What does "affordability" mean to you?

[tcocaro]

I’m left scratching my head... a crash is a crash I cannot say it simpler.

I agree that commodities are more volatile than property as are shares (this is totally irrelevant to this discussion) as price drop of 30% is a crash by "definition" regardless of the volatility of the market. The conversation should end here.

If you are trying to argue that 30% drops are so common place (which they are not) this too is irrelevant because all this this means is that you are investing in an asset class that is so volatile that it "booms" and "crashes" daily, weekly or monthly. Regardless it "crashes".

Simply put a crash is a dramatic fall in value, e.g. 30%.

We are going round in circles here, I couldn’t care less if silver later this year rises by 300% because if it did history will still show a "Crash" of 30% irrespective if someone says “yes but who cares I later made 300% and made my money back and then some” because there will always be the guy that didn’t re-invest, sold out and lost money (thanks to the crash).

I cannot state my position any clearer, 30% fall is a crash irrespective of the growth that has occurred before it. Silver could have risen 1000% prior to a 30% fall and it won’t mute the fact a crash occurred.

If your understanding of crash is subject to you constantly widening your time horizon to look at an overall trend then nothing ever will crash e.g. property because I can say well I am still 100% up from 1990 figures should the market crash today by 50%.

Like someone wrote previously in this thread, lets agree to disagree.

I think it's a matter of interpretation, silver was predicted to perform strongly over 2011 and overall it has, silver is volatile, it does not have the barriers to entry and the high transaction costs that help property remain relatively stable, naturally there will be rapid peaks and troughs but the underlying 12 month trend, year on year will be the determining factor. In reality, whether Hobo's prediction is correct or not can really only be assessed on 31/12/2011.

If I say property will continue to perform strongly over the next decade, it matters not whether there is a 30% drop in 2015, if property doubles between 2011 and 2021, my prediction was correct.

 

[hobo-jo]

InnerWestie has clearly gone back to the original source of the discussion which is where you started obfuscating things by turning it into a crash vs no crash debate (which it never was) rather than the actual debate which was whether strong interest can remain over 2011 regardless of what the price does over the year as long as it closes stronger (crash or not is irrelevant).

re-shove this comment in your mouth;

I expect the interest in Silver to remain strong over 2011, likely pushing the price to new 30 year records. I think there is a real opportunity in Silver stocks which are still reasonably priced given the rise we’ve seen in the Silver spot price.

Silver priced in USD pushed up to almost break the record high as per that prediction. I would say that was actually a pretty good call considering Silver was around $30 at the time.

AUD Silver around $29, currently $33

Re performance of ASX listed silver stocks. These are the approx prices as of mid January vs today:
ARD around 19c, currently 24c (+26%)
SVL around 25c, currently 31c (+24%)
AYN around 4.5c, currently 12.5c (+177%)
CCU around 65c, currently 96c (+47%)

wow!

"I expect the interest in Silver to remain strong over 2011"

are you SERIOUS!!! there was a crash of 30%+ in just a week!?!?!?!?!!?!?!!?! in 2011?!!!?!?!?!?!? so nooooooooooooooooooooooooooooooooo prices didnt remain strong over 2011!

the price of silver has nothing to do with resource companies stock price that went up that also trade in zinc and other metals... you pulled this little tid bit out from the skies to somehow drag the topic away from A CRASH IN THE PRICE OF SILVER...

After talking yourself into frenzy about how I said there was no crash (which is clearly not what I said) you go on to plaster this all over the forum in other discussion threads:

hobo-jo given you deny a 30% drop in the price of silver is a crash I see little point in arguing

Your self delusion, inability to admit to any mistake (30% drop in silver is a CRASH - deal with it), need to prove yourself right despite the evidence and interest in petty arguments is laughable.

There is no agree to disagree. There is you trolling me and trying to put words into my mouth, then there are those that see your antics for what they are.

Anyway I'm done feeding the troll. At least in this thread!

 

[The Fence]

Anyway I'm done feeding the troll. At least in this thread!

You are doing a great job of feeding yourself with trollness....LOL!

 

[skater]

There is you trolling me and trying to put words into my mouth, then there are those that see your antics for what they are.

Anyway I'm done feeding the troll. At least in this thread!

That's a bit rich, don't you think? I said it all in a previous post.

Who is the troll? Pot - kettle - black.

 

[Tehanu]

Wow. Am I the only person who thinks both that, Australian housing is in a massive bubble that is starting to crash and thought silver was in a massive bubble that crashed (and will continue to crash)? The two stances are not contradictory though I will admit that for most people they are as PM bugs do seem to cluster into the housing bubble camp and vice-versa. I did manage to get out of silver just before it crashed though. More than doubled my money over the last three years

 

[devo76]

The average investor is not going to give a rats a##. about today's prices in 10 to 20 years time. Wasting a lot of brain power on this one.
When values are low. People argue over when and how strong the recovery will be. During high values people argue over when and how big the correction will be.
And each point appears to be forgotten as the new part of the cycle takes over.

I guess a forum would get very boring without this kind of debate.

 

[Intrinsic_Value]

The average investor is not going to give a rats a##. about today's prices in 10 to 20 years time. Wasting a lot of brain power on this one.
When values are low. People argue over when and how strong the recovery will be. During high values people argue over when and how big the correction will be.
And each point appears to be forgotten as the new part of the cycle takes over.

I guess a forum would get very boring without this kind of debate.

i would say that the 'average investor' is giving alot of thought to those rats behinds. Why? because whilst its true that in 20 years time, prices today will probably be irrelevant, one needs to be able to hold for those 20 years.

Judging by the evolution of Somersoft over the last 3 years, i would say that the 'average' is doing it tough.

The bastion of strength on somersoft is characterised now by 'survival of the fittest'. The 'weak players' have long ridden into the sunset.
I dont see many of those debates about LOE on 10% withdrawals just because property doubles every 10 years anymore (for the more long timers remember this big 'debate' and how sustainable it might be????).

The experienced players are still around, and those are the ones that will do well. They are smarter than the average bear.

The problem is not residential property as an investment class. The problem is excessive expectations, especially after a 10-15 year bull run.

(a bit like all those weak players in shares, who came aboard just prior to the GFC)

 

[Intrinsic_Value]

Wow. Am I the only person who thinks both that, Australian housing is in a massive bubble that is starting to crash and thought silver was in a massive bubble that crashed (and will continue to crash)? The two stances are not contradictory though I will admit that for most people they are as PM bugs do seem to cluster into the housing bubble camp and vice-versa. I did manage to get out of silver just before it crashed though. More than doubled my money over the last three years

yeah its interesting with silver at the moment, yes its a PM, but its 'beta' in very recent times tends to be more correlated with risk on/risk off trading than with perceived fundamentals, could this be due to speculators, time will tell.

Gold seems to be the more stable brother.

 

[tcocaro]

Your not the only one who thinks the Australian property market is a bubble about to crash, there have been people saying its been in a bubble for the last 10 years straight so dont feel bad your not a lone.

Regarding Silver I strongly suggest you dont play with fire, or else you will cop a 10 page explanation from certain people on this thread on how a 30% drop is not a crash but a mere aberration.

Wow. Am I the only person who thinks both that, Australian housing is in a massive bubble that is starting to crash and thought silver was in a massive bubble that crashed (and will continue to crash)? The two stances are not contradictory though I will admit that for most people they are as PM bugs do seem to cluster into the housing bubble camp and vice-versa. I did manage to get out of silver just before it crashed though. More than doubled my money over the last three years

 

[devo76]

Understand the risk. Have a buffer. I'm sorry but I'm still new to this and even I understand how the game is played.
Bad times can and do come into play.
I don't see how the long term game has changed. Some will struggle yes. Many will survive. And many will win long term .

i would say that the 'average investor' is giving alot of thought to those rats behinds. Why? because whilst its true that in 20 years time, prices today will probably be irrelevant, one needs to be able to hold for those 20 years.

Judging by the evolution of Somersoft over the last 3 years, i would say that the 'average' is doing it tough.

The bastion of strength on somersoft is characterised now by 'survival of the fittest'. The 'weak players' have long ridden into the sunset.
I dont see many of those debates about LOE on 10% withdrawals just because property doubles every 10 years anymore (for the more long timers remember this big 'debate' and how sustainable it might be????).

The experienced players are still around, and those are the ones that will do well. They are smarter than the average bear.

The problem is not residential property as an investment class. The problem is excessive expectations, especially after a 10-15 year bull run.

(a bit like all those weak players in shares, who came aboard just prior to the GFC)

 

[tcocaro]

I think you hit the nail on the head. Price go up, down and sideways you have mastered a concept that confuses many on this forum.

Instead of posts about how to mitigate risk or profit from the possible downturn or even share in actual recent experiences we are left with a debate that basically revolves around questioning whether the world will end or not.

Anyone posting something in-between those two extremes are by force grouped by association e.g. me as a developer I am grouped with the bulls and property loving drones. Anyone saying they beleive prices may drop are cast aside as Keen loving muppets hoping for a train wreck.

This discussion atleast in this thread is no more than a shouting match. (I am very much a reason for it being this way for which I regret letting my emotions getting in the way of a clearer debate or the ability to just walk away when theres no point).

By the way I agree with the original post by Intrinsic_Value to a large extent except for the implied comment that we are now in a 20 year downturn. (sorry if you simply said 20 years flipantly as part of your discussion). However I would like to say in reference to your post that although property has indeed had a very good run most of the LOE\drawing type comments you refer to came in the early 2000s when prices\activity was hottest and were no-one could loose from property. There was a new book, guru, expert daily "Educating" people to simply buy, re-value draw, buy again, flip, wrap just do whatever you had to do to keep buying property a true receipe for a boom\bust (a scenario we dont have today - imho).

If you need further superficial proof of the market conditions then (I mention this for laughs mostly and to see if anyone else here noticed) watch ANY sarah beeny episode almost every show end with the comment that "you didnt add any value but thanks to the property market being so hot you made money". Watch them its funny she literally says this for almost every single episode.

Understand the risk. Have a buffer. I'm sorry but I'm still new to this and even I understand how the game is played.
Bad times can and do come into play.
I don't see how the long term game has changed. Some will struggle yes. Many will survive. And many will win long term .

 

[devo76]

I agree also. Much of what is discussed here is splitting hairs. Definitions of crashes, booms and corrections. Many discuss and argue over a point that is different to each person, as I said before. Long term the game has not changed.
Some say this large boom will run into a large crash.
Well that logic would also say that the next boom will also be a big one after such a large correction.
My personal belief is that if your financial wellbeing relies on CG over the next 5 years.be careful.
If you are looking at 5,10 or more years. Then plan, prepare and allow for the ups and downs.good times will come.

I think you hit the nail on the head. Price go up, down and sideways you have mastered a concept that confuses many on this forum.

Instead of posts about how to mitigate risk or profit from the possible downturn or even share in actual recent experiences we are left with a debate that basically revolves around questioning whether the world will end or not.

Anyone posting something in-between those two extremes are by force grouped by association e.g. me as a developer I am grouped with the bulls and property loving drones. Anyone saying they beleive prices may drop are cast aside as Keen loving muppets hoping for a train wreck.

This discussion atleast in this thread is no more than a shouting match. (I am very much a reason for it being this way for which I regret letting my emotions getting in the way of a clearer debate or the ability to just walk away when theres no point).

By the way I agree with the original post by Intrinsic_Value to a large extent except for the implied comment that we are now in a 20 year downturn. (sorry if you simply said 20 years flipantly as part of your discussion). However I would like to say in reference to your post that although property has indeed had a very good run most of the LOE\drawing type comments you refer to came in the early 2000s when prices\activity was hottest and were no-one could loose from property. There was a new book, guru, expert daily "Educating" people to simply buy, re-value draw, buy again, flip, wrap just do whatever you had to do to keep buying property a true receipe for a boom\bust (a scenario we dont have today - imho).

If you need further superficial proof of the market conditions then (I mention this for laughs mostly and to see if anyone else here noticed) watch ANY sarah beeny episode almost every show end with the comment that "you didnt add any value but thanks to the property market being so hot you made money". Watch them its funny she literally says this for almost every single episode.

 

[The Fence]

Ah, such wisdom and all in a row without disruption....wonderful posts...!
Fully agreed!!

 

[Gun It]

i feel so dirty being GenX/Y border right now.

so dirty.

i think i need a shower, but even then after using the industrial floor scrubber and the solvol, i'm not sure i could stop the cringing everytime someone from my generation opens their mouth.

Aaron you described exactly how I felt when I read the first section of this thread (and I don't even get to claim any Gen X in me at all).

The bit that frustrates me about the mentality is that there is no perception of trade off - most of my friends want a work-life balance AND a great house AND fancy toys / cars AND overseas holidays etc and it all has to be now.

 

[VYBerlinaV8]

Wow. Am I the only person who thinks both that, Australian housing is in a massive bubble that is starting to crash and thought silver was in a massive bubble that crashed (and will continue to crash)? The two stances are not contradictory though I will admit that for most people they are as PM bugs do seem to cluster into the housing bubble camp and vice-versa. I did manage to get out of silver just before it crashed though. More than doubled my money over the last three years

(Tehanu - this isn't meant to be a dig at you, just an opportunity for me to get some thoughts down).

The difference is that the silver in inner Sydney is worth the same as the silver in Adelaide, which is worth the same as the silver in Alice Springs.

One of the major concepts of successful property investing to make educated guesses as to how individual properties in a given market will perform, over the short, medium and long term, and to tie this in with your personal investing goals. This is easier said than done, however, and inevitably requires several goes before you start to really get your head around it. Some people, frankly, never understand (and this is where luck plays a part).

We all know that quite a bit of the residential property in Australia has overshot the 'fair value' mark. But we need to be careful with our analysis, because it will always be coloured by our own situation.

FWIW, I don't think Australian housing is in a 'massive bubble', because there are too many instances where housing is fairly priced within the context of the immediate market. Some places of course are/were. What I really disagree with, though, is use of the emotive language employed by commercial media to scare people (which is how they sell news these days), when as investors we should be taking a much more objective approach to analysing the performance of our individual investments and adjusting accordingly.

 

[The Fence]

The bit that frustrates me about the mentality is that there is no perception of trade off - most of my friends want a work-life balance AND a great house AND fancy toys / cars AND overseas holidays etc and it all has to be now.

Hmmmm....Well, there are going to be some miserable little ones when reality dawns upon them later in life if they don't get off their backsides and have a go now...!

 

[tcocaro]

I have no issue with people wanting all of that. The only issue I do have is when they whine they dont have those very things they seek all the while they are sitting back on the couch watching daytime TV...

The bit that frustrates me about the mentality is that there is no perception of trade off - most of my friends want a work-life balance AND a great house AND fancy toys / cars AND overseas holidays etc and it all has to be now.

 

[InnerWestie]

I have no issue with people wanting all of that. The only issue I do have is when they whine they dont have those very things they seek all the while they are sitting back on the couch watching daytime TV...

Amen to that.

 

[our obsession]

What does "affordability" mean to you?

I am more a 'how can we do this' person, what's the best possible deal I can get/make, I am about 'buying well' (for me, my circumstances).

I buy property 'stuff' (eg houses/land) for investment purposes, with the goal of building wealth, it is a rather expansive field of vision, (and ideas/creativeness) that operates, or drives the 'doing' of it.

I'm an investor first, my goal, my challenge for me is best investing possible, best buying, for me possible, I am asking myself, rather, 'is that a good deal' for me. I enjoy being a researcher and deal-maker, so words like affordability, can't, don't, shouldn'ts to me are sort of, (from my perspective) self limiting in a sense.

I think it is not that I carry the theoretical dictionary of definitions of what can and cannot be, but more the 'hows'.

And, at this stage in building wealth and assets I'm still not interested in buying ...say, a PPOR, I still am not even sure if I want one.

Researching and Deal-making novelty hasn't worn off, it's just got keener. Buying something that maybe more costly does not a good deal make, (to me), nor at the other end of the spectrum in given circumstances.

'Without the two extremes, we have no middle'.

I like buying well, creating good deals. Not assessing investing on affordability.

I enjoyed prattling about that.

Thankyou for the opportunity.

 

[Intrinsic_Value]

By the way I agree with the original post by Intrinsic_Value to a large extent except for the implied comment that we are now in a 20 year downturn. (sorry if you simply said 20 years flipantly as part of your discussion). .

sorry no, i definately am not suggesting in anyform a 20 year downturn, or anything vaguely like that duration.


My view is for property to underperform for the next 5 years and possibly up to 10 years.

The 20 year mention was merely to highlight that regardles what prices are today, they will appear 'cheap' in 20 years time, just as property prices in 1989 now appear cheap (yet from memory that was a highpoint in prices)

There was an interesting chart of residential property that i saw somewhere. It a property price index adjusted for inflation. Basically it showed a very nice run up from the 1940's to around the mid 1970's, but was then stagnent until the mid 1990's, only to run up again significantly to the present day.

To me this was interesting because it highlighted that just like the stock market there are cyclical and secular property market movements.

This is important, when a market is in a secular bull phase, then it pays to ignore the cyclical cycles and hold. But if a market is in a secular bear phase, then making long term investment decisions becomes much more dangerous.