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When I first considered myself a bear on property (before i joined hpc) it was some time before I could see definate signs of the market turning.


But being a bear before the market actually turns does not necessarily mean you were wrong (so long as we are not talking about years difference).

When talking about bear and bull status we must be talking about it in the context of a trading market, rather than say in the context of buying an asset for another purpose (e.g. to live in).


Therefore the point at which you become "bear" is at the point when you believe there is no gain to be made in buying the asset and selling on at a greater price (to the greater fool?) and/or the point at which you say the risk of a fall is greater than you are prepared to accept for the potential gain.


There are two factors about the housing market which justify a high "bear lead time" on this occasion.


Firstly it is a fact of buying and selling houses that both transactions can take a long time, even after bringing the two parties together to complete the process (2 months average?). This locks you in if you need to sell out when the market shows the first signs of falling. So if you want to "flip" a property you better hope nothing happens in the good few months you will need to buy and sell it.

Secondly all the fundamentals for a decline in house prices have been in place for some years, massive credit expansion, low wage inflation etc.... which have made houses a very high risk investment, the fact that the crash hasn't occoured yet dosnt mean the risk wasnt there. Just try asking your insurance company for your premium back at the end of year when you didnt claim! People who have bought in the last 6 months are about to find out how big the risk was but the fact is it could have happened any time in the last few years.


One final thing, you are not a Bull unless you are buying. Belief that the market will rise does not make you a Bull in the same way as wanting a house is not the same thing as demand.


Having access to the means to buy a house and not doing so does make me a bear.



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