Bayareabear Returns

[BayAreaBear]

Here is an update of my Houses priced in Gold research.

Long time visitors to this forum will recall that I have long predicted that there will be a house price crash but that it wont necessarily be in nominal terms. Perhaps just in gold terms.

I will let the chart speak for itself. The data are monthly so they only include the gold price up to April.

Now it may be disappointing to those trusting their political masters that the crash is about half way done already without any nominal reduction at all in the UK as a whole.

BUT there is still hope.

The world is divided into bubble areas and non-bubble areas. The UK as a whole is a "bubble" area. The US as a whole is not. But there are areas such as Southern California and the Bay Area that are bubbles. The following chart shows that the bubble areas are now valued far above the discounted present value of their future rental stream (based on the IR of the FED).

So given that the UK is a bubble areas there is still scope for some nominal decline.

For the bubble to deflate entirely on the basis of the gold price implies a gold price around $1700.

Edited May 21, 2006 by BayAreaBear

[apom]

Every boom market crashes.

Every one has since the dawn of time.

this is a defacto .. well a fact.

For your House Market not to fail it would have to be the first time a market has not done so

ever.

so good luck with that one.

[mongoose]

Every boom market crashes.

Every one has since the dawn of time.

this is a defacto .. well a fact.

For your House Market not to fail it would have to be the first time a market has not done so

ever.

so good luck with that one.

Yet that very much depends on what you class as money? If fiat currencies are devaluing then this is a possible scenario.

Gold was money at the 'dawn of time' - pounds and dollars were not...

[apom]

Yet that very much depends on what you class as money? If fiat currencies are devaluing then this is a possible scenario.

Gold was money at the 'dawn of time' - pounds and dollars were not...

Whatever the true value of whatever wealth is measured in no one really knows..

I have looked into housing myself...

I know one thing.

Everything that is speculated in varies. it fluctuates, gold does.... Just the same as everything else.

gold is at a high, so it can be said that gold always goes up.... same can be said about housing.

but there are peals and troughs.. all you have to be able to do is afford when you buy, no matter where you are in the cycle.

"With housing, if you buy with borrowed money, you need the house not to be worth less then you owe against it... If it is you cannot sell

.... for you are selling it on behalf of yourself (your equity) and the bank (the amount you still owe)...

If the amount you still owe does not equal the selling price then you have to find the missing sum (the difference) yourself before you sell.

If the amount you owe is less then the amount you sell for then the equity is yours.

If the amount you still owe is less then your property is valued at by your mortgage lenders they may allow you to borrow more, sometimes up to the full new "Value" of the house.

This new amount borrowed is now how much you have to pay the bank befire you own the property, it has made the house less yours then it was before.

This is called "Equity Release" some consider it to be "releasing profit from your home"

It is not, you cannot realise profit without sale. what you are doing is selling some of the part of your home that you own back to the bank and agreing to buy it back with interest"

You have only increased your debt

Edited May 21, 2006 by apom

[BayAreaBear]

so good luck with that one.

Thanks. I must say its worked extremely well up to now.

BAB

[Warwickshire Lad]

For the bubble to deflate entirely on the basis of the gold price implies a gold price around $1700.

This is interesting, but the fact is the vast majority of people keep their money in ordinary currency and not gold.

Once interest rates rise significantly, there is going to have to be some equivalent significant nominal decline.

If there isn't any (or there isn't much) then I and most other FTBs are not going to feel satisfied with that.

Edited May 22, 2006 by Warwickshire Lad

[BayAreaBear]

Once interest rates rise significantly, there is going to have to be some equivalent significant nominal decline.

If there isn't any (or there isn't much) then I and most other FTBs are not going to feel satisfied with that.

There does not "have" to be anything.

Its tragic and immoral but the way that modern economies work (via fiat currency and fractional reserve banking) is that the government of the day get to create a "boom" by stealing peoples savings. Of course they cannot just confiscate them. Instead they just inflate them away.

Sorry to be the one that has to break it to you but your savings have been stolen. They are not coming back.

If you had saved in gold instead this would not have happened to you. Thats why the government and city bankers try to make sure you dont understand gold. So long as you dont they can get way with their thieving.

And one other thing.

Thank heavens above for the latest "correction" in gold. Just in nice time for me to take my latest spectacular bonus of confetti money down to the local coin shop. Yeah!!!

BAB

[Guest]

Sorry to be the one that has to break it to you but your savings have been stolen. They are not coming back.

BAB: Not so fast. You're only half-right because, if what you say is true and a theft has taken place, then something else has also been stolen at the same time: People's SALARIES.

Also, if cars, holidays, food, shit-in-the-shops had all doubled in price along with houses, AND salaries had doubled as well, then yes you would be 100% right: Savings stolen too.

But this isn't what has happened. Cars, holidays, etc... are the same price. Salaries are the same price. Only house prices have doubled.

In fact, this is why a good 50% or so of the carnage in this house price crash will be the inability of people in the middle to larger homes to sell. They will have to price down. This doesn't mean they take a loss from their purchase price, but it does mean they never achieve the +100% appreciation that the newspaper told them they had got, they might get +60% or +40%, say.

This is the "silent crash".

The other 50% is just debt / unemployment / recession / usual boring stuff.