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Old 04-07-2008, 14:40   #121
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I
1) investing in a small house in a desirable area;

.
I have recently read quite a bit about "investing" in a house.

If you want a "home" then it will give you the warm fuzzy.

If you expect it to be part of a retirement fund, even sold at a profit, it is a very, very poor investment.

I am truly upset that of all those I have known throughout my life, none have ever looked at the numbers. I just believed them all.
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Old 04-07-2008, 16:41   #122
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I'm not complaining, I'm observing.

The next phase, after dual earners, is to go childless. It's what we're doing (so far, anyway). Anybody see Idiocracy?
Yes I have seen Idiocracy (LMAO) and no , I don't have children

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Old 04-07-2008, 17:16   #123
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Interesting stuff!

Idiocracy is excellent. Not really as a film, but for scaring sense into you.

Heres the introductory scene:
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Old 04-07-2008, 17:36   #124
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Therapy,
Please explain about buying a house. I do not know the facts as you have suggested.
John
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Old 04-07-2008, 17:49   #125
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Therapy,
Please explain about buying a house. I do not know the facts as you have suggested.
John
The problem with facts is that they are different for different people.

Here is a statement by one person with links to others at the bottom. It can keep one occupied for quite some time.

Renting vs. Buying: The Realities of Home-Ownership ∞ Get Rich Slowly

There are multiple comments also.

I went through it all plus (like always on the internet - one can get lost easily) other links.

It is always about what "you" decide.

My take is that if you can't create a savings plan and stick to it the home may be an option, even if it is a poor paying one.
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Old 04-07-2008, 18:51   #126
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Therapy,
Thanks for the link.
John
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Old 04-07-2008, 18:55   #127
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The problem with facts is that they are different for different people.

Here is a statement by one person with links to others at the bottom. It can keep one occupied for quite some time.

Renting vs. Buying: The Realities of Home-Ownership ∞ Get Rich Slowly

There are multiple comments also.

I went through it all plus (like always on the internet - one can get lost easily) other links.

It is always about what "you" decide.

My take is that if you can't create a savings plan and stick to it the home may be an option, even if it is a poor paying one.
I read the article you linked to but found these problems with it.

1) Today is not a good time to buy a house. Historically renting was not as dramtically as expensive as buying is today. There are ups and downs in the housing market. When I first bought a house in 1991 The mortgage was actually cheaper than rent. If I knew what I know now I would have bought 20 houses.

2) Whether you rent or buy chances are you are paying a mortgage. If you buy you are paying yours. If you rent you are paying your landlords.

3) There was no accounting for inflation in the article. If you buy using a fixed rate mortgage you have locked your house payments in for 30 years. If you buy in a desirable area with geographic impediments to growth and a diversified economy chances are your house is going to go up in value. When we bought an apartment building in SF in 1971 the highest rent that people paid in the building was $250 for a furnished apartment when we sold last year the highest rent we had was $2200 for an unfurnished apartment. The year before we bought the building my parents bought a house for $35000. The mortgage on that came to $256 a month. When you lock in a payment with a fixed rate mortgage you take the bite out of the monster of inflation. Can you imagine having todays salaries and a $250 mortgage?

4) I can throw out a spreadsheet that will say whatever you want it to say. Fact is that frugal people who have owned their own homes are more often wealthy than those who have rented. I wouldn't say there is a direct correlation between home ownership and wealth but owning a house was my first introduction to wealth.
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Old 04-07-2008, 21:23   #128
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4) I can throw out a spreadsheet that will say whatever you want it to say. Fact is that frugal people who have owned their own homes are more often wealthy than those who have rented. I wouldn't say there is a direct correlation between home ownership and wealth but owning a house was my first introduction to wealth.
Me too.

It is complicated.
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Old 04-07-2008, 22:34   #129
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Sully, don't read this:

I have made good money investing in property for the last 23 years. My share portfolio looks rubbish by comparison.

Property is a great way to create wealth. Again you cannot generalize. It depends on the state of the market when you enter and exit, location and type of property. If you do your homework though property is a good investment.
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Old 04-07-2008, 23:22   #130
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It depends on the state of the market when you enter and exit, location and type of property
I reckon in 6 months the retail (the big 4 banks) mortgage interest rate over here will cross 10%. We'll start seeing some really interesting listings then.

Where I currently live & work, property goes b/w $1-4m. There's a number of 'em that have been passed in (auction day) or haven't got any tenants. The 2 (1 work, 1 residence) premises (leased) I'm in was empty for several months prior.

Btw: I don't see what some of the fuss in this thread is about, the yanks have it easy with property/mortgages compared to us downunder.
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Old 04-07-2008, 23:46   #131
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I reckon in 6 months the retail (the big 4 banks) mortgage interest rate over here will cross 10%. We'll start seeing some really interesting listings then.
If only. I would love it to go higher than 10%. I think you are wrong though. So do the economists and the currency market who are all expecting Bollard to start lowering the OCR very soon.
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Old 05-07-2008, 00:33   #132
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If only. I would love it to go higher than 10%. I think you are wrong though.
Read a financial article the other day (here in OZ) that stated that the local banks were drying up of credit due to the businesses taking up the available credit. I think at present one of the banks is at 9.75%. But like you say, I could be wrong.

Edit:
Seafox, I may have been a quarter percent off the current highest rate, but here's the article: Banks may raise rates | theage.com.au

"The higher lending rates would hit borrowers with standard variable loans, pushing them up to almost 10%, adding strain to household budgets already stretched by rising costs for petrol and food."

As you're probably aware, inflation is still rising over here (esp in the resource states of QLD & WA). I don't see the OZ OCR being dropped for quite some time. But like you say, I could be wrong.
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Old 05-07-2008, 01:21   #133
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I think you are wrong though. So do the economists
Its quite funny you mention that. Its amusing to watch the bank economists qualify themselves on the late night financial news when they get it wrong. Nowaday's they seem to rate their opinion on a percentage basis (i.e. 50% raise, 40% hold, 10% drop ), kinda sounds like a "punt" at the horse race track . Also, don't forget that these boy's work for the banks & need to sell the loans One other thing, I'm not sure how many people really thought the RBA would raise the rate during the election campaign (first time ever done) last year

This also reminds me, about 12-18 months ago the real estate boys were spending big on advertising saying that housing was a solid investment & that they didn't expect the interest rates to increase
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Old 05-07-2008, 02:35   #134
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We are probably talking about our own markets and not each others without realising it exfishnz.

Our reserve bank have told everyone that they are going to start easing around Sep. 100% of the NZ economists say he will.

The dollar has dropped against yours and the USD as a result of his announcements. He even says he will let inflation rise to just under 5% and not worry about it.

You may be right about the Aussie market though. Although I do follow it I do not follow it as closely as I should. I have some Aussie bank deposits and a few of your shares.

In NZ, a quarter of the funds the banks need come from overseas. Even if bollard decreases our OCR, the banks are still going to have to borrow on the open market for that 25% so that will have a big bearing on what rates do.
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Old 05-07-2008, 02:49   #135
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We are probably talking about our own markets and not each others without realising it exfishnz.
Yeah I think you're right mate That's probably my fault for having "West Island" in my profile For those of you reading, West Island doesn't actually exist, its been a long running joke that OZ is an Island of NZ because a lot of us come over here. Although, interestingly enough, I read some stats back in 2004 that stated 23% of permanently departing Aussie's go to NZ

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Our reserve bank have told everyone that they are going to start easing around Sep. 100% of the NZ economists say he will.
OK, I'll keep that thought it mind. The world credit market is drying up so it'll be interesting to see what happens by Sep.

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He even says he will let inflation rise to just under 5% and not worry about it.
Our inflation target is currently being debated in the press (for ratings etc ), but I don't think Steven's is going to move on it.

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the banks are still going to have to borrow on the open market for that 25% so that will have a big bearing on what rates do.
I think that's a similar percentage to here.

Btw: do you follow the rates in Iceland? That's a crazy place (policy is 15.5%, overnight is 16.5%)

Central Bank of Iceland Interest rates
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