Buy now or wait longer?

TheCityManager

Im in the happy position of having sold my last house in Oct 2007 (just before major crash in prices..got top dollar for it too..), have availed of vol redundancy and have saved quite a few bob...so I actually wont need a mortgage...Im currently renting and have been waiting and waiting for prices to drop so as I could be in the mortgage free position..which I now am...so should I wait longer and save more or be happy that I wont require a mortgage and buy now?
Opinions?

ntlbell

if you want to save more money wait if not buy?

D3PO

well why would you spend more than you have to ?

That said nobody knows when the bottom will hit so for all we know that could be now. (unlikely it but nothings impossible)

TheCityManager

Ah..I left out the fact that I'm pissed off renting, have a teen daughter that stays with me often to consider (she REALLY wants her own room to do up etc..) plus Im not all that long out of a LTR and just need to get 'settled'...

D3PO

well obviously the decision is one as much about personal circumstances as it is a financial one.

the only thing i would say is dont just buy to be mortgage free. Make sure your actualyl buying something you want to live in in an area you want to live in.

If so then sure go it it. Best of luck with it.

warrenaldo

Im wondering the same thing - I am looking to buy in the short term (although i wont be mortgage free).

My reason for waiting is prices continuing to drop and stamp duty.

Stamp Duty will cost me about 13k on a house. There is a lot of talk about property tax and I expect it to be introduced - with stamp duty being ditched.

So im waiting until the Budget to make a move - prices will probably have come down a couple more % by then also! so no harm waiting. Especially if there is a possibility that stamp duty will be gone.

Does anyone else have ideas on thi

ntlbell

TheCityManager wrote: »

Ah..I left out the fact that I'm pissed off renting, have a teen daughter that stays with me often to consider (she REALLY wants her own room to do up etc..) plus Im not all that long out of a LTR and just need to get 'settled'...

so you know the answer to your own question.

D3PO

warrenaldo wrote: »

- with stamp duty being ditched.

Not gonna happen.

Thanos

D3PO wrote: »

Not gonna happen.

So you think we will just stick with stamp duty and property tax will not come in or do you mean that stamp duty will stay AND property tax will come in?

ntlbell

Thanos wrote: »

So you think we will just stick with stamp duty and property tax will not come in or do you mean that stamp duty will stay AND property tax will come in?

if a property tax will affect your afford ability on a home or not then you're probably looking at houses that are too expensive.

it looks like the tax will not be on PPR's.

D3PO

they will stick with both I would imagine.

they have already removed stamp duty for FTB's removing it outright would actually inflate the market a little as vendors price the stamp duty savings into their asking prices.

now in the current market that wouldnt be the case but longer term it would.

warrenaldo

A property tax does not affect my ability to afford a home. But I would rather have the 13k in my pocket - as would anyone.

I think with the Budget coming up - putting in a property tax will generate a lot of reliable income where stamp duty has failed.

I think I would rather be wrong and have to pay stamp duty in January rather than be right and have paid 13k stamp duty in October.

ntlbell

warrenaldo wrote: »

A property tax does not affect my ability to afford a home. But I would rather have the 13k in my pocket - as would anyone.

I think with the Budget coming up - putting in a property tax will generate a lot of reliable income where stamp duty has failed.

I think I would rather be wrong and have to pay stamp duty in January rather than be right and have paid 13k stamp duty in October.

then why bother asking the questions?

wait.

dny123456

ntlbell wrote: »

then why bother asking the questions?

wait.

If you're going to give the same response, no matter the question then why bother answering questions?

ntlbell

dny123456 wrote: »

If you're going to give the same response, no matter the question then why bother answering questions?

the poster in question questions cannot be answered as we don't have the budget if he's worried about something that is going to happen in January then the only answer is to wait until then nothing we say or do here will change the outcome of the budget so you wait.

there was no real question in this thread

it's like going into the food and drink forum and asking them to choose what you should eat for each meal, the posters know their circumstances and they know what they want to get the proof was in the post so there's no need to really ask a question

warrenaldo

ntlbell wrote: »

then why bother asking the questions?

The only question I asked was "Does anyone else have ideas on this?"

It was a topic for discussion - not a yes/no question.
I was looking for peoples opinions.
If you dont want to discuss and give your point of view then dont.

Macha

TheCityManager wrote: »

Ah..I left out the fact that I'm pissed off renting, have a teen daughter that stays with me often to consider (she REALLY wants her own room to do up etc..) plus Im not all that long out of a LTR and just need to get 'settled'...

Well, to be honest your reasons for wanting to buy are emotional and, it could be argued, luxuries. You state that
1-you're tired of renting
2-your daughter 'REALLY' wants a room she can decorate
3-you want to be 'settled'.

1-can you explain why?
2-is temporarily delayingyour daughter's desire to decorate her room worth paying potentially 20% more for a house than necessary?
3-like I said, emotional but understandable. Again, is it worth paying what could be 20%+ more for a house than necessary?

D3PO

taconnol wrote: »

Well, to be honest your reasons for wanting to buy are emotional and, it could be argued, luxuries. You state that
1-you're tired of renting
2-your daughter 'REALLY' wants a room she can decorate
3-you want to be 'settled'.

1-can you explain why?
2-is temporarily delayingyour daughter's desire to decorate her room worth paying potentially 20% more for a house than necessary?
3-like I said, emotional but understandable. Again, is it worth paying what could be 20%+ more for a house than necessary?

Taconnol do you ask yourself the same before you buy a car.

do you pay more for a steak or lobster when you go to a restaurant when its not necessary to get the more expensive items on the menu to satisfy your hunger.

dont confuse an investors logic with that of somebody looking for a home. If somebody has personal desire for something they generally pay a premium for it weather its a house or anything else.

Is having a transient lifestyle, an unhappy family and being emotially unhappy and drained worth 20% for the most part people will say yes.

TheCityManager

taconnol wrote: »

Well, to be honest your reasons for wanting to buy are emotional and, it could be argued, luxuries. You state that
1-you're tired of renting
2-your daughter 'REALLY' wants a room she can decorate
3-you want to be 'settled'.

1-can you explain why?
2-is temporarily delayingyour daughter's desire to decorate her room worth paying potentially 20% more for a house than necessary?
3-like I said, emotional but understandable. Again, is it worth paying what could be 20%+ more for a house than necessary?

Hi and thanks for replies..

To answer the above..

1. I love doing up my own home, which I cannot currently do..Ive been renting / living with gfs for a long time now (even when I have owned my own houses..) and simply dont wish to rent much longer.

2. she is now 15 and there is really little years left in her actually wanting her own room, coming to stay etc..

3. As for settling..Ive lived all over since I seperated years ago..have owned my own houses, lived with gfs in various areas..incl down the country and simply yearn to be finally settled..


I hear all you are saying re more price drops..but do wonder how much more prices will actually drop..so am CONSIDERING choosing a house and making a substiancially reduced offer on it and see is it accepted...

Macha

TheCityManager wrote: »

1. I love doing up my own home, which I cannot currently do..Ive been renting / living with gfs for a long time now (even when I have owned my own houses..) and simply dont wish to rent much longer.

This is a downside to renting in Ireland, definitely.

TheCityManager wrote: »

2. she is now 15 and there is really little years left in her actually wanting her own room, coming to stay etc..

Fair enough. Does she have a room at her mother's place?

TheCityManager wrote: »

3. As for settling..Ive lived all over since I seperated years ago..have owned my own houses, lived with gfs in various areas..incl down the country and simply yearn to be finally settled..

Fair enough - I think it's important to look hard at your reasons for wanting to buy and if they hold up, then you know you're buying for good reasons.

TheCityManager wrote: »

I hear all you are saying re more price drops..but do wonder how much more prices will actually drop..so am CONSIDERING choosing a house and making a substiancially reduced offer on it and see is it accepted...

This is always a good option in a falling market. If you haven't already, download property-bee.com and look up www.irishpropertywatch.com to try and get some more info on the properties you're interested in.

I would say that in terms of getting the lowest price, it's always better to buy 5% from the bottom (on the way up) than god knows where from the bottom on the way down. As it stands, you have other factors to consider.

D3PO wrote: »

dont confuse an investors logic with that of somebody looking for a home. If somebody has personal desire for something they generally pay a premium for it weather its a house or anything else.

I think the sharp distinction you make between an investor and home-buyer is false. Sure, buying a home isn't all about the financial side but I think it's very important to understand that in standard purchasing behaviour, people buy emotionally and then justify their decision logically. It sounds like the OP is in a very financially healthy position and so may not have to worry about this aspect so much - lucky them.

I would also like to point out that your comparison of buying a house with buying a steak is risible. The purchase of a house is probably one of the single largest financial commitments/purchases any person/couple will have. To liken it to upgrading to lobster is just wrong.

D3PO wrote: »

Is having a transient lifestyle, an unhappy family and being emotially unhappy and drained worth 20% for the most part people will say yes.

I would object to renting being referred to as a 'transient lifestyle'. Also, you seem to equate his daughter's unfulfilled decorating aspirations as "an unhappy family". This may be so but I think you're being quite unecessarily melodramatic. Also, what do you know if what "most people" will do and what does it really have to do with the OP? Each person is an individual

In this post-bubble housing market, I am struggling to understand why people continue to encourage lemming-like behaviour.

D3PO

Taconnel my point is some people on here cant see past the financial and into the emotional. You said it yourself people make purchases on emotion.

Investors make purchases on financial logic. They are very different so questioning somebodys decision to buy becuse you believe the economic indicators say 20% overvalulation doesnt really hold any water.

Recognising somebodies personal need and referring to their post off that indication is hardly encouraging lemming like activity.

My comments re buying the most expensive thing on the menu whilst not on the same scale is essentially the same thing. Your argument is why spend money you dont have to.

My point is people do it all the time. Why does anybody buy anything but the cheapest car available I mean it still gets you from A to B right ? Why buy anything but the cheapest house in the cheapest area ? Why buy anything but the cheapest meal in a restaurant actually scrap that why go to a restaurant at all why not cook yourself.

everybody "wastes" money every day making decisions that suit their lifestyle true they arent as large as a house purchase but that doesnt mean you apply a different logic to that than any other personal purchase

D3PO

taconnol wrote: »

I would object to renting being referred to as a 'transient lifestyle'. .

Im not saying every renter is in that position but the fact is your not in control beyond the protection you have in your rental agreement / lease. If a LL decided to provide you notice outsid ethis period you are forced to become transient that cant happen if you own your own home.

sorry if this comment casued any offence Im not calling renters transients Im jsut saying it can become a transient lifestyle due to the lack of tennant protection legistlation in this country compared to say somewher elike the US or Germany

MG

TheCityManager wrote: »

Hi and thanks for replies..

To answer the above..

1. I love doing up my own home, which I cannot currently do..Ive been renting / living with gfs for a long time now (even when I have owned my own houses..) and simply dont wish to rent much longer.

2. she is now 15 and there is really little years left in her actually wanting her own room, coming to stay etc..

3. As for settling..Ive lived all over since I seperated years ago..have owned my own houses, lived with gfs in various areas..incl down the country and simply yearn to be finally settled..


I hear all you are saying re more price drops..but do wonder how much more prices will actually drop..so am CONSIDERING choosing a house and making a substiancially reduced offer on it and see is it accepted...

In the end it all comes down to whether you feel it's worth the money. I want to buy a house for many of the same reasons. I feel I can save about 100k by holding off. That 100k means have a better standard of living for me and my family, retiring earlier, paying for uni for the kids, doing up the house etc.

Weighing it up, I'm holding off. Even if I only save 30k I'm holding off.

ntlbell

warrenaldo wrote: »

The only question I asked was "Does anyone else have ideas on this?"

It was a topic for discussion - not a yes/no question.
I was looking for peoples opinions.
If you dont want to discuss and give your point of view then dont.

you said you don't want to get caught after january.

what difference does it make what people think the only way to make sure you don't get caught is to wait until January.

you can see the sense here right?

there's nothing to discuss.

Macha

D3PO wrote: »

Taconnel my point is some people on here cant see past the financial and into the emotional. You said it yourself people make purchases on emotion.

Well to be honest I find it far more worrying that so many people were incapable of seeing past the emotional and into the financial over the last few years.

I said that people tend to make purchases on emotion, but I didn't say that this was a good thing.

D3PO wrote: »

Investors make purchases on financial logic. They are very different so questioning somebodys decision to buy becuse you believe the economic indicators say 20% overvalulation doesnt really hold any water.

As I said, I don't agree with your (as I see it) assertion that the financial aspect does not merit any consideration when buying a house. Surely, it is most definitely relevant if it looks like house prices are going to drop 20%?

D3PO wrote: »

Recognising somebodies personal need and referring to their post off that indication is hardly encouraging lemming like activity.

I was referring to your comment about "most people" and your use of this to justify basing the decision to purchase a house on (almost?) purely emotional reasons.

D3PO wrote: »

My comments re buying the most expensive thing on the menu whilst not on the same scale is essentially the same thing. Your argument is why spend money you dont have to.

And I would argue that the pure difference in scale means that they are essentially not the same thing. A slightly more expensive meal does not mean that a person has made a terrible financial decision, but themselves (and possibly their family) at risk of huge debt or possible negative equity, risked bankruptcy or tied themselves into a 30+ year contract!

D3PO wrote: »

everybody "wastes" money every day making decisions that suit their lifestyle true they arent as large as a house purchase but that doesnt mean you apply a different logic to that than any other personal purchase

Well, as I have argued above, I think there are very strong reasons for applying a different logic to a house purchase. Although of course if someone insists on "wasting" money that they do not have on the smaller, daily purchases, then they too may end up in a less than desirable financial situation.

If the OP can spare the cash, then this becomes less of an issue. But I think every decision to buy a house involves a compromise between what the purchaser wants and what the purchaser can afford.

An unwillingness to compromise and a willingness to ignore affordability leads to financially irresponsible behaviour. And it was the pervasiveness of this behaviour that helped fuel the housing bubble.

D3PO wrote: »

sorry if this comment casued any offence Im not calling renters transients Im jsut saying it can become a transient lifestyle due to the lack of tennant protection legistlation in this country compared to say somewher elike the US or Germany

Totally agree. It's something I really can't stand (or understand).

geem

I would hold off. You will save a lot of money by so doing. With this money saved you can get a bigger house with a bigger room for your daughter. You can also save enough to start a college fund.
Talk to her and explain that you understand that she needs her own room but that if you buy now you will lose a lot of money.
In the mean time take her on lots of nice outings etc spending time with your daughter is more important than spending money on her.
I totally understand what you mean though. I am currently renting, waiting to buy. I hate renting but I hate losing lots of cash even more than I hate renting.
I think it is inevitable that house prices will fall more. Unemployment, banks not lending, Nama, too many empties.
Hold firm and do other creative things in the meantime.

niallo27

if you do wait we'll say 1 to 2 years to buy, is that not an extra 15 to 20 grand payed on rent which could be put towards a mortgage, prices will fall but 20% from the prices today seems like a huge drop.

Do people think there will be really a huge difference between what they'll save by waiting and what they'll spend by renting. I'm no expert, just want to know what people think, i'm waiting to sign contracts on a house,i still have a few doubts, but this house has already dropped from 370 to 265 at present. is a further 20% drop likely, i dont know.

TheCityManager

I had a deposit on a house this time last year..house purchase price at 360k...withdrew from purchase.. similar houses now advertised at 270k..saving 90k +.......do wonder how much more i will save by waiting another year?

geem

niallo27 wrote: »

if you do wait we'll say 1 to 2 years to buy, is that not an extra 15 to 20 grand payed on rent which could be put towards a mortgage, prices will fall but 20% from the prices today seems like a huge drop.

Do people think there will be really a huge difference between what they'll save by waiting and what they'll spend by renting. I no expert just want to know what people think, i'm waiting to sign contracts on a house,i still have a few doubts, but this house has already dropped from 370 to 265 at present. is a further 20% drop likely, i dont know.

Well I think so, I don't see anything getting better. I'm pretty certain prices will drop more than the 20 grand you pay on rent and don't forget you don't just pay 20k off your mortgage there is the interest as well.
That's just my view though. You are doing the right thing in thinking about it and getting opinions. I recommend reading the 'Propertypin' on the net as well.

niallo27

geem wrote: »

Well I think so, I don't see anything getting better. I'm pretty certain prices will drop more than the 20 grand you pay on rent and don't forget you don't just pay 20k off your mortgage there is the interest as well.
That's just my view though. You are doing the right thing in thinking about it and getting opinions. I recommend reading the 'Propertypin' on the net as well.

Yes but wont that interest need to be payed whenever you get the mortgage, i know its not as straightforward as that, but is the savings you'll make by waiting really going be big enough to keep you renting when i really want a place of my own, i know thats more of a personal decision though.

ntlbell

TheCityManager wrote: »

I had a deposit on a house this time last year..house purchase price at 360k...withdrew from purchase.. similar houses now advertised at 270k..saving 90k +.......do wonder how much more i will save by waiting another year?

it's impossible to know maybe someone else will spot the "bargain" and buy it.

You need to figure out yourself what's most important to you and your child and pull the trigger.

Macha

TheCityManager wrote: »

I had a deposit on a house this time last year..house purchase price at 360k...withdrew from purchase.. similar houses now advertised at 270k..saving 90k +.......do wonder how much more i will save by waiting another year?

Well, that's the million dollar question, isn't it? Opinions may vary but I believe house prices have a long way to go. And before you think it can't happen here, just consider the following diagram:
http://en.wikipedia.org/wiki/File:EconomistHomePrices20050615.jpg

You can also have a look at the latest report from irishpropertywatch.com:

This report is over the period, from the 20th of April to the 7th of June 2009.

The drops per day was 116 up from 103 last report.

There were 5,473 drops and the average drop was €44,394.
Over the same period there were 211 increases and the average increase was €40,785

The 5,473 properties reduced the price by just over €242.9 million in total.

The 211 properties raised their price by just under €8.6 million in total.

Time on the Market

more than 3 months 81%
more than 6 months 70%
more than 9 months 58%
more than 12 months 45%
more than 15 months 22%
more than 18 months 8%

The average number of days properties have been listed is 337 days (11 months) up from 325 days since the last report
You can See the Report by clicking here

Can I ask what area you're looking in?

TheCityManager

Out of interest..I never mentioned..

We currently have my elderly mum's house up for sale as she is in a nuring home and we need the money to pay the home...

Received an offer this morning (we probably wont accept as its too low..)...wondering why others are buying in this declining market ???

ntlbell

TheCityManager wrote: »

Out of interest..I never mentioned..

We currently have my elderly mum's house up for sale as she is in a nuring home and we need the money to pay the home...

Received an offer this morning (we probably wont accept as its too low..)...wondering why others are buying in this declining market ???

people buy all the time in good and bad.

the decline doesn't really matter that much if the house is affordable and your not planning on moving for x amount of years

it's like asking why are people buying 09 cars

Macha

TheCityManager wrote: »

wondering why others are buying in this declining market ???

A very small number buy because they have to, eg need more space, divorce/separation (I'm guessing...)

Also, some people can only see renting as "dead money" and don't understand that in a declining market, you're:
a) straight into negative equity
b) actually saving money by waiting for prices to go down
c) saving even more money by taking out a smaller mortgage (and as a result paying less interest overall.
d) think it won't matter because they won't be selling (but unexpected things can happen in life)

As D3PO pointed out, many people are acutely aware of their lack of rights as renters. I'm happy renting now but I imagine when I have children, I would have to consider the fact that renters have very few rights in Ireland.

Then again, some people just see the house of their dreams and go for it.

belmulletman

taconnol wrote: »

A very small number buy because they have to, eg need more space, divorce/separation (I'm guessing...)

Also, some people can only see renting as "dead money" and don't understand that in a declining market, you're:
a) straight into negative equity
b) actually saving money by waiting for prices to go down
c) saving even more money by taking out a smaller mortgage (and as a result paying less interest overall.
d) think it won't matter because they won't be selling (but unexpected things can happen in life)

As D3PO pointed out, many people are acutely aware of their lack of rights as renters. I'm happy renting now but I imagine when I have children, I would have to consider the fact that renters have very few rights in Ireland.

Then again, some people just see the house of their dreams and go for it.

I bought recently because I thought it was right.
And i'm glad i did, when i did. Can't wait to move in.
I know i'm not going to be in negative equity straight away, or for a long time, if ever!!
The place I got, I got CHEAP (much cheaper that any where else in the area). I bought in the Dublin city center, top floor, 2 bed, 800ish sq foot. For something NOW, in this market for similar spec, you're looking fairly far out of the city! There is nothing where I am for the money i paid (225k).

I had been renting for almost 10 years (A studio), and realized that my mortgage repayments (for a 2 bed apartment) would be the same as what my rent is / has been, so it just make since to me.
Also, I feel a bit more secure. I've got repayment protection etc... and always the option to stop repayments temporarily (if needs be and worst came to worse), but I would always have to pay rent regardless! (correct me if i'm wrong there!)

So, that just me. Maybe i lucked out...

Macha

Well done you - seriously! Especially on getting an apartment of 75sq ft - they are very hard to find in Dublin.

I would just be wary of thinking that you'll never be in negative equity...Anyway, that depends on you LTV ratio and that you can keep up payments.

warrenaldo

Thanos wrote: »

So you think we will just stick with stamp duty and property tax will not come in or do you mean that stamp duty will stay AND property tax will come in?

The report of the Commission on Taxation seems to be in favour of reducing stamp duty AND bringing in a property tax.
http://www.irishtimes.com/newspaper/breaking/2009/0727/breaking7.htm