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Sneak Preview of 2021 -- Part Two, The Housing Market

Hello folks. Welcome to my series on the housing market, and the general political situation, and how to steer your way through what, for most people, is the most puzzling and expensive deal one is likely to undertake. What has 2021 got in store for us? Let's get underway with some thoughts on real estate.

We have just gone through a rather remarkable period, and we are warned that worse is to come. The main argument is that as so many world economies have been wrecked not by the virus but by the futile and idiotic responses to the virus by so many governments that, in order to cope, vast sums of money have been created out of thin air to deal with the consequences of lockdowns and shutdowns, that this will cause problems in the future.

The main conclusion is that all this money creation is going to cause massive inflation some time down the road.

The other conclusion is that all this "borrowed" money is going to have to be paid back. Who is going to pay it? In effect we have borrowed from the future.

There is another conclusion, namely that a debt jubilee will have to be declared. What will that mean? And what is likely to happen to real estate as a result of the current financial situation.

In order to work out what is likely to happen next we need to go back to basics.

If you listen to the Johnny-Come-Latelies who are setting up to tell you what to look for, and why, you will get a false view of what is happening now, and what is likely to happen next. Most of these self-promoted experts have been in the business for a decade or less. They know nothing about how the property markets work. They follow the wrong metrics and end up with screwed results. Whereas I have been in the business for a lifetime, and have successfully called the path of house prices and patterns for the past fifty years. Show me anyone who comes close. You can't. In fact, rather a lot of the metrics I use successfully were invented by me.

Let's look at some of the ways we need to look at what is going on in the housing market (and some of the ways one should most definitely NOT look).

Over the course of the next few videos I am going to analyse the real drivers behind house prices, values, valuations (not the same thing at all), trends, and ways to goose the market. For instance, I will go into detail about the following subjects:

1   There are several housing markets, the commercial market and the domestic market, and at certain points in history they join. Not only that, but there are those who treat houses as a commercial activity or as a route to a pension, and those who treat their house as their home. These distinctions are important, and most people ignore them because they dont see the disparities and connections. There is NOT just one housing market.
2   The important metrics to watch to see where the market is going, and, of course, those to ignore.
3   How to value a house as opposed to being told by an estate agent the price of that house. There is usually a massive difference, and if you dont know how to value real estate you will quickly go bust, or end up paying way over the odds for any deal.
4   The reason a good knowledge of maths is crucial to being successful where buying and selling real estate is concerned.
5   The kinds of things that go towards creating housing booms and busts.
6   How to value money, and set that value against the value of land.
7   How the government interferes with the housing market.
8   Demographics.
9  The rise of the digital world and how that is going to affect house valuations.

There will be more topics, but that gives you an example of where we will be going over the next few weeks. And I hope you will come along for the ride.

If you are interested in real estate you should have heard of me. If you haven't, no problem, here is a quick résumé.

I did my first property deal back in the sixties when I was barely a teenager. My mother wanted to buy a plot of land to build a house. She was having serious trouble doing the calculations. And that is where most people go wrong in real estate, they just can't do the maths. Actually it can be quite complicated working out how things go. However, since I was keen on algebra I started using algebraic functions to solve problems, and ended up with two or three very simple equations which showed how the deal mother wanted could be structured to make a profit.

Mother took me and my equations to the bank. The bank manager looked at the equations, looked at me, and said sweet things to mother, and that was the end of that. In my naivety I thought bank managers were clever, and understood maths. Obviously I now know better. I have watched as bank policy is to withhold funding when houses are cheap, and splash it around when houses are expensive, thereby showing that bankers have no grasp of simple maths or business.

It was some time before I realised that bank managers are there to manage the bank, not the money. They don’t understand money or deals. They are not the guys to go to for help over money matters.

I learned two valuable lessons from this first failed deal. The first was that to get on you need to bypass fools. The second was that there is always another deal coming along behind the one you missed.

Fast forward a few years, and I have a wife and a son, and we are looking to move. This time I am ready for the bank manager. I am also older, so he wont look a fool if he doesn't understand my reasoning. But I make sure he does understand. He still wont lend me any money, but he lends it to my mother.

We buy a ruin in deepest Somerset. We move in. We are young, poor, keen, inexperienced, and the next two years are hard work.

I learn to be an architect, and draw plans for renovating the house. I learn about surveying, and read up how to make cement. I then take on renovating the old cottage, and building a substantial extension on the side.

I do everything from digging the footings to putting on the chimney-pot. I rip all the old stuff out, put in new plumbing, and completely re-wire all the electric circuits. I then decide that although I hate building, it is making me money, so I build another house, this time from scratch.

I started my business for real in 1971, and have predicted every top and bottom in both the UK property market and the Spanish property market since that time. I have also built five houses. And by that I mean I have pushed the wheelbarrow, drawn the plans, dug the holes, laid brick walls, put in the electrics and the plumbing, and done everything from the planning application to painting the name-plate on the gate when it was all finished. In short, I know everything there is to know about houses and land for the simple reason that I have been there, done it all, and got my hands dirty over the course of several decades. I have even obtained land by adverse possession (squatting), and I've done that in both the UK and in Spain, and the methods used in each country are opposites.

I bought UK property in the early seventies, and sold just before the crash. I got the new wave bang on time, and must be one of the few guys who bought the stock market for new time on an amazing Friday when the FTSE was at 141. I followed that with a plunge back into the property market. I was out before the next crash, and back in again in the eighties. Meanwhile I bought in 1971 in Spain, right next to King Saud's spread on the outskirts of Marbella. I sold three years later during the crash for a 40% gain because I entered into a pre-sold contract, knowing the crash was coming.

I spent weeks telling everyone who would listen to get out of the market in the late eighties; very few paid any heed to my warnings. I was back in again in 1991.

If you want to check out how I started buy-to-let, and how the maths stacked up back then, and how the banks were useless then too, check out the appendices to my book, The Ultimate Real Estate Guide, available from Amazon:

I have had an online presence since the start of the world wide web, and my first property website was up and running in a somewhat ragged format in 1993. It morphed into The Unique Property Site in 1995. It is the longest running property website in the world.

Ever heard of Buy-to-Let? Of course you have. But did you know that it was me who invented the scheme, back in the summer of 1991? Together with an old college friend we set it in motion in Hastings later that year. The way it started and how much money the system made is recounted in that book I mentioned above.

Once we had the system up and running successfully for a year I wrote a book about it. That was version one of the aforementioned book. The original was called Buying to let - Your Pension. Not a single publisher would touch the book. All of them told me buying houses was stupid and could not possibly be the basis for a pension. I therefore published the book myself.

Three years later, the banks, previously fiercely against the scheme, suddenly decided that buy-to-let was a great idea. Yet another example of how the financial world was, as usual, way behind the curve.

But that's enough about me. If you want the tools to get stuck in and always be a success, then make your way to the next video:

And do click the button to like this video, and if you want to be alerted to my next videos, and other updates concerning the world of houses, do let me know and I'll put you on my mailing list.

Okay folks, see you in the next instalment.

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