Housing Bubble Bursting

KingKenny7

Calina wrote:

You mean he calls a spade a spade instead of this wishy washy spin-doctoring lark?

Thats right!!!! A typical country builder who probably has moe money then sense.

Zambia

KingKenny7 wrote:

Thats right!!!! A typical country builder who probably has moe money then sense.

He did not strike me as an eejit , didnt he erect some huge anti -war banner on the side of one of his buildings?

He said basically "Yes the markets going down but there is still a living to be had Im not screaming panic"

Remember the days when IT workers where paid a huge figure as they where few and far between.

Its really the blokes setting up estate agencys recently and stuff still paying off starter loans or peolpe owning plots of land in Roscommon on tick they thought would be the new commuter belt are going to hit the wall on a slow down.

Calina

alienhead wrote:

well i hope not, bought 2 years ago, and i'd hate for my house to fall to the price i payed then.

personally, i don't really see them falling, but i can't see them rising much more, and will probably just rise in line with inflation.

if i was a first time buyer now, i'd be pi55ed off i didn't buy 2/3/5 years ago, but hey, at least they're not rising thousands month by month.

Just because you hope for it doesn't mean it won't happen. As for not buying 2/3/5 years ago, I would be of the opinion that if I bought a house that I was happy to live in, whose monetary value was not the most important thing to me (but its utility value) then I don't think it would bother me too much which way prices went. But you might like to remember that 2/3/5 years ago a lot of people weren't in a position to buy because of any or a mixture of the following reasons:

1) they didn't have the deposit
2) they didn't earn enough
3) they were still at university/school
4) they were not sure that they wanted to stay in the job/city/location they were in
5) banks were still more or less applying some lending criteria regarding salaries
6) longer term "affordability" mortgages didn't exist so much.
7) they didn't want to rely on mammy and daddy to "help" them out
8) they didn't believe the property values were sustainable.

The truth is, if your property falls back to the same nominal value as it had 2 years ago, then the person next to you who choose not to buy might well be better off since in many, many cases, rent payable on a property has been less than the interest portion of a mortgage payment on an identical property in the intervening time.

Zambia

Calina wrote:

The truth is, if your property falls back to the same nominal value as it had 2 years ago, then the person next to you who choose not to buy might well be better off since in many, many cases, rent payable on a property has been less than the interest portion of a mortgage payment on an identical property in the intervening time.

So by that calculation

If you brought a house Feb 2005 for 300,000 your mortgage was lets say 1,200 pm. (You had a deposit)

you pay 28,800 over 2 years

So if your neighbour rented for the same length of time at 1100 pm.

26,400 in total over 2 years

So in Feb 2007 the house returns to 300,000 in value , you may well have paid of about 4000 - 5000 off the mortgage.

28,800 - 4500(approx) = 24,300 So you are slightly better of but once you include fees of moving/legal your probaly level.

So your neighbour has nothing to his name you at least have a house for about the same money.

alienhead

Calina wrote:

Just because you hope for it doesn't mean it won't happen. As for not buying 2/3/5 years ago, I would be of the opinion that if I bought a house that I was happy to live in, whose monetary value was not the most important thing to me (but its utility value) then I don't think it would bother me too much which way prices went.

well i tried to buy 5 years ago, and could have bought, but would have meant buying somwhere i didn't particularly want to live.

so i waited, saved more, and bought with a friend.

while living where i want to live is very important, so is the monetary value that we invested in the property.

because this is an investment with a friend, we plan to sell in another 3 years (5 in total). so it would be nice to get a decent return from our substancial investment.

if it was a place that i bought and planned to live in for a good while, like if i bought with a partner, i would be less concerned about the monetary value.

miju

alienhead wrote:

because this is an investment with a friend, we plan to sell in another 3 years (5 in total). so it would be nice to get a decent return from our substancial investment.

if it was a place that i bought and planned to live in for a good while, like if i bought with a partner, i would be less concerned about the monetary value.

rather than come across as a doom and gloom post , if it's an investment over the short term then i'd urge you to research the current market and what potentially down the road in the next 3 years or so

eirmail

alienhead wrote:

well i hope not, bought 2 years ago, and i'd hate for my house to fall to the price i payed then.

personally, i don't really see them falling, but i can't see them rising much more, and will probably just rise in line with inflation.

if i was a first time buyer now, i'd be pi55ed off i didn't buy 2/3/5 years ago, but hey, at least they're not rising thousands month by month.

Alienhead , I would recommend you check the asking proces for similar properties to your own on daft. I know a person who bought a 3 bedroom semi in leixlip last year for 400K , if you search daft now the range of prices for 3 bed semi Ds is 340-385K . This guy still thinks his place is worth 400K ??? If there happens to be a lot of properties similar to yours for sale and the range of asking prices is wide . It is safe to presume that your house is worth close to the lower end if the range.

When there is a glut of

miju

eirmail wrote:

If there happens to be a lot of properties similar to yours for sale and the range of asking prices is wide . It is safe to presume that your house is worth close to the lower end if the range.

surely it's true current worth would be somewhere in the middle rather than nearer te lower end?

The_Conductor

As Publilius Syrus is reputed to have said: "Everything is worth what its purchaser will pay for it....."

When there are a group of similar properties for sale, with everything else being equal, the purchaser will go for the lower priced property. If you are sitting on your house, fine, its worth whatever nominal value you want to put on it, but if you want to sell it- its only worth whatever a purchaser is willing to pay.......

Lower end of range for a group of properties in an area when there is an overhang of available property on the market determines the "value" of the house.

eirmail

miju wrote:

surely it's true current worth would be somewhere in the middle rather than nearer te lower end?

if for example there were 3 near identical houses . Priced at 400K ,390K and 385K.
in the currnet market very little is selling.
If I was looking to buy one of houses which are practically the same i would make an offer for the cheapest one. It is safe to presume in a market like this that the cheapest ones are the ones that are moving and the expensive ones are been sold by stuborn sellers "in denial". The reason that a lot of the inventory is not moving is that a lot of the asking prices are too high.

Zambia

eirmail wrote:

if for example there were 3 near identical houses . Priced at 400K ,390K and 385K.
in the currnet market very little is selling.
If I was looking to buy one of houses which are practically the same i would make an offer for the cheapest one. It is safe to presume in a market like this that the cheapest ones are the ones that are moving and the expensive ones are been sold by stuborn sellers "in denial". The reason that a lot of the inventory is not moving is that a lot of the asking prices are too high.

Really I would say its a lot to do with the state of the house , well if you have a missus its is ...

Dalfiatach

Zambia232 wrote:

So your neighbour has nothing to his name you at least have a house for about the same money.

Alternatively, your neighbour is footloose and fancy free, has a wide selection of cheap rental properties to choose from if he fancies a change, and isn't chained to the bank with a humungous debt hanging over his head for the next 30-40 years.

You don't have a house. The bank has a house.

whizzbang

Dalfiatach wrote:

Alternatively, your neighbour is footloose and fancy free, has a wide selection of cheap rental properties to choose from if he fancies a change, and isn't chained to the bank with a humungous debt hanging over his head for the next 30-40 years.

You don't have a house. The bank has a house.

Too true!
http://www.satirewire.com/news/0106/dream.shtml

Do-more

whizzbang wrote:

Too true!
http://www.satirewire.com/news/0106/dream.shtml

SimpleSam06

Whoops, looks like SpongeBob got a belt with the banstick from ecksor for a week or so... all you bulls lepp in while the going is good!! :rolleyes:

BendiBus

Dalfiatach wrote:

Alternatively, your neighbour is footloose and fancy free, has a wide selection of cheap rental properties to choose from if he fancies a change, and isn't chained to the bank with a humungous debt hanging over his head for the next 30-40 years.

You don't have a house. The bank has a house.

I'm just jumping into this thread as I can't read everything that's gone before. Maybe someone else has already expressed an opinion like mine?

My POV on this is that when I'm 53 (or sooner) I WILL have a house. And no monthly rent. A renter continues to pay market rate for their whole life. I can think about retiring once my mortgage is paid. Can a renter do this?

Rent will broadly follow inflation over the long term. Mortgage repayments don't. In 10/15/35 years rents will probably still take the same % out of your paycheck. A mortgage will reduce as a % of income. Excluding non-inflation pay rises.

I can't see how renting works out better than buying over the course of a lifetime.

SimpleSam06

BendiBus wrote:

I can't see how renting works out better than buying over the course of a lifetime.

Most people here wouldn't argue with that, assuming that

a) rent is higher than the interest portion on a mortgage
b) theres nowhere better to put the money you save by renting
and
c) you are happy with where you are living, and will live there for the rest of your life.

The problem that most people posting here have is that there are a shower of amateur speculators who think they are real estate barons in Ireland driving up house prices due to incredibly low interest rate loans, and foolish lending practices by Irish banks which are terrifying even international monetary institutions, meaning even a couple in good jobs combining their wages will have to slave away their early and middle ages to afford a shoebox rathole apartment.

Phew.

Smoggy

SimpleSam06 wrote:

The problem that most people posting here have is that there are a shower of amateur speculators who think they are real estate barons in Ireland driving up house prices due to incredibly low interest rate loans, and foolish lending practices by Irish banks which are terrifying even international monetary institutions, meaning even a couple in good jobs combining their wages will have to slave away their early and middle ages to afford a shoebox rathole apartment.

Phew.

Amen, Brother

BendiBus

BendiBus wrote:

I
My POV on this is that when I'm 53 (or sooner) I WILL have a house.


I can't see how renting works out better than buying over the course of a lifetime.

Hmmmn - thats all well and good - for you. But the way things have gone people will be paying hefty mortgages in 35 and imagine this one - FORTY years time.

mistake

TCollins

I think if you are disciplined enough (and i know of noone who is) that you put every penny of the difference between rent and mortgage payments you may do as well by saving the extra money in a nice safe high interest account.

The FTB tax relief is a huge change in outgoings for FTBs now. Its like getting free money - €260 a month.

We currently rent a very nice 2 bed house for €1300 pm.

Needless to say we have spoken about rent/mortgage and are still speaking about it trying to make up our minds.

We think we will end up with a mortgage of less than €320000 for a €350000 house in the same area if we decide to go ahead and buy. about €1580 per month for 30 years will be the payments, and we have considerable room to over-pay too should we decide to speed this up even without the annual wage increase we get of an average of about 7% between us.
Interest rate stress testing doesnt hurt with these increases.

After FTB tax relief for both of us thats payments of €1320 PM.
So we would end up saving €20 a month in the difference. We'd make a fortune investing that I suppose we could also invest the 30 odd grand we will have to shell out in advance, but i know for a fact it would go on a new car which i dont even need and a very expensive holiday.

I'm the one resisting this move, as i am scared there might be a recession and i will lose my job and have no salary. GF is in civil service and earns over 60% of our combined income and we could even manage on one wage comfortably, but i just worry, as i'm informed has anyone who has ever decided to buy a house.
Its hard for me to argue against these figures, and that we will own the house at 55 or even a lot sooner if we increase the payments as we intend to. And even if we dont we will own a huge percentage of it anyway by then.
If i was single i would be content to pay €400 or €500 to rent a room in a shared house and would never ever buy, but i'm not, so need some privacy and room to grow. Different stages of life i guess.

Remember too, inflation is your friend when you owe money and your enemy when you are saving.

My brother paid out almost half of his take home pay 4 years ago on his mortgage. I told him he was nuts. Now he's older, better job, more money, ,wage inflation and he pays out just over 10% of his take home pay on his mortgage. I'm not so sure he was nuts anymore.

ah decisions, decisions.

SimpleSam06

TCollins wrote:

We currently rent a very nice 2 bed house for €1300 pm.

So you're paying out €170+ a week each to rent? Wow. Might I suggest re-evaluating your rental arrangements?

TCollins

SimpleSam06 wrote:

So you're paying out €170+ a week each to rent? Wow. Might I suggest re-evaluating your rental arrangements?

Actually its €150 a week each. I'd end up paying that for a room in a shared house too.
nice house, nice area and we have a room for an office which i need for work when working from home. recently moved and rent has jumped a lot since we last looked for a place. that price is as good as it gets for us, believe me we looked for long enough. rent isnt as low as people seem to think

so besides your opinion on us paying rent what do you think of those figures?. i'd be interested in hearing peoples views. might help me make my mind up.

SimpleSam06

TCollins wrote:

Actually its €150 a week each. I'd end up paying that for a room in a shared house too.

€150 a week each is only €1200 a month and that excludes ESB, heat, this lovely internet, etc. You can get a large one bedroom (double bed) apartment with seperate dining room and kitchen in the middle of one of the most costly places in the country to live, Galway city, right now, for €180 a week total.

TCollins wrote:

nice house, nice area and we have a room for an office which i need for work when working from home.

So you think you can get a nice house in a nice area for around €350,000? 2003 just called, it wants its prices back. This also tells us you aren't renting in the middle of Dublin, nor probably anywhere near the capital...

TCollins wrote:

so besides your opinion on us paying rent what do you think of those figures?. i'd be interested in hearing peoples views. might help me make my mind up.

The figures are nonsensical. You put average rents up far too high, and costs of a mortgage far too low, as well as ignoring interest rate rises and things like starting a family, health insurance, that one of you might fall ill or be otherwise incapacitated.

Possibly the fact that you don't have to commute to work, as you said, means you can choose a place in the countreh to live, but if thats the case, the rent you are paying is too high.

TCollins

Ouch. You really are making things up arent you.
You say i dont live in Dublin, i dont commute, i'm a liar etc.

SimpleSam06 wrote:

€150 a week each is only €1200 a month and that excludes ESB, heat, this lovely internet, etc. You can get a large one bedroom (double bed) apartment with seperate dining room and kitchen in the middle of one of the most costly places in the country to live, Galway city, right now, for €180 a week total.

Galway is not the property or rental market that concerns us, so i dont know why you pulled that one out.

I'm not sure you should even be commenting on rents and mortgages if you cant do simple maths.

(1300 * 12) = €15600 per year - There are 12 months in a year
15600 / 52 = €300 per week - There are 52 weeks in a year.
300 / 2 = €150 per week each

ESB, heat, internet we pay for anyway whether renting or not - surely you knew this too.

SimpleSam06 wrote:

So you think you can get a nice house in a nice area for around €350,000? 2003 just called, it wants its prices back. This also tells us you aren't renting in the middle of Dublin, nor probably anywhere near the capital...

Wrong again.
http://www.daft.ie/searchsale.daft?s%5Bcc_id%5D=c1&s%5Ba_id%5D%5B%5D=295&s%5Bmnb%5D=2&s%5Bmxb%5D=2&s%5Bmnp%5D=&s%5Bmxp%5D=&s%5Bpt_id%5D=1&s%5Bhouse_type%5D=&s%5Bmna%5D=&s%5Bmxa%5D=&search=Search+%BB&more=&tab=1&s%5Bsearch_type%5D=sale&s%5Btransport%5D=&s%5Badvanced%5D=&s%5Bprice_per_room%5D=
and many more on myhome.ie

places in some nice areas for around €350k - some not so nice to but i know the area. Do you? Have you ever even been there?
Oh, and you're wrong again. Last i looked i was living in Dublin too.

SimpleSam06 wrote:

The figures are nonsensical. You put average rents up far too high, and costs of a mortgage far too low, as well as ignoring interest rate rises and things like starting a family, health insurance, that one of you might fall ill or be otherwise incapacitated.

Nice 2 bed house is €1300 or over. I've looked at the ones for less - have you? They are dumps.

http://www.daft.ie/searchrental.daft?s%5Bcc_id%5D=c1&s%5Ba_id%5D%5B%5D=295&s%5Bmnp%5D=&s%5Bmxp%5D=&s%5Bbd_no%5D=2&s%5Bpt_id%5D=2&s%5Bmove_in_date%5D=0&s%5Blease%5D=&s%5Bfurn%5D=0&search=Search+%BB&more=&tab=1&s%5Bsearch_type%5D=rental&s%5Btransport%5D=&s%5Badvanced%5D=&s%5Bprice_per_room%5D=


I think you'll find my sums on mortgage costs are also correct if you go back and check. I've actually got approval of that amount and thems the payments alright. But i suppose numbers arent your strong point. I dont need to waste time doing sums for you anyway, you wont believe them because you dont want to.

I could start a family, fall ill or be otherwise incapacitated while renting too and to tell the truth i would much rather own my home if any of these things happened.
I already pay health insurance and life insurance and i rent.

SimpleSam06 wrote:

Possibly the fact that you don't have to commute to work, as you said, means you can choose a place in the countreh to live, but if thats the case, the rent you are paying is too high.

Wrong, yet again.
Oh i do have to commute. about 3 weeks out of every month. I have to live in Dublin because i have to commute to Pearse street 1 week a month - takes about an hour in rush hour.

2 weeks a month i have to go to Santry - takes 20 minutes in rush hour


I really do hope people on here take you with the pinch of salt that you deserve. You have proved here that you pull everything out of your arse that you say. You make too many assumptions and attack an honest request for input with rubbish, just to rubbish a property market ,that you have proved here you know absolutely nothing about.

I am looking for replies to help me make up my mind for or against buying - you're just talking sh!te for the sake of it.

TCollins

TCollins wrote:

I am looking for replies to help me make up my mind for or against buying

Seriously - the asking price drops should be enough to put anyone off at least for a while. Now Im not saying hold off for the bottom of the market - firstly it could be hard to call secondly it could be a long way away.

But would you not just hold off and watch the market ?

TCollins

Deleted User wrote:

Seriously - the asking price drops should be enough to put anyone off at least for a while. Now Im not saying hold off for the bottom of the market - firstly it could be hard to call secondly it could be a long way away.

But would you not just hold off and watch the market ?

This is what we have been doing. My gut instinct is to wait and see, but this has cost us before. I'm more apprehensive about negative equity than the cost of the mortgage. We could easily make the payments, but it would just p!ss me off to see the value drop after we bought.

My gf wants to buy now because the net cost is not that much more than renting at all. Therefore if prices do fall, unless rent falls significantly we would still be better off owning.

Also there is talk of kids, so owning our own home, schools etc is becoming much more attractive than renting. But its just making that jump thats difficult.

Smoggy

TCollins wrote:

I am looking for replies to help me make up my mind for or against buying - you're just talking sh!te for the sake of it.

I'm with you there TCollins, I would love to have some answers, but I don't. My only answer is that I know something is happening to the market. Wether its a change, the peak of a boom or just a temporary lull only time will see. So I'm taking the advice of blindjustice and holding on a while to see what happens. As the one thing I'm sure off is that house prices arent going up and holding off isn't doing me any harm.

Deleted User wrote:

Seriously - the asking price drops should be enough to put anyone off at least for a while. Now Im not saying hold off for the bottom of the market - firstly it could be hard to call secondly it could be a long way away.

But would you not just hold off and watch the market ?

Do-more

TCollins wrote:

I'm the one resisting this move, as i am scared there might be a recession and i will lose my job and have no salary.

I think that's the point so many people miss when they are "hoping" that prices will fall so that they can afford to buy! (I realise you are not in that catagory TC)

There is such a high proportion of the working population who are directly or indirectly dependent on the house building industry that there is going to be an economic meltdown in this country over the next few years.

The question really is how may you be effected? Is your job directly or indirectly dependent on house building?

Property crashes start like death by a thousand cuts, IMHO the evidence for an impending crash is now overwhelming.

Even if I worked in a civil service job, I wouldn't be a buyer at this point in the market. Fact is prices are not going up at present so you have nothing to lose by sitting on the sidelines. To wait and see is not going to cost you anything.

If the bears are wrong (me included) and prices would start to take off again then you should be ready to make a quick decision.

Carry on renting and try to get yourself a more secure job!

My 2 cents.

TCollins

The problem is that we have been watching for a while and they are still going up where we want to buy - one of the few place where they still seem to be going up as far as i can see - possibly because of the interest generated because it will be on the Metro route, but i know what you are saying. Maybe the best thing to do is keep an eye on other locations and wait. I guess we can always buy (or not) somewhere else if we do start to see a shift in the market one way or the other.