Who won in the end?

chucknorris

mwpt wrote: »

But when I try to play devils advocate here, using figures that are not that wild, showing how in some cases you're better renting, I get just as much heat

I think it is way beyond wild, to suggest that house prices could stagnate over 25 years, yet shares provide 7% during that same time frame.


This is a common error that bears seem to make, they assume that they can have a house price crash, yet the rest of the economy is as rosy as ever.

mwpt

chucknorris wrote: »

I think it is way beyond wild, to suggest that house prices could stagnate over 25 years, yet shares provide 7% during that same time frame.


This is a common error that bears seem to make, they assume that they can have a house price crash, yet the rest of the economy is as rosy as ever.

Why do you call me a bear? I'm looking at the housing market and trying o understand drivers and what I think it'll do. I'm neither a bear nor a bull, I just want to optimise my finances.

And no, I don't think the scenario above is that wild. I'm not saying it is likely or unlikely but it's not that wild.

Say, for whatever reason, markets start to demand higher interest rates for bonds (say some huge default event means more risk is priced in). That pushes up borrowing costs, house prices come down, and yields everywhere else improve. That is more of a return to historical norms than the last 5-10 years where yields everywhere have been falling.

The point here is I'm not predicting what might happen, because I can't. I'm adding in a big risk factor and some pessimism to my decisions.

chucknorris

mwpt wrote: »

Why do you call me a bear? I'm looking at the housing market and trying o understand drivers and what I think it'll do. I'm neither a bear nor a bull, I just want to optimise my finances.

And no, I don't think the scenario above is that wild. I'm not saying it is likely or unlikely but it's not that wild.

Say, for whatever reason, markets start to demand higher interest rates for bonds (say some huge default event means more risk is priced in). That pushes up borrowing costs, house prices come down, and yields everywhere else improve. That is more of a return to historical norms than the last 5-10 years where yields everywhere have been falling.

The point here is I'm not predicting what might happen, because I can't. I'm adding in a big risk factor and some pessimism to my decisions.

I'm not calling you a bear, I am merely pointing out that it is an error that bears commonly make.


It is way beyond wild, it is outrageous! How can house prices stagnate for 25 years in a flourishing economy, that facilitates a 7% return for shares? I'm not claiming that a strong correlation exists, but I am saying they both form part of the same economy.

Thrugelmir

floridaman wrote: »

I remember many years ago there was talk of the homeowners vs renters war.

Why is it a war? Life is about personal choices and circumstances. Housing should be affordable to all in some form.

mwpt

chucknorris wrote: »

I'm not calling you a bear, I am merely pointing out that it is an error that bears commonly make.

It is way beyond wild, it is outrageous! How can house prices stagnate for 25 years in a flourishing economy, that facilitates a 7% return for shares? I'm not claiming that a strong correlation exists, but I am saying they both form part of the same economy.

I accept you may be correct. I presented my case for when buying would not be better than renting, and you've dismissed it because you don't agree the figures are remotely possible. That is fair enough.

Carl31

I heard it was a draw

The renters, not caring about their accomodation, let lose their filthy hounds, and threw the old tyres and bits of washing machine from their front gardens at the owners houses. The owners, scared their gleeming white alcoves and pristine carpets may get dirt on them, closed their windows and hid behind their leather 3 piece until the renters ran dry of special brew

Mistermeaner

Is it over now?

Thrugelmir

ggb1979 wrote: »

Is it over now?

Until the next time. New generation no memories.

Mistermeaner

Surely shared ownership won. They both bought and rented

wotsthat

mwpt wrote: »

Say, for whatever reason, markets start to demand higher interest rates for bonds (say some huge default event means more risk is priced in). That pushes up borrowing costs, house prices come down, and yields everywhere else improve. That is more of a return to historical norms than the last 5-10 years where yields everywhere have been falling.

It's difficult to model because much of what you're trying to model is cyclical. In my mortgage life I've paid 9% interest, 2.3% interest, I've seen inflation over 5% and 0%. Two HPI crashes and one boom.

I doubt there's ever been a lengthy period where renting turned out to be cheaper than buying. Better to ask why that is - one reason is letting houses is a business and the consumer pays the profit.

I did mention, tongue in cheek, that this is a game played by owners and people who want to own. You've assumed our renter has a deposit sized lump of cash earning a great return. In this game renters don't have this cash otherwise they wouldn't be renters.