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Housing Recovery Is Years Away


VedantaTrader
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I hope you are right but I'm not holding my breath. You make an interesting point about living in the information age and I have often wondered what effect this might have on the speed of the HPC.

Your arguments about fantastic deals and great value would be backed up if you could provide some examples. If not, you could say at least say in which areas these properties have sold and compare the price to rateable value and peak price.

All I will say is that some areas are reacting slower than others alot depends on Estate Agents ability to adapt and survive mentality or stay stagnant and die scenario, and I know this because I follow things very closely.

Some deals are below RV because sellers were looking to blow them out as they needed cash quickly but I know this will not last and RV's figures in certain areas are debatebale some are too low. They are not totally consistent I believe in terms of value. There are differences of 20 and 25k in the value of equal houses in similar areas in the same towns...... if you look at your own town you will note this. I believe these were blown out at the blowout phase before they level out slightly higher in their stagnant period, some of the deals were too good to be true and I am not kiddin....... some people will have done very well once we eventually move out of the current crisis.

Buy when others are most fearful and sell when confidence is plentiful.

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debt_ridden_ftb if you actively look I can assure you deals are there that are definitely better than you would get in normal times. Once all the doom and gloom stops the blow out phase will have finished. B) But then again. Dont listen to me watch the change in this forum over the next few months as the sheeple keep up with the real time activity on the ground.

Dont forget if you compare this crisis in property in the 1990s the internet in its current form did not exist and the world was a very different place. Mobiles were only for yupee's again the masses didnt have them. forums like this didint exist and nor did information flow at the speed at which it flows at today. To give a very simple idea

1990's - A letter at its best took a day thats 24 hours or thereabouts to reach its receipient and another 24 / 48 hours till you get your reply where as today in

2008/9 - U write your post, i receive it instantly and reply instantly in the 1990s the above would have taken 3-4 days.

Huge advantage of technology..... We can ahev info overload as well and if you go away on holidays think about this you will realise that life moves at an extraordinary pace today.

I understand the important of technology as a means of communication, my MSc degree I am studying for is technology related and I have done ALOT of research on this area. However, technology will mean people will get information quicker, this will not solve the underlying problem of debt and affordability.

I do understand what you are saying, however in order for this to solve the average salary would need to be raised to say 30k and no deposits would be required. On todays salaries it would take about 2 years to save a 20k deposit and that’s living frugally.

Edited by debt_ridden_ftb
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VT I respect your oppinions and views however I am also aware that sometimes you can look too deep into things Im not dissagreeing with you but if you reckon we are goin this way the site should be changed to Global Financial Meltdown and the extinction of mankind as we know it. If houses go to the level of that in the US I personally will support our economy as i reckon I can buy about 50,000 houses if we are heading for the Dollar Houses. This should work out well if the DHSS will pay about £400 per month this means I can £2,250,000 per month yes 2 and a quarter million per month in Rent. HAPPY DAYS

G20 will sort it out in April....... I have full confidence....... I see our int rates remaining low for some time to allow the banks to recapitalise and allow the ordinary people who bought over-valued houses to recapitalise...........

I dont think extremely high inflation will be a concern for quite a while people are scared of spending money and this will continue for some time.

We will see a return to the median and natural house price increases from there forward....... People will be more cautious and in a few years time I reckon we will look at this whole crisis and think what was all the panic was about.

The Global Risks of the "Economic World" Failing are so great that they are so aware and they have their work cut out to get through it that we can agree upon however....... the world has faced crisis before and recovered.

As some one put it the other day to me the world has a habit of overheating and cooling again its a natural cycle.

So lets not panic

I don't see anything in your post other than hope and faith in the people who got us into this mess in the first place - I prefer the reasoning that VT has supplied in his argument - you will understand that, surely? So people are scared of spending money and this will continue for some time.....but this does not apply to houses, apparently.

The bottom line is no recovery until the economy recovers and even I can see that there is no quick fix, nothing so far from the great minds of our leaders has worked. What's going to be different this time?

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I understand the important of technology as a means of communication, my MSc degree I am studying for is technology related and I have done ALOT of research on this area. However, technology will mean people will get information quicker, this will not solve the underlying problem of debt and affordability.

I do understand what you are saying, however in order for this to solve the average salary would need to be raised to say 30k and no deposits would be required. On todays salaries it would take about 2 years to save a 20k deposit and that’s living frugally.

It does solve it the problems of afordability and debt as it give central government to react quicker to situations.

I do understand the deposit scenario etc however you will see builders offering incentives and I believe we will also see the government act on this in the new year possibly with a scheme offered to attract FTB back on the market who they know are the lifeblood of the market, Banks are also back to 90%LTV for First Time Buyers they wouldnt do this if they reckoned the bottom wasnt near as they are jeprodising their own money by offering such a low LTV ............ I feel the government hasnt addressed this situation yet as they know its pointless as FTB's are spooked...... Wait until the New Year in NI to see a change in the situation here............ U will suddenly remember this post and what I have been saying all along. Watch this Space

Most people I know have asked a parent to perhaps go as Gaurauntor on a loan for a house...... banks love to see this for their own peace of mind but it could enable you to get a house with a lower LTV (Loan to Value).

Wages will increase over the next few years however we may have to wait a little longer for a significant increase at least in the private sector plus there is a new Gov Scheme for I believe 2010 to do with Private companies to pay pension contributions so watch the media for the out roar on this...........

REMEMBER - No-one will ever tell you there is no risk in buying a home..........and very few will tell you you got a deal when you buy....... u have got to trust your judgement on this one.

U will look at the posts I have written on this form in the next few months and realise that I am not terribly far off the mark despite the criticisms that many of my posts receive.

Edited by HERMY
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All I will say is that some areas are reacting slower than others alot depends on Estate Agents ability to adapt and survive mentality or stay stagnant and die scenario, and I know this because I follow things very closely.

Some deals are below RV because sellers were looking to blow them out as they needed cash quickly but I know this will not last and RV's figures in certain areas are debatebale some are too low. They are not totally consistent I believe in terms of value. There are differences of 20 and 25k in the value of equal houses in similar areas in the same towns...... if you look at your own town you will note this. I believe these were blown out at the blowout phase before they level out slightly higher in their stagnant period, some of the deals were too good to be true and I am not kiddin....... some people will have done very well once we eventually move out of the current crisis.

Buy when others are most fearful and sell when confidence is plentiful.

These bargains you speak of are only bargains in the context of the current situation and your belief that things will turn round soon. If we agree with the reasonable assumption that given the scale of the credit boom, things will take years to sort out, we are only at the start and they will only be delayed by government meddling, then it is easy to see these bargain prices becoming the norm and there being bigger bargains later on.

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much appreciation VT

that probably took me longer to read than it took you to type ;)

at least now I understand the whole yen carry trade a lot better

still in bits as to what to do to keep our money safe

contemplating a euro account

need to look into it more

I think sterling will continue down against the euro for a bit at least

but I can't really afford to lose much

reckon the dollar could be f...ed pretty soon

think its too risky

agggghhhh

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I don't see anything in your post other than hope and faith in the people who got us into this mess in the first place - I prefer the reasoning that VT has supplied in his argument - you will understand that, surely? So people are scared of spending money and this will continue for some time.....but this does not apply to houses, apparently.

Of course the same scenario applies to houses.......... of course people are scared spending money however despite all that is said I know I am currently in a house which I am sure you are as well at this moment of time

Man has three basic needs

FOOD

SHELTER AND

WATER

These basic needs have existed since man existed and will never change................... People always need shelter whether they rent, live with parents or buy. I guess Buying your first house is the last step which is why many refer to it as getting on the property ladder as it is the first big step from the security of living at home or renting to buying.....

People need shelter recession or no recession and just because they are scared of sepnding money doesnt mean they wont pay their rent or mortgage as people realise that shelter is a basic need.

People will buy when they feel comfortable........ nobody should force them............ but sometimes if it makes financial sense to buy with acceptable prices in terms of affordability etc vs renting then people will slowly regain confidence in home ownership again.

Properties will some day return to 2007 levels and everyone knows that 07 levels are a long way off...... but they will return

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much appreciation VT

that probably took me longer to read than it took you to type ;)

at least now I understand the whole yen carry trade a lot better

still in bits as to what to do to keep our money safe

contemplating a euro account

need to look into it more

I think sterling will continue down against the euro for a bit at least

but I can't really afford to lose much

reckon the dollar could be f...ed pretty soon

think its too risky

agggghhhh

Makes you wonder guys are we heading for a re-valuation of Global currencies in April 09 when the G20 get down to it. Are local currencues preparing themselves for something bigger .........

Hmm.............. Makes you wonder.......... I have suspected this for a long time..... and have mentionned it before on this site

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Makes you wonder guys are we heading for a re-valuation of Global currencies in April 09 when the G20 get down to it. Are local currencues preparing themselves for something bigger .........

Hmm.............. Makes you wonder.......... I have suspected this for a long time..... and have mentionned it before on this site

rumours circulating of going back to gold linking

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Of course the same scenario applies to houses.......... of course people are scared spending money however despite all that is said I know I am currently in a house which I am sure you are as well at this moment of time

Man has three basic needs

FOOD

SHELTER AND

WATER

These basic needs have existed since man existed and will never change................... People always need shelter whether they rent, live with parents or buy. I guess Buying your first house is the last step which is why many refer to it as getting on the property ladder as it is the first big step from the security of living at home or renting to buying.....

People need shelter recession or no recession and just because they are scared of sepnding money doesnt mean they wont pay their rent or mortgage as people realise that shelter is a basic need.

People will buy when they feel comfortable........ nobody should force them............ but sometimes if it makes financial sense to buy with acceptable prices in terms of affordability etc vs renting then people will slowly regain confidence in home ownership again.

Properties will some day return to 2007 levels and everyone knows that 07 levels are a long way off...... but they will return

I think you're backing up my argument here - nobody is saying that people will stop moving, but the minimum level of demand that you're talking about can only sustain prices at the long term average level, which is what we've been arguing here for ages now. 2007 levels in terms of ratio to average salary will not be seen again in our lifetimes - nominal prices maybe, but that will be due to inflation and therefore is meaningless in terms of 'wealth'. The decline will slow and play out over the next few years, by the time we reach the bottom the 'bargains' that you see now will be the norm. That is when confidence will return - when widespread affordability returns, not just for those 'in the know' and when people aren't scared of losing their job in the next month.

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Fantastic post VT - you're a true credit to this forum! I took some time out to read it this morning, after a busy (and cold!) weekend. Bishopscourt isn't at its best at near-zero temps! ;)

Statinstonker - sorry to hear about your accident; I hope you get well soon!

A few commentary points:

- Bond markets: Would there need to be a collapse to cause these markets to freeze over and trigger interest rate increases? Surely, there will be a period where bonds just stop selling (which could happen fairly soon), before total repudiation occurs? IMO, this may mean that interest rates will be forced higher before China starts flogging off its US/UK bonds.

- Gold: Interesting at the causality and sequence of these rises. It looks like the initial gold bugs may have been a bit too keen, with USD safety coming before currency collapse due to inflationary pressures. Would you expect the sell off from USD, into commodities, to be rapid or gradual? My main nagging feeling with gold is that they may try to peg currency with it again and cause forced sales from the current holders at a low price. This makes gold feel less "safe" than it would otherwise be. Is there a way to avoid this risk by buying via the markets in some way (forgive my naivety here - I'm not a trader, just an armchair economist! ;) )?

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Excellent post as usual VT. Thank you for taking the time.

Unfortunately, the people you are aiming the post at will not understand it or how to argue against it. They will just keep on saying 'buy buy buy' as that is all they know. I wonder if they realise they are wasting their time trying to convince people to buy property on a website called housepricecrash.co.uk. :rolleyes: They must be really desperate. :ph34r:

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Excellent post as usual VT. Thank you for taking the time.

Unfortunately, the people you are aiming the post at will not understand it or how to argue against it. They will just keep on saying 'buy buy buy' as that is all they know. I wonder if they realise they are wasting their time trying to convince people to buy property on a website called housepricecrash.co.uk. :rolleyes: They must be really desperate. :ph34r:

Change the record BB. :(

How many desperate people shout BUY, BUY, BUY !!

Any desperate people I have ever had dealings with shout SELL,SELL SELL !!!????

You wouldn't make a very good bull would you ??

MISS JONES

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Change the record BB. :(

You wouldn't make a very good bull would you ??

How much has your property portfolio fallen in value by this last year? I doubt if you will admit that even to yourself. <_< Too painful?

I only know 1 BTL investor and he has lost 30% so far which is about a half million pound capital loss. He is desperately trying to reduce his portfolio in a falling market. But nobody will buy the house he is trying to sell. It's more of a case of 'please buy buy buy my over leveraged crap investment'.

I agree, I would make a terrible bull. I'm too much of a realist.

I am actually quite bullish on some things, but not property. Property values have alot more to fall yet.

Thanks for the advice on finding BMV property. I may use that when there is some sign of the bottom.

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How much has your property portfolio fallen in value by this last year? I doubt if you will admit that even to yourself. <_< Too painful?

I only know 1 BTL investor and he has lost 30% so far which is about a half million pound capital loss. He is desperately trying to reduce his portfolio in a falling market. But nobody will buy the house he is trying to sell. It's more of a case of 'please buy buy buy my over leveraged crap investment'.

I agree, I would make a terrible bull. I'm too much of a realist.

I am actually quite bullish on some things, but not property. Property values have alot more to fall yet.

Thanks for the advice on finding BMV property. I may use that when there is some sign of the bottom.

BB I've explained about my own personal portfolio. It would be very hard for me to loose money.

Example.

I build 16 houses on a site and retained 1.

Site cost £ 36,000

Build cost £ 75,000 ( approx) using my own workforce.

Cost £ 111k

This is new 4 bed, 2 bath, with 2 receptions and massive kitchen. Detached on corner site. Was valued 6 months ago at £320k.

If I was mental enough to sell now for give away price of £ 220k even I know I've made a substancial profit, and doubled my investment.

Should I have sold for £ 375 at height of the boom?, probably, but what to hell I built & sold 28 houses in the boom and flipped about 12 sites. This is a long termer.

I have no gearing on this property at all.

As I've explained before I am not a part time DIY armchair investor. I'm the real deal developer/investor.

MISS JONES

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BB I've explained about my own personal portfolio. It would be very hard for me to loose money.

Example.

I build 16 houses on a site and retained 1.

Site cost £ 36,000

Build cost £ 75,000 ( approx) using my own workforce.

Cost £ 111k

This is new 4 bed, 2 bath, with 2 receptions and massive kitchen. Detached on corner site. Was valued 6 months ago at £320k.

If I was mental enough to sell now for give away price of £ 220k even I know I've made a substancial profit, and doubled my investment.

Should I have sold for £ 375 at height of the boom?, probably, but what to hell I built & sold 28 houses in the boom and flipped about 12 sites. This is a long termer.

I have no gearing on this property at all.

As I've explained before I am not a part time DIY armchair investor. I'm the real deal developer/investor.

MISS JONES

If you were a "real deal" investor, should you not have had the foresight and intelligence to realise in early 2007 that prices were out of control, unsustainable and too good to be true and that it was the time to sell before reality appeared in the market again? Even if it was a short term measure and you wanted to buy again in a few years? Local property investors remind me of the Simpson's episode where Homer invested in pumpkins , making an initial tidy profit, but not having the intelligence to sell before Hallow'een :) It really does baffle me just how stupid investors were.

But what annoys me is that people like you refuse, refuse point blank, to back up any statement with fact, or indeed to refute other peoples' evidence based statements with fact. I can only assume that it is because you don't HAVE any credible argument, which would stand up to scrutiny, that backs up your position.

Perhaps you could answer these questions? Failure to accept my challenge will just reinforce my point.

1) WHEN do you think the market will stop crashing?

2) WHAT do you think the average price of a house will be when this happens?

3) At this "bottoming out" level, HOW do you think these prices will be affordable and WHAT income will people need to be earning to afford them?

4) Do you admit that the Great Northern Ireland Housing Crash was brought about, at least partly, by the unsustainable housing boom that preceded it, and therefore that investors have to accept a lot of the blame for this?

Edited by Jacko79
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If you were a "real deal" investor, should you not have had the foresight and intelligence to realise in early 2007 that prices were out of control, unsustainable and too good to be true and that it was the time to sell before reality appeared in the market again? Even if it was a short term measure and you wanted to buy again in a few years? Local property investors remind me of the Simpson's episode where Homer invested in pumpkins , making an initial tidy profit, but not having the intelligence to sell before Hallow'een :) It really does baffle me just how stupid investors were.

But what annoys me is that people like you refuse, refuse point blank, to back up any statement with fact, or indeed to refute other peoples' evidence based statements with fact. I can only assume that it is because you don't HAVE any credible argument, which would stand up to scrutiny, that backs up your position.

Perhaps you could answer these questions? Failure to accept my challenge will just reinforce my point.

1) WHEN do you think the market will stop crashing?

2) WHAT do you think the average price of a house will be when this happens?

3) At this "bottoming out" level, HOW do you think these prices will be affordable and WHAT income will people need to be earning to afford them?

4) Do you admit that the Great Northern Ireland Housing Crash was brought about, at least partly, by the unsustainable housing boom that preceded it, and therefore that investors have to accept a lot of the blame for this?

Is my previos post not fact. If not explain why?

You try buying a new 4 bed in Co.Down for 111k !!

I stated before my portfolio will probably pass on to my kids so why sell? Oh maybe I should have bought oil !!

I have liquid and don't want or need to sell.

Answer to above.

1. 3rd quarter 2009.

2. In my opinion there is no such thing ? What is an average house? Again I don't buy crap in crapping areas.

3. Not my problem. I they can't buy I rent them, if they can wait and sell. WIN WIN !!

4. A small amount of blame yes. But the government, FSA, the planning dept.housing exec. stormount, etc. and the banks should shoulder 90% of the blame.

Like I keep saying there are hundreds of components to a boom as a bust you just can't point the finger at a company who employs local people. THATS TOO EASY

During the boom there was an opertunity to make money so why not?

Do oil companies, gold dealers etc.etc. not cash in. Do they employ thousands of local people. NO.

Do I feel for FTB's YES

Do I feel for DIY investors going bust NO.

Do I feel for Taggarts and the like NO greedy b2stards !

Did I discount houses for young families during the boom YES

Did I have to. NO

I am a "car dealer" thats how I made it, everything was and is for sale if I turn a profit.If I bought a pair of shoes for £20 and you offered me £21 they're yours !! Half a loaf is better than no loaf Even during the boom.

If you missed out sorry but that's life. A lot of bears think they have some moral high ground regarding property issues, boll$cks!!

MISS JONES

Edited by MISS JONES
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The government can control inflation like a tap.

No, it can't. The UK economy does not exist in a bubble, for starters. Mrs. Thatcher thought she could control inflation like a tap, and that by returning to the doctrine of sound money, she could save the British economy. It was in the process of destroying her when General Galtieri marched into Port Stanley and saved her bacon.

It has the ability to control many factors...... Did you know we can produce enough oil of the coast of GB to leave us in a sustainable position.

No, we can't. As someone who is a hard-core cornucopian (the opposite of a peak-oil doomer!), I wouldn't dare suggest that dwindling North Sea oil reserves are a sensible long-term energy strategy for Britain. Most fields are showing sharply declining production and the few remaining hopes for new, long-term, exploitation, are prohibitvely expensive at current oil prices.

I believe at this precise moment in history the Risks are too great and will be for quite the foreseeable future. I believe we ahev reached a new parady in Interest rates for the next 10-15 years.

Housing wasn't the only asset class to witness a spike in value, fuelled by cheap credit, and a collapse in yield. Remember that, in an efficient market, yield directly reflects risk. In the late 1990s and early 2000s, investors in field after field seemed to forget that risk existed in a frenzied pursuit of credit-fuelled capital gains. Everyone has suddenly realised that the world is not free of risk - "an end to boom and bust" indeed! - and therefore yields will rise across a broad range of investments, and they will rise in the way they always do in a declining economy; by a collapse in their capital value.

Sorry, but if there was an easy way to make money, everyone would figure it out and it would cease to be a means of making money. That's basic economics. Deny it at your peril.

BTW - Vedanta Trader - GREAT post!!!

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MISS JONES

In fairness if what you say is true then fair play, you built and flipped a lot of sites quick;y and got out quickly.

VT

Have followed your posts since day one. great stuff. i have been fortunate enough to build up a lot of money since leaving uni (through day trading stockmarkets). and this might sound crazy seeing as what my day job is but i have been so busy with this that i just dont have the energy to deal with my cash savings. plan to spend the weekend hedging as best i can using your/hugh hendrys similar view for the future as a template.

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VT

I would say many of us here have cash we are hoping to use to purchase ourselves a property one day in Norn Iron or maybe even some other far flung place - whether its 5,10,20,50 or 100 grand - how would you advise us to hedge it in the time frame between now and when you see property prices in NI near their lows ?

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