House prices to keep falling for years

[Julia]

NZ is now worse than USA about 1 in 7 are underwater. Wonder where OZ home owners will end up?

What is the definition of "underwater"?
Can you provide a link to this, please?

 

[numbercruncher]

What is the definition of "underwater"?
Can you provide a link to this, please?

Falling house prices mean one in five homeowners with a mortgage now owes the bank more than their house is worth.

http://www.stuff.co.nz/4799888a13.html

 

[knocker]

http://www.stuff.co.nz/4799888a13.html

Maybe Julias does not understand what sunk/stuffed means.

 

[Aussiejeff]

hello,

i accepted the fact that St Kilda went up 14.7% last Sept08 quarter, and i accepted the fact i have mental issues and just get on with life man,

you cop it sweet, no big deal life rolls on

i wont be announcing a "holiday" and then returning, we in for the next 20, 30, 40+ years solid

thankyou
robots

hello,

thanks to young robots for showing us that we should love ourselves more

thankyou
santabots
:santa:

 

[Lancelot]

Maybe Julias does not understand what sunk/stuffed means.

If they can still meet the repayments why would they be stuffed?

Value has dropped this year, so what, it doesn't make the property any less of a home, especially if not having an intention to sell.

 

[numbercruncher]

If they can still meet the repayments why would they be stuffed?

Value has dropped this year, so what, it doesn't make the property any less of a home, especially if not having an intention to sell.

Nope, Full recourse loans make it a financial prison for the debt slaves .....

 

[knocker]

Church of "give us your money":

 

[Julia]

If they can still meet the repayments why would they be stuffed?

Value has dropped this year, so what, it doesn't make the property any less of a home, especially if not having an intention to sell.

Exactly.
And let's not forget all the people who do not have a mortgage and own their homes (and often IP's also) outright.

 

[knocker]

Exactly.
And let's not forget all the people who do not have a mortgage and own their homes (and often IP's also) outright.

And your point is?

 

[Julia]

And your point is?

I should have thought my point was quite obvious, i.e. that the repetitive announcements of bad news is not balanced. Negative equity, of itself, is unimportant in the whole cycle of home ownership.

 

[wayneL]

Lifted from another forum:

 

[gfresh]

Hello from sunny Melbourrne! :xmaswave

(well was almost sunny for 2 whole days in a row, amazing)

Weren't ASF's predicting this months ago? Resource states such as WA, and also QLD feeling some of the worst of it:

http://business.watoday.com.au/business/house-prices-will-drop-10pc-20080903-488l.html

Even the Westpac head economist coming out of the closet.. They seem to be "converting" quite quickly now eh:

Demand for housing exceeded supply, but Mr Evans believed that the median house price would probably drop up to 10 per cent as housing affordability trended back towards its long-term average.

...

"The best you can hope for is a one per cent fall in the next 12 months," Mr Evans said.

He predicted there would then be a period of little or no movement as the RBA looked for a substantial slowdown in the economy before further rate cuts in 2010.

:xmaswave

 

[noirua]

We could be seeing the next round of sub prime related write when these loans default. Interesting view, lets hope its not as bad as they make it out to be. A must watch.

Huge Crash Coming
http://au.youtube.com/watch?v=shYJ_KkbzWg

Worth watching if anyone missed this video. Shows why the US took rates down to 0% - 0.25%.

 

[MrBurns]

Worth watching if anyone missed this video. Shows why the US took rates down to 0% - 0.25%.

Scary stuff, has the ring of truth to it also, I think we're in a very dangerous situation right now.

 

[Lancelot]

Nope, Full recourse loans make it a financial prison for the debt slaves .....

How so?

What has changed, they had a house and were making repayments, everyone is happy.

They still have a house and are making repayments, but now they pay off even more due to falling IR or they have more money to spend due to falling IR, smiles all round.

Sure, it may be worth less money this week, but it still provides a roof and stability for the family.

Are you clutching at straws NC?

 

[Glen48]

If you went to a garage sale and paid $5 for a Vase and some how found out it was Roman and worth $3 gazzinion and 10cent would you sell it of hang on and hope it goes up in value?
Art is going down yet some how people can't seem want to sell their house and cash in and make a profit.
Even if your house didn't go down and stayed flat for 10 yrs it has to go up a lot to break even..

 

[numbercruncher]

Sure, it may be worth less money this week, but it still provides a roof and stability for the family.

How does a grossly overpriced house provide stability ?


I find it cute how you guys are shifting this from a price debate to some romantic notion about finances dont matter in home ownership speil ....

If Had a house worth 100k less than the mortgage over it there would be no smiles - I find it odd that negative equity is something you embrace......

 

[Lancelot]

How does a grossly overpriced house provide stability ?


I find it cute how you guys are shifting this from a price debate to some romantic notion about finances dont matter in home ownership speil ....

If Had a house worth 100k less than the mortgage over it there would be no smiles - I find it odd that negative equity is something you embrace......

Only an issue if you have to sell as prices go into a down cycle

Only an issue if you think that prices will never rise ever again


I dont have to sell, prices would need to drop about 95% for my ppor to get into neg equity.
Do you think there are others out there in the same boat?
Why do you always assume everyone purchased this week with a 105% loan?
Why do you always think people must treat houses like a stock and sell when they drop some?

 

[sinner]

Only an issue if you have to sell as prices go into a down cycle

Only an issue if you think that prices will never rise ever again


I dont have to sell, prices would need to drop about 95% for my ppor to get into neg equity.
Do you think there are others out there in the same boat?
Why do you always assume everyone purchased this week with a 105% loan?
Why do you always think people must treat houses like a stock and sell when they drop some?

Errr, what?

We don't think "everyone" purchased this week with a 105% loan, it's just blatantly obvious that even if the percentile of people doing this is less than 10% of total housing market it has a MASSIVE inflationary effect on housing prices and a proportional impact when they default en masse.

Sub-prime in the US: 3-6% of total home loan market.

Also, to say negative equity has no effect is rediculous, it just adds to our already gargantuan household debt avg for the nation! You think that is ok?

 

[2BAD4U]

Only an issue if you have to sell as prices go into a down cycle

Only an issue if you think that prices will never rise ever again


I dont have to sell, prices would need to drop about 95% for my ppor to get into neg equity.
Do you think there are others out there in the same boat?
Why do you always assume everyone purchased this week with a 105% loan?
Why do you always think people must treat houses like a stock and sell when they drop some?

Give up Lancelot. Plenty of people in this thread can't see the difference between investing in shares and property.

As you rightly point out, if someone has negative equity THEY DON'T HAVE TO SELL SO THERE IS NO PROBLEM. (Yes typing in capitals is akin to shouting).

What's the alternative - sell your house, turn it into a real loss and then start renting for the rest of your life, geez that's a good investment decision. Or you stay put and pay off your house over the remaining term of the mortgage and you then own the home (which isn't obvious to some people). Yes you pay more in interest etc. Yes you pay more than it ends up being worth, but how many of you have done exactly this with a car or other depreciating asset. You know it will happen yet you still do it, why? Personal gratification, happiness, whatever but you can't put a price on somethings. Not everyone is concerned with making money in the same way many people on this forum are, some people are happy in life with nothing. So please people, stop being so condescending with your comments and treating people with property as being stupid or having the same financial accumen / goals as you, there is more to life than how much money you have.

:chimney