Hi, I'm New Here

[drhewitt]

Hi all, I am an expat living in New Jersey, USA.

I am looking to move back to the UK late next year if possible. I am "entertaining" the thought that house prices might crash before I set foot on English soil, but I don't hold my breath.

Now before you ask, "Why on earth would I move back to the UK and buy there?", the answer is I like it there, that's where I was born and that's where I want to stay - for a long time at least.

The housing market in the States is ridiculous, 2 bedroom houses are selling for $500,000 - the average wage is $35-40k and the property taxes (council taxes) are $10,000 a year.

That's like paying mortgage and rent.

There is a huge housing bubble here, I wonder when it will pop. If you ever had fun with bubbles as a kid, know that you could make a huge bubble out of piece of wire folded into a circle. The bubbles are much bigger than the regular ones you buy at the dollar store, and that is the situation in the USA.

There are too many BTL people, but now they are getting out of the market.

Anyway, enough about the USA, this is a UK forum...

We are saving for a deposit, but when I hear house prices are going up 500 quid a week, I kind of take a deep breath and think what the heck.

I mean, could you imagine your wages going up 500 quid a week?

When I was in England last December, I noticed rents had gone up too. A few years ago, you could rent a one bedroom flat for $325-350, now you're lucky to get a rental for less than 450 a month.

My personal opinon on people taking out x4, x5 or x6 income multiples is you're taking out a real gamble.

Anyway, does anyone have any ideas as to if and when the market will crash?

Cheers

[ʎqɐqɹǝʞɐɥs]

Welcome

[pobby]

Hi all, I am an expat living in New Jersey, USA.

I am looking to move back to the UK late next year if possible. I am "entertaining" the thought that house prices might crash before I set foot on English soil, but I don't hold my breath.

Now before you ask, "Why on earth would I move back to the UK and buy there?", the answer is I like it there, that's where I was born and that's where I want to stay - for a long time at least.

The housing market in the States is ridiculous, 2 bedroom houses are selling for $500,000 - the average wage is $35-40k and the property taxes (council taxes) are $10,000 a year.

That's like paying mortgage and rent.

There is a huge housing bubble here, I wonder when it will pop. If you ever had fun with bubbles as a kid, know that you could make a huge bubble out of piece of wire folded into a circle. The bubbles are much bigger than the regular ones you buy at the dollar store, and that is the situation in the USA.

There are too many BTL people, but now they are getting out of the market.

Anyway, enough about the USA, this is a UK forum...

We are saving for a deposit, but when I hear house prices are going up 500 quid a week, I kind of take a deep breath and think what the heck.

I mean, could you imagine your wages going up 500 quid a week?

When I was in England last December, I noticed rents had gone up too. A few years ago, you could rent a one bedroom flat for $325-350, now you're lucky to get a rental for less than 450 a month.

My personal opinon on people taking out x4, x5 or x6 income multiples is you're taking out a real gamble.

Anyway, does anyone have any ideas as to if and when the market will crash?

Cheers

I think I might well stay put for the moment.Where in the U.k do you hope to buy?

[Living In Hope]

Hi all, I am an expat living in New Jersey, USA.

I am looking to move back to the UK late next year if possible. I am "entertaining" the thought that house prices might crash before I set foot on English soil, but I don't hold my breath.

My husband and I are moving back to the UK this July, after living in Alberta, Canada for 11 years. That's why we've been keeping an eye on this site as well. Have found it to be a really useful source of information. We don't want to buy as soon as we come back, and find that we've bought a shed at the height of the market. So we have a rental place lined up.

but you can't live your life based soley on what's happening with house prices. There are other important factors that have affected our decision and the timing of it - family/domestic matters, kids' education, career options etc. so while there's a need to keep a wise eye on housing market, you've got to get on with life as well.

Good luck with your move - hardest part for us was getting the dogs' passports sorted out!

[Time to raise the rents.]

Go away.

[drhewitt]

Go away.

Hi all, thanks for welcome, will write more soon.

Is Time to raise the rents a troll or does he have an attitude problem?

My husband and I are moving back to the UK this July, after living in Alberta, Canada for 11 years. That's why we've been keeping an eye on this site as well. Have found it to be a really useful source of information. We don't want to buy as soon as we come back, and find that we've bought a shed at the height of the market. So we have a rental place lined up.

but you can't live your life based soley on what's happening with house prices. There are other important factors that have affected our decision and the timing of it - family/domestic matters, kids' education, career options etc. so while there's a need to keep a wise eye on housing market, you've got to get on with life as well.

Good luck with your move - hardest part for us was getting the dogs' passports sorted out!

Living in Hope,

Interesting story. I moved to the US to get married in Aug 2001. The USA is nice, but not to live there permanently.

I also don’t want to buy a house as soon as we move back.

Yeah – about the dogs passports – I’m guessing you did the pet passport scheme?

We have two cats and a bearded dragon – not sure what to do about the lizard, will probably need a license of some sort to bring him over.

Edited May 18, 2006 by drhewitt

[Guest Winners and Losers]

Time to raise the rents does have an attitude problem?

Nail on head, however he does seem to be particularly cranky tonight. :angry: Maybe he is not making enough money out of his BTL Portfolio?

[pobby]

Hi all, thanks for welcome, will write more soon.

Is Time to raise the rents a troll or does he have an attitude problem?

Living in Hope,

Interesting story. I moved to the US to get married in Aug 2001. The USA is nice, but not to live there permanently.

I also don’t want to buy a house as soon as we move back.

Yeah – about the dogs passports – I’m guessing you did the pet passport scheme?

We have two cats and a bearded dragon – not sure what to do about the lizard, will probably need a license of some sort to bring him over.

Ask TTRTR.It`s the same license he uses to get back from Sweden!

[drhewitt]

I think I might well stay put for the moment.Where in the U.k do you hope to buy?

Hey Pobby,

I grew up in West Sussex, but prices don't look good there. My wife likes Cornwall and prices don't look good over there either.

I guess maybe Wales or Midlands perhaps.

There is a website for expat mortgages, but most require a hefty 25% deposit before they'll even consider you.

Thanks guys for the info here, this site is awesome.

[Time to raise the rents.]

Just doing my bit to balance the forum. Someone says welcome, I say go away.

BTW, according to this forum, the US is crashing hard right now, but you don't seem to be aware of that. How so?

[pobby]

Hey Pobby,

I grew up in West Sussex, but prices don't look good there. My wife likes Cornwall and prices don't look good over there either.

I guess maybe Wales or Midlands perhaps.

There is a website for expat mortgages, but most require a hefty 25% deposit before they'll even consider you.

Thanks guys for the info here, this site is awesome.

drhewitt how ya doing.Yes Cornwall,really bad wages and average house price £195,000.Lived there my self for nearly 10 years.Now live over the boarder in Plymoth,Devon quite a bit cheaper but a so so city.W.Sussex---pricey.Hastings and a few other places were not too bad but I think it`s going up there.Wales,hmmmmm now that was O.K up to a couple of years ago{with a few exceptions}.can still buy a refurbed 3 bed terrace for around £85k in fairly easy reach of Cardiff.

[Guest Winners and Losers]

BTW, according to this forum, the US is crashing hard right now, but you don't seem to be aware of that. How so?

I'm with you now TTRTR.

Yeah – about the dogs passports – I’m guessing you did the pet passport scheme?

We have two cats and a bearded dragon – not sure what to do about the lizard, will probably need a license of some sort to bring him over.

Have you tried the expats forum? There is a link on front page of HPC. Better place for that kind of advice.

[drhewitt]

Just doing my bit to balance the forum. Someone says welcome, I say go away.

BTW, according to this forum, the US is crashing hard right now, but you don't seem to be aware of that. How so?

TTRTR

Hello, yeah, I am VERY much aware of what is happening in the USA.

It really is crashing.

If anyone's curious about how people afford these unrealistic house prices, there are some pretty exotic mortgages:

You can now get 40 and 50 year mortgages - A first time buyer who is 34 may well be dead before he pays off his mortgage.

Interest only mortgages - pay nothing but interest! forget the capital. You'll never build up equity.

Hybrid mortgages - In order to avoid paying the fee that comes with not having a 20% downpayment, people will borrow 80% of the mortgage and take out a 20% home equit loan.

In other words, they have a mortgage and a home loan before they even move in/renovate.

Many people have took out ARM (Adjustable Rate Mortgages) - These have a fixed interest rate for 1-5 years. As interest rates have quintupled since their low of 1% to 5%, many homeowners will face paying double.

If you want a real good look at one specific area in the USA where the bubble has burst/is bursting check this link out...

Loudon County Real Estate Bubble Is Ready To Implode (Virginia)

http://www.larouchepub.com/eiw/public/2006...f/09-13_617.pdf

drhewitt how ya doing.Yes Cornwall,really bad wages and average house price £195,000.Lived there my self for nearly 10 years.Now live over the boarder in Plymoth,Devon quite a bit cheaper but a so so city.W.Sussex---pricey.Hastings and a few other places were not too bad but I think it`s going up there.Wales,hmmmmm now that was O.K up to a couple of years ago{with a few exceptions}.can still buy a refurbed 3 bed terrace for around £85k in fairly easy reach of Cardiff.

We have a friend in Chichester who wanted to sell their bungalow and move to Cornwall - no chance.

www.channe4homes.com still has 3 bedroom properties in Wales for 75k or under, though many of them look like they need some serious remodelling.

[Jason]

I am VERY much aware of what is happening in the USA.

It really is crashing.

Welcome drhewitt!

It would be great if you could keep us up to date regarding the USA housing market, and especially what's happening on the ground!

[drhewitt]

Welcome drhewitt!

It would be great if you could keep us up to date regarding the USA housing market, and especially what's happening on the ground!

Hey Jason,

Thanks for the welcome.

I like this forum.

I'll take the job!

If you want to check the US economy, www.bankrate.com is a good site.

[Time to raise the rents.]

Before you start your new job, could you please clarify why you say an ARM has a 1-5 year fixed rate?

An ARM is an ARM to me.

[drhewitt]

Before you start your new job, could you please clarify why you say an ARM has a 1-5 year fixed rate?

An ARM is an ARM to me.

Before I reply, am I allowed to post articles from another site?

Before you start your new job, could you please clarify why you say an ARM has a 1-5 year fixed rate?

An ARM is an ARM to me.

OK, I'll post what I can without copying articles.

When I said that an ARM can have a 1-5 year fixed rate, I meant that you could have an ARM with a fixed interest rate for 1 to 5 years, sometimes seven years.

Example:

http://www.bankrate.com/brm/updates/ybir/y...nit=M&produid=6

A 5/1 ARM is an adjustable-rate mortgage (ARM) that has an initial interest rate for five years, and thereafter has an adjustment interval of one year. The adjustment is based on (or "indexed to") another rate -- often the yield on a Treasury note. Someone taking out a $165,000.00 5/1 ARM at the current average would pay $970.25 a month for the first five years of the loan. The rate would change annually thereafter.

A 7/1 ARM is an adjustable-rate mortgage (ARM) that has an initial interest rate for seven years, and thereafter has an adjustment interval of one year. The adjustment is based on (or "indexed to") another rate -- often the yield on a Treasury note. Someone taking out a $165,000.00 7/1 ARM at the current average would pay $991.38 a month for the first seven years of the loan. The rate would change annually thereafter.

For those who don't know what an ARM is, it's a mortgage whose interest rate is raised or lowered at periodic intervals according to the prevailing interest rates in the market. Also called variable-rate mortgage.

Edited May 18, 2006 by drhewitt

[LargelyIgnorant]

Welcome drhewitt.

There are lots of tools available (not just TTRTR) for you to find out the state of the housing market in various areas. http://www.houseprices.co.uk will show you all the prices actually paid in an area if you know the postcode. This is especially useful for negotiating. If you go to the main discussion area on this site, the 'House Prices in your area' should give you some idea what is happening by region. You can also use the bbc website for regional breakdowns: http://news.bbc.co.uk/1/shared/spl/hi/in_d...html/houses.stm

At the current time, falls in the more expensive parts of the country (mostly the south) are being offset by gains in what have traditionally been the cheaper parts (e.g. wales & scotland). As prices grow closer to parity across the country, IMO the formally cheapest areas are the most overvalued. Good luck in your move - Renting at first in your chosen area could work out well. You might like to learn about buying houses at auction - This is where the distressed ex speculator BTL properties will be sold.

As to the timing of the crash, it probably depends on interest rates. The chancellor, Gordon Brown, is desparate to keep the economy appearing OK until he gets to be prime minister. This means that if possible, the BoE will hold off increasing rates as long as they can. Because all the speculators BTL landlords are so heavily leveraged, they are extremely sensitive to IR rises. The BoE raised rates by 0.25% and started a crash that was only postponed by cutting rates by 0.25% again. By the time you cross the pond, IRs will probably have increased by 0.5%, with the obvious results.

[drhewitt]

Welcome drhewitt.

There are lots of tools available (not just TTRTR) for you to find out the state of the housing market in various areas. http://www.houseprices.co.uk will show you all the prices actually paid in an area if you know the postcode. This is especially useful for negotiating. If you go to the main discussion area on this site, the 'House Prices in your area' should give you some idea what is happening by region. You can also use the bbc website for regional breakdowns: http://news.bbc.co.uk/1/shared/spl/hi/in_d...html/houses.stm

At the current time, falls in the more expensive parts of the country (mostly the south) are being offset by gains in what have traditionally been the cheaper parts (e.g. wales & scotland). As prices grow closer to parity across the country, IMO the formally cheapest areas are the most overvalued. Good luck in your move - Renting at first in your chosen area could work out well. You might like to learn about buying houses at auction - This is where the distressed ex speculator BTL properties will be sold.

As to the timing of the crash, it probably depends on interest rates. The chancellor, Gordon Brown, is desparate to keep the economy appearing OK until he gets to be prime minister. This means that if possible, the BoE will hold off increasing rates as long as they can. Because all the speculators BTL landlords are so heavily leveraged, they are extremely sensitive to IR rises. The BoE raised rates by 0.25% and started a crash that was only postponed by cutting rates by 0.25% again. By the time you cross the pond, IRs will probably have increased by 0.5%, with the obvious results.

Hi Largely Ignorant,

Thanks for the information and advice. It does seem likely that interest rates will move higher in the UK. The exchange rate between the US and UK is very bad, almost 1.89. That means the deposit I am saving for will be lopped in half were I to exchange it into pounds. I had thought that the negative carry trade with the UK would have boosted the dollar, alas, the exact opposite has happened.

[A Fool & His Borrowed Money]

Hi all, thanks for welcome, will write more soon.

Is Time to raise the rents a troll or does he have an attitude problem?

Living in Hope,

Both

[MadJock]

Before you start your new job, could you please clarify why you say an ARM has a 1-5 year fixed rate?

An ARM is an ARM to me.

The mortgage market in the US is very different than that in the UK. Traditionally, people have bought with 30 year fixed rate loans, and 20% downpayment - that was by far the most common way to buy. Occasionally people went with 15 year fixed rate loans, or got a loan for the 20% at a higher rate, but essentially people locked in their rate with a ceiling. They could always refinance when rates came down.

ARMs were for those who needed to stretch that bit further by getting the slightly lower ARM rate.

In the last few years US lending rules have become very lax - stated income loans, Option ARMS (can choose to pay full amount, or anything down to a discounted IO at 2 to 3%), negative amortisation loans, 125% loans, loans to illegal immigrants etc. There are also many stories of significant appraiser fraud (there's no equivalent to Chartered Surveyor) - I believe them since I know people who have simply named their price when selling and that's what the appraiser used without visiting the house.

Most new loans from 2003 on are the 2 or 3 year ARMS, many IO and 'option'. They start to reset this year, and most of these people can expect a large increase in payments (usually the principal repayment starts at the same time the loan resets on options) combined with an inability to refinance, and much stricter BK laws.

[BandWagon]

My personal opinon on people taking out x4, x5 or x6 income multiples is you're taking out a real gamble.

Anyway, does anyone have any ideas as to if and when the market will crash?

Cheers

The average house in the UK now costs 6 times salary, and there are people paying more than that.

In London the average house costs 10 times salary, ie our bubble is as bad as the worst parts of the States.

As others have said, we have seen the start of the burst, but nothing dramatic yet, more like a slow hiss.

We're expecting a rate rise or two later this year to speed things up.

At the moment there is still massive denial amongst the general public, they've come to accept the current situation as normal.

The banks and media are still desperately pumping the "get on the ladder before it's too late" message, and most people still believe it.

When you do arrive over here it may be worth renting for a year or two, to figure out what's happening in the market, and by then the crash should be well and truly under way.

Good luck, and welcome to the forum.

ps TTRTR is ok, he's just worried about convincing his sister to buy in Oz recently, now that they're learning all about "upside-down" mortgages.

Edited May 18, 2006 by BandWagon

[rockdoctor]

If you think the US has loose lending you should see what a recent TV expose found here in the UK; people were encouraged by estate agents to opt for self-certification mortgages (designed for self-employed people or those who have difficulty proving a regular income), and to massively exaggerate their income to get a higher loan. To reduce the monthly payment they would choose interest-only.

Some people are committing more than three-quarters of their income to paying the interest on a gigantic mortgage on a discounted rate. When the discount ends, or the Bank of England raise rates, they will be bust.

We also have a thriving internet-based industry providing fake payslips as evidence of a high income.

When our bubble bursts it's gonna get ugly.

Edited May 18, 2006 by rockdoctor

[Karen]

If you think the US has loose lending you should see what a recent TV expose found here in the UK; people were encouraged by estate agents to opt for self-certification mortgages (designed for self-employed people or those who have difficulty proving a regular income), and to massively exaggerate their income to get a higher loan. To reduce the monthly payment they would choose interest-only.

Some people are committing more than three-quarters of their income to paying the interest on a gigantic mortgage on a discounted rate. When the discount ends, or the Bank of England raise rates, they will be bust.

We also have a thriving internet-based industry providing fake payslips as evidence of a high income.

When our bubble bursts it's gonna get ugly.

I don't know, I heard one mortgage broker say a no doc was great if, for example, and I quote "you are new to the area and don't have a job yet." I so wished I had TIVO right then.

IMHO the US and the UK are very close in there bubbles, the only difference is how prices are figured. For example, in the US the median is figured by houses sold, and they record them with the county when they sell. In short our relaitors can't hid the crash as well as your EAs.

Edited May 18, 2006 by Karen

[right_freds_dead]

sorry im late. was woeking all today.

110% AWOOGA !!!!