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Paul Hodges On The 'great Unwinding' -- Merged

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Talks sense....half the population doesn't want it, the other half can't afford it, so therefore learn to live a better life without it.....steep learning curve for the best.....house prices are already falling......cash is king. ;)

Edited by winkie

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Bull market in housing bear predictions.

The market will decide and so far it's deciding to tell the bears to growl away but go hungry

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Don't know who he is, but he talks sense, and has an aura of honesty and intelligence, with a soft voice of trust.

If we get a deflationary bust (hopefully not slow) and HPC (that he regrets ever reached so high, and is not depressed by correction as it's necessary for good times... and cash is going to be a good investment), just watch out for the hpc anti-capitalists who were claiming buyers were victims/missold in 2008-10, leading to this. Young renting professionals joining HPC today, the anti-capitalists are part of the problem why you're still so badly priced out.

Telegraph

22 Jan 2015

...The number of young professionals relying on their parents’ finances to buy their first property has rocketed. Two thirds of first time buyers currently say they cannot afford to buy a house without turning to the “bank of mum and dad”, double the figure of five years ago, according to the National Housing Federation.

Meanwhile house prices have increased by 26 per cent since early 2009, and 68 per cent in London

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The man was right.....no good borrowing free capital that realistically can never be repaid in a lifetime of living......who wants to take on growing amounts of printed debt, tied (excuse the pun) around your neck when few can ever hope to repay it and still growing few can borrow it?....suck it and see. ;)

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Don't know who he is, but he talks sense, and has an aura of honesty and intelligence, with a soft voice of trust.

If we get a deflationary bust (hopefully not slow) and HPC (that he regrets ever reached so high, and is not depressed by correction as it's necessary for good times... and cash is going to be a good investment), just watch out for the hpc anti-capitalists who were claiming buyers were victims/missold in 2008-10, leading to this. Young renting professionals joining HPC today, the anti-capitalists are part of the problem why you're still so badly priced out.

Telegraph

22 Jan 2015

...The number of young professionals relying on their parents’ finances to buy their first property has rocketed. Two thirds of first time buyers currently say they cannot afford to buy a house without turning to the “bank of mum and dad”, double the figure of five years ago, according to the National Housing Federation.

Meanwhile house prices have increased by 26 per cent since early 2009, and 68 per cent in London

A bit self selecting but most of my FB friends from my hometown are renting.

That's an age range from 25 -> 45.

Home ownership is much more heavily concentrated in the 45+.

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Yum, yum, tasty bear food!

But, I don't buy deflation being as dire as he thinks. People may postpone that sofa purchase but they will still buy food, clothing, petrol, electronics, etc.

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Bull market in housing bear predictions.

The market will decide and so far it's deciding to tell the bears to growl away but go hungry

Bull market in asking prices bear market in sold volumes in most of the country, time will tell, getting that 2008 feeling again

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Yum, yum, tasty bear food!

But, I don't buy deflation being as dire as he thinks. People may postpone that sofa purchase but they will still buy food, clothing, petrol, electronics, etc.

Sure they will if they can, but if push comes to shove they can for a fairly reasonable time...... grow food, borrow a garden, plough the lawn, share the produce, buy for cheaper others waste at eat before date.......buy second-hand, stay at home, buy on-line, skip a few upgrades, purchase for less others cast offs.....share stuff such as tools and equipment, even heat and water....the stuff that is just as good for ten times less......just saying......only recent excesses mean many more have the power and capacity to do that for now. ;)

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great article

seems all pretty simple to me, the lowest levels of the pyramid just cant gain access and the few who can simplify cant then sell on (for profit) and upsize when maxed out. Especially with no wage inflation and much lower demand from the boomers.

the real question is whats next. seems basically two choices either an almighty HPC or alternatively hyperinflation.

the author seems to think that logic will prevail and we can raise retirement ages, and central bankers wont risk actually causing real hyperinflation (helicopter drops?), but i honestly dont think house prices falling, and higher retirement ages will ever be allowed. simply a no go area. Its not realistic. If that happens us on HPC 'win' anyway.

so what does that leave us with? more extreme central bank abuse, more and more 'stimulus' which will lead to helicopter drops and very high inflation. The average person in the street wont understand and riot due to it, they will see wages rises and actually spend more (not realising they are getting poorer). The people in the know (like us on HPC) will see this happening way before it does happen and find ourselves asset rich against houses (which will probably stay stagnant during the currency inflation so back to more normal nominal real levels)



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Well yes, he does see deflation starting in around March (I agree)

Look out for strange expressions on faces of BBC reporters....`this can`t be happening`!

Its a whole other world.

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Well yes, he does see deflation starting in around March (I agree)

Dream on, in March the ECB QE scheme starts...

As long as the money printing press is in the hands of private banksters there will be only inflation as that suits them best.

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He doesnt seem to see how the government will encourage inflation.

He says you cant force people to spend who don't want to, specially if they think they will get it cheaper next year.

Oh yes they can, and they will. What does he think Scrappage was? Or the solar subsidies? or help to buy for that matter?

They can goad people into spending money by providing a 'temporary' discount on whatever area of the economy they think needs more demand. He talks about sofas...just wait till the totalitarian tories start demonizing some kind of fabric, just so people go and buy new sofas with a different fabric.

And people are daft. They buy every iphone update, despite the older ones working just fine, because people want new stuff.

It isnt about logic, its about people being manipulated by government.

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Dream on, in March the ECB QE scheme starts...

As long as the money printing press is in the hands of private banksters there will be only inflation as that suits them best.

But we're still on the cusp of deflation despite all the QE we've so far seen?

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It was vacuum cleaners recently!

We've had years of disguised inflation and devalued currencies, yet a bit of extra money in our pockets is a no-no.

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Does it really matter if we have GDP? Let’s face it, before 1929, which isn’t very long ago, nobody measured GDP, so for thousands of years people were pretty happy and getting by without thinking about…

Merryn: Without knowing what growth was, yes.

Paul Hodges: Yes, and so they were having kids, and going out, and doing all these things, and so I don’t see why we should worry about GDP at all.

Good point.

GDP has become like the Easter Island statues.

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I think UK house prices are already falling. I just wish they had never got to these levels. I think you're going to see.. the top end prices have begun to fall 15-20%. We've seen price falls in the early 90s fall 50%; I think we're at the start if that kind of decline. I'm not depressed about this; it's something we have to go through to get to reality. Cash is actually going to be a very good investment, because under deflation, the value of cash goes up every day. It's already happening, we're going through deflation shock.

The cost of a house is relative to earnings. The thing that Minsky highlighted was that you have to be able to repay the capital. My sons have been priced out of the market. It's all well and good to say they could afford the interest, they could, but they can't afford the capital repayment. So for their good, for the good of younger generations, I'm afraid us old generation have to say, "We did pretty well out of this, we have to hand something back."

Transcribed from towards the end of the interview. Crash, forcing some reality on older family home hoggers who have looked to their home as being financial wealth they expected to fall back on (live on / or who just wisely want to cash out with gains in falling market to put to good use), to come to market, allowing good money in, fresh mortgage lending in volume for patient-saver upsizers.

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But we're still on the cusp of deflation despite all the QE we've so far seen?

Is it because the new money has been stored in static assets and/or new cheaper debt but in greater quantities has been created and distributed from it.....how will that mean people are better off?......paying down both the old and greater quantities of the new stuff.

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Transcribed from towards the end of the interview. Crash, forcing some reality on older family home hoggers who have looked to their home as being financial wealth they expected to fall back on (live on / or who just wisely want to cash out with gains in falling market to put to good use), to come to market, allowing good money in, fresh mortgage lending in volume for patient-saver upsizers.

And another 'Minsky moment' for the market-rigging vermin at the Fed and the BoE.

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Dream on, in March the ECB QE scheme starts...

As long as the money printing press is in the hands of private banksters there will be only inflation as that suits them best.

Well that's what the indebted will be hoping for. You can take an over 55 to water but you can't make him drink.

Nope people will hang onto their Wonga for the reasons given...don't know how long you will live, got everything, bored with stuff anyway.

Deflation bring it on.

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the real question is whats next. seems basically two choices either an almighty HPC or alternatively hyperinflation.

+1

HPC is the least worst way for the country, but worst for the VIs.

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