Waiting For House Prices To Bounce Back

Two weeks ago I got stood up at a meeting.

Well, sort of.

The wife turned up but he was nowhere to be seen.

Turns out, they had an almighty argument the night before, and by sun-up, he wasn’t even in the same postcode, let alone any closer to talking to her.

Here’s the back story…

This time last year their house was on the market for mega-bucks.

The price tag certainly didn’t scare off any buyers because they had a conga line of them at the front door, furiously waiving their cheque books.

But hubby kept playing games, refusing to sell until he got a ridiculous offer like the ones he’d seen on the web.

Coincidentally I’d just written this Moowsletter, ‘Why Interest Rates Will Rise’.

In it, I opined inflation would scream and interest rates would go up much sooner than 2024.

Anyway, a subscriber and friend of theirs sent a copy to the wife and when she read it, she leant on her husband to accept the best offer. Just in case.

But he wouldn’t budge.

And if he did, they would’ve waltzed into Christmas with a big sack of cash, enough to make Santa’s eyes water.

But that didn’t happen.

And now it’s almost a year later and things have changed considerably.

Interest rates have gone up and the value of their house has fallen.

But it gets worse.

Since rates started heading north in April, their repayments have increased by a whopping…$4,200 per month!

No wonder they’re at war with each other.

(BTW…I’ve heard of higher increases than that…try $5,800 per month! I kid you not.)

And now he’s waiting for house prices to bounce back while she just wants to get out before rates go any higher.

Not surprisingly, the lady sitting in front of me is a mess.

Her eyes are peeled wide open, her breathing is shallow and her mouth looks dry from all the worry.

But right now, she just wants to know if her husband is right about property prices rebounding and if interest rates will go much higher?

“Here’s the good news”, I tell her.

“If you sell now, you’ll most likely get out at a good price, just not as good as a year ago. But at least you’ll get rid of all that debt that’s hanging around your neck like an albatross.”

“Here’s the bad news.”

“The boom we saw in asset prices (stocks, property, crypto) during 2020 and 2021 was created by fake money; government hand-outs, money printing and record low interest rates.”

Those days are over.

Here’s an example of how much things have changed this year.

Since January, the interest returns on 1 year bonds (similar to a 1 year term deposit) have gone from 0.3% up to…4.6%.

Interest returns like this were a dream twelve months ago, now they’re real!

What this means for investors is they now have a genuine alternative to invest their money with much less risk compared to property and shares.

Hope is not a strategy.

And neither is fighting.

Have a great weekend!

Adam

Stop the press! A few days after this meeting, the husband was a big enough man to realise his wife was more important than any amount of money and they put their house on the market.

They both gave me permission to share this story with you.