Ballina and property price developments
April 2007 - Interest rates, Ballina, Casino, non-property option, property prices
May 2007 - New loan option, NSW country and Brisbane prices
June 2007 - Loans, Navra, Property Residex
July 2007 - Hot properties, Sub prime mortgaging, Housing affordability
August 2007 - Property vs Shares, Local market, Citibank offer
September 2007 - Overview, Loans, rates and the whole d... thing!, Properties
October 2007 - Overview, Byron Bay, Ocean Shores, October Property Hot List
November 2007 - Gazumping, The Rate Dance, MO & CT, Navra, Property
December 2007 - Property valuations, Replacement value, Equity finance mortgage
Last newsletter 2007 - Byron Bay market graph, beach front & other properties
January 2008 - Mood of Moment, post crash summary, Gossip
March 2008 - March Musings, New Developments
April1 2008 - War Stories, Property Punting, Interest Rates
May 2008 - Only in Byron, Lo Docs and Tax
June 2008 - Debt Consolodation, signs of weakness
July 2008 - Property Punting, Byron Bay Holiday Rental, Housing Affordability
August 2008 - The Wash Up, Signs of Weakness, Growth area, Debt consolidation
September 2008 - Take stock and share the pain, Property, Elections and Finance
November 2008 - Downsizing, Prices dropping, Mortgage Watchdog, FHOG
Hi all
It's good to be back in The Bay after a month away. As we all know, a lot has changed in that time. It is too early yet to tell if the dust has settled on all the market upheaval but it seems that we are in for more uncertain times ahead.
Take Stock and Share the Pain!
Mayhem! Unprecedented! The end of capitalism! The worst since the crash of '29! Panic! Disaster!
What a roller coaster week on the market, but is it really the end of the world as we know it? I know there are many people in this part of the world that have been predicting, even hoping for the end of Western Civilization, so their time may be 'nye'. However, I am not going to be filling the basement with canned goods and sacks of grain just yet.
A few good things should come out of this upheaval. One is more interest-rate cuts in the months ahead, which will ease some pressure. Another is the stark awareness of the hypocrisy that the bail out of financial institutions is causing. A classic case of, "privatize the profits and socialize the losses," is now being played out, whereby CEOs are able to keep massive incomes during the good times but are able to get the tax payer to bail them out when everything goes pear shaped.
Another improvement may be new regulations in the derivitives market - especially "naked" short selling. I have written about this in previous newsletters on how hedge funds manipulate certain stocks and short sell them, causing a stock to plummet way out proportion to the its underlying value. It is predatory behavior that can leave a trail of destruction in its wake. There is now a ban on short selling all stocks for 30 days and a ban on financial stocks indefinitely. I was forced to watch this painful process personally as the only major holding I still have is Macquarie Bank. I became the classic victim of short selling when it plunged to $27. Remember, this stock was over $100 late last year. Ouch! Being a player in the market has become a character building experience for me.
Property
As you can imagine, things are still flat on the property front. With so much uncertainty, most people are 'waiting in the wings' before making major decisions. Agents are experiencing a bit of activity with owner occupiers on the move - many are downsizing of course, as retiring debt is a smart thing to do in these times. This is the first time in my memory when "Top End" or luxury property has had such a massive downturn. Anything over 2 or 3 mil is staying on the shelf. The interesting thing to watch is whether we will see property prices fall. The first sign of this would be if investors and developers start fire selling projects. If this moves into residential property, we could see some price reductions. BUT, with the popularity of the Byron area, this should only be minor.
Driving through parts of California you can really see why they have had a property market meltdown over there. Many square miles of jerry-built condos have spewed forth from the belly of capitalism. Much money was made while the going was good, but like a game of musical chairs, when the music stops the losers are the ones holding the whopping mortgage on an unrentable investment property. Oh dear! The lesson to be learnt here is to do the research and invest only in areas where the demand for accommodation is long term and unassailable. Places like Byron Bay?
Most of the blame of the sub prime financial melt down has been laid at the feet of sleazy, manipulated mortgage brokers in the USA. Apparently in Florida 14,000 mortgage brokers have had a criminal record and were not screened. As I earn a good part of my income as a mortgage broker, I have done my share of soul searching. In my case, I don't believe I have ever facilitated debt to people who either could not afford the debt, or had no feasible strategy for handling it. For every person who may find themselves in financial difficulties, there are many more who have benefited from using creative debt to build assets and expand wealth.
Election News
Congratulations to Jan Barham - our mayor for another 4 years. It will even be a 6 to 3 green council - if you count the independents Cameron and Morrisey voting with the Greens. I support Jan for mayor as I think she has done a good job. She is smart and hard working. I predict she will have a run at the federal seat of Richmond sometime. I have not been a supporter of the greens in general as it just seems to consist of a "No" strategy and, "lets make everything difficult." It would be great to have a pro-active and productive council who makes things happen whilst still preserving our natural environment. I don't see why that can' be possible. I don't know what happened to the Byron United team. I like most of those people and know their hearts are in the right place, but they seemed to have a PR meltdown this election.
Finance News
So, it is still a good time to consolidate your finances and loans. I want to assure people that I have not left the business and am here to serve. You will get a lot of attention right now. My associate Jay and I are happy to take a call or meeting with anybody who wants to talk about their situation. With absolutely no obligation, be rest assured that we will not refinance you out of something unless it is clearly in your interest, and we will not chase a commission.
I want to clear up a couple of misapprehensions as well. Many people think that independent brokers only deal with non bank lenders, except when things go wrong, in which case, major banks are preferred. We deal with and are getting the best deals at the majors - mainly CBA and Westpac.
I look forward to hearing from you and helping you in the future.
Michael