will there be a drop in housing prices?

[headhonchoII]

Owning a house you can do what you want to it and you can get some tax rebates too. In Taiwan Hukou is based on house ownership in reality, it is just the way it is here.

Owning a house is nice if you can afford it. Just make sure you can afford to pay the loan longterm and it can be sold or rented out if you need to move somewhere else.

[*monkey*]

I had spent almost NT$1 million on rental expenses before I got my own place. I sorely wish I could do it all over again, only putting that NT$1 million into home equity and not into some greedy landlord's pocket.

Why is the landlord greedy just because he wants you to pay rent? He's probably just a smart investor.

I suppose so, if a smart investor is someone who sits on his fat ass watching TV all day while other people pay his mortgage installments.

[GC Rider]

I had spent almost NT$1 million on rental expenses before I got my own place. I sorely wish I could do it all over again, only putting that NT$1 million into home equity and not into some greedy landlord's pocket.

Why is the landlord greedy just because he wants you to pay rent? He's probably just a smart investor.

I suppose so, if a smart investor is someone who sits on his fat ass watching TV all day while other people pay his mortgage installments.

Yep that's the exact definition. You might replace TV with iPad though.

[bismarck]

I had spent almost NT$1 million on rental expenses before I got my own place. I sorely wish I could do it all over again, only putting that NT$1 million into home equity and not into some greedy landlord's pocket.

Why is the landlord greedy just because he wants you to pay rent? He's probably just a smart investor.

Or, according to our man GiT, possibly a not so smart "investor". Therefore probably rather ungreedy, perhaps stupid.

[GuyInTaiwan]

bismarck: That's right. I'm not saying that investing in real estate isn't a good thing. What I am saying is that it is not always a good thing. It's highly overrated, as proven by the fiascos in the U.S. and several European nations.

[suntex01]

bismarck: That's right. I'm not saying that investing in real estate isn't a good thing. What I am saying is that it is not always a good thing. It's highly overrated, as proven by the fiascos in the U.S. and several European nations.

I have to disagree. I think the problem in US and Europe was that people didn't draw a clear line between investment, and a home.
An investment is something you try to make as much money as possible while spending the least. While on a home, you shouldn't expect to make any money out of it. But in both US and Europe, people used their own home like an atm and investment. They either poured too much money into it, hoping to get a huge return, or took too much from line of equity, thinking the value will stay up. They crossed the line between owning a home, and making an investment, a big no-no in my opinion. So when wanting to purchase real estate, one should ask themselves, whether or not they want it as a home to live in, or an investment. Because you can't have both...it doesn't work that way.

I for one believe people should own their home, but whether or not everyone should buy real estate for investment, is a different story.

[Omniloquacious]

I will find it hard going back to living in someone else's house if I do decide to rent for a while after selling my present home (if I can sell it). I never minded renting before I bought my first place here, but it really does feel so much better to live in a place of your own and be able to do whatever you want and can afford to do with it.

On the subject of property values: I read a report yesterday that said housing prices in Spain have commonly fallen to just one quarter of their level at the height of the property boom four years ago. Moreover, given the disastrous state of the Spanish economy, the extremely high unemployment rate, and the huge oversupply of housing, some well informed commentators are saying prices are almost certain to continue falling, and could end up as low as just one tenth of their peak value. Could the same thing happen in Taiwan? It may be improbable, but it certainly isn't inconceivable.

Of course, however much the value of a house or apartment rises or falls in the market, it doesn't really matter if you have bought it as your home, paid for it in full or are free from risk of being unable to meet mortgage payments, are happy living in it, and have no need or intention to sell it within the foreseeable future. And even if you need to sell it and move, you should still be able to replace it with a similar place at a similar price within the same market. But if you have overstretched your finances taking out a loan to buy it, or if you have bought it purely as in investment, you're going to be feeling very real and very substantial hurt if its value plunges to just a fraction of what you paid for it.

[GuyInTaiwan]

suntex: I disagree entirely. I don't think everyone should own their own home. There are circumstances when it really makes sense. There are circumstances when it doesn't. Coca-Cola may be a great stock to own, but not for $1,000 a share. Likewise, becoming a dentist may be a great career choice, but not if it puts you $1,000,000 in debt. There is a line for anything you spend money on. On one side of the line, it makes sense. On the other side, it doesn't. Now, we can debate where that line is exactly, but to make a blanket statement that people should do X is irrational. You can never divorce any situation from its financial implications. For many people (perhaps even most), buying a home will be the single biggest financial decision they'll ever make in their lives. To regard this as something that must be done because it's regarded as axiomatic/received wisdom/whatever is going about it the wrong way.

The interesting thing for me about money is that the middle class always want to talk about what to do with money and bandy about the received wisdom. Yet once you actually run the sums, it turns out that sometimes, the received wisdom isn't wise at all. Likewise, once you look at successful people, it's often the case that they took a different route. Furthermore, I'm suspicious of the received wisdom simply because it's followed by the middle class. They're precisely the last people I would ask about money because by definition, they've spent their entire lives striving towards (and achieving) mediocrity. At least the poor don't pretend that they have their shit together.

This sounds extreme, but if you turned up to a gym to get a personal trainer and he was twenty pounds overweight like the average person, you'd be a little suspicious. You wouldn't ask some random dude's dad to teach you to play the piano. You'd be unimpressed if you went to a top restaurant to find me cooking your meal. Yet this is precisely the approach people take to financial advice.

[suntex01]

GuyInTaiwan:

I agree with you on some levels, hence I didn't use stronger words such as "everyone" or "must". But the problem is that, in the case where the home is rented and not owned, over the lifetime the expense spent on renting alone would amount to a pretty significant amount. It would probably still amount to "biggest spenditure" by most middle class. One way or other it would come back to the same point. Unless you live in Germany or similar countries where there are housing that is subsidized or regulated by the government, cost of renting would most certainly end up being more than a purchase.

Bottom line is, landlords are out there to make money. So besides paying for landlord's holding cost, renters are also paying a premium for landlord's profit. Seriously, unless one is in a situation where they foresee changes within five to ten years, they should seriously consider a purchase within means.

Also, I see your point on financial advices from middle class, hence why I mentioned that there should be a definitively separation between an investment and a home. And that fact is, home is usually the one thing middle class can fall back on in the end, if they don't leverage it.

Back before the whole bubble burst, its startles me everytime I watched the reality shows that show people making huge profits from flipping houses. I kept saying this shit can't keep going on... I had no knowledge of the subprime debacle. But when you see boatloads of people jumping into the same industry and money seemingly flowing out of nowhere, shits' about to happen.

Anyways I have to say, in times like these, unless I get positive cash flow from a real estate investment, I would probably bet my money on commodities...

[Kea]

Money will flow into stocks in mid-late Summer. Long term hold.
If Romney wins, Bernanke is out and the Fed may raise interest rates. Housing prices may drop.