Please Give Me Some Advice!

[JamesT]

I am currently panicking about the a recent decision to buy a house and I’d really appreciate some advice/opinions of anyone reading this…

I’m married with a 2 ½ year old daughter. We bought our first house in 2003 and moved again in 2005. Both houses were nice (but only 2 bed) terraces. In July this year, we decided we needed to move to somewhere with a garden and extra bedroom. We had an excellent offer on our house from a first time buyer and to speed up the sale decided to put the furniture into storage and move in with my parents.

We’ve been looking ever since but have struggled to find anywhere nice. Recently we've found the perfect house. It’s a 3 bed detached with garden in a lovely location with great views (albeit it’s a little small!!!). A developer bought the house in Feb this year for £135,500 (web research!). It’s had loads of work, new kitchen, bathroom, all new windows & doors, garden landscaped, new carpets, new fences, all new appliances and internal decoration…very tasteful and in a state you can just move straight into. It was originally on the market for £195K but when we looked hadn’t had any offers!

We spend a couple of weeks negotiating and this week agreed a sale price of £181,500. Relative to the other houses we’ve seen, it ‘s by far the nicest house in this price range.

We have a large deposit (mostly built up from capital gain from the previous houses) and the mortgage required is only 3 times my annual salary.

My parents are great, but clearly living with them isn’t ideal….. we desperately need our own space again. In view of the current state of the market, should I go through with the sale and take the risk of falling value or should I pull out and rent while whilst the market sorts itself out? I’m nervous about both options, I’ve long thought that the market is due for a crash and have been proved wrong so many times before!!!

Any advice would be appreciated.

James

[crashmonitor]

Probably not in a position for speculating with a two and a half year old child and a wife.Don't think most women can cope with uncertainties and playing economic games with houses.Probably best to go through with it,since you are not over-stretching.

Edited October 18, 2007 by crashmonitor

[wickywackywoo]

I am currently panicking about the a recent decision to buy a house and I’d really appreciate some advice/opinions of anyone reading this…

I’m married with a 2 ½ year old daughter. We bought our first house in 2003 and moved again in 2005. Both houses were nice (but only 2 bed) terraces. In July this year, we decided we needed to move to somewhere with a garden and extra bedroom. We had an excellent offer on our house from a first time buyer and to speed up the sale decided to put the furniture into storage and move in with my parents.

We’ve been looking ever since but have struggled to find anywhere nice. Recently we've found the perfect house. It’s a 3 bed detached with garden in a lovely location with great views (albeit it’s a little small!!!). A developer bought the house in Feb this year for £135,500 (web research!). It’s had loads of work, new kitchen, bathroom, all new windows & doors, garden landscaped, new carpets, new fences, all new appliances and internal decoration…very tasteful and in a state you can just move straight into. It was originally on the market for £195K but when we looked hadn’t had any offers!

We spend a couple of weeks negotiating and this week agreed a sale price of £181,500. Relative to the other houses we’ve seen, it ‘s by far the nicest house in this price range.

We have a large deposit (mostly built up from capital gain from the previous houses) and the mortgage required is only 3 times my annual salary.

My parents are great, but clearly living with them isn’t ideal….. we desperately need our own space again. In view of the current state of the market, should I go through with the sale and take the risk of falling value or should I pull out and rent while whilst the market sorts itself out? I’m nervous about both options, I’ve long thought that the market is due for a crash and have been proved wrong so many times before!!!

Any advice would be appreciated.

James

I'd pull out and rent if I were you. The house you want (or better) will be cheaper in a couple of years.

[yes]

I am currently panicking about the a recent decision to buy a house and I’d really appreciate some advice/opinions of anyone reading this…

I’m married with a 2 ½ year old daughter. We bought our first house in 2003 and moved again in 2005. Both houses were nice (but only 2 bed) terraces. In July this year, we decided we needed to move to somewhere with a garden and extra bedroom. We had an excellent offer on our house from a first time buyer and to speed up the sale decided to put the furniture into storage and move in with my parents.

We’ve been looking ever since but have struggled to find anywhere nice. Recently we've found the perfect house. It’s a 3 bed detached with garden in a lovely location with great views (albeit it’s a little small!!!). A developer bought the house in Feb this year for £135,500 (web research!). It’s had loads of work, new kitchen, bathroom, all new windows & doors, garden landscaped, new carpets, new fences, all new appliances and internal decoration…very tasteful and in a state you can just move straight into. It was originally on the market for £195K but when we looked hadn’t had any offers!

We spend a couple of weeks negotiating and this week agreed a sale price of £181,500. Relative to the other houses we’ve seen, it ‘s by far the nicest house in this price range.

We have a large deposit (mostly built up from capital gain from the previous houses) and the mortgage required is only 3 times my annual salary.

My parents are great, but clearly living with them isn’t ideal….. we desperately need our own space again. In view of the current state of the market, should I go through with the sale and take the risk of falling value or should I pull out and rent while whilst the market sorts itself out? I’m nervous about both options, I’ve long thought that the market is due for a crash and have been proved wrong so many times before!!!

Any advice would be appreciated.

James

If this is the house you would love to stay in for the next 10 years, better to buy it as long as you don't have to stretch yourself financially. Else, rent. I know it is easy to advice others and much more difficult to make decisions for yourself.

[Willy Weasel]

If you can afford a capital repayment mortgage over a term which ends before you reach retirement age even if interest rates hit 8% then I would buy it.

[Goldfinger]

The parents are no alternative, so it's renting something nice, or buying something nice. The important questions are:

- How secure is your job?

- Could you keep paying the mortgage even if IRs went up considerably from here (double)?

- Will you stay in this area, or could you be forced selling sometime in the future (and make a considerable loss)?

I am sure similar houses will be cheaper in real (and most likely also nominal) terms anytime from now (possibly much cheaper in 2-3 years). It's really down to personal preferences whether you want to wait or not.

[red]

I'm not at all suggesting gazundering...but why don't you withdraw your offer and go back in at a lower price?

[Umaguma]

Rent!

look after deposit and bide your time.

How would you feel if you paid 180K and this time next year the property is valued at around 130K which is a distinct possibility?

Prices are certainly not going up in a hurry and looking at the graph on the homepage it would seem that prices stagnating is highly unlikely scenario too as much as the Bulls would love you to believe.

You have to decide for yourself, property ownership is great if you get in at the right time, now isn't.

[FreeFall]

I'm with Tuffers on this - doesn't sound like a financial stretch for you, and think of the increased quality of life you & family will get. Personally with no capital from house sale now isn't the time to buy for me, but sounds like it is for you.

[Chriso]

Well if your asking for advice on a website called housepricecrash then expect a one way traffic of answers.

For me, it all depends why your moving. If you see this house as the last house you ever want to live in and you can afford the repayments, then go ahead! It doesnt matter wether they crash to £20,000 or rise to a million because it's your home, the price is irrelevant and you can afford the repayments.

However, if this is just another stepping stone before hoping to move onto something bigger then you should rent. This market is dead in the water and can only go one way. The problem for you and most of us on here is that this is going to be slow and drawn out and I expect it to take 5-6 years to bottom out. Pretty grim reading if you want to buy, but even grimmer if you see your deposit being eaten into by negative equity. I love renting, I got a great deal and pay £475 a month on a £150,000 property. Current repayment mortgage on that is over £1000 a month.

Last point, if you think houses can only go one way, or the missus does, have a look whats happenning in the States at the moment. Absolute carnage. Also, to debunk the small island no room myth, read up on Japan. An island with worse space problems than our own but houses there have DECREASED in price every year for 20 years!! Ask them about house price booms and you get a very different story.

Whatever you do, good luck!!

[chichi]

I'm not at all suggesting gazundering...but why don't you withdraw your offer and go back in at a lower price?

Yeah bound to be good for a laugh...

I'd say check out rents on similar properties ...

You've already said this place is a bit small. If it's small now when you move in it'll get tinier until it makes you want to move.

[symo]

RENT!

More news stories of HPI. IMF report now widely circulated in popular press.

RENT!

[colonel faulkner]

James, here is my opinion FWIW. Incidentally, I'm in a similar position to you, right down to the age of our daughters! I've also negotiated a 12% reduction vs asking price, very similar to yourself. The best advice I think I've ever seen on this forum is to try to imagine which of the possible outcomes of your decision would make you feel worse.

If you buy and house prices fall substantially would you feel worse than if you didn't buy and they carried on rising? For me the answer is no. I am buy on a low earnings multiple, so more IR rises and/or HP falls will not put me on the street. I plan to be in the house (which I love) for a long long time and I'm pretty certain that in 10 years time the value will, at worst, have held constant. Finally the enjoyment of my own place vs another rental (I've had to move the family, on average, every 18 months due to landlord decisions to sell up).

Am I buying at the top of the market? Almost certainly.

Do I stand to lose a chunk of cash if HPs fall. Definitely in the short term.

Do I think I'm making a mistake? No.

Bears, do your worst.

[aussieboy]

Probably not in a position for speculating with a two and a half year old child and a wife.Don't think most women can cope with uncertainties and playing economic games with houses.Probably best to go through with it,since you are not over-stretching.

Agreed - don't mess around with your home. It sounds like you can buy the house you want for a price that is affordable to you. For a 180k house, the transaction costs will mask a lot of any potential gain from a reduction in prices.

Also, never forget that utility curves for loss and gain are not symmetrical.

Put it this way: most people will gain a lot less utility from being given 20k that they would if someone took 20k off them.

[bomberbrown]

Any advice would be appreciated.

James

Tell me where you think house prices are going over the next 5 or 6 years, and I'll give some sure fire advice.

[Property Dreamer]

James Tiberius - Don't be a fool. If you intend to buy the house and live in it as a home and not as an investment, and can afford it then buy it, today.

[It is different this time]

A developer bought the house in Feb this year for £135,500 (web research!). It’s had loads of work, new kitchen, bathroom, all new windows & doors, garden landscaped, new carpets, new fences, all new appliances and internal decoration…very tasteful and in a state you can just move straight into. It was originally on the market for £195K but when we looked hadn’t had any offers!

We spend a couple of weeks negotiating and this week agreed a sale price of £181,500. Relative to the other houses we’ve seen, it ‘s by far the nicest house in this price range.

You need to ask yourself if you can justify paying 34% more than what someone paid just 7 months ago. Putting new kitchen & windows don't cost £50K. Don't let property speculators to steal your kid's future. The best thing you can do, if you must move out, is to rent. Make sure you sign a minimum of 12 months or even longer contract then take it from there.

I am in a similar situation as you are, my son will be 3 next month and we are still renting so don't take notice of any nonsense that you must buy if you have a family. I have a cash deposit of about 40% to buy a property in South East but I am not contributing into the today's corrupted market.

Worse comes to worse I'd prefer to invest & spend my money on my son's future education rather than wasting it on an overpriced property.

[LivingWithTheInlaws]

We're in the same position. Got a 2 and a half year old and just had another baby but we're staying with my wife's parents at the moment. We're not going to make a decision until the new year and then we consider renting or buying.

[tigsrenting]

Agree with it is different, it would stick in my throat to contribute towards a developer's profit. They use the cheapest of everything and it usually falls apart after six months. I also look upon a property as a home not an investment or stepping stone. Good luck in your decision.

[ruggedtoast]

If you can afford it and its a good price and you need somewhere to live now then why not. However - 130 to 180 is a whopping great jump even if it was in poor condition before. Its hard to say without knowing what area youre talking about.

[Belfast Boy]

James Tiberius - Don't be a fool. If you intend to buy the house and live in it as a home and not as an investment, and can afford it then buy it, today.

Don't be a fool and buy at the top of the market. You and your family will be paying for it for a long, long time.

I'm sorry, I really can't believe that people are telling you to buy a house in the current housing market :angry:

Please, please, please wait until spring time. EVERYONE should know by then what is happening in our housing market.

My personal example: I viewed 2 houses after I sold mine in May. Both houses have now reduced their asking price by £31 THOUSAND POUNDS and £35 THOUSAND POUNDS. That sort of money pays for renting a very, very nice house.

[youthoftoday]

James, here is my opinion FWIW. Incidentally, I'm in a similar position to you, right down to the age of our daughters! I've also negotiated a 12% reduction vs asking price, very similar to yourself. The best advice I think I've ever seen on this forum is to try to imagine which of the possible outcomes of your decision would make you feel worse.

If you buy and house prices fall substantially would you feel worse than if you didn't buy and they carried on rising? For me the answer is no. I am buy on a low earnings multiple, so more IR rises and/or HP falls will not put me on the street. I plan to be in the house (which I love) for a long long time and I'm pretty certain that in 10 years time the value will, at worst, have held constant. Finally the enjoyment of my own place vs another rental (I've had to move the family, on average, every 18 months due to landlord decisions to sell up).

Am I buying at the top of the market? Almost certainly.

Do I stand to lose a chunk of cash if HPs fall. Definitely in the short term.

Do I think I'm making a mistake? No.

Bears, do your worst.

I have a colleague in a similar position who bought recently. We all have only a limited amount of time in which to make the decision to settle down and have children. At the end of the day fretting over what will happen with house prices does not make you any happier. If you are not over-stretching yourself and keep some savings for a rainy day then making the decision to buy is the right one.

[onrollover]

RENT

It will be cheaper than a mortgage and if you like you can live somewhere nice for a while.

With renting you probably can afford something pretty impressive for your money, use this as conolation for your family.

There will be another house and in this economic climate it will probably be cheaper than the one you are looking at.

If you are worried about "losing the opportunity" of buying this house, why not wait around and get the estate agent to ring up when someone puts in another offer. Then you can decide, no point doing it before.

I bet, you can get the house for less or a better house for less in a years time, and your outlay on rent will be relatively insignificant.

[colonel faulkner]

"I'm sorry, I really can't believe that people are telling you to buy a house in the current housing market" :angry:

1) Nobody here is TELLING him to do anything

2) I understand why you're advising him to wait. Do you understand why others are not? They are giving him this adivce because their experiences are different to yours.

[madasafrog]

Any advice would be appreciated.

James

What is your gut feeling telling you?

No one knows you or the house you are buying. They do not know the market local to you and they will not understand what your needs are. No one here can tell you exactly what is going to happen in the next few years.

What ever you decide is a gamble. Prices may go up, prices may go down.

You have mentioned that your nervous but how does your wife feel?