Now that I'm back at home and reunited with my charger, I can write my blog posts on the laptop again! Wow... I really empathise with the people who only have phones to write on... its really hard!
Anyway, this is a topic that I have been wanting to write about for quite a few months after I had a chat with a close friend. It is no secret that Australian (and probably everywhere...) house prices had gone through the roof during the pandemic, obviously the flood of free money into the system (mostly going to those who didn't need it... businesses...) meant that inflation had gone completely out of control. So, central banks had started mopping up the slushing money and inflation with higher interest rates... which leads us to this crazy bank run days as depositors start to realise that their banks aren't passing on interest rates to depositors. And that they can easily get safe 5 percent interest on treasury bonds instead of having it sit at 0 percent in banks. And banks... well, fractional reserve... shaky shaky shaky!
But this post isn't about that. My friend was convinced that the rising interest rates would plummet the price of houses. Meanwhile, I wasn't so sure... they had made the mistake of trying to "time" the house market a few years ago... and then, completely missed it when the prices shot up like crazy. Many of us in crypto are familiar the phrase (or at least the concept) "picking up pennies in front of a steam roller"... chasing incremental profit/savings, but losing your capital or your opportunity all together!
This was a case in point... so, they could have bought a decent place with a mortgage at that time... but because they waited to time it... all of sudden, everything is now out of their reach and they have to rethink their plans and expectations. It really sucks... but what is the point of waiting to save a few percent at best on large expenditure that is critical "personal infrastructure"? It is the equivalent of driving around burning petrol to get a save a few cent on a tank refill!
Anyway, I put forward the opinion that I didn't think that interest rates would rise too much higher as things would start breaking (like this past week....)... and more to the point, even if house prices started falling (and they did...)... that there would be ENOUGH well-capitalised investors or companies that would capture the falling market and keep the prices out the reach of regular first home buyers. So, my argument was that IF the market of home buyers were ONLY people that wanted to live in them and needed to raise money for a first mortgage and deposit, then the falling house prices would continue... however, the world is shitty and unfair, and there are well capitalised investors and companies that would LOVE to corner the limited housing stock to extract rent as middlemen.
So, in the longer term... I don't think that house prices will fall that much... if at all. It is much more profitable for investors/companies to force a generation into forced rental servitude... and it is rational economic behaviour as well... yay for the free market... it only doesn't suck when you are winning! Plus, I think many free marketers slightly misunderstand the concept of free-markets. It is an extreme that no-one should be cheering for... just like communism or centrally planned economies... but thanks to our Anglo-American friends, you have to pick one extreme side or another, and it is best to pick a side without understanding what you picked!
So... I am just watching this now as a curious bystander. We sold our house at near the top... and we bought our new place at near the top. We did it not for timing, but because we needed a new place to live on the other side of the planet. We have been lucky either way... and sure, if we "timed" it, maybe we could have gotten a much better deal. But in the end, I don't care... we are comfortable and have a place to live. The end...
I can also be found cross-posting at:
Hive
Steem
Publish0x
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Coinbase: If you need a regulated and safe environment to trade, this is the first exchange for most newcomers!
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