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Debate House Prices
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Myth-Busting. Proving Bears Wrong, again.
Comments
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Germany bounced back post WW2.
http://www.econlib.org/library/Enc/GermanEconomicMiracle.html
Apparently need to: end inflation, remove price controls, and cut high marginal tax ratesFavourite hobbies: Watersports. Relaxing in Coffee Shop. Investing in stocks.
Personality type: Compassionate Male Armadillo. Sockies: None.0 -
Oh dear - we appear to be having a bit of a love fest.
We had better agree to differ about the outlook for household formation and demand as I don't think this can be proven in either direction over short periods.
I don't think the Japanese debt situation is a useful model - yes it is an example but I think the consequences of moving to their household savings ratio overnight would be fairly traumatic for the economy?
Interesting thoughts about segmenting the population in to those who will buy and those who never will - makes sense but I am not sure whether I am happy to make the leap that home-buyers/owners will be in a group who are less impacted by the recession.
HIPS I will definitely agree with you as a possible driver - would be interesting to see something empirical on this.
Negative equity - thinking out loud this will mostly effect hose who bought within the last 3/4 years (I know MEWing etc but predominantly last 3/4 years) - not sure what proportion fo these people would likely be looking to move now - I would expect to keep a house for 7+ years given the transaction costs but I'm not sure what the actual figures are so it may be that right now it is not a big deal as these people would not be trying to move in large numbers right now anyway. Thinking further aloud could their be some sort of natural 'transactions' cycle linking average period between moves with economic cycles tending to synchronise these cycles a bit like the moon and women?I think....0 -
Does he still have a nose ?
Yes, but his septum is more deviated than a compulsive manic depressive bear's.
How's your "cold" doing this week?;)“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Oh dear - we appear to be having a bit of a love fest.
Indeed. God forbid there is a sudden outbreak of sanity on this board. We'll never live it down.:pWe had better agree to differ about the outlook for household formation and demand as I don't think this can be proven in either direction over short periods.
In the short term, no, you're right it's difficult to tell. However even last year, at the height of the recession, net migration was 70,000 people. Given how much worse Europes economy is than ours ATM, I can't see how this will fall any further.I don't think the Japanese debt situation is a useful model - yes it is an example but I think the consequences of moving to their household savings ratio overnight would be fairly traumatic for the economy?
Yes but my point is that culturally, we cannot move to their savings ratio. Not overnight, and not ever. We are just not culturally predisposed to it. The current bounce in the ratio is remarkable, but temporary. And the uptick in consumer spending is one of the things that will help us out of recession, whereas the japanese never did.....Interesting thoughts about segmenting the population in to those who will buy and those who never will - makes sense but I am not sure whether I am happy to make the leap that home-buyers/owners will be in a group who are less impacted by the recession.
The facts are clear on that one, it is the young and lower paid blue collar (who own the least houses by segment) who are worst impacted by unemployment this recession, just like in all previous recessions. It was an interesting hypothesis that white collar workers would be worst off this time, but it was false.HIPS I will definitely agree with you as a possible driver - would be interesting to see something empirical on this.
Agreed.Negative equity - thinking out loud this will mostly effect hose who bought within the last 3/4 years (I know MEWing etc but predominantly last 3/4 years) - not sure what proportion fo these people would likely be looking to move now - I would expect to keep a house for 7+ years given the transaction costs but I'm not sure what the actual figures are so it may be that right now it is not a big deal as these people would not be trying to move in large numbers right now anyway. Thinking further aloud could their be some sort of natural 'transactions' cycle linking average period between moves with economic cycles tending to synchronise these cycles a bit like the moon and women?
Possibly.
And the average is still once every 15 years. Although this may now decline.
I find the "velocity" argument to be fascinating, as on the one hand it points to decreasing prices, on the ohter hand it poinbts to decreased supply maintaining prices.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Ah, but you're wrong.
Higher house prices do not translate into higher debt for those that already locked in a lower price that they paid on a house.
Buyers lock in a price. Higher future prices are a gain without additional debt.
And for 15 years of every 20, prices rise faster than most people can save.
And you're yet to answer this one......“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Possibly. But if so then you are an unusual case.
For most people, ANY reasonable amount of HPI ensures that prices rise faster than they can save.
Thats why the bear argument of "oh, but my rent is cheaper than a mortgage, so I'll just save the difference and buy in cash" is another myth.
Prices rise faster than most people can save, for at least 15 years out of 20 in every cycle.
Rents have never been so low in relation to house prices as this.........
Its a myth because its never been seen before. FACT.
If it continues then it does become a FACT.0 -
You are a silly boy.
Did you just cut and paste that out of an old inside track brochure?
Own up.
Where does it come from?
Google away.
All my own work.:D
None of those boom/crash rampers have the intellectual integrity to argue such a case.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Thrugelmir wrote: »Rents have never been so low in relation to house prices as this.........
Its a myth because its never been seen before. FACT.
If it continues then it does become a FACT.
Never?
Really?
Can you prove this? Or is it just another assumption based on the last few decades, and even then probably incorrect.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Never?
Really?
Can you prove this? Or is it just another assumption based on the last few decades, and even then probably incorrect.
If you've a business head and understand finance you'd know the answer to that one. Without asking me.0 -
HAMISH_MCTAVISH wrote: »Google away.
All my own work.:D
None of those boom/crash rampers have the intellectual integrity to argue such a case.
But you fail to explain to us mere mortals how its going to be financed.0
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