What Would It Take To Admit You Are Wrong?

[Dorkins]

Why would I need to admit I was wrong? Houses are too expensive. I'll buy one if/when they aren't. I don't really care that much about interest rates, exchange rates, deficits, GDP, QE etc. It's like trying to guess what the people who guess for a living what the other people who also guess for a living are guessing are guessing.

Edited July 30, 2013 by Dorkins

[winkie]

Thanks for asking, interest rates won't rise, not while governments are rigging the bond markets.

In terms of the business cycle we are 5 years on from the last trough, the cycle usually fluctuates over a 7-10 years, we are therefore at the top of such a cycle and in terms of the economic numbers it looks very different to the "booms" we've experienced in the past.

I'm preparing for the next down turn in the business cycle that could begin as early as 2015. Governments will be forced at this point to make a choice between a massive default or yet more money printing. Given the precedent over the last 5 years I'm erring on the side of money printing.

If a deficit in revenue of greater than 20-30% is supported by money printing over several years, hyperinflation will be the undoubted result, and given a further crisis in the midst of anaemic growth, huge debts and ever greater financial chicanery (fraud) we could well see the levels of printing required to do this (the UK government has run the biggest QE programme so far, printing about a 12% deficit of revenue, enough to re-inflate so far but no more).

What they can do and what they would like to do are two completely different things.......they can only do what they are able to do within a narrow parameter .......they are only a small peg trying to seal up a large leaking hole, they can only go with flow of others greater than them not against it.

[Huggy]

When I'm on my deathbed and I realise that what I did was actually wrong. Until then, I'm pretty sure at one point I'll be right (about not buying).

Or to put it another way, I am not even halfway into the game of my life. Several peers think they have more points than me in this game, and are quick to remind me of this. However, there's always a chance we're playing golf

Apologies for the analogy overload

[Guest_GradualCringe_*]

What they can do and what they would like to do are two completely different things.......they can only do what they are able to do within a narrow parameter .......they are only a small peg trying to seal up a large leaking hole, they can only go with flow of others greater than them not against it.

Exactly, the parameters are very narrow, the government can hold down interest rates, but only at the expense of the currency.

[Bloo Loo]

Exactly, the parameters are very narrow, the government can hold down interest rates, but only at the expense of the currency.

general borrowing rates are all up i gather.

the World isnt just BASE RATES you know.

[rantnrave]

The moment I admit I was wrong and the moment I run out of time to change my current course are two different events. Actions and words being different things etc

There are so many downward pressures that the UK housing market will face in the coming years, including the numbers of downsizing Boomers, the number of outstanding IO loans with no capital repayment vehicle in place, the debt that future graduates will carry, the continuing decline in real incomes... None of that of course includes any of the props that are currently in place to support prices coming to an end (or more likely, being forced to end due to an 'unforeseen' external crisis). So, I remain a bear.

As others have said, if interest rates return to 5%, the banks come off life-support, the number of outstanding mortgages reduces and given all of the above, this doesn't bring the UK's average house price below their currently salary multiplies then I shall munch away on my hat.

I'm in an unusual situation - approaching the limit of remaining working years I will be allowed to take a standard-length mortgage out for, but having 75% of the funds I need in cash to buy the type of place I'm after outright. An HPC in a few years' time would therefore be of benefit as much as one now. However, we've got a little one and another on the way. Presently we don't have a garden and I really feel like I am failing to provide something for my kids that I took for granted when I grew up. Yes, there are parks nearby, but it's not the same as opening the back door and letting them run around safely in their own private space.

The thought of a MWE'd up Boomer getting a free-ride on my hard-earned savings and a banker clinking wine glasses together on a cruise at my expense keeps me from taking out the mortgage I could currently afford.

[rantnrave]

general borrowing rates are all up i gather.

the World isnt just BASE RATES you know.

Last two weeks, rates on easy access saving accounts have increased by 50 base points

[The Knimbies who say No]

Why would I need to admit I was wrong? Houses are too expensive. I'll buy one if/when they aren't. I don't really care that much about interest rates, exchange rates, deficits, GDP, QE etc. It's like trying to guess what the people who guess for a living what the other people who also guess for a living are guessing are guessing.

Yes, it's easy to lose sight of the overall target- housing priced in line with historic averages. How or why it gets there is beside the point.

[Lepista]

Asking 'when' is a bit like asking a blindfolded man who has been pushed out of a plane when he is going to hit the ground.

[bendy]

The moment I admit I was wrong and the moment I run out of time to change my current course are two different events. Actions and words being different things etc

There are so many downward pressures that the UK housing market will face in the coming years, including the numbers of downsizing Boomers, the number of outstanding IO loans with no capital repayment vehicle in place, the debt that future graduates will carry, the continuing decline in real incomes... None of that of course includes any of the props that are currently in place to support prices coming to an end (or more likely, being forced to end due to an 'unforeseen' external crisis). So, I remain a bear.

As others have said, if interest rates return to 5%, the banks come off life-support, the number of outstanding mortgages reduces and given all of the above, this doesn't bring the UK's average house price below their currently salary multiplies then I shall munch away on my hat.

I'm in an unusual situation - approaching the limit of remaining working years I will be allowed to take a standard-length mortgage out for, but having 75% of the funds I need in cash to buy the type of place I'm after outright. An HPC in a few years' time would therefore be of benefit as much as one now. However, we've got a little one and another on the way. Presently we don't have a garden and I really feel like I am failing to provide something for my kids that I took for granted when I grew up. Yes, there are parks nearby, but it's not the same as opening the back door and letting them run around safely in their own private space.

The thought of a MWE'd up Boomer getting a free-ride on my hard-earned savings and a banker clinking wine glasses together on a cruise at my expense keeps me from taking out the mortgage I could currently afford.

Take it – not doing so isn’t going to stop the clinking. In fact, as you point out, the only group that’s getting deprived is your kids.

[renting til I die]

Without wanting to turn this into a predictions thread, I was hoping that people might set out their stall a bit more fully. Such as this is the way I see things, this is what should happen, if XYZ occurs I am clearly wrong.

I don't want it to be used as taunts in the future but I feel that the same old tropes come out too much on this forum. If you are not constructing a model in your head and making predictions based on it, you are simply creating a religion.

Scepticius got a lot of flack on the other thread, but he has a coherent view of what is happening and his predictions have broadly come to pass. Red Knight is another poster who is routinely correct, yet often maligned.

I think many on here simply don't want to face up to being wrong. I don't like the transfer of wealth, it doesn't benefit me, but it is what it is.

I also trade part-time (trade shares and spread bet) and understand exactly how carefully one has to weight risk when placing a trade, cutting your loses is the probably most important part of learning to trade. But buying a house for a home is not a trade (although many people seem to think it is!). Even if I say now that I am wrong and houses in the UK are not currently overpriced, how do I put that trade on? By buying a house? Locking myself into a leveraged bet with 25 years of debt? And if after some short term price rises, house prices start to head down again and I decide I was wrong buying the house, how do I reverse that trade? Should I hedge using some housing index? If interest rates do go up within 10 years or so, without my wages keeping pace, and I find I lose my home to the bank? Is this a trade I want to risk my life savings on?

I ask myself almost every day if I should buy a home to live in? If I might get a better place if I wait? Whether my saving and investments will grow faster than house prices? If my landlord will ask me to pay more rent? Whether the costs of buying/owning a home would weight me down more than renting?

Fundamentally I think the costs of housing in the UK are too high. Higher than many other countries which also complain that the costs are too high! Any money that goes into housing whether for rent or mortgages has to come from the productive economy. At some point something will give. If you were looking at a share of a company which seemed expensive to the fundamentals would you buy it? No, you look for companies that look cheap compared to their fundamentals!

Although I think that housing cost are fundamentally too high it is totally possible that house prices will not come down but we all find that are earning £100k a year in a few years time (and all my life saving are only a years wage! Ha).

Sorry, that still didn't really answer the question of what XYZ could be! I basically said that the fundamentals don't sit right and I will be right someday (omg, I'm a broken clock, lol). Thank god I don't trade house. Oh, did I miss the trend!

If wage inflation was to take off in the UK this could keep the price of houses high but lower their value changing the fundamentals without anyone seeing a crash and feeling any poorer.

[renting til I die]

I was wrong about house prices crashing and some bargains to be had for cash (or low mortgage) - but I still can't believe the astonishing lengths the PTB are doing/planning in order to keep this crock alive and pulling in new entrants. Their desperation tells me all I need to know, I remember arguing with friends when these 'gifting schemes' came around and this housing market feels the same and smells the same. Those that are already committed to the Ponzi will do everything they can to get others to come aboard, including death threats.

I agree, I have had many similar arguments.

In the meantime, I rent a great house with a 1 acre plot near a good school for peanuts. I can wait this one out, no need to panic. The last HPC (in the nineties) was at the bottom for several years, there's never a need to rush.

Wish I had the same sort of deal! Where about is this place?

These days, I'm thinking that HPC might end up being the very least of our worries

+1

[cybernoid]

Wrong about what? Housing is unaffordable, I can see thats still true by visiting right move. Interest rates are at historic lows, that is unusual and a response to the crisis. By the way, there was a crisis that only reached the general populations minds when it all started to fall over in 2008. Were we all wrong to identify it 5+ years prior? Scheme after scheme is trotted out by the powers that be to try and keep it all afloat. So what were we wrong about? Is it all over now? I missed the announcement.

[65243]

There are a lot of people on here with their “when interest rates rise” who are starting to sound like some nut on the mountaintop talking about “when Jesus returns”.

A rare genuine LOL!

[Bloo Loo]

I agree, I have had many similar arguments.

Wish I had the same sort of deal! Where about is this place?

+1

I got mine by having a place cancel out on us about a week before we moved...I said to the agent find me a place...I told her to talk to people with high priced voided rentals...we had a choice of three by days end....mine was on for £1400 IIRC, we got it @£900 and thats what we are paying today 5 years on.

drive with parking for at least 10 cars, garage, washroom, shed, 4 very large bedrooms huge lounge, dining room 1KM walk to cut the 75 x 75 lawn, fields on the back, crap broadband

[zugzwang]

Without wanting to turn this into a predictions thread, I was hoping that people might set out their stall a bit more fully. Such as this is the way I see things, this is what should happen, if XYZ occurs I am clearly wrong.

I don't want it to be used as taunts in the future but I feel that the same old tropes come out too much on this forum. If you are not constructing a model in your head and making predictions based on it, you are simply creating a religion.

My enduring fear.

But trying to understand a single economy well enough to profit from it is a lifetime's work. Getting a handle on the entire world economy, which what we need, damn near impossible. Laudable aim, however, and I'd certainly be happy to contribute what I can.

Biggest mistake? Not being prepared for the central bank mafia to go all-in. I remember it being suggested as things began to fall apart in 2008 that Gordie might try running £80-90bn into the banks to hold up the housing market. It seemed like an inconcievably huge sum, how could he possibly get away with it? Yet here we are 5 years on and they've borrowed and spent 10x that amount with the possibility of much more to come.

I had few illusions about the Tories, though. Business as usual was what I expected, and business as usual is largely what we've had.

[okaycuckoo]

FaFa is probably the best poster on this site, because he's intelligent enough to admit his ignorance, listens, and shows how his views change.

Being pig ignorant, but lacking the merits, I wll state this:

S&P500 finds equilibrium around 1150 after hitting that mark in Dec 2013-March 2014.

Central London house prices fall 30% over next 2 years - would have been more, except £ finds stability at $1.30 and everyone wants to keep the crooks penned up in Blighty.

Rest of UK enjoys ever decreasing circles of HPD.

Gentle bankruptcy becomes a way of retirement.

Fewer births than deaths in a declining population, so Buddhism becomes the UK's second religion - after The Boris, who knows precisely how excess souls can be recycled through derivatives.

[Guest_GradualCringe_*]

general borrowing rates are all up i gather.

the World isnt just BASE RATES you know.

I agree, interest rates are the price of money.

The government can also influence the market in interest rates for GBP through their offerings on gilt yields, or by flooding the market with so many GBP currency tokens that GBP becomes so cheap as to be worthless.

[silver surfer]

In 2005 I str'd a South East property and got myself ready to benefit from a crash. I'd seen the 1989-95 crash first hand and thought the next one would be much, much bigger. In the 1989-95 crash the big nominal price falls were largely driven by "blighted" property, not the house where a fourth runway has just been announced, but the sort of second rate property you find in every price band that only sells during boom times. This time I expected the really desirable properties to be available to a cash buyer for 20-25% below 2005 prices.

Everyone I knew thought I was barmy, but when the events of 2007/8 happened I felt like the smartest guy in the room.

More fool me.

Last year I took early retirement and decided I'd had enough of renting, I wanted to hang a picture without first checking a lease. So I threw in the towel and bought. I still think residential property will be a terrible investment for the next few decades, so instead of buying the largest property I could afford I bought the smallest property that met my needs. I accept that having that choice puts me in a fortunate minority, but there we go.

I've two teenage children and in time I'll probably be buying properties for both of them, consequently I'm still hoping for big nominal falls in South East property prices. But I'm not holding my breath. I think average UK property will bump along at about £160k for the next ten or twenty years, low level inflation over a protracted period of time will do the hard work of a price correction. As a result home ownership will continue to decline, probably down to the 50% level that's common on the continent.

Tony Blair was right when he said "we're all middle class now", for a brief few years we really were all homeowners, university educated, and in white collar jobs. But that was a flash in the pan. Now we're returning to a crueller landscape of have's and have nots. So a substantial minority are going to rent for their entire lives, while the "have's" will increasingly use BTL's in place of a traditional pension.

Sure, the pendulum will eventually swing back. One day the sheer number of renters will create an irresistible political force to repeal the current landlord friendly legislation, which in turn will trigger material house price declines. But that day is at least twenty years away.

Let's face it, the general expectation of this forum has simply been wrong.

[Guest_GradualCringe_*]

Last two weeks, rates on easy access saving accounts have increased by 50 base points

That was only because Ben Bernanke happened to mention that he might slow down or begin to unwind QE, which panicked everyone into thinking that the free money tap might be turned off, and hence price in future rises in the price of money (i.e. interest rate rises).

The point being that, and like you I think it's completely unjust and discriminatory, markets will continue to be driven by central bankers and politicians until they lose control over peoples' belief in the currency as a medium of exchange, or the politicians acknowledge that what can't be paid, won't be paid (but I think they're too crazy to face that until of course nobody accepts the tokens of exchange that they control).

Edited July 30, 2013 by GradualCringe

[Bland Unsight]

Last two weeks, rates on easy access saving accounts have increased by 50 base points

This probably sounds a little daft but it is actually true that the Bank of England data series IUMTLMV (Monthly interest rate of UK monetary financial institutions (excl. Central Bank) sterling standard variable rate mortgage to households (in percent) not seasonally adjusted) continues to track upwards at about 20 basis points a year. I can't be bothered to re-graph it, but essentially the world's most pathetic trend continues...the June 2013 'print' was an eye watering 4.38%

In 10 short years SVRs will be back at 6.5%. Hold on to your hats!!!!

[19 year mortgage 8itch]

A massive cocked mother******er with a name like Bubba

[TheCountOfNowhere]

define wrong?

prices are still dropping outside London.

London will have its very own collapse this year. the ptb know in..i think this is why we are seeing the government insanity.

[Bruce Banner]

Rather a leading thread title.

To admit to being wrong you have to be wrong and with regard to staying out of the housing market for the past seven years I have been correct and have an extra £150K sitting in the bank to prove it.

[cock-eyed octopus]

Rather a leading thread title.

To admit to being wrong you have to be wrong and with regard to staying out of the housing market for the past seven years I have been correct and have an extra £150K sitting in the bank to prove it.

Or you could have bought a flat in Islington & had an extra £260k sitting in the bank after 4 years.

Edited July 30, 2013 by cock-eyed octopus