Quote:
Originally Posted by Iggle Piggle
Going to show my ignorance here...if prices crash would that be a good time to upgrade to a better home? I get that a crash would suck for investors, but would it really be bad for owner/occupiers that just want somewhere to live and aren't living it up on equity?
Say I owe $100k on my home that is currently worth $400k, and I want to upgrade to a house currently worth $600k. If I do that upgrade now I end up with a mortgage of $300k.
If **** hits the fan and prices drop by 50%, I only get $200k for my current house (instead of $400k) but then I only have to pay $300k for the 'better' house (instead of $600k). So I end up with the better house with a mortgage of $200k instead of $300k. I get I won't have as much equity, but if I am just after somewhere to live and pay down then that doesn't matter.
Obviously a crash would hurt those downsizing, but if the crash is pretty much relative/proportional across all segments then it would be a good time to upgrade/upsize, yeah?
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Ironic that you should suggest this, I was talking to a friend at a BBQ on the weekend and he was telling me that he's just secured his 3rd investment property.
I asked him if he was worried about prices falling and he said quite the contrary, house values always go up.
I said that's a shame, he said why, I said because if they halved you could have 6...
Then I just left him contemplating it and moved chairs
