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Buy When Everyone Says Not To Buy

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Post from CR on his perception of the California housing market:

I've seen previous housing busts in California, and although they were less severe than the current bust, there always seemed to be a stage when people hated housing. So I've been looking for the "hate", and maybe we found some ...

I disagree that housing is "cheap", but I'm starting to feel the hate.

http://www.calculatedriskblog.com/2011/04/housing-feeling-hate.html

I reckon CR is the most balanced blogger on this disaster. He reckons US housing has about 10% to go on a Case-Schiller basis.

Worth heeding. Bring on 2013.

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Sounds about right for California.

Not sure about other states, I think there's more downside, and more "hate factor" to come.

Edited by Greener Pastures

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In our last crash by 1992/93 many people had lost all confidence in property . Remember reading In the Telegraph a report saying that those in London who bought in 1988 would have to wait untill the end of their 25 year mortgage to see the price return to what they had paid. I bought a flat for one third of its 1988 price in 1993 and a banker told me to buy more saying that the time to buy is when no one else wants it. I thought the banker was mad.

How wrong the telegraph were how right the banker was.

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In our last crash by 1992/93 many people had lost all confidence in property . Remember reading In the Telegraph a report saying that those in London who bought in 1988 would have to wait untill the end of their 25 year mortgage to see the price return to what they had paid. I bought a flat for one third of its 1988 price in 1993 and a banker told me to buy more saying that the time to buy is when no one else wants it. I thought the banker was mad.

How wrong the telegraph were how right the banker was.

When are you calling the bottom here in UK miko , I know a few people actually jumping into BTL in Brighton at the moment

and round here in Berkshire total deadlock.

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When are you calling the bottom here in UK miko , I know a few people actually jumping into BTL in Brighton at the moment

and round here in Berkshire total deadlock.

When am I calling the bottom of this crash ?

My mind changes on that weekly or even daily or even every hour. This is so different from the last time . Last time around Double miras finished in August 1988 as interest rates rose. The market in London and the South East dropped overnight , everything dropped from the top to the bottom . We had a lul about the end of 1991 and then it carried on downwards for another few years. As quick as it turned from a bubble to a bust it turned back around again 94/95 and started to rise, slowley slowley to start with then it speeded up the rest is history.

But this time it has been so different , I would have bet my house on it crashing after NR, then again after Lemen Bross, especially in the Docklands and East London. But it has not happened , I hear so many conflicting stories and conflicting views . I think we will have micro markets some will stay up some will go up some will fall some will crash.

I do know that the housing market in East London and Essex was very busy at the start of this year , but now it has gone DEAD very very DEAD. I also follow Docklands with a close eye and even though prices have not dropped much nothing in the second hand market is selling , there is a large supply of new build coming on stream in the next few years , so will that push it down ? who knows ? will the established houses near good schools on the East London outskirts keep the gains they have made in the last few years bringing their prices back to 2007 and beyound ? Will everyone wake up this year ? Will the tax rises , high inflation , tax credit reductions , public sector job cuts and sentiment bring the whole thing down?

I do beleive that if it does tumble the last crash will be like a tea party due to the massive amount of debt so many are in.

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I would just look at the graph:

I've been "watching the graph" since 2005! :huh:

It's sort of hypnotising! ;)

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When am I calling the bottom of this crash ?

My mind changes on that weekly or even daily or even every hour. This is so different from the last time . Last time around Double miras finished in August 1988 as interest rates rose. The market in London and the South East dropped overnight , everything dropped from the top to the bottom . We had a lul about the end of 1991 and then it carried on downwards for another few years. As quick as it turned from a bubble to a bust it turned back around again 94/95 and started to rise, slowley slowley to start with then it speeded up the rest is history.

But this time it has been so different , I would have bet my house on it crashing after NR, then again after Lemen Bross, especially in the Docklands and East London. But it has not happened , I hear so many conflicting stories and conflicting views . I think we will have micro markets some will stay up some will go up some will fall some will crash.

I do know that the housing market in East London and Essex was very busy at the start of this year , but now it has gone DEAD very very DEAD. I also follow Docklands with a close eye and even though prices have not dropped much nothing in the second hand market is selling , there is a large supply of new build coming on stream in the next few years , so will that push it down ? who knows ? will the established houses near good schools on the East London outskirts keep the gains they have made in the last few years bringing their prices back to 2007 and beyound ? Will everyone wake up this year ? Will the tax rises , high inflation , tax credit reductions , public sector job cuts and sentiment bring the whole thing down?

I do beleive that if it does tumble the last crash will be like a tea party due to the massive amount of debt so many are in.

Totally agree , seeing the same round here (Slough , Windsor , Burnham) East Berkshire , new builds flats esp. in

shite areas down upto 30%, anything decent near "good" schools holding price , some even trying it and on plus 10%

2007 prices , others taking maybe 10-15% drops from 2007 but probably still at 2005-6 prices 10-20% overpriced

and not much happening in the market at all.

In a sitaution where we've been given notice on our rental again!! Massive pressure being applied to get on the "ladder"

BOMAD practically begging me to take their money, not much in rental market either and prices up a good 5-10%

from last year.

"I do beleive that if it does tumble the last crash will be like a tea party due to the massive amount of debt so many are in."

I sincerely hope you are right!!! Seems like the dice are seriously loaded aginst us but logic tells me sooner or later prices will

have to crash but by the time that happens it will be the last thing to worry about as the economy will have completely collapsed.

Edited by Maddog21

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I sincerely hope you are right!!! Seems like the dice are seriously loaded aginst us but logic tells me sooner or later prices will

have to crash but by the time that happens it will be the last thing to worry about as the economy will have completely collapsed.

Yes that is why the govenment are doing everything in their power to stop it crashing.

However you cannot hold back the tide . When I speak to anyone who is a bit on the ball about things they always say the numbers do not add up and it will crash . But no one has any idear how we will come out of the other end and what will be left afterwards .

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Yes that is why the govenment are doing everything in their power to stop it crashing.

However you cannot hold back the tide . When I speak to anyone who is a bit on the ball about things they always say the numbers do not add up and it will crash . But no one has any idear how we will come out of the other end and what will be left afterwards .

Agree entirely

Still not sure what to do though , f*cked off with paying someone elses mortgage and getting kicked out every

year because LL wants to sell up or pay way too much for a f*cking roof over my families head and be in debt slavery to

the bank for the next 20 odd years and who can raise interest rates at will

Bent over a barrel

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Sounds about right for California.

Not sure about other states, I think there's more downside, and more "hate factor" to come.

The approach for California depends on the "price point".

The bottom 2/3 of the market has seen the bulk of its crash already.

The top 1/3 is only just beginning to feel the effects of the illusion of wealth created by the credit bubble and has a long way to fall.

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Agree entirely

Still not sure what to do though , f*cked off with paying someone elses mortgage and getting kicked out every

year because LL wants to sell up or pay way too much for a f*cking roof over my families head and be in debt slavery to

the bank for the next 20 odd years and who can raise interest rates at will

Bent over a barrel

I know your between the devil and the deep blue sea. I really feel for the younger people like yourself with or without children. If you did buy I would say try and buy somewhere you will stay put for the next 20 years . Take a fixed mortgage and put as much of a saftey net in the bank as you can manage ( not easy when buying your first home with a young family ) the whole system is so fecked up . Do bear in mind that a big mortgage is going to stay big for years as we have low wage inflation , when I bought my first place the mortgage dropped compared to my wages very quickly. That was how it always worked and that is the bit that is missing. GOOD LUCK

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I know your between the devil and the deep blue sea. I really feel for the younger people like yourself with or without children. If you did buy I would say try and buy somewhere you will stay put for the next 20 years . Take a fixed mortgage and put as much of a saftey net in the bank as you can manage ( not easy when buying your first home with a young family ) the whole system is so fecked up . Do bear in mind that a big mortgage is going to stay big for years as we have low wage inflation , when I bought my first place the mortgage dropped compared to my wages very quickly. That was how it always worked and that is the bit that is missing. GOOD LUCK

That's the problem , finding somewhere like that without being stretched to the limit

All I want is a home for my family, not as an investment

The whole thing is f*cked

Cheers

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I do beleive that if it does tumble the last crash will be like a tea party due to the massive amount of debt so many are in.

Not just the debt but I don't see who is going to be able to buy these houses at current prices.

  • Early 20's uni graduates with £50,000 of debt who are going to be mid 30's before they can even think about saving a deposit.

  • 30 somethings with £120,000+ of mortgage debt on 1/2 bed flats, competing with a glut of identikit new build flats to sell to the handful of the above able to tap BOMAD for £80,000+

  • 40 somethings with £200,000+ of mortgage debt wondering if they're going to have a job in 6 months time let alone 6 years and how they're going to find another £500,000 to fund even a fairly basic private sector pension.

Whilst all the while the state is planning to spend 50% of everything they earn on bloated public services, featherbedded public sector workers and huge spending committments for the older generation.

It doesn't work, it just doesn't add up, there just isn't that much money in the system. We've allowed ourselves to be tricked into believing that property is worth far more than it really is and have forgotten that the debt has to be repaid.

God alone knows where this is going to end up. :(

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It doesn't work, it just doesn't add up, there just isn't that much money in the system. We've allowed ourselves to be tricked into believing that property is worth far more than it really is and have forgotten that the debt has to be repaid.

God alone knows where this is going to end up. :(

Exactley

We have very little manufacturing , so we can not produce jobs there . We either have high paid service sector or very low paid service sector jobs. Many people especially with children can not do the low paid jobs , so they are being paid for by those that are working. So now we find ourselves with a new term SQUEZED MIDDLE. I really beleive in that saying , they have squezed so much form them that there is nothing left to take and they are either falling into the trap of living on benefits or now waking up to the fact that even with two well paid jobs they are going backwards.

It worked in this country as by 25 uni educated or not you could earn the money to buy a house or if you could not you got a council house . That has all gone , inflation enabled you to go up the housing ladder ,at the same time you saved into a pension . By mid 40's or 50 you were on easy street . House was paid off kids off hand wife working full or part time , a job loss was ok as you could always find something to tide you over untill the pension which could be taken from 50 onwards. That was the system and that has been smashed. What will replace it ? you will either be left money or struggle all your life.

We are in a lose lose situation . People can not afford to buy the houses and live , but if we build plenty of cheap housing those in debt on megga mortgages would default if they saw their house crash in value so solving the over priced property problem would create another big problem BANKS GOING UNDER with the defaults.

There is no easy answer and as I said in another post on this thread and has been said to me so many times recently .

HOW WILL THIS ALL END ?

Edited by miko

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Not just the debt but I don't see who is going to be able to buy these houses at current prices.

  • Early 20's uni graduates with £50,000 of debt who are going to be mid 30's before they can even think about saving a deposit.

  • 30 somethings with £120,000+ of mortgage debt on 1/2 bed flats, competing with a glut of identikit new build flats to sell to the handful of the above able to tap BOMAD for £80,000+

  • 40 somethings with £200,000+ of mortgage debt wondering if they're going to have a job in 6 months time let alone 6 years and how they're going to find another £500,000 to fund even a fairly basic private sector pension.

Whilst all the while the state is planning to spend 50% of everything they earn on bloated public services, featherbedded public sector workers and huge spending committments for the older generation.

It doesn't work, it just doesn't add up, there just isn't that much money in the system. We've allowed ourselves to be tricked into believing that property is worth far more than it really is and have forgotten that the debt has to be repaid.

God alone knows where this is going to end up. :(

Yep

What ever way I play it out , I can't see a happy ending in this country.

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Not just the debt but I don't see who is going to be able to buy these houses at current prices.

  • Early 20's uni graduates with £50,000 of debt who are going to be mid 30's before they can even think about saving a deposit.

  • 30 somethings with £120,000+ of mortgage debt on 1/2 bed flats, competing with a glut of identikit new build flats to sell to the handful of the above able to tap BOMAD for £80,000+

  • 40 somethings with £200,000+ of mortgage debt wondering if they're going to have a job in 6 months time let alone 6 years and how they're going to find another £500,000 to fund even a fairly basic private sector pension.

Whilst all the while the state is planning to spend 50% of everything they earn on bloated public services, featherbedded public sector workers and huge spending committments for the older generation.

It doesn't work, it just doesn't add up, there just isn't that much money in the system. We've allowed ourselves to be tricked into believing that property is worth far more than it really is and have forgotten that the debt has to be repaid.

God alone knows where this is going to end up. :(

Currency devaluation.

£10 becomes £1

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Currency devaluation.

£10 becomes £1

IMO there's been and continues to be a massive reality avoidance strategy by succesive governments. This bubble is built on sentiment, reality WILL set in and then sentiment will REALLY swing the other way. Britain isn't working, no matter how hard they try to convince us. London is a disaster waiting to happen.

The only thing that really worries me is the dreaded word (for me anyway) Innovation. What's next - a structural change in mortgage products, mortgage housing benefit, a feudal landlord startup grant? I'm not joking....

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The approach for California depends on the "price point".

The bottom 2/3 of the market has seen the bulk of its crash already.

The top 1/3 is only just beginning to feel the effects of the illusion of wealth created by the credit bubble and has a long way to fall.

parallel with top end of london?

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Not just the debt but I don't see who is going to be able to buy these houses at current prices.

  • Early 20's uni graduates with £50,000 of debt who are going to be mid 30's before they can even think about saving a deposit.
  • 30 somethings with £120,000+ of mortgage debt on 1/2 bed flats, competing with a glut of identikit new build flats to sell to the handful of the above able to tap BOMAD for £80,000+
  • 40 somethings with £200,000+ of mortgage debt wondering if they're going to have a job in 6 months time let alone 6 years and how they're going to find another £500,000 to fund even a fairly basic private sector pension.

Whilst all the while the state is planning to spend 50% of everything they earn on bloated public services, featherbedded public sector workers and huge spending committments for the older generation.

It doesn't work, it just doesn't add up, there just isn't that much money in the system. We've allowed ourselves to be tricked into believing that property is worth far more than it really is and have forgotten that the debt has to be repaid.

God alone knows where this is going to end up. :(

Shut up. I can't hear you. Fingers in my ears.

The £10 to £1 prospect is like music. Not!

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Not just the debt but I don't see who is going to be able to buy these houses at current prices.

  • Early 20's uni graduates with £50,000 of debt who are going to be mid 30's before they can even think about saving a deposit.
  • 30 somethings with £120,000+ of mortgage debt on 1/2 bed flats, competing with a glut of identikit new build flats to sell to the handful of the above able to tap BOMAD for £80,000+
  • 40 somethings with £200,000+ of mortgage debt wondering if they're going to have a job in 6 months time let alone 6 years and how they're going to find another £500,000 to fund even a fairly basic private sector pension.

Whilst all the while the state is planning to spend 50% of everything they earn on bloated public services, featherbedded public sector workers and huge spending committments for the older generation.

It doesn't work, it just doesn't add up, there just isn't that much money in the system. We've allowed ourselves to be tricked into believing that property is worth far more than it really is and have forgotten that the debt has to be repaid.

God alone knows where this is going to end up. :(

your mental block is in seeing buying a house as an inevitable life choice. It isn't, this is not nice, but it is the truth.

Over the next 10 years home owners will lose a lot in real terms and renters will be much better off. The time to the bottom is a terribly long wait, in human terms too long, but who said the dynamic timescales of a house price displacement should move in human timescales?

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Currency devaluation.

£10 becomes £1

Rob the prudent and give to the reckless. :(

Not that it'd help much; too many of the debts and obligations are index linked one way or another and if they tried it we'd quickly end up paying 15%+ on our mortgages.

Which brings you back to the starting point - houses are just too damned expensive and there's nobody left with the money to buy them.

Edited by Goat

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The only thing that really worries me is the dreaded word (for me anyway) Innovation. What's next - a structural change in mortgage products, mortgage housing benefit, a feudal landlord startup grant? I'm not joking....

+1

I don't think this will happen to a significant degree, but of course it may...

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  • 285 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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