Housing Market Dead Cat Bounce - Perfect Time To S T R

[Sheer Heart Attack]

Over the next 3 or 4 years, there may never be a better time to STR.

This dead cat bounce seems to have gained some emotional and intellectual mileage among the population. Couple that with the news coming out of Germany & France and other desperate spin that we're on the way out of a nasty V-shaped recession (not a W- or VW-shaped recession or depression) is finally tempting buyers out, no matter how much that may piss us HPCers off.

The estate agent is coming around next week. There are two houses on my street for sale - a 3-bed for £160,000, a 2-bed for £140,000 - I'll stick mine on at £130,000 but be prepared to accept £115-120,000.

If I can get what I paid for my house in 2006 then, after expenses, I'll be left with a £20,000 doomsday fund just in case the business goes tits up.

Am I reading the mood of the country correctly?

[Confounded]

Over the next 3 or 4 years, there may never be a better time to STR.

This dead cat bounce seems to have gained some emotional and intellectual mileage among the population. Couple that with the news coming out of Germany & France and other desperate spin that we're on the way out of a nasty V-shaped recession (not a W- or VW-shaped recession or depression) is finally tempting buyers out, no matter how much that may piss us HPCers off.

The estate agent is coming around next week. There are two houses on my street for sale - a 3-bed for £160,000, a 2-bed for £140,000 - I'll stick mine on at £130,000 but be prepared to accept £115-120,000.

If I can get what I paid for my house in 2006 then, after expenses, I'll be left with a £20,000 doomsday fund just in case the business goes tits up.

Am I reading the mood of the country correctly?

My only advice would be do not underestimate peoples tendency to pay way over the odds. My brother sold his house at peak 08 price (in Scotland) in June having had it on the market for 6 months, I thought he was looking at a significant loss on it.

I am pretty sure this is a dead cat bounce, volumes are very low and this is after a 6 months propoganda campaign so it is likely to run out of steam pretty soon. I have several friends who have adopted the buy and hold strategy having moved but retained their old house and I have hinted that now is the perfect time to sell but I suspect they will wait until prices return to normal 07 levels.

I personaly think only the froth of the 05-07 pump has come off so far and the meat is still to come.

[redmen9]

Was speaking to a work colleague yesterday who has just bought a house. Ex-council house for about £120k. The EA had him believe that there were 5 others interested in buying the house and that he would have to bid above the asking price to secure the house which he did.

Speaking to him yesterday after he'd moved in, he said the EA had said that the house would increase in value by £30k in the next couple of years. Asked if I was still looking for a house, I said I believed that houses still have a long way to fall, with banks not lending, prices still at ridiculous levels and unemployment rising. He stated that France and Germany were now out of recession and with house prices having risen recently that we were over the worst of it.

He's an intelligent lad but it illustrates clearly to me the stupidity of most people where house prices are concerned and the complete lack of awareness of the world's financial circumstances. When you think you commit to work most of life to working to pay off your mortgage debt, the lack of research people put into the financial conditions affecting house prices is frightening.

There are plenty still out there desperate to buy, fed the 'positive spin' by the media/government. Sell now and pass on your potential losses to the lemmings.

[leedsproperty]

I cant predict the future but am now worried that inflation will be doing the rest of the work, in which case there will be no point selling, taking into account transaction costs and hassle renting.

We are 20% from peak now (perhaps.) To get another 20% in real terms wouldnt take much more than 4% inflation over the next five years. Hardly hyperinflation.

Last time the Nationwide index dropped 40% in real terms the nominal fall was only 10%.

Do you enjoy where you live? Can you comfortably afford it if you will be unemployed for a moderate spell?

[Guest UK Debt Slave]

Over the next 3 or 4 years, there may never be a better time to STR.

This dead cat bounce seems to have gained some emotional and intellectual mileage among the population. Couple that with the news coming out of Germany & France and other desperate spin that we're on the way out of a nasty V-shaped recession (not a W- or VW-shaped recession or depression) is finally tempting buyers out, no matter how much that may piss us HPCers off.

The estate agent is coming around next week. There are two houses on my street for sale - a 3-bed for £160,000, a 2-bed for £140,000 - I'll stick mine on at £130,000 but be prepared to accept £115-120,000.

If I can get what I paid for my house in 2006 then, after expenses, I'll be left with a £20,000 doomsday fund just in case the business goes tits up.

Am I reading the mood of the country correctly?

Smart move

I'm going to become a STE'r. A sell to emigrator.

Property will be a noose around the necks of millions as this depression pans out

[athe]

Over the next 3 or 4 years, there may never be a better time to STR.

...

If I can get what I paid for my house in 2006 then, after expenses, I'll be left with a £20,000 doomsday fund just in case the business goes tits up.

Am I reading the mood of the country correctly?

This is exactly what I have just done. Have accepted an offer, and am just waiting for their surveyor to come round, and looking for somewhere to rent at the moment.

[tpbeta]

It's worth considering there won't be a house price crash in nominal terms. In other words it will be currency devaluation and inflation that account for the loss in value. Or put another way, house prices stay the same, everything else gets more expensive.

In which case STR would be the wrong thing to do unless you're prepared to move your money overseas while you wait or else hedge against inflation in some other way.

My personal opinion is that prices will drift down a bit in nominal terms but some of the drop will be in real terms.

Edited August 14, 2009 by tpbeta

[Willy Weasel]

I cant predict the future but am now worried that inflation will be doing the rest of the work, in which case there will be no point selling, taking into account transaction costs and hassle renting.

We are 20% from peak now (perhaps.) To get another 20% in real terms wouldnt take much more than 4% inflation over the next five years. Hardly hyperinflation.

Last time the Nationwide index dropped 40% in real terms the nominal fall was only 10%.

Do you enjoy where you live? Can you comfortably afford it if you will be unemployed for a moderate spell?

IMHO the chances of inflation of 4% or higher over the next five years is small. The liklihood is that inflation will undershoot rather than overshoot target. What inflationary pressures are there? No-one is even asking for a pay rise anymore much less getting one. Many are having wages cut. Sure, food prices are going up but there is a sea-change right across the country in respect of producing our own food and changing the food we buy from supermarkets.

IMHO no matter what the BoE does QE-wise we will have negative CPI at some point over the next twelve months.

[northeast Canuck]

Smart move

I'm going to become a STE'r. A sell to emigrator.

Property will be a noose around the necks of millions as this depression pans out

Good luck to you! I am an STE'er as well. I emigrate next week! The wife is over there right now and has just secured a huge (but expensive unfortunately) rental home.

I am of the view that it's all going to kick off shortly and it will be bad everywhere. At least I won't be trapped somewhere I don't want to be when it does...

Might have to change my name to "NorthWest Canuck" though!

[Guest KingCharles1st]

Over the next 3 or 4 years, there may never be a better time to STR.

Am I reading the mood of the country correctly?

Another anecdotal- Yesterday I got srved by a nice 50 something woman in Holland & Barratts.

Out of the blue she started telling me she was happy because she had just sold her house- which had been on the market for 2 YEARS! BUT- she had finally let it go for 80k LESS than it was "worth." OK- HPC'ers know the answer to that one, but the worrying thing was that someone bought it. In many people's minds the bottom has been reached, they so desperately want it to be so. They WILL go out and buy again, because they are dim. They will also walk straight back in to the same trap of buying a hugely overpriced "asset." They just can't help themselves, so in answer to your o.p, I would say you are doing the right thing.

If you can do this- how about the following- sell you property as ap to a happy person with lots of money.

Take the money you would have lost if not for the D.C.B. and put that in one place to go purely towards the deposit on your next "at the bottom" purchase.

The interest on the remainder, if effectively invested may well pay a good proportion of your rent for the next 6-12 months.

Also, when the next crescendo of HPC suffering is reached, you will be an instant cash buyer- how fortunate!

[Wires 74]

A colleague of mine was telling me last night that his prospective house purchase in York is proving prolonged to the extent that the EA has now contacted him and told him to pull out of the sale and get somewhere else quick because prices in York are now steaming ahead - I told him the EA was bonkers he said to me that he ( The EA ) is the expert !

And he`s an intelligient bloke - so what`s the reality out there - I just do not know what to believe any more...

[Sybil13]

Over the next 3 or 4 years, there may never be a better time to STR.

This dead cat bounce seems to have gained some emotional and intellectual mileage among the population. Couple that with the news coming out of Germany & France and other desperate spin that we're on the way out of a nasty V-shaped recession (not a W- or VW-shaped recession or depression) is finally tempting buyers out, no matter how much that may piss us HPCers off.

The estate agent is coming around next week. There are two houses on my street for sale - a 3-bed for £160,000, a 2-bed for £140,000 - I'll stick mine on at £130,000 but be prepared to accept £115-120,000.

If I can get what I paid for my house in 2006 then, after expenses, I'll be left with a £20,000 doomsday fund just in case the business goes tits up.

Am I reading the mood of the country correctly?

Good if you can but before you get to STR you have to pass SSTC

HPC Link

[ChadzKhan]

Mate of mine who is an EA told me that sellers are now pulling houses off the market, the sellers expect big increases to come!

[Guest happy?]

Over the next 3 or 4 years, there may never be a better time to STR.

This dead cat bounce seems to have gained some emotional and intellectual mileage among the population. Couple that with the news coming out of Germany & France and other desperate spin that we're on the way out of a nasty V-shaped recession (not a W- or VW-shaped recession or depression) is finally tempting buyers out, no matter how much that may piss us HPCers off.

The estate agent is coming around next week. There are two houses on my street for sale - a 3-bed for £160,000, a 2-bed for £140,000 - I'll stick mine on at £130,000 but be prepared to accept £115-120,000.

If I can get what I paid for my house in 2006 then, after expenses, I'll be left with a £20,000 doomsday fund just in case the business goes tits up.

Am I reading the mood of the country correctly?

STR very much depends on personal circumstances. If you house is only a small proportion of your overall portfolio (and I gather it is for some of the posters on this site) the cost of being wrong is marginal. If on the other hand it is your only/major asset I've never been convinced that this is an appropriate strategy - diversification / non-correlation seems to be the core of any approach to take to personal wealth so I would focus on building other investments e.g. a pension rather than gamble on STR.

In you case the benefit £20k) seems marginal compared to the risk - you will pay half this in selling/moving.

[Neverland]

STR very much depends on personal circumstances. If you house is only a small proportion of your overall portfolio (and I gather it is for some of the posters on this site) the cost of being wrong is marginal. If on the other hand it is your only/major asset I've never been convinced that this is an appropriate strategy - diversification / non-correlation seems to be the core of any approach to take to personal wealth so I would focus on building other investments e.g. a pension rather than gamble on STR.

In you case the benefit £20k) seems marginal compared to the risk - you will pay half this in selling/moving.

+1

But for most people their house is their single biggest financial asset (and a highly leveraged one)

However, i would like to understand more about HMG's mortgage support scheme if you loose your job?

If you have a STR fund you just will get no support until its run down...

For me that could tip the argument towards staying put for some people...

[PopGun]

+1

But for most people their house is their single biggest financial asset (and a highly leveraged one)

However, i would like to understand more about HMG's mortgage support scheme if you loose your job?

If you have a STR fund you just will get no support until its run down...

For me that could tip the argument towards staying put for some people...

Good point.

The time to STR came and went two years ago.

[Happy Teaboy]

Over the next 3 or 4 years, there may never be a better time to STR.

This dead cat bounce seems to have gained some emotional and intellectual mileage among the population. Couple that with the news coming out of Germany & France and other desperate spin that we're on the way out of a nasty V-shaped recession (not a W- or VW-shaped recession or depression) is finally tempting buyers out, no matter how much that may piss us HPCers off.

The estate agent is coming around next week. There are two houses on my street for sale - a 3-bed for £160,000, a 2-bed for £140,000 - I'll stick mine on at £130,000 but be prepared to accept £115-120,000.

If I can get what I paid for my house in 2006 then, after expenses, I'll be left with a £20,000 doomsday fund just in case the business goes tits up.

Am I reading the mood of the country correctly?

I think the idea of STR is try and time the top of the market. Before people have an idea a downturn is coming. 18 months/2 years into a downturn might be seen as slightly missing the moment.

[Lone_Twin]

Brave call OP. Good luck if you decide to go ahead.

[Minos]

Over the next 3 or 4 years, there may never be a better time to STR.

This dead cat bounce seems to have gained some emotional and intellectual mileage among the population. Couple that with the news coming out of Germany & France and other desperate spin that we're on the way out of a nasty V-shaped recession (not a W- or VW-shaped recession or depression) is finally tempting buyers out, no matter how much that may piss us HPCers off.

The estate agent is coming around next week. There are two houses on my street for sale - a 3-bed for £160,000, a 2-bed for £140,000 - I'll stick mine on at £130,000 but be prepared to accept £115-120,000.

If I can get what I paid for my house in 2006 then, after expenses, I'll be left with a £20,000 doomsday fund just in case the business goes tits up.

Am I reading the mood of the country correctly?

If your only savings are £20K you'd be left with from selling the house then I definitely think you are doing the right thing. You already said elsewhere your business was suffering. That's only likely to get worse. Sell and relax.

[nickd]

The estate agent is coming around next week. There are two houses on my street for sale - a 3-bed for £160,000, a 2-bed for £140,000 - I'll stick mine on at £130,000 but be prepared to accept £115-120,000.

If I can get what I paid for my house in 2006 then, after expenses, I'll be left with a £20,000 doomsday fund just in case the business goes tits up.

How much hassle is it to go through the process of selling, then find somewhere to rent, deal with the landlord etc?

Compare this to , how much hassle is it to simply cut your everyday living costs by , e.g, cooking cheap but tasty food by making more effort, learning recipes etc, walking/cycling instead of driving, going to the library instead of buying books, DVDs etc.

Your house will probably fall in value excruciatingly slowly over the next few years. As, happily, will a house you might want to trade up to one day. So if you stay put and get on with your life, then in the long run you'll get the reward of the next rung of the ladder being nearer. (This is my personal strategy BTW).

To my mind STR only works when the market it falling sharply. When its creeping down, you can blow a huge amount in rent in the meantime, rendering STR pointless. Just my 2p .....

[athe]

To my mind STR only works when the market it falling sharply. When its creeping down, you can blow a huge amount in rent in the meantime, rendering STR pointless. Just my 2p .....

Entirely depends on the circumstances. In my case the amount of cash I am freeing from the house through selling + the amount I have saved for a deposit will very nearly cover the rent, even at the 2 - 3% interest rates we're seeing on savings at the moment. On top of that I can keep saving as much as I am saving at the moment, rent a bigger house, and be proceedable with a large deposit when I do decide to jump back in.

[hairy]

Over the next 3 or 4 years, there may never be a better time to STR.

This dead cat bounce seems to have gained some emotional and intellectual mileage among the population. Couple that with the news coming out of Germany & France and other desperate spin that we're on the way out of a nasty V-shaped recession (not a W- or VW-shaped recession or depression) is finally tempting buyers out, no matter how much that may piss us HPCers off.

The estate agent is coming around next week. There are two houses on my street for sale - a 3-bed for £160,000, a 2-bed for £140,000 - I'll stick mine on at £130,000 but be prepared to accept £115-120,000.

If I can get what I paid for my house in 2006 then, after expenses, I'll be left with a £20,000 doomsday fund just in case the business goes tits up.

Am I reading the mood of the country correctly?

Precisely what I'll be doing, but in a different location. Have been reading with great interest all sides of the debate and trying to work out the maths myself, but it's just not sitting right. I believe it has got to be done by next may as Mssr. Brown and the other crooks will be doing all they can to turn this around and that means more debt for us all. Selling all my properties and moving to Devon to keep my head down in a nice rental for a while.

[Hip to be bear]

Sold in Feb......I spoke to the EA recently and he thought he could have got another £10K (around 5%) for the house in the current market. He expects further falls and thinks the buyers are mad!

If you will only be left with £20K, will you have the deposit to buy back in when the price is right? Good luck though wish you well.

With regard to your asking price, sure price it to sell but don't give away too much. Remember most people don't read HPC . THey think they are bagging a bargain. Stick it on higher and drop the price after 3 weeks if there is no interest. It could double your emergency fund!

Edited August 14, 2009 by Hip to be bear

[Hip to be bear]

To my mind STR only works when the market it falling sharply. When its creeping down, you can blow a huge amount in rent in the meantime, rendering STR pointless. Just my 2p .....

What about all those 'astute' owner occupiers who could only afford IO mortgages. They are effectively renting the house from the bank for a 25 year term. I suppose because they 'own' the house and can paint the walls their chosen shade of beige, they are not throwing their money away on rent!

[Guest Daddy Bear]

I think the idea of STR is try and time the top of the market. Before people have an idea a downturn is coming. 18 months/2 years into a downturn might be seen as slightly missing the moment.

Agreed

If you can sell and get aug 2007 prices go for it.

We have had the steepest crash in moden history over the past two years.

Are you prepared to see the next 4 years of this downturn in real terms only and not in nominal terms?

And then you will have to wait another 2-3 years or even more for your wages to catch up as wage inflation normally has a two year lag?

Why did you not sell two years ago when the top of the market was so obvious?