House prices to stagnate for 'years'

[numbercruncher]

The mortgage crisis in America has deepened so much that family homes can now be bought for less than £15,200 - the price of a new car.


Another Detroit house goes under the hammer


A four-bedroom home near the original Motown recording studio in Detroit recently sold for £3,700 ($7,000), less than most used cars. A boarded-up bungalow fetched £685, and a three-bedroom house listed for £276,000 attracted just £69,000.

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/04/06/wdetroit06.xml

 

[Kathmandu]

http://www.realestate.com.au/cgi-bi...eader=&c=46874795&s=vic&snf=rbs&tm=1187492316
This looks ok as well. heaps of family homes out there for under 300K

Hey, thats what I said.

So, why are people bleating about housing unaffordability again??

Dave

 

[wayneL]

Hey, thats what I said.

So, why are people bleating about housing unaffordability again??

Dave

Those are the cheapest homes you can find in the melbourne metro area and still 6 times average earnings, well above historical norms.

Bad value.

 

[Kathmandu]

Those are the cheapest homes you can find in the melbourne metro area and still 6 times average earnings, well above historical norms.

Bad value.

Good value if bought now and they go up in val while tenant pays holding costs.

Dave

 

[wayneL]

Good value if bought now and they go up in val while tenant pays holding costs.

Dave

Bad value if they don't go up for a fair while. With a credit crunch and recession looming, I can't think of a place I'd least like to put my money than these sorts of houses.

Tenant will not pay all of holding costs... and would suspect maintenance issues looking at them = losses while waiting extended periods for cap gain to overcome transaction and holding expenses.

 

[Kathmandu]

Not what I'd buy that's for sure, but for some??

As a first home though they would be great me thinks.

Some close to beach, close to train, more affordable than $500k Mcmansion as a first home, so lees chance of losing it if/when rates rise.


Dave

 

[numbercruncher]

Why would people buy those falling down shacks when they can rent the mcmansion for the same/less (invest the difference elsewhere too?) weekly repayments with no exposure to interest rate rises and the impending housing slowdown ?

 

[Kathmandu]

Mate , you wouldnt know what a falling down shack was...................

Every one of those houses is better than the house I live in, and certainly better than what my parents had as a first home and possibly better than what your parents had as a first home.

What people need to realise is that you cant expect a flash inner city appartment, or a 5 bedroom 3 bathroom as a first home.

Just not the way it is.

As to your comment on why buy these when you can rent ?

That's the stuff us landlords just love to hear, Please dont buy.


falling down shack:

http://www.realestate.com.au/cgi-bi...eader=&c=31873032&s=qld&snf=rbs&tm=1187510395

Dave

 

[numbercruncher]

Davo your doing it the wrong way sir, you should have that house of yours rented out let the tax payer pick up the tab and rent a place to live in .....

Pfft whos buying 3 bathroom homes off the bat ?

 

[Kathmandu]

Davo your doing it the wrong way sir, you should have that house of yours rented out let the tax payer pick up the tab and rent a place to live in .....

Pfft whos buying 3 bathroom homes off the bat ?

Well that I could, except it is damn near un-rentable, all my tenants have really nice houses, so I cant rent it as is. (who said all us landlords are arseholes)

I would rather hold it while the next Brisbane increase goes on and then still have access to all the extra $$ if deciding to sell after a quick tart later.

If tenanted I'll pay CGT on the increase.

Anyway, it owes us less per mth in repayments ($30k PPOR debt) than it would to rent elsewhere.

Dave

 

[Smurf1976]

"Bond holders and those with cash are about to get seriously shafted IMO in order to bail out the debtors. Exactly what's happened plenty of times before"

HI don't understand what you mean by cash holders. If rates go to 15%, then cash in the bank is ideal is it not?

Consider this.

A decade ago a certain amount of cash bought you a nice house. Today, that same cash is at best a one third deposit on the same house.

A decade ago a certain amount of cash was enough to put food on the table for a year. Today, you'll die of starvation if forced to rely on that amount of cash to buy food.

It wasn't that long ago that $100 was a significant amount of money. Today, that won't buy you a night out.

The cash itself is reasonably safe but it's purchasing power is steadily eroded. It's like a battery that slowly goes flat just sitting there on the shelf. Come back in a few decades and your cash is still there but it has lost it's purchasing power.

Practically every major central bank is inflating at over 10% in recent years. At best, you'll get 7% interest on your cash and you'll lose some of that in tax. There's no way you'll keep pace with inflation holding cash. Sure, the nominal value of your cash will rise due to interest but that won't generally be sufficient to offset the loss of purchasing power.

 

[numbercruncher]

Depending on the depth of the Credit crunch and repricing of risk cash imho now has a good opportunity to gain back some of its purchasing power that was eroded by Irrational exhuberance.

 

[Hopeful]

There's a lot of knowledge on this board, and so I'd like to ask a general sort of question and get some advice from you kind folks.

I'm from Sydney but living in Japan at the moment and will be for the next few years, probably 3-4 years. It's a bit hard to be stuck here and watch the Aussie economy go up hard whilst my salary has barely moved in that time. I've been wanting to buy something in Oz but the prices have just kept moving away so I gave up long ago.

Anyway, where do you see the Aussie dollar and real estate in 4 years from now? For me the best situation would be for the A$ to keep falling against the Yen, and for R/e prices in Melb/Syd/Bris (I'll go where the value is) to move down or at least stay flat. How likely is that? Let's not forget that the A$ was at 0.47 cents only a few years ago. I have a cheap unit in Japan worth about $130,000 at the current rates (15% better than a few weeks ago!), so that will be a good deposit when the time comes.

If you were in my shoes what would your rough plan be for the next 4 years?

I could also borrow in yen and buy in A$, but as the fall in the A$ recently demonstrated that could be very dangerous because if the A$ were to fall further that would produce a huge margin call due the the loan/value ratio. On my peanut salary I wouldn't be able to make margin.

Any comments would be great, looking forward to it, thanks!

 

[toothfairy]

Hi everyone,
this thread has become quite hot since the share market had a bit a correction. More people have become interested in properties and are wondering whether it will crash like the stocks. Quite a few bears around this thread as well, some has been here for a long time since 05, much longer than myself.
This thread was actually started by krisbarry in Sep 05, haven't heard from him much lately, must have bought in 05 and enjoying. The title of the thread has been proven WRONG for the last 22 months. See my charts below from REIV.
If someone still wants to debate (I won't say "argue" because I got told off last time by someone) about the topic, we should start a new thread called "House prices to stagnate from 08/2007 for 'years' " ! Any takers?

 

[wayneL]

If someone still wants to debate (I won't say "argue" because I got told off last time by someone) about the topic, we should start a new thread called "House prices to stagnate from 08/2007 for 'years' " ! Any takers?

No takers.

Why have 2 threads with the same debate? Notwithstanding the title of the thread, timing of actions and opinions, the points are the same. Points have been scored on both sides and for the purposes of discussion this thread shall remain a satisfactory place for the same.

 

[toothfairy]

No takers.

Why have 2 threads with the same debate? Notwithstanding the title of the thread, timing of actions and opinions, the points are the same. Points have been scored on both sides and for the purposes of discussion this thread shall remain a satisfactory place for the same.

I guess not, no one is brave enough like krisbarry

 

[numbercruncher]

No more arguing Toothfairy.


As your little graph thingo clearly shows, house prices are going to rise by 40k a month for eternity.

Perhaps you should be leveraging yourself further into the market to enjoy its gravity defying rise into the stratosphere.

Why arnt prodcuers increasing there prices in tandem, you know milk and Bread should surely be rising by 20pc a month as well, it really isnt fair on the poor farmers and bakers it needs to be looked into asap.

Zimbabwe has got a cool thing going down with price rises at the moment too, one week you earn 1000 next week you earn 5000, Houses treble in value every month, its pretty neat really.

But then theres Detroit, second hand cars cost more than Houses, thats surely a rock solid investment too ?

 

[MultiFinanceIT]

Here are two related thread's that I have posted (in) on the WPW IT and eCommerce forum:

Real Estate Bubble Concern Spikes Among Searchers

Real estate and global stock markets. What is happening?

The important questions are, when will we reach the bottom?

1. Generally when everybody hate the market.
2. There may also be a flat bottom going on for years.

 

[wayneL]

I guess not, no one is brave enough like krisbarry

Nonsense

Had a look at the US market? UK starting to record MoM fall in some areas as well, some of the stuff the bears have talked about is happening.

The major overriding point is availability of credit, and this may be the factor that finally torpedoes HPI.

Some very basic excel skills will expose valuation difficulties at present; looking deeper into the figures in Oz, already reveals increasing repos, mortgage stress, etc, all before the current credit market difficulties.

It's been fabulous for those of us who bought in the late 90's early 00's, but it's time to find a new party for a while.

 

[toothfairy]

No more arguing Toothfairy.


As your little graph thingo clearly shows, house prices are going to rise by 40k a month for eternity.

Perhaps you should be leveraging yourself further into the market to enjoy its gravity defying rise into the stratosphere.

Why arnt prodcuers increasing there prices in tandem, you know milk and Bread should surely be rising by 20pc a month as well, it really isnt fair on the poor farmers and bakers it needs to be looked into asap.

Zimbabwe has got a cool thing going down with price rises at the moment too, one week you earn 1000 next week you earn 5000, Houses treble in value every month, its pretty neat really.

But then theres Detroit, second hand cars cost more than Houses, thats surely a rock solid investment too ?

I am not arguing anything, I am just stating some facts for everyone else who is interested. I know both you & Wayne are not.
I am also not suggesting to anyone to buy anything now, except milk & bread.
I am simply saying I bought properties long long time ago and they have increased in value since this thread started.
Lucky me, I didn't buy them to annoy you.