Wednesday, Jun 24, 2009
A Coordinated Property Crash...The Only Hope For Estate Agents
The Economic Voice: A Coordinated Property Crash...The Only Hope For Estate Agents
Just an idea.......
Posted by titaniccaptain @ 11:01 AM (1061 views) Add Comment
15 Comments
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1. uncle tom said...
Unfortunately TC, the EA's would never agree - or if they did, some would cheat.
Some agent's really are trying to crash the market, because they're sick of having property on their books that doesn't get a look, let alone a sale.
The problem is that vendors very rarely give their instruction to the agent with the lowest valuation. My brother has just had his place valued by three agents, getting prices that varied by over 30% betwen highest and lowest. The guy with the lowest price has no chance of getting the sale, although I personally think he was closest to what the place is actually likely to sell for - eventually..!
I don't think any grand plan will take off - nature will take it's course!
2. titaniccaptain said...
That's why it would have to be unified and coordinated to work....those who would break the picket line and sell houses without house price reductions would face one disadvantage....the buyers would flock to the estate agents with the cheaper property....if they could get vendors on their books.
Its not a perfect idea but I wonder how many estate agents made provision in the good times for the drought they now face? not many I suspect...its a s**t or bust idea for a desperate profession....that could work providing it is nationally coordinated.
3. uncle tom said...
The market has effectively locked up at the moment, with great reluctance coupled to a lack of savings and a lack of affordability preventing FTB's from stepping in, while very few of those in their first homes have the equity to upsize.
There is clearly no prospect of price recovery from this point, but a further fall will only serve to increase the number of existing home-owners who are trapped by negative equity; including many who have quite modest income multiples on their existing loans, and but for a lack of equity, would be contemplating a move to a larger home. Moreover, this problem gets worse, the lower prices go.
It follows that FTB's will ultimately leap frog those who first entered the market in the last seven or eight years; but before that can happen, prices have to find a floor, from which they can make a genuine recovery, to a level that is subsequently sustainable
Any attempt at pin-pointing where that floor will be, after taking into account the consequences to the mortgage lenders; suggests that it will be very low indeed; far lower than any group of EA's could contemplate agreeing to.
4. titaniccaptain said...
Very true UT.
Just want to throw this around....another idea which I mentioned in the article is writing off all negative equity after forcing a bottom.....
Yes I can hear you all thinking "You can't force a bottom ....the market finds it blah blah blah"
But if you overestimate the bottom......
Anyway here it is Lord turner wants the banks to hoard cash to protect against future problems from high risk moves from banks....well what about using that hoarded cash to write off the negative equity once the bottom has been reached?
I know I throw simplistic ideas around but that's because I'm simple.
5. alan said...
TC,
"If there could be a coordinated arrangement between estate agents to crash the property market once and for all to a level that is affordable to first time buyers we could see greenshoots in months, or rather a sustainable housing market and a steady flow of property for estate agents to make a living".
Just for the sake of objectivity....how do you think all the other Vested Interests would respond? Everyone has a vested interest....landlords, those owners about to go rapidly into negative equity, the building societies (who would write of big sums against the market fall) and perhaps bust ...and.....of course, buyers would get a good deal.
For my "idea", I'm thinking that an interest rate rise by the BoE will bring down prices by another 6 or 7% around Christmas.
Nice video you posted recently.
6. bluebeach said...
I hear what y'all saying... but are prices REALLY going to fall? All I'm seeing at the moment is new prices the same as 2 years ago and the flock clambering to get on the rungs again. Should I wait? My wife says we should, "let it all blow over and let it find it's own natural level" she says. All well and good, but when is the natural level going to come, how will Gobo and his horrible crew manipulate the next phase to maintain this false level?
My gut feeling is that things are still very expensive for what you can get. Why are the youngsters being brainwashed into saddling themselves up with a real BIG debt at a make believe price for a bit of land and a few bricks and slate.
I will sit it out for the summer and see how it pans out over the winter. I don't think the pain is over by a long way..........
7. titaniccaptain said...
@ Alan
I refer the honourable gentleman to the answer I gave some moments ago...comment 4.
That's the only way I can see the VIs accepting a collapse in house prices....how practical it is I have no Idea. But brainstorming all this knowledge we have amassed in the past few years could come up with a solution for ALL of us.....Buyers/Sellers/VIs/Estate agents etc.....then again maybe it wont but if we don't try all we do is look down our noses at the world without getting our hands dirty.
Thanks Alan....filming a new one as we speak...it will be a weekly thing I hope..if not fortnightly
8. uncle tom said...
"is writing off all negative equity after forcing a bottom....."
Have you tried working out how much that would be?
You're looking at a twelve figure number there - the banks don't have that sort of spare cash..!
The way to get rid of negative equity is to let inflation rise to about 5%, but keeping it from going higher might e a struggle..
9. titaniccaptain said...
Blue Beach....pictures say a thousand words so videos say....errrmm....more than a thousand
http://www.youtube.com/watch?v=EtLanAuSqYw
10. titaniccaptain said...
No UT I haven't tried to work that out....wouldn't know where to start.
Is there other method of writing off that cash that anyone can think of that doesn't include raising inflation?
Sorry to be annoying but it would be great if we could come up with some hypothetical scenarios that would please all parties.
11. uncle tom said...
"Is there other method of writing off that cash that anyone can think of that doesn't include raising inflation?"
Leaving millions in negative equity for a decade or more, effectively unable to move house..
..better that the debt is gently burned down with inflation
"Sorry to be annoying but it would be great if we could come up with some hypothetical scenarios that would please all parties."
Unfortunately, I don't think that is possible..
12. Europeanbear said...
No TC solution will not work. With low IRs it will just be a long slow grind to the bottom with only the minority of realistic sellers being able to sell. Rising unemployment will help a bit to accelerate it. If IRs go up then the long slow grind might speed up a bit, especially as repossessions would increase. Another thing that might help would be to force the land Registry to include all repossessions in their statistics...that would show the average house price to be somewhat lower than present methods suggest and so would encourage prices to generally tick lower.
13. sybil13 said...
In a way this IS what Rightmove's Director, Miles Shipside, has been trying to do since January 2009 but obviously EA's didn't like it because Shipside seems to have given up talking sense. Since Jan 2009 Shipside said that sellers needed to reduce 25% , across the board.By March 2009 Shipside was saying that, "Raised asking prices are doing more harm than good". Saying, "that agent's are being forced to up initial advertising prices to win new instructions, amid the fierce competition for the few quality properties that are currently being put onto the market. That makes the asking price rise, for me, more like bad news than good news. I understand that agent's are trying to survive in a difficult market, but we need to firm out the price drops that we have had, before we can ascertain if they are enough to bring the market to bottom, and accelerate any further drop that may be necessary."
In short, by humouring unrealistic vendors over asking prices, agents may be doing nothing more than prolonging their own misery.
The Rightmove index is based on new houses coming onto the market, it is likely the index would show a drop in prices were it expanded to properties added in the last two months, as agents gradually negotiate vendor price drops from their inflated initial price
14. uncle tom said...
Sybil,
Shipside blows in the wind - he's no great intellectual..
15. gone-to-colombia said...
House prices really are falling.
I check all new property coming on to the market in ten areas of the UK.
this daily check shows that prices are going down. Additionally, the availability of good quality property is rising in these areas, particularly recently.
However, I do see many over priced properties remaining on the market for months, and in some cases years.
Lastly, competitively priced homes sell fairly quickly.