FTB's "Missing Deal Of A Lifetime"

Linton

davilown wrote: »

But what age do you think FTBs are? according to various people in this thread, they are around 31, buying partners who work and therefore can afford to but average houses at average prices. Surely 5-6 years saving is suitable to buy an average house?
Why should FTBs look at less than average houses in areas they don't want to live?

If FTBers in your area with partners can afford the average £250K house - great, they must have saved sensibly and/or have extra finance from M&D.

If they cant they need to look somewhere else.

If they cant afford it it's because there are enough people who can. And in the end the limited number of houses go to people who want them and are prepared and able to pay the most money.

FTBers have no inalienable right to get the best houses in the best areas, or even average houses in average areas - there arent enough of them.

Graham_Devon

julieq wrote: »

Prices clearly were affordable, because people afforded them. Textbook definition of affordability.

They are now more affordable, because (a) prices are (still) lower than they were, and (b) mortgage rates are lower. Thus more affordable.

It's not that difficult, really.

Not difficult at all no. Prices are affordable to those who can afford them.

May as well shut the forum down. You have clearly answered every affordability question

julieq

DervProf wrote: »

Not all people who introduce risk into their lives will get ahead. Some of those will get left behind, big time.

"Stamping your feet and calling for moral rewards for prudence isn't going to change that."

True, but throwing caution to the wind can lead to real trouble. It`s all about balance, and the balance tipped in the favour of financial folly. Prudence is now on the menu again, but the fat cats still want their full cream diet. :undecided

We need to take this full on, because it's important. Yes agreed on points 1, 2 and 3, slight minus on the rhetoric on point 3 because essentially it's the politics of envy. Fat cats generally are defined as people who have it better than you, this can be for a number of reasons including luck, judgement or inheritance (like Emy for example).

The point is that without some level of risk you can't raise yourself above a mid point. Yes, foolhardy risks can wipe you out. These are the equivalent of putting your shirt on a random horse in the 2.15 at Catterick because you like the way it walks. These are generally one off conviction based punts, if you win you win big, if you lose you're finished.

To read many financial forums you'd think most people do this. It's about winning big on a share pick, it's about buying gold before a hike, it's about day trading into a ramping market. People get very exercised about their skills in assessing this sort of thing and swagger about telling everyone how clever they've been, but basically it's a question of random luck. Doesn't mean it can't work as a one off, but it's not as controllable as people think.

Proper risk management is about cool headed assessment of relative risks and finding advantages. Generally if you boost the chances of a positive outcome for any course of action, you'll win overall even if you get the odd disappointment.

And to actually beat the pack you have to do a bit of this. As you say, it's about balance.

As far as the parasite comment goes, as I say it was meant to be emotive. If you want to get ahead of the game, you have to learn to think in different ways, lateral thinking really, and one very useful technique is to invert conventional wisdom and see if you can argue the case for black being white. If you can, it often is, and there's an opportunity. Not least an opportunity to make Graham's head explode.

The very worst thing you can do to get away from a pack is think in the same way as the other members of it, and sadly the bear collective are very prone to that. Look hard at the numbers, tie them down to absolutes (% of total market size is a good one which would have prevented the posting of the "fraud" listing), and think for yourself.

Last night in Beijing, and doubtful I'll be back when I get my life back. Been fun having a quick cameo reappearance.

chucky

Graham_Devon wrote: »

Not difficult at all no. Prices are affordable to those who can afford them.

May as well shut the forum down. You have clearly answered every affordability question

you are learning well my little prodigy...

chucky wrote: »

only people that can afford to buy will be able to buy...

julieq

Graham_Devon wrote: »

Not difficult at all no. Prices are affordable to those who can afford them.

May as well shut the forum down. You have clearly answered every affordability question

So here's the question Graham never answers: where does the money to pay above interest returns on risk free savings come from exactly?

Special marks if you can explain what can trigger risk free savings to become risky.

davilown

Linton wrote: »

FTBers have no inalienable right to get the best houses in the best areas, or even average houses in average areas - there arent enough of them.

Perhaps you should change it to No-one has a?

julieq

chucky wrote: »

you are learning well my little prodigy...

Don't confuse him, he still hasn't explained where the money to pay interest comes from

chucky

julieq wrote: »

Don't confuse him, he still hasn't explained where the money to pay interest comes from

he pulled me up for saying exactly the same thing on this very thread but now he's starting to use it. brilliant.

DervProf

chucky wrote: »

i reckon you should stick around. it's always good to have new characters around - just don't bring some of the 'ghetto' from hpc.co.uk please...

I might just do that. I think I might have some decent points/arguments to convey. I`m not as "clued up" on finances as some of the hpc members, but I am honest, have a reasonable sense of what`s right and wrong, and will try to have a constructive debate.

And yes, I did predict/want a hpc, but not for the reasons that some people (Sibley) believe.

Cards on the table. I reckon I`m working class, don`t earn a big salary, lucky enough to (nearly) own my own home. I do remember the feeling of being "priced out", as I was in my early 20`s during the last property boom. I remember feeling that I might never be able to afford a property, as prices shot up 25%(?) + in about 12 months. Luckily for me, that boom was short lived, and a few years later I was able to take on a mortgage. I think the rate I was paying was just over 7%. The repayments weren`t too bad, as I had a partner at the time. The value of my property was fairly stagnant for several years, and I didn`t really pay any attention to what it was worth anyway. I thought we`d seen the end of property booms, especially when I heard the words of Gordon Brown "I will not let property prices get out of control". Early 2002, I`m living on my own, post 9/11, and I see interest rates being cut, and property prices start to take off. 3 or 4 years later I`m seeing 15%+ annual rises. I`m visiting customers, quite a lot younger than myself, who seem to "have it all". I heard stories of huge mortgages, more and more people buying more than one property. It didn`t feel right, and I thought it would soon end, but on it went. I began to become aware of what seemed like a pro-property media campaign (which seems to still exist). I used to get involved in conversations about property with people that I met. If I suggested that things seemed to be getting out of control, I was often treated like I hadn`t got a clue. I even remember suggesting to one or two people "I reckon the credit could run out if we keep going on like this", only to be laughed at. I was quite angry when I watched The Money Programme (I think that`s what it was), when they went undercover and exposed "liar loan" deals taking place. That was back in 2004. I discovered hpc.co.uk in 2006, so at least I could discuss my views with a few like-minded people, without been treated like some sort of idiot..... most of the time .

I`ll be honest and say that I am a little suprised that we have had the house price correction that I thought we`d have, post credit crunch. And that`s what concerns me most, the property market was left to it`s own devices for several years - inflating prices to fairly high levels, then when it threatened to do what it would have done without intervention, along comes the taxpayer, the BoE, and something called quantitative easing. Some have said that the government weren`t directly bailing out the property market, but what they did do certainly prevented a correction that would have weeded out a few of the greedy, and given hope to the less well off to get on the ladder. I fear that the mantra "you can`t go wrong with bricks and mortar" has been reinforced by what has taken place in the last couple of years. I think this may be storing up more trouble for the future.

DervProf

julieq wrote: »

So here's the question Graham never answers: where does the money to pay above interest returns on risk free savings come from exactly?

Special marks if you can explain what can trigger risk free savings to become risky.

This thing about interest returns on risk free savings interests (no pun intended) me.

This may seem simplistic to you, but I explain things as I see them.

I do an hour`s work, and I get an hour`s pay. Should I not spend all of that money, I decide to keep it somewhere safe, maybe a bank. I have carried out the 35 minutes work that the money represents. I would like to think that even if 10 years passes, I can still exchange that money for 35 minutes worth of someone`s time (assuming they are carrying out similar work to what I did to earn it 10 years previously. If I simply stash the cash under the matress, it will probably only give me about 20 minutes worth of soemone`s effort in 10 year`s time. If I put the money into a bank, it will remain safe. Not only that, I believe it will somehow enable that bank to lend out some money for someone to borrow. The bank will offer me a small return on my cash, as an incentive for me to keep my money in their vaults (or on their computer). I`m virtually guaranteed to get my money back, as the bank are not paying me a large return on it. Of course, I could simply spend the money if I need or want something, or I could invest it elsewhere on something a little riskier, but with slightly higher potential returns. The bank, meanwhile, lends out money at a higher rate, as they have a slightly higher risk of not getting some, or all of their money back.

Now, I`m not demanding inflation + x%, nor base rate + y%, although I`m obviously going to achieve the best return on my money. It would be foolish not to. It won`t be good to see money I don`t want to spend now, or don`t need to, get erroded by inflation. It would mean that the work I carried out for you 10 years ago is no longer valued as much. If I put my money into a "safe" account, and it`s worth 20% more in real terms after 10 years, then you might say that`s money for nothing, but when I do come to spend it, I`ll be able to afford to employ someone for 35 minutes, then employ someone else for a few more. This extra time is being paid for indirectly by those who choose to buy goods/services before they have carried out the work to pay for them. The bank will say to that person, OK, here`s your money, but we don`t know if you`ll do the work to pay us back, so you are going to have to work a little longer.


As far as what could make risk free savings risky ? Well for the UK, a fall in the value of our currency won`t help. Neither will rampant inflation (should the BoE decide to ignore it and keep interest rates artificially low). I`m pretty certain I won`t be earning special marks for those comments. Just had a thought, is it QE (not Her Majesty) ?

Oh, and if I said I have a cashback credit card (on which I pay the full balance every month), would that make me something worse than a parasite ?