Calculating house value?

raido9

There are alot of predictions floating around on this forum. House prices to drop from 0% to 50% and everywhere in between.

Clearly the majority of asking prices of houses on the market are overpriced, but there are surely some good value houses out there.


Is there anyway to calculate roughly what is good value for a house?
I've seen calculations from rental yield, and square footage, anyone have any other ways?

Tigger

raido9 wrote: »

There are alot of predictions floating around on this forum. House prices to drop from 0% to 50% and everywhere in between.

acuall drop will be location dependant


luas houses will never fall as high a % as 40 mile commuter houses

Clearly the majority of asking prices of houses on the market are overpriced, but there are surely some good value houses out there.

i thought so i made an offer but i kept looking

the worst is yet to come

[quotw]


Is there anyway to calculate roughly what is good value for a house?
I've seen calculations from rental yield, and square footage, anyone have any other ways?[/QUOTE]

the way i posted the other dauy based on 4 x the income of the aspiriant seems good


build cost + land value + admin costs + 10% looks goo fior an absolute monimum

that can turn a 2 bed terraced on green field to 50K

what are they at the momemnt?


is scarey

if you wanna buy i say wait

ntlbell

raido9 wrote: »

There are alot of predictions floating around on this forum. House prices to drop from 0% to 50% and everywhere in between.

Clearly the majority of asking prices of houses on the market are overpriced, but there are surely some good value houses out there.


Is there anyway to calculate roughly what is good value for a house?
I've seen calculations from rental yield, and square footage, anyone have any other ways?

When it's the house you want in a location you want at a price you can very comfortably afford factoring in some stress testing for interest rate hikes etc and leaves you with a comfortable standard of living...

then it's right house at the right price...regardless of what that is..

Gareth37

raido9 wrote: »

There are alot of predictions floating around on this forum. House prices to drop from 0% to 50% and everywhere in between.

Clearly the majority of asking prices of houses on the market are overpriced, but there are surely some good value houses out there.


Is there anyway to calculate roughly what is good value for a house?
I've seen calculations from rental yield, and square footage, anyone have any other ways?

Well if you are thinking of buying property as an investment I would say be in no rush, wait a few years. Things are extremely unstable.

New 3 bedroom semis have asking prices of around €130,000 in Donegal but are still not selling so I gues in rural type towns the value of property must be circa €100K but you have to be wary that these housing estates will become delapitated etc. Plus if you are gettinga morgage then a €130K house costs €300K due to interest so no point buying with a morgage, you will never make a profit.

I like renting anyway. If I had a morgage now Id stop paying as property will become worthless for generations to come and the bank cannot sell your house anyway so they are not going to evict you

ntlbell

Gareth37 wrote: »

I like renting anyway. If I had a morgage now Id stop paying as property will become worthless for generations to come and the bank cannot sell your house anyway so they are not going to evict you

not a fan of the news then oh noes just got a evicted

jimmycrackcorm

I thought it was gas how one family have their case suspended for another few months - their outstanding mortgage is €380k and they have been trying to sell the property for a year and halved the price now to €900k.

Pity the judge didn't tell them to wake up and sell it for half that to at least get some return instead of being greedy and trying to maximize their profit.

The_Conductor

ntlbell wrote: »

When it's the house you want in a location you want at a price you can very comfortably afford factoring in some stress testing for interest rate hikes etc and leaves you with a comfortable standard of living...

then it's right house at the right price...regardless of what that is..

Yup- everything is worth what its purchaser is willing to pay for it........

jackal

Tigger wrote: »

acuall drop will be location dependant


luas houses will never fall as high a % as 40 mile commuter houses



i thought so i made an offer but i kept looking

the worst is yet to come

Wrong. Houses close to the luas were even more overpriced to begin with and in all likelyhood will drop (a) the same percentage and (b) more money in real terms because they cost more than a 40 mile commuter town house in the first place.

All things being equal and all that the percentage drop will be very similar across the board. There are exceptions, hopeless places that had absolutely no need for estates in the middle of nowhere may and should drop more.

Nobody but nobody knows how much the average percentage will be, but if there is one thing I have heard a lot over the last year its "Well prices wont drop in MY area"...

SparkyLarks

A house might only be worth what a buyeris willing to pay.
but the seller also has to agree with the price.

So if the seller bought as an investment a few years ago and even today gan get twice what he paid, he might decide to sell.

If a home owner who bought a few years ago has negative equity they might decide not to sell.

Or a builder might be in a position where they have to sell the house for what it cost to build it just to get the bank off their back.

Or it might be the last house in an estate and the've made their money so ther happy to sit on the house.

However there tends to be floor to prices in most things. Some say 3 times the average income for an average home. Some calculate it based on the cost to build a home. Some say it's based on rental yield. All are partly correct.
Personally I think the key figure is the average mortgadge to net income ratio. so if intrest rates go up house prices fall, if the govt drops taxes prices go up. If wages go up prices go up.

CSO Study from a few years ago
http://www.cso.ie/releasespublications/documents/construction/current/constructhousing.pdf
page 48 has a good graph, I'd love to see the figures now


At the moment in Ireland, and the US, Wages are going down, intrest rates are going up ,and the govt doesn't have much room to lower taxes.

So it all turn out to be a guessing game, can you buy it cheaper today or tomorrow, or next week or next year. Who knows intrest rates have fallen, what will the govt do in the budget? what's the out look for jobs.

I don't think we've reached a floor yet, but I do think that when prices start to go up again, we will have as many people saying they will go down again as we had people who once prices started going down said, no house prices will keep rising.

whizzbang

SparkyLarks

The main difference is that you can have distressed sellers, you are not going to have distressed buyers. Most buyers can wait, a lot of sellers can't. Thus buyers price wins.

Also, when using average mortgadge to net income ratio, what length of mortgage do you think it right to use? 20 year/25 year as has been standard for so long?

Tigger

jackal wrote: »

Wrong.

charming

Houses close to the luas were even more overpriced to begin with and in all likelyhood will drop (a) the same percentage

location is important, they have it so they will keep an inheriant value, this is my opinion and neither of us know for sure

and (b) more money in real terms because they cost more than a 40 mile commuter town house in the first place.

i did not know that the same percentage of a higher number is a bigger result thank-you

All things being equal and all that the percentage drop will be very similar across the board. There are exceptions, hopeless places that had absolutely no need for estates in the middle of nowhere may and should drop more.

that is what i said before, "commuter " towns 40 miles away

Nobody but nobody knows how much the average percentage will be, but if there is one thing I have heard a lot over the last year its "Well prices wont drop in MY area"...

i live in mayo

the luas will not affect prices here very much

SparkyLarks

whizzbang wrote: »

SparkyLarks

The main difference is that you can have distressed sellers, you are not going to have distressed buyers. Most buyers can wait, a lot of sellers can't. Thus buyers price wins.

Also, when using average mortgadge to net income ratio, what length of mortgage do you think it right to use? 20 year/25 year as has been standard for so long?

True but as time goes buy, the sellers who can't wait will either sell their house or learn to live with and no longer need to sell. There are people out there who don;t need to sell, and eventually the dynamic will sift, may be 6 months may be 20 years.

Not sure on the length of mortgage to take, I'd probably start looking at a 30 year mortgage, then look at trying to figure out what the average mortgage lenght taken out each year was.

crocro

SparkyLarks wrote: »

However there tends to be floor to prices in most things. Some say 3 times the average income for an average home. Some calculate it based on the cost to build a home. Some say it's based on rental yield. All are partly correct.
Personally I think the key figure is the average mortgadge to net income ratio. so if intrest rates go up house prices fall, if the govt drops taxes prices go up. If wages go up prices go up.

In many European rural property markets, the replacement cost of housing has been historically higher than the second hand price. eg Sweden and Germany. I stayed in a 5 bed rural house with pool in Germany recently that had cost 100k to purchase. Only the rich would build new houses as second houses were so cheap. Replacement cost is not a floor.

astrofool

SparkyLarks wrote: »

Not sure on the length of mortgage to take, I'd probably start looking at a 30 year mortgage, then look at trying to figure out what the average mortgage lenght taken out each year was.

I'd always look to take a 35 year mortgage, but base it on being able to afford a 21/25/30 year mortgage. You can always overpay on a long mortgage, but it's very had to underpay on a shorter length mortgage. A 35 year mortgage is the most flexible in this regard. You're also covered more if things go bad (pay cut, lose a job, interest rate changes).

You shouldn't be getting a 35 year mortgage if it's the absolute limit of what you can possibly borrow, ideally.

SimpleSam06

SparkyLarks wrote: »

True but as time goes buy, the sellers who can't wait will either sell their house or learn to live with and no longer need to sell. There are people out there who don;t need to sell, and eventually the dynamic will sift, may be 6 months may be 20 years.

Then again, as prices drop and time goes by, the number of sellers in negative equity will increase. This mostly applies to those who would be under pressure to sell in negative equity, specuvestors and those in unsuitable accommodation, but that number won't start to level out until prices stop falling. Its already almost at eighty thousand according to Daft, which is several years supply.