Young People See The Housing Bubble

[Bruce Banner]

I've been weakening lately and am thinking of buying myself

You'd probably be better off selling yourself.

[Frugal Git]

I'm also the only one who seems to recall the late 80's/90's price collapse, which I saw vividly with my own parents (who were not victims of it, but were looking to move near peak 80's originally, and ended up moving at the trough in the mid 90's - though they still were very, very cautious).

The rest do not even entertain the notion that that happened, and prices can drop in this region, despite what has happened in NI and the north of England very, very recently!

[Saving For a Space Ship]

Paece, on 30 June 2013 - 07:00 PM, said:

I've been weakening lately and am thinking of buying myself

You'd probably be better off selling yourself.

.

........

Edited June 30, 2013 by Saving For a Space Ship

[spyguy]

Yup. Where I work (a city known for tech in the SE, so eminently guessable) the young people earn (relatively) decent money - probably between 35-45k. Every single one of the 26-34 (except me) demographic is buying or looking to buy - at post 2007 prices. I used to be extremely vocal, I've stopped because it is futile. They are bending over backwards (or maybe a metaphorical bending forwards is more apt) for the sellers, afraid to make offers that aren't very, very close to asking price and believing all the EA hype. The sellers sound awful in general - one was hassling the poor chap handing over a quarter of a million who just wanted a point clarified and threatened him that he'd pull out if he asked any more questions (as well you would if you were spending a ridiculous sum like that), but everyone thinks that's just how it is and prices are going to take off.

I was head in hands the other day listening to talk about how their mortgage offer rate had a high interest rate (not enough deposit to get the best deals - though it was still a very healthy sum for a chap his age to have saved), but that in a couple of years when prices have risen they'll have the equity to have a better deal. Another is waiting for help to buy to kick in next year and saving furiously to 'take advantage'.

These are *incredibly* intelligent people in general, but as you say, if they can get their hands on the requisite debt, they go for it. I feel like a complete cassandra, and it's me who looks insane to them - probably because societal insanity has indeed affected my mentality. Meanwhile, the interest on my savings covers my rent (call me Gen Y Bruce), so who cares!

Reading or Cambridge?

God hope not Swindon!

I arrived in Reading when the last collapse happened - 91.

There was a moment in 91ish when everybody looked at IRs going up and looked around them and, seeing the place for it was, legged it.

They were coughing up London prices to live in a god awful dump of a place.

The problem is the more expensive and area is, the more leveraged it becomes and the harder it gets hit in the downturn.

[Frugal Git]

Reading or Cambridge?

God hope not Swindon!

I arrived in Reading when the last collapse happened - 91.

There was a moment in 91ish when everybody looked at IRs going up and looked around them and, seeing the place for it was, legged it.

They were coughing up London prices to live in a god awful dump of a place.

The problem is the more expensive and area is, the more leveraged it becomes and the harder it gets hit in the downturn.

Cambridge - a bubble in itself. 15 miles outside, prices are static or falling. The city on the other hand is indentured servitude central. Salaries can be pretty good - though in my experience are not rising very fast, but certainly not such that 400k for a 3 bed terrace with no parking makes any sense.

I've been to Reading a lot though through the years when the festival was still decent rather than the rah-rah fest it's now become. Apart from the places right on the Thames round the back of the Rivermead, which I admit had me salivating, I ..ahem...didn't see a great deal of potential.

Edited June 30, 2013 by Frugal Git

[LowestoftBoy]

I have friends a bit younger than me. They are pretty clued in. They had their taste of debt with Uni loans and hate it. Don't want any more. They watch their pennies. Limit nights out. They live like frugul grandmas some of them

Yes, my 21 and 18 year old are just the same. Spend a tenner on a night out, buy clothes and stuff off ebay, save much of the little they do earn, search out the best savings rates. Put me right to shame, if I'm honest.

What makes me smile is the local nightlife is geared up for some kind of perceived youth culture, but is rammed with middle aged folk.

[Venger]

The rest do not even entertain the notion that that happened, and prices can drop in this region, despite what has happened in NI and the north of England very, very recently!

Let's hope HPC doesn't turn into a another crying-fest of excuses, as per 2008-09, for younger buyers in the past few years (and their Bomad parents in some instances), when the crash comes. Realisation that forbearance and stimulus to help save dumb debtors, only hurts those waiting for better value.

Now you know the truth for certain, from buyers of recent years. No missellling. Just individuals all over the place who have utter belief in property, think it's worth today's asking prices, feel absolute entitlement to it, with little fear of debt. With many actively wanting HPI from these levels. Despite it damaging their own prospects of ever trading up.

If they did have fear, they wouldn't be buying. They also have no memories; their entitlement erases short-term memory such as when house prices fell in 2008 due to credit tightening up.

Last week I was just reading in Regional Forum about someone who'd sold in their area. No memory again. Such buyers can't keep getting rewarded when buying at very high asking prices. Also sick of hearing on HPC how buying is 'only £100 more than renting'. That's before a HPC. Despite reports of many younger people still rushing to buy and taking on huge debt, I'm hopeful the crunch on the borrowing side is imminent. I can hear the bottom of a barrel being scraped.

We sold our house, in Leeds (at a minisucle profit which didnt cover the improvements we made to the house to get it sold - which it did, very quickly). We moved to Sale into a rented property with the idea that this would put us in a better position to buy. Weve been looking for months, and decided that we like the Hale, Altrincham, Hale Barns areas - Timperley if we cannot get into the others. We also like space, so the former is likely off the list.

Before anyone says 'stay renting' we cannot stay renting where we are, as our toddler is near school age so we need to move into a good catchment area. We would like a house that we can settle in - but possibly will also accue /add some value/not be hard to shift if we need to move again in a few years.

Ha ha. I can't deny it. I'm find renting weird. Guess I'm hard wired for buying.

For starters, we moved in here, (deliberately smaller than we need to keep us from comfort) being told by LL that we could stay as long as we needed, only to find after a few months that 'they might need us to move out again soon'. So you never feel secure. We have a lot of stuff, ( 2 x work from homes plus all the usual). It's a lot to have to keep lugging round.

That said, it does make a lot of sense to rent, and hubby would be more than happy to just go rent in catchment, and spend longer getting to know area. I can see the argument – but am worried we'd lose our foothold! (yep, there goes the irrational side again).

But also – don't you just love buying property, doing it up, adding value, making changes and upgrades? It's kind of a hobby, with the end result a nice property/garden the way you've always wanted it?

Edited June 30, 2013 by Venger

[otters]

The more you make something unattainable, the more people will want it.

It's the, I gotta have it no matter what syndrome. Make them feel a social outcast because they cant afford a mortgage. Then strike, by putting a cheap loan within their grasp.

Hey Presto! the housing market is booming again so we can say we are on the road to recovery.

[Frugal Git]

Now you know the truth for certain, from buyers of recent years. No missellling. Just individuals all over the place who have utter belief in property, think it's worth today's asking prices, feel absolute entitlement to it, with little fear of debt. With many actively wanting HPI from these levels. Despite it damaging their own prospects of ever trading up.

If they did have fear, they wouldn't be buying. They also have no memories; their entitlement erases short-term memory such as when house prices fell in 2008 due to credit tightening up.

What was a real eye opener was when they were having the 'I'll remortgage at a better rate in a few years when I have equity' discussion.They didn't seem to realise how stupidly low the rates they were getting at the moment were on their 2-5 year fixes, and were convinced that they'd be able to get even better (not considering the remortgage fees) in a few years time. The base rate is already on the floor and their opinion seems to be that will be permanent. Yikes!

[winkie]

I have met under 30s outside of HPC who have figured out that housing is in a bubble but they are a tiny minority. The vast majority would buy if they could get their hands on enough debt.

If the average house price was half a £million pounds and the money was there to be borrowed, there are plenty that would lap it up, take that and more....stuff the consequences when realistically there are few negative consequences for high risk investors now......it is not their money to lose so why not use it if it is going for free.

[steve99]

I am happy with my housing situation as it offers me incredible financial flexibility to do whatever the hell I like. 13 years ago straight out of uni I felt rather differently, and was saving like an utter demon to buy a place outright, only to see prices rising at £2-3 for every pound saved over the next 7 years.

The difference I think between me and them is I saved with the explicit intention to buy without debt and, now have a very reasonable sum and know exactly what it takes to save that much money, and what that sum represents in real terms of living a pretty simple life over a large part of my life.

Despite my username, I don't think denying myself luxuries any more is worth it. That the sum still wouldn't buy anything reasonable near Cambridge (outright) seems so ludicrous to me that it hardens my resolve. They on the other hand play with virtual sums, and have a much less realistic idea of the compromises that they will have to make to their lifestyle to pay for their boxes.. At least I made those compromises without the debt hanging over my head. Now I'm the one that's free - at least, that's the way to think that keeps me semi-sane.

edit typos.

Just been looking around Cambridge, What a bubble! this is its own planet, everything for sale selling within days of going up for sale (unless seriously crap) and prices rising all over the place. Got the impression that the cheaper houses (still expensive of course) are being bought by speculators. Our friends there are totally gung ho re prices, they bought for a better price 5 years ago and are now timetabling in double prices every 10 years (this will help their daughter to buy in the future apparently). This couple is the typical genX London duo who have had a straight line life experience, good school, good uni, good jobs, pay rises every year, she now flexi work condittions, he working from home still with the big city wage. What is really the p*ss off is that they believe everybody in the country has the exact same conditions as themselves, iethey live in their own bubble. They also get angry at anyone who suggests that life and house prices could be different, after all everyone they know (apart from us) is in the same isolation ward.

[winkie]

Just been looking around Cambridge, What a bubble! this is its own planet, everything for sale selling within days of going up for sale (unless seriously crap) and prices rising all over the place. Got the impression that the cheaper houses (still expensive of course) are being bought by speculators. Our friends there are totally gung ho re prices, they bought for a better price 5 years ago and are now timetabling in double prices every 10 years (this will help their daughter to buy in the future apparently). This couple is the typical genX London duo who have had a straight line life experience, good school, good uni, good jobs, pay rises every year, she now flexi work condittions, he working from home still with the big city wage. What is really the p*ss off is that they believe everybody in the country has the exact same conditions as themselves, iethey live in their own bubble. They also get angry at anyone who suggests that life and house prices could be different, after all everyone they know (apart from us) is in the same isolation ward.

There are lots like that.....hey ho, let them enjoy themselves while the going is good, there are other ways to live that are 10 times better than that........but however you live it, nothing is constant and nothing is guaranteed.

[19 year mortgage 8itch]

Let's hope HPC doesn't turn into a another crying-fest of excuses, as per 2008-09, for younger buyers in the past few years (and their Bomad parents in some instances), when the crash comes. Realisation that forbearance and stimulus to help save dumb debtors, only hurts those waiting for better value.

Now you know the truth for certain, from buyers of recent years. No missellling. Just individuals all over the place who have utter belief in property, think it's worth today's asking prices, feel absolute entitlement to it, with little fear of debt. With many actively wanting HPI from these levels. Despite it damaging their own prospects of ever trading up.

If they did have fear, they wouldn't be buying. They also have no memories; their entitlement erases short-term memory such as when house prices fell in 2008 due to credit tightening up.

Last week I was just reading in Regional Forum about someone who'd sold in their area. No memory again. Such buyers can't keep getting rewarded when buying at very high asking prices. Also sick of hearing on HPC how buying is 'only £100 more than renting'. That's before a HPC. Despite reports of many younger people still rushing to buy and taking on huge debt, I'm hopeful the crunch on the borrowing side is imminent. I can hear the bottom of a barrel being scraped.

You know what I think on this and peoples propensity for debt.

I've pretty much gone through a blueprint echo-boomer plan over the last 10-12 years. I got a steady reliable job, wage progression, great benefits,even a pension, very low student debt paid off, married, 2 kids etc. Housing is the only thing where its not gone quite 'to plan'.

But the gulf between my position in 2008 and today is epic. When you're a DINK couple the world is your oyster. When you've got kids to look after, its hard work. The biggest criticism I'd have of young couples is the effect that settling down has on you. The cost is enormous, even if neither partner gives up work. childcare and work related expenses can eat up a reasonable income in no time at all.

Having the experience of sort of emerging from the back of this change and knowing what happens, it is amazing to see so many oblivious to it. Oblivious to how this was manageable in the past and the problems now i.e. wage inflation and my great, steady job could be job loss just as easily.

I really, really really don't want to gamble my family's future on a property transaction

[peahead]

http://blogs.spectator.co.uk/coffeehouse/2013/06/why-dont-young-people-buy-homes-perhaps-they-spy-a-bubble/

Probably not to be honest

[The Masked Tulip]

Three 20-something estate agents - yes, EAs - that I talk with tell me that they have no intention of buying as they think asking prices are ridiculous.

How much an example they are of yougn people today I have no idea.

[Dorkins]

Three 20-something estate agents - yes, EAs - that I talk with tell me that they have no intention of buying as they think asking prices are ridiculous.

Must be soul-destroying for them. Or at least it would be if EAs had souls.

[The Knimbies who say No]

Let's hope HPC doesn't turn into a another crying-fest of excuses, as per 2008-09, for younger buyers in the past few years (and their Bomad parents in some instances), when the crash comes. Realisation that forbearance and stimulus to help save dumb debtors, only hurts those waiting for better value.

Now you know the truth for certain, from buyers of recent years. No missellling. Just individuals all over the place who have utter belief in property, think it's worth today's asking prices, feel absolute entitlement to it, with little fear of debt. With many actively wanting HPI from these levels. Despite it damaging their own prospects of ever trading up.

If they did have fear, they wouldn't be buying. They also have no memories; their entitlement erases short-term memory such as when house prices fell in 2008 due to credit tightening up.

Last week I was just reading in Regional Forum about someone who'd sold in their area. No memory again. Such buyers can't keep getting rewarded when buying at very high asking prices. Also sick of hearing on HPC how buying is 'only £100 more than renting'. That's before a HPC. Despite reports of many younger people still rushing to buy and taking on huge debt, I'm hopeful the crunch on the borrowing side is imminent. I can hear the bottom of a barrel being scraped.

'Adding value', when used as a proxy for doing something like painting a wall, gets my horsecrapometer off the scale. Hey, if you spend three years of your weekends making improvments to your house, it might be worth more. A truly startling revelation.

The real problem is that any clown could pretend to be a builder in the boom years and sell for more six months down the line, but they could have done so regardless, even if that decking and feature wall hadn't divined extra value from thin air (and 3,000 hours nil cost labour)

[The Masked Tulip]

Must be soul-destroying for them. Or at least it would be if EAs had souls.

I think they are just doing it for the money - paid very little - and they have, let us say, somewhat jaded views on some of their older colleagues.

[Renewed Investor]

I wish my younger brother and his GF could see it. They're having a kid and are about to put in a bid for a 2 bedroom terraced house. Asking price is £154,995

I told him to offer £80K. It's not exactly in the nicest part of town either.

[winkie]

The more you make something unattainable, the more people will want it.

It's the, I gotta have it no matter what syndrome. Make them feel a social outcast because they cant afford a mortgage. Then strike, by putting a cheap loan within their grasp.

Hey Presto! the housing market is booming again so we can say we are on the road to recovery.

No they don't.......Ha, social outcast because you don't have a mortgage, pull the other one its got bells on it.

A fool and his borrowed money are easily parted.