Harder to rewrite history than you think Bulls.

Occams_Razor_2

geneer wrote: »

Irrelevant.

And you have neglected to answer the question.

For obvious reasons.

actually its incredibly relevant.

you seem to be saying that short term volatility is more important that subsequent reversion to the mean.

Real estate is a long term real asset class, any volatility over an immaterially short observation period is not relevant to a broader judgement on its performance; and no trying to capture lightening in a bottle during this volatility period does not make someone correct.

if we take an index over time, lets say 2005 and call that 100.
if that index is now 120 6 years later, with some volatility in the interim, it takes a real imagination to suggest that a pessimistic outlook was correct

and if you haven't even put your own money where your mouth is, then you don't have a real opinion, you're just an onlooker.

and onlookers make all sorts of fairly useless pronouncements on all sorts of subjects. this is the equivalent of suggesting that the sun setting proves predictions of the end of the world: but you were right until it came up again.

or not.

Occams_Razor_2

geneer wrote: »

What was the recent statistic. Wasn't it 60% of buyers since 2006 in negative equity at the moment.
Doesn't surprise me. This crash is already similar in nominal terms to the last crash. And that was widely aknowledged as devestating for many.

of course you are not surprised by something I suspect you made up.

in any case, you never to normalise for all time low interest rates, and the significant spead between mortgage payments and rental rates

I can't see that very many people at all would be better off in real terms not having bought in 2006.

certainly there would be NO ONE in the capital that this would be true of.

Occams_Razor_2

peakoil wrote: »

I wonder what the average time people spend in negative equity? given a combination of mortgage repayment, HPI and mortgage overpayments I would have thought a dedicated saver could get out of neg equity relatively quickly.

almost every first time buyer starts in negative equity, when you account for fees & commissions.

this has no bearing on the investment worthiness of that decision, its just part of the ordinary cycle.

Occams_Razor_2

geneer wrote: »

For a £150000 mortgage at a more typical 6% total cost = 289936.

Know of just 15% and for a £127500 mortgage total cost = 246445.

Thats a £43K saving. And most of that will be in the first 1/2 of the term.

where did you get 6% from?

you haven't even discounted the outstanding, or altered for differing terms.

someone who mortgages in 2005 for 25 years has a very different term and observation period than some who does in in 2011.

you need to take off those years for a start.

Occams_Razor_2

geneer wrote: »

Don't believe I said timing didn't matter. Indeed some of my responses to this thread suggest otherwise.

So how was the timing of JDs advice in Mrch 2007?
How did it compare to the VI mortgage broker?
Are you another one who can't answer a simple question then?

ok I'll answer this question for you.

if I wanted to buy a house for $300,000 in 2007, with a 10% deposit, I could do that. at the end of 2008 my mortgage outgoing would fall to historically low levels, meaning the interest servicing of my mortgage is considerably cheaper than rental. probably by a spread of up to £1,000 every month.

so in this period, I can get a mortgage, I can acquire the asset, the cash outgoings are extremely favourable.

however, if we even assume that the price is 10% lower today - something that is very much no certain, as many parts of the country have clawed back any temporary corrections and more. but lets say.

over this period, I have been losing considerable money every month comparing my mortgage interest vs rental. quite possibly MORE than any diminution in the asset value.

on top of that, I am very unlikely to be able to get a mortgage at any point in the interim with that deposit. lending criteria has changed, and for much of this period, favourable mortgage conditions and approval itself has relied on a minimum of 30% deposit. so under those circumstances, I could not even access the ability to purchase the property to capitalise on any lower price opportunities.

and that's without talking about the low transaction volumes due to vendors not selling property due to the low carrying costs; nor does it take into account the benefits of clearing your mortgage a few years earlier.

anyone who thinks in that situation, that buying property in 2007 was financially disadvantageous is financially illiterate.

bottom line, you couldn't get a mortgage at the end of 2008 and being locked out of the market costs you a lot every month in the spread.

sounds like you either made bad decisions or just don't have the means to get in the game.

Occams_Razor_2

geneer wrote: »

One advised that prices would crash.
One advised that they could not.
Clearly the 1st was the best advice.

did the guy who advised the crash say prices would be permanently depressed? if so, he was spectacularly wrong. if not, then its a meaningless preduction.

prices recovered.

Occams_Razor_2

geneer wrote: »

Well did he?




If he did, then it was a spectacular error.
One which has little bearing on his advice in 2007.

selling in 2007 to rent would also have been a spectacularly stupid and financially costly decision too.

Occams_Razor_2

geneer wrote: »

Interest rates increased just 0.5%, and that was enough to push the market over.

that's just wrong as fact.

the market seized due to failures in the wholesale funding markets in the US, it had NOTHING to do with increases in domestic interest rates,

absolutely nothing at all, and I can't think why you would say it did.

Occams_Razor_2

Graham_Devon wrote: »

Makes not a jot of difference what terminology you wish to use.

The basic premise is, some actually predicted something (reduced prices, or crash) would happen. I think we would all accept a crash happened.

actually that is crucially important.

an external liquidity crisis is a completely different beast to someone who claims that the domestic economic equation is unsustainable.

that is like telling someone that they should stop eating big macs because it will lead to an early grave, and then proclaiming foresight when they accidently perish in a freak plane crash.

anyone claiming that a crash would arise due to domestic overheating was wrong.


inarguably wrong, that did not happen.

Occams_Razor_2

sorry, I'm not going to spend much more time on this thread, as some arguments are mind blowingly stupid.
and its obvious some people have never even walked past someone with a finance or economic qualification, let alone have any understanding themselves

rather than just toss off to the idea that you don't want to purchase a piece because you're too clever, instead of having just been too unsuccessful or indeterminate to be able to manage it there are other options.

Government owned banks are strong domestic recovery plays that correlate with actually owning a piece of property. Buy Lloyds, it will synthetically behave like a piece of property over the next 3-5 years. that's if you want to do something like that.

but no one can be proud of exiting or choosing not to enter the property market in 2007 that was a just a stupid costly decision, and with mortgage markets locking many people out still, equities can give similar exposure.