dave

fear of missing out disease

83 posts in this topic

The principal doesn't really start decreasing much until 20 years. Even then you still owe 195K.

Wow, that's a sobering fact that doesn't get expressed well in the average mortgage principal repayment graph.

Edited by I'veArrived

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The Japanese had FOMO with the NASDAQ in the 80s. When you run out of greater fools then there is only one direction for asset prices.

Solomon hits on some important points. 30 years is effectively a lifetime - this is a ridiculous length of time to commit to a mortgage. Divorce is another major issue. Raising children can be extremely stressful at times, especially with the lack of sleep, but when you add 500k mortgages to the equation I can see how financial stresses can be the straw to break the camel's back.

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I like the way everyone says "assume there are no maintenance costs" when comparing renting vs buying.

Well I've decided to assume that there are no maintenance costs too, can I have my $50K* back?

*Probably what I have spent over the past 3 years on my ****hole.

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Maybe its because I'm getting older, but 30 years is a long time.

A lot happens in 30 years now.

Something that I haven't seen mentioned often.

In 2000 I'd just started a real job at age 25. 2001 had the tech crash and there were major redundandies where I worked. House prices skyrocketed. They took off at a rate that was higher than my wage each year. I'm now 38.

If I take out a 30 year mortgage now and pay it off over that time period. I will be retirement age.

My parents bought a house when they were < 25. How this whole thing plays out will be interesting. People used to have the house paid off and then were able to concentrate on retirement in their 50's. My generation will be unable to do that as they'll still be paying off their houses.

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Something that I haven't seen mentioned often.

In 2000 I'd just started a real job at age 25. 2001 had the tech crash and there were major redundandies where I worked. House prices skyrocketed. They took off at a rate that was higher than my wage each year. I'm now 38.

If I take out a 30 year mortgage now and pay it off over that time period. I will be retirement age.

My parents bought a house when they were < 25. How this whole thing plays out will be interesting. People used to have the house paid off and then were able to concentrate on retirement in their 50's. My generation will be unable to do that as they'll still be paying off their houses.

I always thought that of you need 30 years to pay the bastard off, then you can't afford it in the first place... Isn't that the rule, or do people actualky buy with the expectation of grinding away for three decades?

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I always thought that of you need 30 years to pay the bastard off, then you can't afford it in the first place... Isn't that the rule, or do people actualky buy with the expectation of grinding away for three decades?

+1

I know of two young couples that recently borrowed over $600k for their first homes, one couple actually borrowed over $800k (I still can't believe they borrowed or could borrow that much) and had to move back in with their parents as surprise surprise they couldn't afford the repayments. They will need every bit of the 30 years to pay it back and I hope they don't hit too many speed bumps.

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+1

I know of two young couples that recently borrowed over $600k for their first homes, one couple actually borrowed over $800k (I still can't believe they borrowed or could borrow that much) and had to move back in with their parents as surprise surprise they couldn't afford the repayments. They will need every bit of the 30 years to pay it back and I hope they don't hit too many speed bumps.

$800,000 - are they crazy?

That's $5,000 a month over 30 years @ 6% (@10% it goes to 7000 a month!) - If they pay it off they will have spent $1.7 million (or 900k+ interest) over 30 years.

How anyone can think this is normal or healthy is beyond me.

If this is what I have to do to get into the property market then count me out - if I miss out forever then so be it.

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$800,000 - are they crazy?

You should read this - SMH - ''We thought the property was worth $880,000 but were willing to go to $915,000,'' Ms Young said. ''An investor ended up spending $965,000 on it.''

also do a search in domain/Re.com.au for Inner West sydney suburbs and filter 3 bedroom homes. Its really surprising how one can afford and what demographics the buyers are fitting in... must be young couples with no children and each earning a 6 figure income.

In reply to the above posts reg APM comment, no I was not referring anyone here being silly.. I just thought that comment was amusing.

Doesn't this just confirm that the whole FOMO issue is null and void? If your wages are rising faster than inflation, and house prices have remained relatively stable, there is absolutely no rush to "jump in"

So you are saying the current prices are reasonable?? and remained stable compared to the last few years?

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So you are saying the current prices are reasonable?? and remained stable compared to the last few years?

I think you might have missed several discussions on wages and such. Largely the people earning high incomes around here are the ones capable of moving / taking risks etc all of which having a house and a mortgage reduce significantly. Although children are worse in that regard I believe :)

To invest in property and make money you have to be good at investing in property. Sort of like any job really. Otherwise everyone would do it and make money at it. Stands to reason. If you have no track record then you probably suck at it (as with any other job). If you are doing it as a job then who cares a toss whether prices are reasonable? all that matters is whether you make money. The issue with taking on property investment as a job is the rather high barrier to entry. When I take a job I prefer not to have to put half a million up front which gets taken away if I turn out to suck at the job.

But if you are talking about buying a house to live in and (like me) considering it at that point to be worth $0 then it is a different equation altogether. Then it is just a quality of life equation. If having your own house is worth the mortgage payments then you should do it. Again the reasonable aspect of the price of the house is irrelevant. The only relevant aspect is whether you are happier.

I don't believe there are any other reasons to buy property. Hence reasonable is irrelevent for everyone.

As for stable I believe Sydney has been inflation neutral-ish for a decade now as a whole. To be better than the whole you are lucky or doing it as a job so see above.

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Well I should come clean and say that I've bought a house(pending Building and Pest, everything else is sorted).

My wife and I had a decent(ish) deposit , realistic expectations and we knew what we wanted & could afford (with a large margin of safety) so that made it easier. And yes, we really did see properties disappear very quickly with the fastest being about 4 hours, another sold the day it listed.

EDIT TO ADD

Neither my wife nor myself are on high incomes. If I do shed loads of overtime I can reach the average wage, if I do none then I'm apt to appear on the lowest bands.

Edited by Easy Tiger

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Well I should come clean and say that I've bought a house(pending Building and Pest, everything else is sorted).

Congrats!!! I hope all works out well. I bet you cant wait to move :)

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So you are saying the current prices are reasonable?? and remained stable compared to the last few years?

House prices haven't been reasonable for a long time. I don't have local knowledge about the Sydney market, but every graph I've seen suggests tor is (as usual) spot on:

As for stable I believe Sydney has been inflation neutral-ish for a decade now as a whole. To be better than the whole you are lucky or doing it as a job so see above.

Actually Sydney has been ridiculously expensive for new entrants into the ponzi for a long time hasn't it? I also agree with tor's comment about mobility and flexibility, all of my best opportunities have come from being able to respond geographically to where the $s are.

Well I should come clean and say that I've bought a house(pending Building and Pest, everything else is sorted).

Congrats. The decision to purchase a home shouldn't be about fear (or greed), if you want to live in your own home there isn't any other way - you have to buy it. Like everyone here, hope it works out to be right for you and the fam.

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Well I should come clean and say that I've bought a house(pending Building and Pest, everything else is sorted).

My wife and I had a decent(ish) deposit , realistic expectations and we knew what we wanted & could afford (with a large margin of safety) so that made it easier. And yes, we really did see properties disappear very quickly with the fastest being about 4 hours, another sold the day it listed.

EDIT TO ADD

Neither my wife nor myself are on high incomes. If I do shed loads of overtime I can reach the average wage, if I do none then I'm apt to appear on the lowest bands.

Congratulations ET. :)

You've not taken on the mortgage without due diligence and your eyes wide open.

I wish you and Ms ET all the best!

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Wow, that's a sobering fact that doesn't get expressed well in the average mortgage principal repayment graph.

No a chart doesn't cut it. An amortisation schedule paints it better.

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The latest building approvals show that the dropping of interest rates is having a bullish impact on housing. This will continue until the last bear gives up. By Armstrong's prediction, there is still about another 1-2 years to go.

ABS

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I think you might have missed several discussions on wages and such. Largely the people earning high incomes around here are the ones capable of moving / taking risks etc all of which having a house and a mortgage reduce significantly. Although children are worse in that regard I believe :)

To invest in property and make money you have to be good at investing in property. Sort of like any job really. Otherwise everyone would do it and make money at it. Stands to reason. If you have no track record then you probably suck at it (as with any other job). If you are doing it as a job then who cares a toss whether prices are reasonable? all that matters is whether you make money. The issue with taking on property investment as a job is the rather high barrier to entry. When I take a job I prefer not to have to put half a million up front which gets taken away if I turn out to suck at the job.

But if you are talking about buying a house to live in and (like me) considering it at that point to be worth $0 then it is a different equation altogether. Then it is just a quality of life equation. If having your own house is worth the mortgage payments then you should do it. Again the reasonable aspect of the price of the house is irrelevant. The only relevant aspect is whether you are happier.

I don't believe there are any other reasons to buy property. Hence reasonable is irrelevent for everyone.

As for stable I believe Sydney has been inflation neutral-ish for a decade now as a whole. To be better than the whole you are lucky or doing it as a job so see above.

Good observations tor.

For me the whole power relationship with my managers rests on my ability to walk if they attempt to stiff me. I don't keep this secret from them and I don't need to bluff. You have to work hard as well to get in this position and be somebody they want to keep of course. I have some talent but I know more talented people than myself. But if I had to tug my forelock to every lame brain idea they had I would go spare. Much better that I get a say in what I do and the way I do it. I actually get to enjoy work most days. :) One day they might just tell me to jog on but that hasn't happened yet. :P

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Given that the stats show that most PI's are low to medium income earners, I often wonder how much better off they would be if they put all the time they spend on property* into working harder and/or up-skilling so that they get paid more.

*looking at ads and inspecting homes, painting and other renovations that they do themselves, organising tradies, talking to their rental agents about whatever issues that arise, keeping track of all their expenses for tax purposes, locking in profits via lines of credit etc.

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Good observations tor.

I am always somewhat surprised when I sober up and find I have posted something coherent :)

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not sure congrats or condolences are in order ET . i guess time will tell. at least you made a move. inaction is my real killer. i can sit and watch the world and life go by.

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The latest building approvals show that the dropping of interest rates is having a bullish impact on housing. This will continue until the last bear gives up. By Armstrong's prediction, there is still about another 1-2 years to go.

ABS

Thank you. At last someone agrees to my conclusion - if you were to buy in the next 2 yrs, you are better off to buy now.

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The latest building approvals show that the dropping of interest rates is having a bullish impact on housing. This will continue until the last bear gives up. By Armstrong's prediction, there is still about another 1-2 years to go.

I think the mindset may be different in the US. He has written that rising interest rates are bullish for property prices, yet the evidence points to the opposite in Australia.

Looking at some of the indicators (decline in Chinese industrial output/exports, decline in carry trade/AUD, rise in USD, Germany sliding into recession, 'end' to Fed QE, etc.) we may be close to a Lehman-type event coming up soon. Something akin to that is likely to spook the wildebeeste. Whether they can be turned like in 2009-10 is doubtful given that there is less room to move with interest rates here (7% > 3% then, 2.75% > ...? now), and if China rolls over then it may be game over regardless.

Good luck to ET and Mrs ET.

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inaction is my real killer. i can sit and watch the world and life go by.

Maybe you should become a monk or something. :)

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Fresh off the press...Suburbs where paying a mortgage is, on average, more affordable than paying

rent based on principal and interest payments on a variable mortgage rate - Hot Link - Mostly units.

Edited by hpk

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