NZ 1st homebuyers are ScReWeD...

[Crypto Crude]

minimoke-One of the risks to Shrewd Crudes approach is paralysis thorough analysis. That is never actually buying a first home.
...By the time SC has done all the analysis to time the property market right he then has to become a financial markets expert so he can time the interest rate market right. While all this is going on he isn’t enjoying the intangible benefits of being a first home owner.

Rather than all the analysis a person might just work out if they are going to be an owner or a renter. The numbers never really stack up to own your own home from a financial perspective – you do more financially by being a renter. However you don’t get the intangible benefits of owning your own piece of land and having security in location.
With the glut of rentals around now the question should perhaps be : Should I be a first home owner or a first home renter?

Minimoke, if thats the way you feel about me then so be it...
first of all, I am studying to become a financial markets expert, its my future...
Ive not gone overboard on the analysis... Ive kept it very simple for others to understand...
I have not even gone into details, perhaps due to the opposition of me providing it...
The two most important Ideas that we have recently debated
1) dont buy a house because they will keep falling in value, and
2) go floating interest rate because we are on a new cycle

are both givens...absolutely cash in the bank mate...
certainty, no brainer... Its just a wait and see as to if they come true or not and I know Im right... Mackdunk wont even take a bet with me...
I cant believe it someone of your ability (minimoke) would pretty much recommend me buying a house now just so I can enjoy the intangible benefits of it while house values crumble around me... your just trying to be funny eah?

Look mini,
its nothing to do with timing the interest rate cycle (that comes last, perhaps an added bonus only)...
its a mixture of many things in harmony for the best entry time (most profitable outcome).... I will save a decade off my total loan term.... WHAT dont you understand about that...?
Im off for abit, catch you up when I get back...
see you at the national convention, 23rd August Lone Star Riccarton...! check out the appropriate thread for more details...
catch all you buffs in the next round...
In a few years us newbies will be laughing straight to the bank with this...
All of the buffs will all be proven wrong, you just watch me...
its a story in the making...hang around to find out what happens
thank you...bye for now...

.^sc

[minimoke]

Im off for abit, catch you up when I get back...

But here in lies the problem. Are you buying a home or a house? On your return I‘ll look forward to continuing the debate on one or other – or even both but lets not confuse the two. In the meantime enjoy life as a renter. Your landlord will appreciate you paying his mortgage. Oh – and also enjoy that 5% gross you’ll be getting with your money on the bank. The government will appreciate your tax contribution – but watch out as those rates drop!

[Dr_Who]

I ve noticed that a number of sellers are putting prices very close to the 2005 CV valuation. Things are starting to bite and sellers are becoming more realistic when there are no buyers around.

Hey Shrewd. If you are buying a home to live in, it is ok to pay abit more. If you can get property below 2005 CV, it is worth considering. There are plenty out there for you to choose from mate.

[Halebop]

I ve noticed that a number of sellers are putting prices very close to the 2005 CV valuation. Things are starting to bite and sellers are becoming more realistic when there are no buyers around.

Hey Shrewd. If you are buying a home to live in, it is ok to pay abit more. If you can get property below 2005 CV, it is worth considering. There are plenty out there for you to choose from mate.

I was speaking to a group of lawyers and they remarked that they have noticed more than a few sales and valuations at and sometimes below 2005 CVs. Wonder if anyone still hopes this market isn't correcting?

A friend of mine just bought a house in a central Auckland Suburb at 16% under the 2007 CV and in no way does he believe he got a bargain (Any Auckland real estate still seems pricey to me but then I don't have a vested interest... or any interest). He simply made the offer he thought it was worth and refused to move. After weeks on the market with little interest the vendor capitulated.

If I was to put a number on it I think the market will correct 20 to 25% in real terms but inflation may hide some of the drop.

[minimoke]

they remarked that they have noticed more than a few sales and valuations at and sometimes below 2005 CVs.

But that’s a meaningless conversation. RV’s/CV’s are simply a tool to divi up a Councils rapacious finance needs. They are not a reflection of an actual property’s value. At best they give a ball park figure – which is why banks have been happy to accept them when looking at security for a mortgage. And it is only for a very short time that a CV is in sync (but not necessarily accuralty reflecting) with the market.

[tim23]

Agree totally minimoke I still see ads qouting RV, GV (does not even exist!) & CV what garbage they are largely meaningless even registered valuations can date pretty quickly.

[Halebop]

To me that meaningless conversation confirmed the industry data I've seen first hand. The Auckland market at least has dropped by double digits in the last 12 months.

The residential property market is screwed and those with an investment bias towards the sector will do it tough. A house is a house and if you are buying for emotive or practical purposes rather than financial then fair enough. I can't see a compelling need to rush though. At best the market will show neutral movement while inflation will favour deferral strategies.

[minimoke]

..and those with an investment bias towards the sector will do it tough.

Nothing new there. High original purchase price, high interest rates and low ish rental demand all has spelt danger for more than the last few years. Property values may be temporarily deflated as desperate owners try to quit their “rental yield” investment in the face of crippling costs in a talked down market. Indeed I suspect it is these people who are loosing in the current market as they are simply selling. Whereas residential owners are selling and buying in the same market space. If they are selling a lower valued property they are also able to pick up a lower valued property – so they are just as well off.

[minimoke]

At best the market will show neutral movement while inflation will favour deferral strategies.

So presumably today’s buyers are cashed up – but where have they parked their Cash. Higher interest finance companies are risky. The share market is in the doldrums. Bank Interest rates are falling and inflation has probably eaten away any net income. Money has to find a home - the first three options aren’t great: some say property isn’t great - but the money has to go somewhere. Meaning property doesn’t look so bad – and at the end of any fall off you are still left with a piece of dirt, bricks and mortar. Perhaps a reason why the property fall won’t be as bad as some suggest.

[Halebop]

I've had a cash bias for almost two years and been strongly in cash the last 12 months. The 1% real return after tax in the last 12 months has been handily compensated by the 15% to 25% boost to purchasing power it has enjoyed thanks to falls in real estate and equity markets. Going long in falling asset classes hasn't been a compelling argument against low real returns in cash.