Muswell Hillbilly

Sensible Pricing In Edinburgh

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Sensibly-priced properties in Edinburgh actually sell! Where I am, in Marchmont, a two-bedroom flat in Spottiswoode Road came to the market on 21 October. Today, 27 October, it has gone from the ESPC and a ‘sold’ sticker been pasted across the sign. The flat was the standard size (around 85–90 m²) and in good condition. Rather than arsing about with prices like OA 300, OO 285 or whatever, the owner of this one put it straight on at FP 265. I would guess it has sold for 250K. The owner bought it for 222K five years ago, and it has been let out at least for the last three years, so he could afford to sell it for a sensible price. Even so, the speed of the sale has surprised me.

I had posted previously about a genuine three-bed flat on the same road which had been on since late June, firstly at OA 340, then OO 330. On 10 October the price suddenly dropped to OO 295. Lo and behold, the flat sold – at least, it has gone from ESPC. With an asking price lower than that of some two-bedroom flats, it looked almost like fair value.

Another two-bedroom flat has come to the market this week. It needs a new kitchen and bathroom and a lick of paint, but is on a very prestigious road, and has come straight on at OA 250. I expect this one, too, will sell quickly.

Meanwhile a whole load of two-bedroom flats in Marchmont with asking prices around 285–315K continue to languish on the market. Evidently their owners are not bothered about whether they sell or not. Similarly there are a few larger flats in Thirlestane Road with just silly prices – 370–400K – which have been sitting around since the late summer. Presumably their owners also don’t care whether they sell or not.

Please post any information about similarly sensibly-priced properties throughout Edinburgh in this thread.

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Sensibly-priced properties in Edinburgh actually sell! Where I am, in Marchmont, a two-bedroom flat in Spottiswoode Road came to the market on 21 October. Today, 27 October, it has gone from the ESPC and a 'sold' sticker been pasted across the sign. The flat was the standard size (around 85–90 m²) and in good condition. Rather than arsing about with prices like OA 300, OO 285 or whatever, the owner of this one put it straight on at FP 265. I would guess it has sold for 250K. The owner bought it for 222K five years ago, and it has been let out at least for the last three years, so he could afford to sell it for a sensible price. Even so, the speed of the sale has surprised me.

I had posted previously about a genuine three-bed flat on the same road which had been on since late June, firstly at OA 340, then OO 330. On 10 October the price suddenly dropped to OO 295. Lo and behold, the flat sold – at least, it has gone from ESPC. With an asking price lower than that of some two-bedroom flats, it looked almost like fair value.

Another two-bedroom flat has come to the market this week. It needs a new kitchen and bathroom and a lick of paint, but is on a very prestigious road, and has come straight on at OA 250. I expect this one, too, will sell quickly.

Meanwhile a whole load of two-bedroom flats in Marchmont with asking prices around 285–315K continue to languish on the market. Evidently their owners are not bothered about whether they sell or not. Similarly there are a few larger flats in Thirlestane Road with just silly prices – 370–400K – which have been sitting around since the late summer. Presumably their owners also don't care whether they sell or not.

Please post any information about similarly sensibly-priced properties throughout Edinburgh in this thread.

Interesting post, thanks for the link. IMO though quarter of a million pounds is still too much to be tightly surrounded by other people like that, calling the area  "prestigious" depends on your point of view i suppose, green and safe fair enough, quarter of a million still too high for me I`m afraid, pissed students aplenty make it less appealing. It will be interesting to see how this area sells post - free credit era.

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Interesting post, thanks for the link. IMO though quarter of a million pounds is still too much to be tightly surrounded by other people like that, calling the area "prestigious" depends on your point of view i suppose, green and safe fair enough, quarter of a million still too high for me I`m afraid, pissed students aplenty make it less appealing. It will be interesting to see how this area sells post - free credit era.

Yep - seems fair value but only compared to what else is for sale at the time. An average one bed wee flat in Gorgie in 2007 at 105k seemed fair value. However today ? Clearly way overpriced. All relative.

Does show however how 'easy' it is to sell if you really want to. Not sure if anyone remembers but I took about 6 months to convince my parents of this in 2008 (IIRC). In the end once they got it and offered their place as the 'cheap' one in comparison to everyone else ? Sold in 6 days.

I can't sell my house must be one of the most annoying statements I ever hear from 'home owners'. And they generally have a lot !!

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Good post.

Now the others in the street will look and say, "Hi, reduce to same price and sell in 6 days".

Except they won't. B)

Price is set at the margins. Future buyers will look to buy lower than the new street price, as the market is falling.

The seller of the flat you mention has been a smart cookie.

The others will chase the market all the way down.

No tears from me.... :P

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PS.

A quick look on the same ESPC website gives rentals of 2 similar properties (and in v. good condition) at £1000pcm. So, possibily get a rent via another channel (web/newspaper) at £800pcm ?

I used their repayment calculator to see how much it would set me back.

£250K with £50k deposit, leaves £200K to repay.

Over 25yrs on a SVR of 5% (today), that gives me £1200pcm. Add in insurance, upkeep etc, it is £400pcm above the rental.

Even at £250K , it looks well overpriced. And assumes no futher IR rises. This market has a quite a number of drops to go. ;)

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I can't sell my house must be one of the most annoying statements I ever hear from 'home owners'. And they generally have a lot !!

Yep, my friends one bed in Gorgie has not sold now after being on since (I think February). They are refusing to cut the price so are going to rent it out until things pick up again in the spring....

But in the same chat was talking about how her friend who works in property was saying that there are increasing numbers of empty flats in Gorgie as people are refusing to lower their price to sell and not bothering to let them out as it is not worth the hassle.

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Yep, my friends one bed in Gorgie has not sold now after being on since (I think February). They are refusing to cut the price so are going to rent it out until things pick up again in the spring....

But in the same chat was talking about how her friend who works in property was saying that there are increasing numbers of empty flats in Gorgie as people are refusing to lower their price to sell and not bothering to let them out as it is not worth the hassle.

I thnk this will be year 3 of people hoping for this magic bullet. Too late for them IMO. There are people dropping their price already and have been for at least 2 years. Long time for that situation to stop and turn around.

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PS.

A quick look on the same ESPC website gives rentals of 2 similar properties (and in v. good condition) at £1000pcm. So, possibily get a rent via another channel (web/newspaper) at £800pcm ?

I used their repayment calculator to see how much it would set me back.

£250K with £50k deposit, leaves £200K to repay.

Over 25yrs on a SVR of 5% (today), that gives me £1200pcm. Add in insurance, upkeep etc, it is £400pcm above the rental.

Even at £250K , it looks well overpriced. And assumes no futher IR rises. This market has a quite a number of drops to go. ;)

I'm not disagreeing that these flats are over-priced, or that they wont fall below £250k.

However, comparing rent with a repayment mortgage is comparing apples and pears. At the end of 25 yrs you would own a property, whereas renting you would still be renting.

A more direct comparison is rent vs. mortgage interest, since they are both 'rent' in effect (one from a LL, one from the bank)

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I'm not disagreeing that these flats are over-priced, or that they wont fall below £250k.

However, comparing rent with a repayment mortgage is comparing apples and pears. At the end of 25 yrs you would own a property, whereas renting you would still be renting.

A more direct comparison is rent vs. mortgage interest, since they are both 'rent' in effect (one from a LL, one from the bank)

IMO (Rent) vs. (Mortgage interest costs + maintenence costs) is more reasonable.

I get a feeling people seriously underestimate maintenence costs. I reckon they are potentially as important as interest rates, rental rates or whatever. They can be huge.

I know many people who just suddenly get whopping bills for all manner of things. And over 25 years ? Must add up to a hell of a lot of money. Tens of thousands easily. For some places quite possibly 6 figures.

One person I know moved into a flat about 2 years ago. So far new boiler & new floorboards. Also noted that entire windows/glazing will need replaced in next couple of years. And then over 25 years you will prob have to do the roof as well. Must be talking close to 5 figures just for the roof - even for a flat. And for a detached house - ****** knows !!

I think he has spent over £10k already - and it is barely 2 years !! Harsh example but it does happen.

If I bought a house today and planned for the next 25 years ? At a very very rough guess I would be putting aside £50k+ for maintenence costs. In real terms.

You rent for that time and you have none of these costs. Plus you have no interest costs. Plus the rent is usually a fair bit cheaper.

Problem with most people is they are shit with money. They will just piss the savings up against a wall.

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IMO (Rent) vs. (Mortgage interest costs + maintenence costs) is more reasonable.

What about any interest costs on the maintenance costs?

If people have committed themselves to buy in some cases it will mean they have no cash left over. Hence some maintenance costs might require a loan.

My cousin sold in Dec 2008 and it was the first time in years he wasn't waiting for the pay cheque. In 2009 his rental had a major septic tank problem that the landlord sorted quickly but my cousin was very relieved it wasn't him paying for it. New tank, new pipes and JCB hire for days while they found the problem, he said if it had happened at his old house the cost would have crushed them as it would have needed a loan.

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What about any interest costs on the maintenance costs?

If people have committed themselves to buy in some cases it will mean they have no cash left over. Hence some maintenance costs might require a loan.

My cousin sold in Dec 2008 and it was the first time in years he wasn't waiting for the pay cheque. In 2009 his rental had a major septic tank problem that the landlord sorted quickly but my cousin was very relieved it wasn't him paying for it. New tank, new pipes and JCB hire for days while they found the problem, he said if it had happened at his old house the cost would have crushed them as it would have needed a loan.

Yep I often wonder about this. People who stretch themselves to get a one bed flat. Barely a penny left over. Year later get a bill for 12k for shared roof repairs.

I assume in the past most have just added it to their mortgage as, well, HPI would take care of that wouldn't it.

Going to be getting intersting in the next few years. Especially for the many in NE in flats suddenly getting big bills through the door.

Plus I reckon a lot of Central Edinburgh stone work is getting to the stage where it will require a lot of work. Thats not going to be cheap.

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I'm not disagreeing that these flats are over-priced, or that they wont fall below £250k.

However, comparing rent with a repayment mortgage is comparing apples and pears. At the end of 25 yrs you would own a property, whereas renting you would still be renting.

A more direct comparison is rent vs. mortgage interest, since they are both 'rent' in effect (one from a LL, one from the bank)

I used Repayment because that's what most people think about when they compare to renting.

Not correct, but that's the reality.

As for the "you own after 25yrs"...that assumes you stay in the same place for the 25yrs. In that case, buying may be better than renting. If you get married, have kids, change job, lose your job, retire etc , you may decide to move up/down the ladder. Costs involved in every move. If you rent, you remain flexible. I changed jobs 3 times in 4 years and moved to a better paid post every time. Would have been more difficult had I been a houseowner.

Not saying one is better than the other, but need to knock the old EA mantra "renting is dead money" on the head. B)

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Yep I often wonder about this. People who stretch themselves to get a one bed flat. Barely a penny left over. Year later get a bill for 12k for shared roof repairs.

I assume in the past most have just added it to their mortgage as, well, HPI would take care of that wouldn't it. Going to be getting intersting in the next few years. Especially for the many in NE in flats suddenly getting big bills through the door.

Plus I reckon a lot of Central Edinburgh stone work is getting to the stage where it will require a lot of work. Thats not going to be cheap.

Yes, easy-peasy when the market is on the up. Different story when the downturn is in full swing and one can't rely on capital gains or MEW from the banks to pay the bills. As you say, it's going to get interesting.... :D

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Plus I reckon a lot of Central Edinburgh stone work is getting to the stage where it will require a lot of work. Thats not going to be cheap.

Actually, this has already happened. Back in 2003, I think, a waitress got killed by falling masonry in a city centre cafe. After the public inquiry Edinburgh Council decided they might be liable if they didn't take action, the result being a blizzard of statutory notices of repair on city properties. A bonanza for masons, an ****-covering exercise for the council and home-owners left with the bill.

I personally got stung for £8k, rather unnecessarily if you ask me (but then no one did!). I was fortunate enough to be able to pay it out of my capital at the time, but my neighbour, a classic buy to let mug who seemed to spend his MEW on holidays and kitchens, had to sell up the next year.

Now if I see a building with peeling stonework I assume it's got an undismissed statutory notice against it, and that future owners will have a massive liability hanging over them.

Edited by kenzdawg

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Yep I often wonder about this. People who stretch themselves to get a one bed flat. Barely a penny left over. Year later get a bill for 12k for shared roof repairs.

I assume in the past most have just added it to their mortgage as, well, HPI would take care of that wouldn't it.

Going to be getting intersting in the next few years. Especially for the many in NE in flats suddenly getting big bills through the door.

Plus I reckon a lot of Central Edinburgh stone work is getting to the stage where it will require a lot of work. Thats not going to be cheap.

My cousin bought another house in June.

Him and his wife were renting a 4/5 bed farmhouse with a large garden in a lovely quiet spot for £600 a month - the type of house they think they could never afford to buy. It was about 2 miles from his 4 kid's school, had good broadband and he works from home using the internet. I kept telling him he had a superb deal. He had just spread the £70k cash from the house sale (@£130k) across a couple of saving accounts and a few shares and had no intention of buying another house for the foreseable future. Then his wife spotted a house for sale, suggested they view it and they finished up buying it.

The paid £166k for a 3 bed semi in Moray. It took every penny they had to such an extent that the £2k arrangement fee was added to the mortgage. This was at 5 times his real salary (he included other things on the mortgage application). Now he is disappointed with the size of the house they bought compared to where they were renting. At least one of the two Moray airbases are closing so he thinks house prices will drop in the area - negative equity is beckoning. He is on a 2.89% mortgage for 2 years. He is hoping interest rates aren't rising in 2012....

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My cousin bought another house in June.

Him and his wife were renting a 4/5 bed farmhouse with a large garden in a lovely quiet spot for £600 a month - the type of house they think they could never afford to buy. It was about 2 miles from his 4 kid's school, had good broadband and he works from home using the internet. I kept telling him he had a superb deal. He had just spread the £70k cash from the house sale (@£130k) across a couple of saving accounts and a few shares and had no intention of buying another house for the foreseable future. Then his wife spotted a house for sale, suggested they view it and they finished up buying it.

The paid £166k for a 3 bed semi in Moray. It took every penny they had to such an extent that the £2k arrangement fee was added to the mortgage. This was at 5 times his real salary (he included other things on the mortgage application). Now he is disappointed with the size of the house they bought compared to where they were renting. At least one of the two Moray airbases are closing so he thinks house prices will drop in the area - negative equity is beckoning. He is on a 2.89% mortgage for 2 years. He is hoping interest rates aren't rising in 2012....

These figures look odd to me. He had 70k in the bank and bought a house for 166K with a mortgage of about 100k. The 100k is 5times his salary which is therefore 20k and on that 20k he is supporting a wife and 4 kids. Previously they were paying 600 per month to a rent a place now they are 2,890 per year in mortgage interest (about 240 per month). Even assuming another £60 per month in insurance and maintenance on average then his interest repayments are 1/2 what he was paying in rent. Once you figure in capital repayments his mortgage (100k over 25 years) repayments are about £470. So his monthly outgoings on the most basic level have gone down by about £100 per month. He may have had other new expenses but the shift from renting to paying a mortgage has seen him swap from paying £600 per month to a landlord to 240 per month to the bank.

Obviously, house prices may fall significantly in which case he would have been better off waiting and he's lost the interest and/or any return on his shares. But on the figures in front of me, he seems to have smaller monthly outgoings now than he did while renting.

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Deleriad-I could not have put it better myself ;-)

As an aside, I am surprised in this credit-restricted era that you can just "include other things on the mortgage application" in order to get a 5X mortgage!

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I used Repayment because that's what most people think about when they compare to renting.

Not correct, but that's the reality.

As for the "you own after 25yrs"...that assumes you stay in the same place for the 25yrs. In that case, buying may be better than renting. If you get married, have kids, change job, lose your job, retire etc , you may decide to move up/down the ladder. Costs involved in every move. If you rent, you remain flexible. I changed jobs 3 times in 4 years and moved to a better paid post every time. Would have been more difficult had I been a houseowner.

Not saying one is better than the other, but need to knock the old EA mantra "renting is dead money" on the head. B)

I think you're taking the "own after 25 yrs" too literally. Of course you may move etc but the point is you are buying £250k of housing stock and locking it in at 2010 levels and paying it up to 2035. Whether that it s good move or not is a matter of debate-2013 may be infinitely preferable but few would argue that in 2035 prices will be a lot higher.

The real problem arises if you never buy-in 2035 rents will be a lot higher than today and blowing all your meagre pension on rent would be a pretty c r a p existence. The skill in the current downturn will be having the balls to call the bottom and take the plunge when all around have lost faith in the housing market!

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you missed the loss in interest from the 70K in savings

The lower outgoings are probably the reason they jumped, but they may live to regret that when they want to try and move up in a few years with no deposit left.

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you missed the loss in interest from the 70K in savings

The lower outgoings are probably the reason they jumped, but they may live to regret that when they want to try and move up in a few years with no deposit left.

if but maybe. A 40% in nominal prices would be needed for that to happen. Probably a 50% drop in real terms. An unlikely scenario IMO-though doubtless occurs many times a night in the dreams of HPCers :-)

What is more worrying is that he is not happy with the place theyve bought-I mean-did someone put a gun to his head? Come on man-grow a pair!

If they wanted to reduce outgoings they could have rented a cheaper place FFS.

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These figures look odd to me. He had 70k in the bank and bought a house for 166K with a mortgage of about 100k. The 100k is 5times his salary which is therefore 20k and on that 20k he is supporting a wife and 4 kids. Previously they were paying 600 per month to a rent a place now they are 2,890 per year in mortgage interest (about 240 per month). Even assuming another £60 per month in insurance and maintenance on average then his interest repayments are 1/2 what he was paying in rent. Once you figure in capital repayments his mortgage (100k over 25 years) repayments are about £470. So his monthly outgoings on the most basic level have gone down by about £100 per month. He may have had other new expenses but the shift from renting to paying a mortgage has seen him swap from paying £600 per month to a landlord to 240 per month to the bank.

Obviously, house prices may fall significantly in which case he would have been better off waiting and he's lost the interest and/or any return on his shares. But on the figures in front of me, he seems to have smaller monthly outgoings now than he did while renting.

A few good points but not sure.

(1) He has smaller monthly outgoings. This cost him a 70k investment.

(2) Average maintenence per year of £700 quid ? That may be fine for the 9 years out of 10. However in year 10 when theyre is a bill for 14k it changes it all a little. I think your maintenence figures are mega optimistic.

(3) The interest payments you use are based on a 2 year fix - during the period of history of lowest interest rates ever.

Now I am not saying this person made a good or a bad decision. However if prices crash in that area - and the chances they could big style - then I think it could turn out to be a seriously bad move. Time will tell. Although as Sly says - he has stretched himself to the extreme. That is a big red warning signal to me.

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Actually, this has already happened. Back in 2003, I think, a waitress got killed by falling masonry in a city centre cafe. After the public inquiry Edinburgh Council decided they might be liable if they didn't take action, the result being a blizzard of statutory notices of repair on city properties. A bonanza for masons, an ****-covering exercise for the council and home-owners left with the bill.

I personally got stung for £8k, rather unnecessarily if you ask me (but then no one did!). I was fortunate enough to be able to pay it out of my capital at the time, but my neighbour, a classic buy to let mug who seemed to spend his MEW on holidays and kitchens, had to sell up the next year.

Now if I see a building with peeling stonework I assume it's got an undismissed statutory notice against it, and that future owners will have a massive liability hanging over them.

Remember that. My Sis knew the bird who was killed. Aussie girl IIRC.

I am sure I also read something recently that a lot of the New Town sandstone in Edinburgh is at 'that age' where it is all giong to need a lot of work as well.

Will have a google.

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Old article but pretty interesting.

Stone

"The worst-hit areas in the capital are understood to be Marchmont, Gorgie, parts of Morningside, Abbeyhill and Leith."

"The Scottish House Condition Survey looked at 30,000 properties and found that the repair bill for privately-owned homes was £5 billion, with council and housing association flats making up the rest."

:o

That money is just not available for repairs. Not since HPI has stopped anyway. This is going to be a huge story in the next few years IMO. With the high house prices paid for these places there can't be much left for massive bills that must be coming to these places.

Just imagine if more and more of these started to happen. Word got around. That 250k Marchmont flat could fall in price massively very very quickly.

Is it reasonable to get a full stone survey on an entire building if you buy a flat in it ? What sort of money are we talking about here for a proper survey by an expert ? And I assume you would have to ge the whole building done to make it worthwhile.

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These figures look odd to me. He had 70k in the bank and bought a house for 166K with a mortgage of about 100k. The 100k is 5times his salary which is therefore 20k and on that 20k he is supporting a wife and 4 kids. Previously they were paying 600 per month to a rent a place now they are 2,890 per year in mortgage interest (about 240 per month). Even assuming another £60 per month in insurance and maintenance on average then his interest repayments are 1/2 what he was paying in rent. Once you figure in capital repayments his mortgage (100k over 25 years) repayments are about £470. So his monthly outgoings on the most basic level have gone down by about £100 per month. He may have had other new expenses but the shift from renting to paying a mortgage has seen him swap from paying £600 per month to a landlord to 240 per month to the bank.

Obviously, house prices may fall significantly in which case he would have been better off waiting and he's lost the interest and/or any return on his shares. But on the figures in front of me, he seems to have smaller monthly outgoings now than he did while renting.

I think he probably does have smaller outgoings paying the mortgage instead of rent. I'm just a bit worried he has stretched himself too far but more importantly for the wrong house. He does website design and his salary isn't guaranteed.

I don't think that basing a purchase on immediate outgoings because interest rates are at a 300 year low is a good idea. If he had a 10 year fix at a slightly higher rate I would feel better about it. Once he had decided to buy I suggested he got as long a fix as possible for peace of mind (probably more my mind than his!). Time will tell about interest rates.

There are 6 of them. The farmhouse had 4 large bedrooms, a study (he works from home remember) and a dining room. Now he has 3 bedrooms. His outgoings maybe a little less but he has a lot less house. One of the main drivers for selling his house was to get some acres. The house he has bought has the same size garden as the one he sold. He has since seen a 4 bed with study and 11 acres go quite quickly for £185k and wishes he had hung on for that, though the kids would have had to move school as it was 15 miles away.

Incidentally the mortgage is in the 90k's and he was worried he wouldn't get it but Lloyds offered him £115k. I think I mentioned that at the time in another thread on here.

(Edited after finding the brochure for the £185k house)

Edited by Redhat Sly

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Haven't read the rest of the replies. Two things stand out to me:

-The prices quoted are still ridiculously high.

-The speed of the sale is worrying, resembling the 'good' times when people would buy almost without checking a place out - worrying.

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