When Would You Buy?

[ccc]

I actually understated it - last year I saved £52k, I'm a very lucky chap (plus I honestly do work hard).

But you make a great point Meat Puppet - a friend of mine lives in Chang Mai, Thailand & he tells me I should just retire there at age 39 & enjoy life! Tempting having visited the place ...

Anyway, back to the OP.

I got a gummy of a dubious bird in Chang Mai. Excellent.

Now 52k. That is a lot of gummies.

[BufferBear Bitcoin Bull]

We are still holding out but the need for a good secondary school will be a reality in a couple of years, but we may decide to move and continue to rent. Our deposit is looking healthy but I am very reluctant to use it even though due to very sad circumstances, our deposit is set to grow substantially. We believe HP are still significantly overvalued. Job insecurity is now a factor too in terms of getting a mortgage, especially as a public sector employee, but I am not overly concerned if I lose my job as financially we are reasonably secure (If we both lose our job, well that's a different story). Anyway, I'll just spend more time with our children and continue to study (without the stress of working too

Edited July 16, 2010 by Buffer Bear

[Once in a lifetime]

History has said, not everyone will be able to afford to buy a home - ever.

the future may say, less people will be able to buy a home.

[Meat Puppet]

I got a gummy of a dubious bird in Chang Mai. Excellent.

Now 52k. That is a lot of gummies.

Keef has it right because he now has options. He can blow his wad on chicks in Chiang Mai or he can settle down in the UK. Scepticus would have you believe he is as bad off as because deflation is coming but surely those who have prepared will fare better in the coming apocalypse than the profligate.

[Meat Puppet]

Lots of posters seem to have a blind faith in a return to a 3 to 1 income threshold, there is no guarantee that this will happen especially if the lenders don’t see it that way.

Me myself I have no plans to buy in the near term. next moves will be development of existing houses. No great rush except some renovations on the one I am living in now to be done before the UK relatives come out to stay with me over the Christmas period.

If you are leveraged you will be broke within the decade.

[flatnose]

When house prices fall to 3x my wage. Probably will never buy. Been priced out for too long. 45 now and still a first time buyer. Enjoy freedom of renting have always had good landlord and dealt privately with them. Renting a nice house for less than the deposit on an interest only mortgage. Why shackle myself until it betters my situation.

[Meat Puppet]

When house prices fall to 3x my wage. Probably will never buy. Been priced out for too long. 45 now and still a first time buyer. Enjoy freedom of renting have always had good landlord and dealt privately with them. Renting a nice house for less than the deposit on an interest only mortgage. Why shackle myself until it betters my situation.

You've learned the hard way. Freedom is the key word you speak of. Why shackle yourself to a property you have to decorate and maintain. Its all bullshite. The more things you own the more they own you.

Stay free my friend and defy the capitalists.

[Meat Puppet]

Thats quite a sweeping statement especially if you dont know my net wroth and servicing capacity.

So are you are saying that everyone that is leveraged will be broke within a decade ?

Yeah its a bit of an exaggeration but I'm talking my book here same as you are.

[singlemalt]

Lots of posters seem to have a blind faith in a return to a 3 to 1 income threshold, there is no guarantee that this will happen especially if the lenders don’t see it that way.

.....

Not blind faith. A historic precedent whereby this has proven to be the approximate level for a 'sustainable' market. Everything has its equilibrium.

[right_freds_dead]

If we assume that most people on here are wanting to buy a house and waiting for a suitable drop in prices to jump in, then what is your criteria for buying?

Do you have a date cut off? A price point or a salary multiplier that will tell you now is the time. Or will you simply wait till prices start to even out again or slightly go up?

In short, if you have a plan, what is it?

dont have a fixed date, but my fixed rate would be 50% off todays asking prices with a higher interest rate.

£ for £ it works out the same payment but its a more stable platform than a high loan on a low IR.

failing a crash of that level i shall continue to save but keep my funds for early retirement. abroad hopefully.

[Once in a lifetime]

You've learned the hard way. Freedom is the key word you speak of. Why shackle yourself to a property you have to decorate and maintain. Its all bullshite. The more things you own the more they own you.

Stay free my friend and defy the capitalists.

As long as you pay their rent.

[Bloo Loo]

As long as you pay their rent.

what do YOU charge for?

[ScrewsNutsandBolts]

Like other people have said, it is quite a difficult question to answer.

I suppose I have "wanted" to buy since returning to the UK in 2003. What I have slowly started to realise is that I am not really that sure that I "want" to buy anymore. I think a lot of the feeling comes from the herd mentality, and actually I would say I am a very happy renter.

The only problem that leaves is how to save for a happy retirement. My original plan was to own outright a big house in a nice area. Lets say 12-15x average salary (based on pre-boom late 90s prices). I wasn't thinking of relying on HPI, but if I retire with a 15x salary house, I could downsize to something more normal to free up 10 years of average earnings to fund my retirement. The problem now is that HPI has killed this idea. And the big house in a nice area is now more like 24x average salary.

I guess if something really nice comes up in the right area, somewhere where me and the other half will robably be happy for a good few years, then I will buy. I would like to pay around 350k outright for something that peaked at around 600-700k. If not I feel happy renting anyway.

[Crashman Begins]

It looks like I wont be wanting to buy for the next 2 - 4 years...

Willl buy when Dr Bubb says so

[Mikhail Liebenstein]

Interesting question.

Nigh on exactly the same position as me - the sort of house I want is priced at around £600k currently, I think it's worth around £450k & that's what I'm waiting for, ~25% drops.  But I'm currently saving about £40k a year whilst renting so I'll probably meet them halfway as I become more & more impatient to buy a home for life.

A lot of people quote the old three times salary biz on this site, I think four times will become the norm in the years to come.  Just a hunch really.

Keef, I entirely take you point on 25%.  What I will add though is that it was possible to get close to these levels off in 2009, but it needed a lot of work (ie searching) and a fairly hard and unembarrassed approach to negotiations.

I managed to do this, paying £750k for a house that had sold for over £900k just 12 months earlier.  My £750k was the same price as the house was sold for in 2004, though admittedly it was a new build then, so perhaps the 2004 price would have been a bit peaky at the time as with all new builds.

My top bit advice is find someone who either needs to sell (divorcing couple, repos and probates  that will attract inheritance tax are good) or someone that can sell at a discount perhaps to grease the wheel of commerce (eg a builder holding  a part-exchanged property that they took to close another deal).

The reality is that even if a 25% or 40% crash were to occur from now, there will only be a few vendors willing to sell at that price. If someone has lived in their house since 1983 and has paid off the mortgage, and is thinking of downsizing, they are generally in a reasonable position to hold out for a higher price. Meanwhile those he need to money now, will always be in a far weaker position.  It might be considered distasteful by some to prey on the weak, but that does seem to be capitalism for you - though in my case I feel I have clean hands as at least it was a developer who took the hit.

[Frank Hovis]

The reality is that even if a 25% or 40% crash were to occur from now, there will only be a few vendors willing to sell at that price.

Initially. It takes a while but after a few years of low prices on actual transactions people come to realise that their house is not "worth" either what they paid for it or what it was valued at in 2007, but instead what similar houses sold for in the last year.

[Mikhail Liebenstein]

Initially. It takes a while but after a few years of low prices on actual transactions people come to realise that their house is not "worth" either what they paid for it or what it was valued at in 2007, but instead what similar houses sold for in the last year.

I don't disagree that is possible, but it depends on whether you get inflation or deflation.

In reality what we will probably get is real terms deflation in house prices, but everything else going up.

Average wages will be going up the next few years by a small amount, say 1.8%, but in 5 years that is pretty much a 10% wage rise, which would certainly relieve a lot of the current financial pressure. In 10 years that is 20%.

And to be honest, by the time wages are 10% higher we will be booming again.

My gut feeling is that the plan is for a period of reigned in public sector spending and controlled private and public borrowing. Couple this with even a few years mild wage inflation and most of the critical problems vanish until everyone overborrows again.

Edited July 17, 2010 by Mikhail Liebenstein