HPC thread of the week

TheeMaskedTurnip

New thread on HPC asking the loons if they will now STR!?!

What type of idiot unsettles and uproots their family from their dream home to be at the mercy of others and all to try to gamble to save a couple of thou?

http://www.housepricecrash.co.uk/forum/index.php?/topic/208429-would-you-str-at-the-moment-bubblicious-offer-received/#entry1102881446

westernpromise

TheeMaskedTurnip wrote: »

New thread on HPC asking the loons if they will now STR!?!

What type of idiot unsettles and uproots their family from their dream home to be at the mercy of others and all to try to gamble to save a couple of thou?

http://www.housepricecrash.co.uk/forum/index.php?/topic/208429-would-you-str-at-the-moment-bubblicious-offer-received/#entry1102881446

The one who wrote this post is sort of startin to get it:

http://www.housepricecrash.co.uk/forum/index.php?/topic/208429-would-you-str-at-the-moment-bubblicious-offer-received/?p=1102881712

He's basically noticed the concept of the Breakeven Crash Requirement. Unfortunately he hasn't calculated it properly. Although he has noticed that the longer you rent for, the greater the crash you need, his progression of 7%, 9%, 11% etc is all based on the original price. In fact if you need a price crash of 11% from the level of three years ago, you probably need a crash of 20% from the current actual level. That is the rather crucial detail he has overlooked, and it means that he is seriously understating the price correction that he would need to benefit from a crash. Even this underestimate still looks too much for him.

TheeMaskedTurnip

BCR is ultimately the RFLs undoing. It's like that classic cartoon of the character hanging on for deer life onto a bunch of balloons while they rise higher and higher scared to let go.

westernpromise

Yes, the balloons are rising higher, but above a slope, not level ground. So although you go up 50 feet in the air, you're now 75 feet off the ground.

The really pernicious thing about the BCR is its exponentiality (if that’s a word). If house prices aren’t deflating, chances are they’re still inflating instead - on a compound basis, of course. So the top you need to it to crash from goes up in a curve, rather than in a straight line. This, in turn, takes you into progressively higher and higher levels of stamp duty as well. Since Georgie Boy made these progressive, at any re-entry price above where you sold and at quite a few price points below where you sold, you’re going to be paying more stamp duty now.

A partially countering factor to this would be if your rent were to fall. As I've noted before, though, the last two times we've had a housing bust, rents didn’t fall - they went up. People paid top whack to rent because they lost less thereby than the alternative of staying with the bust.

So even after house prices start falling - which lowers your BCR - the rising cost of staying out of the market (by being a renter) is trying to push it back up again.

You can look back at what your BCR is now, based on decisions already taken, but I don’t see how anybody can ever know what they’d need to in order to trade a bear view of house prices.

TheeMaskedTurnip

westernpromise wrote: »

Yes, the balloons are rising higher, but above a slope, not level ground. So although you go up 50 feet in the air, you're now 75 feet off the ground.

The really pernicious thing about the BCR is its exponentiality (if that’s a word). If house prices aren’t deflating, chances are they’re still inflating instead - on a compound basis, of course. So the top you need to it to crash from goes up in a curve, rather than in a straight line. This, in turn, takes you into progressively higher and higher levels of stamp duty as well. Since Georgie Boy made these progressive, at any re-entry price above where you sold and at quite a few price points below where you sold, you’re going to be paying more stamp duty now.

A partially countering factor to this would be if your rent were to fall. As I've noted before, though, the last two times we've had a housing bust, rents didn’t fall - they went up. People paid top whack to rent because they lost less thereby than the alternative of staying with the bust.

So even after house prices start falling - which lowers your BCR - the rising cost of staying out of the market (by being a renter) is trying to push it back up again.

You can look back at what your BCR is now, based on decisions already taken, but I don’t see how anybody can ever know what they’d need to in order to trade a bear view of house prices.

You made an interesting salient point and one I never countenanced - stamp duty rises as house prices increase.

I wonder if it would be possible to calculate the BCR over the years since, say 2004 when the HPC servers were first fired up, for the average person renting an average property wanting to buy an average house. I'm sure someone more intelligent than me could knock those figures up.

Crashy_Time

westernpromise wrote: »

It’s why I see HPC as the anti-MSE. First, they treat the biggest financial decision of their lives as a grossly selfish speculative punt. Property has inflated, they missed it, so they want it to deflate - regardless of the impact on others - purely so they can buy back in at the levels of 20 years ago. Then when it inflates again, as of course it’s certain to do, they’ll be the ones collecting the inflation this time. That this is not happening is the fault of Goldman Sachs, Mark Carney, “boomers”, BTL landlords, “idiots”, “EAs”, “VIs”, “TPTB”, Bilderbergers, lizards, stupid Mumsnetters, George Osborne, BOMAD, trustafarians, Fatcha, and in fact everybody except themselves.

Second, the attitude to financial decision making is fundamentally inane. On HPC you have truck-driver recruiters, people whose caps-lock and exclamation mark keys are jammed on, people who STRed in 2002, people who blame feminism and women for everything, and people who are poor and angry, all routinely mistaking themselves for acutely percipient financial sages. They’re possessed of a unique insight into the future trajectory of the world economy, and to a man, woman and troll they’re all experts on Tokyo 1990. They display an air of sneery superiority that reminds me of 20-year-old members of the college Christian Union, who looked down on others because they knew they were saved, and we weren’t.

The MSEer contemplating buying a house, in contrast, considers how long they’ll need to stay, looks at what they can afford and where, and compares the costs of buying to those of renting over a five- or ten-year horizon. Now as at any time in the last 20 years, the usual and correct choice is to buy with a fixed rate and then overpay the mortgage.

One of these groups is a lot, lot happier about its choices than the other, which is probably why MSE tolerates debate and HPC doesn’t.

And which is probably why you post these lengthy rants day after day after day, you made the right choices, and are very comfortable and happy with those choices.......? :rotfl:

Crashy_Time

chucknorris wrote: »

It is extraordinary and it would be amusing (if it wasn't so sad) how they cannot see how their 'glass half empty' approach to life just doesn't work. Sensible bears however, are worth listening to, they can shed a different light on a subject that I might have overlooked, so it is often worthwhile to read what they have to say, like Thrug, the voice of doom (no offence), but his thoughts are usually based on logic. But the total loonies are best ignored, the worst ones I actually put on ignore.

So you can only see my posts and another two or three posters then?

mwpt

It's not often I agree with the fakeman (turnip head) but on this I do. It is probably not healthy to feel anger toward an online persona but the guy known as "25 year mortgage 8itch" really does make me angry. He caved and bought a few years back, has seen his house increase in value so if his aim was to own it was a good move, but he still actively promotes not buying and in this thread promotes Selling To Rent.

http://www.housepricecrash.co.uk/forum/index.php?/topic/208429-would-you-str-at-the-moment-bubblicious-offer-received/?p=1102881342

Let him put his money where is mouth is rather than advise other people to do the opposite while he sits in his own home.

wotsthat

mwpt wrote: »

Let him put his money where is mouth is rather than advise other people to do the opposite while he sits in his own home.

Someone tells him they STR'ed and rented for 7 years and felt lucky to breakeven despite buying in at a lower price and he nit picks about all the interest they must have earned.

As he did the opposite to STR'ing maybe he's just got a well rounded sense of irony?

He does say he'd STR if the price was right although I suspect having found that being an OO is so much better than being a renter that price will never be offered.

Crashy_Time

Global recession moving up a gear today according to the media chaps, hope you are happy with your positions and get the rent rises you dream of (fat chance IMO)