Current public sentiment towards the housing market?

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Smart Investing Amidst Real Estate Mania

Below is a link to an interesting article by Robert Kiyosaki of "Rich Dad Poor Dad" fame. Somewhat dated yet still relevant I think.

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Bedsit said:
Smart Investing Amidst Real Estate Mania

Below is a link to an interesting article by Robert Kiyosaki of "Rich Dad Poor Dad" fame. Somewhat dated yet still relevant I think.

[broken link removed]
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That guy is a buffoon who got rich selling books filled with dubious financial advice.

The major problem with the advice that you should buy when the market drops is that it is spectacularly easy to lose your shirt doing so. I've read similar advice in many publications and it is something I find particularly erroneous. It leads people to believe that if they invest in a market whenever it dips they will pick up bargains and end up making a killing.

It is as hard to call the bottom of a market as it is to call the top. You will not get rich following any of the advice in "rich dad, poor dad" and you need to question why someone with such supposedly fantastic financial acumen needs to flog overpriced books and games to support himself.
 
Yes I would have to agree. I was more interested in the quotes that he had in the article from Warren Buffet. It is interesting to note that this guy was very bullish on property in the past and now he is predicting a crash. If I remember correctly his main claim to fame was renting out old comics to his peers as child. After that he rode the property boom in Hawaii and wrote a couple of books that caught the public imagination and made a killing.

room305 said:
That guy is a buffoon who got rich selling books filled with dubious financial advice.

The major problem with the advice that you should buy when the market drops is that it is spectacularly easy to lose your shirt doing so. I've read similar advice in many publications and it is something I find particularly erroneous. It leads people to believe that if they invest in a market whenever it dips they will pick up bargains and end up making a killing.

It is as hard to call the bottom of a market as it is to call the top. You will not get rich following any of the advice in "rich dad, poor dad" and you need to question why someone with such supposedly fantastic financial acumen needs to flog overpriced books and games to support himself.
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People are allowed go from bullish to bearish about an asset class - I would imagine that is what makes an investor successful...if the person can move from being a bull to a bear and back to being a bull at the right time.

I am not saying it is easy, but to imply that if one was bullish on as asset class before means that one should be bullish about the same asset class now would seem to me to miss the whole point of investing.
 
I don't see why people would listen to the financial advice of someone who only became rich by writing books offering financial advice. How is he qualified to dispense this advice?

Take market crashes. I love them because that's the best time to buy -- finding true value is a lot easier during such periods.
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I'll say it again - predicting a market bottom is not for the faint hearted. Many an investor has lost huge amounts of money jumping into a "dead cat bounce".

Buying into a market simply because it has fallen is just as idiotic as buying into a market simply because it has risen.
 
He says there are more bargains to be found at such a time - it makes sense to me.

The guy never ever advocates buying stock without researching it - that (in any market) is idiotic.
 
Ok who here can 'say' on record that when the selling season starts again in September that a 'Soft landing' will be called. This thread will i think survive that long and we can then see if our analysis (or wishful thinking) came to fruit.

I am putting my name in.
 
We're I a betting man (which I am), I would agree that the problems will start once the builders and estate agents come back from their spanish villas and decide that enough is enough.

I'd say the probability of a crash is highest this September/October, and if not this Autumn, next Spring with a general election imminent . All other possibilities are rank outsiders AFAIK (bar the possibility that it will occur any over the next couple of weeks).
 
CapitalCCC said:
He says there are more bargains to be found at such a time - it makes sense to me.

The guy never ever advocates buying stock without researching it - that (in any market) is idiotic.
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Yes but a bargain is only a bargain if someone is willing to pay more to purchase that item (even if that someone is you).

Sure, when the market crashes there will be plenty of bargains around because the nature of markets is that they overshoot and then overcorrect. So if you purchase near the top of the market you will pay too much but if you purchase near the bottom you will get a fantastic bargain.

But how can you call the bottom of the market? How do you know the period of correction has completed? If the housing market dips 10% next year will you swoop in to pick up a "bargain"? It may fall 10% every year for the next ten years. Or it may not, it may rise 20% the following year and you'll find you have actually purchased a bargain.

Purchasing because the market has fallen is as idiotic as purchasing because the market has risen. If Robert Kiyosaki was such a great investor he wouldn't have needed to start peddling books and games to make money.
 
The article said there were more bargains around.
It never said buy stock because the price of stock has fallen - the article is not calling a top or a bottom, it is saying that there are bargains to be had when bubbles burst and it is bang on the money.
 
room305 said:
Yes but a bargain is only a bargain if someone is willing to pay more to purchase that item (even if that someone is you).

Sure, when the market crashes there will be plenty of bargains around because the nature of markets is that they overshoot and then overcorrect. So if you purchase near the top of the market you will pay too much but if you purchase near the bottom you will get a fantastic bargain.

But how can you call the bottom of the market? How do you know the period of correction has completed? If the housing market dips 10% next year will you swoop in to pick up a "bargain"? It may fall 10% every year for the next ten years. Or it may not, it may rise 20% the following year and you'll find you have actually purchased a bargain.

Purchasing because the market has fallen is as idiotic as purchasing because the market has risen. If Robert Kiyosaki was such a great investor he wouldn't have needed to start peddling books and games to make money.
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If prices come down to the point where rents will offer a decent yield on the mortgage required to purchase the property then I'll be buying a second property! We will be needing about a 40% drop in prices though for that to happen.
 
CelloPoint said:
We're I a betting man (which I am), I would agree that the problems will start once the builders and estate agents come back from their spanish villas and decide that enough is enough.

I'd say the probability of a crash is highest this September/October, and if not this Autumn, next Spring with a general election imminent . All other possibilities are rank outsiders AFAIK (bar the possibility that it will occur any over the next couple of weeks).
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I think it's years away yet. We are seeing a slowdown at the moment but it as likely to be seasonal as anything else. When the crash occurs we won't even know it for several months afterwards.

The experience in other countries is that builders and developers will keep going full tilt until the veyr end. In fact, the prospect of a slowdown probably accelerates their activity because builders are keen to develop and sell before the inevitable occurs.
 
CapitalCCC said:
The article said there were more bargains around.
It never said buy stock because the price of stock has fallen - the article is not calling a top or a bottom, it is saying that there are bargains to be had when bubbles burst and it is bang on the money.
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Then it is more a platitude than sound financial advice.

Of course there are bargains to be had when a market is oversold. Some of Warren Buffett's best investments occured in the aftermath of the 1987 stock market crash. I'm sure some brave investors made a killing on oversold stock following the dotcom collapse.

However, this is not something that should necessarily be advocated to the ordinary investor. Especially not in housing, due to the fundamental illiquidity of the market.

Feel free to try and snap up an investment bargain when the Irish housing market corrects but I bet you'll regret the decision.
 
For all these people predicting that a crash will happen in x months, or not all, etc, then I would suggest reading a book called Ubiquity - Why Catastrophes Happen by Mark Buchanan.

His arguement (and there is a chapter on financial markets which may be similar to the property market) is that these systems are always in a critical point, where any event can trigger a small or huge response. This is regardless of what the event was, because the system (in this case the market) is complex with many interdependencies then it is impossible to predict what will happen in response to an event.

I cant really explain the whole thing but I am happy enough that we cannot predict or time the markets. So relax everybody, what will be will be! :)
 
A crash or (price correction as the vested interests will call it) can only really occur when interest rates go higher. When base rates are around 4-5%, prices should fall back to 2000-2001 levels. 250k for 3 bed semi in West Dublin. I would imagine the prices in the trade up market will only be marginally effected. If a crash were to happen this coming season, October 13th 2006 would seem apt.
 
redo said:
A crash or (price correction as the vested interests will call it) can only really occur when interest rates go higher. When base rates are around 4-5%, prices should fall back to 2000-2001 levels. 250k for 3 bed semi in West Dublin. I would imagine the prices in the trade up market will only be marginally effected. If a crash were to happen this comming season, October 13th 2006 would seem apt.
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prices for a 3 bed semi in west dublin to go back to 250k? Sorry never going to happen. A 45% drop in prices, you really believe this?
 
SteelBlue05 said:
If prices come down to the point where rents will offer a decent yield on the mortgage required to purchase the property then I'll be buying a second property! We will be needing about a 40% drop in prices though for that to happen.
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The market will probably remain depressed for years after the crash. However, if rental income is providing a reasonable return on your capital then you may be happy with that.
 
SteelBlue05 said:
prices for a 3 bed semi in west dublin to go back to 250k? Sorry never going to happen. A 45% drop in prices, you really believe this?
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Why not? How much does a comparable house cost in Helsinki, Manchester, Stuttgart?
 
Howitzer said:
Why not? How much does a comparable house cost in Helsinki, Manchester, Stuttgart?
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I would have to agree. Worth pointing out that AFAIK, Helsinki, Manchester and Stuttgart have a lot more going for them (in terms of good planning, transport, economic prospects) than Dublin does at present.
 
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