Will there really be a crash?

antrobus

GreatApe wrote: »

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Do you see what I am getting at?

Yes, but you are still horribly wrong.

Typically, people are unemployed for six months or less. Typically, buying a house involves a 25 year+ financial commitment. Trying to equate the two shows a basic lack of understanding of the concept of time.

GreatApe

ukcarper wrote: »

I understand what you are trying to say but as I said fewer people are in a position to buy and just because in the past people moved from private rental to buying it does not follow that that will still happen. Of course prices could fall in relation to earnings and more people will be able to buy. There is a problem and everybody apart from you seem to be able to see it.

This seems counter intuitive but lower prices do not allow more people to buy this can be proven with a simple example. Lets say house prices crashed to 1/1000th of what they are today so the average house cost just £250 you would be correct that £250 is a much smaller number than £250,000 but how can more people buy? The number of properties put up for sale is not going to be more if anything it is going to be less so fewer people can buy

Or you can just look at real world data, 2008-2010 was a crash with lower prices. Did more or fewer people buy?

Housing is a stock and flow of capital it is not a consumption good like bread or eggs what this means is the stock and flow of housing does not change much with price movements. The good news is this means house prices can go up a lot and affordability still be maintained the bad news is house prices can go down a lot and affordability still be no better. You all know this in your bones and instinctively as ownership for uk born brits is close to record highs the only other time they were marginally higher is the period just before the crash when black market workers could also get finance via self cert mortgages which are now gone.

I will say again renting is a temporary tenure in the UK only some 5% of households are long term renters (and even in that group some are owners and some are renters that pay zero rent. A lot of private renters some 500,000 households 'rent' for free this is mostly family members eg an old parent)

There really is no problem but I accept these are not easily grasped by the typical person but it is very insightful and more or less explains everything

GreatApe

antrobus wrote: »

Yes, but you are still horribly wrong.

Typically, people are unemployed for six months or less. Typically, buying a house involves a 25 year+ financial commitment. Trying to equate the two shows a basic lack of understanding of the concept of time.

I am not wrong it is a fact that private renting is a transitional tenure

some 20% of homes in the UK are privately rented so people make the wrong assumption that 20% of households are eternal renters but that is not how it works

Some 5% of homes in the UK are privately rented long term that means 95% of the population eventually become owners or get given free social housing

It is probably even better than that as many longer term renters want to rent or get free rent. For instance I have a friend that rents in zone 1 London and also owns in the midlands. He has been renting for quite a long time and his rented flat shows up as a rental but it is not in the traditional sense people think of renters/rentals. Also some 500,000 private rentals are rented for a sum of zero for free again those are not what most people think of when they think private rentals

Overall there is no problem almost everyone ends up buying or getting free social housing its only a small minority of about 5% of households that rent privately long term

GreatApe

ukcarper wrote: »

I understand what you are trying to say but as I said fewer people are in a position to buy and just because in the past people moved from private rental to buying it does not follow that that will still happen.

How is it that ownership levels for uk born brits are at near record highs the only other time it being marginally higher was a period when the black market participants could get mortgages via self cert.

Of course prices could fall in relation to earnings and more people will be able to buy.

It does not work like that if prices crash so does volume. If prices crash 50% and volume of sales crash 50% are more people able to buy?

There is a problem and everybody apart from you seem to be able to see it.

I accept this is not an easy concept to understand I was in your camp 5-10 years ago but if you think it through what I am saying makes perfect sense but more importantly it fits with everything we can observe

ukcarper

GreatApe wrote: »

How is it that ownership levels for uk born brits are at near record highs the only other time it being marginally higher was a period when the black market participants could get mortgages via self cert.



It does not work like that if prices crash so does volume. If prices crash 50% and volume of sales crash 50% are more people able to buy?



I accept this is not an easy concept to understand I was in your camp 5-10 years ago but if you think it through what I am saying makes perfect sense but more importantly it fits with everything we can observe

So you really don't think there is a problem unlike almost everybody else I'm afraid it's you that doesn't understand.

GreatApe

ukcarper wrote: »

So you really don't think there is a problem unlike almost everybody else I'm afraid it's you that doesn't understand.

It depends what you mean by problem
Price is not a problem it is almost irrelevant
Price for homes is not like price for milk or eggs

It also depends on your aim. If your aim is to maximize ownership it is not the private rental sector holding that back it is the social sector. If private landlords sold 1 million homes all it would do is marginally lower the transitional period of private renting by maybe 1-2 years. If the social sector sold 1 million homes it would permanently increase the level of ownership

So if the aim is to increase home ownership the thing holding it back is primarily the social stock

Malthusian

ukcarper wrote: »

So you really don't think there is a problem unlike almost everybody else I'm afraid it's you that doesn't understand.

And finally GreatApe has ground you down to argumentum ad populum.

The vast majority of the problems reported in the newspapers and obsessed over by people on debating forums do not exist. This is one of them.

Other problems which don't exist despite almost everybody continually thinking they are a problem for the past 10,000 years include:

• young people spending lots of time doing something which older people don't do
• declining moral standards
• inequality
• imminent apocalypse

The fact that "almost everybody" (i.e. the small subset of people who read and obsess over newspapers) thinks something is a problem does not create a problem.

GreatApe wrote:

Men with more money are attractive not necessarily because of the money but because of the other things that you need to be able to accumulate money. Generally intelligence & hard work and an ability not to waste it

That is not the surprising or odd the surprising odd thing is that men are so thick they dont think the same about woman. 90%+ of men dont care a dam about how rich or how good a job a woman has instead 90%+ of men care about how pretty a woman is above anything else.

From where I'm standing, if a poor person marries a rich person (no need to bring gender into it these days) the poor person can't be that stupid.

In reality the chances are the poor spouse is intelligent and hard-working and therefore on equal terms. As you yourself said, being intelligent and hard-working doesn't guarantee you'll be rich. It does however make you attractive to a rich person whether you're rich yourself or not. The rich spouse is already rich, they don't need the money. (Unless they are either exceptionally avaricious, or thick/lazy and need you to prop up their finances, neither of which are attractive traits.)

A rich person who marries a dim poor person is probably thick themselves and received their wealth through inheritance or luck. You said yourself that dim people tend not to hold on to wealth - poorly chosen marriages are one of the ways in which they lose it.

GreatApe

In some ways there are similarities between the 'unemployment problem' and the 'housing problem'

Unemployment is virtually zero, headline is 4-5% but if you look at 6+ unemployment it is about 1.5% hence why it is said we have full employment. It is not that the 1.5 million or whatever the exact number unemployed dont matter its that there are no permanent 1.5 million unemployment it is mostly churn.

The problem is not unemployment there is lots and lots of work available the problem in so far as it exists is that people would like work that pays more and is higher status but that is always true and will always be true boom bust or steady state. Whats worse is that people on low pay low status jobs want better pay better status jobs but often dont even make the error to apply for anything else they somehow expect someone to knock on their door and say hey I know you didn't apply for this job but i want to to have it.

With housing the headline is 20% rent privately but like with unemployment most of that is churn. What is more important is the long term private renters and that is closer to 5% which is just fine it is not a problem especially when you consider a lot of long term renters want to rent or are both renters and owners or are renting for free (some 500,000 private rentals rent for free mostly off friends/relatives)

Again the actual problem in so far as it exists is that people want bigger and nicer homes in nicer parts of town but again that is and always will be true almost irrespective of the quality or quantity of stock.

Sapphire

lookstraightahead wrote: »

Interesting GreatApe. I would also add though that you don't need to be 'intelligent' to make money. Sometimes the more emotionally switched on you are the harder it is to be wealthy. I have always questioned wealth and financial status in men/women as I need to know how they've made their money. There are a lot of very clever, emotionally savvy people out there who don't rate wealth (ie they wouldn't put it above their moral standing). Of course you can be all of those things and that's great, but it's not that common.

That is so true. For some people, amassing wealth is simply not a priority. They have other interests that feed their brains and enrich them. I know many people like that (the ones I know tend to be academics/semi-academics, or 'thinking people' of one sort or another). On the other hand, I have known many wealthy people who are shallow and vulgar, and actually very boring, since they seem to focus so much on material things.

Of course, I wouldn't say no to being wealthy if someone suddenly gave me loadsa money, but I do not crave wealth. I'm comfortably off, and also have a lot of interests that keep me engaged and happy.

lookstraightahead

Also, I think lots of people hide incompetencies behind wealth. I'm married to an academic and he fascinates me - my first marriage was to a wealthy man who had real inferiority issues, always comparing himself against the next wealthy person to measure success. I think of vanity fair and what was important in the 1800s doesn't carry the same weight now. Very interesting how we judge ourselves and others.