I'm going to preface this with saying that I'm a nasty doom and gloomer housing bear. 
One tactic used by those of an ursine persuasion has been to sell their PPOR and rent back a similar property. The theory is step off the market at the top, sit out the impending crash, and buy back at the bottom.
I took a look at some numbers the other day. I'm assuming that the selling (agent, legal fees) and buying (legal, surveys and stamp duties) for a property are both going to be around 5%, and to keep things simple, a property equivalent to that sold is rented that yields around 5%.
Looking at the historic data, the last crash in the UK started in 1989 and bottomed out in 1996. Ireland and the US have been falling since 2007, and not stopped yet.
Supposing our sell-to-renter called the market to perfection, then he or she could be out of the property market for somewhere between six and eight years, plus buying and selling costs for the old and new properties. Assuming a million dollar house, the total would come to somewhere between $400K and $500K, a 40% to 50% fall.
So getting it exactly right strikes me as being a break-even strategy. Reinvesting the proceeds of the sale might put you ahead, but the stockmarket isn't likely to return more than 5% to 10%, which will do little better than cover rent. And any housing crash is likely to be accompanied by a recession.
Gold, maybe? I'm pretty convinced that's in a bubble, and you'd be buying in at the greater fool stage. (Watch it hit $3000 this year, and I get proven wrong as usual.)
The thing is that people are very bad at calling the top of the market. Various people attempted the STR strategy in the UK on the Motley Fool Property board between 2002 and 2006, and several ended up buying back in at a higher price. Merryn Somerset Webb (journalist and prominent housing bear) did in 2010 (link might be behind a paywall) having sold up in 2007, which makes the outcome even worse.
Other lessons? The 1989 to 1996 property market crash in the UK dropped pretty sharply for several years, then drifted down more slowly. It would probably work out better to buy in the latter phases, where the fall is less than rental costs, rather than trying to call the bottom.
It'll be interesting to do the calculation for a delayed purchase. I've held off buying a house because I think that they're too expensive, and I have a horrible suspicion that it'll have proven to be smarter to have bought five or six years ago over that time.
One tactic used by those of an ursine persuasion has been to sell their PPOR and rent back a similar property. The theory is step off the market at the top, sit out the impending crash, and buy back at the bottom.
I took a look at some numbers the other day. I'm assuming that the selling (agent, legal fees) and buying (legal, surveys and stamp duties) for a property are both going to be around 5%, and to keep things simple, a property equivalent to that sold is rented that yields around 5%.
Looking at the historic data, the last crash in the UK started in 1989 and bottomed out in 1996. Ireland and the US have been falling since 2007, and not stopped yet.
Supposing our sell-to-renter called the market to perfection, then he or she could be out of the property market for somewhere between six and eight years, plus buying and selling costs for the old and new properties. Assuming a million dollar house, the total would come to somewhere between $400K and $500K, a 40% to 50% fall.
So getting it exactly right strikes me as being a break-even strategy. Reinvesting the proceeds of the sale might put you ahead, but the stockmarket isn't likely to return more than 5% to 10%, which will do little better than cover rent. And any housing crash is likely to be accompanied by a recession.
Gold, maybe? I'm pretty convinced that's in a bubble, and you'd be buying in at the greater fool stage. (Watch it hit $3000 this year, and I get proven wrong as usual.
)The thing is that people are very bad at calling the top of the market. Various people attempted the STR strategy in the UK on the Motley Fool Property board between 2002 and 2006, and several ended up buying back in at a higher price. Merryn Somerset Webb (journalist and prominent housing bear) did in 2010 (link might be behind a paywall) having sold up in 2007, which makes the outcome even worse.
Other lessons? The 1989 to 1996 property market crash in the UK dropped pretty sharply for several years, then drifted down more slowly. It would probably work out better to buy in the latter phases, where the fall is less than rental costs, rather than trying to call the bottom.
It'll be interesting to do the calculation for a delayed purchase. I've held off buying a house because I think that they're too expensive, and I have a horrible suspicion that it'll have proven to be smarter to have bought five or six years ago over that time.
