FOMO and Home Ownership

To clarify, I'm not saying I'd be buying it. Just making a comment on longer term price trajectory.

 

Yep totally emotional...."shakes head" ....d umb ar$ es.

 

Interesting tonight about the sheer number of middle class Australian's that have no discretionary income after rent.

I guess its clear now what is driving the retail apocalypse.

The "liberal strong economy" is stuffed if everyone loses their jobs!!

 

Yep...let alone mortgages....this is what people who think it will just rocket up all the time. If there is a major downturn....Australia is hugely exposed!

 

What is household spending? Its something like 60% of GDP.

Let's hope the world never gets a new novel virus or we have a natural disaster like a bush fire, flood or hail storm!!

 

Why more of us may be renting for life

"The proportion of Australians living in severely crowded dwellings increased by more than 50% between 2001 and 2016".

I was happy to see the last gentleman move from renting a 2 bedroom unit in St Marys with 7 kids to a 4 bedroom house in St Marys.

 

I would also love to sell for a crazy price but what holds me back is that I won't be able to buy in again. Maybe I'm looking at it wrong? Maybe there's no reason why I should want to buy into an area again once I've sold out of it.

 

A quote from last night 730 show:

“In 2017-18, the ABS found that property-owning households — where at least one of the occupants was 65 and over — had a median net worth of $960,000.

Similar households that were still paying off a mortgage had a median net worth of $934,900.

In stark contrast, the median net worth of similar households that rent was just $40,800.”​

TBH, I was surprised by all three numbers.

From almost $1 million down to $40k — the difference between owning and renting

 

IMHO it has a lot to do with the different mindsets/financial habits of those wanting to own vs those wanting to rent.

I rarely meet renters who have a financial plan in life.


When Melbourne and Sydney had quite a big slump recently, many folks who had a renting mindset would have had absolutely no inclination to look at property and find a deal. Then there were many folks looking to buy a house and have taken advantage of lower prices. Hence their wealth journey begins while the renters continue to rent and build zero net worth over the long-term.


Even since the days of my dad, he had a different mindset compared to his peers. Hence he worked his ass off and bought real estate which was within his budget while most of his peers blew it on x, y and z. It is pretty much the same story today.

 

Totally agree.

We have friends (similar age to us) who have worked all of their lives in good jobs (he is a welder for a mining company; she is a bursar for a Uni) who still rent today.

They have lived the good life and have never voluntarily invested in their future. When they retire, they will struggle as their income will drop significantly BUT their living expenses won’t.

No surprise for the wife and I. We met them 30+ years ago and have been watching the “train wreck” slowly evolve.

I am not convinced they fully understand the predicament they are in.

 

Tbh I don't think many do. Until it's too late.

The simple reality is if you don't financially plan for your future/retirement and you're still renting come retirement time, you're going to have some tough adjustments to make and live a very, very mediocre retirement.

Just at the time you thought your about to become king/queen of your castle.

It's sad really. But unfortunately in most cases, it's a lifetime of making certain decisions which has resulted in this final predicament.

That's why I find investing a no brainier. If you don't take action to do something, your definitely gonna be screwed in the end.

Investing gives the masses a fighting chance for a better life/retirement.

 

Totally agree.

Forty years ago, I left home with $50 (a 21st birthday present from my parents) in my wallet.

Through educating myself, developing a strategy, executing a plan, working hard, being patient, making mistakes, picking oneself back up, applying delayed gratification, ..., I ended up in a fairly nice spot.

Hell, when I look back I can see it wasn’t easy. But, I am so glad I survived the journey. When I look at most of my family, my friends and my peers, I realise that I have done OK.

 

Wow, that's interesting to hear.
Last time I saw the nightclub line ups was Leichhardt around 2013 when the inner west was booming hard and the light rail was about to launch.
But that was for houses. The Ashfield apartment looked like a run of the mill old apartment... Crazy!

 

Apartment wasn't bad, quite a large footprint with a couple of balconies from memory, but yes not worthy of that amount of interest / price. But who am I to say.... property is worth what people are willing to pay

 

@sash You've had the same view for a long time - at least since mid 2014 for Sydney property.

Not saying you are wrong - just that it hasn't happened yet.

I'm with you in locking in some gains before things go back to ... 2013 prices ?

@Gockie What would that place in Epping be worth now ?

Yep....till you get rising unemployment and interest rates at 7%....then the party crashes.....too many people getting carried away...this cannot be sustained.

↑ Gockie said: ↑
I know... Mid 2008 when nobody was buying we bought our house on a regular block of land in beautiful and peaceful North Epping for less than 700k! Now it's roughly worth about 1.1mill and there's no sign of the area becoming any less popular.


sash, 15th Aug, 2014

Nice Suburbs in Sydney around $700k

 

RP Data says 1.44m. The days of it being 1.1m or 700k for a house like that in that area are now well and truly over. 700k gets you an apartment now. Note there was a big correction, but that’s over. It was definitely a great opportunity for anybody who had the means to buy though.

 

We could see alot of money from China leaving.
Who knows.

Its always easy in hindsight.


1 year ago people were saying dont buy as the market will be tanking for the next 5 years. Now the same posters are posting crap again with no regard for the advice they were giving 12 months earlier.

Now the market is booming.(Syd Mel that is.)


So dont listen to alot of guys here. Make the right decision for your self.

Your risk profile, Your family needs . Your finacnical reserves. You simply dont know what the market will do.

Especially with Low rates money needs to be deployed.

This environment has not really happened many times in our living history. SO no one can say with certainty.

 

It is all about sentiment....I saw places I could have bought in the Northern Beaches for 1.25m in Feb...now at 1.5m. But when you discount stamps it is more like 200k profit.

I see heaps of FHB jump in boots and all ...this time I will take some profits whilst I can.

I have just sold one in Melbourne bought for 130k...sold for 426k....another near Newcastle will come onto to the market somewhere in 385 to 410k mark...bought for 205k.

I am taking profits whilst I can...I also don't want to sit around and have my I/O loans come off and put pressure on me to sell at the wrong time.

At the same time I am buying...but just not Sydney and Melbourne's crazy markets.

Having said that...I am watching some market in Sydney and Melbourne.

Buying 700k and making 1.1m is impressive...but when you include stamps and neg CF...it comes down to 300k.

I have a couple of places (not selling yet)...which I bought in the 2s and now around 600-700k. They were also bought during 2010-2012 period.

I really don't care..as I am more interested in divesting out of assets over the next few years..whilst demand and prices are high!

 

There some people on this site...who are getting carried away and making disparaging comments about renters. I know one person who does not want to own....you can't call him a loser as he has a ETF/LIC portfolio worth 2.2m in 4 years (started with a house deposit of 800k). He also has 800k in super with his wife. They are in their mid 40s.....I did the numbers he will have about 3-6m depending on what the market does in another 7 years by doing nutin.

Lots of people do a lot of talkin' but I only 2-3 people on this site who have actually retired before 55 years. Lots have day jobs as...but they are not free.....

Some you ask...about details...in typical fashion that is private. .......nuffies....

People have forgotten Sydney dropped 15%.....in a very short period of time. The only reason the market was able to spring back was a rapid drop in rates. Very soon that option will run out....then what? Australia has had over 25 years of growth..... they way the libs are running the economy....we will be in trouble. It is a matter of time...when it happens it will hit Sydney the hardest.....I see people so in debt...if they lose their jobs and can't get similar jobs or sell their house a good price...they are stuffed!!!.

 

"Transience has replaced durability at the top of the value table. What is valued today (by choice as much as by unchosen necessity) is the ability to be on the move, to travel light and at short notice. Power is measured by the speed with which responsibilities can be escaped. Who accelerates, wins; who stays put, loses."

'I wouldn't want to buy even if I had the money': The rise of renters by choice


This is all good and fine. No one is saying renters are losers.

Stop that divisive crap.

What I am saying is renting vs owning, for many people is a difference in mindset which ultimately, in many cases, will affect the net worth of many renters come retirement time.