Are you a crash troll?

Herzlos

I also bought in 2007 and my house is still worth about 85% of what I paid on paper, as house prices up here haven't really recovered. But I've paid less than private rent for an equivalent house since then whilst knocking a bit of equity off, so I'm still in a much better position even if I took the loss on sale than paying 9 years of rent alone, without even considering the costs of having to move every few years.

I've since married and started a family, so luckily I bought a big enough house to expand into.

Crashy_Time

economic wrote: »

is that you crashy?

No, it is CrashNorris checking if Westernpromise has had his medication.

westernpromise

What's your BCR up to now Crashy?

AnotherJoe

Herzlos wrote: »

I also bought in 2007 and my house is still worth about 85% of what I paid on paper, as house prices up here haven't really recovered. But I've paid less than private rent for an equivalent house since then whilst knocking a bit of equity off, so I'm still in a much better position even if I took the loss on sale than paying 9 years of rent alone, without even considering the costs of having to move every few years.

.

Interesting. I bought a house in 2007 at the absolute peak, it fell (I reckon) to 75% what i paid in about 2010, and sold for exactly 25% more than I paid in 2014 and they are now selling for 50% or more than I paid. But this is SE England.

And the mortgage interest paid over that period was way less than rent would have been. By hundreds of pounds a month. (It was an IO mortgage) So even in a crash scenario buying at the peak was the right thing to do in that case.

Cornucopia

westernpromise wrote: »

Perhaps, but see my 4 above:

4. Relatedly, nobody who took a risk that paid off 10 years later took any risk at all. Buying today is stupid because there’s going to be a crash; in 10 years’ time, buying today will have been riskless, because everyone knew there wasn’t going to be a crash.

When you buy a house you always do so at what feels like a toppy price. If you pay £200k the house probably feels like it's worth £190k. If it were certain to go up to £250k tomorrow then the price would be £250k today to reflect that.

Your crashtroll always thinks the price is about to fall and that the house is worth its 2009 price. To buy it is a huge risk. The homebuyer / landlord just gets on with it and buys it at £200k and 10 years down the line it's worth £375k.

The crash troll who insisted that buying was a huge risk - and who didn't therefore buy - will later insist that the buyer actually took no risk at all. He wasn't smart, he didn't reap a return on his risk - he was just lucky and it's all a fix. And so there should be CGT on the main residence, or an Act of Attainder against landlords, etc.

The hallmark of the crash troll is that risks others take aren't risks. Likewise, to a crash troll it's never a risk not to buy.

Yes, I agree with that. Human capability to assess risk is generally poor, though.

When I was beginning to speculate in property, I went for quite a while with only slightly more exposure to perceived risk than I would have done in just owning my own normal home, and keeping it for a normal time-period. As I "made" more money, I was able to relax that attitude to risk, and was able to see, for example, that owning two properties was no more risky within the market than two people owning one property each.

Anyway, I suppose my point is that although all your observations are valid, some of the HPC Trolls' misconceptions are "wronger"than others, some are shared with the majority of the population, and the popular view of HPI and the popular perception of risk are not particularly rational, anyway.

For most people, what they are hoping for from buying a home is pretty basic:-

- It will cost less than renting in the short and long term.
- It will be paid for by the time they retire.
- That they will not suffer any personal issues that make it difficult to pay the mortgage.
- That interest rates will remain within what they deem to be fair.

I think for most people, HPI above all of that is very much icing on the cake, and not something that they necessarily expect.

The HPC Trolls have the misconceptions you have described. But their biggest misconception is that there was (or could be) a Golden Age in which everyone could buy a home if they wanted to. That's never been the case, and is never likely to be as long as our society continues on its present course in terms of the economic parameters of our system.

Bottom line, I'm happy for HPC Trolls to make the case for Socialism, but not for crashing house prices in isolation.

Herzlos

AnotherJoe wrote: »

Interesting. I bought a house in 2007 at the absolute peak, it fell (I reckon) to 75% what i paid in about 2010, and sold for exactly 25% more than I paid in 2014 and they are now selling for 50% or more than I paid. But this is SE England.

I'm way up North. But you're right, even buying at peak before the crash, it still works out better over a long enough term.

Cornucopia wrote: »

For most people, what they are hoping for from buying a home is pretty basic:-

- It will cost less than renting in the short and long term.
- It will be paid for by the time they retire.
- That they will not suffer any personal issues that make it difficult to pay the mortgage.
- That interest rates will remain within what they deem to be fair.

I think that sums it up pretty well. The reason I bought was because I was going to have to pay something to live somewhere anyway, so this way my payments can only trend downwards, and happen to stop just before I retire.

Not having to deal with a landlord or moving regularly were also a big benefit, despite having to be responsible for maintenance myself.

caronoel

Some of the crashtrolls have gone very quiet recently, which concerns me.

Has anyone seen brit1234 recently? Is he still holding out for a 50% crash by Christmas 2009?

westernpromise

It is worrying. If there could be crash trolls in 1996, and there were, then something is amiss if the crash trolls have gone missing.

Perhaps they've all emigrated to somewhere much nicer, where property is dirt cheap because nobody wants to live there.

Eric_the_half_a_bee

westernpromise wrote: »

It is worrying. If there could be crash trolls in 1996, and there were, then something is amiss if the crash trolls have gone missing.

Why have you picked 1996 as the starting point for your frame of reference?

westernpromise

Eric_the_half_a_bee wrote: »

Why have you picked 1996 as the starting point for your frame of reference?

Because that's about as far back as Usenet archives go. So you can find threads from 1996 and search them online for what people were saying back then. Probably there were crash trolls before but pre-internet I don't know where you'd find a record of them.

Here's a crash troll gem from 1996:

lack of demand indicates that housing is still regarded as overpriced. That indicates further falls rather than a rise. Demographics also mitigate against future house price rises. There are simply less young people to buy houses. Added to this are factors like housing probably having reached a peak in terms of the percentage of the Uk population who actually want to be homeowners. Then there's the trend towards people starting families later.

The odds are that there will be further real falls in house prices. Whether that happens through gradual erosion by inflation with stable nominal house prices, or by another sudden fall caused by those who are hanging on waiting for things to get better finally giving up and selling (a normal scenario after a speculative boom) remains to be seen.

https://groups.google.com/d/msg/uk.finance/ziECfUDSCFM/K4wuspagd6kJ

Apparently he used to post on MSE as "fofp" ("friend of fernando poo") until about 2007.

If it was possible for crash trolls to exist in 1996, after a seven-year bust in house prices, then clearly there will always be crash trolls. It's a state of mind, not a reasoned view.