Hard to explain!

I was bored tonight – and after watching videos online titled “The Crash Course” by Chris Martenson, which detail much of the problems faced by the World, with a specific focus on the US, I came to an item I can’t explain.

Much of the US, according to the research and facts supplied by Chris demonstrate the US is in piss poor shape, and they have nothing but bad government management and bad fiscal policy to blame (poor savings, poor views, poor review of GDP).

Ignoring the US, I figured let’s have a look what’s happening in our own backyard (I wish it was mine), or more to the point, housing locally.

I can’t finger it. The house prices here are ‘affordable’ – I have previously accepted that house prices are out of reach, but reviewing the current prices for Homes locally, many of them suitable, are within acceptable boundaries for price, and can be paid for in a very acceptable time frame.

My concerns can’t be easily pushed aside. Buying a house isn’t like buying a car. A house is a fixed object, you can’t simply move it elsewhere by fuelling up and hitting the freeway. But, also, life isn’t always meant to be a movable object. I’ve lived a fairly ‘mobile’ life thus far (I am young by the way), travelling up and down the east coast of Australia, and settling the last few years in the local area.

The review, of online prices of the local housing market aren’t easily explained. Housing Affordability in Australia is a ‘key crisis’ noted in the media and even by our own PM. Yet, I look at prices locally and now am ’emotionally’ convinced of buying.

I don’t always act on emotion, I act more on strategy, on facts and logic, and then finally, I will consider the thoughts, emotions of others and myself. I can make many of these decisions quickly by putting it to a ‘beneficial’ thought process, and in doing so, I can calculate risk and then determine my next move.

I’m stuck here though. Why can I not simply ‘buy’ one of the few houses I can identify? Why am I now considering concrete financial advise from a financial panther on the best move to take with the property market?

A house isn’t a constant fixed asset though – you can always sell and buy elsewhere (selling at a profit intrigues me). Employment is also something to consider. Whilst Management has advised me that there is nothing to worry about, the risk (see Chris Martenson’s videos) is certainly not 0% that my employment will always be solid. Therefore, if I lost employment, we’d have to sell the house and move to ensure survival (as the house would in effect be locked to my employment – without it, the idea is a dream).

The living costs are there, and considered.

The questions that remain:

1. If I were to no longer be employed – I would then need to consider how we can secure accommodation as a result of the lack of employment (or quickly change to an alternate job).

2. If the house wasn’t ideal – and we found ourselves selling for something more suitable, how do we ensure there is a profit, and not a loss?

3. As a young family, the ‘true’ costs of living may not be fully considered – we must consider the costs of ‘now’ and the costs of the future (ignoring any possible further pay rises, because you can’t bank on them).

4. My partner isn’t well informed in this area – I can’t expect a yes or no from her without her also being fully aware of what we’d both be joining into.

Many of the risks I believe present are ‘manageable’ that is, it is not a high liability that we’ll lose our shirts trying to buy a house. In fact, my calculations so far suggest a shirt, and a jumper is easily possible.

What’s happened in the market to cause this ‘drastic’ change? Are sellers being screwed?

I think I’ll locate a ‘non-bank financial planner’ – at the very least, we can pick their brains on how the current situation looks, and why they would believe we ‘should’ or ‘shouldn’t’ buy a house.

The advantages are clear:
– Buying at a young age means in the future the money won’t be tied up in mortgage repayments and instead will focus towards ‘other expenses’.
– Rent money is ‘dead’ money. It’s a roof for a week, and then it’s rent time again.
– We’ll be creating wealth via an asset (assuming house prices ‘rise’ again).
– House prices are low. They ‘shouldn’t’ sink lower, thereby creating a strong asset.

The disadvantages are not so clear:
– We’ll owe ‘someone’ or ‘something’ money – and for a considerable time.
– We’ll be paying more for something due to Interest Rates

It is tough to explain how the market has come ‘down’ from where it was before, it is tough to predict where it’s going to go – if it’s up, we should be buying now, and either securing a house for ourselves, or even considering selling a house to take advantage of the high housing prices should they ever eventuate.

I must consider what a financial planner can tell me that isn’t clear already. If anything, it’d be good to bounce ideas and thoughts off one, and confirm previous and future plans as they are currently.

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