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But the debt already exists, so how is it adding to the problem?
House prices to keep falling for years
- Thread starter Pommiegranite
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Give up Lancelot. Plenty of people in this thread can't see the difference between investing in shares and property.
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.
Why not? better than going bankrupt, and rent and save to buy the same house or better at half the price in a few years. lol:
chops_a_must
Printing My Own Money
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Or you could sell, buy again in 12 months, and pay the new mortgage off over 20 years instead of 30+.
So_Cynical
The Contrarian Averager
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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.
Hey u could buy the place next door...the property equivalent of averaging down.
Then rent out by the room to Chinese students, and live in a caravan out the back.
There are hundreds of economic research papers addressing this question...
http://www.prres.net/papers/Man_The_Impact_Of_Negative_Equity_Housing.Pdf
http://usj.sagepub.com/cgi/content/refs/31/2/181
http://www.bis.org/publ/qtrpdf/r_qt0812h.pdf
http://www.economy.com/dismal/article_free.asp?cid=109361
http://www.frbsf.org/education/activities/drecon/answerxml.cfm?selectedurl=/2007/0701.html
A good one for the bulls:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=271702
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1467-937X.2006.383_1.x
I could paste a hundred...read ONE
Seriously, to say negative equity has no impact on the housing market is so ludicrous and irrational I am surprised to hear anyone say it.
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What about the fees, cost of moving, inconvenience, disruption to family life, schooling, etc, some people would be happier to stay put.
knocker - you only go bankrupt if you can't service the debt, not if your house falls in value.
knocker - you only go bankrupt if you can't service the debt, not if your house falls in value.
IFocus
You are arguing with a Galah
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It all depends on just how bad it gets.
If house values fall then it affects the banks capitalization
Two things can occur from this one the banks call in loans, I suspect many equity loans holders don't realize this or two banks stop lending.
Either way it gets heavy as the waves smash from financial to the economy and then back again.
Will it happen, I don't know just know the risk bias is south
Oh ok, So that equity thing is no problem then? great news for the 1000 of wantabes who have borrowed to the hilt
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Never said that.
chops_a_must
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Because if you have an equity loan, it's the same as a margin loan, it can be called in.
It's already happening here in Perth mate!
Can't go bankrupt indeed...
EDIT: Beaten to it by IFocus.
Hey u could buy the place next door...the property equivalent of averaging down.
Then rent out by the room to Chinese students, and live in a caravan out the back.
Best post all day. I know someone who did this up north except they had a bus kitted out with annex etc. Actually the bus was better than the house. Then when the time was ripe they sold the house, made a killing and drove off lol.
But please don't forget out sub continental friends, they like to rent rooms as well.
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Because if you have an equity loan, it's the same as a margin loan, it can be called in.
It's already happening here in Perth mate!
Can't go bankrupt indeed...
EDIT: Beaten to it by IFocus.
And if I dont have an equity loan?
Who mentioned equity loan anyway, why are you intent on changing the goalposts?
Are you really that short sighted?
Your personal situation is only a reflection of the market as a whole. All those who do have equity loans, interest only loans, 105% loans, etc are the ones who have inflated the price beyond sustainability.
When that shoe drops, the ripple effects through the economy as a whole will be immense. This is obvious when looking at the US and UK markets. You might have no equity, you might own your home and IP outright but if you lose your job or your tenant loses theirs then we will see what happens.
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"equity loan"... love it. Technically, any secured loan is an equity loan.Because if you have an equity loan, it's the same as a margin loan, it can be called in.
It's already happening here in Perth mate!
Can't go bankrupt indeed...
EDIT: Beaten to it by IFocus.
If you're speaking about an equity release loan... that is the loan purpose, which is used during the assessment of an application - it makes zero difference to the lender once the loan is funded (save for some very basic paperwork requirements depending on whether the loan is regulated or unregulated, which again is not equity release specific).
Pray tell, do you know of any situation, in any circumstance, ever in Australia, where a confirming lender has called in a within limits residential property loan.... say, ever?
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Sorry Mofra, chops is right. If you have an equity loan (line of credit) it can be reduced and you have to pay the outstanding amount if called upon to do so by the lender. This isn't the case with a standard mortgage.
hello,
but the article the other day is talking about property only returning 4.5%, so they arent too inflated,
people who talk about sustainability, average income are people who dont have any money or savings, they on the floor pulling average wages,
the bleeding heart crew who would lay a boot into the well off who have built this country
i know i know, but i have plenty in the bank and am renting for peanuts you have to wait wait wait and wait
well done Robots, top effort brother on your hard work
thankyou
robots
So you are referring to your mates the dole bludgers?
Hi robots,
Got a present for you, merry xmas.
Looks very impressive till you note the data comes with a caveat: St Kilda had less than 30 property sales this quarter!
Pretty obvious the growth number you are so proud of is not really based in reality.
14.08% growth looks very impressive until you consider this is a massive drop (almost 50% drop Year-on-Year) from the 36 month and 24 month growth rates of 25%+.
Warning lights should be flashing robots
Got a present for you, merry xmas.
Looks very impressive till you note the data comes with a caveat: St Kilda had less than 30 property sales this quarter!
Pretty obvious the growth number you are so proud of is not really based in reality.
14.08% growth looks very impressive until you consider this is a massive drop (almost 50% drop Year-on-Year) from the 36 month and 24 month growth rates of 25%+.
Warning lights should be flashing robots
Attachments
hello,
well that looks as though you found the reason Sinner, its all Supply and Demand,
just not enough houses for sale in St Kilda to satisfy demand (less than 30 sales), tight rental market its all adding up
merry xmas to you and your family as well
thankyou
robots
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