NZ 1st homebuyers are ScReWeD...

[Halebop]

quote:Originally posted by Shrewd Crude

gidday halebop...

...has anybody actually started a BB thread?

I probably mention Baby Boomers in 50% of my posts. Many demographers and a few demographically focussed economists believe Demographics is the only game in town. They have a huge impact on both long and short term cycles - in any aspect of life that can cycle.

If you think back to your basic economic theory, there are a number of cycle concepts offered - mostly around the notion of snaking lines cycling up and down on a run chart. Kitchen, Kuznets and others I can't remember right now. There is also the Kondratiev wave (I think called K-Wave but the others start with K too!) - this metric contends that cycles themselve cycle in size over 50 or 60 years. At the moment we are at the top of the last Kondratiev wave that began in the late 70s / early 80s. Being at the top of the Kondratiev cycle is a once or twice in a lifetime event. Lows are higher and highs are highest. Down periods are soft or just don't happen. Up periods are extended and stronger.

If you overlay demographics on the K Wave you see Baby Boomers as a group entered the work force or at worst university & probably part time employment by 1982. It's no coincidence that this is when both share markets and property markets began a 30 year bull run in most western countries. Just when we were thinking the party must one day end, property and share values accelerated in most countries over the last few years. This is because Baby Boomers are now aged 61 to 43. At worst their children are likely at high school. Mums have gone back to work. As a group they are now in senior management positions, peaks of professional knowledge or have established and properly capitalised their businesses. Earnings and disposable earnings have peaked. This feeds both consumption and the availability of risk capital. Down cycles all but disappear or at least lack conviction.

Push forward 10 to 15 to 20 years. More Baby Boomers have retired than are working. While with-holding their labour has made you and I feel richer at work, with-holding their risk capital for less risky, income generating assets means our employers have less capital to innovate and invest. To attract investors they take less risks and invest less to maintain profits. Cycles are now more pronounced because investments are only made when the trading environment is clearly positive, exaggerating the cyclical nature of economics and investing.

The boomers are now costing more in retirement benefits and healthcare. Additionally, infrastructure built by government in the "make hay" boomer years is inadequate for an aging population - it was built for a Boomer aged population. Substantial infrastructure investment is required against a backdrop of falling growth. The children of Baby Boomers are having children themselves, great for the future, but expensive in the moment as this costs more in health care, education and lost labour. Despite the Cullen Fund, Government borrowing hits an all time high. Inflation is difficult to control. Cycles really cycle. In 2028 the bottom of the K wave is reached and the cycle starts up again.

[skinny]

HB et al. you might find some of the papers here interesting.

http://www.rbnz.govt.nz/research/wor...6/2823686.html

p.s. the Barfoot&Thompson recent sales do not reflect NZ's average agent's sales which have been, erm, average!

[rmbbrave]

quote:Originally posted by Shrewd Crude

gidday halebop...
You raise a very interesting point, and especially around the whole Baby Boomer thing which I can see will be the biggest issue in my life time...I think the next stockmarket crash, house slump will be contributed by BB's ... In New Zealand our soon to be retiring BB's crisis could be offset by an expansive immigration policy, other countries like the US will be hit hard, where a census estimated that there are currently 78.2 million BB's... roughly 25% of total population... If you have 20-25% people pulling out of property, shares then we are looking at decades of recessions in all forms of investments...

I can see it starting to begin with my own eyes... I live in Christchurch and the amount of retirement villages pooping up is just amazing... these BB's are selling there houses, internationals are making up with the shortfall at the moment... in 10 years there maynot be enough overseas investors to make up the difference... which could and will lead to house price falls... this could be my entry...

has anybody actually started a BB thread?

Wait 10 to 20 years and buy the dying Baby Boomers houses is a good strategy in my opinion - However what if I'm wrong and pirces don't come down much?

Then you've lost 10 - 20 years.

For a young graduate now this might be okay but I'm 38 and in 20 years I'll only have 15 years left.

See http://www.sharetrader.co.nz/topic.asp?TOPIC_ID=23675

for a discussion of Population Growth and Growth in Property Values - it includes some BB stuff.

[Crypto Crude]

In terms of cycles the BB will be termed the DG cycle... doom and gloom cycle... I must say that NZ is starting to prepare for it quite well with the Cullen Fund which is also making healthy returns... 17 odd % last year.... but in America they have massive all time high debts,.. housing is already starting to go peer shaped, those current BB's that are expecting 401k plans willnot get them...
And I no that I definately wont, and not expecting nothing....
It is such a concern that In Auzzie savings is compulsory...
BB's hold most of the wealth, and will have to pull out of shares, housing ... because they wont get their superannuation or only a small part of it... which will cause a decade of recessions... I have great fear, but people I tell, just laugh it off, or dont take me seriously,
It is a real factor and we must wake up... coz even if we in NZ are positioned quite well to take it, If USA sneezes, we all catch a cold...
Or then again If China is the superpower in 20-30yrs it may not be so bad, they have an inpeckable savings record... (50% of GDP, or something like that) and retirees get nothing... whole generations of families live together..
If we do have a 15-20% drop in popualation, then it is safe to say that property will slump big time...
stocks like Ryman will do very well for the BB's, but once BB's are gone these stocks will crash... (genesis research)
Commdities will be the way to go... and we are only at the start of a 30plus year run on gold,silver, and the lot...
adjusting Gold for inflation over the long term should put it at $2800us per
ounce right now... so there is alot of upside scope...
Kitco.com is quite bullish on comodities, check it out...
[8D]
.^sc

[Crypto Crude]

whats up rmbbrave.... you said
"for a young graduate now this might be okay but I'm 38 and in 20 years I'll only have 15 left"...
we will get early signals...so not 20years but earlier... for most it will be tooo late to start saving...but in say 10 years the smart BB's will sell early... so there will be many years of no growth, but fairly stable before all BB's are retired and then the big crash...
and remember its not when the BB's die... its when they start to sell out of housing because they need the cash to survive....
[8D]
.^sc

[srotherh]

Shrewd dude
You started a bl00dy good thread.
Lots of good points and thoughts coming out
Especially yours

[duncan macgregor]

quote:Originally posted by Shrewd Crude

whats up rmbbrave.... you said
"for a young graduate now this might be okay but I'm 38 and in 20 years I'll only have 15 left"...
we will get early signals...so not 20years but earlier... for most it will be tooo late to start saving...but in say 10 years the smart BB's will sell early... so there will be many years of no growth, but fairly stable before all BB's are retired and then the big crash...
and remember its not when the BB's die... its when they start to sell out of housing because they need the cash to survive....
[8D]
.^sc

Not to shrewd crude. They dont sell to survive they take out a reverse mortgage to survive. You pay it all back when you die.MACDUNK

[srotherh]

Mak Dunc
The generation you are talking about are not into borrowing for the future ,dead or alive.

[rmbbrave]

A reverse mortgage or not when the house owner dies the house still gets sold.

It's either sold by the bank which holds the reverse mortgage or the deceased's kids who want the cash.

If lots of people die at once, lots of houses get sold at the same time. The more houses on the market the lower the prices.

[rmbbrave]

quote:Originally posted by Shrewd Crude

whats up rmbbrave.... you said
"for a young graduate now this might be okay but I'm 38 and in 20 years I'll only have 15 left"...
we will get early signals...so not 20years but earlier... for most it will be tooo late to start saving...but in say 10 years the smart BB's will sell early... so there will be many years of no growth, but fairly stable before all BB's are retired and then the big crash...
and remember its not when the BB's die... its when they start to sell out of housing because they need the cash to survive....
[8D]
.^sc

In his book, Boomer Nation, Steve Gillon breaks Baby Boomers into two groups: Boomers, born between 1945 and 1957; and Shadow Boomers born between 1958 and 1963.

This generation will be dying at a great rate of knots between 2015 (1945+70) and 2043 (1963+80). That's when we MIGHT see falling house prices or we might not.

I think we will but it is possible I'm wrong. If I am wrong and I wait until 2020 to buy a house and they don't get any cheaper then I've wasted 13 years.