Carrying on from Karina's thread - 20 US properties in 4 1/2 years.
Fantastic achievement Karina. You took the brave decision and worked hard and made excellent investments.
Not wanting to derail that thread I decided to start new one. I am aware this topic has been discussed many times here. But looking at some of the deals mentioned in that thread and on her website forced me to think is there anything we can learn from the US property market collapse. Can the market become so irrational. We have heard so many times stock market is notorious for being irrational and think property market is much more stable in general and therefore it is ok to leverage high.
To give some eg. from Karina's website.
1) Purchase price $45K
Last sold in 2004: $157K
2) Purchase price $48.7K
Last sold in 2003: $166K
3) Purchase price $40K
Last sold in 2003: $141.5K
4) Purchase price $43K
Last sold in 2000: $134K
5) Purchase price $50K
Last sold in 2003: $173K
Etc.
See her website for more examples - here
You get the idea. I am sure most purchases were done between 2009-2014. So almost 10 years later you can buy property for 1/3rd it's last sold price. That is incredible.
Can this really be true? Are the US people not aware of replacement costs? Are they not entrepreneurial? US is as capitalistic society as you can ever get. Still they ended up in such a bad situation.
People talk about something like this can never happen in Australia due to the supply/demand, non-recourse loans, Australian's love for property, Replacement costs is much higher so property can never fall below certain value etc.
Would the above factors stand up if Australia went through a bad recession like the US did? When unemployment rate goes above 8%, banks are losing money because people are unable to meet their mortgage repayments. Government don't have $20billion surplus to hand out to the general public and stimulate the housing market. Can we ever end up building too many houses?
Can a $500K property bought today be sold for $170K in 2022?
Thoughts?
Cheers,
Oracle.
Fantastic achievement Karina. You took the brave decision and worked hard and made excellent investments.
Not wanting to derail that thread I decided to start new one. I am aware this topic has been discussed many times here. But looking at some of the deals mentioned in that thread and on her website forced me to think is there anything we can learn from the US property market collapse. Can the market become so irrational. We have heard so many times stock market is notorious for being irrational and think property market is much more stable in general and therefore it is ok to leverage high.
To give some eg. from Karina's website.
1) Purchase price $45K
Last sold in 2004: $157K
2) Purchase price $48.7K
Last sold in 2003: $166K
3) Purchase price $40K
Last sold in 2003: $141.5K
4) Purchase price $43K
Last sold in 2000: $134K
5) Purchase price $50K
Last sold in 2003: $173K
Etc.
See her website for more examples - here
You get the idea. I am sure most purchases were done between 2009-2014. So almost 10 years later you can buy property for 1/3rd it's last sold price. That is incredible.
Can this really be true? Are the US people not aware of replacement costs? Are they not entrepreneurial? US is as capitalistic society as you can ever get. Still they ended up in such a bad situation.
People talk about something like this can never happen in Australia due to the supply/demand, non-recourse loans, Australian's love for property, Replacement costs is much higher so property can never fall below certain value etc.
Would the above factors stand up if Australia went through a bad recession like the US did? When unemployment rate goes above 8%, banks are losing money because people are unable to meet their mortgage repayments. Government don't have $20billion surplus to hand out to the general public and stimulate the housing market. Can we ever end up building too many houses?
Can a $500K property bought today be sold for $170K in 2022?
Thoughts?
Cheers,
Oracle.