NZ 1st homebuyers are ScReWeD...

[Crypto Crude]

minimoke-
Shrewd Crude. You’re doing exactly as I had predicted – trying to forecast the future fixed term interest rates. Lets sit back and watch and do nothing while trying to pick the optimal buy point – which will incidentally pass you by because the goal posts will keep shifting for you . You’ll be like the pokie player thinking that one more week delay will bring you the .1% drop in rates to be the real deal. Keep doing the numbers

Minimoke,
You make it sound like im missing a great opportunity for not buying a house now?

Life is all about taking risks !... buying a house, paying weekly payments for 30years is no risk...Thats the safe option in life...
Im a risk taker... And the first major risk I'll take on is ridding this downturn for all its worth...

its very simple, the goal is to save 10years or more off the loan term...
Buying a first a house would likely be the most important decision of my life, therefore I would like to buy at the best time...buying at lower interest rates is a bonus only... and I will buy on the way up, I will explain further...
....
Ive posted about timing the market before...
If try and buy at the absolute bottom, you will likely miss and prices will keep falling... If you buy as it starts to turn up then you will save the time you stood by and watched, you will identify the new trend, you will be better off...
I will buy my first house on the way up, and I reckon Ive got a few years...
sideways markets at the bottom makes you worse off with interest payments...
If in 5 months the market turns up then Im stuffed, I have no real income... I would have to pursue other avenues I have on offer...
I doubt that I would miss an opportunity if one came my way in a few years...
I see no great opportunity of a life time in housing now!...
I willnot be a 52 year old man with a house only... 25-30 year loan term is what Im currently realistically looking at at 600per week.....
... It is not my dream to be 50, with 10% house price growth mostly cancelled out by 8% interest rates-negative growth for the near term...
...
The cost of Renting is cancelled out by the amount of money I would not put into the house deposit, which could be used to make returns elsewhere....
trust me dude, I have no major dream to be in shares for the rest of my life.. id seriously rather be in housing and grind out those 20-30yrs..Im way smarter than that, And I know I wont have to... Ive got a few other avenues, and In a few years when I get into business, I will need the cashflow...
If I have a house gobbling up $600 a week, (400 of interest payments), then I will likely be very tight (If I dont get married)...
marriage is for another topic... it wont happen over night but it will happen...
The only chance I have in housing is if I can shave that 30yr loan in half, or down to 20years...I know its hard for a buff or someone already in housing to understand...
With falling house prices and falling interest rates, it is very much so possible...
Its no dream of mine to be 50 with one house...
I will have a house, the path to that house might have to be unconventional...it wont be a grinding depressing ride for me...
....
lastly, 30yrs ago it was only 3 yearly incomes to 1 house price...
at the peak it was 7 yearly incomes to 1 house price...
Dont tell me that it is no different today as it was 30years ago...
....
PS-there is nothing wrong with forecasting interest rates...
....
Lets hear some thoughts from some other potential future homebuyers?
Questions I have...
when are you looking to buy?
and what would house values have to fall to for you to consider a future in housing...?
remembering that how far prices fall represents how long loan term will be...
So final question is what do you think an appropriate loan term would be (years needed to pay the house off)?

.^sc

[Crypto Crude]

minimoke-You’ll be like the pokie player thinking that one more week delay will bring you the .1% drop in rates to be the real deal. Keep doing the numbers

get over it minimoke,
Im nothing like that...
As Steve said, life is not about IRR...
its about being smart--> the most amount of output for the least amount of input...
30yr loan is a hell of allot of input...One house is not much output....
even if that house went from 200k to 1mill in 30 years...

.^sc

[minimoke]

lastly, 30yrs ago it was only 3 yearly incomes to 1 house price...
at the peak it was 7 yearly incomes to 1 house price...
Dont tell me that it is no different today as it was 30years ago...
.^sc

ShrewdCrude
This might have been so 30 years ago. But buying a house back then was also different. There were no such things as 110% loans. Nor were there loan options of fixed / floating and overdraft, nor were terms out for 30 + years. The lending ratios were very different; you needed registered valuations and a pile of other paper work and had to literally go down on bended knees to get cash out of a bank. And loan rates got to be over 20%. And people moan today. Jeez today – I can get $50k out of Amex by filling in a form and posting it in.

Your loan doesn’t have to be seen as a mill stone around your neck for the rest of your life. Look upon it as a commitment to repay someone for the privilege of levering equity to make gain. At the moment I am thinking of being in debt till the day I “retire”. Though I am moving towards thinking I might be in debt till the day I die. Doesn’t worry me as assets far outstrip debt and I like having the opportunity to use someone else’s money to do stuff.

Buying a home is different from buying a house. You seem to keep tangling the two. You also sound like you want to get into a house on your own. There are other options.

[minimoke]

Minimoke,
Lets hear some thoughts from some other potential future homebuyers?
.^sc

Here you go
$189k, three bedrrom, 683square section, close to golf, parks and schools. Sky installed, plenty off street parking, 10-15 minutes to CBD, quiet street. Can't go wrong!
http://www.trademe.co.nz/Trade-Me-Pr...-148872167.htm

[Dr_Who]

I am a potential buyer of properties and cashed up. I have a funny feeling that this property cycle has abit more pain to go before any gains. I see 2-3 years of downturn or flat property market. So, I am in no rush to buy. Abit like a Briscoes sale.. 30-50% off everything in store nationwide.

[Halebop]

ShrewdCrude
This might have been so 30 years ago. But buying a house back then was also different. There were no such things as 110% loans. Nor were there loan options of fixed / floating and overdraft, nor were terms out for 30 + years. The lending ratios were very different; you needed registered valuations and a pile of other paper work and had to literally go down on bended knees to get cash out of a bank. And loan rates got to be over 20%. And people moan today. Jeez today – I can get $50k out of Amex by filling in a form and posting it in.

Minimoke all this proves is that the price of housing is partly a function of lending and liquidity rather fundamentals (the other part is the number and desire of people who want to borrow to house themselves). This is a two edged sword. Banks have already tightened lending criteria and no surprise the market has dropped. Funny how they steadfastly stuck to the line that their own practices did not encourage the property boom? Seems quite at odds with what is actually happening or any rules of liquidity that I understood.

A friend was asking $720,000 for their house - a price achieved by several in the same street in the last 6 to 12 months. Their highest initial offer was $640,000. They managed to claw the offer up to $650,000 but the purchaser had to go back to the bank to check. The bank lowered rather than raised his pre approved limit (the same bank allegedly offering 110% loans). Now the offer for $640k is gone too. Another friend, coincidentally only one street away from the first, was buying rather than selling. Went to Auction expecting the old range of $700,000ish to drop to $650,000 and was prepared to pay that. Won the Auction for around $550,000, $100,000 less than expected and a 20%+ drop on prior benchmarks.

The Real estate institute is trying to convince us the median is relatively stable. But once again smoke and mirror prevail because they are reporting sales rather than values. What are selling are small volumes of higher value properties at discounted prices. The market is in the poop and so is financing.

[minimoke]

The market is in the poop and so is financing.

Presuming your friends are buying and selling in the same market they haven’t lost anything so its not a home owners problem.


For those investing in housing then that’s a different story. And since no one invests in property for capital gain (because who is paying the tax!) then they just need to worry about the cash yields.


Things could also get problematic for those that have leveraged their property to buy the overseas trip or new boat. But that’s probably more a function of consumerism rather than property / house ownership.

[steve fleming]

If you get a good job in your 20's & 30's (or before you have major family commitments - kids), and buy a house early enough, you don't really have to worry about all this.

My wife and I ( very early 30's) pretty much paid off our $480k mortgage (first home) in 4 years, thanks to both of us having good jobs/high incomes together with some help from some investments that came good (ie see 10 baggers below).

I must say, however, the combined income really really helps.

[minimoke]

Shrewd Crude - Labour have made it a lot easier for you to get onto the property ladder. Check out the Elections 2008 thread and see how you can exploit the Governements largesse to your benifit.

[Crypto Crude]

Minimoke,
Im voting National...
Any future first homebuyers out there in internet land?

.^sc