NZ 1st homebuyers are ScReWeD...

[Dr_Who]

You gotto be crazy to pay $600k for Rotorua unless it is water front.

[Jessie]

You gotto be crazy to pay $600k for Rotorua unless it is water front.

There must be some crazy people then because houses have been selling in Rotorua for $500, $600, $700K without a glimmer of a waterfront.

[Crypto Crude]

First homebuyers screwed, in one year Plus turning shrewd

My examples are for first homebuyers...
other market participants will not fit into this category.... EG, traders, fixed interest rate holders, buffs, long term holders, renovators, big cats developers, long term investors, developers, king pins in operation, multi home owner_______ etc etc etc....
(mack-a-dad-unk-)... this means you.... you big fish in a small pond......

Ok... Today I went out for lunch with my great mate... Last year near the peak he was on the brink of buying... 'I forced him out'... today he told me he bought... at first ise outraged... rampaging... lost for words... not happy... the story he told started to unfold much better than what it was even 6 months ago (when he wanted to buy)...
his circumstances were not all about money etc... family etc...
Ok... house- went for auction at 300k, 3 accepting bidders... all fell through on finance... after that, then went through on market at 270k on open home...My buddy put bid in at 230k... came back at 240k...then 233k... "sell".... I went around and seen the house and saw what potential this house held...
not good area in Christchurch... shirley.... surrounded by state owned... best house in two blocks... 3 bedroom, two double rooms... garden, newish kitchen... 300 per week for 30 years (to pay house off in that time (including interest).... rent (otherwise) half that plus two rooms rent... so perhaps my buddy scored...
Im convinced he will go floating on my advice... I will free carry him if im wrong, its just not possible (with one more rate cut this year)...
....
So, from one year onwards, first homebuyers (in particular) will become screwed turning shrewd as predicted because the market topped out, and in some circumstances houses are being sold on a forward basis of slashed prices of 10% already being factored in... ie... the sellers save the wait, while reinvesting their money at the current deposit rate and making money while market is in limbo... so factoring in further cuts in housing prices as a given with a shot of making money back through reinvestment.... (smart move)... My dad made the same tough call... valued 610k... sold 500k flat... thats almost 50k (b4 tax) next year while market likely continues to fall, or at major major major best market goes sideways....

My buddy will be worse off in the near term... much better off in the long term, perhaps indifferent if all the dots can fall into place... IE renting both rooms, interest rates continue to fall, suburb already sold down and factoring in further slashes (not like that of guns and roses) ....
I hope he is still prepared for prices to fall much further...
In general I have been learning much about shocks in the market impacting on interest rates, output of the economy, LM, and IS curves (its a given bar nothing) I will bet on it if a buff is prepared to take it up.....
EG, sell it to the grandma (off current info) type stuff...
info does change... so if you are that sure (buff) lock it in now...
next year (with further rate cuts, which are a given), it will be a great time to buy...
Minimoke reckons Im A talker... reckons I will stand by and watch the rebound... reckons all sorts............... you watch buddy...
first home, looking for 3.... and those that cant do teach, right?
With a name like that you should become maximoke...
haha... all in good notion.... good luck to all, no matter how trigger happy you are... bang bang... when are you first homebuyers going to pull the trigger????
I hope not for at least another year...!
Re-address the situation in 6 months, perhaps things will change then...?
hummm.....
bang bang...
when?

.^sc

[minimoke]

..not good area in Christchurch... shirley.... surrounded by state owned... best house in two blocks.

Well, there’s the first two rules of real estate broken!

[minimoke]

Minimoke reckons Im A talker... reckons I will stand by and watch the rebound... reckons all sorts.... first home, looking for 3.

SC – looks like we still haven’t gotten the distinction sorted yet. You can only own one home at a time – the rest are “investment “ properties. Both two quite different things!

[minimoke]

Im convinced he will go floating on my advice... I will free carry him if im wrong, its just not possible (with one more rate cut this year)...

Hopefully you have deep pockets! Here’s why: currently ANZ rates are 10.95 floating and 8.95 for a 2 year fixed.

If your mate fixes for 2 years he’ll pay $35,800 on a $200k mortgage.

If he takes your advice he’ll pay $21,900 for the first year interest on a floating rate. And say the rates drop a whole 1% (which I don’t think they will) he’ll pay $15,900 if he fixes for 2 years in a years time. This means you’ll have him paying $37,800 over the next two years.

So on your advice he’ll pay $2,000 more and he’ll be playing the interest market and wondering when to best time his move – only to find he’s miss timed it and lost a couple of K along the way.

Each month he follows your advice he’ll be paying $333 more in interest. Any drop in interest rates has to be large enough to recoup that loss – and this is without factoring the compound effect of reducing his mortgage by this amount each month in the meantime.

[Cooper]

Hopefully you have deep pockets! Here’s why: currently ANZ rates are 10.95 floating and 8.95 for a 2 year fixed.

If your mate fixes for 2 years he’ll pay $35,800 on a $200k mortgage.

If he takes your advice he’ll pay $21,900 for the first year interest on a floating rate. And say the rates drop a whole 1% (which I don’t think they will) he’ll pay $15,900 if he fixes for 2 years in a years time. This means you’ll have him paying $37,800 over the next two years.

So on your advice he’ll pay $2,000 more and he’ll be playing the interest market and wondering when to best time his move – only to find he’s miss timed it and lost a couple of K along the way.

Each month he follows your advice he’ll be paying $333 more in interest. Any drop in interest rates has to be large enough to recoup that loss – and this is without factoring the compound effect of reducing his mortgage by this amount each month in the meantime.

Yes... and you also have to factor in how much of the bank's borrowing is tied to the OCR; remembering that around 40% (from memory) is borrowed offshore, in an environment which is set to see increasing interest rates.

[Dr_Who]

There must be some crazy people then because houses have been selling in Rotorua for $500, $600, $700K without a glimmer of a waterfront.

$700k with not views in Rotorua!!??? You can get a nice place in Mission Bay, Orakei, St Heliers, Remuera for $700k.

I think maybe it is time to start looking at property again for the long term portfolio. I cant guess the bottom of the market, but the interest rate continue downtrend should help stimulate the market.

[Crypto Crude]

minimoke...SC – looks like we still haven’t gotten the distinction sorted yet. You can only own one home at a time – the rest are “investment “ properties. Both two quite different things!

what about this example,
three homes...Live in one home, Monday through wednesday....Thursday and Friday in the 2nd home... and the weekend at the third...

.^sc

[axion]

Or a normal home, a weekend 'country' home, and a holiday home ;P