I Have Been A Rock Solid Bear For 2 Years Now

[sam]

I have been bearish on property for just short of 2 years now, back then the numbers just did not add up, my calculations were telling me that this was a speculative debt driven bubble.

So why is it today that i am so nervous, 2 years have now passed and if anything the numbers should be telling me that things are worse today than they were 2 years ago, have we missed something.

I have quite often over the last 2 years lurked on a few of the more popular forums(HPC, fool PMT), but for the last few months i have not bothered, i have done this in an attempt to get a feel for what is really happening out there.

I really cannot make my mind up now, commonsense tells me that before long the UK is going to be maxed out with borrowed money, commonsense tells me that far too many people are clinging on by their fingernails.

Yet prices are still holding up, and if anything negative is happening, it is happening really slowly, i do not know what to make of it.

I still believe that Gordon Browns miracle economy is nothing of the sort, the panorama special on him on monday should be interesting, but i am really starting to wonder if he can continue this con for a long while yet.

I must admit i have had a look at some of the forums today, and it is the same old thing, i keep hearing stuff like "oohhh it's going to be messy this time" and "the shit is really going to hit the fan soon". I am not saying any of you guys are wrong, but i for one am starting to have doubts, and this from someone who was rock solid about the coming crash only 6 months ago.

Who knows, maybe we will find out that Gordons miracle economy was a load of old tosh, but it could take decades to find out, and everyone will be the looser.

Right now i could do with something a little more solid in the way of evidence, i have found it hard not to be sucked into what i thought was fools gold(this bubble), there has been a lot of great analysis on this forum, but today Guys i really am not sure now, i really need lifting for the first time

Rgds Sam

[AteMoose]

If you look at FTB loan transactions in the last crash, many FTbers jumped back into the market too soon.... Dont worry, relax, save money renting, come back to the forums in a couple of years, this crash wont play out over a few mounths but over a few years... For me last autumn was the turning point...

Edited September 23, 2005 by moosetea

[magictorch]

Hold the line comrade it will not be much longer before we storm the palace....

[Smell the Fear]

I have been bearish on property for just short of 2 years now, back then the numbers just did not add up, my calculations were telling me that this was a speculative debt driven bubble.

So why is it today that i am so nervous, 2 years have now passed and if anything the numbers should be telling me that things are worse today than they were 2 years ago, have we missed something.

I have quite often over the last 2 years lurked on a few of the more popular forums(HPC, fool PMT), but for the last few months i have not bothered, i have done this in an attempt to get a feel for what is really happening out there.

I really cannot make my mind up now, commonsense tells me that before long the UK is going to be maxed out with borrowed money, commonsense tells me that far too many people are clinging on by their fingernails.

Yet prices are still holding up, and if anything negative is happening, it is happening really slowly, i do not know what to make of it.

I still believe that Gordon Browns miracle economy is nothing of the sort, the panorama special on him on monday should be interesting, but i am really starting to wonder if he can continue this con for a long while yet.

I must admit i have had a look at some of the forums today, and it is the same old thing, i keep hearing stuff like "oohhh it's going to be messy this time" and "the shit is really going to hit the fan soon". I am not saying any of you guys are wrong, but i for one am starting to have doubts, and this from someone who was rock solid about the coming crash only 6 months ago.

Who knows, maybe we will find out that Gordons miracle economy was a load of old tosh, but it could take decades to find out, and everyone will be the looser.

Right now i could do with something a little more solid in the way of evidence, i have found it hard not to be sucked into what i thought was fools gold(this bubble), there has been a lot of great analysis on this forum, but today Guys i really am not sure now, i really need lifting for the first time

Rgds Sam

<{POST_SNAPBACK}>

Put an offer on a house, get it accepted. This concentrates the mind. You will be sh*tting yourself, you'll pull out and you won't need reminding again for a while.

I can only liken it to shagging a really attractive chick who you know has a contagious venereal disease. If you had any doubts about why not to do it, they would evaporate when she spread her legs and you caught sight of her weeping, crusted lesions. You would run a mile and the lesson would be learned.

edit: apologies for the grotesque nature of this post.

Edited September 23, 2005 by Smell the Fear

[right_freds_dead]

doesnt really matter what you think. when your priced out, your priced out. all you can do is wait.

i cant take on a £1300 pcm omrtgage for a crumbling terrace worth 40k max.

crash or no crash. i simply cannot sustain that kind of monthly payment.

[OLDFTB]

Put an offer on a house, get it accepted. This concentrates the mind. You will be sh*tting yourself, you'll pull out and you won't need reminding again for a while.

I can only liken it to shagging a really attractive chick who you know has a contagious venereal disease. If you had any doubts about why not to do it, they would evaporate when she spread her legs and you caught sight of her weeping, crusted lesions. You would run a mile and the lesson would be learned.

edit: apologies for the grotesque nature of this post.

<{POST_SNAPBACK}>

Don't apologise, tell us some more.What does this chick look like??

[OzzMosiz]

doesnt really matter what you think. when your priced out, your priced out. all you can do is wait.

i cant take on a £1300 pcm omrtgage for a crumbling terrace worth 40k max.

crash or no crash. i simply cannot sustain that kind of monthly payment.

<{POST_SNAPBACK}>

Bang on. I can afford a house at the moment, but if IR's spiralled and/or I was made redundant and had to take a lower paid job. I'd be fooked!

I want some sort of comfort zone when buying.

[RichM]

You've touched on the biggest con of all, sam.

I often think/feel the same - why no action? when's it all going to happen?

Brown has given everyone the impression of stability. Bad things just don't happen. Move on, nothing to see here.

In effect, he is encouraging people to build their houses on a major fault line. You can't see the energy building up in those tectonic plates underneath, but you can bet your backside the energy contained therein is enormous.

All this aura of "stability" does is delay and inflate the inevitable chaos. The laws of economics haven't been broken, just taken to an extreme.

You're right not to watch the kettle too much. Consider this - a year ago were we hearing about job losses? record debt? a HUGE slow down in house transactions? oil up twice, inflation doubled, terrorist attacks, hurricanes, retail slumping...

Still wanna build a house on that fault line?

[El_Pirata]

I have been bearish on property for just short of 2 years now, back then the numbers just did not add up, my calculations were telling me that this was a speculative debt driven bubble.

So why is it today that i am so nervous, 2 years have now passed and if anything the numbers should be telling me that things are worse today than they were 2 years ago, have we missed something.

I have quite often over the last 2 years lurked on a few of the more popular forums(HPC, fool PMT), but for the last few months i have not bothered, i have done this in an attempt to get a feel for what is really happening out there.

I really cannot make my mind up now, commonsense tells me that before long the UK is going to be maxed out with borrowed money, commonsense tells me that far too many people are clinging on by their fingernails.

Yet prices are still holding up, and if anything negative is happening, it is happening really slowly, i do not know what to make of it.

I still believe that Gordon Browns miracle economy is nothing of the sort, the panorama special on him on monday should be interesting, but i am really starting to wonder if he can continue this con for a long while yet.

I must admit i have had a look at some of the forums today, and it is the same old thing, i keep hearing stuff like "oohhh it's going to be messy this time" and "the shit is really going to hit the fan soon". I am not saying any of you guys are wrong, but i for one am starting to have doubts, and this from someone who was rock solid about the coming crash only 6 months ago.

Who knows, maybe we will find out that Gordons miracle economy was a load of old tosh, but it could take decades to find out, and everyone will be the looser.

Right now i could do with something a little more solid in the way of evidence, i have found it hard not to be sucked into what i thought was fools gold(this bubble), there has been a lot of great analysis on this forum, but today Guys i really am not sure now, i really need lifting for the first time

Rgds Sam

<{POST_SNAPBACK}>

A friend who works at The Economist told me a very wise thing: one of the defintions of a bubble is that it goes on far longer than you (an intelligent person) expect it to.

Most of us saw the warning signs several years ago. But a lot of idiots didn't and carried on buying. But one day the supply of idiots will run out.

[Culpability Brown]

Sam,

Have a look at Rainbow's Fancy a Laugh? thread and then have a word with yourself.

[Blue Peter]

All this aura of "stability" does is delay and inflate the inevitable chaos. The laws of economics haven't been broken, just taken to an extreme.

<{POST_SNAPBACK}>

Though that does raise the question of why Gordon doesn't want to get things over sooner rather than later, since he wants to be PM. Or iis he hoping to reach Number 10 before it all happens?

Peter.

[Smell the Fear]

Don't apologise, tell us some more.What does this chick look like??

<{POST_SNAPBACK}>

I googled her, and apparently she looks like this:

[DonnieDarker]

I do this.

I save and look at my savings and investements every now and again and I tell myself this:

"This (the savings) is buying me a house. Not next week, not next month, not next year. It is buying me a house now."

Now some may say this is a way of brain-washing myself but I have come to think of my savings as not some inert figure but as something alive and creative.

When people say "why don't you buy?" my reply is "...but I am buying".

So long as you are biding this time (when the decision to buy is 95% of the time the wrong choice) by saving for the right time you are in fact, buying your house.

TIMING is everything.

[Killer Bunny]

Yet prices are still holding up

<{POST_SNAPBACK}>

Simple - that statement is not true. If that were the case why have volumes plummeted?

Why are asking prices 5-10% down on the peak in London?

Why are rents lower than 2 years ago?

[Michael]

These things take time and the younger you are the longer 5 years seems....and i think most wannabe ftbs in here are only in their 20s.......Patience is a virtue right now.........Even if the market doesn't crash it's not going to go up in the next 10 years.so if you buy you'll be out of pocket....even without falling prices..

The GordonB public finance thing will blow the whole thing apart......Considering where we are in the economic cycle the public finances should be in good shape; certainly a surplus of some sort yet the idiot is running a deficit of around 3% of GDP....meaning he's spending about 7% more than he's getting in tax revenues....

Wanting to boost tax revenues and stimulate growth (in sectors where it was prevented by labour shortages)was the main motivation in giving people in the EU accession states the right to work when most EU states did not.......

''Panorama'' Sunday evening will reveal all..............

Edited September 23, 2005 by Michael

[rockdoctor]

Back in the happy dot.com days I remember watching the share prices rise and rise, and listening to whole plane-loads of people discussing their internet business plans and thinking it couldn't last - none of the businesses made any profits, most of the internet businesses could be replicated by anyone who wanted to (eg online house sales - there must have been a 100 sites doing this for free).

I remember being amazed at how long the shares kept rising, and the ever more tenuous justifications being made for this. I remember companies' burn-rates (rate of wasting investment cash) being compared favourably (higher was better). Gradually I began to doubt my own sanity - SURELY I must be right - these 'companies' have no basis for existence, SURELY everyone will soon realise that the emperor is wearing no clothes?

Still prices rose, and lots of people were apparently getting rich. Roads seemed full of porsches and dim neighbours and acquaintances were pouring money into specialist funds (one friend sat on a huge pile of savings and redundancy cash all the way through the boom, then poured it all into an expensive managed fund at the peak).

We all know what happened - the boom went on for ages, but rational behaviour triumphs in the end.

[DonnieDarker]

To the doubters I would also say this, though it is a slightly embrassing anecdote as it is one that comes from myself:

Last summer I and my GF almost bought. We offered £240K on a place priced at £250K.

It was a nice flat - good location - but had a tiny kitchen and the 2nd room was only a single.

We had negotiated from lower than that but had got to the "endgame" and had been guaranteed by Foxtons that "240k would clinch it".

We then heard back a short while later that the owners had "made a mistake" and needed another £2K but were prepared to leave behind furniture for that much.

At that point we said "***K OFF!" which I think was as much a response to their apparent greed as to the affordability of the place. It is only out of their greed that I did not buy. I put this down to BLIND LUCK and pinch myself whenever I remember the sordid details of who I came within a whisker of making the biggest financial mistake I was likley to make.

So, what's changed in the meantime?

In the last 14 months I and the GF have been able to save an additional £8.4K that would have gone on the mortgage repayments.

We've had the interest accrue on the £40k that would have been used as a deposit.

(£2K)

And I can say that after some detailed research that prices have fallen somewhere between 2-4% in the area in that time. Call it 2% (£5K).

So end-product is that having not seen any ground-shaking visible changes in the market (do these even exist?) the compound effect of not buying is that I and the GF are richer to the tune of £16K.

This was not achieved out of any insight but out of the pure luck of encountering someone who was too greedy to realise when the game was up.

[VacantPossession]

Yet prices are still holding up, and if anything negative is happening, it is happening really slowly, i do not know what to make of it.

Rgds Sam

<{POST_SNAPBACK}>

Sam,

I can only repeat what I and others have said many times on this forum. Please look back to 1989-1990 when prices initially held up, VI's were making upbeat statements, three quarters of the population had no idea (including me at the time) of the impending crash and building societies (particularly the Halfix then as now) were rolling out VI spin like there was no tommorow.

It is now all so familiar. Sit tight.

VP

[Marina]

I waivered a few weeks ago - not that I am thinking of buying. However, I am okay now. Gone a bit the other way if anything.

I think we're in for a slump. Job losses each and every day now. Retailers saying it's the worst it's been for 15 years. 2 bed new build flats near me standing empty month after month after month.

I think you have to stand firm, these things take time to permeate the heads of the thicky people. Unless we start getting headlines like 'property prices down 5% in one month' - I don't think we'll get a dramatic crash. But, over the next couple of years there is only one way the market is going.

So, some houses are still being sold now. Its the last few fools at the bottom of chains who haven't twigged yet it would make sense to wait.

[Yankee]

Sam --

But prices are falling. I've been over to Britain twice in the past year and several properties in the areas I've been looking at are still on the market, but at prices that are now 10% to 15% less. And there are a lot more properties available than a year ago. I'm amazed, too, at how the experience of looking at houses has change. Now agents and home owners are eager for me to look at their properties--sometimes, uncomfortably eager; a couple of owners seemed desperate for me to make an offer. Of course, I'm coming in with a lot of cash. They also probably think I'm a dumb American who doesn't know what's going on with British property. If only they knew I'm an HPCer (sort of)!

I'm so grateful I've waited to purchase (and to this site for educating me about the true state of the housing market). I'm coming back to Britain very soon and will continue to look at properties. But I'm not going to buy for another year at least.

Be patient. Save.

[brainclamp]

In many ways the rentier society which is agreesively forming is much worse than pre 1915 when we had a fully feldged class system. There were fewer restrictions on land and Houseprices to earnings were 3.4-4. Now they are 6-7, and the snowballing of investors buying up vast swathes of stock continues.

Of course, the class system continues even today in many professions like law and the media, your circumstances of birth determining your income and access to opportunities.

By 2008 the coming ID card will lock you down with the heavy taxes which Brown has made sure are in the pipeline for 2008. Rising rents and rising taxes and limited social mobility.

[DonnieDarker]

True...but it's Friday!

[needle]

Bang on. I can afford a house at the moment, but if IR's spiralled and/or I was made redundant and had to take a lower paid job. I'd be fooked!

I want some sort of comfort zone when buying.

<{POST_SNAPBACK}>

This is exactly my position.

I do however agree with the main thread - prices are not falling in the manner they "should". I like to think I've missed something.

Problem is, I think this will just slide slowly for the next 10 years.

Prices will stagnate or fall slowly (top down) and wages and inflation will rise slowly (bottom up) until we are back near long term trends.

[Warwickshire Lad]

To all FTBs - Invest in your life - not property.

To many of the patient FTBs out there and the bearish who are perhaps understandably frustrated about the slow downward movements in prices of FTB properties I would say live your life.

The best thing to do for me for now, much as I hate to say it, is only to spend occasional time on this forum.

I've been on holiday for a few weeks to a foreign country. Go and travel, see the world, meet new people, have a laugh, live your life.

Yes - even spend a little bit of your house deposit on it too to reward yourself. I've spent enough years saving in a futile manner, and now I hit 31 last week, it's time to really start living a bit more. Travel is cheap these days. Do it before it's too late.

My plan was to buy a property and then see the world. Unfortunately the former hasn't happened and so I must do the latter first.

No one be afraid of falling in love, or feeling you can't afford to have a relationship because it's too expensive.

After having been away, I've let some steam out of the cooker and pulled back a bit. You have to otherwise you'll go mad.

The banks, the EAs and all of the greedy folk who caused this will get their comeuppance. Don't give in and buy an overpriced house in an overpriced country. You're better off renting and investing your deposit elsewhere.

And investing doesn't necessarily mean putting it into property, shares or commodities. It means spending a bit of money on yourself to invest in your happiness and well being by doing things you've never done before to enrich your life .

Although I put some money in gold and it's gone up 10%.

Bottom line is, I've seen more than enough to convince me that major trouble is ahead, and it could well manifest itself in a way that none of us have predicted.

The wheels are coming off not just the British economy, but the world economy too.

So, before that happens, might as well go out there and take in some fresh air.

[DonnieDarker]

Problem is, I think this will just slide slowly for the next 10 years.

Prices will stagnate or fall slowly (top down) and wages and inflation will rise slowly (bottom up) until we are back near long term trends.

<{POST_SNAPBACK}>

No chance. Markets (from what I see) don't behave in this nice predictable fashion.

In my area prices have dropped 2 or 3% in the last year. Once more people realise this there will be a herd-panic to sell and that will accelerate the price falls and the activity.

At the moment only the 'more aware' have woken up to the fact the boom is over and fallas are happening.