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Bull/bear Calculator

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On another thread Gavin talked about whether people in a given position were long, neutral or short with respect to housing.

I felt his analysis didn't go deep enough, and I'm now wondering if there is some overall formula you could apply to model how long or short you are with respect to housing. Presumably it would also be possible to apply the formula to population aggregates.

Now, presumably Total Assets, Total Liabilities, Housing Assets and Housing Liabilities would have to figure in the formula somewhere, but what other factors? Income? Repayments vis-vis Rent?

Suggestions anyone? I have given some example numbers my (admittedly subjective :rolleyes: ) Bull/Bear rankings, so I'll test any calculation formula against my sample set. If nothing else I'll set up a straw man for you to shoot down in flames :lol::lol: .

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Basically look at the amount of housing you needs ie your final house you are planning on buying.

Then if you own this, then you are neutral.

If your house is 70% of the value of the final home, you are 30% short.

If you do not own any home you are 100% or one house short.

Then basically, you can see how much any movement in the housing market affects you.

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kingofnowhere is on the right track here, but I want to get a number rather than a percentage.

So here goes, ajh's first attempt.

Add up all your gross assets, including pension assets (which can be hard if the major 'asset' is the right to a pension). Separate into housing assets (ha) and non-housing assets (nha).

So my formula is ha - (nha * x), and initially I'll try x=1/2 so we have ha - (nha / 2). If the number is positive, you're long; if it's negative, you're short.

Putting it another way, I am saying the average household would have about twice as many assets outside housing as in housing.

I'll go and look at some national statistics to find out if that comes close at the aggregate level.

By that measure I am personally about 250,000 pounds short, that's gotta make me a bear :lol::lol: .

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  • 301 Brexit, House prices and Summer 2020

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