deflation Posted May 29, 2008 Share Posted May 29, 2008 If prices are set to fall for another 2 years plus, would it be too late for anyone to STR? Admittedly, to get a buyer, you'd have to discount a fair bit but there ARE buyers out there, just not many. What area of the country you are in would probably make quite a difference. If a sale could be achieved at say market value now minus 15%, wouldn't it still be worth it if prices fell another 20% plus? After all, its difficult to call the top AND / OR the bottom of the market. Quote Link to comment Share on other sites More sharing options...
Guest The_Oldie Posted May 29, 2008 Share Posted May 29, 2008 On those figures it probably makes sense. Quote Link to comment Share on other sites More sharing options...
libspero Posted May 29, 2008 Share Posted May 29, 2008 If prices are set to fall for another 2 years plus, would it be too late for anyone to STR? Admittedly, to get a buyer, you'd have to discount a fair bit but there ARE buyers out there, just not many. What area of the country you are in would probably make quite a difference. If a sale could be achieved at say market value now minus 15%, wouldn't it still be worth it if prices fell another 20% plus? After all, its difficult to call the top AND / OR the bottom of the market. Depends how far you think the market will drop. If, as you say, the market drops another 20% then fine.. but that would take the total correction to 35% in nominal terms. Personally I think it would be a gamble and a lot of hassle to do it now (don't forget all the costs involved). If you have no mortgage problems and are just speculating I would say you have probably missed the boat and the gamble is not worth the risk and the hassle. If you are worried you may be forced to sell for whatever reason over the next 3 years.. get rid now and get as much as you can. Just my view Quote Link to comment Share on other sites More sharing options...
Mr Nice Posted May 29, 2008 Share Posted May 29, 2008 (edited) I'd say it's probably still the best thing you could possibly do. even with the recent drops, rents are still much lower than mortgage prices (usually) to be able to go from a situation where you are facing loses of even a few hundred pounds a month for the indeterminate future, and possibly BIG losses, to a situation where you are saving a few hundred pounds a month is a no-brainer. people talk of the costs involved and the effort, but honestly, there are few jobs open to the average citizen that will pay them thousands of pounds for just a few weekends work of moving. I would check on comparable rentals that suit you, and if the prices are lower, I would move in a minute. there is no reason to face the risk of owning a home in today's environment, and paying a PREMIUM to do it. Edited May 29, 2008 by Mr Nice Quote Link to comment Share on other sites More sharing options...
EdiLass Posted May 29, 2008 Share Posted May 29, 2008 I think the factors you would need to consider in addition to the ones already mentioned include: the deposit you put down the difference between your mortgage amount and your sale price the interest on your current mortgage the interest likely when and if you do buy again Quote Link to comment Share on other sites More sharing options...
deflation Posted May 29, 2008 Author Share Posted May 29, 2008 Selling costs are, indeed something to consider. The other potential cost to anyone considering this is any mortgage redemption penalty, as well as the possibility that anyone with a very high LTV would be in N/E already! Quote Link to comment Share on other sites More sharing options...
Downtraded Posted May 29, 2008 Share Posted May 29, 2008 If prices are set to fall for another 2 years plus, would it be too late for anyone to STR? Admittedly, to get a buyer, you'd have to discount a fair bit but there ARE buyers out there, just not many. What area of the country you are in would probably make quite a difference. If a sale could be achieved at say market value now minus 15%, wouldn't it still be worth it if prices fell another 20% plus? After all, its difficult to call the top AND / OR the bottom of the market. If you try -20% on asking price, you should be able to STR then, but is it worth it? Not, if you're planning to buy the same house again - Too many costs involved. Its always the same in life. You have to have the conviction to win (and risk loss) before the herd does. Life's a b*tch isn't it? Quote Link to comment Share on other sites More sharing options...
Justice Posted May 29, 2008 Share Posted May 29, 2008 The crash has just started and already we are breaking records and i don't think 20% is anything to whats coming so i would still STR Quote Link to comment Share on other sites More sharing options...
Mikhail Liebenstein Posted May 29, 2008 Share Posted May 29, 2008 (edited) Selling costs are, indeed something to consider. The other potential cost to anyone considering this is any mortgage redemption penalty, as well as the possibility that anyone with a very high LTV would be in N/E already! Yes, selling costs can be high so it is worth doing the maths before taking the plunge and also making sure your view on further falls is clear. Moving from a £300k to another £300k home with a period of STR in between you'd be talking: agents fee - £4.5k removals - £1500 x 2 lawyers - £900 x 2 Stamp duty - £9k So the cost of doing a STR and then later buying back would be about £18,300 which is 6%. So you'd want prices to fall at least a futher 12% after you STRed to really make it worthwhile. I have STRed, but firstly I was planning on moving anyway and couldn't find anything suitable so moved into rented. In this sense te extra cost is really just the second lot of removal fees. Secondly I count myself as very lucky, basically getting out right at the peak of the market. Anyone STRing now could still do well, as I think prices will fall by at least 30%, but it will depend on whether you can get a good price for your property and an easy sale. Edited May 29, 2008 by mikelivingstone Quote Link to comment Share on other sites More sharing options...
deflation Posted May 29, 2008 Author Share Posted May 29, 2008 You forgot to mention that if you have a large deposit waiting, the interest on this helps to pay your rent too. Quote Link to comment Share on other sites More sharing options...
robski Posted May 29, 2008 Share Posted May 29, 2008 After lurking on here for ages, then finally registering a while ago, this is my first post! I completed the sale of my (and my brother's) house today! My position was somewhat different to most as I would have been forced to sell through CPO at some point in the next 2 - 3 years due to a major development. I figured that it would be better to 'cash in' now rather than risk a forced CPO at a later date when house prices are likely to be significantly lower. Most of my neighbours have already sold up and I think that the remaining few are waiting for the 'big pay off' but in the current climate I fear this may not be forthcoming... but good luck to them and I genuinely hope it works out for them. I am now officially a STR-er! My circumstances dictate that I will be looking to buy back in to the market next summer - unless the market is still falling like a stone. If that happens I guess I will continue to rent for a while longer. I was very lucky in my situation as I got a premium price for my house but in the current climate I definitely feel liberated. Moving back on topic, I'm sure you're aware there are plenty of folks on here with a great deal of knowledge / insight in to the current economic climate so listen to their advice then make your own decision based on your circumstances. However, everything I have read here and in the press over the last few months would indicate to me that we are in for a substantial 'adjustment' in house prices. If you can get a reasonable price for your house now and rent an acceptable property at the right price whilst waiting for the inevitable fall in prices then STR may well be the right option for you. Having bought my house with my brother due to the cost of houses in London I am now looking forward to buying my own place in Surrey when the right time comes. I don't mind buying in to a falling market - as long as I avoid the biggest chunk of the fall and that the house I buy ticks the right boxes. I will, more than likely, live in my next house for a considerable length of time and it will be my home. Sorry for the long, and no doubt tedious, post but just to finish off my final piece of advice is to listen to loads of advice but more importantly read as much as you can. In the end the decision is yours. Whatever you choose to do, I wish you all the best of luck. Rob Quote Link to comment Share on other sites More sharing options...
Saberu Posted May 30, 2008 Share Posted May 30, 2008 never too late to avoid the UK economy Quote Link to comment Share on other sites More sharing options...
werewolves Posted May 30, 2008 Share Posted May 30, 2008 never too late to avoid the UK economy A bit too early to leave the planetary economy though. Quote Link to comment Share on other sites More sharing options...
redwing Posted May 30, 2008 Share Posted May 30, 2008 The hardest part about this type of decision is the evaluation of risk. The risks being: 1. you sell for less than your house is worth in a buyers market just to get rid of it. 2. prices don't fall enough to cover your costs 3. prices fall a bit then start rising again (small risk imo) pricing you out in the medium to long term. 4. you stay where you are and risk missing the opportunity of a speculative shorting of property. I STGTed (Sold to go travelling and now renting) in 2005 making a judgement then that houses were overvalued. I really worried then about: 5. that a crash won't happen Luckily for me, this risk hasn't materialised although I was worried until last summer about this. So there's risk whichever way you play and whenever you play it. I think you need a good reason to STR other than pure speculation. For instance, you need to change location anyway; or you need more space for a growing family; or your family's getting smaller through divorce etc. Quote Link to comment Share on other sites More sharing options...
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