What Reaction To Expect, From Equity Rich House-Owners, In Prime Areas, To Sudden And Sharp Losses Of Housing Peak Value Wealth, In Hpc?

[Venger]

The penny will drop when the house next door that they know is worth more than theirs sells for less than what they thought theirs was worth.

Mainland UK, it never reached the HPC critical mass for most prime area older owners to really accept - when that occurred in isolation - that the lower transaction prices impinged on the value of their own home (in my opinion). They've breezed through it.. these 'crisis years' with their equity wealth reflated, in many low-mid-high parts.

HPC renter-savers were up against forbearance even in 2008, then 0.5% and QE from 2009. And FLS as just been reminded in a quote post from Count below.

Never got the opportunity to know how real HPC, lower prices and prolonged lower prices, would have affected the ego/psyche majority position of equity rich prime owners.

It never got past stage 3 of EC's 1-5 in the minds of most older equity rich/outright owners in low-mid-high prime areas (except at the £1m+ level where I see some mansions outside London and SE)... with £300K-£750K+ level reflated to new peaks.

It seems Greg B found a much more realistic seller, in 2009, but there again, isolated transaction at his much lower than peak buying price that Greg paid, I doubt had any real on the sense of worth/value of surrounding prime house owners.

Although good to see one of his contacts in the misery of a slow chase down spiral in prime, who I suspect could get out for big money and downsize to a nice house, at much lower price... if it were not for their (split up with wife) ego of trying so hard for what it was worth near peak/new peaks, probably vastly more than what they bought it for. Market not complying.

Just it would require real HPC, more such sellers looking to sell, needing to sell, or finding buyers have disappeared, to properly register in minds of neighbours, not an isolated one off lower than peak transaction. And I am so intrigued what it may do for those who put so much of their self-being into the value of their houses.

...Not being able to sell was a weight round my neck. The agents ALL wanted to put the house up for silly money, it sold for 80K less then the initial asking price ( 10K more than I paid for it, which just about covered my buying/selling costs ). It was depressing not being able to find a buyer. It was perhaps the unhappiest time of my life. Lilttle did I know at the time how dysfunctional the market had become and what was coming.

Had I not accepted the offer when I did I'd have been stuck for years because of the 2007 collapse. The people who bought off me put the house up for sale 12 months after moving it and it took them 3 years and a £50K hit before the sold. The caught the start of the FLS money by the looks of it. Some savvy buyer/commuter moving out of london, I like to speculate, getting a bargain. Someone paid 50K less for a much bigger/better house 100 yards up the road 12 months earlier so that savvy buyer was a F**K wit.

Being stuck in a house is no fun.

The costs/risks involved in owning a house are huge.

Buying at the prices we see now is a mugs game for sure.

The moral of this story....price it right for the current market conditions and it will sell....and self harmers should not be lent money from state owned banks.

Great story DWS, with the guitar.

[Mrs Bear]

Why on earth wouldn't equity rich/outright owners just shrug their shoulders and go "oh" ? It's not like a crash would materially reduce their standard of living in any way.

Ditto.

Plenty will not be remotely bothered. Plenty have not MEWed, and never will. Some will be positively pleased if prices drop, since it will benefit their children.

[Venger]

Ditto.

Plenty will not be remotely bothered. Plenty have not MEWed, and never will. Some will be positively pleased if prices drop, since it will benefit their children.

There will be surprises, I am certain of it.

Going to sting some, and shake their entire smug equity rich housing world, in knowledge that could have sold for £750K, when real HPC forces the acceptance they are struggling to find buyer at £400K.. or next door and house across the road sell for £400K/£350K.

Perhaps not for those who don't count their HPI all the time (who are ok by me) - but even there, many will probably still have some regrets... only natural. Could have benefited their children by selling peak valued £750K house quick for £600K, buying a smaller house for £300K, and putting £100K in savings, and gifting 2 kids £100K each to their futures (into savings).

Even if you pay outright, you're still renting the house to yourself, losing alternative uses of that money, and taking the risk of falling house prices.

Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and buying a humbler smaller house to live in for much less money. This extra income could be enough for many is enough to retire in luxury, or with security, for decades.

[Limon]

I really don't think many of them will give a hoot one way or another. In my experience, well off people in that age group will hang on to their houses until the extended family gets too big to have over at Christmas (i.e. when the grandchildren start coupling up and sprogging) and the stairs/garden start getting a bit too much to handle. They see them as homes, not financial assets or some sort of nutty way of keeping score.

[dances with sheeple]

Mainland UK, it never reached the HPC critical mass for most prime area older owners to really accept - when that occurred in isolation - that the lower transaction prices impinged on the value of their own home (in my opinion). They've breezed through it.. these 'crisis years' with their equity wealth reflated, in many low-mid-high parts.

HPC renter-savers were up against forbearance even in 2008, then 0.5% and QE from 2009. And FLS as just been reminded in a quote post from Count below.

Never got the opportunity to know how real HPC, lower prices and prolonged lower prices, would have affected the ego/psyche majority position of equity rich prime owners.

It never got past stage 3 of EC's 1-5 in the minds of most older equity rich/outright owners in low-mid-high prime areas (except at the £1m+ level where I see some mansions outside London and SE)... with £300K-£750K+ level reflated to new peaks.

It seems Greg B found a much more realistic seller, in 2009, but there again, isolated transaction at his much lower than peak buying price that Greg paid, I doubt had any real on the sense of worth/value of surrounding prime house owners.

Although good to see one of his contacts in the misery of a slow chase down spiral in prime, who I suspect could get out for big money and downsize to a nice house, at much lower price... if it were not for their (split up with wife) ego of trying so hard for what it was worth near peak/new peaks, probably vastly more than what they bought it for. Market not complying.

Just it would require real HPC, more such sellers looking to sell, needing to sell, or finding buyers have disappeared, to properly register in minds of neighbours, not an isolated one off lower than peak transaction. And I am so intrigued what it may do for those who put so much of their self-being into the value of their houses.

Great story DWS, with the guitar.

There will be some very strange and internal shifts in their being, which will manifest in all sorts of weird ways which even the DM won`t be able to provide an outlet for. Think "The Wicker Man" or early Genesis with Peter Gabriel, running around with a foxes head on, beating the wife, and screaming to the Gods of Suburban Nimbyism for more QE.

[silver surfer]

Plenty will not be remotely bothered. Plenty have not MEWed, and never will. Some will be positively pleased if prices drop, since it will benefit their children.

I think you're right when it comes to people staying put, the majority will be fairly sanguine about it, but for those forced to sell it might be a different story.

I bought a house during the 1989-95 crash and the seller, who was probably a bit unbalanced to begin with, was pretty much unhinged by the experience. We'd been to see the same house earlier but discounted it as overpriced given that it needed an awful lot of work. We kept looking and a few months later were surprised to get a call from the EA saying the buyer might now entertain offers. I made it clear that, even though it was a lovely plot on a lovely street, the house had had a horrible extension grafted on which in our view needed demolishing and rebuilding, added to the fact it hadn't seen any maintenance in twenty or thirty years it was really a very big project and we'd want a price that reflected both the current market and the work needed.

This went back and forth a few times and eventually the EA hinted that the seller was getting desperate and really needed to sell, he didn't use those words but that was the clear impression I came away with. On that basis we got some quotes for the work and submitted an offer. We didn't hear anything for some while, from memory I think we'd gone back to active looking elsewhere, when the EA called back again, he was pushing for a bit more but it was clear the seller had massively re-appraised his asking price and there was a deal to be done.

Long story short we agreed a price and exchanged. At some point before completion I went around to take some measurements and met the seller. He was very agitated, flipping back and forth from craven wheedling for more money and boiling anger. Apparently he was an accountant who'd left a secure job in a big company to start a business which had subsequently failed, he was by then in his late 50's and couldn't get back into paid employment and had been hoping for a big payoff from the house to get himself straight.

The story didn't end there, when we moved in we found the seller was so angry he'd vandalised the place. It was all fairly petty (a heap of dog sh1t in the swimming pool was one of the things I remember) and as we were about to gut and rebuild the place none of it really mattered. But the memory of it has always stayed with me. The fact was the buyer didn't blame the economy, or the market, or the government, or the EA, or anyone else. He blamed me for, as he saw it, ruining his life.

Daft I know, but that's just how some people are.

Still, it's all a bit academic. Without a material hike in base rates I doubt house prices will fall all that much, and even though it's virtually inevitable that rates will one day rise significantly, I can't see it happening in 2015.

[Venger]

Too few HPI forever / HPI locked in older owners were put in a position to accept their prime housing fell in value 2007-09. And it was all kissed better by reflation in so many prime areas.

Remember Barry? Ok he was a bit on the extreme side, but just showed the extent of complacency, and it still exists, with locked in low-mid-high prime HPI owners.... sat on bubble equity that is far in excess younger generations can ever hope to have anything near, from their own efforts, for the most part vs positions of majority of older owners with long wave hpi in prime.

He was one of the few who was forced to feel the brunt of the market change in 2007-10.

Well in a real hpc, even for outright/equity rich owners... when critical mass of a real prolonged hpc sets in, then there will be realisation and similar regrets, in my view, on what they could have sold for, versus what they come to hard realisation is worth a lot less (into a future real hpc)

Barry: £450,000 is what they've asked us to drop it by. Now that house (points to Peter Andre rented development house to the right of the glass mansion house), and that house (points to his original home) are worth kind of the same money. If I was to drop them both by that kind of money then it's going to cost about one million pounds. The dream that I've had has been entirely changed since we've started building it.

Barry: I've had a few days in each of the last few weeks where I've been really demoralised by it. Now I'm thoroughly aware I've put us in a position that we really didn't actually have to be in. There's a different scenario attached to our personal finances now so us like everyone else have got concerns. Suddenly it seems excessive to have even the vehicles we've got, and three houses in a row, that kind of stuff. There's almost an element of embarrassment about it.

Wife: I've thought so much, were we too greedy, were we striving for too much when what we'd already got was more than, you know, a lot of people would hope for in a lifetime really.

http://www.housepricecrash.co.uk/forum/index.php?/topic/136566-grand-designs-house-up-for-sale-in-brighton/

We'll see, find out for certain, as we go into a real HPC, Limon. A friend's parents have upsized to a large luxury house simply to have their kids over at Christmas, such is the belief in locked in and forever HPI. They would not have upsized had they really felt HPC in 2007-09, before relation. It was just a few other people's houses that lost value then. HPC didn't reach critical mass. Although in my view, more malinvestment just sets things up for harder HPC, eventually.

Couple I know in their late 50s/early 60s actually thinking of upsizing to 5 bed house (although they did want to get it for £550K down from £650K).... also bedroom-facilities above seperate detached garage, on reasoning great to have for when their adult children come to stay at Christmas... despite their renting adult kids living 100+ miles away, all renting.

It requires HPC. Not just younger people carrying the fantasy for them. Some real world change in their worldviews and expectations.

[Dorkins]

I really don't think many of them will give a hoot one way or another. In my experience, well off people in that age group will hang on to their houses until the extended family gets too big to have over at Christmas (i.e. when the grandchildren start coupling up and sprogging) and the stairs/garden start getting a bit too much to handle. They see them as homes, not financial assets or some sort of nutty way of keeping score.

Yeah right, that's what they tell other people because they know anything else would be immodest. Inside they get a little burst of adrenaline every time the BBC/newspaper story says "house prices rose X% last month". Journalists know "house prices soaring" stories get eyeballs, that's why they publish them.

[chronyx]

Publishing t1t pics would be a lot easier and more truthful

[dances with sheeple]

Ditto.

Plenty will not be remotely bothered. Plenty have not MEWed, and never will. Some will be positively pleased if prices drop, since it will benefit their children.

For most ordinary people the HPI bonanza of the last few years was the biggest lottery win they are ever going to see. Many won`t want to let go so easily. We are already seeing this with the delusional adding on of silly money to already silly bought prices in the hopes of selling to a truer mug.

Edited January 13, 2015 by dances with sheeple

[Killer Bunny]

Reaction

[Si1]

I'm imagining my dad's reaction (a pre boomer who's become more and more entitled since about 2007)

He'll probably just go purple for a few years, and I'll ignore him

[Wurzel Of Highbridge]

If boomers lose their imaginary wealth then the possibility of withdrawing the equity for a pension, care or leaving the house to their (skint) kids goes.

[dances with sheeple]

Yeah right, that's what they tell other people because they know anything else would be immodest. Inside they get a little burst of adrenaline every time the BBC/newspaper story says "house prices rose X% last month". Journalists know "house prices soaring" stories get eyeballs, that's why they publish them.

Yep, that is more the truth of the thing. UK sheeple are obsessed with their house and how much it is worth.

[ProleStore]

For most ordinary people the HPI bonanza of the last few years was the biggest lottery win they are ever going to see. Many won`t want to let go so easily. We are already seeing this with the delusional adding on of silly money to already silly bought prices in the hopes of selling to a truer mug.

For most ordinary people, HPI brought nothing but bragging rights and a higher cost of living.

[Venger]

Long story short we agreed a price and exchanged. At some point before completion I went around to take some measurements and met the seller. He was very agitated, flipping back and forth from craven wheedling for more money and boiling anger. Apparently he was an accountant who'd left a secure job in a big company to start a business which had subsequently failed, he was by then in his late 50's and couldn't get back into paid employment and had been hoping for a big payoff from the house to get himself straight.

The story didn't end there, when we moved in we found the seller was so angry he'd vandalised the place. It was all fairly petty (a heap of dog sh1t in the swimming pool was one of the things I remember) and as we were about to gut and rebuild the place none of it really mattered. But the memory of it has always stayed with me. The fact was the buyer didn't blame the economy, or the market, or the government, or the EA, or anyone else. He blamed me for, as he saw it, ruining his life.

Great story.

Nothing to match that, but when my parents bought their main semi-home (to bring up family... 3 sons + 1 daughter), it was being sold by a woman who had to sell when her oldest child reached 18. Part of the divorce agreement. She was a reluctant seller, but the market was slow and there wasn't much money around, and eventually she/he accepted my parents offer, maybe under some pressure from her ex-husband who wanted the money from the settlement.

Both the mother and the daughter downsized to smaller place in the village, but were very hostile later on when bumped into them. Had a grudge at us buying the house they were forced to sell. At first it seemed ok, but one of the co-workers of the grocery store, where the 18 year old girl worked on Saturdays, warned my mother the daughter was bad-mouthing her behind her back, despite smiling to her to her face.

[Byron]

1

Edited January 13, 2015 by Byron

[silver surfer]

Both the mother and the daughter downsized to smaller place in the village, but were very hostile later on when bumped into them. Had a grudge at us buying the house they were forced to sell. At first it seemed ok, but one of the co-workers of the grocery store, where the 18 year old girl worked on Saturdays, warned my mother the daughter was bad-mouthing her behind her back, despite smiling to her to her face.

That's exactly it. Personalising something that is absolutely not personal, being eaten up by misplaced grudges and resentment. There was an ancient Roman who wrote that the best revenge is to simply live a good life. It's fine advice, for their own sakes disappointed sellers should just move on.

[Venger]

That's exactly it. Personalising something that is absolutely not personal, being eaten up by misplaced grudges and resentment. There was an ancient Roman who wrote that the best revenge is to simply live a good life. It's fine advice, for their own sakes disappointed sellers should just move on.

I can't help but have some myself, but try to remain humble.

It's good advice. I try to follow some similar advice from Confucius, but have to vent frustrations somewhere. (Confucius was a Chinese teacher, editor, politician, and philosopher of the Spring and Autumn period of Chinese history. Born: 551 BC, Lu.)

Confucius had another maxim about revenge that is arguably more apposite.

"Before you embark on a journey of revenge, dig two graves," he said.

In other words, the desire for revenge may hurt the seeker as much as the victim.

[Executive Sadman]

My gut feel is this won't happen this time. Was required to get through the first parliament not the same drivers in 2015

We'll do whatever the yanks do, as always.

Personally I think QE was simply to save the banks. Supposedly US and UK banks have 'cleansed' their balance sheets now...although the EU, they say not.

If the US decide not to QE, and the Eurozone runs into deeper problems...as politically seems likely in Spain and Greece...perhaps we get the best of both worlds. A US that leaves us unable to QE, along with a comatose EU dragging things down...hopefully making an EU exit for us more likely (perhaps not that likely)

I can dream, anyway.

[dances with sheeple]

We'll do whatever the yanks do, as always.

Personally I think QE was simply to save the banks. Supposedly US and UK banks have 'cleansed' their balance sheets now...although the EU, they say not.

If the US decide not to QE, and the Eurozone runs into deeper problems...as politically seems likely in Spain and Greece...perhaps we get the best of both worlds. A US that leaves us unable to QE, along with a comatose EU dragging things down...hopefully making an EU exit for us more likely (perhaps not that likely)

I can dream, anyway.

The dream is closer to reality than it was five years ago?

[juvenal]

"It isn't overpriced. We simply haven't yet found the one person who really wants it..."

This type of seller is convinced that somewhere out there is a buyer who has the vendor's exact house in their head as their dream home - complete with mauve bedroom walls, vases of gilded twigs a-plenty, and a replica Queen Vic bar in the main room.

Selling has nothing whatever to do with price.

It's just about waiting for that home hunter who appreciates the life-size mural of dartsman Bobby George in your lounge, and the forest of B&Q garden statuary surrounding your pergola as much as you do.

Edited January 13, 2015 by juvenal

[Stateless]

If the PTB could override market forces we wouldn`t be in deflation? They won`t hold the property market up indefinitely.

Almost certainly, They won't hold the property market up indefinitely.

(they could, but they won't). At some point they are going to let this fall.

Even in deflation there can be winners. (but those with big debts aren't going to be on that list).

If it falls, it is because they want it to fall, they gain from it, that is why they are the PTB.

I would think those that expect the Gov to always intervene on house prices will be betrayed at some point.

I think we will see a large chunk of the BTL (mom and pop / amateurs) properties gets moved up the food chain at low prices.

Most of us end up renting, Home ownership is going to be a smaller and smaller % of the population.

[Greg Bowman]

We'll do whatever the yanks do, as always.

Personally I think QE was simply to save the banks. Supposedly US and UK banks have 'cleansed' their balance sheets now...although the EU, they say not.

If the US decide not to QE, and the Eurozone runs into deeper problems...as politically seems likely in Spain and Greece...perhaps we get the best of both worlds. A US that leaves us unable to QE, along with a comatose EU dragging things down...hopefully making an EU exit for us more likely (perhaps not that likely)

I can dream, anyway.

I agree ES, and as you say we can all dream. Some interesting drivers now that weren't around in 2007. Whilst not a fan of a federal state so I don't wish for a complete exit but I see a weakened split EU where we form a Northern power block with the 'old' EU members an attractive proposition giving us another form of best of both worlds as well

[R K]

None.

And their notional yield will go up.