I agree with a lot of what you say Paul, but not "you will make money in the long term like any other investor in the last two centuries".
In the last 2 centuries many small investors have been screwed over. In the precious metals crash of 1980's, those who bought gold and silver near the top lost as these metals fell and didn't recover for 20 years. Now they have recovered but inflation has stripped any gains. In the .com crash in 2000, those that bought in near the peak, or halfway up lost and will never recover that capital. A lot of the companies don't exist anymore and the nas index is still in the toilet. And in housing? Yes, anyne who bought RE in the 1920's for example saw values fall for decades. It wasn't until 1950 that prices recovered. That's a long time to wait to sell an asset and many investors back then who counted on the money for retirement, grew old and died before they saw any gains.
Every now and then long cycles come into play and economies retract, asset prices collapse. We have just lived through 60 years of constantly appreciating asset mini-cycles, all fueled by ever increasing levels of compounding interest debt. It has to end someday, the debt has to be cleaned so we can start the debt supercycle again.
That I believe is why the smart money was selling their RE holdings in the past few years. Getting out of these assets at the top, putting them into weaker hands so when the collapse comes thet can be taken back at cheaper prices and the debt written off the books in a foreclosure process.
Housing prices take years to rise, and just as many to fall. It will be a slow motion train wreck. But don't take my word on it...
http://www.iceinspace.com.au/forum/
http://sunday.ninemsn.com.au/share/img/hd_v10/9logo.gif
November 6, 2005
Reporter :Graham Davis
Producer : Ann Buchner
Safe as houses
http://sunday.ninemsn.com.au/sunday/...611_house1.jpgGet out of the real estate market now. That's the blunt warning to Australians with investment properties from the country's most respected lender, "Aussie John" Symond of Aussie Home Loans.
Mr Symond predicts a further fall in property prices on the eastern seaboard on top the ten per cent correction in Sydney — the biggest market — since the height of the boom. He tells
Sunday reporter Graham Davis: "Anyone who thinks this softening of the real estate market is about to turn around quickly is in for a shock because this gradual decline, I believe, will go on for several years." Mr Symond urges those with investment properties especially to bail out as soon as they can: "I would be putting it on the market because I reckon the price you are going to get today will be higher than what it will be tomorrow."
With some $20 billion funneled to homebuyers and mum and dad investors, Aussie John is the biggest non-bank lender to middle Australia. His comments will cause a stir because at the same time he urges investors to sell, he says ordinary Australians should refrain from buying in the current market: "The only time I would buy is if I am an owner-occupier and need somewhere to live. For anything else, I would wait because I believe prices will continue to come off."
Mr Symond says the prospect of interest rate rises next year are "deeply worrying", particularly for first home buyers. Commenting on the prediction by property forecaster BIS Shrapnel of a one percent rise in the variable rate by the end of next year, the Aussie Home Loans chief said: "People would hurt and we would start to see defaults. The segment most at risk are first home buyers because if they bought at the top of the market, they would today have negative equity."
http://sunday.ninemsn.com.au/sunday/...611_house2.jpgHe warns that thousands of properties could suddenly flood the market as borrowers default on their loans or cut their losses and run: " I think we will see more and more forced sales and that's why I'm saying to people there's no rush, we are going to have a wider selection of properties to choose from at probably a lower price."
Symond's comments have stunned the real estate industry. "John is highly influential and from the consumer's point of view, he is very credible," said top Sydney agent John McGrath of McGrath Partners. "What he's said will definitely have an impact on the market." Louis Christopher of Australian Property Monitors commended Mr Symond for speaking out: "Obviously a comment like that wouldn't help his own business so he is calling it as he really sees it and all credence to him because not many people do that."