Wednesday, Dec 12, 2007
Crash or slump in 2008?
IHT: Britain's housing market hits the wall due to subprime crisis: crash or slump in 2008?
... Meanwhile, the Andersons are settling in to a two-bedroom rental apartment the same size as the one they sold. But they aren't bemoaning the lack of extra space they were planning to have already. "It doesn't feel like putting our life on hold," said Dave Anderson. "There's the opportunity to potentially pick up a really nice house for 20 percent or 30 percent less — that's much better for us in the long term."
Posted by confused76 @ 12:42 AM (562 views) Add Comment
5 Comments
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1. yorkshireman said...
There are so many contradictions in the article it is difficult to know where to start. The Andersons are waiting for a 20-30 percent reduction, but many sellers can afford to wait to get a better price. As we know, there is already a shortage of properties, although there are plans to build many more. May not be a problem though as there may be no money to fund any of it after all. Cue Roy Orbison singing "Its Over"
Confused 76, I will join you . Ho! Ho! Ho! Merry Christmas! .
2. it_is_going_with_a_bang said...
"self-fulfilling prophecy"
Meaning Sh*ts gona hit the fan. I last heard that phrase used by the very same people in the early 90's.
Whats that supposed to mean exactly? Theres only a problem because everyone starts to think there is one? The alternative being ...? Pretending there isnt one possibly?
Oh sorry .... thats what they have already tried .... must be another alternative hmmmmm.....
3. Guiriduro said...
Actually, the Andersons are doing exactly the right thing at the moment. Even now, if you bought 3 years ago or more, and you were looking to trade up, this is exactly the right strategy (unless lending conditions markedly change in the next 6 months, which is unlikely, if anything they will worsen.)
The house you've bought won't sell for at least 10% off august market value, but if you've seen the price increase 30-40% in the time you've owned it, and you've paid back some more of the principal, now would be a good time to sell, even at a 10-15% loss from the top of the market (which you'll need to take in order to sell at all.) Your e.g. 10% deposit, plus the repaid principal, plus the increase in value (less the markdown), should leave you with a nice pot. Take it out now, and put it in a savings account paying 7% interest. Go find an equivalent property on the rental market, and wait it out for a year or so. Your monthly rent might have seemed like money down the drain while house prices were appreciating (vs lower interest drain on a loan), but if you stay in an owned property now, not only will you be paying higher interest soon, you'll also be losing more equity as the housing market depreciates. Get out now!
4. Xeno said...
That's not what he said - he said he was going to wait and see what happens - potentially pick up a cheaper house, but he can still buy if it stays flat.
cheers
5. Circular008 said...
Hi people,
I've been reading with great interest many of the posts put on here for the last 6 months. It strikes me that for as many people who speculated in property over the last couple of years, theres equally as many people on here hoping for a property crash. Both sides have got extremely good reasons and arguments for which ever way you want house price crashes to go. What I've come to realise is that both sides want exactly the same thing! The people who want house prices to keep on going up are buying lots of properties hoping that prices rise in the future giving lots of equity and get rich.
House price crash fans want prices to crash (they have also sold their existing property in the mean time- cashing in on the growth they have gained) and hoping to buy a property for rock bottom prices, hence providing them with a valuable asset long term ie the same get rich.
So in a sad kind of way, they are one and both the same, but just with opposite strategies (which depended on where you started on the property cycle and/or if you owned a property or not).
Very much like the yin/yang symbol, can be related to virtually anything dynamic in life. You are both interdependent but cannot exist independently. What we need is balance. Thats my sixpence.
Thank you all for some very enjoyable reading!