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vicster

I Give Up....

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I know buying is not a financially savvy thing to do right now but I have my reasons for wanting to do so. I have been looking to buy for several months, and I've been watching the market locally for a year.

I have watched a number of houses, priced a few thousand above what we can manage comfortably just sit there throughout that time and we've made offers (of over 90% of AP, all rejected) on one of them.

Perhaps I'm being a little simplistic here but surely if you want to sell your house and nobody's biting it's time to drop the asking price?

Or are there people out there who just like seeing their house on Rightmove and have no intention of actually selling?!? I'm only half joking here - I honestly get the impression that some people *enjoy* inviting strangers in to look around their house and get a thrill from seeing it in the local paper... :(

I just don't get it - what does it mean?

Edited by vicster

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I know buying now is not a financially savvy thing to do right now but I have my reasons for wanting to do so. I have been looking to buy for several months now, and I've been watching the market locally for a year.

I have watched a number of houses, priced a few thousand above what we can manage comfortably just sit there throughout that time and we've made offers (of over 90% of AP, all rejected) on one of them.

Perhaps I'm being a little simplistic here but surely if you want to sell your house and nobody's biting it's time to drop the asking price?

Or are there people out there who just like seeing their house on Rightmove and have no intention of actually selling?!? I'm only half joking here - I honestly get the impression that some people *enjoy* inviting strangers in to look around their house and get a thrill from seeing it in the local paper... :(

I just don't get it - what does it mean?

It means that they are so heavily indebted that they can't sell for less.

Of course they will have to sell for less at some stage.

Your problem is whether that's sooner rather then later.

Their problem is they may "chase the market down".

NDL

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It means that they are so heavily indebted that they can't sell for less.

Of course they will have to sell for less at some stage.

Your problem is whether that's sooner rather then later.

Their problem is they may "chase the market down".

NDL

Some do not HAVE to sell, and are testing the market; if they get the offer they are looking for fine, if not they will sit tight....

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It means that they are so heavily indebted that they can't sell for less.

Of course they will have to sell for less at some stage.

Your problem is whether that's sooner rather then later.

Their problem is they may "chase the market down".

NDL

I'm not so sure you know. I don't think they *do* have to sell. I can just see things trundling along the way they are now for an age. We've got used to FTBs being in their 30s (not that I think there's anything wrong with this - I was way too busy being flighty in my 20s and have no regrets about missing any boats), used to housing costing 50+% of one earner's salary.

I'm sure I could find this out for myself, but does anyone have any figures illustrating the price differences between (and I sincerely apologise for using this expression...) rungs on the ladder? I'm just thinking that the vendors of the kind of house we want can't afford something higher up the food chain.

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Guest boredwaiting

You're very welcome but you'll need to pay royalties :)

I wish i went out and bought when I first wanted to. But I didn't and that's that....

I don't believe there will be a crash anymore - it's much more likely everything is going to tick along pretty flat. I finish a contract in a few months (maybe a year) then I will look abroad for work.

i think the name veryboredwaiting is available :)

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Ticking along... that's how I see it too.

Honestly, people's lives have changed. We marry later, have children later and thus buy later - when we're earning more and so can afford to pay more. Could this be a reason for the crash never happening?

The only market I can see really taking a tumble is that of 1-bed flats. I'm not convinced that this will have more than a moderate effect on the rest of the market.

Of course I might be talking out of my ar5e - comments welcome (but not about my ar5e).

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Vicster - I think there’s always a wide spread of sellers out there – ranging from those needing to sell quickly and willing to take any reasonable offer to those out kite flying or just waiting for some rich fool to “fall in love with it”. But most are probably just thinking “I need to achieve £X” to buy my next house costing £Y”, completely oblivious to any upcoming correction or the practical difficulty facing their (first time?) buyers in coming up with the asking price, never mind the resentment caused by “pocketing” a three times gain over a decade. Remember, everyone has a different take on what is happening to house prices, and the views held by those actually buying and selling (no matter how idiotic) are quite different from the consensus here. Obviously frustrating, but I guess you need to come off the fence and actually decide between buying and renting, and then get on and do it (EA might help here, as they actually want a sale and would probably twist a seller’s arm for you if they though it meant a commission), or just sit tight and rent safely protected from any capital falls. I think waiting and watching is probably not good for the soul. You could follow the advice on Singing Pig and chase down a BMV purchase, but to be successful that needs a particular type of personality.

Edited by spline

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Personally I wouldn't even bother making offers at the current stage.

Detached prices plunged over 7% in quarter 4 alone where I'm looking, the fun is just starting as far as I'm concerned, it's certaintly not the time to relent. It's like travelling all the way to Scotland and not bothering to taste the whiskey.

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Vicster - I think there’s always a wide spread of sellers out there – ranging from those needing to sell quickly and willing to take any reasonable offer to those out kite flying or just waiting for some rich fool to “fall in love with it”. But most are probably just thinking “I need to achieve £X” to buy my next house costing £Y”, completely oblivious to any upcoming correction or the practical difficulty facing their (first time?) buyers in coming up with the asking price, never mind the resentment caused by “pocketing” a three times gain over a decade.

...

Exactly... and I think their asking price is often "validated" by an offer from someone lower down who can't actually afford it. We were curious (not quite interested) in one property that had been on at the same price for over 12 months. Problem was that a lady had offered the full asking price on it quite early on, but her offer was contingent on her selling ridiculously overprice apartment. Agent told us not to even bother!

T&T

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Currently there is an undersupply of property in the market, so yet again the market is a sellers market.

Most people are toying with the Idea of selling, everything has a price and the mindset is simply If I can get X for it, then I will sell it. If not, then I am happy to sit and wait as I have a low interest fixed rate mortgage and all I need do is make sure I hang onto my job.

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It's like travelling all the way to Scotland and not bothering to taste the whiskey.

LOL!

Perhaps it will be the EAs that tip the balance - after all they're going to go bust if things keep trundling along like this.

I have to say that I'm not looking for a crash - I accept that we'll be taking on a big mortgage compared to peers who bought in their 20s. They're smug now (and some have told me they feel sorry for us!) but back then I was moving to a new city/ new country on a whim, giving up full-time work to do a degree for the fun of it and generally living it up so it's swings and roundabouts.

Laurejon - that makes perfect sense, based on what I've been seeing. Houses priced a bit lower than the average are selling pretty fast imo, which would seem to bear this out.

Edited by vicster

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This doesn't quite follow on with the above thread, but I note the reference to rungs on the ladder.

Some people say that houses can be sticky downward as owners do not want to sell their houses. If we have all this talk of a housing ladder, then we'd expect there to be a lot of people who have houses and wish to move upwards. If house prices drop by a fixed percentage across the board, then the rungs get closer together, so that even though they might sell their first house at a loss, they buy the better/more expensive house at less than they would otherwise have been able to buy. If they wait for the market to recover, then the more expensive houses would have appreciated widening the rungs again. A quick example is:

[high house prices]

Cheap house: 130,000 Expensive house: 260,000

Since this is housepricecrash.co.uk, let's assume that houses drop 30% in value. So the new prices are:

[low house prices]

Cheap house: 91,000 Expensive house: 182,000

The owner then sells the cheaper house, and buys the expensive house. The total amount they have spent (ignoring interest payments) is 130,000-91,000+182,000=221,000. So, they have in effect bought the expensive house for 221,000. If prices then recover, as we're told that they will do "over the long term", then the houses may eventually recover their original prices, and go up another 20%, then the prices will be:

[next boom house prices]

Cheap house: 156,000 Expensive house: 312,000

So, the person who bought a cheap house at the original 130,000 and held onto it has spent 130,000 and has an asset valued at 156,000, for a return on investment of 20%. The person who sold the house during the slump and moved up has spent 221,000 on housing, and has an asset worth 312,000, or a return on investment of 41%. This is twice the return on investment they would have had if they had bought the expensive house in the first place. And, assuming that the purchaser required a mortgage, the owner who moved up during the slump would have been paying interest on first a 130,000 house and then an effective 221,000 house, while the person who bought the 260,000 house in the first place would have being paying interest on a mortgage to support the 260,000 house all the time.

Hence to say that owners will hold onto their houses and not sell during a slump doesn't make sense, provided that the owner of the 130,000 house can move up to the next rung on the ladder during the slump, involving selling the first house at a loss, and be much better off in the long run than if they held tight.

However, this requires that houses higher up the ladder are for sale. The argument that people can improve their position by selling and moving up becomes weaker the higher up the ladder you go as people may not want a more expensive house than they have. But, assuming that we do have a ladder, then on average the higher up the ladder you go, the older people will be. Assuming that people don't get to the top end of the market until they are about 50, and they will move out at 80 to go to a nursing home, move in with their children, or simply die. If those random estimates were true, then we'd expect 3.33'% of these homes to churn every year out of necessity. That's over and above sales due to people wanting to move a different part of the country or world. So over three years or so, there'd be more than 10% churn even if people didn't want to sell. So during a downturn, we would expect there to be properties coming up for sale.

There are a lot of factors I haven't considered here, and it will be obvious to all that I am no economist. But, the same gains in terms of prices and value will apply to BTL landlords as to owner occupiers. Except that BTL landlords have the option of buying more than one 130,000 house at 91,000 rather than moving up.

The one spanner in the works here is if FTBs really over-extend themselves, taking on 6x mortgages and the like. Then even if prices come down, potentially because of higher interest rates, then they wouldn't be able to move up. Taking this argument to the absurd extreme, if a whole generation of people were stuck in negative equity, then no-one would be able to sell and buy the better houses, meaning that the prices of better houses could fall to less than the starter homes. This would never happen because even with over-extension on a massive scale, I couldn't believe that more than a single digital percentage of people in total would end up in that situation.

But summing upl, I don't believe that "wouldn't sell at a loss" argument holds. Though, it's nowhere near black and white.

Billy Shears

Currently there is an undersupply of property in the market, so yet again the market is a sellers market.

Most people are toying with the Idea of selling, everything has a price and the mindset is simply If I can get X for it, then I will sell it. If not, then I am happy to sit and wait as I have a low interest fixed rate mortgage and all I need do is make sure I hang onto my job.

Undersupply? Where? As I've mentioned a boring number of times, I took time out to look at properties within short walking distance of where I live. There were lots of them. Including those with "for sale" signs that I hadn't found on rightmove, there were maybe 20-30 for sale just in the streets around where I live.

I do criticise people for putting too much emphasis on anecdotal evidence, but I'm not sure I see an undersupply around here.

Billy Shears

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Great post, Billy.

I'm really interested in this - the price difference between the rungs (yeuch!) and how this effects the market generally.

Seeing as I really don't know what I'm talking about I'm waiting for some better informed types to comment further....

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Exactly... and I think their asking price is often "validated" by an offer from someone lower down who can't actually afford it. We were curious (not quite interested) in one property that had been on at the same price for over 12 months. Problem was that a lady had offered the full asking price on it quite early on, but her offer was contingent on her selling ridiculously overprice apartment. Agent told us not to even bother!

T&T

The owner of this house:

http://www.rightmove.co.uk/viewdetails-501...pa_n=1&tr_t=buy

is just around the corner from me. This morning when I went to look at houses I took my son with me. He was told we weren't buying soon. As a comparison the following house:

http://www.rightmove.co.uk/viewdetails-588...pa_n=1&tr_t=buy

is 4,000 pounds less in asking price, bigger, and better located. It may have been a mistake to take my son with me as he can't understand why we can't just go and buy it :-(

But returning to the first house, the (I presume) owner turned up in a car when we were looking at it and spotted us. I make no claims to know what other people are thinking, but I would hope she's not thinking "ooh - someone's interest in our house". Even worse would be if the estate agent passed onto her the outcome of my original enquiry about the property and my final comments once being told the price and she was thinking "well if that winker thought it was overpriced, others are still interested."

Billy Shears

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  • 302 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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