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House Price Crash Forum


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Posts posted by deadasadodo

  1. 4 hours ago, Venger said:

    The only issue I'm having with you is I'm sensing a lot of 'Pity The Mad-Gainz Wealthy Older Homeowner' if prices fall.

    Sorry Venger, your Spidey Sense is wrong on this occasion. Easy come, easy go is my opinion - as you say it's a market, and if someone misses the boat so to speak then that's their problem. Personally I'd  tax the hell out of inheritance and close the Trust loopholes in order to remove incentives to horde property until you die. I'd also love to see a thumping great big crash, but having thought one was about to happen since 2002 (and misjudged the duration of the post 2008 event) I've lost any faith I had in my ability to predict one.

    Where I'm pushing back is that you seem to assume that the vast majority of older home owners are driven by greed over their 'mad gainz'. My experience is completely different to this: beyond people involved in BTL most of the older home owners I know don't talk about house prices, and those who do frame it as passing on as much as possible to their children and grandchildren. If a big crash plays out I think many of them will be able to see that this benefits their younger family members. You've jumped on the people I mentioned that were thinking about letting out their main house and renting a smaller place, but they're the exception rather than the rule (and, probably not coincidentally, involved in BTL).

    The other thing you seem to say is that if older home owners don't care about high house prices they really should do. Realistically though there's only so many things people can worry about though, and once people aren't forced to care about an issue they're less likely to do so. I don't care as much about the plight of men who can't find a girlfriend since I got married, and I have to admit that my strong views on the local bus service have mellowed a little since I started using my bike. Older home owners have a whole range of chunky national and global issues that they can choose to either engage (or not) with, and insane house prices are only one of them. People are only human, and I don't see the greed and self interest that you perhaps do.

    If I've misunderstood your position then you have my apologies.



  2. 13 minutes ago, Venger said:

    There seems to be clear positioning involved in the example you gave, with someone looking to rent out their expensive home (keeping it), and rent a downsize home.

    Why are they not tempted to sell and cash in mad-gainz where houses trebled in value, trebled again, and trebled again?  Because they expect it to hold value or rise in value.

    Absolutely. The individuals considering that option have only ever really seen property prices rise, the idea of a crash wouldn't really enter their thinking. Their reasoning for holding onto their house (and that of most older people I've heard talk about property and inheritance) is they'd like to pass on money to grandchildren to help them get a good start in life - read that as a deposit on a house. The fact that a mighty great crash would do a lot more than a deposit to help both their own and other people's grandchildren hasn't really occurred to them. That's why I say I see ignorance rather than greed and intent. 

    21 minutes ago, Venger said:

    Maybe they should have opened their eyes.

    As I've said before, people have different priorities and you can't expect everyone to open their eyes to every significant problem the world faces. The device I'm typing this on contains minerals mined in some very troubled parts of the world, and the carbon emissions from the electricity we're using to converse is causing damage to the planet's climate. Some people would say that the latter is the biggest issue facing humanity. I'm aware of these issues, but I'm not acting on them (buy a Fairphone and a solar panel?) because I feel that I have other things to worry about. We're all sheeple in some areas of our lives, and we shouldn't expect everyone to have the same knowledge and appreciation of the issues that matter most to us.

  3. 36 minutes ago, Venger said:

    They're not idiots.

    No they're not, but that doesn't mean they're financially sophisticated. It's quite possible to be intelligent but never really develop much in the way of awareness and skills around financial matters. If someone isn't moving, re-mortgaging or thinking about dying then there's no real need for them to think about the price of their house. Re-mortgaging has only become popular in the last couple of decades, and 'inheriting' your spouse's IHT allowance took many estates out of the reach of inheritance tax. Note that I'm not talking about BTL types here, obviously they'll have thought a lot about house prices.

    What I'm saying though is that you and I might think a lot about house prices and the huge problems of the private rented sector, but a lot of people will only really consider these issues when fate conspires to bring it to their attention. In terms of older folk downsizing most won't be thinking about the optimum time (financially) to downsize because it won't have really entered their head that there is an optimum time to downsize, until they come to sell. You're seeing greed and intent, whilst I'm largely seeing ignorance. 

    59 minutes ago, Venger said:

    And if they are so green and dumb, then they don't deserve to be rattling around in £500K-£1m homes in the first place.  Make way for intelligence.

    'Deserve' is quite a strong word to use - should we measure people's IQ and allocate them resources accordingly? Unless someone is a one-in-a-million maths whiz  intelligence alone won't get them too far in life. Luck, people skills and an eye for opportunity are equally important.


  4. 40 minutes ago, Venger said:

    I know, but that's because they believe their mad-gainz are locked in on the £1m type home. 

    Yes. But that's because most people are financially unsophisticated, rather than they are true believers in 'mad-gainz'. As you say, a lot of older people bought decades ago and won't have had to think about things like equity and LTV ratios for eons. Some will have followed the whole property porn TV thing, others will only realise what their house is worth when the people down the road sell up. When people say things like "property is a great investment" and "the Government won't let house prices fall" they'll believe it. To people of this mindset the cost of downsizing is seen only as a cost, not as opportunity to lock in a temporary gain.

    The thing is though that being financially sophisticated and, dare I say it a bit thick, has served people pretty well over the last couple of decades. I knew a couple of dim, over levered BTL types going into the 2008 crash who were saved by interest rate cuts and mortgage forbearance. They'd slate the bank bail-outs, then tell me about all of the money they were saving now on their mortgages - completely unaware that they'd been bailed out as well.. Things may well be different next time around, but sometimes being a slow witted optimist in life seems to work well.

  5. 11 minutes ago, Venger said:

    Transaction costs?  I think that's a nonsense when we look out at all the £500,000 - £750,000 - £1m+ homes older people rattle around in.

    As a proportion of the potential gain you're right. But most people would see £10, £20, £30 grand as it is rather than a proportion of something bigger, i.e. it's a lot of money. They can also make a comparison to what this will buy them in terms of home adaptations. You can  get a stair lift, walk in bath and anything else you need installed for less than the cost of moving. Couple that with a belief that the big house is a good investment, and people don't move.

    The other option of course is to rent out the big house and rent yourself something smaller. I've heard a few ageing relatives pondering this. What the don't seem to understand is how poor quality and insecure most rented housing is. The thought that they might get thrown out because the landlord decides they want to sell, cut all the bedrooms in half, etc, etc doesn't seem to enter their heads. 

    17 minutes ago, Venger said:

    Errrr have you seen the costs involved for would-be buyers of a starter home.. vs incomes. 

    Yes I have. It's crazy.

  6. 7 minutes ago, Errol said:

    Yes, but it's entirely up to them

    Hi, I agree. My point (badly put, sorry) was that many older people really do want a smaller, more manageable home but are put off for two financial reasons. The first is the belief that property is best home for their money, and holding onto a big house until the very end is the best way of leaving a chunky sum of cash to their beneficiaries. The second is that two lots of transactional costs (downsizing, then sale of the smaller property after they die) will take a big chunk out of their estate. The first belief is probably misguided, the second is true in most cases.

  7. 15 minutes ago, Venger said:

    In a thread called 'HPC The Message' I also argued older owners can see the housing price issues.  Not blind to them.   Not awaiting the young to 'splain it to them, and then have the owners go on a 'protest' about how their homes are worth way too much.

    I'm sure they can. But for those not up to their necks in BTL the issue probably falls quite far down their list of priorities, that is until their children (or other close family and friends) want to buy a house. For most people, if they manage/ choose to buy a house their feelings about high prices and crummy conditions for renters will fade over time, changing from burning injustice to mild sympathy. I'm not sure we should angry about this - realistically there's only a number of issues people can really engage with without driving themselves crazy. There's plenty of huge global and national injustices that I don't engage with, simply because I have other, closer to home issue to worry about.  

    38 minutes ago, Venger said:

    In a market economy (with QE/stimulus/HTB) there should be more downsizers, sell-to-renters.

    Yeah you're right. Many older people I know are laser focused on holding onto their family home in order to pass it down to their children when they die. Personally the idea the idea that older people are morally obliged to downsize plays false to me - it's their house and they should be able to live in it as long as they like - but holding onto an unsuitable house for financial reasons is nuts. 

  8. 15 hours ago, spyguy said:

    some of the cleverest people in the world, who all live in pokey flats and bedsits

    I've worked in academia and this is very true. Younger academics tend to have insecure contracts and struggle to afford housing in the more popular south east cities. They also get less credit for research outputs, doing the lions share of the work but an established 'name' put on the papers as lead author. I wondered why they stuck it out sometimes. Older academics are more likely to have secure contracts and nice houses, the latter as a consequence of buying many year ago.

    15 hours ago, spyguy said:

    expecting this generation to buy the house off them at 10x, fund their unfunded pension

    Less true. Most of the older academics I knew were well aware that there was a problem, largely through the experience of the own children. The universities pension scheme is a funded one, albeit with a bit of a deficit according to recent reports.  

  9. 1 hour ago, Locke said:

    Some of them are people who have been through university, studying non-BS courses like engineering. Doesn't matter; you get the same responses.

    Intelligence can span a wide range of subject matter, and a person who is burning bright in one area can come across as thick as two planks in another. Philosophy is (judging by your  name) an area that you know a lot about. Conversely I would consider myself reasonably intelligent, but I know very little about philosophy. On the tax is theft question, beyond a memorable night in the pub once where a distant acquaintance got quite upset about it, I’ve never really given it a second thought. I live in the UK with strong ties of friends and family – paying tax is as inevitable as breathing in and out so why worry about it.

    I do wonder though it being intelligent is always particularly helpful in life. I’ve known plenty of successful (money, love, etc) people who aren’t especially intelligent, and I suspect they get ahead because they’re willing to say yes to opportunities without analysing every little thing that could go wrong. Self-restraint and people skills are probably more helpful qualities for a good life than a huge IQ.       

  10. 4 hours ago, FridayThirteenth said:

    Actively wishing for a 50% crash that would put huge swathes of people into financial dire straights and potentially losing their homes just so another load of people can then buy the houses seems pretty selfish to me

    I don't think it's especially selfish. If a crash of that magnitude happened that'd be a huge number of winners as well as a huge number of losers. A property owner saying they want prices to stay high could equally be said to be selfish, as there's plenty of people in dire financial straights right now whoes plight would be eased by prices and rents falling through the floor.

    That said there's two types of wannaby homeowners wishing for a crash. The first just can't afford a house, or can't afford a place that meets their minimum needs. They're wishing for an affordable, secure place to live where they aren't subject to the whims of landlords, fair play. The second have the means to buy a house that meets their need, but don't see value in the current market. Realistically this is just the opposite side of the coin to someone wishing for huge price increaces - you place your bets (or not) and if the outcome you desire doesn't come about you've gambled and lost.  

  11. I’ve been lurking on this site since 2005. Signed up in 2007, but this is the first time I’ve posted. I bought a place in 2013. I’d still like to see a big crash in prices. On a selfish level it would help us with a smaller jump to a bigger place, but I’d also like to see friends and family able to buy if they want to.

    Buying for me was more life happening, rather than giving up or having a change of view. Sharing a rented house gave me cheap, friendly living through my 20s and early 30s, but settling down and having a family in rented house was less attractive – much more expensive (than sharing) and insecure. Whilst I believed (and still do) that houses where I live are hugely overpriced I didn’t have 100% confidence that they were going to fall anytime soon, and as we had the means to do so we bought.

    As another poster said, inherited money has a huge impact, and pretty much everyone I know who’s bought recently has had some kind of windfall to fund a big deposit. Unsurprisingly that windfall usually comes from a property sale.

    The current situation with falls in London is interesting. House prices in London in particular seems to be kept up by the belief that however insane the price they’ll be worth more in a few years’ time. Friends in London use this to justify paying enormous prices for tiny flats – they’ll make a big profit then move away – and also for moving heaven and earth to keep their old place as rentals when they move. If falling prices over a number of years challenge this belief system then prices could crumble away quite quickly.

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