Answer To 'should I Buy Now Or Rent' Questions

[TheEA]

If he was busy he wouldn't be here. Don't feed him and he'll go away.

TheEa is here to stay - you all take things far too seriously.

Worth noting that due to UK and US government intervention the stock markets seem to be recovering this am - maybe this will just be a storm in a teacup and things will improve before you all the think it should.... be ahead of the game - come to suffolk and i'll help you find a home... it's lovely out here - clean air - happy people - good EA's (well 1 anyway!)...

[Lone_Twin]

TheEa is here to stay - you all take things far too seriously.

Worth noting that due to UK and US government intervention the stock markets seem to be recovering this am - maybe this will just be a storm in a teacup and things will improve before you all the think it should.... be ahead of the game - come to suffolk and i'll help you find a home... it's lovely out here - clean air - happy people - good EA's (well 1 anyway!)...

I'm from suffolk. Had to leave to find a proper job though.

.

Considering price earnings ratios do you expect there to be a rapid rise in wages in either the public services

or poultry evisceration sectors?

.

There are some over pessimistic posters here but to describe the current situation as a possible storm

in a teacup betrays a staggering level of ignorance about the state of the economy and the markets.

.

ST

(edit to make clear that the public don't (often) get disembowled in suffolk)

Edited September 19, 2008 by Super Ted

[TheEA]

I'm from suffolk. Had to leave to find a proper job though.

.

Considering price earnings ratios do you expect there to be a rapid rise in wages in either the public services

or poultry evisceration sectors?

.

There are some over pessimistic posters here but to describe the current situation as a possible storm

in a teacup betrays a staggering level of ignorance about the state of the economy and the markets.

.

ST

(edit to make clear that the public don't (often) get disembowled in suffolk)

I doubt there will be. Although we have never relied to heavily upon buyers from the poultry industry- they make great tenants though! and some public service workers - doctors, teachers etc... haven't struggled any more than the rest of us.

Ok... perhaps storm in a teacup was a bit glib but it is not, as some here would have you believe, the end of civilisation or home ownership either!

You say you left suffolk for a proper job... don't tell me you are an investment banker!?

[Si1]

I doubt there will be. Although we have never relied to heavily upon buyers from the poultry industry- they make great tenants though! and some public service workers - doctors, teachers etc... haven't struggled any more than the rest of us.

Ok... perhaps storm in a teacup was a bit glib but it is not, as some here would have you believe, the end of civilisation or home ownership either!

You say you left suffolk for a proper job... don't tell me you are an investment banker!?

it is an end to home ownership for those who bought at recent very high prices, and a beginning of honme pownership for those of us who are patient and are waiting for the (very deep) bottom - including the wise poultry farmers buying up the doctors' reposessions.

[TheEA]

it is an end to home ownership for those who bought at recent very high prices, and a beginning of honme pownership for those of us who are patient and are waiting for the (very deep) bottom - including the wise poultry farmers buying up the doctors' reposessions.

how long have you been waiting so far?

[Si1]

how long have you been waiting so far?

3 years since I called the top of the market, incorrectly.

People I know who bought during this time have pokey houses they paid a fortune for. They think I'm telling porkies when I tell them I have a secure rental at cheap rent of a much bigger house in a much nicer area. They are mostly in negative equity now. Prices in Leeds have fallen off a cliff - 6 bedroom houses going in my area for what I could have paid for a 1 bedroom house 18 months ago.

Don't get me wrong - I am not against owning a home - but that house prices have been insane for at least 5 years, admittedly varying by area.

Can I ask you, do you feel that a house is a good purchase irrespective of the price?

[TheEA]

3 years since I called the top of the market, incorrectly.

People I know who bought during this time have pokey houses they paid a fortune for. They think I'm telling porkies when I tell them I have a secure rental at cheap rent of a much bigger house in a much nicer area. They are mostly in negative equity now. Prices in Leeds have fallen off a cliff - 6 bedroom houses going in my area for what I could have paid for a 1 bedroom house 18 months ago.

Don't get me wrong - I am not against owning a home - but that house prices have been insane for at least 5 years, admittedly varying by area.

Can I ask you, do you feel that a house is a good purchase irrespective of the price?

I have bought and sold 4 times during the last 3 years and have netted 435k profit on those moves and now live in a beautiful house in which i intend to stay for the rest of my life - I am 35 and mortgage free!

However during the same period i have bought a number of resi and commercial investment properties which i do have some borrowing on but all generate approx a 7% yield. I am looking at a number of other opportunities at present and in principle my view is that there are some fantastic opportunities around at the mo and i would rather put my money in bricks and mortar (something i understand) than shares or a pension - but the skill is buying the right property at the right price and ideally something you can add value to rather than just buying anything.

I had heard that leeds had been hit hard but that sounds amazing - If you have some cash behind you i would suggest you get out there now and start buying! I would myself but i get a bit dizzy any further north than Cambridge!

[Si1]

I have bought and sold 4 times during the last 3 years and have netted 435k profit on those moves and now live in a beautiful house in which i intend to stay for the rest of my life - I am 35 and mortgage free!

congrats. if you believe that property is always a good investment then I can only observe that you got lucky. Be careful to know when to cash in your chips.

However during the same period i have bought a number of resi and commercial investment properties which i do have some borrowing on but all generate approx a 7% yield. I am looking at a number of other opportunities at present and in principle my view is that there are some fantastic opportunities around at the mo and i would rather put my money in bricks and mortar (something i understand) than shares or a pension - but the skill is buying the right property at the right price and ideally something you can add value to rather than just buying anything.

I do not know your area, or your yield calculations, but would be surprised if you were not burnt by this. Good luck anyhow, the world needs entrepreneurs.

I had heard that leeds had been hit hard but that sounds amazing - If you have some cash behind you i would suggest you get out there now and start buying! I would myself but i get a bit dizzy any further north than Cambridge!

no, prices are in freefall here as in many areas, there is a repo on every BTL street, long way to go yet

edit to add: for clarification, the 6 bedroom houses situation is in a heavy BTL student area, clearly a repo, other more leafy areas have not shown this. Funnily, in the same area, people are still trying to sell their 1 bedders at the OLD price, unsurprisingly they are not shifting

Edited September 19, 2008 by Si1

[Si1]

TheEA - one thing that this reminds me - the state of overvaluation has varied around the country from what I can tell.

[TheEA]

TheEA - one thing that this reminds me - the state of overvaluation has varied around the country from what I can tell.

It's too easy to say it is luck!

There are opportunities in this market you just have to think laterally.

eg... a local developer bought 6 months ago at 485k - the previous owner was emigrating and desperate to move fast - he spent 100k renovating the house and has got plannning to convert an outbuilding into a seperate dwelling - we have just exchanged contracts on the sale of the main house @ 670k - which means not only has he made a healthy profit but he also has a barn to convert which in principle has cost him nothing - it will probably cost about 250k to convert the barn but would be worth today approx 650k so even allowing for a a significant fall in value between now and the conversion being finished he should be fine and more likely will do very well out of it.

As I say there are always opportunities and it is actually easier to say the sky is falling down or the end is nigh than it is to take a risk but as they say 'the bigger the risk the bigger the reward'

[Si1]

It's too easy to say it is luck!

There are opportunities in this market you just have to think laterally.

same here. I have saved a fortune by not buying over last 4 years.

As I say there are always opportunities and it is actually easier to say the sky is falling down or the end is nigh than it is to take a risk but as they say 'the bigger the risk the bigger the reward'

I am taking the risk that prices will fall at least another 30%, very low risk of thsi not happening imho. The reward in my case is much bigger than the risk. You have to understand that a high risk/reward is not clever investing, no matter how lucky you have got in the past, a low risk/reward (ie low risk, high reward) is a very nice way instead.

[TheEA]

same here. I have saved a fortune by not buying over last 4 years.

I am taking the risk that prices will fall at least another 30%, very low risk of thsi not happening imho. The reward in my case is much bigger than the risk. You have to understand that a high risk/reward is not clever investing, no matter how lucky you have got in the past, a low risk/reward (ie low risk, high reward) is a very nice way instead.

have you saved as much as I have made though?

I disagree - I don't see prices falling that far and i maintain that you can still buy well now - if anything you may find you can find a better opportunity in an uncertain market than one that everyone has agreed has bottomed out because then everyone will be working on the basis that the only way is up and will hold out for a better price.

It's mercenary but if you go out and start looking now making offers 30% beneath what you feel the property is worth today i bet you will find someone desperate enough to take your offer. It's all about the circumstances of the owner and the strength of the buyer...

[emmkay]

I know this has probably been answered a thousand times (and I have tried to read as much on here as possible before posting) but will there not still be a shortage of affordable housing after the crash?

I'm currently looking at properties in Chorlton, Manchester and I was thinking of putting in offers at 25%-30% below the asking price. My budget is around £150k so i'm not looking at anything with an asking price above £200k, for this I can get a 3 bedroom semi in a nice area. I have a deposit of £30k and me and i have estimated that mortgage payments would be in the region of £700 per month (less than what I am paying for rent at the moment). In my situation it seems worthwhile to buy as I intend to stay in the property I buy for the foreseeable future. If anybody can offer any advice on this I would be very grateful.

Thanks in advance and please don't bite my head off.

[Si1]

have you saved as much as I have made though?

I'm sure I have not. Then again I am not in your area and, by your own admission, you have taken greater risks than me, and are still exposed. Risk, as I have said many times before, needs to be priced in and can not simply be taken for granted in the future just because the past turned out ok.

I disagree - I don't see prices falling that far and i maintain that you can still buy well now - if anything you may find you can find a better opportunity in an uncertain market than one that everyone has agreed has bottomed out because then everyone will be working on the basis that the only way is up and will hold out for a better price.

I'll respect your right to hold a different point of view.

It's mercenary but if you go out and start looking now making offers 30% beneath what you feel the property is worth today i bet you will find someone desperate enough to take your offer. It's all about the circumstances of the owner and the strength of the buyer...

seems fair again. In my position, I am renting VERY well and feel in no hurry to move on from this. Certainly 'dead money' is not the issue when rent is cheap enough compared with COC of buying, etc. Furthermore, I may be forced to move with work in 2 years and I don't see the point in the transaction costs of buyiong when I am very happy in my (stable) rental. I will probably be looking to buy, wherever I am in the country, in 2 years' time, but will compare to rentals and local house price falls/gains history.

[Si1]

I know this has probably been answered a thousand times (and I have tried to read as much on here as possible before posting) but will there not still be a shortage of affordable housing after the crash?

I'm currently looking at properties in Chorlton, Manchester and I was thinking of putting in offers at 25%-30% below the asking price. My budget is around £150k so i'm not looking at anything with an asking price above £200k, for this I can get a 3 bedroom semi in a nice area. I have a deposit of £30k and me and i have estimated that mortgage payments would be in the region of £700 per month (less than what I am paying for rent at the moment). In my situation it seems worthwhile to buy as I intend to stay in the property I buy for the foreseeable future. If anybody can offer any advice on this I would be very grateful.

Thanks in advance and please don't bite my head off.

If you are unhappy with renting options, can afford it, and would rather not wait then this seems fair enough.

[TheEA]

If you are unhappy with renting options, can afford it, and would rather not wait then this seems fair enough.

This will amaze you............. I agree too!

There is too much love on this thread!

[Si1]

This will amaze you............. I agree too!

There is too much love on this thread!

of course caveats exist such as the COC of the 30k deposit (over £100 per month), physical deprec of the property (can also be a fair bit), but it sounds like the poster is interested in a home for good value at the right time, and the fine detail fo whether it is loss or profit making in the short term is probably neither here nor there. It DOES depend on how good/bad the local rentals situation is, and what rental deal you can strike.

Nevertheless, people doing the same thing, NOT getting this 25-30% discount, or having bought at peak values 2 years ago, will take/have taken a big bath.

Edited September 19, 2008 by Si1

[RichB]

have you saved as much as I have made though?

But it's a bit like playing Russian Roulette for cash.... he's just waiting till someone else makes it go bang before he plays

[FTBuyer]

Another very similar question.

Have 10k deposit looking at 2/3 bedroom houses in Cardiff at the moment worth between 100k and 120k.

Am currently paying 550pcm in rent in Cardiff Bay for a 1 bed flat ,

On interest only for 3 years is £450pcm for mortgage then back up to 550 for the remainder.

I know that no-one knows regarding the future but having recentley married the flat is nowhere near big enough for us, we are desperate to move but am very scared and aware of negative equity.

Any tips, wait for the new year, if not longer?

[D179]

Another very similar question.

Have 10k deposit looking at 2/3 bedroom houses in Cardiff at the moment worth between 100k and 120k.

Am currently paying 550pcm in rent in Cardiff Bay for a 1 bed flat ,

On interest only for 3 years is £450pcm for mortgage then back up to 550 for the remainder.

I know that no-one knows regarding the future but having recentley married the flat is nowhere near big enough for us, we are desperate to move but am very scared and aware of negative equity.

Any tips, wait for the new year, if not longer?

Possibly your decision should be based on when you need a new property. I guess there is always a chance if you hold on until the bottom of the market, whenever that may be, and then you go to borrow, you may not get a mortgage, i.e. lending maybe even tighter, your 10K may not be enough at that time? Or you could rent a slightly larger property and wait 6 months and continually review your position. No one really knows. My advice, is weigh up your own needs, the financial aspect, your area, employment prospects etc. and the rest is guesswork, nobody really knows the exact answer I am affraid. (My own opion is that prices have a way to go yet).

[TheEA]

Another very similar question.

Have 10k deposit looking at 2/3 bedroom houses in Cardiff at the moment worth between 100k and 120k.

Am currently paying 550pcm in rent in Cardiff Bay for a 1 bed flat ,

On interest only for 3 years is £450pcm for mortgage then back up to 550 for the remainder.

I know that no-one knows regarding the future but having recentley married the flat is nowhere near big enough for us, we are desperate to move but am very scared and aware of negative equity.

Any tips, wait for the new year, if not longer?

Cogratulations!

You could be at risk of negative equity in the short term - but if you are confident about your employment negotiate hard and buy now - in your position you will get a good buy!

[FTBuyer]

Possibly your decision should be based on when you need a new property. I guess there is always a chance if you hold on until the bottom of the market, whenever that may be, and then you go to borrow, you may not get a mortgage, i.e. lending maybe even tighter, your 10K may not be enough at that time? Or you could rent a slightly larger property and wait 6 months and continually review your position. No one really knows. My advice, is weigh up your own needs, the financial aspect, your area, employment prospects etc. and the rest is guesswork, nobody really knows the exact answer I am affraid. (My own opion is that prices have a way to go yet).

Yeah thanks for that.

We have seen 1 house we absolutley adore! (mistake to go looking at houses, when we're not even sure if we should buy now or wait 6 months)

I'm kind of hoping if we put in an offer or two just under 100k on the house which is worth £120k, and if it's accepted (a mere miracle I know!) then I don't think it would be such a bad idea.

3 bed house, 3 car drive, garden, 4 miles to the centre of Cardiff, it feelslike if there were to be a crash the house we have seen will hold a majority of its value.

Hmm well every day is a new day!

Edited September 19, 2008 by FTBuyer

[Si1]

Another very similar question.

Have 10k deposit looking at 2/3 bedroom houses in Cardiff at the moment worth between 100k and 120k.

Am currently paying 550pcm in rent in Cardiff Bay for a 1 bed flat ,

On interest only for 3 years is £450pcm for mortgage then back up to 550 for the remainder.

I know that no-one knows regarding the future but having recentley married the flat is nowhere near big enough for us, we are desperate to move but am very scared and aware of negative equity.

Any tips, wait for the new year, if not longer?

The EA's point is fair, abotu negtiating hard when buying a place.

May I contrast. I have friends who rent a 1 bed flat in a nice part of leeds for 500 per month. I, on the other hand, negotiated hard, and rent a nice, albeit unfurnished, 3 bed house in the same area for the same price. Basically they were uncritical about renting so they paid a premium, I haggled and did not. The landlord knows I am here for years and am no trouble, so long term let at reasonable rent it is.

In summary, I think that you are quite possibly paying far too much for far too small a flat. This happens a lot, people rent places uncritically.

Incase you think my position is fluke, my previous place, a few years ago, was a 2 bed flat for a lot less money. I upgraded to co-habit with my partner into the current much bigger house. I would have to get sub 90k purchase to make it worthwhile buying.

[FTBuyer]

The EA's point is fair, abotu negtiating hard when buying a place.

May I contrast. I have friends who rent a 1 bed flat in a nice part of leeds for 500 per month. I, on the other hand, negotiated hard, and rent a nice, albeit unfurnished, 3 bed house in the same area for the same price. Basically they were uncritical about renting so they paid a premium, I haggled and did not. The landlord knows I am here for years and am no trouble, so long term let at reasonable rent it is.

In summary, I think that you are quite possibly paying far too much for far too small a flat. This happens a lot, people rent places uncritically.

Incase you think my position is fluke, my previous place, a few years ago, was a 2 bed flat for a lot less money. I upgraded to co-habit with my partner into the current much bigger house. I would have to get sub 90k purchase to make it worthwhile buying.

Yeah we are paying too much but our tenancy ends in November. The thought of only wasting another £1100 of my hard earned money on somebody else's mortgage is beautiful!

Our employment is stable and we have no other debts.

I guess the line to take is haggle hard and try and find desperate people willing to accept any offers.(sorry sellers, winners and losers everywhere!)

[TheEA]

The EA's point is fair, abotu negtiating hard when buying a place.

May I contrast. I have friends who rent a 1 bed flat in a nice part of leeds for 500 per month. I, on the other hand, negotiated hard, and rent a nice, albeit unfurnished, 3 bed house in the same area for the same price. Basically they were uncritical about renting so they paid a premium, I haggled and did not. The landlord knows I am here for years and am no trouble, so long term let at reasonable rent it is.

In summary, I think that you are quite possibly paying far too much for far too small a flat. This happens a lot, people rent places uncritically.

Incase you think my position is fluke, my previous place, a few years ago, was a 2 bed flat for a lot less money. I upgraded to co-habit with my partner into the current much bigger house. I would have to get sub 90k purchase to make it worthwhile buying.

But renting is so dull!..... and with your negotiating skills you should be able to get someone to give you a house! infact with your negotiating skills you would make a good EA!