Sunday, Nov 23, 2008
Got nequity? Repossession, repossession, relocation
Times Online: Better to downsize than risk repossession
Property permabull Anne Ashworth suggests that if people are having trouble repaying their mortgage that they defy the laws of gravity, sell their homes and downsize. Genius. Forget that no-one will buy it, even if it is priced way below your mortgage, and forget the fact that if you're in a studio flat in central london (one of the worst affected areas) that you can only downsize to a garage. Why does the Times still employ ditzies like her?
Posted by paul @ 10:46 AM (426 views) Add Comment
6 Comments
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1. Theboss said...
The news is full of news about reposessions but I know plenty of people who reckon their morgage payments have droped significantly with the recent drop in interest rates.
I'm banking on house prices crashing significantly but if the government keeps dropping the interest rates will it mean people will still be able to cope and meet their repayments? i mean there are plenty of people on trackers, right?
any thoughts?
2. stillthinking said...
In denial about negative equity, which isn't mentioned. Also, downsizing usually makes sense when prices are going up, when they are crashing then upsizing(?) makes sense.
Downsizing during a crash locks in your losses, you can't even hope for a market revival because one would no longer help you. In which case her advice is tantamount to saying all is lost, there will be no revival.
Maybe that was what she was thinking deep down...
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4. Mrb said...
She seems to have the mental acuity of a goldfish.
"compel the banks to lend" she says.
That's a great idea, compel banks to lend money, secured against housing which is falling at c15-20% per year, with rising unemployment and overcapacity in most sectors.
This will really help banks balance sheets and the economy.
5. techieman said...
nope shes right.. Everyone should downsize.... hold on though if everyone does that dont we have a reverse ladder? Whose goona buy the properties at the top - oh i knoiw its those stupid foreigners. Actually the point is this. You buy your property then you upsize when the market booms and overstretch yourself then you perform the ultimate downsize by selling your asset and renting when the time is right. The maket implodes and you buy back your own house a few years later - simple!
ST - if you upsize when the market crashes then you must believe you kjnow that there is a floor to the mnarket and where that is. Otherwise you just play the wily old vulture and pick up even more property (in terms of size of space etc.) later on as the differential between studio / 1 beds / 2 bed / 3 bed / terraced / semi / detached etc reduces.
6. whostolemyendowment said...
Well said Mr T...
You can only safely downsize (not just your home but your whole financial footprint) just before the peak - say 1 year before....then sit back and watch the surf crash back on the beach.....wait for the tide to recede, and be ready to snap up your next upsize property bargain.....wait 10 years or so , and repeat......
So who is going to buy the top end properties that will allow us all to downsize in this snakes and ladders game? Can't see many middle Eastern property developers or investers - they're going to have their own problems back home {despite what they think....}....and Far Eastern even worse as they get their fingers bitten off in the rapidly snapping shut tills of the USA.