn't get many calls during the rush last year when I joined the herd and bought IPs.

Now in my area of Brisbane, houses are selling slowly. Asking prices if anything seem a bit higher than when we bought, but houses are not selling quickly. The agent reckoned things would pick up again in February...

I did think last year that the boom must be nearly over, but I thought that in 2001 too. When I saw the BIS predictions of 36 (39?)% growth for Brisbane over 2003-2006, I thought I'd better buy up or I might never be able to afford to upgrade our PPOR in future.

Hopefully any downturn will not be as great in Queensland as other areas.

I believe we can afford to hang on to IPs through any downturn.

Our figures at this stage look like this:

Total annual IP loan interest: $31000 (2 IPs)

Total rent after expenses: $15000 (could end up better)

Leaving deficit of $16000

Depreciation: $10000 (maybe better early, less in later years)

Total deficit $26000

Tax refund around $12000

16 - 12 = $4000 total annual holding costs

Total house value currently around $500 000, I hope.

If house price growth averages 2% per year for next xx years, annual return in today's dollars is around $10 - 4 = 6

6-2.5 CG tax (quarter of 10 k) = 3.5 k

So we would be in front even at 2% annual price growth?

(Unless prices drop a lot before rising and I lose my job at same time!)

Have I missed anything?

Regards

 

[Sunfish]

ABCD I stand corrected. I did not think there would be gents from that war still active in the market. He is doing well.

And thinking about it there would still be some Korean vets investing so it was a careless statement.

Thommo

 

[Aceyducey]

Originally posted by Thommo
The reason I ask is that most "families" would prefer to live in the relative comfort that competent parents can provide than experience the highs and lows that a speculator's life can easily entail.

I see this very different.

Many people in the past - and still today - give up everything they know & own to travel across the world to find safety & security for their family.

They endure hardship and take a huge risk that the new life they will find will be better than the old.

I see investing as a similar process. Sacrifice in the present to gain in the future.

The question is how willing are you to endure hardship now for a future uncertain payoff.

I know people in their 60s and 70s with families who are still prepared to bear hardship to improve their and their childrens' lot.

It's not about whether you have a family, or about how much you care about your family, it's about your own attitudes and beliefs.

And everyone has a different tolerance.

As the old saying goes: 'It is better to have tried and lost, then to have never tried at all'.

There was a couple in their sixties featured on Hot Auctions last year who had lost everything through no fault of their own. They didn't roll over and die, but set to work rebuilding their lives, going back to work, building a new home out of three steel shed (which was what the story was about)

So Thommo, I respect your position, but it's not the one taken by everyone.

Cheers,

Aceyducey

PS: I have children too