Property Bubble Going to Burst?

Caoimhín

<Ollie> wrote: »

Take a very small housing estate on one acre, consisting of a few houses valued at a minimum of €100,000 each - .

Where are you getting the minimum €100,000 value?

<Ollie>

<Ollie> wrote: »

Is this really an option? It sounds mad to me to start knocking down the houses. Take a very small housing estate on one acre, consisting of a few houses valued at a minimum of €100,000 each - it would take literally hundreds of years to yield the same return by means of agriculture or forestry. I know the forestry premiums and grants wouldn't make this financially feasible. And agriculture isn't exactly an industry that's making huge financial returns either, with many farmers struggling to even make a living from it.

Has this happened in other countries? It seems completely bonkers to me..

http://www.abandonedireland.com/

If the houses are never occupied, they will eventually decay to the point that they will be uninhabitable, that process can be surprisingly short if the buildings are not maintained!

It doesn't matter what the yield is! They are not going to be bought by a farmer for €100k each to return to agriculture, the site will be sold at agricultural land prices minus the cost of demolition.

The only way some of those houses will ever be occupied is if they are given to people, they're in the wrong place! Not near any areas of employment, shops or anything you would expect from suburban living.

If people wanted to live in small houses in the middle of nowhere, they would have bought these, rather than building their own one-offs - a big house in the middle of nowhere but much cheaper!

The Pontiac

Caoimhín wrote: »

Where are you getting the minimum €100,000 value?

Deleted User wrote: »

http://www.abandonedireland.com/

If the houses are never occupied, they will eventually decay to the point that they will be uninhabitable, that process can be surprisingly short if the buildings are not maintained!

It doesn't matter what the yield is! They are not going to be bought by a farmer for €100k each to return to agriculture, the site will be sold at agricultural land prices minus the cost of demolition.

The only way some of those houses will ever be occupied is if they are given to people, they're in the wrong place! Not near any areas of employment, shops or anything you would expect from suburban living.

If people wanted to live in small houses in the middle of nowhere, they would have bought these, rather than building their own one-offs - a big house in the middle of nowhere but much cheaper!

€100,000 was example. Even say €30,000 it still wouldn't make sense to demolish them. It's also not true to say the houses (even in the "middle of nowhere") will never be occupied either - if they went on sale tomorrow for €30,000, people would buy them. Everything has a value, and the value of the land for agricultural use is very minimal. The banks just are willing to let them go for this money (yet!!). Demolition makes absolutely no sense whatsoever.

mathie

<Ollie> wrote: »

€100,000 was example. Even say €30,000 it still wouldn't make sense to demolish them. It's also not true to say the houses (even in the "middle of nowhere") will never be occupied either - if they went on sale tomorrow for €30,000, people would buy them. Everything has a value, and the value of the land for agricultural use is very minimal. The banks just are willing to let them go for this money (yet!!). Demolition makes absolutely no sense whatsoever.

Take New Orleans for example ...

"Bowers asked him how much he sold one house for.

'One dollar,' he said.

It's a house he says that just a few years ago would have sold for $75,000. "


http://www.cbsnews.com/stories/2009/02/24/eveningnews/main4826433.shtml?source=search_story

The Pontiac

mathie wrote: »

Take New Orleans for example ...

"Bowers asked him how much he sold one house for.

'One dollar,' he said.

It's a house he says that just a few years ago would have sold for $75,000. "


http://www.cbsnews.com/stories/2009/02/24/eveningnews/main4826433.shtml?source=search_story

Interesting story! When they start demolishing housing estates here to return to farming or forestry, I'll be even more embarrassed as some of the earlier posters in this thread. I can guarantee you it'll never happen. When they start selling houses here for €1, I'll buy a few thousand of them.

Caoimhín

<Ollie> wrote: »

When they start selling houses here for €1, I'll buy a few thousand of them.

Even when property rates/taxed are introduced, along with insurance costs, upkeep, utilities, trespass, vandalism etc? Why on earth would anyone want to own anymore houses than they need? There are easier ways of making money.

mathie

<Ollie> wrote: »

I can guarantee you it'll never happen.

Actually you can't guarantee that

<Ollie> wrote: »

When they start selling houses here for €1, I'll buy a few thousand of them.

And you'll be up to your neck in tens / hundreds of thousands / millions of debt.

The Pontiac

Caoimhín wrote: »

Even when property rates/taxed are introduced, along with insurance costs, upkeep, utilities, trespass, vandalism etc? Why on earth would anyone want to own anymore houses than they need? There are easier ways of making money.

I was speculating that the houses would be worth €2 after three years, thus doubling my investment.

Caoimhín

<Ollie> wrote: »

I was speculating that the houses would be worth €2 after three years, thus doubling my investment.

Maybe, but you have lost tens of thousands on solicitor fees, tax, upkeep and probably rates.

The point i am making is that some of those houses in run down areas of the US were on sale for $1 as there was a lot of expense attached to them. Building codes in the US would require you to make the building safe at least, which in many of these cases would have cost thousands.
It wasnt as simple as giving away the houses for a dollar.

mathie

<Ollie> wrote: »

I was speculating that the houses would be worth €2 after three years, thus doubling my investment.

After this bubble has run its course (and we're a long way from there just now) and you do have the opportunity to pick up a shoebox in the back ar5e of nowhere for a euro then you're going to have to wait a long time for a sucker buyer to come along. A whole generation will be sunk by negative equity and their kids will be told of tales of how buying a house is the worst thing you can do.

So, no you won't be able to double your money in three years in the fall-out of this bubble. You'd need to make a lot more than a euro to cover your fees.

And specuvestors were part of getting us into this mess. Do you want to be the kind of person who would get us into a similar mess x amount of years down the road?

In the distant future homes will be bought by people who are looking for shelter and not by people trying to make a quick euro.

The Pontiac

Caoimhín wrote: »

Maybe, but you have lost tens of thousands on solicitor fees, tax, upkeep and probably rates.

The point i am making is that some of those houses in run down areas of the US were on sale for $1 as there was a lot of expense attached to them. Building codes in the US would require you to make the building safe at least, which in many of these cases would have cost thousands.
It wasnt as simple as giving away the houses for a dollar.

But none of them sold for as low as $1 in the end. I was only making a mockery of the fact of a house here going on the market for €1.

thetonynator

we're not going to stay at the same population for ever, the houses are going to be occupied within the next 10-15 years. The situation earlier, x number of houses on an acre boing worth whatever, an acre of agricultural land is worth roughly 10-15k, depending on where it's situated. if its got foundations in it its worth a lot less, demolition would be crazy!!! there have been some suggestions of modifying estates slightly for use as a school/ nursing home or something else useful.

lamai

We could use the empty houses as brothels. we could ride or way out off this mess????

mathie

lamai wrote: »

We could use the empty houses as brothels. we could ride or way out off this mess????

It might just work.
Sure we were rode into this mess.

K-9

Deleted User wrote: »

http://www.abandonedireland.com/

If the houses are never occupied, they will eventually decay to the point that they will be uninhabitable, that process can be surprisingly short if the buildings are not maintained!

It doesn't matter what the yield is! They are not going to be bought by a farmer for €100k each to return to agriculture, the site will be sold at agricultural land prices minus the cost of demolition.

The only way some of those houses will ever be occupied is if they are given to people, they're in the wrong place! Not near any areas of employment, shops or anything you would expect from suburban living.

If people wanted to live in small houses in the middle of nowhere, they would have bought these, rather than building their own one-offs - a big house in the middle of nowhere but much cheaper!

It reminds me of the old terraced houses you see in mining towns in Wales and Northern England.

<Ollie> wrote: »

€100,000 was example. Even say €30,000 it still wouldn't make sense to demolish them. It's also not true to say the houses (even in the "middle of nowhere") will never be occupied either - if they went on sale tomorrow for €30,000, people would buy them. Everything has a value, and the value of the land for agricultural use is very minimal. The banks just are willing to let them go for this money (yet!!). Demolition makes absolutely no sense whatsoever.

I'm thinking of small villages that have housing estates of maybe 3/400 houses. Some could be used as social housing but even then, there would be a over supply. These are villages that had nothing during the bubble times and have far less now with unemployment the way it is going and industries leaving.

Very few people want to live in estates with maybe 50% occupancy if lucky, often with no lighting or finished roads and footpaths. Many of these estates aren't finished and it would cost €1,000's to finish them. What value is there in finishing them?

K-9

K-9 wrote: »

It reminds me of the old terraced houses you see in mining towns in Wales and Northern England.




I'm thinking of small villages that have housing estates of maybe 3/400 houses. Some could be used as social housing but even then, there would be a over supply. These are villages that had nothing during the bubble times and have far less now with unemployment the way it is going and industries leaving.

Very few people want to live in estates with maybe 50% occupancy if lucky, often with no lighting or finished roads and footpaths. Many of these estates aren't finished and it would cost €1,000's to finish them. What value is there in finishing them?

And that's the killer for many of the ghost estates".

Location, Location, Location has always been the prime driver of the housing market - followed by affordability.

Houses in areas of employment will sell first, only when ALL the property in these areas has gone will the ghost estates see interest.

But before that there is the case that many specusavers will be forced to dump their properties as they can't afford the mortgages, thus maintaining the supply in the cities for several years to come.

Miss Fluff

bazmaiden wrote: »

Is Miss Fluff George Lee?

No no, not George Lee. Am a girl. Have no balls. Well maybe one. A big crystal one.:D

Miss Fluff

Miss Fluff wrote: »

I know some people have been saying in hushed tones that the property bubble will inevitably burst but what this lady says makes perfect sense.

What do people think? Can we sustain this or do you think we're heading for a property slump disaster like the UK experienced in the 80s? :eek:

Miss Fluff wrote: »

No no, not George Lee. Am a girl. Have no balls. Well maybe one. A big crystal one.:D

Well, It's worked batter than many others, at least you saw the writing on the wall!

The Pontiac

mathie wrote: »

After this bubble has run its course (and we're a long way from there just now) and you do have the opportunity to pick up a shoebox in the back ar5e of nowhere for a euro then you're going to have to wait a long time for a sucker buyer to come along. A whole generation will be sunk by negative equity and their kids will be told of tales of how buying a house is the worst thing you can do.

So, no you won't be able to double your money in three years in the fall-out of this bubble. You'd need to make a lot more than a euro to cover your fees.

And specuvestors were part of getting us into this mess. Do you want to be the kind of person who would get us into a similar mess x amount of years down the road?

In the distant future homes will be bought by people who are looking for shelter and not by people trying to make a quick euro.

K-9 wrote: »

I'm thinking of small villages that have housing estates of maybe 3/400 houses. Some could be used as social housing but even then, there would be a over supply. These are villages that had nothing during the bubble times and have far less now with unemployment the way it is going and industries leaving.

Very few people want to live in estates with maybe 50% occupancy if lucky, often with no lighting or finished roads and footpaths. Many of these estates aren't finished and it would cost €1,000's to finish them. What value is there in finishing them?

I was only making the point that I can never see the housing estates getting demolished, as it makes absolutely no sense. There are many estates that are partially finished e.g. phase one was finished off and the rest of the development had to be put on hold. I don't think there's too many small villages with 3/400 unoccupied houses in the country tbh. There are certainly a lot of houses unoccupied in the country, and yes we had a major property crash, but lets not get totally carried away here. Like what a previous poster said, most of them will get sold within the next 10-15 years anyway, and probably even a lot sooner.

K-9 wrote: »

What value is there in finishing them?

A lot of the builders went bust and couldn't finish them, and the banks wouldn't give them anymore money due to the property crash. It doesn't make sense to finish them off now, but it makes no sense whatsoever to start demolishing already finished housing estates.

ScumLord

<Ollie> wrote: »

I was only making the point that I can never see the housing estates getting demolished, as it makes absolutely no sense. There are many estates that are partially finished e.g. phase one was finished off and the rest of the development had to be put on hold. I don't think there's too many small villages with 3/400 unoccupied houses in the country tbh. There are certainly a lot of houses unoccupied in the country, and yes we had a major property crash, but lets not get totally carried away here. Like what a previous poster said, most of them will get sold within the next 10-15 years anyway, and probably even a lot sooner.



A lot of the builders went bust and couldn't finish them, and the banks wouldn't give them anymore money due to the property crash. It doesn't make sense to finish them off now, but it makes no sense whatsoever to start demolishing already finished housing estates.

Those houses are dead money. It would cost a fortune to bring them back to a livable standard. There just isn't money in it.

Allot are in places no body wants to live, the dream of living in the countryside has become a horrible nightmare for some people now that they're trapped away from work and need a car to do anything, most people where buying those property's as an investment, not to live in. There are people out there with 5 or 6 houses all worthless.

Their are some lovely houses, mansions even, out the country all worthless. To expensive to run, made poorly, to far from work and services to expensive to sell. It was just madness with any luck we'll have learned something and pointless housing like that is a thing of the past. I'd like to think that but I have no faith in the leaders of this country not to make the same mistakes over and over again.

It would need a cuban style reversion to manual farming to provide a need for many of these houses.

The Pontiac

ScumLord wrote: »

Those houses are dead money. It would cost a fortune to bring them back to a livable standard. There just isn't money in it.

Allot are in places no body wants to live, the dream of living in the countryside has become a horrible nightmare for some people now that they're trapped away from work and need a car to do anything, most people where buying those property's as an investment, not to live in. There are people out there with 5 or 6 houses all worthless.

Their are some lovely houses, mansions even, out the country all worthless. To expensive to run, made poorly, to far from work and services to expensive to sell. It was just madness with any luck we'll have learned something and pointless housing like that is a thing of the past. I'd like to think that but I have no faith in the leaders of this country not to make the same mistakes over and over again.

I'm not sure what is going to happen to the houses, but the problem isn't unique to Ireland. The article below from The Irish Independent is interesting. This is the link.

What do we do with all the ghost estates?

...and the 500 empty homes that are added weekly, asks Clare Taylor


Thursday December 31 2009

I've come to visit a brand new housing development, just off the main street of a small town 17 miles from Dublin city centre. The signs at the entrance promise 'The Best of Everything'. But there's no one living here.
The gardens are nicely landscaped, sited beside a rushing stream. Apart from the adjacent muddy site and the grey concrete shell of the second phase where development has halted, it looks like a good place to live. Yet, so far, only one unit out of 30 has sold, and the owner hasn't moved in yet.
It's a scene replicated hundreds of times around the country. As the New Year approaches and with Brian Lenihan's "the worst is over" mantra ringing in our ears, the question is: What do we do now with these ghost estates?
First, you have to ask why we were mad enough to build all these surplus homes in the first place. Let's go back to 2006 when the Central Statistics Office identified 266,000 empty residential properties -- representing 15pc of all homes.
It was obvious that supply already exceeded demand and yet, in that same year, property fever still gripped the nation, and people slept in their cars overnight to be first in a queue to buy within commuting distance of Dublin.
Many councillors and planners ignored the evidence of oversupply, and continued to give permission for new developments in areas swamped by vacant houses. In the worst-hit areas -- 29.3pc in Leitrim, 27pc in Donegal and 24.8pc in Kerry (CSO, 2006) -- between a third and a quarter of all houses lay empty. Yet the building frenzy continued. If we had learned the lessons from history, we would have known we were heading for a crash.
One of the classic cases was Florida during the 1920s. Rapidly rising prices and aggressive selling in the Sunshine State resulted in people buying lots they had never seen -- only to discover that they owned a piece of the Everglades swamp. In 1922, the Miami Herald was the heaviest newspaper in the world because it had so much real-estate advertising.
Hurricanes in 1926 and 1928 brought massive floods that killed thousands of people and changed the focus from drainage and development of the wetlands to flood control. Is this starting to sound familiar?
In 1928, Henry S Villard, writing in The Nation, described the approach to Miami by road, which was punctuated with ghost homes and empty plots: "They line the highway, their pompous names half-obliterated on crumbling stucco gates. Lonely lights stand guard over miles of cement side-walks, where grass and palmetto take the place of homes that were to be . . . Whole sections of outlying subdivisions are composed of unoccupied houses, past which one speeds on broad thoroughfares as if traversing a city in the grip of death."
Eighty years later, this description holds true for a trip along Ireland's motorways, or through Spain, or the US, as the problem of uninhabited homes is not unique to Ireland. In Spain, the only European country that was building at a greater rate than Ireland in 2006/7, there are now more than 3 million vacant houses and apartments. In February 2009, USA Today reported that one in nine American homes was empty -- 18 million of them.
So how many houses in Ireland are lying vacant? Statistics show that there's nobody living in 18pc -- almost one in five -- of all homes in Ireland (a figure that includes investment properties and holiday homes). And the problem is getting worse, as about 500 new houses per week are added to the backlog.
Many of the newly built empty homes will end up in the Nama property portfolio; and part of its business plan is to hold on to them for some years until prices rise again. As economist Derek Brawn commented: "Nama will presumably rent out these homes in the interim, thus becoming the largest landlord in the State."
Earlier this year Minister Lenihan referred to a possible 'social dividend' from Nama -- what does this mean? The Irish Council for Social Housing (representing housing associations totalling 22,000 households) is making the case for taking 10,000 units of social housing from the Nama portfolio.
This is a start, but it does not provide for all of the 56,000 households on local authority waiting lists -- and it still leaves us with a lot of empty houses.
So is it all doom and gloom? Not according to Frank Convery, chairman of Comhar Sustainable Development Council. "It's time to consider this crisis as an opportunity," he says.
Maybe we can get a few ideas from other countries. Here are some examples:

• Offer substantial tax credits for first-time buyers -- a short-term measure to get the market moving again. The US senate voted last month to extend what has proved to be a very successful scheme there until the end of April 2010.
• Banks could offer 'non-recourse' residential mortgages. Already standard in commercial property, this means you cannot owe more than the value of your house -- diminishing the threat of owing hundreds of thousands in negative equity. Non-recourse mortgages were introduced in Australia after the 1980s housing bubble there, and are available in 45 out of 50 US states.
• Citizen-led initiatives (Empty Homes Agency in UK, Casas Tristes in Spain) encourage people to report empty houses, contact the owner and privately negotiate re-use of the property.
• In the UK, Empty Dwellings Management Orders empower local authorities to take over privately owned houses and flats that have been unoccupied for more than six months.

Back at the apartments, I chat with the estate agent. Will the second phase be completed? I wonder. Who knows, he says. It could be four, six, 10 years. We are waiting for Nama.
Supported by the Comhar Sustainable Development Media Fund, www.comharsdc.ie
Irish Independent

Dave!

I coulda told ye that.........

LD 50

<Ollie> wrote: »

I'm not sure what is going to happen to the houses, but the problem isn't unique to Ireland. The article below from The Irish Independent is interesting. This is the link.

Tl;dr

LD 50

LD 50 wrote: »

Tl;dr

Why bother replying! :rolleyes:

OutlawPete

Deleted User wrote: »

Why bother replying! :rolleyes:

Bumping after nine days too.

Wouldn't mind, but the article Ollie posted was as about as apt as you could get.

Well worth reading.