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dopester

Darth_Marty wrote: »

Supply and demand remember.

What about the ability to pay?

All that talk about greed and repeating mistakes. Quite a lot of people subscribe to such theories in markets. I hold a the opposite view.

There may be a blind spot which encourages us to repeat mistakes, but only to allow reorganisation and renewal and advancement.

Nature doesn't want us to repeat mistakes, it wants us to advance. Every now and then it allows for a big buildup of mistakes, which leads to a big shakeout - bringing down old power regimes, businesses that dominated, wealthy controlling interests who assumed the boom was permanent...

..and allows for younger generations (not all and not immediately, as there can be a big step back and dark difficult times for many in a long transition) to get a toe hold in for building new wealth out of the destruction and forcing new ways of doing things, creates a new paradigm,... for a greater push of new advancement.

Long wave crises in the economy recurring every fifty to sixty years are often associated with human life span. It is commonly argued that individuals who experienced the previous crisis must die out before their descendants can repeat their mistakes.

There is logic in this, but it is possible that the causality is reversed. Humans may be limited to an adult life span of fifty to sixty years because crises recur with that rough frequency.

Such a limit on life span may optimise the flexibility of response by insuring that the same generation is seldom in command during two successive discontinuations.

The fact that death requires that all human understanding to be relearned anew is an advantage as well as a disadvantage.

A more encompassing perspective on institutional rigidity was spelled out by Mancur Olson. He argued in The Rise and Decline of Nations that resistance to change caused by the predominance of special interest groups in stable societies is a major contributing factor to economic malfunction. Presumably the level of institutional rigidity would be even greater if those who held power could continue at their posts for centuries.

The more interesting question, however, is why we do not have a live 969 years, like Methuselah. After all, in biological terms, there is substantial investment in the life of each human. Why does the species prosper by cutting that life short?

The explanation must point to some survival advantage to compensate for the loss of acquired immunities, skills, and survival traits among individuals who reach maturity.

Here, too, the answer must be found in the prosperity of the environment to undergo nonlinear change. This increase the likelihood of some crisis that can be resolved only through heroic or risky behaviour - such as taking a dangerous hunting trip or confronting an enemy in combat. In this respect, a very long life expectancy could be a detriment to any group for whom it was a common characteristic because it would encourage timidity.

An individual with 900 years to live has 900 years to lose. An individual with 900 months may not be a daredevil, but he is more likely to be. By and large, life is cheapened as life expectancy falls. If individuals lived for the better part of a 1000 years, a single life would be so dear that risky or heroic behaviours, such as fighting for the group - or even crossing the street or giving childbirth - would diminish.

Longer life slows the turnover of generations, thus diminishing the adjustment of the gene pool to new conditions.

Can you imagine what society might look like now if there had been no boom and bust but just a constant stability with no radical and dramatic changes forced by boom and bust?

The political structures and the economy might be very different. We might be stuck in some very different paradigm entirely. We need boom and bust for advancement and for reorganisation of how societies go about their affairs, often leading to the birth of new paradigms how society is structured.

Darth_Marty

Good post.

Id be quite pleased to get the credit based society behind us as I wouldnt want that for my kids.

carolt

Darth_Marty wrote: »

I think a lot of people forget that in 7-10 years the people who got burned in this crash will be superceded by the next generation of buyers and as such things will be pretty much the same as now. Its all cyclical and in my opinion House prices will always (for the foreseeable future anyway) rise, and quite sharply too, peoples greed always shows through and with population figures going through the roof we will always have a need for housing.

Supply and demand remember.

Oh come on - even the usual vested interests - banks, EA's etc - forecast prices falling 10-15% this year - so in reality, probably more.

Are you seriously suggesting house prices are suddenly going to start going up just as we enter recession?

Darth_Marty

No im not, if you cared to read the whole thread what im suggesting is that by 2020 prices will be way up, im certainly not saying prices will go through the roof this year even though i fully expect things to level out by the end of 2009.

whathavewedone

To say that house prices won't rise again because it's different this time is as daft as saying that house prices wouldn't ever go down again/level off during the boom.

History shows us that property prices go in cycles and that's all D M was saying.

NoDebtForMe_2

repoamuse wrote: »

People have lost far to much trust... Houses will sell, and people will buy. The difference is, people wont be buying, selling or moving out of choice.

I am selling and buying out of choice. I am sure I am not alone either.:rolleyes:

rizla01

whathavewedone wrote: »

To say that house prices won't rise again because it's different this time is as daft as saying that house prices wouldn't ever go down again/level off during the boom.

History shows us that property prices go in cycles and that's all D M was saying.

Ah. But as so well pointed out in Dopesters' thread that may NOT be the case again.

The cyclical boom & bust doesn't always HAVE to happen. Perhaps someything else will come along, for people to speculate on/in and the investors will lead the way for others to follow - Or even investing will no longer happen as rewards may no longer be available.

Personally, I expect that the population has a lot more busts to suffer before they learn this lesson though.

I think somewhere, someone will come up with a suitable alternative product to enable house buying, that will force banks to reconsider their position on lending.

Really2

rizla01 wrote: »

The cyclical boom & bust doesn't always HAVE to happen. Perhaps someything else will come along, for people to speculate on/in and the investors will lead the way for others to follow - Or even investing will no longer happen as rewards may no longer be available.

Personally, I expect that the population has a lot more busts to suffer before they learn this lesson though.

.

The further prices go below the long term average the more the future boom is being fulled.

The only way an new cycle was not going to be reapeted was a bust not to happen just below inflation growth for years (for houses)

But the bubble burst. Once somthing go below its "long term value" it is already certain to boom again in the future.

Lets put it this way if you could store barrels of oil at the moment would you (to make a profit)?

whathavewedone

But that assumes that no one will want to buy in the future. Most people who buy homes do so to live in them. Assuming people decide to rent in future - who's going to buy those homes to rent them out then? Will they not want to make a profit out of that?

Sorry but if the theory is that house prices can only ever go down/stagnate ultimatey houses will end up cheaper than food. That's as nonsensical as houses only ever going up and ending up costing billions of pounds in a hundred years.

Conrad

Dopester I enjoyed your informative post, cheers.

As for which categories of customer I am seeing more of, it's buyers as opposed to remortgagors, but to re - itorate, I may be seeing more due to the contraction in the broker & lending community.

High income multiples have not returned, although 5 x income is still available with the likes of C & G, which some will argue is irresponsible.

Will the market boom again? It will, within 5 years at most. The reason is simple; People trust the investment alternatives even less. Stock markets and packaged investments in the eyes of many are to be avoided at all costs. I routinely here of Accountants telling thier clients that 'pensions are a waste of time'. Such sentiment has become deeply embedded.

Furthermore, shelter is one of lifes most basic requirements. As such over any medium to long term span, the cost is highly likely to rise.

People will always attatch significant value to shelter, despite the odd collapse in prices.
Darwinian theory informs us all species make territorial security a high priority. A stable secure self governed dwelling enviroment, is more conducive to Genetic and Mmemetic transfer.