£1.2tn given to old from young

dopester

ukcarper wrote: »

But all the vast majority of babyboomers have done since 1997 has been to sit in their houses and pay down their mortgage.

I really hope that is the case. If it is so, like it is for my mother, many can take a 50%+ crash, with little impact. Of course I could encourage my mother to downsize, and have a packet in savings come the crash, but she loves where she lives and isn't bothered if her home falls 50%+ in value. Yes... they may mourn the loss of value, but it is all relative.. and in many instances they own outright.

If it is the case, then it might not be a system breaker. Therefore Labour should allow those who took on too much debt in order to buy, or trade up, to accept the flow of the market changes. Without mortgage assistance schemes, and repossession help.

Only by allowing good, sound money in, with no market supports, will things ever recover.

[Deleted User]

dopester wrote: »

Interesting post... but I question this bit. 'Value you can release at any point'. A real paradigm-changer can change all that. Just as it did for long term baby-boomers who owned RBS shares or Lloyds TSB shares. Rapid. Property is illiquid. You can't sell it as quickly as you can shares.

In the stockmarket things move very fast. You know why RBS shares fell so fast? Because some of those holding the shares, decided to sell them at ever lower prices.

If I own shares at 800p and another owner decides to accept 700p to cash out, that impacts on the value of my holding. If there is a rush of people selling, but still only a minority of shareholders, accepting ever lower prices, to 400p, 200p, 50p and lower still..... my shares don't maintain 800p value, just because I'm believe they should be worth 800p. You either sell and cash in, or the active participants in the market decides values for you.

House values have been artificially supported against a crushing paradigm changing backdrop... but my bet is it can not be resisted for the long term.

Sure, but if for example you paid 10k for your house 40 years ago and it's currently worth £400k then values can be halved and you still have £200k to spend whilst living in rented accomodation.

Contrast that with someone that's always rented. Even taking interest payments into account they've probably paid out more over the years than you because you paid off your mortgage 15 years ago. They're still living in rented accomodation with no lump sum to spend.

Where I can see that people might come unstuck quite quickly is those that have paid an absolute fortune for tiny rooms in expensive parts of the city. The house that I've recently moved to has a market value of £200k and a rebuild value of £240k. The house that I've recently moved from (in the city) has a market value of £200k and a rebuild value of £140k (something like that - don't remember exactly). Now I feel more comfortable about the situation with my new house. I do actually have a lot of house for my money. I'd feel quite uncomfortable about living in a hut in the city that would cost £20k to rebuild with a market value of half a million!

ukcarper

dopester wrote: »

I really hope that is the case. If it is so, like it is for my mother, many can take a 50%+ crash, with little impact. Of course I could encourage my mother to downsize, and have a packet in savings come the crash, but she loves where she lives and isn't bothered if her home falls 50%+ in value. Yes... they may mourn the loss of value, but it is all relative.. and in many instances they own outright.

If it is the case, then it might not be a system breaker. Therefore Labour should allow those who took on too much debt in order to buy, or trade up, to accept the flow of the market changes. Without mortgage assistance schemes, and repossession help.

Only by allowing good, sound money in, with no market supports, will things ever recover.

Most if not all of the people I know(babyboomers) have not moved in the last 15 years or mewd some are thinking of moving now but they would not take on any more dept. The only people I know who bought in that period are younger

Harry_Powell

dopester wrote: »

I really hope that is the case. If it is so, like it is for my mother, many can take a 50%+ crash, with little impact. Of course I could encourage my mother to downsize, and have a packet in savings come the crash, but she loves where she lives and isn't bothered if her home falls 50%+ in value. Yes... they may mourn the loss of value, but it is all relative.. and in many instances they own outright.

I think this is the 'catch 22' for a lot of the HPC doommongers. On the one hand they tell us that money held in property is 'dead' money and not 'real' and that we can't get at it. Then in the next sentence they go on about how much money baby boomers will lose if their (unmortgaged) houses drop in value.

You can't have it both ways, surely?

dopester

Harry_Powell wrote: »

I think this is the 'catch 22' for a lot of the HPC doommongers. On the one hand they tell us that money held in property is 'dead' money and not 'real' and that we can't get at it. Then in the next sentence they go on about how much money baby boomers will lose if their (unmortgaged) houses drop in value.

You can't have it both ways, surely?

I also said some, like my own mother, won't be financially hurt by such falls, and would even welcome such falls in value. They aren't interested in selling up to downsize, and don't care if values fall.

Yes... some of those baby-boomers who are cashing in will have a lovely smaller home and a lot of savings in the bank from the move. Others who don't sell may cast a reflective eye on perhaps they should have sold and downsized... with a lot of money in the bank. Others won't care.

For many who don't sell it may be lost value if the correction carries out like I expect it will... but I'm not saying it with glee. 'Look at those baby-boomers losing their wealth' - ect.

It might surprise you... but an unmortgaged house is still a house/home for them, and the same if they leave it to children... it will have a relative value to other things in the market. Changes in value are what markets are about. It's just a fact and some can deal with it - both those owners and for the good of other market participants, but unfortunately not those who are overstretched due to buying or upsizing with lots of debt in the boom.

ukcarper

I’m not convince it’s really happened but if it has perhaps the thread title says it all 1.2bn given to old by young. It’s not the olds fault, after all the old haven’t asked them to give it to them.

Harry_Powell

dopester wrote: »

I also said some, like my own mother, won't be financially hurt by such falls, and would even welcome such falls in value. They aren't interested in selling up to downsize, and don't care if values fall.

Yes... some of those baby-boomers who are cashing in will have a lovely smaller home and a lot of savings in the bank from the move. Others who don't sell may cast a reflective eye on perhaps they should have sold and downsized... with a lot of money in the bank. Others won't care.

For many who don't sell it may be lost value if the correction carries out like I expect it will... but I'm not saying it with glee. 'Look at those baby-boomers losing their wealth' - ect.

It might surprise you... but an unmortgaged house is still a house/home for them, and the same if they leave it to children... it will have a relative value to other things in the market. Changes in value are what markets are about. It's just a fact and some can deal with it - both those owners and for the good of other market participants, but unfortunately not those who are overstretched due to buying or upsizing with lots of debt in the boom.

Well, I'm not sure that this is quite what you were saying earlier, but anyway...

Do you think there are many baby boomers who have been overstreched due to "buying or upsizing with lots of debt"? Surely most will have paid their mortgages off long ago? Can you even get a mortgage where the term goes much past the state retirement age?

People of my generation (I'm 25) will have suffered from increased debt from upsizing due to moving from starter homes to family sized homes. Baby boomers will surely have upsized to larger family sized homes well before the boom?

I can't imagine a baby boomer (born in 1945) having kids in 2001 (at age 56) and moving from their one bed flats into 3 or 4 bed family homes. Can you?

Surely your doomsday deflation scenario is going to hit our generation, not theirs? Especially given that we don't have final salary pensions to cushion the pain?

dopester

Harry_Powell wrote: »

Well, I'm not sure that this is quite what you were saying earlier, but anyway...

If you're referring to the baby-boomers in the TV show which was also discussed in this thread... who were blowing £millions of pounds in a crazy property-lusting-frenzy, taking on millions of pounds of extra debt... then no... they deserve to reap the consequences of their decisions.

If I were 54 years old (I'm not - decades younger) had £900,000 savings in the bank, and a £1.5m home, would you feel sympathy for me if I leveraged all that into a business property at £4m which required £2m of refurbishment, if I'd risked everything?

They all mostly got their education about being overly greedy and reckless in those run of documentaries - broken people before their crazy businesses launched. Some of the most amazing television I've ever seen.

I recall you having bought your first home recently Harry. Personally I hoped you would hold off doing so. It will hit people of all ages, imo, but also perhaps offer people of all ages new opportunity and fairness. Fairness isn't just home ownership whatever the crazy asking price and mortgage debt you're are permitted to take on.

dopester

ukcarper wrote: »

I’m not convince it’s really happened but if it has perhaps the thread title says it all 1.2bn given to old by young. It’s not the olds fault, after all the old haven’t asked them to give it to them.

Probably just a typo by you, but the figure quote is £1.2 Trillion (I suspect actually a lot more than this.. £2 Trillion). Not a lousy £1.2 Billion.

[Deleted User]

It comes down to your attitude to risk. I have to say the I'm very much a 'belt and braces' type of person. I cover all the bases and like to know that should the worst happen I'm still OK. I stand to make less that way but I also stand to loose less.

I would feel sympathy for someone that took a gamble and lost. But not too much - I'd figure that they knew the risks and made their decision. But nor would I envy or grudge them the rich rewards if their risk paid off.

I don't know if any of your are familiar with the "Rich Dad, Poor Dad" book? Basically it suggests that the Dad that pays the bills, saves, blah, blah.. and does all the sensible stuff that we're advised to do doesn't get rich.

The Dad that gets rich is the one that pays bills late or at the last minute, takes big risks and gambles and so on. (I'm sure others will sum up the book better than me).

Well, my dad was a typical civil servant and I do things his way. Poor dad's way. Right now the "poor dad's" are probably in a VERY strong position (I know I am). But I don't know how long that will continue.